My name is Sylvia and I will be your conference operator today. At this time I would like to welcome everyone to the Genuine Parts Company third quarter 2008 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks there will be a question and answer session. (Operator Instructions) I would now like to turn the call over to Ms. Carol Yancey, Senior Vice President - Finance and Corporate Secretary.

Thank you for joining us today for the Genuine Parts third quarter conference call to discuss our earnings results and the 2008 outlook. 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 assumptions underlying the 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.

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 results and hopefully you’ve had an opportunity to see them, but for those who may not have yet seen the numbers a quick recap shows that sales for the quarter were $2,882,000 which was up 3%, net income was $131 million which was up 2%, and earnings per share were $0.81 this year compared to $0.76 in the third quarter of 2007 and the EPS increase was 7%. The 3% sales increase follows a 4% increase in the second quarter and a 3% increase in the first quarter, so revenue growth has been steady and consistent over the first nine months of the year. Although the net increase in net income at +2% was not up as the revenue increase, our operating profit was up 3% in line with the sales increase with the difference between operating profit and net income being primarily attributable to the lower interest income in the quarter. Additionally we did expense $2.3 million in the quarter in costs associated with the continued restructuring of our remanufacturing operations. Without these costs operating profit was up 4% in the quarter and net income was up 3%, indicating a reasonably good operating job on the 3% sales increase. Looking at the results by segment, our strongest revenue increases continue to be generated by the industrial and electrical operations.…

We appreciate you joining us on the call today. We’ll first review the income statement and segment information related to our third quarter and year-to-date results and then touch on a few key balance sheet and other financial items. In light of the concerns in the economy and credit markets right now, we want to be especially clear today in communicating the strength of our balance sheet, continued strong cash flows and dividend record which serve to support our ongoing growth initiatives and goals for maximizing shareholder value. We believe more than ever that the excellent financial condition of our company continues to distinguish Genuine Parts Company as a quality investment. After this review, we’ll open the call up to your questions. A review of the income statement shows the following: Total sales for the third quarter were up 3% at $2.9 billion and our year-to-date sales $8.5 billion also up 3% from last year. Third quarter revenue was in line with the first half of 2008 and represents another record level of sales for our company. Gross profit remains consistent with last year at 29.64% to sales for the quarter and 29.67% for the nine months. We look to show progress on this line going forward and will continue to focus on the best product and customer mix as well as expanding global sourcing opportunities to drive this progress. For the year through September, accumulative pricing which represents the prior increases to us is up and I will tell you these are the largest increases we’ve seen in quite some time: 4.7% in automotive, 6.7% in industrial, 2.7% in office products and 7.2% in electrical. Now let’s look at SG&A. For the third quarter SG&A as a percent to sales is 22.14% up less than 10 basis points from…

I think that your closing comments summed it up quite well. These are uncertain times and the current economic issues make it difficult to have a clear view of the quarters ahead. However, one thing that we do have a level of confidence in is that each of our businesses has sound strategies and that the proper execution of these strategies should enable them to not just grow in line with the respective market place growth over the next several quarters, but perhaps to gain a little bit of market share as well. At the same time we maintain a level of confidence in our ability to keep our balance sheet and cash flows strong. Now we don’t underestimate the challenges that we will encounter in the quarter ahead by any means. GPC like all companies will be affected by these external factors but we do feel positive about our relative positioning and about our long-term prospects in each of our four business segments. As far as 2008 is concerned, on the revenue side our prior guidance assumed full-year increases of 2% to 5% in automotive and on a year-to-date basis we’re up 2%. For industrial we said 5% to 8% and year-to-date we’re up 6.5%. In electrical we also said 5% to 8% and we’re up 10% to date. For office products we said 1% to 4% and we’re down a bit at roughly 1%. So we’re in line in the automotive and industrial, above in electrical and off just a bit in office products, but in total about where we said we would be. We anticipate that the revenue for the final quarter will be in line with our year-to-date performance and that would put us up around 3% for the year. On the earnings side our expectations remain about the same as we expressed in our last call and we see no reason to change our prior EPS guidance of $3.12 to $3.18 for the year at this time, but with all the current uncertainty in the market place our bias would be toward the lower end of the range. So that’s how we see it currently, and now we’d like to open up the call to your questions.

