##### Table of Contents









UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549




---

FORM 10-K



| |                                                     
| | ----------------------------------------------------
| | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934


For the fiscal year ended February 4, 2001.



| |                                                          
| | ---------------------------------------------------------
| | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
	THE

SECURITIES EXCHANGE ACT OF 1934


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                |  | 85012                                
|(Address of principal executive offices)                        |  | (Zip Code)                           

Securities registered pursuant to Section 12(b) of the
Act:

|                             |  |                                           
|---------------------------- |  | ------------------------------------------
|Title of each class          |  | Name of each exchange on which registered:
|                             |  |                                           
|Common Stock, $.01 par value |  | New York Stock Exchange                   

Securities registered pursuant to Section 12(g) of the
Act: None

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  

  No

Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not
contained herein, and will not be contained, to the best of the
registrants knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this
Form 10-K or any amendment to this
Form 10-K.

As of April 27, 2001, the aggregate market value of the
Companys common stock held by non-affiliates was
approximately $101.8 million. For purposes of the above
statement only, all directors and executive officers of the
registrant are assumed to be affiliates. As of April 27,
2001, there were 27,841,178 shares of the Companys common
stock outstanding.

Documents Incorporated by Reference



|  |                                                                                                                                                                                                            
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Portions of the Companys definitive Proxy Statement on
	Schedule 14A, with respect to the Companys 2001
	Annual Meeting of Stockholders, are incorporated by reference
	into Part III of this Form  10-K.









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TABLE OF CONTENTS



|                                                                                              |  |  |  |  |  |  |  | 
|--------------------------------------------------------------------------------------------- |  |  |  |  |  |  |  | 
|PART I                                                                                       
|Item 1. Business                                                                             
|Item 2. Properties                                                                           
|Item 3. Legal Proceedings                                                                    
|Item 4. Submission of Matters to a Vote of Security Holders                                  
|PART II                                                                                      
|Item 5. Market for Registrants Common Stock and Related Stockholder Matters                 
|Item 6. Selected Consolidated Financial Data                                                 
|Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
|Item 7A. Quantitative and Qualitative Disclosures about Market Risk                          
|Item 8. Consolidated Financial Statements and Supplementary Data                             
|Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 
|PART III                                                                                     
|Item 10. Directors and Executive Officers of the Registrant                                  
|Item 11. Executive Compensation                                                              
|Item 12. Security Ownership of Certain Beneficial Owners and Management                      
|Item 13. Certain Relationships and Related Transactions                                      
|PART IV                                                                                      
|Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K                     
|EX-3.03.1                                                                                    
|EX-4.01.1                                                                                    
|EX-4.01.2                                                                                    
|EX-10.11                                                                                     
|EX-10.15                                                                                     
|EX-10.16                                                                                     
|EX-10.17                                                                                     
|EX-10.21                                                                                     
|EX-10.22                                                                                     
|EX-10.23                                                                                     
|EX-21.01                                                                                     
|EX-23.01                                                                                     



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TABLE OF CONTENTS

|          |  |                                                                                        |  |      |    | 
|--------- |  | -------------------------------------------------------------------------------------- |  | ---- | -- | 
|          |  |                                                                                        |  | Page
|          |  |                                                                                        |  |     
|PART I    |  |                                                                                        |  |      |    | 
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|Item  1.  |  | Business                                                                               |  |      | 2  | 
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|Item  2.  |  | Properties                                                                             |  |      | 10 | 
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|Item  3.  |  | Legal Proceedings                                                                      |  |      | 10 | 
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|Item  4.  |  | Submission of Matters to a Vote of Security Holders                                    |  |      | 11 | 
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|PART II   |  |                                                                                        |  |      |    | 
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|Item  5.  |  | Market for Registrants Common Stock and Related
	Stockholder Matters                  |  |      | 12 | 
|         
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|Item  6.  |  | Selected Consolidated Financial Data                                                   |  |      | 13 | 
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|Item  7.  |  | Managements Discussion and Analysis of Financial Condition
	and Results of Operations |  |      | 16 | 
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|Item  7A. |  | Quantitative and Qualitative Disclosures about Market Risk                             |  |      | 24 | 
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|Item  8.  |  | Consolidated Financial Statements and Supplementary Data                               |  |      | 24 | 
|         
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|Item  9.  |  | Changes in and Disagreements with Accountants on Accounting and
	Financial Disclosure  |  |      | 54 | 
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|PART III  |  |                                                                                        |  |      |    | 
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|Item  10. |  | Directors and Executive Officers of the Registrant                                     |  |      | 54 | 
|         
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|Item  11. |  | Executive Compensation                                                                 |  |      | 54 | 
|         
|         
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|Item  12. |  | Security Ownership of Certain Beneficial Owners and Management                         |  |      | 54 | 
|         
|         
|         
|         
|Item  13. |  | Certain Relationships and Related Transactions                                         |  |      | 54 | 
|         
|         
|         
|         
|         
|PART IV   |  |                                                                                        |  |      |    | 
|         
|         
|         
|         
|Item  14. |  | Exhibits, Financial Statement Schedules and Reports on
	Form  8-K                      |  |      | 54 | 

Note Concerning Forward-Looking Information

Some of the information in this Report on Form 10-K
contains forward-looking statements that involve substantial
risks and uncertainties. You can identify these statements by
forward-looking words such as may, will,
expect, anticipate, believe,
estimate and continue or similar words.
You should read statements that contain these words carefully
because they: (1) discuss our future expectations;
(2) contain projections of our future results of operations
or of our financial condition; or (3) state other
forward-looking information. We believe that it is
important to communicate our future expectations to our
investors. However, there may be events in the future that we
are not able to accurately predict or over which we have no
control, the occurrence of which could have a material adverse
effect on our business, operating results and financial
condition. These events may include future operating results and
potential competition, among other things. Factors that might
cause actual results to differ materially from those in such
forward-looking statements include, but are not limited to,
those discussed in Item 7. Managements Discussion and
Analysis of Financial Condition and Results of Operations.

1



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##### Table of Contents






PART I




Item 1.  Business

General

We are the largest retailer of automotive parts and accessories
in the Western United States and one of the largest retailers of
such products in the United States based, in each case, on our
number of stores. As of February 4, 2001, we operated 1,152
stores as one fully integrated company under three brand names:



| |   |                                                                                                                   
| | - | ------------------------------------------------------------------------------------------------------------------
| |  | Checker Auto Parts, founded in 1969 and operating in the
	Southwestern, Rocky Mountain and Northern Plains states;
|
| |  | Schucks Auto Supply, founded in 1917 and operating in the
	Pacific Northwest; and                                
|
| |  | Kragen Auto Parts, founded in 1947 and operating primarily in
	California.                                        

We offer a broad selection of national brand name and private
label automotive products for domestic and imported cars, vans
and light trucks. Our products include new and remanufactured
automotive replacement parts, maintenance items and accessories.
Most of our sales are to do-it-yourself customers, although our
commercial sales program, focusing on sales to auto repair
professionals and fleet owners, represents a significant and
increasing part of our business. Our stores typically offer
between 13,000 and 17,000 stock-keeping units, or SKUs.

Automotive Aftermarket Industry

We are a retailer of aftermarket automotive products such as
replacement parts, maintenance items and accessories. The term
aftermarket distinguishes our sales from those items sold as
part of the original sale of a car or truck. We believe that the
automotive aftermarket for these items is growing because of
increases in:



| |   |                                                                 
| | - | ----------------------------------------------------------------
| |  | The size and age of the countrys automotive fleet;             
|
| |  | The number of miles driven annually per vehicle;                
|
| |  | The purchase prices of new cars;                                
|
| |  | The cost of replacement parts; and                              
|
| |  | Labor costs associated with parts, installation and maintenance.

There are many companies selling automotive aftermarket
products. We believe, however, that the industry is
consolidating as national and regional specialty retail chains
gain market share at the expense of smaller independent
retailers and less specialized mass merchandisers. Automotive
specialty retailing chains like ours, which have multiple
locations in a given market area, enjoy competitive advantages
in purchasing, distribution, advertising and marketing compared
to most small independent retailers. In addition, the recent
significant increase in the variety of domestic and imported
vehicle makes and models has increased the number of automotive
replacement parts. This makes it difficult for smaller
independent retailers and less specialized mass merchandise
chains to maintain inventory selection broad enough to meet
customer demands. We believe this has created a competitive
advantage for us and for other automotive specialty retailing
chains that have the distribution capacity and sophisticated
information systems to stock and deliver a large number of
products in a timely manner.

Marketing and Merchandising Strategy

Our marketing and merchandising strategy is to build market
share by providing a broad selection of national brand name and
private label products at everyday low prices. We offer these
products at conveniently located and attractively designed
stores, staffed by highly trained, efficient and courteous
employees.

2



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Customer Service

We are a customer-oriented retailer dedicated primarily to
do-it-yourself consumers with a significant and increasing focus
on commercial customers. We try to enhance customer service by
use of our sophisticated product distribution and store support
systems, as well as our extensive training programs.

We believe that the recruiting, training and retention of high
quality sales associates is required if our business is to be
successful. We operate training and incentive programs to
encourage the development of technical expertise by our sales
associates so they can effectively advise customers on product
selection and use.

CSK University, our sales associate development program, is
dedicated to the continuous education of store associates
through structured on-the-job training and formal classroom
instruction. The curriculum focuses on four areas of the
associates development:



| |   |                                 
| | - | --------------------------------
| |  | Customer service skills;        
|
| |  | Basic automotive systems;       
|
| |  | Advanced automotive systems; and
|
| |  | Management development.         

Much of the training is delivered through formal classes in
training centers that are fully equipped with the same systems
as are in our stores. We believe that our training programs
enable sales associates to provide a high level of service to a
wide variety of customers ranging from less informed
do-it-yourself consumers to more sophisticated purchasers
requiring diagnostic advice. We also provide continuing training
programs for store managers and district managers designed to
assist them in increasing store-level efficiency and improving
their potential for promotion. In addition, we require periodic
meetings of district and store managers to facilitate and
enhance communications within our organization. Many of our
current associates have passed the ASE-P2 test, a nationally
recognized certification for auto parts technicians.

In order to satisfy our customers, we adopted several service
initiatives including free testing of starters, alternators and
batteries; free charging of batteries; installation assistance
for batteries, windshield wipers and other selected products;
no hassle return policies; and electronically
maintained lifetime warranties, which eliminate the need for
consumer record keeping. Our significant investments in
associate training and store-level information systems enable
our in-store personnel to devote more time to attending to our
customers automotive needs.

Product Selection

Our stores have a broad selection of national brand name
products in order to generate customer traffic and appeal to our
commercial customers. In addition, we stock a large selection of
high quality private label products that appeal to
value-conscious customers. Each store offers an extensive
product line, including automotive replacement parts such as
starters, alternators, shock absorbers, mufflers, brakes, spark
plugs, filters and batteries, as well as a wide variety of
maintenance items, such as motor oil, lubricants, waxes,
cleaners, polishes and antifreeze. In addition, each store
offers general accessories such as car stereos, alarms, trim,
floor mats, tools and seat covers.

Product Availability

Our stores offer between 13,000 and 17,000 SKUs of national
brand name and private label automotive products. If a store
does not carry a specific part, store associates are able to use
our surround store inventory program to reserve the part, direct
the customer to pick it up from a store in the same market or at
one of our nearby depots at which point the sale is recorded.

We continue to expand and improve our delivery system and we
have increased our number of strategically located priority
parts depots to 44 and increased product selection through an
increased SKU mix and access to our on-line local warehouse
network. This has led to better customer service by making
available

3



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##### Table of Contents





We have classified our product mix into 120 separate categories
through a merchandising program designed to determine the
optimal inventory mix at each individual store based on that
stores historical sales. We believe that we can improve
store sales, gross profit margin and inventory turnover by
tailoring individual store inventory mix based on historical
sales patterns for each of the 120 product categories.

Pricing

Our pricing philosophy is that we should not lose a customer
because of price. Our pricing strategy is to offer everyday low
prices at each of our stores. Part of this strategy is to beat
any competitors lower price by 5%. As a result, we closely
monitor our competitors pricing levels through our
precision pricing program, which analyzes prices at the store
level rather than at the market or chain level. This initiative
enables us to establish pricing levels at each store based upon
that stores local market competition. Our entry-level
products offer excellent value by meeting standard quality
requirements at low prices. In addition, our sales associates
are encouraged to offer alternative products at slightly higher
price points. These products typically provide extra features,
improved performance, an enhanced warranty or are of national
brand recognition.

Advertising

We support our marketing and merchandising strategy through
print advertising, in-store promotional displays and radio and
television advertising. The print advertising consists of
monthly color circulars that are produced by our in-house
advertising department and that contain redeemable coupons. We
also advertise on radio, television and billboards primarily to
reinforce our image and name recognition. Television advertising
is targeted to sports programming and radio advertising is
primarily aired during commuting hours. Advertising efforts
include Spanish language television and radio as well as
bilingual store signage. In-store signs and displays are used to
promote products, identify departments, and to announce store
specials. We also sponsor two National Hot Rod Association Funny
Cars and have been designated the Official Auto Parts
Store of the NHRA. We have the following web sites on the
Internet:



| |   |                                
| | - | -------------------------------
| |  | http://www.cskauto.com;        
|
| |  | http://www.checkerauto.com;    
|
| |  | http://www.schucks.com;        
|
| |  | http://www.kragen.com;         
|
| |  | http://www.identifix.com; and  
|
| |  | http://www.autoshop-online.com.

Diagnostic & Maintenance Repair Services

Through our subsidiary, Automotive Information Systems, Inc.
(AIS), we provide diagnostic vehicle repair
information to automotive technicians, automotive replacement
parts manufacturers, automotive test equipment manufacturers,
and to the do-it-yourself consumer. This allows us to provide
our retail, commercial, and Internet customers with high quality
diagnostic information in order to assist them with correctly
identifying problems and efficiently obtaining the parts they
need.

4



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##### Table of Contents



AIS was founded in 1987 and markets its products and services
under the brand name IDENTIFIX. These products and services
include:



| |   |                                                              
| | - | -------------------------------------------------------------
| |  | Technical hotlines serving more than 15,000 automotive shops;
|
| |  | The RepairTrac Service Bulletin;                             
|
| |  | On-line diagrams containing over 50,000 wiring diagrams;     
|
| |  | Consulting services to automotive manufacturers; and         
|
| |  | Consumer services provided through our worldwide web sites.  

AIS has evolved into one of the leading sources of knowledge
about where and how vehicles break, and how to correctly repair
those vehicles. This extensive automotive knowledge comes from
(1) more than 250,000 calls received annually from
technicians seeking diagnostic assistance for vehicle repair;
(2) our staff of over 30 Master Technicians who
collectively have over 550 years of vehicle diagnostic
experience; and (3) a comprehensive on-site library of
factory vehicle service information.

In AISs 13 years of operation, it has developed a
customer base of more than 15,000 repair shops by providing
efficient and accurate information resources for automotive
diagnostics and repair. We are committed to supporting
AISs existing customer base while developing new ways to
deliver information to its customers.

Store Operations

Our stores are divided into nine geographic regions: Southwest,
Rocky Mountain, Northwest, Northern Plains, Southern California,
Coastal California, Los Angeles, Pacific Coast and Northern
California. Each region is administered by a regional manager,
each of whom oversees seven to eleven district managers. Each of
our district managers has responsibility for between 8 and 19
stores.

The table below sets forth, as of February 4, 2001, the
geographic distribution of our stores and the tradenames under
which they operated.

|             |       |            |    |             |  |            |     |         |  |  |     |     |  |  |     |       | 
|------------ | ----- | ---------- | -- | ----------- |  | ---------- | --- | ------- |  |  | --- | --- |  |  | --- | ----- | 
|             |       | Checker    |    | Schucks    |  | Kragen     |     | Company
|             |       | Auto Parts |    | Auto Supply |  | Auto Parts |     | Total  
|             |       |            |    |             |  |            |     |        
|California   |       |            | 1  |             |  |            | 2   |         |  |  | 462 |     |  |  | 465 |      
|            
|            
|            
|            
|Washington   |       |            |   |             |  |            | 154 |         |  |  |    |     |  |  | 154 |      
|            
|            
|            
|            
|Arizona      |       |            | 97 |             |  |            |    |         |  |  |    |     |  |  | 97  |      
|            
|            
|            
|            
|Colorado     |       |            | 68 |             |  |            |    |         |  |  |    |     |  |  | 68  |      
|            
|            
|            
|            
|Minnesota    |       |            | 65 |             |  |            |    |         |  |  |    |     |  |  | 65  |      
|            
|            
|            
|            
|Oregon       |       |            |   |             |  |            | 51  |         |  |  |    |     |  |  | 51  |      
|            
|            
|            
|            
|Wisconsin    |       |            | 39 |             |  |            |    |         |  |  |    |     |  |  | 39  |      
|            
|            
|            
|            
|Utah         |       |            | 38 |             |  |            |    |         |  |  |    |     |  |  | 38  |      
|            
|            
|            
|            
|Nevada       |       |            | 19 |             |  |            |    |         |  |  | 14  |     |  |  | 33  |      
|            
|            
|            
|            
|Idaho        |       |            | 7  |             |  |            | 25  |         |  |  |    |     |  |  | 32  |      
|            
|            
|            
|            
|New Mexico   |       |            | 29 |             |  |            |    |         |  |  |    |     |  |  | 29  |      
|            
|            
|            
|            
|Texas        |       |            | 27 |             |  |            |    |         |  |  |    |     |  |  | 27  |      
|            
|            
|            
|            
|Alaska       |       |            |   |             |  |            | 12  |         |  |  |    |     |  |  | 12  |      
|            
|            
|            
|            
|Montana      |       |            | 10 |             |  |            |    |         |  |  |    |     |  |  | 10  |      
|            
|            
|            
|            
|Wyoming      |       |            | 10 |             |  |            |    |         |  |  |    |     |  |  | 10  |      
|            
|            
|            
|            
|North Dakota |       |            | 8  |             |  |            |    |         |  |  |    |     |  |  | 8   |      
|            
|            
|            
|            
|Hawaii       |       |            | 8  |             |  |            |    |         |  |  |    |     |  |  | 8   |      
|            
|            
|            
|            
|South Dakota |       |            | 5  |             |  |            |    |         |  |  |    |     |  |  | 5   |      
|            
|            
|            
|            
|Michigan     |       |            | 1  |             |  |            |    |         |  |  |    |     |  |  | 1   |      
|             |       |            |    |             |  |            |     |         |  |  |     |     |  |  |     |      
|             | Total |            |    | 432         |  |            |     | 244     |  |  |     | 476 |  |  |     | 1,152 | 
|             |       |            |    |             |  |            |     |         |  |  |     |     |  |  |     |      

5



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##### Table of Contents



Our stores are generally open seven days a week, with hours from
8:00 a.m. to 9:00 p.m. (9:00 a.m. to
6:00 p.m. on Sundays). The average store employs
approximately 10 to 20 employees, including a store manager, two
assistant store managers and a staff of full-time and part-time
employees.

Store Formats

Approximately 63% of our stores are freestanding, with the
balance principally located within strip shopping centers. The
stores, which range in size from 2,600 to 24,000 square feet,
average approximately 7,270 square feet in size and offer
between 13,000 and 17,000 SKUs.

We have three prototype store designs which are 6,000, 7,000 and
8,000 square feet in size. The store size for a given new
location is selected based upon sales volume expectations
determined through demographics and the detailed market analysis
that we prepare as part of our site selection process. The
following table categorizes our stores by size, as of
February 4, 2001:

|                          |  |                  |       | 
|------------------------- |  | ---------------- | ----- | 
|Store Size                |  | Number of Stores
|                          |  |                 
|10,000 sq. ft. or greater |  |                  | 110   | 
|                         
|                         
|                         
|                         
|8,000  9,999 sq. ft.     |  |                  | 218   | 
|                         
|                         
|                         
|                         
|6,000  7,999 sq. ft.     |  |                  | 531   | 
|                         
|                         
|                         
|                         
|5,000  5,999 sq. ft.     |  |                  | 201   | 
|                         
|                         
|                         
|                         
|Less than 5,000 sq. ft.   |  |                  | 92    | 
|                          |  |                  |       | 
|                          |  |                  | 1,152 | 
|                          |  |                  |       | 

Approximately 85% to 90% of each stores square footage is
selling space, of which approximately 40% to 50% is dedicated to
automotive replacement parts inventory. The replacement parts
inventory area is fronted by a counter staffed with
knowledgeable parts personnel and is equipped with our
electronic parts catalog. The remaining selling space contains
gondolas for accessories and maintenance items, including oil
and air filters, additives, waxes and other items, together with
specifically designed shelving for batteries and, in many
stores, oil products.

Store Growth Strategy

Our store growth strategy is focused on our existing or
contiguous markets and includes:



| |   |                                                                     
| | - | --------------------------------------------------------------------
| |  | Opening new stores;                                                 
|
| |  | Relocating smaller stores to larger stores at better locations;
	and
|
| |  | Expanding selected stores.                                          

We have identified many of our stores smaller than 5,000 square
feet as future relocation or expansion priorities.

Our market strategy group, which is a part of our real estate
department, utilizes a sophisticated, market-based approach that
identifies and analyzes potential store locations based on
detailed demographic and competitive studies. These demographic
and competitive studies include analysis of population density,
growth patterns, age, per capita income, vehicle traffic counts
and the number and type of existing automotive-related
facilities, such as automotive parts stores and other
competitors within a pre-determined radius of the potential new
location. These potential locations are compared to our existing
locations to determine opportunities for opening new stores and
relocating or expanding existing stores.

We believe that the large number of small operators in our
industry has enabled us to effectively pursue an opportunistic
acquisition strategy. We focus our acquisition efforts in
(1) existing markets to achieve further market penetration
in a timely and cost-effective manner without adding additional
retail square footage; and (2) contiguous markets to permit
further leveraging of our established infrastructure over an
increasing sales base.

6



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##### Table of Contents



The following table sets forth our store development activities
during the periods indicated:

|                                           |  |             |       |      |  |      |       |   |  |  |     |  
|------------------------------------------ |  | ----------- | ----- | ---- |  | ---- | ----- | - |  |  | --- | -
|                                           |  |            
|                                           |  | Fiscal Year
|                                           |  |            
|                                           |  | 2000        |       | 1999 |  | 1998
|                                           |  |             |       |      |  |     
|Beginning stores                           |  |             | 1,120 |      |  |      | 807   |   |  |  | 718 |  
|                                          
|                                          
|                                          
|                                          
|New stores                                 |  |             | 37    |      |  |      | 84    |   |  |  | 94  |  
|                                          
|                                          
|                                          
|                                          
|Relocated stores                           |  |             | 14    |      |  |      | 26    |   |  |  | 31  |  
|                                          
|                                          
|                                          
|                                          
|Acquired stores                            |  |             | 23    |      |  |      | 280   |   |  |  | 2   |  
|                                          
|                                          
|                                          
|                                          
|Closed stores (including relocated stores) |  |             | (42   | )    |  |      | (77   | ) |  |  | (38 | )
|                                           |  |             |       |      |  |      |       |   |  |  |     |  
|Ending stores                              |  |             | 1,152 |      |  |      | 1,120 |   |  |  | 807 |  
|                                           |  |             |       |      |  |      |       |   |  |  |     |  
|Expanded stores                            |  |             | 9     |      |  |      | 9     |   |  |  | 5   |  
|                                          
|                                          
|                                          
|                                          
|Total new, relocated and expanded stores   |  |             | 60    |      |  |      | 119   |   |  |  | 130 |  

We believe that growth opportunities exist in our current
markets and that our store growth strategy will increase our
name recognition and market penetration while we benefit from
economies of scale in advertising, management and distribution
costs. We opened, relocated, or expanded 60 stores in fiscal
2000 as compared to 119 stores in fiscal 1999. We plan to
continue our store growth strategy and expect to open, relocate
or expand approximately 50 stores in fiscal 2001. As of
February 4, 2001, we had executed purchase contracts or
leases for 18 sites, were in various stages of negotiation for
20 additional sites and had identified numerous potential
additional sites for store growth. New stores generally become
profitable during the first year of operation.

Commercial Sales Program

In addition to our primary focus on serving the do-it-yourself
consumer, we have significantly increased our marketing efforts
to the commercial customer in the automotive replacement parts
market. The commercial market constitutes in excess of 50% of
the annual sales in the automotive aftermarket and is currently
growing at a faster rate than the do-it-yourself market. Our
commercial sales program, which is intended to facilitate
penetration of this market, is targeted to professional
mechanics, auto repair shops, auto dealers, fleet owners, mass
and general merchandisers with auto repair facilities and other
commercial repair outlets located near our stores.

We have made a significant commitment to this portion of our
business and upgraded the information systems capabilities
available to the commercial sales group. In addition, we employ
one district sales manager for approximately every five stores
that have a commercial sales center. A district sales manager is
responsible for servicing existing commercial accounts and
developing new commercial accounts. In addition, at a minimum,
each commercial sales center has a dedicated in-store
salesperson, driver and delivery vehicle.

We believe we are well positioned to effectively and profitably
service commercial customers, who typically require a higher
level of customer service and broad product availability. The
commercial market has traditionally been serviced primarily by
jobbers. Recently, however, automotive specialty retailing
chains, such as our company, have entered the commercial market.
The chains typically have multiple locations in given market
areas and maintain a broad inventory selection. We believe we
have significant competitive advantages in servicing the
commercial market because of our experienced sales associates,
conveniently located stores, attractive pricing and ability to
consistently deliver a broad product offering with an emphasis
on national brand names.

As of February 4, 2001, we operated commercial service
centers in 554 of our stores. Our sales to commercial accounts
(including sales by stores without commercial service centers)
increased 14.5% to $249.3 million in fiscal 2000 from $217.7
million in fiscal 1999.

Purchasing

Merchandise is selected from over 300 suppliers and purchased
for all stores by personnel at our corporate headquarters in
Phoenix, Arizona. No one class of product and no single supplier
accounted for as much as 10% of our purchases in
fiscal 2000.

7



---



##### Table of Contents



Our inventory management systems include the E-3 Trim Buying
System, which provides inventory movement forecasting based upon
history, trend and seasonality. Combined with service level
goals, vendor lead times and cost of inventory assumptions, the
E-3 Trim Buying System determines the timing and size of
purchase orders. Approximately 90% of the dollar value of
transactions are sent via electronic data interchange, with the
remainder being sent by a computer facsimile interface. Our
store replenishment system generates orders based upon store
on-hand and store model stock. This includes an automatic model
stock adjustment system utilizing historical sales, seasonality
and store presentation requirements. We also can allocate
seasonal and promotional merchandise based upon a stores
history of prior promotional and seasonal sales.

Our stores offer products with nationally recognized,
well-advertised brand names, such as Armor All, Autolite, AC
Delco, Castrol, Dayco, Exide, Fel Pro, Fram, Havoline, Mobil,
Monroe, Pennzoil, Prestone, Quaker State, RayBestos, Stant,
Sylvania, Turtle Wax and Valvoline. In addition to brand name
products, our stores carry a wide variety of high quality
private label products. Because most of our private label
products are produced by nationally recognized manufacturers
that produce similar brand name products that enjoy a high
degree of consumer acceptance, we believe that our private label
products are of a quality that is comparable to such brand name
products.

Gross profit margin for fiscal 2000 declined from the fiscal
1999 rate in large part due to the sell through of acquired
inventory that was sold without the benefit of normal vendor
allowances. Apart from this situation, we have increased our
gross profit margin over the last several years primarily as a
result of obtaining lower product acquisition costs, more
favorable vendor terms, cash discounts from vendors,
efficiencies from our warehouse and distribution system and
improvements in product mix. We believe that the improved vendor
terms are primarily the result of growth in our store count and
purchase volume.

Warehouse and Distribution

Our warehouse and distribution system utilizes bar coding, radio
frequency scanners and sophisticated conveyor and put-to-light
systems. We instituted engineered labor standards and incentive
programs in each of our distribution centers which have
contributed to improved labor productivity. Each store is
currently serviced by one of our three main distribution
centers, with the regional distribution centers handling bulk
materials, such as oil. All of our merchandise is shipped by
vendors to our distribution centers, with the exception of
batteries, which are shipped directly to stores by the vendor.
We have sufficient warehouse and distribution capacity to meet
the requirements of our growth plans for the foreseeable future.

The following table sets forth certain information relating to
our three main distribution centers as of February 4, 2001:

|                    |  |                                                                                  |  |           |         |           |  |           |       |  |  |  |     | 
|------------------- |  | -------------------------------------------------------------------------------- |  | --------- | ------- | --------- |  | --------- | ----- |  |  |  | --- | 
|                    |  |                                                                                  |  |           |         | Number    |  | Number of
|                    |  |                                                                                  |  | Size      |         | of Stores |  | Full-Time
|Distribution Center |  | Area Served                                                                      |  | (Sq. Ft.) |         | Served    |  | Employees
|                    |  |                                                                                  |  |           |         |           |  |          
|Phoenix, AZ         |  | Arizona, Colorado, Idaho, Nevada, New Mexico, California, Texas,
	Utah           |  |           | 273,520 |           |  |           | 506   |  |  |  | 385 | 
|Dixon, CA           |  | California, Nevada, Washington, Oregon, Idaho, Montana, Wyoming,
	Alaska, Hawaii |  |           | 325,500 |           |  |           | 528   |  |  |  | 437 | 
|Mendota Heights, MN |  | Minnesota, North Dakota, South Dakota, Wisconsin, Michigan                       |  |           | 125,000 |           |  |           | 118   |  |  |  | 91  | 
|                    |  |                                                                                  |  |           |         |           |  |           |       |  |  |  |     | 
|                    |  |                                                                                  |  |           | 724,020 |           |  |           | 1,152 |  |  |  | 913 | 
|                    |  |                                                                                  |  |           |         |           |  |           |       |  |  |  |     | 

We have the ability to expand the Phoenix distribution center by
approximately 80,000 square feet and the Dixon distribution
center by 160,000 square feet should the need arise.

