Welcome to today’s SYSCO Corporation’s first quarter fiscal year 2009 earnings conference call. As a reminder, today’s call is being recorded. At this time for opening remarks and introductions I’d like to turn the call over to Mr. Neal Russell, Vice President Investor Relations. Please go ahead Sir.

Good morning everyone. Thank you for joining us for SYSCO’s first quarter 2009 conference call. On today’s call you will hear from Richard Schnieders, our Chairman and Chief Executive Officer; Ken Spitler, our President and Chief Operating Officer and Bill DeLaney, our Executive Vice President and Chief Financial Officer. Before we begin please note that statements made in the course of this presentation that state the company’s or management’s intentions, beliefs, expectations or predictions of the future are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results could differ in a material manner. Additional information concerning factors that could cause actual results to differ in a material manner from those in the forward-looking statements is contained in the company’s SEC filings including, but not limited to, risk factors contained in the company’s Annual Report on Form 10K for the year ended June 28, 2008 and in the company’s press release issued earlier this morning. Please understand that all comparisons given during the call refer to changes between the first quarter of fiscal 2009 and the first quarter of fiscal 2008 unless otherwise noted. Also all comments about earnings per share refer to diluted earnings per share unless otherwise noted. With that out of the way, I’ll turn it over to our Chairman and Chief Executive Officer, Richard Schnieders.

Here are the headlines. This morning’s fiscal reported record first quarter operating earnings of $5.5 billion, an increase of over 11% compared to last year. Sales grew more than $400 million to $9.9 billion. We also reported record first quarter diluted earnings per share of $0.46, up 7% year-over-year. I am pleased with these results as SYSCO continues to grow share and increased operating leverage despite a difficult operating environment. Ken and Bill will provide additional details of our first quarter results and I will be back to facilitate our Q&A session. Ken?

Thanks Rick. Good morning to all of you. Our operating companies produced exceptional operating leverage in a very soft sales environment. Obviously these are difficult economic times not just for us but for our customers too. Therefore, improving productivity and controlling expenses are very important. During the first quarter SYSCO’s U.S. broad line companies performed particularly well as evidenced by a 6% year-over-year improvement in cases per man-hour, a 3% increase in cases per trip and an 8% reduction in diesel gallon usage. Performing quality business reviews with our best customers remains a top priority as it is increasingly important for us to strengthen those relationships by supporting our customer’s efforts to provide value added offerings to their patrons. We continue to improve the quality of these business reviews with the business review process through better preparation, increased focus on the goals of each review and timely and thorough follow-up subsequent to each review. Also we are encouraged by the progress we see in our supply chain initiative. Productivity has steadily improved in our Front Royal, Virginia RDC and we remain on target for the ramp up timeline for our Alachua, Florida RDC. Our national transportation management system continues to enhance our overall performance as well. Simply stated, we continue to find ways to be more efficient in the near-term which we believe will continue to pay dividends in the long-term. Inflation, as measured by our product cost increases, for the quarter was an extraordinarily high 8.3%. While we have managed the inflationary environment successfully for several quarters, we are keenly sensitive to the difficulties that this unprecedented period of high food prices present to our customers. We hope to see inflation moderate over the long-term and input costs have recently declined. An example of the outstanding execution required to produce these kinds of results is evident in how well our company responded to four named hurricanes across our system during the quarter including hurricane Ike which impacted us right here in Houston. Within hours of the eye of the storm passing over the city our Houston operating company, assisted by associates from several other surrounding companies, was delivering to our customers. We are proud to have worked alongside organizations like the Red Cross, FEMA, numerous hospitals, nursing homes, care shelters to assist those in need. SYSCO was not only early to respond to the relief efforts but importantly was first to be back out on the road working with our customers within a day of the storm. I expect SYSCO to emerge from the business cycle stronger and much more efficient. With that I’ll turn it over to Bill for a discussion of our financial results for the quarter.

