##### Table of Contents



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 August 1, 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(State or other jurisdiction of
Incorporation or organization)
    
    86-0765798(I.R.S. Employer
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 report) 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 September 7, 2004, CSK Auto Corporation had 45,278,966 shares of common stock
outstanding.




---



##### Table of Contents



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 August 1, 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 only those items of the previously
filed Form 10-Q for the thirteen and twenty-six weeks ended August 1, 2004 and August 3, 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




---



TABLE OF CONTENTS PagePART I  Financial InformationItem 1. Financial Statements (unaudited)  As RestatedConsolidated Balance Sheets
    
    
    4Consolidated Statements of Operations
    
    
    5Consolidated Statement of Stockholders Equity
    
    
    6Consolidated Statements of Cash Flows
    
    
    7Notes to Consolidated Financial Statements
    
    
    8Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    23Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    30Item 4. Controls and Procedures
    
    
    30Item 1. Legal Proceedings
    
    
    32Item 2. Changes in Securities, Use of Proceeds and Issuer
Purchases of Equity Securities
    
    
    32Item 3. Defaults Upon Senior Securities
    
    
    33Item 4. Submission of Matters to a Vote of Security Holders
    
    
    33Item 5. Other Information
    
    
    33Item 6. Exhibits and Reports on Form 8-K
    
    
    33Signature
    
    
    35Exhibit 31.1Exhibit 31.2Exhibit 32.0
  3




---



##### Table of Contents



PART I FINANCIAL INFORMATION 
 Item 1.Financial Statements CSK AUTO CORPORATION AND SUBSIDIARIES 
 CONSOLIDATED BALANCE SHEETS (In thousands, except share data)
 (Unaudited)
 August 1,
    
    
    February 1,2004
    
    
    2004(Restated)
    
    
    (Restated)ASSETSCash and cash equivalents
    
    $
    44,615
    
    
    $
    37,221Receivables, net of allowances of $773 and $1,577, respectively
    
    
    87,724
    
    
    
    91,932Inventories
    
    
    556,111
    
    
    
    522,849Deferred income taxes
    
    
    53,019
    
    
    
    67,857Prepaid expenses and other current assets
    
    
    19,908
    
    
    
    21,123Total current assets
    
    
    761,377
    
    
    
    740,982Property and equipment, net
    
    
    138,915
    
    
    
    140,275Leasehold interests, net
    
    
    11,371
    
    
    
    12,278Goodwill
    
    
    127,069
    
    
    
    127,069Other assets, net
    
    
    32,249
    
    
    
    27,388Total assets
    
    $
    1,070,981
    
    
    $
    1,047,992LIABILITIES AND STOCKHOLDERS EQUITYAccounts payable
    
    $
    206,022
    
    
    $
    177,150Accrued payroll and related expenses
    
    
    43,824
    
    
    
    47,498Accrued expenses and other current liabilities
    
    
    48,403
    
    
    
    49,617Current maturities of long term debt
    
    
    2,787
    
    
    
    2,743Current maturities of capital lease obligations
    
    
    6,910
    
    
    
    10,240Total current liabilities
    
    
    307,946
    
    
    
    287,248Long term debt
    
    
    489,357
    
    
    
    498,726Obligations under capital leases
    
    
    9,630
    
    
    
    15,017Deferred income taxes
    
    
    4,683
    
    
    
    3,333Other liabilities
    
    
    51,886
    
    
    
    45,257Total non-current liabilities
    
    
    555,556
    
    
    
    562,333Commitments and contingenciesStockholders equity:Common stock, $0.01 par value, 58,000,000 shares authorized,
45,278,186 and 46,497,936 shares issued and outstanding at
August 1, 2004 and February 1, 2004, respectively
    
    
    453
    
    
    
    465Additional paid-in capital
    
    
    447,569
    
    
    
    466,576Stockholder receivable
    
    
    (65
    )
    
    
    (73
    )Accumulated deficit
    
    
    (240,478
    )
    
    
    (268,557
    )Total stockholders equity
    
    
    207,479
    
    
    
    198,411Total liabilities and stockholders equity
    
    $
    1,070,981
    
    
    $
    1,047,992
 The accompanying notes are an integral part of these consolidated financial statements. 4




---



##### Table of Contents



CSK AUTO CORPORATION AND SUBSIDIARIES 
 CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data)
 (Unaudited)
 Thirteen Weeks Ended
    
    
    Twenty-Six Weeks EndedAugust 1,
    
    
    August 3,
    
    
    August 1,
    
    
    August 3,2004
    
    
    2003
    
    
    2004
    
    
    2003(Restated)
    
    
    (Restated)
    
    
    (Restated)
    
    
    (Restated)Net sales
    
    $
    409,057
    
    
    $
    418,514
    
    
    $
    806,111
    
    
    $
    795,963Cost of sales
    
    
    214,989
    
    
    
    228,790
    
    
    
    423,348
    
    
    
    443,386Gross profit
    
    
    194,068
    
    
    
    189,724
    
    
    
    382,763
    
    
    
    352,577Other costs and expenses:Operating and administrative
    
    
    160,498
    
    
    
    158,748
    
    
    
    319,210
    
    
    
    307,707Store closing costs
    
    
    561
    
    
    
    43
    
    
    
    887
    
    
    
    136Operating profit
    
    
    33,009
    
    
    
    30,933
    
    
    
    62,666
    
    
    
    44,734Interest expense, net
    
    
    7,966
    
    
    
    13,610
    
    
    
    16,580
    
    
    
    27,880Loss on debt retirement
    
    
    
    
    
    
    4,315
    
    
    
    
    
    
    
    4,315Income before income taxes
    
    
    25,043
    
    
    
    13,008
    
    
    
    46,086
    
    
    
    12,539Income tax expense
    
    
    9,779
    
    
    
    4,992
    
    
    
    18,007
    
    
    
    4,733Net income
    
    $
    15,264
    
    
    $
    8,016
    
    
    $
    28,079
    
    
    $
    7,806Basic earnings per share:Net income
    
    $
    0.33
    
    
    $
    0.18
    
    
    $
    0.61
    
    
    $
    0.17Shares used in computing per share amounts
    
    
    46,184
    
    
    
    45,217
    
    
    
    46,349
    
    
    
    45,183Diluted earnings per share:Net income
    
    $
    0.33
    
    
    $
    0.18
    
    
    $
    0.60
    
    
    $
    0.17Shares used in computing per share amounts
    
    
    46,466
    
    
    
    45,499
    
    
    
    46,675
    
    
    
    45,274
 The accompanying notes are an integral part of these consolidated financial statements. 5




---



##### Table of Contents



CSK AUTO CORPORATION AND SUBSIDIARIES 
 CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY (In thousands, except share data)
 (Unaudited)
 AdditionalCommon Stock
    
    
    Paid-in
    
    
    Stockholder
    
    
    Accumulated
    
    
    TotalShares
    
    
    Amount
    
    
    Capital
    
    
    Receivable
    
    
    Deficit
    
    
    EquityBalances at February 1, 2004
(Restated)
    
    
    46,497,936
    
    
    $
    465
    
    
    $
    466,576
    
    
    $
    (73
    )
    
    $
    (268,557
    )
    
    $
    198,411Exercise of options
    
    
    52,652
    
    
    
    
    
    
    
    531
    
    
    
    
    
    
    
    
    
    
    
    531Issuances of restricted stock
    
    
    2,554
    
    
    
    
    
    
    
    45
    
    
    
    
    
    
    
    
    
    
    
    45Tax benefit relating to
stock option exercises
    
    
    
    
    
    
    
    
    
    
    169
    
    
    
    
    
    
    
    
    
    
    
    169Repurchase and retirement of
common stock
    
    
    (1,274,956
    )
    
    
    (12
    )
    
    
    (19,752
    )
    
    
    
    
    
    
    
    
    
    
    (19,764
    )Recovery of stockholder
receivable
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8
    
    
    
    
    
    
    
    8Net income (Restated)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28,079
    
    
    
    28,079Balances at
August 1, 2004 (Restated)
    
    
    45,278,186
    
    
    $
    453
    
    
    $
    447,569
    
    
    $
    (65
    )
    
    $
    (240,478
    )
    
