Good morning ladies and gentlemen and welcome to the Sally Beauty Holdings conference call to discuss the company’s financial results for the fiscal 2008 first quarter. All participants have been placed in a listen-only mode. Later we will conduct a question and answer session and instructions will be given at that time. Now I would like to turn the call over to Sandy Martin, Vice President of Investor Relations for the company.

Before we begin I would like to remind you that certain comments including comments on matters such as forecasted financial information, contracts or business and trend information made during this call may contain forward-looking statements within the meaning of Section 21(e) of the Security Exchange Act of 1934. Many of these forward-looking statements can be identified by the use of words such as may, will, should, expect, anticipate, estimate, assume, continue, project, plan, believe and similar words or phrases. These matters are subject to a number of factors that could cause actual results to differ materially from expectations. Those factors are described in Sally Beauty Holdings SEC filings including its 2007 Annual Report on Form 10-K. The company does not undertake any obligation to publicly update or revise its forward-looking statement. The company has provided a detailed explanation and reconciliation of its adjusting items and non-GAAP financial measures in its earnings press release and on its website. With me on the call today are Gary Winterhalter, President and Chief Executive Officer, David Rea, Senior Vice President and Chief Financial Officer, [Greg Poppy,] Vice President and Treasurer, Mark Flaherty, Chief Accounting Officer and Controller. Now I would like to turn the call over to Gary.

Good morning everyone. Thank you for joining us for our fiscal 2008 first quarter earnings call. Today we reported total net sales of $656 million for the three months ended December 31, 2007. This represented an increase in consolidated revenues of more than 4% from last year’s first quarter and a 2.1% comp store sales increase. Our net earnings for the first quarter were $14.3 million or $0.08 per diluted share and adjusted EBITDA was $87.2 million an excellent start to the new fiscal year. For Sally Beauty Supply first quarter same store sales gains of 0.3% were strong as strong as we would have liked, however we were pleased with a positive comp during a generally weak retail selling season especially given the tougher Q1 comparison of 3.4% from a year ago. Looking at December we believe weather as well as a weaker retail selling environment resulted in softer sales of our appliance category. Our company is unique in that almost one-third of our Sally U.S. revenues and 100% of our BSG revenues are generated through sales to salons and salon professionals. As a result more than half of our consolidated revenues are generated from sales to these professionals and not to the retail consumer. In addition our company does not follow a retail calendar which makes comparability to other retailers more difficult. Historically our Sally North America sales have not followed seasonal patterns like most other retail companies and similar to past years our monthly sales remained relatively evenly spread in a range of approximately 8 to 9% per month of annual revenues. We were extremely pleased with BSG’s comp sales of 7.5% proving our ability to continue attracting brands and expanding distribution territories. I want to quickly update you on BSG’s supplier changes. During the first quarter we acquired certain assets and distribution rights from two Goldwell distributors in four states. In addition we began distributing Goldwell products in thirteen more states including store only distribution in part of New York. Also during the first quarter BSG began distributing Henkel’s Schwarzkopf brand in stores and the DSC channel in four Northeastern states. In January we acquired the assets and distribution rights from a distributor of Shiseido’s Joico and ISO brands in California. Following L’Oreal’s announcement of the acquisition of Beauty Alliance and [Maylees] West, BSG was awarded distribution rights in January for Joico and ISO in stores and the DSC channel in six states including Florida and Michigan. Also in January we expanded our Farouk distribution BSG stores and the DSC channel throughout California. Now David will provide financial details related to the first quarter and then I will finish with a few more remarks.

