Good day, ladies and gentlemen. Thank you for standing by. Welcome to Best Buy's Conference Call for the Fourth Quarter of Fiscal 2011. [Operator Instructions] I would now like to turn the conference call over to Mr. Bill Seymour, Vice President of Investor Relations. Please go ahead, sir.

Thank you, Alicia. Good morning, everyone. Thank you for participating in our fiscal 2011 fourth quarter and full year earnings conference call. We have three speakers for you today: Brian Dunn, our CEO; Mike Vitelli, our Co-President of the Americas; and Jim Muehlbauer, our CFO. And after our prepared remarks, I anticipate we will have plenty of time for your questions. Before I pass the call over to Brian, I'd like to take care of a few housekeeping items. First, we would like to request that callers limit themselves to a single question so that we can include more people in our Q&A session. And as usual, the media are participating in this call in a listen-only mode. Let me remind you that comments made by me or by others representing Best Buy may contain forward-looking statements, which are subject to risks and uncertainties. Our SEC filings contain additional information about factors that could cause actual results to differ from management's expectations. I'd also like to remind you that Best Buy will be having an Analyst Investor Day at its corporate campus on April 14. If you would like to register for this event or need further information, please contact Investor Relations. For those of you that cannot make it in person, the event will be webcast and available on our IR site. You will also note that our reported results this morning included detailed information regarding the impact of the restructuring activities we announced on February 22. I ask that you please refer to our earnings release to understand how our announced restructuring affected our fourth quarter year-end financial results within our Domestic and International segments and across the company as a whole. The adjusted numbers we will be discussing today do not include these charges. It should not be confused with the GAAP numbers we reported this morning in our earnings release and the GAAP numbers we will report in our 10-K. For a GAAP to non-GAAP reconciliation of our reported to adjusted results, please refer to the supplemental schedule on Page 12 of this morning's news release. With those housekeeping items aside, I would like to turn the call over to Brian Dunn.

Good morning, everyone, and thanks for joining us on our fourth quarter and full year earnings call. Before we begin today's discussion, I want to pause and reflect on the horrific events in Japan. We've all been moved by the pictures of destruction in that country, and our heartfelt sympathy goes out to the people of Japan and the many vendor partners and friends of Best Buy who live and work there. Since the tsunami struck on March 11, we have been in close contact with our business partners in Japan and they know that we will support them to the best of our ability as they work to recover and rebuild from this tragedy. Our thoughts and prayers are with everyone affected by this disaster. I'd like to cover a few things this morning. A quick recap of the fourth quarter, a look back at last year and some thoughts and priorities for this new year. First, the fourth quarter. Jim will provide you with a detailed overview of the quarter, but I'd like to highlight a few things. Gross margin improvements continued, a true reflection of the increased profit levers we have developed and highlighted via Domestic segment. Adjusted margins that were up 90 basis points. We demonstrated expense control in the quarter. Total company SG&A was up only slightly, as we reduced spending in response to the sluggish sales environment. Now, looking back on the full year, we faced a restrained consumer in a difficult industry environment during the year, especially in televisions. The TV market was down significantly last year, caused in large part by demand for IPTV and 3D TV that did not materialize as the industry had anticipated. But despite these challenges, I'm pleased with how we responded and executed. We wanted to improve…

Thanks, Brian. One clear incremental opportunity for us is to grow in specific areas of our business. There are several areas in our store where we believe we have a powerful value proposition, with a great brand fit but our share is low. And we believe with effective communication and great execution, we have the opportunity to pick up additional share. First, mobile. Best Buy Mobile has been executing very well and we've gained share. But despite that strong showing, our share is still only around 6%. We're seeing solid momentum in this business. We're growing the footprint of mobile in our big-box stores to add additional accessories. And as we announced last month, we're planning to open an additional 150 mobile standalone stores, taking the count to a total of approximately 325 stores by the end of this year. In addition, our new Buy Back Program is especially relevant to mobile phone consumers, and we're seeing strong attach rates as well as increasing buyback attach rates when bundled with Geek Squad Black Tie Protection. Our biggest obstacle to growing mobile share appears to be awareness, and we believe the store count growth, supported by advertising to drive consumer awareness and smart promotions like Free Phone Fridays will address the awareness gap and accelerate our growth. Last year's hot product was the iPad, and we had success with the iPad and now again with the iPad 2. As choice becomes more important in the emerging tablet category, we are best positioned to showcase the choices and inspire our customers to the art of what's possible. We offer the ability to touch and try all the models side-by-side. We have employees who can explain the differences between the different products and platforms, offering unbiased advice. Best Buy customers can maximize the…

