Dick Fontaine - Chairman and CEO David Carlson - EVP and CFO Dan DeMatteo - Vice Chairman and COO

Elizabeth Osur - Citigroup David Magee - SunTrust Robinson Humphrey Tony Gikas - Piper Jaffray Evan Wilson - Pacific Crest Securities Arvind Bhatia - Sterne, Agee & Leach Bill Armstrong - CL King & Associates Edward Williams - BMO Capital Markets

Good day and welcome to GameStop Corporation’s Third Quarter 2006 Earnings Results Conference Call. Today’s call is being recorded. At the conclusion of the announcement a question-and-answer session will be conducted electronically. (Operator Instructions). I would like to remind you that this call is covered by the Safe Harbor disclosure contained in GameStop’s public documents and is the property of GameStop. It is not for rebroadcast or use by any other party without the prior written consent of GameStop. At this time, I’d like to turn the call over to Dick Fontaine, Chairman and Chief Executive Officer of GameStop Corporation. Please go ahead sir.

Thank you. Good morning, I am Dick Fontaine, the Chairman and CEO of GameStop. With me this morning are Dan DeMatteo, our Vice Chairman and Chief Operating Officer; and David Carlson, our Executive VP and Chief Financial Officer. Thank you all for joining us this morning. As our release indicated, GameStop had another outstanding quarter. The strong sales are a reflection both of the strength of the new and used business model and the ever-increasing importance of GameStop as a focused video game specialist, and this is becoming more and more important. With more game systems to choose from and an ever-increasing number of configuration options, both core and casual gamers are being drawn to GameStop in increasing numbers, while gift givers will need more help than ever before to make the right choices. In all the years that I've been in this business, we've never had the breadth and diversity of excellent products that we have going into this holiday season. And let me assure you, this is not a gross exaggeration, this absolutely is the case. We have a phenomenal line up of both hardware, software, and accessories and with that diversity comes complexity. Complexity of choice that makes the specialty retailer even more important. Our 69% increase in hardware sales highlights the momentum of the business and furthermore positions GameStop to be the most significant launch partner for all the new hardware systems. I know that much of your intentions and undoubtedly a lot of your questions are going to be focused around the PS3 and Wii launches and the future flow of goods and Dan will give you some insights into that in more detail in a minute. But the full story for the remainder of the year is the fact that there are five to six hardware units selling well. Microsoft's 360 has been very strong, DS Lite is picking up momentum heading into the holiday season, and somewhat amazingly heading now into its 7th year, the PS2 is selling well and beginning to look like a real bargain at $129, while their PSP is holding steady. Not only do we have more successful platforms than ever before, the platforms will appear -- appeal to a wider range of holiday shoppers. And with this amazing hardware diversity comes the add-ons, accessories, upgrades and more, from memory cards to marketplace points, to World of Warcraft online time cards to Wii point cards, to an HD-DVD edition for the 360, to wireless headsets, dance pads and air guitars, you can really see that the business is more diverse than ever and plays more into the hands of the specialist, into the hands of our video -- games store managers and associates. Never in the relatively short history of this business has the knowledge, advice and enthusiasm of our store managers and associates been more important to our success and more needed by a growing customer base. Given the wide range products available, we've done a complete zero-based assessment of our store layout and merchandising focus for the holidays. Our inventory levels are more precise than ever before, and our allocation of space in the stores has never been more minutely thought out. In addition, we have drilled down to a more precise level in optimizing store scheduling for better customer support. In short, I believe we are operationally better prepared than ever to serve our customer. And our President, Steve Morgan, and our Head of Stores Operations, Bill Chinn, have done an absolutely wonderful job operationally getting our stores ready for the season. Steve would be with us today, but unfortunately he's out traveling the stores where at this time of the year we would like him to be. It's now been just over a year since our merger with EB Games. During that time, we have successfully combined the best practices of the two companies and really have achieved impressive economies of scale. While our 300 pro forma basis point reduction in SG&A expense is significant, we have also improved our inventory control methodology, developed more streamlined selling cost metrics, improved our merchandising coordination, and have more efficient distribution. GameStop closed the quarter with 4,633 stores worldwide, 3,705 in the US, 265 in Canada, 455 in Europe, and 208 in Australia and New Zealand. We opened 81 stores during the quarter, 40 in the US and 41 internationally. We closed 40 stores worldwide, 19 in the US and 20 internationally, a majority of those internationally being in Spain, and mainly stores that were marginal when EB Games purchased the portfolio of 123 stores last year. And the best news, we’re well on track to achieve our goal of opening 400 stores this year. GameStop has built our business by being totally devoted to gaming and giving our customers a buy rate, trade smart, great deal. In addition, this year we are much better positioned to serve the gift giver and help them get the right products for the gamers on their list. We are enthused about our business and our momentum and the line up of products to have an outstanding fourth quarter and a great holiday season. And now I want to turn the call over to David who will take you through some of the numbers. David?

