Michael Mauler - Executive Vice President of International Robert Lloyd - Chief Financial Officer and Executive Vice President Daniel Dematteo - Executive Chairman Tony Bartel - President J. Raines - Chief Executive Officer

Michael Hickey - Janco Partners, Inc. Anthony Wible - Janney Montgomery Scott LLC David Magee - SunTrust Robinson Humphrey, Inc. Arvind Bhatia - Sterne Agee & Leach Inc. William Armstrong - CL King & Associates, Inc Mark-Andre Saucier-Nadeau Colin Sebastian - Lazard Capital Markets LLC Brian Nagel - Oppenheimer & Co. Inc.

Good morning. Welcome to GameStop Corp.'s Fourth Quarter and Fiscal Year Ending 2010 Earnings Call. [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, Executive Chairman of GameStop Corp. Please go ahead, sir.

Thank you and good morning. And thank you for attending today's call. With me today are Paul Raines, our CEO; Tony Bartel, President; Rob Lloyd, EVP and CFO; and Mike Mauler, our EVP International. This morning, we announced the final financial results for 2010 and our forecast for 2011. 2010 was a record year at GameStop for both sales and earnings and a record fourth quarter. We are pleased that our new initiatives have produced results by growing market share and delivering a new revenue stream of digital earnings. At our Investor Day conference on April 1, we will quantify the digital earnings growth and forecast where we believe they will grow to in the future. And we have been able to make these investments and continue to return value to shareholders through stock repurchases and debt retirement. Rob will discuss the financial results in more detail. In 2011, we expect more of the same, continue our investment in our strategic initiatives in order to grow market share and develop digital earnings. We believe that the GameStop brand is uniquely positioned to deliver gains to our customers no matter where or how they play: on their console, through box product and DLC, on their PCs through digital downloads or browser game play via Kongregate, or through an app store delivering games to their mobile devices. And no matter how they play, they will be earning points and getting benefits from being enrolled in our PowerUp Rewards program. Again, the details of how this all works will be further discussed at our investor conference. With that, I'll turn it over to Paul for his comments. J. Raines: Thanks, Dan. As I begin my remarks, I would like to thank all of our GameStop associates worldwide who continue to serve our customers with the very best customer service, value and assortment in video gaming. As we have discussed on previous calls, GameStop continues to execute the strategic plan we developed over two years ago to fulfill our vision of being the premier multichannel player in video gaming. In August, we announced the investment of $0.03 of earnings per share in the third quarter to accelerate the implementation of our strategic initiatives ahead of holiday, and we are pleased to see the leverage those initiatives are giving us in the marketplace. The growth of our online websites, digital sales in store and our PowerUp Rewards program are combining with our traditional strengths in merchandising and operations to create a shopping experience for consumers unlike any other in video gaming. Investing in our strategy paid off in the fourth quarter, and we believe will continue to do so in 2011. In terms of console gaming, we continue to gain share during this holiday, establishing new market share records for GameStop for both the holiday quarter and year. Hot titles brought core gamers out while in-store digital sales of DLC extended the play beyond the first campaign. As GameStop introduced console digital DLC for the first time this holiday, thousands of consumers bought both physical games and DLC in our stores. The launch of Microsoft's Kinect and Sony's Move provided new options for gameplay and consumers made the Kinect the must-have gift for holiday. Our Pre-owned business grew to a record volume in 2010 and Rob Lloyd will give you details on that growth. Organizationally, we have restructured our merchandising teams to drive greater focus from the New team on emerging digital channels like DLC and greater loyalty and other marketing for the Pre-owned business. We are focused on a strategy to grow the Used business aggressively and will be sharing the details of that strategy at our upcoming Investor Day in April. In our international businesses, we saw improvement in Europe's performance versus prior year with continued challenges in Australia and Canada. In 2011, we expect single-digit growth in revenues and operating earnings in each international segment. Our strategy is to opportunistically grow in our mature and high potential markets; however, in struggling markets, we are focused on restructuring and closing poorly performing stores with a focus on driving down costs and increasing return on invested capital. We continue to see growth in our Pre-owned sales and margins internationally. We are also in the process of rolling out key digital initiatives in our international businesses, and during 2010, we expanded our e-commerce business by adding sites in Germany, Ireland and Spain. Leveraging the investments in technology made in the United States over the last 18 months, I am pleased to announce we have just launched the in-store sale of console DLC for our customers in France. This is the first step in offering DLC to all of our customers globally as we move forward with our multichannel strategy in each market. As some publishers have acknowledged, the NPD data that many investors use as a proxy for the video game category measures less of our complete business every day. Our console digital offerings, our PC digital businesses, our Pre-owned business, our casual game portals and our international segments are not measured by NPD data. Rob Lloyd will be sharing some of our new segmentation with you in his remarks today, and at our investor conference, you will get insight into the market model we have developed for both console and non-console gaming, both physical and digital, going forward. A few words on the status of our very successful loyalty implementation. We rolled out PowerUp Rewards nationally during October after a four-market test, and the results have been well ahead of our expectations. We now have well over 8 million members across the United States in just a few months, and their collective game library is hosted at PowerUpRewards.com -- include over 90 million games. Members shop us with 3x the frequency of non-members and the average member has bought from us 3.9x since joining the program. We are using the PowerUp Rewards program as the core of all new title-launch marketing, pre-owned awareness and promotion, and even in the real estate area to facilitate store consolidation. The program allows us to communicate personally with millions of gaming consumers and their feedback has been extremely positive. In terms of new stores, we continue to make progress in understanding where our customers shop based on the PowerUp data file. We have announced that we will not add any incremental square footage in the United States during 2011, as well as opportunistic growth internationally. As a product of our merger with Electronics Boutique and lease expiration opportunities, we can consolidate customer traffic from multiple stores into one based on our customer database. We can also clearly identify voids and tertiary markets where consumers are traveling long distances to shop a GameStop location. You will see, at our Investor Day, how we were able to leverage the customer data asset from PowerUp Rewards to consolidate store locations and manage our portfolio with far greater precision than before. We are pleased with the progress of our multichannel strategy, and Tony Bartel will give you details of those initiatives in his remarks. We are seeing that hybrid transactions, including both the physical and digital SKU, continue to grow, indicating to us that we are expanding the audience for digital gaming. As GameStop has traditionally done for physical console gaming, we are now introducing many consumers to a digital gaming SKU for the first time, both for consoles and PC gaming. As we look towards 2011, we are forecasting solid growth, making calculated investments and strategic initiatives for the future and continuing a responsible share and debt repurchase program. We look forward to seeing you at our investor conference on April 1 in Southlake, Texas, and I will now turn the call over to Rob Lloyd.