Thanks, Mike, and good morning, everyone. I'd like to start this morning by recapping our fourth quarter financial results, and by providing some additional color on our performance. Then I'll recap what we set out to accomplish in fiscal '11 and how we performed against those goals. We will close with our thoughts on how we currently see fiscal '12 playing out and the resulting financial guidance. As Bill noted up front, the numbers we will be discussing exclude the restructuring charges detailed in our release this morning. This morning, we announced adjusted fourth quarter diluted earnings per share of $1.98, which was up 9% versus last year. As Brian mentioned up front, we are pleased to continue the theme of strong gross margin performance, driven primarily by strength in our key connectivity category, Best Buy Mobile, along with disciplined SG&A spending set against the consumer demand backdrop in our industry. Let's quickly run through some of the key headlines. First, in the fourth quarter, revenue declined 2%, driven by a comparable store sales decline of 4.6% and partially offset by new store growth. In our Domestic segment, fourth quarter revenues decreased almost 4% from last year to $12.1 billion, as comparable store sales declined 5.5%. While on the surface, this decline appears similar to what we experienced in the third quarter, the trend was actually modestly better when you look at the two-year comp and consider that domestic comparable store sales were up over 7% in the fourth quarter last year. The decline in comp store sales was driven primarily by a couple of factors. First, the industry continued to experience lower demand in key categories, including TVs and notebook computers. Second, we were up against a nearly 40% comparable store sales gain last year in mobile computing, largely…

[Operator Instructions] And our first question comes from the line of Dan Binder with Jefferies. Daniel Binder - Jefferies & Company, Inc.: You spoke a little bit about pricing and what you'd like to accomplish over the next year. I was wondering if you can give us maybe a little bit more of an example of how you create -- in a world of higher pricing transparency, how you create a better price image, when in fact, someone is doing a search, whether it's on a smartphone or other device on SKU-specific pricing?

This is Mike Vitelli. It's a great question. And I would say the biggest singular thing that we're doing right now and we began it in the second half of this year is dramatically expanding our Online Only assortment. These are the people that we're competing with that have very, very broad assortments. And what we're doing, rather than just figuring out how to expand the assortment in the store, is dramatically increasing the assortment online. For example, historically we would carry 100 televisions, I'm using that as an illustration, 100 televisions within the store. Now we'll have over 400 televisions online, of which 300 will be Online Only. And that allows us to be very aggressive in the Online Only pricing, because we have a similar operating model there to compete effectively in that channel. Daniel Binder - Jefferies & Company, Inc.: If I'm allowed a follow-on to that, how will you support that? How will you support the inventory needs? Is that through some sort of a wholesaler or is that just keeping limited inventory in the central warehouse?

There's a variety of ways. Some of the SKUs we would own and we'd keep in the centralized warehouse. Others could be done through supplier direct for some that are handled either by the supplier themselves or distribution. So there's a variety of ways to do it. But to your point, it's a much lower inventory position. So a much higher return on inventory that way.

This is Brian. The strategy mike just outlined, we believe allows us to be sharper on our online pricing and create the accurate price image of the sort of value Best Buy presents each and every day to our customers.

The next question is from the line of David Strasser with Janney Montgomoery Scott.

I guess a question regarding CapEx. You talked about $800 million, can you kind of break that down? I know you tend to do it in the K, but can you break it down a little bit more detail, as far as new stores versus IT spending and sort of where the biggest buckets are and what you’re going to try and get out of it?

