Let me acknowledge at the outset that we are very disappointed by our earnings performance. However, over the past year we were able to successfully accomplish important strategic and business objectives even during these difficult times. In brief, we eliminated non-core businesses to focus on our PacSun concept. We exited our underperforming and lowest margin sneaker category to focus attention on our higher margin, faster turning apparel business.

We expect to experience a diminishing comp impact and the benefit to our merchandise margins from this initiative as 2009 progresses. We consolidated in to a single distribution center and enhanced our supply chain to lower cost, improve efficiency and shorten time to market. We implemented a series of actions to better position the company in the current economic environment. We significantly reduced inventory levels, cut planned CapEx and SG&A expenses and managed the balance sheet with a focus on enhancing liquidity and preserving financial flexibility.

We exceeded our goal of apparel representing more than 80% of our mix and juniors being greater than 50% of our apparel assortment. We established a $150 million asset backed credit facility with JPMorgan and Bank of America as our primary lenders. And finally, we ended the year with nearly $25 million in cash on the balance sheet and no direct borrowing on our credit facility. We firmly believe that these actions better position PacSun in the current environment and will enhance our ability to improve profitability over time.

Turning now to the fourth quarter; although we anticipated that it would be a difficult quarter we underestimated the extent and the pace of the general economic slowdown. The same-store sales down by double digits, we increased our promotional activity in the effort to clear through inventories and to capitalize on holiday traffic. While these promotions significantly reduced our margins we were able to achieve our objective by ending the year with inventories down 30% per square foot in dollars and 19% per square foot in units. As a result, we have entered fiscal 2009 with a very clean and current inventory position.

We also took a hard look during the quarter at our organizational structure with a focus on improving management alignment and lowering costs around our single PacSun concept. We have realigned our organizational structure around brand and customer initiatives rather than channels of distribution. We believe that this new structure will result in more efficient operations in areas of product design, sourcing, marketing and promotions.

Turning now to our product assortment; overall we were pleased with the 11% sales growth in our apparel business last year. Our junior’s business driven primarily by fashion achieved a 23% increase year-over-year and our junior’s apparel business now represents 51% of our total apparel sales. Our young men’s apparel business grew 1% and represented 49% of our apparel sales. Admittedly, young men’s lost some competitive ground over the last year but with our evolving brand strategy we believe we have the opportunity to regain and grow this business over the next few years.

Accessories represented 13% of our sales mix for the year. In retrospect, we probably cut too deep on our accessory categories and walked away from some business in 2008. We believe that 2009 presents an opportunity to improve upon this business and we expect that accessories will be above 15% of volume going forward.

Let’s turn briefly to our real estate portfolio. We ended the year with 932 stores that comprised approximately 3.5 million square feet. In this environment the limitations of a one size fits all approach to our real estate portfolio have become increasingly clear. As we were liquidating footwear over the past year it became apparent that there was a value customer that we could serve better in many of our locations that average around $1 million in annual sales. We found that these stores situated in lower tiered malls or strip centers catered to a customer base seeking value. As a result, we began to expand the so-called value assortment in these stores to also include additional apparel promotions and keep opening price points. After making these adjustments in product mix, many of these locations experienced modest improvement in sales and gross margins.

Today, we operate our single concept under two groups of stores - core and value. Our core PacSun stores are comprised of approximately 525 locations primarily in A and B malls with the remainder being value stores which include our outlet. From a volume perspective remember though that core PacSun locations generate more than two thirds of our sales. I would like to emphasize this is not a new concept but rather an assortment adjustment to meet the preferences of our customers in certain locations. We have no intention at this time of changing the name of these stores or investing a material amount of capital in this initiative.

I will now touch on our new store and remodel plan. We have aligned with our landlords to defer nearly all store refresh projects into 2010 and beyond. At this time, our plan for 2009 is to open three new stores, relocate or expand nine stores and to refresh three stores.

As a reminder, we will evaluate for renewal more than 100 leases per year or roughly one-third of our current fleet over the next three years. We anticipate closing through regular course of business between 35 and 50 stores per year during this time as leases expire or as we exercise termination clauses where appropriate.

As we enter 2009 we expect it’s going to be another difficult year. While we cannot control the external environment, we are confident that we have taken the appropriate measures to position PacSun for this difficult environment as well as to deliver increased value to shareholders over time. I will now turn the call over to Mike Henry, our Chief Financial Officer.

Michael L. Henry

Thanks Sally and good afternoon everyone. In today’s environment, it is more important than ever to be prepared for the what-ifs. We have taken several decisive actions that help protect our positioning in this tough economic climate. First, entering fiscal 2009 our inventories were down 30% in dollars and 19% in units versus a year ago as Sally mentioned. This positioning provides us with significant flexibility to absorb sustained negative comps, protect gross margins, chase inventory on trend right goods and be promotional where needed to drive improved traffic. We expect to maintain significantly reduced inventory levels throughout the year.

Second, our inventory aging is greatly improved with 85% of our inventory aged less than 90 days entering fiscal 2009 versus 71% entering fiscal 2008.

Third, capital expenditures for fiscal 2009 are planned at no more than $30 million, a reduction of over $50 million from the fiscal 2008 level. As a reminder, depreciation is expected to be approximately $75 million for the year.

Fourth, SG&A expenses for fiscal 2009 are planned down by approximately $35 million on a GAAP basis versus fiscal 2008.

Fifth, we ended fiscal 2008 with nearly $25 million in cash and no direct borrowings under our $150 million credit facility. We have no direct borrowings outstanding today although we do anticipate borrowing intermittently throughout the year just as we did in fiscal 2008.

We are not subject to any financial ratios or similar covenants under our credit facility unless we are drawn to the last 10% of our total availability at any point in time and our facility does not expire until 2013. Finally, this is not annual guidance but simply a couple of points of references for the year. Even if we were to experience a same-stores sales decline of 20% we would expect to end the year with as least as much cash as we did for 2008.

We expect to receive a federal income tax refund based on our losses from fiscal 2008 of approximately $25 million near midyear. If our comp trend were a negative 15 as another data point we would expect to end the year within the neighborhood of $1 per share in cash. In each case, we would not expect to have any direct borrowings outstanding under our credit facility at yearend.