Good morning everyone. I am assuringly pleased with the quality of the earnings we reported earlier this morning. As Rick and Ken have previously noted the ongoing economic slow down and turbulent markets in general certainly contributed to our modest sales growth. With that said, our ability to produce 7% diluted earnings per share growth despite an unusually high tax rate and a $30 million unfavorable COLI comparison highlights the quality of the first quarter earnings. One area that warrants further discussion is the first quarter tax rate which was impacted by two main components. First, the loss of $22.9 million recorded to adjust the carrying value of corporate-owned life insurance to the cash render value is nondeductible for income tax purposes. As a reminder, the COLI value will continue to fluctuate each quarter as the underlying securities are tied to market performance. Second, the company recorded a tax adjustment for a previously unidentified tax contingency arising from a recent tax audit. I should not that this adjustment is not related to the ongoing appeals process with the IRS regarding our cooperative structure. Notwithstanding the current financial markets, our balance sheet is a tremendous competitive advantage for SYSCO. We continue to manage our assets and capital effectively as evidenced by our trailing 12-month 21% return on total capital and 33% return on equity. Our A1+ P1 commercial paper rating has proved beneficial to us in the past, present and we expect it to continue to benefit us in the future. Although our borrowing requirements during the first quarter were modest, we believe we will continue to access the capital markets effectively. In summary, SYSCO can and will continue to reinvest in our business. Our investment priorities in order are capital expenditures, pursuit of acquisitions, growing a dividend commensurate with earnings and repurchasing our common shares. Before we go to the Q&A let me turn it back over to Rick.

As you have heard, we are pleased with our first quarter results. It is a tough environment but the quality of earnings is impressive. Our operating companies have done an outstanding job. Our trucks have more cases on them. We are driving fewer miles per route and our customer service continues to lead the industry. As we speak, 8,000 marketing associates are taking orders up to 5 p.m. today. Those orders will ship tomorrow to more than 400,000 customers with premier service levels. I want to say again, however, this is a very challenging environment. In the second quarter we continue to see a softening of sales growth. We will continue to focus on supporting our customers while improving productivity and managing expenses. SYSCO is well positioned to weather the storm and well positioned for the long-term. Operator, we will now take questions.

(Operator Instructions) The first question comes from Greg Badishkanian – Citigroup. Greg Badishkanian – Citigroup: First, food inflation was around 8.3% in the quarter so that is higher than it has been around the 6% range and I’m just wondering how you think that is going to trend over the next few quarters? When do you think declining commodity costs will start to lead to that inflation moderating? Just because I know you have a lot of contracts I’m wondering about the timing of that.

As Ken indicated in his comments, some of our input costs are beginning to decline now. We see some sub categories of product now that certainly the rate of inflation is slowing, a couple of sub categories where we are actually seeing some deflation. At the same time we have some categories that have fairly high inflation. As we suggested, we would hope to see some moderation in the inflation rate here pretty shortly within this quarter or the next one. Greg Badishkanian – Citigroup: Also, as you kind of look at your real sales it was down a few points about 3% or so based on my calculations yet you were able to bring down your SG&A and operating expenses as a percentage of sales. I’m just wondering if you could give us some color in terms of the different initiatives and how much of that was due to cutting miles or just different buckets where you have been able to really keep a lid on expenses.

We have got fairly high variable costs so we are able to scale the business appropriately both ways. Certainly the initiatives going back, just to point to one and you can’t just point to one but I’ll use it as an example, XY routing Ken mentioned we are driving 8% fewer miles right now than we were a year ago…I’m sorry, gallons. Our miles are down also. It is those kinds of paying attention to literally hundreds of opportunities within those operating companies that are paying results. We feel very good again about the quarter and the operating companies’ ability to manage a rough environment. Greg Badishkanian – Citigroup: Just from what we see in the industry looking at the major public companies, etc. it seems like the industry is doing a lot worse than you have. I’m assuming you have picked up some share. Is that what you see based on your data or based on talking to people in the field? What kind of color do you have in terms of market share?

That is something we have been very proud of and in fact as we have said on many occasions we tend to do better in tougher times in relation to the rest of the industry because of our financial strength and the overall management of the company. We are pleased, again, with our ability to at the operating company level particularly be able to make it work in a challenging environment. Greg Badishkanian – Citigroup: If you are taking a little bit of share are you hearing anything about some of your competitors? I know you have a lot of them across the country but anyone you think over the next few quarters that if this condition continues with the economy could you see some of those major players go out of business or exit the industry?

It would be pure speculation. I think the challenges right now are for many competitors who have to go to the bank and borrow money to grow their business to get additional inventory, buy new fleet, buy or expand their warehousing, that is very, very difficult as you know in this environment. That is where, in the mid term, it gets pretty tough for some of our competitors. We’re not wishing any bad luck on anybody. I just think the realities are that again with the financial strength that Bill highlighted in his comments I think go to the bottom line again we are well positioned visa vie all our competitors out there and visa vie the industry.

