Quarter-to-Date Comps

Michael Binetti – UBS: Just a quick clarification Ken. I think we got the March and the February number in there. Can you just tell us where the quarter to-date is on comps right now?

Kenneth C. Hicks – Chairman, President and CEO: We did not say that, but the quarter up right now is in the low singles. We recognized we only have a couple of days of March in the whole month of February.

Michael Binetti – UBS: With basketball up 20% plus in the quarter, I am trying to figure out where some of the headwinds that brought the core Foot Locker chain down to comps at about high-single-digits. Could you comment on some of the offsets there?

Kenneth C. Hicks – Chairman, President and CEO: Running as we said is not up to that level and some of the classics did not performed at a stronger level.

Michael Binetti – UBS: So, you are rebooting a little bit on the women side, you’ve got some new test stores of SIX-02 but I think I’d say even with that negative high-single-digit decline at Lady Foot Locker wasn’t up to where you thought it would be at this point after all the stores you closed over the years in the lady business. Can you give us kind of an update on what’s going on there and it seemed what is causing perhaps the deceleration even at this point and maybe little bit on how you think about what gives you confidence and the opportunity to grow that significantly over the next few years?

Kenneth C. Hicks – Chairman, President and CEO: We obviously would like for the women’s business to be stronger. The challenges that we have in women is the Lady Foot Locker business is that we changed that customer and you guys have heard me say before when you fire a customer, they know immediately and it takes a while to bring a customer in. Our overall women’s business as we said was flat, so we are able to make up that loss with the fashion customer in our other chains like Foot Locker and Champs. In Lady as we move to a more active customer, a little bit older 25 to 35, that’s taking time. We also are going through a transition in the apparel area where we have sold a lot of cotton by the pound and now we’re focusing on higher quality from both the brands on our own private Actra label.

ASP Outlook

Kate McShane – Citi: Within your guidance, I wondered if you could give us any indication of what your ASP outlook is for the year.

Lauren B. Peters – EVP and CFO: ASPs have been favorable and we’d expect that that would continue to help support that mid-single-digit comp gain guidance that we gave. With a value that we are putting into product and what we’re offering the customer is supporting that, and the other thing that’s contributing to that is our shifts in apparel as we moved that business to a branded product away from that cotton by the pound that Ken mentioned.

Kate McShane – Citi: I know its early days, but wondered if you had seen any change in the running category momentum since the new Flyknit product has come out?

Richard A. Johnson – EVP and COO: Well, we’ve got Flyknit featured in our run stores. We expect a bigger batch of Flyknit to be in our stores in April and May. So, we expect to see some very positive movement with that.

Kate McShane – Citi: And then my last question is just on Europe. Ken, can you walk us through a little bit what you’re seeing in Europe? How – I know the comps are low single-digits. Maybe how the environment has changed this past quarter versus the quarter before?

Kenneth C. Hicks – Chairman, President and CEO: We’re seeing similar things what we have seen in Europe from the point that the Northern Europe, and particularly, Germany continues to be strong. Southern Europe has its challenges. But what we think is that it’s reached a level. That’s a maintainable level. We also have worked hard on our assortments there. We’ve put in a stronger basketball and performance and running position and those have worked well for us. So, we’re seeing the product mix help us. We are strengthening our position in the markets that are not as impacted by some of the things going on, and even in those markets we see kind of a settling out of the business.

A Closer Look: Foot Locker Earnings Cheat Sheet>>

Dividend Policy

Jarrett Geldenhuys – Deutsche Bank: Two questions, if I may. The first one is related to the dividend policy. As I understand it, at the moment it’s based on EPS. Is there any change to it that we could potentially shift this to a cash-based model or an EPS number, or what are your thoughts around the dividend policy going forward? Second question relates, potentially one for Andre, just related to the South African Polymers margins. Just with all else being equal, can you give us some kind of margin upside, which we could expect from the EPU5 plant and the C3 stabilization? Then just the last question from my side is just on the exploration. On Slide 23, you’ve given us quite a nice breakdown of all the potential drill sites for the next couple of years. Can you just breakdown the costs, as well as the timing, specifically in Mozambique and Botswana?

David E. Constable – CEO: It sounds like we’ve got some static on the line, but we’ll soldier through here; if Christine could take the dividend question first, please.

Christine Ramon – CFO: I think, firstly, we are committed to our progressive dividend policy and delivering superior returns to our shareholders. I think, quite importantly, our dividend has always been based on EPS and our (EBIT) going forward, that we will maintain that. I think with the progressive dividend policy, like we’ve demonstrated, that we will at least maintain the dividend for the year, like we’ve actually done at the interim and we’ll certainly update it going forward. I think declaring the dividend based on EPS certainly does provide shareholders with a certain amount of predictability into what our sustainable earnings label is going forward, and therefore, we do not predict that we will actually change it.

