Daniel A. DeMatteo - Chief Executive Officer David W. Carlson - Chief Financial Officer and Executive Vice President Tony D. Bartel - Executive Vice President of Merchandising and Marketing R. Richard Fontaine - Executive Chairman

William Armstrong - C.L. King & Associates, Inc. Anthony Gikas - Piper Jaffray David Magee - SunTrust Robinson Humphrey Thomas Andrews - BMO Capital Markets Arvind Bhatia - Sterne, Agee & Leach

Please stand by we're about to begin. Good morning, welcome to GameStop Corporation's -- GameStop's Fourth Quarter and Full Year Earnings 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 would like to turn the call over to Dan DeMatteo, Chief Executive Officer of GameStop Corporation. Please go ahead sir. Daniel A. DeMatteo: Thank you moderator and I thank all of you for attending GamesStop's conference call this morning. With me are Dick Fontaine, Executive Chairman; Paul Raines our Chief Operating Officer; David Carlson, Executive VP and CFO; and Tony Bartel, our EVP of Merchandising and Marketing. This morning, we will discuss our 2008 performance and the results of our fourth quarter and also give more information on what we see in 2009. As our release indicated our sales and earnings for the fourth quarter hit the high end of the range we previously gave you and therefore our earnings for the year were also at the high end. And according to U.S. NPD data we gained significant game market share in our Q4. I wish to thank the thousands of GameStop associates around the world that executed a brilliant fourth quarter plan and our developer publisher partners for the continued creation of exciting and diverse content. And we are predicting record sales and earnings growth in 2009. David will give you more information on 2008 sales and earnings as well as 2009 forecast. Now I will discuss what's driving them. As most of you know 2008 set a record for increasing the installed base to new console and handheld system owners with only over 34 new million new units being sold. These new videogame players who are as varied as the overall population, coupled with the growth over the past three -- two years, would drivers software sales this year to an all-time high. Again, the creativity by our software developer and publisher partners who create new games and genres for the ever expanding game player base contributed to this success. In spite of the recession video games are viewed as relatively cheap entertainment and we see software sales growing 5% to 10% in the US as they already grew about 10% in both January and February. And we believe international growth will approximate U.S. growth. As a matter of fact without this recession, games would probably have grown even more this year. And we are predicting growth in hardware units to approximate last year's numbers as potential price reductions and new entrants like the Nintendo DSi will continue to drive demand. Our new store expansion program is driving our sales and expanding the market around the world. We see adding 400 plus stores this year about half domestically and half internationally. While reduction of last year's 1000 stores either opened or acquired, it is still a large commitment and it is warranted given the superior performance of our new stores last year and so far this year. And as we expected we are seeing great deals of new store rents and least renewals. Once again, we opened stores to expand share not cannibalize it and to help expand the entire gaming market. We see our number one goal was driving new users to video gaming and to drive sales of new title releases through our pre-release marketing programs. As a video game specialist, we are in the unique position to do this through conveniently located stores, the largest assortment of games, and knowledgeable sales support. Now we are forecasting positive comps and earnings growth in Q1 in spite of the tremendous comp last year due to the mega hit releases of Grand Theft Auto, Super Smash Brothers and Mario Kart. David will give you more detail on this in his discussion. Lastly we have been asked by many of you what impact we're seeing on our used game market trading program due to new entrants. As most of you know we have seen attempts at mastering the used game model we have developed by others over the past years many times, all without success. The online trade model was tested by us and we saw a very little consumer acceptance as the consumer needs the immediacy of the used game values to purchase new games. We do not believe that this will work as the consumer that is willing to wait will sell peer-to-peer as they always have and get more money. On the retail door front other brick and mortar retailers have tried this and failed as they do not have the dedicated sales force experienced with pricing, systems to manage the inventory, and refurbishment capabilities that we have developed over the years. With that I will turn it over to David and then we will come back for a Q&A session. David W. Carlson: Thanks Dan and good morning. Before the market