Good day everyone and welcome to the Golfsmith International Holdings, Inc. first quarter 2010 earnings conference call. Today’s call is being recorded. For opening remarks and introductions, I would like to turn the call over to Jean Fontana. Please go ahead, ma’am.

Thank you. Good morning, everyone, Thank you for joining us today to discuss Golfsmith’s first quarter fiscal 2010 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, 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 Web site or by calling Investor Relations at 203-682-8200. Presenting on our call today, we have Golfsmith’s Chairman and CEO, Martin Hanaka, as well as Chief Operating Officer and Chief Financial Officer, Sue Gove. And with that, I’ll turn it over to Marty.

Thank you and good morning everyone. It is a pleasure to be with you to share our results. Also joining Sue and myself in Austin, Texas is Janette Ramirez, our VP, Controller. The industry continued to shrink albeit at a slower rate. There is some economic factors but we see that beginning to stabilize. It's more about the conditions. I think the first indicator is rounds played in this quarter; January was down roughly 19%; February, 22%; March was just down 4% as we were in the last couple of days. So year-to-date, rounds played are down an aggregate of 12.4%, but down 5% in the last six months. So the overall conditions haven't been the best. Our sales in January and February were down low single digits. I guess the best way to describe it is a seesaw pattern. We came back in March with a slight increase and then up only down 1% for the quarter, and April is slightly better than our Q1 results. Weather certainly was a factor in what is a seasonally sensitive business. And as we came out of February, understanding that March was as big as January and February combined, we thought we had a shot up on the quarter out and almost dead. When you look at it by markets, again, if you benchmark against rounds played, we have the same pattern. There is a gap, our results are better market to market and a lot of this depends on where you have stores, and let’s think about Texas where we have a number of stores, rounds played have been now 25% year-to-date but recently showing promise for us. Retail clubs was above company average, consumables was down 6%, soft lines was up strong double digits and the mix now has moved…

Okay. Thanks, Marty. Good morning everyone. As Marty mentioned, the first quarter net revenues were down 1% in comp-store sales, $67.6 million compared to $68.8 million, 1.7% decrease overall in revenues and additionally a 13.5% decline in revenues in our direct-to-consumer channel. Sales were negatively impacted by the cold and wet weather condition during the first quarter of 2010 relative to the same period last year. In addition, as Marty mentioned, rounds played for the quarter ended April 3 were down 12.4% according to Golf Datatech. However, we are encouraged that consumers are responding very favorably to the new product launches that rolled out throughout the first quarter and the successful marketing efforts we put in place to enhance our brand and drive traffic. An example of this is our Custom Club Play Better Guarantee program, which significantly increased the sale of custom clubs in the first quarter of this year. Gross margin for the first quarter increased 60 basis points to 33.7% as compared to 33.1% for the same period last year. The gross margin improvement consisted of 70 basis point increase associated with less promotion in the current year quarter and a 30 basis point increase due to improved physical inventory result as compared to the prior-year first quarter. These increases were partially offset by a 40 basis point decrease in vendor allowances associated with a reduction of cost of sales this year compared to last year. The vendor allowances were shifted to SG&A to offset specific advertising costs. SG&A expenses were relatively flat at $27.9 million in the first quarter compared to $28 million in the same quarter last year. As a percentage of net revenue, SG&A increased 41.2% in the current quarter compared to 40.7% in the prior year. In absolute dollars, SG&A decreased $100,000 due…

Great. Thank you, Sue. There are few factors that we are thinking about as we go into our holiday selling season because it is Christmas in the golf industry. NGF says rounds played essentially will be flat. There'll be some seasonal correction depend on where you’re living, but overall we are looking not for growth in rounds played. Our marketing spend is going to be flattish to up slightly. We are seeing a number of competitors have steeply accelerated their spending. We don't intend to do that. It's kind of like Sue mentioned on the margins, we’re really trying to build our margins. So you're not going to see us live with any discounting. As earlier said, this could be a market share gain and at Golfsmith we have to continue to differentiate without discounting. That's our approach to the business. We are specialist, we are the leaders in the off-course space where people come to us, they want to get custom fit. So they can play better. So you will see us doing things, so a customer always will get something extra at Golfsmith. But we are not going to live through discounting or not going to spend frivolously. Having said that May is free golf month at Golfsmith; we are giving away 50,000 rounds of golf with the $99 purchase. We’ve partnered [ph] over 70 courses and we think that’s a catalyst that will get people next reason to pass the competition. And in June, we’ve got something very special plan for Father's Day, again without discounting and without crazy spending. Having said that, there are a number of things that are factors we have to consider in June. Last year, if you remember, there were a lot of free club giveaways. Fortunately, we are in the midst of a strong Iron year and our Play Better Guarantee is helping us take share there. And we think hopefully that could be a watch for us going forward. With those comments, we would like to open up the floor to questions.

