Good day, everyone, and welcome to the Sysco Reports First Quarter Fiscal 2012 Earnings Conference Call. As a reminder, today's call is being recorded. At this time for opening remarks and introductions, I would like to turn the call over to Neil Russell, Vice President of Investor Relations.

Thank you, operator, and good morning, everyone. Thank you for joining us for Sysco's First Quarter 2012 Conference Call. On today's call, you will hear from Bill DeLaney, our President and Chief Executive Officer; and Chris Kreidler, our Chief Financial Officer. Before we begin, please note that statements made on the course of this presentation that state the company 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 10-K for the year ended July 2, 2011, and in the company's press release issued earlier this morning. On the call today, if you've joined us via webcast, you will notice that we have -- that we are augmenting our comments with a slide presentation. You can download a copy of the presentation by going to the Investors section of sysco.com. This presentation was also filed with the SEC on Form 8-K this morning. Non-GAAP financial measures are included in our comments today and in the presentation slides. The reconciliation of these non-GAAP measures to the applicable GAAP measures are included at the end of the presentation and can also be found in the Investors section of our website. In addition, all comments about earnings per share refer to diluted earnings per share unless otherwise noted. Lastly, as many of you know, we recently rescheduled our Investor Day to May 17. We expect that the Investor Day will be held in New York City, but we'll provide an update on meeting location early next year. With that out of the way, I'll turn the call over to our President and Chief Executive Officer, Bill DeLaney.

Thank you, Neil, and good morning, everyone. This morning, Sysco reported net earnings of $303 million for the first quarter of fiscal 2012 and earnings per share of $0.51. Sales increased 8.6% for the quarter, driven mainly by food cost inflation of 7.3%. This represents the sixth consecutive quarter of sequential increases in inflation. Case volume for the quarter was positive, but the growth rate remains modest in this difficult macroeconomic environment. Operating income for the quarter was $509 million, our highest first quarter on record. We're encouraged with these results at a time when the industry's as competitive as it has ever been. Our first quarter performance demonstrates our associates' commitment to focusing on our customers and managing costs. To get a clearer view of our underlying business performance, we believe it's helpful to exclude gross business transformation expenses and the impact of COLI. Looking at the results in this way, you'll see that while reported EPS was flat year-over-year, adjusted EPS grew 7.8% for the quarter, which is a result we are reasonably pleased with. We continue to believe that the food service industry will experience modest volume growth over the medium term. With that said, current industry trends appear to be flat at best. Thus, the approximately 2% case volume growth that we generated during the quarter in our business is encouraging. Looking forward, our focus remains on striking the right balance between volume growth, managing margins and controlling cost. Turning to our multiyear Business Transformation Project for a moment, we are implementing this month a significant system enhancement at our Arkansas location. We will then assess performance, address any concerns and move forward to our second facility. Once we have achieved a successful implementation at the second facility, we will update our rollout schedule and long-range…

Thanks, Bill, and good morning, everyone. For the first quarter, sales were $10.6 billion or an increase of 8.6% compared to the prior year, driven mainly by higher prices. Prices were higher due to increasing levels of food cost inflation, which we estimated to be 7.3% for the quarter. In addition, acquisitions within the last 12 months increased sales by 0.7%, and changes in foreign exchange rates increased sales by 0.7%. As Bill discussed a moment ago, case volume for the quarter increased nearly 2% year-over-year including acquisitions, or a little more than 1% excluding acquisitions. SYGMA's case growth was flat compared to double-digit growth in the prior year quarter, so all of the case growth we saw this quarter came in our Broadline organization. Turning to gross profit. I'd first like to make you aware of a change that is reflected in the results we announced today. Last year, we made the decision to reorganize our buy-in cooperative to streamline certain business functions and help us achieve the goals under our business transformation initiative. We completed the reorganization at the beginning of this fiscal year and the buy-in function now operates as a shared corporate cost center. As a result, we have reclassified certain centralized procurement costs from cost of sales to operating expenses. This change has the effect of enhancing transparency into our gross profits and operating expenses. The net effect of this change is an increase to both the gross profit and operating expense lines, averaging roughly $15 million to $20 million per quarter. Because these 2 increases net out to 0, there is no change to operating income or earnings. We have made these reclassifications retroactively, so the year-over-year variances previously reported on the gross profit and operating expense lines are not materially different. These changes…

[Operator Instructions] And we'll take a question from Karen Short with BMO Capital.