EPU5

David E. Constable – CEO: Thanks, Christine. On to EPU5, which is scheduled for completion this year and C3 stabilization scheduled for completion in calendar year ’14 delivering benefits, Andre?

Andre De Ruyter – Senior Group Executive, Operations: Yes. Just a quick reminder, what we’re trying to do with EPU5 is to extract additional quantities of ethylene so that we can run Poly 2 and 3 in Sasolburg at full capacity. We are also investigating the opportunity whether there is a chance for us to optimize some of our smaller and less efficient cracker assets along the way, and this is part of the turnaround that Christine referred to earlier. So I can’t give you a firm number to play into your model, unfortunately. This is work in progress and within the scope of the turnaround that is in progress. On C3 stabilization, again, this is to introduce a measure of stability in the C3 value chain. It is intended to reduce flaring losses, which at this point in time is quite considerable. So we want to cut that down by building storage capacity for C3 feedstock into our polypropylene value chain. We anticipate that with the improved availability of both our polyethylene as well as our polypropylene assets, that those assets will have a significantly enhanced return on invested capital.

David E. Constable – CEO: Thanks, Andre. Next question is on drilling in Mozambique and Botswana. Giullean, I know that Inhassoro, with the oil we are starting a field development plan over the next couple of years. So, we are excited about that, but maybe you could talk a little bit about Sofala and Block A and then Botswana, the coal bed methane?

Unrecoverable O&M Escalations

Greg Gordon – ISI Group: Thank you for the very concise disclosure on drivers for 2013 earnings, we appreciate that and good work getting back from the storm so quickly. I don’t know if I mentioned this last time you had the call, but I did see a Westar Energy truck here in New York during our storm and we much appreciate your help there as well.

Mark A. Ruelle – President and CEO: We are happy to do it.

Greg Gordon – ISI Group: A couple questions. I just wanted to be clear, if we’re trying to model unrecoverable O&M escalations, I think you’ve made it very clear, the third bullet in your planning assumptions is, all things equal net of riders. Overall O&M should be down 1%?

Tony Somma – SVP, CFO, Treasurer: That’s correct, Greg.

Greg Gordon – ISI Group: If we think about the opportunity for you to go with a fleet operator for Wolf Creek, so what are the key sort of underlying metrics you are looking at in that decision? Should one of them we think about the ability to continue to hold the line on O&M costs, still, say moving up in the rankings in terms of operating performance and safety?

Mark A. Ruelle – President and CEO: I won’t comment on the process because of course we are in the middle of that. But yeah, our objective is not a short-term look at that, it’s recognizing that we got a good asset and it’s got 33 years more of operating license. There seem to be advantages in terms of the long-term structural cost trends whether you are maybe aligned with a fleet or not. So we are taking a hard look at that.

Kansas Economy

Greg Gordon – ISI Group: One of the things I often hear when I talk to investors about Westar is, there’s a lack of familiarity about the underlying economy in Kansas and there is a sense that the – that somehow the Kansas economic picture is sort of below average relative to national trends and people often focus on your exposure to aerospace. Can you talk a little bit more about what you’re seeing in Topeka and Wichita in terms of underlying economic development job growth, job loss et cetera?

Mark A. Ruelle – President and CEO: Sure, sure. They need to come visit because it’s not like Detroit in autos of the 1980s. Aerospace is actually – commercial aerospace which is largely related to Spirit is doing quite well. Now it is true that the small private aircraft and the small jets are not doing well and they haven’t done well since the crash back in ’08, and that’s not a big part of our business. In fact if you look at aerospace overall, I can’t remember the right percentage. Bruce, do you remember how much aerospace is, even as a percent of our revenues?

Bruce Burns – Director IR: Not as percent of revenues, but it’s roughly 16% to 17% of industrial revenue, of just the industrial component.

Mark A. Ruelle – President and CEO: Yeah, so it’s single-digit on our revenues. The Kansas economy is actually pretty diverse. The best – one of the best performing sectors we just had was general manufacturing. So, car batteries, prepared foods, frozen pizzas, dog food, light bulbs. We just have – we are in the process of building a very large chocolate factory in Topeka that will come on line next year, actually maybe in later this year. I can’t remember the schedule. They are going to make M&M’s and Snickers bars for example. More pipeline loading. Then of course we still have a pretty large military presence here and we serve all the major universities. So we are not tied to any particular sector. In fact that’s one of the nice things about our economy in our view.

Greg Gordon – ISI Group: Thank you for the very concise disclosure on drivers for 2013 earnings, we appreciate that and good work getting back from the storm so quickly. I don’t know if I mentioned this last time you had the call, but I did see a Westar Energy truck here in New York during our storm and we much appreciate your help there as well.

Mark A. Ruelle – President and CEO: We are happy to do it.

Greg Gordon – ISI Group: A couple questions. I just wanted to be clear, if we’re trying to model unrecoverable O&M escalations, I think you’ve made it very clear, the third bullet in your planning assumptions is, all things equal net of riders. Overall O&M should be down 1%?

