Greetings, ladies and gentlemen, and thank you for holding. Welcome to the Ulta Salon, Cosmetics & Fragrance, Inc. third quarter 2008 results conference call. (Operator Instructions) It is now my pleasure to introduce your host, Allison Malkin of ICR. Thank you. You may begin.

Thank you. Good afternoon. Before we get started I'd like to remind you of the company's safe harbor language, which I'm sure you're all familiar with. The statements contained in this conference call which are not historical facts may be deemed to constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual future results may differ materially from those projected in such statements due to a number of risks and uncertainties, all of which are described in the company's filings with the SEC. With respect to each reference we make on this call to adjusted net income per diluted share as a result of the October 2007 IPO, a reconciliation of net income per share on a GAAP basis to adjusted net income per share has been provided in Exhibit 4 of our earnings release, which is available on our website and has been filed with the SEC on Form 8-K. And now I'd like to turn the call over to Ulta's President and CEO, Lyn Kirby.

Thank you, Allison. Good afternoon, everyone. Thank you for joining us to discuss our third quarter fiscal 2008 results. On the call with me today is our Chief Financial Officer, Gregg Bodnar. Following my opening remarks, Gregg will review our financial highlights and outlook and then I will provide closing comments my comments and turn the call over to the operator so that we can answer the questions you have for us today. Let me start by saying in these unprecedented times we remain confident in our strategies and financial position, and we are pleased with our strong third quarter performance, although our performance was impacted by the sudden decline in the macro environment that occurred in October. We are also pleased with the recent start to the holiday season and the strategies that are driving these results. And if consumers continue spend on their current trend, we would anticipate delivering fourth quarter comp sales in line with third quarter performance. However, we recognize that the majority of the season remains in front of us, and the most volatile economy we have seen in decades. So, as a result of the change in the macro environment, we have reduced our full year outlook. And further, we believe it is prudent to provide fourth quarter guidance that represents a wider range of potential outcomes due to this volatility. That said, our EPS guidance represents a solid increase over last year's fourth quarter, and our expectations for sales and earnings remain well ahead of many other retailers. Quite simply, given the uncertainty of consumer gift spending, we do not want to over promise. As I mentioned, we are pleased with our third quarter results, which included double-digit growth in net sales and earnings and our 35th consecutive quarter of positive comp growth.…

Thank you, Lyn. As Lyn mentioned, our third quarter results reflect solid double-digit sales growth, positive comp store sales and traffic increases, as well as continued expense leverage which enabled us to achieve a 20.4% increase in operating income and a 28.6% increase in adjusted earnings per share. Beginning with a review of the income statement, net sales increased 22.4% to $254.8 million from $208.2 million in the third quarter last year. Sales growth was driven by the addition of 67 new stores in operation versus a year ago and a 2% increase in comp store sales. This gain was on top of a 6.7% increase in comp store sales last year, resulting in a twoyear comp store sales growth of 8.7%. During the quarter we opened 21 new stores and remodeled two locations, ending the third quarter with 304 stores and expanding square footage by 28% from last year's third quarter. Our new store program continues to perform on model. Gross profit dollars in the third quarter increased 16.7% to $79.5 million from the $68.1 million last year. Gross profit margin decreased 150 basis points to 31.2%, primarily driven by 100 basis points of deleverage in fixed store costs resulting from our expanded new store program, 30 basis points of expected impact related to the addition of our second distribution center, and 20 basis points of gross margin investment used to successfully drive positive customer traffic and comp store sales increases in this difficult economy. SG&A expenses were $65.2 million or 25.6% of net sales compared to $55.6 million or 26.7% of net sales in the prior year period. The 110 basis point improvement in SG&A was primarily driven by our ability to leverage our corporate infrastructure on a growing store base and appropriately manage expenses in this environment.…

Thanks, Gregg. The strength in fundamentals of our business continue favorably in these unprecedented times and are evident in our solid results this quarter. Our value proposition, marketing strategies, compelling brands and inviting in-store experience are clear advantages in a tough economy, and we fully expect to maximize these strengths this holiday. We believe that this economic environment is the time to win market share, and we will continue to pursue this goal through maintaining our investments in our stores, brands, marketing and talent, always with a balanced eye towards return on investment. We have a strong balance sheet and the financial flexibility to invest in market share strategies and now is the time to utilize these strengths to position us for greater growth when the economy stabilizes. While we have cautiously and prudently adjusted our full year expectations to allow for the uncertainty and impacts on consumer gift spending in this unprecedented and volatile economy, we remain confident in our business strategy and ability to deliver to our long-term growth targets as the economy stabilizes. Operator, we're now ready for some questions.

