Good day and welcome ladies and gentlemen and thank you for standing by. Welcome to the Texas Roadhouse Incorporated fourth quarter 2007 earnings conference call. Today’s call is being recorded. At this time all participants are in a listen only mode. Following the presentation we will conduct a question and answer session. Instructions will be provided for you at that time on how to queue for questions. I would now like to turn the program over to Mr. Scott Colosi, Chief Financial Officer of Texas Roadhouse. Please go ahead.

Good evening everybody. By now everyone should have access to our earnings announcement released this afternoon for the fourth quarter and the year ended December 25, 2007 and may also be found on our website at www.TexasRoadhouse.com under the investors’ section. Before we begin our formal remarks I need to remind everyone part of our discussion today may include forward looking statements. These statements are not guarantees of future performance and therefore undue reliance should not be placed upon them. We refer all of you to our recent filings with the SEC for a more detailed discussion of the risks that could impact the future operating results and financial condition of Texas Roadhouse. On the call with me today as always is G. J. Hart our CEO. G. J. is going to provide some general comments on the business and then I’ll walk you through the financials and then we’ll open it up for questions. G. J.?

Good evening everyone. First off, let me thank our team members for a great 2007 especially with all the challenges facing the industry today. The fourth quarter was tough but overall the year was very solid with comp store sales growth at 1.4% and earnings per share at 15% despite an impairment charge we incurred during the fourth quarter. During the year we opened 32 new restaurants and completed our second round of franchise acquisitions in which we acquired nine franchise restaurants. This pushed us past the 200 store count on the company side with a system total approaching 300 in fact, company operating weeks increased over 24% for the year. Now, let me touch on a couple of the highlights for the quarter. We were able to generate diluted earnings per share of $0.09 which was $0.01 lower than the prior year. As was mentioned in the release we did have a -$0.014 impact from an impairment charge in the current quarter. In addition, comparable restaurant sales were .8% less than last year and our restaurant operating costs were 134 basis points higher than last year. Versus our own expectations sales for the fourth quarter were lower than anticipated and food and labor costs were both higher than anticipated particularly in December. Regarding sales, as I mentioned, fourth quarter comparable restaurant sales decreased .8%. Our average check was up about 1% but traffic was down just under 2%. On the check side of things, we continue to give up about a point due to negative mix shift, about half of it being attributable to alcoholic beverages with the remainder being entrée driven. Regarding pricing, we overlapped .8% at the end of October, an additional 1.6% at the end of December. So far this year we have taken approximately 1.1%…

During my review of the fourth quarter please note that many of the numbers I will mention are listed in the schedule of supplemental financial and operating data that as always was included in the press release. So starting at the top of our income statement for the fourth quarter of 2007 as compared to the same period in 2006 revenue increased 22% while company-owned restaurant sales increased just under 23%. The growth in company-owned restaurant sales was driven by operating week growth. As G. J. mentioned earlier comparable restaurant sales of company-owned restaurants decreased 8/10 of 1% versus an increase of 3.3% last year for the quarter our average check increased 1% as our traffic was down 1.8%. From a new restaurant sales perspective I’ll offer a little more color on average weekly sales. For the quarter average weekly sales for restaurants opened during 2007 was just under $72,000 per week which was slightly higher than the overall company average. For the year, average weekly sales at restaurants opened during 2007 are running just over $2,000 higher than the overall company average. Returns at these sales levels are well in excess of our cost of capital. Franchise royalties and fees were $2.4 million which is $400,000 lower than last year primarily due to the acquisition of nine franchise restaurants during the third quarter of 2007. In terms of costs as a percentage of sales and as G. J. mentioned earlier, restaurant operating costs were 134 basis points higher than last year and I’ll touch briefly on the specific lines. Cost of sales was up 90 basis points. During the quarter we experienced higher dairy, produce and non-protein related food costs which more than offset our pricing. Dairy costs were high all quarter and have continued on that trend heading…

