Good morning. My name is Carrie and I will be your conference operator today. At this time, I would like to welcome everyone to the Genuine Parts Company quarterly earnings call. (Operator Instructions). Thank you. I would now like to turn the conference over to Carol Yancey, Senior Vice President of Finance. Ms. Yancey, you may begin your conference.

Thank you. Good morning and thank you for joining us today for the Genuine Parts fourth quarter and year-end conference call to discuss our earnings results and the outlook for 2008. Before we begin today, 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 and its management, statements of future economic performance, and assumptions underlying the statements regarding the company and its businesses. 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 have concluded our remarks, we will look forward to answering any questions that you may have. Earlier this morning, we released our fourth quarter and year-end 2007 results and hopefully you had an opportunity to see them. But for those who may not have seen the numbers as yet, a quick recap shows sales for the quarter were $2.627 billion which was up 3%. Net income was $126.1 million, which was up 6% and earnings per share were $0.75 this year compared to $0.70 in the final quarter of 2006 and EPS increase was 7%. So, while we did see a slight softening on the revenue side from the first three quarters, we were pleased to still be able to get some operating leverage with net income up 6% on the 3% sales increase. For the year, our sales were $10.843 billion, up 4%. Net income was $560.3 million, which was up 7%, and we earned $2.98 per share this year compared to $2.76 in 2006 and the increase in EPS was 8%. So it turned out to be another record year in sales, net income and EPS for our company and we are proud of the job that was done by the GPC team. Looking at the results by segment, the Industrial and Electrical operations continue to produce the strongest results. Industrial sales were up 7% in the quarter and they were up 8% for the year. You may…

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. We'll be brief and then open the call up to your questions. View of the income statement shows the following: Total sales for the fourth quarter were 3% to $2.6 billion and we finish the year up 4% at $10.8 billion. Our fourth quarter was not too different from the circumstances we experienced throughout the year, so our results were pretty consistent from quarter-to-quarter in 2007. Not growing at the rate we like to see over the long-term but still this was another record sales year for us, and we remained optimistic about the opportunities we have to continue to show solid growth in 2008. We are very proud of the GPC team for their accomplishments and continued commitment to sales growth. At December 31, the company reclassified certain warehousing, distribution and handling cost from operating expenses to cost of goods sold. You may have noted this disclosure on our income statement in today's press release, and we will present a five year historical schedule of adjusted cost of goods sold and operating expenses, as well as the 2006, 2007 quarterly reclassification in our 2007 annual report. We can also send this schedule to you in advance of the annual report, and if you like just let us know. For '07 and '06 these costs amounted to $176 million and $171 million, respectively. And we are $43 and $41 million in the fourth quarter of 2007 and 2006, respectively. Our comments regarding gross margin and operating expense will reflect these changes. It should be noted, however, the sales, operating margins, net income and EPS were…

(Operator Instructions). Please go ahead.

We hope everyone to stay with us on the conference call. We apologize for that, we just talked about how good our strong cash flow was. We didn't pay our power bill because we had a brief power out is there we shut the call down for a moment. But hopefully, we got the fact that we [will turn to] '07 and return our focus to 2008 our goal remain to show continued improvement on growing sales, controlling cost and improving our operating margins. To support these initiatives we have a strong and healthy balance sheet and continued strong cash flows further maximizing our return to shareholders. We feel good about our businesses their strategic plans and their prospects for long-term growth. We are proud about dedicated employees and their efforts this is especially true when external business conditions present additional challenges for us. We are very pleased with our efforts in making Genuine Parts Company the great company, than we believe it to be. And now we have the right people in place to make it an even pioneer company in the years ahead. Tom, it will turn it back to you.