(Operator Instructions) Our first question comes from Anthony Cristello - BB&T Capital Markets. Anthony Cristello - BB&T Capital Markets: You talked a little bit about price and the price increases you’ve seen year-to-date. If I look back at the second quarter, I think you talked about automotive pricing up 17% and I think you noted industrial up 34%, and now we get to the third quarter and you talked about auto up 47% year-to-date and industrial up 67%. Does that imply that you’ve seen sort of a 9% price increase during the quarter that gave you that bump of three points over the last three quarters?

No, I don’t view it that way. These are cumulative price increases to us from the beginning of the year. What we actually saw in the third quarter, for instance in automotive, we saw 3%. Anthony Cristello - BB&T Capital Markets: If I then look at the 3% in auto, can I assume then that the industrial also was up about 3%?

That’d be correct. Anthony Cristello - BB&T Capital Markets: How confident are you that you’re going to continue to be able to see price increases go into effect with what has happened on the commodity side of late?

We don’t control price increases. Again, keep in mind these are price increases coming to us from our suppliers and who knows what the impact of China and other raw material costs, oil and petroleum based products, is going to do. Our challenge is to pass these price increases through which in automotive situation I think that’s a lot easier than industrial. In industrial we have some national contracts where we’re not able to pass them all through, certainly not at the time that we receive them. Our suppliers sometimes are willing to work with us and hold those but we don’t have any control over those price increases and when they’re going to come. Anthony Cristello - BB&T Capital Markets: So there will be some fluctuation here in the fourth quarter and probably certainly into the first half of next year?

Based upon what we’ve seen, what’s been announced for the first of the year, we see a little bit more in the pipeline currently but beyond that we really don’t have any visibility. Anthony Cristello - BB&T Capital Markets: Moving to automotive a little bit Tom, you discussed the success you’re seeing in the NAPA Auto Care side and with some major account segments. Could you provide a little bit more detail on why you think that is outperforming some of your core commercial? And then also maybe I missed it. Did you give the breakout between cash and commercial growth in the quarter as well?

Taking the last part of your question first, no but on a year-to-date basis our commercial business is up about 6% and our cash business is flat. As far as the reason for relatively good quarters with Auto Care and major accounts, these are just key initiatives and critical components of our overall growth strategy and I think our teams have done a good job in just executing on these strategies. Anthony Cristello - BB&T Capital Markets: Johnson had some impact this quarter. When is the last quarter we should see that sort of disconnect between what the total NAPA revenue will look like in automotive versus what the impact of Johnson? Is this the last quarter coming up or will we still have some of that feed into 2009?

We have a little bit that goes into the first quarter of 2009 but the significant impact will really moderate after the fourth quarter. Anthony Cristello - BB&T Capital Markets: Tom, you’ve been with the company for a long time and sort of the macro has certainly created some significant headwinds for all businesses, not just Genuine Parts. The diversification of your business does provide some offset. I was just wondering, if you look back at the last couple of recessionary environments that we’ve had, how would you say your business is different today and what have you done to prepare in case of a further economic slowdown that maybe you feel more confident in what your ability was in the last couple recessions?

