Mark C. Vadon: We are seeing mixed things depending on the price point. When you look at over $100,000 price points, that part of the business is still there but it is weak. We had a transaction earlier today of $200,000, so there is still transactions happening there but it is weak versus historically and especially versus the growth rates we saw there previously. When you get below $100,000, it is mixed. What we are seeing in general is kind of $25,000 to $50,000 is doing okay but $5,000 to $25,000 is also weak. It is hard to look at all the numbers and dissect what is the broader macroeconomic picture it is telling us, but overall as you start piecing together, below $5,000 is growing stronger than other parts. But then as you get into that $5,000 to $25,000, more of that aspirational part of the market, we are seeing weakness. You are seeing a better kind of $25,000 to $100,000 price points, better growth in that area where the people buying those, it is not necessarily aspirational purchases. It is truly luxury purchases but then at the mega price points, I think people are sitting on the sidelines right now just watching the market.

Jack Murphy (William Blair): Are you happy with the payables dynamics that you saw in the quarter and if at this level of guidance, what level of free cash flow you are thinking about?

Diane Irvine: We do not provide guidance on free cash flow but to f talk about what is happening there, I think there are a couple of things specific to the quarter. One is that dynamic that you generally see in the first quarter every year where we are paying down the payables that have built up during the holiday season. You see that and so we would expect a negative cash flow quarter. Now with inventory being modestly higher than where we would like it to be, clearly we did not have the working capital benefit there that I would like to see. Then the other thing that you point out is with slower growth, you do not see the same leverage from the payables in terms of the working capital. As we look at the year, I think if we can achieve the goal we set forth for ourselves in terms of revenue growth, we will be in good shape in terms of our free cash flow generation capabilities.

Mark C. Vadon: What we are seeing as far as days payable, but without the significant growth in the first quarter, the dollars of payables being generated is not as great as we have seen in the past. The ability to generate rally robust levels of free cash flow is tied to our growth numbers. With better growth and then with the increases we are seeing in payables and then hopefully getting ourselves in a better inventory position, as we put those together, you will see better free cash flow for the year than we were seeing over this last quarter.

Jim Friedland (Cowen and Company): On commodity pricing in general you have passed it along and gross margins have been growing nicely. If this trend continues, is that how you expect to run the business?

Diane Irvine: We do pass that along but I would say traditionally what we have done is we take a longer to pass that on, so we have generally compressed our own margins and then we find our points once or twice a year to raise our retail prices if necessary based upon the inbound price of the raw materials. We will keep that policy this year. We performed well on gross margin in the first quarter, so we are pleased with that performance. We want to drive those dollars to the bottom line so we will be monitoring that closely as we go through the year. Terri pointed out something special to gross margins a year ago in the second quarter where we were at 20.7% and 30 basis points of that gross margin was caused by a one-time benefit from a shipping refund, such that that should be taken into account as you look year-on-year.

Jim Friedland (Cowen and Company): Are you going to see anything new on your brand building efforts, maybe branching out into TV or more offline type spending Or is it the same sort of blocking and tackling that you have been doing online?

Diane Irvine: We are disciplined in how we look at our marketing. We want every dollar of marketing to pay back, so I do not see us doing things that are not in line with that philosophy, such as other campaigns. We are building our business literally one customer at a time and that is how we build the brand.

Mark C. Vadon: We have no intention of being on TV anytime soon. At least any TV where we have to pay the bill to have it happen.

Jim Friedland (Cowen and Company): What you are seeing on your lower price point items in terms of demand in the non-engagement part of the business?

Diane Irvine: We saw softness across all the product categories, and so we talked about some of the stand-outs in diamonds, the price points below $5,000 and then the $25,000 to $50,000. It was just a different type of quarter from that standpoint where every category has of softness.

Mark C. Vadon: The one category that performed better than we were expecting was diamond bands and wedding bands. We do not know exactly what that means but to some degree, the diamond bands category is doing well because there may be some consumers that are trading down rather than buying a traditional solitaire engagement ring, they are getting a diamond band to use as their engagement ring. I think that was the one stand-out category and other than that, everything was relatively uniform.

Lorraine Maikis (Merrill Lynch): Do you still expect to be able to push days payable higher in this credit environment?

Diane Irvine: We have been doing that and that is a result of the volume that we are doing with our suppliers, where we dominate this category and so we have that ability and we think we will continue to have that ability as we go forward in the next several years.

Mark C. Vadon: We continue to have suppliers lining up to work with us and I think one other aspect of that is right now there are not many retailers buying anything out there. I think as people had a relatively weak Christmas, they are in a position where they have got more than enough inventory and they are not buying and vendors are looking for an outlet for their merchandise. So with the volume we are doing and the fact that we turn our inventory fast, so we are buying every month and in diamonds, we are literally buying every day. I think we are in a position to be the retailer of choice for the supply chain to work with.

Lorraine Maikis (Merrill Lynch): Do you have any comment on keyword pricing and any movement there since the economy has started to deteriorate?

Diane Irvine: No, I think if you look at online marketing prices, we have seen what we have been seeing for the past several years, which is you continue to see rising prices. I think it takes longer probably for some of that to factor in, if it will, in terms of the marketing environment. Our focus is on managing well in terms of looking at the payback on our investment for any of our keywords.

Kristine Koerber (JMP Securities): As you look at international, can you talk about what your next major step or investment would be to build out the international business?

Mark C. Vadon: We have a lot of work left to do in front of us. We spent a couple of years working hard on building Canada and the U.K. into more robust businesses and we have the infrastructure in place there now where we are able to deploy marketing dollars and continue to drive the growth of those businesses. With the other countries we are shipping to, and those range from Western Europe to a few weeks ago we launched some in Eastern Europe and a number of markets in the Asia-Pacific region, across all of those markets there is a tremendous amount of work left to do. Those businesses are in a beta stage and are right now a test to see where we are finding demand so that we can then go behind there and start building up the infrastructure.

Marianne Wolk (Susquehanna Financial Group): Given the relatively large inventory balance you held exiting the fourth quarter, do you assume the bulk of the spike in commodity prices that occurred over the last few months is going to be felt in the second quarter gross margin, especially if you are not passing along the price increase to consumers?