##### 









SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 10-Q

|           |  |                                                                                             
|---------- |  | --------------------------------------------------------------------------------------------
|(Mark One) |  |                                                                                             
|þ          |  | QUARTERLY REPORT PURSUANT TO SECTION 13
    OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
|          
|           |  | For the quarterly period ended
    November 3, 2002                                         
|          
|or        
|          
|o          |  | TRANSITION REPORT PURSUANT TO SECTION 13
    OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|          
|           |  | For the transition period
    from           to                                             

Commission File Number 001-13927

CSK AUTO CORPORATION

(Exact name of registrant as specified in its
charter)


|                                                                                                 |  |                                         
|------------------------------------------------------------------------------------------------ |  | ----------------------------------------
|Delaware                                                                                         |  | 86-0765798                              
|(State or other jurisdiction of
    Incorporation or organization)                               |  | (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 reports)


Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the
past 90 days.

Yes þ          No o

As of December 16, 2002, CSK Auto
Corporation had 45,148,900 shares of common stock
outstanding.



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##### 



PART I

FINANCIAL INFORMATION



|        |                     
|------- | --------------------
|Item 1. | Financial Statements

CSK AUTO CORPORATION AND
SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)


|                                                                      |                                                                                                                                                                                             |                                            |         |             |           |   |         |          |           | 
|--------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ------- | ----------- | --------- | - | ------- | -------- | --------- | 
|                                                                      |                                                                                                                                                                                             | November 3,                                |         | February 3,
|                                                                      |                                                                                                                                                                                             | 2002                                       |         | 2002       
|                                                                      |                                                                                                                                                                                             |                                            |         |            
|                                                                      |                                                                                                                                                                                             | (Unaudited)                                |         |            
|ASSETS                                                                |                                                                                                                                                                                             |                                            |         |             |           |   |         |         
|Cash and cash equivalents                                             |                                                                                                                                                                                             | $                                          | 15,170  |             |           | $ | 16,084  |         
|Receivables, net of allowances of $3,743 and
    $5,230, respectively |                                                                                                                                                                                             |                                            | 102,952 |             |           |   | 84,793  |         
|Inventories                                                           |                                                                                                                                                                                             |                                            | 659,443 |             |           |   | 619,629 |         
|Deferred income taxes                                                 |                                                                                                                                                                                             |                                            |        |             |           |   | 2,718   |         
|Assets held for sale                                                  |                                                                                                                                                                                             |                                            |        |             |           |   | 1,710   |         
|Prepaid expenses and other current assets                             |                                                                                                                                                                                             |                                            | 16,800  |             |           |   | 19,847  |         
|                                                                      |                                                                                                                                                                                             |                                            |         |             |           |   |         |         
|                                                                      |                                                                                                                                                                                             | Total current assets                       |         |             | 794,365   |   |         |          | 744,781   | 
|                                                                      |                                                                                                                                                                                             |                                            |         |             |           |   |         |         
|Property and equipment, net                                           |                                                                                                                                                                                             |                                            | 133,818 |             |           |   | 150,381 |         
|Leasehold interests, net                                              |                                                                                                                                                                                             |                                            | 15,208  |             |           |   | 16,581  |         
|Goodwill                                                              |                                                                                                                                                                                             |                                            | 127,069 |             |           |   | 126,846 |         
|Deferred income taxes                                                 |                                                                                                                                                                                             |                                            |        |             |           |   | 739     |         
|Other assets, net                                                     |                                                                                                                                                                                             |                                            | 27,663  |             |           |   | 29,249  |         
|                                                                      |                                                                                                                                                                                             |                                            |         |             |           |   |         |         
|                                                                      |                                                                                                                                                                                             | Total assets                               |         | $           | 1,098,123 |   |         | $        | 1,068,577 | 
|                                                                      |                                                                                                                                                                                             |                                            |         |             |           |   |         |         
|LIABILITIES AND STOCKHOLDERS
    EQUITY                              |                                                                                                                                                                                             |                                            |         |             |           |   |         |         
|Accounts payable                                                      |                                                                                                                                                                                             | $                                          | 175,097 |             |           | $ | 157,284 |         
|Accrued payroll and related expenses                                  |                                                                                                                                                                                             |                                            | 30,520  |             |           |   | 33,055  |         
|Accrued expenses and other current liabilities                        |                                                                                                                                                                                             |                                            | 44,965  |             |           |   | 44,529  |         
|Deferred income taxes                                                 |                                                                                                                                                                                             |                                            | 5,755   |             |           |   |        |         
|Current maturities of capital lease obligations                       |                                                                                                                                                                                             |                                            | 10,065  |             |           |   | 10,999  |         
|                                                                      |                                                                                                                                                                                             |                                            |         |             |           |   |         |         
|                                                                      |                                                                                                                                                                                             | Total current liabilities                  |         |             | 266,402   |   |         |          | 245,867   | 
|                                                                      |                                                                                                                                                                                             |                                            |         |             |           |   |         |         
|Amounts due under senior credit facility                              |                                                                                                                                                                                             |                                            | 209,000 |             |           |   | 227,000 |         
|12% Senior Notes                                                      |                                                                                                                                                                                             |                                            | 281,048 |             |           |   | 275,416 |         
|11% Senior Subordinated Notes                                         |                                                                                                                                                                                             |                                            | 9,547   |             |           |   | 81,250  |         
|7% Convertible Subordinated Debentures                                |                                                                                                                                                                                             |                                            |        |             |           |   | 49,100  |         
|Obligations under capital leases                                      |                                                                                                                                                                                             |                                            | 23,928  |             |           |   | 27,078  |         
|Deferred income taxes                                                 |                                                                                                                                                                                             |                                            | 1,729   |             |           |   |        |         
|Other                                                                 |                                                                                                                                                                                             |                                            | 7,964   |             |           |   | 8,580   |         
|                                                                      |                                                                                                                                                                                             |                                            |         |             |           |   |         |         
|                                                                      |                                                                                                                                                                                             | Total non-current liabilities              |         |             | 533,216   |   |         |          | 668,424   | 
|                                                                      |                                                                                                                                                                                             |                                            |         |             |           |   |         |         
|Commitments and contingencies                                         |                                                                                                                                                                                             |                                            |         |             |           |   |         |         
|                                                                      | Stockholders equity:                                                                                                                                                                       |                                            |         |             |           |   |         |          |          
|                                                                      | Common stock, $0.01 par value, 58,000,000
    shares
    authorized; 45,147,088 and 32,370,746 shares issued and
    outstanding at November 3, 2002 and February 3, 2002,
    respectively |                                            |         | 452         |           |   |         | 324      |          
|                                                                      | Additional paid-in capital                                                                                                                                                                  |                                            |         | 448,261     |           |   |         | 322,667  |          
|                                                                      | Stockholder receivables                                                                                                                                                                     |                                            |         | (342        | )         |   |         | (686     | )        
|                                                                      | Accumulated deficit                                                                                                                                                                         |                                            |         | (149,866    | )         |   |         | (168,019 | )        
|                                                                      |                                                                                                                                                                                             |                                            |         |             |           |   |         |         
|                                                                      |                                                                                                                                                                                             | Total stockholders equity                 |         |             | 298,505   |   |         |          | 154,286   | 
|                                                                      |                                                                                                                                                                                             |                                            |         |             |           |   |         |         
|                                                                      |                                                                                                                                                                                             | Total liabilities and stockholders equity |         | $           | 1,098,123 |   |         | $        | 1,068,577 | 
|                                                                      |                                                                                                                                                                                             |                                            |         |             |           |   |         |         

The accompanying notes are an integral part of
these consolidated financial statements.

1



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##### 



CSK AUTO CORPORATION AND
SUBSIDIARIES

CONSOLIDATED STATEMENTS OF
OPERATIONS

(in thousands, except share and per share
data)


|                                                |                                             |                      |            |                         |  |             |            |             |  |   |            |         |   |   |            |         |  
|----------------------------------------------- | ------------------------------------------- | -------------------- | ---------- | ----------------------- |  | ----------- | ---------- | ----------- |  | - | ---------- | ------- | - | - | ---------- | ------- | -
|                                                |                                             |                      |            |                        
|                                                |                                             | Thirteen Weeks Ended |            | Thirty-nine Weeks Ended
|                                                |                                             |                      |            |                        
|                                                |                                             | November 3,          |            | November 4,             |  | November 3, |            | November 4,
|                                                |                                             | 2002                 |            | 2001                    |  | 2002        |            | 2001       
|                                                |                                             |                      |            |                         |  |             |            |            
|                                                |                                             |                     
|                                                |                                             | (Unaudited)         
|Net sales                                       |                                             | $                    | 383,045    |                         |  | $           | 366,741    |             |  | $ | 1,156,901  |         |   | $ | 1,104,584  |        
|Cost of sales                                   |                                             |                      | 202,266    |                         |  |             | 195,628    |             |  |   | 628,924    |         |   |   | 617,811    |        
|                                                |                                             |                      |            |                         |  |             |            |             |  |   |            |         |   |   |            |        
|Gross profit                                    |                                             |                      | 180,779    |                         |  |             | 171,113    |             |  |   | 527,977    |         |   |   | 486,773    |        
|Other costs and expenses:                       |                                             |                      |            |                         |  |             |            |             |  |   |            |         |   |   |            |        
|                                                | Operating and administrative                |                      |            | 149,367                 |  |             |            | 146,248     |  |   |            | 443,570 |   |   |            | 437,491 |  
|                                                | Store closing and other restructuring costs |                      |            | 12                      |  |             |            | 11          |  |   |            | 551     |   |   |            | 23,782  |  
|                                                | Legal settlement                            |                      |            |                        |  |             |            |            |  |   |            |        |   |   |            | 2,000   |  
|                                                | Loss on sale of stores                      |                      |            |                        |  |             |            |            |  |   |            | 847     |   |   |            |        |  
|                                                | Secondary stock offering costs              |                      |            |                        |  |             |            |            |  |   |            | 265     |   |   |            |        |  
|                                                | Goodwill amortization                       |                      |            |                        |  |             |            | 1,191       |  |   |            |        |   |   |            | 3,609   |  
|                                                |                                             |                      |            |                         |  |             |            |             |  |   |            |         |   |   |            |        
|Operating profit                                |                                             |                      | 31,400     |                         |  |             | 23,663     |             |  |   | 82,744     |         |   |   | 19,891     |        
|Interest expense                                |                                             |                      | 14,243     |                         |  |             | 14,317     |             |  |   | 48,201     |         |   |   | 45,727     |        
|                                                |                                             |                      |            |                         |  |             |            |             |  |   |            |         |   |   |            |        
|Income (loss) before income taxes               |                                             |                      | 17,157     |                         |  |             | 9,346      |             |  |   | 34,543     |         |   |   | (25,836    | )      
|Income tax expense (benefit)                    |                                             |                      | 6,471      |                         |  |             | 3,412      |             |  |   | 12,695     |         |   |   | (10,186    | )      
|                                                |                                             |                      |            |                         |  |             |            |             |  |   |            |         |   |   |            |        
|Net income (loss) before extraordinary loss     |                                             |                      | 10,686     |                         |  |             | 5,934      |             |  |   | 21,848     |         |   |   | (15,650    | )      
|Extraordinary loss, net of $2,313 of income tax |                                             |                      |           |                         |  |             |           |             |  |   | (3,695     | )       |   |   |           |        
|                                                |                                             |                      |            |                         |  |             |            |             |  |   |            |         |   |   |            |        
|Net income (loss)                               |                                             | $                    | 10,686     |                         |  | $           | 5,934      |             |  | $ | 18,153     |         |   | $ | (15,650    | )      
|                                                |                                             |                      |            |                         |  |             |            |             |  |   |            |         |   |   |            |        
|Basic earnings (loss) per
    share:            |                                             |                      |            |                         |  |             |            |             |  |   |            |         |   |   |            |        
|                                                | Income (loss) before extraordinary loss     |                      | $          | 0.24                    |  |             |            | 0.21        |  |   | $          | 0.55    |   |   |            | (0.56   | )
|                                                | Extraordinary loss, net of income tax       |                      |            |                        |  |             |            |            |  |   |            | (0.09   | ) |   |            |        |  
|                                                |                                             |                      |            |                         |  |             |            |             |  |   |            |         |   |   |            |        
|                                                | Net income (loss)                           |                      | $          | 0.24                    |  |             | $          | 0.21        |  |   | $          | 0.46    |   |   | $          | (0.56   | )
|                                                |                                             |                      |            |                         |  |             |            |             |  |   |            |         |   |   |            |        
|Shares used in computing per share amounts      |                                             |                      | 45,154,866 |                         |  |             | 27,842,105 |             |  |   | 39,129,499 |         |   |   | 27,842,105 |        
|                                                |                                             |                      |            |                         |  |             |            |             |  |   |            |         |   |   |            |        
|Diluted earnings (loss) per
    share:          |                                             |                      |            |                         |  |             |            |             |  |   |            |         |   |   |            |        
|                                                | Income (loss) before extraordinary loss     |                      | $          | 0.24                    |  |             |            | 0.19        |  |   | $          | 0.55    |   |   |            | (0.56   | )
|                                                | Extraordinary loss, net of income tax       |                      |            |                        |  |             |            |            |  |   |            | (0.09   | ) |   |            |        |  
|                                                |                                             |                      |            |                         |  |             |            |             |  |   |            |         |   |   |            |        
|Net income (loss)                               |                                             | $                    | 0.24       |                         |  | $           | 0.19       |             |  | $ | 0.46       |         |   | $ | (0.56      | )      
|                                                |                                             |                      |            |                         |  |             |            |             |  |   |            |         |   |   |            |        
|Shares used in computing per share amounts      |                                             |                      | 45,313,673 |                         |  |             | 31,939,105 |             |  |   | 39,236,096 |         |   |   | 27,842,105 |        
|                                                |                                             |                      |            |                         |  |             |            |             |  |   |            |         |   |   |            |        

The accompanying notes are an integral part of
these consolidated financial statements.

