Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the fourth quarter and fiscal 2008 results conference call. (Operator Instructions) I would now like to turn the conference over to Allison Malkin of ICR. Please go ahead.

Thank you. Good morning. Before we begin, you should be aware that during this conference call certain discussions will contain forward-looking information. Actual results could differ materially from those that will be projected during these discussions. Also, policy on forward-looking statements and additional information concerning a number of factors that could cause actual results to differ materially from such statements is readily available in our Form 10-K and Form 10-Q reports filed with the SEC. In addition, Fossil undertakes no obligation to publicly update or revise any forward-looking statements whether as a result of new information, future events or otherwise. If any non-GAAP financial measure is used on this call, a presentation of the most directly comparable GAAP financial measure and a reconciliation of the non-GAAP financial measure to GAAP will be provided as supplemental financial information through this release under the Earnings Release section under the Investor Relations heading on Fossil's website. Please note that this call is being webcast live on Fossil's website. It will be available for replay on the website under the Investor Relations heading after the conclusion of the call. And now I would like to turn the call over to Fossil's CEO, Kosta Kartsotis.

Thanks, Allison. Good morning, everyone, and thanks for joining us. With us today are Mike Barnes, our President and Chief Operating Officer; Mike Kovar, our CFO; Mark Quick, our Vice Chairman; and Jennifer Pritchard, our President of Retail. We will provide an overview of our fourth quarter and fiscal year results, then give our outlook for 2009. After our prepared remarks we will answer your questions. Fiscal 2008 represented a year of significant progress for Fossil. The weakening global economy and the strengthening of the U.S. dollar affected us in our most productive quarter of the year. We still achieved record revenues and earnings for the year while advancing each of our long-term initiatives. Net sales for the year were $1.58 billion, generating earnings of $138 million. This represented a 15% increase on diluted earnings per share over the prior year. Notable highlights during the year included increasing global demand for the FOSSIL brand, which generated double-digit growth in sales volume. While our retail growth in the core watch and jewelry offerings continued to drive the bulk of the FOSSIL brand business globally, our FOSSIL [inaudible] are becoming a more meaningful part of our business in a number of international wholesale markets. We also had positive comp store sales within our global store base despite the challenging economic environment. During the year we opened 84 retail stores and closed three outlets and one accessory store. Of the 84 new stores, 79 were our full-price accessory concept, of which 50 were opened outside the United States. At year end we operated 191 accessory stores around the world and our direct-to-consumer channel grew to represent approximately 20% of the overall net sales, up from 17.8% at year end 2007. On average, our international base stores outperformed our U.S. stores when measured on…

Thank you, Kosta. Good morning, everybody. I'll start with a review of our domestic business, where we saw sales increase 2.4% for the quarter, with watches up 6.4% and non-watch categories down 4%. These net sales in the wholesale channel were benefited by sales through all price liquidation channels of $4.9 million for watches and $4.2 million for accessories during the fourth quarter. Our businesses in the United States were impacted by the overall economic environment, as well as reduced shipments to certain customers due to credit issues. Domestic wholesale watch growth was primarily driven by our MICHAEL KORS, mass market and MICHELE watch brands. We believe the performance of these businesses was exceptional given the challenges faced in each of their respective distribution channels. Increases from these businesses in the wholesale channel were partially offset by a decline in FOSSIL watch shipments. As FOSSIL was one of our more mature businesses domestically, we feel these results are more indicative of the department store comp results, along with their efforts to manage inventory stock levels lower during the quarter. Growth from our licensed watch category in the U.S. was led by MICHAEL KORS, with additional contributions from our MARC BY MARC JACOBS, EMPORIO ARMANI, and BURBERRY brands. We continued to gain market share and add doors within these businesses. As Kosta mentioned, we increased market share in watches overall in the fourth quarter of 2008 and we believe our portfolio management approach and great style innovations are driving these results. Our proprietary luxury brand, MICHELE, experienced a double-digit increase in wholesale shipments for the quarter. MICHELE outperformed the overall category of luxury watches in the market, which we attribute to its comparatively lower price, creating a greater value in contrast to many other luxury offerings. This, combined with great styling,…

