Chuck Crovitz: We are not at liberty to talk about what is going to happen to those stores right now. We are in advanced stages of negotiation and we will make all this clear over the next short period of time.
Janet Kloppenburg (JJK Research): There are some talks about higher costs coming out of Asia. What are you seeing there?
Jill Kronenberg: Our team is over there right now. So far, year to date we have been able to mitigate most of the challenges that we have seen over there. We do not know what the future is going to bring and that is where we are currently.
Janet Kloppenburg (JJK Research): When you say flat SG&A dollars for this year, does that include an assumption of a higher bonus accrual than 2007?
Rich Flaks: On SG&A, we do anticipate when we think about plans for upcoming years to pay bonuses at that plan rate. I would include higher bonus payments. In terms of occupancy leverage, we have not been committing on forward looking guidance. As mentioned, we are looking at our expenses so our target would be to begin to leverage those costs but we have not provided specific information for the guidance on that.
On the gross margin line there is an opportunity in 2008 for leverage and occupancy and also improved full price selling.
Janet Kloppenburg (JJK Research): Can you give guidance on tax rate on a quarterly basis for 2008?
Sue Riley: We are going to give clarity to 2008, once we conclude what we are going to do with regard to the Disney Store. I do expect to see an increase in the rate. A substantial year on year and the reason for that is because we can no longer assert that our cash is invested permanently abroad. We will be taxed for the full U.S. rate. Then there a tax strategy in place years ago that are in fact driving the book rate up.
Linda Tsai (MKM Partners): The $50 to $100 million exit cost encompasses a wide range. What accounts for the degree of variance?
Chuck Crovitz: We have not concluded our negotiations and there is still several moving parts and alternatives that are not here so that is what accounts for the range. Beyond that, we just can not comment at this point.
Linda Tsai (MKM Partners): Where do you think the long term operating margin goal could get to?
Sue Riley: The ongoing margin would be stands alone Children''s Place. What we said is that we will provide more clarity once we conclude what we are going to do with the Disney Stores. I would also refer you on the range, if you just look at the 10K, the source of those exit costs or cash expenses are well documented in the 10K. We just can not provide more detail on that at this point in time.
Linda Tsai (MKM Partners): Do you think you will provide more detail before the quarter ends?
Chuck Crovitz: Yes.
Andrea for Brian Tunick (JP Morgan): What kind of ramifications to Children''s Place should we be aware of as a result of exiting the Disney agreement?
Sue Riley: At this point we can not comment on anything having to do with the exit until such time as we announce that the discussions with the Walt Disney operation have been concluded. At this point, I can not provide more clarity except what is in the press release and what is in the 10K.
Andrea for Brian Tunick (JP Morgan): Could you provide any comments regarding Ezra against potential bid for the Company at $24?
Chuck Crovitz: We do not comment on those kind of matters. Ezra is our largest shareholder; he has been instrumental in building the Company and we hope to and continue to work constructively with him as we do with all of our shareholders.
Andrea for Brian Tunick (JP Morgan): You mentioned that you are looking at the process improvement across the board, could you talk more specifically what buckets of SG&A opportunity do you see longer term?
Chuck Crovitz: A lot of this has to do with efficiency in organizations a number of levels and appropriate structures like duplication that is one level. There also is a series of process improvements and the big areas we mentioned was our non-merchandise procurement area that have purchased these expense items on a more uncoordinated basis and we are learning that as we coordinate those purchases that we can take advantage of large economies of scale and negotiation and get our cost down there. Other things, just as we said, taking the time to reengineer our stores and make sure that the design that we are happy with now is built in the most cost effective way both in the immediate cost but also that the materials are chosen to have the lowest life cycle cost. We have been going through in terms of audits and review of different contracts to make sure that we are fully realizing the services that we are paying for and that we are fully availing ourselves of all the credits that we are entitled to several other areas. It is a very broad based look. The management team is highly committed and incentive to go after these costs in an aggressive way. I am pleased with the progress that we are making.
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