2



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##### 



CSK AUTO CORPORATION AND
SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS
EQUITY

(in thousands, except share data)


|                                                                                |             |              |            |            |  |             |     |             |  |         |         |         |  |   |      |      |   |   |          |          |   |   |         |         | 
|------------------------------------------------------------------------------- | ----------- | ------------ | ---------- | ---------- |  | ----------- | --- | ----------- |  | ------- | ------- | ------- |  | - | ---- | ---- | - | - | -------- | -------- | - | - | ------- | ------- | 
|                                                                                |             |              |            |            |  |             |     |             |  |        
|                                                                                |             | Common Stock |            | Additional |  |             |     |             |  |        
|                                                                                |             |              |            | Paid-in    |  | Stockholder |     | Accumulated |  | Total  
|                                                                                |             | Shares       |            | Amount     |  | Capital     |     | Receivable  |  | Deficit |         | Equity 
|                                                                                |             |              |            |            |  |             |     |             |  |         |         |        
|Balances at February 3, 2002.                                                   |             |              | 32,370,746 |            |  | $           | 324 |             |  | $       | 322,667 |         |  | $ | (686 | )    |   | $ | (168,019 | )        |   | $ | 154,286 |        
|Conversion of Convertible Subordinated
    Debentures, net of costs (unaudited) |             |              | 5,753,740  |            |  |             | 58  |             |  |         | 46,058  |         |  |   |     |      |   |   |         |          |   |   | 46,116  |        
|Common stock issued in lieu of cash interest paid
    (unaudited)               |             |              | 136,580    |            |  |             | 1   |             |  |         | 1,408   |         |  |   |     |      |   |   |         |          |   |   | 1,409   |        
|Stock offering, net of costs (unaudited)                                        |             |              | 6,878,300  |            |  |             | 69  |             |  |         | 78,073  |         |  |   |     |      |   |   |         |          |   |   | 78,142  |        
|Issuance of loan to stockholder (unaudited)                                     |             |              |           |            |  |             |    |             |  |         |        |         |  |   | (125 | )    |   |   |         |          |   |   | (125    | )      
|Recovery of stockholder receivable (unaudited)                                  |             |              |           |            |  |             |    |             |  |         |        |         |  |   | 469  |      |   |   |         |          |   |   | 469     |        
|Retirement of common stock (unaudited)                                          |             |              | (11,000    | )          |  |             |    |             |  |         | (137    | )       |  |   |     |      |   |   |         |          |   |   | (137    | )      
|Issuance of restricted stock (unaudited)                                        |             |              | 2,285      |            |  |             |    |             |  |         | 31      |         |  |   |     |      |   |   |         |          |   |   | 31      |        
|Exercise of stock options (unaudited)                                           |             |              | 16,437     |            |  |             |    |             |  |         | 161     |         |  |   |     |      |   |   |         |          |   |   | 161     |        
|Net income (unaudited)                                                          |             |              |           |            |  |             |    |             |  |         |        |         |  |   |     |      |   |   | 18,153   |          |   |   | 18,153  |        
|                                                                                |             |              |            |            |  |             |     |             |  |         |         |         |  |   |      |      |   |   |          |          |   |   |         |        
|Balances at November 3, 2002                                                    |             |              |            |            |  |             |     |             |  |         |         |         |  |   |      |      |   |   |          |          |   |   |         |        
|                                                                                | (unaudited) |              |            | 45,147,088 |  |             | $   | 452         |  |         | $       | 448,261 |  |   | $    | (342 | ) |   | $        | (149,866 | ) |   | $       | 298,505 | 
|                                                                                |             |              |            |            |  |             |     |             |  |         |         |         |  |   |      |      |   |   |          |          |   |   |         |        

The accompanying notes are an integral part of
these consolidated financial statements.

3



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##### 



CSK AUTO CORPORATION AND
SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH
FLOWS

(in thousands)


(Unaudited)


|                                                           |                                                                                                 |                                                                               |                                                                     |             |         |         |        |          |         |         |  
|---------------------------------------------------------- | ----------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------- | ------------------------------------------------------------------- | ----------- | ------- | ------- | ------ | -------- | ------- | ------- | -
|                                                           |                                                                                                 |                                                                              
|                                                           |                                                                                                 | Thirty-nine Weeks Ended                                                      
|                                                           |                                                                                                 |                                                                              
|                                                           |                                                                                                 | November 3,                                                                   |                                                                     | November 4,
|                                                           |                                                                                                 | 2002                                                                          |                                                                     | 2001       
|                                                           |                                                                                                 |                                                                               |                                                                     |            
|Cash flows provided by (used in) operating
    activities: |                                                                                                 |                                                                               |                                                                     |             |         |         |        |         
|                                                           | Net income (loss)                                                                               |                                                                               | $                                                                   | 18,153      |         |         | $      | (15,650  | )      
|                                                           | Adjustments to reconcile net income to net cash
    provided by (used in) operating activities: |                                                                               |                                                                     |             |         |         |        |          |        
|                                                           |                                                                                                 | Depreciation and amortization of property and
    equipment                   |                                                                     |             | 23,944  |         |        |          | 24,219  |        
|                                                           |                                                                                                 | Amortization of deferred financing costs                                      |                                                                     |             | 4,044   |         |        |          | 2,658   |        
|                                                           |                                                                                                 | Amortization of other items                                                   |                                                                     |             | 2,817   |         |        |          | 6,196   |        
|                                                           |                                                                                                 | Accretion of discount                                                         |                                                                     |             | 682     |         |        |          |        |        
|                                                           |                                                                                                 | Provision for write down of inventory                                         |                                                                     |             |        |         |        |          | 17,292  |        
|                                                           |                                                                                                 | Write downs on disposals of property, equipment
    and other assets          |                                                                     |             | 769     |         |        |          | 7,675   |        
|                                                           |                                                                                                 | Extraordinary loss on early retirement of debt,
    net of income tax benefit |                                                                     |             | 3,695   |         |        |          |        |        
|                                                           |                                                                                                 | Premium paid on early retirement of debt                                      |                                                                     |             | (4,368  | )       |        |          |        |        
|                                                           |                                                                                                 | Loss on sale of stores                                                        |                                                                     |             | 847     |         |        |          |        |        
|                                                           |                                                                                                 | Deferred income taxes                                                         |                                                                     |             | 13,254  |         |        |          | (10,337 | )      
|                                                           |                                                                                                 | Change in operating assets and liabilities:                                   |                                                                     |             |         |         |        |          |         |        
|                                                           |                                                                                                 |                                                                               | Receivables                                                         |             |         | (18,161 | )      |          |         | (22,587 | )
|                                                           |                                                                                                 |                                                                               | Inventories                                                         |             |         | (43,487 | )      |          |         | (33,715 | )
|                                                           |                                                                                                 |                                                                               | Prepaid expenses and other current assets                           |             |         | 3,047   |        |          |         | (1,140  | )
|                                                           |                                                                                                 |                                                                               | Accounts payable                                                    |             |         | 17,813  |        |          |         | 27,671  |  
|                                                           |                                                                                                 |                                                                               | Accrued payroll, accrued expenses and other
    current liabilities |             |         | (1,115  | )      |          |         | 10,602  |  
|                                                           |                                                                                                 | Other operating activities                                                    |                                                                     |             | (1,047  | )       |        |          | 4,652   |        
|                                                           |                                                                                                 |                                                                               |                                                                     |             |         |         |        |         
|                                                           | Net cash provided by operating activities                                                       |                                                                               |                                                                     | 20,887      |         |         |        | 17,536   |        
|                                                           |                                                                                                 |                                                                               |                                                                     |             |         |         |        |         
|Cash flows provided by (used in) investing
    activities: |                                                                                                 |                                                                               |                                                                     |             |         |         |        |         
|                                                           | Capital expenditures                                                                            |                                                                               |                                                                     | (5,681      | )       |         |        | (10,218  | )      
|                                                           | Proceeds from sale of property and equipment and
    assets held for sale                       |                                                                               |                                                                     | 2,188       |         |         |        | 5,281    |        
|                                                           | Proceeds from sale of stores                                                                    |                                                                               |                                                                     | 4,217       |         |         |        |         |        
|                                                           | Other investing activities                                                                      |                                                                               |                                                                     | (2,699      | )       |         |        | (2,908   | )      
|                                                           |                                                                                                 |                                                                               |                                                                     |             |         |         |        |         
|                                                           |                                                                                                 | Net cash used in investing activities                                         |                                                                     |             | (1,975  | )       |        |          | (7,845  | )      
|                                                           |                                                                                                 |                                                                               |                                                                     |             |         |         |        |         
|Cash flows provided by (used in) financing
    activities: |                                                                                                 |                                                                               |                                                                     |             |         |         |        |         
|                                                           | Borrowings under senior credit facility                                                         |                                                                               |                                                                     | 247,000     |         |         |        | 232,000  |        
|                                                           | Payments under senior credit facility                                                           |                                                                               |                                                                     | (265,000    | )       |         |        | (257,320 | )      
|                                                           | Issuance of Convertible Subordinated Debentures                                                 |                                                                               |                                                                     |            |         |         |        | 30,000   |        
|                                                           | Issuance of common stock in public offering                                                     |                                                                               |                                                                     | 82,540      |         |         |        |         |        
|                                                           | Underwriters discount and other offering
    costs                                             |                                                                               |                                                                     | (4,398      | )       |         |        |         |        
|                                                           | Partial retirement of 11% Senior Subordinated
    Notes                                         |                                                                               |                                                                     | (71,703     | )       |         |        |         |        
|                                                           | Payment of debt issuance costs                                                                  |                                                                               |                                                                     | (1,113      | )       |         |        | (2,102   | )      
|                                                           | Payments on capital lease obligations                                                           |                                                                               |                                                                     | (7,565      | )       |         |        | (7,061   | )      
|                                                           | Loan to stockholder                                                                             |                                                                               |                                                                     | (125        | )       |         |        |         |        
|                                                           | Recovery of stockholder receivable                                                              |                                                                               |                                                                     | 334         |         |         |        |         |        
|                                                           | Exercise of options                                                                             |                                                                               |                                                                     | 161         |         |         |        |         |        
|                                                           | Other financing activities                                                                      |                                                                               |                                                                     | 43          |         |         |        | (649     | )      
|                                                           |                                                                                                 |                                                                               |                                                                     |             |         |         |        |         
|                                                           |                                                                                                 | Net cash used in financing activities                                         |                                                                     |             | (19,826 | )       |        |          | (5,132  | )      
|                                                           |                                                                                                 |                                                                               |                                                                     |             |         |         |        |         
|                                                           |                                                                                                 | Net increase (decrease) in cash and cash
    equivalents                      |                                                                     |             | (914    | )       |        |          | 4,559   |        
|Cash and cash equivalents, beginning of period             |                                                                                                 |                                                                               | 16,084                                                              |             |         |         | 11,131 |         
|                                                           |                                                                                                 |                                                                               |                                                                     |             |         |         |        |         
|Cash and cash equivalents, end of period                   |                                                                                                 | $                                                                             | 15,170                                                              |             |         | $       | 15,690 |         
|                                                           |                                                                                                 |                                                                               |                                                                     |             |         |         |        |         

The accompanying notes are an integral part of
these consolidated financial statements.

4



---



##### 



CSK AUTO CORPORATION AND
SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

Thirteen and Thirty-nine Weeks Ended
November 3, 2002


CSK Auto Corporation is a holding company. At
November 3, 2002, CSK Auto Corporation had no business
activity other than its investment in CSK Auto, Inc., a
wholly-owned subsidiary (Auto). On a consolidated
basis, CSK Auto Corporation and Auto are referred to herein as
the Company.

Auto is a specialty retailer of automotive
aftermarket parts and accessories. At November 3, 2002, the
Company operated 1,111 stores in 19 Western and Northern Plains
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.

Auto also operates Automotive Information
Systems, Inc. (AIS), as a wholly-owned subsidiary.
AIS, based in St. Paul, Minnesota, is a leading provider of
diagnostic vehicle repair information to automotive technicians,
automotive replacement parts manufacturers, automotive test
equipment manufacturers and the do-it-yourself consumer.

Note 1  Basis of
Presentation

The unaudited consolidated financial statements
included herein were prepared by the Company pursuant to the
rules and regulations of the Securities and Exchange Commission,
but do not include all information and footnotes required by
generally accepted accounting principles. In the opinion of
management, the consolidated financial statements reflect all
adjustments, which are of a normal recurring nature, necessary
for a fair presentation of the Companys financial position
and the results of its 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 3, 2002, as included in the
Companys Annual Report on Form 10-K/ A filed with the
Securities and Exchange Commission on May 10, 2002.

