Good morning. My name is Carmen and I will be your conference operator today. At this time I would like to welcome everyone to the fourth quarter and year end earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks there will be a question-and-answer session. (Operator Instructions) I would now like to turn the call over to Miss Lynn Liddle, Executive Vice President of Communications and Investor Relations. Please go ahead, ma’am.

Thank you everybody for joining us today. We’ll spend just about an hour on the call and we’ll open up with some general comments about the quarter and the year and then we will open it up for Q&A. A couple of housekeeping reminders, we generally don’t make a lot of forward-looking statements but to the extent that we do, I will refer you to the Safe Harbor statement that’s in our press release and then I would also ask the members of the media to be in a listen-only mode. With that I would first like to introduce our CEO, David Brandon who will have a few comments followed by Bill Kapp, our Interim CFO.

Good morning everyone and thank you for participating in our fourth quarter and year end 2007 earnings call. I’m not going to take much time this morning to review the macro economic environment in our domestic market. I don’t think I could add anything new or different to what is already being widely reported. The US economy looks weak and consumers are clearly reining in their spending and as you’ve heard from me and others food costs, particularly the commodities that we rely on in the pizza business continue to be extraordinarily high. All of this is real and we continue to navigate our way through it along with many other retailers and restaurant companies. So instead of focusing on those things we can’t control and/or certainly making excuses based on these external factors, I’m going to briefly discuss those things we’re doing to positively impact the things we can control and steps that can make a significant difference in our overall performance. Our focus is primarily on improving our domestic franchisee sales and returning them to our historic run rate of growing 1 to 3% annually. Two years of negative domestic franchisee comps isn’t acceptable to and it isn’t acceptable to most of the franchisees in our system and the fact that our Team USA stores have done a significantly better job is of little consolation. Franchisee performance drives the performance of our entire domestic system and the interests of our shareholders, our franchisees and our team members are closely aligned. Nobody wins until we get our domestic franchisee sales moving in a positive, consistent direction. A couple of points to build on that, first of all after adjusting for our $13.50 dividend, the special dividend that we paid to our shareholders middle of 2007 our share price at…

Good morning everyone. As you’ll note from our earnings release we had several items that affected the comparability of our results to those of the fourth quarter last year. I’ll cover those shortly but first I’ll start with the top line. We ask you to keep in mind that revenues alone do not necessarily give you the complete picture and instead consider global retail sales as a clearer gauge of top line performance. Our global retail sales increased 7.4% during the quarter driven primarily by same store sales growth in our international business and an increase in worldwide store counts of 258 units over year end 2006. Moving to same store sales domestically our sales decreased 3.5% for the quarter. Company-owned stores decreased 1.1% versus a negative 1% in Q4 2006 while franchise same stores sales decreased 3.9% versus a negative 4.9% in Q4 2006. Full year comps however were slightly better with company-owned stores up 1% and franchise down 2.1. Internationally same store sales increased 9.5% over last year’s positive 3.9 in Q4. Full year comps were up a very strong 6.7%. This also marked the 56th consecutive quarter of international same store sales growth. Moving on to the income statement our total revenues for the quarter were $445 million up $10.7 million or 2.5% from last year. This was drive by higher revenues from our international stores. Also we had higher domestic supply chain revenues. We formerly called that distribution caused by elevated food prices mostly cheese. Our consolidated operation margin as a percent of revenue decreased 1.5% in the quarter versus prior year 25.1 versus 26.6 a year ago. I’ll now cover each of the three operating divisions. First our international franchise business which has no cost of sales grew as a percent of revenue thus improving…

(Operator Instructions) Your first question comes from the line of Jeffrey Bernstein with Lehman Brothers.

Couple of questions, first, David, you mentioned some disengaged franchisees. Just wondering if you can give a little bit more color in terms of whether this is really something very new that you’re seeing or perhaps something you’ve seen for a while, perhaps how you assess what makes somebody a disengaged franchisee in terms of key metrics, maybe how many there are. Just trying to get some more color in terms of what you view as disengaged.

