Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to the Crocs, Inc. Fiscal 2009 Second Quarter Earnings Call. (Operator instructions). I will now hand the call over to Jennifer Almquist, Crocs' Director of investor relations.

Thank you. Good afternoon, everyone and welcome to our second quarter earnings conference call. It's a pleasure to speak with you today. On the call today are John Duerden, Crocs' President and CEO, and Russ Hammer, Crocs' CFO. Earlier this afternoon, Crocs announced second quarter financial results. A copy of the press release can be found on the company's website www.crocs.com. Reconciliations of the non-GAAP measures mentioned in the press release and on the call today have been provided and can be found on the Investor Relations of Crocs website and in this afternoon's press release. Before we begin I would also like to remind everyone that some of the information provided in this call will be forward looking and, accordingly, are subject to the safe harbor provisions of federal securities laws. These statements concern plans, beliefs, forecasts, guidance, projections, expectations and estimates for future operations. Crocs cautions you that these statements are subject to a number of risks and uncertainties described in the Risk Factors section of our 2008 Annual Report on Form 10-K, as well as other subsequent filings with the Securities and Exchange Commission. Accordingly, actual results could differ materially from those described on this call. Those listening to this call are advised to refer to our Annual Report on Form 10-K, as well as other documents filed with the SEC for additional discussion of these risk factors. Crocs intends that all of its forward-looking statements in this call will be protected by the Safe Harbor provisions of the Securities Exchange Act of 1934. Crocs is not obligated to updates its forward-looking statements to reflect the impact of future events. I would now like to call the – turn the call over to John Duerden, Chief Executive Officer of Crocs. Please go ahead, John.

Thank you, Jennifer and welcome everyone. We are pleased to report to you today a better than expected operating results for the second quarter of 2009. We are also particularly pleased to announce that due to our strength in cash position at the end of the second quarter, we have completely paid off the outstanding balance on our credit facility this week. And if I may take this opportunity to paraphrase a quote from the American author Mark Twain, "The rumors of our demise have been greatly exaggerated." And while we are certainly not celebrating here, you might forgive us for a few mid-fives given some of the recent media attention. Our recent performance and improved financial position can be attributed to several factors, the extraordinary strength of Crocs brand and its continuing resonance with our core consumer. Secondly, the enthusiastic acceptance and sell-through of our new spring product line. Thirdly, our ability to effectively our assets including managing down our inventory levels. Fourthly, the successful execution of our turnaround strategy to date. And finally, and I think this is important, unwavering commitment to return this company to profitability and to dismiss the notion that Crocs is a fad. Certainly, the company has its challenges, but as our revenue this quarter suggests, finding a solid consumer base doesn't appear to be one of them. And as I've said before, people seem to either love Crocs or hate them. But either way they're certainly talking about them. And the company will continue to battle naysayers. The Washington Post published our obituary in July, claiming we were simply a product of the economic boom, a one-shoe company and a dead brand. Other media outlets in the U.S. and Europe picked up this story on jumped on the on the bandwagon. But our…

Thanks, John. Hello to everyone on the call today and thanks for joining us. As I've done in the past, I'll provide you with year-over-year comparisons and where it makes sense to do so, in order to provide clarity on the progress of our turnaround I'll also provide some sequential comparisons, as well as channel and geographic breakdown to provide additional clarity. But first, the big news. As John mentioned previously, we are pleased to say that we were able to pay off our debt using the cash we generated this quarter. We ended the quarter with $77.5 million in cash after generating cash from operations of $26.1 million. Our strong cash position enabled us to recently pay off the $17.3 million of debt we had sitting on our balance sheet at the end of the second quarter. I am very pleased to say that today the company is completely free of bank debt. This provides us a significant amount of strategic capital flexibility recognizing that a good capital strategy always includes ready access to cash. We have also signed a nonbinding term sheet with a well-known vendor and are in a process of working through the diligence process to secure an asset-backed revolving credit facility allowing us greater liquidity. It's still early in the process, but we hope to finalize a new line by the end of the third quarter. One key element of our cash management strategy that supported our increased cash balance is the strength of our balance sheet through our strong asset management. Notably, at the end of the second quarter was the improvement of our day sales outstanding, which declined from 40.4 days in Q1 to 31 days in the second quarter. Note this was a substantial improvement from Q2 of ’08 when our DSO…