Maybe can you just talk a little bit about, more of an update on the pilot in Arkansas and just talk about some of the kinks that you obviously were focused on in the fourth quarter, how those have worked out? And then also maybe some update on the timing of the rollout to the second opco?

Karen, it's Bill. We can tell you some things and we're obviously right in the midst, as I mentioned, of putting in some of these enhancements this month in Arkansas. So the last time we would have talked with this group and internally for that matter, we said we were going to focus on Arkansas. We had some performance issues there, which kind of mean speed in terms of order process and that type of thing, and as well as some report issues and some inventory replenishment issues. So those are 3 basic things that we're addressing. And we're not addressing them all at this point in time. We've got a couple of those 3 that we're working through this month, and we hope to see some good progress there. And like I said in my prepared talk, we'll assess it at that point. And when we think we, that we're ready to go to the second company in a way that will work for our sales people and our employees and our customers, then we'll go. But I would hope it would be at some point early in the new calendar year. And then once we go through that pilot, really, the key to that pilot is just to confirm how well the system supports 2 companies, and the hope would be to get through that in good shape and then we'll reestablish what our rollout schedule would be.

Okay, that's helpful. And then just talking about sales throughout the quarter, I know you've kind of talked about the cadence in sales in the fourth quarter. Maybe it was looking a little bit better in June, but it wasn't clear. Can you just talk about your sales cadence throughout this quarter?

Yes, I think what we said last time, we saw -- generally, I mean, it's never the same in every company or every market, but generally, we saw a little bit of a flattening or a leveling out after Mother's Day, and it really didn't pick up in June. And I'd say that's continued into this quarter. What we were also concerned about is we got into this quarter when certainly the consumer sentiment that I spoke to from the standpoint of what went on in Washington in July and all that type of thing. So you guys all follow the consumer and many of you follow our industry, so if you've looked at that over the last 2, 3 months, you've seen the optimism of the consumer decline to some extent and that's been a concern. So we've experienced some of that although we're a little bit encouraged by what we've seen here in the last month, that some same type of surveys where it appears the consumer is becoming more optimistic again. So that's critical to us, it's great. We need the economy to grow and that's very important, but what's critical to our customers is that the consumer be in the right frame of mind to go out and enjoy a meal away from home and hopefully, people are gaining confidence again here ever so gradually and that should bode well for us and for our customers.

We'll take our next question from Ajay Jain with Cantor Fitzgerald.

I just had a 2-part question on the current incentive structure for your marketing associates. So the first part of the question is, can you just maybe clarify some of the operating metrics that you think are the most relevant on how the marketing associates are incentivized right now? And then the other part of the question is, whatever those metrics might pertain to, whether that's gross profit per delivery or cases per trip or pieces per trip, did you see any improvement last quarter sequentially? And also based on your earlier comparisons, is that something you can comment on at all?

Let me take the first one, Ajay, you may have to come back to me on the second one. So really, the way we compensate our MAs hasn't changed dramatically. And it does coincide with what, at least, what I would view as one of our top key economic metrics for the business. So there's a lot of key metrics, but certainly one of the top 2 or 3 would be gross profit dollars per delivery. And our MAs, once they reach a point that they're on full commission, they are paid off of gross profit, but off of gross profit per delivery. So they're pretty well aligned in terms of the basic economics. Certainly, there's opportunities over time to continue to assess that. And in addition to how we compensate people, we also recognize people, and that's a big thing within Sysco and it's certainly a big thing with our sales managers, our MAs. So certainly growth and quality growth at the territory level has always been very much emphasized within Sysco, and we continue to look for ways to keep that at the top of our list as well. The second question?

Yes. So Bill, I think in terms of your prepared comments, you mentioned that volumes are -- it sounded like they decelerated a little bit since last quarter. So I guess in that context, the metrics by which you incentivize the MAs, have those metrics improved, like both in the context of last quarter...

I try to be a little more bullish here in my comments, but actually, don't think I said that. I think what I'm trying to say is we saw some volume growth and we're pleased with that. And we saw some -- the real volume growth as you can calculate was flat, but we did try to show you that we saw some case growth in the core business and that's encouraging. But at the same time, it remains very competitive out there. So I would say to you going back to Karen's question that the volume trends we're seeing in our business are pretty comparable to what we've seen in the last couple of quarters. The market is -- the market's, I would say, also about the same, and the consumer sentiment, like I mentioned, really did tail off here in July and August, and it appears it might be coming back a little bit. So we didn't see any material changes in terms of gross profit per delivery or miles or any of that type of thing.

