Thanks. Good afternoon, everyone. First question here, looking at new land deals and potentially purchasing lots when necessary, I am wondering what you think about risk control from that perspective. Should we see home prices come down more in certain areas? Should we see foreclosure levels start to rise driving pricing down? How do you think about risk control in terms of pricing when you look at new lots?
Stuart A. Miller
Good question, David. I think that in our world right now we are keeping our focus very, very short term for exactly the reason that you are highlighting. We are buying each home site. We are looking at buying home sites as we need them because the potential for the market to continue to fall is clearly out there and I guess the message I have made to each of our division is if we are going to explore new opportunity I want to make sure that we are not buying tomorrow’s impairment. So we are making sure that as we take down some home sites we are selling the home, we know what the purchase price is, we know what the profit is on that home and we are not obligated to take down the next two, three, four or five home sites without a price adjustment should we need one.
So we are really focusing on being pretty stiff backed on anything that we are looking to purchase going forward.
David Goldberg - UBS
And the fact is that you are not concerned about price decreases in the intermittent. It’s probably an act of the take down.
Stuart A. Miller
You mean after the take down of the home site?
David Goldberg - UBS
Exactly, before delivery.
Stuart A. Miller
So let’s say we sold a home for $150,000 and I have got a 20% baked in , the potential for home values to go down in that market before I actually deliver the home or the purchase contract being canceled I am certainly at risk relative to that pricing. But I think we are being pretty conservative and aggressive on pricing and leaving ourselves excellent margin, where if there is further erosion it’s still a positive net margin it might just be smaller. I think our risk is fairly short term.
David Goldberg - UBS
Second question, so you did a good job outlining I think some of the efforts in terms of supply chain, and purchasing, centralization. What I am trying to figure out is what’s the next step in that process? Where do you guys go from here now that you have achieved a lot of those benefits? What do you do to cut the cost structure further as you move forward?
Stuart A. Miller
Well, let me just change one word, you say that we have achieved, I want to make sure that I was clear and I think I said achieving. We are still mid-process in achieving the benefits associated with many of the changes that we have put in place. There’s more to be achieved and each division frankly is at a different point in that timeline.
I think the question where do we go from here; I think that we are getting to a point in our best run division where we are at a pretty high degree of efficiency. I think that we are delivering – actually we price product at a good margin. I think we are achieving being a low cost provider by having these national purchasing programs by disassembling materials and labor and really getting our hands around cost.
I think that the place that we go from there and as I said within each operating division that has achieved those efficiencies is to organically grow one small community, one small step at a time and adding profitability in that way I think will be fundamentally strong.
David Goldberg - UBS
Got it. Thank you.
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