Eric Margolin – General Counsel Jack Brouillard - Chairman, President, CEO Jim Wade – EVP, Business Development Michael Moore – EVP, CFO Elwyn Murray – EVP, Merchandising Supply Chain andTechnology

Matthew Fassler – Goldman Sachs Armando Lopez -Morgan Stanley Danielle Fox – Merrill Lynch David Cumberland - Robert W. Baird Dan Wewer – Raymond James Scott Ciccarelli - RBC Capital Markets Gary Balter – Credit Suisse Tony Cristello - BB&T Capital Markets Rick Weinhart - BMO Capital Markets

Welcome to the Advance Auto Parts third quarter 2007conference call (Operator Instructions) Before we begin, Eric Margolin, SeniorVice President and General Counsel, will make a brief statement concerningforward-looking statements that will be made on this call.

Good morning and thank you for joining us on today's call.Certain statements contained in this conference call are forward-lookingstatements as that term is used in the Private Securities Litigation Reform Actof 1995. Forward-looking statements discuss, among other things,management succession and expected growth and future performance, including newstore openings, remodels and relocations, comparable store sales, sales perstore, gross margin, SG&A expenses, operating margin, return on investedcapital, free cash flow, accounts payable ratio, capital expenditures, taxrate, and earnings per share for the fourth quarter and fiscal year 2007 andfiscal year 2008. These forward-looking statements are subject to risks,uncertainties and assumptions including those disclosed in the companies 10-Kfor the fiscal year ended December 30, 2006, on file with the Securities andExchange Commission. Actual results may differ materially from anticipatedresults described in these forward-looking statements. The company intends these forward-looking statements tospeak only as of the time of this conference call and does not undertake toupdate or revise them as more information becomes available. Our results can befound in our press release and 8-K filing which are available on our website atwww.AdvanceAutoParts.com. For planning purposes, our fourth quarter earnings releaseis scheduled for Wednesday, February 13, 2008 after market close; and our quarterly conference call isscheduled for the morning of Thursday, February 14, 2008. To be notified of the dates of future earningsreports you can sign up through the investor relations section of our website. Finally, a replay of this call will be available on ourwebsite for one year. Now let me turn the call over to Jack Brouillard, ourChairman, President, and CEO, who will be followed by Jim Wade, EVP of BusinessDevelopment, and Michael Moore, EVP and CFO. Also joining us today on the callwill be Elwyn Murray, EVP, Merchandising Supply Chain and Technology.