Okay. And then in relation to ERP, it looks like, even based on your updated outlook for this year, looks like you're already on track to maybe exceed that original $900 million budget by the end of fiscal '12. So it looks like between the operating expenses and CapEx, the cumulative total would be in -- it would still be in excess of $1 billion by the end of the year. Is that correct?

You're kind of comparing apples and oranges there, Ajay. The $900 million, which we used to refer to was an overall cash number, but there were a number of things as we've talked about, including our Sysco Business Services that weren't included in that number because we always assume there'd be a netting against them from benefits. So what we're talking about -- obviously, we've spent an amount of cash already. We're continuing to spend cash on the project rollout, but it's very difficult to compare where we are versus that number and draw a conclusion. That's one of the reasons why we went to the, what I think is a totally transparent, here are the gross expenses, and we'll update you on the benefits as we go forward.

Okay. But on a gross expense basis, is that -- am I still conceptually right that it's -- you're sort of on track to be in a $900 million to $1 billion range by the end of this year?

The gross amount of expenses that we've incurred for the projects will obviously be over $900 million, yes. All I'm saying is, I'm not comparing them back to that original $900 million. It's a bit of a -- again, it's comparing it against something that wasn't reflective of what we're now telling you the numbers are.

Yes, Ajay, I would just take you back to our last call, where we talked about our timeline, and we're 6 to 12 months behind and more than likely that could translate into additional cost. But until we get through Arkansas and the next pilot facility, it's very difficult to address that question with any accuracy.

We'll take our next question from Ed Kelly with Credit Suisse. Edward J. Kelly - Crédit Suisse AG, Research Division: I'm sorry for this question upfront, but I actually don't understand. So you're talking about case volume growth in the core business, so 1%, 2% whatever that number is, but real growth is being flat, which you can see if you take your sales and adjust for inflation and acquisitions and currency. So what's the difference between the 2 of those?

They're just different numbers. The real growth is an industry calculation that we had heard for years and years. We actually started putting it into our releases about maybe about 3 or 4 quarters ago because we knew everybody did the calculation, so we thought we'd make it easy. It's not perfectly reflective of case volume growth. It's always directionally correct. It's sometimes very close, but it's just not the same number. Case growth is a real number that we look at that just is a -- we calculate how many cases we deliver this year versus the last year, and what you're looking at is just again a definitional calculation which is sometimes pretty close.

I think, I guess as the long-term guide here, for years, we've talked around real growth in terms of inflation and the impact of acquisitions, and once we have Canada, the FX impact. So it's a long-running statistic or set of statistics that we've always provided. We've run the business off the cases, and so we're just trying to give you a couple of different ways of looking at it. To Chris' point, they're not significantly different, but we thought it was worth, at least sharing that with you.

Yes. I mean, one of the things, not to belabor it, but one of the things that's in that real growth calculation is ForEx, and you really have to scratch your head and think about whether ForEx should be in a calculation that tries to get underlying case growth. But again, we've provided you what we think you all calculate in the past, and this time, we thought we better provide you the real volume growth because it is pretty different. Edward J. Kelly - Crédit Suisse AG, Research Division: Okay. And can you update us on your outlook for inflation over the next few quarters?

Sure.

Well, let's get out the crystal ball.

That won't take long. Now look, you've seen it gradually trend up from 3% to 5% to 7%, and it was -- we had it across many categories again this quarter. Certainly, the dairy and meat and seafood led the charge. But our largest categories are canned and dry and frozen, and we saw meaningful inflation there as well. So that's how you end up with a number as high as 7%. So our best sense, and I wouldn't go out anymore than a couple of quarters is that, it's with us here for a while. I wouldn't be surprised if it mitigated somewhat, but I wouldn't expect it to dramatically decline here over the next couple of quarters. Edward J. Kelly - Crédit Suisse AG, Research Division: And where do you see inflation from a product standpoint? Does that impact your ability to pass it through? So for instance, there's been some talk about, I guess, meat pricing going up beginning of the year. Is that a more difficult category to pass it through for you or is it pretty much the same everywhere?