Tony Somma – SVP, CFO, Treasurer: That’s correct, Greg.

Greg Gordon – ISI Group: If we think about the opportunity for you to go with a fleet operator for Wolf Creek, so what are the key sort of underlying metrics you are looking at in that decision? Should one of them we think about the ability to continue to hold the line on O&M costs, still, say moving up in the rankings in terms of operating performance and safety?

Mark A. Ruelle – President and CEO: I won’t comment on the process because of course we are in the middle of that. But yeah, our objective is not a short-term look at that, it’s recognizing that we got a good asset and it’s got 33 years more of operating license. There seem to be advantages in terms of the long-term structural cost trends whether you are maybe aligned with a fleet or not. So we are taking a hard look at that.

Greg Gordon – ISI Group: One of the things I often hear when I talk to investors about Westar is, there’s a lack of familiarity about the underlying economy in Kansas and there is a sense that the – that somehow the Kansas economic picture is sort of below average relative to national trends and people often focus on your exposure to aerospace. Can you talk a little bit more about what you’re seeing in Topeka and Wichita in terms of underlying economic development job growth, job loss et cetera?

Mark A. Ruelle – President and CEO: Sure, sure. They need to come visit because it’s not like Detroit in autos of the 1980s. Aerospace is actually – commercial aerospace which is largely related to Spirit is doing quite well. Now it is true that the small private aircraft and the small jets are not doing well and they haven’t done well since the crash back in ’08, and that’s not a big part of our business. In fact if you look at aerospace overall, I can’t remember the right percentage. Bruce, do you remember how much aerospace is, even as a percent of our revenues?

Bruce Burns – Director IR: Not as percent of revenues, but it’s roughly 16% to 17% of industrial revenue, of just the industrial component.

Mark A. Ruelle – President and CEO: Yeah, so it’s single-digit on our revenues. The Kansas economy is actually pretty diverse. The best – one of the best performing sectors we just had was general manufacturing. So, car batteries, prepared foods, frozen pizzas, dog food, light bulbs. We just have – we are in the process of building a very large chocolate factory in Topeka that will come on line next year, actually maybe in later this year. I can’t remember the schedule. They are going to make M&M’s and Snickers bars for example. More pipeline loading. Then of course we still have a pretty large military presence here and we serve all the major universities. So we are not tied to any particular sector. In fact that’s one of the nice things about our economy in our view.

A Closer Look: Westar Energy Earnings Cheat Sheet>>

2014 Revenue

James West – Barclays: Vince couple of years ago at your Analyst Day, you had outlined a scenario where Dresser would get to some $4 billion in revenue and about $700 million in op income in ’14. Understanding that ’13 has some moving parts to it and you outlined a lot of those in your prepared remarks, is that still an achievable level of revenue and income for ’14?

Vincent R. Volpe Jr. – President and CEO: I think James, I would say, yes. I think it’s achievable, I think part of depends on currency, if you currency adjust those numbers from time that we made the projections in 2010, there is a significant change in – I don’t know if Mark’s got the number of the top of his head but, it’s I think on the operating income line, it’s – I don’t know $20 million to $40 million or $50 million. It’s a pretty big number right, so whatever that is, you know we can go back and look at it and so I think in terms of the fundamental business change, if you see you’ve got a business that you think is going to be sort of in the mid 3 billion this year on revenue, 2013, and you believe that you are going to book more than you are going to ship which is what we’re forecasting, that means you are going to build backlog again. I don’t think that’s it’s an unreasonable, I don’t think it’s an unreasonable view. And, the other thing, you got to look at is, if you don’t hit it right on the spot, you might hit it a month later on the trailing12-month basis. So, broadly speaking, I think the target is still achievable.

James West – Barclays: Then just a follow-up from me, the projects that got pushed from 4Q into the middle of the year, I know you talked about engineering delays there and other issues. Are these offshore projects or onshore project, could you give some color there and maybe perhaps what regions of the world you are seeing those delays?

Vincent R. Volpe Jr. – President and CEO: They are offshore. At least one of them is in the North Sea, one of them was in – there were really four project streams and it was between 150 million and 200 million, and they are all offshore and you got – I think had pretty good spread on them; one is in the Asia Pacific, one is in the Gulf of Mexico, and two in the North Sea. I just want to build on the math. We have provided guidance that says up to two-thirds of our bookings maybe in the second half of the year, I didn’t say two thirds of the bookings will be in the second half of the year. There is a difference. We’ve seen these projects move out, that’s between $150 million and $200 million of business and four jobs. I don’t know if that’s a proxy for other stuff moving out. We think those have moved out about six months and so you should – I think we are exercising a bit of caution, okay. I do think that the first quarter will be sort of on the order of magnitude of Q4, so in terms of what you expect in Q1 these things moved out for most part passed the first quarter. Second quarter maybe same order of magnitude or maybe better, so let’s not give up on Q2 being strong but we are sort in the interest of caution right now we don’t know if this a proxy for bottlenecks in other places where projects are being executed or in fact the other projects will go you know sort of when we expect them to go. And the final thing I would say, to reiterate all four of those projects we strongly believe are going to be for Dresser-Rand. So, this is not about these projects going away or going away from Dresser-Rand, it is strictly movement.