    $
    207,479
 The accompanying notes are an integral part of these consolidated financial statements. 6




---



##### Table of Contents



CSK AUTO CORPORATION AND SUBSIDIARIES 
 CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)
 (Unaudited)
 Twenty-Six Weeks EndedAugust 1,
    
    
    August 3,2004
    
    
    2003(Restated)
    
    
    (Restated)Cash flows from operating activities:Net income
    
    $
    28,079
    
    
    $
    7,806Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization of property and equipment
    
    
    15,652
    
    
    
    17,534Amortization of deferred financing costs
    
    
    965
    
    
    
    2,367Amortization of long term debt fair market value adjustment
    
    
    (53
    )
    
    
    (307
    )Amortization of other items
    
    
    2,133
    
    
    
    1,900Accretion of debt discount
    
    
    28
    
    
    
    461Losses on disposal of property, equipment and other assets
    
    
    478
    
    
    
    549Tax benefit relating to stock option exercises
    
    
    169
    
    
    
    302Write off of debt issuance costs
    
    
    
    
    
    
    2,268Premium paid on early retirement of debt
    
    
    
    
    
    
    (350
    )Proceeds from interest rate swap termination
    
    
    
    
    
    
    6,031Deferred income taxes
    
    
    16,187
    
    
    
    3,803Change in operating assets and liabilities:Receivables
    
    
    5,332
    
    
    
    13,672Inventories
    
    
    (38,707
    )
    
    
    (15,530
    )Prepaid expenses and other current assets
    
    
    1,215
    
    
    
    (2,978
    )Accounts Payable
    
    
    26,398
    
    
    
    9,360Accrued payroll, accrued expenses and other current liabilities
    
    
    (4,062
    )
    
    
    (1,204
    )Other operating activities
    
    
    (265
    )
    
    
    1,347Net cash provided by operating activities
    
    
    53,549
    
    
    
    47,031Cash flows from investing activities:Capital expenditures
    
    
    (14,528
    )
    
    
    (7,379
    )Proceeds from sales of PP&E
    
    
    16
    
    
    
    23Other investing activities
    
    
    (1,669
    )
    
    
    (1,689
    )Net cash used in investing activities
    
    
    (16,181
    )
    
    
    (9,045
    )Cash flows from financing activities:Borrowings under senior credit facility
    
    
    20,600
    
    
    
    281,000Payments under senior credit facility
    
    
    (21,875
    )
    
    
    (283,000
    )Retirement of balance of 11% senior subordinated notes
    
    
    
    
    
    
    (9,547
    )Payment of debt issuance costs
    
    
    (892
    )
    
    
    (4,047
    )Payments on capital lease obligations
    
    
    (8,975
    )
    
    
    (5,814
    )Proceeds from seller financing arrangements
    
    
    650
    
    
    
    1,120Payments from seller financing arrangements
    
    
    (101
    )
    
    
    (82
    )Proceeds from repayment of stockholder receivable
    
    
    8
    
    
    
    168Proceeds from exercise of stock options
    
    
    531
    
    
    
    2,867Repurchase of common stock
    
    
    (19,764
    )
    
    
    Other financing activities
    
    
    (156
    )
    
    
    (146
    )Net cash used in financing activities
    
    
    (29,974
    )
    
    
    (17,481
    )Net increase in cash and cash equivalents
    
    
    7,394
    
    
    
    20,505Cash and cash equivalents, beginning of period
    
    
    37,221
    
    
    
    15,519Cash and cash equivalents, end of period
    
    $
    44,615
    
    
    $
    36,024
 The accompanying notes are an integral part of these consolidated financial statements. 7




---



##### Table of Contents



CSK AUTO CORPORATION AND SUBSIDIARIES 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Thirteen and Twenty-six Weeks Ended August 1, 2004
 CSK Auto Corporation is a holding company. At August 1, 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 August 1,
2004, we operated 1,123 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 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 decreasing our cost of sales and increasing our gross profit by approximately
$3.2 million and $4.1 million in the thirteen and twenty six weeks ended August 1, 2004. The
change increased our cost of sales and decreased our gross profit by approximately $4.6 million and
$18.4 million in the thirteen and twenty-six weeks ended August 3, 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 8




---



##### Table of Contents



CSK AUTO CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued) 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. 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 August 1, 2004 and February 1, 2004;
    Consolidated Statements of Operations for the Thirteen and Twenty-six weeks ended August 1, 2004 and August 3, 2003;
    Consolidated Statement of Stockholders Equity as of August 1, 2004; and
    Consolidated Statements of Cash Flows for the Twenty Six Weeks Ended August 1, 2004 and August 3, 2003. 9




---



##### Table of Contents



CSK AUTO CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued) CONSOLIDATED BALANCE SHEET
as of August 1, 2004
(in thousands)
(Unaudited) Vendor AllowancesChange in
    
    
    
    
    
    
    
    
    
    
    InventoryAs Previously
    
    
    
    
    
    
    Recognition
    
    
    Other
    
    
    As Corrected
    
    
    Accounting
    
    
    AsReported
    
    
    Leases
    
    
    Period
    
    
    Items
    
    
    and Restated
    
    
    Change
    
    
    RestatedASSETSCash and cash equivalents
    
    $
    44,615
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    44,615
    
    
    
    
    
    
    $
    44,615Receivables, net of allowances
    
    
    133,551
    
    
    
    
    
    
    
    (28,826
    )
    
    
    (17,001
    )
    
    
    87,724
    
    
    
    
    
    
    
    87,724Inventories
    
    
    695,423
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    695,423
    
    
    
    (139,312
    )
    
    
    556,111Deferred income taxes
    
    
    
    
    
    
    
    
    
    
    11,435
    
    
    
    6,738
    
    
    
    18,173
    
    
    
    34,846
    
    
    
    53,019Prepaid expenses and other current assets
    
    
    19,908
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,908
    
    
    
    
    
    
    
    19,908Total current assets
    
    
    893,497
    
    
    
    
    
    
    
    (17,391
    )
    
    
    (10,263
    )
    
    
    865,843
    
    
    
    (104,466
    )
    
    
    761,377Property and equipment, net
    
    
    123,499
    
    
    
    15,416
    
    
    
    
    
    
    
    
    
    
    
    138,915
    
    
    
    
    
    
    
    138,915Leasehold interests, net
    
    
    11,371
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,371
    
    
    
    
    
    
    
    11,371Goodwill, net
    
    
    127,069
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    127,069
    
    
    
    
    
    
    
    127,069Other assets, net
    
    
    32,249
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32,249
    
    
    
    
    
    
    
    32,249Total assets
    
    $
    1,187,685
    
    
    
    15,416
    
    
    
    (17,391
    )
    
    
    (10,263
    )
    
    
    1,175,447
    
    
    
    (104,466
    )
    
    $
    1,070,981LIABILITIES AND STOCKHOLDERS EQUITYAccounts payable
    
    $
    206,022
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    206,022
    
    
    
    
    
    
    $
    206,022Accrued payroll and related expenses
    
    
    43,824
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    43,824
    
    
    
    
    
    
    
    43,824Accrued expenses and other current
liabilities
    
    
    48,403
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    48,403
    
    
    
    
    
    
    
    48,403Deferred income taxes
    
    
    13,230
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,230
    
    
    
    (13,230
    )
    
    
    Current maturities of long term debt
    
    
    2,550
    
    
    
    237
    
    
    
    
    
    
    
    
    
    
    
    2,787
    
    
    
    
    
    
    
    2,787Current maturities of capital lease
obligations
    
    
    6,910
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,910
    
    
    
    
    
    
    
    6,910Total current liabilities
    
    
    320,939
    
    
    
    237
    
    
    
    
    
    
    
    
    
    
    
    321,176
    
    
    
    (13,230
    )
    
    
    307,946Long term debt
    
    
    482,590
    
    
    
    6,767
    
    
    
    
    
    
    
    
    
    
    
    489,357
    
    
    
    
    
    
    
    489,357Obligations under capital leases
    
    
    9,630
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,630
    
    
    
    
    
    
    
    9,630Deferred income taxes
    
    
    14,471
    
    
    
    (9,030
    )
    
    
    
    
    
    
    
    
    
    
    5,441
    
    
    
    (758
    )
    