Thanks, Mike. I'll start off by summarizing our fourth quarter results from this morning's press release. Net sales increased 0.2% to $464.1 million compared to $463.1 million last year. Gross profit fell 2.4% to $242.4 million or 52.2% of net sales compared to $248.4 million or 53.6% of net sales in Q4 last year. Operating income decreased 29.6% to $58 million or 12.5% of net sales compared to $82.4 million or 17.8% of net sales. Net income fell 12.9% to $46.3 million compared to $53.1 million last year. And diluted earnings per share decreased 8% to $0.69 or $0.84 on an adjusted basis on 66.6 million shares compared to $0.75 per diluted share on 70.6 million shares. The sales mix breakdown for the fourth quarter was as follows - 19.9% from domestic wholesale watch sales; 10.9% from other domestic wholesale businesses; 23.5% from worldwide direct-to-consumer businesses; 31.9% from European wholesale sales, and 13.8% from wholesale sales in other international locations. The 0.2% sales growth for the quarter consisted of the following increases and decreases by category and geographic region: Domestic watch sales increased 6.3% to $92.3 million compared to $86.8 million in the prior year quarter. Other domestic sales, which include our leather, sunglass and jewelry businesses, decreased 4% to $50.7 million compared to $52.8 million in the prior year quarter. Sales generated from European-based wholesale operations decreased 9.2% to $148 million compared to $163 million in the prior year quarter. Other international sales, which, as Mike mentioned earlier, consist of our export sales to distributors and sales from our Canada, Mexico and Asia-Pacific wholesale operations, decreased 8% to $64.1 million compared to $69.7 million in Q4 last year. And finally, sales from our worldwide direct-to-consumer businesses grew 20% to $109 million compared to $90.8 million in the prior year…

Thank you, sir. (Operator Instructions) Your first question comes from Neely Tamminga - Piper Jaffray.

Just a couple of questions here for you, I think dovetailing right onto what you were leading with, Mike, in your closing remarks. I'm just wondering in terms of '09 and the opportunity, historically you guys have talked about acquisition of licenses or brands or companies overall or distribution. I'm just wondering how you would size up your opportunity in this economic environment?

I would just say that probably most of the opportunities have not surfaced yet. I think that we're just at the beginning of seeing what's going to happen during this year and what kind of opportunities come out. Because of the strength of our company and our balance sheet and everything else, we're obviously going to stay opportunistic and if we see an opportunity for some type of a great global partnership, whether it's a license or whether there's an acquisition out there that we think we can really leverage going forward, we're going to be looking at that. That's something that is not anticipated in our numbers and where we're at; as you know, everything is pretty much organic growth for us right now. And we still think there's a huge opportunity in our direct-to-consumer businesses as well as the FOSSIL brand and other businesses. But that would be icing on the cake if some great opportunity comes up. We'll keep our eyes open for that.

And then just with respect to the department stores, I guess I'm trying to crack the code a little bit more in getting inside the minds of Macy's and others in that space. Do you get the sense that the order flow has been taken down in order to actually improve their normalized weeks of supply or do you think that they're simply catching up? What extent of that is actually in the $1.40 - $1.60 guidance?

I'm not sure I exactly understand your question.

Weeks of supply on hand with respect to their inventory, with all of their brands and vendors, it seems to me that everybody's talking about order flow in general just being tapered quite a bit from the department stores post-Christmas.

I think you've hit it both ways. I do think there was some catching up in late fourth quarter that we saw continue through early January, but I would also say there is some continued pressure to keep inventories low and improve their weeks of supply. That has been factored into our numbers.

Neely, I would also add to that our expectations for Q1 of '09 and the balance of '09 is that we're going to continue to see a weakening of our sales in that segment in comparison to what we've experienced in Q4. So we're not planning those guys will get any better about the receipt flow and have that built into the guidance we gave this morning.

Would you characterize that, Mike, then as sequential weakness? I guess I'm just trying to understand the language.