(Operator instructions) And we will take our first question from Hayley Wolff with Rochdale Securities.

Hi, guys.

Hi, Hayley.

Hello.

I just had a couple of questions. First, private label’s influence on gross margins in the quarter.

We haven’t calculated that. But it has essentially been very important for us. I don’t have a number to give you, though, Hayley.

And then, how has the MacGregor launch gone so far?

It’s gone fine. In fact, every week we see unit increases. In fact last week’s units were double the week prior. So it’s got legs and we feel very good about it. The quality is phenomenal. It’s being made in the same factories as some of the best premium OEM brands that are out there.

The price is fairly expensive. I mean, what’s the selling proposition on that?

Yes, there is probably – if you just look at Irons, the selling proposition is to be $100 below the comparable product from an OEM. And then they have promotion. The launch give you gift card if you brought ours. So besides the $100 delta you got something extra in the way of a gift card. That was for the launch. There are other promotions coming up as you go through the summer and you will see us be active. But this is good product. We just sit and swap the MacGregor label on some basic product as you see some other stores. Ours is good product and we want to maintain its quality, value proposition. So we will promote it.

Okay. And then in terms of April, you are kind of careful in parsing your words. I am just trying to understand is April – March, it sounds like it had to be up.

We are happy with April.

Is April better than March or April better than the first quarter?

Yes, we are very happy with April.

Okay.

Yes.

And then in terms of thinking about a transition of positive comps, last year you had a lot of discounting. So this year, theoretically we should get more 249, 299 and then – plus Iron sales that should drive ASPs higher. How do we think about relative to units and then relative to comp-store growth in your big order?

Yes. The big category that’s at risk is drivers because that was where you had Free Fairways, Free Hybrids, free everything going on. I don’t think anything else in any other category is so substantial that we can’t overcome it. In fact, there is lots of stuff going on with balls and wedges and bags and shoes. I mean, we are very active there. The big one is can we overcome the drivers into the year ago. Callaway, as you know, had some special offers and tailor-made. But, yes, we think at those more popular price points, hopefully we can overcome it. But if not we believe this great Iron year could washout the effect of it.

Do you expect the driver category to be down – it could be down in units this year?

I expect it will be down in units, yes.

Okay. All right. Thanks a lot, guys.

Thank you.

(Operator instructions) And we will take our next question from Todd Slater with Lazard Capital Markets.

Jennifer [ph] for Todd. Just had a question, it’s good to see that you are going to be less promotional but could you talk a little bit about the competitive environment and what’s going on there?

Yes. The competitive environment is inconsistent market to market. We have some places where we’ve seen some real heavy increase in marketing spend that we would think would be unaffordable for our business. But we haven’t seen across the board discounting anywhere. There are pockets where you’ve got a strong local person doing something unusual, but overall that’s a very rational marketplace.

Thanks. Are you a little worried about lowering your marketing spend given increases from competitors in some areas?

We are not going to lower our spend. As I said, it’s flattish to up slightly. But we will be very competitive, still better buying and better planning, better circulation, I think we will be stronger than we were a year ago for sure.

Okay, great. Thanks. Good luck.

Thank you.

And moving on, we will take our next question from Casey Alexander with Gilford Securities.

Good morning.

Good morning.

First of all, I think you guys have done a very good job managing through this cycle that we’ve been through. I mean there is a lot of people who wondered whether or not you guys would make it. I think you’ve really done a good job managing the balance sheet. Now Marty, when you say that you almost pull the quarter out, I am not sure I understand what that means. What would pulling the quarter out have looked like?

In terms of comp sales, if we had had better sales to offset the decreases we had in January, February due to weather and rounds played being down, we thought we would pull out the quarter in terms of comp sale. That’s it, pure and simple.

Okay. Across the breadth of the domestic market here, how many competitive door closings do you think there have been since last year?

We were trying to calculate that and we gave the longitude number that’s somewhat outdated now. NGF usually publishes that number and hasn’t that I’ve seen. So if you recall, the last two, three years it was down 22%. We thought that trend will continue, maybe not at the same rate. But I would guess there will be a 10% or 12% door closing factor this year. So 1,250 – there used to be 1,800 five years ago, 1,250, it will be 1,100 doors I guess at the end of the year, and that’s a guess. But it is a positive factor. I just don’t have the actual data.

All right. So you have a 1,100 doors closing –

150 roughly, 125, 150 closing; 1,100 remaining.

Okay, right. All right. So on that basis though, you would have to say that you are gaining share just from competitive door closings?