Good morning. Before the market opened today, we released our sales and earnings results for the third quarter of fiscal 2006. GameStop sales for the third quarter increased 89% over the prior year quarter to $1,011.6 million. Comparable store sales increased 8.8% for the quarter with strong sell through of the Nintendo DS Lite handheld system and in-stock positions of Xbox 360 hardware spurring the growth. In addition, new video game software increased 14% with MADDEN NFL 2007 and SAINTS ROW topping the bestseller list. Net earnings for the quarter were $13.6 million, including merger-related expenses of $1.8 million and debt retirement costs of $2.1 million. Diluted earnings per share for the quarter were $0.17, including $0.05 per diluted share of merger-related expenses and debt retirement costs. These results were at the high end of our previously released guidance and stemmed from strong sell through of both new video game hardware and software. Gross margins declined slightly year-over-year in the quarter due primarily to a higher mix of lower margin hardware than in the prior year quarter. However, SG&A leverage improved from the prior year quarter by 300 basis points on a pro forma basis. This leverage came primarily from the closing in sale of the EB Westchester General office and the Coatesville distribution center and improved payroll scheduling during the quarter. Based on these strong results, operating earnings increased four-fold on a GAAP basis and more than doubled on a pro forma basis. We also issued updated guidance for both the fourth quarter fiscal 2006 and the full year. We are expecting fourth quarter comps to range from plus 14% to plus 18%, but these will be highly correlated to the quantity of Sony PS3s that are shipped during the quarter. However, PS3 shipments will have little effect on earnings for the quarter. Fourth quarter diluted earnings per share are expected to range from $1.53 to $1.59 representing EPS growth of 40% to 45%. For the full year fiscal 2006, we continue to believe sales will grow 15% to 17% on a pro forma basis with comparable store sales increasing between 7% and 9%. We are now expecting fully diluted earnings per share for the full year to range from $1.98 to $2.04, narrowing our guidance from last quarter by bringing the lower end of the range up by $0.04. Our balance sheet remains strong with over $180 million in cash at the end of the quarter and inventory levels increasing 13%, inline with our sales increase and our buildup for the holiday selling season. In May, we announced our Board had approved $100 million note repurchase program to be used from time to time as market conditions warrant. Through the third quarter, we have repurchased approximately 66 million of notes. As a final reminder, we will be going into our traditional quiet period at the end of the day on Wednesday until we release our holiday sales in early January. With that I will turn it over to Dan for his comments.

Hi, good morning. As Dick mentioned, we are very pleased with our performance in the third quarter. Hardware sales increased 69% year-over-year led by the Nintendo DS Lite, XBox 360 and the 6-year old PS2. We are especially pleased to see the momentum in the PS2 hardware as it signifies a growing base of budget-oriented gamers that will continue to drive sales of PS2 new and used games. New software sales increased 14% in the quarter led by MADDEN all formats, SAINTS ROW, DEAD RISING and SPLINTER CELL for the Xbox 360. Our used game business grew 10% in the quarter, slightly less than the new software as used sales lag new. As expected, we were very promotional during the quarter in order to build our used inventory, and we are pleased that our per store used inventory levels are ahead of last year heading into the holiday season. The fourth quarter has started out extremely well with strong software sales of titles for the Xbox 360, such as GEARS OF WAR and Call of Duty 3. GEARS Of WAR looks like it will be the best selling title on the 360 platform to date. Also PS2 games have done well this quarter, led by Final Fantasy XII, WWE Smackdown 2007, and Guitar Hero II. We expect the sales momentum of PS2 hardware to continue in the fourth quarter with strong year-over-year growth and sales of the Nintendo DS Lite system are expected to remain very strong throughout this holiday season, I expect many of us will be surprised at how strong it is. As expected, the Sony PS3 and Nintendo Wii launches were sell outs. We have been re-supplied with both systems already and expect to get more on a weekly basis. The best selling titles on the PS3 thus far are Resistance: Fall of Man and Madden Football; and in the Wii, it has been Legend of Zelda and Red Steel. The software tie ratios for the Nintendo Wii have been surprisingly good at 3.0. The software tie ratio for the PS3 has been low at 1.5, which we believe is due to the large percentage of PS3s that are being resold at a huge premium. We are forecasting that the historical norms will prevail as the units end-up in the hands of real gamers. So, from a product perspective, we have never had more excitement. New platform launches, great sales from the Xbox 360 and Nintendo DS Lite systems, and a six-year old platform the PS2, that has been reenergized at $129 price point. Our stores have been re-merchandised to maximize every square foot of selling space. Our distribution network has been performing flawlessly and with the utilization of the Louisville distribution center for the entire company, our in-stock positions have never been better. So, the interactive video game market is posed to set new record highs and GameStop is well positioned to capitalize on its growth. Now I'll turn it over to the moderator for a question-and-answer session.