8



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##### Table of Contents



Associates

As of February 4, 2001, we employed approximately 8,900
full-time associates and 4,850 part-time associates.
Approximately 88% of the personnel are employed in store level
operations, 7% in distribution and 5% in our corporate
headquarters, including our call center and priority parts
operation.

We have never experienced any material labor disruption and
believe that our labor relations are good. Except for
approximately 410 associates located at 44 stores in
the Northern California market, who have been represented by a
union for many years, none of our personnel are represented by a
labor union.

Competition

We compete principally in the do it-yourself sector of the
automotive aftermarket which is highly fragmented and generally
very competitive. We compete primarily with national and
regional retail automotive parts chains (such as AutoZone, Inc.
and The Pep Boys  Manny, Moe and Jack, Inc.),
wholesalers or jobber stores (some of which are associated with
national automotive parts distributors or associations, such as
NAPA), automobile dealers and mass merchandisers that carry
automotive replacement parts, maintenance items and accessories
(such as Wal-Mart Stores, Inc.). We believe that chains of
automotive parts stores like ours, with multiple locations in
regional markets, have competitive advantages in marketing,
product selection, purchasing and distribution, as compared to
independent retailers and jobbers that are not part of a chain
or associated with other retailers or jobbers. We believe that,
as a result of these advantages, national and regional chains
have been gaining market share in recent years at the expense of
independent retailers and jobbers.

The principal competitive factors that affect our business are
store location, customer service, product selection,
availability, quality and price. While we believe that we
compete effectively in our various markets, certain competitors
are larger in terms of number of stores and sales volume, have
greater financial and management resources and have been
operating longer in certain geographic areas.

Trade Names, Service Marks and Trademarks

We own and have registered the service mark
Schucks with the United States Patent and
Trademark Office for use in connection with the automotive parts
retailing business. We have the right to use the tradenames
Checker (in connection with the automotive parts
retailing business) and Kragen. In addition, we own
and have registered numerous trademarks with respect to many of
our private label products. We believe that our various
tradenames, service marks and trademarks are important to our
merchandising strategy, but that our business is not otherwise
dependent on any particular service mark, tradename or
trademark. There are no infringing uses known by us that
materially affect the use of such marks.

Environmental Matters

We are subject to various federal, state and local laws and
governmental regulations relating to the operation of our
business, including those governing recycling of batteries and
used lubricants, and regarding ownership and operation of real
property. We handle hazardous materials during our operations,
and our customers may also use or bring hazardous materials onto
our properties. In addition, automobiles are serviced in
automotive service facilities that we sublease to third parties.
During fiscal 2000, we substantially exited our service center
operations through closure or sublease of such facilities. We
require these automotive service facilities to dispose of
certain items, including used batteries, lubricants and oils in
accordance with applicable environmental regulations.

We currently provide a recycling program for batteries and for
the collection of used lubricants at certain of our stores as a
service to our customers pursuant to agreements with third-party
vendors. The batteries and used lubricants are collected by our
associates, deposited into vendor-supplied containers/ pallets
and then disposed of by the third-party vendors. Our agreements
with such vendors are designed to limit our potential liability
under applicable environmental regulations for any harm caused
by the batteries and lubricants to off-

9



---



##### Table of Contents





Under environmental laws, a current or previous owner or
operator of real property may be liable for the cost of removal
or remediation of hazardous or toxic substances on, under, or in
such property. Such laws often impose joint and several
liability and may be imposed without regard to whether the owner
or operator knew of, or was responsible for, the release of such
hazardous or toxic substances. We do not believe that compliance
with such laws and regulations has had a material impact on our
operations to date, but there can be no assurance that future
compliance with such laws and regulations will not have a
material adverse effect on us.




Item 2.  Properties

The following table sets forth certain information concerning
our principal facilities:

|                             |  |                     |  |         |         |           |  |  |        |    
|---------------------------- |  | ------------------- |  | ------- | ------- | --------- |  |  | ------ | ---
|                             |  |                     |  | Square  |         | Nature of
|Primary Use                  |  | Location            |  | Footage |         | Occupancy
|                             |  |                     |  |         |         |          
|Corporate office             |  | Phoenix, AZ         |  |         | 114,691 |           |  |  | Leased | (1)
|                            
|                            
|                            
|                            
|Distribution center          |  | Dixon, CA           |  |         | 325,500 |           |  |  | Leased |    
|                            
|                            
|                            
|                            
|Distribution center          |  | Phoenix, AZ         |  |         | 273,520 |           |  |  | Leased |    
|                            
|                            
|                            
|                            
|Distribution center          |  | Mendota Heights, MN |  |         | 125,000 |           |  |  | Leased |    
|                            
|                            
|                            
|                            
|Regional distribution center |  | Auburn, WA          |  |         | 52,400  |           |  |  | Leased |    
|                            
|                            
|                            
|                            
|Regional distribution center |  | Denver, CO          |  |         | 34,800  |           |  |  | Leased |    
|                            
|                            
|                            
|                            
|Regional distribution center |  | Salt Lake, UT       |  |         | 32,000  |           |  |  | Leased |    
|                            
|                            
|                            
|                            
|Regional distribution center |  | Commerce, CA        |  |         | 48,400  |           |  |  | Leased |    




|    |                                                                                                                                                                                                                      
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | This facility is owned by Missouri Falls Partners, an affiliate
	of The Carmel Trust (Carmel), a trust governed under
	the laws of Canada. Carmel is an affiliate of the Company and a
	member of the Carmel Group.

At February 4, 2001, all but three of our stores were
leased. The expiration dates (including renewal options) of the
store leases are summarized as follows:

|                  |  |  |       | 
|----------------- |  |  | ----- | 
|Years             |  | 
|                  |  | 
|2001  2002       |  |  | 13    | 
|                 
|                 
|                 
|                 
|2003  2006       |  |  | 59    | 
|                 
|                 
|                 
|                 
|2007  2010       |  |  | 125   | 
|                 
|                 
|                 
|                 
|2011  2020       |  |  | 438   | 
|                 
|                 
|                 
|                 
|2021  2030       |  |  | 469   | 
|                 
|                 
|                 
|                 
|2031  thereafter |  |  | 45    | 
|                  |  |  |       | 
|                  |  |  | 1,149 | 
|                  |  |  |       | 

Additional information regarding our facilities appears in
Item I. Business under the captions Store
Operations, Store Formats and Warehouse
and Distribution.




Item 3.  Legal Proceedings

As previously disclosed, on May 4, 1998, a lawsuit was
filed against us in the Superior Court in San Diego, California.
The case was brought by two former store managers and a former
senior assistant manager. It purported to be a class action for
all present and former California store managers and senior
assistant managers and sought overtime pay for a period
beginning in May 1995 as well as injunctive relief
requiring overtime pay in the future. We were also served with
two other lawsuits purporting to be class actions filed in
California state courts in Orange and Fresno Counties by
thirteen other former and current employees. We have finalized a
settlement of all of these lawsuits. The final amount of the
settlement was approximately $8.8

10



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##### Table of Contents





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, L.L.C. and 250 individual
auto parts dealers alleging 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 14 of the individual plaintiffs
asserted claims against us. The complaint 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. The
complaint seeks injunctive relief against all defendants and
seeks treble damages on behalf of the individual auto parts
dealers who are plaintiffs, plus attorneys fees. The
complaint alleges that the estimated average damage amount per
plaintiff is $1,000,000 (and more for those plaintiffs that are
wholesale distributors and not simply jobbers) before trebling.
We believe the suit is without merit and plan to vigorously
defend it. We, with other defendants, have filed a motion to
dismiss and certain other procedural motions. A decision on
these motions is not anticipated until the second or third
quarter of fiscal 2001. We do not currently believe that this
complaint will result in liabilities material to our
consolidated financial position, results of operations or cash
flows.

We currently and from time to time are involved in other
litigation incidental to the conduct of our business. The
damages claimed in some of this litigation are substantial.
Although the amount of liability that may result from these
matters cannot be ascertained, we do not currently believe that,
in the aggregate, they will result in liabilities material to
our consolidated financial position, results of operations or
cash flows.




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

No matters were submitted to a vote of our stockholders during
the fourth quarter of fiscal 2000.

11



---



##### Table of Contents






PART II




Item 5.  Market for Registrants
Common Stock and Related Stockholder Matters

Our common stock has been listed on the New York Stock Exchange
under the symbol CAO since March 12, 1998. As of
April 27, 2001, there were 27,841,178 shares of our common
stock outstanding and there were approximately 93 record holders
of our common stock.

The following table sets forth, for the periods indicated, the
high and low bid prices for our common stock as reported by the
New York Stock Exchange.

|             |                |                |   |       |  |  |   |       | 
|------------ | -------------- | -------------- | - | ----- |  |  | - | ----- | 
|             |                |               
|             |                | Price Range of
|             |                | Common Stock  
|             |                |               
|             |                | High           |   | Low  
|             |                |                |   |      
|Fiscal 2000: |                |                |   |       |  |  |   |      
|            
|            
|            
|            
|             | First Quarter  |                | $ | 14.00 |  |  | $ | 9.88  | 
|            
|            
|            
|            
|             | Second Quarter |                |   | 15.44 |  |  |   | 6.88  | 
|            
|            
|            
|            
|             | Third Quarter  |                |   | 9.88  |  |  |   | 3.44  | 
|            
|            
|            
|            
|             | Fourth Quarter |                |   | 6.63  |  |  |   | 2.63  | 
|            
|            
|            
|            
|Fiscal 1999: |                |                |   |       |  |  |   |      
|            
|            
|            
|            
|             | First Quarter  |                | $ | 37.38 |  |  | $ | 23.63 | 
|            
|            
|            
|            
|             | Second Quarter |                |   | 30.63 |  |  |   | 24.00 | 
|            
|            
|            
|            
|             | Third Quarter  |                |   | 25.56 |  |  |   | 17.13 | 
|            
|            
|            
|            
|             | Fourth Quarter |                |   | 21.25 |  |  |   | 11.06 | 

We have not paid any dividends on our common stock during the
last two fiscal years. We currently do not intend to pay any
dividends on our common stock.

We are a holding company with no business operations of our own.
We therefore depend upon payments, dividends and distributions
from CSK Auto, Inc., our wholly owned subsidiary, for funds to
pay dividends to our stockholders. CSK Auto, Inc. currently
intends to retain its earnings to fund its working capital, debt
repayment and capital expenditure needs and for other general
corporate purposes. CSK Auto, Inc. has no current intention of
paying dividends or making other distributions to us in excess
of amounts necessary to pay our operating expenses and taxes.
CSK Auto, Inc.s senior credit facility and the indenture
governing its 11% senior subordinated notes contain restrictions
on CSK Auto, Inc.s ability to pay dividends or make
payments or other distributions to us.

12



---



##### Table of Contents






Item 6.  Selected Consolidated Financial
Data

The following table sets forth our selected consolidated
statement of operations, balance sheet and operating data. The
selected statement of operations and balance sheet data are
derived from our consolidated financial statements, which have
been audited by PricewaterhouseCoopers LLP, independent
accountants. You should read the data presented below together
with our consolidated financial statements and related notes,
the other financial information contained herein, and
Managements Discussion and Analysis of Financial
Condition and Results of Operations.

|                                                                                                               |                                         |                                                                  |           |         |  |         |           |         |  |         |           |         |  |   |         |         |  |   |          |         | 
|-------------------------------------------------------------------------------------------------------------- | --------------------------------------- | ---------------------------------------------------------------- | --------- | ------- |  | ------- | --------- | ------- |  | ------- | --------- | ------- |  | - | ------- | ------- |  | - | -------- | ------- | 
|                                                                                                               |                                         |                                                                 
|                                                                                                               |                                         | Fiscal Year(1)                                                  
|                                                                                                               |                                         |                                                                 
|                                                                                                               |                                         | 2000(2)                                                          |           | 1999(3) |  | 1998(4) |           | 1997(5) |  | 1996(6)
|                                                                                                               |                                         |                                                                  |           |         |  |         |           |         |  |        
|                                                                                                               |                                         |                                                                 
|                                                                                                               |                                         | (in thousands, except per share amounts and selected store data)
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|Statement of Operations Data                                                                                   |                                         |                                                                  |           |         |  |         |           |         |  |         |           |         |  |   |         |         |  |   |          |        
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|Net sales                                                                                                      |                                         | $                                                                | 1,452,109 |         |  | $       | 1,231,455 |         |  | $       | 1,004,385 |         |  | $ | 845,815 |         |  | $ | 793,092  |        
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|Cost of sales                                                                                                  |                                         |                                                                  | 769,043   |         |  |         | 636,239   |         |  |         | 531,073   |         |  |   | 468,171 |         |  |   | 463,374  |        
|                                                                                                               |                                         |                                                                  |           |         |  |         |           |         |  |         |           |         |  |   |         |         |  |   |          |        
|Gross profit                                                                                                   |                                         |                                                                  | 683,066   |         |  |         | 595,216   |         |  |         | 473,312   |         |  |   | 377,644 |         |  |   | 329,718  |        
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|Other costs and expenses:                                                                                      |                                         |                                                                  |           |         |  |         |           |         |  |         |           |         |  |   |         |         |  |   |          |        
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                               | Operating and administrative            |                                                                  |           | 568,873 |  |         |           | 471,340 |  |         |           | 391,528 |  |   |         | 326,198 |  |   |          | 298,004 | 
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                               | Store closing costs                     |                                                                  |           | 6,060   |  |         |           | 4,900   |  |         |           | 335     |  |   |         | 1,640   |  |   |          | 14,904  | 
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                               | Legal settlement                        |                                                                  |           | 8,800   |  |         |           |        |  |         |           |        |  |   |         |        |  |   |          |        | 
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                               | Transition and integration expenses     |                                                                  |           | 23,818  |  |         |           | 30,187  |  |         |           | 3,075   |  |   |         | 3,407   |  |   |          |        | 
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                               | Equity in loss on joint venture         |                                                                  |           | 3,168   |  |         |           |        |  |         |           |        |  |   |         |        |  |   |          |        | 
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                               | Goodwill amortization                   |                                                                  |           | 4,799   |  |         |           | 1,941   |  |         |           |        |  |   |         |        |  |   |          |        | 
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                               | Stock-based compensation                |                                                                  |           |        |  |         |           |        |  |         |           |        |  |   |         | 909     |  |   |          |        | 
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                               | Write-off of unamortized management fee |                                                                  |           |        |  |         |           |        |  |         |           | 3,643   |  |   |         |        |  |   |          |        | 
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                               | 1996 Recapitalization charge            |                                                                  |           |        |  |         |           |        |  |         |           |        |  |   |         |        |  |   |          | 20,174  | 
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                               | Secondary stock offering costs          |                                                                  |           |        |  |         |           |        |  |         |           | 770     |  |   |         |        |  |   |          |        | 
|                                                                                                               |                                         |                                                                  |           |         |  |         |           |         |  |         |           |         |  |   |         |         |  |   |          |        
|Operating profit (loss)                                                                                        |                                         |                                                                  | 67,548    |         |  |         | 86,848    |         |  |         | 73,961    |         |  |   | 45,490  |         |  |   | (3,364   | )      
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|Other 1996 Recapitalization charges                                                                            |                                         |                                                                  |          |         |  |         |          |         |  |         |          |         |  |   | 1,009   |         |  |   | 12,463   |        
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|Interest expense, net                                                                                          |                                         |                                                                  | 62,355    |         |  |         | 41,300    |         |  |         | 30,730    |         |  |   | 40,680  |         |  |   | 20,691   |        
|                                                                                                               |                                         |                                                                  |           |         |  |         |           |         |  |         |           |         |  |   |         |         |  |   |          |        
|Income (loss) before income taxes, extraordinary loss and
	cumulative effect of change in accounting principle |                                         |                                                                  | 5,193     |         |  |         | 45,548    |         |  |         | 43,231    |         |  |   | 3,801   |         |  |   | (36,518  | )      
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|Income tax expense(benefit)                                                                                    |                                         |                                                                  | 193       |         |  |         | 17,436    |         |  |         | 15,746    |         |  |   | 1,557   |         |  |   | (11,859  | )      
|                                                                                                               |                                         |                                                                  |           |         |  |         |           |         |  |         |           |         |  |   |         |         |  |   |          |        
|Income (loss) before extraordinary loss and cumulative
	effect of change in accounting principle               |                                         |                                                                  | 5,000     |         |  |         | 28,112    |         |  |         | 27,485    |         |  |   | 2,244   |         |  |   | (24,659  | )      
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|Extraordinary loss, net of income taxes                                                                        |                                         |                                                                  |          |         |  |         |          |         |  |         | (6,767    | )       |  |   | (3,015  | )       |  |   |         |        
|                                                                                                               |                                         |                                                                  |           |         |  |         |           |         |  |         |           |         |  |   |         |         |  |   |          |        
|Income (loss) before cumulative effect of change in
	accounting principle                                      |                                         |                                                                  | 5,000     |         |  |         | 28,112    |         |  |         | 20,718    |         |  |   | (771    | )       |  |   | (24,659  | )      
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|Cumulative effect of change in accounting principle, net of
	income taxes                                      |                                         |                                                                  |          |         |  |         | (741      | )       |  |         |          |         |  |   |        |         |  |   |         |        
|                                                                                                               |                                         |                                                                  |           |         |  |         |           |         |  |         |           |         |  |   |         |         |  |   |          |        
|Net income (loss)                                                                                              |                                         | $                                                                | 5,000     |         |  | $       | 27,371    |         |  | $       | 20,718    |         |  | $ | (771    | )       |  | $ | (24,659  | )      
|                                                                                                               |                                         |                                                                  |           |         |  |         |           |         |  |         |           |         |  |   |         |         |  |   |          |        
|Diluted earnings (loss) per share                                                                              |                                         | $                                                                | 0.18      |         |  | $       | 0.96      |         |  | $       | 0.75      |         |  | $ | (0.04   | )       |  | $ | (2.28    | )      
|                                                                                                               |                                         |                                                                  |           |         |  |         |           |         |  |         |           |         |  |   |         |         |  |   |          |        
|Shares used for computation                                                                                    |                                         |                                                                  | 27,839    |         |  |         | 28,627    |         |  |         | 27,640    |         |  |   | 18,012  |         |  |   | 10,819   |        
|                                                                                                               |                                         |                                                                  |           |         |  |         |           |         |  |         |           |         |  |   |         |         |  |   |          |        
|Other Data                                                                                                     |                                         |                                                                  |           |         |  |         |           |         |  |         |           |         |  |   |         |         |  |   |          |        
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|EBITDA(7)                                                                                                      |                                         | $                                                                | 156,902   |         |  | $       | 148,966   |         |  | $       | 103,861   |         |  | $ | 70,173  |         |  | $ | 50,544   |        
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|EBITDAR(7)                                                                                                     |                                         |                                                                  | 274,175   |         |  |         | 242,295   |         |  |         | 175,549   |         |  |   | 124,695 |         |  |   | 98,450   |        
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|Capital expenditures                                                                                           |                                         |                                                                  | 32,080    |         |  |         | 41,358    |         |  |         | 37,846    |         |  |   | 20,132  |         |  |   | 6,317    |        
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|Commercial sales(8)                                                                                            |                                         |                                                                  | 249,314   |         |  |         | 217,696   |         |  |         | 155,845   |         |  |   | 115,378 |         |  |   | 89,551   |        
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|Net cash provided by (used in) operating activities                                                            |                                         |                                                                  | 32,469    |         |  |         | (4,031    | )       |  |         | 3,403     |         |  |   | (62,703 | )       |  |   | (33,836  | )      
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|Net cash used in investing activities                                                                          |                                         |                                                                  | (34,542   | )       |  |         | (260,221  | )       |  |         | (37,524   | )       |  |   | (56,727 | )       |  |   | (15,216  | )      
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|Net cash provided by financing activities                                                                      |                                         |                                                                  | 1,442     |         |  |         | 268,524   |         |  |         | 36,759    |         |  |   | 119,059 |         |  |   | 49,911   |        
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|Selected Store Data                                                                                            |                                         |                                                                  |           |         |  |         |           |         |  |         |           |         |  |   |         |         |  |   |          |        
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|Number of stores (end of period)                                                                               |                                         |                                                                  | 1,152     |         |  |         | 1,120     |         |  |         | 807       |         |  |   | 718     |         |  |   | 580      |        
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|Percentage increase in comparable store net sales(9)                                                           |                                         |                                                                  | 2         | %       |  |         | 4         | %       |  |         | 2         | %       |  |   | 4       | %       |  |   | 6        | %      
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|Balance Sheet Data (end of period)                                                                             |                                         |                                                                  |           |         |  |         |           |         |  |         |           |         |  |   |         |         |  |   |          |        
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|Net working capital                                                                                            |                                         | $                                                                | 401,523   |         |  | $       | 456,594   |         |  | $       | 306,879   |         |  | $ | 235,651 |         |  | $ | 121,157  |        
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|Total assets                                                                                                   |                                         |                                                                  | 1,076,981 |         |  |         | 1,035,652 |         |  |         | 634,022   |         |  |   | 563,251 |         |  |   | 443,986  |        
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|Total debt (including current maturities)                                                                      |                                         |                                                                  | 647,881   |         |  |         | 627,133   |         |  |         | 333,293   |         |  |   | 439,962 |         |  |   | 335,680  |        
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|Stockholders equity (deficit)                                                                                 |                                         |                                                                  | 139,613   |         |  |         | 134,547   |         |  |         | 105,389   |         |  |   | (75,055 | )       |  |   | (102,263 | )      

See accompanying notes on pages 14 and 15.

13



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##### Table of Contents



Notes to Selected Consolidated Financial Data



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Our fiscal year consists of 52 or 53 weeks, ends on the
	Sunday nearest to January 31 and is named for the calendar
	year just ended. All fiscal years presented had 52 weeks
	except for fiscal 2000 and 1996, which had 53 weeks.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|(2) | Results of operations in fiscal 2000
	include: (1) $30.4 million of acquisition-related
	expenses for the transition of acquired stores to the CSK
	format, store closing costs associated with the closure of CSK
	stores that overlap with better situated acquired stores and the
	operating losses of acquired automotive service centers that
	have been closed; (2) $8.8 million relating to the
	settlement of the class action lawsuit; (3) $0.4 
	million of bad debt expense associated with the bankruptcy of a
	commercial customer; (4) non-cash charges of $3.2 million
	to recognize our proportionate share of PAs net loss and
	write off our remaining investment in the joint venture; and
	(5) $5.7 million of non-cash charges associated with
	the liquidation of certain acquired inventory that we were not
	able to return to vendors at full carrying value. Excluding
	these non-recurring items, net of related income tax thereon,
	net income for the fiscal year was $35.0  million or $1.26
	per diluted share (based on 27.8  million shares
	outstanding).
|   
|(3) | During 1999, we acquired 194 AGA stores and 86 Big
	Wheel stores. See Note 4 to the Consolidated Financial
	Statements. These stores have been included in results of
	operations from the date of the respective acquisitions. Results
	of operations in fiscal 1999 include:
	(1) $30.2 million of transition and integration
	expenses associated with the Big Wheel and AGA Acquisitions;
	(2) $2.5 million of store closing costs for CSK Auto
	stores that were identified for closure due to overlap with
	certain acquired stores; (3) a charge of $0.7 million,
	net of related income tax thereon, relating to the cumulative
	effect of a change in accounting principle associated with the
	adoption of Statement of Position (SOP) 98-5 (see
	Note 2 to the Consolidated Financial Statements). Excluding
	these non-recurring items, net of related income tax thereon,
	net income for the fiscal year was $48.3 million or $1.69
	per diluted share (based on 28.6 million shares
	outstanding).                                                                          
|   
|(4) | Results of operations in fiscal 1998 include: (1) an
	extraordinary loss of $6.8 million, which consisted
	primarily of the premiums paid in connection with the retirement
	of outstanding debt with the proceeds of our initial public
	offering and the write-off of a portion of deferred debt
	issuance costs; (2) $3.1 million of transition and
	integration expenses associated with the Trak West Acquisition;
	(3) the write-off of a $3.6  million prepaid
	management fee; and (4) $0.8 million of secondary
	offering costs. Excluding these non-recurring items, net of
	related income tax thereon, net income for the fiscal year was
	$32.2 million or $1.13 per diluted share (based on
	28.6 million shares outstanding).                                                                                                                                                                                                                                                                                                                                                 
|   
|(5) | In December 1997, we acquired 82 Trak West stores
	which have been included in results of operations from the date
	of acquisition. Results of operations in fiscal 1997 include:
	(1) an extraordinary loss of $3.0 million to reflect
	the write-off of certain deferred financing costs associated
	with the early extinguishment of our previous senior credit
	facility; (2) $3.4 million of transition and integration
	expenses associated with the Trak West Acquisition; and
	(3) $1.0 million of other expenses related to our
	recapitalization in October 1996.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   
|(6) | Results of operations in fiscal 1996 include certain
	non-recurring charges which were incurred when we consummated
	our recapitalization in October 1996, including the following:
	(1) amounts paid to members of management pursuant to then
	existing equity participation agreements of $19.9 million
	($20.2 million including a provision for estimated payroll
	taxes thereon); and (2) expenses of $12.5  million
	incurred in connection with our 1996 recapitalization. Our
	fiscal 1996 results also include a charge of $12.9 million
	to reflect the store closing costs of 91 specific store
	sites. This charge is included in store closing costs.                                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|(7) | EBITDA represents income before net interest expense, provision
	for income taxes, depreciation and amortization expense, other
	non-cash charges, extraordinary items and non-recurring charges.
	While EBITDA is not intended to represent cash flow from
	operations as defined by GAAP (and should not be considered as
	an indicator of operating performance or an alternative to cash
	flow (as measured by GAAP)), it is included herein because we
	believe it is a meaningful measure which provides additional
	information with respect to our ability to meet our future debt
	service, capital expenditure and working capital requirements.
	EBITDA has been calculated as described above in accordance with
	the terms of                                                                                                                                                                                                                                                                                                                                                   

14



---



##### Table of Contents



| |                                                                                                                                                                          
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | the indenture under which our 11% Senior Subordinated Notes were
	issued and may differ in method of calculation from similarly
	titled measures used by other companies.

The computation of EBITDA for each of the respective periods
shown is as follows:

|                                                                                                               |                                              |                |         |        |  |      |         |        |  |      |         |        |  |   |        |        |  |   |         |        | 
|-------------------------------------------------------------------------------------------------------------- | -------------------------------------------- | -------------- | ------- | ------ |  | ---- | ------- | ------ |  | ---- | ------- | ------ |  | - | ------ | ------ |  | - | ------- | ------ | 
|                                                                                                               |                                              |               
|                                                                                                               |                                              | Fiscal Year   
|                                                                                                               |                                              |               
|                                                                                                               |                                              | 2000           |         | 1999   |  | 1998 |         | 1997   |  | 1996
|                                                                                                               |                                              |                |         |        |  |      |         |        |  |     
|                                                                                                               |                                              |               
|                                                                                                               |                                              | (in thousands)
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|Income (loss) before income taxes, extraordinary loss and
	cumulative effect of change in accounting principle |                                              | $              | 5,193   |        |  | $    | 45,548  |        |  | $    | 43,231  |        |  | $ | 3,801  |        |  | $ | (36,518 | )     
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|Add back:                                                                                                      |                                              |                |         |        |  |      |         |        |  |      |         |        |  |   |        |        |  |   |         |       
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                               | Interest expense, net                        |                |         | 62,355 |  |      |         | 41,300 |  |      |         | 30,730 |  |   |        | 40,680 |  |   |         | 20,691 | 
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                               | Depreciation and amortization expense        |                |         | 40,827 |  |      |         | 29,375 |  |      |         | 22,412 |  |   |        | 20,367 |  |   |         | 19,225 | 
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                               | Non-recurring 1996 Recapitalization expenses |                |         |       |  |      |         |       |  |      |         |       |  |   |        | 1,009  |  |   |         | 32,637 | 
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                               | Other non-recurring and non-cash charges     |                |         | 48,527 |  |      |         | 32,743 |  |      |         | 7,488  |  |   |        | 4,316  |  |   |         | 14,509 | 
|                                                                                                               |                                              |                |         |        |  |      |         |        |  |      |         |        |  |   |        |        |  |   |         |       
|Total                                                                                                          |                                              | $              | 156,902 |        |  | $    | 148,966 |        |  | $    | 103,861 |        |  | $ | 70,173 |        |  | $ | 50,544  |       
|                                                                                                               |                                              |                |         |        |  |      |         |        |  |      |         |        |  |   |        |        |  |   |         |       



|    |                                                                                                                                                                                                                                                                                                                                                               
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | EBITDAR represents EBITDA plus operating lease rental expense.
	Because the proportion of stores leased versus owned varies
	among industry competitors, we believe that EBITDAR permits a
	meaningful comparison of operating performance among industry
	competitors. We lease substantially all of our stores.                                             
|   
|(8) | Represents sales to commercial accounts, including sales from
	stores without commercial sales centers.                                                                                                                                                                                                                                                       
|   
|(9) | Comparable store net sales data is calculated based on the
	change in net sales commencing after the time a new store has
	been open twelve months. Therefore, sales for the first twelve
	months a new store is open are not included in the comparable
	store calculation. Relocations are included in comparable store
	net sales from the date of opening.

