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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
 Form 10-Q/A (Mark One) þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended October 31, 2004
 Or o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from                to
 Commission File Number 001-13927 CSK Auto Corporation
 (Exact name of registrant as specified in its charter)
 Delaware
    
    86-0765798(State or other jurisdiction of
    
    (I.R.S. EmployerIncorporation or organization)
    
    Identification No.)
 645 E. Missouri Ave. Suite 400, Phoenix, Arizona(Address of principal executive offices)
    
    85012(Zip Code)
 (602) 265-9200(Registrants telephone number, including area code) N/A(Former name, former address and former fiscal year,
if changed since last reports) Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes þ                 No o Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2). Yes þ               No o As of December 7, 2004, CSK Auto Corporation had 44,995,989 shares of common
stock outstanding.




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Explanatory Note As previously disclosed in the Current Report on Form 8-K as filed by CSK Auto Corporation, (the
Company) on April 18, 2005, the Audit Committee of the Board of Directors of the Company and
management of the Company, concluded that, due to certain accounting errors, the Companys annual
financial statements for the fiscal years ended February 1, 2004 (fiscal 2003) and February 2, 2003
(fiscal 2002), and the related interim financial statements for each of the quarters within those
years, as well as the first three quarters for the fiscal year ended January 30, 2005 (fiscal
2004), should be restated. The restatements contained in this Form 10-Q/A for the quarterly period ended October 31, 2004
reflect corrections and adjustments required as a result of the following items. 1. In the course of the Companys review of its lease accounting practices, the Company identified
accounting errors pertaining to the evaluation of lease terms (thus impacting the amortization of
leasehold improvements), free rent periods (i.e., rent holidays), straight-lining of minimum lease
payments, the classification of landlord incentives/allowances, and the treatment of costs incurred
for certain stores that are constructed and subsequently transferred to our landlords. 2. The Company has historically recognized estimated vendor allowances in a systematic manner
ratably over a performance period that ran from October through September. This recognition period
was initially selected to match the expected benefits to be received with expected costs the Company was incurring to
perform promotional activities. The Company reevaluated this
accounting convention and concluded that the recognition period should be corrected to the contractual period which corresponds to a calendar
year because substantially all allowances are determined and collected based on purchases from
vendors in the calendar year. 3. The Company also recently identified vendor allowances recorded in prior periods that will not
be collected and has determined that the amounts were recorded in error and should not have
been recognized in earlier periods. In addition, we identified certain vendor allowances recorded
in improper periods. 4. The Company implemented a voluntary change in accounting for inventory costs from the Last-In,
First-Out (LIFO) method to the First-In, First-Out (FIFO) method of accounting for inventories in
fiscal 2004. Such a change in inventory accounting method requires a retroactive restatement of prior periods
and has a material impact on the Companys historical financial statements. The Company believes
the change is preferable because it will result in reported inventory cost on our balance sheet
that approximates replacement costs instead of higher historical costs under LIFO. A preferability letter from our independent registered public accounting firm,
PricewaterhouseCoopers LLP, was filed with the Securities and Exchange Commission on
May 2, 2005 as part of the Company's Annual Report on Form 10-K. See Note 1, Accounting Change and Restatements of Financial Statements, in the accompanying
Consolidated Financial Statements (including the notes thereto), and Managements Discussion and
Analysis of Financial Condition and Results of Operations for the impact of these restatements.
This amended Quarterly Report on Form 10-Q/A amends and restates those items of the previously
filed Form 10-Q for the thirteen and thirty nine weeks ended October 31, 2004 and November 2, 2003,
that have been affected by these restatements. In order to preserve the nature and character of
the disclosures set forth in such items as originally filed, no attempt has been made in this
amendment to modify or update the disclosures in the original Quarterly Report on Form 10-Q except
for the foregoing restatements. As a result, this amended Quarterly Report on Form 10-Q/A contains
forward-looking information that has not been updated for events subsequent to the date of the
original filing, and all information contained in this amended Quarterly Report on Form 10-Q/A and
the original Report on Form 10-Q is subject to updating and supplementing as provided in the
periodic reports that the Company has filed and/or will file with the SEC after the original filing
date of the Quarterly Report on Form 10-Q. 2




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TABLE OF CONTENTS PagePART I  Financial InformationItem 1.
    
    Financial Statements (unaudited)  As RestatedConsolidated Balance Sheets
    
    
    4Consolidated Statements of Operations
    
    
    5Consolidated Statements of Cash Flows
    
    
    6Notes to Consolidated Financial Statements
    
    
    7Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    21Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    26Item 4.
    
    Controls and Procedures
    
    
    26PART II  Other InformationItem 1.
    
    Legal Proceedings
    
    
    28Item 2.
    
    Unregistered Sales of Securities and Use of Proceeds and Issuer Repurchases of Equity Securities
    
    
    28Item 3.
    
    Defaults upon Senior Securities
    
    
    28Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    29Item 5.
    
    Other Information
    
    
    29Item 6.
    
    Exhibits
    
    
    29Signature
    
    
    
    
    30Exhibit 31.1Exhibit 31.2Exhibit 32.0
  3




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PART I FINANCIAL INFORMATION 
 Item 1.Financial Statements CSK AUTO CORPORATION AND SUBSIDIARIES 
 CONSOLIDATED BALANCE SHEETS October 31,
    
    
    February 1,2004
    
    
    2004(Restated)
    
    
    (Restated)(In thousands, except share data)(Unaudited)ASSETSCash and cash equivalents
    
    $
    54,673
    
    
    $
    37,221Receivables, net of allowances of $653 and $1,577, respectively
    
    
    82,507
    
    
    
    91,932Inventories
    
    
    554,208
    
    
    
    522,849Deferred income taxes
    
    
    43,733
    
    
    
    67,857Prepaid expenses and other current assets
    
    
    20,481
    
    
    
    21,123Total current assets
    
    
    755,602
    
    
    
    740,982Property and equipment, net
    
    
    139,420
    
    
    
    140,275Leasehold interests, net
    
    
    10,990
    
    
    
    12,278Goodwill
    
    
    127,069
    
    
    
    127,069Other assets, net
    
    
    30,757
    
    
    
    27,388Total assets
    
    $
    1,063,838
    
    
    $
    1,047,992LIABILITIES AND STOCKHOLDERS EQUITYAccounts payable
    
    $
    183,557
    
    
    $
    177,150Accrued payroll and related expenses
    
    
    44,647
    
    
    
    47,498Accrued expenses and other current liabilities
    
    
    54,038
    
    
    
    49,617Current maturities of long term debt
    
    
    2,797
    
    
    
    2,743Senior notes called for redemption
    
    
    14,975
    
    
    
    Current maturities of capital lease obligations
    
    
    7,125
    
    
    
    10,240Total current liabilities
    
    
    307,139
    
    
    
    287,248Long term debt
    
    
    475,044
    
    
    
    498,726Obligations under capital leases
    
    
    11,324
    
    
    
    15,017Deferred income taxes
    
    
    3,462
    
    
    
    3,333Other liabilities
    
    
    50,974
    
    
    
    45,257Total non-current liabilities
    
    
    540,804
    
    
    
    562,333Commitments and contingenciesStockholders equity:Common stock, $0.01 par value, 58,000,000 shares authorized,44,987,963 and 46,497,936 shares issued and outstanding at October
31, 2004 and February 1, 2004, respectively
    
    
    450
    
    
    
    465Additional paid-in capital
    
    
    444,876
    
    
    
    466,576Deferred compensation
    
    
    (1,115
    )
    
    
    Stockholder receivable
    
    
    (65
    )
    
    
    (73
    )Accumulated deficit
    
    
    (228,251
    )
    
    
    (268,557
    )Total stockholders equity
    
    
    215,895
    
    
    
    198,411Total liabilities and stockholders equity
    
    $
    1,063,838
    
    
    $
    1,047,992
 The accompanying notes are an integral part of these consolidated financial statements. 4




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CSK AUTO CORPORATION AND SUBSIDIARIES 
 CONSOLIDATED STATEMENTS OF OPERATIONS Thirteen Weeks Ended
    
    
    Thirty-Nine Weeks EndedOctober 31,
    
    
    November 2,
    
    
    October 31,
    
    
    November 2,2004
    
    
    2003
    
    
    2004
    
    
    2003(Restated)
    
    
    (Restated)
    
    
    (Restated)
    
    
    (Restated)(In thousands, except per share data)(Unaudited)Net sales
    
    $
    401,457
    
    
    $
    409,750
    
    
    $
    1,207,568
    
    
    $
    1,205,713Cost of sales
    
    
    213,551
    
    
    
    218,028
    
    
    
    636,899
    
    
    
    661,414Gross profit
    
    
    187,906
    
    
    
    191,722
    
    
    
    570,669
    
    
    
    544,299Other costs and expenses:Operating and administrative
    
    
    158,879
    
    
    
    155,287
    
    
    
    478,089
    
    
    
    462,994Store closing costs
    
    
    721
    
    
    
    203
    
    
    
    1,608
    
    
    
    339Operating profit
    
    
    28,306
    
    
    
    36,232
    
    
    
    90,972
    
    
    
    80,966Interest expense
    
    
    8,217
    
    
    
    12,763
    
    
    
    24,797
    
    
    
    40,643Loss on debt retirement
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,315Income before income taxes
    
    
    20,089
    
    
    
    23,469
    
    
    
    66,175
    
    
    
    36,008Income tax expense
    
    
    7,862
    
    
    
    9,063
    
    
    
    25,869
    
    
    
    13,796Net income
    
    $
    12,227
    
    
    $
    14,406
    
    
    $
    40,306
    
    
    $
    22,212Basic earnings per share:Net income
    
    $
    0.27
    
    
    $
    0.31
    
    
    $
    0.88
    
    
    $
    0.49Shares used in computing per share amounts
    
    
    45,126
    
    
    
    45,827
    
    
    
    45,939
    
    
    
    45,396Diluted earnings per share:Net income
    
    $
    0.27
    
    
    $
    0.31
    
    
    $
    0.87
    
    
    $
    0.49Shares used in computing per share amounts
    
    
    45,269
    
    
    
    46,239
    
    
    
    46,211
    
    
    
    45,619
 The accompanying notes are an integral part of these consolidated financial statements. 5




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CSK AUTO CORPORATION AND SUBSIDIARIES 
 CONSOLIDATED STATEMENTS OF CASH FLOWS Thirty-Nine Weeks EndedOctober 31,
    
    
    November 2,2004
    
    
    2003(Restated)
    
    
    (Restated)(In thousands)(Unaudited)Cash flows from operating activities:Net income
    
    $
    40,306
    
    
    $
    22,212Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization of property and equipment
    
    
    23,335
    
    
    
    26,178Amortization of deferred financing costs
    
    
    1,456
    
    
    
    3,201Amortization of long term debt fair market value adjustment
    
    
    (80
    )
    
    
    (807
    )Amortization of other items
    
    
    3,208
    
    
    
    2,897Accretion of debt discount
    
    
    42
    
    
    
    702Losses on disposals of property, equipment and other assets
    
    
    555
    
    
    
    751Tax benefit relating to stock option exercises
    
    
    190
    
    
    
    1,859Write off of debt issuance costs
    
    
    
    
    
    
    2,268Premium paid on early retirement of debt
    
    
    
    
    
    
    (350
    )Proceeds from interest rate swap termination
    
    
    
    
    
    
    6,031Deferred income taxes
    
    
    24,253
    
    
    
    12,045Change in operating assets and liabilities:Receivables
    
    
    10,548
    
    
    
    11,367Inventories
    
    
    (36,804
    )
    
    
    (18,186
    )Prepaid expenses and other current assets
    
    
    642
    
    
    
    (4,363
    )Accounts payable
    
    
    3,933
    
    
    
    (18,794
    )Accrued payroll, accrued expenses and other current liabilities
    
    
    2,396
    
    
    
    12,238Other operating activities
    
    
    441
    
    
    
    1,584Net cash provided by operating activities
    
    
    74,421
    
    
    
    60,833Cash flows from investing activities:Capital expenditures
    
    
    (18,770
    )
    
    
    (13,342
    )Other investing activities
    
    
    (2,366
    )
    
    
    (2,542
    )Net cash used in investing activities
    
    
    (21,136
    )
    
    
    (15,884
    )Cash flows from financing activities:Borrowings under senior credit facility
    
    
    20,600
    
    
    
    291,000Payments under senior credit facility
    
    
    (21,875
    )
    
    
    (293,000
    )Retirement of balance of 11% senior subordinated notes
    
    
    
    
    
    
    (9,547
    )Payment of debt issuance costs
    
    
    (1,192
    )
    
    
    (4,162
    )Payments on capital lease obligations
    
    
    (11,093
    )
    
    
    (12,335
    )Proceeds from repayment of stockholder receivable
    
    
    8
    
    
    
    216Proceeds from exercise of stock options
    
    
    621
    
    
    
    13,415Proceeds from seller financing arrangements
    
    
    1,175
    
    
    
    1,120Payments on seller financing arrangements
    
    
    (162
    )
    
    
    (116
    )Repurchase of common stock
    
    
    (23,726
    )
    
    
    Other financing activities
    
    
    (189
    )
    
    
    (207
    )Net cash used in financing activities
    
    
    (35,833
    )
    
    
    (13,616
    )Net increase in cash and cash equivalents
    
    
    17,452
    
    
    
    31,333Cash and cash equivalents, beginning of period
    
    
    37,221
    
    
    
    15,519Cash and cash equivalents, end of period
    
    $
    54,673
    
    
    $
    46,852
 The accompanying notes are an integral part of these consolidated financial statements. 6




