-----BEGIN PRIVACY-ENHANCED MESSAGE-----
Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
Originator-Key-Asymmetric:
 MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen
 TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB
MIC-Info: RSA-MD5,RSA,
 PqGS3kY1WiuJxCNCywSIMiKFsUo+56odWszAqkha1xw6YwQjkrfJo+Ux+rgVdbQC
 0BxmvfrqPowBN3hpk2QyKg==

<SEC-DOCUMENT>0000950153-08-000334.txt : 20080502
<SEC-HEADER>0000950153-08-000334.hdr.sgml : 20080502
<ACCEPTANCE-DATETIME>20080215171101
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0000950153-08-000334
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20080215

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			CSK AUTO CORP
		CENTRAL INDEX KEY:			0001051848
		STANDARD INDUSTRIAL CLASSIFICATION:	RETAIL-AUTO & HOME SUPPLY STORES [5531]
		IRS NUMBER:				860765798
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			0204

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		645 E MISSOURI AVENUE
		CITY:			PHOENIX
		STATE:			AZ
		ZIP:			85012
		BUSINESS PHONE:		6022659200

	MAIL ADDRESS:	
		STREET 1:		645 E MISSOURI AVENUE
		CITY:			PHOENIX
		STATE:			AZ
		ZIP:			85012
</SEC-HEADER>
<DOCUMENT>
<TYPE>CORRESP
<SEQUENCE>1
<FILENAME>filename1.htm
<TEXT>
<HTML>
<HEAD>
<TITLE>corresp</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">February&nbsp;15, 2008
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Michael Moran<BR>
Branch Chief<BR>
United States Securities and Exchange Commission<BR>
Division of Corporation Finance<BR>
450 Fifth Street, N.E.<BR>
Washington, D.C. 20549

</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left">&nbsp;RE:</TD>
    <TD>&nbsp;</TD>
    <TD>CSK Auto Corporation<br>
Form&nbsp;10-K for the fiscal year ended February&nbsp;4, 2007<br>
Forms 10-Q for the fiscal quarters ended May&nbsp;6, 2007, August&nbsp;5, 2007 and November&nbsp;4, 2007<br>
File No.&nbsp;001-13927<br></TD>
</TR>
</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Dear Mr.&nbsp;Moran:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On behalf of CSK Auto Corporation (the &#147;<U>Company</U>&#148;), this letter is in response to the
comments contained in the Staff&#146;s letter (the &#147;<U>Comment Letter</U>&#148;) dated February&nbsp;1, 2008,
regarding the Company&#146;s above-identified Form 10-K and Forms 10-Q.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The responses set forth below correspond to the numbers assigned in the Comment Letter. For the
Staff&#146;s convenience, we have placed the Staff&#146;s comments in bold type followed by the Company&#146;s
response. The Company has reviewed the disclosures referred to in your Comment Letter. While the
Company believes the disclosures it has filed are adequate in all material respects, the Company
appreciates your comments and would like to propose certain enhancements. The Company will make
such enhancements in future filings beginning with its 2007 Form 10-K for the fiscal year ended
February&nbsp;3, 2008 which is due April&nbsp;4, 2008.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U><B>Management&#146;s Discussion and Analysis of Financial Condition and Results of Operations, page
31</B></U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U><B>Critical Accounting Matters, page 51 </B></U>