We are both thankful and fortunate that we have legendary team members and a strong highly valuable brand with significant development opportunities. 2008 has the look of a tough year and we believe we are doing the right thing for the long term success of the business by taking a slightly more conservative approach. Even so, we are still projecting to grow operating weeks over 20% and certainly still view ourselves very much in a growth mode. While you have heard us talk about things like slightly more conservative growth for 2008 and implementing a share repurchase plan, you have not heard us talk about changing our long term growth model. Simply put, we are just being more prudent in the short term given the environment. Before opening the call up for questions, I do want to take a moment to thank all the Texas Roadhouse team members for their continuing commitment to offer legendary food and legendary service to each and every quest that we serve. Now, let’s use 2008 as an opportunity for Texas Roadhouse to further distance itself from the competition. With that, that covers our prepared remarks so operator if you would, please open the lines for questions.

The question and answer session will be conducted electronically. (Operator Instructions) Our first question comes from David Tarantino with Robert W. Baird. David E. Tarantino – Robert W. Baird & Co.: First question, G. J. you mentioned that you’re not changing the long term growth model that you outlined in December. Should we assume that you might reaccelerate the unit growth rate as you look out into 09? Or, I guess a follow up to that would be what are you looking for in 08 to determine what type of rate you might grow in 09?

I think right now it’s uncertain as to what we will do in 09. We first have to see what 08 brings us so as we said in the remarks we really need to analysis what inflation, what pricing looks like, all the things that we talked about. But again, as we said, we’re not changing that long term growth strategy so you might see us go back to that depending on what the results look like in 2008. David E. Tarantino – Robert W. Baird & Co.: Okay. Thanks. Then, just a question on some of the assumptions that are embedded in guidance in terms of pricing that you’ve already taken with the 1.1%, have you assumed any additional pricing in the guidance for the balance of the year?

No. David E. Tarantino – Robert W. Baird & Co.: Then, a follow up to that, have you assumed any benefits related to the initiatives related to food yield or the new labor module in the guidance?

I think what our message to you is that we’re not prepared at this time pretty much for competitive reasons to talk about what pricing we may take or may not take going forward as there’s a lot of things going on in the industry that we’re seeing with our competition. So I think, we’re going to keep that pretty close to the vest but chances are we’re going to do something. I think on the yields, it’s really too early to tell. We’re optimistic about it sitting here today as we are optimistic about the floating beef cost that we had but, we don’t have specific guidance for any of those items that we’re willing to share with everybody.

Our next question will come from Jason West with Deutsche Bank. Jason West – Deutsche Bank: [Inaudible] you guys talk a little bit more about the food and labor cost inflation numbers that are no embedded in the 08 guidance? I think the numbers sound a little more conservative or bearish then what you guys had been indicating in December and then in January I think you said around 1 to 2% on food and 2.5 to 3.5 I believe, on labor. I’m just wondering sort of why those numbers now seem to be a lot higher.

You know, we’ve seen continued inflation on the dairy side and the produce side and I think we felt by this time the dairy side would start to moderate. We really haven’t seen that piece of it. Then secondarily, we do have a couple of big wild cards which makes the range fairly large with the beef that we do have floating and the yields on the newly spec’d rib and ribeye products. Again, that creates a pretty wide range for us which is somewhat driving some of the earnings that we’re seeing. On the labor side, that’s a little more predictable for us, that being probably in the 3 to 4% range. It really just depends, as G. J. mentioned, how much flows through on the federal and state minimum wage increases. We kind of have a pretty good idea on the tip wage side. As an addendum to that, there are some states that from time-to-time sort of get into the game so to speak. They kind of pop in and decide they’re going to change the tip wage or minimum wage. We don’t know that today but that may happen three months from now for example and its happened in the past. So, all that said probably the labor more realistic inflation ranges is probably in that 2 to 4% so when we’re sitting here right now with pricing totally 1.1 you can see there’s a bit of a gap there between those two. David E. Tarantino – Robert W. Baird & Co.: Okay. Then just while I think in the past you guys have given us a little help sort of on the restaurant margin, sort of how you see that playing out, can you talk about where we might see restaurant margins fall out for the year?