15



---



##### Table of Contents






Item 7.  Managements Discussion and
Analysis of Financial Condition and Results of Operations

Our fiscal year ends on the Sunday nearest to January 31
and is named for the calendar year just ended. Occasionally this
results in a fiscal year which is 53 weeks long. When we
refer to a particular fiscal year, we mean the following:



| |   |                                                            
| | - | -----------------------------------------------------------
| |  | Fiscal 2000 means the 53 weeks ended February 4, 2001;     
|
| |  | Fiscal 1999 means the 52 weeks ended January 30, 2000;
	and
|
| |  | Fiscal 1998 means the 52 weeks ended January 31, 1999.     

General

CSK Auto Corporation is the largest retailer of automotive parts
and accessories in the Western United States and one of the
largest retailers of these products in the United States based,
in each case, on our number of stores. As of February 4,
2001, we operated 1,152 stores as one fully integrated
company under three brand names:



| |   |                                                                                                                   
| | - | ------------------------------------------------------------------------------------------------------------------
| |  | Checker Auto Parts, founded in 1969 and operating in the
	Southwestern, Rocky Mountain and Northern Plains states;
|
| |  | Schucks Auto Supply, founded in 1917 and operating in the
	Pacific Northwest; and                                
|
| |  | Kragen Auto Parts, founded in 1947 and operating primarily in
	California.                                        

The discussion which follows includes several references to
charges and effects relating to the following significant
transactions which occurred during the period covered:



| |   |                                                                                                                                                                                                                                                                                                 
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | In April 2000, we acquired 22 AllCar stores (the
	AllCar stores) located in Wisconsin and Michigan
	from All-Car Distributors, Inc. We refer to this transaction as
	the AllCar Acquisition.                                                                                                
|
| |  | In March 2000, we participated in the formation of a new joint
	venture, PartsAmerica.com (PA), with Advance Stores
	Company, Inc. (Advance) and Sequoia Capital. PA
	engages in the sale of automotive parts and accessories via
	e-commerce.                                              
|
| |  | In October 1999, we acquired 194 Als and Grand Auto Supply
	stores (the AGA stores) located in California and
	the Pacific Northwest from PACCAR Inc. We refer to this
	transaction as the AGA Acquisition.                                                                                
|
| |  | In September 1999, we acquired Automotive Information
	Systems, Inc. (AIS), a leading provider of
	diagnostic vehicle repair information. We refer to this
	transaction as the AIS Acquisition.                                                                                             
|
| |  | In June 1999, we acquired 86 Big Wheel/ Rossi stores (the
	Big Wheel stores) located in the Northern Plains
	states from APSCO Products Company. We refer to this transaction
	as the Big Wheel Acquisition.                                                                                
|
| |  | In December 1998, certain of our stockholders completed a
	secondary offering of our common stock. We received no proceeds
	from this offering and incurred an aggregate of $770,000 in
	legal, accounting, printing and other costs. We refer to this
	transaction as the Secondary Offering.
|
| |  | In March 1998, we completed the initial public offering of
	our common stock and used the net proceeds to repay outstanding
	debt. We refer to this transaction as our IPO.                                                                                                                   

16



---



##### Table of Contents



Results of Operations

The following table sets forth our statement of operations data
expressed as a percentage of net sales for the periods indicated:

|                                                                                          |  |             |       |      |  |      |       |   |  |  |       |  
|----------------------------------------------------------------------------------------- |  | ----------- | ----- | ---- |  | ---- | ----- | - |  |  | ----- | -
|                                                                                          |  |            
|                                                                                          |  | Fiscal Year
|                                                                                          |  |            
|                                                                                          |  | 2000        |       | 1999 |  | 1998
|                                                                                          |  |             |       |      |  |     
|Net sales                                                                                 |  |             | 100.0 | %    |  |      | 100.0 | % |  |  | 100.0 | %
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Cost of sales                                                                             |  |             | 53.0  |      |  |      | 51.7  |   |  |  | 52.9  |  
|                                                                                          |  |             |       |      |  |      |       |   |  |  |       |  
|Gross profit                                                                              |  |             | 47.0  |      |  |      | 48.3  |   |  |  | 47.1  |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Operating and administrative expenses                                                     |  |             | 39.3  |      |  |      | 38.3  |   |  |  | 39.0  |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Store closing costs                                                                       |  |             | 0.4   |      |  |      | 0.4   |   |  |  |      |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Legal settlement                                                                          |  |             | 0.6   |      |  |      |      |   |  |  |      |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Transition and integration expenses                                                       |  |             | 1.6   |      |  |      | 2.4   |   |  |  | 0.3   |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Equity in loss of joint venture                                                           |  |             | 0.2   |      |  |      |      |   |  |  |      |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Goodwill amortization                                                                     |  |             | 0.3   |      |  |      | 0.1   |   |  |  |      |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Write-off of unamortized management fee                                                   |  |             |      |      |  |      |      |   |  |  | 0.3   |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Secondary offering costs                                                                  |  |             |      |      |  |      |      |   |  |  | 0.1   |  
|                                                                                          |  |             |       |      |  |      |       |   |  |  |       |  
|Operating profit                                                                          |  |             | 4.6   |      |  |      | 7.1   |   |  |  | 7.4   |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Interest expense, net                                                                     |  |             | 4.3   |      |  |      | 3.4   |   |  |  | 3.1   |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Income tax expense                                                                        |  |             |      |      |  |      | 1.4   |   |  |  | 1.6   |  
|                                                                                          |  |             |       |      |  |      |       |   |  |  |       |  
|Income before extraordinary loss and cumulative effect of change
	in accounting principle |  |             | 0.3   |      |  |      | 2.3   |   |  |  | 2.7   |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Extraordinary loss, net of income taxes                                                   |  |             |      |      |  |      |      |   |  |  | (0.6  | )
|                                                                                          |  |             |       |      |  |      |       |   |  |  |       |  
|Income before cumulative effect of change in accounting principle                         |  |             | 0.3   |      |  |      | 2.3   |   |  |  | 2.1   |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Cumulative effect of change in accounting principle, net of
	income taxes                 |  |             |      |      |  |      | (0.1  | ) |  |  |      |  
|                                                                                          |  |             |       |      |  |      |       |   |  |  |       |  
|Net income                                                                                |  |             | 0.3   | %    |  |      | 2.2   | % |  |  | 2.1   | %
|                                                                                          |  |             |       |      |  |      |       |   |  |  |       |  

Gross profit consists primarily of net sales less the cost of
sales and warehouse and distribution expenses. Gross profit as a
percentage of net sales may be affected by variations in our
product mix, price changes in response to competitive factors
and fluctuations in merchandise costs and vendor programs.

Operating and administrative expenses are comprised of store
payroll, store occupancy, advertising expenses, other store
expenses and general and administrative expenses, including
salaries and related benefits of corporate employees,
administrative office occupancy expenses, data processing,
professional expenses and other related expenses.

Fiscal 2000 Compared to Fiscal 1999

Net sales for fiscal 2000 increased 17.9% to $1.45 billion from
$1.23 billion for fiscal 1999, primarily reflecting an increase
in the number of stores operated and a comparable store sales
increase of 2%. Commercial sales increased 14.5% to $249.3
million in fiscal 2000 from $217.7 million in fiscal 1999 as a
result of the continued expansion of our commercial sales
program. We acquired 86 Big Wheel stores on June 30, 1999
and 194 AGA stores on October 1, 1999. As a result, the
operating results for fiscal 1999 include the results of these
acquired stores commencing July 1, 1999 for the Big Wheel
stores and October 2, 1999 for the AGA stores, while fiscal
2000 includes their operating results for the entire period.
Additionally, fiscal 2000 is a 53 week period whereas
fiscal 1999 is a 52 week period. During fiscal 2000 we
opened 37 new stores, relocated 14 stores, acquired
23 stores and expanded 9 stores. We closed 42 stores
including those closed due to relocation. At February 4,
2001, we had 1,152 stores in operation compared to 1,120 stores
at the end of fiscal 1999.

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Gross profit for fiscal 2000 was $683.1 million, or 47.0% of net
sales, compared to $595.2 million, or 48.3% of net sales, for
fiscal 1999. Gross profit margin for fiscal 2000 declined in
large part due to the sell through of product obtained via store
acquisition that was acquired without the benefit of normal
vendor allowances.

Operating and administrative expenses increased by $97.6 million
to $568.9 million, or 39.3% of net sales, for fiscal 2000 from
$471.3 million, or 38.3% of net sales, for fiscal 1999. The
increase in operating and administrative expenses reflects an
increase in store payroll expenses and associated benefits
costs, increased store rent expenses and the incremental costs
of new stores.

Operating profit decreased to $67.5 million, or 4.6% of net
sales, for fiscal 2000, compared to $86.8 million, or 7.1% of
net sales, for fiscal 1999. The decline in operating profit
primarily reflects a $2.9 million increase in goodwill
amortization and a lower gross profit contribution. In addition,
during fiscal 2000, we incurred the following items, all of
which are treated as non-recurring items for purposes of
computing earnings before interest, taxes, depreciation and
amortization (EBITDA) under our debt indentures: (1)
$30.4 million of acquisition-related expenses for the transition
of acquired stores to the CSK format, store closing costs
associated with the closure of CSK stores that overlap with
better situated acquired stores and the operating losses of
acquired automotive service centers that have been closed; (2)
$8.8 million relating to the settlement of the class action
lawsuit; (3) $0.4 million of bad debt expense associated with
the bankruptcy of a commercial customer; (4) non-cash
charges of $3.2 million to recognize our proportionate share of
PAs net loss and write off our remaining investment in the
joint venture; and (5) $5.7 million of non-cash charges
associated with the liquidation of certain acquired inventory
that we were unable to return to vendors at full carrying value.

Interest expense for fiscal 2000 increased to $62.4 million from
$41.3 million for the comparable period of fiscal 1999,
primarily due to the increased debt levels as a result of our
1999 acquisitions, higher variable interest rates and a 53rd
week of expense accrual during fiscal 2000.

Income tax expense for fiscal 2000 was $0.2 million, compared to
income tax expense of $17.4 million in fiscal 1999. Our
effective tax rate decreased during the 2000 period to
approximately 4% of pre-tax income from approximately 38% in
fiscal 1999. The rate decreased as a result of a reversal of
prior reserves no longer required and certain tax credits that
were realized in the current year which were not available in
the prior year.

As a result of the factors cited above, net income decreased in
fiscal 2000 to $5.0 million, or $0.18 per diluted share,
compared to net income for fiscal 1999 of $27.4 million, or
$0.96 per diluted share. However, EBITDA increased by $7.9
million to $156.9 million in fiscal 2000 compared to $149.0
million in fiscal 1999. See Item 6. Selected Consolidated
Financial Data for discussion regarding the calculation of
EBITDA.

Fiscal 1999 Compared to Fiscal 1998

Net sales for fiscal 1999 increased $227.1 million, or 22.6%,
over net sales for fiscal 1998, primarily reflecting an increase
in the number of stores operated and a comparable store sales
increase of 4%. During the third quarter of fiscal 1999, we
acquired 194 AGA stores. During the second quarter of fiscal
1999, we acquired 86 Big Wheel stores. The acquired stores
contributed $101.5 million of net sales during the portion of
the year that we owned them. In addition to the AGA and Big
Wheel stores, during fiscal 1999 we opened 84 new stores,
relocated 26 stores and expanded 9 stores. We closed 77 stores
including those closed due to relocation, of which 37 were
acquired stores. At January 30, 2000, we had 1,120 stores
in operation compared to 807 stores at the end of fiscal 1998.

Gross profit for fiscal 1999 was $595.2 million, or 48.3% of net
sales, compared to $473.3 million, or 47.1% of net sales, for
fiscal 1998. The increase in gross profit percentage primarily
resulted from our ability to obtain generally better pricing and
more favorable terms and support from our vendors due to
increased purchase volume and improved financial performance.

Operating and administrative expenses increased by $79.8 million
to $471.3 million, or 38.3% of net sales, for fiscal 1999 from
$391.5 million, or 39.0% of net sales, for fiscal 1998. The
increase in dollar value is

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Operating profit increased to $86.8 million, or 7.1% of net
sales, for fiscal 1999, compared to $74.0 million, or 7.4% of
net sales, for fiscal 1998. During fiscal 1999, we incurred
$30.2 million of non-recurring expenses associated with the
integration and conversion of the AGA and Big Wheel stores into
our operations, $2.5 million of store closing costs for CSK Auto
stores that were identified for closure due to overlap with
certain acquired stores, $1.9 million of goodwill amortization
relating to our recent acquisitions and $2.4 million of other
store closing costs. Operating profit for fiscal 1998 was
affected by $3.1 million of expenses associated with the
integration of the Trak West stores, a $3.6 million
non-recurring charge associated with the termination of a
management agreement as a result of our IPO and $0.8 million of
costs associated with our Secondary Offering.

Interest expense for fiscal 1999 increased to $41.3 million from
$30.7 million for fiscal 1998. The expense increased
primarily as a result of the additional indebtedness incurred to
fund the AGA and Big Wheel Acquisitions.

Income tax expense for fiscal 1999 was $17.4 million, compared
to income tax expense of $15.7 million in fiscal 1998. Our
effective tax rate increased during the 1999 period to
approximately 38% of pre-tax income from approximately 36% in
fiscal 1998 as a result of certain tax credits that were
realized in the prior year which were not available in the
current year.

Fiscal 1999 was affected by a charge of $0.7 million, net of
income tax, relating to the cumulative effect of a change in
accounting principle associated with the adoption of SOP 98-5,
Reporting on the Cost of Start-up Activities. See
Note 2 to the Consolidated Financial Statements.

As a result of the factors cited above, net income increased in
fiscal 1999 to $27.4 million, or $0.96 per diluted share,
compared to net income for fiscal 1998 of $20.7 million, or
$0.75 per diluted share. However, EBITDA increased by $45.1
million to $149.0 million in fiscal 1999 compared to $103.9
million in fiscal 1998. See Item 6. Selected Consolidated
Financial Data for discussion regarding the calculation of
EBITDA.

Liquidity and Capital Resources

Overview

Our primary cash requirements include working capital (primarily
inventory), debt service obligations and capital expenditures.
We intend to finance our cash requirements with cash flows from
operations and borrowings under our revolving credit facility.
At February 4, 2001, we had net working capital of
approximately $401.5 million and total liquidity (cash plus
availability under our revolving credit facility) of
approximately $22.0 million. During most of fiscal 2000, we had
access to an off-balance sheet operating lease facility which
was used to finance new store construction. As of
February 4, 2001, $10.6 million had been committed, of
which $9.6 million had been utilized and $1.0 million remained
to be funded for stores not completed by December 31, 2000.
Under a similar agreement that expired on May 31, 1999 with
respect to the addition of new stores, approximately $80.9
million was used to finance new store construction. We are
currently negotiating a new lease facility and expect to have a
facility in place by the end of the second quarter of fiscal
2001. We do not believe that such a lease facility is critical
to our store development plans for fiscal 2001 based on the
limited number of projected store openings and the availability
of other alternative financing arrangements, including
sale-leaseback financing transactions directly with individual
investors.

We have finalized an agreement to settle the class action
lawsuits (see Note 14 to the Consolidated Financial Statements)
brought by former and present California store managers and
senior assistant managers seeking overtime pay under California
law. The amount of the settlement is approximately $8.8 million
(which includes plaintiffs attorneys fees and costs)
and will be paid in April and May 2001. The settlement will
be funded through the revolving credit facility.

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In fiscal 2000, net cash provided by operating activities was
$32.5 million, compared to $4.0 million of cash used in
operating activities during fiscal 1999. The largest component
of the change in cash flow from operating activities relates to
our investment in inventories, where $7.6 million of cash was
used during fiscal 2000 compared to $93.6 million used for such
purposes during fiscal 1999. The decrease in inventories
reflects the sell through, return to vendors or other
disposition of inventories obtained in acquisitions and reduced
inventory levels as a result of cost containment.

Net cash used in investing activities totaled $34.5 million in
fiscal 2000, compared to $260.2 million in fiscal 1999. The
decrease in cash used in investing activities was primarily the
result of $218.2 million used in the Big Wheel, AGA and AIS
Acquisitions during fiscal 1999 and a lower level of capital
expenditures in fiscal 2000.

Net cash provided by financing activities totaled $1.4 million
in fiscal 2000 compared to $268.5 million in fiscal 1999. In
2000, we used $17.7 million of net borrowings under the Senior
Credit Facility to fund investing activities and made payments
of $10.9 million on capital lease obligations. In 1999, we used
$283.7 million of net borrowings under the Senior Credit
Facility primarily relating to the Big Wheel, AGA and AIS
Acquisitions, incurred $4.7 million of debt issuance costs and
made payments of $10.9 million on capital lease obligations.

We expect to spend approximately $15.5 million during fiscal
2001 for capital expenditures, including new store fixtures and
information systems hardware and software. Our debt service
requirements in 2001 include scheduled principal reductions of
approximately $54.6 million, $10.9 million of principal payments
under capital lease obligations and associated annual interest.
We believe that cash flow from operations combined with the
availability of funds under the revolving credit facility will
be sufficient to support our operations and liquidity
requirements for the foreseeable future.

Store Acquisitions

On April 27, 2000, we acquired the AllCar stores. Under the
terms of the agreement, we paid approximately $711,000 in cash,
which includes associated transaction costs, for the assets of
AllCar and assumed vendor accounts payable and certain
indebtedness and accrued expenses. In August 2000, we made
a payment of approximately $206,000 pursuant to a purchase price
adjustment formula contained in the original agreement. In
addition, we may be required to make an additional payment in
2002 of approximately $215,000 upon the satisfaction of certain
conditions. The AllCar stores are serviced out of our Mendota
Heights Distribution Center and have been converted to the
Checker name and store format and integrated into our operations.

In connection with our 1999 acquisitions and the acquisition of
the AllCar stores, we incurred one-time transition and
integration expenses of approximately $23.8 million during
fiscal 2000, consisting primarily of grand opening advertising,
training and re-merchandising costs. In addition, during fiscal
2000, we incurred $10.2 million of capital expenditures,
consisting primarily of expenditures related to equipment, store
fixtures, signage and the installation of our store-level
information systems in these stores. We do not anticipate any
significant transition and integration expenses or capital
expenditures relating to these acquisitions during fiscal 2001.

Expansion

We opened 60 new, relocated or expanded stores in fiscal 2000
and 119 new, relocated or expanded stores in fiscal 1999. We
expect to open, relocate or expand approximately 50 stores in
fiscal 2001. We anticipate that the majority of these new,
relocated or expanded stores will be financed under arrangements
structured as operating leases that require no net capital
expenditures except for fixtures and store equipment. For the
remainder of our planned new, relocated or expanded stores, we
expect to spend approximately $125,000 per store for leasehold
improvements. In addition to capital expenditures, each new
store will require an estimated investment in working capital,
principally for inventories, of approximately $300,000. New
stores generally become profitable during the first full year of
operations.

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Store Closing Costs

We provide an allowance for estimated costs and losses to be
incurred in connection with store closures. For stores to be
closed, 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 (prior to
January 31, 1999, within eighteen months). 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. The allowance for store
closing costs is included in accrued expenses in the
accompanying financial statements, and consists primarily of
future rents to be paid over the remaining terms of the lease
agreement for stores, net of estimated sub-lease recoveries.
Future rents will be incurred through the expiration of the
non-cancelable leases, the longest of which runs through
March 2018.

Activity in the provision for store closings and the related
store closing costs for the three fiscal years ended
February 4, 2001, is as follows (in thousands):

|                                 |                                 |                                       |         |       |       |      |        |       |       |   |        |       |     | 
|-------------------------------- | ------------------------------- | ------------------------------------- | ------- | ----- | ----- | ---- | ------ | ----- | ----- | - | ------ | ----- | --- | 
|                                 |                                 |                                      
|                                 |                                 | Fiscal Year                          
|                                 |                                 |                                      
|                                 |                                 | 2000                                  |         | 1999  |       | 1998
|                                 |                                 |                                       |         |       |       |     
|Balance, beginning of year       |                                 | $                                     | 4,802   |       |       | $    | 2,670  |       |       | $ | 8,379  |      
|                                
|                                
|                                
|                                
|Store closing costs:             |                                 |                                       |         |       |       |      |        |       |       |   |        |      
|                                
|                                
|                                
|                                
|                                 | Store closing costs, gross      |                                       |         | 6,101 |       |      |        | 5,252 |       |   |        | 1,925 |    
|                                
|                                
|                                
|                                
|                                 | Adjustments to prior year plans |                                       |         | (41   | )     |      |        | (387  | )     |   |        | (620  | )  
|                                
|                                
|                                
|                                
|                                 | Revisions in estimates          |                                       |         |      |       |      |        | 35    |       |   |        | (970  | )  
|                                 |                                 |                                       |         |       |       |      |        |       |       |   |        |      
|                                 |                                 | Store closing costs, net              |         |       | 6,060 |      |        |       | 4,900 |   |        |       | 335 | 
|                                
|                                
|                                
|                                
|Purchase accounting adjustments: |                                 |                                       |         |       |       |      |        |       |       |   |        |      
|                                
|                                
|                                
|                                
|                                 | Big Wheel                       |                                       |         |      |       |      |        | 98    |       |   |        |      |    
|                                
|                                
|                                
|                                
|                                 | Als and Grand Auto Supply      |                                       |         | 2,744 |       |      |        | 4,080 |       |   |        |      |    
|                                 |                                 |                                       |         |       |       |      |        |       |       |   |        |      
|                                 |                                 | Total purchase accounting adjustments |         |       | 2,744 |      |        |       | 4,178 |   |        |       |    | 
|                                
|                                
|                                
|                                
|Payments                         |                                 |                                       | (12,054 | )     |       |      | (6,946 | )     |       |   | (6,044 | )    
|                                 |                                 |                                       |         |       |       |      |        |       |       |   |        |      
|Balance, end of year             |                                 | $                                     | 1,552   |       |       | $    | 4,802  |       |       | $ | 2,670  |      
|                                 |                                 |                                       |         |       |       |      |        |       |       |   |        |      

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. As a
result of the AGA Acquisition, we analyzed our store locations
in California and the Pacific Northwest. We closed or relocated
39 of the former AGA stores (of which 37 were closed as of
January 30, 2000) based on several factors including:
(1) market saturation; (2) store profitability; and
(3) store size and format. Costs associated with these
closures have been considered in our final purchase price
allocation (see Note 4 to the Consolidated Financial
Statements). In addition, we finalized a store closure plan for
our own stores that overlap with AGA stores, which resulted in
pre-tax charges of approximately $3.7 million and $2.5 million
during fiscal 2000 and 1999, respectively. The charges consist
of two components: (1) future rents to be paid over the
remaining terms of the lease agreements for the stores (net of
estimated sub-lease recoveries); and (2) write-down of
leasehold improvements and other fixed assets associated with
the stores.

Adjustments to prior plans relate to costs for store closures
that were accrued in prior years but withdrawn from our store
closure plan in the year of adjustment. Such withdrawals are due
to subsequent improvements in the underlying economics of the
stores performance or (in the case of store relocation)
because we were unable to secure a previously identified site
upon acceptable lease terms. We had significant adjustments to
prior year plans in 1998 because of changes resulting from
improved performance at certain stores scheduled for closure in
1998. Further significant changes to the strategic plan are not
considered likely. All relocations and store closings are
anticipated to be completed within twelve months of accrual and
only after costs can be estimated.

Other cost revisions are comprised of changes in expected future
rental costs for vacant or sub-leased store locations, which are
due largely to early terminations of lease agreements.

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As part of the purchase price allocation for the AGA and Big
Wheel stores (see Note 4 to the Consolidated Financial
Statements), we recorded an allowance for the costs of closing
or relocating certain stores.

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

|               |  |                               |    |              |  |            |    |               |  |            |     |   |  |  |     |   |  |  |    | 
|-------------- |  | ----------------------------- | -- | ------------ |  | ---------- | -- | ------------- |  | ---------- | --- | - |  |  | --- | - |  |  | -- | 
|               |  |                               |    |             
|               |  | Number of Stores to be Closed |    |             
|               |  |                               |    |             
|Store Count by |  | Beginning                     |    |              |  | Plan       |    |               |  | Balance to
|Fiscal Year    |  | Balance                       |    | Stores Added |  | Amendments |    | Stores Closed |  | be Closed 
|               |  |                               |    |              |  |            |    |               |  |           
|1997           |  |                               | 56 |              |  |            | 36 |               |  |            | (15 | ) |  |  | (29 | ) |  |  | 48 | 
|              
|              
|              
|              
|1998           |  |                               | 48 |              |  |            | 24 |               |  |            | (10 | ) |  |  | (33 | ) |  |  | 29 | 
|              
|              
|              
|              
|1999           |  |                               | 29 |              |  |            | 87 |               |  |            | (11 | ) |  |  | (77 | ) |  |  | 28 | 
|              
|              
|              
|              
|2000           |  |                               | 28 |              |  |            | 24 |               |  |            | (1  | ) |  |  | (42 | ) |  |  | 9  | 

At February 4, 2001, there were 9 stores remaining to be
closed under our store closing plans, comprised of the following:

|                |  |              |    |            |  |               |    |            |  |  |     |   |  |  |   | 
|--------------- |  | ------------ | -- | ---------- |  | ------------- | -- | ---------- |  |  | --- | - |  |  | - | 
|Store Count by  |  | Stores in    |    | Plan       |  |               |    | Balance to
|Year of Accrual |  | Closing Plan |    | Amendments |  | Stores Closed |    | be Closed 
|                |  |              |    |            |  |               |    |           
|1999            |  |              | 87 |            |  |               | (2 | )          |  |  | (82 | ) |  |  | 3 | 
|               
|               
|               
|               
|2000            |  |              | 24 |            |  |               |   |            |  |  | (18 | ) |  |  | 6 | 
|                |  |              |    |            |  |               |    |            |  |  |     |   |  |  | 9 | 

Service Centers

As a result of our 1999 Acquisitions and the AllCar Acquisition
in the first quarter of fiscal 2000, we acquired 84 automobile
service centers. The majority of these centers are adjacent or
attached to existing retail stores and perform automotive
maintenance as well as tire sales and service. During fiscal
2000, we substantially exited the service center business as it:
(1) required management experience that is not consistent
with our core business operations; (2) required human and
financial resources better utilized in our retail and commercial
operations; and (3) did not allow us sufficient economies
of scale to achieve required profitability.

In conjunction with our plan, during fiscal 1999 we closed 12
centers and during fiscal 2000 we sublet 44 centers and closed
27 centers. The one remaining center was subleased during the
first quarter of fiscal 2001. During fiscal 2000, these centers
generated net sales of approximately $7.6 million and pre-tax
operating losses of approximately $2.9 million.

Quarterly Results and Seasonality

Our business is somewhat seasonal in nature, with the highest
sales occurring in the summer months of June through August
(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 such
periods, extremely hot and cold temperatures tend to enhance
sales by causing auto parts to fail and sales of seasonal
products to increase.

The following table sets forth certain quarterly unaudited
operating data for fiscal 2000 and 1999. The unaudited quarterly
information includes all adjustments which management considers
necessary for a fair presentation of the information shown.

The data presented below should be read in conjunction with our
consolidated financial statements and related notes and the
other financial information included herein.