The next question comes from Jason Whitmer – Cleveland Research. Jason Whitmer – Cleveland Research : Can you provide a little more color, there seems to be end market, particularly restaurants and traffic flow as well as maybe further closures out there and maybe not just restaurants but also touch on institutional and how that has been trending?

It is definitely that we are seeing traffic slow down. It is a very tough environment for our customers. We haven’t seen a lot of closures yet. We are really not anticipating…the closer you get to the holidays I think everybody even if you are close with difficulties you are going to try and get through the holidays and those typically are good times for our restaurants. I don’t want to make that sound like there are not problems. They have traffic problems.

The second piece of that on the institutional side of the business which would include schools, colleges, hospitals and nursing homes and as you point out 63% of our revenues come from restaurants, the rest come from obviously non-restaurant businesses. That does tend to be a little bit more stable in this environment. So the schools, colleges and healthcare in general that business continues to go along well. In fact our healthcare business today is very robust. Jason Whitmer – Cleveland Research : Do you have any thoughts on elasticity with food inflation potentially coming down over the next couple of quarters; do you think that we will revert in some of the case volume deterioration you have seen in some of the last 6-9 months? I can remember at the analyst meeting awhile back you were looking for high single digit long-term sales growth whether food inflation was driving more of that or case line was driving more of that as food inflation was more normalized. Any update on where that could trend on the elasticity if people were to start buying more cases if prices come down?

We haven’t done any scientific studies. We have gone back and looked at some historical data which does tend to support that as inflation comes down the case growth will improve. I can’t give you the exact numbers in relationship there but yes, we would anticipate that. That food inflation moderating is going to make it significantly better for our customers out there to manage their business. Jason Whitmer – Cleveland Research : Along the process of doing business review and really getting closer to customers in this environment it sounds like you have been doing some deeper customer analytics. What have you really learned there either with your share of the customer or the share of some of the things you don’t have? How do you continue to gain share or extend your share lead in this environment coming out of the environment? What are some of the things you have learned so far in doing some of those deeper dives?

One of the things we have learned is that there seems to be no end to the opportunity. First of all the distributor is great relationship building. I think we have said this before but one of the things we found is that our lost sales related to customers that go through a business review go to virtually zero. That is very powerful and we continue to see customers that run to multiple business reviews we continue to see good growth in those customers. So we have lots of opportunity there.

I think part of that question was what are we learning from it. We continue to be focused on the menu itself and how that drives traffic and profitable traffic through their business which is very important of course to them. We still focus on the menu with our customers and that drives their business. What drives their business drives our business.

We found too that during these more difficult times the recent activity of customers and non-customers alike to business reviews has been very high. We don’t have any lack of customers coming into the operating companies for business review.

The next question comes from Meredith Adler – Barclays Capital. Meredith Adler – Barclays Capital: I’d like to just go back to the question about inflation. We have definitely seen a decline in some commodities, especially for the grain, but I’ve heard from some sources that meat prices and all proteins are likely to go up. I think that is the [SEA] forecast as well. Is that something that you have factored into your thinking? Are you seeing any of that?

As usual, if you kind of look at the averages it is a bit deceiving. What we find today are the middle meats, those meats that are used to cut steaks. So the strip loins, rib eyes and tenderloins are actually fairly significant lower than they were a year ago. On the other hand you’ve got the end cuts, the chucks and rounds that are higher. Part of the reason for that is a lot of that gets ground into hamburger and the demand for hamburger right now and ground beef is fairly high. It is obviously a lower cost item on the menu. That is where it becomes tricky talking about inflation in general or inflation in a category. In this case you have to look deeper than the category. You have to look at the sub-category. All of that kind of depends. I think it is safe to say because of demand we won’t see upward pressure on the middle meats, the steak cuts, for awhile unless we have a foreign country that jumps in and buys a bunch of boneless rib eyes and boneless rib steaks. That could change that. There are just so many moving parts to the question and the answer. Meredith Adler – Barclays Capital: Even with supply being down, which it has come down especially for beef?

I still think you see middle meats not having a lot of upward pressure for awhile; those steak cuts. Probably, and again I don’t know what will happen to hamburger, chucks and rounds. Meredith Adler – Barclays Capital: Another question would be you are taking share. I was wondering though if you are gaining new customers. How does the profitability of a new customer compare with wooing sales with an existing customer which obviously you are doing some of that too because of business reviews. Maybe you can give us a sense of how the real growth you got this quarter balanced between new and existing customers and then what the profit difference is.

