Fifteen new International stores were opened in 2005, including the first two Borders franchise stores, which are located in Malaysia. Total International sales increased 12.9% in 2005 compared to a 25% gain the previous year. This result is primarily attributable to the difficult economic environment in the U.K., which we believe is temporary and will not impact our future growth plans. Outside of the U.K., results continued to be strong, particularly in Asia Pacific.

We remain firmly committed to our global expansion strategy and in March 2006 named a new chief executive for our U.K. operations, strengthening the management team. Our plan for the International segment in 2006 includes opening 12 to 14 new stores, primarily where we already have a presence, and we'll also continue new market expansion.

Launching a rewarding new loyalty program

Among the keys to our fourth quarter success: We used targeted e-mail promotions more effectively to increase store traffic and sales. We will continue to refine and expand these promotions in 2006, as we seek more efficient ways to reach our customers with compelling reasons to visit our stores more often.

Our new Borders RewardsSM loyalty program, launched in February 2006, is one of the cornerstones of this effort. This program, designed to be particularly compelling when compared with competing programs, provides many unique benefits. First and foremost, the program is free for customers. And, members earn rewards every time they shop at any Borders, Borders Express, Borders Outlet, Borders airport, and Waldenbooks store throughout the U.S.

I encourage you to become a Borders Rewards member. Just pick up a card at your neighborhood store to begin earning savings immediately. Then, register your card online at www.bordersrewards.com and gain even more program advantages.

Extending our ''single brand'' strategy

Borders Rewards is just one component of our growing single brand strategy designed to leverage the recognition and value of the Borders brand across our entire enterprise and to improve the operating effectiveness of our businesses.