</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>1.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Your disclosure of critical estimates and judgments should supplement and not duplicate the
summary of significant accounting policies that are already disclosed in Note 1 to the
financial statements. In most cases, your discussion here mirrors that disclosure and should
be revised to provide a greater insight into the quality and variability of the critical
judgments you make in arriving at estimates that have a significant impact on your financial
condition and operating performance. Please carefully evaluate each policy and revise your
discussion to clarify and quantify each critical estimate and clearly identify the</B></TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->1<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #textcolor#; background: #bgcolor#">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>assumptions you used to calculate each estimate. Disclose why management believes those
estimates are critical to your financial condition and operating results. Discuss how accurate
your estimates and assumptions have been in the past and whether they are likely to change in
the future. For example, your discussion of vendor allowances does not identify what estimates
you actually make with respect to these funds such as whether you estimate the current year
volume using historical data with respect to achieving certain contracted volume commitments.
Your disclosure in management&#146;s discussion and analysis should present your analysis of the
uncertainties involved in applying an estimate at a given time, or the variability this is
reasonably likely to result from its application over time. Refer to Release Nos. 33-8350 and
34-48960.</B></TD>
</TR>
<TR>
    <TD>&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Response</U>:</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company has reviewed all the disclosures presented in Critical Accounting Matters and
agrees to enhance certain disclosures in its fiscal 2007 Form 10-K. The Critical Accounting
Matters disclosure enhancements that the Company will include in the 2007 Form 10-K are
substantially as set forth below.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Critical Accounting Matters</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The preparation of our financial statements requires us to make critical accounting estimates that
affect the amounts reported in those financial statements. We define a critical accounting estimate
as one that is both significant to the portrayal of our financial condition and results of
operations, and requires management&#146;s difficult, subjective or complex judgments. Periodically
throughout the fiscal year, we evaluate our accounting estimates based on historical experience,
current results, future projections, and other relevant factors and make adjustments as
appropriate. The application of certain of these policies requires significant judgments and
estimates that can affect the results of operations and the financial position of the Company, as
well as the related footnote disclosures. The Company bases its estimates on historical experience
and other assumptions that it believes are most likely to occur. The disclosures below note
situations in which it is reasonably likely or probable that future financial results could be
impacted by changes in these estimates and assumptions. The term reasonably likely refers to an
occurrence that is more than remote but less than probable in the judgment of management. The term
probable refers to an occurrence that is likely to occur in the judgment of management.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Inventory Valuation</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Inventories are valued at the lower of cost or market, cost being determined utilizing the
First-in, First-Out (&#147;FIFO&#148;) method. We maintain inventory in stores, parts depots and distribution
centers. A physical inventory count is performed at each store, parts depot and distribution center
at least once during the fiscal year. Due to the fact that we have numerous stores, parts depots
and distribution centers, physical inventory counts are performed throughout the fiscal year.
Typically, physical inventory counts for the
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->2<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">distribution
centers are scheduled for later in the fiscal year. At each balance sheet date, we
adjust our inventory carrying balances by an estimated allowance for inventory shrinkage that has
occurred since the most recent physical inventory and an allowance for inventory obsolescence, each
of which is discussed in greater detail below.
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>We reduce the FIFO cost of our inventory for estimated loss due to shrink since the
most recent physical inventory. Shrink estimates for each store are determined by dividing
the shrink loss based on the most recent physical inventory by the sales for that store
since its previous physical inventory. The resulting percentage for each store is
multiplied by the sales for that store since the last physical
inventory through reporting period end.
Shrink allowances for each parts depot and distribution center are determined in a similar
manner. The shrink amount, based on the most recent physical inventory at the parts depot
or distribution center, is divided by the inventory receipts at the location since the
previous physical inventory. The resulting percentage for each parts depot or distribution
center is multiplied by the receipts for that location since the last physical inventory
through the reporting period end. Shrink expense for fiscal 2007, 2006 and 2005 was
approximately $XX million, $31.6&nbsp;million and $28.8&nbsp;million, respectively. As a percentage
of cost of goods sold, shrink expense for fiscal 2007, 2006, and 2005 was XX%, 3.1% and
3.3%, respectively. While the shrink accrual is based on recent experience, it is an
estimate and thus it is probable that actual losses will be higher or lower than estimated.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In certain instances, we retain the right to return obsolete and excess merchandise
inventory to our vendors. In situations where we do not have a right to return, we record an
allowance representing an estimated loss for the difference between the cost of any obsolete
or excess inventory and the estimated retail selling price. Inventory levels and gross
margins earned on all products are monitored monthly. On a quarterly basis, we assess
whether we expect to sell a significant amount of inventory below cost and, if so, estimate
and record an allowance. The allowance for excess and obsolete inventory was $ XX million
and $0.8&nbsp;million at February&nbsp;3, 2008 and February&nbsp;4, 2007, respectively. It is reasonably
likely that market and other factors relative to the valuation of inventory may change in
the future, which could result in increases or decreases to gross margins on the sale of
inventory.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Vendor Allowances</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Vendor allowances consist of vendor rebates, discounts and allowances associated with our
purchasing activities and promotional activities with certain vendors. We earn such allowances as a
reduction of our cost of inventory in accordance with EITF No.&nbsp;02-16, <I>Accounting by a Customer
(including a Reseller) for Certain Consideration Received from a Vendor. </I>Based on EITF No.&nbsp;02-16,
allowances provided by our vendors are presumed to be a reduction in the costs of purchasing
inventories (to be recognized in inventory and cost of sales). Amounts earned are based on written
contracts with vendors.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->3<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Most of our vendor allowances are expressed in the inventory purchase contract as a percentage of