I would say if you're modeling you should be expecting kind of a low double-digit decline in that segment for the balance of 2009.

Your next question comes from Anna Andreeva - J.P. Morgan.

I was hoping to drill down a little bit on inventories. It looks a little high given the sales trend. How should we think about inventories as we go through the year? Can you bring down inventories closer to sales? And maybe what is your retail inventory per square foot or per store?

I've got all that information. I'll start with talking in general terms about inventory. As we alluded to on the call, the biggest part of the inventory increase quarter-over-quarter from last year is the fact that we did miss our original sales plan for the quarter. And I would point to specifically the other international market, where we were not expecting that business to be down on a constant dollar basis. As you know, that's one of our fastest-growing opportunities and we have a lot of penetration left, so most of the inventory from the miss probably came from that part of our business. As it relates to our retail stores, the full-price accessory stores, the inventories are probably up close to 2% to 3% on a per-store basis. It went from around $72,000 a store to about $75,000 a store or $77,000, so that's no big increase to speak of. So I think for the stores that we see performing in Europe, for our comp stores in the U.S., we're seeing great productivity on that inventory in the retail stores.

Anna, also in respect to your question about future inventory projections, quarter one ending we're expecting to be up something in the single digit range in terms of ending inventory and of that number about 25% of that increase will be due to additional store count. By the end of quarter two we're projecting that we will be below our last year level in inventory; in fact, a considerable part of our open to buy in quarter two has not yet been placed with the factories due to the shorter lead times we're starting to see and experience.

One of the obvious advantages of the company is the fact that our inventories are not seasonal, so currently our inventories are current. We have relatively short lead times. We slowed down the production and allowed the inventory to catch up, so we feel like we're in a pretty good position.

Anna, I'll put one more data point in. If you look at the inventory versus the sales increase over the last two, three and four-year period, on a two-year basis sales are up 30.4% with inventories up 27.9%; on a three-year basis sales are up 51.8%, with inventories up 21%; and even on a four-year basis - we've had this anniversary in some of the challenges we had back in 2005 - inventories are up 62.9%, but sales are still up 65.4%.

So it sounds like you are starting to manage those inventories closer to the sales trend. In the back half of '09 could inventories still be down year-over-year?

Yes.

And Mike, you mentioned the other international bucket. I was just hoping to clarify exactly what happened there and how should we expect other international sales for the remainder of the year or at least in the first half?

Well, there are two main segments to that business; one of them is our North American operations, which includes our Mexico and our Canadian subsidiaries and also sales to third-party distribution partners, mainly in Latin America. And what we saw is that the economic pullback in both Canada and Mexico was pretty severe in the fourth quarter. The good news is that as we move into the first quarter we've seen that improve quite a bit in January, and so hopefully we'll see better results from that part of our other international segment. The other main portion of that segment, of course, is our Asia-Pac operation. And we had, as I kind of alluded to, it was a very diverse situation, country by country, in Asia-Pac. Without getting into too much detail, I can tell you that the economic hit was pretty substantial in places like Japan and Singapore, where they both saw considerable GDP falloff in those countries. Other things that happened are crazy things from Thailand almost shutting down due to the political environment there where the airport was closed, and we also had a big shift - we had one of our major customers in Australia, for instance, that we shifted into a concession environment, which created a one-time return of goods to us that impacted our net sales there. So it was kind of different country by country, but we still feel that that is by far the largest percentage growth opportunity for this company going forward, and I think we'll start seeing that again.

And Anna, on a constant dollar basis, our guidance for 2009 does not include any improvement in that environment over the first three quarters of the year. In fact, we've kind of projected a little bit of a worsening trend due to the fact that in many countries, like Mexico and South America, they've seen significant currency devaluation over the last couple of months that's obviously causing them some pain to continue to flow inventory in those markets. So we're not being too optimistic on a quick turnaround in that market; we do understand we have some work to do there to figure things out. But I think our guidance is somewhat very conservative given the current environment.

And finally just on the SG&A savings, the $16 million, how should we expect that to flow through in '09? Do the saving begin now or are they more back half weighted?