Consolidated net sales for the first quarter were $655.8 million an increase of $25.9 million or 4.1% over the year ago period. First quarter consolidated gross profit was $306.2 million or 46.7% sales improvement of 150 basis points from last year’s 45.2% of sales. Both operating segments Sally Beauty Supply and BSG experienced gross margin improvements during Q1. Gross margins increased at Sally Beauty due to among other things a continued increase in sales of exclusive label products and margin increases on certain products. These improvements were partially offset by the diluted margin impact of adding Sally International acquisition related revenues with its lower margins. For BSG margin improvements at our franchise business as well as the shift of revenue towards higher store sales versus DSC revenue positively impacted gross profit margins. First quarter SG&A and expenses were $224.5 million or 34.2% of sales compared to $213.2 million or 33.8% of sales from the year ago period. The increase was primarily due to additional SGA related to the salon services acquisition in the UK. Additionally SG&A expenses included BSG’s retention incentives of $1.7 million paid to DSCs during Q1 due to the contractual changes with L’Oreal last year. First quarter SG&A expenses also included $5.6 million of share based compensation of which $3.1 million represented the accelerated recognition of option expense for certain retirement eligible employees. Last year’s Q1 SG&A costs included $5.7 million of share based compensation of which $5.3 million was related to early investing triggered by our separation from Alberto-Culver. Unallocated corporate overhead costs including share based comp are included as a component of SG&A expenses and were $22.8 million for the first quarter of 2008 compared to $22.7 million for the year ago quarter. For fiscal 2008 we expect unallocated corporate overhead expenses to be approximately…

I would like to make a few additional remarks regarding our future outlook. From a unit growth perspective we continue to believe that the Sally store concept currently has potential for 3,000 total U.S. stores based on recent population and demographic studies. We plan to continue opening new stores in Canada and Mexico and believe there is potential for 250 stores in each of those countries. We remain excited about our international expansion and seek potential acquisition and unit growth opportunities in the European union and eventually into South America. [Chad Seldidge] recently joined SBH in a newly created position, Vice President of Business Development for South America. Chad brings a wealth of operational experience and hands on expertise in Central and South America. Over the short term we intend to remain focused on improving the profitability of our Sally International business. During this fiscal year we expect to continue the integration of last year’s UK acquisition with a goal of having the Sally International business performing at a 10% operating income margin. Earlier I discussed the fact that macro pressures had a somewhat dampening effect on Sally’s comp stores sales for the first quarter especially in December. On a geographic basis for Q1 comp stores in California were flat with the prior year. Historically our large representation of Sally stores in California had outperformed the company average for comp store sales. In contrast Texas represents our largest marketplace in terms of store count. In Q1 comp store sales outperformed the company average. We are currently analyzing geographic data and will work on methods to improve sales in certain areas. Although fiscal 08 may turn out to be a more challenging environment for our Sally business than we initially expected I believe the longer term outlook for our Sally business…

(Operator Instructions) We’ll pause for just a moment to compile the Q&A roster. Once again we’ll pause for just a moment to compile the Q&A roster. Your first question comes from the line of Grant Jordan with Wachovia.

A couple of questions. You’re certainly not looking for any guidance but maybe you could just update us on what you’re seeing from the retail Sally customer since the beginning of the year. Has it continued to see further pressure or do you think you’re just seeing general weakening from last year’s levels?

I assume you’re talking about the beginning of the calendar year, Grant?

Yes. Sorry.

What we’re seeing is the same trends continuing that we experienced in Q1. Fortunately looking at the other retail numbers that came out this morning our comps in the Sally division for January were positive and BSG continues to run very strong and consistent with Q1.

Great. That’s very helpful. Second question. You mentioned you got the benefit on the gross margin from the higher control and private label in the Sally stores. Do you have the percentage that that’s up to now?

For Q1, David, it was…

Last year for the full year it was around 40% which was up as I recall almost 3 percentage points from the year prior to that. In the quarter it’s now exceeding that 40% level closer to 42%. So it continues to grow nicely for us and as we said that certainly is helping drive the margins.

Do you have a goal for that percentage?

No, we really don’t. I’ve said in the past that I believe that it will continue to go up probably not as dramatically as it has the last two years for the foreseeable future. What we’ve experienced longer term is about a 1 or 1.5 point increase per year and that’s where I would expect it to settle in at after this fiscal year.

Then my last question. It looks like you’ve certainly done a good job getting more brands into the BSG side of the business. As the competition between yourself and L’Oreal continues have the levels of calls, the discussions with owner suppliers has that picked up? Do you feel like you’re gaining more momentum getting new brands into the BSG business?

