Key questions from the third quarter fiscal 2007 earnings call conducted by Circuit City Stores Inc. on December 21, 2007.

Danielle Fox (Merrill Lynch): Could you compare and contrast some of the changes you’ve made in the plan for executive compensation with some of the changes you’ve made to associate compensation?

Bruce H. Besanko: September of last year we put a program in place for all management in the company, including our store directors and above, and I would characterize this as a retention program but also as an incentive for them to perform and it was incremental to their base and standard bonus program. The retention program was aimed at retaining the leadership necessary to continue this difficult turnaround. Over the course of the last three years, I’ve reassembled the management team and underneath our senior-most managers, they’ve assembled a set of senior vice presidents, vice presidents, and directors to lead this transformation. This is very difficult work and that takes continued commitment and in light of the recent difficulties, it was necessary to put a retention vehicle at all levels. The base program that we have in place was a combination of stock options and restricted shares. Because of the current stock performance, that program for many of our executives was underwater and so far underwater that it didn’t have any meaningful value over time. In addition to that, our senior most executives did not receive a bonus for the last two years and will not receive a bonus based on this year’s performance. We have two plans now to retain those leaders. One is our cash-based retention program and two is a stock-based incentive program which is in line with our annual stock-based incentive program.

Danielle Fox (Merrill Lynch): Could you address the issue of incentives at the associate level?

Bruce H. Besanko: It’s fair to say that we have competitive salaries for entry-level associates and we pay all of our supervisors and above a bonus in addition to their base salary based upon performance.

Chris Horvers (Bear Stearns): Can you talk about the ability to drive cash? How much of the deferred tax asset is an NOL? Earlier in the year, you talked about net-owned inventory being down 125 year over year. Any comment on that now?

Bruce H. Besanko: From a cash perspective, we’re actively managing the balance sheet and our cash position for strength. Nearly all of our stores are cash-flow positive and we’re in a great position to continue to maintain a strong balance sheet as a consequence of the great cash that the stores produce. The change year over year was principally driven and our cash position was principally driven by investments in PP&E and then the repurchase of stock late last year and the early part of this year, so that’s what happened in terms of the sequential improvement, was in short was working capital efficiencies.

As it relates to the tax issue, we talked about impairing our deferred tax assets in the third quarter. We were required to do that based on FAS-109. The result was a tax expense on top of the pre-tax loss. The three important elements of the tax impairment issue are first, this is a non-cash issue; second, we’ll be able to use the NOLs in the future and then finally, it doesn’t affect the income tax receivable that’s on the balance sheet.

The consolidated inventories at quarter end were relatively flat with last year despite the fact that the firm opened 28 new superstores. the net owned inventory was flat but I feel confident that we can achieve the goals of the $100 million to $150 million of net-owned inventory take out atthe end of the year.

Mike Baker (Deutsche Bank): Could you discuss a little bit the promotional environment in particular over Black Friday? You were a little bit more promotional but now you’ve become less promotional again. Is that a fair characterization and can you describe your philosophy on driving sales versus maintaining some gross margin trend?

John Kelley: The promotional activity over Black Friday was a little bit less than I’ve seen in the past years and we were able to capitalize on that with strong promotions in our TV and PC world. We also saw an increase in margin over that period of time also.

Philip J. Schoonover: It depends on the competitive set. In one way, our more traditional competitors were less promotional. The web was more promotional than ever and there is certainly more commerce flowing through the web these days and our new competitors, not the least of which are the warehouse clubs, are extraordinarily price and promotionally driven. We saw a balance of some opportunity in the insert promotions to improve profitability but we do not feel that the competitive climate in general in the consumer electronics industry is any less competitive than it was a year ago.

Andy Hargreaves (Pacific Crest Securities): You talked about linear improvement through fiscal Q3 in both attach rate and the close rate. Can you give any commentary on whether that continued into the first part of December?

George D. Clark: We had began to settle down on our operating model and our same ticket attach and our basket bottomed out at the beginning of Q3 and we’ve seen initial progress since then in terms of Circuit City advantage, Firedog, and accessory same ticket attach. We’re very focused on rebuilding our selling culture. We’re trying to settle down our operating model and focus in those particular areas, getting ready for our customers and helping our customers shop, find, enjoy. We have seen some initial progress but we have more work to do.

Bill Cimino: We are not going to discuss December trends on the call. We are going to focus on the third quarter.

Andy Hargreaves (Pacific Crest Securities): What is it exactly that you are doing with the store level associates to help improve the selling culture? What do you think that they are missing right now that your competitors are doing better?

George D. Clark: We have a lot on their plate and changing their operating model can be very complicated. We put seven new SOPs in place over the course of the summer. What we’ve done is we’ve narrowed the focus and we’ve gotten very focused on our selling culture -- what our experience is like with our customer, building the capabilities with our associates, and helping our managers focus on important Firedog services, Circuit City advantage and accessory attachment in our categories. Narrowing the focus has helped us see some initial progress.

Scott Ciccarelli (RBC Capital Markets): How would you characterize your vendor relationships at this point, because obviously the trends in the business are relatively soft?

Bruce H. Besanko: We maintain an ongoing dialog with our vendors. We have an excellent relationship certainly with our top vendors and they clearly understand where we are at in our turnaround plan. Our vendors are comfortable with our liquidity in large part because of the strength of our balance sheet and the $1.3 billion amended credit facility, which extends us out for another five years has given them additional comfort.

Jonathan Cramer (Cowen & Company): Can you go over what the status is of all your initiatives and then your thoughts about where you plan to take those going forward?