Again, we’re not going to give any specific guidance to that but suffice to say if labor inflation does turn out to be 3 to 4 and if you have food inflation closer to 2%, our pricing needs to be well above 2 probably closer to 3 for us to hold margins flat. If our pricing is less than that like it is now chances are margins would be a little bit lower. Again, a lot of it depends on how much fluctuation we get in the beef costs and also to a certain extent what our traffic trends end up being.

We take our next question from Destin Tompkins, Morgan Keegan. Destin Tompkins – Morgan Keegan: Scott, a couple of questions on development, can you give us some guidance on kind of the timing of new restaurants? You mentioned over 20% of operating week growth, did you reduce from the 35 back to the 30 units, did you take some of that out of the back half of the year or the first half of the year?

Absolutely the five reduction is definitely most after the last quarter of the year. Everything else relatively evenly spread out amongst – about half the first half of the year, half the second half of the year on the development piece. Destin Tompkins – Morgan Keegan: And can you give us an update on what your cap ex outlook is for 2008?

It would be pretty close to this year, within a few million dollars of this year which was about $101 million excluding acquisitions. Destin Tompkins – Morgan Keegan: Okay. Then on the average weekly sales Scott, it looked like they were a little bit lower than what you had indicated for the class of 2007. Is it that the restaurants that have been open more than a year are falling off? Or, were the acquired restaurants at a lower volume and they’re pulling down the average weekly volumes? Can you give us a little clarity there?

I think if you’re saying that the average unit volume growth was less than same stores sales growth, that’s kind of been the trend all year and yes, that’s saying that the new stores that we’re hoping, once they get past their honeymoon curve are coming into the system a couple of thousand dollars below systems average. So, even for the 2007 ones, they’re not out of their honeymoon curve yet so you bake in the honeymoon curve, you know if we were projecting them in 08 they’re probably going to be a few thousand dollars less than the system average once they come out of their honeymoon curve. Destin Tompkins – Morgan Keegan: Okay. Great. Then, one more quick one on the quarter-to-date trend, have you been able to tell what the mix impact has been now that you’ve lapped some of the previous pricing?

The mixed impact looks like it was about 7/10 down which is a little less than what it was running before, it was more like 1.1, 1.2 before.

Jeff Omohundro with Wachovia, your line is open. Please go ahead. Jeff Omohundro – Wachovia Securities: Just a couple of questions; first, in that guidance on the 5 to 15% EPS, is there any share repurchase assumed there?

No. Jeff Omohundro – Wachovia Securities: Then, next on the momentum from December into January, is that performance that you’ve provided regarding the down 1.5%, is there much of a shift from December? Or, is that a continuation trend, or how does that change?

Jeff, I’ll tell you in December our comps were -2 so we’ve actually gotten a little bit better in January then we were in December and in December we had a little bit of benefit from Christmas being on, I think it was Tuesday versus Monday which means Christmas Eve was Monday instead of Sunday so we had a little bit of benefit there, we were still down 2. It feels like we’ve been impacted more by weather particularly in December-January. We haven’t quantified it but anecdotally it seems like there’s been more snow in inches I guess you could say, in those parts of the country that get a lot of snow then we had last year or the year before that. Jeff Omohundro – Wachovia Securities: Lastly, just wondering if we don’t see much of an improvement in this macro environment, are there new local store marketing initiatives that you might pursue? And, at what systems size would you consider perhaps pursuing something more broadly than a local store?

Let me comment on that. I think at the last call I talked about us getting much more intensity around our local store marketing effort and that continues. We are not changing our strategy relative to being the local hometown favorite and really adding that intensity to being more creative and sharing best practices of the local store marketing efforts that work. One of the things I will tell you is that we do have a permission based marketing program that we have well in excess of 100 names that we are trying to be more creative with in getting information out to our loyal guests. One of the areas that we’re looking to improve upon is letting those folks know that our call ahead program is available and to share it with a friend, those that may not be joining us because the biggest problem is our waits are so long. So, it’s things like that that we’ll continue to add that intensity to. The question about media, if you will, is not one that we’ve discussed and it’s not one that we hope to pursue or don’t want to pursue any time in the near future. I believe again, through our efforts providing the operational focus that we have, will continue to drive our traffic and steal share from our competitors.