Absolutely. I think as more of the manufacturers and brands out there see that L’Oreal intends to be in the distribution business I would expect on a national basis I think they’re really evaluating where their future should be.

Your next question comes from the line of Karru Martinson with Deutsche Bank.

I was just calling in regards to your gross margins. You guys have posted a couple quarters here of nice elevation. Is that how we should look at the business going forward?

Well, Karru, good morning. As I just said a significant amount of that right now is being driven by the increase in controlled private label exclusive brands and that as David mentioned was up about 3 points last year and is running for Q1 about 2 points ahead of that. I do expect that growth rate to slow a little bit because it has to do with some major product introductions we’ve done this year and last. I do expect it to continue and the gross margin to continue to be affected by that but possibly not at the rate that it has been this year and last.

The other thing to keep in my mind as we’ve talked about prior quarters – and we mentioned today as well – was the somewhat diluted effect on a segment basis for the additional Sally International revenue. Once we comp against that – we did the salon services acquisition in February – then you’re talking on a more of an apples to apples basis and one of the initiatives that we have discussed is to improve the overall profitability of that business both on an earnings basis as well as a gross margin basis and that’s hopefully one of the things that will help drive the overall segment margins going forward.

The softness in appliance sales that we saw here in the past quarter, how much of a drag was that on the non-Sally’s comps?

I don’t have that in terms of the percent on the number, but as Gary said in the past when you look at the business that’s one of the areas that has some seasonality to that, things like styling appliances, curling irons, flat irons, hair dryers, etcetera are items that we do see and believe are purchased as holiday gift items. Whereas things like hair color typically are not. So you do see that in this quarter, our first quarter and that’s where we did see some weakness.

And then the contractual, the retention costs for the consultants. Those are going to roll off here at the end of February, correct?

The majority of those roll off in February, that’s correct. There may be a very small amount that we decide to move forward with in some specific geographies where we still haven’t replaced enough brands but it’ll be significantly less than it’s been.

If we were to look at the second half of the year, it’s probably just in that second half, another say $3 million that would drop to the bottom line?

Compared to last year’s retention bonuses, yeah, I would say it’s at least that. Isn’t it, David? Because I think you –

Last year’s, for instance in Q2, DSC incentives paid was about $1.2 last year in Q3, is about $3 million in Q4, is about $1.9 million as we previously recorded.

And, Karru, we neglected to say this, but we’re going to only take a couple of each questions from each caller.

Not a problem at all. Thank you.

Your next question comes from Carla Casella with JPMorgan.

You seem to moving very well with the acquired brands. I’m wondering if you can talk about the acquired brands, are they typically higher margin brands as well, or is there some margin opportunity there?

The margins are comparable with other BSG margins with the brands like Goldwell and the P&G brands and Joico and ISO. We do think that there is margin opportunity more from the standpoint of when we pick up these brands it is on an exclusive basis.

Right. Okay. Great. So you have an opportunity to grow even from the level where they are now as you expand the distribution?

Yes.

And then do you think there’s any more potential fallout in terms of additional brands coming available out of the L’Oreal – because of the L’Oreal acquisitions that they made?

As I said earlier, I think as they make other geographic acquisitions that the brands that are representative by those acquired distributors are going to be giving some serious thought as to where they see their future being. The answer to that is yes.

And then just one other question. On the salon business I’m wondering in past down terms, has that business always held up better than the retail business?

Absolutely. I think the salon business as we’ve said many times in the past, when you look at it from sensitivity to the economy is somewhat similar to the liquor business. It seems to hold its own through all kinds of economic situations and I think it makes sense. People basically, regardless of the condition of the economy to some degree, still want to look good and feel good.

Your next question comes from the line of Joe Altobello. Joseph Altobello – Oppenheimer & Co.: The first question is on the Sally Beauty side and the weakness in the sales. Any sense of whether or not that was more from traffic or more from average ticket?

As we said we saw come challenges with traffic particularly in December, a little of that was weather related and I think a little of it was just general weakness on the retail side that really shows up with us in that appliance category more than any. So, yes. In other words same store transactions down but comp store sales being driven by inflation and mix change. Joseph Altobello – Oppenheimer & Co.: Even in California and Texas where weather typically isn’t a major factor?