Thank you, Jerry. We will have recaps our performance for the fourth quarter and year end 2007. As we look back over the year, we feel good about the results in industrial and electrical electronic with an 8% sales increase industrial also is going to improve their margin 10 basis points, electrical was up 7, they improved their operating margin 130 basis points. Automotive while only up 2% and revenue was able to show 10 basis points margin improvement for the year, which we are pleased to see. Only office products progressed on is being down 1% in sales and all 50 basis points in operating margin but we do anticipate improved results from office products in 2008. Putting altogether with sales up 4%, net up 7%, and EPS up 8%. We are pleased to be able to report another record year in all three areas as well as to be able to show continued improvements in asset management, working capital efficiencies and maintaining strong cash flows. So, progress was made in a number of important areas and we are proud of the job that was done by the GPC team. Now, as far as 2008 is concerned, we ended the year feeling good about the specific plans in place in each of the four business segments. At the same time, however, we recognized the additional challenges that we will face due to a slower economy. And with that in mind we are a bit more cautious in our expectations for 2008. Generally speaking, we feel that the second half of the year will be a bit stronger than the first half and full year revenue expectations for each of the segments will be as follows: In Industrial and the Electrical Electronic, we are looking for 5% to 8% revenue increases; in Automotive, 2% to 5% and in Office Products, 1% to 4%, giving total GPC, 3% to 6% on the revenue side. And with revenue growth in this range we would expect net income to be up 4% to 7% and earnings per share of $3.12 to $3.22, which will be up 5% to 8%. At this point, we will ask Carrie to go ahead and open up the calls to your questions.

(Operator Instructions) Your first question comes from Tony Cristello with BB&T Capital Markets. Tony Cristello - BB&T Capital Markets: Thank you. Good morning, gentlemen.

Good morning, Tony.

Good morning, Tony. Tony Cristello - BB&T Capital Markets: I guess, one question given the environment that we are in right now, you have been working a lot on the cost side of things for the last year, even longer and always tried to maintain a lean operating infrastructure, and I am just wondering with level of sales now, are you positioned to continue to take even more out on a cost basis? Or do you run the risk of being perhaps too thin to sort of sustain levels of growth that you might need once the operating environment improves?

Tony, I don't think we run the risk of being too thin, that’s an area that we are very sensitive to. We would not reduce cost of the expense of revenue growth, but I do think that we have opportunity to further refine some of the cost structures we have in the businesses. And as we said in our closing comments, we think that we can continue to look for margin improvement as well as EPS improvement in 2008 at the level of sales that we’ve described across each of the businesses.

Tony, I would also point out that our CapEx numbers have been up the last two to three years and the reason for that is productivity enhancement and investments in the IT side of our business that aid us and getting our cost down without affecting the service. It actually improves the service to our customer. Tony Cristello - BB&T Capital Markets : Have you started to receive the benefit side of the capital spend yet on those processes or is this something that may take quarter, two quarters, six quarters to finally get through where you are at the level of meeting of more than offsetting the investment?

I think we are seeing some of the benefit from some of the initiatives that were put in place last year and the year before. I think that's evidenced by the 10 basis points improvement in operating margin and automotive as well as industrial, 150 in the electrical electronic. So, I think we are seeing the benefit and we get projects that will pay further dividends to us in 2008. Tony Cristello - BB&T Capital Markets : Okay. And looking at Q4 and as well as 2007. Shifting gears, I am just wondering what was the organic growth of revenue versus how much revenue did you actually end up acquiring for the year.

Well, the majority of the revenue was all organic. We had less than 1% contribution from acquisitions in quarter end and in the year. Tony Cristello - BB&T Capital Markets: Okay. And in this environment what is your strategy, or thought on acquisitions. Is there opportunity to perhaps be a bit more aggressive when others are struggling?

Well, I think that that's probable, I might mention here, that we have two recent announcements on smaller acquisitions on the industrial side as of March 1st, we'll have a regional bearing and PT distributor that will join Motion Industries, they have about $32 million in revenue. And then as of April 1st they we are going to be including a regional office products distributor, and with the office products group and they have annualized revenue of about $30 million. So we see those two as enhancements for 2008, and we have discussions at various stages with other companies across the businesses, and we're hopeful that we can go ahead and tell you about those in our next call or two. Tony Cristello - BB&T Capital Markets: Okay. And just one last question with respect to NAPA, what is the plan for growth, I mean typically it would have been about a 100 short of the target or the goal, and as we look into 2008 given the soft operating environment on automotive, can you give some thought as to how you plan to invest into the business and grow the business given what's going on from a sort of a headwind?

