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Ladies and gentlemen, thank you for standing by, and welcome to todays conference call. At this time, all lines are in listen only mode. Later, there will
2014 Nike Free Run Gimnasio Blanco Rojo Hombres Precio Barato Calidad Cozy be an opportunity for questions, and instructions will be given at that time. [Operator Instructions]. And as a reminder, today’s conference is being recorded.

I would now like to turn the conference over to James Grant. Please go ahead sir.

Good afternoon and welcome to Collective Brands Conference Call and the results of Payless ShoeSource’s Second quarter of 2007. I am James Grant, Director of Investor Relations. Our
2012 Nike Free Run 2.0 Gris Azul Blanco Mujeres Running Zapatos For Barato call today will begin with Rick Porzig, Senior Vice President and Chief Financial
2012 Nike Free Run 2.0 Gris Pinke Azul Mujeres Para Usted Al Mejor Precio Officer, followed by Matt Rubel, Chief Executive Officer and President. After we complete our
Nike Run Balanza gratuito 2014 Verde Mujeres Orange Para Auténtico Barato prepared remarks, Matt
Nike Free Run Powerlines Ii Azul Oscuro Hombres Entrega Rápida a Su Puerta and Rick will take your questions.

Our remarks today will
Nike Free Run Powerlines arco iris púrpura Hombres Una Semana Llegue a Su Puerta y Super Servicio Al Cliente contain forward looking statements which are not historical facts and are subject to a number
Nike Free Run Powerlines Ii Negro Rojo Hombres Precio Barato Calidad Cozy of risks and uncertainties. Actual results may differ materially. Please refer to today’s press release for more information on risk factors.

And now, I would like to
2013 Nike Free Run Powerlines Negro Hombres Bueno Guality Y Media Precio turn the call over to Rick.

Ullrich E. Porzig
Nike Run Balanza gratuito 2014 Mujeres Gris Naranja Suministramos Alta Calidad Senior Vice President and Chief
Nike Free Run 2014 Negro Rosa Mujeres Garden Fresh Produce Hasta 50% De Descuento Financial Officer

Thanks, James, and good
2013 Nike Free Run Powerlines Negro Hombres Ahorre Tiempo y Dinero Ahora afternoon, everyone. Second quarter
2012 Nike Free Run 2 Rose verde Mujeres 2015 Nueva Llegada Del Envío Libre 2007 net
2012 Nike Free Run 2 Negro Rojo Blanco Mujeres Entrega Rápida a Su Puerta earnings were $25 million or $0.38 per diluted share, down 23% versus the second quarter of 2006. However, this $0.10
2013 Nike Free Run Powerlines 2012 Gris Azul Hombres Para Auténtico Barato per diluted share
Nike Free Run Powerlines Ii Azul Verde Hombres Versión Adecuado Para Usted decline was impacted by the following.

Second quarter 2007 expenses related to the Companys distribution
Nike Free Run 3.0 grises azules claros Mujeres Zapatos Corrientes De Venta center initiative including the exit from one facility and the temporary redundancies between facilities. Those expenses totaled $3.6 million pretax or
2012 Nike Free Run 3.0 V2 Light Negro Azul Mujeres Venta Online $0.04 per diluted share.
Nike Roshe Run 2014 mujeres rojas Ant-piel Envío Gratis Para Todo El Mundo Second quarter 2007
Nike Free Run Powerlines Ii Azul Blanco Hombres Para Barato Pero El Real expenses related to the integration and planning of Stride Rite. Those expenses totaled $1.8
2013 Nike Free Run Líneas Azul Gris Hombres Cada Par De Zapatos Que Compra million pretax or $0.02 per diluted
2012 Nike Free Run 3.0 V2 Gris Naranja Mujeres Precio Barato Calidad Cozy share.

Second quarter 2006 income related to Payless receipt of Visa
2012 Nike Free Run 2 Gris Rosa Mujeres Venta En Línea Con El Precio Barato Check/Mastermoney antitrust settlement proceeds and the income totaled $2.3 million pretax or $0.02
Nike Free Run 2014 Negro Rosa Mujeres Excelente Calidad per diluted share. In second quarter 2006, income related to Payless insurance recoveries due to hurricane. The
2013 Nike Free Run Powerlines Gris Verde Hombres Más De 60% De Descuento net incremental income over 2007 totaled $1.6 million pretax
2012 Nike Free Run Tr Fit Azul Blanco Hombres Disfrute El Mayor Descuento or $0.02 per diluted share.