We'll see a little bit of that in the first quarter, but nothing significant. Most of the actions won't start impacting us until the beginning of the second quarter.

Your next question comes from Eric Tracy - BB&T Capital Markets. Eric Tracy - BB&T Capital Markets: Comps obviously have been bucking the trends of most retailers out there. Can you talk about what your assumptions are for both Q1 in '09 in terms of the overall guidance, what the comp expectations are?

Yes, our comp expectations are very low for both first quarter and through most of '09. We're looking for very low single digits. Eric Tracy - BB&T Capital Markets: And that's on a consolidated basis and then just in terms of sort of full price versus accessory, are you able to break that down?

Global comps as well on a constant dollar basis. And, you know, to Mike's point on the call, we're seeing a much better performance than that early on the first quarter. Mike alluded to our global comps being up over 8.3% in January and we've continued to see positive comps up through the first two weeks of February, which included the Valentine's period, so we're still being somewhat cautious on the balance of the quarter and obviously cautious on the balance of the year. If you look one other data point on that, that's on a consolidated basis. If you look how our Q4 came out, the trend is similar in that, like European comps, for instance, are ahead of U.S. comps and within the U.S. the outlet stores are slightly ahead of the accessory stores. Eric Tracy - BB&T Capital Markets: And then turning to just sort of this liquidation of some product in Q4, are you able to sort of get a little bit more granular within each of the watch and accessory categories where that was coming from and then how we should sort of think about that on a go forward basis for '09 and the impact to gross margins?

Eric, it was basically across all categories to be honest with you and it wasn't anything significant, I would say, to any one brand or business line. We did feel like given the fact that we were going to fall short of our sales performance relative to some of the challenges we were having with U.S. department stores placing orders and even with our Asia-Pacific business suffering, we just felt it was the prudent thing to do and the opportunistic thing to do to start managing the inventory much lower, and that was the primary reason why that sale occurred.

It also allowed us to keep pretty much our normal pricing situation in our outlets and our other stores. Because we moved some merchandise through a different channel, it didn't affect the prices in our [own] distribution. Eric Tracy - BB&T Capital Markets: And you're able to kind of give an order of magnitude on a go forward basis pretty much through that, do you think, or just sort of - how shall we think about that going forward?

Well, as you know, our outlets move quite a lot of merchandise at pretty good prices. In fact, that operation, as you know, makes a profit even on an [overall] basis and including corporate expenses, so it moves quite a bit. And as we mentioned before, we're planning on managing our inventories a lot tighter this year based on the environment, so we don't expect that we would have the same amount or a similar amount to last year in terms of what we might move through a different channel. Eric Tracy - BB&T Capital Markets: Just lastly on the DKNY watches, could you talk a little bit about that just in terms of the deceleration of trends there? And then any read through to the jewelry business or just two very different stages and categories of what's going on there?

You mean in comparison to DKNY watches versus the jewelry? Eric Tracy - BB&T Capital Markets: Well, the watches had decelerated and you talked about the weakness there. I'm just trying to gauge is there any read through, you know, jewelry obviously pretty new and still ample room for growth from a door perspective, but just seeing if it was just specific product issues to the watches?

We've seen basically if you look at the DKNY watches, we've seen this happen to us in the past where we let the line get a little bit stale and see a fall off in the sales - with other brands we've seen that happen. As we improved the product, we saw it pick up again. We feel like the opportunity is there for DKNY as well and that the back half of the year has a big opportunity for us to see some improvement in the DKNY watch business. We're very excited about the DKNY jewelry launch that happened last year. We feel like it was very successful and it was probably a little bit better than we expected, so I wouldn't say that it's necessarily a full branding issue, where watches and jewelry have an issue. I think it has more to do with our own product development of the watches and that the opportunity is there, first, to see big improvements.

