Angel Martinez – Chief Executive Officer, President Zohar Ziv – Chief Operating Officer, Chief Financial Officer

Mitch Kummetz – Robert W. Baird & Company, Inc. [Stephanie Wisting – Piper Jaffray] Todd Slater – Lazard Capital Markets Robert Samuels – J.P. Morgan Sam Poser – Sterne, Agee & Leach Jeff Mintz – Wedbush Morgan Securities Chris Svezia – Susquehanna Financial Group

Welcome to the Deckers Outdoor Corporation first quarter fiscal 2008 earnings conference call. (Operator Instructions) Before we begin, I would also like to remind everyone of the company’s Safe Harbor Statement. Please note that some of the information provided in this call will be forwarded looking statements within the meaning of the securities’ laws. These statements concern Deckers plans, expectations and objectives for future operation. The company cautions you that a number of risks and uncertainties beyond its control could cause Deckers actual results to differ materially from those described in this call. Deckers has explained some of these risks and uncertainties in the risk factor section of its annual report on Form 10-K and on its other documents filed with the Securities and Exchange Commission. Among these risks and the fact that company sales are highly sensitive to consumer preference, to general economic conditions, to the weather and to the choice of the customers to carry and promote its products. Decker intends that all of its forward-looking statements in this call will be protected by the safe harbor provision of the Securities and Exchange Act of 1934, as amended. Deckers is not obligated to update its forward-looking statements to reflect the impact of future events. I would now like to turn the conference over to President and Chief Executive Officer Angel Martinez.