Thank you, Russ. Maybe I should as a final end to this call, try and place the magnificent performance, if you like, within the context of our overall recovery strategy, which I took you through last time. Last quarter I gave you my initial observations on the business after my first 60 days with the company. And I think it's true to say my general impression since then has not changed. First of all, this remains a vibrant brand. But I have a greater understanding of where the company truly stands now in the market and with its consumers and the challenges, which the company faces. I also have a better idea on where the company should be both operationally and financially with respect to its peers. Most importantly, I see a clear path and how to get there, very similar to the last quarter. I've also had an opportunity to discuss the performance with the management team during the last four months. I'll share these points with you now. Last quarter, I pointed out seven initiatives that I felt was required to build a solid foundation from which this company could grow profitably in the future. They were; first of all, improving our cash position. That was my highest priority 90 days ago. As we've highlighted on the call, we exceeded our own cash forecast as a result of higher sales and tight asset management in the second quarter and as a result, were able to pay off our debt. Candidly, I didn’t we would be in this position this early. As a bank debt-free company, this puts us in an excellent position to negotiate favorable terms for a new facility that I think will give us greater flexibility in the long run. We will continue to actively manage…

Thank you. (Operator instructions). First, we'll hear from Jeff Klinefelter with Piper Jaffray Jeff Klinefelter – Piper Jaffray: Yes. Congratulations to everyone on great management of the business in this environment, that's terrific.

Thanks, Jeff. Jeff Klinefelter – Piper Jaffray: Couple of – few questions for you. John, maybe we could start with you a view towards short term on Q3, or John and Russ combined. Can you give us a little bit more sense for how you see the gross margin and SG&A lines shaking out with that top line and bottom line guidance that you provided for us? And then, also in terms of the revenue, I think one of the keys here is getting a higher level of comfort with visibility and as you mentioned John, it's still difficult, but with your diversification of the model, the greater retail – the more retail that you have, the momentum in Asia, can you talk a little bit more about how you are coming up with your forecast for Q3, what geographic regions or channels and how confident you are in those – in that forecast?

Jeff, it's Russ. Let me – thanks first for the congratulations. And let me give a little color on that. So – I think first, your question regarding around the margins, so as I stated on the call, we did see some uplift in the margin on a GAAP basis. As we reported, that won't reoccur in Q2 and we are not giving specific margin guidance, but we will have the continuing inefficiencies of the consolidation of both our Europe and Asia warehouses in third and fourth quarters. So I do expect the third quarter margin will not be as robust as the second quarter margin sequentially, if that helps you. And then as far as the revenues from the geographic and channels, the second quarter is normally our highest seasonality, I think 2007 was the only exception to that when we had the big build-up to Mammoth. So we normally see our second quarters 31%, 33% of our business and then we see a seasonality drop-off in the third quarter. Plus in our consumer direct after the back-to-school time, retail slows down in September. So we'll see those natural effects in our revenue. So if you look at our – for example, our second quarter without the benefit of the impaired unit sales, which we identified when we said we were around $174 million, and then seasonality, that's how we got to our guidance. We do see strengths still in the Asian market and as we said, everywhere we see strength in the consumer direct channels of both retail and Internet. John, any other –?

Yes. I think – let me say Jeff, that we expect to see continued strength in the things that are moving pretty well. Recovery in the wholesale channel takes a little time, as I think everyone is aware. So we will continue to push on those things that are already moving. I believe very much in galvanizing the resources of the company behind the areas of opportunity or areas perhaps of competitive weakness. And I think that we've seen really good growth in Asia and I think the growth in our retail business and our understanding certainly of the retail business has been enhanced significantly during the last quarter. And I think we'll continue to push hard on those. Jeff Klinefelter – Piper Jaffray: Okay. In terms of the balance of this year and I guess to the extent you already have things in the pipeline for next year, can you give us a sense for what sort of retail growth you have planned currently? I mean, how many stores do you plan on adding second half of this year and next year or at least directionally how you are thinking about store adds?