purchases. Our earning of vendor allowances is based on the contract rate as applied to actual
product purchased from the vendor in the period the product is received. Fixed dollar allowances
not expressed in terms of purchases are earned ratably over the vendor program period, which is
generally the calendar year. When a vendor contract includes a volume minimum or volume incentive
provision, the allowance accrual rate is based upon our best estimate of purchases using historical
purchasing patterns and sales forecasts as the basis for the estimate. Each quarter, the
volume-based accrual rates are reevaluated using the actual cumulative purchases and the
expectation for the remainder of the program year. Adjustments, if necessary, are made on a
quarterly basis. Certain of our vendor contracts have several year terms, thus requiring
recognition over an extended period.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Vendor allowances earned are recorded as a reduction of inventory cost at the end of each of the
Company&#146;s fiscal quarters. Amounts earned for each vendor are expressed as a percentage of that
vendor&#146;s purchases for the period and multiplied by on hand inventory balances by vendor. This
vendor capitalized allowance amount is adjusted as inventory levels change for each vendor each
period. In summary, allowances are earned as product is received, recorded as a reduction in
inventory while the product is on hand, and are recognized as a reduction to cost of sales when the
corresponding inventory is sold.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We enter into hundreds of contracts with vendors each year that contain allowance provisions.
Contractual disputes and misunderstandings can occur with vendors with respect to specific aspects
of our program that could result in adjustments to allowances we earn. We adjust our vendor
allowance recognition for disputes when the disputed amount is probable and reasonably estimable.
Based on historical experience, we also consider in our estimated recognition that processing
errors and other transactional adjustments will likely be identified upon reconciliation of amounts
earned with vendors. We do not believe it is reasonably likely that such adjustments will have a
material impact on future results of operations. <U> </U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Warranty</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We or the vendors supplying our products provide our customers with limited warranties on certain
products ranging from 30&nbsp;days to lifetime warranties. Our warranty exposure is analyzed on a
vendor by vendor basis using the master vendor agreements in place at the time the product was sold
to the customer. Some of our vendors provide us no protection for warranty; however, in many cases,
the vendors are responsible for warranty claims and provide us a credit at cost for warranty items
we process on behalf of the vendor. In other cases, our vendors provide us a negotiated warranty
allowance as agreed to in the vendor contract. These allowances are negotiated to approximate the
estimated amount of warranty exposure on the product purchased by us from our vendors. Typically,
the allowances are based on a percentage of each product we purchase and are collected as an off
invoice deduction on the vendor&#146;s invoice. Warranty costs relating to merchandise sold under
warranty not covered by vendors or exceeding the allowances
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->4<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">provided by the vendor are estimated and recorded as warranty liabilities at the time of sale and
are based on historical experience and recent trends. This liability is recorded as a component of
accrued expenses. Quarterly, we assess the adequacy of our recorded warranty liability and adjust
the liability and cost of sales as necessary based on the previous six month history of customer
warranty returns and vendor allowances. We believe a six month period of warranty return history
is appropriate as substantially all warranty returns are made within six months of the original
purchase date.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table reflects the changes in our warranty reserves ($ in thousands):
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000"><B>Fiscal Year Ended</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>February 3,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>February 4,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>January 29,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Warranty reserves, beginning of period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3,908</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,580</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,918</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Provision for warranty</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">XX</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,428</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">963</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Allowances from vendors</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">XX</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,067</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,841</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Destroyed parts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">XX</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(8,167</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7,142</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Warranty reserves, end of period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">XX</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3,908</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,580</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We expect our actual warranty costs to differ from our estimates and it is reasonably likely that
the difference could be significant. A 10% change in estimated warranty liability would have
affected our operating profit by approximately $XX million for the fiscal year ended February&nbsp;3,
2008.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Income Taxes</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We adopted FASB Interpretation No.&nbsp;48, <I>Accounting for Uncertainty in Income Taxes &#151; an
Interpretation of FASB statement No.&nbsp;109 </I>(&#147;FIN 48&#148;) at the beginning of fiscal 2007. At February
3, 2008, our unrecognized tax benefits totaled approximately $XX million which, if recognized, would
favorably affect the effective income tax rate in future periods by
approximately $XX&nbsp;million. We do not anticipate a significant change
in the total amount of unrecognized tax benefits during the next twelve months. However, as
discussed in Note XX to the consolidated financial statements, we have multiple years open for U.S.
Federal or state examination. It is reasonably likely our estimate of unrecognized tax benefits
could change in future periods, thus impacting the amount of income
tax expense we report in our
financial statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Included in our net deferred tax asset are deferred tax assets of $XX million as of February&nbsp;3,
2008, reflecting the benefit of federal and state tax loss carry forwards approximating $XX million
and $XX million, respectively, which begin to expire in 2021 and 2007, respectively. Realization is
dependent on generating sufficient taxable income in the respective jurisdictions prior to expiration of the loss carry forwards. Utilization of
certain of the net operating loss carry forwards may be limited by the change in ownership rules
under Section&nbsp;382 of the Internal Revenue Code. Although realization is
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->5<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">not assured, management