I'm going to turn it over to Jim in just a second, this is Brian. The frame we’ve used in or CapEx allocations this year, in the places where we have matured businesses where we are invested like our Big-Box business, our intention is to leverage those investments. It's also clearly our intent to deploy our capital and our human resource against growth areas, some of which you heard about this morning. I think maybe, Jim, you can give a little color on what some of those growth areas are.

As you would expect, as we have been lowering the number of big-box new stores over the last three or four years, our CapEx spending dedicated to U.S. big-box growth has been coming down significantly. We've also been using money over the last couple of years to remodel our existing stores and put value props in place where we know that there's high levels of consumer demand in spaces where our share is like Best Buy Mobile. So what you see happening next year is, while the capital is actually coming down a little bit year-over-year, there is a shift in capital spending that's really been a continuation of a theme in that we continue to lower our big-box capital spending, but we're ramping up our capital spend on profitable new models like Best Buy Mobile, and we're ramping up spending next year to support the profitable growth we see in China around our Five Star business as well.

And as I said in my remarks, these are proven profitable models that we're quite happy to invest in.

Other areas of investment really dovetail the parts of the business that Mike and Brian talked about earlier in looking at opportunities to improve our store environment around our Gaming business to support pre-orders and used game, and really doing something more than just a physical presence, but actually building a labor model to support customers in the gaming space, to give them the advise and service that we think could be a large differentiator in improving our sales and share in that space.

You'll also see us investing in our Dotcom capabilities which we're very enthusiastic about.

The next question is from the line of David Schick with Stifel, Nicolaus.

So, the Buy Back Program. You mentioned the attach rates are strong and I guess, how should we think about the impact on 2011 and really beyond on the margin structure of Best Buy?

I'll ask Jim to comment on the financials. I will tell you the math is early. As I mentioned on the call, we're very pleased with what we've seen so far. We love what this does for customers, and the early results indicate customers appreciate it. As I mentioned, particularly in smartphones and the emerging tablet category, very, very high acceptance. And Jim, do you want to comment or not comment on the financials?

Yes, happy to. Clearly that program is meant to do a couple of things. First and foremost, as Mike Vitelli talked about, we're using that as an opportunity to demonstrate what we can do differently for customers to increase their comforts in buying [ph] purchases. So that, for us, is really about the traffic in a closed vehicle. The economics of that, over time, will depend upon how customers actually behave and what those products actually do from a resale standpoint. But key thing for us is, we're using that as a differentiator to drive traffic, close sales. And then just as a reminder, in that program we've actually ceded the kind of residual value of the exposure of those purchases will be with a third-party. So once Best Buy initiates the fund into that transaction, we have no longer -- we don't have to continuing liability as it relates to the product.

It really is -- the Buy Back Program, I think, stands as an excellent opportunity to highlight what will be the constant innovation that goes on within our model. We take what we learn from our customers and what we know what's happening in the industry and increasingly, customers are becoming accustomed to this notion of XYZ one this year. I’ve got two next year and on and on and on, and that rhythm has created great excitement for customers, also some anxiety about buying. And I think that Buy Back is just a great example of the continuing innovation around our model.

Next question is from the line of Scot Ciccarelli with RBC Capital Markets.

You guys have obviously closed your stores in Turkey, you’ve closed the Best Buy stores in China and new store growth in the U.S. is now just over flat. Are we at the point where we may start to see your existing U.S. big-box store portfolio start to undergo some more meaningful changes?

We are constantly assessing all parts of our business. We're looking to improve returns wherever we can. I think what's really important about our strategy is we are looking to increase distribution points and customer touch points. One of the things we like so well about the Best Buy Mobile model and why we're accelerating our growth there, because it gives us additional touch points while we're accessing new customers. And you're going to continue to see Shari and our real estate team work diligently to increase the touch points and to be as efficient as possible with our space deployment.

