(Operator Instructions) Welcome to the Ingles Markets Incorporated Fourth Quarter Conference Call. At this time for opening remarks and introductions I would like to turn the call over to the Chief Financial Officer, Mr. Ron Freeman.

Welcome to Ingles Markets 2009 Fourth Quarter and Year End Conference Call. With me today are Robert Ingle, Founder of the Company and Chief Executive Officer, Robert Ingle II, Chairman of the Board, Jim Lanning, President, and Tom Outlaw, Vice President of Sales and Marketing. Statements made on this call include forward looking statements as defined by and subject to the Safe Harbors created by Federal Securities laws. Words such as expect, anticipate, intend, plan, believe, and similar expressions are intended to identify forward looking statements. These statements are not guarantees of future performance and involve risks, uncertainties, and assumptions, which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed on this call. Ingles Markets, Incorporated does not undertake to update publicly any forward looking statements, whether as a result of new information, future events or otherwise. For a description of factors that could cause actual results to differ materially from that anticipated by forward looking statements, you are referred to the company's public filings, including the Form 10-K for the fiscal year ended September 26, 2009 that will be filed later today. This morning, I’ll provide you with a summary of our annual and fourth quarter results followed by additional comments on each period. After that, we will be pleased to take your questions. Our press release issued this morning is available on our website, www.Ingles-Markets.com. Our Form 10-K will be available on the website as well after it’s filed. We are very pleased to report that this was our 45th consecutive year of record sales totaling $3.25 billion. Fourth quarter sales totaled $830.1 million. Excluding gasoline, sales grew 4.3% for the year and 1.5% for the fourth quarter. Net income totaled $5.2 million for the three months ended and $28.8 million…

(Operator Instructions) Your first question comes from Emily Shanks – Barclays Capital Emily Shanks – Barclays Capital: What was the actual reason for reallocating distribution costs? What was the trigger event?

We did research of most of the other publicly filing grocery companies and we were one of the few companies left that still included distribution costs in operating and administrative expenses. We just made the mere reclassification in order to allow us and to allow folks like you to better prepare our margins to our peers. Emily Shanks – Barclays Capital: Specific to trends during the quarter, can you comment on how prepared foods did specifically on a year over year and maybe even a quarter over quarter basis?

In the 10-K we’ve got a table that breaks out the perishables versus the non-perishables. They did a little bit better. Again, I think that’s a continuation of the trend of people not dining out as much but yet still not having a lot of time or inclination to cook at home. Emily Shanks – Barclays Capital: Can you comment at all about how comps have trended in the months of October and November?

I’m sorry, how what trended? Emily Shanks – Barclays Capital: Comparable store sales.

No, we don’t talk about individual months within a quarter. Emily Shanks – Barclays Capital: Can you comment quarter to date how things are looking?

No we can’t.

Your next question comes from Bryan Hunt – Wells Fargo Securities Bryan Hunt – Wells Fargo Securities: I was wondering if you could talk about some of your competitors actions; Food Lions cut prices, just had a big announcement, other companies as well, some of your competitors are triple couponing. Could you talk about what actions you’re taking to maintain your customer counts at such high levels?

We’re not going to talk about any of our individual competitors; you know we don’t do that. Suffice it to say, everyone is trying to keep market share and it’s an intensely competitive environment out there right now. Bryan Hunt – Wells Fargo Securities: That’s the first time you’ve used the word intensely in a while. Could you talk about when you saw the competitive intensity escalate? Six months ago.

Yes. Bryan Hunt – Wells Fargo Securities: Six months ago from today or the end of the quarter?

Maybe we should just say back in the spring, once everybody got through the holidays last year. Bryan Hunt – Wells Fargo Securities: Maybe more specifically, given your customer counts are growing at such a strong rate, could you maybe give us some insight into some strategy? Do you feel like it’s tied to your ability to mine your data from your customer information? What do you attribute it to?

We attribute it to having a great product selection including gasoline that makes people want to come visit us even it they can’t spend quite as much as they used to. Bryan Hunt – Wells Fargo Securities: With regards to product selection, when you talked about private label earlier, could you tell us where your private label is as a percent of mix and do you all have a strategy to hit a specific percentage mix behind private label?