    
    4,683Other
    
    
    20,697
    
    
    
    31,189
    
    
    
    
    
    
    
    
    
    
    
    51,886
    
    
    
    
    
    
    
    51,886Total non-current liabilities
    
    
    527,388
    
    
    
    28,926
    
    
    
    
    
    
    
    
    
    
    
    556,314
    
    
    
    (758
    )
    
    
    555,556Commitments and ContingenciesStockholders equityCommon Stock
    
    
    453
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    453
    
    
    
    
    
    
    
    453Additional paid-in capital
    
    
    447,569
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    447,569
    
    
    
    
    
    
    
    447,569Stockholder receivable
    
    
    (65
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (65
    )
    
    
    
    
    
    
    (65
    )Accumulated deficit
    
    
    (108,599
    )
    
    
    (13,747
    )
    
    
    (17,391
    )
    
    
    (10,263
    )
    
    
    (150,000
    )
    
    
    (90,478
    )
    
    
    (240,478
    )Total stockholders equity
    
    
    339,358
    
    
    
    (13,747
    )
    
    
    (17,391
    )
    
    
    (10,263
    )
    
    
    297,957
    
    
    
    (90,478
    )
    
    
    207,479Total liabilities and stockholders equity
    
    $
    1,187,685
    
    
    
    15,416
    
    
    
    (17,391
    )
    
    
    (10,263
    )
    
    
    1,175,447
    
    
    
    (104,466
    )
    
    $
    1,070,981
 10




---



##### 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
 11




---



##### Table of Contents



CSK AUTO CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued) CONSOLIDATED STATEMENT OF OPERATIONS
for the Thirteen Weeks Ended August 1, 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
    
    $
    409,057
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    409,057
    
    
    
    
    
    
    $
    409,057Cost of sales
    
    
    217,740
    
    
    
    8
    
    
    
    (36
    )
    
    
    503
    
    
    
    218,215
    
    
    
    (3,226
    )
    
    
    214,989Gross profit
    
    
    191,317
    
    
    
    (8
    )
    
    
    36
    
    
    
    (503
    )
    
    
    190,842
    
    
    
    3,226
    
    
    
    194,068Other costs and expenses:Operating and administrative
    
    
    160,437
    
    
    
    61
    
    
    
    
    
    
    
    
    
    
    
    160,498
    
    
    
    
    
    
    
    160,498Store closing costs
    
    
    561
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    561
    
    
    
    
    
    
    
    561Operating profit
    
    
    30,319
    
    
    
    (69
    )
    
    
    36
    
    
    
    (503
    )
    
    
    29,783
    
    
    
    3,226
    
    
    
    33,009Interest expense
    
    
    7,592
    
    
    
    374
    
    
    
    
    
    
    
    
    
    
    
    7,966
    
    
    
    
    
    
    
    7,966Income (loss) before income taxes
    
    
    22,727
    
    
    
    (443
    )
    
    
    36
    
    
    
    (503
    )
    
    
    21,817
    
    
    
    3,226
    
    
    
    25,043Income tax expense (benefit)
    
    
    8,869
    
    
    
    (174
    )
    
    
    14
    
    
    
    (198
    )
    
    
    8,511
    
    
    
    1,268
    
    
    
    9,779Net income (loss)
    
    $
    13,858
    
    
    
    (269
    )
    
    
    22
    
    
    
    (305
    )
    
    $
    13,306
    
    
    
    1,958
    
    
    $
    15,264Basic earnings per share:Net income (loss) per share
    
    $
    0.30
    
    
    
    (0.00
    )
    
    
    0.00
    
    
    
    (0.01
    )
    
    $
    0.29
    
    
    
    0.04
    
    
    $
    0.33Shares used in computing per share
amounts
    
    
    46,184
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    46,184Diluted earnings per share:Net income (loss) per share
    
    $
    0.30
    
    
    
    (0.00
    )
    
    
    0.00
    
    
    
    (0.01
    )
    
    $
    0.29
    
    
    
    0.04
    
    
    $
    0.33Shares used in computing per share
amounts
    
    
    46,466
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    46,466
 12




---



##### Table of Contents



CSK AUTO CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued) CONSOLIDATED STATEMENT OF OPERATIONS
for the Thirteen Weeks Ended August 3, 2003
(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
    
    $
    418,514
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    418,514
    
    
    
    
    
    
    $
    418,514Cost of sales
    
    
    224,812
    
    
    
    8
    
    
    
    (1,901
    )
    
    
    1,297
    
    
    
    224,216
    
    
    
    4,574
    
    
    
    228,790Gross profit
    
    
    193,702
    
    
    
    (8
    )
    
    
    1,901
    
    
    
    (1,297
    )
    
    
    194,298
    
    
    
    (4,574
    )
    
    
    189,724Other costs and expenses:Operating and administrative
    
    
    158,475
    
    
    
    273
    
    
    
    
    
    
    
    
    
    
    
    158,748
    
    
    
    
    
    
    
    158,748Store closing costs
    
    
    43
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    43
    
    
    
    
    
    
    
    43Operating profit
    
    
    35,184
    
    
    
    (281
    )
    
    
    1,901
    
    
    
    (1,297
    )
    
    
    35,507
    
    
    
    (4,574
    )
    
    
    30,933Interest expense
    
    
    13,251
    
    
    
    359
    
    
    
    
    
    
    
    
    
    
    
    13,610
    
    
    
    
    
    
    
    13,610Loss on debt retirement
    
    
    4,315
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,315
    
    
    
    
    
    
    
    4,315Income (loss) before income taxes
    
    
    17,618
    
    
    
    (640
    )
    
    
    1,901
    
    
    
    (1,297
    )
    
    
    17,582
    
    
    
    (4,574
    )
    
    
    13,008Income tax expense (benefit)
    
    
    6,804
    
    
    
    (252
    )
    
    
    747
    
    
    
    (510
    )
    
    
    6,789
    
    
    
    (1,797
    )
    
    
    4,992Net income (loss)
    
    $
    10,814
    
    
    
    (388
    )
    
    
    1,154
    
    
    
    (787
    )
    
    $
    10,793
    
    
    
    (2,777
    )
    
    $
    8,016Basic earnings per share:Net income (loss) per share
    
    $
    0.24
    
    
    
    (0.01
    )
    
    
    0.03
    
    
    
    (0.02
    )
    
    $
    0.24
    
    
    
    (0.06
    )
    
    $
    0.18Shares used in computing per share
amounts
    
    
    45,217
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    45,217Diluted earnings per share:Net income (loss) per share
    
    $
    0.24
    
    
    
    (0.01
    )
    
    
    0.03
    
    
    
    (0.02
    )
    
    $
    0.24
    
    
    
    (0.06
    )
    
    $
    0.18Shares used in computing per share
amounts
    
    
    45,499
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    45,499
 13




---



##### Table of Contents



CSK AUTO CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued) CONSOLIDATED STATEMENT OF OPERATIONS
for the Twenty-six Weeks Ended August 1, 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
    
    $
    806,111
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    806,111
    
    
    
    
    
    
    $
    806,111Cost of sales
    
    
    426,198
    
    

    
    17
    
    
    
    (321
    )
    
    
    1,556
    
    
    
    427,450
    
    
    
    (4,102
    )
    
    
    423,348Gross profit
    
    
    379,913
    
    
    
    (17
    )
    
    
    321
    
    
    
    (1,556
    )
    
    
    378,661
    
    
    
    4,102
    
    
    
    382,763Other costs and expenses:Operating and administrative
    
    
    319,182
    
    
    
    28
    
    
    
    
    
    
    
    
    
    
    
    319,210
    
    
    
    
    
    
    
    319,210Store closing costs
    
    
    887
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    887
    
    
    
    
    
    
    
    887Operating profit
    
    
    59,844
    
    
    
    (45
    )
    
    
    321
    
    
    
    (1,556
    )
    
    
    58,564
    
    
    
    4,102
    
    
    
    62,666Interest expense
    
    
    15,847
    
    
    
    733
    

    
    
    
    
    
    
    
    
    
    
    16,580
    
    
    
    
    
    
    
    16,580Income (loss) before income taxes
    
    
    43,997
    
    
    
    (778
    )
    
    
    321
    
    
    
    (1,556
    )
    