believes it is more likely than not that all of the deferred tax assets will be realized with the
exception of a portion of California Enterprise Zone credits and a portion of Arizona net operating
losses for which management has determined that a valuation allowance in the amount of $XX million
and $XX million, respectively, is necessary at February&nbsp;3, 2008.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Legal Matters</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We currently and from time to time are involved in litigation incidental to the conduct of our
business, including but not limited to asbestos and similar product liability claims, slip and fall
and other general liability claims, discrimination and other employment claims, vendor disputes,
and miscellaneous environmental and real estate claims. The damages claimed in some of this
litigation are substantial. Based on an internal review, we accrue reserves using our best estimate
of the probable and reasonably estimable contingent liabilities. We do not currently believe that
any of these legal claims incidental to the conduct of our business, individually or in the
aggregate, will result in liabilities material to our consolidated financial position, results of
operations or cash flows. However, if our estimates related to these contingent liabilities are
incorrect, the future results of operations for any particular fiscal quarter or year could be
materially adversely affected.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In addition to the litigation that is incidental to our business, we are also subject to the
other litigation and the governmental investigations that are described in Item&nbsp;3, &#147;Legal
Proceedings.&#148; Although these matters are in their early stages and we cannot predict their outcome,
an adverse outcome in any of them could have a material adverse effect on our consolidated results
of operations, financial position or cash flows.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Self-Insurance Reserves</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company purchases third-party insurance for workers&#146; compensation, automobile, product and
general liability claims that exceed a certain dollar threshold. However, we are responsible for
the payment of claims under these insured limits. In estimating the obligation associated with
reported claims and incurred but not reported (&#147;IBNR&#148;) claims, we utilize independent actuaries.
These actuaries utilize historical data to project the future development of reported claims and
estimate IBNR claims. Loss estimates are adjusted based upon actual claims settlements and reported
claims. The independent actuaries make a significant number of estimates and assumptions in
determining the cost to settle claims. Although we do not expect the amounts ultimately paid to
differ significantly from our estimates, it is reasonably likely that self-insurance costs could
differ significantly from the historical trends and actuarial assumptions. Our self-insurance
reserves approximated $XX million and $23.5&nbsp;million at February&nbsp;3, 2008 and
February&nbsp;4, 2007, respectively, and are included with current liabilities in the accompanying
consolidated balance sheets. A 10% change in our self-insurance reserves
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->6<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">would have affected our
operating profit by $XX million for the fiscal year ended February&nbsp;3, 2008.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Store Closing Costs</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On an on-going basis, store locations are reviewed and analyzed based on several factors including
market saturation, store profitability, and store size and format. In addition, the Company
analyzes sales trends and geographical and competitive factors to determine the viability and
future profitability of its store locations. If a store location does not meet our required
performance, it is considered for closure. As a result of past acquisitions, we have closed
numerous locations due to store overlap with previously existing store locations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We account for the costs of closed stores in accordance with SFAS No.&nbsp;146, <I>Accounting for
Costs Associated with Exit or Disposal Activities. </I>Under SFAS No.&nbsp;146, costs of operating lease
commitments for a closed store are recognized as expense at fair value at the date we cease
operating the store. Fair value of the liability is determined as the present value of future cash
flows discounted using a credit-adjusted risk free rate. Accretion expense represents interest on
our recorded closed store liabilities at the same credit adjusted risk free rate used to discount
the cash flows. In addition, SFAS No.&nbsp;146 also requires that the amount of remaining lease payments
owed be reduced by estimated sublease income (but not to an amount less than zero). Sublease income
in excess of costs associated with the lease is recognized as it is earned and included as a
reduction to operating and administrative expense in the accompanying financial statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The allowance for store closing costs is included in accrued expenses and other long-term
liabilities in our accompanying financial statements and primarily represents the discounted value
of the following future net cash outflows related to closed stores: (1)&nbsp;future rents to be paid
over the remaining terms of the lease agreements for the stores (net of estimated probable sublease
income); (2)&nbsp;lease commissions associated with the anticipated store subleases; and (3)&nbsp;contractual
expenses associated with the closed store vacancy periods. Certain operating expenses, such as
utilities and repairs, are expensed as incurred and we do not incur employee termination costs when
we close stores.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In addition, we expense as incurred and report as store closing costs operating expenses we incur
when closing a store. These expenses include temporary labor and transportation costs for
inventory, fixtures and other assets we own in the store.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As of February&nbsp;3, 2008, we had a total of XXX locations included in the allowance for store closing
costs, consisting of XXX store locations and XX service centers. Of the store locations, XX
locations were vacant and XXX locations were subleased. Of the service centers, X were vacant and
XX were subleased. Future rent expense will be incurred through the expiration of the
non-cancelable leases.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->7<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Activity in the allowance for store closing costs and the related payments for the last three
fiscal years is as follows ($ in thousands):