A couple of key things we've done on improving the line is we've narrowed it and focused it to five key platforms so that there is definitely clarity of offering at point of retail. And we've also gone back, we've made mention several times, of engineering value into the product. And there will be a key opening $75 and $95 product offering that we think will help this business as well. Eric Tracy - BB&T Capital Markets: On the DKNY in terms of the jewelry, can you remind us again the exact door launch that was in and then shall we think about incremental door growth for that in '09 or is it just about sort of getting deeper in those existing doors?

Eric, we launched in about 1,300 doors primarily in Europe and, to a lesser extent, in the AsiaPac region. That business contributed about $6.2 million since the launch in the third quarter, and we expect there to obviously be some opportunities to continue to grow the door base in those regions.

(Operator Instructions) Your next question comes from Robin Murchison - Suntrust Robinson Humphrey.

Did you disclose all price liquidation, how much was in the channel last year? I guess the sum total this year was about $9.1 million?

Correct. It was up. The $9.1 million was actually the net increase of about $2 million in the fourth quarter last year in the U.S. to about $11 million this year.

Okay. I'm sorry, Mike, I'm not understanding. So last year in the fourth quarter the liquidation channel was about $2 million?

Right. As you know, we generally use all price liquidation primarily on the non-watch category to just get out of certain styles we may be too deep in based upon performance at retail. And last year there was about $2 million worth of off-price sales to that liquidation group, and this year we increased that to about $11 million, so the increase of $9 million is what was included in the discussion today - $4.9 million from watches, $4.1 from leather goods and eyewear and other categories.

Now a couple of questions just in terms of some of your test product out there. Anything to comment on regarding MICHELE handbags? And then given the environment and understanding of the show must go on, so to speak, but how are your criteria in terms of the men's shoe launch and then the women's shoe launch in the later part of the year?

Let me take the MICHELE question. We just hit product at retail. It is in a very limited number of doors, primarily Nordstrom. And the sell through performance in the first two weeks has been very encouraging. We have a major market that's actually going on this week, [showing] a lot of other customers. We believe the line is significantly improved. But, as you know, our stance as a company is very conservative rollout, test, and then react to it, so it's very preliminary. But the results that we're seeing there are strong.

And what about the shoes?

Shoes, same story. Hit about 100 doors, men's only; been in the doors approximately, I'd say, nine to 10 days, and very encouraging. We actually met with one of the key retailers this Sunday and they are exploring already rolling out doors based on the initial results that they've seen. Women's we'll ship conservatively as well in fall of '09. We're expecting a similar door count for the rollout of women's doors that we experienced with men's.

Okay, so 100 doors, right?

Slightly north of 100.

Do the men's and the women's doors cross? Are there synergies there?

Well, as you know, the floors won't actually cross. They're physically distinct. But the doors themselves, yes, we expect there to be a lot of synergy there. The other place I failed to mention is we have footwear in a limited number of our own retail doors and we're experiencing equal success with the men's footwear product there.

Now also anything you can tell us in terms of your customer base - bankruptcy, going out of business - anything like that and how it's affecting your business and your planning?

We've obviously been impacted by those companies that have filed since our last call. I would say from a reserve perspective we're being very prudent in our approach, but not calling out any significant customer that we think won't make it through this environment, nor would we do that. What it has done, though, is it's having us manage that collection activity a lot more closely than we otherwise would given the environment. And daily we're looking at receipts that we collect against open orders that stores have placed, and we're making sure that we're not letting anybody get ahead of themselves. I would say that it is impacting our order flow somewhat, and again that's something that we considered in the Q-1 guidance that we gave. But we're being very prudent about how we approach some of the customers that we do business with so that we don't put ourselves in a position that we have too much exposure out there should something happen. Now, you know, saying that, our large customers like Macy's and Dillard's obviously we continue to ship, but it's some of the more smaller regional players and then obviously a lot of the specialty retail mom and pop stores that we're looking at as well.

Your DSOs actually improved a little bit, didn't they?

Yes, I would say that would be primarily due to the fact that we're focusing on the collection effort much more significantly than we have in the past because a lot of times the collection effort itself is dependent upon whether or not we're going to release future orders. So if customers fall behind in paying, we're calling them not at Day 10, Day 15 past due, we're calling them at Day 1 letting them know that they need to get us a check before we release open orders.