opened today we released our sales and earnings results for the fourth quarter and full year of fiscal 2008. GameStop's sales for the fourth quarter increased 22% to 3.5 billion as compared to 2.9 billion in the prior fiscal quarter. Comparable store sales for the fourth quarter increased a retail leading 9.6%, particularly strong considering the world wide economic recession that is underway. These results were driven by exceptional results across all merchandise categories. New hardware sales grew 13% driven by Nintendo's Wii and Microsoft's Xbox 360. New software sales grew 23% with top title such as Call of Duty, World at War, Gears of War 2 and Wii Fit leading the way. And finally used sales grew 31% during the holiday quarter as customer's traded in games in record amounts to buy the newly released titles. Net earnings for the quarter were 232.3 million increasing 22% over the prior year net earnings of 189.8 million. Diluted earnings per share for the quarter were $1.39 and included merger related income of $0.05 per share related to currency hedging on the Microsoft acquisition, excuse me, on the Micromania acquisition. Fourth quarter EPS was at the high end of our previously released guidance. Gross margins increased by 10 basis points as products mix shifted from low margin hardware sales to higher margin new and used software sales. This positive mix shift was partially offset by lower margins on new software and used products due primarily to the success of our value messaging and promotions during the holiday period. In addition, SG&A expenses leveraged by 10 basis points allowing operating margins excluding merger related income to expand from 10.2% in the prior year quarter to 10.5% this year. GameStop sales for the full fiscal year 2008 increased 24% to over 8.8 billion with full year comparable store sales increasing 12.3%. Operating margins expanded from 7.1% to 7.7% with 35% growth in operating earnings. Net earnings for the year grew 38% to 398.3 million, including 4.4 million of debt retirement costs and merger-related expenses. Diluted earnings per share for fiscal 2008 were $2.38 including $2 ... excuse me, including $0.02 per share of debt retirement costs and merger-related expenses which represented 36% EPS growth for the fiscal year. Our balance sheet remains strong with over 575 million in cash at the end of the year with total senior debt reduced to 55 million over the course of 2008. Inventories increased 34% from the prior year with the acquisition of Micromania accounting for approximately one third of the increase and the remaining increase consistent with sales growth. This morning we also issued initial guidance for the first quarter of fiscal 2009 and reiterated guidance for the full fiscal year. Based on the strong game line up, historical tie ratios and continuing growth of the hardware installed base, we expect full year 2009 sales to increase between 10% and 12% with comparable store sales increasing between 4% and 6%. We believe the U.S. videogame industry will continue to grow at a rapid pace with similar hardware units sold in 2009 as in 2008, and a new videogame software growth rate of somewhere between 5% and 10% for the year. Based on these assumptions, we currently expect diluted earnings per share for fiscal 2009 to range from $2.83 to $2.93 representing strong EPS growth of between 18% and 22%. At the midpoint of our guidance, operating margins are expected to improve by 50 basis points to 8.2% with approximately 70 to 80 basis points coming from gross margin improvements, offset by approximately 20 to 30 basis points from increases in SG&A expenses. Depreciation should range from 153 million to 155 million with net interest expense in the 47 million to 49 million range. Finally, our effective tax rate for fiscal 2009 is expected to be between 36% and 37%. As Dan mentioned earlier, the first quarter of last year had three blockbuster titles which resulted in a 27% comps sales increase and EPS growth of 147%. Despite these tough comparisons, for the first quarter of 2009 we're expecting comparable store sales of between flat and plus 2% with diluted earnings per share ranging from $0.40 to 42% ...$0.42 and EPS growth rate of 5% to 10%. In addition to the momentum from the increased hardware installed base, the first quarter is expected to be driven by the launch of Nintendo's DSi and several great titles; including Resident Evil 5 and Street Fighter IV from Capcom and Halo Wars from Microsoft. With that I'll turn it over to the moderator for questions.

Thank you. (Operator Instructions). And we'll take our first question from Bill Armstrong with C.L. King & Associates. William Armstrong - C.L. King & Associates, Inc.: Good morning, last couple of days there has been a lot of buzz about this new online products that provides games-on-demand or will anyways as proposed then and the speculation is that at some point this might eliminate the need for consoles and disc. I'm just wondering if you've looked at this at all and what your initial impressions maybe?