Yeah it was interesting. Weather was a bit of a factor in California this year. But yes, in general that’s correct. Joseph Altobello – Oppenheimer & Co.: Secondly, just some housekeeping items for David. The life of the swaps, can you tell us when those come off and the loss L’Oreal revenue in the March quarter of last year?

Greg, the swap – [Greg Poppy]: We have one swap that will roll off in November of 2008 that’s $150 million and then $350 million rolls off in November 2009.

The answer to the second half was in Q2 last year the lost L’Oreal revenues were –

Are we asking in Q2 or – Joseph Altobello – Oppenheimer & Co.: In the March quarter, yeah.

- were approximately two out of the three months which was about $20 million.

Your next question comes from the line of Laura Richardson with BB&T. Laura Richardson – BB&T Capital Markets: Just wanted to get a sense for Sally. I thought the Sally store customer mix shifted between the December quarter and the rest of the year, more towards professionals out of December and could you help me understand the magnitude of that shift?

I’m not sure I completely understand the question. But basically our customer mix doesn’t change a whole lot in the Sally division. We’ve been running about 70% consumer and 30% professional and on a year-to-year basis that’s been shifting about 1% a year, but we don’t really see any significant differences from month to month to month. Laura Richardson – BB&T Capital Markets: I guess I misunderstood that then, Gary. Because I thought in the holiday season you might have a little heavier than 70% regular consumers.

It could – let’s take a look at it – it could very slightly, Laura, but it isn’t significant. Laura Richardson – BB&T Capital Markets: Okay. Thanks. And then this is kind of a question and also a request in terms of the interest rate swap. Because I think I heard David basically say where rates stand right now there could be like a $16 million non-cash charge in Q2 because of the interest rate swaps.

Let me clarify that. What I said was as of the end of January the liability in our balance sheet would be approximately $16 million which means the additional interest expense for January would be $7 because we already had some of that on our balance sheet at the end of Q1. So the P&L in fact if you will where rates stood at the end of January was an additional roughly $7 million non-cash charge embedded in interest expense which shows up in Q2. As I said holding all other things constant, meaning no changes in interest rates and holding the swaps through to the term, then ultimately that $16 million liability that’s on our balance sheet as of the end of January will have to reverse off so that the value of the swaps at the end is zero and that will reflect itself as essentially non-cash interest income in our income statement over time. Laura Richardson – BB&T Capital Markets: Okay. I kind of understand that. I guess the request part here is maybe in the press release you could make a headline that says Operating EPS of X. So we can all be modeling towards something that excludes this highly volatile interest rate swap stuff because that’s been a big swing in the quarter. It’s like three of the last four in the last year.

It has had impacts in each quarter. There is one quarter it was an income item, the other quarter it [inaudible] and an additional expense and we try to highlight that on a pre-tax basis for you so you can decide what you want to do with that in terms of your numbers. But we will continue to make sure you understand what – Laura Richardson – BB&T Capital Markets: You’re giving the infor – I’ll talk to Sandy later because there’s a way to just make it more obvious in the press release so you don’t get credited for beating when it’s on a swap or missing when it’s on a swap and we just focus on the operations.

Laura, the attorneys won’t let us highlight it too much in the bullets and so forth. Laura Richardson – BB&T Capital Markets: Oh well.

Your next question comes from Ted Bernstein with UBS Securities. Ted Bernstein – UBS Securities: I understand the inventory related explanation but I was still surprised by the amount borrowed under the ABL facility as of the end of the quarter. Can you tell us has the ABL balance been paid down subsequent to December 31st?

As we said, there is really a couple of things going on in that borrowing one of which is just the timing of interest payments under our high yield notes and so that has an impact on just the timing of borrowing and repayment. Greg, I don’t know if you want to add anything to that. [Greg Poppy]: That’s the biggest driver that we see. We have large payments due each quarter on the term loans and semi-annually on the senior sub-notes. November and May are the biggest five months. We had about $55 million in cash interest expense that was paid out in November.