New Units Booking Expectation

Jeff Spittel – Global Hunter Securities: Could we start off Vice with your new units booking expectation for the year and speak a little bit about what percentage of that you would expect to come from offshore production infrastructure and then maybe whatever color you can provide on what component of that FPSO it might represent?

Vincent R. Volpe Jr. – President and CEO: Well, if I use the inquiries Jeff as a sort of option we’re going to book, I think we’ve got as an example our inquiries were up 20% year-over-year formal inquiries and so you know as people get to (EBGBs) about the fact that we were light in the fourth quarter on bookings, the formal inquiry level is up 20% year-over-year. That is a very concrete proxy for next year’s activity and the upstream activity was up over 30% year-over-year. Now, in terms of our forecast which we know is wrong, it always changes right from now to the end of the year, we’ve roughly got about half of our business so called between 40% and 50% coming from the upstream and then we’ve got the other two principal pieces which is downstream and midstream sort of divided equally amongst them with the environmental services slightly below that. So, I would say – well hold on, let me correct myself. We’ve got a little bit 40% and 45% on upstream, at this time the actual percentage is – so let give them to you between 40% and 45% upstream, 10% to 15% midstream that could be a little higher, downstream between 15% and 20%, environment services between 25% and 30% and then other is makes up the rest. So, again principally upstream and the preponderance of that would be (floaters), Jeff.

Jeff Spittel – Global Hunter Securities: And then modeling question on Q1. There is a lot going on in both segments anything you could do to help us out in terms of moving parts that are going to impact the segment operating margins in the first quarter specifically?

Mark E. Baldwin – EVP and CFO: Jeff, this is Mark. One thing historically that first quarter has been a slower quarter, that’s why we are guiding 60 to 70. Our fixed cost are spread roughly 25% per quarter and (indiscernible) period cost. And therefore the overall margins for the first quarter are going to be lower because of those fixed cost being spread ratably than our overall full year guidance, Jeff, is all I would say right now.

Full Year Extension of the CR

Robert Spingarn – Credit Suisse: You’ve both talked about the fact that the guide does contemplate a softening federal acquisition climate as the year progresses, but one of the scenarios you pointed out in this morning’s 10-K was a full year extension of the CR, which potentially might not be accompanied with new fiscal ’13 action and we know that that could create a problem for new starts et cetera. How might your guidance differ, if we actually get that outcome?

Peter J. Milligan – SVP and CFO: Well, so, I think about it this way Rob. We have about 86% or so of our full year revenue in backlog, which would include unfunded backlog right now. So, for programs like ADS-B and K-BOSSS which represent some of our large unfunded programs that we see obviously continuing to support on throughout 2013, So, from that perspective, we think that the topline is fully protected, but as Dave will mention or has mentioned if the environment get much worse than of course it seems to be evolving minute by minute then there could be some incremental pressure in what we’d see on the top line, but this is our best guess of taking into account everything we know quite literally through today.

Robert Spingarn – Credit Suisse: I was just going to say so you don’t have any major new starts that we’d need to worry about under our continued CR?

David F. Melcher – CEO and President: There is a couple of new starts that we hope to win certainly things like NextGen Jammer. There are some other programs with the FAA that could represent a new start. I think the key on that piece though is that you could impact clearly to orders and backlog that would be I think a line item that we would see more pressure on, let so protect, we’re more protected I guess on the top line on revenue because we’re pulling it out of the backlog. But certainly if the environment was to get worse you would see the pressure on backlog.

Robert Spingarn – Credit Suisse: So that’s really a ’14 issue then it sounds like. Then just the other question I have is on the restructuring the $60 million to $70 million how should we think about from a cash perspective and when would we see that as we flow through the year?

David F. Melcher – CEO and President: Yeah, so largely those restructuring expenses represent employee separation. We should see most of that being paid out in this year, fairly linear. Again, most of that and we say $60 million to $70 million probably $55 million to $60 million of that would be paid during 2013 and again in a fairly linear way.

Robert Spingarn – Credit Suisse: So, you cash flow guidance embeds that cost?

David F. Melcher – CEO and President: Absolutely.

Bookings Target

Joseph Nadol – JPMorgan: Could you guys characterize or do you have a bookings target you could share for the year just given the pipeline you mentioned et cetera?