Thank you, Paul. Good morning, everyone. I'd like to start today with a brief discussion about our capital allocation fund. During the fourth quarter, we repurchased 5.4 million shares for a total of $112 million under the share buyback authorization from September 2010. We had approximately $138 million remaining on that authorization when we replaced it with the new $500 million authorization for stock and debt buybacks, which we announced on February 4. Since February 4, we've purchased 5.9 million shares at an average of $19.88 for a total of $118 million. In the last 15 months, we've purchased 29.1 million shares or 17.7% of our starting outstanding shares for a total of $579 million, and we repurchased $200 million in debt. We intend to execute the remainder of the current authorization over the next 18 months. Now I'll briefly recap our fourth quarter and fiscal 2010 year-end results, which set records in many areas. Then I'll provide our initial outlook for the first quarter and fiscal 2011. Total sales increased 4.8% over the fourth quarter of '09 to $3.69 billion on the strength of Kinect and new titles like Call of Duty: Black Ops and Assassin's Creed: Brotherhood. Comparable store sales for the quarter were 2.6%, with U.S. comps plus 3.7% and international comps slightly positive at 0.4%, our first quarter of positive international comps since the fourth quarter of 2008. We've also had four straight quarters of positive comps in the U.S. GameStop increased its fourth quarter new software market share in the U.S. by 200 basis points over Q4 2009. This is evidence that the PowerUp Rewards program and e-commerce enhancements improved our competitive position during the holiday season. Pre-owned product sales increased 3.7% to a record $805 million, including 5% growth in the U.S. These results reflected strength post-holiday as consumers return with gift cards to buy pre-owned. Pre-owned margins were 44.2% due to the increased promotional activity in the U.S. during the holiday season. Tightened expense controls, coupled with leverage from the positive comp, resulted in a decrease in SG&A as a percent of sales from 13.7% last year to 13.1% in the fourth quarter of 2010. Net earnings increased 10.1% to $237.8 million and diluted earnings for the quarter were $1.56, an increase of 20.9% over the prior year quarter and in line with reiterated guidance communicated on January 6. Looking at select financials for full year 2010, total sales increased 4.4% (sic) [4.3%] to a record $9.47 billion, while comparable store sales increased 1.1% including a positive 3.8% in the U.S. Net earnings were also a record $408 million, up 8.1% over 2009, and diluted earnings per share increased 17.8% to $2.65, including debt retirement costs of $0.02 per share. New software sales increased 6.4% year-over-year as we continued to gain market share, including share gains of 400 basis points in the U.S. Pre-owned sales increased 3.2% as consumers clearly opted for new products as evidenced by the sales of Kinect, new software during the year and the 9.9% increase in the Other category, which includes accessories and PC software. While we missed our forecast for Pre-owned growth in 2010, it should be noted that Pre-owned sales and gross profit hit a record high. New hardware sales decreased 2.1% during 2010, declining less than our initial expectations due to strong sales of Microsoft Kinect and Xbox 360. One very bright spot during 2010 was the 61% increase in the purchase of our digital product offerings by consumers in our stores and on our web properties. We categorized digital sales in two buckets, console digital and PC digital. Console digital includes DLC, points, time and subscription cards for consoles services like Xbox LIVE. PC digital includes Kongregate, PC downloads from our e-commerce sites and timecards for other online gaming sites such as FarmVille and Nexon. We believe our digital sales put us among the top producers of digital revenue in the North American game market. We will provide further commentary on the financial impact of digital on our future next week at our Investor Day. Gross margins were flat with 2009. Pre-owned margins were 46.2%, in the range of our guidance for the year. SG&A as a percent of sales remained flat with 2009 at 18% as we invested heavily in strategic initiatives including PowerUp, digital and e-commerce while we achieved cost savings in other key areas. The effective tax rate for the year declined from 36.2% in '09 to 34.5% in 2010 due to the accounting for uncertain tax positions and the expiration of audit statutes. We ended 2010 with over $700 million in cash. Total company inventory levels increased 15% on a per-store basis year-over-year. This change is due to efforts to improve in-stock positions in the U.S., primarily on hardware and hot titles. In addition, inventory to support Kinect and Move has added to our inventory levels. As you may recall, hardware was in incredibly short supply in early 2010, and our inventory levels back then were abnormally low. That is less of a factor this year, and we are adequately stocked (not overstocked) as we move through the first quarter. Inventory turnover was comparable at 5.19 in 2009 and 5.14 in 2010. Our AP leverage declined from 91% to 82% due to earlier and larger purchases of hardware. 2010 CapEx totaled $198 million, primarily used for technology initiatives including the rollout of PowerUp loyalty, in-store DLC and e-commerce upgrades. We also opened 359 stores and closed 139 stores. With fewer openings and more closings than planned, our net store growth was 27% less than our initial plans. We ended the year with 107 additional stores in the U.S. and 113 international. Now for the 2011 financial outlook. We are confident in our ability to deliver a year of revenue and EPS growth. Full year 2011 revenues are projected to grow between 6% and 8%, with comparable store sales ranging from plus 3.5% to 5.5%. This revenue increase is due to the benefits we are seeing from previous investments in PowerUp Rewards, e-commerce, DLC and digital. We also expect consumer purchases of our digital product offerings to increase in 2011 by a growth rate similar to 2010. We will speak more about our strategic investments on our Investor Day on April 1. Earnings per share for the full year are projected to range from $2.82 to $2.92, representing an EPS growth rate of 6% to 11% based on 2010 EPS of $2.67, which excludes debt retirement costs. Gross margin dollars are expected to increase 5% to 7%, with a slight decline in gross margin rate due to the up-front costs associated with the continued growth in PowerUp Rewards. PowerUp drives sales and gross profit dollars, but the cost of signing new members impacts margin rate in the short run. Operating margins are expected to decline by 40 to 60 basis points due to the gross margin impact from loyalty and increased SG&A expenses to support our strategic initiatives. As we mentioned in the release, we expect to invest an additional $26 million or approximately $0.12 per share in these initiatives. Given the success we had in 2010 as a result of our past investments, we believe these continued investments will pay off in the future. For 2011, GameStop's capital expenditure budget is $170 million, a 14% decrease from 2010. This includes $70 million related to new store openings and remodels, while $100 million will be used for technology systems in support digital initiatives, global distribution and loyalty program support. Capital expenditures for stores are planned to decline 20% from 2010. We expect to generate approximately $600 million in cash flow from operations, resulting in approximately $430 million in free cash flow. For the first quarter of fiscal 2011, we expect comparable store sales to range from plus 4% to plus 6%. Diluted earnings per share expected to range from $0.53 to $0.55, a 10% to 14% increase compared to $0.48 in the prior year quarter. Now I'll turn it over to Tony for his comments.