Thank you. (Operator Instructions) Your first question comes from Daniel Hofkin - William Blair.

I guess the first question on the gross margin. Was a little bit of the deleverage from the store program a function of the pace of comp sales relative to, let's say, prior quarters? And secondly just, I guess, with regard to the pre-opening expense, I just wanted to understand a little bit better why that was up in absolute terms year-to-year given the lower store openings and remodels. And then secondly, I guess, just recognizing it's quite early at this point, any sense for what 2010 could look like from a store opening perspective?

Dan, we'll take those one at a time. In terms of the difference between our 3% to 5% range and the expected impact on store occupancy costs, it's probably about 10 to 15 basis points coming down to the [two comp]. And then with respect to 2010, are you referring to next year?

I'm referring to, I guess, the fiscal year ended January '11, so one year out, yeah, recognizing it's very early. I'm just trying to - I think you guys have said in the past that it's you know, even previously that the 2010 openings could be impacted by retail center development.

That's correct, Dan. So on the negative side is that the impact of the economy on real estate development; on the positive side is what we believe will happen even at the beginning of 2009 as there are retailers who go out of business and there are store closures and some have, as you know, already been announced. I think there is a chance that that will continue through 2009, which will continue to give us opportunities in 2010 to balance against the slower real estate development. So from where we sit right now, it is hard for us to predict exactly the size of the 2010 program, but I certainly would not expect it to be any smaller growth than what we are currently planning for 2009. And if the economy improves and stabilizes, then we have a chance to go back to the 20% to 25% targets.

And then, Dan, on your pre-opening question, pre-opening is up a little bit in absolute dollars given the number of stores that we opened. And when we talk about Q4 of 2008 as we did the last quarter, you'll find that it's a little bit of a shift between the two quarters just based on the timing of when the stores opened. So pre-opening in the fourth quarter will be down from preopening in the prior year.

Your next question comes from Neely Tamminga - Piper Jaffray.

I have some philosophical questions for Lyn, but I want to just cover some housekeeping here. Gregg, just D&A at quarter end - I don't know if we caught that; I might have missed it in a rundown - and where you expect D&A to be at the end of the year as well as D&A as well as CapEx guidance as early as you can for - extra considering you're taking on store growth.

Yes, Neely, for the full year I would still expect D&A to be about $52 million, which is consistent with what we've talked about in the past. And then for the quarter it was about $14 million.

Okay, and then CapEx for next year now that you're taking down store growth so much?

Let me describe it this way, since we haven't given any specifics on guidance for next year. If you go from the 25% square footage growth down to the 15% square footage growth, that's a reduction of about 31 stores, which would be about $34 million in CapEx.

And then just two philosophical questions here, Lyn. First, on the stores and the leases and the locations, I mean, I think when you guys were out there on the road and originally thinking you would be potentially kind of a 1,000 location-type concept and chain, how many of those 1,000, just sizing it up for us, a third, a half, etc., were you kind of expecting theoretical new center growth? Said another way, if what's happened in our economy has been so unprecedented, and it has been, how much of this might potentially affect the longer term growth opportunity for Ulta?

You know, this is sort of just a reflection on what we have been doing the last couple of years. I would say in the 1,000 or the 700 or so to go, about 30% would be new centers. And the key comment, does it slow us down, it really goes back a little bit to the response to Dan. You know, on the one hand we'll have slowdown in new centers, but for us on the positive, we really do believe that there will be some very attractive sites that we would not otherwise have been able to get into in existing centers that are going to come our way. So we see a tremendous silver lining in what is going to go on here in the economy. And so you take those two factors together and I go back to my response to Dan - it's really very early for us to predict the size of the 2010 and out program, but at some point, when this economy does stabilize, we do anticipate that we will move back to our original growth targets and certainly don't see any need to diminish our original program of 1,000 doors. That still remains very relevant and, in some ways, as I say, a great opportunity for us to get back into centers that we have not been able to get into.

And I think, you know, given that I'm an analyst for 12 years and I'm asking a leading question I'll just be open and honest about that - I think you're making exactly the point, right? That the brand - because we're unprecedented and because you have this opportunity, would you expect that you have some unprecedented conversations with future brand growth, particularly on the prestige side to continue to further open up those opportunities for market share gain?