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##### Table of Contents



|                                     |  |                                          |         |         |  |         |         |         |  |   |         |  |  |   |         |  
|------------------------------------ |  | ---------------------------------------- | ------- | ------- |  | ------- | ------- | ------- |  | - | ------- |  |  | - | ------- | -
|                                     |  |                                         
|                                     |  | Fiscal 2000                             
|                                     |  |                                         
|                                     |  | First                                    |         | Second  |  | Third   |         | Fourth 
|                                     |  | Quarter                                  |         | Quarter |  | Quarter |         | Quarter
|                                     |  |                                          |         |         |  |         |         |        
|                                     |  |                                         
|                                     |  | (in thousands, except per share amounts)
|                                    
|                                    
|                                    
|                                    
|Net sales                            |  | $                                        | 356,354 |         |  | $       | 374,802 |         |  | $ | 368,898 |  |  | $ | 352,055 |  
|                                    
|                                    
|                                    
|                                    
|Gross profit                         |  |                                          | 173,543 |         |  |         | 173,454 |         |  |   | 172,698 |  |  |   | 163,371 |  
|                                    
|                                    
|                                    
|                                    
|Legal settlement                     |  |                                          |        |         |  |         |        |         |  |   |        |  |  |   | 8,800   |  
|                                    
|                                    
|                                    
|                                    
|Transition and integration expenses  |  |                                          | 11,447  |         |  |         | 11,063  |         |  |   | 1,308   |  |  |   |        |  
|                                    
|                                    
|                                    
|                                    
|Equity in loss of joint venture      |  |                                          |        |         |  |         | 716     |         |  |   | 1,188   |  |  |   | 1,264   |  
|                                    
|                                    
|                                    
|                                    
|Operating profit(1)                  |  |                                          | 23,785  |         |  |         | 12,842  |         |  |   | 24,521  |  |  |   | 6,400   |  
|                                    
|                                    
|                                    
|                                    
|Net income (loss)                    |  |                                          | 5,675   |         |  |         | (1,495  | )       |  |   | 5,892   |  |  |   | (5,072  | )
|                                    
|                                    
|                                    
|                                    
|Basic earnings (loss) per share(4)   |  |                                          | .20     |         |  |         | (.05    | )       |  |   | .21     |  |  |   | (.18    | )
|                                    
|                                    
|                                    
|                                    
|Diluted earnings (loss) per share(4) |  |                                          | .20     |         |  |         | (.05    | )       |  |   | .21     |  |  |   | (.18    | )
|                                    
|                                    
|                                    
|                                    
|EBITDA                               |  | $                                        | 45,168  |         |  | $       | 40,267  |         |  | $ | 37,632  |  |  | $ | 33,835  |  

|                                                                          |  |                                          |         |         |  |         |         |         |  |   |         |  |  |   |         |  
|------------------------------------------------------------------------- |  | ---------------------------------------- | ------- | ------- |  | ------- | ------- | ------- |  | - | ------- |  |  | - | ------- | -
|                                                                          |  |                                         
|                                                                          |  | Fiscal 1999                             
|                                                                          |  |                                         
|                                                                          |  | First                                    |         | Second  |  | Third   |         | Fourth 
|                                                                          |  | Quarter                                  |         | Quarter |  | Quarter |         | Quarter
|                                                                          |  |                                          |         |         |  |         |         |        
|                                                                          |  |                                         
|                                                                          |  | (in thousands, except per share amounts)
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Net sales                                                                 |  | $                                        | 269,402 |         |  | $       | 302,322 |         |  | $ | 331,320 |  |  | $ | 328,411 |  
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Gross profit                                                              |  |                                          | 130,151 |         |  |         | 142,729 |         |  |   | 160,374 |  |  |   | 161,962 |  
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Transition and integration expenses                                       |  |                                          |        |         |  |         | 619     |         |  |   | 3,551   |  |  |   | 26,017  |  
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Operating profit(2)                                                       |  |                                          | 23,223  |         |  |         | 28,781  |         |  |   | 30,496  |  |  |   | 4,348   |  
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Cumulative effect of change in accounting principle, net of
	income taxes |  |                                          | (741    | )       |  |         |        |         |  |   |        |  |  |   |        |  
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Net income (loss)(3)                                                      |  |                                          | 9,121   |         |  |         | 12,693  |         |  |   | 11,668  |  |  |   | (6,111  | )
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Basic earnings (loss) per share(4)                                        |  |                                          | 0.33    |         |  |         | 0.46    |         |  |   | 0.42    |  |  |   | (0.22   | )
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Diluted earnings (loss) per share(4)                                      |  |                                          | 0.32    |         |  |         | 0.44    |         |  |   | 0.41    |  |  |   | (0.22   | )
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|EBITDA                                                                    |  | $                                        | 29,119  |         |  | $       | 35,836  |         |  | $ | 41,614  |  |  | $ | 42,397  |  




|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Operating profit during fiscal 2000 was negatively affected by
	non-recurring charges of: (a) $30.4 million of
	acquisition-related expenses for the transition of acquired
	stores to the CSK format, store closing costs associated with
	the closure of CSK stores that overlap with better situated
	acquired stores and the operating losses of acquired automotive
	service centers that have been closed; (b)  $8.8 million
	relating to the settlement of the class action lawsuit;
	(c) $0.4 million of bad debt expense associated with the
	bankruptcy of a commercial customer; (d) non-cash charges
	of $3.2 million to recognize our proportionate share of
	PAs net loss and write off our remaining investment in the
	joint venture; and (e) $5.7 million of non-cash charges
	associated with the liquidation of certain acquired inventory
	that the Company was not able to return to vendors at full
	carrying value.
|   
|(2) | Operating profit during fiscal 1999 was negatively affected by
	non-recurring charges of $30.2 million related to the transition
	and integration of the 86 Big Wheel stores and the 194 AGA
	stores (see Note 4 to our Consolidated Financial Statements), as
	well as $2.5 million of non-recurring store closing costs.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   
|(3) | Net income in the first quarter of fiscal 1999 was negatively
	affected by a $0.7 million cumulative effect of change in
	accounting principle, net of a $0.5 million benefit for income
	taxes, as a result of a change in the accounting literature with
	respect to the timing of recognition for store pre-opening
	expenses.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|(4) | The sum of the quarterly earnings (loss) per share amounts
	within a fiscal year may differ from the total earnings
	(loss) per share for the fiscal year due to the impact of
	differing weighted average share outstanding calculations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

23



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##### Table of Contents



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.

Recent Accounting Pronouncements

In March 2000, the FASB issued FASB Interpretation
No. 44, Accounting for Certain Transactions Involving
Stock Compensation: An Interpretation of APB Opinion
No. 25. The interpretation became effective
July 1, 2000. The adoption of the pronouncement did not
have a material impact on the Companys financial position
or the results of operations.

In December 1999, the staff of the Securities and Exchange
Commission issued Staff Accounting Bulletin No. 101 (SAB
101), Revenue Recognition in Financial Statements.
SAB 101 summarizes some of the staffs interpretations of
the application of generally accepted accounting principles to
revenue recognition. In June 2000, the SEC staff issued SAB
101B which delays the implementation date of SAB 101 until no
later than the fourth fiscal quarter of fiscal years beginning
after December 15, 1999. The adoption of the pronouncement
did not have an impact on the Companys financial position
or the results of operations.




Item 7A.  Quantitative and Qualitative
Disclosures about Market Risk

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 are sensitive to changes in interest rates. Our variable
rate debt relates to borrowings under our Senior Credit
Facility, which is primarily vulnerable to movements in the
LIBOR rate. Our fixed rate debt consists primarily of our 11%
Senior Subordinated Notes and capital lease obligations. Our
exposure to interest rate risk increased during fiscal 2000 due
to increases in corresponding interest rates as well as
increased debt balances in conjunction with our recent
acquisitions.

We currently utilize no derivative financial instruments that
expose us to significant market risk. While we cannot predict
the impact interest rate movements will have on our debt, we
believe the exposure to interest rate risk is not material to
our financial position or results of operations.




Item 8.  Consolidated Financial Statements and
Supplementary Data

24



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##### Table of Contents



Report of Independent Accountants

To the Board of Directors and Stockholders



In our opinion, the accompanying consolidated balance sheet and
the related consolidated statements of operations,
stockholders equity (deficit) and cash flows present
fairly, in all material respects, the financial position of CSK
Auto Corporation and its subsidiary at February 4, 2001 and
January 30, 2000, and the results of their operations and
their cash flows for each of the three years in the period ended
February 4, 2001 in conformity with accounting principles
generally accepted in the United States of America. These
financial statements are the responsibility of the
Companys management; our responsibility is to express an
opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States of
America, which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by
management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable
basis for our opinion.

PRICEWATERHOUSECOOPERS LLP

Phoenix, Arizona



25



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##### Table of Contents



CSK AUTO CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share data)


|                                                                                                        |                                                                                           |                   |           |             |  |             |           |            |   |   |           |            |  
|------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------- | ----------------- | --------- | ----------- |  | ----------- | --------- | ---------- | - | - | --------- | ---------- | -
|                                                                                                        |                                                                                           |                  
|                                                                                                        |                                                                                           | Fiscal Year Ended
|                                                                                                        |                                                                                           |                  
|                                                                                                        |                                                                                           | February 4,       |           | January 30, |  | January 31,
|                                                                                                        |                                                                                           | 2001              |           | 2000        |  | 1999       
|                                                                                                        |                                                                                           |                   |           |             |  |            
|Net sales                                                                                               |                                                                                           | $                 | 1,452,109 |             |  | $           | 1,231,455 |            |   | $ | 1,004,385 |           
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|Cost of sales                                                                                           |                                                                                           |                   | 769,043   |             |  |             | 636,239   |            |   |   | 531,073   |           
|                                                                                                        |                                                                                           |                   |           |             |  |             |           |            |   |   |           |           
|Gross profit                                                                                            |                                                                                           |                   | 683,066   |             |  |             | 595,216   |            |   |   | 473,312   |           
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|Other costs and expenses:                                                                               |                                                                                           |                   |           |             |  |             |           |            |   |   |           |           
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                        | Operating and administrative                                                              |                   |           | 568,873     |  |             |           | 471,340    |   |   |           | 391,528    |  
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                        | Store closing costs                                                                       |                   |           | 6,060       |  |             |           | 4,900      |   |   |           | 335        |  
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                        | Legal settlement                                                                          |                   |           | 8,800       |  |             |           |           |   |   |           |           |  
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                        | Transition and integration expenses                                                       |                   |           | 23,818      |  |             |           | 30,187     |   |   |           | 3,075      |  
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                        | Equity in loss of joint venture                                                           |                   |           | 3,168       |  |             |           |           |   |   |           |           |  
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                        | Goodwill amortization                                                                     |                   |           | 4,799       |  |             |           | 1,941      |   |   |           |           |  
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                        | Write-off of unamortized management fee                                                   |                   |           |            |  |             |           |           |   |   |           | 3,643      |  
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                        | Secondary stock offering costs                                                            |                   |           |            |  |             |           |           |   |   |           | 770        |  
|                                                                                                        |                                                                                           |                   |           |             |  |             |           |            |   |   |           |           
|Operating profit                                                                                        |                                                                                           |                   | 67,548    |             |  |             | 86,848    |            |   |   | 73,961    |           
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|Interest expense, net                                                                                   |                                                                                           |                   | 62,355    |             |  |             | 41,300    |            |   |   | 30,730    |           
|                                                                                                        |                                                                                           |                   |           |             |  |             |           |            |   |   |           |           
|Income before income taxes, extraordinary loss and cumulative
	effect of change in accounting principle |                                                                                           |                   | 5,193     |             |  |             | 45,548    |            |   |   | 43,231    |           
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|Income tax expense                                                                                      |                                                                                           |                   | 193       |             |  |             | 17,436    |            |   |   | 15,746    |           
|                                                                                                        |                                                                                           |                   |           |             |  |             |           |            |   |   |           |           
|Income before extraordinary loss and cumulative effect of change
	in accounting principle               |                                                                                           |                   | 5,000     |             |  |             | 28,112    |            |   |   | 27,485    |           
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|Extraordinary loss, net of $4,236 of income taxes                                                       |                                                                                           |                   |          |             |  |             |          |            |   |   | (6,767    | )         
|                                                                                                        |                                                                                           |                   |           |             |  |             |           |            |   |   |           |           
|Income before cumulative effect of change in accounting principle                                       |                                                                                           |                   | 5,000     |             |  |             | 28,112    |            |   |   | 20,718    |           
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|Cumulative effect of change in accounting principle, net of $468
	of income taxes                       |                                                                                           |                   |          |             |  |             | (741      | )          |   |   |          |           
|                                                                                                        |                                                                                           |                   |           |             |  |             |           |            |   |   |           |           
|Net income                                                                                              |                                                                                           | $                 | 5,000     |             |  | $           | 27,371    |            |   | $ | 20,718    |           
|                                                                                                        |                                                                                           |                   |           |             |  |             |           |            |   |   |           |           
|Basic earnings (loss) per share:                                                                        |                                                                                           |                   |           |             |  |             |           |            |   |   |           |           
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                        | Income before extraordinary loss and cumulative effect of change
	in accounting principle |                   | $         | .18         |  |             | $         | 1.01       |   |   | $         | 1.03       |  
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                        | Extraordinary loss, net of income taxes                                                   |                   |           |            |  |             |           |           |   |   |           | (0.25      | )
|                                                                                                        |                                                                                           |                   |           |             |  |             |           |            |   |   |           |           
|                                                                                                        | Income before cumulative effect of change in accounting principle                         |                   |           | .18         |  |             |           | 1.01       |   |   |           | 0.78       |  
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                        | Cumulative effect of change in accounting principle, net of
	income taxes                 |                   |           |            |  |             |           | (0.03      | ) |   |           |           |  
|                                                                                                        |                                                                                           |                   |           |             |  |             |           |            |   |   |           |           
|                                                                                                        | Net income                                                                                |                   | $         | .18         |  |             | $         | 0.98       |   |   | $         | 0.78       |  
|                                                                                                        |                                                                                           |                   |           |             |  |             |           |            |   |   |           |           
|                                                                                                        | Shares used in computing per share amounts                                                |                   |           | 27,839,348  |  |             |           | 27,815,160 |   |   |           | 26,722,322 |  
|                                                                                                        |                                                                                           |                   |           |             |  |             |           |            |   |   |           |           
|Diluted earnings (loss) per share:                                                                      |                                                                                           |                   |           |             |  |             |           |            |   |   |           |           
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                        | Income before extraordinary loss and cumulative effect of change
	in accounting principle |                   | $         | .18         |  |             | $         | 0.98       |   |   | $         | 0.99       |  
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                        | Extraordinary loss, net of income taxes                                                   |                   |           |            |  |             |           |           |   |   |           | (0.24      | )
|                                                                                                        |                                                                                           |                   |           |             |  |             |           |            |   |   |           |           
|                                                                                                        | Income before cumulative effect of change in accounting principle                         |                   |           | .18         |  |             |           | 0.98       |   |   |           | 0.75       |  
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                        | Cumulative effect of change in accounting principle, net of
	income taxes                 |                   |           |            |  |             |           | (0.02      | ) |   |           |           |  
|                                                                                                        |                                                                                           |                   |           |             |  |             |           |            |   |   |           |           
|                                                                                                        | Net income                                                                                |                   | $         | .18         |  |             | $         | 0.96       |   |   | $         | 0.75       |  
|                                                                                                        |                                                                                           |                   |           |             |  |             |           |            |   |   |           |           
|                                                                                                        | Shares used in computing per share amounts                                                |                   |           | 27,839,348  |  |             |           | 28,626,776 |   |   |           | 27,640,099 |  
|                                                                                                        |                                                                                           |                   |           |             |  |             |           |            |   |   |           |           

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

26



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##### Table of Contents



CSK AUTO CORPORATION AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)


|                                                                  |                                                                                                                                                                               |                                            |         |             |           |   |         |          |           | 
|----------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ------- | ----------- | --------- | - | ------- | -------- | --------- | 
|                                                                  |                                                                                                                                                                               | February 4,                                |         | January 30,
|                                                                  |                                                                                                                                                                               | 2001                                       |         | 2000       
|                                                                  |                                                                                                                                                                               |                                            |         |            
|ASSETS                                                            |                                                                                                                                                                               |                                            |         |             |           |   |         |         
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Cash and cash equivalents                                         |                                                                                                                                                                               | $                                          | 11,131  |             |           | $ | 11,762  |         
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Receivables, net of allowances of $4,236 and $3,294, respectively |                                                                                                                                                                               |                                            | 79,901  |             |           |   | 69,129  |         
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Inventories                                                       |                                                                                                                                                                               |                                            | 621,814 |             |           |   | 625,480 |         
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Deferred income taxes                                             |                                                                                                                                                                               |                                            | 3,133   |             |           |   |        |         
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Assets held for sale                                              |                                                                                                                                                                               |                                            | 1,497   |             |           |   | 4,745   |         
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Prepaid expenses and other current assets                         |                                                                                                                                                                               |                                            | 19,169  |             |           |   | 18,471  |         
|                                                                  |                                                                                                                                                                               |                                            |         |             |           |   |         |         
|                                                                  |                                                                                                                                                                               | Total current assets                       |         |             | 736,645   |   |         |          | 729,587   | 
|                                                                  |                                                                                                                                                                               |                                            |         |             |           |   |         |         
|Property and equipment, net                                       |                                                                                                                                                                               |                                            | 175,358 |             |           |   | 160,561 |         
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Leasehold interests, net                                          |                                                                                                                                                                               |                                            | 20,244  |             |           |   | 8,341   |         
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Goodwill, net                                                     |                                                                                                                                                                               |                                            | 130,544 |             |           |   | 124,750 |         
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Other assets, net                                                 |                                                                                                                                                                               |                                            | 14,190  |             |           |   | 12,413  |         
|                                                                  |                                                                                                                                                                               |                                            |         |             |           |   |         |         
|                                                                  |                                                                                                                                                                               | Total assets                               |         | $           | 1,076,981 |   |         | $        | 1,035,652 | 
|                                                                  |                                                                                                                                                                               |                                            |         |             |           |   |         |         
|LIABILITIES AND STOCKHOLDERS EQUITY                              |                                                                                                                                                                               |                                            |         |             |           |   |         |         
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Accounts payable                                                  |                                                                                                                                                                               | $                                          | 199,483 |             |           | $ | 168,770 |         
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Accrued payroll and related expenses                              |                                                                                                                                                                               |                                            | 27,673  |             |           |   | 38,910  |         
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Accrued expenses and other current liabilities                    |                                                                                                                                                                               |                                            | 42,448  |             |           |   | 50,663  |         
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Current maturities of amounts due under Senior Credit Facility    |                                                                                                                                                                               |                                            | 54,640  |             |           |   | 3,340   |         
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Current maturities of capital lease obligations                   |                                                                                                                                                                               |                                            | 10,878  |             |           |   | 9,893   |         
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Deferred income taxes                                             |                                                                                                                                                                               |                                            |        |             |           |   | 1,417   |         
|                                                                  |                                                                                                                                                                               |                                            |         |             |           |   |         |         
|                                                                  |                                                                                                                                                                               | Total current liabilities                  |         |             | 335,122   |   |         |          | 272,993   | 
|                                                                  |                                                                                                                                                                               |                                            |         |             |           |   |         |         
|Amounts due under Senior Credit Facility                          |                                                                                                                                                                               |                                            | 471,840 |             |           |   | 505,480 |         
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Obligations under 11% Senior Subordinated Notes                   |                                                                                                                                                                               |                                            | 81,250  |             |           |   | 81,250  |         
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Obligations under capital leases                                  |                                                                                                                                                                               |                                            | 29,273  |             |           |   | 27,170  |         
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Deferred income taxes                                             |                                                                                                                                                                               |                                            | 10,544  |             |           |   | 5,801   |         
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Other                                                             |                                                                                                                                                                               |                                            | 9,339   |             |           |   | 8,411   |         
|                                                                  |                                                                                                                                                                               |                                            |         |             |           |   |         |         
|                                                                  |                                                                                                                                                                               | Total non-current liabilities              |         |             | 602,246   |   |         |          | 628,112   | 
|                                                                  |                                                                                                                                                                               |                                            |         |             |           |   |         |         
|Commitments and contingencies                                     |                                                                                                                                                                               |                                            |         |             |           |   |         |         
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Stockholders equity:                                             |                                                                                                                                                                               |                                            |         |             |           |   |         |         
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Common stock, $0.01 par value, 50,000,000 shares authorized,
	27,841,178 and 27,834,574 shares issued and outstanding at
	February 4, 2001 and January 30, 2000, respectively |                                            |         | 278         |           |   |         | 278      |          
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Additional paid-in capital                                                                                                                                                    |                                            |         | 291,063     |           |   |         | 291,004  |          
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Stockholder receivable                                                                                                                                                        |                                            |         | (745        | )         |   |         | (584     | )        
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Deferred compensation                                                                                                                                                         |                                            |         | (156        | )         |   |         | (324     | )        
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Accumulated deficit                                                                                                                                                           |                                            |         | (150,827    | )         |   |         | (155,827 | )        
|                                                                  |                                                                                                                                                                               |                                            |         |             |           |   |         |         
|                                                                  |                                                                                                                                                                               | Total stockholders equity                 |         |             | 139,613   |   |         |          | 134,547   | 
|                                                                  |                                                                                                                                                                               |                                            |         |             |           |   |         |         
|                                                                  |                                                                                                                                                                               | Total liabilities and stockholders equity |         | $           | 1,076,981 |   |         | $        | 1,035,652 | 
|                                                                  |                                                                                                                                                                               |                                            |         |             |           |   |         |         

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

27



---



##### Table of Contents



CSK AUTO CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
(DEFICIT)

(in thousands, except share data)


|                                                                               |  |              |            |            |  |             |     |            |  |              |         |         |  |           |        |   |  |   |      |   |  |   |          |   |  |   |         |  
|------------------------------------------------------------------------------ |  | ------------ | ---------- | ---------- |  | ----------- | --- | ---------- |  | ------------ | ------- | ------- |  | --------- | ------ | - |  | - | ---- | - |  | - | -------- | - |  | - | ------- | -
|                                                                               |  |              |            |            |  |             |     |            |  |              |         |        
|                                                                               |  | Common Stock |            | Additional |  |             |     |            |  |              |         | Total  
|                                                                               |  |              |            | Paid-in    |  | Stockholder |     | Deferred   |  | Accumulated  |         | Equity 
|                                                                               |  | Shares       |            | Amount     |  | Capital     |     | Receivable |  | Compensation |         | Deficit |  | (Deficit)
|                                                                               |  |              |            |            |  |             |     |            |  |              |         |         |  |          
|Balances at February 1, 1998                                                   |  |              | 19,113,388 |            |  | $           | 191 |            |  | $            | 130,513 |         |  | $         | (1,168 | ) |  | $ | (675 | ) |  | $ | (203,916 | ) |  | $ | (75,055 | )
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Amortization of deferred compensation                                          |  |              |           |            |  |             |    |            |  |              |        |         |  |           |       |   |  |   | 182  |   |  |   |         |   |  |   | 182     |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Recovery of stockholder receivable                                             |  |              |           |            |  |             |    |            |  |              |        |         |  |           | 150    |   |  |   |     |   |  |   |         |   |  |   | 150     |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Issuance of common stock in initial public offering, net of
	transaction costs |  |              | 8,625,000  |            |  |             | 86  |            |  |              | 158,537 |         |  |           |       |   |  |   |     |   |  |   |         |   |  |   | 158,623 |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Stock compensation                                                             |  |              |           |            |  |             |    |            |  |              | 220     |         |  |           |       |   |  |   |     |   |  |   |         |   |  |   | 220     |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Exercise of options                                                            |  |              | 30,444     |            |  |             | 1   |            |  |              | 366     |         |  |           |       |   |  |   |     |   |  |   |         |   |  |   | 367     |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Tax benefit of exercise of options                                             |  |              |           |            |  |             |    |            |  |              | 184     |         |  |           |       |   |  |   |     |   |  |   |         |   |  |   | 184     |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Net income                                                                     |  |              |           |            |  |             |    |            |  |              |        |         |  |           |       |   |  |   |     |   |  |   | 20,718   |   |  |   | 20,718  |  
|                                                                               |  |              |            |            |  |             |     |            |  |              |         |         |  |           |        |   |  |   |      |   |  |   |          |   |  |   |         |  
|Balances at January 31, 1999                                                   |  |              | 27,768,832 |            |  | $           | 278 |            |  | $            | 289,820 |         |  | $         | (1,018 | ) |  | $ | (493 | ) |  | $ | (183,198 | ) |  | $ | 105,389 |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Amortization of deferred compensation                                          |  |              |           |            |  |             |    |            |  |              |        |         |  |           |       |   |  |   | 169  |   |  |   |         |   |  |   | 169     |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Recovery of stockholder receivable                                             |  |              |           |            |  |             |    |            |  |              |        |         |  |           | 434    |   |  |   |     |   |  |   |         |   |  |   | 434     |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Exercise of options                                                            |  |              | 65,742     |            |  |             |    |            |  |              | 791     |         |  |           |       |   |  |   |     |   |  |   |         |   |  |   | 791     |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Tax benefit relating to stock option exercises                                 |  |              |           |            |  |             |    |            |  |              | 393     |         |  |           |       |   |  |   |     |   |  |   |         |   |  |   | 393     |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Net income                                                                     |  |              |           |            |  |             |    |            |  |              |        |         |  |           |       |   |  |   |     |   |  |   | 27,371   |   |  |   | 27,371  |  
|                                                                               |  |              |            |            |  |             |     |            |  |              |         |         |  |           |        |   |  |   |      |   |  |   |          |   |  |   |         |  
|Balances at January 30, 2000                                                   |  |              | 27,834,574 |            |  | $           | 278 |            |  | $            | 291,004 |         |  | $         | (584   | ) |  | $ | (324 | ) |  | $ | (155,827 | ) |  | $ | 134,547 |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Amortization of deferred compensation                                          |  |              |           |            |  |             |    |            |  |              |        |         |  |           |       |   |  |   | 168  |   |  |   |         |   |  |   | 168     |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Recovery of stockholder receivable                                             |  |              |           |            |  |             |    |            |  |              |        |         |  |           | 28     |   |  |   |     |   |  |   |         |   |  |   | 28      |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Advances to stockholders                                                       |  |              |           |            |  |             |    |            |  |              |        |         |  |           | (189   | ) |  |   |     |   |  |   |         |   |  |   | (189    | )
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Exercise of options                                                            |  |              | 6,604      |            |  |             |    |            |  |              | 59      |         |  |           |       |   |  |   |     |   |  |   |         |   |  |   | 59      |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Net income                                                                     |  |              |           |            |  |             |    |            |  |              |        |         |  |           |       |   |  |   |     |   |  |   | 5,000    |   |  |   | 5,000   |  
|                                                                               |  |              |            |            |  |             |     |            |  |              |         |         |  |           |        |   |  |   |      |   |  |   |          |   |  |   |         |  
|Balances at February 4, 2001                                                   |  |              | 27,841,178 |            |  | $           | 278 |            |  | $            | 291,063 |         |  | $         | (745   | ) |  | $ | (156 | ) |  | $ | (150,827 | ) |  | $ | 139,613 |  
|                                                                               |  |              |            |            |  |             |     |            |  |              |         |         |  |           |        |   |  |   |      |   |  |   |          |   |  |   |         |  