Note 2  Inventories

Inventories are valued at the lower of cost or
market, cost being determined utilizing the last-in, first-out
(LIFO) method. An actual valuation of inventory under the
LIFO method can only be calculated at the end of a fiscal year
based upon the inventory levels and costs at that time.
Accordingly, interim LIFO calculations reflected herein are
based upon managements estimates of year-end inventory
levels and costs. The replacement cost of inventories
approximated $556 million and $528 million at
November 3, 2002 and February 3, 2002, respectively.

The carrying value of the inventory exceeds the
current replacement cost primarily as a result of the
application of the LIFO inventory method of accounting. The
Companys costs of acquiring inventories through normal
purchasing activities have been decreasing in recent years as
the Companys increased size and cash flows have enabled it
to take advantage of volume discounts and lower product
acquisition costs resulting in a lower current replacement cost
of inventory.

From time to time, the Company performs an
analysis of the net realizable value of the inventory, after
consideration of expected disposal costs and normal profit
margins, to determine if the LIFO carrying value of the
inventory is impaired. Should an impairment be indicated, the
carrying value of the inventory would be reduced. No such
impairment is indicated based on current market conditions.
Historically, the net realizable value of the inventory has
exceeded its carrying value. The Companys analysis for the
first thirty-nine weeks of fiscal 2002 indicated that the net
realizable value exceeded the carrying value of inventories at
November 3, 2002.

5



---



##### 



CSK AUTO CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Note 3  Issuance of Common Stock
and Earnings Per Share



| |                         
| | ------------------------
| | Conversion of Debentures

On May 20, 2002, at the election of the
Company, the entire $50.0 million of 7% Convertible
Subordinated Debentures issued in December 2001 were converted
into approximately 5.75 million shares of CSK Auto
Corporation common stock. Pursuant to the agreements relating to
the debentures, interest on the debentures was paid in shares of
the Companys common stock in lieu of cash. In the first
quarter of 2002, interest was paid on the debentures in the form
of 105,708 shares of CSK Auto Corporation common stock. The
Company elected to pay interest accrued on the debentures for
the period April 1, 2002 to the date of conversion in the
form of 30,872 additional shares of CSK Auto Corporation common
stock. The following table details the amount transferred to
stockholders equity at the time of conversion ($ in
thousands):

|                                                  |                                          |   |        |        | 
|------------------------------------------------- | ---------------------------------------- | - | ------ | ------ | 
|Face value of Convertible Subordinated Debentures |                                          | $ | 50,000 |       
|Unamortized debt discount                         |                                          |   | (838   | )     
|Unamortized debt issuance costs                   |                                          |   | (3,046 | )     
|                                                  |                                          |   |        |       
|                                                  | Amount converted to stockholders equity |   | $      | 46,116 | 
|                                                  |                                          |   |        |       



| |               
| | --------------
| | Stock Offering

On July 2, 2002, CSK Auto Corporation sold
6,878,300 shares of common stock in an underwritten public
offering at $12 per share. In addition, a selling stockholder
sold 2,600,000 shares in the offering. The Company received no
proceeds from the shares sold by the selling stockholder.
Issuance costs related to the stock offering approximated
$0.7 million. These costs included approximately
$0.4 million of legal, accounting and printing fees charged
to additional paid in capital for the primary offering and
approximately $0.3 million of costs charged to operating
expense for the secondary offering. Proceeds from the
Companys sale of shares in this offering were used to
retire approximately $71.7 million of Autos
outstanding 11% Senior Subordinated Notes due 2006. The early
extinguishment of this debt resulted in an extraordinary loss of
approximately $3.7 million, net of approximately
$2.3 million of income tax benefit, primarily as a result
of the payment of an early redemption premium and the write off
of deferred debt issuance costs. The components of this
transaction are as follows ($ in thousands):

|                                                               |              |                    |         |        |         |  
|-------------------------------------------------------------- | ------------ | ------------------ | ------- | ------ | ------- | -
|Proceeds:                                                      |              |                    |         |       
|Gross proceeds at $12 per share                                |              | $                  | 82,540  |       
|Underwriting discount                                          |              |                    | (3,921  | )     
|                                                               |              |                    |         |       
|                                                               | Net proceeds |                    | $       | 78,619 |        
|                                                               |              |                    |         |       
|Uses:                                                          |              |                    |         |       
|Retire 11% Senior Subordinated Notes                           |              | $                  | (71,703 | )     
|Premium on note retirement  charged to
    extraordinary loss |              |                    | (3,943  | )     
|Accrued interest on note retirement                            |              |                    | (1,972  | )     
|Issuance costs                                                 |              |                    | (741    | )     
|General corporate purposes                                     |              |                    | (260    | )     
|                                                               |              |                    |         |       
|                                                               |              | Total use of funds |         | $      | (78,619 | )
|                                                               |              |                    |         |       

6



---



##### 



CSK AUTO CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Earnings per Share

Calculation of the numerator and denominator used
in computing per share amounts is summarized as follows (in
thousands):

|                                                  |                                                                  |                                               |   |                         |        |             |   |             |        |  |   |        |        |  |   |         |         |  
|------------------------------------------------- | ---------------------------------------------------------------- | --------------------------------------------- | - | ----------------------- | ------ | ----------- | - | ----------- | ------ |  | - | ------ | ------ |  | - | ------- | ------- | -
|                                                  |                                                                  |                                               |   |                        
|                                                  |                                                                  | Thirteen Weeks Ended                          |   | Thirty-nine Weeks Ended
|                                                  |                                                                  |                                               |   |                        
|                                                  |                                                                  | November 3,                                   |   | November 4,             |        | November 3, |   | November 4,
|                                                  |                                                                  | 2002                                          |   | 2001                    |        | 2002        |   | 2001       
|                                                  |                                                                  |                                               |   |                         |        |             |   |            
|Numerator for basic EPS:                          |                                                                  |                                               |   |                         |        |             |   |             |        |  |   |        |        |  |   |        
|                                                  | Net income (loss)                                                |                                               | $ | 10,686                  |        |             | $ | 5,934       |        |  | $ | 18,153 |        |  | $ | (15,650 | )      
|                                                  |                                                                  |                                               |   |                         |        |             |   |             |        |  |   |        |        |  |   |        
|Denominator for basic EPS:                        |                                                                  |                                               |   |                         |        |             |   |             |        |  |   |        |        |  |   |        
|                                                  | Weighted average shares outstanding (basic)                      |                                               |   | 45,155                  |        |             |   | 27,842      |        |  |   | 39,129 |        |  |   | 27,842  |        
|                                                  |                                                                  |                                               |   |                         |        |             |   |             |        |  |   |        |        |  |   |        
|Numerator for diluted EPS:                        |                                                                  |                                               |   |                         |        |             |   |             |        |  |   |        |        |  |   |        
|                                                  | Net income (loss)                                                |                                               | $ | 10,686                  |        |             | $ | 5,934       |        |  | $ | 18,153 |        |  | $ | (15,650 | )      
|                                                  | Interest savings, net of tax, on assumed
    conversion of notes |                                               |   |                        |        |             |   | 294         |        |  |   |       |        |  |   |        |        
|                                                  |                                                                  |                                               |   |                         |        |             |   |             |        |  |   |        |        |  |   |        
|                                                  |                                                                  | Adjusted net income                           |   | $                       | 10,686 |             |   | $           | 6,228  |  |   | $      | 18,153 |  |   | $       | (15,650 | )
|                                                  |                                                                  |                                               |   |                         |        |             |   |             |        |  |   |        |        |  |   |        
|Denominator for diluted EPS:                      |                                                                  |                                               |   |                         |        |             |   |             |        |  |   |        |        |  |   |        
|                                                  | Weighted average shares outstanding (diluted)                    |                                               |   | 45,155                  |        |             |   | 27,842      |        |  |   | 39,129 |        |  |   | 27,842  |        
|                                                  | Effect of dilutive stock options                                 |                                               |   | 159                     |        |             |   | 25          |        |  |   | 107    |        |  |   |        |        
|                                                  | Assumed conversion of note                                       |                                               |   |                        |        |             |   | 4,072       |        |  |   |       |        |  |   |        |        
|                                                  |                                                                  |                                               |   |                         |        |             |   |             |        |  |   |        |        |  |   |        
|                                                  |                                                                  | Weighted average shares outstanding (diluted) |   |                         | 45,314 |             |   |             | 31,939 |  |   |        | 39,236 |  |   |         | 27,842  |  
|                                                  |                                                                  |                                               |   |                         |        |             |   |             |        |  |   |        |        |  |   |        
|Shares excluded as a result of
    anti-dilution: |                                                                  |                                               |   |                         |        |             |   |             |        |  |   |        |        |  |   |        
|                                                  | Stock options                                                    |                                               |   | 727                     |        |             |   | 2,314       |        |  |   | 778    |        |  |   | 2,862   |        
|                                                  | Conversion of subordinated debentures                            |                                               |   |                        |        |             |   |            |        |  |   | 2,242  |        |  |   | 1,354   |        
|                                                  |                                                                  |                                               |   |                         |        |             |   |             |        |  |   |        |        |  |   |        
|                                                  |                                                                  | Total shares excluded                         |   |                         | 727    |             |   |             | 2,314  |  |   |        | 3,020  |  |   |         | 4,216   |  
|                                                  |                                                                  |                                               |   |                         |        |             |   |             |        |  |   |        |        |  |   |        

Note 4  Recent Accounting
Pronouncements

In June 2001, the Financial Accounting Standards
Board (FASB) issued Statement of Financial Accounting
Standards No. 141 (SFAS 141), Business
Combinations, and No. 142 (SFAS 142), Goodwill
and Other Intangible Assets. The provisions of SFAS 141
require that the purchase method of accounting be used for all
business combinations initiated after June 30, 2001 and
provide guidance on the accounting for intangible assets and
negative goodwill. The Company adopted the provisions of SFAS
141 on February 4, 2002. The adoption of SFAS 141 had no
effect on the Companys current financial statements.

SFAS 142 is effective for fiscal years beginning
after December 15, 2001 and primarily addresses the
accounting for goodwill and intangible assets subsequent to
their initial recognition. SFAS 142 requires an initial goodwill
impairment assessment in the year of adoption and annual
impairment tests thereafter. The Company completed the
transitional impairment test during the second quarter of 2002
and determined that there was no impairment of existing
goodwill. The remaining balance of goodwill is
$127.1 million. In accordance with SFAS No. 142, the
Company ceased amortization of its remaining goodwill upon
adoption of the standard on February 4, 2002.

7



---



##### 



CSK AUTO CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

SFAS 142 requires the presentation of net income
and related earnings per share data adjusted for the effect of
goodwill amortization. The following table provides pro forma
net income and earnings per share data for the thirteen and
thirty-nine weeks ended November 3, 2002 and
November 4, 2001, to illustrate the impact of goodwill
amortization on the results of the prior year period ($ in
thousands except per share amounts):

|                                       |                                        |                      |        |                         |  |             |       |             |  |   |        |      |  |   |         |       |  
|-------------------------------------- | -------------------------------------- | -------------------- | ------ | ----------------------- |  | ----------- | ----- | ----------- |  | - | ------ | ---- |  | - | ------- | ----- | -
|                                       |                                        |                      |        |                        
|                                       |                                        | Thirteen Weeks Ended |        | Thirty-nine Weeks Ended
|                                       |                                        |                      |        |                        
|                                       |                                        | November 3,          |        | November 4,             |  | November 3, |       | November 4,
|                                       |                                        | 2002                 |        | 2001                    |  | 2002        |       | 2001       
|                                       |                                        |                      |        |                         |  |             |       |            
|Reported net income (loss)             |                                        | $                    | 10,686 |                         |  | $           | 5,934 |             |  | $ | 18,153 |      |  | $ | (15,650 | )    
|Add: goodwill amortization, net of tax |                                        |                      |       |                         |  |             | 756   |             |  |   |       |      |  |   | 2,186   |      
|                                       |                                        |                      |        |                         |  |             |       |             |  |   |        |      |  |   |         |      
|Pro forma net income (loss)            |                                        | $                    | 10,686 |                         |  | $           | 6,690 |             |  | $ | 18,153 |      |  | $ | (13,464 | )    
|                                       |                                        |                      |        |                         |  |             |       |             |  |   |        |      |  |   |         |      
|Basic earnings per share:              |                                        |                      |        |                         |  |             |       |             |  |   |        |      |  |   |         |      
|                                       | Earnings (loss) per share, as reported |                      | $      | 0.24                    |  |             | $     | 0.21        |  |   | $      | 0.46 |  |   | $       | (0.56 | )
|                                       | Goodwill amortization, net of tax      |                      |        |                        |  |             |       | 0.03        |  |   |        |     |  |   |         | 0.08  |  
|                                       |                                        |                      |        |                         |  |             |       |             |  |   |        |      |  |   |         |      
|                                       | Pro forma earnings (loss) per share    |                      | $      | 0.24                    |  |             | $     | 0.24        |  |   | $      | 0.46 |  |   | $       | (0.48 | )
|                                       |                                        |                      |        |                         |  |             |       |             |  |   |        |      |  |   |         |      
|Diluted earnings per share:            |                                        |                      |        |                         |  |             |       |             |  |   |        |      |  |   |         |      
|                                       | Earnings (loss) per share, as reported |                      | $      | 0.24                    |  |             | $     | 0.19        |  |   | $      | 0.46 |  |   | $       | (0.56 | )
|                                       | Goodwill amortization, net of tax      |                      |        |                        |  |             |       | 0.02        |  |   |        |     |  |   |         | 0.08  |  
|                                       |                                        |                      |        |                         |  |             |       |             |  |   |        |      |  |   |         |      
|                                       | Pro forma earnings (loss) per share    |                      | $      | 0.24                    |  |             | $     | 0.21        |  |   | $      | 0.46 |  |   | $       | (0.48 | )
|                                       |                                        |                      |        |                         |  |             |       |             |  |   |        |      |  |   |         |      

In June 2001, the FASB issued SFAS 143,
Accounting for Asset Retirement Obligations.
SFAS 143 addresses financial accounting and reporting for
obligations associated with the retirement of tangible
long-lived assets and the associated asset retirement costs.
This statement applies to all entities that have legal
obligations associated with the retirement of long-lived assets
that result from the acquisition, construction, development or
normal use of the asset. SFAS 143 is effective for fiscal
years beginning after June 15, 2002. The Company does not
expect the adoption of SFAS 143 to have a significant
impact on its financial statements.