We continue to have the conversations. I do have a smile on my face. Thank you for being transparent. We continue to have conversations with the brands that we would love to attract and, as we have always said, the more we continue with our store openings, the more important we are as an alternative channel of distribution for the brands. And, like you, we remain hopeful that that could be a silver lining in this economy. But there is no change from what we have always disclosed on that, which is that we are still just in conversations.

Your next question comes from Liz Dunn - Thomas Weisel Partners.

I guess my first question relates to your comments about the comp expectations for fourth quarter. When you say if spending trends remain as they are currently, does that suggest your November results were sort of in line with what you saw in the third quarter?

My answer to you is that the first few weeks of this quarter are exactly where we had anticipated; Thanksgiving a little better than we had anticipated. But the trends that we're running are in line with the guidance - let me not say the guidance - were in line with the performance that we delivered in third quarter. So with the current trends that we have, we would expect to deliver the same performance as third quarter, so a 2 to 2.5. What's unknown - and I do what to make sure I stress this - we really cannot predict the impact of the macro environment on the consumer headset going into fourth quarter, and particularly around gift giving, we think it's very volatile and we just, like everybody else, we don't have clear enough eyes in here to say that our comps would stay zero to 2, for example. We really felt the need to broaden the range because we just do not have eyes into it.

Are you doing some specific things to be more giftable and more compelling from a value proposition?

As we have in third quarter, we continue with those strategies. We do continue to invest some of our own margin into our private label business. We continue to partner with our vendors to invest surgically in pricing that can drive traffic into the stores, so we certainly do that. You heard me touch on an exciting new product program that we have in fourth quarter, so we do have some really good newness coming in. And we continue, although we have not spent more advertising rates in this quarter than last year, we have certainly started from scratch, as we always do with every quarter to learn from last year, and we believe that we have a more exciting marketing program that fourth quarter last year and believe that we are very solidly positioned for this holiday season as long as the consumer is spending at a normal and expected rate.

Now did I understand, Gregg, you correctly when you said you'd have $120 million in availability under your bank line at the end 2008? And is there any help you can provide on what you might need to draw on that line in 2009?

The debt levels at the end of this year we're expecting to be $120 million, okay, debt levels at the end of this year. And then, as we look into next year, part of our approach in planning in this environment and being cash flow focused and also leaving some dry powder available for real estate opportunities is to try and balance the capital investment with our cash flow needs so that we maintain a significant level of availability in our credit line. I wouldn't say exactly the levels that they were this year; probably slightly below that.

And then just my final question relates to I think since the IPO you've been able to ratchet down your pre-opening costs and it sounds like your construction costs now, with today's reduction in CapEx. Can you just update us on what you see as the four wall cash contribution and the cash payback term or, if not, just update us on construction costs per store and pre-opening costs per store?

Let me take all three of those each individually, Liz. I'll take the last one first - or the second to the last one first. If you look at our store model, right now there's a three and a half year cash-on-cash return. Based on some of the improvements that we've made in lowering construction costs that are meaningful coming out of this particular year, it's about $120,000 a store, which is about 7% of our total store investment of $1.6 million, and it has the impact of reducing that payback period from about three and a half years to just over three years, so about three and a quarter years. So a first nice step, as we've been focused on lowering that payback and improving the financial returns. And then as it relates to pre-opening costs, the impact of what we've done this year is pretty modest relative to the impact of the construction costs. So pre-opening costs in our store model was about $205,000, and that's come down about $5,000 on average.

Your next question comes from Joe Altobello - Oppenheimer & Co. Joe Altobello - Oppenheimer & Co.: In terms of the comp in the quarter, could you give us a sense of how sales progressed throughout the quarter? Did they get materially worse in October?

Joe, we have not commented on individual monthly performance at all and so we're not going to respond to that question specifically. However, you did hear me say that we were able to be very nimble as we watched, even from the beginning of third quarter, before the major crisis that hit in October. We could see some softening coming out of second quarter, so we were nimble enough to be able to put in some advertising and some very modest margin investment at the very back end, and we were very pleased with the response to that strategy. And that is a strategy that we have continued into the first weeks of this quarter, and again, very pleased with what we're seeing at the beginning of the quarter. So not a specific answer, but hopefully it gives you a flavor. Joe Altobello - Oppenheimer & Co.: Were comps positive in all three months? Can I ask that?