    
    41,984
    
    
    
    4,102
    
    
    
    46,086Income tax expense (benefit)
    
    
    17,186
    
    
    
    (306
    )
    
    
    126
    
    
    
    (612
    )
    
    
    16,394
    
    
    
    1,613
    
    
    
    18,007Net income (loss)
    
    $
    26,811
    
    
    
    (472
    )
    
    
    195
    
    
    
    (944
    )
    
    $
    25,590
    
    
    
    2,489
    
    
    $
    28,079Basic earnings per share:Net income (loss) per share
    
    $
    0.58
    
    
    
    (0.01
    )
    
    
    0.00
    
    
    
    (0.02
    )
    
    $
    0.55
    
    
    
    0.05
    
    
    $
    0.61Shares used in computing per share
amounts
    
    
    46,349
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    46,349Diluted earnings per share:Net income (loss) per share
    
    $
    0.57
    
    
    
    (0.01
    )
    
    
    0.00
    
    
    
    (0.02
    )
    
    $
    0.55
    
    
    
    0.05
    
    
    $
    0.60Shares used in computing per share
amounts
    
    
    46,675
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    46,675
 14




---



##### Table of Contents



CSK AUTO CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued) CONSOLIDATED STATEMENT OF OPERATIONS
for the Twenty-six Weeks Ended August 3, 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
    
    $
    795,963
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    795,963
    
    
    
    
    
    
    $
    795,963Cost of sales
    
    
    427,237
    
    
    
    16
    
    
    
    (3,460
    )
    
    
    1,180
    
    
    
    424,973
    
    
    
    18,413
    
    
    
    443,386Gross profit
    
    
    368,726
    
    
    
    (16
    )
    
    
    3,460
    
    
    
    (1,180
    )
    
    
    370,990
    
    
    
    (18,413
    )
    
    
    352,577Other costs and expenses:Operating and administrative
    
    
    307,198
    
    
    
    509
    
    
    
    
    
    
    
    
    
    
    
    307,707
    
    
    
    
    
    
    
    307,707Store closing costs
    
    
    136
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    136
    
    
    
    
    
    
    
    136Operating profit
    
    
    61,392
    
    
    
    (525
    )
    
    
    3,460
    
    
    
    (1,180
    )
    
    
    63,147
    
    
    
    (18,413
    )
    
    
    44,734Interest expense
    
    
    27,187
    
    
    
    693
    
    
    
    
    
    
    
    
    
    
    
    27,880
    
    
    
    
    
    
    
    27,880Loss on debt retirement
    
    
    4,315
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,315
    
    
    
    
    
    
    
    4,315Income (loss) before income taxes
    
    
    29,890
    
    
    
    (1,218
    )
    
    
    3,460
    
    
    
    (1,180
    )
    
    
    30,952
    
    
    
    (18,413
    )
    
    
    12,539Income tax expense (benefit)
    
    
    11,553
    
    
    
    (479
    )
    
    
    1,360
    
    
    
    (464
    )
    
    
    11,970
    
    
    
    (7,237
    )
    
    
    4,733Net income (loss)
    
    $
    18,337
    
    
    
    (739
    )
    
    
    2,100
    
    
    
    (716
    )
    
    $
    18,982
    
    
    
    (11,176
    )
    
    $
    7,806Basic earnings per share:Net income (loss) per share
    
    $
    0.41
    
    
    
    (0.02
    )
    
    
    0.05
    
    
    
    (0.02
    )
    
    $
    0.42
    
    
    
    (0.25
    )
    
    $
    0.17Shares used in computing per
share
amounts
    
    
    45,183
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    45,183Diluted earnings per share:Net income (loss) per share
    
    $
    0.41
    
    
    
    (0.02
    )
    
    
    0.05
    
    
    
    (0.02
    )
    
    $
    0.42
    
    
    
    (0.25
    )
    
    $
    0.17Shares used in computing per
share
amounts
    
    
    45,274
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    45,274
 15




---



##### Table of Contents



CSK AUTO CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued) CONSOLIDATED STATEMENT OF CASH FLOWS
for the Twenty-six Weeks Ended August 1, 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 operating activities:Net income (loss)
    
    $
    26,811
    
    
    
    (472
    )
    
    
    192
    
    
    
    (944
    )
    
    
    25,590
    
    
    
    2,489
    
    
    $
    28,079Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:Depreciation & amortization on PP&E
    
    
    13,781
    
    
    
    1,871
    
    
    
    
    
    
    
    
    
    
    
    15,652
    
    
    
    
    
    
    
    15,652Amortization of other items
    
    
    2,133
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,133
    
    
    
    
    
    
    
    2,133Amortization of deferred financing costs
    
    
    965
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    965
    
    
    
    
    
    
    
    965Amortization of long term debt fair market value
adjustment
    
    
    (53
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (53
    )
    
    
    
    
    
    
    (53
    )Accretion of debt discount
    
    
    28
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28
    
    
    
    
    
    
    
    28Loss on disposal of property, equipment and other assets
    
    
    606
    
    
    
    (128
    )
    
    
    
    
    
    
    
    
    
    
    478
    
    
    
    
    
    
    
    478Tax benefit relating to stock option exercises
    
    
    169
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    169
    
    
    
    
    
    
    
    169Deferred income taxes
    
    
    15,367
    
    
    
    (306
    )
    
    
    126
    
    
    
    (613
    )
    
    
    14,574
    
    
    
    1,613
    
    
    
    16,187Changes in operating assets and liabilities:Receivables
    
    
    4,096
    
    
    
    
    
    
    
    (321
    )
    
    
    1,557
    
    
    
    5,332
    
    
    
    
    
    
    
    5,332Inventories
    
    
    (34,605
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (34,605
    )
    
    
    (4,102
    )
    
    
    (38,707
    )Prepaid expenses and other current assets
    
    
    1,215
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,215
    
    
    
    
    
    
    
    1,215Accounts payable
    
    
    26,398
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26,398
    
    
    
    
    
    
    
    26,398Accrued payroll, accrued expenses, & other current
liabilities
    
    
    (4,062
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,062
    )
    
    
    
    
    
    
    (4,062
    )Other operating activities
    
    
    (448
    )
    
    
    183
    
    
    
    
    
    
    
    
    
    
    
    (265
    )
    
    
    
    
    
    
    (265
    )Net cash provided by operating activities
    
    
    52,401
    
    
    
    1,148
    
    
    
    
    
    
    
    
    
    
    
    53,549
    
    
    
    
    
    
    
    53,549Capital expenditures
    
    
    (12,831
    )
    
    
    (1,697
    )
    
    
    
    
    
    
    
    
    
    
    (14,528
    )
    
    
    
    
    
    
    (14,528
    )Other investing activities
    
    
    (1,653
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,653
    )
    
    
    
    
    
    
    (1,653
    )Net cash used in investing activities:
    
    
    (14,484
    )
    
    
    (1,697
    )
    
    
    
    
    
    
    
    
    
    
    (16,181
    )
    
    
    
    
    
    
    (16,181
    )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
    
    
    (892
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (892
    )
    
    
    
    
    
    
    (892
    )Payments on capital lease obligations
    
    
    (8,975
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,975
    )
    
    
    
    
    
    
    (8,975
    )Proceeds from exercise of stock options
    
    
    531
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    531
    
    
    
    
    
    
    
    531Proceeds from seller financing arrangements
    
    
    
    
    
    
    650
    
    
    
    
    
    
    
    
    
    
    
    650
    
    
    
    
    
    
    
    650Payments on seller financing arrangements
    
    
    
    
    
    
    (101
    )
    
    
    
    
    
    
    
    
    
    
    (101
    )
    
    
    
    
    
    
    (101
    )Repurchase of common stock
    
    
    (19,764
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19,764
    )
    
    
    
    
    
    
    (19,764
    )Recovery of stockholders receivable
    
    
    8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8
    
    
    
    
    
    
    
    8Other financing activities
    
    
    (156
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (156
    )
    
    
    
    
    
    
    (156
    )Net cash
provided by (used in) financing activities:
    
    
    (30,523
    )
    
    
    549
    
    
    
    
    
    
    
    
    
    
    
    (29,974
    )
    
    
    
    
    