So since you paid twice a year you accrue in between and make the payments and that swing your accrued expenses and working capital from that perspective due to the timing of those. Ted Bernstein – UBS Securities: Would you tell us where the borrowing is currently?

I don’t have that figure right in front of me but I would tell you is because of that type of working capital change similar to what frankly we saw last year excluding any type of acquisition effect is that I would expect to see that the ABL facility would come down over time. Probably not much in Q2 but by the end of the year it would be my expectation, again excluding acquisition impact, that all that would be paid off. Ted Bernstein – UBS Securities: Is the business overall becoming more cyclical with greater focus on retail consumer sales on the SBS side of the business?

I don’t think so. As I stated we’re still running approximately between 8 and 9% of our business every month. The holiday season as we become more and more retail we do see a fair amount of fluctuation in primarily in the electrical category because it’s such a big gift item. But other than that, and as I started out saying, with 50% of our total revenues including BSG going to the licensed cosmetologists and salon, that business is extremely steady throughout the year. Ted Bernstein – UBS Securities: I wasn’t really addressing seasonality so much as cyclicality with the overall economy. Because I thought that you had said earlier that the same sorts of trends that you saw in the SBS segment during December were continuing into the current quarter.

What we said was that the trends we saw for the full quarter one in terms of sales of BSG and Sally are continuing on into January meaning Sally U.S. and International same store sales is positive but not up a lot and continued strong growth at BSG.

Your next question comes from Emily Shanks.

Thanks for the taking the question. Most of them have been answered but I do want to just follow up on the inventories. I want to be very clear. Did I hear you say in the last question that the majority of the drawdown on the term loan was because of interest? So you would say that the inventories are a lesser reason?

There is both things happening there. As we said in one of the fundamental parts of the BSG business plan is to bring in those additional brands and so as we said in the fourth quarter that we were anticipating from again an inventory working capital respect this to be a more challenging year. For sure BSG inventories are up due to that. Just from a timing perspective, yes, the ABL also has an impact in terms of the timing of interest in. So there are both of those things going on.

That’s helpful. And then as it relates to increased inventory within the Sally segment, I think I heard you right that North America is actually down but International is up?

Yeah, remember we did the – when you look on a total basis – we did the salon services acquisition in February. So when you do comparison to the prior year meaning December 2006 versus December 2007 Sally U.S. inventories are down over that December time frame but International is up in large part simply because we did the acquisition.

Okay. Thank you and what I wanted to follow up also on is there is not one specific category on the International basis, it’s just the overall business, right?

In terms of inventory?

Yeah.

Yeah, well exactly, because the inventory for salon services at the time we acquired it was – I’m trying to remember – roughly $25 million or so, so that’s kind of the biggest difference.

Great and then if I could just one follow up housekeeping question. I know that at the end of your comments you all had stated that the new store growth, the target of 140 to 180, and I know in the last call you said for 08 you were looking for 140 to 150. Is that number for 08 still good and then the 140 to 180 more of a long term view?

No, I think that we’ve said the last couple of calls that historically we’ve increased space 3 to 3.5% and that going forward we would increase it 4 to 5% not including acquisitions.

Right. So as Gary mentioned in his earlier remarks our expectation is to open between 140 and 180 new stores excluding acquisitions on a combined basis for both Sally and BSG this year.

Your next question comes from Peter Grondin. Peter Grondin – OSS Capital: Sorry to keep focusing on this swap interest but, David, just want to be clear. The extra $5.7 million on top of the base interest charge, then let’s say everything stays stable for the rest of the quarter so it would have to add on $7 million more to the – whatever the interest was for the quarter, $45 million or so to get the pro forma interest for Q2?

No, what I’m saying is in the quarter we had the additional charge, the non-cash charge, for the swap and then in January – The question is what was the change in the market value, the fair value of the swap? What happened post the end of Q1 interest rates went down in January what we’re seeing is an additional interest expense of approximately $7 million, holding all other things constant, that’s what the additional interest expense that we see in Q2, but also recognize that over time, holding interest rates constant, that that liability, whatever it is on our balance sheet, will have to reverse itself out to zero by the end of the terms of the swap. Peter Grondin – OSS Capital: Okay. May be slow here. So you had an extra $5.7 million or so in interest for this quarter, correct?