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

28



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##### Table of Contents



CSK AUTO CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)


|                                                       |                                                                        |                                                                                              |                                                                              |                                                                 |   |             |         |          |   |        |          |         |   |        |         |  
|------------------------------------------------------ | ---------------------------------------------------------------------- | -------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------- | --------------------------------------------------------------- | - | ----------- | ------- | -------- | - | ------ | -------- | ------- | - | ------ | ------- | -
|                                                       |                                                                        |                                                                                             
|                                                       |                                                                        | Fiscal Year Ended                                                                           
|                                                       |                                                                        |                                                                                             
|                                                       |                                                                        | February 4,                                                                                  |                                                                              | January 30,                                                     |   | January 31,
|                                                       |                                                                        | 2001                                                                                         |                                                                              | 2000                                                            |   | 1999       
|                                                       |                                                                        |                                                                                              |                                                                              |                                                                 |   |            
|Cash flows provided by (used in) operating activities: |                                                                        |                                                                                              |                                                                              |                                                                 |   |             |         |          |   |        |          |        
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Net income                                                             |                                                                                              | $                                                                            | 5,000                                                           |   |             | $       | 27,371   |   |        | $        | 20,718  |  
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                        | Adjustments to reconcile net income to net cash provided by
	(used in) operating activities: |                                                                              |                                                                 |   |             |         |          |   |        |          |         |   |       
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                        |                                                                                              | Depreciation and amortization of property and equipment                      |                                                                 |   | 33,120      |         |          |   | 26,066 |          |         |   | 20,930 |        
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                        |                                                                                              | Amortization of goodwill                                                     |                                                                 |   | 4,799       |         |          |   | 1,941  |          |         |   |       |        
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                        |                                                                                              | Amortization of leasehold interests                                          |                                                                 |   | 1,841       |         |          |   | 761    |          |         |   | 919    |        
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                        |                                                                                              | Amortization of other deferred charges                                       |                                                                 |   | 1,067       |         |          |   | 607    |          |         |   | 563    |        
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                        |                                                                                              | Amortization of deferred financing costs                                     |                                                                 |   | 2,224       |         |          |   | 1,406  |          |         |   | 1,016  |        
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                        |                                                                                              | Tax benefit relating to stock option exercises                               |                                                                 |   |            |         |          |   | 393    |          |         |   | 184    |        
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                        |                                                                                              | Equity in loss of joint venture                                              |                                                                 |   | 3,168       |         |          |   |       |          |         |   |       |        
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                        |                                                                                              | Extraordinary loss on early retirement of debt, net of income
	taxes         |                                                                 |   |            |         |          |   |       |          |         |   | 6,767  |        
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                        |                                                                                              | Cumulative effect of change in accounting principle, net of
	income taxes    |                                                                 |   |            |         |          |   | 741    |          |         |   |       |        
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                        |                                                                                              | Write-off of unamortized deferred charge                                     |                                                                 |   |            |         |          |   |       |          |         |   | 3,643  |        
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                        |                                                                                              | Deferred income taxes                                                        |                                                                 |   | 193         |         |          |   | 15,637 |          |         |   | 15,542 |        
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                        |                                                                                              | Change in operating assets and liabilities, net of effects of
	acquisitions: |                                                                 |   |             |         |          |   |        |          |         |   |        |        
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                        |                                                                                              |                                                                              | Receivables                                                     |   |             | (11,915 | )        |   |        | (5,812   | )       |   |        | (21,056 | )
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                        |                                                                                              |                                                                              | Inventories                                                     |   |             | (7,577  | )        |   |        | (93,567  | )       |   |        | (45,848 | )
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                        |                                                                                              |                                                                              | Prepaid expenses and other current assets                       |   |             | (208    | )        |   |        | 7,240    |         |   |        | (200    | )
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                        |                                                                                              |                                                                              | Accounts payable                                                |   |             | 25,172  |          |   |        | 11,203   |         |   |        | 7,925   |  
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                        |                                                                                              |                                                                              | Accrued payroll, accrued expenses and other current liabilities |   |             | (23,332 | )        |   |        | 2,793    |         |   |        | (947    | )
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                        |                                                                                              |                                                                              | Other operating activities                                      |   |             | (1,083  | )        |   |        | (811     | )       |   |        | (6,753  | )
|                                                       |                                                                        |                                                                                              |                                                                              |                                                                 |   |             |         |          |   |        |          |        
|                                                       |                                                                        |                                                                                              |                                                                              | Net cash provided by (used in) operating activities             |   |             | 32,469  |          |   |        | (4,031   | )       |   |        | 3,403   |  
|                                                       |                                                                        |                                                                                              |                                                                              |                                                                 |   |             |         |          |   |        |          |        
|Cash flows provided by (used in) investing activities: |                                                                        |                                                                                              |                                                                              |                                                                 |   |             |         |          |   |        |          |        
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Business acquisitions, net of cash acquired                            |                                                                                              |                                                                              | (1,182                                                          | ) |             |         | (218,201 | ) |        |          | (892    | )
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Capital expenditures                                                   |                                                                                              |                                                                              | (32,080                                                         | ) |             |         | (41,358  | ) |        |          | (37,846 | )
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Expenditures for assets held for sale                                  |                                                                                              |                                                                              | (5                                                              | ) |             |         | (7,400   | ) |        |          | (19,144 | )
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Proceeds from sale of property and equipment and assets held for
	sale |                                                                                              |                                                                              | 5,029                                                           |   |             |         | 8,760    |   |        |          | 21,650  |  
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Investment in joint venture                                            |                                                                                              |                                                                              | (3,168                                                          | ) |             |         |         |   |        |          |        |  
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Due to affiliate                                                       |                                                                                              |                                                                              |                                                                |   |             |         |         |   |        |          | (1,000  | )
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Other investing activities                                             |                                                                                              |                                                                              | (3,136                                                          | ) |             |         | (2,022   | ) |        |          | (292    | )
|                                                       |                                                                        |                                                                                              |                                                                              |                                                                 |   |             |         |          |   |        |          |        
|                                                       |                                                                        |                                                                                              |                                                                              | Net cash used in investing activities                           |   |             | (34,542 | )        |   |        | (260,221 | )       |   |        | (37,524 | )
|                                                       |                                                                        |                                                                                              |                                                                              |                                                                 |   |             |         |          |   |        |          |        
|Cash flows provided by (used in) financing activities: |                                                                        |                                                                                              |                                                                              |                                                                 |   |             |         |          |   |        |          |        
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Borrowings under Senior Credit Facility                                |                                                                                              |                                                                              | 309,500                                                         |   |             |         | 502,000  |   |        |          | 126,000 |  
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Payments under Senior Credit Facility                                  |                                                                                              |                                                                              | (291,840                                                        | ) |             |         | (218,340 | ) |        |          | (87,065 | )
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Issuance of common stock in initial public offering,                   |                                                                                              |                                                                              |                                                                |   |             |         |         |   |        |          | 172,482 |  
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Underwriters discount and other IPO costs                             |                                                                                              |                                                                              |                                                                |   |             |         |         |   |        |          | (13,859 | )
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Premiums paid upon early retirement of debt                            |                                                                                              |                                                                              |                                                                |   |             |         |         |   |        |          | (4,875  | )
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Retirement of 11% Senior Subordinated Notes                            |                                                                                              |                                                                              |                                                                |   |             |         |         |   |        |          | (43,750 | )
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Retirement of 12% Subordinated Notes                                   |                                                                                              |                                                                              |                                                                |   |             |         |         |   |        |          | (50,000 | )
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Payment of Senior Credit Facility with public offering proceeds        |                                                                                              |                                                                              |                                                                |   |             |         |         |   |        |          | (53,825 | )
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Payment of debt issuance costs                                         |                                                                                              |                                                                              | (1,815                                                          | ) |             |         | (4,730   | ) |        |          |        |  
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Payments on capital lease obligations                                  |                                                                                              |                                                                              | (10,934                                                         | ) |             |         | (10,905  | ) |        |          | (8,634  | )
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Advances to stockholders                                               |                                                                                              |                                                                              | (189                                                            | ) |             |         |         |   |        |          |        |  
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Recovery of stockholder receivable                                     |                                                                                              |                                                                              | 28                                                              |   |             |         | 434      |   |        |          | 150     |  
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Exercise of options                                                    |                                                                                              |                                                                              | 59                                                              |   |             |         | 791      |   |        |          | 367     |  
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Other financing activities                                             |                                                                                              |                                                                              | (3,367                                                          | ) |             |         | (726     | ) |        |          | (232    | )
|                                                       |                                                                        |                                                                                              |                                                                              |                                                                 |   |             |         |          |   |        |          |        
|                                                       |                                                                        |                                                                                              |                                                                              | Net cash provided by financing activities                       |   |             | 1,442   |          |   |        | 268,524  |         |   |        | 36,759  |  
|                                                       |                                                                        |                                                                                              |                                                                              |                                                                 |   |             |         |          |   |        |          |        
|                                                       |                                                                        |                                                                                              |                                                                              | Net increase (decrease) in cash and cash equivalents            |   |             | (631    | )        |   |        | 4,272    |         |   |        | 2,638   |  
|                                                      
|                                                      
|                                                      
|                                                      
|Cash and cash equivalents, beginning of period         |                                                                        |                                                                                              | 11,762                                                                       |                                                                 |   |             | 7,490   |          |   |        | 4,852    |        
|                                                       |                                                                        |                                                                                              |                                                                              |                                                                 |   |             |         |          |   |        |          |        
|Cash and cash equivalents, end of period               |                                                                        | $                                                                                            | 11,131                                                                       |                                                                 |   | $           | 11,762  |          |   | $      | 7,490    |        
|                                                       |                                                                        |                                                                                              |                                                                              |                                                                 |   |             |         |          |   |        |          |        

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

29



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##### Table of Contents



CSK AUTO CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

CSK Auto Corporation is a holding company. At February 4,
2001, CSK Auto Corporation had no business activity other than
its investment in CSK Auto, Inc. (Auto), a
wholly-owned subsidiary. On a consolidated basis, CSK Auto
Corporation and subsidiary are referred to herein as the
Company.

Auto is a specialty retailer of automotive aftermarket parts and
accessories. At February 4, 2001, the Company operated
1,152 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;
Schucks Auto Supply, founded in 1917 and operating in the
Pacific Northwest; and Kragen Auto Parts, founded in 1947 and
operating primarily in California.

Note 1  Summary of Significant Accounting
Policies

Principles of Consolidation

The consolidated financial statements include the accounts of
CSK Auto Corporation and Auto for all years presented. In
addition, the accounts of Automotive Information Systems, Inc.
(AIS) are included in the accompanying financial
statements from September 7, 1999, the date of acquisition
(see Note 4). All intercompany accounts and transactions
are eliminated in consolidation.

Fiscal Year

The Companys fiscal year end is on the Sunday nearest to
January 31 of the following calendar year. The fiscal year
ended February 4, 2001 (fiscal 2000) consists
of 53 weeks, while the fiscal years ended January 30,
2000 (fiscal 1999) and January 31, 1999
(fiscal 1998) each consisted of 52 weeks.

Revenue Recognition

The Company recognizes sales upon the delivery of products to
its customers, which generally occurs at the Companys
retail store locations. For commercial customers, the Company
also delivers products to customer locations. All retail and
commercial sales are final upon delivery of products. However,
as a convenience to the customer and as typical of most
retailers, the Company will accept merchandise returns. The
Company generally limits the period of time within which
products may be returned to 30 days and requires returns to
be accompanied by original packaging and a sales receipt. The
accompanying financial statements include an allowance for sales
returns, which has been estimated by management based upon
historical activity.

Cash Equivalents

Cash equivalents consist primarily of certificates of deposit
with maturities of three months or less when purchased.

Receivables

Receivables are primarily comprised of amounts due from vendors
for rebates or allowances, and amounts due from commercial sales
customers.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to
concentration of credit risk consist principally of cash and
cash equivalents and trade receivables. As of February 4,
2001, the Company had cash and cash equivalents on deposit with
a major financial institution that were in excess of FDIC
insured limits. Historically, the Company has not experienced
any loss of its cash and cash equivalents due to such
concentration of credit risk.

30



---



##### Table of Contents



CSK AUTO CORPORATION AND SUBSIDIARY


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

The Company does not hold collateral to secure payment of its
trade accounts receivable. However, management performs ongoing
credit evaluations of its customers financial condition
and provides an allowance for estimated potential losses.
Exposure to credit loss is limited to the carrying amount.

Inventories and Cost of Sales

Inventories are valued at the lower of cost or market, cost
being determined utilizing the last-in, first-out method. Cost
of sales includes product cost, net of earned vendor rebates,
discounts and allowances. The Company recognizes vendor rebates,
discounts and allowances based on the terms of the underlying
agreements. Such amounts may be amortized over the life of the
applicable agreements or recognized as inventory is sold.
Certain operating and administrative costs associated with
purchasing and handling of inventory are capitalized in
inventories. The amounts of such costs included in inventories
as of February 4, 2001 and January 30, 2000 were
approximately $31.7 million and $31.8 million, respectively. In
addition, the Company increases cost of sales and reduces
inventory by an estimate of purchase discounts and volume
rebates that are unearned at period end, based upon inventory
turnover rates. Such capitalized purchase discounts totaled
$23.6 million and $23.5 million as of February 4, 2001 and
January 30, 2000, respectively. The replacement cost of
inventories approximated $539.4 million and $548.3 million at
February 4, 2001 and January 30, 2000, respectively.

Property and Equipment

Property, equipment and purchased software are recorded at cost.
Depreciation and amortization are computed for financial
reporting purposes utilizing primarily the straight-line method
over the estimated useful lives of the related assets, which
range from 5 to 25 years, or for leasehold improvements and
property under capital leases, the base lease term or estimated
useful life, if shorter. Maintenance and repairs are charged to
earnings when incurred.

Store Preopening Costs

During the first quarter of fiscal 1999, the Company adopted
Statement of Position (SOP) 98-5, Reporting on
the Cost of Start-up Activities. SOP 98-5 requires
that store preopening costs, consisting primarily of incremental
labor, supplies and occupancy costs directly related to the
opening of specific stores, be expensed as incurred. Previously,
the Company capitalized such costs as prepaid expenses and other
current assets and expensed them during the month in which the
store was opened. See Note 2.

Internal Software Development Costs

During the first quarter of fiscal 1999, the Company adopted
SOP 98-1 Accounting for the Cost of Computer Software
Developed or Obtained for Internal Use. SOP 98-1
provides for the capitalization of certain internal software
development costs and amortization over the life of the related
software. Previously, internal software development costs,
consisting primarily of incremental internal labor costs and
benefits, were expensed as incurred. Amounts capitalized during
fiscal 2000 and fiscal 1999 were $2.6 million and $1.7 million,
respectively. Accumulated amortization as of February 4,
2001 and January 30, 2000 was $0.7 million and $0.2
million, respectively. Total amounts charged to operations,
prior to adoption of SOP 98-1, for fiscal 1998 were
approximately $1.6 million.

Leasehold Interests

Leasehold interests represent the discounted net present value
of the excess of the fair rental value over the respective
contractual rent of facilities under operating leases acquired
in business combinations. Amortization expense is computed on a
straight-line basis over the respective lease terms. Accumulated
amortization totaled $10.3 million and $16.6 million as of
February 4, 2001 and January 30, 2000, respectively.

31



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CSK AUTO CORPORATION AND SUBSIDIARY


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

Goodwill

The cost in excess of net assets acquired is amortized on a
straight-line basis over periods ranging from 20 to 30 years,
depending on the business acquired. Management estimates such
periods using factors such as entry barriers in certain regions,
operating rights and estimated lives of other operating assets
acquired. The realizability of goodwill and other intangibles is
evaluated periodically when events or circumstances indicate a
possible inability to recover the carrying amount. Such
evaluation is based on cash flow and profitability projections
that incorporate the impact of existing Company businesses. The
analyses necessarily involve significant management judgment to
evaluate the capacity of an acquired business to perform within
projections. Accumulated amortization as of February 4,
2001 and January 30, 2000 was $6.7 million and $1.9
million, respectively.

Store Closing Costs

The Company provides an allowance for estimated costs and losses
to be incurred in connection with store closures and losses on
the disposal of store-related assets, which is net of
anticipated sublease income. 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. See Note 13.

Advertising

The Company expenses all advertising costs as such costs are
incurred. Amounts due under vendor cooperative advertising
agreements are recorded as receivables until their collection.
Advertising expense for fiscal 2000, 1999 and 1998 totaled $18.6
million, $16.5 million and $21.9 million, net of vendor funded
cooperative advertising, respectively.

Assets Held for Sale

Assets held for sale consist of newly acquired land, buildings
and store fixtures owned by the Company which the Company
intends in the next twelve months to sell to and lease back from
third parties under lease arrangements.

Long-lived Assets

The Company applies Statement of Financial Accounting Standards
(SFAS) No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed Of, which requires that long-lived assets and
certain identifiable intangible assets to be held and used or
disposed of by an entity be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. In the event assets
are impaired, losses are recognized based on the excess carrying
amount over the estimated fair value of the asset. SFAS
No. 121 also requires that assets to be disposed of be
reported at the lower of the carrying amount or the fair market
value less selling costs. The Company evaluates the carrying
value of long-lived assets on a quarterly basis to determine
whether events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable and an
impairment loss should be recognized. Such evaluation is based
on the expected utilization of the related asset and the
corresponding useful life.

Income Taxes

Deferred income taxes are recognized for the tax consequences in
future years of differences between the tax basis of assets and
liabilities and their financial reporting amounts
(temporary differences) at each year end based on
enacted tax laws and statutory rates applicable to the period in
which the temporary differences are expected to affect taxable
income. Valuation allowances are established, when necessary, to
reduce

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CSK AUTO CORPORATION AND SUBSIDIARY


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

deferred tax assets to the amount expected to be realized.
Income tax expense includes both taxes payable for the period
and the change during the period in deferred tax assets and
liabilities.

Stock-Based Compensation

SFAS No. 123, Accounting for Stock-Based
Compensation, encourages but does not require companies to
record compensation cost for stock-based employee compensation
plans at fair value. The Company has chosen to continue to
account for stock-based compensation using the intrinsic value
method prescribed in Accounting Principles Board Opinion
No. 25, Accounting for Stock Issued to
Employees and related interpretations thereof.
Accordingly, compensation cost for stock options is measured as
the excess, if any, of the market price of the Companys
stock at the date of grant over the amount an employee must pay
to acquire the stock. See Note 10.

Earnings per Share

Basic earnings per share is based on the weighted average
outstanding common shares. Diluted earnings per share is based
on the weighted average outstanding shares adjusted for the
effect of stock options.

Calculation of shares used in computing per share amounts is
summarized as follows:

|                                            |                      |                   |            |             |  |             |            |            |  |  |            |            | 
|------------------------------------------- | -------------------- | ----------------- | ---------- | ----------- |  | ----------- | ---------- | ---------- |  |  | ---------- | ---------- | 
|                                            |                      |                  
|                                            |                      | Fiscal Year Ended
|                                            |                      |                  
|                                            |                      | February 4,       |            | January 30, |  | January 31,
|                                            |                      | 2001              |            | 2000        |  | 1999       
|                                            |                      |                   |            |             |  |            
|Common stock outstanding:                   |                      |                   |            |             |  |             |            |            |  |  |            |           
|                                           
|                                           
|                                           
|                                           
|                                            | Beginning of period  |                   |            | 27,834,574  |  |             |            | 27,768,832 |  |  |            | 19,113,388 | 
|                                            |                      |                   |            |             |  |             |            |            |  |  |            |           
|                                            | End of period        |                   |            | 27,841,178  |  |             |            | 27,834,574 |  |  |            | 27,768,832 | 
|                                            |                      |                   |            |             |  |             |            |            |  |  |            |           
|                                            | Issued during period |                   |            | 6,604       |  |             |            | 65,742     |  |  |            | 8,655,444  | 
|                                            |                      |                   |            |             |  |             |            |            |  |  |            |           
|Weighted average number of shares (basic)   |                      |                   | 27,839,348 |             |  |             | 27,815,160 |            |  |  | 26,722,322 |           
|                                           
|                                           
|                                           
|                                           
|Effects of dilutive securities              |                      |                   |           |             |  |             | 811,616    |            |  |  | 917,777    |           
|                                            |                      |                   |            |             |  |             |            |            |  |  |            |           
|Weighted average number of shares (diluted) |                      |                   | 27,839,348 |             |  |             | 28,626,776 |            |  |  | 27,640,099 |           
|                                            |                      |                   |            |             |  |             |            |            |  |  |            |           

Use of Estimates

The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from these estimates.



|         |                                                                                          
|-------- | -----------------------------------------------------------------------------------------
|Note 2  | Recent Accounting Pronouncements and Cumulative Effect of
	Change in Accounting Principle

In March 2000, the FASB issued FASB Interpretation
No. 44, Accounting for Certain Transactions Involving
Stock Compensation: An Interpretation of APB Opinion
No. 25. The interpretation became effective
July 1, 2000. The adoption of the pronouncement did not
have a material impact on the Companys financial position
or the results of operations.

In December 1999, the staff of the Securities and Exchange
Commission issued Staff Accounting Bulletin No. 101
(SAB 101), Revenue Recognition in Financial
Statements. SAB 101 summarizes some of the
staffs interpretations of the application of generally
accepted accounting principles to revenue recognition. In
June 2000, the SEC staff issued SAB 101B which delays
the implementation date of SAB 101 until no later

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CSK AUTO CORPORATION AND SUBSIDIARY


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

than the fourth fiscal quarter of fiscal years beginning after
December 15, 1999. The adoption of the pronouncement did
not have an impact on the Companys financial position or
the results of operations.

In April 1998, the Accounting Standards Executive Committee
of the American Institute of Certified Public Accountants issued
SOP 98-5, Reporting on the Cost of Start-up
Activities. The SOP broadly defines start-up activities as
those one-time activities related to opening a new facility,
introducing a new product or service, conducting business in a
new territory, or commencing some new operation. The SOP
requires that the costs of start-up activities be expensed as
incurred and is effective for financial statements for fiscal
years beginning after December 15, 1998, with earlier
application encouraged. The Companys historical accounting
policy with respect to the cost of start-up activities (store
preopening expenses) was to defer such costs for the
approximately three month period of time that it takes to
develop a new store facility and to expense such costs during
the month that the new store opens. The Company adopted
SOP 98-5 in the first quarter of fiscal 1999, which
required the Company to change its accounting policy to expense
start-up costs as incurred. Upon adoption, the Company expensed
approximately $741,000, net of an income tax benefit of
$468,000, of preopening expenses that had been deferred as of
January 31, 1999. Such expense is reflected in the
accompanying consolidated statement of operations as the
cumulative effect of a change in accounting principle.

Note 3  Investment in Joint Venture

On March 1, 2000, the Company participated in the formation
of a new joint venture, PartsAmerica.com (PA), with
Advance Auto Parts (Advance) and Sequoia Capital. PA
engages in the sale of automotive parts and accessories via
e-commerce. PA operates independently from its partners and
utilizes both Autos and Advances existing logistic
systems to support its web-based operations.

In exchange for approximately 37% of the outstanding equity of
PA, the Company has contributed assets and incurred costs of
approximately $3.2 million, which include associated transaction
costs. The Company is accounting for its investment in PA under
the equity method and, accordingly, recognizes its proportionate
share of PAs net income or loss. During fiscal 2000, the
Company incurred non-cash charges of $3.2 million to recognize
its proportionate share of PAs net loss and to write off
our remaining investment in the joint venture. Accordingly, as
of February 4, 2001, the Company has no remaining
investment in PA recorded in the accompanying consolidated
balance sheets. Auto is not obligated to support PA financially
beyond the extent of its original investment. See Note 5.

Note 4  Business Acquisitions

AllCar

On April 27, 2000, the Company acquired substantially all
of the assets of All-Car Distributors, Inc.
(AllCar), an operator of 22 stores in Wisconsin and
Michigan. Under the terms of the agreement, the Company paid
approximately $711,000 in cash, which includes associated
transaction costs, for the assets of AllCar and assumed vendor
accounts payable and certain indebtedness and accrued expenses.
In August 2000, the Company made a payment of approximately
$206,000 pursuant to a purchase price adjustment formula
contained in the original agreement. In addition, the Company is
subject to an additional payment of approximately $215,000 upon
the satisfaction of certain conditions.

The AllCar stores are serviced out of the Companys Mendota
Heights Distribution Center and have been converted to the
Checker name and store format and integrated into the
Companys operations. In connection with the integration of
the AllCar stores, the Company incurred one-time transition and
integration expenses of approximately $3.0 million, consisting
primarily of grand opening advertising, training and
re-merchandising costs. In addition, the Company incurred
capital expenditures of approximately $3.1

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CSK AUTO CORPORATION AND SUBSIDIARY


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

million, consisting primarily of expenditures related to
equipment, store fixtures, signage and the installation of the
Companys store-level information systems in the AllCar
stores.

The AllCar Acquisition was accounted for under the purchase
method of accounting. Accordingly, the results of operations of
these stores are included in the consolidated operating results
of the Company from April 28, 2000, the first day of
operations subsequent to the acquisition. The financial
statements reflect the preliminary allocation of the purchase
price, based on estimated fair values at the date of
acquisition. Approximately $5.0 million was allocated to
inventory and fixed assets. The excess of the purchase price
over the estimated fair value of the assets acquired resulted in
goodwill of approximately $4.3 million and is being amortized on
a straight-line basis over 30 years.

SuperAuto

On June 19, 2000, the Company acquired one store in
California for $1.0 million. The Company converted this store to
the Kragen name and store format and integrated the store into
the Companys operations. No significant transition and
integration costs were incurred relating to this acquisition.

Als and Grand Auto Supply

On October 1, 1999, the Company acquired the common stock
of Als and Grand Auto Supply, Inc. (AGA),
formerly known as PACCAR Automotive, Inc., which operated 194
stores under the trade names of Als Auto Supply and Grand
Auto Supply (collectively, the AGA stores) in
Washington, California, Idaho, Oregon, Nevada and Alaska. The
Company has substantially converted these stores to the
Schucks and Kragen names and store formats and integrated
these stores into the Companys operations.

The Company paid approximately $145.6 million in cash for the
stock of AGA and associated transaction costs. The acquisition
was funded with proceeds from the Senior Credit Facility. In
connection with the acquisition, the Company amended and
restated the Senior Credit Facility to provide an additional
$150.0 million of senior term loan borrowing ability. There are
no contingent payments, options or commitments associated with
the acquisition.

In connection with the integration of the AGA stores, the
Company incurred one-time transition and integration expenses of
approximately $15.7 million and $21.3 million during fiscal 2000
and 1999, respectively. These expenses consisted primarily of
grand opening advertising, training and re-merchandising costs.
In addition, the Company incurred one-time capital expenditures
of approximately $5.6 million and $2.0 million during fiscal
2000 and 1999, respectively. These expenditures consisted
primarily of equipment, store fixtures, signage and the
installation of the Companys store-level information
systems in the AGA stores.

As a result of the AGA acquisition, the Company has analyzed its
store locations in California and the Pacific Northwest. The
Company has closed or relocated 39 of the formerly owned AGA
stores based on several factors including: (1) market
saturation; (2) store profitability; and (3) store
size and format. Costs associated with these closures consist of
future rents to be paid over the remaining terms of the lease
agreements for the stores (net of estimated sublease
recoveries). In addition, the Company finalized a store closure
plan for its own stores that overlap with AGA stores, which
resulted in a pretax charges of approximately $2.5 million
during the fourth quarter of fiscal 1999 and $3.7 million during
the second quarter of fiscal 2000. The charges consisted of two
components: (1) future rents to be paid over the remaining
lease terms of the lease agreements for the stores (net of
estimated sublease rentals); and (2) a write-down in the
carrying amounts of leasehold improvements and other fixed
assets associated with the affected stores. These charges were
included in store closing costs in the accompanying Consolidated
Statement of Operations. See Note 13.

The AGA acquisition was accounted for under the purchase method
of accounting. Accordingly, the results of operations of these
stores are included in the consolidated operating results of the
Company from

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CSK AUTO CORPORATION AND SUBSIDIARY


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

October 2, 1999, the first day of operations subsequent to
the acquisition. The financial statements reflect the final
allocation of the purchase price, based on estimated fair values
at the date of acquisition. Approximately $127.7 million was
allocated to inventory, leasehold improvements, fixed assets and
favorable lease rights. The final allocation also includes an
estimated liability for the cost of closing the 39 acquired
stores described above. The excess of the purchase price over
the estimated fair value of the assets acquired resulted in
goodwill of approximately $63.3 million and is being amortized
on a straight-line basis over 30 years.

Automotive Information Systems

On September 7, 1999, the Company acquired all of the
common stock of Automotive Information Systems, Inc.
(AIS). 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. The Company paid approximately $10.3
million in cash for AIS and funded the acquisition through its
Senior Credit Facility. There are no contingent payments,
options or commitments associated with the acquisition.

The AIS acquisition was accounted for under the purchase method
of accounting. Accordingly, the results of operations are
included in the consolidated operating results of the Company
from September 7, 1999, the first day of operations
subsequent to the acquisition. The financial statements reflect
the final allocation of the purchase price, based on fair values
at the date of acquisition. The excess of the purchase price
over the fair value of the assets acquired resulted in goodwill
of approximately $9.2 million and is being amortized on a
straight-line basis over 20 years.

Big Wheel

On June 30, 1999, the Company acquired substantially all of
the assets of APSCO Products Company dba Big Wheel/Rossi
(Big Wheel), the leading retailer of auto parts in
the Northern Plains states. Big Wheel operated 86 stores in
Minnesota, North Dakota and Wisconsin along with a distribution
center in Minnesota. The Company has converted these stores to
the Checker name and store format and integrated these stores
into the Companys operations.

The Company paid approximately $62.7 million in cash for
substantially all the assets and assumed certain current
liabilities and indebtedness of Big Wheel. The acquisition was
funded with proceeds from the Senior Credit Facility. In
connection with the acquisition, the Company amended and
restated the Senior Credit Facility to provide an additional
$125.0 million of senior term loan borrowing ability. There are
no contingent payments, options or commitments associated with
the acquisition.

In connection with the integration of the Big Wheel stores, the
Company incurred one-time transition and integration expenses of
approximately $5.2 million and $8.9 million during fiscal 2000
and 1999, respectively. These costs consist primarily of grand
opening advertising, training and re-merchandising costs. In
addition, the Company incurred one-time capital expenditures of
approximately $1.5 million and $3.0 million during fiscal 2000
and 1999, respectively. These costs consist primarily of
equipment fixtures, signage and the installation of the
Companys store-level information systems in the Big Wheel
stores.

The Big Wheel acquisition was accounted for under the purchase
method of accounting. Accordingly, the results of operations of
these stores are included in the consolidated operating results
of the Company from July 1, 1999, the first day of
operations subsequent to the acquisition. The financial
statements reflect the final allocation of the purchase price,
based on fair values at the date of acquisition. Approximately
$19.5 million was allocated to inventory, leasehold improvements
and fixed assets. The excess of the purchase price over the
estimated fair value of the assets acquired resulted in goodwill
of approximately $60.0 million and is being amortized on a
straight-line basis over 30 years.

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CSK AUTO CORPORATION AND SUBSIDIARY


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

M&O Auto Parts

On January 6, 1999, the Company acquired two stores in
Alaska from M&O Auto Parts for $0.9 million. The Company has
converted these stores to the Schucks name and store
format and integrated these stores into the Companys
operations. No significant transition and integration costs were
incurred relating to this acquisition.