    
    (29,974
    )Net increase in cash
    
    
    7,394
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,394Cash and cash equivalents, beginning of period
    
    
    37,221
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    37,221Cash and cash equivalents, end of period
    
    $
    44,615
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    44,615
 16




---



##### Table of Contents



CSK AUTO CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued) CONSOLIDATED STATEMENT OF CASH FLOWS
for the Twenty-six Weeks Ended August 3, 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 operating activities:Net income (loss)
    
    $
    18,337
    
    
    
    (739
    )
    
    
    2,101
    
    
    
    (717
    )
    
    
    18,982
    
    
    
    (11,176
    )
    
    $
    7,806Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:Depreciation & amortization on PP&E
    
    
    15,437
    
    
    
    2,097
    
    
    
    
    
    
    
    
    
    
    
    17,534
    
    
    
    
    
    
    
    17,534Amortization of other items
    
    
    1,900
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,900
    
    
    
    
    
    
    
    1,900Amortization of deferred financing costs
    
    
    2,367
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,367
    
    
    
    
    
    
    
    2,367Amortization of long term debt fair market value
adjustment
    
    
    (307
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (307
    )
    
    
    
    
    
    
    (307
    )Accretion of debt discount
    
    
    461
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    461
    
    
    
    
    
    
    
    461Loss on disposal of property, equipment and other assets
    
    
    560
    
    
    
    (11
    )
    
    
    
    
    
    
    
    
    
    
    549
    
    
    
    
    
    
    
    549Tax benefit relating to stock option exercises
    
    
    302
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    302
    
    
    
    
    
    
    
    302Write 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
    
    
    10,623
    
    
    
    (479
    )
    
    
    1,360
    
    
    
    (464
    )
    
    
    11,040
    
    
    
    (7,237
    )
    
    
    3,803Changes in operating assets and liabilities:Receivables
    
    
    15,952
    
    
    
    
    
    
    
    (3,461
    )
    
    
    1,181
    
    
    
    13,672
    
    
    
    
    
    
    
    13,672Inventories
    
    
    (33,943
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (33,943
    )
    
    
    18,413
    
    
    
    (15,530
    )Prepaid expenses and other current assets
    
    
    (2,978
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,978
    )
    
    
    
    
    
    
    (2,978
    )Accounts payable
    
    
    9,360
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,360
    
    
    
    
    
    
    
    9,360Accrued payroll, accrued expenses, & other current
liabilities
    
    
    (1,204
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,204
    )
    
    
    
    
    
    
    (1,204
    )Other operating activities
    
    
    676
    
    
    
    671
    
    
    
    
    
    
    
    
    
    
    
    1,347
    
    
    
    
    
    
    
    1,347Net cash provided by operating activities
    
    
    45,492
    
    
    
    1,539
    
    
    
    
    
    
    
    
    
    
    
    47,031
    
    
    
    
    
    
    
    47,031Capital expenditures
    
    
    (4,802
    )
    
    
    (2,577
    )
    
    
    
    
    
    
    
    
    
    
    (7,379
    )
    
    
    
    
    
    
    (7,379
    )Other investing activities
    
    
    (1,666
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    

    (1,666
    )
    
    
    
    
    
    
    (1,666
    )Net cash used in investing activities:
    
    
    (6,468
    )
    
    
    (2,577
    )
    
    
    
    
    
    
    
    
    
    
    (9,045
    )
    
    
    
    
    
    
    (9,045
    )Borrowings under senior credit facility
    
    
    281,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    281,000
    
    
    
    
    
    
    
    281,000Payments under senior credit facility
    
    
    (283,000
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (283,000
    )
    
    
    
    
    
    
    (283,000
    )Retirement of balance of 11% senior subordinated notes
    
    
    (9,547
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,547
    )
    
    
    
    
    
    
    (9,547
    )Payment of debt issuance costs
    
    
    (4,047
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,047
    )
    
    
    
    
    
    
    (4,047
    )Payments on capital lease obligations
    
    
    (5,814
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,814
    )
    
    
    
    
    
    
    (5,814
    )Proceeds from exercise of stock options
    
    
    2,867
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,867
    
    
    
    
    
    
    
    2,867Proceeds from seller financing arrangements
    
    
    
    
    
    
    1,120
    
    
    
    
    
    
    
    
    
    
    
    1,120
    
    
    
    
    
    
    
    1,120Payments on seller financing arrangements
    
    
    
    
    
    
    (82
    )
    
    
    
    
    
    
    
    
    
    
    (82
    )
    
    
    
    
    
    
    (82
    )Recovery of stockholders receivable
    
    
    168
    
    
    
    
    
    
    
    
    
    

    
    
    
    
    
    168
    
    
    
    
    
    
    
    168Other financing activities
    
    
    (146
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (146
    )
    
    
    
    
    
    
    (146
    )Net cash provided by (used in) financing activities:
    
    
    (18,519
    )
    
    
    1,038
    
    
    
    
    
    
    
    
    
    
    
    (17,481
    )
    
    
    
    
    
    
    (17,481
    )Net increase in cash
    
    
    20,505
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,505Cash and cash equivalents, beginning of period
    
    
    15,519
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,519Cash and cash equivalents, end of period
    
    $
    36,024
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    36,024
 17




---



##### Table of Contents



CSK AUTO CORPORATION AND SUBSIDIARIESNOTES 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 years financial statements have been reclassified to conform to
the current year presentation. This has no impact on our previously reported financial position,
results of operations or cash flows. Note 3  Recent Accounting Pronouncements In January 2003, the Financial Accounting Standards Board (FASB) issued Financial
Interpretation No. (FIN) 46, Consolidation of Variable Interest Entities, which addressed
accounting for special-purpose and variable interest entities. In December 2003, the FASB issued
FIN 46R, Consolidation of Variable Interest Entities, which superseded FIN 46. The effective date
of FIN 46R is the end of the first reporting period that ends after March 15, 2004, unless the
entity is considered to be a special-purpose entity. Companies that have adopted FIN 46 prior to
the effective date of FIN 46R will either continue to apply FIN 46 until the effective date of FIN
46R or apply the provision of FIN 46R at an earlier date. We have adopted the provisions of FIN
46R with no impact on our financial statements. Note 4  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: August 1, 2004
    
    
    February 1, 2004(1)(Restated)
    
    
    (Restated)($ in millions)FIFO cost
    
    $
    585.4
    
    
    $
    557.0Administrative and overhead costs
    
    
    41.0
    
    
    
    39.6Vendor allowances
    
    
    (56.8
    )
    
    
    (60.4
    )Shrinkage
    
    
    (13.5
    )
    
    
    (13.4
    )Net inventory
    
    $
    556.1
    
    
    $
    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- 18




---



##### Table of Contents



CSK AUTO CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)  K , filed with the SEC on May 2, 2005, to reflect the correct balances. Net inventory did
not change. Note 5  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 store 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 for employee termination
costs. As of August 1, 2004, we had a total of 148 store locations included in the allowance for
store closing costs. Of this total, 13 locations were vacant and 135 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 January 2018. Activity in the allowance for store closings and the related payments for the first half of
fiscal 2004 are as follows ($ in thousands): Balance, beginning of year
    
    $
    12,148Store closing costs:Provision for store closing costs
    
    
    106Revisions in estimates
    
    
    (12
    )Accretion
    
    
    287Operating expenses and other
    
    
    506Store closing costs, net
    
    
    887Payments:Rent expense, net of sublease income
    
    
    (1,553
    )Occupancy and other expenses
    
    
    (481
    )Lease buyouts and sublease commissions
    
    
    (2,103
    )Total payments
    
    
    (4,137
    )Balance as of August 1, 2004
    
    $
    8,898
 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. Note 6  Debt 19




---



##### Table of Contents



CSK AUTO CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued) Outstanding debt, excluding capital leases, is comprised of the following ($ in thousands): August 1,
    
    
    February 1,2004
    
    
    2004(Restated)
    
    
    (Restated)Senior credit facility  term loan
    
    $
    253,725
    
    
    $
    255,000Senior credit facility  revolving credit commitment
    
    
    
    
    
    
    12% senior notes
    
    
    14,910
    
    
    
    14,910Unamortized original issue discount on 12% senior notes
    
    
    (121
    )
    