Your next question will come from Keith Siegner, Credit Suisse. Keith Siegner – Credit Suisse : I was wondering if you could give a little more detail about the comp trends by region and by menu mix to give us a better sense, I mean you mentioned weather, did that show up in the regional trends?

Yes and no, essentially we were a little bit stronger in the mid-west, believe it or not the mid-west and the southwest and a little bit weaker in the west, the south and the northeast was basically the trend. We’re not going to get into specific menu items or menu mix items but regionally that’s kind of been the story. Keith Siegner – Credit Suisse : Okay. Then quickly on the impairment line obviously, baked into the current guidance in terms of same store sales and other trends, how should we think about that impairment line? I mean, do things have to get much worse from here? Or, how many do you kind of have in the plan? What might we see in that line item [inaudible].

We’ve got a few stores that are, if you will, breakevenish on net income. The restaurant that we impaired was significantly negative in cash flow and we are very much contemplating closing that restaurant in the near future. These other restaurants we’re still kind of debating how much is related to the environment versus site selection versus operation and how much better do we think we can get and our system takes a lot of operational resources to run a restaurant so our preference may just be to close a store and move on. Will we have impairment as defined by GAAP this year? It really depends on what happens to the trends in those specific restaurants. Keith Siegner – Credit Suisse : Are those stores relatively recently class years or are they older still?

It’s both.

Our next question will come from Steven Rees with JP Morgan. Steven B. Rees – JP Morgan: I just wanted to ask about the five units or so that you cut back on this year versus prior guidance. Was there any commonalities among those units that made them marginal units based on geography and new markets? Or, were they simply just the ones you could cut back on because they were further out in the fourth quarter?

It’s a little bit of both. It’s a little more difficult for us to cut back on units that are opening in the next six months because we’re already in permitting, we’re under in construction in a lot of them, we’ve got people hired for a lot of them. So, we take a look at okay do we have stores in the third or fourth quarter that maybe we’re a little more on the fence on from a return standpoint and if you believe things may get tougher or more challenging, those would be the first stores you’re going to put off. If you can put them off indefinitely you’ll do that. If you can delay them six months before you have to make a final decision you’ll do that and you may be able to delay hiring people for those restaurants. So, essentially that was kind of our thought process. Steven B. Rees – JP Morgan: Okay. But, you could have cut more than five if you wanted to, right?

We could have cut more than five. Steven B. Rees – JP Morgan: Then just on the pricing tests, I realize it’s still early but perhaps you could provide some color in terms of how price sensitive you think your customers today are versus last year? I know mix has been negative for a while but that doesn’t appear to be getting worse so I think [inaudible] price sensitivity has increased on your consumers?

The mix issues with price, it’s a little debatable on how much of that is customers pushing back versus is that a reflection of the way we’ve taken price meaning taking it on a few items on the menu versus most of the items on the menu. So, there is a debate over how much of that is driving the mix shift but in our price test that we’re doing going forward we’re trying to really hash that out and get a better feel for how much of it is determined by what items we specifically touched versus how much the guest is really saying, “Hey I don’t like what you’re doing here.” As well as traffic, you know the dynamics with the price test as well. So, we’re very cautious, we’ve got a number of different levels of pricing that we’re testing but again, we’re still going to remain very cautious and protective of our positioning. Steven B. Rees – JP Morgan: Would you consider tier pricing structure perhaps in regions that are less price sensitive?

Well, the answer is we have tier pricing now around the country and that’s become even more challenging for us as we’ve had these states take tip wage increases in particular and where we use to have three or four menus today we might have 15 price menus. So, we’re already doing that.

Barry Stouffer, BB&T Capital Markets, please go ahead. Barry Stouffer – BB&T Capital Markets: I just had one question, the sales slowdown in December and into the first quarter, would you characterize that as broad based or characterized by specific geographies?

I would say its broad based.