The Big Wheel and AGA Acquisitions were accounted for under the
purchase method of accounting. Prior financial statements
reflected the preliminary allocation of the purchase prices,
based on estimated fair values at the date of the respective
acquisition. During fiscal 2000, the Company made adjustments to
reflect the final determination of certain acquired balances.
Significant changes in the allocation of acquired balances
include: (1) a lower accounts receivable valuation
primarily relating to acquired accounts payable debit balances
for vendors with which the Company does not conduct business;
(2) a revised inventory allocation representing (a) a
lower inventory valuation on core and warranty returns as a
result of excessive acquired inventory levels; and (b) a
lower valuation on non-returnable inventory lines not carried by
the Company; (3) a leasehold rights allocation representing
the discounted net present value of the excess of the fair
market rental value over the respective contractual rent of
stores under operating leases acquired; (4) an accounts
payable adjustment as a result of an adjustment to acquired bank
overdrafts; and (5) a revised closed store reserve
reflecting the final costs of closing or relocating previously
identified stores. The final allocations of the fair value of
the assets and liabilities recorded as a result of the Big Wheel
and AGA Acquisitions as well as preliminary allocations for the
fiscal 2000 acquisitions is as follows (in thousands):

|                              |                           |             |        |       |  |      |         |         |  |   |        |     | 
|----------------------------- | ------------------------- | ----------- | ------ | ----- |  | ---- | ------- | ------- |  | - | ------ | --- | 
|                              |                           |            
|                              |                           | Fiscal Year
|                              |                           |            
|                              |                           | 2000        |        | 1999  |  | 1998
|                              |                           |             |        |       |  |     
|Cash and cash equivalents     |                           | $           | 108    |       |  | $    | 145     |         |  | $ |       |    
|                             
|                             
|                             
|                             
|Receivables                   |                           |             | 171    |       |  |      | 3,161   |         |  |   | 245    |    
|                             
|                             
|                             
|                             
|Inventories                   |                           |             | 4,499  |       |  |      | 103,023 |         |  |   | 1,208  |    
|                             
|                             
|                             
|                             
|Assets held for sale          |                           |             |       |       |  |      | 3,238   |         |  |   | 835    |    
|                             
|                             
|                             
|                             
|Property and equipment        |                           |             | 1,180  |       |  |      | 30,049  |         |  |   | 125    |    
|                             
|                             
|                             
|                             
|Goodwill                      |                           |             | 4,632  |       |  |      | 132,499 |         |  |   | 193    |    
|                             
|                             
|                             
|                             
|Leasehold interests           |                           |             |       |       |  |      | 14,655  |         |  |   |       |    
|                             
|                             
|                             
|                             
|Prepaids and other assets     |                           |             | 219    |       |  |      | 2,244   |         |  |   | 3      |    
|                             
|                             
|                             
|                             
|Deferred income taxes         |                           |             |       |       |  |      | 3,137   |         |  |   |       |    
|                             
|                             
|                             
|                             
|Accounts payable              |                           |             | (3,702 | )     |  |      | (36,851 | )       |  |   | (109   | )  
|                             
|                             
|                             
|                             
|Accrued liabilities and other |                           |             | (5,817 | )     |  |      | (29,781 | )       |  |   | (1,608 | )  
|                             
|                             
|                             
|                             
|Closed store reserves         |                           |             |       |       |  |      | (6,922  | )       |  |   |       |    
|                              |                           |             |        |       |  |      |         |         |  |   |        |    
|                              | Total cash purchase price |             | $      | 1,290 |  |      | $       | 218,597 |  |   | $      | 892 | 
|                              |                           |             |        |       |  |      |         |         |  |   |        |    

The following unaudited pro forma financial information presents
the combined historical results of the Company, Big Wheel, AIS
and AGA as if the acquisitions had occurred at the beginning of
the periods presented, after giving effect to certain
adjustments. Pro forma adjustments reflect the final purchase
price allocations noted above and include the following:
(1) amortization of goodwill of $2.7 million and $4.8
million for fiscal 1999 and 1998, respectively;
(2) depreciation expense based on the allocation of
purchase price to fixed assets of $1.4 million and $2.0 million
for fiscal 1999 and 1998, respectively; and (3) interest
expense and amortization of deferred financing costs associated
with the additional borrowings under the Senior Credit Facility
of $11.4 million and $19.0 million for fiscal 1999 and 1998,
respectively; and (4) amortization of leasehold rights of
$1.3 million for fiscal years 1999 and 1998. Although cost
savings and

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CSK AUTO CORPORATION AND SUBSIDIARY


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

other future synergy benefits of the combined companies are
expected, no such benefits are reflected in this pro forma
financial information.

|                                                                                              |                                                                                               |                       |           |             |  |   |           |      | 
|--------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------- | --------------------- | --------- | ----------- |  | - | --------- | ---- | 
|                                                                                              |                                                                                               |                      
|                                                                                              |                                                                                               | Fiscal Year Ended    
|                                                                                              |                                                                                               |                      
|                                                                                              |                                                                                               | January 30,           |           | January 31,
|                                                                                              |                                                                                               | 2000                  |           | 1999       
|                                                                                              |                                                                                               |                       |           |            
|                                                                                              |                                                                                               |                      
|                                                                                              |                                                                                               | (unaudited)          
|                                                                                              |                                                                                               |                      
|                                                                                              |                                                                                               | (in thousands, except
|                                                                                              |                                                                                               | per share data)      
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Net sales                                                                                     |                                                                                               | $                     | 1,423,907 |             |  | $ | 1,296,272 |     
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Net income before extraordinary loss and cumulative effect of
	change in accounting principle |                                                                                               |                       | 20,138    |             |  |   | 19,161    |     
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Net income                                                                                    |                                                                                               |                       | 19,397    |             |  |   | 12,394    |     
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Basic earnings per share:                                                                     |                                                                                               |                       |           |             |  |   |           |     
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                              | Net income before extraordinary loss and cumulative effect of
	change in accounting principle |                       |           | .72         |  |   |           | .72  | 
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                              | Net income                                                                                    |                       |           | .70         |  |   |           | .46  | 
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Diluted earnings per share:                                                                   |                                                                                               |                       |           |             |  |   |           |     
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                              | Net income before extraordinary loss and cumulative effect of
	change in accounting principle |                       |           | .70         |  |   |           | 0.69 | 
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                              | Net income                                                                                    |                       |           | .68         |  |   |           | 0.45 | 

The pro forma combined results are not necessarily indicative of
the results that would have occurred if the acquisitions and
borrowings had been completed as of the beginning of each of the
periods presented, nor are they necessarily indicative of future
consolidated results.

Note 5  Transactions and Relationships with
Related Parties

The Carmel Trust (Carmel) is a trust governed under
the laws of Canada. Carmel is an affiliate of the Company.

In October 1989, the Company entered into a nine year lease (the
Initial Lease) for its corporate headquarters in
Phoenix, Arizona, with an unaffiliated landlord. During January
1994, Missouri Falls Holdings Corp., an affiliate of Carmel,
acquired an interest in the partnership (Missouri Falls
Partners) which acquired the building and assumed the
lease between the Company and the former landlord. In October
1996, the Company extended the Initial Lease through October
2006. The lease relates to approximately 78,577 square feet and
provides for a current base rent of approximately $1,490,000 per
year.

In April 1995, the Company assumed a lease (the Subsequent
Lease) between a former tenant and Missouri Falls Partners
for approximately 11,683 square feet of additional office space
at its corporate headquarters. In October 1996, the Company
extended the Subsequent Lease through October 2006. At its
originally scheduled termination as of April 1998, rent under
the Subsequent Lease increased to the same per square foot as is
charged under the Initial Lease to a total annual rent of
$221,510.

Under multiple agreements that expire in October 2006, the
Company leases approximately 24,000 square feet of additional
space at the above premises from Missouri Falls Partners for an
annual rent of approximately $510,000.

The Company also leases a parking lot adjacent to its corporate
headquarters for an annual rental of $62,506 under a separate
lease which expires in October 2006 from MFP Holdings, LLC, an
affiliate of Carmel.

From time to time, the Company has entered into sale-leaseback
or other financing arrangements with related parties.

38



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##### Table of Contents



CSK AUTO CORPORATION AND SUBSIDIARY


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

Beginning in October 1995, the Company entered into a series of
sale-leaseback transactions with Transatlantic Realty, Inc.
(Realty), another affiliate of Carmel, for various
real property and fixtures. The total funding provided by Realty
in these transactions through January 30, 2000 was
approximately $33.1 million (of which $27.3 million was for real
property and $5.8 million was for fixtures). This amount
represented the Companys cost of such assets. The Company
has replaced approximately $27.3 million of the real property
sale-leasebacks and certain of the fixture sale-leasebacks with
similar arrangements with unrelated third parties. As of
February 4, 2001, there were approximately $0.2 million of
payments remaining under this facility.

Beginning in October 1996, the Company entered into a series of
sale-leaseback transactions with Transatlantic Leasing, Inc.
(Leasing), another affiliate of Carmel, for certain
real property. In November 2000, the last lease under this
facility was terminated. In October 1997, the Company
established a new sale-leaseback facility and the Company
terminated the facility with Leasing.

The Company believes that the terms of the transactions with
affiliated parties described above in this Note were no less
favorable to it than terms that may have been available from
independent third parties at the time of the applicable
transaction.

In connection with his engagement as Chief Executive Officer,
the Company loaned Mr. Jenkins $550,000, which he used to
finance the purchase of the new home required as a result of his
relocation. This loan was to mature in 1999 and bear interest at
a rate of 4.545%. This loan was authorized by the Board of
Directors prior to the commencement of Mr. Jenkins
employment. In September 1999, the Company agreed to forgive
$300,000 principal amount of the loan on November 1, 1999
and $250,000 principal amount, together with approximately
$18,000 accrued and unpaid interest thereon on February 1,
2000, provided that Mr. Jenkins remained employed on such
date (unless his failure to remain employed was caused by the
Companys termination of his employment).

On March 1, 2000, the Company participated in the formation
of PA, a new joint venture (see Note 3). During fiscal
2000, the Company contributed assets and incurred costs of
approximately $3.2 million, which include associated transaction
costs. The Company also incurred non-cash charges of $3.2
million to recognize its proportionate share of PAs net
loss and to write off our remaining investment in the joint
venture. In addition, during fiscal 2000, the Company recorded
sales to PA of approximately $0.5 million and incurred
reimbursable costs of $0.3 million. As of February 4, 2001,
the Company had a receivable from PA of approximately $0.4
million, which includes reimbursable costs and advances.

Note 6  Property and Equipment

Property and equipment is comprised of the following (in
thousands):

|                                                |  |             |          |             |  |                       |          |   |  |                              
|----------------------------------------------- |  | ----------- | -------- | ----------- |  | --------------------- | -------- | - |  | -----------------------------
|                                                |  | February 4, |          | January 30, |  |                      
|                                                |  | 2001        |          | 2000        |  | Estimated Useful Life
|                                                |  |             |          |             |  |                      
|Land                                            |  | $           | 893      |             |  | $                     | 554      |   |  |                              
|                                               
|                                               
|                                               
|                                               
|Buildings                                       |  |             | 1,244    |             |  |                       | 766      |   |  | 25 years                     
|                                               
|                                               
|                                               
|                                               
|Leasehold improvements                          |  |             | 96,246   |             |  |                       | 84,701   |   |  | 15 years or life of lease    
|                                               
|                                               
|                                               
|                                               
|Furniture, fixtures and equipment               |  |             | 124,998  |             |  |                       | 113,677  |   |  | 10 years                     
|                                               
|                                               
|                                               
|                                               
|Property under capital leases                   |  |             | 80,667   |             |  |                       | 67,976   |   |  | 5  15 years or life of lease
|                                               
|                                               
|                                               
|                                               
|Purchased software                              |  |             | 10,585   |             |  |                       | 11,585   |   |  | 5 years                      
|                                                |  |             |          |             |  |                       |          |   |  |                              
|                                                |  |             | 314,633  |             |  |                       | 279,259  |   |  |                              
|                                               
|                                               
|                                               
|                                               
|Less: accumulated depreciation and amortization |  |             | (139,275 | )           |  |                       | (118,698 | ) |  |                              
|                                                |  |             |          |             |  |                       |          |   |  |                              
|Property and equipment, net                     |  | $           | 175,358  |             |  | $                     | 160,561  |   |  |                              
|                                                |  |             |          |             |  |                       |          |   |  |                              

39



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##### Table of Contents



CSK AUTO CORPORATION AND SUBSIDIARY


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

Accumulated amortization of property under capital leases
totaled $42.6 million and $32.3 million at February 4, 2001
and January 30, 2000, respectively.

Note 7  Long Term Debt

Senior Credit Facility

Borrowings under the Senior Credit Facility of Auto are as
follows (in thousands):

|                                                                                                                                                                                                                               |       |             |         |             |  |   |         |         | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ----- | ----------- | ------- | ----------- |  | - | ------- | ------- | 
|                                                                                                                                                                                                                               |       | February 4, |         | January 30,
|                                                                                                                                                                                                                               |       | 2001        |         | 2000       
|                                                                                                                                                                                                                               |       |             |         |            
|Term Loan (Tranche B), variable interest rates, average
	rate 8.9% and 7.4% for fiscal 2000 and 1999, respectively,
	semi-annual installments payable each June 30 and
	December 31, final installment is due October 31, 2003 |       | $           | 144,480 |             |  | $ | 145,320 |        
|                                                                                                                                                                                                                              
|                                                                                                                                                                                                                              
|                                                                                                                                                                                                                              
|                                                                                                                                                                                                                              
|Term Loan (Tranche B1), variable interest rates, average
	rate 8.9% and 7.8% for fiscal 2000 and 1999 respectively,
	semi-annual installments payable each June 30 and
	December 31, final installment is due October 31, 2003 |       |             | 123,500 |             |  |   | 124,500 |        
|                                                                                                                                                                                                                              
|                                                                                                                                                                                                                              
|                                                                                                                                                                                                                              
|                                                                                                                                                                                                                              
|Term Loan (Tranche B2), variable interest rates, average
	rate 8.9% and 8.2% for fiscal 2000 and 1999 respectively,
	semi-annual installments payable each June 30 and
	December 31, final installment is due October 31, 2003 |       |             | 148,500 |             |  |   | 150,000 |        
|                                                                                                                                                                                                                              
|                                                                                                                                                                                                                              
|                                                                                                                                                                                                                              
|                                                                                                                                                                                                                              
|Revolving Credit Commitment, variable interest rates, average
	rate 9.3% and 8.1% for fiscal 2000 and 1999, respectively,
	$125.0 million maximum capacity at February  4, 2001                                                |       |             | 110,000 |             |  |   | 89,000  |        
|                                                                                                                                                                                                                               |       |             |         |             |  |   |         |        
|                                                                                                                                                                                                                               | Total |             |         | 526,480     |  |   |         | 508,820 | 
|                                                                                                                                                                                                                              
|                                                                                                                                                                                                                              
|                                                                                                                                                                                                                              
|                                                                                                                                                                                                                              
|Less: current maturities                                                                                                                                                                                                       |       |             | 54,640  |             |  |   | 3,340   |        
|                                                                                                                                                                                                                               |       |             |         |             |  |   |         |        
|                                                                                                                                                                                                                               |       | $           | 471,840 |             |  | $ | 505,480 |        
|                                                                                                                                                                                                                               |       |             |         |             |  |   |         |        

During December 2000, the Company amended and restated its
Senior Credit Facility after previously amending and restating
the Facility to provide additional funding for the consummation
of the AGA and Big Wheel Acquisitions in fiscal 1999. As amended
and restated, as of February 4, 2001, the Senior Credit
Facility includes the following significant provisions:



| |   |                                                                                                                                                                                                                       
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The due date of the revolving credit commitment has been
	extended from October  31, 2001 to October 31, 2002;                                                                                                        
|
| |  | Interest and commitment fees at variable rates as provided
	within a pricing grid with the rates commencing at LIBOR plus 3%
	on the revolving credit commitment and commitment fees of 0.5%
	of undrawn availability;
|
| |  | Easing of previously existing financial covenant requirements,
	including capital expenditure levels, and EBITDA and interest
	coverage ratios.                                                                       

Borrowings under the Senior Credit Facility are collateralized
by a first priority security interest in substantially all of
the personal property of Auto, subject to certain permitted
liens. The Company also issued a guarantee of such borrowings
under the Senior Credit Facility, which guarantee is
collateralized by a pledge by the Company of all issued and
outstanding capital stock of Auto. In addition, the revolving
credit portion allows for the issuance of letters of credit that
reduce revolver availability. Letters of credit outstanding were
$4.1 million and $2.9 million at February 4, 2001 and
January 30, 2000, respectively. After considering the
letters of credit outstanding, there was $10.9 million in
undrawn availability at February 4, 2001.

40



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##### Table of Contents



CSK AUTO CORPORATION AND SUBSIDIARY


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

The Senior Credit Facility prohibits, with certain limited
exceptions, the optional or mandatory prepayment or other
defeasance of Autos 11% Senior Subordinated Notes. The
Senior Credit Facility further requires that, under certain
circumstances, Auto make prepayments of the term loan
outstanding thereunder with (i) 50% of any Excess Cash Flow
(as defined therein); and (ii) 50% of the Net Proceeds (as
defined therein) from certain offerings of the Companys
voting stock. In addition, a change of control
allows the lenders to accelerate the loans. A change of control
occurs under any of the following circumstances:
(i) anyone, other than the Initial Shareholders (as defined
therein), acquires the power to vote at least 30% of the common
stock, on a fully diluted basis (as defined); (ii) certain
changes in the composition of the Board of Directors; and
(iii) any sale of the common stock of Auto.

Commitment fees on available funds under the Revolving Credit
Commitment are payable quarterly in arrears on the average daily
unused amount of the total commitment. Commitment fees totaling
$81,000 and $103,000 were incurred in fiscal 2000 and 1999,
respectively.

The terms of the Senior Credit Facility include restrictions on
investments, capital expenditures, dividends and certain other
payments and require the Company to meet certain financial
covenants. The Company believes it was in compliance with all
such covenants at February 4, 2001.

11% Senior Subordinated Notes Due 2006

On October 30, 1996, Auto issued and sold in a private
placement $125.0 million aggregate principal amount of 11%
Senior Subordinated Notes due 2006 (the Old 11%
Notes) pursuant to an indenture, between Auto and The Bank
of New York (as successor to Wells Fargo Bank, N.A.), as
Trustee. On March 13, 1997, Auto offered to exchange up to
all outstanding Old 11% Notes for a like principal amount of its
11% Series A Senior Subordinated Notes due 2006 (the
11% Senior Subordinated Notes) issued pursuant to
the Indenture in a transaction registered under the Securities
Act of 1933, as amended. Auto consummated the exchange offer on
June 18, 1997, with all of the Old 11% Notes being
exchanged for the 11% Senior Subordinated Notes.

In April 1998, 35% of the aggregate principal amount of the
11% Senior Subordinated Notes was redeemed at a redemption price
of 110% of the principal amount thereof, plus accrued and unpaid
interest thereon, to the redemption date, with the net proceeds
of an initial public offering of Common Stock. See Note 9.

The indenture potentially restricts Auto from making additional
borrowings under its Revolving Credit Commitment that, when
added to the aggregate amount of outstanding borrowings under
the Senior Credit Facility (including term loans), exceed $200.0
million. This restriction does not apply if the new borrowings
are of a type specifically permitted by the indenture, or, if
after giving pro forma effect to such new borrowings the ratio
of Autos consolidated EBITDA to fixed charges (as such
terms are defined in the indenture) exceeds 2.25 to 1.
Accordingly, the Company has been able to exceed the potential
restriction and does not anticipate that it will limit access to
further borrowings under the Senior Credit Facility.

The indenture also provides that upon a change of
control, as defined therein, each holder of 11% Senior
Subordinated Notes will have the right to require Auto to
repurchase all or any part of such holders notes at a
purchase price in cash equal to 101% of the principal amount
plus accrued and unpaid interest, if any, to the date of
purchase.

The 11% Senior Subordinated Notes bear interest at 11% per year,
payable semiannually in arrears on each May 1 and
November 1, and mature on November 1, 2006. The 11%
Senior Subordinated Notes are general, unsecured senior
subordinated obligations. The 11% Senior Subordinated Notes are
required to be guaranteed fully, unconditionally and jointly and
severally by most future United States subsidiaries of Auto, on
a senior subordinated basis.

41



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##### Table of Contents



CSK AUTO CORPORATION AND SUBSIDIARY


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

On and after November 1, 2001, the 11% Senior Subordinated
Notes will be redeemable, at the option of Auto, in whole or in
part, upon not less than 30 nor more than 60 days
notice, at the redemption prices set forth below (expressed in
percentages of principal amount), plus accrued and unpaid
interest thereon, if any, to the applicable redemption date, if
redeemed during the 12-month period beginning on November 1 of
the years indicated below:

|                    |  |            |         |  
|------------------- |  | ---------- | ------- | -
|                    |  | Redemption
|Period              |  | Price     
|                    |  |           
|2001                |  |            | 105.500 | %
|                   
|                   
|                   
|                   
|2002                |  |            | 103.667 | %
|                   
|                   
|                   
|                   
|2003                |  |            | 101.833 | %
|                   
|                   
|                   
|                   
|2004 and thereafter |  |            | 100.000 | %

12% Subordinated Notes Due 2008

On October 30, 1996, the Company issued and sold in a
private placement $10.0 million aggregate principal amount of
12% Subordinated Series A Notes due 2008 (the
Series A Notes) pursuant to an Indenture
between the Company and Transatlantic Finance, Ltd., as Trustee,
and $40.0 million aggregate principal amount of 12% Subordinated
Series B Notes due 2008 (the Series B
Notes, and together with the Series A Notes, the
12% Subordinated Notes) pursuant to an Indenture
between the Company and AIBC, N.V., as Trustee. The terms of the
Series A Notes and the Series B Notes were identical.
These notes were retired, in full, with proceeds of the
Companys March 1998 initial public offering of common
stock. See Note 9.

Included in other assets are the following debt financing
charges which have been deferred and are being amortized over
the life of the related debt instrument (in thousands):

|                              |       |             |        |             |  |   |        |       | 
|----------------------------- | ----- | ----------- | ------ | ----------- |  | - | ------ | ----- | 
|                              |       | February 4, |        | January 30,
|                              |       | 2001        |        | 2000       
|                              |       |             |        |            
|11% Senior Subordinated Notes |       | $           | 5,341  |             |  | $ | 5,341  |      
|                             
|                             
|                             
|                             
|Senior Credit Facility        |       |             | 7,880  |             |  |   | 6,023  |      
|                             
|                             
|                             
|                             
|Accumulated amortization      |       |             | (5,411 | )           |  |   | (3,187 | )    
|                              |       |             |        |             |  |   |        |      
|                              | Total |             | $      | 7,810       |  |   | $      | 8,177 | 
|                              |       |             |        |             |  |   |        |      

At February 4, 2001, the estimated maturities of long term
debt were (in thousands):

|            |  |        |         | 
|----------- |  | ------ | ------- | 
|Fiscal Year |  | Amount
|            |  |       
|2001        |  | $      | 54,640  | 
|           
|           
|           
|           
|2002        |  |        | 199,920 | 
|           
|           
|           
|           
|2003        |  |        | 271,920 | 
|           
|           
|           
|           
|2004        |  |        |        | 
|           
|           
|           
|           
|2005        |  |        |        | 
|           
|           
|           
|           
|Thereafter  |  |        | 81,250  | 
|            |  |        |         | 
|            |  | $      | 607,730 | 
|            |  |        |         | 

42



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##### Table of Contents



CSK AUTO CORPORATION AND SUBSIDIARY


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

As more fully described in Note 9, the Company completed an
initial public offering of its common stock in March 1998.
Net proceeds from the offering were used to reduce outstanding
debt of the Company, as follows (in millions):

|                              |  |   |       | 
|----------------------------- |  | - | ----- | 
|                             
|                             
|                             
|                             
|12% Subordinated Notes        |  | $ | 50.0  | 
|                             
|                             
|                             
|                             
|11% Senior Subordinated Notes |  |   | 43.8  | 
|                             
|                             
|                             
|                             
|Senior Credit Facility        |  |   | 53.8  | 
|                             
|                             
|                             
|                             
|Premiums on retirement        |  |   | 4.9   | 
|                             
|                             
|                             
|                             
|Accrued interest              |  |   | 6.6   | 
|                              |  |   |       | 
|                              |  | $ | 159.1 | 
|                              |  |   |       | 

Upon the consummation of the offering, the Company recorded an
extraordinary loss of approximately $6.8 million, net of taxes.
Such extraordinary loss consisted primarily of the premiums paid
in connection with the redemption of indebtedness and the
write-off of a portion of deferred debt issuance costs.

Note 8  Leases

The Company leases its office and warehouse facilities, all but
three of its retail stores, and a majority of its equipment.
Generally, store leases provide for minimum rentals and the
payment of utilities, maintenance, insurance and taxes. Certain
store leases also provide for contingent rentals based upon a
percentage of sales in excess of a stipulated minimum. The
majority of lease agreements are for base lease periods ranging
from 15 to 20 years, with three to five renewal options of five
years each.

Until December 31, 2000, the Company also had access to an
off-balance sheet operating lease facility that was used to
finance new store construction. As of February 4, 2001,
$9.6 million had been utilized under this facility. Under a
similar agreement that expired on May 31, 1999 with respect
to the addition of new stores, approximately $80.9 million was
used to finance new store construction. The Company is currently
negotiating a new lease facility.

Operating lease rental expense is as follows (in thousands):

|                   |  |             |         |      |  |      |        |   |  |   |        |  
|------------------ |  | ----------- | ------- | ---- |  | ---- | ------ | - |  | - | ------ | -
|                   |  |            
|                   |  | Fiscal Year
|                   |  |            
|                   |  | 2000        |         | 1999 |  | 1998
|                   |  |             |         |      |  |     
|Minimum rentals    |  | $           | 123,298 |      |  | $    | 97,748 |   |  | $ | 75,689 |  
|                  
|                  
|                  
|                  
|Contingent rentals |  |             | 945     |      |  |      | 976    |   |  |   | 1,088  |  
|                  
|                  
|                  
|                  
|Sublease rentals   |  |             | (6,970  | )    |  |      | (5,395 | ) |  |   | (5,089 | )
|                   |  |             |         |      |  |      |        |   |  |   |        |  
|                   |  | $           | 117,273 |      |  | $    | 93,329 |   |  | $ | 71,688 |  
|                   |  |             |         |      |  |      |        |   |  |   |        |  

43



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##### Table of Contents



CSK AUTO CORPORATION AND SUBSIDIARY


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

Future minimum lease obligations under non-cancelable leases at
February 4, 2001 are as follows (in thousands):

|                                    |  |           |         |         |  |   |         |  
|----------------------------------- |  | --------- | ------- | ------- |  | - | ------- | -
|                                    |  | Operating |         | Capital
|For Fiscal Years                    |  | Leases    |         | Leases 
|                                    |  |           |         |        
|2001                                |  | $         | 122,985 |         |  | $ | 14,800  |  
|                                   
|                                   
|                                   
|                                   
|2002                                |  |           | 115,549 |         |  |   | 13,387  |  
|                                   
|                                   
|                                   
|                                   
|2003                                |  |           | 103,244 |         |  |   | 10,002  |  
|                                   
|                                   
|                                   
|                                   
|2004                                |  |           | 87,459  |         |  |   | 6,496   |  
|                                   
|                                   
|                                   
|                                   
|2005                                |  |           | 77,683  |         |  |   | 1,456   |  
|                                   
|                                   
|                                   
|                                   
|Thereafter                          |  |           | 387,218 |         |  |   | 3,410   |  
|                                    |  |           |         |         |  |   |         |  
|                                    |  | $         | 894,138 |         |  |   | 49,551  |  
|                                    |  |           |         |         |  |   |         |  
|Less: amounts representing interest |  |           |         |         |  |   | (9,400  | )
|                                    |  |           |         |         |  |   |         |  
|Present value of obligations        |  |           |         |         |  |   | 40,151  |  
|                                   
|                                   
|                                   
|                                   
|Less: current portion               |  |           |         |         |  |   | (10,878 | )
|                                    |  |           |         |         |  |   |         |  
|Long term obligation                |  |           |         |         |  | $ | 29,273  |  
|                                    |  |           |         |         |  |   |         |  

The above amounts include future minimum lease obligations under
operating leases with affiliates totaling $12.9 million at
February 4, 2001. Operating lease rental expense under
leases with affiliates totaled $2.7 million for the year ended
February 4, 2001, $2.4 million for the year ended
January 30, 2000, and $3.2 million for the year ended
January 31, 1999.

Future minimum sublease rental income under non-cancelable
subleases for fiscal 2001, 2002, 2003, 2004, 2005 and thereafter
is approximately $7.9 million, $6.6 million, $5.3 million, $3.7
million, $2.8 million and $5.8 million, respectively.

Note 9  Capital Stock and Initial Public
Offering

On March 17, 1998, the Company completed an initial public
offering (the IPO) of approximately 8.6 million
shares of its common stock, generating proceeds of approximately
$159.1 million, net of offering expenses. The offering proceeds
were used to retire the Companys 12% Subordinated Notes
and other indebtedness as more fully described in Note 7.
Upon retirement of the 12% Subordinated Notes, all of the
outstanding preferred stock of Auto was cancelled.

In connection with the IPO, the Companys Board of
Directors and stockholders approved a 17.105 to 1 stock split
effected in the form of a stock dividend. Accordingly, all share
and option information contained herein has been adjusted to
give retroactive effect to such stock split. In addition, under
the terms of the Companys restated Certificate of
Incorporation in effect at the time of the IPO, each share of
each class of issued and outstanding capital stock of the
Company automatically converted to common stock upon the
consummation of the IPO on March 17, 1998.

In March 1998, the Company amended its Certificate of
Incorporation to eliminate all classes of stock other than
common stock and increase the total common stock authorization
to 50 million shares.

Note 10  Employee Benefit Plans

The Company provides various health, welfare and disability
benefits to its full-time employees which are funded primarily
by Company contributions. The Company does not provide
post-employment or post-retirement health care or life insurance
benefits to its employees.

44



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##### Table of Contents



CSK AUTO CORPORATION AND SUBSIDIARY


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

Retirement Program

The Company sponsors a 401(k) plan which is available to all
employees of the Company who have completed one year of
continuous service. Effective October 1, 1997, the Company
matches from 40% to 60% of employee contributions in 10%
increments, based on years of service with the Company, up to 4%
of the participants base salary. Prior to October 1,
1997, the Company matched 20% of employee contributions, up to
6% of the participants base salary, without regard to
years of service. Participant contributions are subject to
certain restrictions as set forth in the Internal Revenue Code.
The Companys matching contributions totaled $1,377,300,
$1,422,400, and $1,258,500 for fiscal years 2000, 1999, and
1998, respectively.

1996 Stock Option Plans

On October 30, 1996, the Company awarded options to
purchase shares of common stock under its Associate Stock Option
Plan (the Associate Plan) and its Executive Stock
Option Plan (the Executive Plan and together with
the Associate Plan, the Plans) in order to provide
incentives to store managers and salaried corporate and
warehouse employees of the Company. In October 1996 and
February 1997, the Companys Board of Directors
approved the Associate Plan and the Executive Plan,
respectively. The Compensation Committee of the Board of
Directors has been appointed to administer the Plans.

