Good morning. My name is Celeste and I will be your conference operator today. At this time, I would like to welcome everyone to the Genuine Parts fourth quarter 2009 earnings release conference call. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question-and-answer session. (Operator Instructions) I would now like to turn today’s call over to Mr. Scott Smith, Senior Vice President of Corporate Counsel; please go ahead, sir.

Thank you, Celeste. Good morning and thank you for joining us today for the Genuine Parts fourth quarter and year end conference call, to discuss earnings results and the 2010 outlook. Before we begin, 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 brief remarks from Tom Gallagher, our Chairman, President and CEO. Tom.

Thank you, Scott 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 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 $2.471 billion, which was down 2%. Net income was $99.2 million which was up 13% and earnings per share were $0.62 this year, compared to $0.55 in the fourth quarter of 2009, and the EPS increase was also 13%. For the full year, sales were $10.58 billion which was down 9%. Net income was $399.6 million which was down 16% and earnings per share were $2.50 compared to $2.92 last year, and that’s down 14%. So, it was a tough and challenging year for us without question, but we were a bitten encourage by the continued sequential revenue improvement that we saw across each of the four businesses in the fourth quarter results, and also by the fact that we were able to produce double-digit net income and earnings per share increases in the final quarter. This was our first positive quarter in 2009, and it is a marked improvement over our results for the first three quarters. In looking at the individual segments, the two businesses that have been most impacted over the past year are industrial and electrical/electronic.…

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 for a recap and then we’ll open the call up to your questions. View of the income statement shows the following: total sales for the fourth quarter were down 2% at $2.5 billion, and reflect sequential improvement in each of our businesses and for the total company as Tom mentioned earlier. For the year, we finished down 9% at $10.1 billion, only our second sales decrease in the last 60 years. So we move forward to sales increases in 58 of the last 60 and are expecting to get back on track with another year of sales growth in 2010. Gross profit in the quarter increased 123 basis points to 31.1% to sales, compared to 29.8% in the fourth quarter last year. We’re pleased to show progress for the quarter in our gross margin, and for the year gross margin improved by 22 basis points to 29.9% to sales. Through the first three quarters of 2009, we are slightly behind our ‘08 gross margin levels as we have been addressing certain competitive issues and we are also challenged by reduced incentives earned on lower levels of purchases during the year. In the fourth quarter, our pricing concerns seemed to stabilize and we also had the benefit of approximately $20 million in LIFO liquidation for the quarter. Without the $20 million LIFO adjustment, gross margin would have been 30.25 for the fourth quarter. In 2010, we will continue to focus on gross margin improvement, although we’ll see a more gradual process relative to the fourth quarter movement. For the year, our cumulative…

Thank you, Jerry. So that’s a recap of 2009 and in many ways we are glad to get it behind us. We are certainly disappointed to end the year with decreases in both revenue and earnings. However, we are pleased with the progress that the GPC team made on the asset management and balance sheet side of the equation, despite the difficult operating environment. As far as 2010 is concerned, because of some of the progress that was made over the latter part of 2009, we feel that we’re in a position to be able to report improved and positive results for each of our businesses in 2010. Our Automotive management team showed good sequential improvement over the second half of the year and the fourth quarter results would indicate that we are gaining a bit of momentum and perhaps even recapturing some of the market share on the commercial side of the business that was lost during the first half of the year. Our expectation is for automotive revenues to be up 3% to 5% in the year ahead. In industrial and electrical, we feel that we are in the early stages of what will be a very gradual recovery and we may even experience a little choppiness in our results over the first half of the year, but our expectation is that each of these businesses will be up 2% to 4% for the full year. Our sense is that Office Products will continue to face a challenging end market for the first few quarters, but at this time we’d say, that they should end the year even to up 3%. Combining these individual expectations for each of the four businesses would give us an overall full year revenue range of plus 2% to plus 4% for Genuine Parts Company. On the earnings side, our expectation is for the operating units to produce a combined earnings increase in the mid-to-high single digit range, but then these results will be tempered somewhat by a projected unfavorable swing in our pension and retirement expenses of approximately $26 million. Considering this additional expense in 2010 and maintaining a bit of caution until we see how the first half of the year develops, our guidance on earnings would be in the $2.52 to $2.70 range, and we would hope to refine this a bit as we get a little deeper into the year. So that will conclude our planned remarks and at this time we’d like to open the call up to your individual questions and we’ll turn the call back over to Celeste.

(Operator Instructions) Your first question comes from Mike Montani - Morgan Stanley.