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CSK AUTO CORPORATION AND SUBSIDIARIES 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Thirteen and Thirty-nine Weeks Ended October 31, 2004
 CSK Auto Corporation is a holding company. At October 31, 2004, CSK Auto
Corporation had no business activity other than its investment in CSK Auto, Inc. (Auto), a wholly
owned subsidiary. On a consolidated basis, CSK Auto Corporation and its subsidiaries are referred
to herein as the Company, we, us, or our. Auto is a specialty retailer of automotive aftermarket parts and accessories.
At October 31, 2004, we operated 1,129 stores in 19 states as a fully integrated company and single
business segment under three brand names: Checker Auto Parts, founded in 1969 and operating in the
Southwestern, Rocky Mountain and Northern Plains states and Hawaii; Schucks Auto Supply, founded
in 1917 and operating in the Pacific Northwest and Alaska; and Kragen Auto Parts, founded in 1947
and operating primarily in California. Note 1  Accounting Change and Restatements of Financial Statements We implemented a voluntary change in our accounting for inventories, which is
effected by a retroactive restatement of our historical financial statements. In addition, we
identified errors in our accounting for leases and vendor allowances, which required a restatement
of our previously issued historical financial statements. Change in inventory accounting method We historically used the last-in, first-out (LIFO) method for accounting for inventories.
In the fourth quarter of fiscal 2004, we changed our method of determining the cost of
inventories to the first-in, first-out (FIFO) method. We have applied this accounting change
retroactively by restating prior period financial statements as required by Accounting Principles
Board Opinion No. 20, Accounting Changes. Our inventory levels over the last five years have increased modestly due to new store
openings and growth. During the same time, we were able to reduce the overall unit costs of our
inventories. In this environment, our LIFO method of accounting was resulting in an increasing
difference between the carrying cost of inventories on our balance sheet and our current product
acquisition costs. The carrying cost on our balance sheet under LIFO reflected the higher prices
paid for inventories in prior periods and also included higher costs paid for inventories purchased
in connection with business acquisitions the last of which occurred in fiscal 1999. Since we do not
expect the pricing environment for most products we purchase to change dramatically in the
foreseeable future, this difference between LIFO cost and replacement cost can be expected to
continue and possibly increase as we continue to pursue strategies to reduce our product
acquisition costs. In the fourth quarter of fiscal 2004, we changed to the FIFO method of
inventory accounting which will result in reported inventory cost on our balance sheet that
approximates replacement costs, which we believe is preferable to continuing to report our
inventories at the higher costs we experienced in prior years. Although the primary effect of the change was a decrease in inventory on our balance sheet, it
also has a significant impact on our determination of cost of sales because of differences in unit
costs and increases in the amount of vendor allowances and inventory purchasing and handling costs
that will remain in inventory at period end under FIFO. As shown in the tables below, the change
had the effect of increasing our cost of sales and decreasing our gross profit by approximately
$4.0 million in the thirteen weeks ended October 31, 2004. The change also decreased our cost of
sales and increased our gross profit by approximately $0.1 million in the thirty-nine weeks ended
October 31, 2004. The change decreased our cost of sales and increased our gross profit by
approximately $3.3 million in the thirteen weeks ended November 2, 2003. The change increased our
cost of sales and decreased our gross profit by approximately $15.1 million for the thirty-nine
weeks ended November 2, 2003. Lease accounting restatement We operate in excess of 1,100 leased locations, primarily consisting of retail stores but also
including warehouses, distribution centers and our corporate office facilities. We identified
accounting errors pertaining to the evaluation of lease terms (thus impacting our amortization of
leasehold improvements), free rent periods (i.e., rent holidays), straight-lining of minimum
escalating lease payments, the classification of landlord incentives/allowances, and the treatment
of costs incurred for certain stores which are constructed and subsequently transferred to our
landlords. We have corrected these errors by restating prior period financial statements. We reevaluated our lease terms for our operating leases, which resulted in a reduction to the
useful life assumption for depreciating leasehold improvements. We previously depreciated leasehold
improvements over the term of the lease which consisted of the initial term and could include one
renewal option period but no more than 15 years in total. We now include renewal option periods
when determining the life of our leasehold improvements only if they are to be included in the lease term as defined in Statement of Financial Accounting
Standards (SFAS) No. 13, Accounting for Leases, as amended. The impact of this change increased
our annual depreciation expense for the earlier years of the leases. We previously recorded build-out allowances received from landlords as an offset to the
amounts capitalized as leasehold improvements. We are now recording such allowances as a deferred
rent liability with a related increase in recorded leasehold improvements or property assets resulting in an increase to
depreciation expense while the amortization of the deferred rent liability reduces operating rent
expense over the lease term. This correction also increases our reported capital expenditures
(investing cash flows) and our operating cash flows we report in our Consolidated Statements of
Cash Flows.




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CSK AUTO CORPORATION AND SUBSIDIARIES
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued) We identified a small number of stores where the extent of our monetary involvement in the
construction of the store (based on the excess of our construction costs over the landlords
reimbursement to us of such costs) results in the Company being considered the owner of the property during the construction period and in capitalization of the construction costs as an asset
and recording the landlord reimbursement as construction debt under Emerging Issues Task Force
(EIFT) No. 97-10, The Effect of Lessee Involvement in Asset Construction (EITF 97-10). We also identified situations where we did not straight-line escalating rent or recognize rent
for free rent periods. The net effect of the required adjustments to address these errors increased
rent expenses in our historical financial statements. The Companys overall cash flow was not impacted by these corrections. Vendor allowance restatements We historically recognized estimated vendor allowances in a systematic manner ratably over our expected
performance period that ran from October through September. This recognition period was initially
selected to match the estimated benefits to be received with estimated costs the Company was incurring to perform
promotional activities required to earn the vendor allowances. We reevaluated this accounting
convention and concluded that the recognition period should be corrected to the contractual period which corresponds to a calendar year because
substantially all allowances are determined and collected based on purchases from vendors in the
calendar year. We also identified vendor allowances recorded in fiscal 2003 that will not be collected and
have determined that the amounts were recorded because of errors in earlier periods.
In addition, we identified certain vendor allowances recorded in improper periods. We have applied the changes required retroactively by restating prior period
financial statements. Effect of restatements on retained earnings The cumulative effect of the accounting restatements and the retroactive accounting change
increased our accumulated deficit at February 2, 2003 by approximately $112.8 million and consisted
of approximately $78.4 million attributable to the inventory method change, approximately $11.8
million for the lease accounting errors and approximately $22.6 million for the vendor allowance
errors. The effect of the above mentioned errors and accounting change on our previously reported
financial statements are detailed below. The effect of the errors and accounting change are
presented for the following statements:  
    Consolidated Balance Sheet as of October 31, 2004 and February 1, 2004;
    Consolidated Statements of Operations for the thirteen and thirty-nine weeks ended October 31, 2004 and November 2, 2003; and
    Consolidated Statements of Cash Flows for the thirty-nine Weeks Ended October 31, 2004 and November 2, 2003. 8




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CSK AUTO CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued) CONSOLIDATED BALANCE SHEET
as of October 31, 2004
(in thousands)
(Unaudited) Vendor AllowancesChange in
    
    
    
    
    
    
    
    
    
    
    InventoryAs Previously
    
    
    
    
    
    
    Recognition
    
    
    Other
    
    
    As Corrected
    
    
    AccountingReported
    
    
    Leases
    
    
    Period
    
    
    Items
    
    
    and Restated
    
    
    Change
    
    
    As RestatedASSETSCash and cash equivalents
    
    $
    54,673
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    54,673
    
    
    
    
    
    
    $
    54,673Receivables, net of allowances
    
    
    127,295
    
    
    
    
    
    
    
    (28,302
    )
    
    
    (16,486
    )
    
    
    82,507
    
    
    
    
    
    
    
    82,507Inventories
    
    
    697,541
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    697,541
    
    
    
    (143,333
    )
    
    
    554,208Deferred income taxes
    
    
    
    
    
    
    
    
    
    
    11,229
    
    
    
    6,536
    
    
    
    17,765
    
    
    
    25,968
    
    
    
    43,733Prepaid expenses and other current assets
    
    
    20,481
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,481
    
    
    
    
    
    
    
    20,481Total current assets
    
    
    899,990
    
    
    
    
    
    
    
    (17,073
    )
    
    
    (9,950
    )
    
    
    872,967
    
    
    
    (117,365
    )
    
    
    755,602Property and equipment, net
    
    
    124,459
    
    
    
    14,961
    
    
    
    
    
    
    
    
    
    
    
    139,420
    
    
    
    
    
    
    
    139,420Leasehold interests, net
    
    
    10,990
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,990
    
    
    
    
    
    
    
    10,990Goodwill, net
    
    
    127,069
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    127,069
    
    
    
    
    
    
    
    127,069Other assets, net
    
    
    30,757
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30,757
    
    
    
    
    
    
    
    30,757Total assets
    
    $
    1,193,265
    
    
    
    14,961
    
    
    
    (17,073
    )
    
    
    (9,950
    )
    
    
    1,181,203
    
    
    
    (117,365
    )
    
    $
    1,063,838LIABILITIES AND STOCKHOLDERS EQUITYAccounts payable
    
    $
    183,557
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    183,557
    
    
    
    
    
    
    $
    183,557Accrued payroll and related expenses
    
    
    44,647
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    44,647
    
    
    
    
    
    
    
    44,647Accrued expenses and other current liabilities
    
    
    54,038
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    54,038
    
    
    
    
    
    
    
    54,038Deferred income taxes
    
    
    23,903
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23,903
    
    
    
    (23,903
    )
    
    
    Current maturities of long term debt
    
    
    2,550
    
    
    
    247
    
    
    
    
    
    
    
    
    
    
    
    2,797
    
    
    
    
    
    
    
    2,797Senior notes called for redemption
    
    
    14,975
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,975
    
    
    
    
    
    
    
    14,975Current maturities of capital lease obligations
    
    
    7,125
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,125
    
    
    
    
    
    
    
    7,125Total current liabilities
    
    
    330,795
    
    
    
    247
    
    
    
    
    
    
    
    
    
    
    
    331,042
    
    
    
    (23,903
    )
    
    
    307,139Long term debt
    
    
    467,822
    
    
    
    7,222
    
    
    
    
    
    
    
    
    
    
    
    475,044
    
    
    
    
    
    
    
    475,044Obligations under capital leases
    
    
    11,324
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,324
    
    
    
    
    
    
    
    11,324Deferred income taxes
    
    
    13,250
    
    
    
    (9,246
    )
    
    
    
    
    
    
    
    
    
    
    4,004
    
    
    
    (542
    )
    
    
    3,462Other
    
    
    20,159
    
    
    
    30,815
    
    
    
    
    
    
    
    
    
    
    
    50,974
    
    
    
    
    
    
    
    50,974Total non-current liabilities

    
    
    512,555
    
    
    
    28,791
    
    
    
    
    
    
    
    
    
    
    
    541,346
    
    
    
    (542
    )
    
    
    540,804Commitments
and contingenciesstockholders equityCommon stock
    
    
    450
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    450
    
    
    
    
    
    
    
    450Additional paid-in capital
    
    
    444,876
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    444,876
    
    
    
    
    
    
    
    444,876Deferred compensation
    
    
    (1,115
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,115
    )
    
    
    
    
    
    
    (1,115
    )Stockholder receivable
    
    
    (65
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (65
    )
    
    
    
    
    
    
    (65
    )Accumulated deficit
    
    
    (94,231
    )
    
    
    (14,077
    )
    
    
    (17,073
    )
    
    
    (9,950
    )
    
    
    (135,331
    )
    
    
    (92,920
    )
    
    
    (228,251
    )Total stockholders equity
    
    
    349,915
    
    
    
    (14,077
    )
    
    
    (17,073
    )
    
    
    (9,950
    )
    
    
    308,815
    
    
    
    (92,920
    )
    
    
    215,895Total liabilities and stockholders equity
    
    $
    1,193,265
    
    
    
    14,961
    
    
    
    (17,073
    )
    
    
    (9,950
    )
    
    
    1,181,203
    
    
    
    (117,365
    )
    
    $
    1,063,838
 9




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##### Table of Contents



CSK AUTO CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued) CONSOLIDATED BALANCE SHEET
as of February 1, 2004
(in thousands)
(Unaudited) Vendor AllowancesChange in
    
    
    
    
    
    
    
    
    
    
    InventoryAs Previously
    
    
    
    
    
    
    Recognition
    
    
    Other
    
    
    As Corrected
    
    
    AccountingReported
    
    
    Leases
    
    
    Period
    
    
    Items
    
    
    and Restated
    
    
    Change
    
    
    As RestatedASSETSCash and cash equivalents
    
    $
    37,221
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    37,221
    
    
    
    
    
    
    $
    37,221Receivables, net of allowances
    
    
    136,523
    
    
    
    
    
    
    
    (29,147
    )
    
    
    (15,444
    )
    
    
    91,932
    
    
    
    
    
    
    
    91,932Inventories
    
    
    666,263
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    666,263
    
    
    
    (143,414
    )
    
    
    522,849Deferred income taxes
    
    
    787
    
    
    
    
    
    
    
    11,562
    
    
    
    6,127
    
    
    
    18,476
    
    
    
    49,381
    
    
    
    67,857Prepaid expenses and other current assets
    
    
    21,123
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21,123
    
    
    
    
    
    
    
    21,123Total current assets
    
    
    861,917
    
    
    
    
    
    
    
    (17,585
    )
    
    
    (9,317
    )
    
    
    835,015
    
    
    
    (94,033
    )
    
    
    740,982Property and equipment, net
    
    
    124,813
    
    
    
    15,462
    
    
    
    
    
    
    
    
    
    
    
    140,275
    
    
    
    
    
    
    
    140,275Leasehold interests, net
    
    
    12,278
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,278
    
    
    
    
    
    
    
    12,278Goodwill, net
    
    
    127,069
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    127,069
    
    
    
    
    
    
    
    127,069Other assets, net
    
    
    27,388
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27,388
    
    
    
    
    
    
    
    27,388Total assets
    
    $
    1,153,465
    
    
    
    15,462
    
    
    
    (17,585
    )
    
    
    (9,317
    )
    
    
    1,142,025
    
    
    
    (94,033
    )
    
    $
    1,047,992LIABILITIES AND STOCKHOLDERS EQUITYAccounts payable
    
    $
    177,150
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    177,150
    
    
    
    
    
    
    $
    177,150Accrued payroll and related expenses
    
    
    47,498
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    47,498
    
    
    
    
    
    
    
    47,498Accrued expenses and other current liabilities
    
    
    49,617
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    49,617
    
    
    
    
    
    
    
    49,617Current maturities of long term debt
    
    
    2,550
    
    
    
    193
    
    
    
    
    
    
    
    
    
    
    
    2,743
    
    
    
    
    
    
    
    2,743Current maturities of capital lease obligations
    
    
    10,240
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,240
    
    
    
    
    
    
    
    10,240Total current liabilities
    
    
    287,055
    
    
    
    193
    
    
    
    
    
    
    
    
    
    
    
    287,248
    
    
    
    
    
    
    
    287,248Long term debt
    
    
    492,463
    
    
    
    6,263
    
    
    
    
    
    
    
    
    
    
    
    498,726
    
    
    
    
    
    
    
    498,726Obligations under capital leases
    
    
    15,017
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,017
    
    
    
    
    
    
    
    15,017Deferred income taxes
    
    
    13,121
    
    
    
    (8,727
    )
    
    
    
    
    
    
    
    
    
    
    4,394
    
    
    
    (1,061
    )
    
    
    3,333Other
    
    
    14,251
    
    
    
    31,006
    
    
    
    
    
    
    
