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

Thank you. Good morning and thank you for joining us today for the Genuine Parts third quarter conference call to discuss our earnings results and the outlook for the remainder of the year. Before we begin, 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 those 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 comments 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 have concluded our remarks, we will look forward to answering any questions that you may have. Earlier this morning, we released our third quarter 2009 results and hopefully you’ve had an opportunity to review them. But for those who may not have seen the numbers as yet, a quick recap shows that sales for the quarter were $2.607 billion, which was down 10%. Net income was $107.6 million, which was down 18%, and earnings per share was $0.67 this year compared to $0.81 in the third quarter of 2008, and EPS decrease was 17%. In looking at the individual results by business segment, our automotive revenues were down 1% in the quarter. This follows a 7% decrease in the first quarter and a 5% decline in the second quarter. As a matter of information, currency exchange impacted our results by 1% and without this, we ended the quarter even with prior year. So while we are not yet where we feel we should be in our automotive operations, we were encouraged by the third quarter improvement over the first two quarters and we do see some positive things happening in our automotive segment. Within our company store group, we closed or consolidated a number of stores; however, our same-store sales were up 1% in the quarter. This follows decreases of 3% and 1% in same-store sales in the first two quarters and we are encouraged by the trend in the…

Thank you, Tom. Good morning. We appreciate you joining us on the call today. We will partially review the income statement and segment information and then touch on a few key balance sheet and other financial items. Tom will come back on for a brief recap and then we will open the call up to your questions. A view of the income statement shows the following -- total sales for the third quarter 2009 were down approximately 10% to $2.6 billion, and reflect another period of slight sequential improvement for automotive and office products, as well as more consistent results in our industrial and electrical businesses. Gross profit in the quarter was down slightly to 29.4% of sales compared to 29.5% in the third quarter last year. Our gross margin year-to-date of 29.6% also remained down slightly from last year and is primarily driven by reduced volume incentives earned, which was caused by the lower levels of purchases. For the year through September, our cumulative pricing, which represents the prior increases to us, were a negative 1.9% in automotive, plus three-tenths of 1% in industrial, plus 3.5% in office and plus 1.5% in electrical. Now let’s look at SG&A. As a percent to sales, SG&A increased 67 basis points to 22.8% versus 22.1% in the third quarter of 2008, and for the year-to-date period SG&A is up 82 basis points to 23.2 compared to 22.4% last year. The increase for the quarter and year-to-date is due to the loss of expense leverage on lower sales, which remains a challenge for us even with our continued progress in reducing our cost structure, which we’d like to discuss further. For the third quarter, SG&A expenses of $595 million were down $43 million compared to $638 million last year. For the nine months…

Thank you, Jerry. Well that recaps our third quarter and nine month results and with sales down 11% through September, net income down 23% and earnings per share down 20%, it obviously has been a tough and challenging year for GPC. As you heard earlier, automotive has improved a bit over the past two quarters and we expect this to continue in the coming quarters. Office products seem to be moving in the right direction but at a slower pace than automotive. Our biggest challenges have been and continue to be in the industrial and electrical segments and at this time, we feel that it will be another quarter or two before we see any material recovery in either of these businesses. With that said, our expectation for the fourth quarter is for revenues to be down 5% to 6%. That’s an improvement from the 11% decrease in the first, 12% in Q2, and 10% in Q3 but this would still put us down 9% to 10% for the year. On the earnings side, we anticipate fourth quarter earnings per share to be in the $0.44 to $0.50 per share range and this would put us at $2.32 to $2.38 for the year. This would be down 18% to 21%, which is about in line with where we find ourselves through nine months. So that concludes our remarks and at this point, we’d like to take your questions and we’ll turn the call back over to the operator. Operator.

(Operator Instructions) Your first question comes from the line of Scott Ciccarelli from RBC Capital Markets.

This is Austin Paul sitting in for Scott today. My first question relates to the segment breakout you provided, specifically the operating profit on the other line item. You mentioned the positive impact of the $4 million on the pension valuation but when I add that back, I still get a lower number, both sequentially and year over year. I was wondering if you could help me understand what else is in that other line item and if this represents a new run-rate going forward.

