Our primary challenge in our U.S. toy stores is to drive traffic into our renovated stores. We plan to intensify our efforts in this direction in 2003. We have analyzed the product categories that did not perform well in 2002, and we have partnered with our vendors to re-energize these categories. We intend to increase the number of new product launches at Toys"R"Us in 2003, building on our Times Square store's reputation as the media center for the toy industry.

Encouraged by our momentum in the core toy business in 2002, we will work to further strengthen it in 2003. We learned from the launch of the "Low Price Super Stars" campaign during the 2002 holiday season, and we will fine tune our pricing strategies in the coming year. In addition, we are focused on improving the experience of our customers inside our toy stores. We have taken a number of steps to increase both the quantity and quality of sales help in our stores. We know that additional sales associate hours, properly utilized, will help us to increase conversion and average transaction size. Thus, as we work to optimize in-store performance and enhance our service capability, we will take additional steps to maximize sales associate hours and ensure that those hours are aligned with customer shopping patterns.

We have put in place a more solid foundation for our future growth and improved our ability to execute our strategy, but we still have a lot of hard work ahead of us. There is no higher priority at Toys"R"Us, Inc. than improving our U.S. toy store performance. While gaining market share is a significant sign of progress, we will not be satisfied until we are successful in achieving our sales and profit goals as well.