You can ask, but we're not going to answer.

We don't want to slide into the territory of being a monthly reporter, so we're just not going to do it. And also keep in mind the other strategic reason why is, you know, as Lyn has said in the past, we take a fresh look at the marketing strategy and its comparability to the prior year every quarter as they approach the quarter and then adjust during the quarter as necessary, so therefore the comparability may not make as much sense on a monthly basis. Joe Altobello - Oppenheimer & Co.: And then in terms of slowing down the door growth or the square footage growth, you guys did talk about this a lot, but I was just curious, in terms of the mind-set or the thought process behind that, I mean, you've obviously got two competing goals here - one is to be prudent in their environment, the other is to gain market share and go after market share when there is share to be gained. And so how much internal debate was there in terms of slowing down the square footage growth for '09?

Let me take a first pass, and then Gregg can add. There was actually no internal debate. As we started to see some co-tenants - and really, it did become fairly precipitous in October; we began to see more co-tenants drop out of our centers and, as a consequence, more slowdown of new centers - so we certainly do not want to be in centers where the quality of the co-tenant had changed, so they were very, very easy decisions for us. We obviously were also very cognizant of some of the slower states around the United States in terms of their economies, so we took a very close look at those as well. So the desire to pare the program back is consistent with what we have always said, which is we are never chasing a magical number of 20% to 25%. We were always focused on delivering quality real estate and if that started to change, we would appropriately change. So the first half was, as we began to see the change, it was quite easy decisions. And it's not that we couldn't have made money in many of these centers over time, but we would not have optimized the short-term return on the cash. In conjunction with that, we certainly began to see news breaking on closures that we can expect after the holiday season, and we think that that may actually accelerate as well. And we wanted to, as Gregg just mentioned, we just wanted to keep our powder dry so that we can be very opportunistic with those sites as they become available to us. So the two things were actually separate decisions. One was only quality and the changes caused us to want to pull back, but it gives us a simultaneous advantage of being able to be very flexible as these opportunities break. And we think they will certainly break post-holiday, but we'll probably continue through the year as well.

And Joe, we believe this is the right balance. I mean, we're continuing to gain market share in our comp doors as well as our square footage growth, and that opportunity, particularly in this environment, is going to continue to exist whether we're growing at 15% to 20% or 20% to 25%. We have a very rigorous evaluation process on our real estate; it takes all the emotion out of the decision-making progress. And when that criteria tells us that the centers that we're focused on the quality and the returns are not there, then we change the targets. Joe Altobello - Oppenheimer & Co.: And then lastly, if I could - and I apologize if I missed this - it sounded like you said earlier that store traffic was up. Was average ticket up in the quarter as well?

No, the average ticket was - our customer count growth outpaced the average comp, so we saw a slight downtick in average ticket. But the traffic was very solid and so those two things balanced out. And that was very much in response to the question you asked at the very beginning, where we didn't give you a specific monthly response, but I said we invested some margin in advertising in the back part of the quarter. It was done deliberately to drive traffic. We had anticipated that to be a very difficult time period, not just because of the economic trends but it was preelection and we anticipated quite a bit of concern and caution on the consumer's part. So we specifically drove traffic during that period of time and were delighted with the response that we got. We drove traffic both in terms of our existing loyalty members, who we got additional shopping from, as well as really good response to our investments in our newspaper inserts, which attracted new customers to the brand.

Your next question comes from Brian Tunick - J.P. Morgan.

So I guess I've got one for you, Lyn, and then two for Gregg. So, Lyn, you talked about market share and a lot of your co-tenants potentially closing their doors, but what do you see happening in your own drugstore/salon area? Are you seeing salons closing? Have you seen this part of the cycle before? Are you seeing drugstores closing? Maybe just talk a little about maybe capacity coming out of your own sector for a second, and then I'll ask Gregg the other two.

