Good afternoon, ladies and gentlemen, and welcome to the Systemax Inc. third quarter 2009 earnings teleconference call. (Operator Instructions) At this time I would like to turn the call over to Denise Roche of Brainerd Communicators. Please go ahead, Ms. Roche.

Thank you, Operator. Welcome to the Systemax third quarter 2009 earnings conference call. I'm here today with Richard Leeds, Chairman and Chief Executive Officer of Systemax, Gilbert Fiorentino, Chief Executive of Systemax Technology Products segment, which includes TigerDirect, CompUSA, CircuitCity.com, MISCO, WStore, and Larry Reinhold, Executive Vice President and Chief Financial Officer. This discussion may include certain forward-looking statements. It should be understood that actual results could differ materially from those projected due to a number of factors, including those described under the caption Forward-Looking Statements in the company's annual report on Form 10-K. This call is the property of and is copyrighted by Systemax Inc. I will now turn the call over to Richard Leeds.

Good afternoon, and thank you for joining us on today's call. Despite the continued economic challenges, Systemax posted solid third quarter results, growing consolidated sales both on a U.S. dollar basis and on a constant currency basis. Our results were primarily driven by a strong performance in our consumer channel businesses, where sales grew over 10% in U.S. dollars and 12% on a constant currency basis. During the quarter we experienced some erosion in our overall gross margin resulting from the continuing impact of shipping promotions coupled with changes to the product mix; however, on a sequential quarter basis our gross margin improved 20 basis points. We continue to carefully control operating costs, which resulted in double-digit bottom line earnings growth. In our earnings press release issued earlier today we provided a review breakdown from consumer which includes retail stores, consumer websites, inbound catalog and television shopping, and our business-to-business channels, which include managed relationships conducted through outbound call centers and extranets with business customers. I'd like to discuss how the current environment has impacted each of these channels. On the consumer front, our operations performed well relative to the current economic environment, with same-store channel sales up 6%. This growth has been aided by our Retail 2.0 initiative, which is now live in 23 CompUSA stores. Since our last call, CompUSA has opened two new retail locations in South Florida, and there is one additional store scheduled to open in that market later this month. This will bring CompUSA's total number of retail locations to 27. In addition, TigerDirect continues to operate five retail stores in Canada. The retail storefront expansion remains a key focus for CompUSA, and leases have been signed for stores in several new U.S. markets. Our strategy is to expand in the large metropolitan areas…

Thank you, Richard, and good afternoon, everybody. We are pleased with the solid performance of the Technology Products Group during the third quarter. Net sales increased by 4% in U.S. dollars and 8% on a constant currency basis. Revenue growth in the quarter was driven by our North American operations, where sales grew about 11% over the prior year. North America represented 71% of Systemax's Technology Products total revenue in the third quarter. In North America, consumer business CompUSA continues to lead the retail storefront strategy in the United States. CompUSA has recently opened two new stores with a third one set to open later this month. Taking advantage of attractive rents, there are already several leases for new CompUSA stores signed, and we continue to explore opportunities to open additional locations in target metro areas in the U.S. Our Retail 2.0 initiative is successfully progressing as we look to continue our leading position as an innovator in our industry. By the end of the quarter 23 CompUSA stores had been re-launched with the Retail 2.0 strategy. Currently, four CompUSA stores and five Canadian TigerDirect stores are in the conversion process, and we remain on track to convert all retail stores to Retail 2.0 layout by the end of the year. Customer response to Retail 2.0 remains positive, with customers appreciating the added value Retail 2.0 offers. The stores are a one-stop shop for product information, comparisons and reviews as well as price match comparisons without leaving the store. Last quarter we noted the addition of intelligent Retail 2.0 waterfall displays for cameras, GPS devices, mp3 players and cell phones. We're always looking for new ways to innovate and keep Retail 2.0 as unique and current as possible, and we spend time in our stores talking to associates, talking to…

Thank you, Gilbert, and good afternoon, everyone. Systemax posted third quarter consolidated sales of $753.9 million, up 2% compared to the third quarter of 2008. When you look at revenue on a constant currency basis, sales grew 6%. Third quarter consumer channel sales increased by over 10% in U.S. dollars and 12% on a constant currency basis compared to last year, while business-to-business channel sales were down 7% in U.S. dollars and 1% on a constant currency basis. Our performance was again highlighted by growth in our North American Technology Products Group, which I will discuss in further detail shortly. Gross margin for the quarter was 15.0% versus 15.6% in 2008, down mostly from a change in product mix and the continued use of discounted freight charges. Sequentially, gross margin was up in the third quarter over the second quarter by 20 basis points. Net income for the quarter was $12.6 million or $0.34 per diluted share, up from $11.3 million or $0.30 in the same period last year. Income tax expense in the quarter was about $8 million. Our third quarter results included pre-tax charges of $1.0 million for costs related to the WStore acquisition and the previously announced plan to exit the PCS hosted software business. Charges impacted our third quarter net earnings by approximately $0.02 per diluted share after tax. Our effective tax rate for the first nine months was 36.3%, down from 37.3% last year. Included in the 2009 rate is a reversal of tax reserves of approximately $1 million as a result of statute expirations. If we exclude this reserve reversal, the company's effective tax rate would have been 38.7%. This higher effective tax rate this year is primarily the result of a higher percentage of taxable income in the United States, where corporate tax…

Thank you, sir. (Operator Instructions) Your first question comes from Ali Motamed - Boston Partners.

First of all, can you talk a little about the CapEx outlook, let's say, for the next quarter and maybe the next year, sort of what we should be looking at?

Our CapEx has been relatively modest in the company, typically under $10 million a year, for normal kinds of activities. I think that we're spending, as we know we've commented on, our Retail 2.0 initiative and also some other IT system upgrades. I think you could probably look to the future of normal CapEx in about the same range. Possibly we're going to be looking at some additional distribution center capability as our volume of business grows.

Okay. And then Newegg's meant to be coming public any day soon. I see the valuations that are put out in their prospectus, and you guys are pretty much the best comp. They're looking at 20 times earnings and 30% of sales. Obviously, it's a little bit of a different business, but are you going to use this as an opportunity to maybe get out and discuss the company a little more and meet investors? You don't even really have much analyst coverage, you know? So make yourselves more available to the investment community?

We obviously look at all of our competitors, and they're one of them and they're a good competitor. We certainly want to have the best stock price that we could possibly have, and we always look at things like that.

So will you be going out you think and doing that more? Do you have any plans?

I hope so. I mean, that's our intent, to get out more as we can.

And what about supporting analyst coverage perhaps?

We're always trying to get more analyst coverage. If you could help us with that, we'd appreciate it.

Your next question comes from Ross Licero - Wisco Research.

I wanted to know how many new leases are signed for the new CompUSA stores?

There are two right now. There's one new store opening in Aventura, Florida imminently in the next few weeks. Other than the ones that are imminent to open, for competitive reasons we just don't like to talk about where we're putting stores or the markets we're looking at.

And for the other category that you guys listed in your press release, can you explain what that is exactly and why it's going from - I guess it's consistent year-over-year, but it drops from about 100 to 15.5 from the second to third quarter.

On the product category mix?

Correct.

That's the catchall net of everything that doesn't make the specifically identified list, so it's really too voluminous to go into there.

With no additional questions in queue, I'd like to turn it over to Richard Leeds for any additional comments and closing remarks.

I'd like to thank everybody for listening to our call, and we look forward to speaking to you next quarter. Thank you.

That does conclude today's conference call. Thank you for joining us.