Well, meat's tough, just because those cases cost a lot to begin with. Those are expensive cases. So when you have 6%, 8%, 12% inflation, that just makes it a bigger ticket item for the customer. But in general, they're all -- it's all difficult when you've got 6% or 8% or sometimes by category double-digit price increase or cost increases for us at a time when our operators are still struggling to get traffic into their businesses. So we're in a different time. We've managed inflation of this type in the past, we've managed it well. It's harder this time and as I said before, I think there's an obvious reason for that, which is just the, what we're coming back from in terms of the economy, people's psyches, it's just more difficult. So I don't know that it's category-specific, but when you get into high single-digit, low double-digit cost increases, those are difficult for people to swallow in a short span of time. We do pass it along over time, but the bigger the number, the longer it takes. Edward J. Kelly - Crédit Suisse AG, Research Division: Okay. And just last question for you, your D&A was down, I guess, modestly year-over-year. I don't know if you can help us there. And then you've been capitalizing costs on SAP, and I was curious as to when the amortization on that would actually end up starting?

Yes, the way we're looking at the project or the machine, as I keep referring to it is, once we're out of the pilot stage and we're actually into the implementation stage, we will begin to amortize it. I mean, internally, we've assumed that when we get past the second pilot, that, that's when it will happen. And I think I've said in the last call that in our internal plans, we do assume that we'll start depreciating it this year. So in the numbers that we've given you, we do have an assumption that we'll start depreciating the project this year. We've not been specific about what month, but we've said it will begin this year. Edward J. Kelly - Crédit Suisse AG, Research Division: Okay. But that's when the second pilot is complete, that's right?

Yes, when we've put the second pilot in, and we've assessed that it does indeed work, and we're going to start a rollout process, and that's when we'll declare the machine to be ready and fit for implementation.

We'll take our next question from Mark Wiltamuth with Morgan Stanley.

Just to stand back here. If you take the business transformation cost out, do you think you can actually grow earnings this year?

Yes. I mean, we grew it this quarter. That's the plan, I guess we're trying to make, Mark, that we did grow operating income about 6% this quarter. If you take that and the COLI out, which I think is fair in terms of this type of a perspective. So I'm a little cautious in terms of the environment and that type of thing, but that's certainly what we're planning to do.

And if you leave them all in, if we leave -- it's like almost a $0.26 to $0.28 drag, you leave that in versus the $0.11 drag last year, do you think the earnings numbers is up on that basis?

Mark, that's not fair. I'll let Chris take that one.

Yes, I think we call that guidance. Mark, look, I'll go back to your first question. You're hitting on the point that we've been trying to make, which is, we understand we're responsible for business transformation, and we've got a lot of very, very quality people working on that, we're managing the costs appropriately, but we're not going to avoid spending money and do the wrong thing on that project. What we're trying to make sure people understand and remember that there's an underlying business here, and we have to keep that underlying business growing. And so we're trying to give you the numbers you need to show that we are indeed continuing to grow the underlying business. It's hard, but as Bill said, we do believe we can continue growing the underlying business.

Okay. And by quarter here, so it sounds like a big back half weighting here on the remaining business transformation for the year. Can you give us any help on the individual quarters on what those are going to look like?

No, we're really not going to break it down by quarter. Look, this is just me talking. We've been doing pretty good to give you guys rough estimates for the year and some would say we haven't done that good a job at that. So to break it down by quarter, the ranges would be very, very wide. Look, the meat of this year will be when we get through the pilot and we start to roll out. That's going to be where the expense picks up because that's when we'll have both depreciation kicking in and implementation teams kicking in. So that's why we make the comment, we'll be heavier in the second half of the year than in the first half of the year.

And do you think the high watermark for expense is going to be next year or is it this year?

I'm going to have to hold off on that one, only because we continue to relook at the number. And it may sound like it's taking us a while. The reality is we need to get through the second pilot and reassess the implementation plan, the rollout schedule, before we really have a good view on the next few years. And our goal is to be able to talk about that in the spring, as we said the last time around. So maybe you can give us a little more time before we can give you a multiyear look on that.

Okay. And just outside of the gross margin pressure from inflation, how do you think the other factors there? What's going on with price competition and just the overall competitive environment?

Look, it's very hard to separate inflation from price competition, from the challenges in the marketplace that our customers are working in. So I would stick with what we said here, Mark, which is -- I would characterize the competitive environment as, as strong as it's ever been, and I probably have been saying that for the better part of the 1.5 years to 2 years, and I don't think it's let up.

