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Vendor Price Increases
Steve Forbes – Guggenheim Securities: Richard, it’s actually (Steve Forbes) on for John today. Regarding inflation, when do you expect to see vendor price increases and what magnitude are the Company’s buyers talking about?
Richard A. Galanti – EVP and CFO: Well, this is very general. I mean, probably the standout area is our things like protein; pork, beef and poultry, and the anticipation is over the next several months given some of the issues with wheat and corn that that will continue to go up. Some of the bakery raw materials for the same reason will go up and these are (additional) talking in the mid-single-digit or a little higher range, but that’s a guess at this point. Don’t hear a lot on the other areas. In fact, in just the first – our first month, if you will of this fiscal year in September we saw essentially Company-wide, as reflected through the LIFO calculation, of almost exactly flat – I mean 1 basis point of inflation, and there’s a little bit – again, well less than a 0.5 percentage point in the food and sundries categories and a little bit of deflation in things like apparel; in electronics. And again, the apparel has more to do, I think, with its – some of those prices are down from a year ago when they were quite high, and so higher than a few years ago. So, if you add it all up, modest inflation is the expectation with it being geared more towards some of the fresh food items and raw material food ingredients.
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Steve Forbes – Guggenheim Securities: I guess about the handling of pass 30, you guys expect to pass everything through or – because I think you said the margin on food and sundries was up for the quarter, right?
Richard A. Galanti – EVP and CFO: Yes. Generally – I mean, look, sometimes we do and sometimes we don’t. Generally speaking, things like refrigerated fresh foods; meat and things like that, those prices change daily and weekly, and certainly the input costs change daily and weekly in some cases and the sales prices, and we, like everyone in the fresh foods business, are price checking our competition and adjusting according. Now, as you know from history, there have been times when we’re not going to change the pack – the cost of a 16-pack of muffins or the cost of a slice of pizza when cheese went up, but generally speaking, there is not those outsize areas. Now that being said also, things like fresh meat are uber-competitive, and we’re out there where we can gain a little strength in that area as the higher end cuts of beef and some of the organic aspects of beef where we can show a greater savings and make a little better margin. But those are still small percentages of the total sales.
Steve Forbes – Guggenheim Securities: And then just looking at expansion of the longer-term, obviously, 27 to 30, as you said, is the (largest) you guys done. But what would you say is the principal bottleneck when it comes to club expansion when you get to that high upper 20s range, and then, what would you say is your maximum amount of clubs to add within a year that you can execute at a high level?
Richard A. Galanti – EVP and CFO: We’ve always – as you know been hands on and I think, I’m guessing operationally there the classic view is we can easily handle 30, that challenges operationally. The bottleneck is, it really has been ourselves in terms of, one, it takes little longer to find and develop sites in some of these foreign countries like Asia and subject to other appeal processes. There is some countries, where the competitors can appeal you, just to appeal you and slow you down and which isn’t very nice, but at the end of the day, I think we’ve got a lot more in the pipeline finally. We have more people devoted to real estate, we have people on the ground physically, and I believe every country over the last couple of years. So, again, the pipeline is more filled and I think that’s evidenced in the expense – the amount that we’re doing in some of these countries where it does take longer like some of the Asian countries, Australia and the like. So, I think the bigger bottleneck was us and this is finally picking up a little bit.
Charles Cerankosky – Northcoast Research: When I go through a couple of things with you, I’ll start with on the fuel. Can talk about how profitable fuel was in the quarter and where the comp gallons growth were?
Richard A. Galanti – EVP and CFO: I think first on the profitability, we never talked about how profitable it is. We talked about how it is year-over-year when there is outsize changes to fluctuate quite a bit. Actually on a quarter-over-quarter basis, year-over-year, it was pretty – less than a $0.01 I think a difference, so really nothing to speak up there. As you know when prices are going down, profits are up and there was some of that both this fiscal quarter as well as in the fourth quarter of last year, so both quarters add some pretty good profit year-over-year. In terms of – Chuck the other question was…
Charles Cerankosky – Northcoast Research: Fuel comparable gallons.
Richard A. Galanti – EVP and CFO: The comp gallons in the fourth quarter were 6% and that compares to 8% in Q3 and quite a bit more in September for whatever reason. I guess because prices were going back up.
Charles Cerankosky – Northcoast Research: At the end of the fiscal year what was your square footage?
Richard A. Galanti – EVP and CFO: It was 86937 million.
Charles Cerankosky – Northcoast Research: When you’re looking at the nice performance you had Richard in the fourth quarter, what elements of the gross profit margin in the SG&A, especially SG&A improvement do you think are sustainable into the New Year?
Richard A. Galanti – EVP and CFO: I think the easiest sustainable things for the next few quarters are those things that we’ve done like the debt pay down, the Mexico acquisition and the membership fee increase and how that affects deferred accounting, so all those things are permanent for a year – they continue for a year and then it is part of the base. Beyond that, I mean, I think the sales drive – you always heard from us we are top line company, certainly our relative sales strength has helped us here. I think the focus on little things I am throwing out some examples over the last months and quarters about the past year one of the focus items is over time hours and I think we showed for the first four years or weeks of the fiscal year in one of our budget meetings that while aggregate hours were up 3.5% or so for the year, over time hours were down 25%. Not a lot of money maybe $10 million, $15 million a year but it is real and it maybe – it goes over – maybe you don’t even get it all in the first year you get over a couple of years but those are the kinds of things that we see out there. Is that sustainable, I mean, what’s sustainable is our efforts to do it. I think on the margin side, as I have said in the past, it’s more us than them, whoever them is, and we are competing with them. We tend to be proactive in it, we’ve been asked about the question, now that some of the (quote) investing in price is starting to anniversary from when it was being discussed a year ago, does that mean it’s over or there is more of it, and again we don’t talk about that. I can assure you that when things are good we’re going to continue to do things to drive the business.
Charles Cerankosky – Northcoast Research: Couple of more things, Richard. Do you have a full year fuel sales figure that you can give us at this time and can you comment on what the spike in retail gasoline prices in California on the fuel prices there, what’s that doing to traffic and gasoline sales?
Richard A. Galanti – EVP and CFO: I don’t have anything specific on the total dollars. I think for the year it was like 12% or so of sales. The craziness in California had to do with all the moons lined up bad and there was several days thereof incredible supply shortage. As you would expect we are a major consumer I think in the greater L.A. market we have close to 40 locations and at the peak or at the trough I guess, we had 16 or so of those stations closed for one or two days. Happily that ended I believe Sunday, this Sunday and they were back to normal generally. The impact to us was again – my sense was what I heard was is that, it was a little bit of the concern that there’s gas shortage everywhere and people are topping up their tanks or created more volume. We saw a little bump in the sales of those locations in store, but we were also in some cases losing money in the gas front. So my gas it wasn’t a big impact to us in the bottom line, we lost money no doubt in gas and made money with the few extra cars in the parking lot coming to get gas. It’s really a blip for a few days in California – Southern California.
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