(Operator Instructions). And we'll go first to Elizabeth Osur with Citigroup. Elizabeth Osur - Citigroup: Thanks. Great quarter guys, I had three separate questions. First, could you give us an idea of how much visibility you have on the new console follow-through deliveries? And whether or not that information changes your forecast for full year shipments of PS3 and Wii?

Liz, this is Dan. I will stress it separately. On the Wii, we have anticipated deliveries pretty much through December. On the PS3, we are getting information on a weekly basis. We got information last week on our first Wii supply and we are expecting to get information today on next week Wii supply. So, it's coming week-by-week. And Dave, you want to take the second part of that question on does it change our financial?

No, it doesn't change our financial forecast. It pretty much -- we have had a conservative estimate of both the PS3 and the Wii all along, and the shipments that we are seeing, won't affect our earnings guidance at all. It may affect the comp guidance slightly depending on how many PS3 is actually shipped, but it will not affect the earnings. Elizabeth Osur - Citigroup: Okay, thanks. Second question on the store opening I think the pace was -- the net pace is little slower than we were looking for. Could you just comment on the pace you expect in the fourth quarter, where there is -- stores might be weighted US or international and whether you are still targeting the same 500 for next year?

I think Liz, as I said, we will hit our 400 number. As you know, the fourth quarter is a little bit really shorter. We try not to open too many stores as we get into December. So, they will be more heavily weighted to the early months, generally speaking, but I wouldn't take too much of this. So, it will be somewhat more tilted to the US than internationally, not because we have in any manner, shape or form backed-off internationally. In fact, we haven't backed-off in any country, but one of the things that I have been discovering as I have been spending more time particularly in Europe is that predominantly due to the explosion of competing phone entities seeking space in malls, the mall space has been at a real premium. We have therefore not jumped in and not paid ridiculous amounts for space, and instead we've stepped up and approached to go into to may be a little bit smaller, little bit larger locations and therefore -- so we could be a little bit light there. Also, we have reorganized our real estate function completely through Germany and that probably is satisfact somewhat, but again it's not significant relative to this year numbers nor we are forecasting next year. Elizabeth Osur - Citigroup: That’s great.

Next year -- you asked Liz, about the number of stores, we are still looking at 600 new stores next year and 100 closings, where I think you came up with the net 500. Elizabeth Osur - Citigroup: Right. And last question just housekeeping, could you guys -- I apologize if I miss this, but could you run through the year-over-year sales growth on a pro forma basis for each of your segments?

Sure, I think we got through most of them but let me just reiterate them again. The video game hardware increased 69%, new video game software increased 14%, used video game products increased 10%, and other products decreased 6%. Elizabeth Osur - Citigroup: Okay. Thanks so much.

Thank you. And we'll go next to David Magee with SunTrust Robinson Humphrey. David Magee - SunTrust Robinson Humphrey: Hi, good morning.

Good morning. David Magee - SunTrust Robinson Humphrey: Couple of questions. First the -- what do you all anticipate this week and next week with regard to the non-specialist in the space and your promotions?