Now, I would like to walk you through
Nike Free Run 3.0 V5 Ext Gris Rosa Mujeres Regalo Para Usted o Su Familia the second
2012 Nike Free Run Mujeres Plata 3.0 Verde azul Running Zapatos For Barato quarter 2007 financial statements and explain the drivers behind these results. Let’s start with sales.

Second quarter sales totaled $699 million, a decrease of 1% over the second quarter of 2006. Same
2012 Nike Free Run 3.0 Piel café Mujeres Ahorra Hasta Un 50% De Descuento store sales were down 1.4% for the second quarter of this year. Importantly, we did pick up market share during the quarter according to industry
2012 Nike Free Run 2.0 Gris Pinke Azul Mujeres Entrega Rápida a Su Puerta reports. So, we are
Nike Free Run 3.0 V5 Ext Negro Rosa Mujeres Usted Puede Ahorrar Mucho Aquí very pleased with that achievement, in spite of overall sales performance.

Second quarter 2007 sales were unfavorably driven by the following
Nike Free Run 10o Aniversary Verde Gris Mujeres Disfrute De Más Descuento factors. First, weak
Nike Free Run 4.0 Mujeres Blue Sky Con Descuento Grande y El Envío Rápido results in our sandal business which caused total unit
Nike Free Run 2014 Gris Mujeres rojas Comercio Al Por Mayor Tienda Online sales to decline by 2%. And second, the later timings of the back
2012 Nike Free Run Tr Fit Azul Blanco Hombres Ayuda Para Alojarse En Estilo to school to season. Certain key markets
2012 Nike Free Run Tr Fit Naranja Hombres Tenemos El Precio Bajo En Línea shifted
Nike Free Run 2014 gris rosa claro de la Mujer Venta Aquí Con Alta Calidad there as school start dates a couple of weeks later.
Nike Free Run Powerlines Rainbow Negro Hombres Liquidación De 2014. Obtenga 85% De Descuento These factors were mostly offset by the following related favorable drivers. We converted a higher percentage of customers in our stores and sold more units per transaction. Athletic and casual footwear performed particularly well
Nike Free Run Powerlines Ii Verde Blanco Hombres Guardar Descuento Grande and average unit retails were up 1%.

Now on to gross margin. Gross margin was 34.4% of sales in the second quarter of 2007, down 20 basis points. The gross margin rate was driven principally by the following factors. Higher initial mark on enhanced by more direct
2014 Nike Free Run Gimnasio Blanco Rojo Hombres Uk Online Salestore sourcing, mark downs on most types of sandals, investments in our distribution center infrastructure and last years hurricane insurance recoveries. The latter two factors, as I quantified
2012 Nike Free Run 3 Naranja Gris Mujeres Regalo Para Usted o Su Familia earlier are negatively impact the gross margin by a combined 73 basis points.

Selling, general and administrative expenses as a percent
2012 Nike Free Run 3.0 V2 Rojo Gris Mujeres Venta Hogar Es Su Mejor Opción of sales was 28.7% in the second quarter of 2007
Nike Run Balanza gratuito 2014 Mujeres Verde Naranja Para Hombres Baratos versus 24.7% last year, an increase
Nike Free Run 2014 Vino Rojo Oscuro Blanco Mujeres Cada Compra Que Realice of 130 basis points. The de leverage was due primarily
Nike Free Run 2 Negro Azul Mujeres Outlet Tienda Online 2014 to lower sales of sandals rather than a growth in expenses. SG expenses for the quarter were $201 million, up 3.9% versus last year. The increase was primarily driven by higher payroll, last
Nike Free Run 3.0 V5 Ext Fuego Rojo Blanco Mujeres Más De 60% De Descuento years antitrust settlement and the Stride
Nike Free Run Powerlines Rainbow amarillas Hombres Cada Compra Que Realice Rite integration planning costs, principally professional services.
Nike Run Balanza gratuito 2014 Verde Mujeres Orange Con Descuento Grande The latter two factors,
2012 Nike Free Run 3.0 V2 Blanco Gris Verde Mujeres Comprar Con Seguridad as
Nike Free Run 4.0 Mujeres Negro Rosa Anti-pieles Liquidación Envío Rápido I quantified earlier negatively impacted SG by combined 59 basis points.

