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To: Bill Harmond who wrote (25920)	11/13/1998 2:08:00 PM
From: Glenn D. Rudolph	Read Replies (1) \| Respond to of 164684

>>Not your logic. That's for sure! William, Is your logic just to go with the momentum? Glenn

To: Bill Harmond who wrote (25920)	11/13/1998 11:54:00 PM
From: Glenn D. Rudolph	Read Replies (1) \| Respond to of 164684

Marketing and sales expenses consist primarily of advertising, public relations and promotional expenditures, as well as payroll and related expenses for personnel engaged in marketing, selling and fulfillment activities. All fulfillment costs not included in cost of sales, including the cost of operating and staffing distribution centers and customer service, are included in marketing and sales. Marketing and sales expenses increased primarily due to increases in the Company's advertising and Page 12 promotional expenditures, increased payroll and related costs associated with fulfilling customer demand and increased credit card fees resulting from higher sales, as well as increased marketing and sales activities associated with the entry into music sales, the launch of new stores in Germany and the United Kingdom and the acquired entities. Such expenses decreased as a percentage of net sales due to the significant increase in net sales. The Company intends to continue to pursue its aggressive branding and marketing campaign and expects its costs of fulfillment to increase based primarily on anticipated sales growth. In addition, the Company intends to increase investments in marketing, promotion and fulfillment activities related to its product and international expansion, as well as in marketing and sales activities of Junglee and PlanetAll. As a result of the foregoing, the Company expects marketing and sales expenses to increase significantly in absolute dollars.