Okay. Well, first let me just make the statement that, although they are partial in our segment, we certainly see ourselves as much more than just a drugstore or a salon, so I do want to just make that comment to you. But relative to salon, we are not seeing any significant closing in chain salon. Certainly, small independents, I think that we're not specifically tracking them, Brian, but I am sure post holiday season that we may see some businesses close down there, and that may give us some positive traction. We are, just on the salon business in general, we are seeing some slowdown in our salon business. We remain positive comps in third quarter, but certainly some slowing down there. Not a complete surprise given some of the shifts in this economy that happened particularly in the middle of October. As it relates to the drugstore business - and our drugstore, our mass businesses - our mass businesses continue to do very well. We're not seeing a shift - it's not just there has been a slight downtick in average ticket, as you heard me say to Joe - we are seeing any significant mix shift in the business. The customers who buy prestige continue to buy prestige; the customers who buy mass continue to buy mass from us. And we're not seeing any significant shift there, just an overall slight downward tick on purchasing. And as it relates to the competition in the mass sector, what we primarily see is not significant price changes from our competition there, but there is certainly increased frequency of promotion and we have our eye very closely on that and continue to compete in the manner that we always do, with our own advertising, ad pages, if we feel that's appropriate, so that we can compete with great frequency with what we're seeing in the drugstores. So Brian, did that give you enough flavor?

Yes, I was just curious if you were seeing any store closing anywhere else. And obviously there will be some department store closings, which obviously could help you as well.

We remain ever hopeful on that Brian, not so much to wish our department store competitors ill so much as, you know, we continue to hope that this economy will provide us some opportunities with some of those department store brands.

And so, Gregg, I guess for you, two questions. Number one, so now that you've brought down new store growth, can we also expect your SG&A leverage point to come down? So in other words, if comps are flat somehow next year, can SG&A actually grow slower than sales? And then my second question, Gregg, is that I guess 50 some odd stores are going to enter the comp base, I think, here in the fourth quarter, and how are you thinking about those stores relative to your comp guidance? Do you now expect those stores to come into the comp base maybe closer to the chain average versus several points above?

Two things, Brian. As we look into next year - and you can kind of look and see what kind of SG&A leverage we get coming out of this year - but as we look into next year, I would expect somewhere around a 2% comp before we give specific guidance for next year, that we're going to require probably somewhere around a 2% comp to start to leverage SG&A going into next year.

And how about the new stores entering the comp base this quarter?

Yes, if you look at the change from third quarter this year to last year and then fourth quarter this year to last year, you actually have an increase of about 13 stores growing into the comp base from third quarter to fourth quarter, and that will provide a modest benefit to comps in the fourth quarter.

And just if I can, are you guys going to announce the holiday comps like you did last year?

We plan to, yes.

That's our intention.

Your next question comes from Jason Gere - Wachovia Capital Markets, LLC.

Just one housekeeping-type question - with the 15% to 20% square footage growth for next year, can you kind of talk about how many will affect the new Phoenix facility versus the Chicago facility? And then on that same note, maybe new markets versus existing markets?

Let me take those one at a time, Jason. In terms of what's going to affect Phoenix, I think it's going to be fairly balanced between Phoenix and Romeoville based on what we see in the program so far this year headed into next year. And then, as it relates to - I'm sorry, Jason, what was your second question?

New markets versus existing markets.

Jason, the current approved sites are about a 50-50, pretty much in line with what we had done last year, but obviously we are going to wait and see what happens with store closings. And they could go both new or existing although, if you ask me to give you a best guess perspective, my guess is they'll probably lean a little more towards existing markets because much of our new markets - as you know, we have opened up some great opportunities in smaller metro - smaller markets, not necessarily metro - and we think that the closures will happen more in the larger metro markets, which would be our existing markets.

Next question, I guess, just going back on the SG&A, and I guess you're saying that you need a 2% comp to leverage SG&A. One of the things you've been talking about is just cost control, and I was just wondering, you know, with the slowdown in the economy, is it fair to assume that, you know, has there been any change inside the store with a lot of your full-time personnel? I mean, there's a good mix of part-time and full-time, but you do have a lot of layers of management in the store, so I was just wondering if there's any type of thought there and if, you know, you're able to kind of manage those schedules a little bit better because of the slower traffic you're seeing.

Jason, what we have done - well, first of all, again, our traffic isn't slower. We had positive customer count in third quarter and continue with third quarter trends at this point in time in fourth quarter. In terms of the store base, we've actually taken a deliberate position over the last nine months to move our store base from full-time to more part-time, and the reason we did it was so that we could leverage our work force deployment IT program. What we found is that, with the extent of full-time personnel that we had, we could not get as much flexibility as we needed, and so we shifted more to part-time. We do not anticipate at this point in time any significant change in our full-time personnel or the structure of our stores. We believe we are well resourced in our stores, at that point in time, with this one change that I described to you that we put into play earlier in the year.