We don’t have a problem in the world right now but clipping our negative 1.7 domestic same store sales number to a positive one or two which is kind of where we’ve been able to operate with our Team USA business. That is the essence of our issue and as we have pushed hard to get our franchise community to get more aggressive in the environment that we’re in and understand that the game has changed and that we need to be sharper in the way we approach pricing and our local marketing we have a number of our franchisees who are proving to us that they can fall into line with a lot of the same things that we’ve done effectively in our corporate stores and achieve terrific results. But that bottom 10% frankly is dragging us down and in many instances as we’ve pushed harder and delved deeper into what’s going on with their businesses, we feel some of them are simply just not engaged at the level they need to be engaged to operate in the environment that we’re in. So our job as a franchisor for the good of the whole system is to either fix those problems or change the ownership of those stores in such a way that we can improve our overall results. So the whole concept of re-franchising which is not something that we’ve really focused on I think is as a result of a certain level of impatience and a certain level of frustration over the fact that we just need to operate better at the local level with some of our franchisees. I definitely want to make sure we don’t paint the world with a big brush here because we stand on the strength of our franchisees and we have some of the best in the world and we’re very proud of them and they’re leading in a lot of different ways. Having said all of that though we think it’s time for us to be more aggressive in terms of transforming the composition of our franchise system to a higher performing group.

Are you able to broad brush kind of quantify give or take that bottom 10% what they’re delivering in terms of whether it’s sales profitability versus the clear majority of your system?

I would just tell you that we’re focused on the bottom 10% and the bottom 10%, when you look at their store level economics, their sales short fall over the last two years and our ability to get them to step up and arrest those trends and fix them, that’s the area that we’re focused on and we think there’s a significant amount of value to either getting those folks to step up or, if we can’t, getting those stores under the ownership of operators who in fact will quickly lift them to a better level.

The other question, obviously international businesses looks like it’s doing extremely well, just wondering, you said it’s growing gang busters and it’s making up the majority of the unit growth, what’s the likelihood or the possibility that you can accelerate the international unit growth or can you talk about the barriers to faster growth in that market since it is doing so well and there seems to be a lot of room for it?

The business feeds on itself, so as you see these countries that are putting these significant sales growth levels together and some of them are getting to the scope and scale where they can go on television and that even creates greater brand awareness which allows for faster growth, we believe there is an acceleration growth opportunity in many of our international markets. We’re also looking at the possibility of opening up some new markets. We’re in nearly 60 countries around the world and obviously there is places we’re not currently competing where we think we have viable opportunities today. So, yeah we think there’s acceleration opportunities going forward but managing the rate and pace of growth in any country is one of the most important things you do and we’re not going to get in the business to see how fast we can open stores, we’re going to be in the business of seeing how fast we can open stores that operate at a high level. And for that reason we’re going to have controlled growth as opposed to just trying to go out there and see how many stores we can throw up in any given year. It’s not the right way to build the business to last.

And then lastly, you mentioned potential for more aggressive share repo, just wondering perhaps what metric you use to determine what the appropriate amount is, obviously we saw a big ramp up in the fourth quarter, just trying to come up with an estimate going forward in terms of how you look at it.

I don’t think we’re in a position right now to offer you a whole bunch of details as it relates to how we think about that other than my general comment that we think at these share price levels our stock is a great buy and we’ll continue to deploy capital against those opportunities.

Your next question comes from the line of John Ivankoe with JP Morgan. Diana Campbell – JP Morgan: This is Diana Campbell here on behalf of John. I have some questions for you, the first one was you said that you had some softer weeks at the end of the fourth quarter. Do you have any update on the momentum continuing into the first quarter?

We don’t comment on existing market conditions or we don’t give statements or are not in a position to give reports on what’s happened so far this quarter. I would just emphasize the point that when you look at the overall results of our fourth quarter, a significant part of that was skewed by the last few weeks which we experienced a significant softness in terms of traffic and basic consumer spending. Diana Campbell – JP Morgan: My second question, could you update us on what sort of effect your cheese hedges could have on 08 results?