That’s correct. Peter Grondin – OSS Capital: Okay. So I guess what I’m asking is, let’s say it’s March 31st and the interest rates stay where they’re at right now, is it $7 million plus the $5.7, or is it just whatever my base calculation is for interest based on the debt plus the $7 million, or is it base plus $5.7 plus $7 million?

No, it would the base plus the $7 million because the $7 million represents the change – Peter Grondin – OSS Capital: Got it. Okay. I’m there. Okay. That’s fine. Okay. And the second, I think on the last quarterly call you had said that you were targeting $8 million in compensation expenses as it relates to share based compensation expense.

Yeah. Peter Grondin – OSS Capital: $10 million now. Is that right?

Yeah, that’s correct. Our overall estimate toward total unallocated between 80 and 85 that hasn’t changed but the stock option piece went up a little bit. We think some of the other pieces come down so the total range is the same as what we had said. Peter Grondin – OSS Capital: And do you think it has sort of the same lumpiness where it looks you took a lot of it in the first quarter here?

Yes Peter Grondin – OSS Capital: Would you take a lot of in the second quarter or would it be blended out evenly for the next three?

Yeah. No, what’s happening there is that the timing of when we issue stock option awards is in the first quarter. Because of that, and we anticipate we’ll be doing that every first quarter going forward, so when we do that there is an effect because of certain retirement eligible employees that we basically have to accelerate the recognition of all of the stock option expense rather than over the life of the option four or five years. So that tends to make and will likely make going forward the first quarter our largest stock option expense quarter of the fiscal year. In this particular quarter it was $3.1 million representing the accelerated rate of recognition of those stock options. It will likely go down for Q’s 2, 3 and 4, go back up in Q1 next year and so forth.

Your next question comes from Todd Harkrider. Todd Harkrider – Goldman, Sachs & Co.: You’ve done a great job of refilling the contractual loss L’Oreal bucket. How much of the BSG same store sales do you believe as being pulled forward? And should we see a couple quarters of the negative same store sales of BSG after the initial sell down of the Goldwell, Joico and ISO [inaudible] or how should we look at that?

At this point I don’t think so because a lot of these brands haven’t come anywhere near hitting their stride as you can tell from our comments, a lot of the additions that we made were just in this past quarter. As we continue to add brands and as those we’ve added really just get up to speed from an advertising standpoint and sales standpoint my expectations are that BSG same store sales should be good quite a ways into the future, I hope.

As I said that the one thing frankly that we’ve been wrong on is we said a number of times because of the very strong growth we had at BSG on same store sales we were thinking that would moderate and we’re going against tougher comparables. We thought that would happen in Q4 but comp store sales for BSG remain strong and the same thing in theory applies to this first quarter and they continue to be strong so I guess what I would say though is we are up against pretty strong comparisons in second quarter of last year, BSG’s comp store sales were up like 11%, 9% in Q3 and almost 10% in Q4. Those are pretty good numbers that are going to be tough to beat, but as Gary said we continue to add new brands and have been pleasantly surprised at how strong those have remained in the face of pretty tough comparables.

And my expectation is we wouldn’t beat those rates but I think we will stay very positive with BSG same store sales. Todd Harkrider – Goldman, Sachs & Co.: That sounds good. Can you talk a little bit about your relationship with P&G and Paul Mitchell specifically? Do you think it’s maybe gotten stronger lately with L’Oreal continuing to buy large distributors with significant store base or do you think it’s weakening maybe a little bit since you picked up Joico and Goldwell and so forth?

It’s absolutely strengthening. In some of the geographies where we carry particularly Paul Mitchell are not necessarily the same geographies that we carry Paul Mitchell or Joico or ISO. They’re different geographies but the relationship with both those companies is extremely strong because I think they, as we said a year ago, see this as a huge window of opportunity to get more distribution stores and sales consultants and to have an opportunity to make some significant increases in their market share.