We'll take our next question from John Ivankoe with JPMorgan. John W. Ivankoe - JP Morgan Chase & Co, Research Division: A couple of things, if I may. Firstly, I mean, I guess it looks like, I mean, I guess being a restaurant analyst, I mean what you're seeing is your customers are ordering less expensive food this year versus last year. And that would explain the difference between case volume and real sales, I suppose? I mean, is that a phenomenon that, I mean, that you're kind of seeing across the industry? I mean, is it located in certain pockets? I mean, maybe on the lower end and is there anything that you can do to kind of prevent that, perhaps some investments in the types of products that they're not ordering year-on-year?

John, I'm Bill. I think from a logic standpoint, your theory is plausible, but it certainly is not necessarily the whole reason why you might see a difference. Again, we're not talking about a large difference so I would say over the last 2 to 3 years, our customers have taken a very hard look at their spending budgets and have focused very much on being economical with their purchases and still having a consistent quality of offering for their patrons. So I don't know that I can tell you that they're offering less expensive food this year. There's other things that can be driving that as well like mix. And these calculations, we do them across all of our companies. They're not precise like a scientist would be precise. So I wouldn't overplay that difference there too much. So that could be a contributing cause, but if that is, I don't think it's a new phenomena, I guess, is my point. The second part of your question? John W. Ivankoe - JP Morgan Chase & Co, Research Division: Regarding SYGMA. I mean, I'm assuming that inflation number is somewhere near right for SYGMA. I mean, it does look like it was -- I mean, if that's flat, probably negative case volume or real sales, whatever you want to call it, in SYGMA in the quarter. And it's not really what we're seeing in the industry. I mean, it seems like traffic is at worst about flat across the industry for the September quarter. So I just wanted to get a sense of whether there's -- whether you're intentionally giving up some business or if there are some flow of, from customers in and out of that segment that we should be aware of.

No, I think our SYGMA business is in line with what you just said in terms of, if you will, our comp for same-store sales, that type of thing. With SYGMA, we've had a nice little spurt here over the last 1.5 or 2 years. We've brought on some customers. We're running the business a lot better and SYGMA is going to ebb and flow a little bit based upon bringing in new accounts and that type of thing. So we haven't lost any major customers. We just kind of wrapped the period of time and we haven't bought any large ones on either. But I would agree with you that kind of the same-store part comp, if you will, is about flat in what we're seeing in that side of the business.

Our next question comes from Greg Badishkanian with Citigroup.

Why do you guys think maybe the Broadline business did a little bit better, particularly with soft consumer confidence? I mean, are those, some of those, I would think some of the pricing might be a little bit higher than kind of the, more of the chain business?

Better than SYGMA, is that what you're getting at, Greg?

Yes, yes, better than yes, I would think just from a pricing perspective maybe there's a little bit price points in that Broadline business.

Yes, I think I'll stick with the answer I just gave John. I don't think it's -- they're just 2 different businesses in terms of, we're always bringing on new business in the Broadline, and SYGMA tends to be a little bit more volatile as far as that goes. So I don't have a great insight in terms of that. It's not that much difference, to be honest with you, in terms of how we look at the numbers. But we're pleased with what the Broadline is doing. We're growing it both on the contracts side and in the street. We're just not seeing the volume growth that we'd like to see.

Right, right, yes. And just from a business transformation purpose, is there anything next quarter that's different than this quarter? I mean, is it going to be around $0.04? Or without giving guidance, but I mean, is there anything that we should consider, if there's any type of step up next quarter?

We're not going to give any guidance. So it's really hard for me to answer that question. I'll go back to what I said earlier and I'm sorry, but we just can't give you much guidance. But as we said, and I'll now weave in what Bill said earlier, we are, this month, making some upgrades and enhancements to Arkansas, and he said early in the calendar year, we would hope to go into our second pilot site, so that actually gets you past the second quarter. And what I've said is that, once we go into pilot side and we make sure that, that works, then we would start amortizing and then we would reassess the rollout, and that's where the expenses would really start to kick in. So to the extent that you want some sort of insight, that's probably the best we can give you.

Yes, all right, okay. And then just generally in terms of -- were there any changes in terms of mix or menu price over the last few months? Or has it been pretty, kind of status quo versus kind of what you saw in the second calendar quarter?

I don't think there's any big changes one way or another.

We'll take our next question from Andrew Wolf with BB&T Capital Markets. Andrew P. Wolf - BB&T Capital Markets, Research Division: I wanted to follow-up on the trading down and the differential and I know -- it was nice of you to give that information, I know there's some estimation in such large organizations. But I think from your answer to John, I would take away that you're probably saying there's a little stickiness in passing through some of this rapid inflation? Is that fair to say and that's sort of market driven?