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000"><B>Fiscal Year Ended</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>February 3,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>February 4,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>January 29,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance, beginning of year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">4,911</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">7,033</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">7,774</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Store closing costs:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Provision for store closing costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">XX</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">258</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">246</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other revisions in estimates</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">XX</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">112</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,505</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accretion</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">XX</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">306</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">420</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Operating expenses and other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">XX</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">811</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">732</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total store closing costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">XX</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,487</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,903</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Purchase accounting adjustments &#151; Murray&#146;s Discount Auto Stores</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">324</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Payments:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Rent expense, net of sublease recoveries</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">XX</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,279</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,227</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Occupancy and other expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" nowrap align="center">XX</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(915</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(740</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Sublease commissions and buyouts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" nowrap align="center">XX</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(415</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,001</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total payments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">XX</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,609</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,968</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance, end of year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">XX</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">4,911</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">7,033</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">During fiscal 2007, we recorded the following: (1) $XX million in charges associated with fiscal
2007 store closures; (2) $XX million associated with accretion expense relating to the discounting
of closed store liabilities; and (3) $XX million associated with other operating expenses such as
utilities, repairs and maintenance costs that are expensed as incurred.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">During fiscal 2006, we recorded the following: (1) $0.3&nbsp;million in charges associated with fiscal
2006 store closures; (2) $0.3&nbsp;million associated with accretion expense relating to the discounting
of closed store liabilities; and (3) $0.8&nbsp;million associated with other operating expenses such as
utilities, repairs and maintenance costs that are expensed as incurred.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">During fiscal 2005, we recorded the following: (1) $0.2&nbsp;million in charges associated with fiscal
2005 store closures; (2) $1.5&nbsp;million in charges resulting from revisions in estimates, primarily
related to stores that were subleased and became vacant as well as rent increases in master lease
agreements; (3) $0.4&nbsp;million associated with accretion expense relating to the discounting of
closed store liabilities; and (4) $0.7&nbsp;million associated with other operating expenses such as
utilities, repairs and maintenance costs that are expensed as incurred.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">There are several significant assumptions that underlie the estimates inherent in the closed store
reserve. These assumptions include: (1)&nbsp;real estate broker estimates for vacancy periods and
estimated sublease rates based on the broker&#146;s experience and expertise and (2)&nbsp;estimates for occupancy expenses based on historical averages which, in the case
of real estate taxes, are subject to changes in the future if increased or decreased by taxing
authorities. Accordingly, we continuously review these assumptions and revise the reserve as
necessary.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->8<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In addition, there are certain assumptions that are sensitive to general economic deviations and it
is reasonably likely changes could produce actual results significantly different from management&#146;s
original estimates. These assumptions may be revised due to the following factors: (1)&nbsp;national or
regional economic conditions that can shorten or lengthen vacancy periods; (2)&nbsp;changes in
neighborhoods surrounding store locations resulting in longer than anticipated vacancy periods; (3)
changing subtenant needs resulting in functional obsolescence of store locations; and (4)&nbsp;subtenant
defaults or bankruptcies resulting in vacant properties. Historically, the Company has recorded
revisions in estimates to the closed store reserve that have resulted from these factors. These
revisions usually result from overall longer vacancy periods on store locations and realized
sublease rates lower than originally anticipated.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Valuation of Long-lived Assets</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We evaluate the carrying value of long-lived assets whenever events or changes in circumstances
indicate that a potential impairment has occurred. A potential impairment has occurred if the
projected future undiscounted cash flows are less than the carrying value of the asset(s). The
estimate of cash flows includes management&#146;s assumptions of cash inflows and outflows directly
resulting from the use of that asset in operations. When a potential impairment has occurred, an
impairment write-down is recorded if the carrying value of the long-lived asset exceeds its fair
value. Our impairment analyses contain estimates due to the inherently judgmental nature of
forecasting long-term estimated cash flows and determining the ultimate useful lives and fair
values of the assets. Actual results could differ from these estimates, which could materially
impact our impairment assessment.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Goodwill Impairment</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As disclosed in the consolidated financial statements, we have as of February&nbsp;3, 2008 unamortized
goodwill in the amount of $XX million. In accordance with the provisions of SFAS No.&nbsp;142, <I>Goodwill
and Other Intangible Assets</I>, we perform an annual impairment test of goodwill. Our test as of
February&nbsp;3, 2008 &#091;resulted in no impairment being identified&#093;. However, the process of evaluating
goodwill for impairment involves the determination of the fair value of the Company. Inherent in
such fair value determinations are certain judgments and estimates, including the interpretation of
economic indicators and market valuations and assumptions about our strategic plans. To the extent
that our strategic plans change or economic and market conditions worsen, it is possible that our
conclusion regarding goodwill impairment could change which could
result in a material effect on our financial position or results of operations; however, an
impairment charge would not affect our cash flows.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->9<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U><B>Note 1 &#151; Summary of Significant Accounting Policies, page 65</B></U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U><B>Inventory Valuation, page 67</B></U>