Good morning and welcome to our third quarter conference call.We are pleased to report that we remain on track with the initiatives that wereviewed with you on the last call. Although we anticipated it would take time,we believe the results of those initiatives are beginning to have a positiveimpact on our sales, earnings, and return on capital. I will spend my time this morning reviewing with you thehighlights of our third quarter results, the status of our initiatives, and howwe see the business over the coming months. In the third quarter, comp store sales grew by 1.1%, whichwas in line with our sales growth over the past several quarters, but betterthan we had expected for the quarter. As you may recall, we forecast our third quartersales to be in the negative 2% to zero range based on how the quarter startedoff. After those early weeks, sales trends improved and stayed fairlyconsistent during the remainder of the quarter. As Jim will discuss, Do-It-For-Me our sales showed solidimprovement over our year-to-date run rate, but our Do-It-Yourself trend hasnot yet improved. We believe that the tough economic environment continues tohamper sales across much of retail, including our business. Our gross margin percent was 28 basis points less in thethird quarter than last year, due to several factors that Mike will discuss inmore detail. Although gross margin was down in the quarter, we do see theopportunity to continue to grow the gross margin rate as we go forward,although at a lower rate. Overall, SG&A was up 37 basis points in the quarter, butleveraged 18 basis points excluding the severance costs and asset write-offsrelated to our expense reduction initiatives. We feel this is a solid step inthe right direction and reflects our team’s commitment to getting our costs inline. We anticipate additional SG&A leverage in the fourth quarter. Webelieve the expense reductions we have put in place will not compromise futuresales growth. Our priority is to drive the top line while lowering our expenserate. Earnings per share were $0.57 which was at the high end ofour guidance range of $0.53 to $0.57 per share. Earnings per share was $0.61excluding the severance cost and asset write-offs, or an increase of 9% overlast year’s third quarter. Now I will provide you an update on the status of ourinitiatives to drive sales, earnings, and return on capital. As I discussed onour last call, we are in the process of returning to what matters most in theauto parts business to reinvigorate our sales and earnings growth. Our recentbusiness strategy review and the related customer research provided goodinsight and background for our action plans. First, we are improving parts availability. We are well intoimplementing our plan to increase parts availability in our stores. We believethis will drive improvement in both our DIY and commercial sales. The plan isfocused on greater late model and foreign vehicle coverage, as well as beingmore aggressive in getting parts into our stores and closer to our customers. Imentioned that our DIFM business has started to improve but that our DIYBusiness has not yet shown the same trends. Our plan to improve parts availability is on schedule. Someof this increase in coverage has now been distributed to our stores and weanticipate much of it will be completed by year end. We told you on the last call that we expected to fund partof this increase by making our existing inventory more productive. That processis also underway and ahead of schedule; Mike will review our progress. In theshort term, we are making select investments in more parts inventory that webelieve will help grow sales. Going forward, however, we are committed to growsales at a rate faster than inventory growth. Second, we are increasing our commercial focus. We said onour last call that we believed we had missed meaningful opportunities to driveour commercial sales and as a result, our comp growth in this area had slowed.We continued to achieve 5% to 6% comps, but believe that undershot ourpotential in this area. With our increased focus on commercial sales, our commercialcomps for the third quarter rose to 8%. We saw an improvement in commercialcomps as we went through the quarter and comps continue to run above 8% for thefourth quarter to-date. We continue to look at store staffing and training,compensation policies, truck utilization, and many other areas to beststructure us for further commercial growth. You will hear more about this overthe next several quarters. Third, we are changing our previous focus on the front room.As part of our ongoing business review, we are improving the productivity andefficiency of our sales floor or front room portion of our stores. We are inthe process of rationalizing and removing SKUs within sales floor categories,as well as full categories that do not align with our focus on parts andrelated items. We now have less frequent end cap rotation, fewer sales floorplanogram changes, fewer price changes and less frequent rotation of point ofpurchase signage. The hours previously spent on these tasks are now beingapplied to parts-related, sales-driving initiatives. We are on schedule with all the SG&A reductions andreturn on invested capital improvements we outlined in the last call, as well ashaving worked through additional cost reductions that Mike will address on thiscall. The reduction of 250 positions in our field and store support center hasbeen completed. We have reduced our new store openings for 2008. On our lastcall, we announced guidance of 140-150 new stores for 2008. As we look at thesignificant changes in many parts of our business that our new strategyrequires, we now believe that our new store openings for 2008 will be in therange of 110- 120 stores. We would anticipate store openings will increase in2009. Jim will talk in more detail about the additional steps we are taking tobetter align our new store growth strategy with our updated strategic plan andto improve our return on new store investments. We anticipate store relocationsto be in the range of ten to 20 stores in 2008 for the same reasons. We halted our 2010 store remodel program. We discontinuedour Advanced TV Network in our stores. We eliminated advertising expendituresthat we determined were not productive. We continue to test and measure otherportions, including our print advertising program and we are implementing aplan for 2008 that will shift expenditures away from print towards moreelectronic media. In addition, we will be increasing the portion of our totalspend targeted to the Hispanic customer. In partnership with our new ad agency,we believe we can achieve greater results in 2008 with less expenditure. Weeliminated IT, logistics, and other investments that did not demonstrate anacceptable return. Over the past three years, we have repurchased over 18million shares, including 6.2 million shares repurchased in the third quarterat an average price of $33.26. We see this as an excellent use of our capitalat our current stock price and as we generate additional free cash flow, wewill review further purchases. We are also currently evaluating taking onadditional debt to repurchase shares. Externally, the economic headwinds continue to be a negativefor sales growth. We believe these headwinds have reduced our customer’sability to make purchases and has led to increased maintenance deferrals. With our parts-focused initiatives, we are pleased to seeour parts categories are growing; however, we continue to see softness in ourmore highly discretionary categories. We believe our focus on partsavailability, a more productive and effective advertising program, increasingparts knowledge in our stores, and other initiatives will drive DIY positivelybut it has not yet offset the economic headwinds and regional challenges. Weanticipate that over time, customers will adjust their budgets, and coupledwith our initiatives, we will see a benefit. We will not be providing specific guidance for 2008 untilthe February conference call. However, we will address how we are planning fornext year. At this time, we continue to see a challenging sales environmentwhere we believe it is prudent for us to plan comps in the 1% to 2% range untilwe see our trends show consistent improvement. We anticipate gross margin toimprove incrementally by 10 to 15 basis points as we continue to pursue lowercosts and leverage our logistics network, but we anticipate that theseincreases will be somewhat offset by a higher commercial sales mix. Lastly, with our SG&A reductions, we believe we canleverage SG&A in 2008 at the higher end of our forecasted 1% to 2% complevels. In regard to the CEO search, we feel very good about ourprogress and expect to announce a new CEO by the end of the year. Now, I'd like to turn the call over to Jim and Michael, whowill review further our third quarter results and our guidance for theremainder of the year.