Say that again, Andy? Andrew P. Wolf - BB&T Capital Markets, Research Division: Well, the 1% differential that you talked about in case volume to the calculated real sales? If it's not from trading down, I was thinking about this too. If it's not from trading down, then it's probably because the inflation you're actually increasing your cost, your pricing by is a little lower than your product cost.

Possibly. I think all I'm saying is, we're talking about a directional move here that's comparable, and the difference between the 2 is not to me overly significant. So I wouldn't overanalyze that particular difference. We're just trying to give you a feel for cases, and so I guess I'll just leave it at that. I think we're seeing some case growth we're having to invest in price a little bit to get it, and we're managing our expenses reasonably well, but as I said in my comments, we have an opportunity to do all 3 a little bit better here as we go forward in the year.

Andrew, I want to jump in because I don't want folks to fixate on some 1% number. I think when you back out ForEx, we're talking less than half a point that is explained in terms of the difference between those 2 numbers. And as we keep saying, they're never exact, they've never been exact as long we have watched them, they're usually directionally correct. So I wouldn't spend too much time trying to explain away the half-point differential. Andrew P. Wolf - BB&T Capital Markets, Research Division: But you do think the 1% real case estimate for the organization is pretty close? We don't have to -- we should consider that, right?

I'd say that's closer than the other because we actually can see that.

Yes, I mean, it's a little better than a point after excluding acquisitions and that's our real volume. Andrew P. Wolf - BB&T Capital Markets, Research Division: Got it. And is that coming more from penetration or new customers or could it just be your customers are doing better than the industry and you have good selection, positive selection volumes.

We'd like to think that, but when you do the amount of business that we do, our overall results are going to reflect the industry to a large extent. I'd say when you take it down to cases, I'd go back to what would appear to us that the market's relatively flat, we're seeing that at the customer level, and so what you're seeing here is the new cases coming in and faster than loss cases are going out, which is a good thing. I mean, we're working very hard on that. Andrew P. Wolf - BB&T Capital Markets, Research Division: You think it's your lines as you look at invoices, are the amount of lines going up, penetration?

We don't really show that number, probably any of that. Andrew P. Wolf - BB&T Capital Markets, Research Division: Okay, fair enough. And I just wanted to ask the inflation question. You're not the only folks. Some of the food retailers are also talking about mitigation, and some are using the word hope, and you guys talked about a crystal ball, and I mean, I don't blame you for nobody really knows especially where things are at. But is there any -- first of all, when you define mitigation, are you talking about just a lower rate of inflation or are you actually think there could be some sequential lower prices, maybe in some of the big commodity groups? Which -- what would be mitigation to you?

I said mitigation, and I'll see it in the transcript here at some point, I probably should have said that it would subside, the rate of inflation. We would hate using that word hope, so I think the best case for us, as you know very well, best case for our customers and for us is 2 or 3 points of inflation. I don't see that coming in the next couple of quarters, but it would be nice if the 7% turns out to be the high watermark and that it subsides here as we go through the next several months. It's really hard to predict beyond that though. Andrew P. Wolf - BB&T Capital Markets, Research Division: Okay. And are any of the futures markets are in forward contracts that you can enter into? Are any of these at kind of lower inflation rates? Is there any hard evidence at this point that there might be some?

Well, in some of the commodities if you go out and if you look at the numbers year-over-year, there's a little bit of a lessening, I guess, if you will the inflationary pressures, but not a lot. And so we typically don't go out and do a lot of forwards on commodities, and I don't expect that we'll do that anytime soon. Again, our whole model is predicated on as a marketer and distributor, being able to pass along these cost increases. And to some extent, we're in unprecedented times here, but I wouldn't expect us to start doing a lot of forward speculating.

Our next question comes from John Heinbockel with Guggenheim Securities.

So a couple of things. The lower business transformation expense this year, is that simply a timing issue that it gets pushed out to next year? Or is that a true reduction in cost?

That's really just firming up our estimates from earlier in the year. When we were putting together our plans and guidance for the year, we were kind of in the middle of still reading the results from Arkansas. So we put together the best numbers we thought, and as we've gone through the first quarter, we've been able to true those up. So at this point, I'm just going to say, the true up in the numbers.

But you were conservative -- or you were conservative before that -- this is where we're coming out now?