    
    (149
    )7% senior subordinated notes
    
    
    225,000
    
    
    
    225,000Seller financing arrangements
    
    
    7,004
    
    
    
    6,456Notes and loans, including current maturities
    
    
    500,518
    
    
    
    501,217SFAS No. 133 fair market value adjustments
    
    
    (8,573
    )
    
    
    $100.0 million of 7% senior subordinated notes
12% senior notes
    
    
    199
    
    
    
    252Total debt
    
    
    492,144
    
    
    
    501,469Less:Current maturities under senior credit facility
    
    
    2,550
    
    
    
    2,550Seller financing arrangements
    
    
    237
    
    
    
    193Total long term debt
    
    $
    489,357
    
    
    $
    498,726
 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 the amendment. 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 the
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 August 1, 2004,
the fair value of the interest rate swap approximated $8.6 million, which is included as an
increase in other long-term liabilities with an identical amount reflected as a basis adjustment to
the 7% senior subordinated notes on the accompanying Consolidated Balance Sheet. Note 7  Earnings Per Share Calculation of the numerator and denominator used in computing per share amounts is summarized
as follows (in thousands): Thirteen Weeks Ended
    
    
    Twenty-six Weeks EndedAugust 1, 2004
    
    
    August 3, 2003
    
    
    August 1, 2004
    
    
    August 3, 2003(Restated)
    
    
    (Restated)
    
    
    (Restated)
    
    
    (Restated)Numerator for basic and diluted EPS:Net income (Restated)
    
    $
    15,264
    
    
    $
    8,016
    
    
    $
    28,079
    
    
    $

    7,806Denominator for basic EPS:Weighted average shares outstanding
(basic)
    
    
    46,184
    
    
    
    45,217
    
    
    
    46,349
    
    
    
    45,183Denominator for diluted EPS:Weighted average shares outstanding
(basic)
    
    
    46,184
    
    
    
    45,217
    
    
    
    46,349
    
    
    
    45,183
 20




---



##### Table of Contents



CSK AUTO CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued) Thirteen Weeks Ended
    
    
    Twenty-six Weeks EndedAugust 1, 2004
    
    
    August 3, 2003
    
    
    August 1, 2004
    
    
    August 3, 2003(Restated)
    
    
    (Restated)
    
    
    (Restated)
    
    
    (Restated)Effect of dilutive stock options
    
    
    282
    
    
    
    282
    
    
    
    326
    
    
    
    91Weighted average
shares outstanding
(diluted)
    
    
    46,466
    
    
    
    45,499
    
    
    
    46,675
    
    
    
    45,274Shares excluded as a result of anti-dilution:Stock options
    
    
    473
    
    
    
    652
    
    
    
    375
    
    
    
    2,056
 Note 8  Stock Based Compensation In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based Compensation 
Transition and Disclosure. SFAS No. 148 amends SFAS No. 123, Accounting for Stock-Based
Compensation, to provide alternative methods of transition for a voluntary change to the fair
value based method of accounting for stock-based employee compensation. In addition, SFAS No. 148
requires expanded and more prominent disclosure in both annual and interim financial statements
about the method of accounting for stock-based employee compensation and the effect of the method
on reported results. 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 Annual Report on Form 10-K filed with
the SEC on April 15, 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 material stock-based employee
compensation expense is reflected in net income for the thirteen or twenty-six weeks ended August
1, 2004 or August 3, 2003 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
    
    
    Twenty-six WeeksEnded
    
    
    EndedAugust 1,
    
    
    August 3,
    
    
    August 1,
    
    
    August 3,2004
    
    
    2003
    
    
    2004
    
    
    2003(Restated)
    
    
    (Restated)
    
    
    (Restated)
    
    
    (Restated)Net income  as reported
    
    $
    15,264
    
    
    $
    8,016
    
    
    $
    28,079
    
    
    $
    7,806Less: Total stock-based employee
compensation expense determined
under fair value based method for
all awards, net of related income
taxes
    
    
    (164
    )
    
    
    (157
    )
    
    
    (335
    )
    
    
    (402
    )Net income  pro forma
    
    $
    15,100
    
    
    $
    7,859
    
    
    $
    27,744
    
    
    $
    7,404Earnings per share  basic:As reported
    
    $
    0.33
    
    
    $
    0.18
    
    
    $
    0.61
    
    
    $
    0.17Pro forma
    
    $
    0.33
    
    
    $
    0.17
    
    
    $
    0.60
    
    
    $
    0.16Earnings per share  diluted:As reported
    
    $
    0.33
    
    
    $
    0.18
    
    
    $
    0.60
    
    
    $
    0.17Pro forma
    
    $
    0.33
    
    
    $
    0.17
    
    
    $
    0.60
    
    
    $
    0.16
 During the second quarter of fiscal 2004, our stockholders approved a new Stock and Incentive
Plan which allows for the issuance of a variety of equity-based awards, including stock options and
restricted stock. Note 9  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 21




---



##### Table of Contents



CSK AUTO CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued) program will expire in December 2005. During the second quarter of fiscal 2004, we
repurchased approximately 1.3 million shares of our common stock at a cost of approximately $19.8
million under this program. Note 10  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 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 the legal
claims, individually or in the aggregate, will result in liabilities material to our consolidated
financial position, results of operations or cash flows. 22




---



##### Table of Contents



Item 2.Managements Discussion and Analysis of Financial Condition and Results of Operations Accounting Change and Restatements of Financial Statements 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 decreasing
our cost of sales and increasing our gross profit by approximately $3.2 million and $4.1 million in
the thirteen and twenty-six weeks ended August 1, 2004. The change increased our cost of sales and
decreased our gross profit by approximately $4.6 million and $18.4 million in the thirteen and
twenty-six weeks ended August 3, 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 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 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. 23




---



##### Table of Contents



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 products in the United States
based, in each case, on our number of stores. As of August 1, 2004, through our wholly owned
subsidiary CSK Auto, Inc., we operated 1,123 stores in 19 states under one fully integrated
operating format and three brand names:  
    Checker Auto Parts, founded in 1969, with 419 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 479 stores primarily in California. In the following discussion, we refer to the thirteen and twenty-six week periods ended on
August 1, 2004 and August 3, 2003, respectively, as the second quarter and first half of those
respective fiscal years. During the first half of fiscal 2004, we opened 16 stores, relocated 4 stores and closed 7
stores in addition to the 4 stores closed upon relocation. Our goal for fiscal 2004 is to open
approximately 45 stores, consisting of approximately 35 new stores and 10 relocated stores. During
fiscal 2004, we expect to close approximately 10 stores (in addition to approximately 10 stores
closed due to relocation) for a net increase of approximately 25 stores. During the first half of fiscal 2004, we were faced with many challenges. We experienced 5.2%
same store sales increases during the first quarter of fiscal 2004 and same store sales decreases
of 2.5% during the second quarter of fiscal 2004. We believe our sales during the second quarter
of fiscal 2004 were negatively impacted by higher gas prices and milder summer temperatures in many
of our key markets. Despite the sales environment, our gross profit rate increased almost 50 basis
points compared to the same period of last year. Our inventory management process allowed us to
effectively control our inventory with only a slight increase compared to the same period of last
year. 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 primary objective is to
remain focused on our long-term goals and initiatives of: (1) reducing our debt while maximizing
our return on investment; (2) accelerating our store growth; (3) continuing to strengthen our
vendor partnerships to reduce costs from the supply chain and reduce our merchandise inventory; and
(4) reducing our operating and administrative expenses. Automotive Information Systems, Inc. (AIS) is a wholly owned subsidiary of CSK Auto, Inc.
that provides diagnostic vehicle repair information to automotive technicians, automotive
replacement parts manufacturers, automotive test equipment manufacturers, and to DIY consumers. We
are continuing to examine alternatives that will allow us to maximize the potential value of AIS
without significantly increasing our capital commitment. Possibilities include joint ventures or a
sale in a manner that would allow us to retain certain of the attributes of AIS we deem most
valuable to our business. 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 twenty-six weeks ended August 1, 2004 and our consolidated
financial position at that date. The following information should be read 24




---



##### Table of Contents



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), which was filed with the Securities and
Exchange Commission 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
    