We had net interest expense of $800,000 in the second quarter of 2007 versus net interest income of $700,000 in the same period last year. The change was driven by lower
2012 Nike Free Run 3 Pinke plata Mujeres Con Precio Barato cash balances this year. As previously communicated, the Company financed
2012 Nike Free Run 2 Negro Púrpura Mujeres Usted Puede Ahorrar Mucho Aquí the
Nike Free Run Powerlines Ii Negro Oro Hombres Outlet Store Waiting For You portion of its acquisition of Stride
2014 Nike Free Run Gimnasio Blanco Rojo Hombres Aquí Sería Su Mejor Opción Rite with a $725 million term loan B at a variable rate of 8.3% over seven years. On
2012 Nike Free Run Tr Fit Naranja Hombres Cada Par De Zapatos Que Compra August 24, 2007, Company entered into an interest rate swap arrangement for $540 million, which
2012 Nike Free Run 2.0 Gris Púrpura Mujeres Outlet Tienda Online 2014 provides for a fixed interest rate of approximately 7.75%, portions of which mature on a series of dates over the next five years.

Our income tax provision was $12.7
Nike Free Run 3 2012 Negro Rosa Mujeres Con Precio Barato million in the
Nike Free Run 2014 Vino Rojo Oscuro Blanco Mujeres Cada Compra Que Realice second quarter of 2007 versus $17.3 million in the prior year period. The
2012 Nike Free Run 2 Gris Rosa Mujeres Proporciona Varios 50% De Descuento lower
Nike Free Run 3.0 V4 Gris Mujeres Precio Más Bajo tax
2012 Nike Free Run 2.0 Gris Púrpura Mujeres Es Una Buena Opción Para Usted provision was due in part to lower pretax earnings. Our effective income tax
Nike Free Run 2 Gris Azul Mujeres Convertido En Una Parte Esencial De Moda rate
2014 Nike Free Run Gimnasio Negro Blanco Hombres Liquidación Envío Rápido of 32.8% on continuing operations was down compared to 34% last year due primarily to reinstating of certain federal employment tax credits and a decrease in the effective tax
Nike Free Run Powerlines Ii Verde Negro Hombres En Línea Con El Descuento Más Grande y El Envío Libre rate related to our international operations. The full year effective tax rate on continuing operations, including
Nike Free Run 4.0 2012 Negro Rojo Mujeres Para Barato Zapatos Para Hombre discrete events known at this time is projected to be approximately 33%.

Minority interest represents a 40% share earnings
Nike Free Run 3.0 V4 amarillas azules Mujeres Venta Aquí Con Alta Calidad due to our joint venture partners in
Nike Free Run 3.0 V4 blancas púrpuras Mujeres Venta Con 70% De Descuento Latin America. Second quarter 2007 monitory interest was $1.3
2012 Nike Free Run 3.0 Negro Azul Mujeres Para Baratos Pero Real Zapatos million compared to $600,000 in the same period last year. The increase was due
2012 Nike Free Run 3.0 Gris Rosa Mujeres Buena Calidad y El Envío Rápido to our stronger results in our Latin American
Nike Free Run 2014 Vino Rojo Oscuro Blanco Mujeres Comprar Con Seguridad business.

Second quarter net earnings from continuing operations were $24.7 million this year versus $33 million last year. Our cash and short term investments at quarter end were at $327 million,
Nike Free Run 4.0 2012 Azul Verde Mujeres Usted Puede Ahorrar Mucho Aquí down $114 million or 26% over the previous
Nike Free Run 2 2 year. The decrease was due primarily to the first quarter 2007 acquisition of Collective Licensing International.

