S&P puts CSK Auto on negative watch

Standard & Poor's said it placed CSK Auto Inc.'s B+ corporate credit rating, B+ senior unsecured debt rating and B- subordinated debt rating on CreditWatch with negative implications following the company's announcement that it has uncovered accounting irregularities and will postpone the release of its 2005 fourth-quarter results. CSK Auto does not yet know which periods it will need to restate or by how much.

While CSK Auto anticipates that the accounting errors and irregularities are related mainly to its inventories and vendor allowances, the agency said it believe that these restatements will also likely impact the company's historical costs of goods sold and overall profitability levels.

S&P said the CreditWatch placement also reflects the possibility that high debt to EBITDA levels may persist longer than expected, given the company's softer-than-anticipated performance. Management provided guidance that same-store sales for the fourth quarter were roughly flat.

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