I don’t believe it represents a new run-rate, Austin. What’s in that line is our corporate expense and that includes a number of things, such as that pension but you are right -- we were down about $9 million to $10 million there and $4.5 million of that was due to the retirement plan adjustment. The other was due to a lack of stock option expense and also an adjustment to the bonuses that we accrued. We are obviously not going to be paying out the bonuses that we had planned on at the beginning of the year so it’s a combination primarily of those three items that makes up most of it.

Great, thank you. And my second question relates to the pricing trends you’ve talked about previously, the NAPA segment. What are you seeing there both this quarter and going forward, and could you please talk a little bit about how that affected both the sales and operating profit at that segment?

I’ll try to answer that question -- as far as what we are seeing currently, we think there is some stability in the marketplace currently but we also feel with our pricing checks and surveys that we’ve got a little more adjusting to do on some specific product categories and we’ll be making some of those adjustments in the fourth quarter. As far as the impact thus far this year in automotive, it’s a negative 1.9% through September.

Great. Thanks, guys.

Your next question comes from the line of Tony Cristello with BB&T Capital Markets. Tony Cristello - BB&T Capital Markets: I guess one of the questions I wanted to talk -- I have a few but when you think about the trends in automotive, if I were to strip out fleet now, would it be close on your core automotive to being back up to a sort of flat to positive on a sales basis?

Core automotive would be up, absent fleet. The fleet impact is -- well, tapping there is costing us about 2 points currently. Tony Cristello - BB&T Capital Markets: Do you think that the sequential improvement is totally related to the initiatives or are you -- and I guess in that, are you gaining some share back or do you think that the trends in the industry as a whole have perhaps accelerated a little bit or continued to strengthen, given the duration of the macro?

That’s a multi-part question but trying to break it down, I would start by saying that of the four businesses that we are in, the best economy or the best segment is the automotive, without question. So we were underperforming, as you know, for several quarters and I think now what’s happened is that we are performing a bit better. It would suggest that maybe we are regaining a little bit of the share that we lost in some prior quarters and I do think it’s sustainable as we move through the next few quarters. Tony Cristello - BB&T Capital Markets: And then shifting gears to the office segment, do you think or can you attribute anything to sort of what happened this quarter and what was sort of the sequential improvement and is there something that you might see happen to exhibit I guess further improvement on office? Typically it’s more of a late cycle recovery but I’m just wondering if there’s anything specific that you saw that led to that improvement.

No, I think we started to really feel the effects in office products in the fourth quarter of last year. And our folks have been working awfully hard over the past several quarters to try to recover from that, so they’ve got some focused initiatives that I think are yielding a little bit of positive impact for them and I don’t think there’s any dramatic change in the external climate. You know, I mentioned earlier that office worker employment is one of the key drivers for us and if we look back, we were really running quite well in the 2004 through 2007 timeframe and in that period of time, white collar employment was going up anywhere from 1.6 million to 2.1 million jobs per year. Last year white collar employment contracted about 1.6 million, with 900,000 of those occurring in the fourth quarter and thus far this year, we’ve contracted about 2.1 million jobs. If we’re looking for positives, at least sequentially, the job contraction is going down. It was down 1.1 million in the first quarter, roughly 600,000 in the second quarter and 400,000 in the third quarter but it still means we’re going to be down 2.3 million, 2.4 million for the year and that’s the biggest headwind that our office products team faces today. Tony Cristello - BB&T Capital Markets: And I guess the last question and I’ll let someone else ask but when you look at the industrial motion piece of the business and if you go back to I guess the early 2000s and the last time you sort of faced a tough operating environment, it seemed like from the bottom to the period where you were able to recover and get back to growth again over the levels from the fall-off, it was about eight quarters, if I’m not mistaken and now obviously there could have been some acquisitions and some other things. How do you categorize what you did or saw or experienced from the bottom of that period to what appears to be maybe the bottom of this period? I think in our discussions you’ve always said you’ve got a pretty good six-month window of visibility and if you are starting to see some improvement, I mean, how would you categorize our thinking or how should we think about the time or when you would expect motion to sort of surpass where you were a year, year-and-a-half ago?

