Peter J. Bocian: First there is share repurchase in the long-range plan but would characterize it as 10% growth coupled with operating margin expansion off of an 2008 baseline.

We have got to improve, stabilize the U.S. operating margins, improve the U.S., get the lift out of consumer products group, contribute the G&A, and operating margin will improve over the horizon. In addition then, we get some lift out of share repurchases and out of the tax rate over time.

John Glass (Morgan Stanley): Comment about your decision to use buy-backs versus say a dividend policy to communicate the maturation of the business to investors?

Peter J. Bocian: Historically we have used share repurchases. We will continue to dialog with the board. The good news is with the $800 million per year of capital that we expect to spend, there should be a lot more free cash flow.

John Glass (Morgan Stanley): To what extent have you considered expanding the role of licensing in the U.S. as the business is maturing, the returns have gone down?

Howard Schultz: When we look at licensing as a part of the portfolio, one thing that we can look back on is that perhaps the number of licenses and some of the license partners was too much, and we want to dial that back.

We have to make sure that the level of execution and the experience is compatible with what we believe to be the most important component. And when we have had issues and tension, more often than not it has been on those licensed stores. We want to be very prudent in not chasing an economic model that in any way would dilute the integrity of the experience.

Joseph Buckley (Bear Stearns): What is the CapEx on the transformation side?

Peter J. Bocian: The CapEx would have gone down based on lower company-operated store openings. Putting the clover machine in the stores, Mastrena has a capital component, the beverages leveraged some of the infrastructure but could have their own unique capital components as well. We plan to incorporate all of those within the $800 million each year looking forward.

Joseph Buckley (Bear Stearns): Did you have store closings in the U.K. or Canada and what is the game plan there going forward?

Peter J. Bocian: Without naming the market, we are looking at the stores, it was not Canada or the U.K., and rationalizing and not dissimilar to the 100 stores that we have talked about for the U.S. There is some element of that and it was fairly material when you look at the size of the impact for international in the quarter.

Howard Schultz: There is some sign that there is a softening in the U.K. business due to the economic issues facing that consumer. And as we speak to other retailers, both U.S. and abroad that are doing business there, we are not alone.

It is really yet to be seen whether or not that is going to be a mirror image of what we have experienced here or whether or not that is going to be a short-term situation.

Joseph Buckley (Bear Stearns): On the store rationalization, did you close stores in some international markets during the quarter?

Peter J. Bocian: We took charges against the P&L relative to eventually being in a position to do that.

Nicole Miller (Piper Jaffray): Comment on the executive succession planning at the end of this three-year turnaround phase?

Howard Schultz: I am here for the long-term to lead the company back to the position it’s been and deeply committed to that process. The management team is strong. There’s lots of people within our organization that are heavily tenured and the organization is organized the right way but we are all looking at the same thing and that is a deep, comprehensive, and individual commitment to the long-term.

In terms of milestones, prior to this past period, call it 18 months, we had the kind of relationship with our customers and our people and with our shareholders that basically exceeded expectations and we want to get back to the point where the level of confidence that you have in us is tied to where it once was. And we realize we have some work to do, but I don’t want to get into the specifics.

Nicole Miller (Piper Jaffray): How do commodities play a factor?

Peter J. Bocian: We have some element of coffee and diary increases baked in. We also on the other hand have supply chain efficiencies and other procurement savings baked in.