Good morning, congrats on a great quarter. Just wanted to ask you guys quickly, if we could delve into the gross margin a bit, still up 40 bips even if we subtract out the LIFO. Is that really all driven by pricing? And can you just help us understand volume rebate outlook for this coming year, do you need just a low single digit sales growth to get there?

Mike, I’ll take that question, this is jerry. We did have the challenge in our gross margin area because of pricing in the first nine months, but for the full year we had $80 million to $85 million less in volume incentives, so that had an impact. The marketplace itself remains very competitive, so we’re not getting any leverage there on the sales that we have. So it stayed competitive in all the markets, but the impact on gross margin in 2009 was primarily driven by less volume incentives. Now, each of the business units are currently negotiating their programs with our suppliers and it just depends on how those negotiations come out, what the impact of volume incentives have on 2010. Certainly, increased revenue will help increase the purchases and increase the volume incentives in total, but you also have to see how those programs are negotiated and some of those in the process at the current time.

Just a follow-up quickly on the automotive side, it does sound like pricing was stable there. Is that fair to say, after the adjustments that you had made earlier?

I think it’s more stable, Mike than what it was earlier in the year, but it is very competitive still and we continue to monitor pricing on an ongoing basis and maintain our competitive positioning.

Your next question comes from Tony Cristello - BB&T. Tony Cristello - BB&T: Tom, I am wondering if you could maybe categorize now, as you look into the industrial side of the business, do you still think your visibility six months out is a good indicator of what’s happening or because of the backdrop of the macro, are your customers really hesitant to sort of still kind of give any indication of where they’re thinking business maybe down the road?

I think the six to nine month timeframe that we used in the past is still relevant and accurate. So at this point, having seen what’s happened with both the Industrial production and capacity utilization numbers for the last four months or so, we’d say that we have tempered optimism for the first half of this year. I mentioned in my comments, we think the results for industrial and electrical maybe a little bit choppy in the first half of the year, but we do think as we work our way through the year that the industrial demand should certainly stabilize and maybe even improve a little bit for us. Tony Cristello - BB&T: Is that choppiness attributed to any sort of sector or sub-sector that you’re seeing from a business trend standpoint right now?

No, not necessarily, it’s really more thinking that we may have a little bit of up and down yet in the overall economy as we work our way through the first half. So we’re just trying to remain a little cautious. Tony Cristello - BB&T: Shifting gears then on the automotive side, when you look at the progress you made throughout 2009 and it sounds like you feel pretty confident in the initiatives you took, is there anything sort of in a second phase, if you will that you want to do with respect to automotive and what your targeted plans then would be for 2010 with respect to that?

Well, we have very specific plans for automotive as we have for all of the businesses for the year ahead. We would not want to get into the details of those plans on this call, but we’ve got specific initiatives that are being implemented right now that we think will help to position automotive where it should be in the marketplace. Tony Cristello - BB&T: When you look at the sort of recovery in the automotive in the second half versus first half of last year and then if you were to categorize it, has most of that market share driven in terms of gaining back and seeing improvement in revenue, has it been a function of macro environment just helping you from a sort of deferral mentality or keeping vehicles longer? Has it been just sort of attributed to anyone? Has it been more of a combination and what you’re seeing now? I’m assuming weather is playing a little bit of a benefit to you as well.

Well, it’s a combination of the things that you referenced. Keep in mind that we feel we lost a little bit of share over the first half of the year and we did some things late first, early second quarter that were intended to try to help us recapture some of that share. I think the fact that we were down 1% in the third quarter and then up 6% in the fourth would indicate that we may have recovered some of what we lost. It’s also important to remember that the overall market for automotive is better than it is for our other three businesses. So, we’re fortunate that the aftermarket has been comparatively healthy compared to the other businesses that we’re in. As far as the weather, the weather actually has been a negative in the first part of this year. We will recover some of that as those vehicles are used again, but the fact that many of our customers were closed through the first part of the year, January, February, and the fact that many of those vehicles were not running, I think that that will have a little bit of tempering effect on our results. I might mention that we will recover some in automotive, but what happens in the remaining three businesses is that if their customer base is not operating, that business is gone and gone forever, because if the equipment is not running in industrial or in electrical or people aren’t working in the offices and office products, you don’t get that demand back, but these are temporary things and we’ll work our way through them over the next few weeks. Tony Cristello - BB&T: Last, Jerry, when you look at them, can you sort of with organic versus acquired revenue growth in Q4 as well as any currency impact in Q4 and then also just a clarification does the guidance of the 2% to 4% include impact of acquisitions such as BC Bearings as well?