</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>2.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>You indicate certain operating and overhead administrative costs associated with
purchasing and handling of inventory is capitalized as part of your inventory costs.
Please identify the certain operating costs and revise your disclosure to clarify why the
operating and overhead administrative costs are capitalizable inventory costs. If the
costs are directly related to purchasing and handling of inventory in bringing the goods
to the purchaser, please disclose that fact. Reference is made to ARB No.&nbsp;43, chapter 4.</B></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Response</U>:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The costs the Company capitalizes are consistent with the principles in ARB No.&nbsp;43. In future
filings, the Company will include the following enhanced disclosure, substantially as set forth
below, under the Inventory Valuation heading in Note 1 of the fiscal 2007 Form 10-K.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company capitalizes purchasing, storage, and handling costs into inventory. The amount
capitalized into inventory consists of both direct and indirect costs. Direct costs represent
most of the costs capitalized as they include the cost centers that comprise all of the costs
of the Company&#146;s distribution centers and warehouses.
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>3.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>We note you estimate shrinkage from taking of your last physical inventory to the
balance sheet date. Please disclose how often you take physical inventories at the
stores, warehouse and parts depots. Also tell us how you determine shrinkage at the
warehouses and parts depots.</B></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Response:</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company disclosed under Item&nbsp;9A in its fiscal 2006 Form 10-K that it conducts annual
physical inventory counts at each location; however, the Company agrees the disclosure in Note
1 could be enhanced. The Company will enhance the disclosure, substantially as set forth
below, under Inventory Valuation in Note 1 of the 2007 Form 10-K.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">A physical inventory count is performed at each store, parts depot and distribution center at
least once during the fiscal year. Shrink allowances for each store are determined by dividing the shrinkage amount, based on the most recent physical inventory, by
the sales for that store since its previous physical inventory. The percentage for each store
is multiplied by the sales for that store since the last physical inventory through current
period end. Shrink allowances for each parts depot and distribution center are determined in a
similar manner. The shrink amount, based
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->10<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">on the most recent physical inventory at the parts
depot or distribution center, is divided by the inventory receipts at the location since the
previous physical inventory. The percentage for each parts depot or store is multiplied by the
receipts for that location since the last physical inventory through current period end.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U><B>Vendor Allowances and Cost of Sales, page 69</B></U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>4.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Please expand your disclosure to clarify whether or not you receive reimbursements
from some vendors based upon the volume of purchases or sales of the vendors&#146; products.
If so, please tell us and disclose in future filings whether reimbursements are recognized
as the milestones are achieved or if the reimbursements are accrued. If you apply the
accrual method, please explain to us the factors you considered in determining the
reimbursements are probable and reasonably estimable.</B></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Response</U>:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Approximately 90% of the Company&#146;s vendor allowances are calculated based on actual product
purchased from a vendor in the accounting period. For certain vendors, allowances are based
on net purchases (i.e. purchases less returns to the vendor in the period). Fixed dollar
allowances not expressed in terms of volume of purchases are earned ratably over the vendor
program period, which is generally the calendar year. Allowances related to sales of vendor
products do not represent a material portion of the Company&#146;s vendor allowances. The Company
will add the following enhanced disclosure, substantially as set forth below, under Vendor
Allowances in Note 1 of the fiscal 2007 Form 10-K.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company records the earning of the total vendor allowances by taking the contract rate and
applying it to actual product purchased from the vendor in the period in which product is
received. Fixed dollar allowances not expressed in terms of volume of purchases are earned
ratably over the vendor program period, which is generally the calendar year. When a vendor
contract includes a volume minimum or volume incentive provision, the allowance accrual rate is
estimated based upon the Company&#146;s best estimate of purchases based on historical purchasing
patterns and sales forecasts. Each quarter, the volume estimates and volume-based accrual
rates are reevaluated based on the actual cumulative purchases and the expectation for the
remainder of the vendor program year. Adjustments, if necessary, are made on a quarterly
basis. Certain of the Company&#146;s vendor contracts have several year terms, thus requiring
recognition over an extended period.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Vendor allowances earned are recorded as a reduction of inventory cost at the end of each of
the Company&#146;s fiscal quarters. Amounts earned for each vendor are expressed as a percentage of
that vendor&#146;s purchases for the period and multiplied by on-hand balances by vendor. This
vendor capitalized allowance amount is adjusted
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->11<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">as inventory levels change for each vendor each
period. In summary, allowances are earned as product is received, recorded as a reduction in
inventory cost while the product is on hand, and are recognized as a reduction to cost of sales
when the corresponding inventory is sold.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company enters into hundreds of contracts with vendors each year that contain allowance
provisions. Contractual disputes and misunderstandings may occur with vendors for specific
aspects of a vendor&#146;s program that could result in adjustments to allowances the Company earns.
The Company adjusts its vendor allowance recognition for disputes when the disputed amount is
probable and reasonably estimable. Based on historical experience, the Company also considers
in its estimated recognition that processing errors and other transactional adjustments will
likely be identified upon reconciliation of amounts earned with vendors. The Company does not
believe it is reasonably likely that such adjustments will have a material impact on future
results of operations.
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>5.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>For each year presented, please advise us of the aggregate amount of adjustments to
allowances for contractual disputes and misunderstandings. In addition please advise us
of the percentage of vendor contracts each period that have been adjusted for contractual
disputes and/or misunderstandings.</B></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Response</U>:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As you are aware, the Company recently restated its consolidated financial statements. For
years ending January&nbsp;29, 2006 (fiscal 2005) and prior, vendor allowance information was
reconstructed based on what the Company actually received for the period. Commencing with
fiscal 2006, the Company has reduced its estimated recognition of vendor allowances by 1% each
period to provide for final adjustments expected with vendors. In addition, adjustments were
made for specific disputes when the Company became aware of an issue and revised such amounts.
Subsequent to each year, the Company prepares a detailed annual reconciliation of what the
Company recorded for the vendor program for the year to the actual collections. This
information is reviewed with the vendors who compare the information with their records.
Discrepancies can arise for a variety of reasons. For example, quantity differences can arise
if the Company&#146;s records of what was received and returned to the vendor do not agree with the
vendor&#146;s records. Administrative errors occur with processing of collections. Differences of
opinion can arise over which allowance rate applies to a particular vendor product. Small
adjustments to most contracts are expected due to the complexity of the process and
the record keeping required. The annual reconciliation with the vendor is not completed until
well into the next fiscal year because of the time it takes to accumulate all the information
and communicate with our vendors. Based upon the Company&#146;s current processes and internal
accounting controls, the Company does not
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->12<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">expect annual adjustments to materially differ from
the estimates it is recording in the fiscal year.
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>6.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Please disclose the types of expenses that you include in the cost of sales line item
and the types of expenses you include in the operating and administrative expenses line
item. In doing so, please disclose whether you include in cost of sales inbound freight
charges, purchasing and receiving costs, inspection costs, warehousing costs, internal
transfer costs and the other costs of your distribution network. If you currently exclude
a significant portion of these costs from cost of sales, please provide cautionary
disclosure in MD&#038;A that your gross margins may not be comparable to others, since some
entities include the costs related to their distribution network in cost of goods sold and
others like you exclude all or a portion of them from gross margin, including them instead
in a line item such as operating and administrative expenses. To the extent it would be
material to an investor&#146;s ability to compare your operating results to others in your
industry, you should quantify in MD&#038;A the amount of these costs excluded from cost of
goods sold.</B></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Response</U>:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company includes inbound freight charges, purchasing and receiving costs, inspection costs,
warehousing costs, internal transfer costs and other distribution network costs within cost of
sales. The Company does not exclude the cost of its distribution network from cost of sales.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On page 38 of our fiscal 2006 Form 10-K, the Company disclosed the components of Operating and
Administrative Expenses, however, its disclosure was not as explicit for cost of sales. In
future filings, the Company will enhance its Summary of Significant Accounting Policies
footnote by segregating the Vendor Allowance policies from the Cost of Sales policies. The
Company will modify its disclosure, substantially as set forth below, to include, under a Cost
of Sales policy note, the following tabular comparison of the types of expenses included in
cost of sales compared to operating and administrative expenses.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->13<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="1%">&nbsp;</TD>
    <TD width="0%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="43%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD><!-- VRule -->
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="43%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD width="1%" style="border-left: 1px solid #000000; border-top: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD style="border-right: 1px solid #000000; border-top: 1px solid #000000">&nbsp;</TD>
    <TD style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD style="border-top: 1px solid #000000" nowrap align="left" colspan="3">&nbsp;</TD>
    <TD width="1%" style="border-right: 1px solid #000000; border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD width="1%" style="border-left: 1px solid #000000">&nbsp;</TD>
    <TD align="left" colspan="5"><B>Cost of Sales</B></TD>