I would say we were probably erring on the side a bit on conservatism, and I'm not going to say that it won't be a timing issue. Again, we're holding off on giving you further out guidance until we got a chance to read the second pilot and finish our rollout. But right now, I'll just say, it's a true up for 2012 and that's pretty much the best view I've got.

All right. Now Bill, on price elasticity, if we end up a year from now with inflation of 2% or 3% or something like that, what's your sense on price elasticity and how much of that helps unit demand? Or in this macro does it not help much?

Well historically, it's helped, John, as you well know. Historically, whether it's a mindset or elasticity or whatever when you have lower levels of inflation, our trends would tell you, our historical trends would tell you, we're able to grow our boxes a little bit more. I think that's though because that the operator that we're selling to is in a better place in terms of their business and in terms of their outlook. So time will tell, but I would still say that we would be better served, and our customers will be better served if we can get to that lower level of inflation, the 2 or 3 points. And I just think people's outlooks will be better in that kind of environment. So I would much rather see that. It would be good to get there in the right way, and not get there too fast, but I would think that, that's a better scenario for us.

But there's not a 1:1 relationship, right? If inflation backs off 400 basis points, we'd probably don't see a 400 basis point improvement in unit demand?

No, I don't think you do. And I would, double on what I had given -- just given the world that we operate in today, which is much different than one we operated in 4 or 5 years ago, so I would not make that leap.

All right. Then finally, if you think you just talked about other opportunities to reduce cost. When you look at the growth in payroll, is that primarily, is that hours, is it cost per hour and where is there opportunity if you think there is to bring that increase down?

I think there's a couple levels of opportunity. One is, I mentioned Fred coming on board here and working with Larry on rolling out this enterprise-wide enhanced operational support work, if you will. So you watched us over a lot of years, so we've gone from basically pretty much letting the operating companies do whatever they want, to do operationally, to best practice websites, to integrated delivery models, to now we're just kind of trying to strike a better balance between what the OpCos can see through their prism locally, where they can make improvements in terms of the productivity, and what we might be able to see across the entire enterprise. And so, I think over the medium-term, there continues to be opportunity, like we've created over the last 3 or 4 years, where you've seen our productivity improve nicely, both in the warehouse and in delivery, and I think that continues to be that type of opportunity going forward. And keep in mind, that was all part of the umbrella -- under the umbrella of business transformation. It just didn't happen to be part of the SAP component of it. So I think that's a kind of a medium-term opportunity ongoing for us. And then secondly, I've said this before and I don't mean to be oversimplified or trite, but I think anytime you've got 500 people coming to work together every day, anytime you got 200 people in operations and a sales force of 100 people, there's always opportunity to mobilize those folks in a more efficient way. So we do a great job, I think we do better than most, if not all. But when you have that many transactions, that many cases and pilots coming in and going out every day, there's always opportunities to manage the business and little bit better, and that's certainly what we're working on very hard here.

We'll take our next question from Meredith Adler with Barclays Capital.

I'm wondering if you could talk a little bit about your staffing for marketing associates. There was a time where I think everybody thought the economy was going to improve more quickly, and I know you didn't want to be behind in terms of training marketing associates. When you look where you are now, do you just think that you need to make some changes in the staffing?

Meredith, it's Bill. I actually think we're in a pretty good place right now. We have gone through a transition to your point over the last 12 to 18 months. Where I think some of our operating companies, got behind or maybe cut a little bit more than, in retrospect, than we would've liked to have cut. But as I look at our numbers today, we're up modestly in terms of MAs, and we're up about, what the cases are up, and we're up about what our expectations for case growth are, so I think we're in a pretty good place there.

Okay, that's great. And then I think this is beating a dead horse, but if you were to start depreciating the business transformation cost, saying, let's just make this up in the fourth quarter and you were also going to start to have the actual expenses of the rollout should be running through the P&L. Can you give us some idea of, based on what you know today, what that would do to earnings per share?

Well, we've given you the full year guidance on that, Meredith, which includes both those items. So we updated it today, of course, $250 million to $275 million of expense for the year. You can make your own assumption on how much of that is the first half versus the back half of the year. Included in that is depreciation and the expensing of the items, and so roughly $10 million per $0.01 per share, that would be the impact on our earnings per share.

Okay, I'm sorry I didn't realize that, that included the D&A component in it.

Yes, it's all expensed.

We'll take our next question from Erin Lash with MorningStar.