We’ll take our next question from Bryan Elliott with Raymond James. Bryan Elliott – Raymond James & Associates: I just wanted to follow up with a couple of additional modeling questions. Scott, on the other operating expense line where you’ve gotten some benefit from the accounting change or the repurchase of the lease, is that behind us kind of 12/31, is that correct? And, will that line sort of move from leverage, deleverage from comps going forward here starting Q1?

That is absolutely right. Bryan Elliott – Raymond James & Associates: Then in the G&A piece can you help us understand the range of bonus, there was some bonus benefit in the fourth quarter, was that some recapture of previous or was that basically none in Q4 and got us to where we were for the year? And then looking forward, what kind of range is embedded in the guidance and how much swing might there be if we get a nice recovery? Give us a sense of the range between zero and full in the G&A line.

The bonuses in the fourth quarter were lower but not, I would say substantially lower then what they’ve been in prior quarters because they still came very, very close to our plan for the year. So, it wasn’t that big of a benefit for us therefore it’s not going to be that big of a deal to lap it next year. We still expect to get some G&A leverage next year and I think we’ve said our model is to get 20, 30 bips of G&A leverage every year and we’ve got a shot at that this year. Bryan Elliott – Raymond James & Associates: So, if we get a recovery the bonus might eat up the additional leverage on that. If we don’t get a recovery you still expect to do somewhere in that range then. [Inaudible] recovery in the business overall.

Yeah. I mean, our bonus target is going to be in the 10 to 15% range so we have to get over 15% growth to have that really become – well over 15% growth to have the bonus number become any kind of material number for us.

We move now to Conrad Lyon, FTN Midwest. Conrad Lyon – FTN Midwest Securities: Scott, first question I just want to confirm the 5 to 15% earnings growth, that’s off the $0.51 number for 07, is that right?

That’s correct. Conrad Lyon – FTN Midwest Securities: With respect to the development plans here, do you guys have to cut any leases or will we see any charges with respect to that?

No. There’s no earnings charge or anything from lowering the number of stores. Conrad Lyon – FTN Midwest Securities: Maybe just to kind of ask a macro question here, with the beef recall this weekend and the one we later on the air with tops, granted its different segments of beef, do you find your customers sensitive at all to beef recalls? Or, is there a way to play up to this and say your outfit is a little more safe than others?

I’ll comment on that. In the past when we’ve had these things whether it be mad cow or other beef related issues, we haven’t seen any change and really haven’t seen anything affect our guest base. That’s not to say it wouldn’t happen in the future. I think this particular beef recall while terrible I think is somewhat over stated because of the type of recall it is and most of these products have already been consumed. I don’t see it having a lot of affect on our guest base at all.

We go now to Paul Westra, Cowen & Company. Paul Westra – Cowen & Company: A couple of more follow ups, fourth quarter comp trends I know you gave most of the answer with December comps down two. Did things sort of hit a wall in December or did they gradually come down from the 2.5 in the third quarter?

Well, October was 0.3 and November was -0.2. So really, December really dropped off quite a bit and December is a five week month for us. Paul Westra – Cowen & Company: Then segwaying on, as you look forward [inaudible] running down 1.5, you have flat to up 1 for the year. I think you’ve mentioned that pricing 1.1 is assumed to be stable throughout the year. Can you give us an idea of what gives you confidence that you can boost traffic from current trends up a couple of hundred basis points.

Repeat your question Paul. Paul Westra – Cowen & Company: Comps are -1.5 now. I think your guidance assumes that pricing remains at 1.1 and your yearly comp guidance was flat to up 1, you’re assuming a couple of hundred basis points recovery or so in traffic throughout the year. I was wondering if you could point to some things you’re doing that gives you confidence that that can happen?

Remember, we are testing some pricing so there could be out of that 0 to 1 there could be some pricing in there. We think our traffic was a little bit impacted by the weather that we’ve seen so far and we’ve got an opportunity to pick that up a little bit here as we get further into the year. That’s kind all that I can comment on at the moment. Paul Westra – Cowen & Company:

There’s always a potential for that. As we said in the past there are very opportunistic deals, we’re talking to people all the time. Certainly, we want to maintain a somewhat conservative balance sheet and also maintain the flexibility in our balance sheet that should opportunities arise we can take advantage of those opportunities whatever that they may be. Paul Westra – Cowen & Company: How did you come up with the $25 million number?