Thanks, Rob. I'm pleased to have taken you on our digital and e-commerce performance in the fourth quarter. On GameStop.com, we had a productive fourth quarter as we made significant upgrades to our e-commerce platform and maintained our status as the fastest-growing e-commerce video game site, not only for the fourth quarter but for the full year as well. Our e-commerce business grew 120% in the fourth quarter and more than doubled for the full year. Enhancements to our product pages, check out and our pick-up-at-store process continue to drive significant e-commerce growth. On the digital front, we continue to expand our digital offerings with all of our digital efforts contributing to our 61% digital growth that was mentioned earlier. Downloadable content continues to be a strong growth vehicle as our associates and our website help consumers discover this rich content. Our attach rate of digital offerings as a percent of total transactions grew by 59% in the fourth quarter. During the recent launch of the First Strike map pack for Black Ops [Call of Duty: Black Ops] on the 360 [Xbox 360] platform, we attached downloadable content to 28% of the games that we sold during the first week of the launch. And customers are using all forms of currency to access the digital content, with trade credits representing 23% of the currency used to fund the Blacks Ops First Strike Xbox LIVE map pack. The sale of digital goods is also increasing our sale of physical goods, as over half of the people who purchased downloadable content also purchased a physical good in the same transaction. We continue to expand our downloadable content offerings with both Microsoft and Sony, and we have now integrated our systems to the point where we will begin to accept pre-orders that will be digitally fulfilled to our PowerUp Rewards members at the time of launch. We are also adding third-party content to our PlayStation 3 game offerings, so we will now begin pre-selling and selling the most popular Xbox LIVE and Sony PlayStation downloadable content in our stores and on our website. We continue to see this multi-billion dollar segment as a strong growth opportunity as well as a strong enhancement to the gaming experience. Another multi-billion dollar opportunity with significant growth potential is PC digital distribution. We, again, doubled our business in this segment, and we believe that there is much more growth potential ahead. We recently announced that we have hired a new head of PC digital downloads, Steve Nix, who joins us from ZeniMax-id Software. Steve has rich experience in the development and management of digitally distributed games and platforms, and we are committed to providing him with the team and technology that he needs to grow our market share in the download PC digital games. Kongregate continues to see strong traffic and revenue growth as fourth quarter traffic increased 55% and revenue grew 47%. We've increased the number of games that monetize through virtual currency threefold and have nearly doubled our virtual currency revenue versus last year. We also integrated PowerUp Rewards into the site, allowing Kongregate players to earn PowerUp Rewards points for achievements that they obtain. Our multichannel strategy is working, as traffic generated from GameStop properties is monetizing at a rate that is 12x higher than the average monetization rates on Kongregate. Finally, we launched our Kongregate Arcade app for Android-based phones and tablets and have already seen hundreds of thousands of people download this app. With that, I'll turn it over to the moderator for questions.