Well David, I think that as you know there has been some leaks in terms of what the FSIs are like and I am assuming that those are relatively accurate and if indeed that's the case, it looks to be on a broad base little bit business as usual as far as we're concerned. We anticipate it because of the strength of the category, particularly with the new platforms that the mass merchants would devote somewhat more space to the video game category that appears to be the case. But so far of the advance peaks that we've seen, I don’t see anything that is earth-shattering. I would expect, however, that we would see more space devoted to the video game category and possibly even more FSIs, but it's not an order of magnitude difference. It's just a reflection that this is a very, very strong category for the holiday season. David Magee - SunTrust Robinson Humphrey: Thanks. And secondly, with regards to the used business, I know you all have been expecting it sounds like seeing an influx of used product in the stores on the supply side, which is good. Do you anticipate the benefit of that to be in the fourth quarter or is that more of a first quarter benefit?

I think that the benefit in sales on the used increase in inventory will come more in the first quarter than the fourth quarter. That's generally been the case as the gift giver is more focused on the newer product. So, I think it will be a downstream effect and it will affect the first quarter used sales. David Magee - SunTrust Robinson Humphrey: So, we should see used maybe as a percent of sales, the same relationship maybe in the fourth quarter as we saw in the third quarter?

No, typically used is a lower percentage of sales in the fourth because of -- particularly this year because of the hardware launches. So, your used percentage of the total will go down. But absolute growth in used will increase probably more than it did in the third quarter. So, we will see improvement in the used growth rate. It just won't be able to keep up with the spectacular growth in the new hardware and new software. David Magee - SunTrust Robinson Humphrey: On a year-to-year basis then that to be a little bit improved from the third quarter into the fourth quarter?

The growth rate, yes. David Magee - SunTrust Robinson Humphrey: Great. Thanks a lot.

(Operator Instructions). We will go next to Tony Gikas with Piper Jaffray. Tony Gikas - Piper Jaffray: Good morning guys. Couple of questions this morning. Do you anticipate looking at next year that the growth rate for used software sales will be inline with new or is it going to be a lower number, could it be flat year-to-year? Second question, how did new stores that were opened during the last 12 months perform relative to your expectations? And then I have two quick housekeeping follow-ups?

The used -- this is Dan. On the used game business, it will probably grow slower than the new game business because the new game business I see is expected to explode next year with all of the titles, as well as the increased installed base on the 360, PS3, Wii et cetera. So, we haven't put any numbers on that yet, but it will most likely be slower growth. It will be good growth, but it will be slower growth than what the new is.

And as to your second question, the new store performance has continued to be very, very good. As a matter of fact, the only thing that we may have touch on, I think, in our second quarter call is that, those stores that we had put in tertiary markets that are anchored by Wal-Mart seem to be somewhat slower, and we had anticipated that that was predominately due to gas prices and fewer shopping trips per week. That clearly seems to have been behind us. Even though as we all know Wal-Mart didn't report particularly strong October quarter, we have seen those tertiary stores begin to come back. And, we are very positive about the performance of the new stores. Tony Gikas - Piper Jaffray: Okay. Just a couple of quick housekeeping. Tax rate looking forward and have you been experiencing any storages of PlayStation 2 hardware sales? I've heard that sales have been very strong particularly with the Silver edition?

No, we have not to date experienced any shortages, although the Silver edition is a sellout. I think it was planned to be that. It was item -- and no, we are not -- I think, we try to re-supply it, but that will be out of stock. But overall, we are in-stock with PS2s. I can't guarantee that will occur or stay that way throughout the quarter, neither can Sony, but we’re in good position right now.

I want to re-stress the fact that, I think, something that even surprised us a little bit is this price point on this PS2, given the quality of the game play, relative to the price points on the new platforms, appears to be really being looked at as a tremendous value and a tremendous bargain. And I think that driving into the fourth quarter is going to keep this momentum going, although I think both Dan and I would say, we see how wish that Sony got just switched over and continue to manufacture the Silver, but that isn’t the case.

And then, your question on the tax rates, we are looking at between 37% and 38% on an annual basis that fluctuates quarter-to-quarter depending on the contribution of the various international countries. But on an annual basis, it's between 37 and 38. Tony Gikas - Piper Jaffray: Okay. Thanks guys, great job.

Thanks.

Thank you. And we will go next to Evan Wilson of Pacific Crest Securities. Evan Wilson - Pacific Crest Securities: Hi guys. Thanks for taking the question. I've got a couple. First, in terms of the inventory you said that, used inventory is higher per store. We know that there is more inventory this year than last on all three new hardware consoles. How are you managing the inventory per store because you are having much less shelf space and specifically, how you are allocating space for the PS3, maybe as a percentage of total square feet? And then just a follow-up on one of Liz's questions, on the PS3 and the Wii, you previously said, you were expecting 1 million PS3s, 750,000 Wiis, does that number stand?