    
    
    
    
    45,257
    
    
    
    
    
    
    
    45,257Total non-current liabilities
    
    
    534,852
    
    
    
    28,542
    
    
    
    
    
    
    
    
    
    
    
    563,394
    
    
    
    (1,061
    )
    
    
    562,333Commitments
and contingenciesstockholders equityCommon stock
    
    
    465
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    465
    
    
    
    
    
    
    
    465Additional paid-in capital
    
    
    466,576
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    466,576
    
    
    
    
    
    
    
    466,576Stockholder receivable
    
    
    (73
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (73
    )
    
    
    
    
    
    
    (73
    )Accumulated deficit
    
    
    (135,410
    )
    
    
    (13,273
    )
    
    
    (17,585
    )
    
    
    (9,317
    )
    
    
    (175,585
    )
    
    
    (92,972
    )
    
    
    (268,557
    )Total stockholders equity
    
    
    331,558
    
    
    
    (13,273
    )
    
    
    (17,585
    )
    
    
    (9,317
    )
    
    
    291,383
    
    
    
    (92,972
    )
    
    
    198,411Total liabilities and stockholders equity
    
    $
    1,153,465
    
    
    
    15,462
    
    
    
    (17,585
    )
    
    
    (9,317
    )
    
    
    1,142,025
    
    
    
    (94,033
    )
    
    $
    1,047,992
 10




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##### Table of Contents



CSK AUTO CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued) CONSOLIDATED STATEMENT OF OPERATIONS
for the Thirteen Weeks Ended October 31, 2004
(in thousands, except per share data)
(Unaudited) Vendor AllowancesAs
    
    
    
    
    
    
    Change in
    
    
    
    
    
    
    
    
    
    
    InventoryPreviously
    
    
    
    
    
    
    Recognition
    
    
    Other
    
    
    As Corrected
    
    
    AccountingReported
    
    
    Leases
    
    
    Period
    
    
    Items
    
    
    and Restated
    
    
    Change
    
    
    As RestatedNet Sales
    
    $
    401,457
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    401,457
    
    
    
    
    
    
    $
    401,457Cost of Sales
    
    
    210,565
    
    
    
    4
    
    
    
    (524
    )
    
    
    (515
    )
    
    
    209,530
    
    
    
    4,021
    
    
    
    213,551Gross Profit
    
    
    190,892
    
    
    
    (4
    )
    
    
    524
    
    
    
    515
    
    
    
    191,927
    
    
    
    (4,021
    )
    
    
    187,906Other costs and expenses:Operating and administrative
    
    
    158,718
    
    
    
    161
    
    
    
    
    
    
    
    
    
    
    
    158,879
    
    
    
    
    
    
    
    158,879Store closing costs
    
    
    721
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    721
    
    
    
    
    
    
    
    721Operating profit
    
    
    31,453
    
    
    
    (165
    )
    
    
    524
    
    
    
    515
    
    
    
    32,327
    
    
    
    (4,021
    )
    
    
    28,306Interest expense
    
    
    7,837
    
    
    
    380
    
    
    
    
    
    
    
    
    
    
    
    8,217
    
    
    
    
    
    
    
    8,217Income (loss) before income taxes
    
    
    23,616
    
    
    
    (545
    )
    
    
    524
    
    
    
    515
    
    
    
    24,110
    
    
    
    (4,021
    )
    
    
    20,089Income tax expense (benefit)
    
    
    9,248
    
    
    
    (214
    )
    
    
    206
    
    
    
    202
    
    
    
    9,442
    
    
    
    (1,580
    )
    
    
    7,862Net income (loss)
    
    $
    14,368
    
    
    
    (331
    )
    
    
    318
    
    
    
    313
    
    
    $
    14,668
    
    
    
    (2,441
    )
    
    $
    12,227Basic earnings per share:Net income (loss) per share
    
    $
    0.32
    
    
    
    (0.01
    )
    
    
    0.01
    
    
    
    0.01
    
    
    $
    0.33
    
    
    
    (0.06
    )
    
    $
    0.27Shares used in computing per share
amounts
    
    
    45,126
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    45,126Diluted earnings per share:Net income (loss) per share
    
    $
    0.32
    
    
    
    (0.01
    )
    
    
    0.01
    
    
    
    0.01
    
    
    $
    0.33
    
    
    
    (0.06
    )
    
    $
    0.27Shares used in computing per share
amounts
    
    
    45,269
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    45,269
 11




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##### Table of Contents



CSK AUTO CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued) CONSOLIDATED STATEMENT OF OPERATIONS
for the Thirteen Weeks Ended November 2, 2003
(in thousands, except per share data)
(Unaudited) Vendor AllowancesAs
    
    
    
    
    
    
    Change in
    
    
    
    
    
    
    
    
    
    
    InventoryPreviously
    
    
    
    
    
    
    Recognition
    
    
    Other
    
    
    As Corrected
    
    
    Accounting
    
    
    AsReported
    
    
    Leases
    
    
    Period
    
    
    Items
    
    
    and Restated
    
    
    Change
    
    
    RestatedNet Sales
    
    $
    409,750
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    409,750
    
    
    
    
    
    
    $
    409,750Cost of Sales
    
    
    217,565
    
    
    
    8
    
    
    
    3,490
    
    
    
    296
    
    
    
    221,359
    
    
    
    (3,331
    )
    
    
    218,028Gross Profit
    
    
    192,185
    
    
    
    (8
    )
    
    
    (3,490
    )
    
    
    (296
    )
    
    
    188,391
    
    
    
    3,331
    
    
    
    191,722Other costs and expenses:Operating and administrative
    
    
    155,068
    
    
    
    219
    
    
    
    
    
    
    
    
    
    
    
    155,287
    
    
    
    
    
    
    
    155,287Store closing costs
    
    
    203
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    203
    
    
    
    
    
    
    
    203Operating profit
    
    
    36,914
    
    
    
    (227
    )
    
    
    (3,490
    )
    
    
    (296
    )
    
    
    32,901
    
    
    
    3,331
    
    
    
    36,232Interest expense
    
    
    12,396
    
    
    
    367
    
    
    
    
    
    
    
    
    
    
    
    12,763
    
    
    
    
    
    
    
    12,763Income (loss) before income taxes
    
    
    24,518
    
    
    
    (594
    )
    
    
    (3,490
    )
    
    
    (296
    )
    
    
    20,138
    
    
    
    3,331
    
    
    
    23,469Income tax expense (benefit)
    
    
    9,476
    
    
    
    (233
    )
    
    
    (1,372
    )
    
    
    (116
    )
    
    
    7,755
    
    
    
    1,308
    
    
    
    9,063Net income (loss)
    
    $
    15,042
    
    
    
    (361
    )
    
    
    (2,118
    )
    
    
    (180
    )
    
    $
    12,383
    
    
    
    2,023
    
    
    $
    14,406Basic earnings per share:Net income (loss) per share
    
    $
    0.33
    
    
    
    (0.01
    )
    
    
    (0.05
    )
    
    
    (0.00
    )
    
    $
    0.27
    
    
    
    0.04
    
    
    $
    0.31Shares used in computing per share
amounts
    
    
    45,827
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    45,827Diluted earnings per share:Net income (loss) per share
    
    $
    0.33
    
    
    
    (0.01
    )
    
    
    (0.05
    )
    
    
    (0.00
    )
    
    $
    0.27
    
    
    
    0.04
    
    
    $
    0.31Shares used in computing per share
amounts
    
    
    46,239
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    46,239
 12




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##### Table of Contents



CSK AUTO CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued) CONSOLIDATED STATEMENT OF OPERATIONS
for the Thirty-nine Weeks Ended October 31, 2004
(in thousands, except per share data)
(Unaudited) Vendor AllowancesAs
    
    
    
    
    
    
    Change in
    
    
    
    
    
    
    
    
    
    
    InventoryPreviously
    
    
    
    
    
    
    Recognition
    
    
    Other
    
    
    As Corrected
    
    
    Accounting
    
    
    AsReported
    
    
    Leases
    
    
    Period
    
    
    Items
    
    
    and Restated
    
    
    Change
    
    
    RestatedNet Sales
    
    $
    1,207,568
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    1,207,568
    
    
    
    
    
    
    $
    1,207,568Cost of Sales
    
    
    636,763
    
    
    
    21
    
    
    
    (845
    )
    
    
    1,041
    
    
    
    636,980
    
    
    
    (81
    )
    
    
    636,899Gross Profit
    
    
    570,805
    
    
    
    (21
    )
    
    
    845
    
    
    
    (1,041
    )
    
    
    570,588
    
    
    
    81
    
    
    
    570,669Other costs and expenses:Operating and administrative
    
    
    477,900
    
    
    
    189
    
    
    
    
    
    
    
    
    
    
    
    478,089
    
    
    
    
    
    
    
    478,089Store closing costs
    
    
    1,608
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,608
    
    
    
    
    
    
    
    1,608Operating profit
    
    
    91,297
    
    
    
    (210
    )
    
    
    845
    
    
    
    (1,041
    )
    
    
    90,891
    
    
    
    81
    
    
    
    90,972Interest expense
    
    
    23,684
    
    
    
    1,113
    
    
    
    
    
    
    
    
    
    
    
    24,797
    
    
    
    
    
    
    
    24,797Income (loss) before income taxes
    
    
    67,613
    
    
    
    (1,323
    )
    
    
    845
    
    
    
    (1,041
    )
    
    
    66,094
    
    
    
    81
    
    
    
    66,175Income tax expense (benefit)
    
    
    26,434
    
    
    
    (520
    )
    
    
    332
    
    
    
    (409
    )
    
    
    25,837
    
    
    
    32
    
    
    
    25,869Net income (loss)
    
    $
    41,179
    
    
    
    (803
    )
    
    
    513
    
    
    
    (632
    )
    
    $
    40,257
    
    
    
    49
    
    
    $
    40,306Basic earnings per share:Net income (loss) per share
    
    $
    0.90
    
    
    
    (0.02
    )
    
    
    0.01
    
    
    
    (0.01
    )
    
    $
    0.88
    
    
    
    0.00
    
    
    $
    0.88Shares used in computing per share
amounts
    
    
    45,939
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    45,939Diluted earnings per share:Net income (loss) per share
    
    $
    0.89
    
    
    
    (0.02
    )
    
    
    0.01
    
    
    
    (0.01
    )
    
    $
    0.87
    
    
    
    0.00
    
    
    $
    0.87Shares used in computing per share
amounts
    
    
    46,211
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    46,211
 13




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##### Table of Contents



CSK AUTO CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued) CONSOLIDATED STATEMENT OF OPERATIONS
for the Thirty-nine Weeks Ended November 2, 2003
(in thousands, except per share data)
(Unaudited) 
 Vendor AllowancesAs
    
    
    
    
    
    
    Change in
    
    
    
    
    
    
    
    
    
    
    InventoryPreviously
    
    
    
    
    
    
    Recognition
    
    
    Other
    
    
    As Corrected
    
    
    Accounting
    
    
    AsReported
    
    
    Leases
    
    
    Period
    
    
    Items
    
    
    and Restated
    
    
    Change
    
    
    RestatedNet sales
    
    $
    1,205,713
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    1,205,713
    
    
    
    
    
    
    $
    1,205,713Cost of sales
    
    
    644,802
    
    
    
    24
    
    
    
    30
    
    
    
    1,476
    
    
    
    646,332
    
    
    
    15,082
    
    
    
    661,414Gross profit
    
    
    560,911
    
    
    
    (24
    )
    
    
    (30
    )
    
    
    (1,476
    )
    
    
    559,381
    
    
    
    (15,082
    )
    
    
    544,299Other costs and expenses:Operating and administrative
    
    
    462,266
    
    
    
    728
    
    
    
    
    
    
    
    
    
    
    
    462,994
    
    
    
    
    
    
    
    462,994Store closing costs
    
    
    339
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    339
    
    
    
    
    
    
    
    339Operating profit
    
    
    98,306
    
    
    
    (752
    )
    
    
    (30
    )
    
    
    (1,476
    )
    
    
    96,048
    
    
    
    (15,082
    )
    
    
    80,966Interest expense
    
    
    39,583
    
    
    
    1,060
    
    
    
    
    
    
    
    
    
    
    
    40,643
    
    
    
    
    
    
    
    40,643Loss on debt retirement
    
    
    4,315
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,315
    
    
    
    
    
    
    
    4,315Income (loss) before income taxes
    
    
    54,408
    
    
    
    (1,812
    )
    
    
    (30
    )
    
    
    (1,476
    )
    
    
    51,090
    
    
    
    (15,082
    )
    
    
    36,008Income tax expense (benefit)
    
    
    21,029
    
    
    
    (712
    )
    
    
    (12
    )
    
    
    (580
    )
    
    
    19,725
    
    
    
    (5,929
    )
    
    
    13,796Net income (loss)
    
    $
    33,379
    
    
    
    (1,100
    )
    
    
    (18
    )
    
    
    (896
    )
    
    $
    31,365
    
    
    
    (9,153
    )
    
    $
    22,212Basic earnings per share:Net income (loss) per share
    
    $
    0.74
    
    
    
    (0.02
    )
    
    
    (0.00
    )
    
    
    (0.02
    )
    
    $
    0.69
    
    
    
    (0.20
    )
    
    $
    0.49Shares used in computing per share
amounts
    
    
    45,396
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    45,396Diluted earnings per share:Net income (loss) per share
    
    $
    0.73
    
    
    
    (0.02
    )
    
    
    (0.00
    )
    
    
    (0.02
    )
    
    $
    0.69
    
    
    
    (0.20
    )
    
    $
    0.49Shares used in computing per share
amounts
    
    
    45,619
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    45,619
 14




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##### Table of Contents



CSK AUTO CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued) CONSOLIDATED STATEMENT OF CASH FLOWS
for the Thirty-nine Weeks Ended October 31, 2004
(in thousands)
(Unaudited) Vendor AllowancesAs
    
    
    
    
    
    
    Change in
    
    
    
    
    
    
    
    
    
    
    InventoryPreviously
    
    
    
    
    
    
    Recognition
    
    
    Other
    
    
    As Corrected
    
    
    Accounting
    
    
    AsReported
    
    
    Leases
    
    
    Period
    
    
    Items
    
    
    and Restated
    
    
    Change
    
    
    RestatedCash Flows provided by (used in) operating
activities:Net Income (loss)
    
    $
    41,179
    
    
    
    (803
    )
    
    
    513
    
    
    
    (632
    )
    
    
    40,257
    
    
    
    49
    
    
    $
    40,306Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating
activites:Depreciation & amortization on PP&E
    
    
    20,333
    
    
    
    3,002
    
    
    