In October 2001, the FASB issued SFAS 144,
Accounting for the Impairment or Disposal of Long-Lived
Assets. SFAS 144 replaces certain previously issued
accounting guidance, develops a single accounting model for
long-lived assets, and broadens the framework previously
established for assets to be disposed of by sale (whether
previously held or newly acquired). The Company adopted
SFAS No. 144 as of the beginning of fiscal 2002. The
adoption of this standard did not have a material effect on the
Companys financial statements.

In April 2002, the FASB issued SFAS 145,
Rescission of FASB Statements 4, 44, and 64,
Amendment of FASB Statement 13, and Technical
Corrections. SFAS 145 updates, clarifies and
simplifies existing accounting pronouncements and addresses the
reporting of debt extinguishments and accounting for certain
lease modifications that have economic effects that are similar
to sale-leaseback transactions. The Company is required and
plans to adopt the provisions of SFAS 145 by February 3,
2003. During the second quarter of fiscal 2002, the Company
recorded an extraordinary loss of $3.7 million (net of
income tax benefit) relating to the early retirement of debt.
SFAS 145 will require that this amount be reclassified to
operations.

In July 2002, the FASB issued SFAS 146,
Accounting for Costs Associated with Exit or Disposal
Activities. SFAS 146 requires companies to recognize
the present value of costs associated with exit or disposal
activities when they are incurred rather than at the date of a
commitment to an exit or disposal plan. Examples of costs
covered by the standard include lease rental and termination
costs and certain employee severance costs that are associated
with a restructuring, discontinued operation, store closing, or
other exit or

8



---



##### 



CSK AUTO CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

disposal activity. SFAS 146 is to be applied
prospectively to exit or disposal activities initiated after
December 31, 2002, with early implementation encouraged.
Although the Company is currently analyzing the impact of this
pronouncement on its financial statements, adoption of the
pronouncement will impact the timing of the Companys
recognition of closed store charges.

Note 5  Interest Rate Swap

During February 2002, the Company entered into an
interest rate swap agreement to convert the interest rate
payment obligation on $100.0 million of its 12% Senior
Notes to a floating rate, set quarterly, equal to the
3 month LIBOR rate plus 760 basis points. At the time
the contract commenced, the Companys fixed rate debt was
approximately 66% of its outstanding debt. The Companys
fixed rate debt, on average, carries higher interest rates than
its variable rate debt. The interest rate swap is intended to
provide a better balance of fixed and variable rate debt
instruments and to hedge the fair value of these notes against
potential movements in market interest rates. For accounting
purposes, the interest rate swap is designated and qualifies as
a fair value hedge of a portion of the Companys fixed rate
debt instruments. As the critical terms of the swap match those
of the underlying hedged debt, the change in fair value of the
swap is perfectly offset by changes in fair value of the debt.

At November 3, 2002, the fair value of the
interest rate swap approximated $5.0 million. This amount
is included in other long-term assets with an identical amount
reflected as a basis adjustment to the 12% Senior Notes on
the accompanying Consolidated Balance Sheet. The differential to
be paid or received under this agreement is accrued consistent
with the terms of the agreement and is recognized in interest
expense over the term of the related debt. The related amounts
payable to or receivable from the counter party are included in
other liabilities or assets. Cash flows related to the interest
rate swap agreement are classified as operating activities in
the Consolidated Statement of Cash Flows. For the thirteen and
thirty-nine weeks ended November 3, 2002, the Company
reduced interest expense by approximately $0.6 million and
$1.7 million respectively, as a result of the interest rate
swap. There were no interest rate swaps in place in the
comparable period last year.

Note 6  Legal
Matters

The Company was served on March 8, 2000 with
a complaint filed in Federal Court in the Eastern District of
New York by the Coalition for a Level Playing Field, O.K. and,
based on the current amended complaint, 255 individual auto
parts dealers. The complaint alleges that the Company and seven
other auto parts dealers (AutoZone, Inc., Wal-Mart Stores, Inc.,
Advance Stores Company, Inc., Discount Auto, Inc., The Pep
Boys  Manny, Moe and Jack, Inc., OReilly
Automotive, Inc., and Keystone Automotive Operations, Inc.)
violated the Robinson-Patman Act. Only 15 of the individual
plaintiffs asserted claims against the Company. The complaint,
as amended, alleges that the Company and other defendants
knowingly either induced or received discriminatory prices from
large suppliers, allegedly in violation of Section 2(a) and
2(f) of the Robinson-Patman Act, as well as received
compensation from large suppliers for services not performed for
those suppliers, allegedly in violation of Section 2(c) of
the Robinson-Patman Act. In May 2002, the Company reached a
settlement with all the plaintiffs that provides for the payment
of nominal consideration by the Company. As the first step in
the settlement, the attorneys for the Company and the plaintiffs
have filed with the Court a Stipulation and Order for the
dismissal with prejudice of all claims by all plaintiffs against
the Company. This Stipulation and Order has been signed by the
Court.

The Company currently and from time to time is
involved in other litigation incidental to the conduct of its
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, the Company accrues reserves using its best
estimate of probable and reasonably estimable contingent
liabilities.

9



---



##### 



CSK AUTO CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Although the amount of liability that may result
from these matters cannot be ascertained, the Company does not
currently believe that any of these legal claims, individually
or in the aggregate, will result in liabilities material to its
consolidated financial position, results of operations or cash
flows.

Note 7  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, the Company analyzes sales trends and geographical and
competitive factors to determine the viability and future
profitability of its store locations. If a store location does
not meet the Companys required projections, it is
identified for closure. As a result of the Companys
acquisitions over the last several years, the Company has closed
numerous locations as a result of store overlap with previously
existing store locations. In these situations, the Company
negotiates with the landlord to cancel the lease or the Company
attempts to sublease the closed store to a third party to reduce
the Companys future exposure.

The Company provides an allowance for estimated
costs to be incurred in connection with store closures. The
allowance for store closing costs primarily consists of three
components: (1) future rents to be paid over the remaining
terms of the lease agreements for the stores (net of estimated
probable sublease recoveries); (2) lease commissions
associated with the anticipated store subleases; and
(3) occupancy expenses associated with the closed store
vacancy periods. Such costs are recognized when a store is
specifically identified, costs can be estimated and closure is
planned to be completed within the next twelve months. No
provision is made for employee termination costs. For stores to
be relocated, such costs are recognized when an agreement for
the new location has been reached with a landlord and site plans
meet preliminary municipal approvals. During the period that
they remain open for business, the rent and other operating
expenses for the stores to be closed continue to be reflected in
normal operating expenses. The actual costs of relocating a
store, such as transporting of inventories, are considered a
normal operating expense and are not included in the store
closing reserve.

As of November 3, 2002, the Company had a
total of 229 store locations included in the allowance for
store closing costs. Of this total, 52 locations were
vacant, 170 locations were subleased and 7 locations
were identified for closure but remained open. In addition to
these store locations, the Company had 59 service centers
of which 3 were vacant and 56 were subleased.

During the first three quarters of fiscal 2002,
the Company recorded gross store closing costs of
$0.6 million relating to 17 stores identified for closure.
Activity in the provision for store closings and the related
store closing costs for the first three quarters of fiscal 2002,
is as follows ($ in thousands):

|                           |                                          |                |       |        |        |  
|-------------------------- | ---------------------------------------- | -------------- | ----- | ------ | ------ | -
|Balance, beginning of year |                                          | $              | 6,771 |       
|Store closing costs, gross |                                          |                | 551   |       
|Payments:                  |                                          |                |       |       
|                           | Rent expense, net of sublease recoveries |                |       | (3,893 | )     
|                           | Occupancy and other expenses             |                |       | (1,397 | )     
|                           | Sublease commissions and buyouts         |                |       | (487   | )     
|                           |                                          |                |       |       
|                           |                                          | Total payments |       |        | (5,777 | )
|                           |                                          |                |       |       
|Balance, end of quarter    |                                          | $              | 1,545 |       
|                           |                                          |                |       |       

10



---



##### 



CSK AUTO CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

On a fiscal year basis, store count activity and
the remaining number of stores to be closed are summarized as
follows:

|                                |  |                               |    |        |  |            |    |        |  |            |    |   |  |  |     |   |  |  |   | 
|------------------------------- |  | ----------------------------- | -- | ------ |  | ---------- | -- | ------ |  | ---------- | -- | - |  |  | --- | - |  |  | - | 
|                                |  |                               |    |       
|                                |  | Number of Stores to be Closed |    |       
|                                |  |                               |    |       
|                                |  | Beginning                     |    | Stores |  | Plan       |    | Stores |  | Balance to
|Fiscal Year                     |  | Balance                       |    | Added  |  | Amendments |    | Closed |  | be Closed 
|                                |  |                               |    |        |  |            |    |        |  |           
|2000                            |  |                               | 28 |        |  |            | 24 |        |  |            | (1 | ) |  |  | (42 | ) |  |  | 9 | 
|2001                            |  |                               | 9  |        |  |            | 46 |        |  |            | (2 | ) |  |  | (46 | ) |  |  | 7 | 
|2002 (through November 3, 2002) |  |                               | 7  |        |  |            | 17 |        |  |            |   |   |  |  | (17 | ) |  |  | 7 | 

At November 3, 2002, there were 7 stores
remaining to be closed under the Companys store closing
plans. The table below details the progress of store closings
under the store closing plans by fiscal year:

|                                |  |              |    |            |  |        |    |            |  |  |     |   |  |  |   | 
|------------------------------- |  | ------------ | -- | ---------- |  | ------ | -- | ---------- |  |  | --- | - |  |  | - | 
|                                |  | Stores in    |    | Plan       |  | Stores |    | Balance to
|Fiscal Year of Closing Plan     |  | Closing Plan |    | Amendments |  | Closed |    | Be Closed 
|                                |  |              |    |            |  |        |    |           
|1999                            |  |              | 87 |            |  |        | (2 | )          |  |  | (84 | ) |  |  | 1 | 
|2000                            |  |              | 24 |            |  |        |   |            |  |  | (24 | ) |  |  |  | 
|2001                            |  |              | 46 |            |  |        | (2 | )          |  |  | (44 | ) |  |  |  | 
|2002 (through November 3, 2002) |  |              | 17 |            |  |        |   |            |  |  | (11 | ) |  |  | 6 | 
|                                |  |              |    |            |  |        |    |            |  |  |     |   |  |  |   | 
|                                |  |              |    |            |  |        |    |            |  |  |     |   |  |  | 7 | 
|                                |  |              |    |            |  |        |    |            |  |  |     |   |  |  |   | 

The remaining store from the 1999 closing plan
was closed during the fourth quarter of fiscal 2002.

Note 8  Sale of
Stores

During the second quarter of fiscal 2002, the
Company sold 13 stores in Texas. The stores were sold because
they were geographically remote from the Companys other
operations. This transaction resulted in net cash proceeds of
approximately $4.2 million and a loss on sale of
approximately $0.8 million.

Note 9  Officer Loan

In May 2002, the Company extended a personal loan
to Mr. Martin Fraser, the Companys Chief Operating
Officer, in the principal amount of $125,000, pursuant to
Mr. Frasers execution of a Promissory Note and Stock
Pledge Agreement. The Promissory Note provided for quarterly
payment of interest on the outstanding principal amount of the
loan equal to the average interest rate paid by CSK Auto, Inc.
under the revolving portion of its senior credit facility during
such period.

On September 30, 2002, Mr. Fraser
surrendered 11,000 shares of CSK Auto Corporation common stock
to the Company in full payment and satisfaction of the
above-referenced loan (including accrued and unpaid interest
thereon) and the then outstanding balance of a separate loan in
the principal amount of $9,731 (plus the accrued and unpaid
interest thereon) which had been extended to Mr. Fraser in
February 2000 pursuant to the Companys Senior Executive
Stock Loan Plan. The total number of shares surrendered by
Mr. Fraser in exchange for extinguishment of these two
loans was determined by dividing the total amount due of
$137,280.00 by $12.48, which was the closing price of the
Companys stock on September 30, 2002. Mr. Fraser
currently has no outstanding loans with the Company.