Thank you, Jack and good morning. I'll provide a furtherbreak down of our sales for the third quarter as well as store growth, andMichael will discuss gross margin and SG&A, as well as our balance sheetand cash flow. Our comp store sales increase for the quarter was 1.1%compared to 1.4% last year. As Jack mentioned, our sales started off slower atthe beginning of the third quarter. As the weather in August became warmer, webegan to see sales pick up and we saw that momentum continue for the remainderof the third quarter. We've also seen sales continue in the current range sofar in the fourth quarter, and we believe we are seeing a positive impact fromour sales initiatives even though the macroeconomic environment remainschallenging. On a geographic basis, comps continue to be stronger in theNorth and Midwest and weaker in Floridaand the Gulf Coast.Our comps, excluding Florida andthe Gulf Coast,were 2.1% in the third quarter. The comps in Floridaand the Gulf Coastimproved slightly over the second quarter. During the third quarter, our DIY comps were a negative 1%compared to negative 0.6% last year. We believe we're doing the right things toimprove DIY and will be well-positioned over the next several months. Our commercial comps are 8% in the third quarter over 8.7 %last year. As Jack mentioned, the steps we're taking to refocus on commercialgrowth has started to show up in our comps as the 8% comp in the third quartergrew from the 5.4% comp in the first half of 2007. Our focus remains on gettingour commercial comps back to the double-digit run rate we've previouslyachieved. Our commercial comps continue to run in the 8% plus range in the fourthquarter to date. Commercial sales, including Autopart International,represented 27% of our total sales for the quarter. Our total commercial saleswere approximately $314.1 million, a 13% increase over last year. During thequarter, we added 46 new commercial programs to our Advance Auto Parts stores,most of which were in our new stores, bringing the total number of Advancestores with commercial programs to 2,571. Today, about 82% of our Advancestores have commercial programs, compared to 81% for the third quarter lastyear. In the third quarter we opened 43 new stores; 39 of thesenew stores opened as Advance Auto Parts and four opened as AutopartInternational. Year-to-date we've opened 156 new stores, 139 as Advance and 17as AI. We closed two stores in the quarter and ten year-to-date. Our new storeproductivity remained comparable to last year. We continue to expect to open 190 to 200 stores in 2007through a combination of Advance and AI stores. As Jack mentioned, we nowexpect to open 110 to 120 new stores in 2008. This represents an approximate 6%rate of growth in 2007 and 3.5% to 4% in 2008. In 2007 and 2008, weanticipate all of our new stores will open within our existing 40 statefootprint. Year-to-date we've relocated 24 stores and foresee approximately 30relocations in 2007. We anticipate ten to 20 relocations in 2008. We mentioned last quarter that we're doing a complete reviewof our new store strategy and related occupancy costs as part of our overallstrategy SG&A and CapEx review. That project is now well underway and we'veidentified a number of opportunities to more closely align our go-forward focuson what matters most in being a parts store, while reducing our new store siteand building costs. We're looking at where we can locate our stores to maximizeboth our DIY and our commercial sales. Previously our focus was on maximizingDIY sales and then capturing available commercial sales. We're testing smallerprototype buildings and different store layouts to optimize parts availabilityand sales floor needs. Some of these opportunities can be implemented quickly, andsome will take time as we work through our new store pipeline. In the meantime,we'll open new stores at a reduced pace in 2008. With our real estate activityin 2007, we ended the quarter with 3,124 Advance Auto Parts stores and 104Autopart International stores for a total store count of 3,228 stores. Now, let me turn the call over to Michael to review ourfinancial results.