    
    
    
    
    
    
    
    
    23,335
    
    
    
    
    
    
    
    23,335Amortization of other items
    
    
    3,208
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,208
    
    
    
    
    
    
    
    3,208Amortization of deferred financing costs
    
    
    1,456
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,456
    
    
    
    
    
    
    
    1,456Amortization of long term debt fair market
value adjustment
    
    
    (80
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (80
    )
    
    
    
    
    
    
    (80
    )Accretion of debt discount
    
    
    42
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    42
    
    
    
    
    
    
    
    42Loss on disposal of property, equipment and
other assets
    
    
    685
    
    
    
    (130
    )
    
    
    
    
    
    
    
    
    
    
    555
    
    
    
    
    
    
    
    555Tax benefit relating to stock option exercises
    
    
    190
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    190
    
    
    
    
    
    
    
    190Deferred income taxes
    
    
    24,819
    
    
    
    (521
    )
    
    
    332
    
    
    
    (409
    )
    
    
    24,221
    
    
    
    32
    
    
    
    24,253Changes in operating assets and liabilities:Receivables
    
    
    10,352
    
    
    
    
    
    
    
    (845
    )
    
    
    1,041
    
    
    
    10,548
    
    
    
    
    
    
    
    10,548Inventories
    
    
    (36,723
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (36,723
    )
    
    
    (81
    )
    
    
    (36,804
    )Prepaid expenses and other current assets
    
    
    642
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    642
    
    
    
    
    
    
    
    642Accounts payable
    
    
    3,933
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,933
    
    
    
    
    
    
    
    3,933Accrued payroll, accrued expenses, & other
current liabilities
    
    
    2,396
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,396
    
    
    
    
    
    
    
    2,396Other operating activities
    
    
    631
    
    
    
    (190
    )
    
    
    
    
    
    
    
    
    
    
    441
    
    
    
    
    
    
    
    441Net cash provided by operating activities
    
    
    73,063
    
    
    
    1,358
    
    
    
    
    
    
    
    
    
    
    
    74,421
    
    
    
    
    
    
    
    74,421Capital expenditures
    
    
    (16,399
    )
    
    
    (2,371
    )
    
    
    
    
    
    
    
    
    
    
    (18,770
    )
    
    
    
    
    
    
    (18,770
    )Other investing activities
    
    
    (2,366
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,366
    )
    
    
    
    
    
    
    (2,366
    )Net cash used in investing activities:
    
    
    (18,765
    )
    
    
    (2,371
    )
    
    
    
    
    
    
    
    
    
    
    (21,136
    )
    
    
    
    
    
    
    (21,136
    )Borrowings under senior credit facility
    
    
    20,600
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,600
    
    
    
    
    
    
    
    20,600Payments under senior credit facility
    
    
    (21,875
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (21,875
    )
    
    
    
    
    
    
    (21,875
    )Payment of debt issuance costs
    
    
    (1,192
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,192
    )
    
    
    
    
    
    
    (1,192
    )Payments on capital lease obligations
    
    
    (11,093
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,093
    )
    
    
    
    
    
    
    (11,093
    )Proceeds from exercise of stock options
    
    
    621
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    621
    
    
    
    
    
    
    
    621Proceeds from seller financing arrangements
    
    
    
    
    
    
    1,175
    
    
    
    
    
    
    
    
    
    
    
    1,175
    
    
    
    
    
    
    
    1,175Payments on seller financing arrangements
    
    
    
    
    
    
    (162
    )
    
    
    
    
    
    
    
    
    
    
    (162
    )
    
    
    
    
    
    
    (162
    )Repurchase of common stock
    
    
    (23,726
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (23,726
    )
    
    
    
    
    
    
    (23,726
    )Recovery of stockholders receivable
    
    
    8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8
    
    
    
    
    
    
    
    8Other financing activities
    
    
    (189
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (189
    )
    
    
    
    
    
    
    (189
    )Net cash provided by (used in) financing
activities:
    
    
    (36,846
    )
    
    
    1,013
    
    
    
    
    
    
    
    
    
    
    
    (35,833
    )
    
    
    
    
    
    
    (35,833
    )Net increase in cash
    
    
    17,452
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,452Cash and cash equivalents, beginning of period
    
    
    37,221
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    37,221Cash and cash equivalents, end of period
    
    $
    54,673
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    54,673
 15




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##### Table of Contents



CSK AUTO CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued) CONSOLIDATED STATEMENT OF CASH FLOWS
for the Thirty-nine Weeks Ended November 2, 2003
($ in thousands)
(Unaudited) Vendor AllowancesAs
    
    
    
    
    
    
    Change in
    
    
    
    
    
    
    
    
    
    
    InventoryPreviously
    
    
    
    
    
    
    Recognition
    
    
    Other
    
    
    As Corrected
    
    
    Accounting
    
    
    AsReported
    
    
    Leases
    
    
    Period
    
    
    Items
    
    
    and Restated
    
    
    Change
    
    
    RestatedCash Flows provided by (used in) operating
activities:Net Income (loss)
    
    $
    33,379
    
    
    
    (1,100
    )
    
    
    (18
    )
    
    
    (896
    )
    
    
    31,365
    
    
    
    (9,153
    )
    
    $
    22,212Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating
activites:Depreciation & amortization on PP&E
    
    
    22,999
    
    
    
    3,179
    
    
    
    
    
    
    
    
    
    
    
    26,178
    
    
    
    
    
    
    
    26,178Amortization of other items
    
    
    2,897
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,897
    
    
    
    
    
    
    
    2,897Amortization of deferred financing costs
    
    
    3,201
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,201
    
    
    
    
    
    
    
    3,201Amortization of long term debt fair market
value adjustment
    
    
    (807
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (807
    )
    
    
    
    
    
    
    (807
    )Accretion of debt discount
    
    
    702
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    702
    
    
    
    
    
    
    
    702Loss on disposal of property, equipment and
other assets
    
    
    683
    
    
    
    68
    
    
    
    
    
    
    
    
    
    
    
    751
    
    
    
    
    
    
    
    751Tax benefit relating to stock option exercises
    
    
    1,859
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,859
    
    
    
    
    
    
    
    1,859Write off of debt issuance costs
    
    
    2,268
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,268
    
    
    
    
    
    
    
    2,268Premium paid on early retirement of debt
    
    
    (350
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (350
    )
    
    
    
    
    
    
    (350
    )Proceeds from interest rate swap termination
    
    
    6,031
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,031
    
    
    
    
    
    
    
    6,031Deferred income taxes
    
    
    19,278
    
    
    
    (712
    )
    
    
    (12
    )
    
    
    (580
    )
    
    
    17,974
    
    
    
    (5,929
    )
    
    
    12,045Changes in operating assets and liabilities:Receivables
    
    
    9,861
    
    
    
    
    
    
    
    30
    
    
    
    1,476
    
    
    
    11,367
    
    
    
    
    
    
    
    11,367Inventories
    
    
    (33,268
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (33,268
    )
    
    
    15,082
    
    
    
    (18,186
    )Prepaid expenses and other current assets
    
    
    (4,363
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,363
    )
    
    
    
    
    
    
    (4,363
    )Accounts payable
    
    
    (18,794
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (18,794
    )
    
    
    
    
    
    
    (18,794
    )Accrued payroll, accrued expenses, & other
current liabilities
    
    
    12,238
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,238
    
    
    
    
    
    
    
    12,238Other operating activities
    
    
    1,249
    
    
    
    335
    
    
    
    
    
    
    
    
    
    
    
    1,584
    
    
    
    
    
    
    
    1,584Net cash provided by operating activities
    
    
    59,063
    
    
    
    1,770
    
    
    
    
    
    
    
    
    
    
    
    60,833
    
    
    
    
    
    
    
    60,833Capital expenditures
    
    
    (10,568
    )
    
    
    (2,774
    )
    
    
    
    
    
    
    
    
    
    
    (13,342
    )
    
    
    
    
    
    
    (13,342
    )Other investing activities
    
    
    (2,542
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,542
    )
    
    
    
    
    
    
    (2,542
    )Net cash used in investing activities:
    
    
    (13,110
    )
    
    
    (2,774
    )
    
    
    
    
    
    
    
    
    
    
    (15,884
    )
    
    
    
    
    
    
    (15,884
    )Borrowings under senior credit facility
    
    
    291,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    291,000
    
    
    
    
    
    
    
    291,000Payments under senior credit facility
    
    
    (293,000
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (293,000
    )
    
    
    
    
    
    
    (293,000
    )Retirement of balance of 11% senior
subordinated notes
    
    
    (9,547
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,547
    )
    
    
    
    
    
    
    (9,547
    )Payment of debt issuance costs
    
    
    (4,162
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,162
    )
    
    
    
    
    
    
    (4,162
    )Payments on capital lease obligations
    
    
    (12,335
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,335
    )
    
    
    
    
    
    
    (12,335
    )Proceeds from exercise of stock options
    
    
    13,415
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,415
    
    
    
    
    
    
    
    13,415Proceeds from seller financing arrangements
    
    
    
    
    
    
    1,120
    
    
    
    
    
    
    
    
    
    
    
    1,120
    
    
    
    
    
    
    
    1,120Payments on seller financing arrangements
    
    
    
    
    
    
    (116
    )
    
    
    
    
    
    
    
    
    
    
    (116
    )
    
    
    
    
    
    
    (116
    )Recovery of stockholders receivable
    
    
    216
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    216
    
    
    
    
    
    
    
    216Other financing activities
    
    
    (207
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (207
    )
    
    
    
    
    
    
    (207
    )Net cash provided by (used in) financing
activities:
    
    
    (14,620
    )
    
    
    1,004
    
    
    
    
    
    
    
    
    
    
    
    (13,616
    )
    
    
    
    
    
    
    (13,616
    )Net increase in cash
    
    
    31,333
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    31,333Cash and cash equivalents, beginning of period
    
    
    15,519
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,519Cash and cash equivalents, end of period
    
    $
    46,852
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    46,852
 16




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##### Table of Contents



CSK AUTO CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued) Note 2  Basis of Presentation We prepared the unaudited consolidated financial statements included herein in
accordance with generally accepted accounting principles for interim financial information and with
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the financial statements
do not include all information and footnotes required by generally accepted accounting principles
for fiscal year end financial statements. In the opinion of management, the consolidated financial
statements reflect all adjustments, which are of a normal recurring nature, necessary for a fair
statement of our financial position and the results of our operations. The accompanying
consolidated financial statements should be read in conjunction with the consolidated financial
statements and related notes thereto for the fiscal year ended February 1, 2004 (fiscal 2003), as
restated, as included in our Annual Report on Form 10-K, dated January 30, 2005, filed with the SEC
on May 2, 2005. Certain amounts in the prior fiscal years financial statements have been
reclassified to conform to the current fiscal year presentation. This has no impact on our
previously reported financial position, results of operations or cash flows. Note 3  Inventories Inventories are valued at the lower of cost or market, cost being determined utilizing the
First-in First-out (FIFO) method. In most instances, we retain the ability to return damaged,
obsolete and excess merchandise inventory to our vendors. In situations where we do not have a
right to return merchandise inventory (generally for certain import products), we may from time to
time record an allowance representing an estimated loss for the difference between the cost of any
damaged, obsolete or excess product and the estimated retail selling price. Inventory levels and
margins earned on all products are monitored monthly. Quarterly, we assess whether we expect to
sell any significant amount of inventory below cost and, if so, record an estimated allowance. We
refer to this allowance as an obsolescence allowance. At each balance sheet reporting date, we adjust our inventory carrying balances by the
capitalization of certain operating and overhead administrative costs associated with purchasing
and handling of inventory, an estimation of vendor allowances that remain in ending inventory at
period end, and an estimation of allowances for inventory shrinkage and obsolescence as follows: October 31, 2004
    
    
    February 1, 2004 (1)(Restated)
    
    
    (Restated)($ in millions)FIFO cost
    
    $
    586.5
    
    
    $
    557.0Administrative and overhead costs
    
    
    40.9
    
    
    
    39.6Vendor allowances
    
    
    (57.4
    )
    
    
    (60.4
    )Shrinkage
    
    
    (15.8
    )
    
    
    (13.4
    )Net inventory
    
    $
    554.2
    
    
    $
    522.8
   1)
    
    FIFO cost, capitalized administration and overhead costs, and vendor allowance amounts
have been adjusted from those previously reported in our Form 10-K, filed with the SEC on
May 2, 2005, to reflect the correct balances. Net inventory did not change. Note 4  Store Closing Costs On an on-going basis, store locations are reviewed and analyzed based on several factors
including market saturation, store profitability, and store size and format. In addition, we
analyze sales trends and geographical and competitive factors to determine the viability and future
profitability of our store locations. If a store location does not meet our required performance,
it is considered for closure. As a result of past acquisitions, we have closed numerous locations
due to overlap with previously existing store locations. We account for the costs of closed stores in accordance with Statement of Financial Accounting
Standard (SFAS) No. 146, Accounting for Costs Associated with Exit or Disposal Activities.
Under SFAS No. 146, costs of operating lease commitments for a closed store are recognized as
expense at fair value at the time we cease operating the store. Fair value of the liability is
determined as the present value of future cash flows discounted using a credit-adjusted risk free
rate. Accretion expense represents interest on our recorded closed store liabilities at the same
credit adjusted risk free rate used to discount the cash flows. In addition, SFAS No. 146 also
requires that the amount of remaining lease payments owed be reduced by estimated sublease income
(but not to an amount less than zero). Sublease income in excess of costs associated with the lease
is recognized as it is earned and included as a reduction to operating and administrative expense
in the accompanying financial statements. The allowance for store closing costs is included in accrued expenses and
other long term liabilities in the accompanying financial statements and primarily represents the
discounted value of the following future net cash outflows related to closed stores: (1) future
rents to be paid over the remaining terms of the lease agreements for the stores (net of estimated
probable sublease income); (2) lease commissions associated with the anticipated store subleases;
and (3) contractual
expenses associated with the closed store vacancy periods. Certain operating expenses, such as
utilities and repairs, are expensed as incurred and no provision is made 17




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CSK AUTO CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued) for employee termination costs. As of October 31, 2004, we had a total of 143 store locations included in the
allowance for store closing costs. Of this total, 13 locations were vacant and 130 locations were
subleased. In addition to these stores, we had 55 service centers of which 3 were vacant and 52
were subleased. Future rental payments will be made through the expiration of the non-cancelable
leases, the longest of which runs through March 2018. Activity in the allowance for store closings and the related payments for the
thirty-nine weeks ended October 31, 2004 (the thirty-nine weeks of fiscal 2004) are as follows ($
in thousands): Balance, beginning of year
    