I had -- I wanted to go back to some of the strategic pricing initiatives that you've talked about over the past couple of quarters. I don't think that you mentioned it this time around, and I was wondering if you could give us an update or a little bit more detail on that.

Yes, Erin, this is Chris. I didn't mention it frankly because it wasn't a significant impact at all. We -- that number or the impact of that number on our gross margin has declined the last couple of quarters as we've discussed, to the point where it's not really, it's not something we're going to call out because it's not material. So the translation -- we're starting to see the impact that we wanted to see. We're starting to see the benefits on those geographies that were rolled out earlier, offsetting the geographies that we rolled out later in the process.

Right, thank you, that's helpful. Following up, I'm pretty sure that you mentioned this about a year ago. But could you remind us what the impact is regarding the timing of the holidays, meaning with Christmas and New Year's falling on Sundays for the upcoming -- in the current quarter, how that impacts your case volumes versus if they were to fall on a weekday?

Okay, I'll take a shot at that one. It's actually better if it falls on a Sunday because that's a normal day off, obviously, for most of our people. The reality is though that they get holidays. There's the expense side of this, so we'll incur some extra cost anytime you have a holiday week, especially a big one like Christmas or New Year's the following week. So the reality is Christmas, in particular, is a time where at some point that weekend, people stop going out. So in the case of Sunday, we'll do a little better because you'll have Christmas Eve, most people though pretty much shut it down by noon on Saturday. So it could help us a little bit. I think the holidays fall at the same time this year as last year. I'll have Neil come back to you on that if that's different. But I think in terms of what weeks they fall in, it's the same. And Erin, that's probably more important, to be honest with you, in terms of the week as opposed to the day of the week.

I think that's where we gave you some guidance a year ago because actually one of the quarters had one less holiday than the prior year, one had one more holiday than the prior year, so we did the adjustment to help you out with that.

Okay, that's helpful. And then just finally, any update on the acquisition pipeline or premiums that sellers are potentially looking at? Or should we assume that most of your focus is going towards the business transformation and not on the acquisitions at this point?

No, we continue to spend a great deal of amount of time working on acquisitions. We've got a small team of people, and then we've got a large group of people out in the field that one of their roles is to continue to source potential acquisitions. So the pipeline is reasonably robust. We don't announce every deal that we do. We tend to make an announcement involving 3 or 4 deals that we've done. We'll continue to say that most of these are smaller-ish transactions given our size. Most things are going to be smaller transactions, but we'll keep doing them. And the first part of your question in terms of pricing, it's really about the same. We're pretty disciplined in our approach. We don't feel we overpay for anything. We like to be fair, but we continue to see owners of companies that are at a point where they're ready to exit the business, come forward and we're typically able to get to an agreement on pricing and we move on down the path towards closure.

We'll take our next question from Bob Cummins from Wellington Shields & Co. Robert Cummins - Shields & Company: My question just happened to be also on acquisitions. I see that you did spend $36 million on acquisitions in this quarter, so you're not standing still. But it also occurs to me in the current environment that there might be and particularly in areas of the country where you have a relatively small market share, there may be more acquisition opportunities and perhaps of a larger size that you might consider doing. Can you kind of give me a sense of whether you see more people looking to sell out their businesses around the country and what your strategy would be? You still have a relatively small market share nationwide.

Bob, thanks for pointing that out. But the reality is, the market share moves around depending on the market. So as you go to 17% nationwide statistic, there's markets where we have considerably more than that and to your point, there's markets where we have less. So we are seeing, to Chris' point, we are seeing and have seen over the last year or so and I think we're being more effective and proactive, some fold-in opportunities, which, Bob, I think could be the more likely scenario for us. So there are some bigger players out there. We don't have the sense that they're overly interested in selling their businesses right now, but certainly we'd be open to talking to them. But I think the bigger opportunity is on the smaller to midsize competitors. And to your point, in markets where we do have more opportunity to grow our share.

Yes, I'll weigh in there, Bob. I mean, we're looking everywhere. We have folks working everywhere. I hate to say it like this, but we'll talk to anybody if they're interested in selling. So we don't necessarily focus on areas where we've got low market share although in certain markets, Los Angeles or Southern California we're under-penetrated, we announced a deal there within the last year, a decent sized deal to help us out. We'll certainly look in those areas, but we don't look exclusively in those areas. We'll look at transactions anywhere we can find them.

That concludes today's question-and-answer session. Thank you for your participation and have a wonderful day.