SENIOR EXECUTIVES OF AUTO PARTS RETAILER CHARGED WITH SCHEME TOMANIPULATE CORPORATE EARNINGS

WASHINGTON – Two former senior executives of CSK Auto Corp. (CSK), have been chargedin a 31-count indictment for a scheme to manipulate the company’s reported earnings, ActingAssistant Attorney General Rita M. Glavin of the Criminal Division announced today.The indictment, returned on April 7, 2009, by a federal grand jury in Phoenix, charges Martin G.Fraser, 53, of Glendale, Ariz., and Don W. Watson, 53, of Gilbert, Ariz., with conspiracy,securities fraud, mail fraud, false filings with the U.S. Securities and Exchange Commission(SEC), false books and records, and false statements to its auditor. Watson is charged separatelywith falsely certifying financial reports.Fraser, the former president and chief operating officer, and Watson, the former chief financialofficer, allegedly engaged in a scheme from 2001 to 2006 to misstate CSK’s income by, primarily, concealing that the company had tens of millions of dollars of uncollectiblereceivables that it should have written off. Uncollectible receivables are funds that a companyreports as income because it expects to collect the funds, but later determines the funds not to becollectable. According to the indictment, during the scheme, CSK operated under the brandnames Checker Auto Parts, Schucks Auto Supply and Kragen Auto Parts. At the time the allegedearnings manipulation occurred, CSK was the largest specialty retailer of auto parts andaccessories in the western United States and one of the largest such retailers in the entire UnitedStates.According to the indictment, CSK purchased hundreds of millions of dollars worth of auto partsevery year, and its vendors gave CSK allowances, or rebates, for products CSK purchased inexchange for CSK using the allowances, generally, for marketing of the vendors’ products for sale in its stores. The vendor allowances reduced CSK’s expenses and thus increased itsincome. As the indictment alleges, instead of writing off these uncollectible receivables, theconspirators concealed them by moving vendor allowance collections from later years to cover the shortfalls in prior years; by moving uncollectible receivable balances to subsequent years tohide them; and by billing vendors to try to collect allowances CSK was not owed. As a result of the scheme, CSK allegedly misstated its receivables and pre-tax income in its annual reports(Forms 10-K) in fiscal years 2002, 2003 and 2004 by approximately $10 million, $24 millionand $19 million, respectively.The conspiracy charge carries a maximum penalty of five years in prison and a $250,000 fine.Each charged count of securities fraud, false filings, false books and records, and false statementsto auditors carries a maximum penalty of 20 years in prison and a $5 million fine. Each chargedcount of mail fraud carries a maximum prison sentence of 20 years and a $250,000 fine. Eachcharged count of falsely certifying financial reporters carries a maximum penalty of 10 years in prison and a $1 million fine.In related actions, Edward William O’Brien III, the former controller of CSK, pleadedguilty on April 7, 2009, to obstruction of justice. According to court documents, inapproximately summer 2006, O’Brien corruptly made material false statements and omittedmaterial information during an internal investigation interview in order to influence, obstruct andimpede the SEC’s investigation. O’Brien admitted that at the time of the interview, he knew theSEC was investigating allegations of fraud in connection with financial disclosures by hisemployer. A sentencing date has not yet been set for O’Brien. In addition, a criminalinformation was unsealed on April 7, 2009, against Gary Michael Opper, the former director of