We don’t have any cheese hedges as we’ve reported previous. We have a purchase agreement with our cheese supplier that we don’t go into great specifics that certainly collars some of the volatility in cheese and so our operators are blessed in this environment to not be paying at the top of the market or at the current market price as a result of that collar, but we do not have hedges in place that afford us any significant economic benefit in the current environment. Diana Campbell – JP Morgan: And then, you guys were mentioning your G&A spend and how you made an investment in your domestic system, was that like a one time thing that we should expense for the fourth quarter or something that should be ongoing into 08 and could you give us any color on what that investment was?

I think we spoke about this last year, but as part of this whole recruiting new franchisees, refreshing the system and putting a focused development activity in place both franchise recruitment development in addition to store development, we made an investment that really became more apparent and showed up in a bigger way in our financials during the fourth quarter. That investment will continue, however as we move through 2008 we’re making other compensating management decisions as it relates to our G&A and again, going forward I’m not in a position to comment on that but that’s the specific investment that Bill was alluding to when he talked about G&A. Diana Campbell – JP Morgan: You can’t give us an update as to whether we should expect G&A to go up or down like on a margin basis?

The only thing I will tell you is that we’re going to be very, very prudent in the environment that we’re operating in with our G&A spending and we will be taking some actions to make sure that our spending flexes with the revenue realities that we’re dealing with.

Your next question comes from the line of Glen Petraglia with City Investment Research. Glen Petraglia – City Investment Research: Dave, I was hoping maybe you could comment on the bottom 10%, presumably those are the franchisees that are struggling most from a financial perspective, do you think that they’re at a significant risk of closing, hence you’re being more aggressive to try to make sure that you don’t necessarily see net unit closures, but you’re trying to manage the process appropriately?

I think that’s exactly right. We’re willing in this environment, if there’s a terrific operator out there who’s thinking about building a new store but he’s got an operator next door who’s failing and isn’t being aggressive on their pricing tactics and isn’t driving traffic and is financially in trouble, we’d rather direct that franchisee to buy those two failing stores next door and turn around and fix them even if it’s the expense of that new store that they were contemplating because under the circumstances that we’re operating in right now, we think that that re-franchising opportunity will ultimately yield greater benefit. Glen Petraglia – City Investment Research: Is there a reluctance within the system of franchisees who are doing better to make the investment in growth at this point because of the commodity environment, because of the consumer environment and real estate costs, etcetera?

You’ll note we opened up a number of new stores in the US last year, so we still have people who are growing and building stores and there’s plans in place and there’s stores opening as we speak, but the reality is as long as the commodity pressures are extraordinarily high and as long as sales are soft and with many of our good operators and one of their stores coming on the market in adjacent areas that are very opportunistic in terms of their price, we will likely see a diminished performance in terms of our new store activity until that correction kind of works its way through the system. Glen Petraglia – City Investment Research: And when you say re-franchising, that’s not necessarily reducing the percentage of the system that’s run by company-owned but it’s more keeping it roughly the same general levels, just to clarify?

Actually our objective at the end of this year would be to have a lower number of franchisees and a higher ratio of stores to franchisees on the domestic system. We are trying to focus more on our better operators and weed out, if you will, some of our weaker operators. And I would also tell you that we will likely be more aggressive as it relates to taking a look at our corporate store portfolio and if there are franchisees that we feel can operate at a higher level, we’ll be sellers and we’ll allow them to grow in that way as well. Glen Petraglia – City Investment Research: In terms of the weakness in the same store sales in the US, is there any way to break it out? Maybe if you could just speak on general competitive dynamics. Do you think that competition has stepped up, do you feel like some of the initiatives over at your largest competitor are having a negative impact on you? Maybe you can talk about that.

