There were some very positive signs of improved business performance during 2008. We said at the start of the year that we would maintain a flat to slightly positive gross margin rate for the year. We did that and we did it at the same time we launched a new lower price campaign. This is indicative of better control and coordination within our merchandising organization and our effective focus on everyday pricing. We also reduced our inventory by over $1 billion while at the same time maintaining the best in-stock rate we’ve had in several years.

Again, this reflects planning, focus, and execution across the business from merchandising to store operations to supply chain to finance, and we continue to see improvement in customer satisfaction as measured by our voice-of-the-customer surveys and by independent third parties. We also gained market share in key categories, as Craig will describe.

For 2009, we anticipate another difficult year. We are expecting sales to decline approximately 9% and earnings per share to decline by about 7%. Excluding the impacts of our strategic actions from this January and the store rationalization charges of earlier in 2008, we expect earnings per share to decline approximately 26%.

Let me add a note of caution here -- last year at this time, we provided guidance in terms of a range of performance for 2008. This year, we are not providing a range. That doesn’t mean that we are more certain about 2009 than we were about 2008 -- in fact, 2009 is an even more uncertain planning horizon. Housing inventory remains high; consumer demand remains soft, and the impact of government stimulus is uncertain. But rather than giving a very broad range, which would not provide you much of an understanding of how we think about the business, we thought it better to provide our working estimate. Carol will outline for you the key assumptions underlying this estimate. Our intent is to provide a reasonably transparent framework for thinking about our business without implying a certainty that would be misplaced in the current environment. And while we are anticipating a tough year in 2009, we will continue to make progress in improving our business.

Over the last two years, we have become a simpler company, which is a good thing. We have exited non-core businesses; we have restructured support staff; we have stopped applying significant capital to building new square footage; and we have renegotiated our private label credit agreement. These actions will make us a better business. They also allow us to focus in 2009 on the steps we know we have to take for long-term success.

We have to improve our supply chain. With the opening of our fifth RDC in January, RDCs now serve approximately 500 of our stores. By the end of 2009, we expect that they will serve over 1,000 stores. We are pleased with the results we have seen to date with RDCs and we anticipate additional improvement as we get closer to critical mass on the number of stores served, vendors onboarded, and percent of cost of goods flowing through the facilities.

We have to improve our merchandising tools. We have made progress over the last two years on this and 2008’s performance on margin rate and inventory would not have been possible without the improved tools and disciplines we have already put in place. Matt Carey and our IT team, along with Craig and the merchandising team, have additional improvements in process for 2009. We are not contemplating any significant spend on a U.S. based enterprise wide system in 2009. We have the advantage of being able to assess the benefits of putting such a program in place in Canada in 2008 and we’ll be in a good position at the end of 2009 to assess whether such an investment for the U.S. would make sense and we have to continue to improve our customer service. Marvin and the store operations team have applied the same concept of simplification to our stores. Last year, we re-invested over $250 million annualized in hours to the floor of the store, our Aprons on the Floor initiative. This year, Marvin and Tim Crow, our Head of HR, and their teams will focus on improving our training so that we enhance our associates’ effectiveness.

We are going into 2009 conscious that we have to preserve the momentum in improving our business and also conscious that we have to be more disciplined than ever in our use of cash. Our capital spending is back-end weighted and we’ll be prepared to adjust if circumstances require, and we’ll continue to carefully control our discretionary spending.

I want to thank our associates for all their hard work and dedication during a very tough year and their commitment for the year ahead. Our associates carry the culture of our company to our customers every day and I am very proud that even in these difficult times, we had a record number of stores participate in our success sharing program for hourly associates.

Now let me turn the call over to Craig.

Craig Menear

Thanks, Frank and good morning, everyone. Our sales reflect the ongoing softness in the home improvement market. For the quarter and full year, our remerchandising department experienced negative comp sales growth compared to 2007. In the fourth quarter, the departments that outperformed the company’s average comp were building materials, plumbing, seasonal, paint, and hardware. Flooring performed at the company’s average comp.

From a regional perspective, sales trends were mixed. In the areas that first experienced the housing downturn, there are some signs of stabilization. For example, markets such as Miami, San Francisco, and San Diego are still posting negative comps but have shown a significant improvement in comps in the fourth quarter versus last year. However, in areas that previously showed some resilience, like Cleveland, Seattle, and Pittsburgh, we are seeing greater softness.

We also saw strong comps for regions that had been affected by severe weather. The Gulf Region posted positive comps in the fourth quarter as communities continued to rebuild following last summer’s hurricanes. Additionally, we saw increased sales in chemicals, flashlights, chainsaws, portable generators, shovels, and snow blowers as a result of ice storms that spread across the Midwest and Kentucky.

I want to take a moment to thank our store associates, merchants, and logistics teams for coordinating the efforts during those ice storms to ensure that we had the right products in the stores to take care of our customers. It was a tremendous collaboration and they executed very well.

During the quarter, we continued to experience softness in big ticket projects. We define these projects as those transactions over $500. In this average ticket tier, we saw double-digit declines during the quarter. Contrast this with transactions with tickets under $20 where the decline was just 2.7%. In total, average ticket for the fourth quarter on a comparable 13-week basis was down 7.5% to $50.87. We continued to see relative strength in basic repair and remodel as evidence of our plumbing, hardware, and paint department results.

We also were pleased with the better execution and performance in the holiday and seasonal gift merchandise. While there are several economic factors affecting our results that we cannot control, we continue to focus on those areas we can control. We are executing on our merchandising transformation to provide a great, everyday value to our customers and will continue to do so in 2009. At the heart of our merchandising transformation is our portfolio strategy. This defines the role and intent of our merchandise categories to capture the full basket on project sales, driving sales and gross margin productivity.

Our new lower price campaign is a major component of our portfolio strategy, where we shout out value on key products and project starters across the store. An example of this is in interior paint, where we have lowered prices on items such as Behr’s Flat Premium Plus. Unit sales are increasing and at the same time, our attachment sales of related items are going up. Overall, we are pleased with the results of this campaign and can already see that our customers are responding to this program.

Despite the deterioration we saw in the fourth quarter sales as a result of the worsening economy, we were very pleased that our comp transactions did not decline sharply in the fourth quarter. Comp transactions were a negative 5.8% compared to the full year at negative 5.5%.

Our enhanced assortment planning and forecasting tools allowed our merchants to make faster decisions in this business environment. Enhanced forecasting is particularly important in our seasonal businesses. We knew it was going to be a difficult holiday season, so in the U.S., we assorted accordingly and planned for less inventory in these categories. This resulted in better sell-through and fewer markdowns. To put this in perspective, our special buy, seasonal merchandise, we purchased fewer goods, had better than 90% sell-through while reducing markdowns nearly 10%.