Scott, this is Shari. A couple of things in the near-term, we think our opportunities in the big-box stores to get better returns, one is around the operating model. Mike mentioned this in his remarks. But in categories like tablets, in mobile, in appliances where we see an enormous amount of customer need that we think is still, and is very unfulfilled. We'll use different operating models in those spaces to get the right amount of labor in with the customer, in a way that we think we can get better returns. So in those particular categories, those are queued up this year for that. And then two, I would call the general bucket of space, better returns in the existing stores from a category perspective. So we've expanded the space around Best Buy Mobile, we'll expand around tablets, and as we mentioned, we'll expand around gaming and the used gaming and gaming trade-in. More broadly on real estate, yes, we've got opportunity in the big-box portfolio. We're still a little bit early, but we like what we're seeing in the connected stores right now in terms of our ability to handle the traffic, to show customers better Connected World and multichannel value propositions in a less space. So there is definitely opportunity from the size of the typical big-box stores.

Next question is from the line of Peter Keith with JMP Securities.

I know you'd highlighted in your press release that the Q4 market share had improved relative to 3Q, which I guess would be in line with your historical trends. Just curious if you could just provide how you thought the year-over-year change in market share trended relative to the 125-basis-point change in 3Q. And then related to that, I know you've got a number of drivers with some of your emerging categories to drive share, I guess what type of market share gain or loss is currently embedded in your sales guidance?

The first part of your question, as you mentioned, our market share was sequentially improved from the third quarter to the fourth quarter. The declines we saw are consistent with what we saw in the third quarter. But for the year, in looking at it for the total of the year, last year our share was approximately 22%, again in the categories that we're measuring here, which it’s important to call out our [ph] missing the things that were growing the fastest in cellphones, services, tablets. These aren't in these track numbers yet. But our share this year was down about 100 basis points for the year. We were up 170 last year, so we're still on a sequencing trend positive over a multiyear basis. We have a very strong number one position in television, computing and digital imaging and television. Our share is higher than the next three competitors combined. So in those areas, we're going to really vigorously defend the share in those three positions. The biggest thing we're going to do to grow share is what I mentioned earlier, we have four categories for our shares that are in single digits. Gaming and software, we have probably a little over that, but we have massive area for improvement in mobile, appliances, tablets is just beginning. So these are all areas of -- that's where we see the growth coming from while we maintain and continue to grow a bit the really strong sales positions and share positions we have in the big three.

The next question is from the line of Ian (sic) [Daniel] Wewer with Raymond James. Daniel Wewer - Raymond James & Associates, Inc.: It's Dan. So we talked about growing market share in categories where your share is low. I wanted to talk about the other scenario, categories where you're benefiting from a large market share but sales are struggling. And I guess the one category that really stands out is televisions. You noted that the new technology is not resonating with your customers, there may be some competitive issues, perhaps penetration rates of high-def TVs are already so high, there's not a lot left in a way of growth. But I'd be very curious to see what the game plan is for stimulating TV sales in FY '12, or perhaps are we just pushing on a string and that's the reason why the other comp sales outlook is flat or minus 3% for this new year.

If you're talking about TV specifically for a moment, the second half of last year was a different cost [ph] environment for the industry. Industry projections, therefore were relatively modest this year on an industry basis. One of the things we're doing in planning to grow our share in television is twofold. One is the industry is going to be focused on larger screen sizes, and we think that fits very well within our model, as Brian mentioned earlier, about large televisions being ordered online or in the store but being picked up in the store, because that's what people want to do with those televisions of that size versus shipping it. But equally important is what I mentioned earlier, is the rapid expansion of our Online Only assortment. That's going to allow us -- because we weren’t competing in those SKUs in prior periods. Daniel Wewer - Raymond James & Associates, Inc.: But aren't you carrying the most relevant SKUs in your store? And therefore that strategy may not be as effective?

Well, I think you're going to get both. We are in fact carrying the most relevant SKUs in the store but there are still -- we were, in a sense, calling down a 500-SKU assortment to put 100 SKUs in the store. Yes, they're the most relevant. The other 400 are selling. We just weren’t selling them, and now we're going to be able to aggressively do that.

