Good day, everyone and welcome to the Golfsmith International Holdings Inc. fourth quarter 2009 earnings and yearend conference call. As a reminder today’s call is being recorded. For opening remarks and introduction I would like to turn the call over to Joe Teklits from ICR for opening remarks and introduction.

Thanks. Good morning, everybody, and thanks for joining us again today to discuss Golfsmith’s fourth quarter and full year fiscal 2009 results. As a reminder, our presentation includes and responses to various questions may include forward-looking statements about the company’s financial results and about future plans and objectives. Any such statements are subject to risks and uncertainties which could cause the actual results and implementation of the company’s plans and operations to vary materially. These risks are discussed in the company’s annual report on Form 10-K for fiscal 2009 filed with the SEC. We issued a press release this morning. If you have not received a copy, you can find it on our website or by calling Investor Relations at 203-682-8200. Presenting on our call today, we have Golfsmith’s Chairman and CEO, Marty Hanaka, as well as Chief Operating Officer and Chief Financial Officer, Sue Gove. And with that, I’ll turn the call over to Marty.

Thank you, Joe and good morning everybody. With me in Austin, Texas today are Sue Gove, our COO and CFO, Janette Ramirez our Controller and Ron Dekelbaum our General Counsel. It’s a pleasure to review Q4 with you today and expand on our January prerelease. I’ll cover the highlights and trends and Sue will go through detailed financials and actually we are looking forward to answer any questions you might have. First I go through the top line. In Q4, we comp down to see we were pleased with that and for the first time in five quarters after five consecutive decreases we saw a sequential improvement throughout the year, as you know, but are pleased that in the fourth quarter we could pick up a 1% comp essentially and actually had our best share gain of the entire year. We saw few points of share gains in all the quarters; at least it is up to Q4. In Q4 we had about 9% share gain, if you base it on Golf Datatech, so we are pleased with that. Business is basically stabilized; traffic was up 3% for the quarter. Our conversion was down slightly but ALB was also up solidly particularly in November, December. So, overall we put a comp quarter together. In terms of markets, it was mixed. Texas has basically been a laggard for us overall with the economic trends here have lagged the country, but otherwise we have pretty good trends across well over half of our markets and particularly on the West Coast and Florida, Centers of the Midwest. We are pleased with the mixes of markets and geography that contributed to our comp. In terms of products, clubs had sequential improvement throughout the quarter in comp in December. Components, really no change to our…

Thanks Marty. Good morning everyone. I’ll first review the financials and then provide an update on some of the key initiatives we have in place to benefit us in 2010. As Marty mentioned, for the fourth quarter of fiscal 2009, we reported net revenues of $63.8 million compared with $67.8 million in the fourth quarter last year. Total net revenues represent 13 weeks in the fourth quarter of 2009 compared with 14 weeks in 2008. We were encouraged that we ended the quarter with positive comp store sales of 0.9%, our first positive quarter since the second quarter of 2008. Comparable sales, again, are calculated on a 13-week basis for both quarters. Net revenue reflected a 21.3% decrease from our direct to consumer channel. Gross margin for the fourth quarter was 33.9% compared to 30.7% for the same period last year. The 320 basis point improvement was primarily attributable to a few factors. First, the fourth quarter of 2008, we recorded a year-to-date reclassification adjustment related to cooperative vendor advertising programs that negative impacted gross margin in the prior year fourth quarter. This attributed to 170 basis point improvement in gross margin year-over-year. Second, the increase in full-price selling due to cleaner inventories with fewer clearance items led to higher margins, which contributed about a 100 basis points improvement year-over-year. We also benefited about 60 basis points from improved freight and distribution cost. Selling, general and administrative expenses increased 3.7% to 28 million from 27 million in the same period last year. The increase in SG&A is primarily due to the reclassification adjustment that I just previously mentioned, partially offset by decreases in advertising and promotional expense and other operating expenses. On a comparable basis, without the reclassification impact in the fourth quarter of 2008 as a percentage of sales…

Thank you. (Operator Instructions) And we'll take our first question from Hayley Wolff with Rochdale Securities.

Hi guys.

Good morning.

Good morning.

You must be happy to have comp positively.

Yes, exactly.

Just a couple of questions. Just first on top line, can you give us a sense of what you are seeing this quarter and how big of an effect you think the weather might have on the first quarter?

Yes, actually, as I said earlier it stabilized, and we've been comp positive three or four, the last five, and four is the one that we didn’t comp was because of all the snow that shutdown the Midwest, the Northeast and Atlanta. But in an absolute sense it is all about March in the first quarter, because March by itself is bigger than January, February. So, we don’t think the weather is, we are not going to use weather as an excuse if we don’t make our quarter, let me put that way.