I think what’s happened to us as a category – and well know that people in the cutback mode they’re in, they’re doing less at the dinner day part – everybody in the dinner day part is being hit with this and certainly we’re a dinner focused product and so we’re caught up in that probably to a greater degree than we have in the past. In the past we actually would have, in these market conditions, seen people who were reluctant to spend $50, $60, $70 at a sit down, fast casual restaurant or whatever. We see them kind of retreat to us as a value choice. And I’m sure some of that has happened and some of that will continue to happen but what’s unusual about this situation is that our category at the same time the consumer is crying for value, we’ve been out there raising prices substantially. If you look at the average ticket in this category, in the independent research that we purchased, shows that the average ticket in this category has gone up several dollars over the last few years and against a relatively small base, it’s created a real value problem where consumers typically saw this as a category they could retreat to and get great value on price, the combination of the industry in the last few years getting very focused on delivery charges which is just another tax on the ticket, at the same time being hit with these extraordinary foot cost inflation has really put the category and our operators in a situation where price comes first and we keep pushing up the average ticket of the bundle of food that we’re selling. I believe that the people who are doing the best job of navigating in this period come up with value platforms that still provide appeal to those consumers who are looking for value in this environment. And as I look back, as we’ve been dancing on the head of the pin trying to get our prices aligned with costs, at the same time we’re trying to get our traffic moving, I believe this is an area where we haven’t been as aggressive as we need to be. The people who have been more aggressive with low price point value menu approaches I think have performed better so I don’t telegraph our plans and I don’t want to tip off our competition other than to say we believe in this environment for us to get our traffic moving we’re going to have a stronger value message to our customer and we’re working hard on that. Glen Petraglia – City Investment Research: And then just lastly, David Mounts has been overrunning the distribution or supply chain business now for the last, I don’t know, four or five months. Anything that’s changed, any areas of potential efficiency pick up, etcetera that maybe you’d be willing to share?

I don’t want to be real specific other than I can tell you that having a new set of eyes on that business has been productive. We’ve made organizational changes that we’ve already seen some benefit from. Clearly whether it was David or anybody else, we’re in a very different marketplace right now in terms of how we procure the commodities that we need to buy and we’re putting aggressive collars and protections in place as best we can to kind of take some of this volatility out. Wheat is a classic example, that’s a commodity that least year we were fundamentally naked in the wind and eating all those increases that were coming by almost the day and the hour, whereas now we’ve got forward contracts in place with our supplier that protect us and all of these increases that have occurred even thus far in 2008, our operators are not going to have to incur because we did a longer, better job of locking in our wheat prices through our supplier and those are all initiatives that are a sign of the times. It’s also a sign of the fact that David’s over there challenging the status quo and looking at ways that we can be more efficient and I think they’re all adding value. So I’m very comfortable with what’s going on there and I think we’ve already experienced some savings that will be a result of our activity and our focus there and we’ll see as the year unfolds how big that number can be.

Your next question comes from the line of Joe Buckley with Bear Stearns. Joseph Buckley – Bear Stearns: I wanted to go back to the re-franchising for a moment. Originally what I thought what you were talking about was sort of brokering the under-performing franchise stores into better hands, better franchisees, it sounds though like you’re looking to buy the stores and fold them into the company next. Is that the game plan?

No. If you heard me say that I was clumsy in my communication. That is not what we’re saying. What we are saying is that we are going to doing re-franchising, which means we’ll either be bringing in new franchisees, new blood into the system or we’ll be selecting carefully some of our existing high performing franchisees and we will try to move under-performing stores into their hands and control. What I also said is that we may see situations where we’ll take those same high performing franchisees and the will be buyers and the corporate stores will be sellers to facilitate opportunities for those excellent franchisees to gain bigger business opportunities as a result of taking over some corporate stores. We do not intend to invest significant amounts of capital in growing our corporate store unit. Joseph Buckley – Bear Stearns: Okay, I understand then. Do you have the means to force the under-performing franchisees to sell? What has to take place to start making transactions occur?