We are pleased to report first quarter sales and earnings that exceeded our expectation. Our performance was especially gratifying given the current economic climate and challenging retail environment. While no company in our space is immune to the slow down in retail traffic and consumer spending, we believe our results highlight the strengths of our brands and underscore the benefits of our controlled distribution strategy. Sales from the first quarter rose approximately $25 million or 34.4 % to $97.5 million. This was roughly $7 million ahead of our original forecast due primarily to high demand for our UGG spring line. At the same time, diluted earnings per share rose 17.8% to $0.86 versus $0.73 a year ago and compared to our prior guidance, the first quarter of 2008 a flat to up slightly over the first quarter of 2007. The upside to our earnings was driven by a higher sales and strong full price selling of our UGG brand products, which allowed us to expand gross margins by 130 bases points over last year’s first quarter. Before I review each brand performance, I would like to briefly touch on some key hires and strategic initiatives we have recently executed. First, as you saw by the release issued this afternoon, we have completed our search for a Chief Financial Officer and we are excited to announce the appointment of Tom Hillebrandt to the role. Tom most recently served as Corporate Controller and Chief Accountant at K2. Prior to that, Tom served as Chief Financial Officer of Fotoball USA, a publicly held souvenir and promotional products company that was acquired in 2004 by K2. Tom brought with him a great deal of valuable experience that will be an important asset of the company as we continue to grow and expand in our business around the world. We also recently appointed Dick Ambroisio to the newly created position of Vice President of China Operations and Sourcing. Dick will be based in our office in southern China and oversee the manufacturing of all three brands at our third party production facilities located around the country. Dick has extensive footwear sourcing and manufacturing experience and he will help expand our factory base and streamline the product sourcing and quality control processes that we already have in place. Finally, we assign the letter of intent for a joint venture in China for the UGG brand through which we plan to open two stand alone stores in 2008 or 2009, one in Beijing and one in Shanghais, as well as three Shop in Shops. At the same time, we are very excited to announce that our Teva and Simple China distributor plan plans to open two stand alone Teva Stores during the second quarter. The first in Shanghais next week followed by Beijing in mid May. They are also planning to open ten more shop in shops later in the year. They will also oversee the debut of the Simple brand in China, which includes plans to open 10 to 15 Shop in Shops by year end. As everyone is aware, China has quickly become a dynamic market for American branded footwear and apparel and we believe that each of our three brands unique positions will resonate very well with consumers throughout the country. .: Now to the brands, the UGG brand had an exceptional first quarter with sales of $54.8 million, an increase of 83.6% over sales of $29.8 million the same period last year. The spring line sold through very well at retail as demand for the season’s product offering including sandals, boots and slippers, exceeded our expectations. Some of the key styles were Cardia, Gypsy, Nomad, Layback and Fluffy. January is an excellent retail month traditionally for UGG. We pre-booked a substantial increase in boots for this time period and they proved to be very successful at retail for us including the Cardy boots, the Classic short and tall, the Wahini and the Wilshire logo boots. We also pre-booked an increase in slippers for January, which performed very well. For February, we sold in the comfort sandals including the Gypsy, the Nomad and the Layback, which have been selling through at retail as well. Sales were consistently strong across all channels, department stores, specialty retail line independents, as well as, our e-commerce and company owned stores. All posted meaningful gains in spring’s sales versus a year ago. I think it is worth noting that each of our wholesale accounts that carry the fall line purchased the spring product in 2008, which is an important step in our efforts to evolve the UGG brand into a year round brand. Turning to Teva, sales were down slightly in the first quarter compared to a year ago. The shortfall was attributable to delay in shipments to both domestic and international accounts as well as lower than expected fill in orders late in the quarter. We were certainly disappointed in Teva’s start to the year; we believe the brand’s performance was negatively impacted primarily by external factors, most notably, challenging economic conditions that have created a difficult retail environment for the entire industry. In fact, while general commentary from outdoor retailer of the quarter were discouraging, including talk of wide spread cancellations, specific feed back on Teva has been encouraging. Many of our accounts continue to tell us the brand is holding its own against the competition and we have not experienced any meaningful order cancellations to date. Importantly, at REI, Teva sales were up high single digits compared with a year ago despite REI’s overall sandal business being flat to slightly down. Several of the standouts from this year’s new spring line come from both our technical and casual collection highlighting the increased breaths of our product mix and the wider consumer appeal of the brand. They include the open Tawachi, the Homium, the Fossil Canyons, the Dozier, Westwater, Mandolyn wedge and the Symcosi. Simple had a good first quarter with sales of 5.1 million, an increase of 25.2% over last year’s Q1. The brands performance was fueled by strong demand for ecoSneaks, which made up more than 40% of Simple sales during the period, as well as, strong sale through of the spring Green Toe collection. We experienced double-digit gains for the brand across all channels of distribution including key accounts such as Biller’s, Nordstrom, Urban Outfitters, REI and Whole Foods, in addition to our strong portfolio of specialty stores and independents. Simple is quickly becoming a more meaningful contributor to our overall results as the awareness of the brand is growing and the product collections are gaining traction at retail. Over the past several months, we have increased our efforts, our marketing efforts to build on this momentum. This has included traditional print advertising in major publications like Rolling Stone, Teen Vogue and Surfer, as well as, more enhanced point of purchase materials at retail that convey the sustainable lifestyle story. We also continue to take part in sustainable promotion and events across the world. This past weekend, we were at Earth Day events, worldwide, with our retail partners selling products and educating consumers on the brand’s commitment to sustainability. Importantly, we are seeing a very good return on these investments at traffic and sales on Simple’s e-commerce website are up over 100% and 50%, respectively, versus the same time a year ago. Finally, our consumer direct business nearly doubled from a year ago as sales increased approximately 89% to $21 million, which includes revenues of $15.6 million from our e-commerce division and $5.4 million from our seven retail locations. Increased demand and heightened interest in all three brands couple with more effective marketing programs have resulted in a significant spike in total visits to our website, including that triple digit increase at simpleshoes.com for the first quarter. Meanwhile, despite the general slow down in traffic levels discussed by many retailers, we saw healthy increases at our company owned stores versus the same period a year ago. More importantly, both our full priced and outlets stores reported solid gains driven by demand for our new spring products. With regard to our store opening plans, we expect to open an UGG Concept Store in San Francisco during the third quarter, which will be located near Union Square and a second location in New York during the fourth quarter, which will be located near Lincoln Center. We also plan to open an outlet store in New Jersey during the fourth quarter. Overseas, we are aggressively searching for real estate to open at least one and potentially two UGG brand stores in London. As I mentioned earlier, our distributor in China plans to open two Teva Stores there next month and as part of our joint venture, we expect to open two additional UGG brand stores in China. Before I turn the call over to Zohar to review the financial, I wanted to point out for those who might have missed it that Deckers was recently named to Outside Magazine’s Inaugural List of the best places to work. The list was created by employee surveys and aimed at identifying employers that not only create a great work environment but also promote an environmentally friendly business process and create a work to outdoor life balance for its staff. We are honored to have received this award and I am extremely humbled that it was our own employee feedback that resulted in this nice designation, Zohar.

