Several of you I know are interested in the performance of our retail fuel operations. In the first quarter, we sold more fuel gallons compared to the prior year on both an absolute and identical basis, which reflects our customers’ strong interest in this part of our retail offering. While gallons were up, cents per gallon fuel margins were down year-over-year. The cents per gallon fuel margin for our convenience stores and supermarket fuel centers was $0.082 in the first quarter compared to $0.092 in the same period last year. Our retail fuel operations did not materially impact total company earnings or year-over-year EPS growth.

Because of the margin volatility inherent in selling large volumes of fuel, we always encourage investors to take a longer view of this part of our business. On a rolling four-quarter basis, the cents per gallon fuel margin was $0.143 this year compared to $0.114 for the same period a year ago. Please keep in mind that the fuel margins we realized in 2008, particularly in the second and third quarters, were exceptionally strong. Our expectations for the current fiscal year are based on a more normalized fuel margin of $0.11 per gallon.

Now I’d like to spend a few minutes talking about our financial strategy. As you know, Kroger’s Customer 1st strategy is supported by the disciplined and balanced approach we take regarding our long-term financial strategy. We believe it is important to allocate cash flow to keep our store base current, reduce Kroger’s leverage, and provide a solid return for shareholders.

Capital investments, excluding acquisitions, totaled $654 million for the first quarter, compared to $637 million in the prior year. We did not invest in acquisitions in the first quarter of this year, compared to $80 million invested in the same period last year.

Capital projects during the quarter included 10 new, relocated, or expanded stores and 37 remodels. Our return on asset measures improved year-over-year. We continue to project fiscal 2009 capital spending of $1.9 billion to $2.1 billion, excluding acquisitions.

Net total debt was $7.4 billion, a decrease of $243 million from a year ago. On a rolling four-quarter basis, Kroger''s net total debt to EBITDA ratio was 1.78 compared with 1.95 during the same period last year. This compares favorably to the 1.77 ratio we reported in the second quarter of 2007, which was the lowest ratio since our leveraged recap in 1988.

We expect to continue to improve Kroger’s debt coverages on a year-over-year basis. Kroger’s bias toward debt reduction and away from share buybacks remain. We believe this is the right approach in the current environment to maintain an appropriate level of liquidity and allow financial flexibility to take advantage of any opportunities.

On the labor front, we have some progress to report. Earlier this year, we successfully completed contract negotiations in Roanoke, Virginia and Las Vegas. Last week, our Smith’s Associates in New Mexico ratified a new agreement. We are currently in some tough negotiations in Denver and have contract extensions in Arizona, Dayton, and Portland. Later this year, we will negotiate agreements for our store associates in Atlanta and Dallas. In addition to the normal pressures on our business, the twin challenges of rising healthcare costs and under-funded pension plans will have to play out at the bargaining table.

Before I turn it back over to Dave, I want to thank our associates for their efforts during the quarter. We delivered value to our customers and our shareholders in an environment that is incredibly trying. We are able to do this because of your commitment to our Customer 1st strategy. Listening to customers and responding to their needs is a critical part of our strategy to earn customers’ loyalty for life. It is also an important part of our objective to create a sustainable business model that rewards shareholders with long term value creation.

Now I will turn it back over to Dave for some closing remarks.

David B. Dillon

Thanks, Rodney. As you can see from the results we reported this morning and the information we shared with you today, Kroger established good momentum in the first quarter. We are focused on maintaining this momentum throughout the year by investing in what we offer customers and adapting along the way to meet their changing needs. We expect to emerge on the other side of this recession as an even stronger player.

Now, we would be happy to take a few moments to answer your questions.

Question-and-Answer Session

Operator

Thank you. Ladies and gentlemen, if you wish to ask a question, please press star one on your touchtone telephone. If your question is answered or you wish to withdraw your question, please press star two. Please press star one to begin. Your first question comes from the line of Deborah Weinswig representing Citi. Please proceed.

Susan Anderson – Citigroup

Hi. This is actually Susan Anderson for Deborah Weinswig. Good job on the quarter, you guys. First, can you talk a little bit about Kroger’s tuck-in strategy and the strategy for gaining market share? Do you expect any real estate opportunities to open up as a result of the weak economy and some consolidation we’re seeing? I think the last quarter, you mentioned that valuations are still too high. Have you seen those come down yet?

David B. Dillon

I didn’t hear the first part of your sentence but if I understood you right, you wanted to talk a little bit about how we see the market in terms of acquisitions.