Note 10  Subsequent
Event

On November 20, 2002, entities affiliated
with the Carmel Group, a former stockholder group of the
Company, sold their remaining approximately 3.0 million
shares of CSK Auto Corporation common stock, in an underwritten
offering through Merrill Lynch & Co. The offering was made
pursuant to the shelf registration

11



---



##### 



CSK AUTO CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

statement filed by the Company with the
Securities and Exchange Commission on October 24, 2002. The
Company did not receive any proceeds from the sale of this
common stock. The Company expects to incur approximately
$0.2 million of accounting, legal and miscellaneous
expenses associated with this offering.

Upon the sale by the Carmel Group entities of all
of their shares, a stockholders agreement originally
executed in 1996 and subsequently amended, terminated, except
with respect to certain registration rights. As a result of the
sale of these shares, Jules Trump, Eddie Trump and Robert Smith,
who were nominated to serve on the Companys board of
directors by the Carmel Group pursuant to the terms of the
Companys stockholder agreement, have resigned as directors
of the Company.

Item 2.     Managements
Discussion and Analysis of Financial Condition and Results of
Operations

Overview

Our business is somewhat seasonal in nature, with
the highest sales occurring in the months of June through
October (overlapping our second and third fiscal quarters). Our
business is, in addition, affected by weather conditions. While
unusually severe or inclement weather tends to reduce sales, as
our customers tend to defer elective maintenance during those
periods, extremely hot and cold temperatures tend to enhance
sales by causing auto parts to fail and sales of seasonal
products to increase.

Results of Operations

The following table expresses the statements of
operations as a percentage of sales for the periods shown:

|                                            |  |                      |       |                         |  |             |       |             |  |  |       |   |  |  |       |   
|------------------------------------------- |  | -------------------- | ----- | ----------------------- |  | ----------- | ----- | ----------- |  |  | ----- | - |  |  | ----- | --
|                                            |  |                      |       |                        
|                                            |  | Thirteen Weeks Ended |       | Thirty-nine Weeks Ended
|                                            |  |                      |       |                        
|                                            |  | November 3,          |       | November 4,             |  | November 3, |       | November 4,
|                                            |  | 2002                 |       | 2001                    |  | 2002        |       | 2001       
|                                            |  |                      |       |                         |  |             |       |            
|Net sales                                   |  |                      | 100.0 | %                       |  |             | 100.0 | %           |  |  | 100.0 | % |  |  | 100.0 | % 
|Cost of sales                               |  |                      | 52.8  |                         |  |             | 53.3  |             |  |  | 54.4  |   |  |  | 55.9  |   
|                                            |  |                      |       |                         |  |             |       |             |  |  |       |   |  |  |       |   
|Gross profit                                |  |                      | 47.2  |                         |  |             | 46.7  |             |  |  | 45.6  |   |  |  | 44.1  |   
|Operating and administrative                |  |                      | 39.0  |                         |  |             | 39.9  |             |  |  | 38.3  |   |  |  | 39.6  |   
|Store closing and other restructuring costs |  |                      |      |                         |  |             |      |             |  |  |      |   |  |  | 2.2   |   
|Legal settlement                            |  |                      |      |                         |  |             |      |             |  |  |      |   |  |  | 0.2   |   
|Loss on sale of stores                      |  |                      |      |                         |  |             |      |             |  |  | 0.1   |   |  |  |      |   
|Secondary stock offering costs              |  |                      |      |                         |  |             |      |             |  |  |      |   |  |  |      |   
|Goodwill amortization                       |  |                      |      |                         |  |             | 0.3   |             |  |  |      |   |  |  | 0.3   |   
|                                            |  |                      |       |                         |  |             |       |             |  |  |       |   |  |  |       |   
|Operating profit                            |  |                      | 8.2   |                         |  |             | 6.5   |             |  |  | 7.2   |   |  |  | 1.8   |   
|Interest expense                            |  |                      | 3.7   |                         |  |             | 3.9   |             |  |  | 4.2   |   |  |  | 4.1   |   
|                                            |  |                      |       |                         |  |             |       |             |  |  |       |   |  |  |       |   
|Income (loss) before income taxes           |  |                      | 4.5   |                         |  |             | 2.6   |             |  |  | 3.0   |   |  |  | (2.3  | ) 
|Income tax expense (benefit)                |  |                      | 1.7   |                         |  |             | 1.0   |             |  |  | 1.1   |   |  |  | (0.9  | ) 
|                                            |  |                      |       |                         |  |             |       |             |  |  |       |   |  |  |       |   
|Income (loss) before extraordinary loss     |  |                      | 2.8   |                         |  |             | 1.6   |             |  |  | 1.9   |   |  |  | (1.4  | ) 
|Extraordinary loss, net of income tax       |  |                      |      |                         |  |             |      |             |  |  | (0.3  | ) |  |  |      |   
|                                            |  |                      |       |                         |  |             |       |             |  |  |       |   |  |  |       |   
|Net income (loss)                           |  |                      | 2.8   | %                       |  |             | 1.6   | %           |  |  | 1.6   | % |  |  | (1.4  | )%
|                                            |  |                      |       |                         |  |             |       |             |  |  |       |   |  |  |       |   

12



---



##### 



CSK AUTO CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Thirteen
Weeks Ended November 3, 2002 Compared to Thirteen Weeks
Ended November 4, 2001

Net sales for the thirteen weeks ended
November 3, 2002 (the third quarter of fiscal
2002) increased 4.5% to $383.0 million compared to
net sales of $366.7 million in the thirteen weeks ended
November 4, 2001 (the third quarter of fiscal
2001). Same store sales increased by 7%. During the third
quarter of fiscal 2002, we opened 3 stores, relocated
2 stores and closed 6 stores in addition to the stores
closed due to relocation. At November 3, 2002, we had
1,111 stores in operation, compared to 1,133 at the end of
the third quarter of fiscal 2001.

Gross profit was $180.8 million, or 47.2% of
net sales, in the third quarter of fiscal 2002 as compared to
$171.1 million, or 46.7% of net sales in the third quarter
of fiscal 2001. Sequentially, when compared to the second
quarter of fiscal 2002, gross profit margin increased by
150 basis points in the third quarter of fiscal 2002 due to
our improved inventory in-stock position and greater realization
of cash discounts and vendor allowances as a result of our
increased liquidity. In addition, we recently revised our method
for allocating vendor allowances in connection with certain
advertising programs to better match the amounts of the
allowance with the actual advertising costs incurred. As a
result, approximately $2.5 million of allowances, or .65%
of net sales, are reflected in gross profit in the third quarter
of fiscal 2002 that would have served to reduce advertising
expense under the prior method.

Operating profit for the third quarter of fiscal
2002 totaled $31.4 million, or 8.2% of net sales, compared to
$23.7 million, or 6.5% of net sales, for the third quarter
of fiscal 2001. In the third quarter of fiscal 2002, operating
and administrative expenses as a percent of sales decreased to
39.0% from 39.9% in the third quarter of fiscal 2001. Operating
profit in the third quarter of fiscal 2001 was reduced by
approximately $1.2 million due to goodwill amortization.
Due to the adoption of SFAS 142, goodwill is not being
amortized during the current fiscal year.

Interest expense was $14.2 million for the
third quarter of fiscal 2002 compared to $14.3 million in
the third quarter of fiscal 2001. The benefit of lower
outstanding loan balances in the current quarter was offset by
slightly higher average interest rates on our new fixed rate
debt compared to the third quarter last year.

Income tax expense for the thirteen weeks ended
November 3, 2002 was $6.5 million (an effective rate of
37.7%) as compared to $3.4 million (an effective rate of
36.5%) in the prior year. The increase in the effective rate is
due to the impact of certain permanent tax differences.

Net income for the third quarter of fiscal 2002
was $10.7 million, or $0.24 per diluted common share, on a
weighted average share base of 45.3 million shares, compared to
net income of $5.9 million, or $0.19 per diluted common
share, on a weighted average share base of 31.9 million
shares in the third quarter of fiscal 2001. The substantial
increase in the weighted average number of fully diluted
outstanding common shares is primarily the result of our recent
offering in July 2002 of approximately 6.9 million shares
and the conversion in May 2002 of $50.0 million of
Convertible Subordinated Debentures into approximately
5.8 million shares of common stock.

Thirty-nine Weeks Ended November 3,
2002 Compared to Thirty-nine Weeks Ended November 4,
2001

Net sales for the thirty-nine weeks ended
November 3, 2002 increased 4.7 % to $1,156.9 million
from sales of $1,104.6 million in the comparable
thirty-nine weeks ended November 4, 2001. Same store sales
increased 7% for the thirty-nine weeks ended November 3,
2002.

Gross profit was $528.0 million, or 45.6% of
net sales, for the thirty-nine weeks ended November 3, 2002
as compared to $486.8 million or 44.1% of net sales in the
comparable thirty-nine weeks of fiscal 2001. Gross profit in the
fiscal 2001 period was reduced by $23.1 million of charges,
which were incurred in connection with our Profitability
Enhancement Program (PEP).

13



---



##### 



CSK AUTO CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Operating profit for the thirty-nine weeks of
2002 totaled $82.7 million, or 7.2 % of net sales, compared
to $19.9 million, or 1.8% of net sales for the thirty-nine
weeks of 2001. The operating profit increase is primarily the
result of cost reductions associated with the PEP and the
leveraging of fixed costs over rising net sales. In addition to
the effect on gross profit mentioned above, the fiscal 2001
operating profit was affected by: (1) $21.5 million of
costs and charges incurred largely in connection with the PEP;
(2) $2.0 million of charges for certain legal settlements;
(3) $1.2 million for a loss on the disposition of certain
fixed assets; (4) $0.2 million of transition and
integration expenses; and (5) $1.7 million of expense due
to longer vacancy periods at stores closed as a result of
acquisitions. Also, operating profit in fiscal 2001 was affected
by the amortization of approximately $3.6 million of
goodwill. Due to the adoption of SFAS 142, goodwill is not being
amortized during the current fiscal year. Operating profit for
the thirty-nine weeks ended November 3, 2002 was affected
by: (1) a loss of $0.8 million on the sale of 13
stores in west Texas; and (2) $0.3 million of expenses that
were incurred in connection with our common stock offering in
July 2002.

Interest expense for the thirty-nine weeks of
fiscal 2002 increased to $48.2 million from
$45.7 million in the same period last year, due to
increased amortization of costs associated with our December
2001 refinancing, slightly higher outstanding average
indebtedness and slightly higher interest rates.

Income tax expense for the thirty-nine weeks of
fiscal 2002 was $12.7 million as compared to a benefit of
$10.2 million in the prior year. The effective tax rate in
2002 (36.8%) is lower than the effective benefit in the prior
year (39.4%) due to certain state tax credits available during
the fiscal 2002 period.

Net income for the thirty-nine weeks of fiscal
2002 increased to $18.2 million or $0.46 per diluted common
share, from a loss of $15.7 million, or $0.56 per diluted
common share, in the thirty-nine weeks of fiscal 2001. Net
income for the thirty-nine weeks of fiscal 2002 was affected by
an extraordinary loss of $3.7 million (net of
$2.3 million of income tax benefit) for costs associated
with the early extinguishment of approximately $71.7 million of
our 11% Senior Subordinated Notes due 2006.

Liquidity and Capital Resources

Overview of Liquidity

During fiscal 2001, we completed a refinancing
(the Refinancing) of our capital structure that
resulted in the elimination of scheduled bank debt amortization
payments prior to the end of 2004, the extension of debt
maturities and enhanced liquidity. The Refinancing consisted of
the following: (1) the issuance of a $30.0 million, 7%
convertible subordinated note, which was converted during fiscal
2001 into approximately 4.5 million shares of CSK Auto
Corporation common stock at a conversion price of $6.63 per
share; (2) a new three-year $300.0 million senior
secured, asset-based credit agreement due in December 2004
comprised of a $170.0 million non-amortizing term loan and
a $130.0 million revolving credit facility; (3) the
issuance of $280.0 million of 12% Senior Notes due 2006;
and (4) the issuance of $50.0 million of 7%
Convertible Subordinated Debentures due December 2006 and
related make-whole warrants at a conversion price of $8.69 per
share.

On May 20, 2002, the $50 million
Convertible Subordinated Debentures were converted at our
election into approximately 5.75 million shares of our
common stock at the contractual conversion price of $8.69 per
share. In addition, we elected to pay interest on the debentures
in additional shares of our common stock in lieu of cash. Of the
additional interest shares issued, 105,708 were issued during
the first quarter of fiscal 2002 and 30,872 were issued during
the second quarter of fiscal 2002.

On July 2, 2002, we sold
6,878,300 shares of common stock in an underwritten public
offering at $12 per share. In addition, a selling stockholder
sold 2,600,000 shares in the offering. We received no proceeds
from the shares sold by the selling stockholder. Issuance costs
related to the stock offering approximated $0.7 million.
These costs included approximately $0.4 million of legal,
accounting and printing fees charged to

14



---



##### 



CSK AUTO CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

additional paid in capital for the primary
offering and approximately $0.3 million of costs charged to
operating expense for the secondary offering.