    
    Twenty-six Weeks EndedAugust 1,
    
    
    August 3,
    
    
    August 1,
    
    
    August 3,2004
    
    
    2003
    
    
    2004
    
    
    2003(Restated)
    
    
    (Restated)
    
    
    (Restated)
    
    
    (Restated)Net sales
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Cost of sales
    
    
    52.6
    
    
    
    54.7
    
    
    
    52.5
    
    
    
    55.7Gross profit
    
    
    47.4
    
    
    
    45.3
    
    
    
    47.5
    
    
    
    44.3Operating and administrative
    
    
    39.2
    
    
    
    37.9
    
    
    
    39.6
    
    
    
    38.7Store closing costs
    
    
    0.2
    
    
    
    
    
    
    
    0.1
    
    
    
    Operating profit
    
    
    8.0
    
    
    
    7.4
    
    
    
    7.8
    
    
    
    5.6Interest expense
    
    
    1.9
    
    
    
    3.3
    
    
    
    2.1
    
    
    
    3.5Loss on debt retirement
    
    
    
    
    
    
    1.0
    
    
    
    
    
    
    
    0.5Income before income taxes
    
    
    6.1
    
    
    
    3.1
    
    
    
    5.7
    
    
    
    1.6Income tax expense
    
    
    2.4
    
    
    
    1.2
    
    
    
    2.2
    
    
    
    0.6Net Income
    
    
    3.7
    %
    
    
    1.9
    %
    
    
    3.5
    %
    
    
    1.0
    %
 Thirteen Weeks Ended August 1, 2004 Compared to Thirteen Weeks Ended August 3, 2003 Net sales for the second quarter of fiscal 2004 decreased 2.3% to $409.1 million from $418.5
million for the second quarter of fiscal 2003. Same store sales decreased 2.5% (negative 2.5% for
retail and negative 2.7% for commercial). We believe our sales during the second quarter of fiscal
2004 were negatively impacted by higher gas prices and milder summer temperatures in many of our
key markets. During the quarter we experienced weaker than anticipated demand for products in
heat-related categories (for example, air conditioning, cooling accessories, batteries, starters,
alternators and water pumps). Gross profit was $194.1 million, or 47.4% of net sales, for the second quarter of fiscal 2004
as compared to $189.7 million, or 45.3% of net sales, for the second quarter of fiscal 2003. Gross
profit, as a percent to sales, increased during the quarter primarily due to lower acquisition
costs on selected products, improvements in our balance of sales through our category management
systems, and reduced store inventory shrinkage as a result of improved store procedures and
enhanced inventory control systems. Operating and administrative expenses were $160.5 million or 39.2% of net sales in the second
quarter of fiscal 2004, compared to $158.7 million or 37.9% of net sales in the second quarter of
fiscal 2003. The increase is primarily attributable to higher payroll rates and benefit-related
expenses. Interest expense for the second quarter of fiscal 2004 decreased to $8.0 million from $13.6
million in the second quarter of fiscal 2003 primarily as a result of the lower interest rate and
corresponding reduced interest expense associated with our January 2004 refinancing. Income tax expense for the second quarter of fiscal 2004 was $9.8 million, compared to $5.0
million for the comparable period of fiscal 2003. Our effective tax rate increased slightly to
39.0% from 38.4% primarily as a result of the non-deductibility of certain employee benefits and a
reduction in employment based state tax credits as a percentage of pretax income. Net income increased to $15.3 million, or $0.33 per diluted common share, for the second
quarter of fiscal 2004, compared to net income of $8.0 million, or $0.18 per diluted common share,
for the second quarter of fiscal 2003. Twenty-six Weeks Ended August 1, 2004 Compared to Twenty-six Weeks Ended August 3, 2003 Net sales for the first half of fiscal 2004 increased 1.3% to $806.1 million from $796.0
million for the first half of fiscal 2003. Same store sales increased 1.1% (1.1% for retail and
1.5% for commercial). 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. We believe our sales during the second quarter of fiscal 2004 were negatively impacted by
higher gas prices and milder summer temperatures in many of our key markets. Same store sales
decreased primarily due to weak demand for products in heat-related categories. 25




---



##### Table of Contents



Gross profit was $382.8 million, or 47.5% of net sales, for the first half of fiscal 2004 as
compared to $352.6 million, or 44.3% of net sales, for the first half of fiscal 2003. The increased
gross profit margin dollars and percent are a result of our continuing efforts to lower the
acquisition costs of our core products and our ability to source our promotional products at more
favorable terms. In addition, we have reduced our store inventory shrinkage through improved store
procedures and enhanced inventory control systems. Operating and administrative expenses were $319.2 million or 39.6% of net sales in the first
half of fiscal 2004, compared to $307.7 million or 38.7% of net sales in the first half of fiscal
2003. The increase year over year is primarily attributable to increased store count and higher
payroll rates and benefit-related costs. Interest expense for the first half of fiscal 2004 decreased to $16.6 million from $27.9
million in the first half of fiscal 2003 primarily as a result of the lower interest rate and
corresponding reduced interest expense associated with our January 2004 refinancing. Income tax expense for the first half of fiscal 2004 was $18.0 million, compared to $4.7
million for the comparable period of fiscal 2003. Our effective tax rate increased slightly to
39.1% from 37.7% primarily as a result of the non-deductibility of certain employee benefits and a
reduction in employment based state tax credits as a percentage of pretax income. Net income increased to $28.1 million, or $0.60 per diluted common share, for the first half
of fiscal 2004, compared to net income of $7.8 million, or $0.17 per diluted common share, for the
first half 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. We are required to make only minimal debt amortization payments
prior to fiscal 2009 other than payments on capital leases and seller financing arrangements. 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: August 1,
    
    
    February 1,2004
    
    
    2004($ in thousands)Cash
    
    $
    44,615
    
    
    $
    37,221Availability under revolving line of credit
    
    
    113,616
    
    
    
    120,068Working capital (Restated)
    
    
    453,431
    
    
    
    453,734
 Availability under our revolving line of credit decreased during the first half of fiscal 2004
relative to prior periods, primarily due to the issuance of letters of credit relating to our
increased purchases of import products. 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 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 for the balance of fiscal 2004 (6 months)
by approximately $0.3 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 second quarter of fiscal 2004, we repurchased approximately 1.3 million shares of
our common stock at a cost of approximately $19.8 million under this program. 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. 26




---



##### Table of Contents



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 (2,4)
    
    $
    500,639
    
    
    $
    1,379
    
    
    $
    20,637
    
    
    $
    5,957
    
    
    $
    472,666Interest on long-term debt (4)
    
    
    214,876
    
    
    
    14,890
    
    
    
    51,979
    
    
    
    51,193
    
    
    
    96,814Capital lease obligations
    
    
    20,918
    
    
    
    4,771
    
    
    
    11,139
    
    
    
    3,142
    
    
    
    1,866Operating lease obligations (3,4)
    
    
    726,257
    
    
    
    59,662
    
    
    
    219,354
    
    
    
    167,592
    
    
    
    279,649Total contractual obligations
    
    $
    1,462,690
    
    
    $
    80,702
    
    
    $
    303,109
    
    
    $
    227,884
    
    
    $
    850,995
   (1)
    
    Represents the period from August 2, 2004 to January 30, 2005.(2)
    
    Change from fiscal year 2003 annual report due to the extension of our term loan to August 10, 2010.(3)
    
    Operating lease obligations are not reduced to reflect sublease income. Changes from fiscal year
2003 annual report due primarily to new stores and lease extensions.(4)
    
    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 $31.4 million, the
latest of which expire in April 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: Twenty-six Weeks EndedAugust 1, 2004
    
    
    August 3, 2003(Restated)
    
    
    (Restated)($ in thousands)Net income
    
    $
    28,079
    
    
    $
    7,806Non-cash expenses and adjustments
    
    
    35,559
    
    
    
    28,527Change in inventory, net of accounts payable
    
    
    (12,309
    )
    
    
    (6,170
    )Proceeds from interest rate swap termination
    
    
    
    
    
    
    6,031Changes in other operating assets and liabilities
    
    
    2,220
    
    
    