Options to purchase up to an aggregate of 1,026,300 shares of
common stock may be granted under the Associate Plan. On
April 30, 1999, the Board of Directors amended and restated
the Executive Plan, increasing the maximum number of shares for
which options may be granted by 60,000 to a total of 744,200
shares of common stock. Options granted under the Plans may be
options intended to qualify as incentive stock options under
Section 422 of the Internal Revenue Code of 1986, as
amended, or options not intended to so qualify. In the event of
a sale of more than 80% of the outstanding shares of capital
stock of the Company or 80% of its assets, as defined, all
options under the plan are vested. All options expire on the
seventh anniversary of the date of grant (or, under certain
circumstances, 30 days later).

As a result of the IPO, each then outstanding option granted
under the Plans became exercisable upon vesting. Options granted
under the Associate Plan vest in three equal installments on the
second, third and fourth anniversaries of the date of their
grant, assuming the associates employment continues during
this period (Four Year Vesting). Options granted
under the Executive Plan are subject to the Four Year Vesting as
to 84% of such options and performance vesting (over the same
four years) as to the remaining 16%. The performance vesting
criteria is based upon achieving specified operating results.
Partial vesting of options subject to performance vesting occurs
if the Company achieves less than 95% of the specified operating
results. Any portion of options granted under the Executive Plan
which are subject to performance vesting and which do not vest
during the four years will automatically vest 90 days prior
to the end of the options term. If the specified operating
results are exceeded for any year by at least 10%, the executive
will receive options for up to an additional 5% (20% on a
cumulative basis) of his or her original option grant at an
exercise price equal to that of the original grant. As a result
of exceeding the specified results, additional option grants of
approximately 15,000, 18,000 and 8,700 were granted in
April 2001, 2000 and 1999, respectively.

As of February 4, 2001, the Company has granted options to
purchase 905,873 shares under the Associate Plan and 602,252
shares under the Executive Plan, net of cancellations and
exercises. Except for 96,062 options granted under the Executive
Plan (see Employment Agreements below), the exercise
prices represent the fair market value at the date of grant
based upon the price paid for such shares and other valuation
analyses performed by the Company, or actual market prices as
determined by trades reported by the New York Stock Exchange
subsequent to the IPO, as applicable.

45



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##### Table of Contents



CSK AUTO CORPORATION AND SUBSIDIARY


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

1999 Stock Option Plan

On April 30, 1999, the Company adopted the 1999 Employee
Stock Option Plan (the 1999 Plan) in order to
attract, retain and motivate qualified individuals to serve as
employees of the Company. The 1999 Plan is administered by the
Compensation Committee of the Board of Directors of the Company,
which has broad authority in administering and interpreting the
plan.

Options to purchase up to an aggregate of 750,000 shares of
common stock may be granted under the 1999 Plan. Options granted
under the 1999 Plan may be options intended to qualify as
incentive stock options under Section 422 of the Internal
Revenue Code of 1986, as amended, or options not intended to so
qualify. In the event of a sale of more than 80% of the
outstanding shares of capital stock of the Company or 80% of its
assets, as defined, all options under the plan are vested. All
options expire on the tenth anniversary of the date of grant
(or, under certain circumstances, 30 days later).

As of February 4, 2001, the Company has granted options to
purchase 530,186 shares under the 1999 Plan, net of
cancellations and exercises. The exercise prices represent the
fair market value at the date of grant based upon actual market
prices as determined by trades reported by the New York Stock
Exchange. Options granted under the 1999 Plan vest and become
exercisable as determined by the Board of Directors.

Directors Stock Plan

Directors who are currently associated with the Investcorp Group
or the Carmel Group do not currently receive any compensation
for serving as directors. In June 1998, the Companys
Board of Directors adopted a non-employee director compensation
plan, which was approved in June 1999. The plan provides
for an aggregate of up to 50,000 shares in the form of
restricted stock grants or stock options. The Board of Directors
has adopted a policy which provides the two non-employee
directors who are not associated with the Investcorp Group or
the Carmel Group with an annual stipend of $25,000, of which at
least $10,000 must be paid in the form of restricted stock
grants. Pursuant to this Plan, two Directors were granted a
total of 1,854, 1,534 and 1,516 shares of restricted stock
during fiscal years 2000, 1999 and 1998, respectively.

Employment Agreements

Auto has entered into an employment agreement with its Chairman
pursuant to which he is paid a fixed base salary and is eligible
for a bonus based upon earnings per share. The agreement does
not contain a stated termination date, but rather is terminable
at will by either party. If Auto were to terminate the
employment of the Chairman without cause, or if he terminates
his employment for good reason, Auto has agreed to pay to the
Chairman his base salary and performance bonus for a period of
24 months. The Chairman also received a loan of $550,000
from the Company, bearing interest at 4.545%. In consideration
of the Chairmans efforts regarding the Companys
acquisitions (see Note 4), $300,000 in principal amount of
this loan was forgiven during the fourth quarter of fiscal 1999,
with the remaining balance (including accrued and unpaid
interest) forgiven during the first quarter of fiscal 2000. Auto
had entered into an employment agreement with its then President
pursuant to which he was paid a base salary and a bonus based
upon earnings per share. The agreement was terminated effective
April 1, 2000 in connection with the Presidents
retirement from day-to-day operations.

In connection with the commencement of his employment, the
Company agreed to pay the Chairman $1.0 million which, in turn,
was used by the Chairman to purchase 83,079 shares of common
stock from a member of the Investcorp Group, reflecting a share
value of $12.04, the fair market value at the date of the
agreement. The Company also loaned the Chairman approximately
$440,000 to pay the income tax consequences of the award. The
loan bears interest at the rate applicable to borrowings under
the Revolving Credit Commitment. This loan was paid in full in
December 1998.

46



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##### Table of Contents



CSK AUTO CORPORATION AND SUBSIDIARY


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

In connection with the execution of his employment agreement,
the Companys Chairman received options for 401,967 shares
of common stock, exercisable at $12.04 per share. As of
February 4, 2001, these options were fully vested. The
Companys Chairman received options for 39,940 shares of
common stock, exercisable at $12.04 per share, effective as of
February 1, 1998. These options will vest and become
exercisable in four equal annual installments beginning in
April 1999. In connection with the issuance of these
options, the Company will recognize a charge to earnings of
approximately $0.2 million over the vesting period for the
difference between the exercise price and the fair market value
of the common stock at the date of grant. In connection with the
IPO, the Companys Chairman received options for 216,635
shares of common stock, exercisable at $20.00 per share, the
fair market value at the date of grant based on the IPO. These
options will vest and become exercisable in three equal annual
installments beginning in April 2000.

The Company also has a supplemental retirement plan agreement
with the Chairman which provides supplemental retirement
benefits for a period of ten years beginning the earlier of
February 1, 2006 or the first anniversary of the date of
termination of his employment, provided he is terminated without
Cause (as defined in such retirement plan agreement). The
benefit amount payable to the Chairman under this agreement is
based on the percentage of the benefit vested as of the date of
termination of his employment, not to exceed $600,000 per annum.

In connection with the execution of his employment agreement,
the Companys former President received an option for
299,337 shares of common stock, exercisable at $12.04 per share.
As of February 4, 2001, these options were fully vested.

Management Stock Purchase Agreements and
Loan Plans

In December 1997, the Company entered into stock purchase
agreements with certain executives of the Company. Under the
terms of the agreements, the Company agreed to issue a total of
180,600 shares of its common stock at a price of $12.04 per
share. In addition, the Company granted certain executives
non-qualified options to purchase 96,058 shares of its common
stock, also at a price of $12.04 per share. The options contain
similar terms and vesting provisions as existing options under
the Companys Executive Stock Option Plan. In addition, in
the fourth quarter of fiscal 1997, the Company recorded deferred
compensation of approximately $0.5 million to reflect the
difference between the exercise price and the fair market value
of stock associated with the options granted to certain
executives. The deferred compensation will produce a charge to
earnings over the vesting period of the options.

Of the total consideration paid to the Company of $2.2 million
in connection with the purchase of the Companys common
stock by certain executives, approximately $1.0 million was
loaned by the Company to certain executives to purchase 84,542
of the shares (the Stock Loans). In addition, the
Company loaned $0.2 million to certain executives during fiscal
2000 to purchase additional shares. The Stock Loans are
collateralized by the stock under pledge agreements, provide
full recourse to the executive, bear interest at the average
rate paid by the Company under the revolving portion of its
Senior Credit Facility, and mature in December 2003.

47



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##### Table of Contents



CSK AUTO CORPORATION AND SUBSIDIARY


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

Options Activity

Activity in all of the Companys stock option plans is
summarized as follows:

|                            |                            |           |           |                |   |            |       |       |  |  |   |       | 
|--------------------------- | -------------------------- | --------- | --------- | -------------- | - | ---------- | ----- | ----- |  |  | - | ----- | 
|                            |                            |           |           | Weighted       |   | Weighted  
|                            |                            | Number of |           | Average        |   | Average   
|                            |                            | Shares    |           | Exercise Price |   | Fair Value
|                            |                            |           |           |                |   |           
|Balance at February 1, 1998 |                            |           | 2,022,652 |                |   | $          | 13.19 |       |  |  |   |      
|                           
|                           
|                           
|                           
|                            | Granted at market price    |           |           | 267,784        |   |            |       | 25.03 |  |  | $ | 12.20 | 
|                           
|                           
|                           
|                           
|                            | Exercised                  |           |           | (30,444        | ) |            |       | 12.04 |  |  |   |       | 
|                           
|                           
|                           
|                           
|                            | Cancelled                  |           |           | (114,790       | ) |            |       | 13.66 |  |  |   |       | 
|                            |                            |           |           |                |   |            |       |       |  |  |   |      
|Balance at January 31, 1999 |                            |           | 2,145,202 |                |   |            | 14.56 |       |  |  |   |      
|                           
|                           
|                           
|                           
|                            | Granted at market price    |           |           | 1,040,302      |   |            |       | 24.32 |  |  | $ | 13.22 | 
|                           
|                           
|                           
|                           
|                            | Exercised                  |           |           | (65,742        | ) |            |       | 12.04 |  |  |   |       | 
|                           
|                           
|                           
|                           
|                            | Cancelled                  |           |           | (142,701       | ) |            |       | 19.71 |  |  |   |       | 
|                            |                            |           |           |                |   |            |       |       |  |  |   |      
|Balance at January 30, 2000 |                            |           | 2,977,061 |                |   |            | 17.78 |       |  |  |   |      
|                           
|                           
|                           
|                           
|                            | Granted at market price    |           |           | 294,844        |   |            |       | 9.54  |  |  | $ | 7.64  | 
|                           
|                           
|                           
|                           
|                            | Granted above market price |           |           | 18,531         |   |            |       | 12.04 |  |  | $ | 9.79  | 
|                           
|                           
|                           
|                           
|                            | Exercised                  |           |           | (6,604         | ) |            |       | 12.04 |  |  |   |       | 
|                           
|                           
|                           
|                           
|                            | Cancelled                  |           |           | (287,642       | ) |            |       | 19.50 |  |  |   |       | 
|                            |                            |           |           |                |   |            |       |       |  |  |   |      
|Balance at February 4, 2001 |                            |           | 2,996,190 |                |   | $          | 16.77 |       |  |  |   |      
|                            |                            |           |           |                |   |            |       |       |  |  |   |      

The following table summarizes information about the
Companys stock options at February 4, 2001:

|                         |                |                     |  |                  |           |                  |  |  |      |  |  |   |       | 
|------------------------ | -------------- | ------------------- |  | ---------------- | --------- | ---------------- |  |  | ---- |  |  | - | ----- | 
|                         |                |                    
|                         |                | Options Outstanding
|                         |                |                    
|                         |                |                     |  | Weighted Average |           |                 
|                         |                | Number              |  | Remaining        |           | Weighted Average
|Range of Exercise Prices |                | Outstanding         |  | Contractual Life |           | Exercise Price  
|                         |                |                     |  |                  |           |                 
|$                        | 2.72  $ 9.75  |                     |  |                  | 134,500   |                  |  |  | 6.74 |  |  | $ | 6.01  | 
|$                        | 9.78  $12.04  |                     |  |                  | 1,506,744 |                  |  |  | 3.23 |  |  |   | 12.01 | 
|$                        | 12.06  $20.00 |                     |  |                  | 692,571   |                  |  |  | 5.22 |  |  |   | 16.96 | 
|$                        | 20.13  $32.25 |                     |  |                  | 650,540   |                  |  |  | 5.12 |  |  |   | 29.62 | 
|$                        | 32.32  $36.53 |                     |  |                  | 11,835    |                  |  |  | 5.16 |  |  |   | 33.96 | 
|                         |                |                     |  |                  |           |                  |  |  |      |  |  |   |       | 
|$                        | 2.72  $36.53  |                     |  |                  | 2,996,190 |                  |  |  | 4.27 |  |  | $ | 16.77 | 

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                         |                |                     |  |                   |           |  |  |   |       | 
|------------------------ | -------------- | ------------------- |  | ----------------- | --------- |  |  | - | ----- | 
|                         |                |                    
|                         |                | Options Exercisable
|                         |                |                    
|                         |                |                     |  | Weighted         
|                         |                | Number              |  | Average          
|Range of Exercise Prices |                | Exercisable         |  | Exercisable Price
|                         |                |                     |  |                  
|$                        | 2.72  $ 9.75  |                     |  |                   |          |  |  | $ |      | 
|$                        | 9.78  $12.04  |                     |  |                   | 1,244,689 |  |  |   | 12.04 | 
|$                        | 12.06  $20.00 |                     |  |                   | 129,360   |  |  |   | 16.50 | 
|$                        | 20.13  $32.25 |                     |  |                   | 239,062   |  |  |   | 30.42 | 
|$                        | 32.32  $36.53 |                     |  |                   | 463       |  |  |   | 33.03 | 
|                         |                |                     |  |                   |           |  |  |   |       | 
|$                        | 2.72  $36.53  |                     |  |                   | 1,613,574 |  |  | $ | 15.13 | 

The Company has adopted the disclosure-only provisions of SFAS
No. 123, Accounting for Stock-Based
Compensation. Had compensation costs for the
Companys stock option plans been determined based on the
fair value at the grant date for awards, consistent with the
provisions of SFAS No. 123, net income and diluted earnings
per share would have been changed to the pro forma amounts
indicated below (in thousands except per share data):

|                            |             |             |   |       |  |      |   |        |  |  |   |        | 
|--------------------------- | ----------- | ----------- | - | ----- |  | ---- | - | ------ |  |  | - | ------ | 
|                            |             |            
|                            |             | Fiscal Year
|                            |             |            
|                            |             | 2000        |   | 1999  |  | 1998
|                            |             |             |   |       |  |     
|Net income:                 |             |             |   |       |  |      |   |        |  |  |   |       
|                           
|                           
|                           
|                           
|                            | As reported |             | $ | 5,000 |  |      | $ | 27,371 |  |  | $ | 20,718 | 
|                           
|                           
|                           
|                           
|                            | Pro forma   |             |   | 1,852 |  |      |   | 24,471 |  |  |   | 19,621 | 
|                           
|                           
|                           
|                           
|Diluted earnings per share: |             |             |   |       |  |      |   |        |  |  |   |       
|                           
|                           
|                           
|                           
|                            | As reported |             | $ | 0.18  |  |      | $ | 0.96   |  |  | $ | 0.75   | 
|                           
|                           
|                           
|                           
|                            | Pro forma   |             |   | 0.07  |  |      |   | 0.85   |  |  |   | 0.71   | 

48



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##### Table of Contents



CSK AUTO CORPORATION AND SUBSIDIARY


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

The fair value of each option grant is estimated on the date of
grant using the Black Scholes method of option pricing and is
based upon the following assumptions:

|                         |  |             |            |      |  |      |            |   |  |  |            |  
|------------------------ |  | ----------- | ---------- | ---- |  | ---- | ---------- | - |  |  | ---------- | -
|                         |  |            
|                         |  | Fiscal Year
|                         |  |            
|                         |  | 2000        |            | 1999 |  | 1998
|                         |  |             |            |      |  |     
|Dividend yield           |  |             | 0          | %    |  |      | 0          | % |  |  | 0          | %
|                        
|                        
|                        
|                        
|Risk free interest rate  |  |             | 5.35- 6.65 | %    |  |      | 4.75- 5.94 | % |  |  | 4.25- 5.63 | %
|                        
|                        
|                        
|                        
|Expected life of options |  |             | 6 years    |      |  |      | 6 years    |   |  |  | 6 years    |  
|                        
|                        
|                        
|                        
|Expected volatility      |  |             | 98         | %    |  |      | 49         | % |  |  | 43         | %

Note 11  Supplemental Schedule of Cash Flows

Interest paid during fiscal 2000, 1999, and 1998 amounted to
$61.5 million, $36.7 million, and $29.4 million, respectively.
Income taxes paid during fiscal 2000 and 1999 amounted to $0.7
million and $6.8 million, respectively. No income taxes were
paid in fiscal 1998.

The Company acquired certain fixtures and other equipment under
capital lease arrangements totaling approximately $13.5 million,
$17.2 million, and $10.5 million in fiscal 2000, 1999, and 1998,
respectively.

Note 12  Income Taxes

The provision for income taxes (exclusive of extraordinary
items) is comprised of the following (in thousands):

|          |         |             |     |       |     |      |        |        |        |  |        |        |        | 
|--------- | ------- | ----------- | --- | ----- | --- | ---- | ------ | ------ | ------ |  | ------ | ------ | ------ | 
|          |         |            
|          |         | Fiscal Year
|          |         |            
|          |         | 2000        |     | 1999  |     | 1998
|          |         |             |     |       |     |     
|Current:  |         |             |     |       |     |      |        |        |        |  |        |       
|         
|         
|         
|         
|          | Federal |             | $   |      |     |      | $      | 450    |        |  | $      | 225    |       
|         
|         
|         
|         
|          | State   |             |     |      |     |      |        | 387    |        |  |        | 130    |       
|          |         |             |     |       |     |      |        |        |        |  |        |       
|          |         |             |    |       |     |      | 837    |        |        |  | 355    |       
|          |         |             |     |       |     |      |        |        |        |  |        |       
|Deferred: |         |             |     |       |     |      |        |        |        |  |        |       
|         
|         
|         
|         
|          | Federal |             |     | 1,052 |     |      |        | 13,707 |        |  |        | 12,614 |       
|         
|         
|         
|         
|          | State   |             |     | (859  | )   |      |        | 2,892  |        |  |        | 2,777  |       
|          |         |             |     |       |     |      |        |        |        |  |        |       
|          |         |             | 193 |       |     |      | 16,599 |        |        |  | 15,391 |       
|          |         |             |     |       |     |      |        |        |        |  |        |       
|          |         | Total       |     | $     | 193 |      |        | $      | 17,436 |  |        | $      | 15,746 | 
|          |         |             |     |       |     |      |        |        |        |  |        |       

Included in fiscal 1999 results of operations is $468,000 of tax
benefit relating to the cumulative effect of change in
accounting principle (see Note 2).

49



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##### Table of Contents



CSK AUTO CORPORATION AND SUBSIDIARY


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

The following table summarizes the differences between the
Companys provision for income taxes and the expected
provision, exclusive of extraordinary items (in thousands):

|                                                                                                        |  |             |        |      |  |      |        |   |  |   |        |  
|------------------------------------------------------------------------------------------------------- |  | ----------- | ------ | ---- |  | ---- | ------ | - |  | - | ------ | -
|                                                                                                        |  |            
|                                                                                                        |  | Fiscal Year
|                                                                                                        |  |            
|                                                                                                        |  | 2000        |        | 1999 |  | 1998
|                                                                                                        |  |             |        |      |  |     
|Income before income taxes, extraordinary loss and cumulative
	effect of change in accounting principle |  | $           | 5,193  |      |  | $    | 45,548 |   |  | $ | 43,231 |  
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|Federal income tax rate                                                                                 |  |             | 34     | %    |  |      | 35     | % |  |   | 35     | %
|                                                                                                        |  |             |        |      |  |      |        |   |  |   |        |  
|Expected provision for income taxes                                                                     |  |             | 1,766  |      |  |      | 15,942 |   |  |   | 15,131 |  
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|Non-deductible goodwill and other permanent differences                                                 |  |             | 406    |      |  |      | 521    |   |  |   | 153    |  
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|State taxes, net of federal benefit                                                                     |  |             | 243    |      |  |      | 2,131  |   |  |   | 2,019  |  
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|Reversal of reserves no longer required                                                                 |  |             | (1,222 | )    |  |      |       |   |  |   | (807   | )
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|Tax credits and other                                                                                   |  |             | (1,000 | )    |  |      | (1,158 | ) |  |   | (750   | )
|                                                                                                        |  |             |        |      |  |      |        |   |  |   |        |  
|Actual provision for income taxes                                                                       |  | $           | 193    |      |  | $    | 17,436 |   |  | $ | 15,746 |  
|                                                                                                        |  |             |        |      |  |      |        |   |  |   |        |  

The current and non-current deferred tax assets and liabilities
consist of the following (in thousands):

|                                |                                    |                                      |        |             |        |   |        |        |        | 
|------------------------------- | ---------------------------------- | ------------------------------------ | ------ | ----------- | ------ | - | ------ | ------ | ------ | 
|                                |                                    | February 4,                          |        | January 30,
|                                |                                    | 2001                                 |        | 2000       
|                                |                                    |                                      |        |            
|Gross deferred tax assets:      |                                    |                                      |        |             |        |   |        |       
|                               
|                               
|                               
|                               
|                                | Store closing costs                |                                      | $      | 616         |        |   | $      | 1,905  |       
|                               
|                               
|                               
|                               
|                                | Accrued employee benefits          |                                      |        | 5,654       |        |   |        | 5,949  |       
|                               
|                               
|                               
|                               
|                                | Capital lease expenditures         |                                      |        | 389         |        |   |        | 555    |       
|                               
|                               
|                               
|                               
|                                | Internally developed software      |                                      |        |            |        |   |        | 933    |       
|                               
|                               
|                               
|                               
|                                | Preopening costs                   |                                      |        |            |        |   |        | 573    |       
|                               
|                               
|                               
|                               
|                                | Reserve for legal settlement       |                                      |        | 3,491       |        |   |        |       |       
|                               
|                               
|                               
|                               
|                                | Provision for bad debts            |                                      |        | 949         |        |   |        | 862    |       
|                               
|                               
|                               
|                               
|                                | Tax loss carryforwards             |                                      |        | 11,239      |        |   |        | 2,242  |       
|                               
|                               
|                               
|                               
|                                | Other                              |                                      |        | 5,025       |        |   |        | 2,727  |       
|                                |                                    |                                      |        |             |        |   |        |       
|                                |                                    | Total gross deferred tax assets      |        |             | 27,363 |   |        |        | 15,746 | 
|                                |                                    |                                      |        |             |        |   |        |       
|Gross deferred tax liabilities: |                                    |                                      |        |             |        |   |        |       
|                               
|                               
|                               
|                               
|                                | Inventory                          |                                      |        | 20,602      |        |   |        | 14,931 |       
|                               
|                               
|                               
|                               
|                                | Depreciation                       |                                      |        | 8,663       |        |   |        | 4,478  |       
|                               
|                               
|                               
|                               
|                                | Provision for site selection costs |                                      |        | 4,443       |        |   |        | 2,052  |       
|                               
|                               
|                               
|                               
|                                | Other                              |                                      |        | 1,066       |        |   |        | 1,503  |       
|                                |                                    |                                      |        |             |        |   |        |       
|                                |                                    | Total gross deferred tax liabilities |        |             | 34,774 |   |        |        | 22,964 | 
|                                |                                    |                                      |        |             |        |   |        |       
|Net deferred tax liability      |                                    | $                                    | (7,411 | )           |        | $ | (7,218 | )     
|                                |                                    |                                      |        |             |        |   |        |       

The net deferred tax assets (liabilities) are reflected in
the accompanying balance sheets as follows:

|                                               |  |             |         |             |  |   |        |  
|---------------------------------------------- |  | ----------- | ------- | ----------- |  | - | ------ | -
|                                               |  | February 4, |         | January 30,
|                                               |  | 2001        |         | 2000       
|                                               |  |             |         |            
|Current deferred tax assets (liabilities), net |  | $           | 3,133   |             |  | $ | (1,417 | )
|                                              
|                                              
|                                              
|                                              
|Non-current deferred tax liabilities           |  |             | (10,544 | )           |  |   | (5,801 | )
|                                               |  |             |         |             |  |   |        |  
|Net deferred tax liability                     |  | $           | (7,411  | )           |  | $ | (7,218 | )
|                                               |  |             |         |             |  |   |        |  

50



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##### Table of Contents



CSK AUTO CORPORATION AND SUBSIDIARY


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

The Company has recorded deferred tax assets of approximately
$11.2 million as of February 4, 2001 reflecting the benefit
of federal and state tax loss carryforwards approximating $30.7
million and $11.0 million, which begin to expire in 2013 and
2006, respectively. Realization is dependent on generating
sufficient taxable income prior to expiration of the loss
carryforwards. Utilization of certain of the net operating loss
carryforwards may be limited under Section 382 of the
Internal Revenue Code. Although realization is not assured,
management believes it is more likely than not that all the
deferred tax assets will be realized. Accordingly, the Company
believes that no valuation allowance is required for deferred
tax assets in excess of deferred tax liabilities. The amount of
the deferred tax assets considered realizable, however, could be
reduced in the near term if estimates of future taxable income
during the carryforward period are reduced.

Note 13  Store Closing Costs

The Company provides an allowance for estimated costs and losses
to be incurred in connection with store closures. For stores to
be closed, 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 (prior to
January 31, 1999, eighteen months). 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. The allowance for store
closing costs is included in accrued expenses in the
accompanying financial statements, and consists primarily of
future rents to be paid over the remaining terms of the master
lease agreement for stores, net of estimated sub-lease
recoveries. Future rents will be incurred through the expiration
of the non-cancelable leases, the longest of which run through
March 2018.

Activity in the provision for store closings and the related
store closing costs for the three years ended February 4,
2001, is as follows (in thousands):

|                                 |                                 |                                       |         |       |       |      |        |       |       |   |        |       |     | 
|-------------------------------- | ------------------------------- | ------------------------------------- | ------- | ----- | ----- | ---- | ------ | ----- | ----- | - | ------ | ----- | --- | 
|                                 |                                 |                                      
|                                 |                                 | Fiscal Year                          
|                                 |                                 |                                      
|                                 |                                 | 2000                                  |         | 1999  |       | 1998
|                                 |                                 |                                       |         |       |       |     
|Balance, beginning of year       |                                 | $                                     | 4,802   |       |       | $    | 2,670  |       |       | $ | 8,379  |      
|                                
|                                
|                                
|                                
|Store closing costs:             |                                 |                                       |         |       |       |      |        |       |       |   |        |      
|                                
|                                
|                                
|                                
|                                 | Store closing costs, gross      |                                       |         | 6,101 |       |      |        | 5,252 |       |   |        | 1,925 |    
|                                
|                                
|                                
|                                
|                                 | Adjustments to prior year plans |                                       |         | (41   | )     |      |        | (387  | )     |   |        | (620  | )  
|                                
|                                
|                                
|                                
|                                 | Revisions in estimates          |                                       |         |      |       |      |        | 35    |       |   |        | (970  | )  
|                                 |                                 |                                       |         |       |       |      |        |       |       |   |        |      
|                                 |                                 | Store closing costs, net              |         |       | 6,060 |      |        |       | 4,900 |   |        |       | 335 | 
|                                
|                                
|                                
|                                
|Purchase accounting adjustments: |                                 |                                       |         |       |       |      |        |       |       |   |        |      
|                                
|                                
|                                
|                                
|                                 | Big Wheel                       |                                       |         |      |       |      |        | 98    |       |   |        |      |    
|                                
|                                
|                                
|                                
|                                 | Als and Grand Auto Supply      |                                       |         | 2,744 |       |      |        | 4,080 |       |   |        |      |    
|                                 |                                 |                                       |         |       |       |      |        |       |       |   |        |      
|                                 |                                 | Total purchase accounting adjustments |         |       | 2,744 |      |        |       | 4,178 |   |        |       |    | 
|                                
|                                
|                                
|                                
|Payments                         |                                 |                                       | (12,054 | )     |       |      | (6,946 | )     |       |   | (6,044 | )    
|                                 |                                 |                                       |         |       |       |      |        |       |       |   |        |      
|Balance, end of year             |                                 | $                                     | 1,552   |       |       | $    | 4,802  |       |       | $ | 2,670  |      
|                                 |                                 |                                       |         |       |       |      |        |       |       |   |        |      

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. As a
result of the AGA acquisition, the Company analyzed store
locations in California and the Pacific Northwest. The Company
closed or relocated 39 of the former AGA stores (of which 37
were closed as of January 30, 2000) based on several
factors including: (1) market saturation; (2) store
profitability; and (3) store size and format. Costs
associated with these closures have been considered in the final
purchase price allocation (see Note 4). In addition, the Company
finalized a store closure plan for CSK owned stores that overlap
with AGA stores, which resulted in pretax charges of
approximately $3.7 million and $2.5 million during fiscal 2000
and 1999, respectively. The charges consist of two components:
(1) future rents to be paid over the remaining terms of the
master lease

51



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CSK AUTO CORPORATION AND SUBSIDIARY


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

agreements for the stores (net of estimated sub-lease
recoveries); and (2) write-down of leasehold improvements
and other fixed assets associated with the stores.