Proceeds from this offering were used to retire
approximately $71.7 million of our outstanding 11% Senior
Subordinated Notes due 2006. The early extinguishment of this
debt resulted in an extraordinary loss of approximately
$3.7 million, net of approximately $2.3 million of
income tax benefit, primarily as a result of the payment of an
early redemption premium and the write off of deferred debt
issuance costs. Redemption of these 11% Senior Subordinated
Notes will reduce the cash needed to fund interest expense by
approximately $1.9 million for the balance of fiscal 2002.
The sources and uses of funds of this transaction are as follows
($ in thousands):

|                                                                        |                    |   |         |         |  
|----------------------------------------------------------------------- | ------------------ | - | ------- | ------- | -
|Proceeds:                                                               |                    |   |         |        
|Gross proceeds at $12 per share                                         |                    | $ | 82,540  |        
|Underwriting discount                                                   |                    |   | (3,921  | )      
|                                                                        |                    |   |         |        
|                                                                        | Net proceeds       |   | $       | 78,619  |  
|                                                                        |                    |   |         |        
|Uses:                                                                   |                    |   |         |        
|Partial retirement of 11% Senior Subordinated
    Notes                 |                    | $ | (71,703 | )      
|Redemption premium on retired notes 
    charged to extraordinary loss |                    |   | (3,943  | )      
|Accrued interest on retired notes                                       |                    |   | (1,972  | )      
|Issuance costs                                                          |                    |   | (741    | )      
|General corporate purposes                                              |                    |   | (260    | )      
|                                                                        |                    |   |         |        
|                                                                        | Total use of funds |   | $       | (78,619 | )
|                                                                        |                    |   |         |        

Our primary cash requirements include working
capital (primarily inventory), interest on our debt and capital
expenditures. Due to the Refinancing, we will not be required to
make any debt amortization payments prior to December 2004 other
than capital lease payments. We intend to finance our cash
requirements with cash flow from operations and borrowings under
our credit agreement. The following table outlines our working
capital and liquidity ($ in thousands):

|                                            |  |             |         |             |  |   |         | 
|------------------------------------------- |  | ----------- | ------- | ----------- |  | - | ------- | 
|                                            |  | November 3, |         | February 3,
|                                            |  | 2002        |         | 2002       
|                                            |  |             |         |            
|Net current assets                          |  | $           | 527,963 |             |  | $ | 498,914 | 
|                                            |  |             |         |             |  |   |         | 
|Cash                                        |  | $           | 15,170  |             |  | $ | 16,084  | 
|Availability under revolving line of credit |  |             | 59,081  |             |  |   | 35,885  | 
|                                            |  |             |         |             |  |   |         | 
|Total liquidity                             |  | $           | 74,251  |             |  | $ | 51,969  | 
|                                            |  |             |         |             |  |   |         | 

As of November 3, 2002, we had net working
capital of approximately $528.0 million, an increase of
$29.0 million, or 5.8%, compared to February 3, 2002.
Working capital increased primarily due to: (1) a
$39.8 million increase in inventories consistent with our
return to a more normal inventory in-stock position, the
acquisition of new product types in support of new merchandise
programs and the purchase of approximately $7.0 million of
inventory in excess of our normal requirements in anticipation
of further labor unrest in West Coast seaports; and (2) an
$18.2 million increase in receivables primarily as a result
of the start of new vendor rebate and cooperative advertising
programs in the third quarter of fiscal 2002 and the extension
of the collection period for certain of the expiring vendor
rebate programs. Working capital decreased primarily due to:
(1) a $17.8 million increase in accounts payable
relating to the increased inventory purchases and extended
payment terms; and (2) changes in tax liabilities and tax
accruals consistent with our improved profitability.

15



---



##### 



CSK AUTO CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

As of November 3, 2002, we had total
liquidity (cash plus availability under our existing revolving
credit facility) of approximately $74.3 million.
Availability under our revolving credit facility is controlled
by borrowing base limitations applicable to that facility. The
borrowing base formula is equal to the lesser of
$300.0 million and the sum of certain percentages of our
eligible inventory and accounts receivable. As a result of the
limitations imposed by the borrowing base formula, at
November 3, 2002, we could only borrow up to
$281.7 million of the total $300.0 million facility.
Accordingly, we have $18.3 million of additional borrowing
capacity that has not been included in our liquidity
calculation, but that may become available in the future,
subject to the borrowing base calculation.

Debt is an important part of our overall
capitalization. While we are still highly leveraged, our total
outstanding debt balances have decreased as a result of our
conversion of $50.0 million in outstanding Convertible
Subordinated Debentures to common stock, our recent stock
offering and the subsequent retirement of approximately
$71.7 million of outstanding 11% Senior Subordinated Notes
due 2006. Our debt to equity ratio continues to improve. The
table below details our debt to equity ratio ($ in
thousands):

|                                          |  |             |         |             |  |   |         | 
|----------------------------------------- |  | ----------- | ------- | ----------- |  | - | ------- | 
|                                          |  | November 3, |         | February 3,
|                                          |  | 2002        |         | 2002       
|                                          |  |             |         |            
|Debt, including capital lease obligations |  | $           | 533,588 |             |  | $ | 670,843 | 
|Equity                                    |  | $           | 298,505 |             |  | $ | 154,286 | 
|                                          |  |             |         |             |  |   |         | 
|Debt to equity ratio                      |  |             | 1.8     |             |  |   | 4.3     | 
|                                          |  |             |         |             |  |   |         | 

Analysis of Cash Flows

During the thirty-nine weeks of fiscal 2002, net
cash provided by operating activities was $20.9 million
compared to $17.5 million of cash provided by operating
activities during the thirty-nine weeks of fiscal 2001. Net
income for the current fiscal period increased to
$18.2 million from a loss of $15.7 million in the
prior fiscal period. Other items contributing to the increase
were: (1) a slower growth in the receivables balance
($4.4 million) due mainly to more timely collection of
commercial receivables; and (2) $2.3 million more in
non-cash expenses and adjustments during the fiscal 2002 period.
The largest components of decreases in cash flow from operations
relate to: (1) a $19.6 million increase in inventory,
net of the effect on accounts payable due to the reasons cited
above; (2) a $13.2 million change in other operating
assets and liabilities, which was comprised of a number of small
changes; and (3) a $4.4 million premium payment that
we were required to pay as part of our retirement of
$71.7 million of Autos outstanding 11% Senior
Subordinated Notes due 2006.

Net cash used in investing activities totaled
$2.0 million for the thirty-nine weeks of fiscal 2002,
compared to $7.8 million used in investing activities
during the comparable 2001 period. The decrease in cash used in
investing activities during fiscal 2002 was the result of (1)
$4.2 million in proceeds from the sale of 13 stores in west
Texas in the thirty-nine weeks of fiscal 2002 (no such sale
occurred in the comparable 2001 period); and
(2) $4.5 million less in capital expenditures in the
thirty-nine weeks of fiscal 2002 than in the comparable 2001
period. These sources of cash were offset in part by
$3.1 million less in proceeds from assets held for sale in
the 2002 fiscal period.

Net cash used in financing activities totaled
$19.8 million for fiscal 2002 compared to $5.1 million
in fiscal 2001. In the prior fiscal year, we received
$30.0 million of cash from the issuance of Convertible
Subordinated Debentures. No debentures were issued during the
2002 fiscal period. Our July 2002 stock offering provided
$6.4 million of cash which reflected proceeds of $82.5
million, net of underwriters discount and offering costs of
$4.4 million, and $71.7 for the partial retirement of the
11% Senior Subordinated Notes. Also, the net payments made on
our revolving credit facility during fiscal 2002 were
$7.0 million less than in the prior fiscal year.

16



---



##### 



CSK AUTO CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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 projections, it is identified for closure.
As a result of our acquisitions over the last several years, we
have closed numerous locations due to store overlap with
previously existing store locations. In these situations, we
negotiate with the landlord to cancel the lease or we attempt to
sublease the store to a third party to reduce our future
exposure.

We provide an allowance for estimated costs to be
incurred in connection with store closures. The allowance for
store closing costs primarily consists of three components:
(1) future rents to be paid over the remaining terms of the
lease agreements for the stores (net of estimated probable
sublease recoveries); (2) lease commissions associated with
the anticipated store subleases; and (3) occupancy expenses
associated with the closed store vacancy periods. Such costs are
recognized when a store is specifically identified, costs can be
estimated and closure is planned to be completed within the next
twelve months. No provision is made for employee termination
costs. For stores to be relocated, such costs are recognized
when an agreement for the new location has been reached with a
landlord and site plans meet preliminary municipal approvals.
During the period that they remain open for business, the rent
and other operating expenses for the stores to be closed
continue to be reflected in our normal operating expenses. The
actual costs of relocating a store, such as transporting of
inventories, are considered a normal operating expense and are
not included in the store closing reserve.

As of November 3, 2002, we had a total of
229 store locations included in the allowance for store closing
costs. Of this total, 52 locations were vacant,
170 locations were subleased and 7 locations were
identified for closure but remained open. In addition to these
store locations, we had 59 service centers of which 3 were
vacant and 56 were subleased. During the fourth quarter of
fiscal 2002, we are undertaking a thorough review of the closed
store vacancy periods and will adjust the reserve, if required,
consistent with our policy.

During the thirty-nine weeks of fiscal 2002, we
recorded gross store closing costs of $0.6 million relating
to 17 stores identified for closure. Activity in the
provision for store closings and the related store closing costs
for the thirty-nine weeks of fiscal 2002, is as follows
($ in thousands):

|                           |                                          |                |       |        |        |  
|-------------------------- | ---------------------------------------- | -------------- | ----- | ------ | ------ | -
|Balance, beginning of year |                                          | $              | 6,771 |       
|Store closing costs, gross |                                          |                | 551   |       
|Payments:                  |                                          |                |       |       
|                           | Rent expense, net of sublease recoveries |                |       | (3,893 | )     
|                           | Occupancy and other expenses             |                |       | (1,397 | )     
|                           | Sublease commissions and buyouts         |                |       | (487   | )     
|                           |                                          |                |       |       
|                           |                                          | Total payments |       |        | (5,777 | )
|                           |                                          |                |       |       
|Balance, end of quarter    |                                          | $              | 1,545 |       
|                           |                                          |                |       |       

On a fiscal year basis, store count activity and
the remaining number of stores to be closed are summarized as
follows:

|                                |  |                               |    |        |  |            |    |        |  |            |    |   |  |  |     |   |  |  |   | 
|------------------------------- |  | ----------------------------- | -- | ------ |  | ---------- | -- | ------ |  | ---------- | -- | - |  |  | --- | - |  |  | - | 
|                                |  |                               |    |       
|                                |  | Number of Stores to be Closed |    |       
|                                |  |                               |    |       
|                                |  | Beginning                     |    | Stores |  | Plan       |    | Stores |  | Balance to
|Fiscal Year                     |  | Balance                       |    | Added  |  | Amendments |    | Closed |  | be Closed 
|                                |  |                               |    |        |  |            |    |        |  |           
|2000                            |  |                               | 28 |        |  |            | 24 |        |  |            | (1 | ) |  |  | (42 | ) |  |  | 9 | 
|2001                            |  |                               | 9  |        |  |            | 46 |        |  |            | (2 | ) |  |  | (46 | ) |  |  | 7 | 
|2002 (through November 3, 2002) |  |                               | 7  |        |  |            | 17 |        |  |            |   |   |  |  | (17 | ) |  |  | 7 | 

17



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##### 



CSK AUTO CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

At November 3, 2002, there were
7 stores remaining to be closed under our store closing
plans. The table below details the progress of store closings
under the store closing plans by fiscal year:

|                                |  |              |    |            |  |        |    |            |  |  |     |   |  |  |   | 
|------------------------------- |  | ------------ | -- | ---------- |  | ------ | -- | ---------- |  |  | --- | - |  |  | - | 
|                                |  | Stores in    |    | Plan       |  | Stores |    | Balance to
|Fiscal Year of Closing Plan     |  | Closing Plan |    | Amendments |  | Closed |    | Be Closed 
|                                |  |              |    |            |  |        |    |           
|1999                            |  |              | 87 |            |  |        | (2 | )          |  |  | (84 | ) |  |  | 1 | 
|2000                            |  |              | 24 |            |  |        |   |            |  |  | (24 | ) |  |  |  | 
|2001                            |  |              | 46 |            |  |        | (2 | )          |  |  | (44 | ) |  |  |  | 
|2002 (through November 3, 2002) |  |              | 17 |            |  |        |   |            |  |  | (11 | ) |  |  | 6 | 
|                                |  |              |    |            |  |        |    |            |  |  |     |   |  |  |   | 
|                                |  |              |    |            |  |        |    |            |  |  |     |   |  |  | 7 | 
|                                |  |              |    |            |  |        |    |            |  |  |     |   |  |  |   | 

The remaining store from the 1999 closing plan
was closed during the fourth quarter of fiscal 2002.

Sale of Stores

During the second quarter of fiscal 2002, we sold
13 stores in Texas. The stores were sold because they were
geographically remote from our other operations. This
transaction resulted in net cash proceeds of approximately
$4.2 million and a loss on sale of approximately
$0.8 million.

Risk Factors Affecting Liquidity and Capital
Resources



| |             
| | ------------
| | Sales Trends

Our business is somewhat seasonal in nature, with
the highest sales occurring in the months of June through
October (overlapping our second and third fiscal quarters). In
addition, our business is affected by weather conditions. While
unusually severe or inclement weather 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 products to increase.

As a result of our Refinancing during fiscal
2001, we were able to improve relationships with our vendors and
eliminate many out-of-stock conditions that we believe had
resulted in dissatisfaction amongst our customers and decreased
sales in late fiscal 2001. Since the completion of our
Refinancing, our same-store sales increases have been in the
mid-single digits. In addition, our same store retail customer
counts have become positive. This improved sales performance
reflects our improved inventory position and the generally
favorable dynamics in the U.S. automotive aftermarket sector.