The first quarter of 2008, net sales increased 34.4% to $97.5 million versus $72.6 million for the first quarter of last year. Including sales from the wholesale division as well as the consumer direct business, our net sales of our products increased 83.6% to $54.8 million versus $29.8 million for the first quarter last year. Net sales of Teva products decreased 2.6% to $37.7 million in the last quarter compared to $38.7 million in the same period of 2007. Simple brand sales increased 25.2% to $5.1 million for the quarter versus $4 million in the same period last year. Included in these numbers are e-commerce sales for all three brands of $15.6 million up 75.4% from $8.6 million in the first quarter 2007 and retail sales of $5.3 million up 145.4% from $2.2 million in the prior year period. Also included in the brand sales numbers, international sales for all three brands increased 11.3% to $18.8 million compared to $16.9 million in the first quarter last year. In domestic sales increased 41.4% to $78.7 million compared to $55.6 million in 2007. Our gross margin for the current quarter was 47.3% compared to 46% in the first quarter of last year. Our margin remains high due to the robust full price selling and low inventory write down for UGG brand. In addition, the change in sales mix toward higher e-commerce and retail sales, as well as slightly lower international sales as a percentage of total sales also contributed to the higher gross margin for the current year. Total SG&A expense for the quarter was $29.1 million or 29.8% of net sales compared to $18.3 million or 25.3% of net sales a year ago. The planned increase in SG&A expense in the first quarter was primarily due to variable cost associated with the higher sales such as commission, marketing and other selling expenses and two new retail stores that were not open in the first quarter last year. As we discussed in the prior quarter’s call, we also incurred higher stock compensation expense and higher distribution center rent expense related to the additional space added in December 2007. In addition, we incurred higher expenses in 2008 for our portion of the production cost of the Teva IMAX movie. It is important to note that a substantial amount of our SG&A expenses are fixed and evenly spread throughout each of our four quarters. As a reminder, in addition to typical yearly increases in outstanding, we expect the incremental components to our SG&A 2008, which included additional stock compensation, several new senior level hires and expansion of our distribution capabilities. As a result, our operating margin for the first quarter of 2008 was 17.5% of net sales compared to 24.8% last year. For the full year, we expect our operating margin to be in the low 20s. Interest income was approximately $1.4 million in the first quarter compared to last year’s first quarter interest income of $1.2 million. This increase is the result of higher cash balances partially offset by lower interest rate. Net income for the first quarter was $11.3 million or $0.86 per diluted share compared to $9.5 million or $0.73 per diluted shares in the first quarter of last year. Turning to the balance sheet, March 31, 2008, our overall inventory increased to $49.4 million versus $34.2 million a year ago. By brand, UGG inventory increased 84.6% to $26.9 million. Teva inventory increased 50.8% to $18.3 million. Simple inventory increased 11.7% to $4.2 million. The increase in UGG brand inventory occurred to meet demands in both orders and the increase in inventory for our Teva and Simple brands were due to higher than anticipated sales for the second and third quarters of this year. In addition, March 31, 2008, we had cash, cash equivalent and short time investments totally $183.4 million compared to $109.5 million in March 31, 2007. Accounts receivable were $40.7 million compared to $36.4 million at March 31, 2007. With regard to our outlook, based on our first quarter results, coupled with improved visibility into the back half of the year and based upon the current pre-book and discussions with our retail partners, we are raising our 2008 guidance. We now expect revenues to increase approximately 31% over 2007 levels up from our previous guidance of approximately 25% growth. We also now expect diluted earnings per share to increase approximately 27% over 2007 up from our previous guidance of approximately 20% growth. Again, this is based on first quarter results; improved visibility based upon the current pre-book and takes into account a gross margin of approximately 45% in 2008 versus 46.2% in 2007 and SG&A as a percentage of sales approximately 23%. In addition, our fiscal 2008 guidance includes approximately $8.8 million of stock compensation expense an increase of approximately $2.2 million over 2007. For the second quarter as compared to the second quarter 2007, we currently expect revenues to increase approximately 50% and diluted earnings per share to increase approximately 30%. Our forecast is based on a gross profit margin in line with the second quarter of 2007 and SG&A on an absolute dollar bases up slightly from the first quarter of 2008. The increase in Q2 SG&A on a year over year comparison is based on the same reasons as the increase for the first quarter of 2008, which I have discussed, in addition to the recent hired executive expense. For the full year, we now expect our sales to increase by approximately 37%, Teva sales to grow by approximately 8% and Simple sales to increase by approximately 35% over 2007. I will now turn the call back to Angel for some closing remarks.

We are very pleased with our strong start to 2008 and we feel very good about our opportunities for the remainder of the year, evidenced by our heightened outlook. As we begin the second quarter and approach the back half of the year, we are very excited about what we see for all three brands. The UGG brand’s fall line is broader and more diverse than ever before with a significant amount of new styles for women, men and kids. Based on our first quarter performance coupled with our current pre-book, we are predicting another year of strong double digit growth for the brand. As the weather has begun to warm over the past few weeks, we have seen retail sales for Teva pick up. We expect this to accelerate through late spring and early summer and anticipate Teva’s sales in the second quarter to increase by approximately 10% over the same period 2007. Later this year will mark the debut of Teva’s inaugural fall line of clothes, toe and toe protective foot wear. The reaction from retailers to this product has been positive and we expect Teva’s sales in the second half of the year to increase by approximately 20% over the same period in 2007, which gives us confidence in our beliefs that we can evolve Teva into a year round brand. The momentum from ecoSneaks, from that introduction last summer, has continued to fuel Simple’s recent performance and proven that the combination of sustainability and commercial success in the footwear industry are achievable. We are still in the early stage of development; we believe the global potential of this business is considerable. In closing, I want to reiterate that we remain confident about our prospects this year and feel it is important to point out our outlook does takes into account the current economic trends in the U.S. as well as overseas. We feel our upwardly revised guidance is not optimistic but rather realistic based on our order book and discussions with retail partners. During my 30 years in the footwear industry, I witnessed several similar market conditions before and what I have consistently seen is the flight to quality and a flight to comfort during times like these and that is certainly what we are experiencing right now. Looking beyond this year, we are excited about the many global opportunities we still believe e exist and importantly we are putting the pieces in place now to support our long term growth strategy. Thank you again for joining us and we will now be glad to take questions.