Our franchise agreement enforces the ability to hold our franchisees accountable to certain standards as it relates to their operational execution, the way that they protect and portray the image of the brand. There are certain financial metrics that need to be upheld. We can’t unilaterally go just throw somebody out of the system nor do we want to do that. But what we can have is serious conversations with people in terms of expectations and their responsibilities and obligations to the system and to the extent those operators are not responsive, we do have the ability and we certainly have ways of trying to facilitate changes in ownership. We have not been particularly aggressive in that mode over the last several years because obviously our performance has been such that frankly we haven’t had to. I think where we are today with the nature of the business and what it takes to be successful, this is an area that we just need to put greater focus. Joseph Buckley – Bear Stearns: Then question on the traffic for the category, where do think it’s going? What are people doing in lieu of ordering home delivery pizza?

I think the Mia experiment that Pizza Hut came out with was very creative, they architected a cheap down product and put a very low price point on it and fundamentally I view that as their value entry and I think that’s the way they’re positioning that is that they, if you want to think about a value menu in the pizza business much like we’ve learned to understand value menus in the burger business I think they’re positioning themselves in that way. The Little Caesars of the world and the take and bake players, the people out there who can afford a very, very low price point for their dinner options I think are doing the best in this environment because of the nature of the consumers’ interests and the consumers’ attitude. We can, as I said in my opening remarks, we can continue to go out there and kind of beat the fact that we deserve to have higher prices because food inflation is so significant and so impactful, the reality is I think the people who win are going to be the ones who capture the imagination of customers in this environment as being a very, very aggressive value option for them. I would also tell you that as we look at the world out there, a lot of the dollars that used to spent at dinner are still being spent, in some cases they’re being spent at different day parts. So we think the lunch day part and the snack day part, which are day parts that we should be well positioned to pursue have opportunities associated with them because, again if we can come up with the right platform of products and price points, we can compete for some of those lower ticket spenders in those day parts and extend our business. As we look in benchmarking against people who have grown in this difficult environment, those are some of the tactics that they’ve employed and we’re going to steal a page from their playbook. Joseph Buckley – Bear Stearns: Then a question on the commodities, Bill, I think you mentioned the cheese costs of $2.01 per pound, under the new contract were you paying significantly less than that in the fourth quarter? If you can, share what you did pay?

I don’t think the word significant is the word to use. We were paying less as a result of this collar so the way our arrangement works with our provider is [inaudible 00:04:43] we’re going to tell you less than the top of the market, when the market is high and we’ll pay a little bit more than the market, when the market is low. But that is not a number that’s measured in quarters, it’s a number that’s measured in nickels and dimes. And I think I need to leave it at that. Joseph Buckley – Bear Stearns: And then locking in the flour costs for 08, just talk about the implications for that, I guess you’ve got to price quarterly. Does that become less relevant because you’ve locked in the flour for 08?

What we did last fall, late last year, because we were just getting killed by this commodity, we went to our suppliers and worked out an arrangement where we took go forward contracts at that particular time which really took care of our purchasing needs as forecasted for the entire calendar year 2008. And at the time the numbers we were looking at for flour seemed astronomical but based on the irrational behavior and the volatility of the commodity we just decided to lock it in and put ourselves in a position where we had protection. In this particular case we were brilliant, we didn’t know how brilliant at the time because from the time we locked those in flour continued to go up through year end 2007 and it has gone up dramatically higher thus far in 2008. So we’re pleased that we’ve got that protection and it will afford our operators to be dealing at a flour price that’s measurably higher than it was a year ago at this time and certainly higher than historical norms but substantially lower than what current market pricing would create. Joseph Buckley – Bear Stearns: For the full year 08 do you think flour costs will be up?