[Operator Instructions] We will move to Tony Wible with Janney [Janney Montgomery Scott LLC]. Anthony Wible - Janney Montgomery Scott LLC: Two questions for you this morning. The first is, I guess, Amazon had some comments out about the 3DS pre-order activity breaking records. I was wondering if you guys could comment on that for yourself. And then secondly, on the Used margin, can you give some color on how we should expect you guys to manage that margin going forward? Is the goal to manage the margin in order to kind of drive the revenues?

First I will ask Tony to comment on the 3DS. By the way, I think that comment was from the U.K, if I remember correctly. It was the U.K. So it wasn't U.S. But go ahead, Tony.

We are seeing very strong demand for the 3DS. We've been working very closely with Nintendo to maintain our reservations, to keep them open, and Nintendo has been very good with providing us with additional supply of 3DS so that we can keep our reservations open. But demand has been so strong that, literally, we are working every day with Nintendo to ensure that we have sufficient product. And they have been very good partners on this, and we fully expect to have sufficient product at launch, but demand is very strong.

Then on Used margin, Rob, you want to take that?

Sure. The quarter started slower for Used than we'd hoped. And in December, we executed additional promotions that we thought would provide greater value proposition for our customers during the holidays, perhaps a little bit more than we needed to. We expect Used margin rate to return to normal in Q4 2011, and we'll elaborate more on our strategies around Used next week. J. Raines: Yes, Rob. This is Paul, Tony, if I can jump in on this one. Used is an important lever of the business, and you'll hear more in Investor Day, but, really, we're focused on the cash flow from the complete business. We take a portfolio approach to what we're doing. When you look at our digital growth, our new and record market share of new software, $580 million of stock and debt buyback, PowerUp Rewards -- we feel that our portfolio approach is working and we think it will continue to work. So I just want to make sure we reframe that when we talk about one segment versus looking at the overall. One more point I would make to add to Tony's comments is if you haven't played with the 3DS, come down to a GameStop on Sunday if you can, take a look at this device. I think you'll agree it's very compelling, game changing kind of gameplay. So please come and see us on the 3DS. It's pretty hot. Anthony Wible - Janney Montgomery Scott LLC: One last, quick, follow-up, if I may. Is Kongregate -- seems to be one of those assets that just isn't really fully, I think, understood by all. If you talk about the platform that you're on now with, I think, the Android devices and your ability to go to more devices, is there any possibility of getting that for instance on, say, the Sony device that was recently announced: the PlayStation Phone?

We'll provide a lot more detail on that at the investor conference. But right now, our device works on any -- our application works on any device that is Android-enabled. And so we are expanding that to other platforms as well. But any device that is Android-enabled will run the Kongregate Arcade, so it runs on smartphones and tablets as well. J. Raines: And remember, you can download the Kongregate app from the Google market. And it downloads really well, and it plays extremely well on any Android phone.

I believe the Sony tablet -- Sony phone would probably be an Android phone. I don't know, but I mean [indiscernible] not going to be iOS...

[indiscernible] so we'll see what that platform is, but we will expand that to other platforms during this year. And we'll talk about that more in our Investor Day.

We'll take the next question from Colin Sebastian with Lazard Capital. Colin Sebastian - Lazard Capital Markets LLC: I guess first off, guys, you're guiding to accelerating growth in revenues in the current year. Maybe you can talk about sort of the industry from a packaged-goods perspective, how much of that may or may not be part of the growth. Or if we're really starting to see now just increase in velocity and acceleration due to the digital initiatives and PowerUp really starting to move the needle on the top line.