    <TD style="border-right: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="3"><B>Operating and Administrative Expenses</B></TD>
    <TD width="1%" style="border-right: 1px solid #000000">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD width="1%" style="border-left: 1px solid #000000; border-top: 1px solid #000000">&nbsp;</TD>
    <TD colspan="5" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>

<TD align="left" style="border-top: 1px solid #000000; border-right: 1px solid #000000">&nbsp;</TD>
    <TD align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD colspan="3" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD width="1%" style="border-right: 1px solid #000000; border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD width="1%" style="border-left: 1px solid #000000">&nbsp;</TD>
    <TD align="center" valign="top"><B>&#149;</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">Total cost of merchandise sold including:</TD>
    <TD style="border-right: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>&#149;</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Payroll and benefit costs for retail and corporate</TD>
    <TD width="1%" style="border-right: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD width="1%" style="border-left: 1px solid #000000">&nbsp;</TD>
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#149;</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Freight expenses associated with moving merchandise
</TD>
    <TD style="border-right: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">employees, including share-based compensation;</TD>
    <TD width="1%" style="border-right: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD width="1%" style="border-left: 1px solid #000000">&nbsp;</TD>
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">inventories from our vendors to our distribution centers
</TD>
    <TD style="border-right: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>&#149;</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Occupancy costs of retail and corporate facilities;</TD>
    <TD width="1%" style="border-right: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD width="1%" style="border-left: 1px solid #000000">&nbsp;</TD>
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">and warehouses;
</TD>
    <TD style="border-right: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>&#149;</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Depreciation related to retail and corporate assets;</TD>
    <TD width="1%" style="border-right: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD width="1%" style="border-left: 1px solid #000000">&nbsp;</TD>
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#149;</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Vendor allowances;
</TD>
    <TD style="border-right: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>&#149;</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Advertising</TD>
    <TD width="1%" style="border-right: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD width="1%" style="border-left: 1px solid #000000">&nbsp;</TD>
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#149;</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Cash discounts on payments to vendors;
</TD>
    <TD style="border-right: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>&#149;</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Self-insurance costs, excluding those related to the</TD>
    <TD width="1%" style="border-right: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD width="1%" style="border-left: 1px solid #000000">&nbsp;</TD>
    <TD align="center" valign="top"><B>&#149;</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">Inventory shrinkage;</TD>
    <TD style="border-right: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">distribution network;</TD>
    <TD width="1%" style="border-right: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD width="1%" style="border-left: 1px solid #000000">&nbsp;</TD>
    <TD align="center" valign="top"><B>&#149;</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">Warranty costs;</TD>
    <TD style="border-right: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>&#149;</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Professional services; and</TD>
    <TD width="1%" style="border-right: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD width="1%" style="border-left: 1px solid #000000">&nbsp;</TD>
    <TD align="center" valign="top"><B>&#149;</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">Costs associated with purchasing and operating our distribution</TD>
    <TD style="border-right: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>&#149;</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Other administrative costs, such as data processing, credit</TD>
    <TD width="1%" style="border-right: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD width="1%" style="border-left: 1px solid #000000">&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">centers and warehouses,
including payroll and benefit costs,</TD>
    <TD style="border-right: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">card service fees and supplies.</TD>
    <TD width="1%" style="border-right: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD width="1%" style="border-left: 1px solid #000000">&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">occupancy costs and depreciation; and</TD>
    <TD style="border-right: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD width="1%" style="border-right: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD width="1%" style="border-left: 1px solid #000000">&nbsp;</TD>
    <TD align="center" valign="top"><B>&#149;</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">Freight expenses associated with moving
merchandise inventories from our
distribution centers to our retail stores.</TD>
    <TD style="border-right: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD width="1%" style="border-right: 1px solid #000000">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD width="1%" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD colspan="5" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD colspan="3" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD width="1%" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>