: (Operator Instructions) Your first call is from Mitch Kummetz - Robert Baird. Mitch Kummetz - Robert Baird: A few questions here let me start with the guidance. Obviously, you are raising the guidance for the full year by more than you beat in Q1, clearly there is some confidence in that there is this going forward. Can you talk a little about the visibility you have there. Is it mostly fall pre-book orders and then Q2, I am surprised how strong your sales outlook is for Q2. I know you mentioned Teva up 10%, obviously, you are expecting a big increase in UGG and is that pre-book driven or are you expecting reorders there? I am curious as to what the expectation is on the Q2 UGG sales to get the big sales increase for Q2?

Most of our assumptions are based on our pre-book and the visibility that we have been discussing has been based on that. Obviously, we consider the macro economic factors not only in the U.S. but around the world and we take that into consideration as well. We remain very bullish on the product and the sell through we are seeing and the way retailers have responded to new product. It is based on pre-book, Mitch. Mitch Kummetz - Robert Baird: The pre-book, what is your expectation for UGG in the second quarter? I haven’t had a chance to back that out yet; but I am assuming it is up more than 50%.

It is more than 50%. If we are looking at 50% and Teva is about 10%, UGG will be in the neighborhood of 80%.

I think the second quarter also includes our introduction of the Planet Walkers with the walking company on a nationwide basis. Plus, for Teva, we are pulling the fall introduction of the Mountain Scuff into July, which I think is also going to prove to be important and I think retailers are excited about that. Mitch Kummetz - Robert Baird: Okay, a couple of questions on the long term outlook for UGG and I know you, in the past, have talked about that being a $500 million business in three to five years. If you look at the guidance you have now for this year, I think you said up 37% that gets you pretty close to 500 million; I think around 475-476 million. At what point do you start talking about a new target for that business, maybe a billion dollar business and at what point do you think you will get to a level and how do you get there, if indeed that might be a target of yours?

You are right, Mitch, as we are looking at the numbers right now. We are looking to reach our number much quicker than the target that we had set. We go into our strategic planning we go into next month that will be reviewing our long-term goal and the projection for the three brands and for the company. We will probably update the targets for the brands and the company in the second quarter call. Mitch Kummetz - Robert Baird: Is it premature to ask you about your long term international opportunity? I know you have talked about international getting the 30% of the business also during that 3-5 year time frame. I am just curious as to when you might be going direct in Europe. I know that could hinge on your U.K. distributorship and I am curious as to when that agreement runs out and when a decision might be made to go direct in Europe?

We haven’t specifically outlined a date; but as these agreements expire, we will be replacing them with subsidiary models. In the end, what we have been up to in Europe is building a solid foundation of quality distribution and in addition to that, at retail we have been developing the retail relationship’s that allow the brand to be showcased the way we want them to be. We don’t want to just be driving volume in Europe; we want to be building our brands in Europe. Stepping outside of Europe for a second, you can see the aggressiveness with which we are pursuing China and things in China move very quickly. There is a lot of demand for our products over there and we are, I think, going at it the right way with quality distribution, quality presentation of the brand and quality relationships with our partners inclusive in that would be the joint venture we just sent it into. We are very firm on our expectation of 30% for our international business and we are going to be as aggressive as we should be in reaching those goals.

In addition, the London store that will be opening that will be owned 100% by the company. They will be the first foothold into us establishing fully operating subsidiary in Europe. Mitch Kummetz - Robert Baird: Then last question, on the inventory, I just wanted to clarify, Zohar, I don’t know if I heard you right on the Teva inventory, you said it was up 16.8%, one-six point eight not six-zero point eight, is that correct?

No, Teva inventory is 15.8%, one-five point eight. Mitch Kummetz - Robert Baird: It doesn’t sound as if there is any excess inventory on your books even as Teva business was off a little in the first quarter.