David F. Melcher – CEO and President: Yes. We are trying to make sure that we are booking as much as we say we are going to have in sales, if not more. The hesitancy I have is that nobody knows exactly how this year’s going to unfold. It’s one of the reasons that I mentioned having $7 billion in potential bookings in the pipeline right now for decision. We will see how those things rollout during the year and one of the – as you know with a Company that’s got a service business the size that we have there used to be a day when those contracts were funded fully upfront and now it tends to be month by month or maybe two months by two months at the most. So we are cognizant of the environment. We want to basically hold the line on any backlog erosion and make some inroads into building it.

Peter J. Milligan – SVP and CFO: Yes. 2014, it’s obviously going to be some dynamics happening this year, depending on how quickly the withdrawal takes place. Just from a sizing perspective, the two big programs we have in Afghanistan are LOGCAP with Fluor and the Afghan North and South. Collectively, we’ll probably do a little north of $300 million on those programs. So, 2013, as Dave mentioned, we feel pretty good about that. 2014, we’ll see as the year develops, but right now, I think logically we would expect to see that trending down.

William Loomis – Stifel Nicolaus: The recent commentary of the Army about reducing contractors on or contractor costs on LOGCAP, how might that impact you, have you heard anything specific on that?

David F. Melcher – CEO and President: We are a subcontractor on LOGCAP with Fluor. I think any pressures there would be transmitted in some fashion to us as well, but I think as a general comment across the O&M world, there is a general pressure on contract costs and the government is trying to be a good steward of their resources and we are trying to help them by bringing the best efficiencies we can to our work.

William Loomis – Stifel Nicolaus: You haven’t heard of near term reductions of volume or any of that sort at this point?

Peter J. Milligan – SVP and CFO: Nothing sizeable for the work we are doing.

Inpatient Acute Care Volumes

AJ Rice – UBS: Couple of questions if I could ask. First of all, it’s good to see a return to the positive on the inpatient acute care volumes. Can you give us a little more flavor? Do you have a sense of how much if any, the flu impacted that or maybe in terms of geographies, was that Vegas-driven churn, was that more broad-based, any color would be helpful?

Steve G. Filton – SVP and CFO: Sure AJ. I think that like everybody we experienced a busier flu season this past winter than we’ve had in several years, although again I think as most hospital providers have reported for us, it was probably more of an ER dynamic and more ER visits than actual inpatient admissions. I think we believe we had a bit of a pick-up in inpatient admissions but don’t believe it to be a material number or certainly a material impact from a financial statement perspective for the quarter. As far as the improved, I think both volumes and payor mix in the acute division for the quarter I think that strength was relatively pervasive throughout the division. It was not focused in one or two markets, but more of a trend that we tended to see throughout the facilities and throughout the portfolio.

AJ Rice – UBS: On your 2013 guidance, I know you gave us the numbers for the HITECH incentives and so forth. How about just operating assumptions, are you assuming any kind of churn either in the acute business or steady statement side, can you give us a little more flavor for some of the key underlying assumptions there?

Steve G. Filton – SVP and CFO: Yeah, I think that the guidance for next year is generally premised on stabilizing trends underlying the business. On the acute side, I think that it is reflective of the sort of revenue growth that we saw in the third quarter that is kind of in the 2.5%, 3% range split sort of evenly between pricing and volumes. Obviously, we have factored into our guidance as our peers, the effective sequestration beginning in April and the effect of both the disproportionate share encoding cost that will become effective in October as part of the affordable care act. On behavioral side I think just generally more of the same 4% or 5% revenue growth and mid-single-digit EBITDA growth and then obviously we got a full-year of the Ascend facilities in our guidance for next year.

Trends in Behavioral Care

AJ Rice – UBS: And then just a last question maybe, I don’t know how much you say on the OIG but clearly a lot of the regulatory and questions that have been related to the site business over the – really the last decade have been more clinical type of questions as opposed to billing questions, is there any way to look at the wording of thing and make any assessment as to whether it’s watching those two directions that seems to be going?

Alan B. Miller – CEO and Chairman: I think A.J. as you suggest the trend in behavioral care has been and have these investigations focused on clinical practices and I would say that the content of the subpoenas would suggest that that’s largely the focus here. I will say that I believe the government often pursues the technique in which they are trying and tie together what they perceived to be clinical issues and quality deficiencies than with an argument that false claim has been filed because there is not adequate care et cetera we have no idea that’s where the government is going in this case and you certainly couldn’t predict that.

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Opana ER

Gregg Gilbert – Bank of America Merrill Lynch: My first one is about Opana ER, what makes the company confident that the FDA will remove the non-abuse deterrent oxymorphone products in May. If you could provide the latest color you have on that.

Ivan Gergel, M.D. – EVP, R&D, and CSO: Clearly, we are pleased to say they put out a guidance and obviously we continue to work closely with them on the guidance. We think the epidemiological surveillance data that we are getting in is very supportive of what we expect these abuse deterrent formulations should do it supporting our original contention in this regard.