Thanks, Jim, and good morning. Let me begin with our income statement.For the quarter, gross margin was 47.9%, a 28 basis points decrease over lastyear’s rate of 48.2%. Gross margin was down from last year, primarily due to aless favorable merchandise sales mix this year. In addition, fewer discountswere earned as merchandise purchases were less than year-ago levels, and we hada greater proportion of commercial sales this year. Third quarter was our most difficult quarterly comparison ofthe year. Third quarter 2006 was a 100 basis point improvement over the prioryear, while the entire year of 2006 was 50 basis points higher than 2005. Looking forward, we expect lower procurement cost andlogistics efficiencies will more than offset the unfavorable rate impact of agreater mix of commercial sales and that our gross margin rate will grow overtime by ten to 15 basis points per year. For fourth quarter, we expect grossmargin percent to be in line with fourth quarter last year. LIFO was a $0.4 million charge in this year’s quartercompared to a $0.4 million credit in last years third quarter. Going forward,we would expect modest LIFO credits in most quarters as we benefit from lowercosts in most product categories. Turning now to SG&A. In the quarter, we recorded apretax charge of $6.3 million or $0.04 per share in severance costs related toour position eliminations and asset write-offs associated with shutting downthe Advance TV Network. On a reported basis, our SG&A rate for the quarterwas up 37 basis points. However, excluding the severance and asset write-offs,we leveraged SG&A by 18 basis points as compared to last year. This was animprovement of 62 basis points over the 44 basis points of de-leverage we sawin the first half of 2007. Over the past quarter, we have taken a number of steps tofurther reduce our expense structure. We have identified additional expenseinitiatives that will reduce SG&A by more than $20 million in 2008. Theseare in addition to the $50 million in expense reduction initiatives that weannounced in conjunction with our last quarterly earnings report. These expense reductions include savings in advertising and marketing,store occupancy, utilities, transportation expense, non-merchandise purchasingcosts, and an additional 30 positions in our field and store support centerthat have been eliminated. These newinitiatives will impact 2007 to a minimal degree but will favorably impact 2008by $20 million. As Jack stated, we believe the expense reductions we haveput in place will not compromise future sales growth. Our priority is to drivethe top line while lowering our expense rate. In fourth quarter 2007, as aresult of the expense reduction initiatives that we have implemented, we expectto leverage SG&A within our comp sales guidance of zero to 2%. Interest expense, net of interest income, was $7.6 millionin the quarter compared to $9.1 million last year. Interest expense decreasedfrom last year as a result of less debt outstanding and lower borrowing costs.Our borrowing costs in the quarter was approximately 6%. In third quarter last year, in conjunction with therefinancing of our credit facility, we recorded a net pre tax gain of $1.0million which was recorded in the gain on extinguishment of debt line on the incomestatement. Our third quarter income tax rate was 36.4% as compared to37.6% last year. Both this year and last year’s income tax included a benefitfrom a successful completion of state income tax audits. In addition, this yearincluded the benefit of additional federal and state tax credits. In the fourthquarter, we expect our tax rate to be in the 37.8% to 38.0% range. Now, I will review key components of our balance sheet andour cash flow statement. For the quarter, inventory increased 5.4% on a salesincrease of 5.3%. This was a significant improvement over the second quarterand reflects our focused plan to improve inventory productivity whileincreasing parts availability. Even with our significant investment additionalparts inventory, we expect that inventory will grow only slightly higher thansales in the fourth quarter. We expect to fund the majority of our investment in additionalparts availability through several inventory reduction initiatives. We expectthat our parts availability initiative will require an investment ofapproximately 5% of our total inventory; however, we expect to offset most ofthis incremental investment through the rebalancing of inventory in selectedcategories and stores and other inventory reduction actions. We expect that ournet incremental investment, net of accounts payable, will be less than 1% oftotal inventory. As Jack said, we are making investments in additional partsinventory that we believe will help grow sales. Going forward, however, we arecommitted to grow sales at a rate faster than inventory growth. Our accounts payable to inventory ratio was 55.9% comparedto 55.4% last year. We continue to see opportunity to grow our AP ratio. As aresult of working with our suppliers, we expect that this ratio will exceed theprior year’s corresponding ratio for the fourth quarter. On the cash flow statement, our capital expenditures were$31 million for the quarter and $147 million year-to-date. This compares to$201 million year-to-date last year or a reduction of $54 million. We nowestimate capital expenditures for 2007 to be $215 million to $225 million, areduction from our previous guidance of $230 million to $240 million. Our 2007 capital expenditures break down as follows: $110million for store development which includes new, relocated and remodeledstores; $70 million in maintenance capital for our stores, distribution centersand corporate infrastructure, primarily IT-related; $15 million for new IT andlogistics initiatives; and $25 million for our ninth distribution center in Indiana.As a result of fewer new store openings in 2007 and 2008 than originallyplanned, we have pushed the opening of our next distribution center to thebeginning of 2010. Our efforts to improve return on invested capital arebeginning to show up in our free cash flow. As a result of lower capitalspending and less working capital required, we are now increasing our free cashflow estimate for full year 2007. We now expect free cash flow for the year tobe in the range of $200 million to $220 million. This is an increase from ourprevious guidance of $150 million to $170 million and compares to $83 millionin free cash flow generated in 2006, or more than a 140% increase. In the quarter, we repurchased 6.2 million shares orapproximately 6% of our total outstanding at an average price of $33.26, for atotal expenditure of $207 million. In the last three years, we have repurchasedover 18 million shares at a cost of nearly $600 million. We now have $335million left on the share repurchase authorization approved by the board of directorson August 2007. As a result of our share repurchases, our fully diluted thirdquarter share count was 103.2 million shares, a reduction of more than 4million shares from second quarter. In the fourth quarter, we expect our fullydiluted share count to decrease to slightly less than 102 million shares,assuming no share repurchases in the fourth quarter. As Jacksaid, we are currently evaluating adding debt to fund additional sharerepurchases. We believe that we have some flexibility to increase leverage andstill maintain our current debt rating. In terms of updated guidance for comp store sales, we arereaffirming our guidance of zero to 2% for fourth quarter. We continue to baseour guidance on an assumption that a challenging macroeconomic environment willcontinue through the fourth quarter and because of the implementationtimeframe, our sales-building initiatives will positively impact sales to a limiteddegree in 2007. We expect fourth quarter gross margin percent to be more inline with last year, as compared to the third quarter. Also, we expect toleverage SG&A in the fourth quarter as a result of the expense initiativeswe have implemented. We expect earnings per diluted share in the fourth quarterto be $0.36 to $0.40, an increase of 9% to 21%; and for the year, to be $ 2.28to $2.32. Excluding the $0.04 per share in severance, cost and asset write-offsrecorded in the third quarter, earnings per diluted share for the year areexpected to be in the range of $2.32 to $2.36, an increase of 7% to 9%. Although we will not be providing 2008 earnings guidanceuntil our fourth quarter call, we are providing guidance for some of ouroperating metrics for 2008. As Jack stated, in 2008 we are basing our planningon a 1% to 2% comp sales increase. We expect an improvement in gross margin of tento 15 basis points and we expect to leverage SG&A at a 2% comp level. In addition, as Jim stated, in 2008 we are expecting to open110 to 120 new stores and to relocate ten to 20 existing stores. As a result,we expect 2008 capital expenditures to be in the range of $170 million to $190million. Also, you should know that 2008 will be a 53 week fiscal year. In summary, we believe that all the steps we are taking willposition us to grow sales, reduce SG&A expenses and improve return oninvested capital going forward. Now, I would like to turn the call back over to Jack.

Thanks, Mike. In closing, I'd like to again thank our teamfor their commitment over this past quarter. I am confident that our sales-drivinginitiatives will show solid results over the next few months. We are now ready for questions, operator.

