The new store performance has continued to be very good. In the second quarter, the stores that the firm had put in tertiary markets that are anchored by a Wal-Mart seem to be somewhat slower than what the company had anticipated and that was predominantly due to gas prices and fewer shopping trips per week. That clearly seems to have been behind the firm, even though Wal-Mart didn’t report particularly strong October quarter. The company has seen those tertiary stores begin to come back and the management is very positive about the performance of the new stores.

Have you been experiencing any shortage of the PlayStation 2 hardware sales? Has the sales been very strong particularly with the Silver edition?

No, the firm has not to date experienced any shortages, although the Silver edition is a sellout. Even though the firm has been resupplied but that will be out of stock. But overall, the firm is in stock with PS2s. The management can''t guarantee that will occur or stay that way throughout the quarter, neither can Sony.

What is the expected annual tax rate?

The firm is 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%.

You mentioned that used inventory is higher per store. How are you managing the inventory per store because you are having much less shelf space and how are you allocating space for the PS3 as a percentage of total square feet?

On a per store basis, the firm has a regional stock balance program. The stock balance is the inventory among stores and the firm keeps the inventory moving in the stores where it''s needed and it will start with that. Secondly, space is a concern. In the firm’s stores, you see the 999 games are in dump-bins, off the wall where space is more valuable and they are in dump bin 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. The management is very focused on managing the space in its stores, in its inventory and making sure that everything is in alignment. The company has been through this before as platforms will leave next year, the PS1 platform will exit GameStop stores on the used business as its contribution has become very insignificant and so will the N64. The firm will continue to manage the space as it always has.

On the PS3 and the Wii, you previously had said that you were expecting 1 million PS3’s and 750,000 Wii’s. Does that number still stand?

The company was looking at 1 million PS3’s and 750,000 Wii''s. At this point, the management has not changed those numbers, but obviously they have changed. The firm’s assumption is that any shortfall in the number for PS3 will be made up with additional Wii''s. The Wii''s obviously are a lesser price points so there would have to be more Wii''s to make up for those dollars. But at this point, the firm’s same store sales guidance of 14% to 18% should cover whatever happens with the PS3 or Wii''s.

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?

The firm obviously has been 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, the management is not ready to forecast what the gross margins will be for next year.

For this holiday season, in terms of competition and your preparation, what are you doing different this year compared to last year?

The company is doing significantly more external advertising this year than what it has done last year. As far as the preparation for competition, it''s as usual.

The company is anticipating a broader base of customers drawn into its stores mainly because of the Wii and the DS Lite. The firm has changed its merchandizing particularly in its mall stores somewhat more dramatically as a result of that. The firm believes that the customer this year is going to need more help, more direction and more knowledgeable sales people and it''s very clear that it is going to be delivered at GameStop.

What do you estimate your market share in North America to be at this point?

In total, the company’s market share is roughly 25%. But, that varies dramatically by platform, but in total it’s about 25 percent.

If you look at the European market, how was same store sales performance in the quarter? How is the business performing in Europe, in general with the inter-launch especially given the delay of the PlayStation launch there?

Europe is doing well, and in general their same store sales for the year have been somewhat higher than the US. The firm doesn’t break out the numbers individually. The company has got rapid growth countries and Germany and Italy are performing extremely well, and the firm has repositioned in Nordic, which has done a phenomenal job this year and is starting to get momentum. Spain is the new kid on the block and the management is watching it very closely, but they are completely different places and different countries. Overall, the firm is very happy with Europe and will be expanding in all of these countries.

Looking at next year and the 300 plus stores you are talking about adding internationally, how many of those are you expecting to put into the European market?

The European market will probably be the majority of those stores and the management does not want to get more specific than that. The the management believes that there is growth opportunity in markets that it is already serving.