Your next question comes from Duncan Byce with AIG Investments. Duncan Byce – AIG Investments: The first question just goes back to some of the comments that you made on the previous conference call on the BSG side. You guys had talked about sequential operating margin improvement in each of the quarters with a target of returning to historical levels in the back half of 08 which to me implies 9.5 to 10% operating margins. Is that still the case and are you guys doing better than your plan or was there anything that was won off in the quarter that may have made these margins better than what I was expecting?

Just from an historical point of view the BSG segment operating margins in 2006, so pre-L’Oreal were about 9%. So when we talk about going back to more historical levels that’s more or less what we’re talking about and as we had said our goal for BSG for this year is to drive the segment profitability back towards that type of number during the second half of the year. Obviously we’re happy to have the progress that we did in Q1 towards that and hope to continue having those types of improvements as we said. But particularly during the second half of the year. Duncan Byce – AIG Investments: Should we still of sequential improvement or is that now –

No, I think that’s there.

Well, is sequential meaning from first to second to third or meaning quarter-over-quarter? Because I – Duncan Byce – AIG Investments: First to second, second to third, I guess.

The second and third quarter as we talked about in last quarter’s conference call may have some expenses related to our distribution project. As we said we were anticipating order magnitude up $4 million of expenses related to that. So that’s not the capital part of that, that’s the operating expense. So to the extent that those flow in, that statement may not be true but we’re going to have to figure out the timing of when those occur but I would anticipate as I said during the second half Q3 and Q4 to continue to show that type of improvement. Duncan Byce – AIG Investments: Then just on the Sally Beauty side, remind me again what kind of a same store sales comp do you guys need to maintain operating margins?

We’ve never discussed that and because we have the three things that I’ve commented on many times all working to our favor in the way of increasing margins, I’m not sure that we necessarily have to have a particular same store sales increase to achieve that and those three things are the continued shift of our business a little more toward the retail customer which is a higher margin business, the continued growth of our exclusive label products which are a significantly higher margin and what we’ve been doing over the last year to 18 months in increasing our low country costs source of product. With those three things adding to our margin I believe that we can have very minor same store sales increases which is certainly not our intent, but if that happened I think that we could still maintain our increases in margin.

By point of fact for the quarter as you know comp store sales for Sally were up just slightly and yet gross profit margins for the Sally Beauty Supply segment did increase. Duncan Byce – AIG Investments: Okay. So you guys basically, even with a flat to maybe slightly positive same store sales comps, you still think your margins are going to see improvement on the Sally side?

So long as the trends for things like our control label, proprietary label sales within Sally continue, that’s one of the big drivers. Yeah, that’s certainly possible.

Your final question comes from Carla Casella with JPMorgan. Carla Casella – JPMorgan: Just two quick follow ups. In your 10-K it mentioned that your term loan was at an average interest rate of 8%. Is that the rate it’s hedged at so is that the rate we should use until the hedges fall off?

I believe that statement in there – I don’t have that in front of me – related to our total debts. Do you have - Carla Casella – JPMorgan: I guess what I’m trying to figure out is until – you’ll get the benefit of the lower LIBOR rate as soon as your hedges come off, but until that time I’m wondering what rate I should be using for LIBOR. Are you hedged at 5.2, 5.4% where it was this year, or is it at a higher rate?

The way to think about it is we have a fixed rate that we pay on our senior sub-notes and on our term loans $500 million of that we pay a fixed rate on, the rest we pay the floating LIBOR rate. So, it’s going to fluctuate with whatever LIBOR moves. Carla Casella – JPMorgan: Right. But on the fixed portion what’s it fixed at? That’s what I’m trying to figure out.

On the swaps I think we published that the swaps are about 5% and then you think of the spread that we pay on top of that of 250 basis points. Carla Casella – JPMorgan: Okay, great. And then secondly did you disclose how much EBITDA came from the acquired revenue? It looked to me like it was a relatively high –

No, we didn’t break out the EBITDA. We did break out revenues, however.

Thank you very much for your interest in our company.

Thank you.

Thank you for joining today’s conference call. You may now disconnect.