I might answer that, Tony. As far as the impact of currency exchange and acquisitions for the quarter, it was a positive two. For the year, it was a negative two. So we saw that play out that way. As far as the 2% to 4%, that does include the expected revenue gained from the BC Bearing acquisition and the Fay Electric on the electrical side, but it does not include anything beyond that. As a matter of information, we expect to close on BC Bearing at the end of this month and take over March 1st.

Your next question comes from John Murphy - Bank of America/Merrill Lynch. John Murphy - Bank of America/Merrill Lynch: A broad question and then kind of take you down to industrial and automotive. As you look at your cost cutting efforts and slightly maybe some repositioning in the automotive side, is there anything more that you can do internally or is the future just really a function of you keeping control over what you’ve done and the leverage from sales beginning to comeback? I’m just trying really to understand, because when we look at the industrial business there was certainly better than expected, at least better than we expected revenue and the margins were much stronger. I’m just trying to think as we go forward and think about 2010, if it’s really a case of operating leverage and you’ve done a lot of the hard work already?

Well, I think we’ve done some good work throughout all four of the businesses and I think our management teams from our perspective should be complimented, but that’s not say that we feel that our work is done. There are some additional opportunities that we have in all of the businesses. We have some very specific opportunities identified and we have teams in place to help us do the work necessary to capitalize on those. So I think there’s more in the way of cost reduction that will be done in all four of the businesses, but honestly we’re hoping for some top line growth. So we can get a little bit of leverage off of what’s been done and what will be done also in 2010, but we don’t think we’re anywhere near the bottom yet in terms of our ability to take some cost out. John Murphy - Bank of America/Merrill Lynch: And Tom when we look at industrial in the fourth quarter and the great operating margin that you guys posted of 8.2%, I mean there was obviously some operating leverage from the top line growth or say better than top line than we thought, but I mean what specifically was driving that big 8.2% margin? Was there LIFO liquidation that was helping out there or were there other specific initiatives?

John, primarily in the industrial side, the LIFO that we talked about earlier, the bulk of that came in the industrial side. So they benefited from that in the fourth quarter, but they also had taken some cost out earlier in the year and they were projecting revenue growth and we gave that in our third quarter conference call. They were projecting revenue growth to be down more than 11%. So the benefit is some from leverage, but the primary pickup there was in the LIFO gain in the fourth quarter. John Murphy - Bank of America/Merrill Lynch: Then just lastly on the retirement in OPEB liabilities look like they have cranked down from the first half of the year. They were running around $449 million and they were down about $300 million on the balance sheet, yet you’re talking about higher expense in 2010 versus 2009. What’s the discrepancy there?

John, I’ll have to get into that with you offline. I don’t have the answer to that at this point, but we’ll get back to you on that. Primarily John, it’s the pension plan. The contribution we made in the first quarter of the year and then the pension curtailment, but I’ll get back to you with specifics.

I might just add to that, it’s more a comparative issue. We did a little better as Jerry pointed out in his comments, we did a little better on the pension expense in 2009 than was anticipated and we don’t expect that to repeat. We’re going to normalize again in 2010. So it’s a comparison issue. John Murphy - Bank of America/Merrill Lynch: Actually I’ll just hop off after this, but the soft freeze was just for the year of 2009, not for 2010, that’s coming off?

Well, that’s [Inaudible] has an impact going forward. It reduces our pension expense going forward. The thing that we did in 2009 is because the headcount reduction, we had a pension curtailment that we picked up significant income as a result of that.

Your next question comes from Matthew Fassler - Goldman Sachs.

A couple questions for you, first of all, on the gross margin line. Can you talk about the impact of incentives on the fourth quarter in particular? You talked about an $80 million to $85 million hit over the course of the year, but presumably as your revenues came in a little bit better in the fourth quarter you were able to do a little bit better than you had expected on the rebate side?

Matt, primarily we complete those incentives, we do our best to target those as we go throughout the year and have them hit each quarter based on projections, and that’s pretty much what happened in the industrial sector. We spread those incentives out over the year and as well in the office products and those are two primary business segments that that occur in. So the gross margin impact there would have been spread throughout each quarter. The one thing that’s positive that occurred was a pickup in the LIFO in the fourth quarter.

My second question relates to SG&A. Your dollars were up and that was despite the pension numbers not being quite as severe as we had expected actually favorable variance. Was there incentive compensation that you were able to pay out, given that the earnings ended up being certainly better than most of the street numbers?