First I’d say that if you look back over an extended period, Genuine Parts Company has performed comparatively well through all of the economic cycles. One of the things that positions us perhaps a little bit better as we’re going into the cycle we’re in right now are some of the decisions that have been made over the past several years that I think strengthen our platform. Number one, you may remember that we had a very cyclical component within EIS and that affected our EIS results in the ’01 to ’03 timeframe. But that component of EIS is no longer with us. Our management team did a good job of selling that piece and they’re less dependent upon that than what they were. We just talked about Johnson Industries. Johnson Industries is no longer a part of GPC and I think that positions us a little bit better. Within our industrial group we’ve got a broader footprint on the product side which gives us an opportunity to sell more products to existing customers than what we might have been able to do in the past, and that business is a bit more diversified than what it was in the last cycle. Somewhat the same can be said for our automotive business. With the recent inclusion of Altrom, our import parts company, and our heavy duty initiative I think we’re positioned across a broader product platform than what we have been in prior times. So I think our company, while not immune to this cycle, we’re in a better position to weather the cycle than we might have been at times in the past.

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

Jerry, I missed the maturity date you extended the $250 million out to.

We have a shelf offering there and the date of that is December 1 of this year.

And you said you have a new agreement that extends till what year?

Another four or five years.

How much spending for acquisitions was included in the third quarter?

About $98 million.

Of revenue, but in the third quarter alone, how much cash did you put out for acquisitions?

I think it was right at $25 million to $30 million.

I think it’s $111 million for the year. And then we did have the S.P. Richards acquisition as well.

You talked about operating cash in 2009 at $700 million. What are the primary drivers of that? It seems like it’s very strong.

It really is coming from the working capital improvements. Our receivables are growing less than our revenues. We’ve got several of the business units doing a good job in our inventory and taking excess inventory out. Also the payables extended turns that we put in place last year, we need to push those out a little further this year as well. Again, coming from just the general operating results. And Mike if you’ll notice, our cap ex numbers are also down. Some of the business units have held that spending down. We were at $60 million versus $83 million at this point last year.

So as you go into ’09 some of those things will continue so we could actually see from a working capital standpoint that could be a positive contribution?

We would hope so.

On the stores, do you have the separation of the store count between company-owned and independent?

In terms of the 41 year-to-date?

Yes.

It’s about 50/50. About half company-owned and half independent.

The third quarter reduction, was that largely independent?

No, it was a combination. There were a lot of consolidations that were done to strengthen existing operations.

Our next question comes from Keith Hughes - SunTrust Robinson Humphrey.

Given where consumer credit is, it looks like the average age of cars on the road is about to go up maybe dramatically over the next couple years. That’s historically been a positive for your business. How long does that take to come into the revenues in the automotive segment?

We should see some impact from that in 2009. You’re right about the aging of the vehicles, and they’re going to continue to age next year. You probably know that the average age of a vehicle on the road today is 9.8 years and I wouldn’t be surprised to see it get to 10 or thereabouts in the not-too-distant future. That is a positive for us as we look ahead with the age of the vehicles.

You had broken out your commercial and your cash business in that segment in terms of the growth. What’s the rough mix right now in the segment?

Across the NAPA system it’s about 75% commercial and 25% cash.

Our next question comes from Saul Rubin - Silverstone Capital.

You’ve continued quite consistently to buy back shares and obviously you’ve indicated you’re going to continue that, but I just wonder what consideration you’ve given to potentially strengthening the balance sheet even further and possibly using the coming year or two to remain very opportunistic? If you strengthen the balance sheet further, you could make potentially quite a very material acquisition. So I just wondered how you think about that as a possibility?

We just view that as a balancing act. If you just look at the numbers, our dividend yield today is 4.5% and when we buy these shares and we’re discontinuing that dividend into perpetuity. We’re earning today pre-tax about 2% on our cash so the numbers just make sense right now to do it. But I will tell you that if we saw an acquisition that made sense, we wouldn’t back away from it. I don’t know that we’re going to make a material acquisition. Of course the economy’s going to change; it has changed; just look at what’s happened in the last couple of months; and we just try to stay flexible as we move forward. If we saw something like that, we’d pull back on the share repurchase. But right now we think that’s the best acquisition we can make is Genuine Parts Company.

You’re adding net stores this year. Do you expect to continue to add stores on a net basis next year?

Yes we would Saul. About in line with what we’ll do this year; 50 to 60.