I'll take the first, this is Dan, the first question on how we are managing the used inventory. First on a per-store basis, we have a regional stock balance program. The stock balance is the inventory among stores. So, we keep the inventory moving in the stores where it's needed. So, we'll start with that. Secondly, yes, space is a concern. If you are in our stores now, you see the 999 games are in dump bins, off the wall where the space is more valuable. And they're in dump bins where people can browse through the dump bins for them rather than on the wall. The PS3 section will start out as primarily one-wall section and so will the Nintendo Wii and of course they always get space ahead of their sales contribution. It's just a necessary way of doing business. Yet, we are very focused on managing the space, as Dick mentioned in our stores, in our inventory and making sure that everything is in alignment. And we've been through this before as platforms will leave, next year the PS1 platform will exit our stores on the used business as its contribution has become very insignificant, so will the N64, etc. So, we'll just continue to manage the space as we always have. And there is a third question that I don’t remember what it was.

On the PS3 and Wii allocations, our forecasts were fairly conservative. You said it right, we were looking at 1 million PS3s and 750,000 Wiis. At this point, we haven’t changed those numbers but obviously they have changed, but our assumption is that any shortfall we may see in the number for PS3 will be made up with additional Wiis. So, the Wiis obviously are a lesser price point, so there would have to be more Wiis to make up for those dollars. But at this point, our comp guidance of 14% to 18% should cover whatever happens with the PS3 or Wiis. Evan Wilson - Pacific Crest Securities: Thanks very much.

Thank you. And we'll go next to Arvind Bhatia with Sterne, Agee. Arvind Bhatia - Sterne, Agee & Leach: Good morning, guys. My question, I want to go back to the new store openings for next year. Wondering how many of the 600 locations you feel good about in terms of, maybe leases or locations you've identified, etcetera? And what kind of mix -- sorry, you said that earlier, the mix next year, domestic versus international? And my second question is on gross margins, directionally would it be fair to assume flat to slightly down gross margins next year, given more new hardware and more new software next year?

Let me check the first one, Arvind. I will tell you without having a specific number. Our real estate people in terms of their domestic leases that they have already got signed and committed are off to a phenomenal start. I'm now thinking that our expansion next year while we will still target the 600 we'll probably be somewhat more tilted to the US, something probably in the 325, maybe the 340 range, with the balance being throughout Europe. One of the things that we have done this year is that in our Canadian and Australian operations where we have huge market share, we've challenged the managing directors in both of those areas to look at a number of different models that might see them expanding beyond their historical locations, and particularly in Australia, that has been very, very successful. And so, we believe there's additional growth there. I look for Canada to pick up some of that this next year and the recap would be that we will be expanding in literally all of the countries that we are in, but probably somewhat more tilted to the US.

And your question on gross margins for next year we obviously haven't given guidance for next year at this point. You are right in saying that there will be a significant amount of hardware sell through next year, but at this point, we are not ready to forecast what the gross margins will be for next year. Arvind Bhatia - Sterne, Agee & Leach: Let me ask a different question then, for -- I guess for this holiday season, may be coming back to that, in terms of competition and your preparation, what are you guys doing different this year compared to last year as you had forecast what competition is going to do?

Well, one thing, I think you will see without getting into specifics, we are doing significantly more external advertising this year than what we had done last year. As far as our preparation for competition, I think as Dick mentioned, it's pretty much as usual from what we have seen thus far is that on occasion, mass merchants and/or electronic stores take a shot on a title here or there, but pretty much it has seemed to be pretty much as usual.

Well and I'd like to also get in Arvind because sometimes this is really the sexy part of the business but you know execution, execution, execution as I indicated, store people have taken a far more in-depth look at how we are scheduling our people into the stores, what hours they are there, we've broken down, how do we do a better job of serving the customers who are anticipating a broader base of customers drawn into our stores namely because of the Wii and the DS Lite. We have changed our merchandising particularly in our mall stores somewhat more dramatically as a result of that. Our distribution, which Dan reflected on, particularly with the Louisville facility being able to turnaround products a lot faster, replenishment should be better. So net, net a lot of the basics to get us where we are going is kind of fundamental, improving on the basic blocking and tackling as opposed to the sexy elements of advertising or promotions. And again, as I alluded to in my opening comments, we believe that the customer this year is going to need more help, more direction, and more knowledgeable sales people and it's very clear to us that that’s going to be delivered at GameStop. Arvind Bhatia - Sterne, Agee & Leach: Great. Thanks guys.