Of course the most profitable thing we can do is to increase business in an already profitable customer. That is the best thing that happens. In terms of new customers, what we watch very carefully is the ratio of new customers to lost customers to customer penetration which is growing the business in the customer base. You need a balance of that to continue to be profitable in the distribution business so you have got to keep having new customers on board. We are actually seeing a higher rate than normal coming on but commercially we are also seeing there is a bit of moderation in the penetration so as yet that hasn’t been big enough to affect our profitability but it is something we watch every week. Meredith Adler – Barclays Capital: Fuel costs and fuel surcharges. I think there was a time when it was really only the contracted business that had fuel surcharges but in this recent environment fuel surcharges became more common for all kinds of restaurants. Is that still the case? How did that compare to your cost? Are they successful at covering most of your fuel costs?

It moderates I think currently and it changes of course with how you are hedged, but currently moderated about 70% of that cost. Right now we do have a fuel surcharge on everyone. The difference between a blanket charge or per delivery charge on the non-contracted business and then generally speaking it is a sliding scale for the contracted customers. It is still markedly over last year, of course down sequentially from last month. It is one of those things that is very sensitive so we are constantly looking to see if there should be one and what it should be. There is a lot of factors of course in that. What everybody looks at is the price at the pump and sometimes that doesn’t have any direct relationship to what we are doing.

We are filing our Q tomorrow and there will be a little bit more detail. What we are projecting right now for the first six months, obviously we have got four months behind us and three that we have reported. We would expect, and this factors in the forwards we have in place as well as today’s price at the pump, we would expect our fuel cost gross to be up $40-50 million for the first six months and we would expect to recover the bulk of that through fuel surcharges assuming no changes in spot prices and assuming no changes in fuel surcharges. Going forward for the rest of the year we are about 2/3 of our volume is locked in on forwards and about 1/3 of it we will be buying spot. So we are, as Ken alluded to, locked into some higher prices right now on the buy because of the forwards and we will continue to evaluate the fuel surcharges as well. Meredith Adler – Barclays Capital: There is not much chance you will see the fuel surcharges be a profit to you right now?

We have no design to make a profit on fuel surcharges. As you have heard we are not covering those costs.

We are just trying to cover the incremental year-over-year costs.

The next question comes from Andrew Wolf – BB&T Capital Markets. Andrew Wolf – BB&T Capital Markets: Let me start with the fuel surcharge and a follow-up. Just doing some quick calculating, tell me if I am way off, it looks like the fuel surcharge this year is about 25 [bips] roughly run rate per quarter and what I’m trying to get to and I’ll just ask it directly is with the gross margin has been reported the 6 [bips] of expansion if not for the fuel surcharge, or would it have been flattish or slightly down?

It would have been down a little bit. I’m not too good at [bips] but again what you will see in the Q tomorrow is $28 million roughly increase in gross fuel expense and about a $23 million increase in fuel surcharges. Andrew Wolf – BB&T Capital Markets: The other similar type of question for granularity is Ken reported the 6% increase in cases per man-hour. Can you give a little commentary on that? What kind of class of employees are in the denominator? Is it just warehouse workers or is it workers, all the employees at an operating company?

We measure it all the ways but what I was referring to there typically when we talk about productivity we talk about how we get a case out of the warehouse and transport it to a customer. So it would be the people that are directly involved in that which would be occupancy, transportation and warehouse. Is that clear? Andrew Wolf – BB&T Capital Markets: So is that systems driven or are you actually using robotics or substituting capital for labor? How is that productivity increase being driven?

It actually has been several initiatives we have had out. One we have talked about many times, going from double jacks to triple jacks which simply means that when we pass through the warehouse we have three pallet positions on a piece of equipment where we had two. That allows us less travel time. When you are talking about warehouse productivity there are several things you are looking at. The big thing is and a big area we have been watching is just the travel time. So if you can cut a trip through the warehouse to select orders, cut several minutes off of that and start multiplying those minutes times thousands times hundreds of thousands times millions it starts to really make a big difference. Of course, when you reduce the number miles that you drive you have got more time at the customer’s back door; your productivity goes up there also. So this is all operationally driven if that is the question.