No, when you are looking at anticipation for Teva 10% and Teva is doing 20% the second half of the year, you can see we are managing the inventory quite tightly when you look at the big increase for Simple that only went up by 11.7%. I know that on a percentage basis our inventory is up 84.6%; but as you said, their sales are going to be approximately at the same level and the bulk of this inventory is booked.

Your next call is from Stephanie Wisting - Piper Jaffray. Stephanie Wisting - Piper Jaffray: First, could you give us some colour as to the composition of the UGG booking second half given the strength across the range in the spring. Do the retailers want to take some bets on some of your newer items or categories into the fall?

We have had a tremendous response to the newer items inclusive; the fluffy flip-flop has been very successful. We have sold the Cardy has been really spectacular. We had a great classic boot business; the slippers have done well in the first quarter. All of that sort of creates great momentum and we will continue to see the casual product I believe performed well because it is performing, Driving Mocs for women, Estadrills, while the weather has probably been an issue there, we expect those to continue to perform as the weather heats up. Truly a business is not dependent on items per se, it is really one and if you see our presentation at retail around the country, you will see a much better spread and assortment. Retailers understand that the brand is built on comfort and we are delivering comfort in each of the product categories and that is what consumer’s are responding to. Stephanie Wisting - Piper Jaffray: Zohar, if you could provide us an update on your store same cost and maybe some of the cost engineering initiatives you have in place, particularly to the UGG brand.

As we mentioned before, the specifics for this year our cost structure has been fixed with the factories so that’s backed into our prices. Looking at cost, we are developing items for the coming year, some of the things that we are doing is we have moved some of our factories, especially for the UGG brand, they have built a new factory in the northern part of China where there are lower costs; it is next to the tannery. We are looking how to mitigate some of the cost increase from China. In addition, part of the major responsibility of big who will join us who have got expensive sourcing and manufacturing experience in China is to expand our sourcing capability and to make sure that we are containing cost increases.

For many years, those were not big priorities. The supply chain was not something talked about in the footwear industry, per se. I think that is all changing and changing quickly. The new pick module, which you know we have spent a lot of money on, it’s going to be up and running in June and that creates tremendous efficiencies for us in handling products, etc. We are actually very excited about those improvements. Stephanie Wisting - Piper Jaffray: If you could just remind us of the ranking of markets internationally by country or even general regions.

Right now, Europe is, outside of North America, the most important market for us. It is the one that we have had; we have put effort and energy into for quite a few years beginning with our distributors in Switzerland and Benelux, we have been in German with the Teva brand for many years. The U.K. is probably the lead driver in the European market primarily because it is a great footwear market and we think there is a great affinity for the UGG brand in the U.K. As we move around the rest of Europe, you start to see opportunity in markets like Germany, which are very undeveloped for the UGG brand. We have a good Teva business there, but we think that there is a very large business potentially. Scandinavia is a market that just came on board last year that is in combination all the Scandinavian countries is a good market for us. Russia is a market that we are aggressively pursuing a distributor relationship there potentially a very strong market. People have been wearing sheepskin products in Russia for a long time given the fact that we have the most evolved footwear collection in the world of sheepskin product that bodes well. Canada, if you come back to North America, is a very important market and we are actually seeing some great growth in Canada with a great distributor there for the UGG brand and the Teva brand. Then there is Asia; the key driver in Asia is China and the energy that I think is starting to develop with our brands in China, all of them as I described in my comments, will have retail presence; they will have stores dedicated to the brands and there is an affinity for these kind of brands in the China market that all bodes very well. Stephanie Wisting - Piper Jaffray: The last one for me is regarding Simple, if you could just talk about some of the distribution for the brand with the ecoSneak line and then the penetration of the stores, the chains that you mentioned in your prepared remarks, if you could just give us an update there, thanks.

I don’t have specific store counts but we have had just great success with Dilliard’s for example. We are seeing great sales with Nordstrom. Urban Outfitters, we have had great response and we continue to do well with ecoSneaks and now also with Green Toe in Whole Foods. It is an interesting scenario, because this is a difficult market for a lot of retailers but one of the things that retailers have not abandoned is the need to give their customers something new, something fresh, something contemporary and timely and the product is good. The price points are good. From the independence out there to the department stores, we have had a lot of interest in Simple this spring. It is suddenly as if people woke up and discovered Simple. In addition to that are all the PR and the amount of media energy that is going around sustainability. The brand is very well positioned; it has become like the first place someone goes when they think, okay I need a sustainable category in my store. I don’t have it in footwear, which of the brands am I going to go at. Well, Simple is at the top of the list. We are getting a lot of opportunity; I think you will see over the next six months a very important broadening of the distribution platform for Simple.