Okay. And then in the December quarter and even what you are seeing currently, are consumers still going for the discounted product or you are starting to see them open up and go to full-priced?

We are going to full-price, some of these new products and the mix between, you just take the tailor-made product, the mix between the 249 and 299, as we thought the 299 was some more that we thought. So, that’s one of the reasons our AOV is slightly improving, and we have seen that trend continue since our weak 43 last year, that the AOV has been up slightly consistently.

Okay. And then when I think about 2010 there are couple of different moving parts. First, the confidence that the direct business is up.

Yep.

Can you go through that, and then talk about how the cost structure is changed on that component of the business?

Sure. I’ll talk about how we are going to grow. We have actually added some real talent to the team over the last six months, and I think we have a skill-set that the company really lack. And shame on me because we didn’t do it sooner but given the climate and our management of cash and the uncertainty of economy, we do some work aggressive and going after that, and that's all to my lap. But having said that, I think we’ve got talent, all of this for running the direct business. So when everybody is accountable nobody is accountable, and I think that got us into a position where now we have leadership, we have an approach to our customers’ segments that we’ve not utilized in the past. We introduced new metrics across the board that we’ve got a number of traffic driving tactics that seem to be working, and we have a number of conversion proving tactics that seems to be working, and actually we got a Board meeting yesterday and we went through it in great detail. So, I have more confidence today that the web will grow nicely. We are seeing that in recent trends and that the catalog business is going to be just flat and maybe slightly down, but you are not going to see the erosion we had over the last of couple of years in that business. On the cost side, we have invested in people and our mantra here is there are no constraints on growing our web. As we can prove incremental contribution from any offer [ph] we are going to keep doing it. And I know Steve Larkin who joined us recently in running that business for us. It’s really impressed with the team we have there. So, I think we have got the talent and again, no budget constraints. We can drive incremental profit. We are going to just keep doing it and you will see us get -- I think very active in that space.

Right. And then when I look at the base business, you talked about low-single digit same-store sales growth leveraging your cost structure, and how do we think about contribution from the four new stores?

Well I think when you look at the year, we are thinking that after pre-opening they are going to be flat for the year. It’s a long-term build and sued much in the past. We have plan of 477 four stores this year, seven in next, seven subsequently. So we’re not looking for EBITDA from those four. We definitely will get revenue, but once you open the store and advertise and so of course we think it will flat in terms of contribution -- bottom-line contribution this year. Sue, do you want to add to that?

Yes, I would just add to what Marty says. They will be slightly positive just based on the timing of the stores, but again, our model is and we expect that these stores will be on cash flow positive within two years.

Okay, and then how much – what’s the CapEx going to look like for 2010?

CapEx for 2010 is just under $11 million.

Okay. Thank you.

Thank you, Hayley.

(Operator Instructions) We’ll take our next question from Alex (inaudible).

Hey, good morning.

Good morning, Alex.

I apologize; can you spend a minute on what expenses were reclassified and the magnitude?

It was 170 basis points of advertising, co-op advertising, vendor funding, that was reclassified in 2008. And basically what we did was we changed the accounting for that. There was catch-up, one time catch-up in 2008 in the fourth quarter. So, as you seen the numbers reported throughout the year 2009, it is on a apples-and apples go forward basis. But there is that one-time effect from a comparison standpoint that reduced gross margins as well as SG&A by about 170 basis points in 2008.

I got you, I misunderstood, I thought it was 2009.

Okay.

And the 11 million of CapEx is net or gross?

That is gross number, and that includes the four new stores. That includes the remodels that Marty mentioned. It includes the infrastructure costs that we are investing in, in terms of the systems.

But that’s net of tenet allowances?

No, it does not include tenant allowance.

Oh, it does not?

That’s a gross number.

It is, okay.

….as you would see it on the balance sheet.

Got it.

Right.

Great. Thank you.

Thank you.

(Operator instructions) And it appears that we have no further questions at this -- actually we do. We have a question from Harold (inaudible).

Good morning, people. How are you doing?

Hi, Harold.

I have a quick question regarding revolver, which currently is maturing in 2011, are there any plans to amend that to extend the maturity date at this point in time?

We are evaluating that right now. There is no definitive plan at this time but we are evaluating it.

Okay. Just in terms of availability, I notice the 12 million is definitely an improvement over last year.

16 million.

16.

I am sorry, 16 million, my apologies. What is the going forward look for the spring?

