Print Letter to Shareholders (PDF)

In addition, Waldenbooks expanded membership in its long-running Preferred Reader® loyalty program in 2002, also increasing sales to those customers. Waldenbooks' seasonal businesses also performed well, including the operation of 725 Day by Day Calendar kiosks which helped to bolster holiday sales.

Staying Focused in 2003
The business environment is likely to remain challenging in 2003. But we strongly believe in our business and product categories, and we further believe the initiatives we have put in place will help us to distinguish our performance, in weak and strong cycles alike. During 2003, we will stay focused on implementing our four-point business plan, including:

• Opening approximately 40 new Borders stores domestically, which will generally reflect a trend toward smaller square footage and be located in markets where there is less impact on existing stores. In addition, we plan to open six to eight new international locations in markets where we already have a presence, such as the U.K. and Australia.
  
  
• Continuing to roll out Category Management within our stores, and maximizing the returns from each individual category.
  
  
• Enhancing the design and productivity of our stores and increasing our emphasis on strategic non-book and non-music categories, such as gifts and stationery.