Sure. Certainly the new distribution will play a role we have said many times in the past that we would like to open a 100 net new stores a year. This past year we fell way short of that, but as I mentioned we did open 10 in January, and I think that we will have a positive result on net new stores if pressed for a response as to how many, I would say 50 to 60 net new stores for 2008. We're going to look to continue to roll-out the all term import products initiative across the remainder of the NAPA organization on the US side. So that will be an enhancement to our growth. The heavy duty initiative we'll continue to invest in that. And we have got some specific initiatives in other areas that will continue to push in the year ahead. Tony Cristello - BB&T Capital Markets: Okay, great. Thank you guys.

Thank you, Tony.

Your next question comes from Jonathan Steinmetz with Morgan Stanley.

Good morning everyone.

Good morning, Jonathan.

A few questions here, first a couple on the weeds and then maybe a bigger picture. I think, Jerry you've talked about some potential Johnson Industries exit cost in the first quarter, and then a benefit in the second and fourth quarter. Can you just be specific on what we should expect for the first quarter. And then was it actually a loss making operation in the second to fourth quarter and could you so comment on what we should see as a benefit?

I think in the first quarter it's going to be about a penny per share, because of some exit cost and so forth, but beyond that it should be a margin enhancement this year for us, but even if they were making profit, it was a much lower margin than of this is. So we should be positive and I can't quantify the positive in a third for last three quarters. But in the first quarter it should cost us about a penny a share.

Okay. And I think you also mentioned in this quarter you had a gain on a sale on some maybe insurance reserve type unwinds. Can you first of all is that correct, and second can you give some amounts attached to that?

Well, the reserves were adjusted it may have been, I don’t know what the specific number, well I had to check that and give to you. We had a gain, we sold some property, we also had a portion that had gain on sale and leased back that fell in the fourth quarter. So it was more slanted in an area of the gain on the sale of assets than it was on the insurance reserves.

Okay and what was that gain, do you remember?

No, I don’t. I think it is $2 million to $3 million.

Okay, and lastly maybe for Tom. There are a lot of companies in the S&P 500 who are growing earnings more rapidly than you guys not so much, because they have better domestic in North American operations, but because they have so much more international exposure. When you think about acquisitions going forward, do you want a broader international footprint or would you just prefer a focus domestically?

Our footprints would be to be a North American company and currently 90% or so of our revenue comes from the US, about 9% from Canada, and about 1% in Mexico. We see ample growth opportunity in all three of those markets, that would not preclude us from looking at something other, but our priority would be to do it in North America and to leverage the strength of the management team and the infrastructure that we have in place in each of the businesses.

Okay, thank you, guys.

Thank you.

Thank you.

Your next question comes from Keith Hughes with SunTrust.

Thanks, I just wanted to follow-up a little bit on your guidance specifically around the industrial electrical revenue. The guidance at least to the top end will be basically a repeat of what we saw last year. You are talking about a couple or one small acquisition you are doing, but does that number include more acquisitions as you contemplate 2008?

Well, it does include the expectation that we will benefit from the one that we just mentioned that closes March 1. We are very comfortable with the range we gave you and if another opportunity comes and we can exceed the ranges that we've given out, then we'll be thrilled to be able to do that.

And how much would price play a factor in that number?

Well, price in the industrial sector right now is a little over 4%, I think it's about 4.7% currently.

And also I would say Keith, while everyone is expecting the industrial sector has slow the industrial production numbers have been up in the last two months. And then our folks have been talking to our customers, you would think that the cycle will slow some, but at this point there is no evidence of it.

Okay. And final question, Jerry, you had talked about interest expense being higher and always on the fourth quarter. Is the drag you are talking about the difference of what you are earning on the cash, and what you're paying on the $500 million of borrowing?

Yes, that's correct.

That's what I was talking about. Okay. Thank you

Thanks.