Hi Bill. This is Dan DeMatteo, and yes we've looked at it obviously this week. First of all I will say I'm no technical expert. But as I understand it this cloud computing for games has been tried before and internet choke points and other technical issues have caused it to fail. Also an unnamed very large company has been working on compression techniques like this, for many, many years to no avail. Again I'm not a technical expert but building a network that thousands of gamers can play simultaneously through the internet with satisfactory speed will be need to be proven as technically viable. I'm sure you can get something to work well in a lab but getting it out there into realities you had a different thing so, well we are not sure. I'll just say there is a lot of technical challenges to that working. William Armstrong - C.L. King & Associates, Inc.: Okay, what are your expectations for the DSi that will soon be launched?

Tony, do you want to answer that.

Yes, we expect it to be very strong. We are very encouraged by our reservations which are significantly ahead of the reservations for the DS, its processor and we are also very pleased with the long haul supply that Nintendo will have for a launch. So, we are very excited for the launch and expect it to exceed our expectations that we originally have for it. William Armstrong - C.L. King & Associates, Inc.: Okay, great and then just one house keeping, can you go through the year for Q4 the number of store openings and closings and the final number of acquired stores for Q4?

Sure we opened 577 stores in Q4 and we closed... I am sorry we opened 476 stores and we closed three and of those 476 stores that we opened 328 were Micromania purchases. William Armstrong - C.L. King & Associates, Inc.: 328, so you finished with 62 in 07?

That is correct. Yes. William Armstrong - C.L. King & Associates, Inc.: Okay great. Thank you.

We'll take our next question from Anthony Gikas with Piper Jaffray. Anthony Gikas - Piper Jaffray: Hey good morning guys, couple of questions as well. David I think you said that interest expense for the year was expected in the range of... did you say 47 to 49 million and if so could you just may be elaborate on what's driving that little higher than we would expect it? Number two, what is the new store opportunity over the course of the next few years. I mean where do you see the business going over the next few years? And the third question I have is the gross margin during the quarter on used hardware and other came in a little below just slightly below my expectation, is that... how do we model that going forward?

Sure, I can take the first and the last one. The interest expense rate... expense range of 47 to 49 million, as you are well aware we had somewhere I believe it was around 39 million in 2008. However, we had about 11 million of interest income and as you're very well aware interest rates are at zero. So we're making no money on our interest or on our cash. So, 48 million is basically the interest on our debt of 550 million that's outstanding. So, that's the difference in interest expense 2009 versus 2008. The margins unused and the new software in the fourth quarter as I said in my script, they were slightly lower than the prior year due to some of the promotional activity that we did during the holiday season to drive sales. As you recall, when we're still obviously in a very difficult retail environment, we use some of those promotions to drive traffic and it worked very well. And, so those margin rates going forward, they were result of promotions during the holiday period.

And Tony, this is Dan. I will take the new store question in the U.S. and Dick will cancel the international part of that. First of all our stores here in U.S. continue to perform exceptionally well, exceptionally well so that being said, we thought we would open 200 this year that's down from what we did last year, that is pretty much in line though with a lot of centers that were going to be built that aren't going to be built. So we see 200 a year possible for the next several years here in the United States or another 800 to 1000 stores. And Dick, if you want to talk international. R. Fontaine: I will say the same thing is generally true internationally, there has been some slowdown in the amount of centers that are being built, and some of them have been put on hold; not a phenomenal amount but we are seeing the same thing internationally. That actually gives us an opportunity, however, so we are pretty confident opening a large level of quality stores this year because what is happening is that many of the international malls have a much higher occupancy rate than generally in the U.S. So projects that we desire to get into were not new but existing was very difficult. What we are finding now is that more and more space is opening up and actually at better rental terms. So while the new malls that are being built are somewhat being pulled back, the existing malls are giving us an incremental opportunity. And as I said, at generally better rental terms and a better term as well. So we shall be very confident in the amount that we are forecasting and probably the larger question is do we see continued growth in this area? And the answer is, yes, absolutely. This is not a one-year growth vision that we have. We see continued operating growth in this area for a number of years. Anthony Gikas - Piper Jaffray: Are there many new store ...are there many acquisition opportunities on an international basis and are you interested in doing anything on size? R. Fontaine: There are a number of ...of course, we don't comment on the specifics but there are number of acquisition opportunities that tend to be basically of the real estate variety where a chain with size that fits up well with us, is not doing well, is desirous of getting out of the business and we will look at all of those on a case-by-case basis. Of size, that's kind of beauty in the eyes of the beholder, let me just say that we retain a very aggressive posture towards growing our business and as you know we have the capital to grow, so we are very open to any opportunity. Anthony Gikas - Piper Jaffray: Okay, thank you guys great job.