It is not a new computer system. It is really a new process so they are systems but they are human systems. They are new processes within the warehouse and transportation.

Part of it goes back to 5-6 years ago we started redesigning our warehouses strictly to be more productive. It has everything to do with how many times you let product down for the percent to the order selector and the distance they travel, how many stops that driver has, it is strictly operational. Andrew Wolf – BB&T Capital Markets: I know this is ongoing and one of the great attributes of the company is new things keep getting developed. Just in terms of the double to triple jacks and it sounds like maybe you are changing how you pick to be more efficient, in terms of the whole U.S. system or include Canada, whatever, where are you at in that so we can get a sense of there are three more quarters of productivity here or are we at the end or barely scratched the surface? On the things you just identified in particular.

I think we are beyond barely scratching the surface here but we certainly…you don’t just go out and change out all your equipment overnight from doubles to triples because that is a fairly significant capital expenditure so we have been doing it over time. I don’t have a number but I would argue if I said 50% in the warehouse we are probably comfortable saying that but that is a very guess at that point.

I think what isn’t a guess but is somewhat open ended is that we have years left for productivity improvements we can make. Some of that will require systems changes. Some of that will require process changes. We still recognize lots of opportunities that we will get to over a period of time and do that appropriately and within the culture of SYSCO.

We live this way and we have people dedicated just to finding new and better ways of doing things. We are currently looking for some big bang stuff. Some things we can do that are industry changing. I don’t have that in my pocket by the way but we are looking and as an industry leader we think we have the ability to do it. Andrew Wolf – BB&T Capital Markets: Rick, on this theme of driving down your cost structure, a few years ago you laid this out as pretty much your top priority as you saw the way the industry might go with family formations, the end of the big spike in dual income households and so on. So I guess my question is it seems to be working quite well frankly on reducing your cost structure through some of the things we have been discussing but if I recall there was an idea you might use price as a lever to gain market share. Perhaps you are doing that. Could you just speak to that and whether you think…are you doing it somewhat and do you think the environment for that type of an approach where you actually could see if you led with price more so than SYSCO has in the past then you could get some of the customers you have been wanting to get for awhile.

I think the answer is that it is more surgical than broad based. I think we still stand by that. In fact we are working hard on pricing and understanding the elasticity where it is related to a customer or related to a product. We have some opportunities there but we still have some learning to do. Your initial thought though is right. Our biggest opportunity is still in terms of cost control. We have been very pleased with our ability and again I’ll take my hat off to the operating companies, our ability to manage those gross margins. But we have also said in the past there is a lot of stickiness in this business. You can’t just go out and wholesale reduce a bunch of prices and expect to gain five points of market share. It is, as I said before, very surgical. So we have to be careful and we have to be smart about it. It is not going to drive 5% market share gains in a short period of time. So, it is just kind of paying attention to the many things we have to pay attention to in a business that appears to be pretty straightforward but in the end has a great deal of complexity to it. Andrew Wolf – BB&T Capital Markets: On the industry consolidation and acquisition environment do you think that multiple expectations of sellers are unrealistic or heading towards realistic? Can you give us a sense of that? This cycle obviously down cycles are good times for a company like SYSCO for acquisition opportunities but how do you think the credit crunch might play into that as well?

I think we are beginning to see the impact of the credit crunch and the cumulative economic challenges out there a lot of folks are dealing with. It is mixed and it is kind of like what Rick was saying on pricing. It is going to be somewhat tactical or opportunistic in terms of individual people’s situation. I’m not going to sit here and say we have got a huge backlog of deals but we are working on more deals today than we were a year ago. I feel like we will see more of that just because of the reality of what I think we alluded to earlier in the call. It is a very difficult environment to borrow money in. First of all to grow your business and second of all if you are highly levered folks are going to run into some challenges. We thought we’d see this quite honestly a year ago when things turned in the markets and what has been going on here in the last two months I think is different and deeper and we would expect to see more opportunities going forward.

The next question comes from Alec Patterson – RCM Capital Management. Alec Patterson – RCM Capital Management: I wanted to turn around the question on inflation impact and try and see if it creates an issue if we were to suddenly fall into a deflationary situation. You guys have done a lot to mitigate the rising costs and the real sales impact has not been as much to offset what you have gotten on a gross profit dollar per unit basis. So, I’m just curious in this environment if suddenly we fell into a deflationary situation where prices were flat to down how do you think that would play out on a gross profit dollar per unit and gross profit dollar growth basis?