Your first question comes from Matthew Fassler – GoldmanSachs. Matthew Fassler –Goldman Sachs: Good morning to you. I'd like to start by focusing on grossmargin. If you could shed a little more light on the decline this quarter, andthe moderation in growth you expect going forward? I understand that commercial should have some impact on themargin, but for a number of years your commercial comp growth has sharplyexceeded retail comp growth so my sense is that mix shift is not a newphenomenon for you. Any light you could shed on what, if anything, has changedon the gross margin front would be great.

A few things I would add. First of all, I would highlightwhat Michael did in that Q3 was obviously a tough comparison versus last year,with 3Q06 being 100 basis points higher versus the entire year around 50 basispoints. We did see some softness in what I would categorize asdiscretionary categories, in particular things like appearance accessories,appearance chemicals, interior accessories, exterior accessories, things ofthat nature that carry with them around a 60% or so gross margin. Some of that, I think, is reflective of a softer consumerwallet and I think some of it as well is specifically linked to some of the drierconditions as far as less car washing and things of that nature. We did see, as Michael mentioned, some lower volumediscounts as we work to bring our inventory in line with sales so we'reconsciously working hard to be more disciplined in what we're bringing in whilewe're at the same time investing in more parts. I would certainly want to reiterate our guidance goingforward of ten to 15 basis points. We certainly see continued cost of goodsreduction opportunities and are working hard to identify those. In addition,continuing to work with AI on synergy opportunities there. We continue to seelogistic improvement opportunities while simultaneously strengthening thecapability of our supply chain. I certainly want to reiterate our commitment topricing and remaining competitive there, particularly in the categories thatmatter most. So, overall, I think Q3 is interesting to observe from ayear-ago perspective, but we're confident going forward that there's ten to 15basis points of growth. But again, as we stated in our last call, we don't see50 to 100 basis points growth year over year like it had been. Matthew Fassler –Goldman Sachs: That's very helpful. On the expense reductions, where areyou from a run rate perspective in terms of harvesting the $50 million that youdiscussed? Did the third quarter’s results reflect the full annualized impactof that number? Is there still some of that to come as you come into Q4?

Matt, as we said on our second quarter call, we had $20million that would benefit 2007 out of the $50 million that we put in place andcertainly, a sizeable portion of that $20 million favorably impacted the thirdquarter. Matthew Fassler –Goldman Sachs: The $20 million for next year, is that to be felt throughthe year or is that a run rate to be harvested incrementally as the yearprogresses?

It would be felt throughout the year.

Your next question comes from Armando Lopez -Morgan Stanley. Armando Lopez -MorganStanley: A quick question on the capital spending, or the CapEx. TheCapEx expectations continue to come down. Could you maybe talk a little bitabout what's the difference or what drove the difference from your currentexpectations relative to what you were forecasting?

Yes. I can speak to that. I think certainly this year wehave reduced the amount of new stores that we originally had planned to open. Wehave reduced the amount of relocated stores from originally 35 to 30 stores; certainlywe've eliminated all remodels so there's no more CapEx earmarked for remodels.We have some of our new projects we're spending a bit less on, so it'sprimarily store development related reduced spending. Armando Lopez -MorganStanley: In terms of the pricing environment, could you comment alittle bit about what you're seeing from a competitive perspective on thecommercial side? And then just from an overall inflation perspective?

I would say we continue to monitor pricing with allcompetitors, certainly on the DIY and the commercial side, and we are notseeing any significant shifts there but continue to position ourselvescompetitively.

Your next question comes from Danielle Fox – Merrill Lynch. Danielle Fox –Merrill Lynch: First, just going back to the quarter, you beat the comp byit looks like about 100 basis points at the high end of the range, and you camein at the high end of your EPS range. Was gross margin the reason why your EPSdidn't exceed your plan in the way that sales did?

I would say primarily it was gross margin related. If grossmargin was less of a decline, we would have exceeded the high end of ourguidance. Danielle Fox –Merrill Lynch: Could you talk a little bit more about the decision to slowunit growth in 2008? Is this decision being driven by the performance of yournew stores or is it being driven by the desire to focus on execution at yourexisting stores?

It's a combination of factors. I think as we've gone throughthe strategy review this past year and we've done a lot of customer research,both on the DIY and commercial customer, we are using that to identify betterwhere we should be opening our new stores. Through that process, as we focus onmaximizing both DIY and commercial potential, we're looking at the opportunityto have somewhat less main-on-main type of locations and still get us in theright position for our customers so we can manage our occupancy costs at abetter rate. What we've seen happen over the last few years is our sales inour new stores have continued to increase and we've seen that continue, but thecost of occupancy has gone up at a faster rate than our sales increase; sowe're working through that. I think withthe slower pace in 2008, by the time we get to 2009 we'll be in a position tobetter locate our stores relative to the potential of both DIY and commercial,and at the same time, do that at a lower occupancy cost than we have in thepast. It makes sense from our standpoint to open fewer stores in 2008 whilewe're working through that. Certainly, your other point is valid as well, that as we'reopening fewer stores during this timeframe, it certainly gives our team theopportunity to focus on executing and implementing the strategy changes in ourstores that we've talked about as well. Danielle Fox –Merrill Lynch: So does this mean that you're experimenting with a formatthat's much more dedicated to targeting the commercial customer or is it simplytrying to find better real estate opportunities?