Flour costs will be up 08 versus 07 for sure. However, keep in mind that we had a policy last year of not imposing those flour increases on the system because we hadn’t historically done that. We’ve clearly changed the pricing of flour through our distribution business and our dough ball pricing starting at the beginning of the year. So even though at the store level they’ll be paying higher, corporately we’re in a much stronger position in 2008 as a result of that price increase that we put in place. Joseph Buckley – Bear Stearns: And then last question, just on the cap ex, obviously the plane replacement I guess is what drove the cap ex so high for 07, is there anything looking ahead that is going to goose up cap ex over the next couple years of will we see it fall back to that $20 to $30 million?

As Bill said $20 to $30 million is the regular run rate and the situation with the sale of the plane which shows up in one category and the replacement which shows up in the cap ex is a one timer and we’re well positioned and we don’t know of any one timers that are looming out there that are certainly part of any of our plan. That $20 to $30 million range should be a very, very good one to use.

Your next question comes from the line of Colin Guheen with Cowen and Company. Colin Guheen – Cowen and Company: I guess one more question on the wheat contract, how much effective pricing for 2008 would the franchisees need to take to offset the inflation in wheat from the distribution channel?

We don’t share our cost per dough ball information and frankly a lot of that has to do with a lot of moving parts including the fact that as you know our distribution business is on a profit sharing basis so the larger operator you are and the higher percent you control of whatever distribution center you purchase from and the profitability of that distribution center creates rebates. To try and answer your question directly would require so many moving parts I’d probably confuse you more than I would help you. Suffice to say that the biggest cost factor in a pizza continues to be cheese. It’s 35 to 40% of the cost of a pizza. Flour is an important ingredient and we saw last year how important it had become but it’s still a much smaller percentage of the cost of that product. If you gave me a choice right now with the flour market weakening or the cheese market weakening, I could tell you I would choose cheese in a minute. Colin Guheen – Cowen and Company: And then on the technology front, how many number of franchise stores are basically compliant with the expanded ordering capabilities and the POS system and does that roll out kind of get wrapped up in the next three to six months, does it look on track to you?

Yes. The mandatory requirement is to have that installed by the middle of this year. We typically, whenever we have one of these mandatory dates, we have stragglers based on stores under construction and stores being relocated and some cases stores being bought and sold and so we will give some relief. But we’re to the point now where I think we have somewhere in the neighborhood of 3,500 stores that are fully installed and operational with Pulse and we’re adding more virtually every day. Colin Guheen – Cowen and Company: On the company, just one more question on the company franchise mix, over the next three to five years I think if I take your comments it could start dipping below that 10% company-owned mix that you guys have maintained for a long time now I guess. Is that correct?

Yeah, we don’t tip our hand in terms of where we’re buyers and where we’re sellers and when we’re buyers and when we’re sellers because obviously we’re out there making a market. But I would tell you that my general sense is that we will be in a situation where there are certain markets where we may invite some of our better operating franchisees to have bigger businesses and we would be sellers. If we buy corporate stores they will be very opportunistic and they will be adjacent to existing markets where we have infrastructure and I would not anticipate that our percent control of the system by virtue of corporate store ownership would go up. If anything I would predict it would go down. Colin Guheen – Cowen and Company: And then just one model question, the gain, did that show up from a P&L perspective in the G&A line? Is that correct?

Yes.

Your next question comes from the line of Mitch [Pfeiser] with Halsey Advisory. Mitch [Pfeiser] - Halsey Advisory: Couple questions, first on a US distribution, I did check in your 10-K I believe for the full year US distribution income from operations was down 14%, in the fourth quarter down 31%. Just trying to get a sense as we look out to 08 given these new contracts you have in place and just say a positive 1% comp, should that US distribution income from ops be flat or so on a year-over-year basis?

I think that the first is the fourth quarter and the margins were definitely impacted by not passing along the wheat and secondly, but more importantly, on the big picture number is the getting traffic turned around and getting traffic in our domestic operations was a bigger impact than the wheat number. The wheat affected the margin number but the overall dollars were just driven in the soft traffic for the current year.