I think first of all we have been in deflationary periods before and I would say that we have done a very good job. We have got a lot of experience. In fact we already have a heads up to our operating companies in terms of reminding them what to do when you have a category or sub-category of products that is deflationary. So they are very tuned in to it and I think very experienced. What will happen, or what has happened in the past, is we will see a little bit on a percentage basis you will see a little more pressure in the expense line but we will pick up on the gross margin line. Those are pretty much in balance if you will. If you look at inflation or deflation, we don’t give ourselves anything for picking up at the gross margin line or expense line now. What we do give ourselves credit for, as Ken talked about a minute ago, is being able to improve our productivity in any environment. That is where we are getting our real leverage. We are not counting on it from inflation or deflation.

This is just a matter of opinion, but I think our systems are better at handling deflation than they are inflation. Alec Patterson – RCM Capital Management: Clearly it is working to your advantage. Your systems and scale advantage and RDC’s, etc. I guess I’m just trying to get a handle on the current environment we are in where traffic through away from home consumption is so depressed right now and you guys are at an advantage taking share and what have you. I hate to paint a negative picture, but if inflation is actually giving you guys an opportunity in terms of sourcing or what have you to take share because you are able to out price or under price as need be, is there an issue with deflation coupled with potentially a negative traffic scenario for the industry where there is a gross profit dollar issue.

That is one of those great questions where probably there is not one answer to it. I think the way you initially posed the question you used the word suddenly. I think if there was a sudden, deflationary spiral that would create highly unusual pressures that I don’t know if we have ever seen in this industry from where we are at right now. With that said, what would be a better environment for our customers and us would be a lessening of inflation and we would expect that would be a more likely scenario. The challenge in this market, I guess from what I see, and I don’t have quite as many years as Rick and Ken do in the business, but I saw some other earnings releases over the last week or two if we were just in a recession right now that would be one thing but what is going on in the environment is much broader than that. It is very psychological. The financial markets are weighing on people. So I don’t know if you can just talk about inflation and deflation or a recession in isolation. I think you have to look at it in terms of other ramifications. So if there was a significant lessening of inflation and that somehow got the consumer to feel better about their pocketbook then that might be some offsetting positives for that. With respect to return to traffic at our customers and I’ll end where I started. I think the pace of this would be pretty important. If it happened gradually I think that would be a better scenario.

I think the other thing to keep in mind is that we again in comparison to our competition think we are much better positioned than our competition to deal with the swings in pricing. I would also go back to, because I think you suggested that inflation was helping us with share gain, and I’m not sure that is what we are hanging our hat on in terms of share gain. Our share gain, we believe, is primarily coming from more fundamental activities and initiatives we have out there. Specifically again, business reviews. Business reviews and our go to market strategy unrelated, uncoupled to inflation is really the way we grow share. Again, we are not counting on inflation or deflation to help us in any particular way. Alec Patterson – RCM Capital Management: On that point, the sourcing program, I was wondering if I could get an update what phase we are in or where we are in the phase. What changes in the goals for that in the next 12-18 months?

Our sourcing continues. We had a very robust first quarter. I don’t know what phase we are in anymore. It is just part of our business now. We continue to learn from it and I guess I would have to say we are pleased with our ability to buy better than we were buying in the past. We still have lots of things to learn. It is a small percentage of our total spend and we will continue to adjust and experiment and learn as we go forward. Alec Patterson – RCM Capital Management: So no real change then?

No. Alec Patterson – RCM Capital Management: Lastly, Bill you were making a comment about the first 6 months fuel cost impact of $40-60 million if I heard that correctly.

$40-50 million. Alec Patterson – RCM Capital Management: Is part of that reflecting, I thought there was a hedge in place in last year’s first part of the year. Is that being captured in this increase?

Yes. We had a favorable hedge last year compared to what spot prices were at the time and today we have people looking…we have favorable forward contracts in place. Last year this time period compared to spot prices. Currently, as I mentioned, we have several forward contracts that are higher than the current spot levels. So that is a big part of it. We talked about it a little bit at the end of the last quarter and actually at that time we estimated an increase for the six months of $55-65 million. So we have brought that down primarily because as I said we are still buying about 1/3 of it spot and obviously prices have come off a lot. We think when the six months is over $40-50 million is a pretty good ballpark. We expect to recover most of that on the fuel surcharges. Then hopefully things will stabilize a little bit in the economy. We’ll have some better thoughts for you in the second half of the year at that time.

