For Borders superstores, the agenda also includes continued expansion of Title Sleuth, our Web-based in-store product search stations. This innovation was rolled out to all stores in the fourth quarter of 2000 as a key component of our convergence strategy. The technology investment to support Title Sleuth is critical. Ultimately, it will give us the flexibility and functionality to someday deliver a wide assortment of customer benefits — including digital distribution of books and music — to be provided as demand evolves. In addition to Title Sleuth, we will drive core business growth through the continued intensification of our Children’s category and expansion of the Gifts & Stationery program. These individual efforts, which are detailed throughout this report, have already demonstrated an ability to drive comparable store sales.

The positive results of these initiatives will be extended into additional areas through a recently announced Category Management structure at the corporate level. Category Management tightly bonds the merchandising function with the sales and marketing function at Borders Group. As we apply this process, we are confident it will ultimately help deliver performance by creating a more intense focus on categories from a customer perspective while also requiring measurable goals and specific accountability for meeting them.

While we are mobilizing on these fronts, we will pace our new store growth to 25-30 domestic Borders stores for the year 2001. This allows for complete focus on and attention to enhancing our strong and productive Borders store model while still taking advantage of the opportunity ahead for domestic growth over the next decade. Demographic trends favorable to Borders, such as the continued rise in the number of affluent and highly educated Americans, support our growth thesis.