    $
    12,148Store closing costs:Provision for store closing costs
    
    
    106Revisions in estimates
    
    
    345Accretion
    
    
    418Operating expenses and other
    
    
    739Store closing costs, net
    
    
    1,608Payments:Rent expense, net of sublease income
    
    
    (2,249
    )Occupancy and other expenses
    
    
    (696
    )Lease buyouts and sublease commissions
    
    
    (2,110
    )Total payments
    
    
    (5,055
    )Balance as of October 31, 2004
    
    $
    8,701
 We expect cash outflows for vacant stores (which includes certain operating expenses that are
expensed as incurred), sublease losses and lease buyouts to be approximately $7.0 million during
our fiscal year ending January 30, 2005 (fiscal 2004). We expect the remainder of cash outflows
relating to these stores to occur primarily during fiscal years 2005 through 2007. Note 5  Debt Outstanding debt, excluding capital leases, is comprised of the following ($ in
thousands): October 31,
    
    
    February 1,2004
    
    
    2004(Restated)
    
    
    (Restated)Senior credit facility  term loan
    
    $
    253,725
    
    
    $
    255,000Remaining 12% senior notes
    
    
    14,910
    
    
    
    14,910Remaining Unamortized original issue discount (OID) on 12% senior notes
    
    
    (107
    )
    
    
    (149
    )7% senior subordinated notes
    
    
    225,000
    
    
    
    225,000Seller financing arrangements
    
    
    7,469
    
    
    
    6,456Notes and loans, including current maturities
    
    
    500,997
    
    
    
    501,217SFAS No. 133 fair market value (FMV)adjustment:$100.0 million of 7% senior subordinated notes
    
    
    (8,353
    )
    
    
    Remaining FMV adjustment on 12% senior notes
    
    
    172
    
    
    
    252Total debt
    
    
    492,816
    
    
    $
    501,469Less: Current maturitiesRemaining balance, OID and FMV adjustment on 12% senior notes
    
    
    14,975
    
    
    
    Under senior credit facility
    
    
    2,550
    
    
    
    2,550Seller Financing Arrangements
    
    
    247
    
    
    
    193Total long term debt
    
    $
    475,044
    
    
    $
    498,726
 We have made an election to redeem the approximately $15.0 million remaining balance of Autos
$280.0 million 12% senior notes due 2006 in December 2004, the first date such senior notes become
redeemable pursuant to the indenture governing such notes, at a redemption price equal to 106% of
the principal amount plus accrued and unpaid interest. In connection with the planned redemption,
we expect to record a charge during the fourth quarter of fiscal 2004 of approximately $1.0
million. This charge will consist of redemption premiums paid, the write-off of the remaining
unamortized debt discount, and the write-off of certain unamortized debt issuance costs, partially
offset by a fair market value adjustment to the senior notes associated with the termination in
June 2003 of an interest rate swap agreement. We reclassified the approximately $15.0
million balance as a current liability on the accompanying consolidated balance sheet to reflect
our election to redeem the notes during fourth quarter of fiscal 2004. On August 10, 2004, we amended our senior credit facility to provide for an immediate
reduction of the interest rate on the term loan of 25 basis points and an opportunity for an
additional 25 basis points reduction of the interest rate on such term loan upon the achievement of
certain conditions, as more particularly set forth in 18




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CSK AUTO CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued) the amendment. The current interest rates on
our revolving credit facility and term loan are LIBOR +275 basis points and LIBOR +200 basis
points, respectively. The amendment also provides for a one-year extension of the term loan
maturity to August 2010. On April 5, 2004, we entered into an interest rate swap agreement to effectively convert
$100.0 million of our 7% senior subordinated notes due 2014 to a floating rate, set semi-annually
in arrears, equal to the 6 month LIBOR + 283 basis points. The agreement is for the term of such
notes. The hedge is accounted for as a fair value hedge; accordingly, the fair value of the
derivative and changes in the fair value of the underlying debt will be reported on our
consolidated balance sheet and recognized in the results of operations. Based upon our assessment
of effectiveness of the hedge, changes in the fair value of this derivative and the underlying debt
will not have a significant effect on our consolidated results of operations. At October 31, 2004,
the fair value of the interest rate swap was a liability of approximately $8.4 million, which is
included in other long-term liabilities with an identical amount reflected as a basis adjustment in
long term debt on the accompanying Consolidated Balance Sheet. In June 2003, we replaced our $300.0 million credit facility with the new $325.0 million
facility. In connection therewith, we expensed $3.8 million of certain unamortized debt issuance
costs and certain direct costs. With proceeds from the new credit facility, we redeemed the
remaining $9.5 million in aggregate principal amount of Autos 11% senior subordinated notes,
including accrued and unpaid interest associated therewith. In connection with that redemption, we
paid $0.3 million in early redemption premiums and expensed $0.2 million of unamortized deferred
debt issuance costs. All of these costs are reflected in the $4.3 million loss on debt retirement
that is shown on the Consolidated Statement of Operations for the thirty-nine weeks ending November
2, 2003. Note 6  Earnings Per Share Calculation of the numerator and denominator used in computing per share
amounts is summarized as follows (in thousands): Thirteen Weeks Ended
    
    
    Thirty-nine Weeks EndedOctober 31, 2004
    
    
    November 2, 2003
    
    
    October 31, 2004
    
    
    November 2, 2003(Restated)
    
    
    (Restated)
    
    
    (Restated)
    
    
    (Restated)Numerator for basic and diluted EPS:Net income (restated)
    
    $
    12,227
    
    
    $
    14,406
    
    
    $
    40,306
    
    
    $
    22,212Denominator for basic EPS:Weighted average shares outstanding (basic)
    
    
    45,126
    
    
    
    45,827
    
    
    
    45,939
    
    
    
    45,396Denominator for diluted EPS:Weighted average shares outstanding (basic)
    
    
    45,126
    
    
    
    45,827
    
    
    
    45,939
    
    
    
    45,396Effect of dilutive securities
    
    
    143
    
    
    
    412
    
    
    
    272
    
    
    
    223Weighted average shares outstanding (diluted)
    
    
    45,269
    
    
    
    46,239
    
    
    
    46,211
    
    
    
    45,619
 Options to purchase approximately 1.8 million shares of common stock were not included in our
computation of diluted earnings per share for the third quarter of fiscal 2004 because they would
have been anti-dilutive. Note 7  Stock Based Compensation We have stock-based employee compensation plans, which are described more fully
in Note 11 of the Notes to Consolidated Financial Statements in our 2003 10-K. On October 18,
2004, the Company issued 81,614 shares of restricted stock to our executive officers and other
associates pursuant to our CSK Auto Corporation 2004 Stock and Incentive Plan. The restricted
stock was valued at the closing market price of the stock on the New York Stock Exchange on the
grant date and approximately $1.1 million was recorded as deferred compensation with an offset to
additional paid-in capital in stockholders equity on the Consolidated Balance Sheet. The deferred
compensation in stockholders equity will be amortized to expense over the three year vesting
period. No material compensation expense was recorded during the third quarter of fiscal 2004. We continue to apply the recognition and measurement provisions of Accounting Principles Board
(APB) Opinion No. 25, Accounting for Stock Issued to Employees and related interpretations in
accounting for those plans. No stock-based employee compensation expense was reflected in net
income for stock option grants as the intrinsic value of all options granted under those plans was
zero. The following table illustrates the effect on net income and earnings per share if we had
applied the fair value recognition provisions of SFAS No. 123 Accounting for Stock-Based
Compensation ($ in thousands, except per share amounts): Thirteen Weeks
    
    
    Thirty-nine WeeksEnded
    
    
    
    
    
    
    EndedOctober 31,
    
    
    November 2,
    
    
    October 31,
    
    
    November 2,2004
    
    
    2003
    
    
    2004
    
    
    2003(Restated)
    
    
    (Restated)
    
    
    (Restated)
    
    
    (Restated)Net income  as reported
    
    $
    12,227
    
    
    $
    14,406
    
    
    $
    40,306
    
    
    $
    22,212Add: Stock-based employee
compensation expense included in
reported net income, net of related
income taxes
    
    
    24
    
    
    
    
    
    
    
    24
    
    
    
    Less: Total stock-based employee
compensation expense determined
under fair value based method for
all awards, net of related income
taxes
    
    
    (224
    )
    
    
    (166
    )
    
    
    (557
    )
    
    
    (568
    )Net income  pro forma
    
    $
    12,027
    
    
    $
    14,240
    
    
    $
    39,773
    
    
    $
    21,644
 19




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CSK AUTO CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued) Thirteen Weeks
    
    
    Thirty-nine WeeksEnded
    
    
    
    
    
    
    EndedOctober 31,
    
    
    November 2,
    
    
    October 31,
    
    
    November 2,2004
    
    
    2003
    
    
    2004
    
    
    2003(Restated)
    
    
    (Restated)
    
    
    (Restated)
    
    
    (Restated)Earnings per share  basic:As reported
    
    $
    0.27
    
    
    $
    0.31
    
    
    $
    0.88
    
    
    $
    0.49Pro forma
    
    $
    0.27
    
    
    $
    0.31
    
    
    $
    0.87
    
    
    $
    0.48Earnings per share  diluted:As reported
    
    $
    0.27
    
    
    $
    0.31
    
    
    $
    0.87
    
    
    $
    0.49Pro forma
    
    $
    0.27
    
    
    $
    0.31
    
    
    $
    0.86
    
    
    $
    0.47
 Note 8  Stock Repurchase Program On June 8, 2004, our Board of Directors approved a share repurchase program that authorized
our purchase of shares of our common stock with an aggregate purchase price not to exceed $25.0
million. The program provides that we may buy shares in the open market or in privately negotiated
transactions and that we will base our decisions on whether to repurchase shares and the timing of
any such repurchases on factors including the stock price, our cash and debt levels, and general
economic and market conditions. Shares of stock repurchased under the program will be retired and
returned to the status of authorized and unissued shares. This program will expire in December
2005. During the third quarter of fiscal 2004, we repurchased 0.3 million shares of our common
stock at a cost of approximately $4.0 million under this program. Since the inception of this
program, we have repurchased approximately 1.6 million shares of our common stock at a cost of
approximately $23.7 million. The repurchase has been recorded as a reduction to additional paid-in
capital. Note 9  Legal Matters During the third quarter of fiscal 2003, we received notification from the State of California
Board of Equalization (the Board) of an assessment for approximately $1.2 million for sales tax
and approximately $0.6 million for related interest based on the Boards audit findings for the tax
periods of October 1997 through September 2000. During this time period, we refunded the sales tax
associated with battery cores to customers who returned a battery core to our stores. The Board
believes that the sales tax associated with the battery cores should have been remitted to the
taxing authority rather than refunded to the customers. Based on the Boards position, we could be
responsible for the sales tax and related interest associated with this matter for the audited
periods of October 1997 through September 2000, plus the additional unaudited time period through
December 2002, when we changed our business practices in this area to mitigate potential future tax
related liability. We believe that we have a strong basis under California law for disputing the payment of this
assessment, and in October 2003 we timely filed a Petition for Redetermination with the Board. In
May 2004, we received a response from the Board indicating that the district office that conducted
the audit upheld its position and requested confirmation of our desire to proceed with the
scheduling of an appeals conference concerning this matter. We responded affirmatively to the
Boards letter in May 2004 and are presently waiting for formal scheduling by the Board of an
appeals conference before an appeals division attorney or auditor. Our practices through December
2002 relative to the handling of taxes on battery cores had been consistent for over a decade, and
it is our position that our consistent treatment of battery core charges, together with prior tax
audits and tax auditors written commentary concerning our handling of such charges, permits us to
rely upon precedent set in prior audits. Reliance on prior audits is a position that is supportable
under California law. We also have other defenses and intend to vigorously defend our position with
regard to this matter. A liability for the potential sales tax and related interest payments has
not been recorded in our consolidated financial statements. We were served on October 26, 2004 with a lawsuit that was filed in the Superior Court in San
Diego, California. The case was brought by a sales associate in California who resigned in January
2003, and purports to be a class action on behalf of all current and former California hourly
store employees claiming that plaintiff and those similarly situated were not paid for: (i) all
time worked (i.e. off the clock work), (ii) the minimum reporting time pay when they reported to
work a second time in a day, (iii) all overtime due, (iv ) all wages due at termination, and (v)
amounts due for late or missed meal periods or rest breaks. Plaintiff also alleges that CSK
violated certain record keeping requirements arising out of the foregoing alleged violations. The
lawsuit claims these alleged practices are unfair business practices, and requests back pay,
restitution, penalties for violations of various Labor Code sections and for failure to pay all
wages due on termination, and interest for the last four years, plus attorney fees and that the
Company be enjoined from committing further unfair business practices. We believe we have
meritorious defenses to all of these claims and intend to defend the claims vigorously. If one or
more of the claims is permitted by the court to proceed as a class action and is decided against
us, the aggregate potential financial exposure could be material to our annual results of
operations. We do not believe an adverse outcome would materially affect our liquidity or
consolidated financial position. However, the litigation is in its early stages and we cannot
predict the outcome with any certainty. A liability for this matter has not been recorded in our
consolidated financial statements. We currently and from time to time are involved in other litigation incidental to the conduct
of our business, including asbestos and similar product liability claims, slip and fall and other
general liability claims, discrimination and employment claims, vendor disputes, and miscellaneous
environmental and real estate claims. The damages claimed in some of this litigation are
substantial. Based on internal review, we accrue reserves using our best estimate of the probable
and reasonably estimable contingent liabilities. We do not currently believe that any of these
other legal claims incidental to the conduct of our business, individually or in the aggregate,
will result in liabilities material to our consolidated financial position, results of operations
or cash flows. 20