So Jeff, we are not thinking super-aggressive in that area. We are looking some modest growth in – particularly in the outlet areas in the U.S. and in Asia, but we are talking half a dozen type stores in each market type of a growth rate, so pretty modest.

We are going to put a full press, Jeff, on the operational efficiency of those stores. We've got some consultants working with us on that at the present time and I don’t think we'd see a massive growth in stores between now and the end of the year, in fact very marginal.

Jeff, one thing that we – as John commented on, we are focusing on the operational aspect. In the second quarter, we saw – just to give a little flavor, our same-store comps in the U.S. were down, but they are only down 1.9%. And we saw that, it was a significant accomplishment given that most comps in most markets were down more than that in the quarter. We are really focusing on the operational efficiencies in our stores and we are seeing the consumer demand is pretty strong in the consumer direct channel. Jeff Klinefelter – Piper Jaffray: Okay. In terms of the SG&A run rate, Russ, could you just go through again what you would consider your core SG&A, what it was in Q2 and what you expect that to result in here for sort of second half into 2010? I mean, what's the base level SG&A that you are working down to?

As we said, we reported a GAAP $91 million (inaudible) we were down in the low-80s and we do have that AVP sponsorship, which is significant still in Q3. So we expect Q3 will continue to come down from Q2, but slightly. We'll see more significant drop-offs in the fourth quarter and as we go into first quarter, as we complete the changeover of our AVP, and then we are continuing our cost reductions in all areas of admin, corporate, and looking at all areas globally within the SG&A function. Jeff Klinefelter – Piper Jaffray: Okay. Just a couple of housekeeping and then I'll take the rest offline. CapEx for full year and free cash flow forecast for full year at this point?

We are not going to give guidance on the full year, Jeff, but our CapEx is running tighter than what we thought here in the first half and – but as John said, we are investing in our IT systems on the order entry, the global Internet system platform and our global retail system. So we are going to spend a little less than what we thought on an annual basis, but we are not going to give any guidance on that right now. Jeff Klinefelter – Piper Jaffray: Okay, great. Good luck, congrats to everyone. I will call you back offline for more questions.

Thanks, Jeff.

Thanks, Jeff.

And next from D.A. Davidson, we'll hear from Reed Anderson. Reed Anderson – D.A. Davidson: Good afternoon. A couple of questions. On the sales of the impaired merchandise or previously impaired, just curious, I presume the majority that went through the U.S. and through your own retail or Internet, is that a fair assumption?

Actually, it's not. The channels – lot of it went through retail and Internet, but it was global. Reed Anderson – D.A. Davidson: Okay.

It was in Asia, it was in Europe and it was in the U.S., not primarily in the U.S. We were thoughtful about how we did that. As John had mentioned on previous calls, we weren’t just going to go to channels where we knew we could jump through. And we actually found that by going through the consumer direct channel, we actually got higher price than what we have estimated at the time that we had impaired it. Reed Anderson – D.A. Davidson: And is there additional carryover perhaps in the third quarter from a similar – because there is still more impaired merchandise out there that you are selling at better prices or was that all worked out in 2Q?

So if you recall, back in Q3 we had about 8.2 million units that we impaired and at the end of Q2 now, we are down to 2.2 million units. So it's way ahead of schedule of what we thought we would accomplish by this time, because we said that would take us 12 to 18 to 24 months to thoughtfully execute in the markets. So we will continue to see that in third and fourth quarters, but at a much smaller. Reed Anderson – D.A. Davidson: Much smaller rate? Okay. That's very helpful. And then piggybacking on Jeff's question about just kind of getting at the core SG&A, I'm just curious if you just give us kind of a sense of direction relative to just kind of what you consider your marketing spend, what is that looking like today versus what it would have been maybe a year ago or a quarter ago? Just giving a sense of what you are spending there to drive the current level of business?

So we are spending a lot less in our marketing area and we are also going through a pretty dynamic change of our marketing. So as we said in the call, we are changing our sponsorship strategy, what we've enjoyed being an AVP sponsor over the years and now we are changing from doing that type of sponsorship to more direct consumer. And also as we've expanded our retail and that's become a significant part of our business, that is marketing is own with the stores that we have.