Considering our improved financial position, we
expect net sales for the remainder of fiscal 2002 to increase
within a mid-single digit range on a same-store basis. However,
any unusual weather conditions, competitive pressures, or other
adverse changes to our business or the economy in general could
materially affect our financial position and results of
operations.

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 Covenant
Compliance

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

18



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##### 



CSK AUTO CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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
November 3, 2002 our Consolidated Leverage Ratio was 3.79
to 1.00 and our Interest Coverage Ratio was 2.51 to 1.00, both
of which were in compliance with the related covenants. The
following table shows the ratios that we need to meet through
the life of our credit agreement.

|            |  |                |        |             |  |             |              |  |  |  |              | 
|----------- |  | -------------- | ------ | ----------- |  | ----------- | ------------ |  |  |  | ------------ | 
|            |  |                |        |             |  | Interest   
|            |  |                |        | Leverage    |  | Coverage   
|            |  |                |        | Ratio       |  | Ratio      
|            |  |                |        | (must be at |  | (must be at
|Fiscal Year |  | Fiscal Quarter |        | or below)   |  | or above)  
|            |  |                |        |             |  |            
|2002        |  |                | Fourth |             |  |             | 4.25 to 1.00 |  |  |  | 2.00 to 1.00 | 
|2003        |  |                | First  |             |  |             | 4.25 to 1.00 |  |  |  | 2.00 to 1.00 | 
|2003        |  |                | Second |             |  |             | 3.75 to 1.00 |  |  |  | 2.25 to 1.00 | 
|2003        |  |                | Third  |             |  |             | 3.75 to 1.00 |  |  |  | 2.25 to 1.00 | 
|2003        |  |                | Fourth |             |  |             | 3.75 to 1.00 |  |  |  | 2.25 to 1.00 | 
|2004        |  |                | First  |             |  |             | 3.75 to 1.00 |  |  |  | 2.25 to 1.00 | 
|2004        |  |                | Second |             |  |             | 3.50 to 1.00 |  |  |  | 2.50 to 1.00 | 
|2004        |  |                | Third  |             |  |             | 3.50 to 1.00 |  |  |  | 2.50 to 1.00 | 
|2004        |  |                | Fourth |             |  |             | 3.50 to 1.00 |  |  |  | 2.50 to 1.00 | 

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 our 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 secured by substantially all of our
assets.

We are 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, is sensitive to changes in interest rates.
Our variable rate debt relates to borrowings under our senior
credit agreement, which is primarily affected by movements in
the LIBOR rate. During February 2002, we entered into an
interest rate swap agreement which converted the interest
payment obligation on $100.0 million of our 12% Senior
Notes to a floating rate, set quarterly, equal to the
3 month LIBOR rate plus 760 basis points.

19



---



##### 



CSK AUTO CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

At November 3, 2002, including the
$100.0 million of Senior Notes that are part of the
interest rate swap agreement, 58% of our outstanding debt was at
variable interest rates and 42% of our outstanding debt was at
fixed interest rates. With $309.0 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 $3.1 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.

Currently our debt instruments are rated by the
major debt rating agencies. A downgrade of our ratings would
make it more difficult and more costly for us to obtain
additional financing.

Critical Accounting Matters

For a discussion of our critical accounting
matters, please refer to our Annual Report on Form 10K/ A
filed with the Securities and Exchange Commission on
May 10, 2002.

Recent Accounting Pronouncements

In June 2001, the Financial Accounting Standards
Board (FASB) issued Statement of Financial Accounting
Standards No. 141 (SFAS 141), Business
Combinations, and No. 142 (SFAS 142), Goodwill
and Other Intangible Assets. The provisions of SFAS 141
require that the purchase method of accounting be used for all
business combinations initiated after June 30, 2001 and
provide guidance on the accounting for intangible assets and
negative goodwill. We adopted the provisions of SFAS 141 on
February 4, 2002. The adoption of SFAS 141 had no effect on
our current financial statements.

SFAS 142 is effective for fiscal years beginning
after December 15, 2001 and primarily addresses the
accounting for goodwill and intangible assets subsequent to
their initial recognition. SFAS 142 requires an initial goodwill
impairment assessment in the year of adoption and annual
impairment tests thereafter. We completed the transitional
impairment test during the second quarter of 2002 and determined
that there was no impairment of existing goodwill. The remaining
balance of goodwill is $127.1 million. In accordance with
SFAS No. 142, we ceased amortization of our remaining
goodwill upon adoption on February 4, 2002.

SFAS 142 requires the presentation of net income
and related earnings per share data adjusted for the effect of
goodwill amortization. The following table provides pro forma
net income and earnings per share data for the thirteen and
thirty-nine weeks ended November 3, 2002 and
November 4, 2001, to illustrate the impact of goodwill
amortization on the results of the prior year period ($ in
thousands except per share amounts):

|                                       |                                        |                      |        |                         |  |             |       |             |  |   |        |      |  |   |         |       |  
|-------------------------------------- | -------------------------------------- | -------------------- | ------ | ----------------------- |  | ----------- | ----- | ----------- |  | - | ------ | ---- |  | - | ------- | ----- | -
|                                       |                                        |                      |        |                        
|                                       |                                        | Thirteen Weeks Ended |        | Thirty-nine Weeks Ended
|                                       |                                        |                      |        |                        
|                                       |                                        | November 3,          |        | November 4,             |  | November 3, |       | November 4,
|                                       |                                        | 2002                 |        | 2001                    |  | 2002        |       | 2001       
|                                       |                                        |                      |        |                         |  |             |       |            
|Reported net income (loss)             |                                        | $                    | 10,686 |                         |  | $           | 5,934 |             |  | $ | 18,153 |      |  | $ | (15,650 | )    
|Add: goodwill amortization, net of tax |                                        |                      |       |                         |  |             | 756   |             |  |   |       |      |  |   | 2,186   |      
|                                       |                                        |                      |        |                         |  |             |       |             |  |   |        |      |  |   |         |      
|Pro forma net income (loss)            |                                        | $                    | 10,686 |                         |  | $           | 6,690 |             |  | $ | 18,153 |      |  | $ | (13,464 | )    
|                                       |                                        |                      |        |                         |  |             |       |             |  |   |        |      |  |   |         |      
|Basic earnings per share:              |                                        |                      |        |                         |  |             |       |             |  |   |        |      |  |   |         |      
|                                       | Earnings (loss) per share, as reported |                      | $      | 0.24                    |  |             | $     | 0.21        |  |   | $      | 0.46 |  |   | $       | (0.56 | )
|                                       | Goodwill amortization, net of tax      |                      |        |                        |  |             |       | 0.03        |  |   |        |     |  |   |         | 0.08  |  
|                                       |                                        |                      |        |                         |  |             |       |             |  |   |        |      |  |   |         |      
|                                       | Pro forma earnings (loss) per share    |                      | $      | 0.24                    |  |             | $     | 0.24        |  |   | $      | 0.46 |  |   | $       | (0.48 | )
|                                       |                                        |                      |        |                         |  |             |       |             |  |   |        |      |  |   |         |      

20



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##### 



CSK AUTO CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

|                            |                                        |                      |   |                         |  |             |   |             |  |  |   |      |  |  |   |       |  
|--------------------------- | -------------------------------------- | -------------------- | - | ----------------------- |  | ----------- | - | ----------- |  |  | - | ---- |  |  | - | ----- | -
|                            |                                        |                      |   |                        
|                            |                                        | Thirteen Weeks Ended |   | Thirty-nine Weeks Ended
|                            |                                        |                      |   |                        
|                            |                                        | November 3,          |   | November 4,             |  | November 3, |   | November 4,
|                            |                                        | 2002                 |   | 2001                    |  | 2002        |   | 2001       
|                            |                                        |                      |   |                         |  |             |   |            
|Diluted earnings per share: |                                        |                      |   |                         |  |             |   |             |  |  |   |      |  |  |   |      
|                            | Earnings (loss) per share, as reported |                      | $ | 0.24                    |  |             | $ | 0.19        |  |  | $ | 0.46 |  |  | $ | (0.56 | )
|                            | Goodwill amortization, net of tax      |                      |   |                        |  |             |   | 0.02        |  |  |   |     |  |  |   | 0.08  |  
|                            |                                        |                      |   |                         |  |             |   |             |  |  |   |      |  |  |   |      
|                            | Pro forma earnings (loss) per share    |                      | $ | 0.24                    |  |             | $ | 0.21        |  |  | $ | 0.46 |  |  | $ | (0.48 | )
|                            |                                        |                      |   |                         |  |             |   |             |  |  |   |      |  |  |   |      

In June 2001, the FASB issued SFAS 143,
Accounting for Asset Retirement Obligations.
SFAS 143 addresses financial accounting and reporting for
obligations associated with the retirement of tangible
long-lived assets and the associated asset retirement costs.
This statement applies to all entities that have legal
obligations associated with the retirement of long-lived assets
that result from the acquisition, construction, development or
normal use of the asset. SFAS 143 is effective for fiscal
years beginning after June 15, 2002. We do not expect the
adoption of SFAS 143 to have a significant impact on our
financial statements.

In October 2001, the FASB issued SFAS 144,
Accounting for the Impairment or Disposal of Long-Lived
Assets. SFAS 144 replaces certain previously issued
accounting guidance, develops a single accounting model for
long-lived assets, and broadens the framework previously
established for assets to be disposed of by sale (whether
previously held or newly acquired). We adopted SFAS No. 144
as of the beginning of fiscal 2002. The adoption of this
standard did not have a material effect on our financial
statements.

In April 2002, the FASB issued SFAS 145,
Rescission of FASB Statements 4, 44, and 64,
Amendment of FASB Statement 13, and Technical
Corrections. SFAS 145 clarifies and simplifies existing
accounting pronouncements and addresses the reporting of debt
extinguishments and accounting for certain lease modifications
that have economic effects that are similar to sale-leaseback
transactions. We are required and plan to adopt the provisions
of SFAS 145 by February 3, 2003. During the second
quarter of fiscal 2002, we recorded an extraordinary loss of
$3.7 million (net of income tax benefit) relating to the
early retirement of debt. SFAS 145 will require that this
amount be reclassified to operations.

In July 2002, the FASB issued SFAS 146,
Accounting for Costs Associated with Exit or Disposal
Activities. SFAS 146 requires companies to recognize
the present value of costs associated with exit or disposal
activities when they are incurred rather than at the date of a
commitment to an exit or disposal plan. Examples of costs
covered by the standard include lease rental and termination
costs and certain employee severance costs that are associated
with a restructuring, discontinued operation, store closing, or
other exit or disposal activity. SFAS 146 is to be applied
prospectively to exit or disposal activities initiated after
December 31, 2002, with early implementation encouraged.
Although we are currently analyzing the impact of this
pronouncement on our financial statements, adoption of the
pronouncement will impact the timing of recognition of closed
store charges.

Forward-looking Statements

The foregoing Managements Discussion and
Analysis contains certain forward-looking statements about the
future performance of the Company that are based on
managements assumptions and beliefs in light of the
information currently available. These forward-looking
statements are subject to uncertainties and other factors that
could cause actual results to differ materially from those
statements. Factors that may cause differences are identified in
our Annual Report on Form 10-K/ A filed with the Securities
and Exchange Commission on May 10, 2002, and are
incorporated herein by reference.

21



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##### 



CSK AUTO CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)





|        |                                                               
|------- | --------------------------------------------------------------
|Item 3. | Quantitative and Qualitative Disclosures
    about Market Risk

See Risk Factors Affecting Liquidity and
Capital Resources above.

Item 4.     Controls
and Procedures

Within the 90-day period prior to the filing of
this report, an evaluation was carried out under the supervision
and with the participation of the Companys management,
including the Chief Executive Officer (CEO) and
Chief Financial Officer (CFO), of the effectiveness
of our disclosure controls and procedures. Based on that
evaluation, the CEO and CFO have concluded that the
Companys disclosure controls and procedures are effective
to ensure that information required to be disclosed by the
Company in reports that it files or submits under the Securities
Exchange Act of 1934 is recorded, processed, summarized and
reported within the time periods specified in Securities and
Exchange Commission rules and forms. Subsequent to the date of
such evaluation, there were no significant changes in the
Companys internal controls or in other factors that could
significantly affect the internal controls, including any
corrective actions with regard to significant deficiencies and
material weaknesses.

22



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##### 



PART II

OTHER INFORMATION



Item 1.     Legal
Proceedings


We were served on March 8, 2000 with a
complaint filed in Federal Court in the Eastern District of New
York by the Coalition for a Level Playing Field, O.K. and, based
on the current amended complaint, 255 individual auto parts
dealers. The complaint alleges that we and seven other auto
parts dealers (AutoZone, Inc., Wal-Mart Stores, Inc., Advance
Stores Company, Inc., Discount Auto, Inc., The Pep
Boys  Manny, Moe and Jack, Inc., OReilly
Automotive, Inc., and Keystone Automotive Operations, Inc.)
violated the Robinson-Patman Act. Only 15 of the individual
plaintiffs asserted claims against us. The complaint, as
amended, alleges that we and other defendants knowingly either
induced or received discriminatory prices from large suppliers,
allegedly in violation of Section 2(a) and 2(f) of the
Robinson-Patman Act, as well as received compensation from large
suppliers for services not performed for those suppliers,
allegedly in violation of Section 2(c) of the
Robinson-Patman Act. In May 2002, we reached a settlement with
all of the plaintiffs that provides for the payment of nominal
consideration by us. As the first step in the settlement, our
attorneys and the attorneys for the plaintiffs have filed with
the Court a Stipulation and Order for the dismissal with
prejudice of all claims by all plaintiffs against us. This
Stipulation and Order has been signed by the Court.