Our total
Nike Free Run Powerlines Rainbow amarillas Hombres Ven y Únete a Nosotros inventory at the end of the second quarter 2007 was $370 million compared to $351 million at the end of the second quarter of 2006. Inventory quality
Nike Free Run Trainer 3.0 Negro Hombres A La Venta Con Precio De Descuento at quarter end was better because aged
Nike Run Balanza gratuito 2014 Gris Rosa Mujeres Liquidación Envío Rápido unit as a percent of total inventory was lower. The increase in inventory was driven primarily by
Nike Free Run 3.0 V2 Blanco Rosa Mujeres Con Precio Barato the following factors. We had greater investments in
2014 Nike Free Run Gimnasio Blanco Rojo Hombres Running Zapatos For Barato strong performing product categories for fall, merchandised mix shift towards our footwear at higher average cost linked to higher average retail in
Nike Free Run Powerlines Ii Azul Rojo Hombres Venta Con 70% De Descuento the initial mark on, and an increase in longer lead time raw material commitments associated with a higher percentage of products sourced directly by Payless.

Regarding our fixed assets, our capital expenditures through the first half of fiscal 2007 totaled $93 million, up $40 million
2012 Nike Free Run 3.0 púrpura Blanco Mujeres Precio Barato Calidad Cozy from the same
2014 Nike Free Run Gimnasio Negro fluoresceína Hombres Venta En Línea Con El Precio Barato period last year. The increase was due primarily to greater
2012 Nike Free Run 2 Mujeres Gris Rosa Con Alta Calidad y Entrega Rápida investments in the
2012 Nike Free Run 3 Pinke plata Mujeres Con Alta Calidad y Entrega Rápida Companys supply chain and Payless stores. Collective Brands capital expenditures for fiscal 2007 are expected to total about $175 million. This higher level of investment is driven predominately by our new distribution center initiative. We will also continue to invest meaningfully in our retail store base to improve our customers shopping
Nike Free Run 3.0 V2 Blanco Rosa Mujeres Ahorra Hasta Un 50% De Descuento experience.

And as for share repurchases, during the second quarter of 2007, we repurchased 141,000 shares for $4.6 million during under our stock repurchase program in accordance with our debt covenants. We may repurchase approximately $32 million more of our stock at this time. This limit will continue to adjust quarterly
2013 Nike Free Run Powerlines Ejército reverdecido Hombres Con Alta Calidad y Bajo Precio based
2012 Nike Free Run Tr Fit Gris Verde Hombres Zapatos Corrientes De Venta on our net earnings.

Regarding the Collective Brands financial outlook, Collective Brands is
Nike Free Run 3.0 mujeres azules Nueva Colección Está Disponible expected to have strong pro forma financials, excluding the impact of purchase accounting. The acquisition is expected to be accretive to
Nike Free Run Powerlines Ii Gris Hombres Ahorre Hasta Un 70% De Descuento earnings per
2012 Nike Free Run 3 Gris Naranja Mujeres Siempre Se Puede Encontrar Fuera Su Favorita share in 2008, as the Stride Rite unit’s earnings contribution is expected to exceed the incremental interest expense. Due to the impact of purchase accounting, the Stride Rite acquisition is not expected to
Nike Free Run OG 2014 mujeres rojas de piel Anti- Usted Recibirá Usted Quería Aquí be
Nike Free Run Powerlines Ii Green Men Para Baratos Pero Real Para Hombre earnings per share accretive in fiscal year 2008 on a GAAP basis. Excluding
Nike Run Balanza libre 2014 mujeres del ciruelo rojo Comprar Con Seguridad the purchase accounting, the 2006 to 2009 compound annual growth rate in operating profit is expected
Nike Run Balanza gratuito 2014 Verde Mujeres Orange Con Calidad Auténtico to be in the
2012 Nike Free Run 3.0 Piel Gris Blanco Mujeres Tenemos Buena Reputación mid to upper
2012 Nike Free Run 3.0 Negro Azul Mujeres Para Barato Zapatos Para Hombre teens. Including purchase accounting, the 2006 to
Nike Free Run 2 2 2009
Nike Free Run 3.0 grises azules claros Mujeres Precio Barato Calidad Cozy compound annual growth rate in operating profit is expected
2014 Nike Free Run Gimnasio Negro Rojo Hombres Para Barato Zapatos Para Hombre to be in the low teens on a GAAP basis.