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Item 2.Managements Discussion and Analysis of Financial Condition and Results of Operations We
implemented a voluntary change in accounting for inventories, which is
effected by a retroactive restatement of our historical financial statements. In addition, we
identified errors in our accounting for leases and vendor allowances, which required a restatement
of our previously issued historical financial statements. Change in inventory accounting method We historically used the last-in, first-out (LIFO) method for accounting for inventories.
In the fourth quarter of fiscal 2004, we changed our method of determining the cost of
inventories to the first-in, first-out (FIFO) method. We have applied this accounting change
retroactively by restating prior period financial statements as required by Accounting Principles
Board Opinion No. 20, Accounting Changes. Our inventory levels over the last five years have increased modestly due to new store
openings and growth. During the same time, we were able to reduce the overall unit costs of our
inventories. In this environment, our LIFO method of accounting was resulting in an increasing
difference between the carrying cost of inventories on our balance sheet and our current product
acquisition costs. The carrying cost on our balance sheet under LIFO reflected the higher prices
paid for inventories in prior periods and also included higher costs paid for inventories purchased
in connection with business acquisitions the last of which occurred in fiscal 1999. Since we do not
expect the pricing environment for most products we purchase to change dramatically in the
foreseeable future, this difference between LIFO cost and replacement cost can be expected to
continue and possibly increase as we continue to pursue strategies to reduce our product
acquisition costs. In the fourth quarter of fiscal 2004, we changed to the FIFO method of
inventory accounting which will result in reported inventory cost on our balance sheet that
approximates replacement costs, which we believe is preferable to continuing to report our
inventories at the higher costs we experienced in prior years. Although the primary effect of the change was a decrease in inventory on our balance sheet, it
also has a significant impact on our determination of cost of sales because of differences in unit
costs and increases in the amount of vendor allowances and inventory purchasing and handling costs
that will remain in inventory at period end under FIFO. The change
had the effect of increasing our cost of sales and decreasing our gross profit by approximately
$4.0 million in the thirteen weeks ended October 31, 2004. The change also decreased our cost of
sales and increased our gross profit by approximately $0.1 million in the thirty-nine weeks ended
October 31, 2004. The change decreased our cost of sales and increased our gross profit by
approximately $3.3 million in the thirteen weeks ended November 2, 2003. The change increased our
cost of sales and decreased our gross profit by approximately $15.1 million for the thirty-nine
weeks ended November 2, 2003. Lease accounting restatement We operate in excess of 1,100 leased locations, primarily consisting of retail stores but also
including warehouses, distribution centers and our corporate office facilities. We identified
accounting errors pertaining to the evaluation of lease terms (thus impacting our amortization of
leasehold improvements), free rent periods (i.e., rent holidays), straight-lining of minimum
escalating lease payments, the classification of landlord incentives/allowances, and the treatment
of costs incurred for certain stores which are constructed and subsequently transferred to our
landlords. We have corrected these errors by restating prior period financial statements. We reevaluated our lease terms for our operating leases, which resulted in a reduction to the
useful life assumption for depreciating leasehold improvements. We previously depreciated leasehold
improvements over the term of the lease which consisted of the initial term and could include one
renewal option period but no more than 15 years in total. We now include renewal option periods
when determining the life of our leasehold improvements only if they are to be included in the lease term as defined in Statement of Financial Accounting
Standards (SFAS) No. 13, Accounting for Leases, as amended. The impact of this change increased
our annual depreciation expense for the earlier years of the leases. We previously recorded build-out allowances received from landlords as an offset to the
amounts capitalized as leasehold improvements. We are now recording such allowances as a deferred
rent liability with a related increase in recorded leasehold
improvements or property assets resulting in an increase to
depreciation expense while the amortization of the deferred rent liability reduces operating rent
expense over the lease term. This correction also increases our reported capital expenditures
(investing cash flows) and our operating cash flows we report in our Consolidated Statements of
Cash Flows. We identified a small number of stores where the extent of our monetary involvement in the
construction of the store (based on the excess of our construction costs over the landlords
reimbursement to us of such costs) results in the Company being
considered the owner of the property during the construction period
and in capitalization of the construction costs as an asset
and recording the landlord reimbursement as construction debt under Emerging Issues Task Force
(EIFT) No. 97-10, The Effect of Lessee Involvement in Asset Construction (EITF 97-10). We also identified situations where we did not straight-line escalating rent or recognize rent
for free rent periods. The net effect of the required adjustments to address these errors increased
rent expenses in our historical financial statements. The Companys overall cash flow was not impacted by these corrections. Vendor allowance restatements We
historically recognized estimated vendor allowances in a systematic
manner ratably over our expected performance period that ran from October through September. This recognition period was initially
selected to match the estimated benefits to be received with estimated costs the Company was incurring to perform
promotional activities required to earn the vendor allowances. We reevaluated this accounting
convention and concluded that the recognition period should be
corrected to the contractual period which corresponds to a calendar year because
substantially all allowances are determined and collected based on purchases from vendors in the
calendar year. We also identified vendor allowances recorded in fiscal 2003 that will not be collected and
have determined that the amounts were recorded because of errors in earlier periods.
In addition, we identified certain vendor allowances recorded in
improper periods. We have applied the changes required retroactively by restating prior period
financial statements. Overview CSK Auto Corporation is the largest specialty retailer of automotive parts and accessories in
the Western United States and one of the largest retailers of these 21




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##### Table of Contents



products in the United States based, in each case, on our number of stores. As of October 31,
2004, through our wholly owned subsidiary Auto, we operated 1,129 stores in 19 states under one
fully integrated operating format and three brand names:  
    Checker Auto Parts, founded in 1969, with 422 stores in the Southwestern, Rocky Mountain and Northern Plains states and Hawaii;
    Schucks Auto Supply, founded in 1917, with 225 stores in the Pacific Northwest and Alaska; and
    Kragen Auto Parts, founded in 1947, with 482 stores primarily in California. In the following discussion, we refer to the thirteen and thirty-nine week periods ended on
October 31, 2004 and November 2, 2003, respectively, as the third quarter and thirty-nine weeks
of those respective fiscal years. During the thirty-nine weeks of fiscal 2004, we opened 22 stores, relocated 5 stores and
closed 7 stores in addition to the 5 stores closed upon relocation. Our goal for fiscal 2004 is to
open approximately 40 to 45 stores, consisting of approximately 30 to 35 new stores and 10
relocated stores. During fiscal 2004, we expect to close approximately 8 stores (in addition to
approximately 10 stores closed due to relocation) for a net increase of approximately 25 stores. We experienced 5.2% same store sales increases during the first quarter of fiscal 2004 and
same store sales decreases of 2.5% and 3.2% during the second quarter and third quarter of fiscal
2004, respectively. We believe that many factors contributed to our same store sales decreases in
the second and third quarters of fiscal 2004, including, milder temperatures in many of our key
markets, economic conditions and higher gas prices. Despite the difficult sales environment, our
gross profit rate increased almost 80 basis points compared to the thirty-nine weeks of fiscal
2003. Our inventory management process allowed us to effectively control our inventory with only a
slight increase compared to the same period of last year. In light of these conditions, we will
continue to: (1) analyze our operating and administrative expenses to further reduce our cost
structure; (2) review and refine our core product categories, such as batteries, brakes, shocks,
starters and alternators, to ensure that we are meeting our customers expectations; (3) add new
product offerings as we deem appropriate to give our customers additional reasons to shop our
stores; and (4) review our marketing programs, sales promotions, event marketing and sports
sponsorships to build customer awareness and help drive store traffic. Our goal is to remain
focused on our long-term objectives and continue to manage our business toward achievement of those
objectives. Automotive Information Systems, Inc. (AIS) is a wholly owned subsidiary of Auto that
provides diagnostic vehicle repair information to automotive technicians, automotive replacement
parts manufacturers, automotive test equipment manufacturers, and to DIY consumers. For the past
several months, we have been examining alternatives that will allow us to maximize the potential
value of AIS without significantly increasing our capital commitment. We do not anticipate that
any potential transaction will have a material effect on our fiscal 2004 consolidated results of
operations or our financial condition. The following discussion and analysis presents factors that affected our consolidated results
of operations for the thirteen and thirty-nine weeks ended October 31, 2004 and our consolidated
financial position at that date. The following information should be read in conjunction with the
consolidated financial statements and notes included in this Form 10-Q/A as well as the
consolidated financial statements and related notes thereto in our Annual Report on Form 10-K,
dated January 30, 2005, (2004 Annual Report) filed with the SEC on May 2, 2005. Results of Operations The following table expresses the Statements of Operations as a percentage of sales for the
periods shown: Thirteen Weeks Ended
    
    
    Thirty-nine Weeks EndedOctober 31,
    
    
    November 2,
    
    
    October 31,
    
    
    November 2,2004
    
    
    2003
    
    
    2004
    
    
    2003(Restated)
    
    
    (Restated)
    
    
    (Restated)
    
    
    (Restated)Net sales
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Cost of sales
    
    
    53.2
    
    
    
    53.2
    
    
    
    52.7
    
    
    
    54.9Gross profit
    
    
    46.8
    
    
    
    46.8
    
    
    
    47.3
    
    
    
    45.1Operating and administrative
    
    
    39.6
    
    
    
    38.0
    
    
    
    39.6
    
    
    
    38.4Store closing costs
    
    
    0.1
    
    
    
    
    
    
    
    0.1
    
    
    
    Operating profit
    
    
    7.1
    
    
    
    8.8
    
    
    
    7.6
    
    
    
    6.7Interest expense
    
    
    2.1
    
    
    
    3.1
    
    
    
    2.1
    
    
    
    3.4Loss on debt retirement
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.4Income before income taxes
    
    
    5.0
    
    
    
    5.7
    
    
    
    5.5
    
    
    
    2.9Income tax expense
    
    
    2.0
    
    
    
    2.2
    
    
    
    2.2
    
    
    
    1.1Net Income
    
    
    3.0
    %
    
    
    3.5
    %
    
    
    3.3
    %
    
    
    1.8
    %
 Thirteen Weeks Ended October 31, 2004 Compared to Thirteen Weeks Ended November 2, 2003 Net sales for the third quarter of fiscal 2004 decreased 2.0% to $401.5 million
from $409.8 million for the third quarter of fiscal 2003. Same store sales decreases of 3.2%
(negative 3.8% for retail and flat sales for commercial) were partially offset by our increased
store count (net of closures). Sales decreases were observed in all major product categories. Gross profit was $187.9 million, or 46.8% of net sales, for the third quarter
of fiscal 2004 as compared to $191.7 million, or 46.8% of net sales, for the third quarter of
fiscal 2003. Gross profit as a percent to net sales was comparable year over year. Operating and administrative expenses were $158.9 million or 39.6% of net sales
in the third quarter of fiscal 2004, compared to $155.3 million or 38.0% of net sales in the third
quarter of fiscal 2003. The increased expenses and increase as a percent of sales are primarily
attributable to our increased store count, higher 22




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advertising as a result of certain marketing initiatives, increased payroll and benefit-related
expenses and the effect of the decline in sales on certain fixed operating costs. Interest expense for the third quarter of fiscal 2004 decreased to $8.2 million
from $12.8 million in the third quarter of fiscal 2003 primarily as a result of the lower interest
rates and corresponding reduced interest expense associated with our refinancing completed in
January 2004. Income tax expense for the third quarter of fiscal 2004 was $7.9 million,
compared to $9.1 million for the comparable period of fiscal 2003. Our effective tax rates for the
third quarters of fiscal 2004 and 2003 were 39.1% and 38.6%, respectively. Net income decreased to $12.2 million, or $0.27 per diluted common share, for
the third quarter of fiscal 2004, compared to net income of $14.4 million, or $0.31 per diluted
common share, for the third quarter of fiscal 2003. Thirty-nine Weeks Ended October 31, 2004 Compared to Thirty-nine Weeks Ended November 2, 2003 Net sales for the thirty-nine weeks of fiscal 2004 increased 0.2% to $1,207.6
million from $1,205.7 million for the thirty-nine weeks of fiscal 2003. Same store sales were flat
compared to the thirty-nine weeks of fiscal 2003 with higher sales generated by our net increase in
store count. During the first quarter of fiscal 2004, same store sales increased 5.2% and were
strong in core product categories such as batteries, brakes, shocks and rotating electric parts.
During the second quarter of fiscal 2004, we experienced weaker than anticipated demand in
heat-related categories primarily as a result of milder temperatures in many of our key markets and
higher gas prices. During the third quarter of fiscal 2004, sales decreases were observed in all
major product categories. Gross profit was $570.7 million, or 47.3% of net sales, for the thirty-nine
weeks of fiscal 2004 as compared to $544.3 million, or 45.1% of net sales, for the thirty-nine
weeks of fiscal 2003. The improvement in gross margin rates year over year has resulted from lower
product acquisition costs on selected items, improvements in our balance of sales through enhanced
category management, and reduced store inventory shrinkage as a result of improved store procedures
and enhanced inventory control systems. Operating and administrative expenses were $478.1 million or 39.6% of net sales
in the thirty-nine weeks of fiscal 2004, compared to $463.0 million or 38.4% of net sales in the
thirty-nine weeks of fiscal 2003. The increase year over year is primarily attributable to
increased store count, higher payroll rates and benefit-related costs and increased advertising. Interest expense for the thirty-nine weeks of fiscal 2004 decreased to $24.8
million from $40.6 million in the thirty-nine weeks of fiscal 2003 primarily as a result of the
lower interest rates and corresponding reduced interest expense associated with our refinancing
completed in January 2004. In June 2003, we replaced our $300.0 million credit facility with a new $325.0 million
facility. In connection therewith, we expensed $3.8 million of certain unamortized debt issuance
costs and certain direct costs. With proceeds from the new credit facility, we also redeemed the
remaining $9.5 million in aggregate principal amount of Autos 11% senior subordinated notes,
including accrued and unpaid interest associated therewith. In connection with that redemption, we
paid $0.3 million in early redemption premiums and expensed $0.2 million of unamortized deferred
debt issuance costs. All of these costs were reflected in the $4.3 million loss on debt retirement
that is shown on the Consolidated Statement of Operations for the thirty-nine weeks ended November
2, 2003. Income tax expense for the thirty-nine weeks of fiscal 2004 was $25.9 million,
compared to $13.8 million for the comparable period of fiscal 2003. Our effective tax rate was
39.1% in fiscal 2004 and 38.3% in fiscal 2003. Net income increased to $40.3 million, or $0.87 per diluted common share, for
the thirty-nine weeks of fiscal 2004, compared to net income of $22.2 million, or $0.49 per diluted
common share, for the thirty-nine weeks of fiscal 2003. Liquidity and Capital Resources Overview of Liquidity Our primary cash requirements include working capital (primarily inventory),
interest on our debt and capital expenditures. Other than payments on capital leases and seller
financing arrangements, we are required to make only minimal debt amortization payments prior to
fiscal 2009. We intend to fund our cash requirements with cash flows from operating activities,
borrowings under our senior credit facility and short-term trade credit relating to extended
payment terms for inventory purchases. The following table outlines our liquidity: October 31,
    
    
    February 1,2004
    
    
    2004($ in thousands)Cash
    
    $
    54,673
    
    
    $
    37,221Availability under revolving line of credit
    
    
    115,038
    
    
    
    120,068Working capital (Restated)
    
    
    448,463
    
    
    