Your next call is from Todd Slater - Lazard Capital. Todd Slater - Lazard Capital: I just want to start with Teva and I am just wondering on here, what’s for the scorecard you give yourself on the turnaround so far, sort of beyond the external issues, which we all know about out there. What has really worked and what do you think if anything you reworked?

Let’s go back to the mix, when we started, the mix of products we were selling was heavily slated toward flip-flops. We were driving the top line based on flip-flops and I always pointed out the fact that back then, if you looked at our revenue top line was 80 million or thereabouts, most of that was comprised of flip-flops at about $20 retail. In the mix, you really saw the primarily driver of our growth in units was that kind of products. We had to change that; we went to a $80 price point product in the performance sandals and almost reversed the mix that is a difficult thing to do and it involved a lot of product development and repositioning of the brand; we are still in that process. We also had to create a year round line and we didn’t have anything to offer for the fall season. When you look at the response we have had the fall ’08, included in that is every caveat is the macro environment. We have had an incredible response and I normally don’t use words like that; but, it’s been a fantastic response to this fall line, people seeing it as very fresh, very saleable, very commercial product. I believe the other thing to note is that the brand has sustained this environment very well. We are holding our own in retail and performing better than most and that is indicative of the strength of the brand. Brands are very important and consumers always go back to brands they know and they trust. For a long time there, a few years before I came, we were not developing enough new products and I think that really caused the brand to stagnant. I think retail has now known Teva is the brand that is on the move and we are gaining back market share that we lost in those years. I give us pretty high marks for all the things we have had to do to bring this brand back and on top of that position it as a performance brand, which is an ongoing part of the process. Todd Slater - Lazard Capital: I think that is fair and then moving on to UGG, just wondering if you could give us a little bit of the vision of the rest of the (inaudible) extensions like the hand bags and the apparels, talk about and also just hit on some of the performance of the more fashion sandals like the Malta and the Conn and the things that stuff has got any traction in it.

We view UGG as a lifestyle brand and have from the beginning; yes, the handbags, the cold weather accessories, hat, gloves, scarves and the outerwear are all a very important part of that mix. When you see the fall ads in full weight, you are going to see the brand showcased as a complete lifestyle statement. We were really not that satisfied with where we were going with our outer wear through licensing and we have decided this year we are going to be doing that. We are tackling that ourselves, very limited, very selective but really focusing on quality. We like what we have got; you will see it in selected place, you will see it in our own stores, you will see it on our website and you will see it in selected retailers. When it comes to the handbags, again there we felt that we really wanted to take better control of that entire process, speaking to quality, I mean that is really what the brand is. It’s a premium brand and so we will continue to develop those kinds of products that make sense to the brand and if all these retail showcases around the world, you must have more than just shoes to look at, to try on, and to aspire to. The retail showcase will be a great laboratory and experiment, a laboratory and experiment for this kind of ancillary kind of products. They are going to give us a great read of what consumers are looking for around the world and we will come up with new things based on the exposure to retail direct to the consumer. Todd Slater - Lazard Capital: Lastly and a follow up international question, I understand the goal is 30% there and was just wondering if you could remind us what the mix is likely to be by the end of this year and how that compares to ’07. Is that growing faster than the domestic?

Yes, internationally it is going to grow faster this year, the domestic. I would say it would grow in the neighborhood of over 40%. Todd Slater - Lazard Capital: Okay, so maybe gain a couple of points in the mix kind of thing?

Yes.

: Your next call is from Robert Samuels - J.P. Morgan. Robert Samuels - J.P. Morgan: You have a boatload of cash on the balance sheet and you have spoken in the past about adding another (inaudible). Can you just update us on this and what sort of opportunities on held you are currently seeing out there?

I am seeing opportunities out there and just as I had hoped. This difficult environment I think is great. Evaluation is down to more palatable place. We are looking for lifestyle brands or brands that have that potential. We are looking for brands with quality distribution. Ideally we would like a brand with management team because we don’t have a lot of bodies to spare. Generally speaking, the things I am looking at are brands that are right in our power alley right in the strength of our company to leverage production sourcing, development, distribution and increasingly the worldwide distribution. My preference and I have to be straight with that, I love to build brands. It would probably be a brand that we can take that ride up to a couple hundred million dollar levels that would be my goal as optimal. It’s not to say we would reject out of hand the brand that is bigger than that but generally speaking that is the fun for me and we remain very entrepreneurial as a company in that respect. That is our mission to build brands into a market leader. Robert Samuels - J.P. Morgan: Sounds great and also on that, did you say that SG&A for Q2 should be up slight on a dollar basis to Q1, did I hear you right?

Yes, as we said, most of our SG&A is kind of spread throughout the year. We are looking for SG&A to be in the neighborhood of 20, 30% in sales for the full year. Q2 you will see a slight dollar increase from Q1. Robert Samuels - J.P. Morgan: Then, gross margin, you said flat to last year.