    10,837Cash flows from operating activities
    
    $
    53,549
    
    
    $
    47,031
 During
the first half of fiscal 2004, net cash provided by operating activities was $53.5
million compared to $47.0 million of cash provided by operating activities during the first half of
fiscal 2003. The change primarily relates to the following: (1) an increase of $20.3 million in
net income resulting primarily from improved gross profit as discussed above and lower interest
expense. This was offset by an increase of our inventory purchases (net of accounts payable) by
$6.1 million. Cash flows from operations during the first half of fiscal 2003 were favorably
impacted by $6.0 million associated with the termination of an interest rate swap agreement. Net cash used in investing activities totaled $16.2 million for the first half of fiscal 2004,
compared to $9.0 million used during the comparable period of fiscal 2003. Capital expenditures
during the first half of fiscal 2004 were $7.1 million higher than in the first half 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. 27




---



##### Table of Contents



Net cash used in financing activities totaled $30.0 million in the first half of fiscal 2004
compared to $17.5 million used in financing activities in the comparable period of fiscal 2003.
During the first half of fiscal 2004, we utilized approximately $19.8 million of our cash to
repurchase and subsequently retire approximately 1.3 million shares of our common stock; no such
purchases were made in fiscal 2003. Payments on capital leases were $3.2 million higher in the
first half of fiscal 2004 than in the comparable period of fiscal 2003 due to $4.5 million of lease
buyouts during fiscal 2004 offset by $1.3 million of lower monthly lease payments. Payments for
debt issuance costs were $3.2 million less during the first half of fiscal 2004 than in the first
half of fiscal 2003. Also, during the first half of fiscal 2003 we retired $9.5 million of our 11%
senior subordinated notes. No debt retirements occurred during the first half of fiscal 2004. 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 store 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 August 1, 2004, we had a total of 148 store locations included in the allowance for
store closing costs. Of this total, 13 locations were vacant and 135 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 January 2018. Activity in the allowance for store closings and the related payments for the first half of
fiscal 2004 are as follows ($ in thousands): Balance, beginning of year
    
    $
    12,148Store closing costs:Provisions for store closing costs
    
    
    106Revisions in estimates
    
    
    (12
    )Accretion
    
    
    287Operating expenses and other
    
    
    506Store closing costs, net
    
    
    887Payments:Rent expense, net of sublease income
    
    
    (1,553
    )Occupancy and other expenses
    
    
    (481
    )Lease buyouts and sublease commissions
    
    
    (2,103
    )Total payments
    
    
    (4,137
    )Balance as of August 1, 2004
    
    $
    8,898
 28




---



##### Table of Contents



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 typically 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 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 increased 1.1% during the first half 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% during the second quarter of fiscal 2004. We believe higher gas prices and
milder summer temperatures in many of our key markets adversely impacted our sales during the
second quarter of fiscal 2004. Based on our trends and in recognition of our 7.8% same store sales
increase in the second half of fiscal 2003, we would expect same store sales to decline 2.0% to
3.5% during the third quarter of fiscal 2004 and to be flat to negative 2% 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. 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 August
1, 2004 we were in compliance with the related 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. 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, which
is collateralized by substantially all of our assets. 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. 29




---



##### Table of Contents





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 August 1, 2004, the fair value of
the interest rate swap approximated $8.6 million, which is included as an increase in other
long-term liabilities with an identical amount reflected as a basis adjustment to the 7% senior
subordinated notes on the accompanying Consolidated Balance Sheet.

At August 1, 2004, including the $100.0 million of senior subordinated notes that are subject
to the interest rate swap agreement, 70% of our outstanding debt was at variable interest rates and
30% 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.

Recent Accounting Pronouncements

In January 2003, the Financial Accounting Standards Board (FASB) issued Financial
Interpretation No. (FIN) 46, Consolidation of Variable Interest Entities, which addressed
accounting for special-purpose and variable interest entities. In December 2003, the FASB issued
FIN 46R, Consolidation of Variable Interest Entities, which superseded FIN 46. The effective date
of FIN 46R is the end of the first reporting period that ends after March 15, 2004, unless the
entity is considered to be a special-purpose entity. Companies that have adopted FIN 46 prior to
the effective date of FIN 46R will either continue to apply FIN 46 until the effective date of FIN
46R or apply the provision of FIN 46R at an earlier date. We have adopted the provisions of FIN
46R with no impact on our financial statements.

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, 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.




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. 30




---



##### Table of Contents



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 August 1, 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. 31




---



##### Table of Contents



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 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 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 the legal
claims, individually or in the aggregate, will result in liabilities material to our consolidated
financial position, results of operations or cash flows. 
 Item 2.Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities Issuer Purchases of Equity Securities (1)TotalNumber ofShares
    
    
    Dollar ValuePurchased
    
    
    of SharesTotal
    
    
    Average
    
    
    as Part of
    
    
    That May YetNumber of
    
    
    Price
    
    
    Publicly
    
    
    be PurchasedShares
    
    
    Paid per
    
    
    Announced
    
    
    Under thePeriod
    
    Purchased
    
    
    Share
    
    
    Plans
    
    
    PlanJune 8, 2004
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    25,000,000June 8, 2004 to July 4, 2004
    
    
    475,756
    (2)
    
    $
    17.50
    
    
    
    475,756
    
    
    
    16,674,270July 5, 2004 to August 1, 2004
    
    
    799,200
    
    
    
    14.31
    
    
    
    799,200
    
    
    
    5,234,924As of August 1, 2004
    
    
    1,274,956
    
    
    $
    15.50
    
    
    
    1,274,956
    
    
    $
    5,234,924
   (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 9 to the Consolidated Financial Statements.(2)
    
    Represents 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 32




---



##### Table of Contents



stock on the date of purchase.
Charles K. Marquis, a member of our Board of Directors, is
employed by Investcorp. 
 Item 3.Defaults upon Senior Securities NONE 
 Item 4.Submission of Matters to a Vote of Security Holders We held our annual meeting of stockholders on June 16, 2004. The following are the results of
certain matters voted upon at the meeting: I. Stockholders elected seven directors to serve until our
2005 Annual Meeting of the Stockholders. The stockholders voted
as follows: Directors
    
    Votes for
    
    
    WithheldMaynard L. Jenkins Jr.
    
    
    31,659,440
    
    
    
    9,374,772James G. Bazlen
    
    
    31,690,231
    
    
    
    9,343,981Morton Godlas
    
    
    33,787,833
    
    
    
    7,246,379Terilyn A. Henderson
    
    
    33,806,868
    
    
    
    7,227,344Charles K. Marquis
    
    
    33,937,335
    
    
    
    7,096,877Charles J. Philippin
    
    
    33,806,858
    
    
    
    7,227,354William A. Shutzer
    
    
    30,194,731
    
    
    
    10,839,481
 There were no votes against or broker non-votes with respect to the election of directors. II. Stockholders ratified the appointment of PricewaterhouseCoopers LLP as our independent accountants for the
fiscal year ending January 30, 2005. The stockholders voted as follows: For: 40,681,707 Against: 347,195 Abstain: 5,310 Broker non-vote: 0 III. Stockholders approved the adoption of the 2004 Executive Incentive Program covering certain senior executives.
The stockholders voted as follows: For: 40,530,914 Against: 481,750 Abstain: 21,548 Broker non-vote: 0 IV. Stockholders approved the adoption of the 2004 Stock and Incentive Plan. The stockholders voted as follows: For: 27,958,583 Against: 4,635,180 Abstain: 21,213 Broker non-vote: 8,413,926 
 Item 5.Other Information None. 
 Item 6.Exhibits and Reports on Form 8-K (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. (b) Reports on Form 8-K: 33




---



##### Table of Contents



On June 3, 2004, we filed a current report on Form 8-K to report under Items 9
and 12 thereof, the issuance of a press release announcing our financial
results for the first quarter of fiscal 2004. On June 9, 2004, we filed a current report on Form 8-K to report under Item 9
thereof, the placement of slides from an investors conference on our web site. On July 8, 2004, we filed a current report on Form 8-K to report under Item 9
thereof, our comparable store sales for the nine weeks ended July 4, 2004 and
revised projections of the second quarter of fiscal 2004. 34




---



##### Table of Contents



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. WATSON
 Don W. WatsonChief Financial Officer
and Duly Authorized Officer
 June 10, 2005 35




---



##### Table of Contents



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.