I wouldn't say it's much more focused on the commercialcustomer but what I would say is as we've looked at why our DIY customers shopwith us and what the optimal location is for commercial, that we can accomplishboth of those and grow our sales per store, while at the same time not being ina location that is quite as expensive from an occupancy standpoint as we'veseen over the last three or four years. Again, I don't think as you look at where we locate ourstores it would not be a dramatic difference, but what we would see is slightlyless retail locations that carry the highest level of occupancy cost. As partof that, as we're looking at the size of our stores and experimenting withsales floor space and more parts in our stores, it will allow us to likely getinto some locations we might not have gotten into before, which again can helpour ability to open more stores at a lower cost.

On top of everything Jim said, we would expect and hope toincrease the growth rate the year following. While we're rethinking some of ourreal estate, we're also, as you know, working on the business in a number ofdimensions and that's why we pulled back a little bit in the second quarter.This is just a little more incremental thinking along those lines.

Your next question comes from David Cumberland - Robert W.Baird. David Cumberland -Robert W. Baird: First a couple of questions on AI. What was revenue for AI inQ3? In ‘08 how many AI locations do you expect to add?

Let me answer the second part of that first. In 2008, theguidance that we provided in total is 110 to 120 stores. We don't knowspecifically how that will break down yet but likely AI would be in probablythe 15 range, somewhere in that range. Sales for AI for the quarter wereapproximately $34 million. David Cumberland -Robert W. Baird: Related to the parts availability initiative, what types ofchanges do you foresee in terms of leveraging existing supply chain assets,meaning distribution centers, warehouses; and also perhaps in yourrelationships with suppliers?

A great question. Obviously parts availability is a hugearea of focus for us. Michael mentioned nearly 5% of our total inventory from agrowth standpoint being what we're looking to invest here; which you can do themath and it's close to $75 million of incremental parts. We're working very hard with our suppliers and our supply chainto accomplish this in a way that is relatively neutral to overall inventory andalso that we can digest and do this effectively with our supply chain. In addition to introducing incremental parts and having greaterparts coverage in our network, we're also working very hard to ensure that our supplychain is flexible and nimble and capable enough to have those parts availablein the markets and close to the customer. So simultaneous to the investments indollars of just pure inventory, we're working our supply chain to ensure thatit is laid out and operates in a way that accomplishes what we want. We've just completed about an eight-week study looking atour supply chain really independent of what it is we have today and havedetermined some exciting opportunities that we see will allow us to providegreater coverage in our various markets, through our supply chain with someenhancements that actually should allow us to operate at a lower cost withimproved coverage and availability. We're very excited about the future of thisinitiative. David Cumberland -Robert W. Baird: Elwyn, can you elaborate on or give an example or two of anenhancement or change to the supply chain that you're considering?

Sure. A lot of folks when they look at our supply chain,they look at us as more of a retailer set up with large distribution centers. whilewe certainly have eight large, 600,000 square footfacilities across the country, we also have a master PDQ facility, we have 20PDQ facilities and 80 of what we call local area warehouses; not to mention 3,200stores and about 6,000 vehicles. What we find is if you look in different markets, weleverage those various assets in our supply chain differently. I would say theinsight that we're gaining is what makes the most sense in specific markets? Ithink what you'll see is going forward, similar tools, if you will, in our supplychain but perhaps redeployed differently depending on what the market needs are.It may not be revolutionary, which on one hand is exciting to us because wethink we understand how to distribute the product. We just need to apply itspecifically to markets as it would best suit them.

Your next question comes from Dan Wewer – Raymond James. Dan Wewer – RaymondJames: Jack, am I correct in understanding the $20 million savingsin ‘08 is in addition to the $50 million outlined in recent quarters, but atthe same time, the point where you would expect SG&A leverage is going tobe 2% in ‘08 rather than the 1% to 2% range?

The $20 million, as Mike mentioned, is on top of the $50million. As Mike also mentioned, for the various topics that involve it, itwill unfold during the year and so we feel on an annualized basis, we've put$70 million worth of savings in place. For next year, that $70 million alongwith our continuing initiatives will allow us to leverage SG&A in that 2%comp range.

One thing I want to add to that because we've made thesesignificant reductions, we will be able to leverage at a 2% comp next year. Ona long term basis though, we really need a 2% to 3% comp on a long term basis. Dan Wewer – RaymondJames: Was the prior thought on SG&A leverage in ‘08 was arange of 1% to 2% and now you're tightening it to 2%?

No, I never said 1% to 2%. It will leverage in that range. The point iswe've made a number of decisions that have immediate impact. Mike's point isother costs increase and over time, we think we need to get comps 2% to 3%based on our current model to leverage on a continuous basis. We will leveragenext year because of the large amount of SG&A we've taken out. Dan Wewer – RaymondJames: A separate question on the real estate strategy. Other partsretailers that attempt to straddle the DIY and commercial segment with a real estatestrategy, it sounds like you're going to follow. They end up giving up some DIYrevenues in the pursuit of the growth of that DIFM. Do you see that balance,that trade off, as a risk for your DIY component?