Tony, you want to talk about the packaged goods assumptions?

Sure. In the packaged goods industry, we expect to see flat to 3% in new video game software in the U.S. So that's our estimate going in. Obviously, what we believe is going to happen is there's going to be tremendous acceleration in the digital business. We see that growing over 20%. We see DLC, in particular, very much -- a very strong growth vehicle next year. So the category, the digital category, we see growing 20%. Obviously as Rob said, we believe that we're going to significantly outpace that and grow with growth rates similar to what we saw in 2010.

So just to be clear, the 20% was the industry, and then we expect growth similar to what we had last year. You may want to give some color on recent DLC...

Yes. It's interesting. Just to give an example where that growth is going to come from for us in the next year, if you just look at DLC alone, we are going -- are on pace to sell more DLC in the first quarter this year than we sold all of last year. As you recall, some of these programs were not launched in their entirety until later in the year, so that rollover impact is going to have a massive growth effect on our digital rate next year. J. Raines: DLC, guys, is a very interesting phenomenon that's happening. GameStop is introducing what I call, we're introducing mom and dad to DLC. So lots of consumers who've never even understood what DLC is are getting introduced to it. They like it and they are buying more and more DLC at GameStop stores. Colin Sebastian - Lazard Capital Markets LLC: I don't want to let the cat out of the bag out for your Analyst Day, but the $290 million in digital revenues, growing 61%, I don't believe that includes just your regular e-commerce business. But applying some normalized growth rates to that, I mean, this should be at least a $0.5 billion business for you guys in a couple of years. Is that kind of a fair assumption?

Yes, Tony?

Actually, it does not include the sale of physical games off of our e-commerce site, so that is a totally separate, fast-growing stream of revenue that we have. But, yes, we do believe that the digital business is going to grow at similar rates, so you can put that into your model for next year and, obviously, see a very strong growth rate and very strong business there. J. Raines: And I think in Investor Day, you'll see what we expect the four-year growth rate on digital. We'll share that.

That's the market model I referenced in my remarks. Colin Sebastian - Lazard Capital Markets LLC: And then just lastly, if you could talk about some of the key software titles you expect for the coming year and maybe how some of the recent releases have been performing. That would be helpful.

As we talked about earlier, we've seen significant market share growth. We saw significant market share in the fourth quarter. We continue to see strong market share gains as on recent launches. Pokèmon Black & White were extremely strong for us. Dragon Age 2 and Homefront were strong as well. We increased market share and had strong sales. We're obviously very excited about Nintendo 3DS. Super Street Fighter IV, The Sims, and nintendogs are all going to be very strong titles there. Mortal Kombat. We're seeing very strong reservations for Socom 4, Portal 2, and then L.A. Noire, we're also seeing very strong reservations. That kind of gives you a good update on what we see in the second quarter.

The next question in line will be from David Magee with SunTrust Robinson Humphrey. David Magee - SunTrust Robinson Humphrey, Inc.: Just a couple of questions on the PowerUp program. I'm curious if you can quantify just sort of a rough assumption in terms of just the earnings impact of that program in the fourth quarter. And then as far as you're looking ahead, what sort of assumptions you're making as far as the growth in that 8 million member number for 2011? J. Raines: Sure, David. I think Rob would not allow me to make any kind of earnings assumptions on PowerUp. I'm not sure we're ready for that, but let me give you some color and maybe help you think about it. Remember, we made a choice in the third quarter to accelerate PowerUp and that was based on what we saw in our pilot markets. We're pleased that we're well over 8 million members. We added 1 million members in December alone, so our pace of growth on PowerUp is very, very strong. I really don't want to make any forecast on where it's going to grow. You'll see a lot of detail on that next Friday at Investor Day. As far as where it's headed, there are many interesting pieces that we are just trying to understand. One of those is that PowerUp members trade and buy used at a much higher penetration, and the awareness of used and pre-owned in our business is driven by our marketing through PowerUp. So as we grow that file, it's becoming a real resource in the real estate area, it's becoming a resource for new launches, it's driving digital content. As Tony mentioned, we're using the PowerUp technology to send consumers their digital codes for DLC. So that asset continues to grow. And as I said earlier, our game library, for example, which is that personalized library that you have as a member, has over 90 million games in it now. And that's an enormous, rich marketing asset that we can use to launch games and so forth. So I will probably leave the rest of the details for next Friday and we'll stay away from any kind of earnings impact on PowerUp. David Magee - SunTrust Robinson Humphrey, Inc.: Is there a way to sort of estimate what percent of that 8 million members just sort of remain active or, say, active in the last three months? Or is it too early to make that kind of a metric? J. Raines: Well, we have lots of data around that, probably none that I would want to share right now. I did say in my remarks the average member has shopped us 3.9x since joining the program, and as you know, the program is not that old. So there's a tremendous frequency effect, which is what we were going for when we launched the program, and one of the things we're finding is that the program is much more than just a so-called loyalty program. It's becoming very much a personal relationship between GameStop and the consumer. We track your games, you send us things, you get points. It's become a very interactive process with consumers. So the rate of growth is strong, the frequency is strong and getting stronger and we're finding that our heavy consumers are increasing share wallet.