    453,734
 Availability under our revolving line of credit decreased during the thirty-nine weeks of
fiscal 2004 relative to prior periods, primarily due to the issuance of letters of credit relating
to our increased purchases of import products. We have made an election to redeem the approximately $15.0 million remaining balance of our
$280.0 million 12% senior notes due 2006 in December 2004, the first date such senior notes become
redeemable pursuant to the indenture governing the senior notes, at a redemption price equal to
106% of the principal amount plus accrued and unpaid interest. In connection with the planned
redemption, we expect to record a charge during the fourth quarter of fiscal 2004 of approximately
$1.0 million. This charge will consist of redemption premium paid, the write-off of the remaining
unamortized debt discount, and the write-off of certain unamortized debt issuance costs, partially
offset by a fair market value adjustment to the senior notes associated with the termination in
June 2003 of an interest rate swap agreement. Upon redemption of the 12% senior notes,
our actual cash outlay for principal, redemption premium, and accrued and unpaid interest will be
approximately $16.7 million. On August 10, 2004, we amended our senior credit facility to provide for an immediate
reduction of the interest rate on the term loan of 25 basis points and an opportunity for an
additional 25 basis points reduction of the interest rate on such term loan upon the achievement of
certain conditions, as more particularly set forth in 23




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the amendment. The amendment also provides for a one-year extension of the term loan maturity
to August 2010. We anticipate that this interest rate reduction will reduce our interest expense
in the fourth quarter fiscal 2004 by approximately $0.2 million. On June 8, 2004, our Board of Directors approved a share repurchase program that authorized
the purchase of shares of our common stock with an aggregate purchase price not to exceed $25.0
million. The program provides that we may buy shares in the open market or in privately negotiated
transactions and that we will base our decisions on whether to repurchase shares and the timing of
any such repurchases on factors including the stock price, our cash and debt levels, and general
economic and market conditions. Shares of stock repurchased under the program will be retired and
returned to the status of authorized and unissued shares. This program will expire in December
2005. During the third quarter of fiscal 2004, we repurchased 0.3 million shares of our common
stock at a cost of approximately $4.0 million under this program. Since the inception of this
program, we have repurchased approximately 1.6 million shares of our common stock at a cost of
approximately $23.7 million. We lease our office and warehouse facilities, all but one of our retail stores, and much of
our equipment. Substantially all of our store leases are operating leases with private landlords
and provide for monthly rental payments based on a contractual amount. These leases generally
require minimal initial cash outlay and we expect that substantially all of our new store locations
will be leased pursuant to similar operating leases. In order to facilitate an understanding of our contractual obligations and
commercial commitments, the following data is provided ($ in thousands): Payments Due by Fiscal Year (Restated)Contractual Obligation
    
    Total
    
    
    2004 (1)
    
    
    2005  2006
    
    
    2007 - 2008
    
    
    ThereafterLong-term debt (2,6)
    
    $
    501,104
    
    
    $
    16,238
    
    
    $
    5,727
    
    
    $
    5,958
    
    
    $
    473,181Interest on long-term debt (3,6)
    
    
    213,241
    
    
    
    11,961
    
    
    
    52,189
    
    
    
    51,412
    
    
    
    97,679Capital lease obligations (4)
    
    
    21,538
    
    
    
    2,476
    
    
    
    12,805
    
    
    
    4,391
    
    
    
    1,866Operating lease obligations (5,6)
    
    
    697,894
    
    
    
    29,795
    
    
    
    220,001
    
    
    
    168,229
    
    
    
    279,869Total contractual obligations
    
    $
    1,433,777
    
    
    $
    60,470
    
    
    $
    290,722
    
    
    $
    229,990
    
    
    $
    852,595
   (1)
    
    Represents the period from November 1, 2004 to January 30, 2005.(2)
    
    Change from 2003 10-K due to the extension of the term loan portion of our senior credit facility to August 10, 2010 and our election to redeem
the remaining approximately $15.0 million balance of our 12% senior notes in December 2004.(3)
    
    Interest on the term loan was calculated assuming the current interest rate of 4.06% would be in effect through the loan expiration date of
August 2010. $100.0 million of our $225.0 million 7% senior subordinated notes is subject to an interest rate swap agreement. The estimate of
the effect of the interest rate swap on interest was made assuming the current interest rate related to the rate swap would be in effect for the
term of the rate swap.(4)
    
    Capital lease payments include both principal and interest.(5)
    
    Operating lease obligations are not reduced to reflect sublease income. Changes from 2003 10-K due primarily to new stores and lease extensions.(6)
    
    As part of our Lease Accounting Restatement, we identified a small number of stores where the extent of our monetary involvement in the
construction of the store (based on the excess of our constructions costs over the landlords reimbursement to us of such costs) results in
capitalization of the construction costs as an asset and recording the landlord reimbursement as construction debt under Emerging Issues Task
Force (EITF) No. 97-10, the Effect of Lease Involvement in Asset Construction (EITF 97-10). These payments were previously shown in the
contractual obligation table as operating lease obligations. They have been reclassified as long term debt and interest payments . Other commercial commitments consist of standby letters of credit totaling $30.0
million, the longest term of which expires in June 2005. Our inventory purchase commitments are
cancelable and therefore not included in the above table. Analysis of Cash Flows The following table summarizes our cash flows from operating activities: Thirty-nine Weeks EndedOctober 31, 2004
    
    
    November 2, 2003(Restated)
    
    
    (Restated)($ in thousands)Net income
    
    $
    40,306
    
    
    $
    22,212Non-cash expenses and adjustments
    
    
    52,959
    
    
    
    48,744Change in inventory, net of accounts payable
    
    
    (32,871
    )
    
    
    (36,980
    )Proceeds from interest rate swap termination
    
    
    
    
    
    
    6,031Changes in other operating assets and liabilities
    
    
    14,027
    
    
    
    20,826Cash flows from operating activities
    
    $
    74,421
    
    
    $
    60,833
 During the thirty-nine weeks of fiscal 2004, net cash provided by operating activities was
$74.4 million compared to $60.8 million of cash provided by operating activities during the
thirty-nine weeks of fiscal 2003. The significant change primarily relates to an increase of $18.1
million in net income in fiscal 2004 resulting primarily from lower interest expense and no loss on
debt retirement. Changes in inventory, net of accounts payable improved $4.1 million as a result
of improved payables management. Cash flows from operations during the thirty-nine weeks of fiscal
2003 were favorably impacted by $6.0 million associated with the termination of an interest rate
swap agreement. The net changes in other operating assets and liabilities during the 2004 period
relative to the 2003 period relates primarily to lower accrued interest balances during the 2004
period. Net cash used in investing activities totaled $21.1 million for the thirty-nine weeks of
fiscal 2004, compared to $15.9 million used during the thirty-nine weeks of fiscal 2003. This
increase occurred because capital expenditures during the thirty-nine weeks of fiscal 2004 were
$5.4 million higher than in the thirty-nine weeks of fiscal 2003 as a result of additions made to
support new store growth, additional capital upgrades to existing stores and the purchase of
certain leased assets. Net cash used in financing activities totaled $35.8 million in the thirty-nine
weeks of fiscal 2004 compared to $13.6 million in the thirty-nine weeks of fiscal 2003. 24




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The change primarily relates to the following: (1) during the thirty-nine weeks of fiscal 2004, we
utilized approximately $23.7 million of our cash to repurchase and subsequently retire
approximately 1.6 million shares of our common stock; no such purchases were made in fiscal 2003;
(2) during the thirty-nine weeks of fiscal 2003, proceeds from the exercise of stock options were
$12.8 million higher than the thirty-nine weeks of fiscal 2004 as a result of significant stock
option exercises (3) during the thirty-nine weeks of fiscal 2003 we retired $9.5 million of our 11%
senior subordinated notes; no such retirements occurred during the thirty-nine weeks of fiscal
2004; and (4) payments for debt issuance costs were $3.0 million less during the thirty-nine weeks
of fiscal 2004 than in the thirty-nine weeks of fiscal 2003 as a result of the June 2003
refinancing of our former senior credit facility. Store Closures On an on-going basis, store locations are reviewed and analyzed based on
several factors including market saturation, store profitability, and store size and format. In
addition, we analyze sales trends and geographical and competitive factors to determine the
viability and future profitability of our store locations. If a store location does not meet our
required performance, it is considered for closure. As a result of past acquisitions, we have
closed numerous locations due to overlap with previously existing store locations. We account for the costs of closed stores in accordance with SFAS No. 146, Accounting for
Costs Associated with Exit or Disposal Activities. Under SFAS No. 146, costs of operating lease
commitments for a closed store are recognized as expense at fair value at the time we cease
operating the store. Fair value of the liability is determined as the present value of future cash
flows discounted using a credit-adjusted risk free rate. Accretion expense represents interest on
our recorded closed store liabilities at the same credit adjusted risk free rate used to discount
the cash flows. In addition, SFAS No. 146 also requires that the amount of remaining lease
payments owed be reduced by estimated sublease income (but not to an amount less than zero).
Sublease income in excess of costs associated with the lease is recognized as it is earned and
included as a reduction to operating and administrative expense in the accompanying financial
statements. The allowance for store closing costs is included in accrued expenses and other
long term liabilities in the accompanying financial statements and primarily represents the
discounted value of the following future net cash outflows related to closed stores: (1) future
rents to be paid over the remaining terms of the lease agreements for the stores (net of estimated
probable sublease income); (2) lease commissions associated with the anticipated store subleases;
and (3) contractual expenses associated with the closed store vacancy periods. Certain operating
expenses, such as utilities and repairs, are expensed as incurred and no provision is made for
employee termination costs. As of October 31, 2004, we had a total of 143 store locations included in the
allowance for store closing costs. Of this total, 13 locations were vacant and 130 locations were
subleased. In addition to these stores, we had 55 service centers of which 3 were vacant and 52
were subleased. Future rental payments will be made through the expiration of the non-cancelable
leases, the longest of which runs through March 2018. Activity in the allowance for store closings and the related payments for the
thirty-nine weeks of fiscal 2004 are as follows ($ in thousands): Balance, beginning of year
    
    $
    12,148Store closing costs:Provision for store closing costs
    
    
    106Revisions in estimates
    
    
    345Accretion
    
    
    418Operating expenses and other
    
    
    739Store closing costs, net
    
    
    1,608Payments:Rent expense, net of sublease income
    
    
    (2,249
    )Occupancy and other expenses
    
    
    (696
    )Lease buyouts and sublease commissions
    
    
    (2,110
    )Total payments
    
    
    (5,055
    )Balance as of October 31, 2004
    
    $
    8,701
 We expect cash outflows for vacant stores (which includes certain operating expenses that are
expensed as incurred), sublease losses and lease buyouts to be approximately $7.0 million during
fiscal 2004. We expect the remainder of cash outflows relating to these stores to occur primarily
during fiscal 2005 through 2007. Factors Affecting Liquidity and Capital Resources Sales Trends Our business is somewhat seasonal in nature, with the highest sales occurring in the
months of June through October (overlapping our second and third fiscal quarters.) In addition,
our business is affected by weather conditions. While unusually severe or inclement weather
typically tends to reduce sales, as our customers are more likely to defer elective maintenance
during such periods, extremely hot and cold temperatures tend to enhance sales by causing auto
parts to fail and sales of seasonal product to increase. Our same store sales were flat during the thirty-nine weeks of fiscal 2004, which was
comprised of 5.2% same store sales increases during the first quarter of fiscal 2004 and same store
sales decreases of 2.5% and 3.2% during the second and third quarters of fiscal 2004 respectively.
Based on our estimate of future sales trends and in recognition of our 7.5% same store sales
increase in the fourth quarter of fiscal 2003, we expect same store sales to be in the range of
negative 1.5% to negative 3.5% for the fourth quarter of fiscal 2004. Inflation We do not believe our operations have been materially affected by inflation. We
believe that we will be able to mitigate the effects of future merchandise cost increases
principally through economies of scale resulting from increased volumes of purchases, selective
forward buying and the use of alternative suppliers. 25




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Debt Covenants Our credit agreement contains negative covenants and restrictions on actions
by us and our subsidiaries including, without limitation, restrictions and limitations on
indebtedness, liens, guarantees, mergers, asset dispositions not in the ordinary course of
business, investments, loans, advances and acquisitions, payment of dividends, transactions with
Affiliates (as defined in the credit agreement), change in business conducted, and certain
prepayments (other than in the ordinary course of business) and amendments of subordinated
indebtedness. Our credit agreement requires that we meet certain financial covenants, ratios and
tests, including a maximum leverage ratio and a minimum interest coverage ratio. The Consolidated
Leverage Ratio is Consolidated Total Funded Debt, as defined in the credit agreement, divided by
Consolidated EBITDA as defined in the credit agreement. The Interest Coverage Ratio is
Consolidated EBITDA, as defined in the credit agreement, divided by cash interest expense, as
defined in the credit agreement. At October 31, 2004 we were in compliance with the covenants. We
anticipate meeting all required covenants under our existing credit agreement in fiscal 2004. A breach of the covenants, ratios, or restrictions contained in our credit
agreement could result in an event of default thereunder. Upon the occurrence of such an event of
default, the lenders under our credit agreement could elect to declare all amounts outstanding
under the credit agreement, together with accrued interest, to be immediately due and payable. If
we were unable to repay those amounts, the lenders could proceed against the collateral granted to
them to secure the indebtedness. The collateral consists of substantially all of our assets. If
the lenders under the credit agreement accelerate the payment of the indebtedness, we cannot be
assured that our assets would be sufficient to repay in full that indebtedness. Although we have significantly reduced our outstanding debt over recent years,
we are still highly leveraged. The degree to which we are leveraged could have important
consequences on our ability to obtain additional financing for working capital, capital
expenditures, acquisitions or general corporate purposes. A substantial portion of our cash flow
from operations must be dedicated to the payment of interest on our indebtedness, thereby reducing
the funds available for other purposes. We are substantially more leveraged than some of our
competitors, which might place us at a competitive disadvantage to those competitors that have
lower debt service obligations and significantly greater operating and financial flexibility than
we do. We may not be able to adjust rapidly to changing market conditions and we may be more
vulnerable in the event of a downturn in general economic conditions or in our business. Interest Rates Financial market risks relating to our operations result primarily from changes
in interest rates. Interest earned on our cash equivalents as well as interest paid on our variable
rate debt and interest received or paid on our interest rate swap is sensitive to changes in
interest rates. Our variable rate debt relates to borrowings under our senior credit facility,
which is primarily vulnerable to movements in the LIBOR rate. We hold no market risk sensitive
instruments for trading purposes. On April 5, 2004, we entered into an interest rate swap agreement to effectively convert
$100.0 million of our 7% senior subordinated notes due 2014 to a floating rate, set semi-annually
in arrears, equal to the 6 month LIBOR + 283 basis points. The agreement is for the term of the
notes. We entered into the interest rate swap to hedge the changes in the fair value of the
underlying fixed rate debt that result from changes in the general level of market interest rates.
The hedge is accounted for as a fair value hedge; accordingly, the fair value of the derivative
and changes in the fair value of the underlying debt will be reported on our consolidated balance
sheet and recognized in the results of operations. Based upon our assessment of effectiveness of
the hedge, changes in the fair value of this derivative and the underlying debt will not have a
significant effect on our consolidated results of operations. At October 31, 2004, the fair value
of the interest rate swap was a liability of approximately $8.4 million, which is included in other
long-term liabilities with an identical amount reflected as a basis adjustment in long term debt on
the accompanying Consolidated Balance Sheet. At October 31, 2004, including the $100.0 million of senior subordinated notes
that are subject to the interest rate swap agreement, 69% of our outstanding debt was at variable
interest rates and 31% of our outstanding debt was at fixed interest rates. With $354.0 million in
variable rate debt outstanding, a 1% change in the LIBOR rate to which this variable rate debt is
tied would result in a $3.5 million change in our annual interest expense. This estimate assumes
that our debt balance remains constant for an annual period and the interest rate change occurs at
the beginning of the period. Critical Accounting Matters For a discussion of our critical accounting matters, please refer to our 2004
Annual Report. Forward-looking Statements Certain statements contained in the foregoing Managements Discussion and
Analysis of Financial Condition and Results of Operations are forward-looking statements. They
discuss, among other things, expected growth, future store development and relocation strategy,
business strategies, future revenues and future performance. The forward-looking statements are
subject to risks, uncertainties and assumptions, including, but not limited to, competitive
pressures and impacts, demand for our products, factors impacting procurement of import products,
fluctuations in and the overall condition of the economy, timing and number of equity awards issued
and the market value of such awards, inflation, consumer debt levels, factors impacting consumer
spending and driving habits, conditions affecting new store development, weather conditions, the
possibility that we may fail to complete our assessment of, or we may identify material weaknesses
in our internal control over financial reporting in the course of our assessment of internal
control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act, and litigation
and regulatory matters. Actual results may differ materially from anticipated results described in
these forward-looking statements. Additional information regarding these and other risks that may
cause differences are contained in our periodic and other filings with the Securities and Exchange
Commission. 
 Item 3.Quantitative and Qualitative Disclosures About Market Risk See Factors Affecting Liquidity and Capital Resources above. 26