We do not see that as a risk and again, that's part of whywe're taking the time and effort to work through this and make sure we makevery clear decisions. I think we have all of the information we need throughthe research we've done and as I said before, I don't think you'll see usdramatically change where we locate stores but we're going to do it in such away that we can manage our occupancy costs at a better level and we can take astrong DIY business that we have already, be able to capture a greater portionof the commercial business, and at the same time, do that in a location thatwill not put as much pressure on our expense structure going forward. Dan Wewer – RaymondJames: the last question I had, Jack, I understand the decision notto complete any additional 2010 remodels given the returns were nil. On theother hand, it is critical for retailers to maintain a fresh store base. Areyou considering testing some new remodels for the existing stores or is it justsimply on hold for the next two years?

Well one thing that should be a distinction is we've setaside plenty of capital and expense going forward to maintain the physicalcondition of the stores and that includes exterior painting and things likethat. The expense was really fixtures and a lot of this inside work which wasnot proving out to be very cost effective, so I don't want to give anyone theimpression that we're going to let our physical plant rundown because that'snot our intent. When and if we come up with some ideas which I think we willover time, about improving adjacencies and remodels, we'll get back into it. Theprior program was expensive and not producing results. It doesn't mean we'veshut off the idea going forward.

I think the other thing I would add to that as well is thatwe talked about before because of the remodels we've done over the past severalyears in the new stores, well over 2,000 of our stores are either new or havebeen remodeled just in the last three or four years and as we got further intothe remodel of stores, we're getting closer and closer to stores that have beeneither open new or have been remodeled in the not too far past. Our overall group of stores is in good shape and we'refocused as Jack said on using capital we've set aside to still address thestores that need to have work done but not to do it across all of our stores.

Your next question comes from Scott Ciccarelli - RBC CapitalMarkets. Scott Ciccarelli -RBC Capital Markets: What do you guys see as the key to improving commercialcomps? Obviously it's an area you guys are focusing on. Is it just the greaterinventory investment? Is it more aggressive sales tactics? What is the pushbackyou get from potential commercial customers that you weren't servicing?

I think if you look at our past several years we have had atrack record of some strong comp increases in commercial, and last year or so,we had less focus on commercial and our comps were lower although they were stillreasonably good. What we're doing now first of all is we've talked aboutfocus, ensuring that our entire team realizes the importance of growing it. Allof the initiatives that we've talked about align very well with commercialalong with DIY, and that's a big part of the parts availability expansion. It'sa big part of the parts knowledge focus. In addition to that, we're doing a number of things withinthe company to better allow us to drive the commercial business. The other thing I would add is as we did the commercialresearch over the last several months, I think we're overall positionedprobably better than we've been able to explain with the commercial customer. Ithink the opportunity is there and with the focus and with the additional availability,we can continue to see and to ramp up what you saw in the third quarter. Scott Ciccarelli -RBC Capital Markets: So the infrastructure is there. You just have to market itbetter to the commercial customers?

We have to market it better, we have to increase theavailability which we're in the process of doing; Elwyn touched on some of thelogistics related things that we're going to be able to take what works prettywell already and strengthen over the next year or so. So there's a number offactors that clearly start with focus.

I would just add a few points to Jim's comment. Under theparts availability side, clearly the late model has more application there aswe introduce that, so we're seeing some of the early gains from some of theparts initiatives there. I would reiterate Jim's point: supply chain capability is ahuge piece of being able to do commercial and do it well. IT capability,building the tools from a B2B online, a commercial customer database, those arethings that we have not done historically, having viewed this moreopportunistic than strategic so those will be things going forward that areimportant for us. There are a number of capabilities that we are adding andbuilding, as well as continuing our effort to gain access to the quality brandsthat we think have instant credibility with the commercial customers. Scott Ciccarelli -RBC Capital Markets: Could we see more store closings if there's some stores outthere with occupancy costs that just aren't yielding the desired returns?

I don't think you'll see anything significantly different.We have over the years and certainly continued to at even a greater level lookat the performance of each of our stores and where we have stores that are notperforming to our expectations or with an occupancy cost, we go through aprocess of seeing what the maximum potential is and then addressing occupancycost within that store with the landlord or whatever as we need to. We've closed ten stores this year, you'll continue to see usclose stores like that as we go forward, but overall, our base is in goodshape. It's a matter of ensuring as we go forward that we better align thesales potential with the cost of the land and building that we've beenexperiencing the last two or three years.

Your next question comes from Seth Basham and Gary Balter –Credit Suisse. Seth Basham and GaryBalter – Credit Suisse: Looking at the expense initiatives for 2008, could youpotentially quantify or at least rank order the buckets of improvement? What'sgoing to be the biggest savings initiative?

From the $20 million, I think the two biggest items would bemarketing and advertising and non-merchandise purchasing. Those two combinedwould be well over$10 million out of the savings. Behind that would be theutilities, I spoke about transportation, staffing and occupancy. Occupancy, wethink there's a lot of opportunity to drive down occupancy cost but it takestime and we will achieve those savings over time as we open new stores goingforward and the occupancy savings should be greater going forward beyond 2008. Seth Basham and GaryBalter – Credit Suisse: Related to that, as you study the labor model in your storeson the DIY side and the commercial side, have you come to any conclusions aboutwhether or not it's appropriate or whether you need to make any shifts?