And moving along, we will go to Mike Hickey with Janco Partners. Michael Hickey - Janco Partners, Inc.: Rob, real quick, just a couple of housekeeping. Your foreign exchange impact for the quarter and then your non-comparable store sales, if you have that.

I don't have the non-comparable store sales in front of me. The foreign exchange impact for the quarter was approximately $30 million downward on sales and about $2.5 million downward on operating earnings. Michael Hickey - Janco Partners, Inc.: And then another question on the 3DS. I don't know if you guys are doing any midnight store openings, if that is just function of supply at the moment. And then I'm curious if you can kind of reflect on how the 3DS is taking shape versus other DS releases. And then I'm also curious if you have any insight into whether the 3DS buyers are new DS consumers, or if you just see kind of an upgrade cycle from current DS installed base.

Two things we're actually doing on the 3DS to help the launch. In 1,400 of our stores we'll actually be having -- on Saturday we'll actually be having demo days, like Paul articulated. Coming in and seeing this device is really the greatest way to experience it, and so that really is a unique experience. So we will have midnight launches for the 3DS in many of our stores. It'll be based on the volume of reservations, so not of all of our stores will be doing the night releases, but we will be doing a significant number of midnight releases for the 3DS. In terms of the type of customer that's coming in, obviously, one of the things that we do really well is execute our buy-sell-trade model, and at a $250 price point, it is a very attractive offer where you could come in and bring in your DS Lite or your DSi or your DSi XL and trade it in for $50 or $75 or $100. So we are seeing a lot of activity on the trade side of that. So that would indicate there's a lot of people who are current DS users; however, we're also seeing -- it is such a unique device that we are seeing a fair number of people that seem to be new to the DS category coming in as well. It really is a very unique experience. If you have not had a chance to have hands-on experience, you can try it on Saturday or definitely get there on Sunday. Michael Hickey - Janco Partners, Inc.: Yes. I've tried it. It's awesome and the kids love it for sure. It's obviously a unique experience. And last question on the Kinect platform. Obviously Microsoft has done a phenomenal job at really growing that platform's installed base. I'm just curious what you're seeing in the market today in terms of software sales attach rate, and if you think that this thing is just kind of connect more to the holiday and what you're hearing from publishers in terms of getting games out to support the installed base?

It continues to have very strong demand. Fortunately Microsoft is meeting that demand so we have strong demand, good supply, those in stock and we continue to see strong sales of the unit. Attach rate is where we anticipated that it would be. And we obviously just got back from a meeting with all the publishers that we do about this time every year. And we talk with them, and most publishers are developing games for the Kinect platform. So we were happy to see that there is strong support for the Kinect platform.

Mike, the non-comparable sales were about $100 million in the fourth quarter.

And moving along, we will go to Brian Nagel with Oppenheimer. Brian Nagel - Oppenheimer & Co. Inc.: I wanted to ask, just dig a little deeper on it. I think one of the prior questioners asked, too, but about the Used margin -- I'm sorry, the margin on used games and we saw the deceleration from earlier in the year to Q4. Was that simply a different promotional cadence that you assumed through the end of the year? Or was there something else to cause that sequential shift, so to say, in that trend?

Yes. As we said, there was increased promotion at holiday. We put that into the mix of activity that we did at holiday, and were a little more aggressive this holiday, probably, than we had been. Brian Nagel - Oppenheimer & Co. Inc.: And then as far as -- was that -- there's been a lot of noise out there about other entrants, so to say, into the used game. Our store checks suggests we haven't seen much now yet, but are you starting to something -- as you look at your data, are you starting to see some impact of potentially a more competitive environment there in Used?

We have lots of data on that and we have seen absolutely no impact from competitors. And the way we look at that is, we look at stores adjacent to competitors, we look at volumes of those stores, et cetera, and we've seen no impact from those competitors in the Used business. J. Raines: Brian, as we spoke about back in January, what we're seeing is that when there is strong new product, the consumers are going for that new product. Brian Nagel - Oppenheimer & Co. Inc.: And just one if I could, just one, larger -- or bigger-picture question as well, or thought, I guess. So there's been some chatter lately about broadband providers charging more for broadband access. And I know this is one of the concerns that weighs upon your stock is direct download of video games. Again, this chatter's been kicking up, any thoughts from you guys as far that threat to your business?

Tony, do you want to take that?