Yes, comparable to last year.

Your next call is from Sam Poser - Stearn, Agee. Sam Poser - Stearn, Agee: I know that you inventory in (inaudible) is in very good shape; but, is most of that spring goods or is that some of the closed toe stuff that you are starting to set up for already?

Yes, we are going to be…you will start seeing the fall goods start coming in here in the next six weeks. We’ve got the inventory mix right now is the new stuff, the good stuff, weather of course is hopefully going to be turning in our benefit here in the next few weeks. We anticipate an improvement in the fill-in business. A lot of retailers have been, as you know, keeping their powder dry and not building up their own inventory. They are waiting for the weather to turn and then trying to fill in on an at once basis. I think we will see some of that as well benefiting us here soon. Sam Poser - Stearn, Agee: One, if you could just walk back through the Chinese, the store openings in China for me and lastly, Zohar, now that you have a new CFO in place, what are your main objectives going to be going forward in you new role?

I will answer that first, besides taking some time off, I think as was indicated before when the question was asked about us focusing on improving our infrastructure. It is really spending the time in the supply chain both on the sourcing side also the China extension, working on the JV, the European distributor and stores; those are areas that I am heading so I will be spending a lot of my time both on the operation and the supply chain and also international extension. And further, talking about the supply chain, our distribution center and probably (inaudible).

As far as the stores go, we are planning two stand alone stores in 2008 or 2009, one in Beijing, one in Shanghais and three Shop in Shops in that same time frame. We are also planning with our Teva and Simple distributor to open two stand alone Teva stores during the second quarter, this coming quarter, the first in Shanghais and that is next week, followed by Beijing in mid May and they are planning to open ten more Shop in Shops later in the year. We will also be seeing more on the Simple front in China, which includes plants open 10 to 15 Shop in Shops by year end. You are going to see the brand being born in China, which is very exciting for us. Sam Poser - Stearn, Agee: What kind of growth do you foresee with that in 2009 just sort of looking ahead, if all goes the way you envision and now that you have more people to put against that area and the total?

I think the most important thing right now is, obviously, you can open stores anywhere in the world and just drive volume that is not our goal. We are building the brands in those markets so it is important to get location; the right locations surrounded by the appropriate other brand. It is important to establish ourselves with a premium positioning in China so that the price points are comparable to what we would need them to be for making performance product in the case of Teva, for staying to our sustainable store with Simple and obviously the premium luxury comfort story with UGG. It is the foundation phase is where we are at, brand positioning, good real estate choices, building the staff, building the infrastructure; we have great service in the stores, which is kind of new to China, by the way, that full service orientation and making sure that we have a sound infrastructure for growth. At that point and it’s probably a couple of years of development along those fronts, we would be able to start being even more aggressive in rolling outdoors. My goal right now is not to see how many stores we can open, how much volume we can drive.

: Your next question comes from Jeff Mintz - Wedbush. Jeff Mintz - Wedbush: Zohar, could you talk a little about the potential implications of the new pick module for margins going forward and do you anticipate a margin impact in the second half of this year? Do you expect that to really impact in ’09?

We are planning to put it into production in June. You are not going to see any margin impact in the second quarter for only the bulk of the impact you will start to see more toward the later part of the year in ’09. You are not going to see it into margin in the gross profit margin, you will see it in SG&A piece and what it will allow us…the pick module right now is menu of picking, we can pick up to 65,000 picks per day. The pick module will allow us to do up to 225,000 picks per day. They allow us to triple our picking capacity on a daily basis. Jeff Mintz – Wedbush: Is that with fewer people, is that where the SG&A benefit comes in?

Correct because it was a big investment. As we said, it was about $12 million. The payback we are getting is through the efficiency and fewer people. Jeff Mintz – Wedbush: Can you just talk a little about the UGG strength in product in particular? I know you have talked a little about the selling of slippers and boots in the spring; but, I am trying to get a sense of where the spring product has matured to at this point and where you see it going as we go into ’09 as well.

Primarily it has been women; it has been driven by the women’s business. We have some key styles that are spring only styles, the Cardy is a great example and that has been very successful. It is built on the platform of a classic boot but now added a whole new fabrication, a whole upper and whole new style. This fluffy flip-flop has just been a bit of a phenomenon; it is just kind of hard to find right now that has created another dimension of the brand; it is fun. It is very colorful; if you have seen that product there is just a lot of color in it. We continue to do a good job with the core styles. The core styles I would describe included moccasins, the layback, which is sandal style. It is a diversification of the line; what is different about each of these products is they compare to many of the competitors and they are very comfortable. In addition to being a unique look, we are not out there replicating what other people are doing. These are unique looks to us and I think that has just created a lot of buzz at retail. Jeff Mintz – Wedbush: On Teva, but I am just trying to figure out where you are getting the confidence to look for 10% growth in Q2 given the difficulties in Q1 and, obviously, the weather, which hopefully will improve here, but kind of the overall environment continues to be difficult and I am trying to get a sense of what you are hearing that is giving you that confidence.