The next question comes from Bob Cummins – Shields and Co. Bob Cummins – Shields and Co. : One large company that I follow that also generates a lot of excess cash has publicly announced that they don’t intend to buy back any more shares for the near term in view of the turmoil of the financial markets and wanted to conserve funds. I’m just wondering what your policy will be? I see your share repurchase expenditures were down a little from a year ago in this quarter. Your stock seems awfully appealing at $25 a share. Kind of fill us in on what your strategy will be going forward.

I think you would see us continue with the strategy you have seen in the last few years. We will continue to buy shares back. The only reason it was off a little in the first quarter is we were in a blackout in the early part of the quarter. We are actively buying today. As I mentioned in my comments, we look at share repurchase as a legitimate way to provide return of capital to our shareholders but in terms of priority we certainly are looking at capEx, acquisitions and the dividends first. So it is somewhat of a residual but unless there was a significant pop in capEx or acquisition opportunity of a larger scale came along I think you would see us continue the pattern we are at right now. We would agree with you especially now that we see the shares as very attractive.

The next question comes from John Heinbockel – Goldman Sachs. Analyst for John Heinbockel – Goldman Sachs: Can you clarify, did you mentioned what Q2 sales to date were rising?

No, we do not do that. We do not give that kind of guidance. Analyst for John Heinbockel – Goldman Sachs: If this environment where supermarkets seemingly could take share just based on food at home and food away from home numbers, if it continues for an extended period of time, how can you help your customers combat it?

One way, there might be several answers to this question, but certainly one way is to help our customers understand the take out market, if you will. If you look at the restaurant business and slice and dice it a bit, you see take out business increasing at the restaurants at fairly nice rates. I saw a number the other day and I wouldn’t bank on this but 20% increase in take out. I think some of that is being fueled by the reality that the major retailers, major and a good regional grocery retailers, have done a nice job over the last few years at improving their take out offerings. Now having said that, we are not abdicating that space. We have a good program with a number of regional players out there and larger players where we provide them ingredients for their take out business. The ingredients, packaging and that sort of thing. Going back to the restaurants for a second, it is crucial that they have a comprehensive take out program so they have to have the right packaging. They have to have the ability for the customer to enter their order via the Internet and all those components. They have to have the marketing program. So we help the customer with all of those to give them a strong take out program. So that is one example. I’m sure there are others. Analyst for John Heinbockel – Goldman Sachs: There are a lot of moving parts to this but in the back half of next year if gas prices remain where they are, diesel should certainly be at a tail end. Is it as simple as just taking that as a percent of your costs and figuring how much or do you guys have an idea of that?

When you say back half of next year are you talking about calendar year next year? Analyst for John Heinbockel – Goldman Sachs: Calendar or even a little bit into your fiscal.

I would say again, as far as where we are at right now we are locked into these forwards for 2/3 of our purchases. So it will not be a tailwind this year. We will update you in terms of the second half of the year as we have better information when we release earnings for the second quarter. The forward is pretty much expired through next summer and early fall I think. Then at that point we will just have to see where the spot prices are and that type of thing.

It is also important to note that we are not trying to beat the oil market. We have enough trouble just in the food market. We are not trying to beat the market or be smarter than anybody else in oil. What we are trying to do is ultimately take the volatility out of that component of our costs. Analyst for John Heinbockel – Goldman Sachs: A couple of things on financial items, the COLI, the multi-state employer and the company-owned pension, the run rates that were accrued I guess beginning in this quarter should those continue to stand based on assumptions or does the COLI still fluctuate with the market but the pensions still continue at the same run rate?

Let me go easiest to hardest here. The pension quarterly performance you saw for the pension you can pretty much annualize that comparison to last year in terms of the company’s qualified pension plan. So the pension hurt us $4-5 million. The stock comp helped us by a comparable amount. That is going to be pretty accurate as well. We still do need to tweak that a little bit here as we issue options here later in November and December. So that is not quite as hard a number but it should be pretty close. The multi-employer plan will fluctuate. What you saw this quarter was we didn’t have any situations where we needed to set up provisions for multi-employer plan liabilities. A year ago we did. As we have noted in all of our ongoing disclosures we have other situations out there that could bring that to bear again and we’ll just have to update you as that goes along. The COLI, as I mentioned in my comments, a large part of those investments are tied to marketable securities. There is a lot of unfavorable volatility in the first quarter and there has been comparable unfavorable volatility so far this quarter. So as we sit here today you should expect to see similar results. If the market were to bounce back then that would mitigate that. Analyst for John Heinbockel – Goldman Sachs: Back on the company-owned pension, the assumptions I believe are set at the beginning of the fiscal year for you which was in the summer time. This year you continue to accrue at whatever rate was set. Does that have implications as you go into next year as far as under funded status? I think the markets are considerably changed a little bit since the middle of the summer, or does it totally depend on what you use for the assumptions of the following year?