Sure. I think it's very consistent with what we've been saying for the last 18 months, that the download of full-sized games is a very difficult proposition, given the broadband limitations that exists in the United States and frankly, just globally. And so, it's not a surprise to us given the fact that there's so much volume on the Internet infrastructure today. So that's the reason why we decided to move so strongly into the DLC business, because that is not taxing to today's infrastructure. It's a very simple download. We continue to work with Microsoft and Sony to reduce the amount of friction that's involved in getting that delivered to the system. But we believe that DLC offers a great alternative because it's not a huge download. It is accessible on the current infrastructure. And so, like we've been saying for the last 18 months, if we were going to go to full digital-downloaded games, the infrastructure would not support it. I think this is just indicative of that fact. J. Raines: Brian, we're going to let you buy some DLC next week at a GameStop, and I think you'll see what that experience Tony's talking about. The other thing is the AT&T announcement, they put dollar numbers around what was already a challenged business model. So now I think you can model what the impact could be to try and to buy a full game via -- the economics just get tougher and tougher on that, is what we see.

Next question in line will be from Bill Armstrong with CL King & Associates. William Armstrong - CL King & Associates, Inc: The $100 million of CapEx and $26 million you're expensing on digital initiatives, I was wondering if you could maybe just give us a little more detail on what specific items those are going to be spent on? J. Raines: Sure, I'll turn it over to Rob here. Rob, you want answer that?

Well first of all, the $100 million is not entirely on digital. It's on digital. It's on a lot of systems and infrastructure, on technology, development, et cetera, rewards enhancements, et cetera. So the $100 million is not purely on digital. It's on four or five major initiatives. J. Raines: $26 million in incremental expense, Rob, you want to take that?

Yes, I guess first, just to complete a thought on the CapEx. Just part of what we anticipate is the CapEx that'll be required as we continue to make digital acquisitions. And then I will point out that last year, we had the planned distribution expansion in our Australian location, and we spent approximately half of what we intended to last year as that project is going a little lower and we'll finish that up in 2011. So a portion of the spend is to complete that facility. I think what Dan kind of covered, where the $26 million goes and that's into the initiatives that we've been talking about -- PowerUp Rewards, e-commerce, digital -- that will continue to grow and expand next year. J. Raines: As you can imagine, Bill, there's a portfolio of things that we're trying to look at. Tony's Digital Ventures team, and then you look at our CapEx reductions that we're making on the legacy/traditional side and that frees up some capital. So there's a portfolio approach there of where we're trying to invest and make sure they're as productive as last year's initiatives. William Armstrong - CL King & Associates, Inc: So when we're modeling the out-years, should we assume that this $26 million is sort of a recurring expense, then? In other words, that we should see something like that each year?

I don't know that I have a number to give you on that for the out-years. But the one thing that I will point out is when you consider your model, is that the investments we make on the CapEx side will have a depreciation run-out in the future. William Armstrong - CL King & Associates, Inc: Right. But the $26 million part, I assume which would mostly be in SG&A, we should not consider that just to be some non-recurring, onetime type of item?

Well, again, it's hard for me to sit here today and tell you what that spend might be in 2012 or 2013. I'm sure there's a component of it that is more onetime in nature, and there's going to be things that become recurring. I can't give you specifics on the amounts unfortunately.

However, at the end of the day, those spends are going to be driving revenue. Okay? And so you may have a little bit of up-front loading here in 2011, but you're going to see them driving revenue into the future.

Revenue and earnings.

And earnings, right. William Armstrong - CL King & Associates, Inc: On another topic, you're going to have some opportunistic expansion internationally. Your international markets have underperformed the U.S, so you're pretty much stopping net square-footage growth in the U.S., but also you've got to expand a little bit more internationally. I was wondering if you can give us your thought process on that.

Okay. Mike, you want to take that?

Sure. I could add to that. With the continued rolling out of best practices and investments in technology, as Rob mentioned, we're starting to gain some momentum. So in Q4, international popped up 0.4%, and we expect this year for international to have single-digit growth in revenue and sales. From a growth perspective, our growth strategy going forward really will vary by market segment. So in mature markets, we'll have opportunistic store growth. And in high-potential markets such as Italy and Germany, we will continue to see investments there, as well as some controlled store growth with increasing profitability; however, there are some struggling markets where there will be some restructuring, as well as closing of underperforming stores with a real focus on driving down costs and increasing ROIC. William Armstrong - CL King & Associates, Inc: And then finally, on capital allocation. The share buyback clearly are accretive to earnings. Has the board seriously considered starting to pay out a dividend on a quarterly basis, because even if you took a fraction of this $500 million that you seem to be targeting annually and use it as a dividend, the yield on your shares right now at $21 obviously would be very high, and I think could be very accretive for shareholders. What are the board's thoughts on that?

Our capital allocation right now includes allocating capital for the initiatives we talked about and share buybacks, and does not -- and debt reduction and does not include a dividend at this time.

