David B. Rickard: I do not want to comment too much on my competitor’s results but I understand that they have said that they are finding a need to spend more promotionally. We are finding the reverse of that. We do not have to expend as much promotionally. We also have favorable mix change, the growth in our private label is a good example of that. We have got a lot of things going positively in that business. Extra care is a unique weapon. It is something we have and they do not have and it permits us to manage our promotional spend much more precisely and to much greater effect than broad campaigns or circulars. We have known that for years and it is an advantage we have in our business. It is structural. We also are getting some benefits in purchasing that they may or may not be getting, so all I can tell you is that the programs that we have in place are working and I do not know any details about their progress.

Eric Bosshard (Cleveland Research): Is the terminal or long-term target for Minute Clinics any different and can you give reminder of the concept of what that number might be?

David B. Rickard: We expected about 1,500 to 2,500 Minute Clinics across the system. We have not revisited that, so I do not have news on that. We still would expect it will be something like that. We will solve the long-term in due course. Right now we want to make sure we are having as great an impact as we possibly can with the model. We are going slower but still going in that direction. We are expanding the services that we are offering, so it is going to be a richer content as we roll it further, but we also have to back-fill now with that richer content into the first 500 stores.

Eric Bosshard (Cleveland Research): What do you see going on in terms of underlying pharmacy profitability, especially on the generic side of the business?

David B. Rickard: What we have been experiencing for the last several quarters continues, with no acceleration or change. The last several quarters are faster macking than a few years ago. That trend continues. It is not accelerating.

Eric Bosshard (Cleveland Research): The cash flow targets you gave out suggest a significant amount of free cash flow this year. What the board is thinking or management is thinking in terms of using that cash flow?

David B. Rickard: We do not have any new announcement to make today on new programs there. It has a lot of cash. We wanted to put ourselves in more flexible position from a strategic standpoint relative to cash capacity, but after that it would be appropriate to find appropriate ways to get it to shareholders.

Mark Wiltamuth (Morgan Stanley): There is a lot of chatter out there in the marketplace that the new PBM contracts were just price focused wins. Is there anything you can relate to indicate that that is not the case, that there were actual attributes that they liked about the new combined offering?

David B. Rickard: It has been my experience as we have gotten more deeply into PBM dynamics that the loser of contracts always says that, and there have been a lot of losers out there. We think that the reality is that we do have to be competitive in terms of price but that what we are bringing to the table is value. We are bringing a better product that we can uniquely deliver because of our structure and our customers certainly are cognizant of that and are very enthusiastic about that. What we are seeing here is the beginnings of what we expected to see when we talked about this combination of CVS and Caremark originally - that is, the ability to add service and convenience and ease for customers, improve outcomes, and lower costs for clients. That is what we are doing and they are responding.

Mark Wiltamuth (Morgan Stanley): Did those contracts include any discounts on the front-end or any flexible prescription capabilities or anything like that yet?

David B. Rickard: They do not. Before the merger, we had a couple of programs like that. We had a feature like that in the State of Connecticut contract and the Daimler Chrysler contract, so it is something that is available to us as a tool but it is not a primary tool.

Mark Wiltamuth (Morgan Stanley): There have been softening in the prescription volume trends across the industry. What is going on there and do you think there is any component of this that is consumers reacting to the economy?

David B. Rickard: We do not see at this point evidence or market research that would suggest that consumers are changing behavior - more pill splitting or things like that. We do monitor that. The Zyrtec phenomenon is a piece of it. The absence of the growth that we had in last year’s numbers due to Med D is a piece of it. But the PBM utilization rate is up and our share is up, so we are still seeing reasonable trends on the pharmacy side. I am not going to rule out the possibility that consumers will start to adapt differently to a new economy but we just have not seen it yet.

Neil Currie (UBS): Can you just give color on the synergies that you have been getting, because the retail performance was outstanding against expectations and how you allocate those synergies on an accounting basis?

David B. Rickard: All the way that those synergy benefits come through the P&L is simply by having lower prices on purchased goods as each retail and PBM use the inventory. It is not an allocation decision. It is not something that we sit and say now how much should we put here and how much should we put there. It just flows through cost of goods like any other cost or benefit. It is not an allocation. Both retail and PBM therefore are getting substantial benefits out of the purchasing synergies, which is the bulk of the $700 million. On the overhead piece, the $100 million or so, goes disproportionately to the PBM because it just so happens that there were call centers and things like that were able to be closed and those were costs of the PBM and so those floated the PBM disproportionately, but the purchasing goes both ways.

Neil Currie (UBS): In terms of the Save-on Osco stores, how much do they help to contribute as well to an improved performance, and are you looking now to accelerate more aggressively into Northern California, Pacific Northwest mountain regions, and will that be organic or will you consider acquisitions?

David B. Rickard: Osco Save-on outperformed core CVS both in sales and in margins. It has the advantage that it started with a shrink opportunity that we are rapidly capturing and so that is helping the margin comparisons and simply the sales is the result of bringing the CVS discipline to the way those stores are run. It is a mature base now - the management, the systems, everything is in place and it is working better. In terms of Northern California, we are anxious to be in Northern California but it is an extremely complicated real estate environment and we will be doing and are doing now the groundwork necessary for organic expansion, so if we stumble across some acquisition along the way, we would want to consider it but right now, our view and our plan is to do it organically.

Neil Currie (UBS): When you look at the population per store of the Save-on Osco stores, it is twice that of the CVS average, yet the scripts per week seem to be similar. Do you see a significant opportunity for those stores to exceed the average because of the population densities?

David B. Rickard: The actual sales per square foot overall are lower than core CVS by a meaningful amount, and so yes, we do see a substantial opportunity there, both front and pharmacy.

Meredith Adler (Lehman Brothers): What impact the PharmaCare gross-up has had on the PBM numbers?