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Red and Kitty are throwing their annual neighborhood Christmas party that Eric detests; he asks Red if he can have his own party in the basement. Red gives Eric forty dollars to buy a great Christmas tree; Eric can use any leftover money for his party. Bob asks Red to work Christmas Eve at the appliance store because he always has a lot of last minute shoppers. The guys chop down a tree on the interstate and keep all the money for beer for the party. Hyde wants to buy Donna a special present and asks Midge what she likes; Midge says she likes perfume, especially "White Shoulders". Eric's sister Laurie tells him she knows he stole the tree, but he silences her by threatening to tell Red and Kitty that she's flunking out of school. Fez asks Hyde what he's doing buying a present for Donna when he knows Eric likes her; Hyde says it's not official with Eric and Donna. Kitty insists on making punch for Eric's party, and Laurie, angry that Eric has been allowed to have a party, spikes the punch with rum. At the party, several cheerleaders get drunk on the punch and the police arrive to confiscate the Christmas tree. The friends exchange gifts, and Donna gets White Shoulders from Eric, but she's especially touched by Hyde's gift, a framed photo of Donna and Hyde when they were in the fifth grade.
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