<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U><B>Warranty, page 69</B></U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>7.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Please explain to us and revise your disclosure to clarify the nature of the
allowances from vendors. In this regard, please indicate if the allowances represent
amounts for warranties covered by the vendors provided to the company or if the allowances
represent amounts to compensate the company for warranties that are not the responsibility
of the vendors.</B></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Response</U>:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Please refer to the proposed enhancements to the disclosures in future filings as noted in
Comment #1 above related to warranty. The Company will make the same changes, as appropriate to
Note 1 in its fiscal 2007 Form 10-K.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U><B>Note &#151; 13 Store Closing Costs, page 96</B></U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>8.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Please expand your disclosure to provide the total amount expected to be incurred for
each major type of cost associated with store closings and the cumulative amount incurred
to date. See SFAS No.&nbsp;146, paragraph 20.b(1). Please show us what your disclosure will
look like revised.</B></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Response</U>:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company believes the existing disclosures in this area have been adequate as they present
(i)&nbsp;the SFAS No.146 liability balances; (ii)&nbsp;the SFAS No.146 provision for stores closed in the
period with operating lease commitments; (iii)&nbsp;the provision for changes in estimates; (iv)
accretion expense; (v)&nbsp;other operating expenses and;
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->14<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(vi)&nbsp;cash payments for a three year period
in our Form 10-K and for interim periods in each of our Forms 10-Q. At the end of fiscal 2006,
the Company had a total of 175 locations included in our SFAS No.146 liability calculations
that we have to account for on a location by location basis to apply SFAS No.&nbsp;146 requirements.
It would not be practical or meaningful information to disclose cumulative and expected amounts
because the large number of stores and the volume of data involved. Also, stores are regularly
removed from the liability calculations as commitments end and a smaller number of new stores
are added to the liability calculation each year as they are closed.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Under SFAS No.&nbsp;146, the Company accrues as a store closing cost the fair value of any remaining
operating lease contractual commitment (which includes estimated occupancy expenses the Company
is contractually responsible for under the lease) on the date the Company ceases operating the
store. Fair value of the liability is determined as the present value of future cash flows
discounted using a credit-adjusted risk free rate. SFAS No.&nbsp;146 also requires that the Company
reduce lease costs by estimated net sublease income (gross sublease rent plus estimated lease
occupancy expenses paid by the lessee minus lease commissions) to the extent sublease rent does
not exceed rent costs calculated on a lease by lease basis. Accretion expense is recorded each
period on the recorded liability. Cash payments for lease costs and cash receipts for net
sublease income are included in the liability account when paid or received. The Company
updates its estimates quarterly and records as store closing costs any changes in the Company&#146;s
estimates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">When the Company closes a store, the Company also incurs costs to remove the Company&#146;s
inventory and property from the premises. These costs are not accrued under SFAS No.&nbsp;146, but
are expensed as incurred and appear as activity in the closed store disclosure table because
they are reported as store closing costs. Also, for closed stores, the Company incurs certain
occupancy expenses, such as utilities and repairs and maintenance that are not contractual
liabilities under the lease and that are not accrued under SFAS No.&nbsp;146. These costs are
expensed as incurred and appear as activity in the closed store disclosure table. Any
impairment on fixed assets (e.g. fixtures) is recorded as an operating and administrative
expense rather than a store closing cost. The Company does not incur employee termination
costs when it closes stores.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company believes disclosing all this activity for three historical fiscal years provides a
user of the financial statements historical information on costs and cash payment requirements
of the Company&#146;s closed store activity.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As requested pursuant to the Comment Letter, the Company acknowledges that:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company is responsible for the adequacy and accuracy of the disclosure in the
filing;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Staff comments or changes to disclosure in response to Staff comments do not foreclose
the Commission from taking any action with respect to the filing; and</TD>
</TR>


</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->15<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company may not assert Staff comments as a defense in any proceeding initiated by
the Commission or any person under the federal securities laws of the United States.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Please contact me at (602)&nbsp;631-7220 to discuss any questions you may have.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 50%">Sincerely,

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 50%">CSK Auto Corporation

</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 50%">/s/
<U>James D. Constantine</U>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 50%">James D. Constantine<BR>
Executive Vice President of Finance &#038;<BR>
Chief Financial Officer

</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->16<!-- /Folio -->
</DIV>



</BODY>
</HTML>
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