Your next question comes from Neely Tamminga - Piper Jaffray.

Just a little bit here on Q2, if I may. In looking back, it's actually hard to kind of detect a pattern of Q2's performance relative to Q1 - in some years it's less and in some years it's more and some years it's even. So I'm just wondering if there's anything you can point to to give us guidance at least to how we should be thinking about the first half kind of, as it were, kind of a darker half in which to try to come up with estimates. And any sort of one-time cost shifts between the quarters that we need to be mindful of or maybe the fact that, and maybe this is a small [piece] of the total, but I know that the way they collect rent is different across the pond versus how they do it here. They kind of true-up at three months upfront versus kind of a month-to-month type basis and, given that you have more openings going international, is there something we should be mindful of as we look at Q2 versus Q1?

I would say in the first half of the year there shouldn't be any significant operating expense impact related to the opening cost of new stores. Again, most of the new stores planned will be kind of a June forward type of opening event. As it relates to sales production, to your point, Q1 and Q2 are generally pretty interchangeable. Our operating expense historically has been slightly higher in Q2 than Q1, and that's primarily due to the fact that generally our co-op programs are more significant with our U.S. department store base as it relates to Q1, including Mother's Day, Father's Day, graduations, whereas in the first quarter all you really have from a promotional environment is Valentine's Day. But we're obviously looking at our co-op programs given the overall environment and see if that money is still an investment we think we should be making in trying to move the customer into the stores. You know, the [inaudible] cost a couple of years ago, which used to be significant as it shifted from Q1 into Q2 and then back to Q1 because it's right on the March/April timeframe, it's not the event it used to be. If you recall, we basically moved the [inaudible] fare as it relates to Fossil into a building we purchased in Switzerland a couple of years ago, so the only cost we have going into it now is basically just the airfare and travel to get our folks there and don't pay the exorbitant lease costs and setup costs to put the booth in the building.

And then I guess related to that later Easter this year?

You know, I would say Easter's not a significant event as it relates to the wholesale business. It could have some slight impact on retail stores. Jennifer, I think you came up with some exposure there we could have with the shift?

It's about [250] basis points.

150 basis points positive to Q2 versus Q1?

Correct.

Your next question comes from Justin Maurer - Lord Abbett.

Mike, just so I'm clear. On inventory, is it all in dollars? So when you guys buy inventory, is that all in dollars so therefore the increase year-over-year 17%, you need to take into account constant dollar sales in order to compare that?

Yes, you should look at it on a constant dollar basis. It basically translates back into a U.S. dollar equivalent because, to your point, it is all U.S. dollar based since it's primarily coming through Hong Kong and China. Obviously there's currency risk with the [RMB] out there, but not significant at this time.

So therefore the gross margin hit is just simply the flow through of the lower foreign-denominated sales against U.S.-based inventory?

Exactly.

So my question to all that, then, you mentioned in the commentary that the payables on nonU.S. subsidiaries clipped you, and I guess I'm wondering what those payables are since obviously you're not buying inventory locally, what is it? Is it insurance and kind of other things or what are those expenses?

What happens is all of our subsidiaries outside the United States either buy from our factories in Hong Kong or buy from the U.S. business, and those sales are denominated in U.S. dollars, so they will ultimately be paid back in U.S. dollars. So anytime they have a situation where their local currency is weakening against the USD, they're going to have to convert more local currency to take care of that U.S. dollar payable, which results in them generating transaction losses from the time of the invoice to the time of settlement. For the euro and the pound-based countries, we usually set up forward contracts to offset that risk in the timing of the payable. We don't do it in a lot of the other smaller subsidiaries just because we don't have the predictability in cash flows to settle for it we would enter into. And as we see continued losses as we saw in the fourth quarter, where some of those are coming from is the fact that some of our smaller markets where there are payables on the books are seeing some pretty significant changes in their currency against the U.S. dollar. You know, Mexico had a 40% devaluation in the peso in the fourth quarter, which basically meant that the U.S. payable at the end of Q3 was going to have to be settled with a lot more local currency and thus generates the losses on the transaction.