Yes, I'd like to make a comment on that. I am – we are not spending enough on marketing in my view and we need to make provision to spend more on marketing by reducing costs in other areas. We are realigning marketing spend, however, much more in support direct retail. One of our big programs and most important programs and I think, proving to be one of our most successful programs this year has been in-store merchandizing. We set up a completely separate team in the company that has been very successful and we've seen some quite dramatic changes in sell-throughs as a result of installing this merchandizing in the store. So that's an area we are going to put money in there, we are certainly going to be behind direct support of our retailers and direct support of our retail operations and we get a good bang for the buck there, it appears. I think there are other things we can do at the brand level, but as I've observed already, the brand recognition for Crocs is huge and that’s not an area I think now that we need to spend a lot of money on. What we need to do is we need to very carefully focus our spend in support of the retailers and in support of full merchandizing of our product line. But we are going to try and make provision to spend more on that next year. Reed Anderson – D.A. Davidson: Very good. And Russ, you had – in your comments, you had given a number that you said that the expense to operate the retail business and I didn't write that down. Could you repeat that number, please?

Sure. In this quarter, it's $25 million, Reed. Reed Anderson – D.A. Davidson: Okay. And then lastly, I'm just curious – I know it's a small piece of your business, but just a sense to what the trend is. Could you tell us what Jibbitz's sales would have been in the quarter versus – and what the change would have been either year-to-year or quarter-to-quarter?

Sure. Just give us a second here. It’s small, it's going down, but – we'll get that for you here in just a second. Well, Jibbitz in the quarter was $7.1 million. Reed Anderson – D.A. Davidson: What would that have been like versus either the 1Q or last year's 2Q?

Second quarter last would have been $17 million, so down about $10 million. Reed Anderson – D.A. Davidson: Okay. All right, that's it from me for now. Thanks, guys.

Thanks, Reed.

And next, we'll hear from Jim Duffy from Thomas Weisel Partners. Jim Duffy – Thomas Weisel Partners: Thanks and very nice work on the quarter balancing and improving. It is very impressive, I congratulate you on that. Russ, you said a mouthful going through the numbers to say the least. I think you said 48% gross margin ex items.

That's correct. Jim Duffy – Thomas Weisel Partners: Could you walk me through how you got to that number again, please?

Sure. So primarily Jim, if you look at the business, we had – we had $197 million sales and we had $23 million of sales in impaired product. So our standard, call it, product sales were $174 million. Jim Duffy – Thomas Weisel Partners: Okay.

And our GAAP reported margin was at the $101.1 million. So what you back out of there is the impaired unit profit, $25.2 million. It's on our attached schedules that we sent out too, Jim. We put – Jim Duffy – Thomas Weisel Partners: Okay.

And then we had the restructuring charges of $5.3 million. So the $25.2 million was a benefit. And then there is also additional stock-based comp of $3.1 million. That will get you down to $84.2 million, which is the 48% I referenced. And there is a bridge in the attachment just to walk you through that in detail. Jim Duffy – Thomas Weisel Partners: Okay. I'll take a closer look at that.

And we attached it for your reference, so you can see what very normalized our GAAP to non-GAAP, we attached a profit bridge and SG&A bridge and the margin bridge. Jim Duffy – Thomas Weisel Partners: Okay. And then, that 48% gross margin, do you see that as a good normalized gross margin to work with on a go-forward basis?

No. As I said, we are still going to have some inefficiencies in the third and fourth quarter as we are going to – the exercise that we completed in the U.S. of consolidating down the southern warehouses here in the Denver area, which I think you visited most of them, Jim, to L.A. We are doing that exercise in third quarter and fourth quarter in Asia and Europe. So we are going to have some inefficiencies there. Jim Duffy – Thomas Weisel Partners: Okay.

Just – as John said, that's going to be more in getting out into 2010, that's our longer-term objective, just to get back up to those levels.

But I think we've got a line of attack on that margin, Jim, and I really think that we can get to those industry level margins.

Absolutely. Jim Duffy – Thomas Weisel Partners: Okay. Great, you have a good growth in retail. I would assume that would be achievable. And then a point of clarification on the $25 million for retail operating expense, does that include the leases?

