We mobilized to create various fundraising efforts including in-store point of purchase programs, a create a flag program, and other initiatives, all of which benefited organizations in support of the children and families affected by the tragic events on September 11. The Toys“R”Us Children’s Fund, Inc.’s “9/11 Emergency Relief Fund” has to-date donated approximately $2 million to local and national organizations supporting groups that were affected by 9/11. In addition, we made available a workbook titled, “First Aid for Feelings,” authored by childhood grief expert, Denise Daniels, to guests in all of our Toys“R”Us and Kids“R”Us stores nationwide, free of charge. I was extremely proud of the way our company responded throughout an unimaginable time, and I believe our shareholders should be proud, too.

Moving forward, reenergizing stores

Despite the turmoil and stress of the past year, we remained focused on our business. By the end of 2001, 433 of our U.S. toy stores had been converted to the new Mission Possible format highlighting unique content, a fun and easy to shop environment and improved service for our guests. We believe in the long-term value of meeting the needs of our guests through unique shopping destinations that sell concepts, ideas and exciting products with services that help each guest select the perfect gift -- and the Mission Possible stores achieve that goal.

Validating the underlying vitality of this strategy was a store-for-store increase of more than 8 percent for the last five-week period of the holiday selling season among the entire portfolio of newly renovated stores completed in 2001 -- the best Toys“R”Us U.S. December results in nearly a decade. We will complete the conversion of the balance of our stores to our new format by holiday 2002.

Geoffrey has come to life as our lovable, wise-cracking spokes-animal.

Celebrating the brand

Our award winning flagship store in Times Square opened in November to great fanfare, terrific public response, tremendous media coverage and sales that exceeded our plans. Called a “unique entertainment experience for the young and young-at-heart,” our flagship store continues to be an ongoing celebration of the “R”Us brand as well as a landmark destination that sets us apart from other toy retailers.

This store also exemplifies our strong relationship with our key resources, and is an excellent example of partnership at work. The flagship serves as a platform to support product introductions and exclusive licensing programs, and enhances our brand as well as the brands of our most valuable resources.

Also in 2001, our marketing campaign featuring Geoffrey the Giraffe garnered rave reviews from customers and was recognized by USA Today as one of the most effective advertising campaigns in 2001 in reaching its target audiences, according to their proprietary research. In addition, our independent consumer research showed that in the top 21 markets we had the highest advertising awareness of any of our largest competitors at the holiday season, confirming that our campaign truly resonates with customers.

Our strategic partnerships, licenses and alliances with exceptional brands and companies infused exciting products and events into our stores. Our own private brand business, which provides higher margins to fuel the revitalization and rebuilding of the “R”Us family of brands, reached an unprecedented $1 billion in sales in the U.S., a fourfold increase in just a few short years.