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.
Although the amount of liability that may result from these
matters cannot be ascertained, 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 and Use of Proceeds

NONE

Item 3.     Defaults
upon Senior Securities

NONE

Item 4.     Submission
of Matters to a Vote of Security Holders

NONE

Item 5.     Other
Information

NONE

23



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##### 



Item 6.     Exhibits
and Reports on Form 8-K

(a) Exhibits:

| |        |  |  |                                                                                                                                                                                                                                                                                                                                                       
| | ------ |  |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 3.01   |  |  | Restated Certificate of Incorporation of the
    Company, incorporated herein by reference to Exhibit 3.01
    of the Companys annual report on Form 10-K, filed on
    May 4, 1998 (File No. 001-13927).                                                                                                                                            
| | 3.02   |  |  | Certificate of Correction to the Restated
    Certificate of Incorporation of the Company, incorporated herein
    by reference to Exhibit 3.02 of the Companys annual
    report on Form 10-K, filed on May 4, 1998 (File
    No. 001-13927).                                                                                                       
| | 3.02.1 |  |  | Certificate of Amendment of the Restated
    Certificate of Incorporation of CSK Auto Corporation, filed on
    June 13, 2002, incorporated herein by reference to
    Exhibit 3.02.1 of the Companys Report on
    Form 10-Q filed on September 19, 2002.                                                                                           
| | 3.03   |  |  | Amended and Restated By-Laws of the Company,
    incorporated herein by reference to Exhibit 3.03 of the
    Companys Annual Report on Form 10-K, filed on
    April 28, 1999 (File No. 001-13927).                                                                                                                                                  
| | 3.03.1 |  |  | First Amendment to Amended and Restated By-laws
    of the Company, incorporated herein by reference to
    Exhibit 3.03.1 of our annual report on Form 10-K,
    filed on May 1, 2001 (File No. 001-13927).                                                                                                                                          
| | 10.01  |  |  | Fourth Amendment to Stockholders Agreement,
    incorporated herein by reference to Exhibit 99.1 to our
    report on Form 8-K, filed on November 15, 2002 (File
    No. 001-13927).                                                                                                                                                                 
| | 10.02  |  |  | Purchase Agreement, related to the sale of
    approximately 3.0 million shares of CSK Auto Corporation common
    stock, between CSK Auto Corporation, selected shareholders of
    the company and Merrill Lynch, incorporated herein by reference
    to Exhibit 1.1 to our report on Form 8-K filed on
    November 19, 2002 (File No. 001-13927).
| | 10.03  |  |  | Form of Indemnity Agreement by and between the
    listed directors and CSK Auto Corporation.                                                                                                                                                                                                                                                         
| | 99.1   |  |  | Certification by the Chief Executive Officer
    pursuant to 18 U.S.C. Section 1350, as adopted
    pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                        
| | 99.2   |  |  | Certification by the 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:



| |                                                                                                                                                                                                                                                                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | On September 18, 2002, we filed a current
    report on Form 8-K, to report under item 9 thereof, the
    filing of the sworn statements of the Chief Executive Officer
    and the Chief Financial Officer relating to certain previously
    issued financial statements of CSK Auto Corporation.                                                                                              
|
| | On November 15, 2002, we filed a current
    report on Form 8-K, to report under item 5 thereof, the
    Fourth Amendment to the Companys Stockholders
    Agreement with certain entities affiliated with the Carmel Group.                                                                                                                                                                   
|
| | On November 15, 2002, we filed a current
    report on Form 8-K, to report under item 5 thereof,
    selected recent events including our sales for the thirteen
    weeks ended November 3, 2002. We also filed an exhibit
    which was a press release announcing the sale of approximately
    3.0 million shares of CSK Auto Corporation common stock by
    affiliates of the Carmel Group.
|
| | On November 18, 2002, we filed a current
    report on form 8-K/A, to report under item 5 thereof,
    a clarification of when our financial results for the thirteen
    weeks ended November 3, 2002 will be released and when our
    form 10-Q will be filed.                                                                                                                                
|
| | On November 19, 2002, we filed a current
    report on form 8-K, to file under item 7 thereof, a
    purchase agreement for approximately 3.0 million shares of
    CSK Auto Corporation common stock by and between CSK Auto
    Corporation, the stockholders selling the shares and Merrill
    Lynch.                                                                                        

24



---



##### 



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 CORPORATION



| |     |                  
| | --- | -----------------
| | By: | /s/ DON W. WATSON

| |                        
| | -----------------------
| |                        
| | Don W. Watson          
| | Chief Financial Officer

Dated: December 18, 2002

25



---



##### 



CERTIFICATION

I, Maynard L. Jenkins, certify that:



| |    |                                                                                                                                                                                                                                                                                                                                                   
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1. | I have reviewed this quarterly report on
    Form 10-Q of CSK Auto Corporation;                                                                                                                                                                                                                                                                   
|
| | 2. | Based on my knowledge, this quarterly report does
    not contain any untrue statement of a material fact or omit to
    state a material fact necessary to make the statements made, in
    light of the circumstances under which such statements were
    made, not misleading with respect to the period covered by this
    quarterly report;
|
| | 3. | Based on my knowledge, the financial statements,
    and other financial information included in this quarterly
    report, fairly present in all material respects the financial
    condition, results of operations and cash flows of the
    registrant as of, and for, the periods presented in this
    quarterly report;                   
|
| | 4. | The registrants other certifying officer
    and I are responsible for establishing and maintaining
    disclosure controls and procedures (as defined in Exchange Act
    Rules 13a-14 and 15d-14) for the registrant and we have:                                                                                                              



| |    |                                                                                                                                                                                                                                                                                                                
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a. | designed such disclosure controls and procedures
    to ensure that material information relating to the registrant,
    including its consolidated subsidiaries, is made known to us by
    others within those entities, particularly during the period in
    which this quarterly report is being prepared;



| |    |                                                                                                                                                                                                          
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | b. | evaluated the effectiveness of the
    registrants disclosure controls and procedures as of a
    date within 90 days prior to the filing date of this
    quarterly report (the Evaluation Date); and



| |    |                                                                                                                                                                                
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | c. | presented in this quarterly report our
    conclusions about the effectiveness of the disclosure controls
    and procedures based on our evaluation as of the Evaluation Date;



| |    |                                                                                                                                                                                                                                                                  
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 5. | The registrants other certifying officer
    and I have disclosed, based on our most recent evaluation, to
    the registrants auditors and the audit committee of the
    registrants board of directors (or persons performing the
    equivalent function):



| |    |                                                                                                                                                                                                                                                                                                                    
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a. | all significant deficiencies in the design or
    operation of internal controls which could adversely affect the
    registrants ability to record, process, summarize, and
    report financial data and have identified for the
    registrants auditors any material weaknesses in internal
    controls; and



| |    |                                                                                                                                                               
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------
| | b. | any fraud, whether or not material, that involves
    management or other employees who have a significant role in the
    registrants internal controls; and



| |    |                                                                                                                                                                                                                                                                                                                                                                                                                 
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 6. | The registrants other certifying officer
    and I have indicated in this quarterly report whether or not
    there were significant changes in internal controls or in other
    factors that could significantly affect internal controls
    subsequent to the date of our most recent evaluation, including
    any corrective actions with regard to significant deficiencies
    and material weaknesses.



| |                        
| | -----------------------
| | /s/ MAYNARD L. JENKINS 
| |                        
| | Maynard L. Jenkins     
| | Chief Executive Officer

December 18, 2002

26



---



##### 



CERTIFICATION

I, Don W. Watson, certify that:



| |    |                                                                                                                                                                                                                                                                                                                                                   
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1. | I have reviewed this quarterly report on
    Form 10-Q of CSK Auto Corporation;                                                                                                                                                                                                                                                                   
|
| | 2. | Based on my knowledge, this quarterly report does
    not contain any untrue statement of a material fact or omit to
    state a material fact necessary to make the statements made, in
    light of the circumstances under which such statements were
    made, not misleading with respect to the period covered by this
    quarterly report;
|
| | 3. | Based on my knowledge, the financial statements,
    and other financial information included in this quarterly
    report, fairly present in all material respects the financial
    condition, results of operations and cash flows of the
    registrant as of, and for, the periods presented in this
    quarterly report;                   
|
| | 4. | The registrants other certifying officer
    and I are responsible for establishing and maintaining
    disclosure controls and procedures (as defined in Exchange Act
    Rules 13a-14 and 15d-14) for the registrant and we have:                                                                                                              



| |    |                                                                                                                                                                                                                                                                                                                
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a. | designed such disclosure controls and procedures
    to ensure that material information relating to the registrant,
    including its consolidated subsidiaries, is made known to us by
    others within those entities, particularly during the period in
    which this quarterly report is being prepared;



| |    |                                                                                                                                                                                                          
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | b. | evaluated the effectiveness of the
    registrants disclosure controls and procedures as of a
    date within 90 days prior to the filing date of this
    quarterly report (the Evaluation Date); and



| |    |                                                                                                                                                                                
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | c. | presented in this quarterly report our
    conclusions about the effectiveness of the disclosure controls
    and procedures based on our evaluation as of the Evaluation Date;



| |    |                                                                                                                                                                                                                                                                  
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 5. | The registrants other certifying officer
    and I have disclosed, based on our most recent evaluation, to
    the registrants auditors and the audit committee of the
    registrants board of directors (or persons performing the
    equivalent function):



| |    |                                                                                                                                                                                                                                                                                                                    
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a. | all significant deficiencies in the design or
    operation of internal controls which could adversely affect the
    registrants ability to record, process, summarize, and
    report financial data and have identified for the
    registrants auditors any material weaknesses in internal
    controls; and



| |    |                                                                                                                                                               
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------
| | b. | any fraud, whether or not material, that involves
    management or other employees who have a significant role in the
    registrants internal controls; and



| |    |                                                                                                                                                                                                                                                                                                                                                                                                                 
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 6. | The registrants other certifying officer
    and I have indicated in this quarterly report whether or not
    there were significant changes in internal controls or in other
    factors that could significantly affect internal controls
    subsequent to the date of our most recent evaluation, including
    any corrective actions with regard to significant deficiencies
    and material weaknesses.



| |                        
| | -----------------------
| | /s/ DON W. WATSON      
| |                        
| | Don W. Watson          
| | Chief Financial Officer

December 18, 2002

27



---



##### 



Exhibit Index

|        |        |             |  |                                                                                                                                                                                                                                                                                                                                                           
|------- | ------ | ----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |        |            
|Number  |        | Description
|        |        |            
|        | 3.01   |             |  | Restated Certificate of Incorporation of the
    Company, incorporated herein by reference to Exhibit 3.01
    of the Companys annual report on Form 10-K, filed on
    May 4, 1998 (File No. 001-13927).                                                                                                                                                
|        | 3.02   |             |  | Certificate of Correction to the restated
    certificate of incorporation of the Company, incorporated herein
    by reference to Exhibit 3.02 of the Companys annual
    report on Form 10-K, filed on May 4, 1998 (File
    No. 001-13927).                                                                                                           
|        | 3.02.1 |             |  | Certificate of Amendment of the Restated
    Certificate of Incorporation of CSK Auto Corporation, filed on
    June 13, 2002, incorporated herein by reference to
    Exhibit 3.02.1 of the Companys Report on
    Form 10-Q filed on September 19, 2002                                                                                                
|        | 3.03   |             |  | Amended and Restated By-Laws of the Company,
    incorporated herein by reference to Exhibit 3.03 of the
    Companys annual report on Form 10-K, filed on
    April 28, 1999 (File No. 001-13927).                                                                                                                                                      
|        | 3.03.1 |             |  | First Amendment to Amended and Restated By-laws
    of the Company, incorporated herein by reference to
    Exhibit 3.03.1 of our annual report on Form 10-K,
    filed on May 1, 2001 (File No. 001-13927).                                                                                                                                              
|        | 10.01  |             |  | Fourth Amendment to Stockholders Agreement,
    incorporated herein by reference to Exhibit 99.1 to our
    report on Form 8-K, filed on November 15, 2002 (File
    No. 001-13927).                                                                                                                                                                     
|        | 10.02  |             |  | Purchase Agreement, related to the sale of
    approximately 3.0 million shares of CSK Auto Corporation
    common stock, between CSK Auto Corporation, selected
    shareholders of the company and Merrill Lynch, incorporated
    herein by reference to Exhibit 1.1 to our report on
    Form 8-K filed on November 19, 2002 (File
    No. 001-13927).
|        | 10.03  |             |  | Form of Indemnity Agreement by and between the
    listed directors and CSK Auto Corporation.                                                                                                                                                                                                                                                             
|        | 99.1   |             |  | Certification by the Chief Executive Officer
    pursuant to 18 U.S.C. Section 1350, as adopted
    pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                            
|        | 99.2   |             |  | Certification by the Chief Financial Officer
    pursuant to 18 U.S.C. Section 1350, as adopted
    pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                            

28