Midas International asked for additional concessions that would make this business unattractive to the company. The firm was not willing to implement these changes and they decided to exercise their options to terminate this agreement.

The firm has recognized a $1 million termination fee during the third quarter. This was the only supplier chain program that the firm had and its professional customers continue to move away from stocking programs to a hotshot arrangement. Although the firm’s exclusive stocking arrangement will end, it has developed very strong relationships with the Midas dealers and will be very aggressively pursuing their businesses.

Key questions and answers from the third quarter fiscal 2007 earnings call conducted by AutoZone Inc. on May 22, 2007.

Bill Sims (Citigroup): You mentioned that price would drag on gross margins. Is that you were unable to pass along the higher raw material costs to your customers, or do you think the problem will improve as you go forward to the next several quarters?

William Rhodes: Yes, to some extent, it is more about being slow to pass-through line, you always have fluctuations in the overall price and there is always a little bit of a time lag relative to our ability to pass that prize along. As we continue to have volatility, we continue to have a little bit of pressure on gross margins.

Seth Bashem (Credit Suisse): Thinking about the improvements you made on the parts assortment, especially on the hard part side, can you give a way to benchmark your progress there, as the mix of hard parts change significantly versus accessories?

William Rhodes: That hasn’t changed significantly versus accessories at this point in time, but these products have been coming in throughout the course of the last two quarters. As the firm has implemented specific individual categories, it has been pleased with its progress and it is going to continue to do this. This is not a one-time event. This is something we do every year, but this year it was significantly more focused on hard parts coverage.

Seth Bashem: Given normalization of weather patterns and the progress you have made on the assortment planning, do you expect a pickup in comps?

William Rhodes: We don’t give financial guidance. Looking forward, we continue to be optimistic about what we’re doing. I’m very pleased with the progress we have made on our major initiatives and we continue to be optimistic. We don’t want to get into trying to forecast what’s going to happen into the comps, because there is obviously lots of different factors that go into that.

Seth Bashem: Looking at the commercial business, can you quantify what profit improvement you saw in that business?

William Rhodes: We are not getting into the specifics of the profit improvement, but it was a significant increase and we want to build a model that’s replicable. It’s a long-term, but is also significantly profitable and we continue to work on that from the last two years. Although we have been disappointed with our sales performance, we have been very pleased with the model that we built.

Matthew Fassler (Goldman Sachs): Can you shed a little more light on some of the developments improving or positioning in commercial business and in some of the changes that have enhanced your profitability in that business even though the topline has been on the slow side?

William Rhodes: We are very confused on making sure that we serve the customers that we can serve profitably. We are not out there chasing on profitable sales, we are out there making sure that we are providing the delivery business, we want to make sure that provide deliveries that are going to be profitable to us and so more stick to our range of customers within a reasonable range of a store. The things that we continue to do are work on the basics of that business. It is about making sure we got the right parts coverage, making sure that we deliver when we say we are going to deliver, make sure that we have knowledgeable customer. We are optimistic about the future is something we have got to build world-class sales organization. The retail sales approach is very different than going out and making sales calls. We need to create the processes, the training and then develop a world-class sales organization through the people. In that component, we haven’t done a great job and we are in a very early stages of doing that. As we continue to build our model and see that we do provide a great offering to our customers always got to go tell them about it.

Matthew Fassler: How many of your 2100 commercial stores currently have the most advanced sales model and most developed sales force you have got?

William Rhodes: It is about 700 stores.

Daniel Fox (Merrill Lynch): Could you clarify some of the comments that you made about advertising? Are you simply planning to change in the message in your advertising, where you planning to spend more advertising dollars to get the word out on some of the changes that are taking place at the store?

William Rhodes: It is a combination of both. One of the things is that our message continues to be very much focused on trustworthy advise and also promoting the Duralast brand, which continues to be one of the number one brands in the industry. At the same time, we launched the national advertising on Z-Net over the last four or five weeks. In addition to that, we’ve shipped a little bit of advertising dollars towards the fourth quarter, and that will be well positioned for the busier selling season of the year with a very appropriate advertising again promoting Z-Net focused on trustworthy advisors, and we will have a little bit higher emphasis in the fourth quarter than we did last year.

Daniel Fox: In the past you had mixed results from incremental investments in advertising. What is the opportunity that you see with the higher advertising spend, that is different than in the past?

William Rhodes: We are not satisfied with our advertising spend in the past, but we have spent a lot of time on the last 12 months getting ready for the selling season. We’ve put a lot of end products in place, we also added Z-Net, which is a major new customers enhancement, and then we also have two strong marketing message that we’re very comfortable with both Z-Net.

Dan Weaver (Raymond James): Now that you completed the expanding the assortments, how would you compare your assortment to competitors that have a larger DIFM focus such as CARQUEST, NAFA, and OReilly?