I think it’s a number that we feel we want to make it clear that we’re pretty serious about the share buyback program. Buying a sizeable number of shares but at the same time we’re not changing our strategy we’re still going to open up a lot of restaurants, we’re still doing 30 this year. We haven’t changed our growth model. We’re just being a little cautious here given the environment that we’re in. We just saw oil go above $100 a barrel today and those kinds of things just make us a little bit cautious.

(Operator Instructions) We move now to Larry Miller, RBC Capital Markets. Larry Miller – RBC Capital Markets: I just had a couple of quick follow ups for you guys. When would be the next opportunity that you could take price? I know that you probably roll out menus all the time but just so we get [inaudible].

As we said, we’re in the midst of testing several different versions. I think you’ll see us take some action one way or the other sometime later in the second quarter. Larry Miller – RBC Capital Markets: Okay. Then, obviously there’s some things that have changed relative to your plan into the fourth quarter on the negative side. Is there anything other than the beef that you’re floating at 25% and the specs that you’ve been working on that give you some optimism about 2008? You’ve done a good job managing labor, is that somewhere we might look for some positive delta relative to current expectations?

I would say we don’t have any silver bullets. If anything, when we talk to our folks we tell them to keep on the pressure on the competition by keeping our food quality high, no shortcuts, keep portioning up and keep staffing levels up. We’re not going to produce a new labor model that miraculously has 50 or 100 less hours of labor a week in it. Again, we’re definitely positioning the concept for the longer term and we believe when things do turnaround a little bit that we’re going to be sitting very, very well with our guest base. Larry Miller – RBC Capital Markets: Okay. On the food cost side you’re assuming that cheese and wheat or dairy in general are going to continue at this rate, is that correct?

We’ve assumed on dairy and produce that they continue at this rate. Just on wheat I’d comment that we did do a contract in late October for our bread mix which is the predominate amount of wheat that we use which runs through the bulk of 2008 and that contract obviously is pretty favorable at the moment given the markets. So, that’s already embedded into what we’re saying from a guidance perspective.

We will take a follow up question from Dustin Tompkins with Morgan Keegan Destin Tompkins – Morgan Keegan: Just a couple of quick ones, gift card promotion has been a big deal in the past. Can you give us any update on how this year went and if you expect any kind of meaningful redemptions in Q1?

Gift cards year-over-year in total were up slightly. We felt it was a good year in spite of it being a much more challenging environment with gift cards. Yes, we do anticipate a higher redemption rate in the first quarter. Destin Tompkins – Morgan Keegan: Okay. Then Scott, on the interest expense line, should we assume that you guys are going to use your line of credit to pay for these share repurchases, assuming you do some? Or, should we assume interest expense at a similar run rate that Q4 came in?

You know, with Q4 interest rates have come down. LIBOR is a couple percent below what it was in Q4 I think today so that’s going to help us. By reducing the number of stores that we open this year we’re going to have a little bit of free cash flow, we believe which depending upon if we buy back stock which will depend upon in part what the share price is and if it is appetizing enough for us. We won’t comment on what those numbers are but, we may use a lot of free cash flow to buy back stock and so I don’t know if we’re going to borrow much money, if you will, to buy back stock. I can tell you if we do any franchise acquisitions those will all be debt financed deals so those would come into play with higher interest expense. Destin Tompkins – Morgan Keegan: Then just a confirmation, the management – the GM conference in 08 is apples-to-apples, it’s in second quarter as it was last year, is that correct?

Yeah, that is correct.

At this time we have no other questions standing by. I’d like to turn the program back to our speakers for any additional or closing comments.

Well, we appreciate your time this evening and we look forward to giving you results of our first quarter later on in the year. Good evening.

Thank you everyone for your participation in today’s conference. You may disconnect at this time.