We are in the process over the last few months of taking avery long in-depth look at our staffing in our stores and how we best do it andI think we'll be able to be in a position over the next few months to be ableto talk a little more in detail about that. We don't know all of the answers yet in terms of what wewant to do, but we have opportunities I think to do a better job with that interms of staffing relative to the mix of DIY and commercial. The key is to dothat, to get the right people in our stores that have the right knowledge andwe've done all of that work internally here with some external resources thathave helped us to look at how best we can staff the stores going forward. Seth Basham and GaryBalter – Credit Suisse: But at this stage you're not cutting any labor hours?

No. We have a pretty solid system, I think that you've heardus talk about it, it is called MPT, and we're looking at all of the aspects ofhow that builds a staffing model, what our cost per hour is, and managing thosecomponents. Our intent is to ensure we have staffing in the stores. If we wereto reduce hours in a store, it's based on taking a task out of the store thatwas not there before as opposed to increasing the work load for the staff. Seth Basham and GaryBalter – Credit Suisse: I think Gary hasa bigger picture question. We're watching oil hit $96 and could you talk about yourthoughts if oil stays up here, how this impacts your projections for next yearor your guidance for next year and your thinking about cost controls? Giventhat the top line may be more challenging?

Well, a couple of things come to mind, Gary.Internally, you think about your transportation cost of fuel and we'veaddressed that through some forward contracting and we feel pretty good wherewe are vis-a-vis that. I do think if the price of gasoline follows as people say itwill, then it further increases the headwinds, particularly on our side, percustomer. It's embedded in, we think we should not be planning for a robustconsumer next year and that's why in our initial thinking we're thinking 1% to2% comps. As we mentioned, if that's the world we see coming forwardat least for the nearer term, then we continue to think about our model inthose terms and how much can we spend on various things and how do we run thebusiness if that's going to be the case? it's very much on our minds.

Your next question comes from Tony Cristello - BB&TCapital Markets. Tony Cristello - BB&TCapital Markets: You talked about the 5% increase for inventory. I'mwondering how you came about that being the right number? Was that a product ofsoliciting an opinion from your commercial segment? Was it looking at whereparts were not in stock when needed? Is that a number that could go higher asthis process evolves?

That's a great question. The input or the sources of why theproduct we've put came from a number of sources. Clearly looking at the datathat's available through the industry to understand what type of vehicleregistration there are in different markets has clearly been a key informant,particularly when it comes to import coverage. We also solicited a significantamount of feedback from our field on what are we missing and that as welltranslated into the significant chunk of this dollar figure. We will continue, I think, this is what I would considerwhat we've seen in our initial look at what's needed from a late model andimport coverage for both commercial as well as DIY with some strong input fromour field. We will continue to look at the sources of data and continue toincrease inventory over time in the right categories. I think simultaneously, it requires an active management ofthe tail, if you will, of things that you no longer need in your network. Sothis is not a “one and done” type of initiative. It's a major thrust for usright now but we will continue to make parts investments going forward andsimultaneously work the less productive out of the equation. Tony Cristello - BB&TCapital Markets: The DIY customer in particular, once they come to your storeand you don't have their part, it's switching for them is not somethinguncommon. I'm wondering now and even maybe for the commercial side, once youreplenish or sort of augment here what you're carrying in terms of in-stock,how do you go about now reeducating that consumer, whether it's the commercialcustomer or the DIY, that now we have this part, you need to come back and tryus, when they've already switched to one of your competitors?

That's a great question, and I would say that it's anopportunity for us as we are getting the inventory into the markets, we clearlyneed to market that, and while we have had significant placement of inventoryin the third quarter, the fourth quarter literally 50% of this initiative ishappening right now, so we have to get it physically in place but then it isimperative that our commercial salesforce be armed with the insight andinformation so they can as they're calling on customers -- existing and new --to let them know what we now carry. We also are looking to produce somein-store signage if you will that allows the store to DIY'ers to alsocommunicate the incremental coverage now available in their respective storesand markets.

Your final question comes from Rick Weinhart - BMO CapitalMarkets. Rick Weinhart - BMOCapital Markets: On the labor model you're using in your stores. Is it safeto say at this point that you've now reviewed the compensation structure andthat you're happy with what you currently have in place? I'm thinking more or less along the lines for the commercialbusiness; no thoughts on changing to a commission model?

That's one of the things that we're looking at. As Imentioned before, through an internal review as well using some external resourceswe've been looking at really every aspect of our model and certainly,commercial incentives and incentives overall is a component of that analysis.We're not at a point yet where we have made any final decisions internally andcertainly not to a point where we are implementing, but I think that will be insome way a portion of our plan as we go forward. Rick Weinhart - BMOCapital Markets: A follow-up on the hedging strategy for fuel costs. Can youjust clarify for us whether you had a hedge in place and when that expires? Ifyou have any data you can share in terms of what the impact was?

I'm going to look to Michael as far as what we want todisclose as far as the numbers, but perhaps a little distinct from a hedge,this is actually a forward contract. We have storage tanks in our distributioncenters for diesel in particular, so we're not specifically a hedge as much asa forward contractor purchase.

I would think that answers the question.

This concludes our question-and-answer session. I will nowturn the call back to management for any final comments.

Well, I'd like to thank everybody for being on the calltoday and we appreciate all of your interest in Advance. We view Q3 as havingtaken a number of steps in the right direction and our goal is to build on thatmomentum and take it into Q4 to set us up for a strong year in 2008. So again, thanks for being with us today and we appreciateyour interest in the company.