Depending where they are. A recent closing was in St. Louis where Discount Golf closed 15 doors. We weren’t in any of those markets. So the answer is that’s not definite. The other one is if you look at rounds played, New England was up 32% for last period. And we have zero stores there. So even where it’s growing we don’t necessarily have stores. So, today, the exact science.

I can appreciate that. I believe that your release said that you felt like you took share from the competition as a result of the Callaway Driver promotion related to the Masters.

We did. We are really pleased with that results. Yes.

Okay. Without some of these factors, do you have any sort of modeling as to where do you think same-store sales would have been without some of those tailwinds?

No. We don’t have a model on that. It would be conjecture. I am sorry.

Okay. (inaudible) promotion if I calculate it right was about 1.5 drivers per store per day. And this is right in the middle of the key point of the selling season, right around the Masters when everybody is getting cranked up. What would you normally expect to do per store per day?

We don’t calculate that. And if we do, we wouldn’t share it for competitive reasons. But again we believe that it’s not necessary to discount great new product which is what we are all about. We are into selling third generation product at $100, $150 price points. We do, we have those price points, but we want to sell new stuff to people. So these promotions are important to establish us as the doors that have innovative product all the time.

All right. Okay. Thank you.

Thank you.

We will take our next question from Harold Citron with Creditntell.

Good morning, gentlemen. Quick question regarding the marketing spend. You’ve mentioned in general some competitors are “ramping up” and in your mind too early. Do you have any names for who do you think?

I wouldn’t share that. But I would say it’s too early to guess they’ve ramped up their spending. We have a business plan, we are going to make our plan. We will stick to it. And it’s for competitive spending at a healthy level, but not be really rapidly spending more. As we said last quarter, we are carefully moving off. The key is careful. We are not out of this yet. We don’t see rounds played going up. We don’t see big demand. The economy is still lag in a number of ways. So we are just – so we are going to make money this quarter and next quarter. We don’t want to through the baby out to hit an artificial comp at this juncture.

Sounds good. Few questions. Are you looking at any sort of forecast to a point where you do see rounds going up, whether it’s either later this year or 2012, 2013?

I can’t forecast that. NGF does a lot of work on that. I think certainly it’s stabilized and you will see slight increases, flattish. It’s not going to be robust growth at any time. But we think this summer the people are going to get on play. They love the game, they want to play their game, I think there has been pent-up demand in equipment and rounds played. People had cabin fever. You could see it; it’s started to move in April. So yes, we think as we get through the summer barring some unusual event, I see people really getting out there and playing the game they love.

Sounds good. Last quick question, I came on to the call a minute late. You mentioned with the drivers. Did you give out a percentage of sales that the drivers –

No. We did not.

Okay. Well, thanks again. And good luck with the year.

Thank you, very much.

And we have a follow-up question from Hayley Wolff with Rochdale Securities.

Hi, there.

Yes.

Can you comment on where you are in terms renegotiating the credit line and then sort of any incremental SG&A savings that we can look for the remainder of this year?

Sure, I’ll let Sue handle both of those and while you are off the line Hayley Sue has calculated – the proprietary impact on our total margin was 20 basis points in the quarter.

Okay.

Sue, do you want to talk about –

So, Hayley, your first question was about the line of credit and our line of credit matures in June of 2011. So we are in conversation with a number of banks and really getting a feel for the market and understanding pricing, just overall market sensitivity. So right now we are staying very close to it, but are not doing anything immediately. Again, feel like we’ve got lots of options. And on the expense side, in terms of cost take out, we have a plan for the year that has still cost take out coming. We’ve laid that out in the plan. I believe what we communicated in the past is that it’s an excess of $1.5 million for this year. And we continue to accelerate that number. So we continue to identify new opportunities and ways that we can improve processes, improve our cost structure.

And then, for the year should we think of interest expenses getting a little bit higher in the second quarter and then dropping back down?

Higher than LY [ph], no. Again –

Higher than first quarter.

In the first quarter? Well, the first quarter, yes. Again, there was a rate adjustment that was affected in the first quarter as well. So it will be slightly improved to last year. Again, assuming that LIBOR remains in the area that it is because again our borrowings will continue as we projected to remain favorable through the end of the year.

Okay. And then one last question. You set out some three-year targets for EBITDA. How are you guys relative those in terms of comfort level?

Well, it’s just one quarter. So if you ask this in July, we could give you a lot better indication. But we believe those are very reachable and we are not adjusting our plan for this year, that’s for sure.

Okay. All right, thanks a lot.

Thank you.

And Mr. Hanaka, with no further questions in the queue I would like to turn the conference back over to you for any additional or closing remarks.

No. Thank you very much. We appreciate everyone’s time and interest today and (inaudible) in Q2. Thank you.

Again that does conclude today’s conference, and we thank you for your participation.