It does, Jim. Jim Duffy – Thomas Weisel Partners: Okay.

All of our retail costs are in SG&A. Jim Duffy – Thomas Weisel Partners: All right. And then the savings you expect from parting ways with the AVP and the closing of facilities, can you quantify that for us?

Actually – so actually, Jim, we are not going to – as John just articulated, we are not going to pour all that into the savings. We are going to invest more in marketing and our intention is to actually increase our marketing spend, not decrease it. We're just going to channel it into other areas, more consumer direct, as John articulated. Jim Duffy – Thomas Weisel Partners: Okay. And then can you ask you guys to speak more specifically about the components of the Asia businesses? Which geographies are driving the growth, where you are seeing strength, where you expect to see strength to continue?

We’ve got – it's consistently fairly strong, I must say. But the biggest and most successful market is Japan. I was just there actually last week and we have a good management team there. The brand is extremely well received and I think that – I think we can see continued growth in Japan. Korea is a big potential market for us and China, of course, and we are really just organizing ourselves to go after the China market. And some of the markets, Singapore is very successful for us.

Thailand, Australia and Hong Kong.

We still look at Hong Kong obviously as a separate operation, as distinct from PRC, but they are all actually quite strong markets for us. The brand is very well positioned there, it's extremely well presented at retail and I think that there is a good potential for the growth there.

We also include, Jim, in our Asia markets from a geographic perspective, South Africa and Middle East and those are also doing very well, especially South Africa. Jim Duffy – Thomas Weisel Partners: Okay. How is it that you are able to kind of fight off copycat product that there's been such a headwind for you in the European market? Does it just not exist? Do you have better branding, better trademark protection?

Yes. I – if I – it's interesting looking back on prior expense in this industry. Europe is always a very good of a market for some reason. First of all, price levels are higher there and it attracts knock-offs, grey market, like a magnet. And we've adjusted our price levels there to try and counteract some of that. But it comes down really the clever positioning of the brand and just staying after that real clear brand positioning. And I think probably in Asia everybody knows you can get knock-offs, but they really want the branded product, whereas the Europeans tend to be cheaper, I can say that, and they'll take knock-offs and they are less concerned about brand and imagery than either the U.S. market or the Asian market. I think that's the truth of it. Jim Duffy – Thomas Weisel Partners: Okay. And then final question. You mentioned some opportunity for SG&A savings, but plans to reinvest in advertising and marketing and John, on your comments you implies a long-run operating margin in the mid-teens. So if we kind of project out a $600 million, $650 million run rate, that implies $150 million or so reduction in SG&A from FY ’08 SG&A levels. Is that – as you think about it, is that achievable or do you foresee that you'd have to grow into that margin structure that you talked about?

No, I think that you got that – maybe I didn't communicate clearly. The number we are looking at is a 30% – 46% gross margin or the high-40s and the 30% SG&A percentage of revenue. Jim Duffy – Thomas Weisel Partners: Okay. Wouldn’t that imply a mid-teens operating margin?

Yes, that's correct. Jim Duffy – Thomas Weisel Partners: Okay. And how do you get –

– your question. Jim Duffy – Thomas Weisel Partners: Well, no, I think we are both talking about the same thing using different numbers. My question is if you get SG&A rate to the 30% or so, if we assume a $600 million, $650 million revenue run rate, that's a huge reduction in SG&A from FY ’08 SG&A levels and I'm wondering whether to get that 30% SG&A rate, you think you need to grow into that or can you get there by cost cutting?

I think it will be some of both.

Yes. Jim, that –

We will grow revenues at a higher rate. I think that we will see modest growth in our revenues next year, but I think that once we stabilize the business, we can see accelerated – assuming that the economy continues to move in the right direction, I think we can higher growth rates in the years beyond that. So I do think that we can get to the number that we are talking about through a combination of revenue growth and cost reduction. Jim Duffy – Thomas Weisel Partners: Very good.

Jim, I think one important aspect is to look at our SG&A, obviously retail SG&A as you asked the question has rent and everything else and runs a much higher percentage. Our retail SG&A runs up close to 50% – 48%, 50% globally. And our wholesale runs significantly lower than that. As we invest more in retail, we have to balance that. Jim Duffy – Thomas Weisel Partners: I see. Thank you.