And
2012 Nike Free Run 2 Negro Púrpura Mujeres Para Baratos Zapatos Auténticos now, I will turn the call
Nike Free Run Powerlines Ii Verde Blanco Hombres Guardar Descuento Grande over to Matt Rubel.

Matthew E. Rubel Chief Executive Officer and President

Thanks, Rick and good afternoon everyone. Today, its my
Nike Free Run 4.0 2012 Rojo Plata Mujeres Tienda Online Clearancesale 2014. Consigue 85% De Descuento pleasure to address
Nike Free Run Powerlines Ii Azul Plata Hombres Disfrute El Mayor Descuento the investment community for the first
2012 Nike Free Run 3 Gris Naranja Mujeres Regalo Para Usted o Su Familia time representing our new Company Collective Brands. Collective Brands is a global footwear, accessory and lifestyle brand company that reaches customers through multiple price points and multiple selling channels, such as retail, wholesale, licensing, and e commerce.

Later
2012 Nike Free Run Tr Fit Azul Blanco Hombres Precio Barato Calidad Cozy in
2012 Nike Free Run 2 Rose verde Mujeres Ahorre Hasta Un 70% De Descuento my remarks, I will address some of the strategies we are pursuing related
Nike Free Run 3.0 V2 2012 Mujeres Blanco Gris Bueno Guality Y Media Precio to our recently acquired Stride Rite unit and the corresponding impact on our new company, Collective Brands. But first, I will provide you with some commentary on recent Payless performance and how we are progressing on the Payless strategy.

While our second quarter results underperformed our expectations, we are pleased that according to the survey prepared by the footwear
2014 Nike Free Run Gimnasio Negro Verde Hombres Entrega Rápida a Su Puerta distributors and retailers of America, we were successful in continuing the grow market share. I
Nike Free Run 2 2012 Gris Amarillo Mujeres Tenemos El Precio Bajo En Línea will also mention that while on a fiscal basis, our comp store sales were down 1.4%, on a calendar basis which reflects how our customers shop, our comp store sales were
2012 Nike Free Run 3.0 Piel Negro Púrpura Mujeres Para Barato Pero El Real flat to last year. Again, this performance was due to sales of
2012 Nike Free Run 2.0 Gris Púrpura Mujeres Es Una Buena Opción Para Usted sandals, which
Nike Free Run Powerlines Ii Azul Oscuro Hombres Disfrute De Más Descuento made
2012 Nike Free Run 3.0 V2 Blanco Gris Azul Mujeres Tienda Outlet On Sale up 36% of the sales in the second quarter of 2007. Importantly, we continue to see that our merchandise
Nike Free Run 2 2012 Gris Amarillo Mujeres Tenemos El Precio Bajo En Línea and core strategies are resonating
2012 Nike Free Run 3.0 Negro Azul Mujeres Para Baratos Zapatos Auténticos with consumers. This was evidenced by the improvement in several important sales metrics in the second quarter. We
Nike Roshe Run 2014 mujeres rojas Ant-piel Ayuda Para Alojarse En Estilo converted a higher percentage of
2012 Nike Free Run 2.0 Gris Púrpura Mujeres Con Más Bajo Precio Auténtico customers with
Nike Free Run 3.0 V4 Gris Mujeres Precio Más Bajo more units per transaction and at a higher average retail. This encourages us that our
Nike Free Run 3.0 V4 Azul Gris Mujeres 2015 Nueva Llegada Del Envío Libre merchandising strategies are positioning Payless to continue to build market share.

So, now
Nike Free Run 2014 Gris Mujeres rojas En Venta En Su Selección I would now like to update you on some of
Nike Free Run 2 2 our more important initiatives and achievements, which I believe will provide additional confidence that we are well positioned to capitalize on growing market segments in both the
Wmns Nike Free Run 3.0 V5 2014 Orange Mujeres Se Venden Con El Precio Bajo short and long term. Lets go through each of the four cornerstones of the Payless strategy, starting first with on trend, targeted product.