Susan Riley: The reason for that is it is highly advisable to have those issues resolved prior to filing the K.
Brian Tunick (JP Morgan): What kind of top line disruption do you expect for next year, as you go through remodeling the stores?
Tara Poseley: All of that has been scheduled into our plans for 2008. We are not going to have new stores coming online next year, so it is going to be a balance in some of the stores closing for remodel and new stores coming online. We do not foresee any great disruption in the topline sales. It is more just about trying to make sure we are getting all of those openings and remodels done in the first half of the year. We are staged and poised for that back half of the year, which is important to the Disney business, as we move into that late fourth quarter timeline.
Brian Tunick (JP Morgan): What is your plan for direct marketing customer acquisition in the fourth quarter?
Amy Hauk: As far as acquisition of direct mail, we know that that is important for our customer, our guest to get them through our doors to get them excited about the product. We have an aggressive campaign in the back half of the year, and so that is up substantially over last year, our direct mail, so our expense as a percent to sales is relatively flat in overall marketing spend. E-commerce has been good. We have a lot of history because Disney Shopping owned a lot of these categories previously, so we felt the planning teams feel comfortable about how much we have invested and where we have invested our inventory to support sales.
Brian Tunick (JP Morgan): Are you seeing the sales lifting at the Disney e-commerce that you are expecting given the inventory?
Tara Poseley: With the amount of traffic that goes to the Disney shopping site, as a percent of brick-and-mortar, the Disney Store e-com side is going to be a higher percent of sales than you would find at The Children''s Place.
Brian Tunick (JP Morgan): What kind of cash or potential drawdown into your line of credit do you think we should be expecting for year end?
Susan Riley: Cash is expected to be between $150 and $170 million as of year fiscal year end. That is contingent on our ability to achieve the guidance. We also are anticipating doing financing for some of the equipment that we have in our southeast distribution center for about $30 million. That is contemplated in that ending cash balance. At this point in time, we are not looking at drawing down on the credit facility as we exit the year.
Brian Tunick (JP Morgan): We saw that one large shareholder filed a 13-G recently and sometimes companies respond with some press release that they will talk to them. Are you open to talking to your larger shareholders and have you had a meeting with them?
Susan Riley: We are always open to speaking to our shareholders. We meet with many shareholders in the normal course of business, particularly the large ones.
Rob Wilson (Tiburon Research): You mentioned there was a credit to long-term equity compensation in the second quarter. Could you provide that number?
Susan Riley: The credit that we have for long-term comparable in the second quarter is under $1 million.
Rob Wilson (Tiburon Research): As you look at Disney merchandise margin in the second quarter this year, how does that compare with two years ago?
Susan Riley: Directionally in this quarter, the merchandise margins at both Disney and TCP were down versus last year and the reason for that is because of higher markdowns. We do not have the two-year-ago numbers, but they are down year-on-year.
Tara Poseley: The initial margins from 2006 to 2007 are up about 150 basis points and we still continue to see some of that initial margin increase in the 2008 piece. The merchandise margins were affected by a highly promotional climate we had in the second quarter to make sure that we are moving into inventory and moving into the thirdquarter clean.
Rob Wilson (Tiburon Research): Two years ago you had tremendous merchandise margin opportunity. Did that all come to fruition?
Tara Poseley: It has been coming to fruition and as we continue to expand our sourcing base. We have a lot of opportunities in toys as we continue to develop new partners. We are confident and will continue to see our initial margin increase as we go forward, not as dramatically, as we have seen since the acquisition, but we do see that there is still opportunity there.
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