Thanks. Operator: We'll take our next question from David Magee with SunTrust Robinson Humphrey. David Magee - SunTrust Robinson Humphrey: Yeah, hi good morning everybody. Just a couple of quick questions, one, based on toddlers (ph) that have been announced or maybe those that haven't been announced yet, how are you feeling about what you are seeing in the second half release schedule versus which in your month or so ago is it becoming clear at this point in time.

Tony, do you want to take that?

Yes, well we definitely see that there are some strong titles that we have taking a look at, some of them have been announced, some of them have not been announced but we're very excited about the second half. We feel like we obviously have a difficult roll over that is that we are looking at but we clearly see that there are some strong titles that we have out there including Halo 3, (inaudible) as well so we are looking forward to that. We have seen some titles that are definitely exciting that's on the horizon. David Magee - SunTrust Robinson Humphrey: What are you all seeing with regard to Amazon's pricing thus far in terms of their solicitation of the product. Are you impressed either way by their pricing thus far?

Not impressed by their pricing. They seem to be following us if anything. And again as I mentioned earlier we do not see that being successful. We tried it ourselves. If somebody were willing to wait for cash; they might as well sell peer-to-peer on eBay or even on Amazon and get more money rather than trade in value. David Magee - SunTrust Robinson Humphrey: Thanks and then the last question, with regard to the hardware sell through this year for the sector, that would be another good year and flush out good things for software next year, what does it take do you think with regard to price this year to make that happen, are you being somewhat conservative in terms of your anticipation of hardware price cuts or do you have very significant price cuts, what do you think has to happen there?

I think we're being fairly conservative in our assumption on what price cuts will take place. Although none of this is confirmed in our budgeting process, we have put in a slight price cut for PS2 to $99 which we do every year. So we'll see it actually happens this year or not and we are looking for potentially a price cut on the PS3 after we saw the price cut on Xbox last year. So I think we've been very conservative in putting in the price cuts and yet we still are looking at between 35 and 36 million hardware units in the U.S.

And also don't forget, we did have knowledge prior about the DSi coming out too and we think that's going to really drive growth in that category. R. Fontaine: David, I would also point out ... this is Dick, that the numbers that we are talking about ... this makes ...we'll make the third straight year of numbers in that record category. The 34 million which rent, I think, the 35 and now we are talking about something in the 36. So, cumulatively over these three years we have never seen so much hardware go out into the marketplace when you are 100% right, that bodes extremely well for us downstream. David Magee - SunTrust Robinson Humphrey: Okay, thanks a lot.

We'll take our next question from Edward Williams with BMO Capital Markets. Thomas Andrews - BMO Capital Markets: Hi, good morning everyone. This is Tom Andrews standing in for Edward. One housekeeping question, I think you said in your prepared remarks that depreciation expense would be... was it 153 to 154 for the year?

153 to 155, yes. Thomas Andrews - BMO Capital Markets: Okay, 155. And then of the 200 or so stores that you plan to open in Europe, are those going to be weighted towards any particular countries?

Well, yeah, they will be wherever the opportunities seem to be the most significant. Of course, we'll get the weight and, generally speaking, that those will be in the larger countries as you would imagine. Thomas Andrews - BMO Capital Markets: Okay.