And I guess the last question, you talked about the 20 basis points of investment of your own margin to sharpen your value during this quarter, can you talk maybe a little bit about the conversations you're having with some of your vendors right now? I mean, I think in the past you guys have received some dollars from them in order to kind of support some of the marketing initiatives you've done, and I was just wondering if you could talk maybe a little bit more about some of those initiatives and how receptive they've been to supporting their own brands in your store at this point.

They continue to be very responsive, Jason, simply because they get a good return on the investment. We are very disciplined in tracking the responsiveness to the investments we make, so they do continue to want to partner with us for the short term. But at least as important as that is the long-term partnership that they know they have with us. They have very few partners who will still grow with the square footage growth that we will continue to do in this sort of climate. We do talk to them not just about the individual tactical program with them, but we do talk to them about the margin investment on our own part that we make in our programs, particularly in some of our marketing strategies and our gift repurchase strategies that drive traffic into the total brand that they, of course, benefit from as well. So we talk tactically, we talk strategically with them, and, although I certainly am not going to say they have an open checkbook - we would neither expect that, nor would they have that but we continue to have very good partnerships and support where we can prove that this makes sense to the brand.

Your next question comes from David Cumberland - Robert W. Baird & Co., Inc. David Cumberland - Robert W. Baird & Co., Inc.: Can you give some examples of what you're doing to manage the expense structure in response to the environment?

Yes, sure. And just with regard to, you know, as we head into next year, even in advance of, you know, we certainly haven't given specific guidance for next year. If you look at the guidance that we've given for the fourth quarter, we're going to continue to show SG&A leverage even below that 2% level. And as we head into the 2009 time period and continue to evaluate the strength of the economy, the weakness of the economy, we will continue, David, to manage expenses so that we get the maximum amount of leverage and also focus on continuing the long-term growth of the business as well. We've continued to do a couple of things, one, making sure that we are leveraging the technology investments internally in the business. We have continued to focus on making sure that we have - and Lyn was referring to this on the last question - we continue to make sure that we leverage all of our four wall store operating costs to make sure that we utilize the tools that we have today to makes sure that we are lining up hours with guest count and moving very quickly when we see any fluctuations in that and planning for those ebbs and flows in guest count as well. And then just various other means that we're taking to leverage our growth, which is similar to what we did on reducing construction costs for our new store program. You know, we are working with all of our vendor partners - not just our merchandising vendor partners, but all of our supply partners as well - to make sure that we're getting maximum leverage on the growth that we're experiencing here, as we should as a high growth retailer. David Cumberland - Robert W. Baird & Co., Inc.: And my other question is on the 15% to 20% store growth planned for next year. Would real estate opportunities that you've talked about related to closings by others potentially add to that range or would those opportunities mainly translate to some of your 2010 openings?

There's two parts to that. The reason for a 15% to 20% range - and that range allows for some of what you've just asked, potentially happening in 2009 - but the reality is as the sites do become available post-Christmas, very few will probably be able to fit into the 2009 timeline. There's a possibility some could get into a late third quarter, perhaps into January, but by and large we expect the majority of those opportunities flowing probably more into 2010.

Your last question comes from Neely Tamminga - Piper Jaffray.

I just had one follow up question. Gregg, how should we be thinking about the store openings next year? Logically, analysts usually approach that as going more in the first half versus the second half, but I just wanted to double check - is that how you guys are thinking about it?

You know, we've actually done - and it's been sort of part and parcel, Neely, the theme that we've talked about this year, too, as well - you know, as part of trying to leverage the infrastructure, we will shift more store openings into the back half of the year next year, unlike what we did this year. So this year about 55% of our openings were in the first half of the year and about 45% in the second half of the year. Next year I would expect the relationship to be closer to 40% in the first half of the year and 60% in the second half of the year.

Thank you. ladies and gentlemen, at this time there are no further questions. I would like to turn the floor back to management for closing remarks.

Yes, a couple of things. Again, as we sign off here, let me again just say that we remain very confident about our long-term prospects. We, of course, as we have described to you, for the reasons we gave you, we remain cautious about the gift giving period that we are confronted with in the very immediate short term, but remain confident in the long-term growth opportunities. So let me thank everyone for joining us today. We hope you have a happy and healthy holiday and New Year, and we certainly look forward to speaking to you in 2009. Thank you very much, everyone.

Thank you. Ladies and gentlemen, this concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.