[Operator Instructions] The next question will be from Arvind Bhatia with Sterne Agee. Arvind Bhatia - Sterne Agee & Leach Inc.: One question I did have is: On the hardware side, I'm wondering what your assumptions are for 2011. Specifically, are you viewing any kind of price cuts in your numbers, especially as it relates to the same-store sales guidance that you have for the year? And on the Kinect and Move markets, what kind of growth you might be looking for in 2011. And then just wanted to also understand some of the real estate strategy perspective. Should we look at 2011 as sort of the way to think about going forward? In other words, net square footage zero, or should we be expecting perhaps more store closings in 2012 than openings? Any kind of color there would be helpful as well.

First, I'll ask Rob to give you the color on the hardware.

Yes, I might defer to Tony on specifically what he sees for Kinect and Move, but overall in hardware, because of the 3DS launch and what we think that is going to bring, we do expect growth there. J. Raines: And we have not made an assumption on price cuts at all.

We have no visibility into that.

We have no pre-knowledge of price cuts on any of the platforms, and we do expect Kinect to continue to grow very aggressively. We have struggled to stay in stock on the Sony Move controllers. There's tremendous amount of demand for that, and provided that we're able to get into stock and we don't have any unforeseen shortages in Japan, we should see strong growth there as well. J. Raines: On the real estate side, Arvind, I think the net zero number you see for 2011, you can probably expect that, that will be a starting point for us going forward. But what's interesting, I think, that you need to understand is that historically, traditionally, the way to expand customer demand was to penetrate geographies that customers weren't in. What's happening now with PowerUp Rewards is, we now have a knowledge and an asset of the customer spend independent of store. We actually know at an individual level where you shop, and if you shop a mall, you shop the strip. On weekends, you go one place, on weekdays you go another. So we can use that data to look at our portfolio. As you know, GameStop is a series of acquisitions and mergers. So, for example, with EB, we have a lot of stores were you'll have an EB and a GameStop very close to each other. So using the PowerUp program, we're able to identify where those consumers shop and be very smart about consolidation. And we can even provide incentives to consumers to migrate from one store to another. So we're heavily engaged with that and that's where you see the 200 closures come in. At the same time, we renew 20% of the portfolio every year, as you know. We have great opportunities every year to eliminate leases or move stores. But we also have real good visibility now to tertiary markets where I may be driving 30 miles to go to GameStop, or there may be a town somewhere in the rural area that's got 1,000 customers driving to a GameStop 15 to 20 to 30 miles away. So we can penetrate those markets, particularly if there is a large, big-box competitor who doesn't have a competition. So all of that rolls up into a scenario that's becoming more and more efficient. And you see the impact that has on capital allocation from Rob's remarks, and I think you'll see a very good view of that next week at our Investor Day. We'll share with you some of our new technology that we're using to integrate PowerUp Rewards with the real estate selection process. Arvind Bhatia - Sterne Agee & Leach Inc.: So along those lines, I'm curious what happens when you close a store. Is there some way to think about what percentage of the customers transfer immediately or maybe over the course of six months or something like that? It sounds like you're able to track them pretty well, Matt. Obviously, the store that remains open benefits from sales that gets transferred and better margins and what-have-you, better sit [ph] for sales. Can you provide some color along those lines for us today? J. Raines: Arvind, the consolidation -- the transfer and consolidation is a very profitable scenario for us when we do it right, but I'd rather really hold that until our Investor Day. We're going to show you some math and some case studies there that are going to give you a view as to how that works. But it's a very positive impact for us when we do it well.

The final question for today will be from Mark-Andre Saucier-Nadeau with Goldman Sachs. Mark-Andre Saucier-Nadeau: I was wondering, in the first quarter, could you just give a little bit more color in terms of where we're tracking for different segments, and how do you see the progression or what's the progression that's embedded in your full year guidance for some of those segments? That would be very helpful. And the other piece would be how flexible the incremental expenses are if ever you need to cut back on those eventually.

Okay, Rob?

Yes, I'm not going to get into too much detail on how the quarter is progressing segment-by-segment. We'll tell you that, as Mike indicated, we're expecting single-digit revenue growth and operating earnings growth in each of the segments for the year. In terms of the flexibility of the incremental expenses, I'd have to look at exactly what's what under those covers. I don't have that data in front of me, but I will point out that one of the reasons we were successful in the fourth quarter is that -- not just with respect to expenses on initiatives, but within the overall business, when we saw that the Used business in particular was not getting off to the kind of start that we wanted to in the fourth quarter, we exercised some extensive cost control measures and as a result, we were able to gain some leverage in SG&A that helped us in the quarter. And I would expect that, as we move through 2011, should the need arise to execute similar types of programs we'll be able to do that as well. Mark-Andre Saucier-Nadeau: Actually on those cost control measures, could you discuss what kind of measures you're implementing?

I don't want to get into a lot of details on that.

Thank you for attending today's conference call. And we look forward to continued earnings growth in 2011, and we will continue to execute on our strategic initiatives which will help us grow market share and provide us with a strong digital growth. Thank you very much.

Ladies and gentlemen, this does conclude today's conference call. Thank you for your participation.