Well, it’s a tough question to answer, as you know, because nobody really knows how long it is going to take for the economy to really come back to a level that we are more accustomed to. I’d say first that the depth of this cycle has been deeper than I’ve experienced in my 40 years working at Genuine Parts Company. This one came on more suddenly, it’s deeper, and it seems to be more broad spread than any that I can recall. With that said, one thing that is a little bit encouraging is that when the industrial production and capacity utilization figures started to tick up in July and August, we saw our average daily sales volume tick up a little bit as a result of that. We felt for some time that inventories were fairly lean and the reaction time to any pick-up in demand would be shortened some and we are hoping that that’s an indication that will prove to come to fruition. But we need another couple of months yet to see what happens with the manufacturing segment and if in fact these increases that we saw in July and August really are the beginning of a modestly improving trend. We’re thinking that if it does continue for a couple of more months, then we should see a more noticeable improvement in our industrial business, some time mid to late first quarter or early second quarter but that is fully dependent upon that trend continuing. Tony Cristello - BB&T Capital Markets: Okay, great. That was very helpful. Thanks, guys.

Your next question comes from the line of Matthew Fassler with Goldman Sachs.

The first question I would like to ask relates to automotive margins. You talked about the negative expense leverage in the industrial related businesses as being a challenge. If you look at the automotive margin, your sales trend did improve but your margin, which had been up in each of the prior two quarters, came under a little bit of pressure and the profit decline was slightly steeper than the year-to-date number. I know you might have been cycling some one-off factors perhaps in the first half of the year but can you lend some transparency to that trend and talk about what might have transpired in the way you came to market that might have impacted your margin there?

Matt, it’s not a large enough number for it to have been any one thing. We’ve looked at that and tried to determine -- you know, we did make some price adjustments and our gross margin affected a little bit there and -- and we have closed some operations that were non-profitable, some stores, as Tom mentioned in his remarks. And I think it’s a combination of a lot of those types of issues. There’s no one thing there. I would say that by the time we make the turn here in the fourth quarter, then we will start to see that operating margin look better but get back to what it had been through the first six months versus what it shows for the third quarter.

Was the investment in price material in taking that margin down?

Not material to the overall, no, but it certainly would have had an impact.

On automotive, got it. And so you are -- you’ve looked at elasticity and you’ve looked at the pay-back that you are getting on some of these price investments and you are comfortable with the pay-out?

Yes.

Matt, what happens, just a little more information on that, what happens is that we lower prices on a particular day and the impact on margin is immediate but the impact on revenue, it takes a little bit of time for that to settle into the marketplace and for us to recapture some business so there’s a little bit of lag between the pricing action and the revenue contribution.

Got it. Second question, within the other line, so to speak, that below the line series of items, how significant or how much of that number related to the bonus accrual number?

Well, there was about $2.5 million associated with the fact that we didn’t grant any options this year and then the other 2.5 would have been associated with the adjustment for bonus reserves.

Got it, okay, but your view is that sort of the run-rate for that business is still -- you know, call it $10 million to $12 million in an ordinary quarter?

That’s correct.

Okay, and then within the industrial business, it’s interesting some of the industrial macro data, including some data that came out this morning, looks to be getting somewhat better and Tom, you indicated that July and August I guess, or August and September were perhaps a little bit better in terms of run-rate. Are there parts of the industrial segment where you are seeing headway versus where it had been before? You talked about automotive and [inaudible] equipment, for example, still being under pressure but are those segments coming back in any way?

I would say as a general response first is that light industrial, which would be things like food processing and energy related, alternate energy, those seem to be a bit more responsive than the heavy industrial. We don’t see any pick-up, material pick-up in automotive at this point and frankly with new car sales estimated to be what, some 10.5 million for the year, we don’t anticipate any material improvement in that until we get into 2010. But we do see -- anecdotally we see some things happening. There is some steel furnaces that are being fired back up. We do see a little bit of an up-tick in some production and some of the mining and aggregate sectors. We are seeing a little bit increased demand there, so it’s more encouraging than it might have looked a couple of quarters ago but I think it is still early to say that we are really starting to climb out.