Gregg Gilbert – Bank of America Merrill Lynch: Ivan are you and the team focused on other abuse deterrent formulations of oxymorphone obviously generic companies are pretty quick to copy technologies especially the simpler ones, is there a program that you can speak to for other forms going forward?

David P. Holveck – President and CEO: Certainly. Obviously we believe very much in the tamper-resistant – these tamper-resistant formulation of medical abuse deterrent formulations. We believe they do provided a benefit. As I said, obviously, the epidemiological data is encouraging and, as you know, we are a Company very much focused in pain and certainly, if there’s something, if there’s more we can do to help in the sort of prevention of abuse certainly, certainly we’ll be looking at.

Gregg Gilbert – Bank of America Merrill Lynch: My next one is for Julie on the Qualitest front. Despite in light of the recalls are you confident that the facility and facilities are in good shape from an FDA regulatory perspective and maybe you can talk about when the (AMC) were last there and what any findings were?

Julie H. McHugh – COO: Sure. Yes, we’re obviously very focused on continuous improvement of our manufacturing processes including our quality systems, and we’re making some dramatic improvements in the course of the two years that we’ve owned the Qualitest facility and we will continue to remain committed to all of those process improvements as we move forward. Our last inspection and we’ve got a number of different sites from – as you know manufacturing sites now focus on Qualitest. The last time we had FDA general GMP inspection was in 2011 in Huntsville and in Charlotte.

Mesh Liability

Chris Schott – JPMorgan: I just had a couple questions here; first on Opana. How should we think about realized price for Opana as we go through this year? Has there been any impact at all from the generic launch on for instance you are rebating strategy anything we should think about in that front? And my second question was on mesh liability, what’s you latest thinking about how we should be evaluating or how you are evaluating risk on that front and Can you maybe just give us any timing of initial cases we should be watching here?

Julie H. McHugh – COO: So, I’ll take the first question and with respect to Opana and pricing and how to think about that. We do as I have mentioned earlier have very strong formulary access for Opana ER. We’ve been very successful with our initial interactions with payors in that. We have extended our contract terms to payors for the new formulation and we don’t anticipate having to offer additional rebates at this time. In fact, many of the payors have been very cooperative and recognizing the value of these tamper-resistant formulation and in a number of major payors have chosen to block the generic – block access to the generic versions that have been recently approved. So, we remain confident as long as the FDA does in fact uphold our business petition and doesn’t approved additional generic formulations that we have a growth asset on our hands for the years ahead.

Alan G. Levin – EVP and CFO: Just one more a quick comment on the pricing, so remember when you are doing year-over-year comparisons to the performance last year, because the change in the dose mix overall decreased the overall percentage the 40 mg represented. You will see again a little bit of a price differential there but we expect that to kind of normalize as we move forward from this point.

David P. Holveck – President and CEO: Let me just say a few words relative to the other question, relative to the AMS MS litigation, I think first of all we – in looking forward we see each cases as a very isolated individual element and they have to support on the facts. So, I think we again are very heavy into looking at the each one of those cases. I think the other element that is I think a step in the right direction in February of 2012 the multi-district litigation and the southern district of West Virginia has consolidated the cases and I think this gives us also some continuity because it’s all under the same judge. So again our belief is that it is an element that is what I call under obviously very close management and the next, I think trial that we see is in May. So this particular point again we, we feel again the number of cases and it should be reminded that the FDA was looking at pelvic organ prolapse in most of these cases and a high percentage of these cases are in stress incontinence. So at least, these are very different clinical situations and therefore cast a very different light on the individual trials themselves.

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The Force Business

Adam Holt – Morgan Stanley: My first question is about the Force business and the strength there. Are you seeing higher attach as you’re doing more large deals around SFA extensions? Or are you seeing expanded used cases, that’s continuing to perpetuate the Force strength?

Marc Benioff – Chairman and CEO: I think it’s a great question, and I really appreciate that because we’ve been focused on building our platform now for many, many years. Of course, we provide a single customer platform, it lets you accomplish what you need to do as sales productivity, it lets you accomplish what you need to do in customer service and support and call center. It allows you to accomplish what you need to do in marketing, whether it’s listening, publishing or advertising. We really didn’t get into some of the exciting announcements that happened this quarter with the Marketing Cloud, including our exciting relationship with Twitter and being the pioneer of the Twitter API and connecting our new social advertising product with that. What I can tell you is that in each and every customer case, we’re seeing expanded use of our platform and I was with a large financial services customer as I mentioned this week in New York and it’s a company that has built many applications on our platform and it wasn’t really surprising to me that we’re starting to talk about it becoming their standard way of building all their applications. It’s a faster way to build applications. It’s certainly a lower cost way to build applications. It’s an easier way. It’s elastic as companies change and evolve, the platform can move with them. These are not characteristics that you found in the client server world and I think that’s why the platform is so attracted to so many customers. Also, we’ve really doubled down on our relationships with the large systems integrators. You see them at our show, like in New York, you’ll see the big SIs, whether it’s the well-known ones like Accenture or even the mid-tier market SIs, many of whom we have a very strong relationship with, having a lot more competency with the platform, this gives customers, an easier time to deploy it. so, I’m very optimistic about the future of the platform. I feel that customers understand it more than ever before. They have universally positive experiences with it and I think that they’re going to do more and more with it. I appreciate the question because, it’s one of the things that I’m especially excited about.