Our next question comes from Ann McCormick - Friedman Billings Ramsey.

It’s actually Stephen Chick. Just to clarify Jerry, the cap ex guidance for the year I think is $100 million to $110 million I believe if I caught that right. Given your year-to-date spend I think it reflects something in the area of $40 million for the fourth quarter. Did I take that down correctly?

Yes, that’s correct. We may be closer to $100 million than $110 million. Some of that is because we have some IT projects that are in process right now that those will get set up in the cap ex numbers in the fourth quarter as they get rolled out and we start to utilize them.

As we kind of look into ’09, and I don’t recall if you actually addressed this, but is that a normalized level of spend that we should expect?

Yes. You can expect us to be at normal maintenance cap ex particularly in the IT productivity enhancement projects and our delivery equipment; you can expect us to be $100 million to $120 million each year.

You gave us the company store group; auto, retail, commercial sales and the cash; what the percentages were year-to-date. Do you have those percentages for the quarter?

I don’t have them with me for the quarter. We can get that and get back to you.

That would be great.

What I would say though is our results have been pretty consistent all year long and my guess is that they’re going to be about in line with the year-to-date performance.

So the 3% ongoing automotive sales that you reported for Q3, it sounds like that’s the type of number we should think about for the fourth quarter as well?

Yes, that’s right.

Our next question comes from Gregory Melich - Morgan Stanley.

I apologize; I jumped on a little late, so if you mentioned this, please just cut me off. I’d love some color on how the quarter progressed because clearly September was a different kind of month from July and August? Do you have any color you can provide there?

We do. September was the weakest month of the quarter and we saw a similar pattern in the second quarter with June being the weakest month of the quarter. Things came back in July and August, and then we had a weaker month in September. I would say through the most recent report for October we’re seeing the development of a similar pattern with October looking like it’s going to be a little bit better than what September was.

What do you think accounts for that? Was it people staring at their TV screens the last weeks of September?

That may be part of it, and you know we’ve all been bombarded with how bad things are and I think after a while people acquiesce and say they must be pretty bad. But we don’t have a factual reason for it other than the trends that we see right now.

But the fact that you think the fourth quarter could look more like the whole third quarter, and you just confirmed basically that October was looking a little better?

That’s right.

If you were to look at September, was it the hurricane and weather impacted areas where it was weak or was it more general?

That had an impact on all of our businesses for sure, and they’re still not back at full tilt in certain parts of the affected areas. That probably explains a little bit of the September weakness and some of the bounce-back in October.

You would say September had something in addition to just weather? I know weather’s always a funny thing to talk about.

I don’t know again that I can give you a factual reason why September softened. We’re just pleased that we see October starting to revert back to more normal levels.

Our next question comes from Stephen Chick - Friedman Billings Ramsey.

Within automotive obviously you have a large competitor that’s going through a relatively large acquisition. I’m just wondering two things: If you’re changing anything to compete with that and secondly, if you happen to be seeing any change in trend in the markets where you compete against that company?

What we are doing is just reminding all of the store operators what it takes to be successful in a very competitive market place, and that’s an ongoing initiative that we have. As far as seeing any trend changes, we don’t detect any at this point.

I would also say there’s always somebody making an acquisition in some of our businesses and we just have to continue to execute the plans that we have.

I’m showing no further questions at this time. You may proceed with any closing remarks.

We want to express our appreciation to you again for joining us on the call today and remind you of what we said earlier. We’re still great believers in the four businesses we have at Genuine Parts Company. We have confidence in them. We’re in the right industries and we’ve got the right marketing initiatives in place to continue to show progress. It may not be as good as it would have been if the economy was better than it is, but nevertheless we believe Genuine Parts Company’s going to be fine. We appreciate your continued interest in and support of GPC. Have a good day.

Ladies and gentlemen, this concludes the Genuine Parts Company third quarter 2008 earnings conference call. You may now disconnect.