Sam Martin: As you look creatively at what you have in your cost to deliver business, in our industry, we have to find ways to be more efficient in what we do. So it is not just one component of store labor or any other single component, but an overall way, the number of things that we do to drive our sales, we look at every area of cost to contain it and control it.

Sam Duncan: Also, we still have opportunities in our supply chain which we have said all along. You look at what that has done for us this year, I am happy and pleased with our store inventories levels being down 15% from last year and our clearance inventories being the lowest level in four years. Those two things add up to improved gross margins. As we continue to work on our supply chain initiatives, which Rubin Sloan and his team has done a phenomenal job, hopefully we will see some improvements there. We still have some room for improvement and our supply chain and our people are aggressively working on it.

Matthew Fassler (Goldman Sachs): To the contract sales decline in the US had a 12% hit. Can you try to disaggregate that by customer size?

Sam Duncan: On our contract business we do some 80% of our business in the large customer segment is what we call it. In that segment is where last year we exited a contract from a large customer because it was not profitable and we are cycling that the second half of the year. We will continue to review accounts. There has been more than one account that we walked away from because the gross margin being negative or the total economic value added of the account being negative and we will continue to look at those. In the long run we feel it is the right thing to do.

Matthew Fassler (Goldman Sachs): You spoke about reduced vendor dollars coming into play to some small degree in the first quarter. How much longer are the vendor dollar comparisons difficult such that if the sales environment stays where it is, that will be a drag on the numbers year to year?

Don Civgin: I think that question is impossible to answer because it depends on what receipts are. It is going to depend on what happens to the top line. Our commitment is going to be to do the best job we can managing the inventory and if that means vendor inventory is going to suffer, it may be a short term pain but in the long run that is the right thing to do.

Matthew Fassler (Goldman Sachs): Could you give clarity on the unusual items?

Don Civgin: The unusual item that we talked about, the $20.5 million is related to the transaction that sold the paper product business first quarter and so we received a distribution of $20.5 million during the quarter in other income. That is not something that you can predict when it is going to happen, what it is going to look like and whether it helps you and so forth. That I do not know that it has any bearing on what happens in the future or what has happened in the past.

Matthew Fassler (Goldman Sachs): Did that impact by the way the book value of the Boise LLC?

Don Civgin: No.

Sam Duncan: It was just on a paper pricing, I will make a comment that three years ago when I came to the company, paper pricing on a per ton basis was somewhere between $700-$800 a ton. Today it is well over $1,000 a ton. A lot of that is due to the dollar being so low, with few imports coming in.

Don Civgin: With respect to what happened in the fourth quarter with the additional consideration agreement being terminated, that agreement is now closed. So anything that we had seen in the past relating to unusual income or expenses or anything like that, because we do not have that agreement going forward, that we would not expect to see again.

Mike Baker (Deutsche Bank): Small market sales were down, how about middle market?

Sam Martin: I would say that the middle market and smaller market customer segmentation is still a focus of ours. We talk to the large accounts; some of the similar dynamics affect the middle market accounts as well at some levels. Our initiatives are still targeting those middle market customers and we are looking for more and different initiatives but the US macroeconomic conditions has a major impact on customers as well.

Steve Chick (J.P. Morgan): Given the deleverage that you are seeing in retail and it does not sound like sales are going to improve anytime soon, the average life left on your leases is relatively short. Why you are not looking at things more aggressively in terms of letting more leases expire and taking more of a defensive posture with real estate, as it relates to net closures or relocations?

Don Civgin: Every time we have a real estate decision to make we look at the fundamentals and make it on the basis of what we expect the longer term value to be. What I do not want to do and none of us want to do is react to an economic cycle and make decisions that three years from now we will wish we had not made. So we look at the somewhat longer term implications of opening store, closing a store, remodeling a store and whatever those decisions are and try to make them prudently in the context of how much cash we have available and what we want our credit spending to look like. We have taken a defensive posture where we think keeping a store open poses a risk to us. Where we think it has an opportunity, I would say we would be aggressive and take advantage of that opportunity so that when the cycle does come back, we are not disadvantaged and we are in a strong position vis-à-vis real estate than we were when we entered.

Sam Duncan: We have a real estate committee and in those committee meetings we look at every store where the lease expires and we decide if we want to renew that lease or not and we look at all the financial metrics to help us make that decision. So we are constantly looking at that throughout the year when leases expire.

Steve Chick (J.P. Morgan): Can you clarify if the targeted 40 new store openings for the year is both the US and Mexico or is it just US?

Sam Duncan: The 40 stores are in the US. Those are stores where we signed the lease well over a year ago. You are usually working anywhere from a year to two years in advance. All of those stores are in the US.

Steve Chick (J.P. Morgan): The $200-$220 million cap ex guidance looks high given what you spent in the first quarter. Are you still comfortable that is the level you might spend or does that have some wiggle room in terms of being south of that level of spend?