The next question is from the line of Brian Nagel with Oppenheimer. Brian Nagel - Oppenheimer & Co. Inc.: I wanted to ask a question just on domestic gross margins. So we've seen, for a few quarters now, some very nice expansion. And given the sales data you give us, it's clear that sales is a mix shift to higher margin categories in mobile, et cetera. As you look at the specific categories, in the margins within those categories -- the question I have, is the better domestic gross margin we've seen primarily a result of the sales shift or are there actually fluctuating margins within the categories in the stores?

I'll start with an overview and then Jim or Mike can jump in. Brian, clearly, Best Buy Mobile carried a huge piece of that rate improvement for us in Q4. The shift, the mix shift was very large for us, a big piece of that. And I'll leave it to Mike to comment within categories. You see any notable trends there?

Yes, Brian, I'm going to take that. So certainly, as we look at the different parts of our business, you have pieces moving in different directions but from a macro standpoint, as we noted in our release, basically the improvement in gross profit through most of the year has been mix-driven based on what happened in Best Buy Mobile growing successfully, and just a lower portion of notebook computers in our mix. I'll remind you that, remember last year in Q4, with the launch of Windows 7, notebooks in the mix went way up. So it depressed our margins in Q4 of last year, once again that was mix-driven. Overall, our rates in most of our categories has stayed very fairly stable. One exception would be in the Television business, and that's purely due to the mix of the type of TV sales that we've seen this year versus the previous year. As Mike mentioned, the new technologies that the industry planned to sell this year didn't grow as fast as the industry planned. We sold more mid-line televisions and lower-end televisions, so our margins in that space came down. But I would attribute that to kind of mix within the TV category, not a rate on a SKU-per-SKU-type product. So overall, rates relatively stable through the year. We think we have opportunities to drive more sales going forward as Mike talked about. That's going to have some impact and pressure on the rates next year, but those are incremental sales dollars and incremental margin dollars, that's why the guidance we've provided next year is expecting gross margins to grow, albeit at a slower rate than we saw this year.

The next question is from the line of Matt Fassler with Goldman Sachs.

My question relates to home office, and I want to address what looks to be the pretty sharp deceleration in home office and mobile computing in the latter two months of the quarter. And then relate that if you could to your broad expectations as to how tablets roll into the mix in calendar '11 and impact that Home Office business as we move through the year.

This is Jim, why don't I take kind of the front half of that and Mike will talk a little bit about what we're seeing in tablets and what we see into next year. Just maybe take a second to remind everybody that what's going on in part in the computing space, which is in home office last year, is we had the launch of Windows 7 last year. So late in Q3, early in Q4, our computing comps were way down as we were bleeding down inventories to prepare for that Windows 7 launch. Computing comps in January and February last year were enormous in the business. I know I mentioned in my prepared remarks that we saw Q4 comps in mobile computing of up 40%, driven by that. So part of what you're seeing in your comment is just what we're lapping last year from a computing experience standpoint. And I’ll let Mike talk a little bit about what we're seeing in the Tablet business and going forward.

We're excited about the opportunity that tablets is presenting. I think from June on, there'll be a good range of competitors coming into market, and when choice then becomes more of a prevalent issue, our model can do well there. Our assortment breadth, both in the store and online, gives you an opportunity to touch and feel these products side-by-side. And as I mentioned earlier, customers can walk people through the different platforms, because that's becoming increasingly important of the ecosystem that the different tablet will have to live in, whether it's the Android platform, the IOS platform, the emerging webOS platform. That's going to be important for consumers to understand and see, and we think we’re going to be the best place to see all three of those live and in person.

Just a little follow-up, Jim. You spoke about the compares last year. My numbers could be off, but it looks like the December home office comp number last year was sort of stronger than the fourth quarter overall. It looks like up 29 in December and up 22 for Q4 in terms of domestic comps. So is it just compares or anything else in the underlying trend or tablet cannibalization or people waiting for the iPad 2 or something like that, that might have impacted the underlying count?

