CSK Finds $90 Million in Accounting Errors
AAPEX Shortened to Three Days

CSK FINDS $90 MILLION IN ACCOUNTING ERRORS

CSK Auto Corp., the parent company of Kragen Auto Parts in California as well as Shucks, Checker, and Murray's Discount Auto Stores, reported that it found over $90 million of overstatements on its books.

The errors were found as part of an internal audit by the automotive parts and accessories retailer.

As a result of the massive errors found in the audit, CSK President and COO Martin Fraser and Chief Administrative Officer and Chief Financial Officer Don Watson, "are no longer employed by the company."

In addition, CSK Chairman and CEO Maynard Jenkins will remain at his post only until a successor can be found. In an official statement, Jenkins said, "When our new CEO is on board, I will retire from the Company but will remain available to provide such assistance as the Board may request."

CSK officials added that "several other individuals in the company's finance organization are no longer employed by the company."

Jenkins added, "Needless to say, I am extremely disappointed by the results of the investigation, and I will work with the Board to implement the policies and procedures to assure that the issues identified by the investigation do not recur."

The audit found the "accounting errors and irregularities" were linked primarily to the company's inventories (an estimated $70 million in overstatements) vendor allowances (an estimated $12 million) and store surplus fixtures and supplies (an estimated $3 to $7 million). It is expected that the errors will result "in a maximum of $92 million in overstatements."

CSK says it will defer the release of its financial results for 2005 and 2006 until the audit and corrections are completed. The company says it will also revise its financial statements for 2001-2004.

Phoenix-based CSK operates 1,288 auto parts stores in 22 states.

AAPEX SHORTENED TO THREE DAYS

The leadership of the Automotive Aftermarket Products Expo (AAPEX) has decided to shorten the Las Vegas aftermarket trade show to three days, eliminating Friday.

Show sponsors AAIA and MEMA said they chose to shorten the Industry Week show "as a result of discussions with a number of long-time exhibitors and careful review of feedback from post-AAPEX 2005 surveys." The Associations said "the overwhelming support for a three-day trade show justified the significant change. The compressed show times would greatly enhance the quality of AAPEX and save exhibitors considerable time and expenses."

The decision to cut a day from the trade show is exclusive only to AAPEX; the SEMA Show remains unchanged. The change will not eliminate or alter any AAPEX educational offerings, events or networking functions.

"Exhibitors provided valuable input into our decision and many told us that the amount of business they complete with existing and potential customers the first three days of AAPEX is the most productive three days of the year," said MEMA President and CEO Bob McKenna. "By compressing AAPEX into three days, we have a chance to save AAPEX exhibitors considerable expenses while not impacting the significant amount of business performed during the week."

AAPEX 2005 experienced the highest number of exhibitors ever with 2,067, up 95 from 2004.

Originally published in the November 2006 issue of Automotive Booster Magazine.
Copyright 2006 by KAL Publications Inc.