David Magee (Suntrust Robinson Humphrey): With regard to Care Mark, do you sense a different agenda than had been the case a year ago or this issue you had with these four plans, they would have cropped up whether CVS owned it or not?

Jeffrey A. Rein: That is the best way to put it. We have been fighting with the PBMs for a long, long time. Most of these do not get to be public knowledge. You would never hear about it. These four plans unfortunately could not come to an agreement which was fair to both sides. We hope to have a resolution, but I would not say things are going to get worse at all.

John Heinbockel (Goldman Sachs): How much of your front-end do you think is economically sensitive, is discretionary and how price-elastic do you think that is such that if you increase promotions you get a response?

Jeffrey A. Rein: We are recession resistant, but we are not recession proof. It depends on your level of income. What might be someone’s discretionary spend is someone’s needed spend somewhere else. With promotional activity that ebbs and flows, most of our sales happen because people are in the store. That is why we want these prime locations on the best corners in America. Once they get them into the store, we are fine in terms of selling and what we need. We need to do some price points, instead of $3.19 is $2.99 or two for $5 or something of that nature, but our job in terms of the circulars is to get people in the door. We will do what we need to do depending on how competition responds and how the economy is and how things have been and are going.

John Heinbockel (Goldman Sachs): Does $3 gas help you in that traffic generation or no?

Jeffrey A. Rein: We are in a neighborhood; we are close to home so in that sense when people have a need, once again, the only time we ask for 1.6 items so they are top of mind. They are out of milk, they are out of bread. Who is not going to have that for their children in the morning? They think of Walgreens right off the bat. They think about Walgreens’ milk, they come to our store to buy it and then they pick up something else. I would say with gas prices increasing, people are coming to our stores.

Scott Mushkin (Banc of America Securities): What in basis points would SG&A have been OpEx some of these one-time items, legal and insurance and store closings?

William M. Rudolphsen: We are not going to release the exact amount but it is not a tremendously significant amount. I would again point to as we look at the increase in SG&A last year in the first quarter of 18% versus 9.5% this quarter, the most significant amount of that reduction in the increase was store salaries and we would point to that being about a third of the change. The other two-thirds were much one-time items, not as repeatable.

Scott Mushkin (Banc of America Securities): The gross margin is yet down 29 points. Was that all front-end related?

William M. Rudolphsen: On the margin side, our pharmacy margins were up, driven by generics but our front-end margins were down as we moved to less profitable categories being sold. The front-end was the major factor in the reduction of gross margins.

Jeffrey A. Rein: When you look at the sales going back to November where it started to tail-off, do not forget that cough cold is a big, big part of our business and before the FDA said anything about children’s cough medications, we were up about 15%. The day after that immediately started to drop. We ended up zero for the time period. We have never seen us up zero in cough cold. Seasonal-type products we saw starting to decline in November. Halloween was good but not as good as we would have liked and we have high expectations. Items like vaporizers in November just did not sell. People are not buying, they do not need them, and it is too warm. Products like mittens and hats and clothing are down 20%. Those products we are not selling. Once again in an environment it is slowing, people do look at what they are spending and what is discretionary. They may or may not be buying some of the promotional items that we offer. A lot of it is dependent on not only what do they think of the future in terms of their mortgage, their job and so on, but also the weather does impact us. Particularly on the cough, cold and the flu index side.

John Spina: In a difficult economic time, there are many moving parts to our sales; it is hard to pin it on one thing. We are going to make sure we take care of the customer; we have the right advertising, get them in the door, put that extra item in the basket and go forward.

Scott Mushkin (Banc of America Securities): Do you anticipate this gross margin pressure will continue through the year?

Jeffrey A. Rein: We do not comment on which way it is going one way or the other.

Lisa Gill (J.P. Morgan): You talked about expansion of your healthcare strategy. Can you talk about areas that you are looking at?

Jeffrey A. Rein: We do not comment on any acquisitions that may or may not be happening. We have never done that in the past and we are not going to comment right now. What we are trying to do with our strategy is make sure that we can take care of people’s pharmaceutical needs. In the past we have been able to serve customers, in many cases, from the time they were born until 65 to 70 and then we are out of the picture. The acquisitions that we have done, whether it is Option Care, Med Mark and Senior Meds allow us to take care of that patient from cradle to grave.

Lisa Gill (J.P. Morgan): How are you integrating specialty pharmacy into your front-end pharmacy?

Jeffrey A. Rein: Everything we are doing and seeing is that more and more of the pharmaceutical needs of people can be met by the infusion or specialty side. These customers who have to be infused or take specialty meds also take other medications. If we get the specialty person, you also get whatever else they are taking that they can take orally.

Lisa Gill (J.P. Morgan): How do you view the overall strategy for healthcare offering?

Gregory D. Wasson: A big area of focus for us is the specialty and fusion area. With it growing at 15%, 20%, and $60 billion today, that could double in the next five years, even triple. It is a huge area of focus for us. The science of pharmacy is moving more and more toward biologicals; we want to be there. We invested a year ago in Met Mart and bought a lot of expertise and manufacturer relations. With Option Care we bought what we feel is one of the best national platforms and home infusion. We are working at integrating the specialty side of that with the fusion side as we speak. That is going well. As far as the retail opportunities, we do think that there is going to be opportunity to leverage the retail pharmacy as well as to take care of healthcare clinics.

Lisa Gill (J.P. Morgan): On the retail pharmacy side, are you using your pharmacist in a consultative way to talk about specialty pharmacy so if someone walks in to pick up a specialty prescription they do not have a specialty pharmacy company today, are you using that opportunity to try to cross-sell some of the new services that Walgreens has?