Matt, I don't have the December mobile comps for last year sitting in front of me right now, but what I'm processing through, and we can follow up with you. Also in that number us Best Buy Mobile which would have had a significant comp last year during the holiday season as well.

And the last question is from the line of Chris Horvers with JPMorgan. Christopher Horvers - JP Morgan Chase & Co: I was just curious, I wanted to follow up on the previous question on the U.S. big-box store base. It seems to me like as TVs mature, you’ll see some skew rationalization, mobile next accessory footprint is up dramatically in the past two years, and ultimately convergence knocks out some categories or the space needed in PC and GPS. I know you're investing in gaming, that seems also like an eventually declining category. So with 8% of your stores up for renewal each year, is there something else that's keeping you from closing stores in the U.S? Is it the age of the underperforming stores, maybe opening [indiscernible] (59:51) five, or do you expect innovation to ultimately be able to refill that space?

This is Jim. As we mentioned earlier, I think it's the combination of things. There's nothing that's preventing us from doing things that we see in the model today that we should be taking actions on. So to Shari's point, as we see opportunities in the marketplace to improve the utilization of our square footage, we’re actually doing it. I think for the things that we see in the models specifically for next year around investing in gaming and things of that nature, we’re not talking about enormous investments in those spaces to improve the productivity of those stores. Similar to what we think we can experience in the appliance space, given a better value proposition and labor model around selling appliances like we're seeing in our early days of our Pac sales stores within Best Buy stores, demonstrates that we've got the right traffic in the store to convert customers if we have a better value prop and labor model. That's really where we saw the success in Best Buy Mobile, putting Best Buy Mobile in the store. Initially we didn't bring new customers into the store, we were leveraging the traffic that's there, and that space is way more productive than it was before. So we think we have opportunities to both to do that, but to also Shari's point, we also think we have opportunities as we see how these labor models evolve to meet customer needs. We think we can pull that off in smaller square footage. And as we get sharper on what that looks like and how customers respond to that in this environment, we'll be pulling those leverage to accommodate that as well. Christopher Horvers - JP Morgan Chase & Co: So the message here is like you recognize that some of your stores are maybe too big and you're slowing down the growth, but where you're trying to figure out exactly what the right size of the store should be and that's the TBD that's basically holding that piece of the story?

This is Shari. We're actually making some moves now in existing stores and making them smaller. So that's not holding us back. As renewals come up, we can and are making some of the larger stores smaller. We think the biggest and best near-term opportunity is in what I said earlier. If you look at a store-by-store basis, the biggest near-term opportunity is in lowering the square footage of existing locations. That doesn't mean we won't do things on a location-by-location basis that are different than that, but the largest opportunity is in better returns in existing locations using smaller square footage.

I think there's a couple other quick points, this is Brian, that I think are important if you're considering this. One, the notion that, for our categories that we sell and represent better than anyone in the world that have to be experienced. Home Theater is one of those, and we don't see anything coming down the road that's going to change the very personal nature of people picking out the home theater componentry that makes the most sense for them. That's just sort of one example. And the second thing I'd ask everyone to consider, I think there's changes on the horizon potentially around taxation. And as those things play out, it's going to change the role of physical distribution and how multi-channel, the online works and coexists with the physical. So we are very, very carefully looking at our square footage, but we're also very clear that there are things we do better that need to be done physically, and we do it better than anyone in the world. We appreciate the question. Thank you very much.

Thank you, Alicia, and thanks to our audience for participating in our fourth quarter earnings conference call. As a reminder, a replay will be available in the U.S. by dialing (800) 406-7325 or (303) 590-3030 internationally. The personal ID number is 4424565. The replay will be available from 11:30 a.m. Central today through March 31. You can also hear the replay on our website under For our Investors. Thank you for your attention, and that concludes our call.

Ladies and gentlemen, this concludes the conference call. You may now disconnect, and thank you for your participation.