I don’t have the percentage numbers but again our strategy is to make sure that we give the customer a choice. With our stores being a little larger then some of our competitors it gives us some leeway to do that. Bryan Hunt – Wells Fargo Securities: Looking at the balance sheet, your accounts payable days the way we calculate it it’s roughly 18 days and it’s the lowest it’s been in several years. Could you give us any reasoning behind why it’s at a low point over the last three to four years?

A difficult number to look at because you’re looking at one point in time day. Our overall vendor management strategy is that we’re going to take payment discounts wherever we can get them, we’re going to pay electronically wherever we can because it’s the cheapest form of payment for both the vendors and for us. Both of those things can tend to drive that number down. Again, since you’re looking at one day at a point in time at the end of that day, hard to draw a lot of hard conclusions beyond that. Bryan Hunt – Wells Fargo Securities: Given your customer count data and your continuing growing same store sales which are I would say strong relative to your peer group. Are you getting more opportunities to get promotional dollars from your vendors? Are you seeing an increase in promo dollars and marketing dollars?

Anytime you have higher volumes that gives you a little bit better leverage. Bryan Hunt – Wells Fargo Securities: Could you talk to us about how many stores you closed in fiscal 2009 and what’s the plan for that real estate if any of that is owned?

That was one store that we closed and I believe it was a leased store. We just didn’t renew the lease. Bryan Hunt – Wells Fargo Securities: Is that Q4 or for the whole year?

That’s for the whole year. Bryan Hunt – Wells Fargo Securities: Looking at your CapEx spend, $120 to $150 million, I was wondering if you could tell us what the maintenance number is within that $120 to $150 million, as well as how many are actual new stores versus replacements or remodels within that mix?

As we’ve consistently said for a long time, maintenance CapEx number is a concept that we just don’t subscribe to because you have to improve your store base. Maintenance CapEx number where you don’t improve your stores is just not a number we’re ever going to bother to calculate or pay attention to. For 2010 we’ll still have a number of projects but it will be a little bit more weighted towards remodels as opposed to completely new buildings.

Your next question comes from Karen Short – BMO Capital Markets Karen Short – BMO Capital Markets: On inflation or deflation, I didn’t catch it if you said it. Do you have a sense of what the food deflation would have been in the quarter or if there was any?

Once you get past milk and gasoline which are two huge volume items that have had substantial cost decreases over the last year. The effect of most everything else on top of that tends to be muted. We have had some cost deflation in most of our product and meat items as well. Karen Short – BMO Capital Markets: Do you have percent off the top of your head, excluding gas obviously?

No I do not. Karen Short – BMO Capital Markets: Talking a little bit about private label penetration, where is it in terms of percent of food sales and I guess what do you think the opportunity is?

We don’t have a percent available as a percent of total food sales but you have more options in most every area of the store now then you had a few years ago. Again, we want to make sure that the customers have a choice. If they want the national brand it’s going to be just as easy for them to buy that as it is to be able to buy a private label product. Karen Short – BMO Capital Markets: To clarify in the competitive environment, has it gotten more competitive into your first quarter from your fourth or is it stable?

We can’t talk about the first quarter at all. Karen Short – BMO Capital Markets: On your gross margin, other than private label what else would have been the driver of the improvements in gross margin in the fourth quarter?

Gasoline we had some difficult gross margins last year fourth quarter due to the hurricane disruptions. With milk prices being down and with your volume being up your margin is going to improve there some. Most other cases it hasn’t been that appreciably different one way or the other because at the end of the day the overall margins have been pretty stable.

Your next question comes from Damian Witkowski – Gabelli & Company Damian Witkowski – Gabelli & Company: I wanted to dig in a little bit more on the operating expense side. For the fourth quarter the $161 million versus $154 million last year, I know you said that a lot of it was due to the fact that you’ve opened a lot of stores and it required a lot of help. Is any of it temporary or is it all just the sales haven’t caught up to the expense number yet?

I think its more the sales haven’t caught up to the expense number yet. Like I said earlier in the call, you incur those costs from day one and in a recession its just taking a little bit longer for the sales volume to catch up to the level we want it to, to bring that operating expense number down a little bit. Damian Witkowski – Gabelli & Company: You don’t actually disclose the number of new stores you plan on opening in your next fiscal year? In the press release it says 10 but it doesn’t break down the remodels versus new stores.