Our expectation for the year is to be cash flow positive. We are expecting to be roughly $45 million to that cash flow positive, there is seasonality throughout the year. And we’d be happy to walk you through some of the more specific details but from a macro standpoint we will be cash flow positive and seasonality ranges very consistently with prior years.

Okay. It sounds good.

Thank you.

Thank you.

If there are no more questions --

It looks like we have a follow-up from Hayley Wolff with Rochdale.

Okay.

Sorry Marty.

Not at all.

You have to hang on.

So we are here for.

Just on inventory, how do you think you are going to flow inventory through the course of the year? And then what are you hearing just on the vendor side in terms of discounting, and are they nervous and ready to pull the trigger on discounting?

Yes, I will take the second part and Sue will do the first in a moment. There is a couple of brands that are nervous because there is a couple of winners as is always are. So, I think you will see some stimulation, there’s some ideas being floating around, but right now not to the level we saw in Q2 last year.

Okay.

And I guess Sue will talk about the inventory flow a little bit.

Sure. Inventory flow, again, remains fairly consistent, I would say that we are bringing a little bit in, a little bit earlier this year into the first quarter, and some of that just ties in with the significant new product launches that we’re experiencing right now, so that’s building a lot of excitement in the stores, and then again layering on the inventory purchases for these new stores. Three of these new stores, three of the four new stores will be open prior to Father’s Day. So again that will allow to the inventory slot.

Okay. And then one last question, Marty, in your remarks you talked about the soft goods category.

Yes.

As having that well in the fourth quarter, can elaborate on that, the changes that you put in place because that’s been a big issue, that’s not only been still in the top line but also hurt you guys on markdowns, right?

It really did, and it's been a long process. Fresh leadership who are doing a terrific job for us, it starts we’ve taken 39 brands on a 19 brands becoming meaningful, and therefore buying better, buying deeper, staying in stock on fewer solo ads and profiles and adding the long sleeve that’s required, climatic marketing, landing goods in the right geographies. This crew group has done a terrific, terrific job for us. And by selling through better, worse take a fewer markdown. So we have got real professional group there as we do throughout the company, and I think we’re now seeing there, we’re really growing up in the apparel, and I am really hopeful. We expect that you are going to see drill faster than the house for the next foreseeable future with better margins, and that’s going to lift up both. So, they are really good about that category.

And MacGregor?

MacGregor, we launched March 31st.

Okay.

So there will be a big celebration throughout the country. It's a brand new product. It is premium product. It is quality. We got forced irons. We got amazing woods, putter, wedges, MacGregor is the greatest name in golf since 1897, it's won 59 majors and the tradition will continue beginning March 31st.

Okay, great.

Thank you.

Thank you.

And it looks like we have question from Casey Alexander with Gilford Securities.

Good morning, that’s all right. Hayley beat me to the inventory question. Thank you.

Thank you.

It looks like we have a follow-up from Harold (inaudible).

Hi, guys. One more quick question, again. Regarding the store closings industry wide, you mentioned that you continued to see doors being going dark and stuff, has the pace accelerated or decelerated, any change from previous forecasting or so, like I think it’s 200 stores expected to close in the next year or two?

It depends which stores to use, but the one we have been using and we used our last Investor Conference was Longitudes. And Longitudes has published at 21.6% fewer doors exist now than two years ago. And we do see -- I don’t see the trend will be as rapid as 2009, but we continue to see erosion. Most recent one was Discount Golf on Saint Louis. They announced 15 stores closings. Unfortunately today, we don’t have a store to compete there, but beginning in May we will in Kansas City. And, so those markets are ripe and I think you’ll still see closings, and you have to remember do look at the Longitude study. 57% of the doors that comprise units today are mom and pop doors. And then small and the middle doors are another chunk. So, big boxes like ourselves have a lot of growth opportunity ahead of us, because I do see that it’s going to be difficult for them to compete going forward, hence the Discount Golf announcement.

Okay. How large is this small and the middle category by Longitude standards?

57% of the doors, it’s 20% of the square footage. We don’t know the volumes.

Okay, wait, then you said, mom and pop was 57%, so that’s --

57 for doors, 20% of the square footage.

Okay. Got it.

And we don’t know the volumes.

Okay.

So, market by market we are going to Naples for the 17 local fur shops, not counting Regress. So the structural change will continue as we go into the year and we have a number of Regress guys that want to buy our private label product, and so we know they are having trouble making money and maybe they need help. So we think that advantages us long-term.

Got you. Thanks again.

Okay.

And it looks like those are all the questions that we have for today.

Well, thank you very much everyone, we appreciate your time and interest in Golfsmith. See you in May. Bye, bye.

That does conclude today’s conference. Thank you for your participation.