CMOs

Kirk Materne – Evercore Partners: Mark, I know you and Michael are spending a lot of time out there talking about CMOs and I was just curious of your perception. Are they ready to take on a full platform approach t so some of the challenges that come about with social media? Or do you see them taking on more of an incremental approach and if it is the more full platform approach, I guess, how do you feel about having all the pieces there to be able to help them solve their challenges?

Marc Benioff – Chairman and CEO: Well that’s just an outstanding question and I’ll tell you why. When we talk to Chief Information Officers, we talk to them on a very strategic basis in terms of their (decadent) strategy and what they’re going to be doing with their companies going forward. But when we are talking to Chief Marketing Officers, of course they are strategic but their needs are much more tactical. They’ve got campaigns that are executing today. They have needs that they need executed – needs that need to get fulfilled today. They have problems that need to get solved now and those Chief Marketing Officers they may decisions with a different frame than Chief Information Officers. That’s why we encourage these CMOs to partner with the CIOs. We are trying to build a muscle at Salesforce that we can talk comfortably with CMOs just like we talk comfortably with Chief Information Officers or Chief Revenue Officers or Chief Service Officers and certainly Chief Executive Officers. Our job is to be able to sit with that management team, something I did several times this week and have a holistic conversation about how their company is connecting with their customer. It doesn’t matter who that company is, whether its General Electric, or whether its Philips or whether it’s Bank of America, whoever it is in our portfolio of customers. In each and every case they are re-defining, re-conceptualizing and re-energizing their own employees about how they connect their company with their customers and that’s why we called it a customer company. The CMO is a relatively new entry into the conversation. That’s why we have spent $1 billion buying Radian6 and Buddy Media because we believe strongly in that. We need to find more marketing companies. Honestly there is more for us to do. There’s more demand but we need to innovate in this area. We are going to do some of that holistically and organically. We need to do some of that through acquisition. We want to be the company that you turn to in four key areas, in sales, in service, in marketing and as Adam correctly pointed out as well, in the platform. These are our four areas of focus and this is what our customers want to hear and how these four categories are the seminal interest for them in becoming this customer company.

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Weather Uncertainties

Randal Konik – Jefferies: I guess questions for Tom. Tom, you gave a very interesting statement regarding your top line assumptions for 2013. You said that 7% outlook growth includes a similar winter kind of assumption to this year. Now to clarify, does that kind of incorporate similar amounts of closeouts, similar amounts of at once pre-book et cetera. How should we be thinking about that there, because the way it kind of looks to me is that the probability would increase in year three, that the winter should theoretically could get better? And then second, we have almost likely a car analogy here where almost women haven’t been buying UGGs for two years of the replacement cycle could actually get better in year three here. So just trying to get a level of what should we be thinking in that similar winter comment regarding the top line, how should we be thinking about that? That’s my first question and then I have a follow-up. Thanks.

Angel R. Martinez – Chairman, CEO and President: Yeah, Randy, what we’ve assumed in the guidance, we are pretty cautions here in light of the uncertainty around the weather. So we’ve really assumed minimal reorders similar to what we experienced in 2012, i.e., minimal reorders and we’ve assumed similar cancellations that we received in 2012, and we received a fair amount of cancellations relatively large amount relative to our historical pattern for cancellation. So that’s the assumptions that we put into it. At this point in time we run a pre-booking process, we want to make sure we were cautious on our domestic wholesale business and…

Angel R. Martinez – Chairman, CEO and President: This is Angel. I think the replenishment component is something to keep in mind. We are the number one – in terms of footwear gifted items at the holidays, and we saw with the onset of colder weather people did Russia to replace some of the UGG product primarily it was a lot of slippers a lot of the new styles. Some of the classic products does not affect in the daily beast that is always there was an article on the resurgence of UGG Classic. So, that’s I would go where we when, I don’t think that we when, but people are rediscovering, and so that as well. It just still right now consumers are challenged by the multiple opportunities that have the byproduct, not just in retail environments, wholesale environments, but in online et cetera. So, we are sort of try and evaluate all that stuff in our assumptions.

Randal Konik – Jefferies: I’d say, just it does feel like the visibility and predictability at least we’re starting come a little bit more into focus here. I guess so my follow-up question would be definitely around the comp store sales number. So, if we look at the comp in the fourth quarter down 3-ish versus the third quarter down 13. I mean would you argue that because it’s a holiday quarter that speaks to that strength of the brand? I mean what did you see in the quarter did progress towards the up until Christmas or how did the comps in quarter kind of play out, because it was a big beat versus expectations. I’m just curious there for your thoughts.