Your next question comes from Michael Ward with Soleil.

Good morning

Hi, Mike.

Two questions. First of all do you have the store count for the company owned as well as the total on the automotive side? Are you there. Hello.

Ladies and gentleman this is the operator, we apologize for the delay. However, today's conference is experiencing technical difficulties. Your line will be place on silent mode until the conference resume. Miss Yancey, please go ahead.

Hi, are you there?

We are back Mike.

We are sorry about that.

We apologize, at least we know our generator is working.

Alright. Just repeat the question, do you have the store count for year end, and if you have a breakdown between the company owned and independent?

We will get that for you just a minute Mike.

Okay. The second thing is, the share repurchase you mentioned, you had 9.5 million shares. So was the share repurchase a dollar amount or is it a share amount?

It’s a share amount. And Mike the count of stores we had at the of the year was 4,743. We had company owned 1094 so we had a total stores of 5,837.

Okay. So the independents are down?

That's correct.

Right, and the company owned are up I think nine for the year.

Okay. On the pricing side with automotive, what are you seeing there. Are you seeing anything at all on the pricing front. Has it changed at all?

Well, we have 1.6 in automotive for all of 2007. We don't have the results for this thus far in 2008. But in total that folks I think we'd probably be looking at another year of 1% to 2% of price increases and if you look back, we had 1.7 in '06 and we had 1.6 in '05, so it's been pretty steady at that level.

Sounds great. Thank you guys

Okay. Thank you

Thank you Mike.

(Operator Instructions) Your next question comes from Rick Weinhart with BMO Capital Markets.

Good morning, gentlemen.

Good morning, Rick.

Couple of questions on the automotives area, we had fewer competitors report recently that there was a pretty step changes and sales as we get to the end of the year. And I am wondering what kind of volatility you're seeing in that business sequentially and even maybe if there is any changes since the beginning of the year?

Rick, we did see a change in the month of December. We had pretty steady and stable results in October, November and then we saw a drop off in December. Especially as we got towards the holiday seasons the second half of the month, we saw a change. We were pleased to see that the January numbers came back, and are more in line with what we saw earlier in the quarter, and through mid month February we're consistent with where we were in January.

Okay. Good thank you. And one question on I believe it’s the Rayloc division, I had referred to others perhaps on the internal consolidation there. That's occurring in the first quarter I believe can you comment on that and perhaps talk about is there any impact to the P&L that we should know about?

We are consolidating one of the plants that we have into the remaining facilities that we have in that remanufacturing business. That will be completed by the end of the quarter. We will have some expense associated with the consolidation. Jerry you may have the number…

It would be minimal, and it would be about to $2 million, $2 million to $3 million and that's not minimal, but relative the overall numbers it is impact wise.

Okay. And that's obviously in your guidance am I right?

That's correct.

Okay. And then my last question is on the office products business. Well, actually it's two for that business division. First, was there any impact from significant change in the vendor rebates at the end of the year. As I think we've heard from some of your competitors.

Well in our case our purchases were not as strong as it might have been in some prior years. So we would have seen a difference in the dollar amount, but proportionately it would have been the same.

Okay. And then the other question on office products. Have you seen any change in the trends for that business now that we've seen a lot of the megas kick down your inventories, or do we still think there is maybe more inventory adjustments going on at some of these places?

Well I wouldn't answer specifically what's happening at a particular customer segment. But I would say that we saw a slightly improve performance in January it's our expectation that office products will have a positive year force, we told you, I think that we expect it to be up 1% to 4% for the year. I think everybody is looking at supply chain and how you can become more efficient, but we expect an improved performance from office products as the year progresses.

Okay, thanks very much.

Thank you.

Thank you, Rick.

At this time there are no further questions. Do you have any closing remarks?

We just want to apologize to those of you who are listening. The inconvenience today was a power outage. We appreciate you sticking with us and we appreciate your continued interest in and support of Genuine Parts Company and we look forward to talking to you at a future call. Thank you for joining us.

This concludes today's conference. You may now disconnect.