Good day, ladies and gentlemen, and welcome to the Kroger Company Third Quarter 2005 Earnings Conference Call. My name is Ann Marie and I will be your coordinator for today. At this time, all participants are in listen-only mode. We will be conducting a question and answer session toward the end of today's conference. If at any time during the call you require assistance, please press star followed by zero and a coordinator will be happy to assist you. I would now like to turn the call over to Ms. Carin Fike. You may proceed, please.

Good morning and thank you for joining us. Before we begin, I want to remind you that today's discussion will include forward-looking statements. We want to caution you that such statements are predictions and actual events or results can differ materially. A detailed discussion of the many factors that we believe may have a material effect on our business on an ongoing basis is contained in our SEC filings, but Kroger assumes no obligation to update that information. Both our third quarter press release and our prepared remarks from this conference call will be available on our website at www.kroger.com. Now I will turn the call over to Mr. Dillon.

Thanks, Carin. Good morning, everyone. We're pleased you could join us to review Kroger's third quarter financial results. With me today are Rodney McMullen, Kroger's Vice Chairman, Don McGeorge, Kroger's President and Chief Operating Officer, and Mike Schlotman, Senior Vice President and Chief Financial Officer. I'd like to begin this morning by briefly reviewing our third quarter performance and some key areas of our business. Rodney will share additional details about our results, and then we'll take your questions. Total sales for the third quarter increased 9.1% to $14 billion. This growth was once again broad-based across the organization, driven by strong sales at the Company's food stores and fuel centers, some improvement in southern California, and a great performance at our convenience stores. This growth continues a very good trend. Identical supermarket sales increased 6.6% with fuel and 3.7% without fuel. Once again, by either measure, this represents Kroger's highest identical supermarket sales since the merger with Fred Meyer in 1999. It also is the ninth consecutive quarter of positive identical supermarket sales, excluding fuel. We're very pleased by this performance. As we've discussed before, identical sales growth is a key component of Kroger's strategy. Kroger's business strategy is squarely aimed at consistently meeting the needs of our customers through great service, selection, and value. To do that, we've taken a page from Kroger's past to build our business for the future. Some of you may know that back in the 1970s Kroger became the first U.S. grocer to formalize consumer research. Since late last year, our Company has been surveying thousands of customers around the country each quarter to ask about their shopping experience in our stores. The great thing about this feedback is that it comes directly from our customers and it clearly identifies areas where we…

Thank you, Dave, and good morning, everyone. As Dave said, our sales growth during the quarter was very broad-based. We had growth across all of the country and across all major categories. All but one of our divisions experienced another quarter of an increased identical supermarket sales. The strongest categories included produce, grocery, and drug general merchandise across the Company. Also at Fred Meyer, in addition to these categories, the home fashion and apparel categories were strong. We estimate product cost inflation during the quarter was 0.4%, that's 0.4%, excluding fuel and 3.4% including fuel. Kroger reported net earnings of $185.4 million or $0.25 per diluted share for the third quarter. Net earnings in a year ago period was 142.7 million or $0.19 per diluted share. Kroger's results for the quarter reflected a variety of items that together had little effect on fully diluted shares earnings per share. These items include $0.02 of income resulting from the settlement of a previous class action credit card suit and the reversal of an unrelated tax contingency. These benefits were offset by a combined $0.03 of expense resulting from the impact of Hurricane Katrina and Rita and an increase in certain legal reserves, some of which are nondeductible for tax purposes. And a write down to fair market value of assets held for sale. The biggest item was the increase in certain legal reserves. Our fuel business had a strong quarter in sales, gallons, and margins. While fuel margins in the quarter were strong, on a year-to-date basis, they were more normalized. FIFO gross margin was 24.48% of sales, a decline of 62 basis points compared to the third quarter of 2004. Excluding the effect of retail fuel operations, FIFO gross margin declined 6 basis points from the prior year. Improvements in strength,…

Thanks, Rodney. Thanks to the hard work and outstanding contributions of the entire organization, Kroger has made tremendous progress in several key areas this year. Our associates are offering improved shopping experiences to our customers in a variety of ways. And Kroger has been able to fund these improvements by taking costs out of our business and improving productivity. Holiday sales are off to a strong start. We are focused on becoming more competitive in every aspect of our business so that we can take advantage of growth opportunities and generate value for our shareholders. During this holiday season, it's important to thank our associates and customers for their generous response throughout the year to help those in need. 2005 has been a difficult year for so many, including those affected by the hurricanes in the Gulf coast. I'm tremendously proud of the way our customers and our associates at our stores, our manufacturing plants, offices, and distribution centers rallied to help. Together we raised more than $7 million for the American Red Cross hurricane relief efforts. Kroger has long understood the importance of giving back to the communities where our customers and associates live and work. Now others appear to be taking note, too. Last month, Business Week magazine recognized Kroger was one of the most generous companies in America for our work with schools, food banks, youth groups, and other charitable organizations. We're proud of that honor and will continue to look for new ways to partner with these organizations in 2006. We now will be happy to take your questions.