Thanks, Jim.

And next, we'll hear from Mitch Kummetz from Robert Baird. Mitch Kummetz – Robert W. Baird: Thank you. Let me ask maybe Jim's last question in a different way, because John, you talked about expecting to achieve profitability at some point next year and correct me if I'm wrong, I believe that doesn’t assume that you are going to be profitable for the year.

That's correct. Mitch Kummetz – Robert W. Baird: But is there a certain minimum level of revenue that you think you need to be at in order to have a breakeven or better business on an annual basis at some point? Do you have sort of top line target in mind whether – not 2010, but 2011 or –?

I think – not that I'm going to disclose at this stage. Mitch Kummetz – Robert W. Baird: Okay. Right. I think I heard you say – I’m not sure, but I thought you said that your direct to consumer business in the Americas was $42 million in the quarter. Is that correct?

Let me tell you exactly what I said there, Jim. Mitch Kummetz – Robert W. Baird: It's Mitch actually.

Sorry, Mitch. So on the Americas, the consumer direct channels, which is made up of both retail and Internet were $42 million, up 47%. Mitch Kummetz – Robert W. Baird: Okay.

I did say that. Mitch Kummetz – Robert W. Baird: So your – that’s nearly half your Americas business at this point?

That's correct. Mitch Kummetz – Robert W. Baird: So let me ask you this. I haven’t backed into what that means wholesale was for the Americas in the quarter. Maybe you can give me that number, it's pretty easy math but I'm not going to do it right now. But it seems like your wholesale business in the U.S. is pretty challenged and I know you guys have made the comments about attempting to rebuild relationships there. So can you talk a little bit about where you are in that process and I imagine you are having discussions at this point about spring 2010? Do you think that your wholesale business could actually – in the U.S. could actually be up year-over-year by the time you get to the first half of next year? I mean, kind of where are you in the process of rebuilding those relationships?

I – first of all, I think we are well engaged in rebuilding the relationships. And the response to spring '10 line has been actually very favorable. I believe that with our major accounts, our business should be up with all of our major accounts next year compared with this year. I hesitate to give you a particular number for our wholesale business next year, but I am encouraged frankly but – the combination of our in-store merchandizing, the improved level of customer service, just getting out and talking with our customers and the spring product line next year is beginning to have an effect. I'm not sanguine about how difficult it is to rebuild those relationships, particularly in the market where retail generally is under huge pressure. But I do think that we are making progress on it. We have more work to do on it certainly. And ironically, I think that the success of our own retail business may assist us in that process because we are able, through our own retail business, to demonstrate the full power of our product line and the merchandizing of our product line. And when the Crocs product line is presented really well, it's very appealing. It's colorful, it is – it's a broad product line. It has products that addresses women, kids and men. And I think – so I think the work we are doing in that area – we are learning a lot from it frankly and it is ironic, but I think we can leverage our own experience at retail to help support reengaging the retail – the wholesale channel in the United States and in Europe. Mitch Kummetz – Robert W. Baird: Okay.

It's a view that I formed over the last three months and spent quite a lot of time looking at it. So – yes, I think it's possible to restore our relationships. Is it going to happen overnight? Are you going to see 40% growth in our business with wholesale next year? I doubt it. But I do think you will see growth in the business with our major accounts in the United States. Mitch Kummetz – Robert W. Baird: All right, that's helpful. And then Russ, you ran through some retail numbers in terms of units, kind of like classification whether it's kiosk or outlet or – I didn’t quite catch all of that. I think I could probably pull it off the transcript, but can you give me what those numbers were a year ago so I can get some sort of sense as to how much retail grew year-over-year?

Sure. So – one moment there, Mitch, I've got it right here. So our – year-over-year, he is asking. Our year-over-year Q2 ’09 – Mitch, you want same stores or just you're looking for the growth? Mitch Kummetz – Robert W. Baird: I'm just looking for the units. How many do you – I think you said all in, you ended up with 500 –

Okay, sure, sure. So Q2 ’08, we had company-owned locations 243. Mitch Kummetz – Robert W. Baird: Okay.