And I mentioned this in my remarks, but I’ll emphasize it because it’s very important, one of the many reasons why getting traffic back is important is if we continue to see ticket go up and traffic go down, which has been kind of the problem that we’ve been confronting for the last 18 months, from a distribution company perspective we lose a lot of efficiency. We’re selling a lot less dough balls, we’re leveraging that infrastructure to a much lesser degree and so one of the ways our business model is going to operate the best is to get that plus 1, plus 2% growth and have some of that come from traffic because that accelerates the efficiencies of our dough making activities as well as the efficiencies of the supply chain. So that’s far more a bigger issue for us in terms of the benefit that comes from that than any of the commodity issues. Mitch [Pfeiser] - Halsey Advisory: And moving along, was there any foreign exchange benefit to earnings per share this quarter?

Our FX rates for the quarter, our sales benefited by about $50 million in FX, the sales number. Mitch [Pfeiser] - Halsey Advisory: And we could translate that into EPS through the international margins or if you can give us some guidance on that.

Our international royalty rates are less than our domestic royalty rates. They’re different by country but they average somewhere in the 3% range.

If you take that $50 million and you use, call it a 3.5% average royalty rate, and there’ll be some noise in that calculation because it depends on where the FX came from, but that would get you close. Mitch [Pfeiser] - Halsey Advisory: And just lastly, and David, you’ve talked about this in previous quarters, but it seems like you want to do less unnecessary discounting yet you do have to provide a value message. So I guess as we look to 08, do you expect there to be net pricing increases through that mix? I guess the question is how do you balance it?

Believe me, this is one of the says easy, does hard, but it is absolutely the question. You have asked the question and it’s challenging but it’s the work that needs to be done. Again if you look at Team USA, our corporate owned unit, for calendar year 2007 they increased prices higher than our franchise system. So their average ticket went up on a higher percentage basis than the franchisees, yet their traffic loss was lower. So what that says is that they did a much better job, which is a daily activity, of maximizing price where you can maximize price, at the same time driving traffic when you need to with the right kind of value-targeted promotions. Much of that is done at the local level and so what we need is to recreate that with a broader array of our franchisees where they’re continuing to manage price carefully because, hell you have to. Look at the commodity cost that everybody’s paying. You can’t be insensitive to your pricing, but you also have to balance that with very careful and, in some cases, aggressive promotional tactics that will continue to stimulate your traffic. Team USA did it better in 2007 than the rest of the system. If we can get the rest of the system to operate where Team USA is, I’d be a much happier guy right now.

Your next question comes from the line of Mark [Hussin] with Cedar Rock Capital. Mark [Hussin] - Cedar Rock Capital: I just wanted to drill down a little bit more on the variation that you’re seeing around the country. Where you’re seeing particular weakness, is there any kind of geographic concentration of that, is it in poorer neighborhoods, is it in high volume stores, low volume stores? Is there any kind of consistency in this and does that tell you what’s going to happen next?

We’re teething through a lot of that data. I can tell you geographically in terms of any kind of macro regional factors, there’s no correlation. We’ve run it against real estate markets, we’ve run against everything, energy, gallon of gas. We’ve run it against all the different factors out there that could be affecting the consumer and we don’t the correlation. We do believe, going back to this value positioning that some of the customers that we’re losing as a result of our traffic problems over the last year and a half could very well be in some of the areas where we have consumers that are very, very value oriented and very, very price sensitive. So in some cases we may have priced some of those consumers out of the market and I just as soon not tell you where they are and who they are because I think that’s giving my competitors more than you want to me to give them. Mark [Hussin] - Cedar Rock Capital: Is it using less sort of attachment rate? You’ve seen that in other kinds of retailers, where people will by a TV but they won’t buy anything else to go with it. They’re not buying the ticket kickers or the cheesy bread or something.

We’re seeing price sensitivity out there on behalf of certain customers and we need to be responsive to that, although frankly our problem isn’t as much upselling and getting more on the ticket, our problem is traffic. So in some cases the problem we have is those consumers who were purchasing from us have kind of gone into stall mode and we’ve to figure out a way to attract them back. Mark [Hussin] - Cedar Rock Capital: So they’ve just literally stopped ordering?