Not to speak of, we didn’t grant any options in 2009. We also gave no salaried personnel any increases in 2009. We do have a number of our folks that are driven by profit incentives and are on a bonus plan and some of them were paid out, even though we did better than expected, those incentives that were paid out were less than made the prior year and less than they were projected to make.

So I guess if year-to-date through the third quarter your SG&A has been down roughly 7%, and if you back out some of the adjustments last year, the increase were larger than that, I guess; any particular reason?

No, not that I’m aware of. Again, we had to accrue for some bonuses at the end of the fourth quarter, but it was still, again lower than the prior year, but it was higher than it was in the first three quarters.

My next question relates to the industrial business. Obviously, we’ve heard lots about an inventory correction and inventory restocking through the industrial complex broadly speaking, driving more throughput than final demand in this kind of a systemic thing. Tom, what is your sense as to the nature of the improvement in the industrial business. Would it be inventory driven from your customers, or do you think they’re also seeing improvement at the point of sale?

I think there was some inventory replenishment throughout the segment, but I also think we get anecdotal information about lines being started back up or running a little bit longer, and we see a little bit of that happening in the current environment in some of the industry segments, not all of them, but in some we like what we see. The food and food related industries, for instance they continue to perform pretty well for us. The power generation and the alternative energy segments continue to perform pretty well. Some of the heavy industrial as we mentioned automotive, iron and steel we see those continuing that to have an uphill battle yet to get back to where we were.

Just a couple quick ones, if you look at historical seasonality in your business and the industrial business, frankly, most of your businesses, the first quarter is stronger than the fourth quarter. That’s less true in automotive, but distinctively true in industrial with the exception of last year obviously when things slowed down. Are we ready to go back to historical seasonality at this point? Do you think we’ve based such that trend going forward on a sequential basis should be no worse than it’s typically been?

I’d like to defer the answer to that until the end of this first quarter. We don’t have a sense for that yet, Matt honestly. The only way I could answer it is in a very broad sense and that is that, we feel better about the opportunities in 2010 than we did going into 2009. We think there is more firmness in the end market currently than clearly there was in the first part of 2009. So we’re cautious, but we’re more optimistic than we are pessimistic as we were at the end of 2008 going into 2009.

Just a quick final question, you talked about the trends for megas versus independents in the office products business on the year. Jerry, could you tell us what that looked like for the fourth quarter in particular?

I can tell you, Matt, if you just give me a minute on it. We were down six on the independent side and down two on the mega side in the quarter.

Your next question comes from Scot Ciccarelli - RBC.

First of all, couple of clarifications. Did you say most of the 90 basis points or so of LIFO adjustments were in the industrial segment?

Yes. 80% would have been in the industrial. We had some LIFO pickup in the electrical side. The office products group is on FIFO inventory so there would have been none of that there and then been a minor amount in the automotive side.

Then outside of the LIFO adjustment, was the only other let’s call it one timeish item that the $2 million of so was pension expense, or was there anything else in the P&L in the quarter?

No, those were the major items, Scott.

Then the last question I guess a little bit broader. Maybe this is for Tom. Can you just talk about the operating environment in the auto segment a bit? Obviously you guys have made some changes, you made some price changes. We have cross currents with gas prices, new car sales, and miles driven. How would you sum up how you guys are thinking about the auto business at this point?

We think that 2010 is going to be more favorable for us than 2009 turned out to be. We think most of the demographics that we look at are positive, favorable going forward. I was looking at something recently, just as an example. In 2008, 29% of the vehicles registered were one to five years old. Forecasts or predictions are that that will drop to 19% in 2013, 81% then being six years and older and the significance for us is that vehicles that are six years and older, the annual expenditures for parts and maintenance are a little bit better than two times what they are for vehicles one to five years old. So that’s a positive the miles driven were very modest improvement year-over-year, as least seem to have stopped the declines. So I think the overall climate is better than it was in the past year and I think over the next several years, it’s a bit more favorable than what we’ve just come through and then more specific to us. I think some of the initiatives that our automotive team has implemented and some of the plans that they have going forward should enable us to perform at a higher level in 2010 and beyond than what we did in 2009.

What are the expectations for the fleet business for 2010?

Right now we’re just hoping it stays flat for the whole year with some decrease in the first part and a little bit of improvement in the second half.

Your next question comes from Michael Ward - Soleil.

On the pricing side, you said automotive, Jerry minus 2.6%. Was that the year or the fourth quarter?

No, that was for the year. The fourth quarter was 7/10 of a percent negative.

So is that kind of the run rate going forward?