We have had a lot of conversation with our retailers and we have them everyday and I am very impressed with the way the brand has held its own. I think a lot of retailers when they have discretionary dollars in terms of fill-in, they will place them with brands that have held their own in difficult times and brands that people know. We are definitely getting commitments that come at the expense of other brands. We are taking share back from people that in the last few years have taken it from us. I think our products are priced right; I think they perform well; we have got the Omnium for example, it is a closed toe sandal at a better price point, better fit and better grip than anything else out there in the closed toe category. Retailers are stepping up and reordering that product as the weather improves. Our expectations for Teva were always conservative. We knew we were in a turn around situation and that continues; we are not done yet. I am seeing good response to the product line and it is coming off of a conservative expectation. We don’t have to set the world on fire for Teva to experience some significant increases and that is just not really including the opportunities that present themselves as we move into the back half of the year; because, there we see some nice growth potential in response to the fall line. We are very optimistic, I believe and realistic with the Teva expectations.

Next we will take our last question from Chris Svezia - Susquehanna Financial Group. Chris Svezia – Susquehanna Financial Group: I have a handful of questions quickly here on Teva just for clarification. I just want to get some idea of the inventory levels at retail because it seems like when you are walking around and checking you are not seeing the promotional activity on the Teva brand. It seems like it is working at full price. Can you just explain why REI’s doing so much better? I know they are a big customer of yours versus other retailers like EMS or Dicks or L.L. Bean, etc.

First of all, it is product; you know product, product, product. As I mentioned, there are some really good products at great price points in the Teva line this spring. If you go around and check, as you have, you will see it; it is out there full price. There are a lot of people who are not at full price. I think that just bodes well; it is confidence by the retailer and beliefs in the brand. They know that the minute we start seeing a pattern of warm weather that they will continue to sell these products all through the summer. We really are getting that first hand from them and the brand is holding its own. I think there was a really big question that was answered this spring with the tough environment as it is about Teva’s ability to turn itself around and I think that we are seeing the answer to that. It is a very positive one and it is expressed by the retailer’s confidence and the fact that the brand has good potential going forward as a year round brand. In the end, retailers make subjective decisions as well as objective decisions based on sale through and turn, et cetera. We seem to be meeting the mark on both fronts. Chris Svezia – Susquehanna Financial Group: I assume on the 10% increase you are looking for Q2 just for clarification, make an assumption for re-orders for the second quarter, not just moving up the introduction for the Mountain Scuff.

We really look to improved weather and, obviously, we hope for that; I can’t predict it. We expect a much better re-order cycle in the second quarter than we have seen so far with the delay of spring that’s what it has been. Nothing like last year and hopefully won’t be; but, we think we are at the top of the list with retailers when it comes to re-orders. Again, we have been conservative all along on this front. We really are working very hard and let me underscore that point, too. If you talk to any retailers and we have great programs out there for them; we are committed to the retailer’s success with our brand; we are making it easy for them to buy our product. I think we are fulfilling very well in our customer service group. Our discount program is quite competitive; we are doing some things with freight that they appreciate, trying to take some of the pressure off them. We are working this at every angle; we are being very aggressive, very hungry and we demonstrate that we want the business. I think that the retailers are appreciating that. Chris Svezia – Susquehanna Financial Group: When you talk about the growth and the penetration you are getting down in the south and southeast markets from the UGG brand, some of those newer markets, are retailers being very receptive to looking at the entire product line not just emphasis on boots. I was just wondering if you could talk about that as the year unfolds.

The answer to that is yes. One of the things you get to do when you have a powerful brand is that you get to showcase your entire assortment the way you want it to showcase the year round basis. We select our retail partners very carefully; we really want people who are committed to the brand on a year round basis. We don’t have a lot of interest in one-sided relationships, we find ourselves in a position to be able to make that expectation know, and to have it met. The answer is that it is somewhat a bit of leverage; yes, it is. The product is selling and turning and I would never use the leverage if we didn’t have the opportunity for retailers to make money and great margins. We have had no resistance and we continue to grow our business based on those kinds of relationships.

I show that there are no further questions at this time.

I just want to thank you all for believing in our company and continuing to support our efforts. It has been a great quarter for us; we are very excited about our results but very proud of our company and all our employees worldwide. We are adding to our team with some very high-end talent. I think that bodes very well for the future that we are using our success to invest in our future potential here in the U.S. and around the world. I hope you can see that from what we have discussed today. Thank you very much and we will speak to you next quarter.