Yeah, we’ve just had too many customers that liked the value equation before and they don’t like it as well now. And we think this is systemic. If this was us just going off and doing something crazy I think I’d really be concerned, but the reality is we believe that based on all the crust data that we’ve seen and what we pick up from our competitors’ comments we think that this is a systemic issue that in the category we’ve lost some of our value positioning. We’ve already talked about what Pizza Hut is doing and their attempt to address it, I don’t know what Papa John’s is doing. I know what Domino’s is going to do because we really think it’s important to go after that. Mark [Hussin] - Cedar Rock Capital: You’ve seen this film before presumably at some stages in your history and what did you do then and did it work?

You know what, this is a new film. The one thing that’s very different and even in my nine years, I’ve seen consumer confidence really low and we’ve seen moments where cheese prices were really high. We’ve been through a whole bunch of different hurdles that were thrown in front of us over the last nine years. We’re talking about 911 and Katrina and all kinds of things and energy price volatility and the like. The thing that’s particularly strange about this situation is normally when the consumer goes into retreat mode, our category is there with open arms saying here’s the best value in town. This is the first time we’ve been forced into a situation because of what’s going on with cheese and wheat and corrugated and meats and energy and minimum wage and gas prices at the pump and you name it, this is the first time we’ve been in a situation where we’re trying to increase our prices at the same time everybody else is out there causing the consumer to choke. So this is a different set of circumstances for us as a category and for us as a company and, to that extent, we’re kind of picking our way through it. We’re learning as we go and I think we’re locking in more and more on what we need to do and how we need to get there, but these are uncharted waters to a large degree. Mark [Hussin] - Cedar Rock Capital: So this is a working class recession is what you’re saying?

Based on our experience, absolutely. Absolutely. This is a consumer, forget about what they’re doing with interest rates on capital goods. Right now we have a consumer who I think at holiday time when they started buying holiday presents, they stopped buying a lot of other things. I think they ran up their credit cards and I think we have a consumer right now who is very, very uncertain in terms of their spending patterns and I think you see that across a whole bunch of retailers and certainly we’re caught up in that to a certain degree.

Your next question comes from the line of Dan [Pearloff] with [Iridian]. Dan [Pearloff] - [Iridian]: Two questions, number one could you just talk about, since there’s still some moving pieces in interest expense, reasonable proxy for 08 somewhere in the $105 million range if you simply take the $1.7 billion times 6, or 6.1%. Is that a reasonable proxy for interest expense?

Yeah.

Yes. Dan [Pearloff] - [Iridian]: And secondly, just so I understand the $80+ million of cash that’s now classified as restricted cash, I think you touched it on but I’m still a little bit confused what your flexibility is to use that cash in 08 for share repurchase or whether that’s truly restricted.

That $80 million is truly restricted. In there, there is $26 million that is a restricted three month interest payment that we had negotiated an opportunity to release two-thirds of that if we hit certain debt service coverage ratios. We didn’t hit that level in Q4. If we are able to hit certain covenant levels for two quarters in a row, we would have the ability to release two-thirds of that $26 million but that didn’t happen in Q4 and so it’s got to happen two quarters in a row before it would release. So the soonest it would release would be into the fall. Dan [Pearloff] - [Iridian]: And just so I understand, does your comment that, just to paraphrase that you anticipate a healthy level of share repurchase in 08, is that in way dependent on the release of any of that restricted cash?

No.

That’s all the time we have for today’s Q&A session. Do you have any closing remarks?

I just want to say in closing that as always, I take personal accountability for this company’s performance as does every membership of my leadership team and we’re working long and hard to maximize the results we can achieve on behalf of all of our shareholders and that will continue and I’ll look forward to reviewing the first quarter numbers with you a little later in the year. Thank you all very much.

This concludes today’s conference. You may now disconnect.