And then finally on cost structure, it sounds like you are making some new redemptions. Is it feasible that if necessary in 2010, your SG&A number could come down again or have we hit sort of mid-rack here?

I think it can continue to come down. You know, where most of that is related to employees and so forth but we got some further facility rationalization that we are working on and can take place and costs associated with that come down, and there are a number of other longer term things that we are looking at in an infrastructure situation that we can bring that down. But to support the revenue growth, these expenses won't just be added back. Certainly depending on the level of revenue growth we have, we may have to re-add headcount to some operations but by and large, we’ll benefit from these cost reductions going forward. But there are some further reductions that can be made, assuming that we continue to see revenue decreases.

If I can just tag onto that, our cost reduction initiatives are tiered. We’ve got near-term, midterm, and longer term and the near-term obviously we can affect the most quickly but the mid-term and longer term are we think pretty impactful and we’ve got teams working on various initiatives currently to continue to keep bringing that cost structure down.

Got it. Thank you so much.

Your next question comes from the line of Michael Ward with Soleil Securities.

Jerry, I wonder if I could follow-up a little bit on your cost saving initiatives. I think you said $65 million to $70 million this year?

That’s correct.

Okay, and what is that up from?

I’m sorry, Mike?

What was your previous target?

Oh, now that’s what we had targeted. We thought we’d get about 60 to 65 and we have 55 through the nine months so we raised that to 65 to 70.

Okay, and what types of items are they? Are these cost reductions that can stick or is it just temporary type --

No, they are cost reductions that can stick. As I mentioned previously, if we have revenue growth come back strong then we are going to have to add some headcount back and that will take away some of it but by and large, some of these changes in closing, losing operations and so forth are things that we have done and those costs would be permanent to some other changes that we’ve made as far as putting in systems and so forth. It makes us more productive, things like that.

Okay. Tom, you touched a little bit on inventories at some of your customers, particularly on the industrial side, the EIS side. Is there anything out there that you can look at that suggests they were leaner hitting, you know, they react much more quickly to reducing orders and is that what is allowing the pick-up to continue a little bit faster than you thought?

Well, we know from the visits into customer facilities that like most companies, they were leaning out inventories as we were working our way through the early stages of this cycle, so that we pick up on an ongoing basis. But I think the best evidence we have is the fact that July and August indices showed a little bit of an up-tick in August and September average daily sales volume showed a little bit of an up-tick, and that’s fairly rapid response to those indices, in our opinion. So I think it validates the thought that the inventories have been leaned out some.

Okay, now when they buy the components and they are sitting in their inventory, they won the inventory, correct?

Yes, sir, that’s right.

Did they have the ability to send that back to you?

Well, we would do some adjustments on an as-needed basis.

Okay, so going forward do you think this system will be a little bit more efficient?

We are thinking that, Mike, but without the benefit of absolute fact base, that’s our thinking right now.

Okay, I really appreciate it. Thank you.

Your next question comes from the line of Gregory Melich with Morgan Stanley.

Two questions, one on the SG&A and then on office products -- just to go a little bit further on the SG&A, if you look at the year-to-date dollars, it’s down quite a bit more, I think almost double from my math on the -- versus the cost savings. Could you just help bridge that gap? And then I hate to be the curmudgeon but if next year is again another down year, have we reached the stage where to cut much more in terms of headcount in other areas, you are really cutting into the franchise? And I have a follow-up on office products.

Let me address that -- the first issue, the difference is some of our SG&A dollars are down simply because business is off. You have certain expenses that are associated with just having additional volume and those, when business goes down, delivery expense and those kinds of things go down accordingly. These SG&A savings that we are referring to are targeted savings and those were specific initiatives that we went out on, and some of that is on fuel savings, change in delivery routes going around optimization programs and so forth. Some of it is headcount reduction. And anything associated with that -- there’s some other things we’ve done, we went to a soft freeze on our pension plan effective 1/1. We granted no stock options this year. So from a compare standpoint, the long-term incentive compensation is down. Now if we go into next year and we still are down in revenue, we will not grant stock options next year. But if we see an improvement, certainly we like to go back to giving our people the long-term incentive compensation that they have gotten used to. So some of the things will depend upon how quickly and how much they come back in the SG&A category, will depend on the revenue side of things. But in answer to your question, it will be very difficult to have targeted initiatives other than some of these facility rationalizations that we are going to proceed with regardless if revenue comes back, with the exception of those who continue just to reduce people count -- you’re right, it becomes very difficult beyond -- keep in mind since the first part of 2008, we’ve cut our headcount 11%, so it will be difficult and I believe that we are pretty efficient before we even started that. But that does present a challenge for us going forward.