Well, I would just correct real quickly. It's not just in Europe; it's internationally we'll have 200 stores. So that will include Canada and Australia. Thomas Andrews - BMO Capital Markets: Okay, great. And two other questions, as far as the DSi, are you getting kind of an allocation or do you expect to get an allocation that is consistent with what you've had in the past or is there any variance there? And then can you tell us, approximately, what you think your share is for each of the major software categories, PC console and handheld? R. Fontaine: I'll handle the DSi question, first. We are very excited and comfortable with the allocation that we are receiving from Nintendo. We think that they have done a very good job of having supply to meet demand for this product. And so we are very excited and do not expect to have any shortages in the launch phase of this product. They have already come around here.

Sure, on the market share, we have never given out that much detail on our market share. As Dan said in his opening remarks, we did gain significant market share on gains in the fourth quarter based on the NPD data. But other than that, we are reluctant to give out too much detail on that. Thomas Andrews - BMO Capital Markets: Okay, great. Thank you.

You have time for two more questions, we will take our next question from Arvind Bhatia with Sterne, Agee. Arvind Bhatia - Sterne, Agee & Leach: Thanks, good morning. Just quickly on the hardware side, given your unit assumption as well the pricing assumptions you have, what would that translate into in the terms of dollars growth? That's the first question. And then second, one of the things we hear from investors in terms of concerns is software pricing. Wonder if you could give your ...or how you feel about how pricing is going to hold up this year? What you're seeing out there right now?

Based on the assumed price cuts we talked about earlier, our U.S. hardware forecast is down about 2% in dollars over 2008 and yet we're increasing units slightly.

And on the pricing issue, this is Dan, we have not seen any reluctance of the consumer to spend $59 for the grade A games which most games rather that come out under PS3 and the 316. As a matter of fact, we have seen consumer acceptance of higher price points 10, 20, and $30 higher than that for exclusive versions; collectors' editions, if you will. And have seen acceptance of that 10, 20 or $30 price point consistently last year and so far this year. Arvind Bhatia - Sterne, Agee & Leach: Great, then last question, I think Dave you had mentioned last conference call, you are expecting the music category to be generally flattish I believe this year, given all the new information we have on some of the titles, wonder if you could update us on you are thinking on the category?

I think we're still thinking that it could be flattish particularly with the unknown of DJ Hero, we've heard something about it, I am not sure we know pricing yet, but it sounds pretty exciting. In addition to that we're seeing very, very strong demand in our pre-sale reservations for both the Guitar Hero Metallica and the Rock Band Beatles. So, there is still there is a lot of new exciting things coming out in the music genres this year so, I think its quite possible we could see flat numbers year-over-year. Arvind Bhatia - Sterne, Agee & Leach: Great, thank you guys.

And we'll go next to Colin Sebastian with Lazard Capital Markets.

Good morning, this is Paul Beaver (ph). Thank you for taking my question. Do you guys expect to continue your value messaging in the used segment going forward which you mentioned impacts the gross margins in the quarter? And then secondly, could you break up the comp store sales guidance in the U.S. versus international?

On the value messaging, I think you will find us; we have been very consistent with our value messaging quarter-over-quarter over the last several years. In other words, we offer when value on the buy side several times a quarter and we offer value on the sell side several times a quarter. What you saw in Q4 this year was an extension of what we normally did primarily because of the type of retail environment that we were in. So to answer that for next year in the fourth quarter, I think would be too soon.

And then on the segment comps as we talked about it in the third quarter, Europe is having a little bit more difficult time with the global recession than some of the other segments are. For the fourth quarter, Europe had a mid single digit comp while most of the other segments were in the double digit. So that is pretty much it.

Thank you very much.

Okay, this is Dan. Again, thank you for spending time with us this morning. We do believe that videogames will continue to hold up well as well as any category in this recession. And that we are very well positioned to continue to grow share in this category both in the United States and worldwide. Thanks again for attending today. Operator: This does conclude today's conference. We appreciate your participation and have a good day.