Thank you. We have time for two more questions. We will go next to Bill Armstrong with CL King & Associates. Bill Armstrong - CL King & Associates: Good morning. Most of mine have been answered, but I have a couple left. As far as allocations of the PS3 and the Wii, are you -- did they come in inline with your expectations in terms of your market share and would that also apply to the replenishment shipments that you have been getting?

One would have to have empirical data that we'd know exactly how many we did launch with in order to answer that but we have been told definitely that we have gotten replenishment and initial allocations inline with our market share. Bill Armstrong - CL King & Associates: What do you estimate your market share in North America to be at this point?

Well in total our market share is roughly 25% -- is roughly 25%, but that varies dramatically by platform and -- by platform. So but in total it's about 25%.

If your question may be heading towards, and I understand it, did we get that portion of what was laid down particularly from PS3 and as Dan said we don’t have hard numbers as to what they released, but the answer would be no, we don’t believe we did. It is also true that in the 10 years we have been in this business I don’t think any of us have ever been satisfied with the allocation of any new machine that we have gotten. This is really no different. I think the difference will be as to what extent and I think again, particularly from Sony, we are going to have a constant flow of goods. As you recall, last year one of the real difficult things of the quarter was that we were a little bit more optimistic about a consistent flow of goods from Microsoft and that became very sporadic. This year while the allocation initially was not as robust as we had hoped, if the flow of goods is more consistent we will be in much better shape, but that’s yet to be determined.

I think the most important thing as you think about GameStop when you think about the new platforms, is that historically we have the highest tie-ratio in the country. So while manufacturers may have to allocate the hardware across a broad base of retailers etc, the customer that’s buying these systems really wants to shop at GameStop. And so they are coming to us for the games and accessories and add-ons and that’s the important part is where we excel in the tie-ratio of games and accessories to the hardware units. Bill Armstrong - CL King & Associates: Got it. And my second question has to do with, I have noticed on TV ads from FYE, which is the chain of music stores, advertising that they buy and sell used games. I recognize that they have a very small market share, but I guess, my question is, have you noticed them impacting the market in anyway and in particular, have you noticed them impacting pricing for used games either on the buy or the sell side in local specific markets?

Absolutely not. On the pricing aspect, I can assure you, if we felt that that was becoming a negative we will hear loud and clear from our field and we have not. They have actually been in that business for, I don't know, Dan, two years, three years?

I think it's three or four years.

So they have been around, and you would have to say, well they must take some portion of the market they are still in it. But I think the key is the focus that they have or do not have on it. It is a very, very difficult business as we have said before to execute well if it is a small part of a much larger business. So we look at them, we certainly take all of our competition seriously, but I don't think there is significant impact to our overall used business. Bill Armstrong - CL King & Associates: Right. I knew that they were -- have been in for a little while. I guess, when I started seeing these TV ads on football games with presumably some fairly major viewership, I was just wondering if you would seen them becoming any more aggressive in the markets?

Well it's possible that they may be. I really can't answer that. Again, one of the challenges that we continue to look at is that when you have an entertainment competitor and the base business is under tremendous pressure whether it be movies in Blockbuster or the Gamecrazy or music in the case of FYE, they will look around and try to determine what else they can ride. So, it isn't surprising to me that there is more focus on the video game category, and the only reason for that and to some degree maybe the use is that it's just a tremendously hot category heading into the holiday season, and we will benefit from that a lot more than we will lose to the emerging competition. Bill Armstrong - CL King & Associates: Okay. Well thanks and good luck for the holidays.

Thank you.

Thank you. Our next question comes from Edward Williams with BMO Capital Markets Edward Williams - BMO Capital Markets: Good morning. Just a couple of quick questions. If you look at the European market, how is same-store performance in the quarter? And secondly, how is the business performing in Europe in general leading into launch, especially given the delay of the PlayStation launch there?