I’m not sure, after coming off of the highest inflation we’ve seen in 20 something year in 2008 and then get into a negative pricing environment in 2009, I think at this point we’re not expecting to see any decreases or increases in it.

Part of that was your strategy, just to try to go after some of those commercial customers?

Those prices I’ve given you are prices to us from our suppliers.

Your next question comes from Ryan Brinkman - JP Morgan

This is Ryan Brinkman for Himanshu Patel. You talked a little bit about in your prepared remarks the prospect or outlook for bolt on acquisitions. How are the multiples you might be being asked to pay changing as the economy now recovers and is that impacting your capital allocation strategy at all?

Well, the multiples of late have been more inline with what we consider to be more reasonable than what we had encountered a year or so ago. How they’ll be impacted in the year ahead, I don’t know, but we try to value off of historical earnings and not projected earnings. So the historical earnings are going to include 2009 and will reflect the difficult environment. So we pay on past performance, not on anticipated performance.

Brian, what the multiples that we’re willing to pay has not changed. The expectation has changed because the private equity money has basically disappeared and then not others out there with balance sheets to do it today, but what we’re willing to pay has not changed but the expectations have comedown in some cases and some they haven’t and we’re going to maintain our discipline until they do and if not, we’ll continue to repurchase the stock and use the cash that way.

Your next question comes from Scott Stember - Sidoti.

Do you guys have what the automotive segment sales excluding currency?

I don’t know, we have it by segment or not, but we can get back to you. Let us check on that. We don’t have it right here with our information, but we’ll get back to you.

Could you talk about how you do it yourself segment performed for you in the quarter?

I don’t have it for the quarter. I do have it for the second half and we were up 2% in the first half and 3% in the second half of the year.

Some of the macro trends you guys touched on, maybe you could just expand on the impact that the closing of the new car dealerships is having on your business, any anecdotal stories that you’re hearing at the shop level?

Well, the reduction in new car dealerships is a positive for the independent repair trade in the aftermarket. Any work, non-warranty work that was being done in any of the dealerships now is being moved into the independent aftermarket. So I think if you look at some of the publicly traded companies that do repair work, you’ll see that it’s had a favorable impact on their results. I think we mentioned in our comments that we had a nice quarter with our major accounts and with our NAPA Autocare customers. I think the increased demand for their services is reflected in those numbers. So we think that’s a positive for the aftermarket and it’s going to continue, it looks like through 2010 and perhaps beyond. The reports that I’ve seen basically say that there will be fewer car dealerships at the end of the year. We’re in right now than there were this past year and some of those disenfranchised dealers have in fact opened up independent repair operations and used car businesses and they’ve become really good prospects and then customer candidates for us.

Your final question comes from Brian Sponheimer - Gabelli & Co. Brian Sponheimer - Gabelli & Co.: Just very briefly, I want to talk about the fleet customer on the automotive side and what really drives that customer that’s such a wide array of end users of customer mix? Is it construction? Is it freight? What should we be looking for to really see that flat 2010 outlook improve?

Well, if we kind of slice it a little bit, construction would certainly have a positive or negative impact on the one end of the spectrum and they would be the landscapers and the contractors and people like that. On the other end, if you go all the way to the other end of the spectrum, it’s the big class six, seven and eight vehicles over-the-road equipment and truck tonnage is an important measurement there and if they’re moving for freight, they’re going to be using that equipment. So what we expect is as I mentioned is that the first half maybe still down a bit, but the second half, it’s our expectation that we’ll see that pickup just a little bit, just because of the projected improvement in the overall economy in 2010. Brian Sponheimer - Gabelli & Co.: One last question, if I might. Product mix on the automotive side across your segments, with the understanding that your customers are always looking for best price, have you seen any movement back towards better and best offerings versus value?

In some particular instances, we have. We’ve seen it in our friction product offering as a for instance, because there is a significant value proposition for them there. So we’ve seen it happen in product categories like that, but then we continue to see an overall price sensitivity and an overall movement towards the value line type of product and our product positioning strategy is good, better, best and the good and better unit growth is stronger for 2009, than the best unit growth would be. We don’t expect that to change dramatically in this coming year.

Ladies and gentlemen, at this time we have reached the allotted time for question-and-answer session. I will now turn the call back over to management for closing remarks.

Thank you, Celeste. We appreciate those of you joining us on the call today and we also appreciate your continued interest and support of Genuine Parts Company. We look forward to a better 2010, and we look forward to talking with you at our April conference call for the first quarter results.

Ladies and gentlemen, this concludes today’s Genuine Parts fourth quarter 2009 earnings release conference call. You may now disconnect.