So the foreign subs, they are buying inventory directly?

They're buying directly in U.S. dollars.

And then just lastly, on the off-price sales you mentioned the increase, which I appreciate the detail, but how far out do you make that decision? Is that something that you contemplate at the end of the third quarter or is that just kind of you think about it on a week-to-week basis or how do you do that? And then therefore how do you think about it kind of as we move into '09?

It was partly a factor of several things. We're looking at the economy in the second and third quarter and fourth quarter changing pretty dramatically, starting to miss sales plan. We're looking at our inventory flows from Hong Kong, looking at sell-throughs. We did some tests on different prices in our outlets and looking at all that and looking at the situation we thought it was prudent to move some merchandise through a different channel to kind of clean up our inventory and get us in position for this year. So on balance I think it was a pretty good move for us and we'll continue to look at that kind of stuff in the future.

But part of the answer to your question is we maintain a weekly meeting where we review with our head of planning, Jennifer Pritchard, who's our President of Stores, we look at quality of inventory, and on a weekly basis, looking at the standard of how much the outlets can utilize, look at the inventory. So we do it every week.

And therefore, though, it sounds like it's more good timing than anything as the calendar kind of shifts here to the new year and, as you mentioned, you have some decent visibility to your books for the second quarter, that you're able to put the brakes on that somewhat and let the stuff that you already have kind of move through without having to do a lot more of that.

That would be correct.

Your next question comes from Anna Andreeva - J.P. Morgan.

Just a quick follow up. Looking at your guidance and keeping in mind the $60 million in SG&A savings, it seems to imply some expectation for gross margin improvement in the back half. Could you maybe talk about that? And should there be improvement in gross margins organically, I guess, with the currency impact stabilizing in the fourth quarter just directionally?

I would say that our guidance does not include any expectation that reported gross profit margins will exceed last year's levels, at least for the first nine months of the year, and that's primarily due to the fact that we've got some tough currency comparisons. We do expect, however, in Q4 as we start to anniversary the currency downturn that we should see significantly improved gross margins based upon the fact that we're continuing to see opportunities to grow our international wholesale businesses that have a higher margin than our U.S. wholesale businesses. But the fact is, as our wholesale businesses decline on balance for the year, that direct-to-consumer segment becomes a much bigger part of the mix and a much higher margin. So I would say for the first three quarters of the year, no real expectations and margin improvement is still going to be below last year, but Q4 could be an obviously large opportunity for us to show improvement.

One other thing I would add to that, Anna, is the fact that there is opportunity for us to see better potential pricing on a lot of our goods going forward. As the pressure has come off of raw materials a lot and also we don't have the labor shortage that we had at the beginning of last year. That is something that, if we do see any improvement, it'll take awhile to watch that shift turn because obviously we have to work through the inventories on hand and what's already in the pipeline. But we have been talking to our suppliers and our vendors, and we are seeing some pretty good opportunities for some savings maybe going forward.

Thank you, and at this time there are no further questions. I'd like to turn the call back over to management for any closing remarks.

Thank you. Should you want to replay this conference call, it has been recorded and will be available from 10:00 a.m. Central Time today until 12:00 midnight Central Time tomorrow by calling 3035903000 or 8004052236 and entering reservation number 11123560 followed by the pound sign. Again, that's 303-590-3000 or 1-800-405-2236, reservation number 11123560. The conference call has also been recorded by Street Events and may be accessed through Street Events' website at www.StreetEvents.com or directly through our website at Fossil.com by clicking on Investor Relations on our home page and then on Webcast. And finally, should you have any questions that did not get addressed today, please give myself or Mike Barnes a call. Thanks again for joining us today. Our next scheduled conference call will be in May for the release of our 2009 first quarter operating results.

Thank you. Ladies and gentlemen, this concludes the fourth quarter and fiscal 2008 results conference call. You may now disconnect. Thank you for using ACT Conferencing.