And Q2 ’09, the number I gave on the call was 310. So we went up about 67 and let me give you a little more color. That's about a 30% increase, Asia went from 80 to 123. Mitch Kummetz – Robert W. Baird: Okay.

And the U.S. went from 145 to 158, a more moderate growth. But we went up over 50% in Asia and about – less than 10% in the U.S. Mitch Kummetz – Robert W. Baird: And that overall 30%, is that more – I thought it was kiosk driven, is it?

No, no. I think as we said in the last call, we've changed our strategy and we are going heavier into the outlets. Mitch Kummetz – Robert W. Baird: Okay.

So we are seeing very, very good success globally in the outlet area. Mitch Kummetz – Robert W. Baird: Okay.

And it’s – merchandise, as John said, very well, I mean the sell-through is very strong. Mitch Kummetz – Robert W. Baird: All right. So let me ask one last question.

Sure. Mitch Kummetz – Robert W. Baird: Russ, I think you had the comment to that your direct business was strong in the Europe in the quarter. Was that correct?

I said the Internet piece of the direct business. Mitch Kummetz – Robert W. Baird: The Internet piece?

Yes and it's a small piece, Mitch. I don't want to overemphasize that. I think I did say it was in a startup mode. Mitch Kummetz – Robert W. Baird: Right.

But it more than doubled. Mitch Kummetz – Robert W. Baird: Okay.

So – but it’s a small number, but – we are finding the Internet has global appeal and the retail has global appeal when we go direct to consumer and when you think about it, it gives us guaranteed access to our consumer base and as John said, when we have guaranteed access and we can show the whole portfolio, merchandize it correctly, but sell-through is strong. Mitch Kummetz – Robert W. Baird: Okay. All right, that's all I had. Thanks and good luck.

Mitch, thanks.

And we'll take our final question from Jeff Mintz from Wedbush. Jeff Mintz – Wedbush: Thanks very much. Just a couple of follow-up questions here. First of all, on the ASPs, you indicated that excluding the impaired product, the ASPs were actually up year-over-year. Is that primarily driven by the increased level of retail?

It is. We saw, as Jeff you I have talked about before, a full price there. And at our wholesale, we sold a lot of our units that were impaired at higher as well. Jeff Mintz – Wedbush: Okay. And then on the wholesale side, do you have – can you give us some sense of the number of doors that you were in this spring? Obviously, it's come – could down, but just to get a sense of where you are in terms of door count on the wholesale business, U.S. and international.

Yes. So Jeff, as I said in the last call, we are no longer providing door information, it's not our industry relevant measurement that's used consistently and we are not providing it. But I will you a little color. We did clean up our distribution channel as John articulated, in the U.S. and we are pretty much through that exercise now and in the Asia, we did increase our doors, but we are not going to provide any specific numbers on those. Jeff Mintz – Wedbush: Okay. So when you cleaned up your U.S. distribution, does that suggest accounts that you don't plan to get back into as you recreate these relationships?

That's correct. Jeff Mintz – Wedbush: Okay.

Yes. We – for instance, we were in Hallmark Cards. We are not in Hallmark Cards any longer. Jeff Mintz – Wedbush: Okay.

To give one example, there are others. Jeff Mintz – Wedbush: And then Russ, just kind of a technical question. Were there in previous quarters or last Q2, were there expenses that you are now breaking out as charitable expenses because I know that obviously Crocs has been doing charitable projects for at least I believe a year and I'm just wondering kind of what the level of those expenses were in the past.

In Q2 last year, they were very, very minor. We have done them in the past, the year before too, ’07, we did more than we did last year and – but they were too minimal to actually break out and have an impact. Jeff Mintz – Wedbush: Okay. Okay, great. Thanks very much and good luck.

Thanks, Jeff.

Thanks, Jeff.

And that does conclude our question-and-answer session. I would like to turn it back to our presenters for closing remarks.

Ladies and gentlemen, thank you for taking the time to listen to the call. I do believe that we are making progress here. I am cautiously optimistic about our ability to get the company to where we want it to be and I think we have a good management team in place to pull that off. Thank you.

And that does conclude today's call. We thank you for your participation.