Good morning, ladies and gentlemen. And welcome to the [Foot Locker, Inc.] Fourth Quarter 2010 Earnings Release Conference Call. [Operator Instructions] This conference call may contain forward looking statements that reflect management’s current views of future events and financial performance. These forward looking statements are based on many assumptions and factors, including the effects of currency fluctuations, customer preferences, economic and market conditions worldwide and other risks and uncertainties described in the company’s press release and SEC filings. We refer you to Foot Locker, Inc.’s most recently filed Form 10 K or Form 10 Q for a complete description of these Jordan Pro Strong factors.

Any changes in such assumptions or factors could produce significantly different results, and actual results may differ materially from those contained in the forward looking statements. Please note that this conference is being recorded.

I will now turn the call over to Mr. Peter Brown, Senior Vice President, Chief information Officer and Investor Relations. Mr. Brown, you may begin.

Good morning. We are pleased with our fourth quarter results, which represents the fourth consecutive quarter of sales and profit increases versus the corresponding periods of the prior year. On a GAAP basis, our net income was $0.36 per share for the fourth quarter of 2010 versus $0.14 per share last year. Our results included net charges of $0.03 per share this year and $0.10 per share last year that we’ve excluded in the non GAAP comparison that Nike KD 7 is included in yesterday’s press release. This non GAAP comparison shows an earnings increase of 63% to $0.39 per share this year versus $0.24 per share last year. During our prepared comments this morning, we will refer to our financial results on a non GAAP adjusted basis to help facilitate your analysis of our financial results.

Bob McHugh, our Executive Vice President and Chief Financial Officer, will begin our prepared remarks with a review of our financial results, including the charges that we’ve excluded in our non GAAP adjusted comparison. Ken Hicks, our Chairman and Chief Executive Officer, will follow with an operational review and provide an update on our long term strategic initiatives. We will conclude the call with a question and answer session.

The highlights of our fourth quarter performance include the following: comp store sales increased 7.3%; gross margin rate improved by 210 basis points; and our SG expense rate improved by 50 basis points. These factors contributed to our 63% increase in adjusted earnings per share.

I’ll now turn the call over to Bob McHugh.

Good morning. As Peter mentioned, I will discuss our quarterly results for this year and last year on a non GAAP basis, which includes the adjustments detailed in our press release.

The fourth quarter adjusted results were higher than our expectations going into the quarter and slightly above the Wall Street consensus estimate due to three key factors. during the last half of January, which coincides with a seasonal low point in terms of customer demand. Overall, by month, comp store sales increased high single digits in November and December and increased mid single digits in January. apparel business.

Two other key factors that contributed to the significantly improved results were our strong gross margin rate increase and effective operating expense management.

Our fourth quarter gross margin rate on a GAAP basis increased by 320 basis points versus last year. On a non GAAP basis, excluding the $14 million inventory write down that we Air Jordan 19s recorded last year, our gross margin rate increased by 210 basis points. This gross margin rate increase reflected a 120 basis point improvement in our merchandise margin rate, including increases in both footwear and apparel, and a 90 basis point improvement in our buying and occupancy rate. Our efforts to right size the quantity and improve the quality of our inventory over the past several quarters have led to a meaningful increase in our sales and merchandise margin rate.

Improved inventory management has allowed us to take strategic steps, such as reducing our store promotional events and clearance activity, while also fostering programs that have resulted in lower inventory Air Jordan CDP shrinkage. Our fourth quarter buying and occupancy Air Jordan 7s expenses dating constant currency dollars were essentially flat with last year. Therefore, with our solid sales increase, we achieved 90 basis points of leverage in our gross margin rate.

Fourth quarter SG expenses increased $8 million versus last year. Increased incentive compensation accruals and planned additional marketing expenses contributed to our fourth quarter expense increase. Excluding the increased incentive compensation accruals and marketing costs, our SG expenses were approximately 2% lower than the fourth quarter of last year. Our fourth quarter SG expense rate improved by 50 basis points to 21.8% this year versus 22.3% last year.

Depreciation expense for the fourth quarter was $27 million, in line with both the fourth quarter of last year and each of the first three quarters of this year. Net interest expense for the fourth quarter was $2 million, in line with last year and our quarterly trend for the year. Our income tax rate for the fourth quarter, on a non GAAP adjusted basis, was 37.8% this year versus 32.8% last year. Included in our income tax provision this year was $4 million of expense to adjust income tax expense provisions associated with prior year financial statements. This additional expense increased our effective tax rate for the fourth quarter from 33.7% to 37.8%, and reduced our earnings by $0.02 per share.

The income statement adjustments for the fourth quarter of 2010 that we have excluded from the non GAAP comparison are as follows: Other income of $2 million, reflecting a partial cash recovery related to our investment in the reserve money market fund that we were required to impair in 2008 when Lehman Brothers went bankrupt; a non cash impairment charge of $10 million related to our CCS business.

The income statement adjustments for the fourth quarter of 2009 that we have excluded from a non GAAP comparison are as follows: A $14 million inventory write down; a $5 million restructuring charge related to our Lady Foot Locker organizational change and costs associated with corporate staff reductions; an income tax benefit of $7 million relating to the inventory write down and restructuring charge, partially offset by a $4 million tax expense related to the write down of Canadian deferred tax benefits due to a Canadian tax law change.

Moving to our balance sheet. Our merchandise inventory is well positioned at the end of the fourth quarter and just 2.1% higher than at the same time last year. Additionally, our merchandise inventory is current and within a more stringent aging standard that we adopted last year. and Canadian pension funds.

At year end, we had $696 million of cash and short term investments and $137 million of long term debt. Our total cash position net of debt was $108 million favorable to the same time last year. Given our strong financial position, last year’s significantly improved financial performance and our outlook for the future, we increased our quarterly dividend by 10% to $0.165 per share effective with our first quarter 2011 payout. economy is stabilizing. However, unemployment, while coming down slowly, remains high, and there is risk that rising costs may continue to put downward pressure on overall consumer spending. Therefore, we will remain conservative in our planning process. Our current outlook for the full year of 2011 is to generate a double digit earnings per share increase versus last year’s adjusted results based upon the following: Comp store sales increase low to mid single digits; our gross margin rate to improve 30 to 50 basis points; our SG expenses to increase 1% to 2%, reflecting increased marketing costs and variable expenses to support the higher sales, offset in part by lower incentive compensation accruals. Depreciation expense is expected to be $106 million to $110 million, depending, as always, on foreign exchange rates. Interest expense should be relatively flat with last year at approximately $10 million. And our income tax rate is expected to be approximately 37%.