Angel R. Martinez – Chairman, CEO and President: Well I think first of all weather was a factor. I think certainly the back-half of December the weather did improve to what we call out weather and it was a significant factor. I think consumers are putting off their purchasing to – as we’ve said, beginning of last year even, buy now, wear now. So they’re just developing a habit of buying closer to the market, which as I think part of why we’ve made the decision that our expectation is that we’re going to see more of our business weighted towards the fourth quarter than we had seen in the past, and I think that this is also a component of the Omnichannel strategy that seems to be emerging in so many different manifestations. I mean it’s still hard to understand the full impact of Omnichannel on consumer behavior, on the impact to unconventional wholesale customers. Consumers want what they want and they want it now. And they want it in every easy way they can get it. So that has a ripple effect on a lot of assumptions and a lot of investments that people make in terms of inventory levels, etc. So this is all still shaking out and we’re being cautious, but I think we have our eyes open and we’re working very, very hard to project the impact of what I would almost call a revolutionary change in the wholesale environment and consumer behavior around Omnichannel.

Randal Konik – Jefferies: Tom, (can I sneak another) question, just a clerical question. The headquarter CapEx that you’re guiding for in 2013, are we to assume that there’s no headquarter CapEx in 2014?

Thomas A. George – CFO: Yes, and let me also clarify something. The 2013 CapEx of $85 million, $30 million of it’s for the facility and I think I misspoke when I said $15 million for everything else. It’s really $55 million for everything else, and you are correct.

Randal Konik – Jefferies: So, $30 million of that could theoretically go – is going to away in 2014, so improving free cash flow cycle.

Thomas A. George – CFO: That’s right.

U.S. Wholesale Business

Robert Drbul – Barclays Capital: The first question I have, Angel, you mentioned the potential to narrow the account base on the U.S. wholesale business, so I wonder if you could expand on that a little bit maybe like the magnitude that you think might be necessary. And then the second question that I have is essentially around pricing on the classics, can you just talk about the pricing strategies heading into ‘12 both in the U.S. and some of the international businesses on lot of your marquee style?

Angel R. Martinez – Chairman, CEO and President: Sure. Well first of all our classic pricing we saw that, the classic pricing is something that our researchers said consumers have an expectation of quality with the UGG brand and are willing to pay a premium price, but when we push the price beyond a certain point we start seeing negative effect, and we saw that last year. We expect that we will be able with (UGG Pure) and other improvements in supply chain in the design and development that we will be able to hold our structure now and actually evolved our pricing to fill in in our product line to fill in some areas where we are leaving opportunity open to the competition. And that’s a worldwide statement. We feel that in markets like China, for example, we are price quite high and I think that we are speaking a very high end luxury consumer and there are people out there with knock off product selling out 20%, 30%, 40% below driving a very, very big business on the tails of UGG. We feel that that’s an opportunity for the UGG brand and we’re going to be developing product to address that. What was the first question again, sorry.

Robert Drbul – Barclays Capital: Distribution.

Angel R. Martinez – Chairman, CEO and President: I said before that as the brand has evolved and our men’s business, our kids’ business, our year round business, it requires a commitment of inventory, it requires a commitment on the brand by a retailer, and where we get those commitments and we see that kind of support for the brand, we have partners for life if you will. However, there are some environments where we don’t – we are not happy with the brand presentation. We are not happy with the support for the year round elements of the business, the support for the men’s product. So we have to reevaluate whether or not those are long-term participants in the brand success going forward. Consumers today expect a full brand experience when they have a brand they love like UGG. They don’t want to see a piecemeal representation and a brand I guess cheery picked and put out there in retail. So we are taking a very hard look at that, very important part of what we will be doing. When you walk into an Apple retail, you expect to see a full array of Apple products. You expect to see all the new stuff, you expect to see it celebrated in the presentation and that’s what we’ll have with the UGG brand.

Robert Drbul – Barclays Capital: Just one more question is on the share repurchase was pretty solid. Could you maybe give us an update on the Board’s perspective or the Company’s perspective on the capital structure and the willingness to sort of take on significant debt or any level of debt to continue the repurchase authorization?

Angel R. Martinez – Chairman, CEO and President: Yeah, Bob, I think the Board is open to be more flexible from a capital structure point of view in incurring some debt. That being said, we are cautious about the business and don’t want to incur too much debt, as obviously the seasonal in the business in the third quarter, especially, there is a large consumption of working capital thereby some good size draws on our working capital line. So, I think ne-net, there’s sort of a general trend to being more open to some borrowing related to the share repurchase. That being said, we see a lot of opportunity within our own business to continue to reinvest in our own business vis-a-vis repurchasing stock. I think the last 12 months where we repurchased $221 million of stock that, I think that sends a strong message about our confidence in the business itself.

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