Operator: Welcome to the Safeway's Third Quarter 2011 Conference Call. At this time, all participants are in a listen-only mode.
I will now turn the call over to Ms. Melissa Plaisance, Safeway's Senior Vice President of Finance and Investor Relations. Please go ahead.
Melissa C. Plaisance - SVP, Finance and IR: Good morning, everyone, and thank you for joining us for our third quarter conference call. With me this morning is Steve Burd, Safeway's Chairman, President and CEO; and Robert Edwards, Executive Vice President and Chief Financial Officer.
Before we begin, I'd like to remind you that management will make statements during this call that include forward-looking statements within the meaning of the federal securities laws. Forward-looking statements contain information about future operating or financial performance. Forward-looking statements are based on our current expectations and assumptions and involve risks and uncertainties that could cause actual results or events to be materially different from those anticipated. However, we undertake no obligation to update or revise any such statements as a result of new information, future events, or otherwise. For a list of description of those risks and uncertainties, please see our filings with the SEC.
With that, I'd like to turn the call over to Steve.
Steven A. Burd - Chairman, President and CEO: Thank you, Melissa. Let me begin with net income. Net income for the quarter was just over $130 million. This compares with net income from the same quarter a year ago of just under $123 million. Expressed in terms of earnings per share, we made $0.38 this quarter. A year ago we made $0.33 a share, representing a 15% increase in earnings per share.
By way of some quick highlights, our earnings per share results were above first call consensus estimates and above our own internal expectations. Our ID sales were much stronger than they were in quarter two, and they strengthened as we moved throughout the quarter.
Our gross margin rate adjusted by both fuel sales and the Blackhawk reporting change that we announced in the last quarter was flat with last year, despite all the challenges of keeping up with inflation. O&A expenses as a percentage of sales were less than last year. As a result, our operating margins expanded moderately, just as it did in quarter one.
Providing a little bit more detail, starting with sales. Total sales increased 7.1% over last year. This strong increase in reported sales is largely the result of four factors. These factors in the order of importance start with much higher fuel sales, and those sales were driven by a 26% increase in price per gallon versus the previous year, coupled with a 13% increase in what we would call ID gallon, those gallons and the identical number of stations that we operated last year.
Our second element of improvement came from ID sales growth, third was an increase in the Canadian exchange rate, and then finally, the change in the Blackhawk revenue reporting that we discussed kind of last quarterly earnings call.
ID sales excluding fuel, increased 1.5%. Now this is three times the 0.5% increase we experienced in quarter two of this year, and it is also the seventh consecutive quarter of improvement. In addition, we have 9 of 10 divisions that had positive ID quarters, indicating that while not uniform, it’s very broad based.