Europe is actually doing quite well, and in general their comps for the year have been somewhat higher than the US. When we look at our European operations, we really break it down although we don't break out the numbers individually. We've got rapid growth companies in Germany and Italy are performing extremely well. We've had repositioned in Nordic, which has done a phenomenal job this year and is really starting to get momentum, and we look at Spain as a brand new out of the box business. It just really as of October this year, moved out a lot of the old PC product that was still in the inventories as a result of the acquisition. So, Spain is kind of the new kid on the block and we are watching it very closely. But they are completely different places and different countries. Overall, we are very happy with Europe and as I said before we will be expanding in all of these countries.

The one thing I would add to that is when we actually released the segment information in the Q, you will find that last year -- during the third quarter both Europe and Australia at the PSP launch, that they had a little bit more difficult of the comparison than the US and Canada, just to note when we release those numbers.

And that is a good point David, as most of you know is that as we went into the year, Sony had announced they were going to make a worldwide launch of PS3. Couple of months ago, they announced that they were going to delay Europe until March. Again it probably affect our top-line more than our bottom-line. The truth for the matter is that Managing Directors in Europe put that announcement and they were very positive about it. So, I think that speaks well they are looking at their business and what they expect earlier in the year, and may be hopefully a better launch with more supply by delaying it in Europe. Edward Williams - BMO Capital Markets: Okay. And then if you look at next year in the 300 plus stores you are talking about adding internationally, how many of those are you expecting to put into the European market?

European market will probably be the majority of those stores that I don't want to get more specific than that particularly, I don’t want to get in breaking it down by country but it will be the majority of the international by store count. Edward Williams - BMO Capital Markets: Okay. And then that will largely be the market you are already in it or you -- do you anticipate moving into any new market structure?

Well, our first focus is the markets that we are in. Again, we believe that there is growth opportunity in markets that we are already serving, but we'll also do a research on emerging countries and we have done that and that could be possible, but a primary focus is on serving the countries we already do business better. Edward Williams - BMO Capital Markets: Okay. And how is the 360 performed of late, leading into this past week since launch? Any changes in the performance of the 360 hardware unit sales and software sales relative to what you anticipated?

Yeah, definitely the hardware sales have increased each week, each of the last three or four weeks, and especially post Gears of War launch, we've seen a tremendous uptick in 360 hardware, which the MPD data, I am sure will document here in a couple of weeks. But definitely the 360 has moved tremendously up since (inaudible). Edward Williams - BMO Capital Markets: Do you think that's inline with seasonal patterns or is that exaggerated because of Gears of War?

Well I think the driver right now is Gears of War. I think the seasonality really starts on the hardware basically. I think you will see that's the seasonality beginning now. And so the last couple of weeks have been driven by Gears of War. Edward Williams - BMO Capital Markets: Okay. And then, David, can you give us an update of cash flow from operations in the quarter?

Cash flow from operations? Edward Williams - BMO Capital Markets: Yeah.

Actually, we will release that with our Q in a couple of weeks. Edward Williams - BMO Capital Markets: Okay. And then, if you can give us some color as to where you are with your used inventory levels compared to what your targeted used inventory level is? Are you still below what you would like to be at?

Well, we had a target, and we reached that target. And we're always below where we want to be especially heading into the fourth quarter, where we have tremendous sell-through of what we haven't stocked. So, as we were promotional in the third quarter, to buyback inventory, to reach our goals for the beginning of the holiday season and we met that goal. Edward Williams - BMO Capital Markets: Okay. And then the last question for you is what are your thoughts with regards to the two class of stocks? Any possibility of eliminating the Wii shares?

Actually, Ed, our Board discussed the possibility of combining the AMD shares at its last meeting, as we had a lot of request from these shareholders. More work needs to be done, but if and when there is anything to report, we will release the information to the public. Edward Williams - BMO Capital Markets: Okay. Thank you very much.

Thank you.

Thank you.

Thank you. That will conclude our question-and-answer session. At this time, I'd like to turn the conference back over to Mr. Fontaine for any additional or closing remarks.

Thank you all for joining us today. I sure, as you can tell from our enthusiasm and also from your questions, there is an awful lot going on. There is a lot of attention focused on this category coming into the holiday season. It's all good, good from our perspective. We are ready and we are extremely excited. Hopefully, you are as well. Thanks for joining us today.

And ladies and gentlemen, that will conclude today's call. We thank you for your participation, and you may disconnect at this time.