To your point we are fiscal year so we, if you will, trued up our funding position at the end of June and that impacted our expense and to a lesser extent our funding. We actually pre-funded that a little bit this year because we were in a good cash situation. So if you fast forward we will true all that up here again in June of this year for the following year and there is a lot of things that impact it but certainly you are right on point. I know there have been some articles on there that what has been going on in the markets today, when the markets are down 30-35% that would have an unfavorable effect on our funding position. We think we are still relatively fully funded as we sit here today but in terms of the expense that would hurt us for next year. However, there are other variables such as the discount rate that we would need to address at that time as well. So to the extent that corporate rates have risen, and they have, one thing we did get some misfortune on was our bond financing yield back in February. We locked in at 4-5% and those rates are 2-2.5 points higher today. So that would offset it. Cutting through it all, I think net it would be unfavorable but that is a long ways from now and a lot of other things could impact it. Analyst for John Heinbockel – Goldman Sachs: Finally, the last update on the IRS tax case I think characterized the discussion as being constructive. If you could provide any color on that?

Really constructive. They are better. Like I said they are better than they were a year ago this time in that we are having dialogues. They are constructive. We feel our facts are strong. I wish I could give you more. It is just one of those processes that is going to take some time to work through it appropriately. It is moving in the right direction. It is going to take some more time. We feel very good with our position.

The final question is a follow-up question from Meredith Adler – Barclays Capital. Meredith Adler – Barclays Capital: Back to the COLI situation, have you guys thought about eliminating or finding some other way to do this? I know other companies that had COLI and it created unnecessary volatility in earnings.

Yes every day we think about it. It is very volatile right now. In a certain way we have addressed it in terms of the plans that particular investment underwrites or supports, even though it technically doesn’t support it on the accounting side, but those contracts are out there to support supplemental retirement benefits for our senior leadership. We have actually cut back on the formula in those plans and we have also pared back the future eligibility for those plans. So over the longer term we have done some things. In the shorter term there is still some pretty viable tax reasons to fund it the way we do and unfortunately the accounting requires you to essentially mark it mark to market which probably isn’t technically right but essentially the same. So, it is a trade off between the volatility and the tax benefits and as much as we would like to lessen the volatility at this point we are planning on staying the course. Meredith Adler – Barclays Capital: I have a question about labor costs. You improved productivity, management did take a pay cut I think starting July 1. Were there cuts in other employee pay? Did commissions for marketing reps go down?

No.

I think the only thing we did there was obviously when you have the kind of inflation we have seen I think our folks have looked at their commission programs and make sure they are appropriate but there have been no direct cuts. Meredith Adler – Barclays Capital: About credit, I know you haven’t seen a lot of restaurants go out of business but do you feel comfortable with the way the operating companies are dealing with their credit customers?

Comfortable and credit aren’t two words you usually use together a lot in our business but yes, we would reiterate what we have said all along. We feel we do a good job managing credit and obviously most of that is done at a local level as all of our business tends to be local to a large extent. So we feel good about how we are managing it but clearly these economic times are providing challenges and there are situations where people are going out of business. There are situations where we are having to work with folks on payment plans and so we have said from the beginning we would expect credit to be more of a lagging indicator and I would stand by that. We definitely feel we are managing it well.

At this time for closing remarks I would like to turn the call back over to Mr. Richard Schnieders.

I would just like to go back and reinforce again we believe that SYSCO is better positioned than any food service distributor to thrive in the years to come. Secondly, I will make a political comment. We want to encourage everyone to go out and vote tomorrow and after you vote please take a friend or loved one out to dinner. All the poll workers, if possible, but please enjoy a good meal out as soon as possible. Thank you all.

Ladies and gentlemen we thank you for your participation in today’s call. You may now disconnect.