Okay, so basically you could make some targeted reductions but we shouldn’t expect it to be $60 million or $70 million again, it’s just --

I think that’s a fair statement.

And then on office products, you mentioned inflation there I think over 3% now year-to-date. Could you explain where -- what parts that is and what is moving that and how should we look at that going forward?

This is a number that is spread across all product categories and all product lines and some of it will be carryover when you get forward buys in anticipation of price increases and try to take advantage of that to protect the gross margins. I don’t - we don’t have a specific category that is -- and some of them, they’ve got obviously decreases in a number of their product categories but it is spread across all product lines and I don’t know that any one as large enough or significant enough to point it out.

And so that -- just to be clear, that’s the -- your sourcing cost is up 3% and you’ve generally passed that through 100%?

I hope it’s 100% but you know, our gross margins stayed fairly stable over there, so that would say that we’ve been able to pass most of it along.

Great. Thank you.

Your next question comes from the line of Keith Hughes with SunTrust.

Just real quickly in [F.P. Richards], if you take out the tech products and the furniture, would those businesses have been running up this year?

Yes, we are running -- the other two categories, just as a reminder, would be the cleaning and break room and the core office supplies, both positive for the year, negative in tech and furniture.

All right. Thank you.

Your next question comes from the line of Brian [Sponheimer] with Gabelli & Company. Brian Sponheimer - Gabelli & Company: Just a question still on office -- I may have missed it, I got bounced off for a minute. When you are talking about office products margin, you said that gross margin had stayed flat sequentially and year over year. But operating profit for the segment [inaudible] -- 8.3% in the second quarter to 6.1. What in G&A is making that so, and is that something that we should expect to see going forward?

One big piece in that, Brian, is they increased their allowance for doubtful accounts a bit in the quarter. We think it should be recoverable but we did in fact beef up the allowance so the reserve in the quarter in office products.

And they did say they had some discontinued inventory that they sold in the quarter that didn’t provide them the normal gross margins that they would get. Brian Sponheimer - Gabelli & Company: Okay, thank you. All my other questions have been answered.

We have time for one more question. Your last question comes from the line of Erica [Wolford] with Cleveland Research.

Good morning. I was just hoping that you could talk a little bit about the margin trends that you are seeing within the industrial part of the business. It looks like you saw a good sequential up-tick in the third quarter from the second quarter.

The margins in industrial -- our operating margins are affected in a negative way. While we think our industrial margins is still good but on that kind of a revenue decrease, it’s very difficult to get your expenses cut and cut fast enough and deep enough to maintain the operating margins and they did have good operating margin but on that 22% revenue decrease in the quarter, to be down 53% in operating profit is not a number that we are proud of and not a number that we are happy with and the industrial management team is working on that and hopefully as we go to the end of the year, we’ll see some improvement there. I will remind you and the others on the call that the industrial group is affected by volume incentive rebates that are earned from the vendors and we’ve cut our inventory significantly at the industrial sector this year, as well as the purchases have been off just because business is off 20%, so that has been a major impact and that’s affected our gross margin in the industrial sector, as well as the operating margins. They’ve done a very good job in cutting their SG&A type expenses but we have just barely overcome the incentives that they would have earned had we maintained our inventory or the normal purchasing cycle.

Thank you.

Operator, do you have any additional questions?

No, sir, that is all the questions that we have. Do you have any closing remarks?

We appreciate each of you joining us on the call today and we are grateful for your continued interest in and support of Genuine Parts Company and we look forward to talking to you in the future.

This concludes Genuine Parts Company third quarter 2009 earnings conference call. You may now disconnect.