You’ll see that in the K later on. Ten projects but with a little bit lower overall number, maybe a little bit more towards the remodel side. Damian Witkowski – Gabelli & Company: When you talk about, you spelled it out in your press release for the full year but not for the quarter. When you talk about traffic being up 9.9% in the fourth quarter I assume that excludes traffic to your gas pumps.

That’s correct. Damian Witkowski – Gabelli & Company: Do you talk about that number at all? Just out of curiosity in terms of what’s happening there as prices have come down 37% are people actually buying more gallons of gas?

Our gallon sales are up, yes. Damian Witkowski – Gabelli & Company: You don’t disclose by how much though?

No we do not. Damian Witkowski – Gabelli & Company: Milk obviously helped your gross margins because actual milk itself it was cheaper on a year over year basis. I assume that’s kind of reversing here in the first quarter.

I’m sorry; I can’t address anything about the first quarter. Damian Witkowski – Gabelli & Company: Going back to gasoline one more time, I think you managed the business to profit per gallon, is that right? Ideal you’d have it lower because in theory people would buy more gallons. Do you really care either way whether gas is higher or lower?

It’s certainly better for our customers when gasoline is lower because that means they’ve got more money to come inside the store. Damian Witkowski – Gabelli & Company: Again, from your profitability you sort of manage it more to a profit per gallon?

Correct.

Your next question comes from Andrew Berg – Post Advisory Group Andrew Berg – Post Advisory Group: With respect to the change in the accounting, where can we find the quarterly historical restatements? Will those be in the 10-K?

You’ll certainly see ’09, ’08, and ’07 fiscal years in the K. We don’t have a separate gross profit number in the quarterly results of operations footnote. I take that back, yes we do. You’ll see the quarters for ’09 and ’08 in the 10-K as well. Andrew Berg – Post Advisory Group: Roughly what’s the shift in dollars in the fourth quarter that went from O&A to cost of goods sold?

Thirty something million, roughly. Andrew Berg – Post Advisory Group: Revolver availability at the end of the quarter?

I’m sorry, say that again please. Andrew Berg – Post Advisory Group: What was available on the revolver at the end of the quarter?

All of it, $190 million. Andrew Berg – Post Advisory Group: Can you tell me what the breakout is on your sales between grocery and dairy? I missed that before.

We include dairy as part of grocery and again we’ve got tables in the 10-K that break out three or four categories but that’s as deep as we go. Andrew Berg – Post Advisory Group: When you talked about average transaction size being down I think it was $1.51, what’s that on a percentage basis?

I do not have that number with me. The average number is somewhere in the 20s but I don’t know the exact percentage of that decrease. Andrew Berg – Post Advisory Group: When are you guys actually going to file the K?

It’ll be after the market closes this afternoon.

Your next question comes from [Ken Ban] – Jefferies & Company [Ken Ban] – Jefferies & Company: On the new stores that you opened last year you said that the results were I guess a little bit behind schedule. Is there anything other than the economy that you can attribute that to? Did you market them any less then you normally do on a new store or anything like that? Has that changed your outlook for new stores this next year or going forward?

Three things to address there. We didn’t market them any differently. It’s overwhelmingly due to the economy. It’s also important to keep in mind that most of these ’08 and ’09 store openings were in process when the economy turned bad. It certainly wouldn’t have been cost efficient to just pull the plug and stop. The good news is that when the economy turns around and perhaps some other folks saying great I can start building stores again, we’ve already got them there. We suffered through a couple of years while we wait for them to catch up but I think that’ll put us ahead of things coming out of this. [Ken Ban] – Jefferies & Company: Could you tell us how many of those new stores are on properties that you own? Going into 2010 how many of the new stores will be also on properties that you own versus lease?

Substantially all of them are on owned properties, that’s far and away our preference. [Ken Ban] – Jefferies & Company: Going into 2010 will that be the same?

I don’t have the exact number but it should be the same.

This will conclude today’s question and answer session. At this time I’d like to turn the conference back to Mr. Freeman for any additional or closing remarks.

Thank you for your time and your interest and joining us today. We wish all of our customers, employees and shareholders a happy and safe holiday season. Thank you very much.

This will conclude today’s conference. Thank you for your participation.