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Item 4.Controls and Procedures As previously disclosed under Item 8. Consolidated Financial Statements and Supplementary
Data, in our Annual Report on Form 10-K for the fiscal year ended January 30, 2005 filed with the
Securities and Exchange Commission on May 2, 2005, management concluded that as of January 30, 2005
the Company did not maintain effective internal control over financial reporting based on the
criteria established in Internal Control  Integrated Framework issued by the Committee of
Sponsoring Organizations (COSO), as the Company had identified the following material weaknesses:  
    The Company did not maintain effective controls over the
completeness and accuracy of its accounting for lease related
assets, liabilities and expenses. Specifically, the Companys
controls over the selection, application and monitoring of its
accounting policies related to the effect of the amortization
periods for leasehold improvements, rent holidays,
straight-lining of minimum lease payments, lease incentives and
lessee involvement in asset construction practices were
ineffective to ensure that such transactions were accounted for
in conformity with generally accepted accounting principles.
This control deficiency resulted in the restatement of our
consolidated financial statements for the fiscal years ended
February 1, 2004 and February 2, 2003, the restatement of each
of the quarters in the fiscal year ended February 1, 2004, and
the restatement of each of the first three quarters in and an
adjustment to the consolidated financial statements for the
fiscal year ended January 30, 2005.
    The Company did not maintain effective controls over the
completeness and valuation of our vendor allowance receivable
account and related cost of sales. Specifically, the Company did
not maintain effective controls over the review and approval
process for initial vendor allowance agreements; the monitoring
of modifications to existing vendor allowance agreements; and
the accuracy of our recording of various vendor allowance
transactions. This control deficiency resulted in the
restatement of our consolidated financial statements for the
fiscal years ended February 1, 2004 and February 2, 2003, the
restatement of each of the quarters in the fiscal year ended
February 1, 2004, and the restatement of each of the first three
quarters in and an adjustment to the consolidated financial
statements for the fiscal year ended January 30, 2005.
    The Company did not maintain effective controls over the
valuation of our inventory allowance accounts for shrinkage and
obsolescence and related cost of sales. Specifically, the
Company did not have effective supervisory and review controls
over our process to determine the inventory shrinkage allowance
and the method of valuing certain slow-moving inventory in
accordance with generally accepted accounting principles. This
control deficiency resulted in audit adjustments to the
consolidated financial statements for the fiscal year ended
January 30, 2005.
    The Company did not maintain effective controls over certain
aspects of the financial reporting process because we lacked a
sufficient complement of personnel with a level of accounting
expertise and an adequate supervisory review structure that is
commensurate with the Companys financial reporting
requirements. Specifically, this control deficiency directly
contributed to each of the above described material weaknesses
and also resulted in audit adjustments to our consolidated
financial statements for the fiscal year ended January 30, 2005
related to the return to vendor accounts receivable and
self-insurance accrued liability accounts. These material weaknesses could result in a misstatement of the Companys accounts in a future
period that would result in a material misstatement to the Companys annual or interim financial
statements that would not be prevented or detected. In our fiscal 2004 Annual Report, management outlined the following plan for remediation of
the material weaknesses: The Company has made and will continue to make improvements to internal control over financial
reporting that we believe will remediate the material weaknesses described above. Specifically,
with regard to our lease accounting practices, management intends to:  
    Require a formal accounting review of each new or amended lease
transaction by a management level associate;
    Provide additional educational resources to accounting personnel
regarding lease accounting guidance applicable to the various
lease accounting matters that arise in the course of the
Companys business;
    Implement additional processes and procedures to (i) enhance the
communication between the real estate/property management
departments and accounting personnel concerning various aspects
of the Companys lease transactions, and (ii) have key
accounting personnel more closely monitor the Companys lease
transactions; and
    Hire additional or reassign staff to facilitate the additional
workload needed to handle lease accounting requirements, which
go well beyond the approval and processing of lease payments. With regard to our accounting for vendor allowances, management intends to address the
material weaknesses in the accounting and estimation for vendor allowances as follows:  
    Improve the training of personnel in the accounting and
merchandising departments with respect to the Companys contract
review and approval procedures and vendor allowance policies;
    Enhance the staffing of personnel in the merchandising department;
    Clarify the duties and responsibilities of the Company personnel
who interact directly with vendors to reinforce accountability;
    Monitor closely vendor agreements with allowances tied to specific
purchase volumes to determine when specified criteria are met and
when allowances have been earned by the Company; and
    Implement a more formalized quarterly process for updating of
estimates by vendor including reconciliation to the general ledger
accounts. With regard to our estimation and calculation of the required inventory shrink and
obsolescence allowances, management will reassign the review responsibility to permit a more
complete review and require that certain data inputs be verified by the reviewer. With regard to the capabilities and experience of our accounting organization, we intend to:  
    Implement the organizational structure changes required to facilitate effective supervisory review;
    Evaluate the necessity of additional key finance and accounting personnel to facilitate a more
effective monitoring and review process; and
    Provide for greater review and oversight for key significant accounts. Although the Company has begun to implement certain of the above-described actions, it is
still evaluating the appropriate remediation measures required in order to address the
above-described deficiencies. Progress relative to our remediation measures with respect to the
above material weaknesses will be disclosed in our subsequent Exchange Act reports. Nevertheless, in light of the material weaknesses described above, the Company has implemented
additional processes and procedures and performed additional analysis and other post-closing
procedures to ensure that our consolidated financial statements were prepared in accordance with
generally accepted accounting principles. With regard to accounting for lease related assets in
particular, we changed our procedures regarding the review, analysis and recording of new and
amended leases, including the selection and monitoring of appropriate assumptions and factors
affecting lease accounting and leasehold depreciation practices. Accordingly, management believes
that the financial statements included in this Form 10-Q/A fairly present in all material respects
our financial position, results of operations and cash flows for the periods presented. Evaluation of Effectiveness of Disclosure Controls and Procedures Under the supervision and with the participation of our management, including our Chairman and
Chief Executive Officer and our Chief Financial Officer, we evaluated the effectiveness of our
disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under
the Securities Exchange Act of 1934, as amended. In making this evaluation, we considered the
material weaknesses in our internal control over financial reporting
that we previously identified (as more
fully described above). Based on that evaluation, our Chairman and Chief Executive Officer and our
Chief Financial Officer concluded that our disclosure controls and procedures were ineffective as
of the end of the period covered by this quarterly report. Changes in Internal Control Over Financial Reporting During the fiscal quarter ended October 31, 2004, there has been no change in our internal control
over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) that
has materially affected or is reasonably likely to materially affect, our internal control over
financial reporting. 27




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PART II OTHER INFORMATION 
 Item 1.Legal Proceedings During the third quarter of fiscal 2003, we received notification from the State of California
Board of Equalization (the Board) of an assessment for approximately $1.2 million for sales tax
and approximately $0.6 million for related interest based on the Boards audit findings for the tax
periods of October 1997 through September 2000. During this time period, we refunded the sales tax
associated with battery cores to customers who returned a battery core to our stores. The Board
believes that the sales tax associated with the battery cores should have been remitted to the
taxing authority rather than refunded to the customers. Based on the Boards position, we could be
responsible for the sales tax and related interest associated with this matter for the audited
periods of October 1997 through September 2000, plus the additional unaudited time period through
December 2002, when we changed our business practices in this area to mitigate potential future tax
related liability. We believe that we have a strong basis under California law for disputing the payment of this
assessment, and in October 2003 we timely filed a Petition for Redetermination with the Board. In
May 2004, we received a response from the Board indicating that the district office that conducted
the audit upheld its position and requested confirmation of our desire to proceed with the
scheduling of an appeals conference concerning this matter. We have responded affirmatively to the
Boards letter in May 2004 and are presently waiting for formal scheduling by the Board of an
appeals conference before an appeals division attorney or auditor. Our practices through December
2002 relative to the handling of taxes on battery cores had been consistent for over a decade, and
it is our position that our consistent treatment of battery core charges, together with prior tax
audits and tax auditors written commentary concerning our handling of such charges, permits us to
rely upon precedent set in prior audits. Reliance on prior audits is a position that is supportable
under California law. We also have other defenses and intend to vigorously defend our position with
regard to this matter. A liability for the potential sales tax and related interest payments has
not been recorded in our consolidated financial statements. We were served on October 26, 2004 with a lawsuit that was filed in the Superior Court in San
Diego, California. The case was brought by a sales associate in California who resigned in January
2003, and purports to be a class action on behalf of all current and former California hourly
store employees claiming that plaintiff and those similarly situated were not paid for: (i) all
time worked (i.e. off the clock work), (ii) the minimum reporting time pay when they reported to
work a second time in a day, (iii) all overtime due, (iv ) all wages due at termination, and (v)
amounts due for late or missed meal periods or rest breaks. Plaintiff also alleges that CSK
violated certain record keeping requirements arising out of the foregoing alleged violations. The
lawsuit claims these alleged practices are unfair business practices, and requests back pay,
restitution, penalties for violations of various Labor Code sections and for failure to pay all
wages due on termination, and interest for the last four years, plus attorney fees and that the
Company be enjoined from committing further unfair business practices. We believe we have
meritorious defenses to all of these claims and intend to defend the claims vigorously. If one or
more of the claims is permitted by the court to proceed as a class action and is decided against
us, the aggregate potential financial exposure could be material to our annual results of
operations. We do not believe an adverse outcome would materially affect our liquidity or
consolidated financial position. However, the litigation is in its early stages and we cannot
predict the outcome with any certainty. A liability for this matter has not been recorded in our
consolidated financial statements. We currently and from time to time are involved in other litigation incidental
to the conduct of our business, including asbestos and similar product liability claims, slip and
fall and other general liability claims, discrimination and employment claims, vendor disputes, and
miscellaneous environmental and real estate claims. The damages claimed in some of this litigation
are substantial. Based on internal review, we accrue reserves using our best estimate of the
probable and reasonably estimable contingent liabilities. We do not currently believe that any of
these other legal claims incidental to the conduct of our business, individually or in the
aggregate, will result in liabilities material to our consolidated financial position, results of
operations or cash flows. 
 Item 2.Unregistered Sales of Securities and Use of Proceeds and Issuer Repurchases of Equity Securities Issuer Repurchases of Equity Securities (1)Total Number of
    
    
    Dollar Value ofAverage
    
    
    Shares Purchased
    
    
    Shares ThatTotal Number
    
    
    Price
    
    
    Part of as
    
    
    May Yet beShares of
    
    
    per Paid
    
    
    Publicly
    
    
    PurchasedPeriod
    
    Purchased
    
    
    per Share
    
    
    Announced Plans
    
    
    Under the PlanBalance as of August 1, 2004 (2)
    
    
    1,274,956
    
    
    $
    15.50
    
    
    
    1,274,956
    
    
    $
    5,234,924August 2, 2004 to August 29, 2004
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,234,924August 30, 2004 to October 3, 2004
    
    
    300,000
    
    
    
    13.20
    
    
    
    300,000
    
    
    
    1,275,034October 4, 2004 to October 31,
2004
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,275,034As of October 31, 2004
    
    
    1,574,956
    
    
    $
    15.06
    
    
    
    1,574,956
    
    
    $
    1,275,034
   (1)
    
    On June 8, 2004, our Board of Directors approved a share
repurchase program authorizing us to acquire up to $25.0 million of
our common stock. The program expires in December 2005. See Note 8
to the Consolidated Financial Statements.(2)
    
    Consists of a) 475,756 shares purchased in a privately negotiated
transaction with Investcorp S.A., formerly one of the Companys
significant shareholders, at an approximate 1% discount from the
average market price of our common stock on the date of purchase.
Charles K. Marquis, a member of our Board of Directors, is employed
by Investcorp; and b) 799,200 shares purchased in open market
transactions. 
 Item 3.Defaults upon Senior Securities NONE 28




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Item 4.Submission of Matters to a Vote of Security Holders NONE 
 Item 5.Other Information NONE 
 Item 6.Exhibits (a) Exhibits:31.1
    
    Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification by the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.0
    
    Certification by the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 29




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SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly
authorized. CSK AUTO CORPORATIONBy:
    /s/ DON W. WATSONDon W. WatsonChief Financial Officer Dated: June 10, 2005 30




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EXHIBIT INDEX ExhibitNumber
    
    Description31.1
    
    Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification by the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.0
    
    Certification by the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.