As part of the purchase price allocation for the AGA and Big
Wheel stores (see Note 4), the Company recorded an
allowance for the costs of closing or relocating certain stores.

Adjustments to prior plans relate to costs for store closures
that were accrued in prior years but withdrawn from the
Companys store closure plan in the period of adjustment.
Such withdrawals are due to subsequent improvements in the
underlying economics of the stores performance or (in the
case of store relocation) because the Company was unable to
secure a previously identified site upon acceptable lease terms.
The Company had significant adjustments to prior year plans in
1998 because of changes resulting from improved performance at
certain stores scheduled for closure in 1998. Further
significant changes to the strategic plan are not considered
likely. All relocations and store closings are anticipated to be
completed within twelve months of accrual and only after costs
can be estimated.

Other cost revisions are comprised of changes in expected future
rental costs for vacant or sub-leased store locations, which are
due largely to early terminations of lease agreements.

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

|               |  |                               |    |              |  |            |    |               |  |            |     |   |  |  |     |   |  |  |    | 
|-------------- |  | ----------------------------- | -- | ------------ |  | ---------- | -- | ------------- |  | ---------- | --- | - |  |  | --- | - |  |  | -- | 
|               |  |                               |    |             
|               |  | Number of Stores to be Closed |    |             
|               |  |                               |    |             
|Store Count by |  | Beginning                     |    |              |  | Plan       |    |               |  | Balance to
|Fiscal Year    |  | Balance                       |    | Stores Added |  | Amendments |    | Stores Closed |  | be Closed 
|               |  |                               |    |              |  |            |    |               |  |           
|1997           |  |                               | 56 |              |  |            | 36 |               |  |            | (15 | ) |  |  | (29 | ) |  |  | 48 | 
|              
|              
|              
|              
|1998           |  |                               | 48 |              |  |            | 24 |               |  |            | (10 | ) |  |  | (33 | ) |  |  | 29 | 
|              
|              
|              
|              
|1999           |  |                               | 29 |              |  |            | 87 |               |  |            | (11 | ) |  |  | (77 | ) |  |  | 28 | 
|              
|              
|              
|              
|2000           |  |                               | 28 |              |  |            | 24 |               |  |            | (1  | ) |  |  | (42 | ) |  |  | 9  | 

At February 4, 2001, there were 9 stores remaining to be
closed under the Companys store closing plans, comprised
of the following:

|                |  |              |    |            |  |               |    |            |  |  |     |   |  |  |   | 
|--------------- |  | ------------ | -- | ---------- |  | ------------- | -- | ---------- |  |  | --- | - |  |  | - | 
|Store Count by  |  | Stores in    |    | Plan       |  |               |    | Balance to
|Year of Accrual |  | Closing Plan |    | Amendments |  | Stores Closed |    | be Closed 
|                |  |              |    |            |  |               |    |           
|1999            |  |              | 87 |            |  |               | (2 | )          |  |  | (82 | ) |  |  | 3 | 
|               
|               
|               
|               
|2000            |  |              | 24 |            |  |               |   |            |  |  | (18 | ) |  |  | 6 | 
|                |  |              |    |            |  |               |    |            |  |  |     |   |  |  | 9 | 

Note 14  Legal Matters

As previously disclosed, on May 4, 1998, a lawsuit was
filed against the Company in the Superior Court in San Diego,
California. The case was brought by two former store managers
and a former senior assistant manager. It purported to be a
class action for all present and former California store
managers and senior assistant managers and sought overtime pay
for a period beginning in May 1995 as well as injunctive relief
requiring overtime pay in the future. The Company was also
served with two other lawsuits purporting to be class actions
filed in California state courts in Orange and Fresno Counties
by thirteen other former and current employees. The Company has
finalized a settlement of all of these lawsuits. The final
amount of the settlement was approximately $8.8 million (which
includes plaintiffs attorneys fees and costs and
other miscellaneous expenses).

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, L.L.C. and 250
individual auto parts dealers alleging that the Company and
seven other auto parts dealers (AutoZone, Inc., Wal-Mart Stores,
Inc.,

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CSK AUTO CORPORATION AND SUBSIDIARY


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

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 14 of the individual
plaintiffs asserted claims against the Company. The complaint
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. The complaint seeks injunctive relief
against all defendants and seeks treble damages on behalf of the
individual auto parts dealers who are plaintiffs, plus
attorneys fees. The complaint alleges that the estimated
average damage amount per plaintiff is $1,000,000 (and more for
those plaintiffs that are wholesale distributors and not simply
jobbers) before trebling. The Company believes the suit is
without merit and plans to vigorously defend it. The Company,
with other defendants, has filed a motion to dismiss and certain
other procedural motions. A decision on these motions is not
anticipated until the second or third quarter of fiscal 2001.
The Company does not currently believe that this complaint will
result in liabilities material to its consolidated financial
position, results of operations or cash flows.

The Company currently and from time to time is involved in other
litigation incidental to the conduct of its business. The
damages claimed in some of this litigation are substantial.
Although the amount of liability that may result from these
matters cannot be ascertained, the Company does not currently
believe that, in the aggregate, they will result in liabilities
material to its consolidated financial position, results of
operations or cash flows.

Note 15  Fair Value of Financial Instruments

The estimated fair values of the Companys financial
instruments, which are determined by reference to quoted market
prices, where available, or are based upon comparisons to
similar instruments of comparable maturities, are as follows (in
thousands):

|                                                |  |                  |         |                  |  |          |         |            |  |   |         |  |  |   |         | 
|----------------------------------------------- |  | ---------------- | ------- | ---------------- |  | -------- | ------- | ---------- |  | - | ------- |  |  | - | ------- | 
|                                                |  |                  |         |                 
|                                                |  | February 4, 2001 |         | January 30, 2000
|                                                |  |                  |         |                 
|                                                |  | Carrying         |         | Estimated        |  | Carrying |         | Estimated 
|                                                |  | Amount           |         | Fair Value       |  | Amount   |         | Fair Value
|                                                |  |                  |         |                  |  |          |         |           
|Cash and cash equivalents                       |  | $                | 11,131  |                  |  | $        | 11,131  |            |  | $ | 11,762  |  |  | $ | 11,762  | 
|                                               
|                                               
|                                               
|                                               
|Receivables                                     |  |                  | 79,901  |                  |  |          | 79,901  |            |  |   | 69,129  |  |  |   | 69,129  | 
|                                               
|                                               
|                                               
|                                               
|Amounts due under Senior Credit Facility        |  |                  | 526,480 |                  |  |          | 526,480 |            |  |   | 508,820 |  |  |   | 508,820 | 
|                                               
|                                               
|                                               
|                                               
|Obligations under 11% Senior Subordinated Notes |  |                  | 81,250  |                  |  |          | 55,656  |            |  |   | 81,250  |  |  |   | 82,367  | 

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##### Table of Contents






Item 9.  Changes in and Disagreements with
Accountants on Accounting and Financial Disclosure

None




PART III




Item 10.  Directors and Executive Officers
of the Registrant

The information required by this item with respect to Directors
is incorporated by reference from the information under the
caption Election of Directors contained in our
definitive proxy statement in connection with the solicitation
of proxies for our 2001 Annual Meeting of Stockholders to be
held on June 19, 2001 (the Proxy Statement).

The required information concerning our Executive Officers is
also contained in the Proxy Statement.




Item 11.  Executive Compensation

The information required by this item is incorporated by
reference from the information under the caption Executive
Compensation contained in the Proxy Statement.




Item 12.  Security Ownership of Certain
Beneficial Owners and Management

The information required by this item is incorporated by
reference from the information under the caption Security
Ownership of Certain Beneficial Owners and Management
contained in the Proxy Statement.




Item 13.  Certain Relationships and Related
Transactions

The information required by this item is incorporated by
reference from the information under the caption Certain
Relationships and Related Transactions contained in the
Proxy Statement.




PART IV




Item 14.  Exhibits, Financial Statement
Schedules and Reports on Form 8-K

(a)(1)  The following consolidated financial statements of
CSK Auto Corporation are included in Item 8. of this Report
on Form 10-K.

Report of Independent Accountants

Consolidated Balance Sheets  February 4, 2001
and January 30, 2000

Consolidated Statements of Operations  Fiscal Years
Ended February 4, 2001, January 30, 2000, and



Consolidated Statements of Stockholders
Equity  Fiscal Years Ended February 4, 2001,
January 30, 2000,



Consolidated Statements of Cash Flows  Fiscal Years
Ended February 4, 2001, January 30, 2000, and



Notes to Consolidated Financial Statements

(a)(2)  The following financial statement schedule of CSK
Auto Corporation for the three years ended February 4, 2001
is included in this Report on Form 10-K, as required by
Item 14(d): Schedule II  Valuation and
Qualifying Accounts and report of independent accountants
thereon. Other schedules have been omitted because information
is not required or otherwise is included in the Notes to the
Consolidated Financial Statements.

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(a)(3)  Exhibits:

|        |         |                         |  |                                                                                                                                                                                                                                                                                                                                                                        
|------- | ------- | ----------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |         |                        
|Number  |         | Description of Exhibits
|        |         |                        
|        | 3.01    |                         |  | Restated Certificate of Incorporation of the Company,
	incorporated herein by reference to Exhibit 3.01 of our
	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 our Annual Report on Form  10-K,
	filed on May 4, 1998 (File No. 001-13927).                                                                                                                                              
|        | 3.03    |                         |  | Amended and Restated By-laws of the Company, incorporated herein
	by reference to Exhibit 3.03 of our 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.                                                                                                                                                                                                                                                                                                        
|        | 4.01    |                         |  | Third Amended and Restated Credit Agreement, dated as of
	September 30, 1999, among Auto, The Chase Manhattan Bank,
	DLJ Capital Funding, Inc., Lehman Commercial Paper Inc., and the
	Lenders from time to time parties thereto, incorporated herein
	by reference to Exhibit 4.1 of our Current Report on
	Form 8-K, filed on October 15, 1999 (File
	No. 001-13927).
|        | 4.01.1  |                         |  | Amendment No. 1 to the Third Amended and Restated Credit
	Agreement, dated as of February 17, 2000.                                                                                                                                                                                                                                                                    
|        | 4.01.2  |                         |  | Amendment No. 2 to the Third Amended and Restated Credit
	Agreement, dated as of December 4, 2000.                                                                                                                                                                                                                                                                     
|        | 4.02    |                         |  | Indenture, dated as of October 30, 1996, by and among CSK
	Auto, Inc. (Auto), Kragen Auto Supply Co.,
	Schucks Distribution Co. and The Bank of New York (as
	successor to Wells Fargo Bank, N.A.), as Trustee, including form
	of Note, incorporated herein by reference to CSK Auto,
	Inc.s Registration Statement on Form S-4 (File
	No. 333-22511).            
|        | 4.03    |                         |  | Form of Common Stock certificate, incorporated herein by
	reference to our Registration Statement on Form S-1 (File
	No. 333-43211).                                                                                                                                                                                                                                   
|        | 10.01.1 |                         |  | Amended and Restated Employment Agreement, dated as of
	June  12, 1998, between Auto and Maynard Jenkins,
	incorporated herein by reference to our Quarterly Report on
	Form 10-Q, filed on September 11, 1998 (File
	No. 001-13927).                                                                                                                                  
|        | 10.01.2 |                         |  | Amendment to Employment Agreement, dated as of September 
	24, 1999, between Auto and Maynard Jenkins, incorporated herein.
	by reference to our Annual Report on Form 10-K, filed on
	April 28, 2000 (File No. 001-13927).                                                                                                                                            
|        | 10.02   |                         |  | Stock Option Agreement, dated January 27, 1997, between the
	Company and Maynard Jenkins, incorporated herein by reference to
	our Registration Statement on Form S-1 (File
	No. 333-67231).                                                                                                                                                                           
|        | 10.03   |                         |  | Stock Option Agreement, dated February 1, 1998, between the
	Company and Maynard Jenkins, incorporated herein by reference to
	our Registration Statement on Form S-1 (File
	No. 333-43211).                                                                                                                                                                           
|        | 10.04   |                         |  | Stock Option Agreement, dated March 9, 1998, between the
	Company and Maynard Jenkins, incorporated herein by reference to
	our Registration Statement on Form S-1 (File
	No. 333-43211).                                                                                                                                                                              
|        | 10.05   |                         |  | Restated 1996 Associate Stock Option Plan, incorporated herein
	by reference to our Registration Statement on Form  S-1
	(File No. 333-67231).                                                                                                                                                                                                                         
|        | 10.06   |                         |  | Supplemental Executive Retirement Plan Agreement, dated
	August 28, 2000 between Auto and Maynard Jenkins,
	incorporated herein by reference to our Quarterly Report on
	Form 10-Q, filed on September 13, 2000 (File No. 
	001-13927).                                                                                                                                
|        | 10.07   |                         |  | Restated 1996 Executive Stock Option Plan (Amended and Restated
	June 8, 1999), incorporated herein by reference to our
	definitive Proxy Statement, filed on May 11, 1999 (File
	No. 001-13927).                                                                                                                                                                      
|        | 10.08   |                         |  | 1999 Employee Stock Option Plan, incorporated by reference to
	our definitive Proxy Statement, filed on May 11, 1999 (File
	No. 001-13927).                                                                                                                                                                                                                            

55



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##### Table of Contents



|        |         |                         |  |                                                                                                                                                                                                                                                                                                                     
|------- | ------- | ----------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |         |                        
|Number  |         | Description of Exhibits
|        |         |                        
|        | 10.09   |                         |  | CSK Auto Corporation Directors Stock Plan, incorporated herein
	by reference to our Quarterly Report on Form 10-Q, filed on
	September 11, 1998 (File No. 001-13927).                                                                                                                                               
|        | 10.10   |                         |  | Form of Restricted Stock Agreement pursuant to the CSK Auto
	Corporation Directors Stock Plan, incorporated herein by
	reference to our Annual Report on Form 10-K, filed on
	April 28, 2000 (File No. 001-13927).                                                                                                  
|        | 10.11   |                         |  | CSK Auto Corporation 2000 Senior Executive Stock Loan Plan.                                                                                                                                                                                                                                                         
|        | 10.12   |                         |  | Amended and Restated Lease, dated October 23, 1989 (the
	Missouri Falls Lease), between Auto and Missouri
	Falls Associates Limited Partnership, incorporated herein by
	reference to CSK Auto, Inc.s Registration Statement on
	Form S-4 (File No. 333-22511).                                                  
|        | 10.13   |                         |  | First Amendment to the Missouri Falls Lease, dated
	November  22, 1991, between Auto and Missouri Falls
	Associates Limited Partnership, incorporated herein by reference
	to CSK Auto, Inc.s Registration Statement on Form S-4
	(File No.  333-22511).                                                           
|        | 10.14   |                         |  | Amendment to Leases, dated as of October 30, 1996, by and
	between Missouri Falls Associates Limited Partnership and Auto,
	incorporated herein by reference to CSK Auto, Inc.s
	Registration Statement on Form S-4 (File
	No. 333-22511).                                                                         
|        | 10.15   |                         |  | Lease dated July 31, 1997 between Missouri Falls Partners
	and CSK Auto, Inc.; First Amendment to Lease dated April 1,
	2000.                                                                                                                                                                                       
|        | 10.16   |                         |  | Lease dated April 20, 2000 between Missouri Falls Partners
	and CSK Auto, Inc.; First Amendment to Lease dated
	February  23, 2000.                                                                                                                                                                                 
|        | 10.17   |                         |  | Lease dated April 20, 2000 between Missouri Falls Partners
	and CSK Auto, Inc.; First Amendment to Lease dated August 
	20, 2000.                                                                                                                                                                                   
|        | 10.18.1 |                         |  | Stockholders Agreement, dated October 30, 1996, by
	and among the Initial Investcorp Group, Cantrade Trust Company
	Limited in its capacity as trustee of The Carmel Trust, the
	Company and Auto, incorporated herein by reference to CSK Auto,
	Inc.s Registration Statement on Form S-4 (File
	No.  333-22511).
|        | 10.18.2 |                         |  | Form of Supplemental Stockholders Agreement Signature
	Page, Incorporated herein by reference to our Registration
	Statement on Form S-1 (File No. 333-43211).                                                                                                                                                     
|        | 10.18.3 |                         |  | Amendment to the Stockholders Agreement, dated
	June 12, 1998, incorporated herein by reference to our
	Registration Statement on Form S-1 (File
	No. 333-67231).                                                                                                                                                  
|        | 10.18.4 |                         |  | Letter Agreement re: Stockholders Agreement, incorporated
	herein by reference to our Annual Report on Form 10-K,
	filed on April 28, 1999 (File No. 001-13927).                                                                                                                                                   
|        | 10.19   |                         |  | CSK Auto Corporation 1997 Senior Executive Stock Loan Plan,
	Incorporated herein by reference to our Registration Statement
	on Form S-1 (File No. 333-43211).                                                                                                                                                      
|        | 10.20   |                         |  | Form of Stock Purchase Agreement pursuant to the CSK Auto
	Corporation 1997 Stock Loan Plan, incorporated herein by
	reference to our Registration Statement on Form S-1 (File
	No. 333-43211).                                                                                                                     
|        | 10.21   |                         |  | Employment Agreement, dated October 13, 1995, between CSK
	Auto, Inc. and Don Watson.                                                                                                                                                                                                                               
|        | 10.22   |                         |  | Employment Agreement between CSK Auto, Inc. and Lon B. Novatt.                                                                                                                                                                                                                                                      
|        | 10.23   |                         |  | Employment Agreement, dated February 25, 1997, between CSK
	Auto, Inc. and Dale E. Ward.                                                                                                                                                                                                                            
|        | 21.01   |                         |  | Subsidiaries of the Company.                                                                                                                                                                                                                                                                                        
|        | 23.01   |                         |  | Consent of PricewaterhouseCoopers LLP.                                                                                                                                                                                                                                                                              






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REPORT OF INDEPENDENT ACCOUNTANTS ON

FINANCIAL STATEMENT SCHEDULE


To the Board of Directors of CSK Auto Corporation:

Our audits of the consolidated financial statements referred to
in our report dated March 28, 2001 appearing in this Annual
Report on Form 10-K of CSK Auto Corporation and its
subsidiary also included an audit of the financial statement
schedule listed in Item 14(a)(2) of this Form 10-K. In
our opinion, this financial statement schedule presents fairly,
in all material respects, the information set forth therein when
read in conjunction with the related consolidated financial
statements.

PRICEWATERHOUSECOOPERS LLP

Phoenix, Arizona



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##### Table of Contents



CSK AUTO CORPORATION AND SUBSIDIARY

SCHEDULE II  VALUATION AND QUALIFYING ACCOUNTS

For the Fiscal Years 2000, 1999, and 1998


|                         |                             |                |   |            |  |             |   |            |  |            |   |       |  |  |   |        |   |  |   |       | 
|------------------------ | --------------------------- | -------------- | - | ---------- |  | ----------- | - | ---------- |  | ---------- | - | ----- |  |  | - | ------ | - |  | - | ----- | 
|                         |                             | Balance at     |   | Charged to |  | Purchase    |   |            |  | Balance at
|                         |                             | Beginning of   |   | Costs and  |  | Accounting  |   |            |  | End of    
|Description              |                             | Period         |   | Expenses   |  | Adjustments |   | Deductions |  | Period    
|                         |                             |                |   |            |  |             |   |            |  |           
|                         |                             |               
|                         |                             | (in thousands)
|                        
|                        
|                        
|                        
|Allowance for Bad Debts: |                             |                |   |            |  |             |   |            |  |            |   |       |  |  |   |        |   |  |   |      
|                        
|                        
|                        
|                        
|                         | Year Ended January 31, 1999 |                | $ | 2,403      |  |             | $ | 1,591      |  |            | $ |      |  |  | $ | (2,291 | ) |  | $ | 1,703 | 
|                        
|                        
|                        
|                        
|                         | Year Ended January 30, 2000 |                |   | 1,703      |  |             |   | 3,910      |  |            |   | 1,178 |  |  |   | (3,497 | ) |  |   | 3,294 | 
|                        
|                        
|                        
|                        
|                         | Year Ended February 4, 2001 |                |   | 3,294      |  |             |   | 6,119      |  |            |   | 1,289 |  |  |   | (6,466 | ) |  |   | 4,236 | 

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended, the registrant has
duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized, on this 1st day of
May 2001.



| |                     
| | --------------------
| | CSK AUTO CORPORATION



| |     |                   
| | --- | ------------------
| | By: | /s/MAYNARD JENKINS

| |                                     
| | ------------------------------------
| | Maynard Jenkins                     
| | Chairman and Chief Executive Officer

Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended, this report has
been signed by the following persons on behalf of the
registrant, and in the capacities indicated, on this 1st day of
May 2001.

|                                                 |  |                                                                                 
|------------------------------------------------ |  | --------------------------------------------------------------------------------
|/s/ MAYNARD JENKINSMaynard Jenkins               |  | Chairman of the Board and Chief Executive Officer (Principal
	Executive Officer)
|                                                
|/s/ JOHN F. ANTIOCOJohn F. Antioco               |  | Director                                                                        
|                                                
|/s/ JAMES BAZLENJames Bazlen                     |  | Director                                                                        
|                                                
|/s/ CHARLES L. GRIFFITHCharles L. Griffith       |  | Director                                                                        
|                                                
|/s/ MORTON GODLASMorton Godlas                   |  | Director                                                                        
|                                                
|/s/ CHARLES K. MARQUISCharles K. Marquis         |  | Director                                                                        
|                                                
|/s/ CHRISTOPHER J. OBRIENChristopher J. OBrien |  | Director                                                                        
|                                                
|/s/ MAMOUN ASKARIMamoun Askari                   |  | Director                                                                        
|                                                
|/s/ ROBERT SMITHRobert Smith                     |  | Director                                                                        
|                                                
|/s/ CHRISTOPHER J. STADLERChristopher J. Stadler |  | Director                                                                        

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|                               |  |                                                                                                                             
|------------------------------ |  | ----------------------------------------------------------------------------------------------------------------------------
|/s/ JULES TRUMPJules Trump     |  | Director                                                                                                                    
|                              
|/s/ EDDIE TRUMPEddie Trump     |  | Director                                                                                                                    
|                              
|/s/ SAVIO W. TUNGSavio W. Tung |  | Director                                                                                                                    
|                              
|/s/ DON W. WATSONDon W. Watson |  | Senior Vice President, Chief Financial Officer and Treasurer
	(Principal Financial Officer and Principal Accounting Officer)

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INDEX TO EXHIBITS

|        |         |                         |  |                                                                                                                                                                                                                                                                                                                                                                        
|------- | ------- | ----------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |         |                        
|Number  |         | Description of Exhibits
|        |         |                        
|        | 3.01    |                         |  | Restated Certificate of Incorporation of the Company,
	incorporated herein by reference to Exhibit 3.01 of our
	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 our Annual Report on Form  10-K,
	filed on May 4, 1998 (File No. 001-13927).                                                                                                                                              
|        | 3.03    |                         |  | Amended and Restated By-laws of the Company, incorporated herein
	by reference to Exhibit 3.03 of our 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.                                                                                                                                                                                                                                                                                                        
|        | 4.01    |                         |  | Third Amended and Restated Credit Agreement, dated as of
	September 30, 1999, among Auto, The Chase Manhattan Bank,
	DLJ Capital Funding, Inc., Lehman Commercial Paper Inc., and the
	Lenders from time to time parties thereto, incorporated herein
	by reference to Exhibit 4.1 of our Current Report on
	Form 8-K, filed on October 15, 1999 (File
	No. 001-13927).
|        | 4.01.1  |                         |  | Amendment No. 1 to the Third Amended and Restated Credit
	Agreement, dated as of February 17, 2000.                                                                                                                                                                                                                                                                    
|        | 4.01.2  |                         |  | Amendment No. 2 to the Third Amended and Restated Credit
	Agreement, dated as of December 4, 2000.                                                                                                                                                                                                                                                                     
|        | 4.02    |                         |  | Indenture, dated as of October 30, 1996, by and among CSK
	Auto, Inc. (Auto), Kragen Auto Supply Co.,
	Schucks Distribution Co. and The Bank of New York (as
	successor to Wells Fargo Bank, N.A.), as Trustee, including form
	of Note, incorporated herein by reference to CSK Auto,
	Inc.s Registration Statement on Form S-4 (File
	No. 333-22511).            
|        | 4.03    |                         |  | Form of Common Stock certificate, incorporated herein by
	reference to our Registration Statement on Form S-1 (File
	No. 333-43211).                                                                                                                                                                                                                                   
|        | 10.01.1 |                         |  | Amended and Restated Employment Agreement, dated as of
	June  12, 1998, between Auto and Maynard Jenkins,
	incorporated herein by reference to our Quarterly Report on
	Form 10-Q, filed on September 11, 1998 (File
	No. 001-13927).                                                                                                                                  
|        | 10.01.2 |                         |  | Amendment to Employment Agreement, dated as of September 
	24, 1999, between Auto and Maynard Jenkins, incorporated herein.
	by reference to our Annual Report on Form 10-K, filed on
	April 28, 2000 (File No. 001-13927).                                                                                                                                            
|        | 10.02   |                         |  | Stock Option Agreement, dated January 27, 1997, between the
	Company and Maynard Jenkins, incorporated herein by reference to
	our Registration Statement on Form S-1 (File
	No. 333-67231).                                                                                                                                                                           
|        | 10.03   |                         |  | Stock Option Agreement, dated February 1, 1998, between the
	Company and Maynard Jenkins, incorporated herein by reference to
	our Registration Statement on Form S-1 (File
	No. 333-43211).                                                                                                                                                                           
|        | 10.04   |                         |  | Stock Option Agreement, dated March 9, 1998, between the
	Company and Maynard Jenkins, incorporated herein by reference to
	our Registration Statement on Form S-1 (File
	No. 333-43211).                                                                                                                                                                              
|        | 10.05   |                         |  | Restated 1996 Associate Stock Option Plan, incorporated herein
	by reference to our Registration Statement on Form  S-1
	(File No. 333-67231).                                                                                                                                                                                                                         
|        | 10.06   |                         |  | Supplemental Executive Retirement Plan Agreement, dated
	August 28, 2000 between Auto and Maynard Jenkins,
	incorporated herein by reference to our Quarterly Report on
	Form 10-Q, filed on September 13, 2000 (File No. 
	001-13927).                                                                                                                                
|        | 10.07   |                         |  | Restated 1996 Executive Stock Option Plan (Amended and Restated
	June 8, 1999), incorporated herein by reference to our
	definitive Proxy Statement, filed on May 11, 1999 (File
	No. 001-13927).                                                                                                                                                                      
|        | 10.08   |                         |  | 1999 Employee Stock Option Plan, incorporated by reference to
	our definitive Proxy Statement, filed on May 11, 1999 (File
	No. 001-13927).                                                                                                                                                                                                                            

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|        |         |                         |  |                                                                                                                                                                                                                                                                                                                     
|------- | ------- | ----------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |         |                        
|Number  |         | Description of Exhibits
|        |         |                        
|        | 10.09   |                         |  | CSK Auto Corporation Directors Stock Plan, incorporated herein
	by reference to our Quarterly Report on Form 10-Q, filed on
	September 11, 1998 (File No. 001-13927).                                                                                                                                               
|        | 10.10   |                         |  | Form of Restricted Stock Agreement pursuant to the CSK Auto
	Corporation Directors Stock Plan, incorporated herein by
	reference to our Annual Report on Form 10-K, filed on
	April 28, 2000 (File No. 001-13927).                                                                                                  
|        | 10.11   |                         |  | CSK Auto Corporation 2000 Senior Executive Stock Loan Plan.                                                                                                                                                                                                                                                         
|        | 10.12   |                         |  | Amended and Restated Lease, dated October 23, 1989 (the
	Missouri Falls Lease), between Auto and Missouri
	Falls Associates Limited Partnership, incorporated herein by
	reference to CSK Auto, Inc.s Registration Statement on
	Form S-4 (File No. 333-22511).                                                  
|        | 10.13   |                         |  | First Amendment to the Missouri Falls Lease, dated
	November  22, 1991, between Auto and Missouri Falls
	Associates Limited Partnership, incorporated herein by reference
	to CSK Auto, Inc.s Registration Statement on Form S-4
	(File No.  333-22511).                                                           
|        | 10.14   |                         |  | Amendment to Leases, dated as of October 30, 1996, by and
	between Missouri Falls Associates Limited Partnership and Auto,
	incorporated herein by reference to CSK Auto, Inc.s
	Registration Statement on Form S-4 (File
	No. 333-22511).                                                                         
|        | 10.15   |                         |  | Lease dated July 31, 1997 between Missouri Falls Partners
	and CSK Auto, Inc.; First Amendment to Lease dated April 1,
	2000.                                                                                                                                                                                       
|        | 10.16   |                         |  | Lease dated April 20, 2000 between Missouri Falls Partners
	and CSK Auto, Inc.; First Amendment to Lease dated
	February  23, 2000.                                                                                                                                                                                 
|        | 10.17   |                         |  | Lease dated April 20, 2000 between Missouri Falls Partners
	and CSK Auto, Inc.; First Amendment to Lease dated August 
	20, 2000.                                                                                                                                                                                   
|        | 10.18.1 |                         |  | Stockholders Agreement, dated October 30, 1996, by
	and among the Initial Investcorp Group, Cantrade Trust Company
	Limited in its capacity as trustee of The Carmel Trust, the
	Company and Auto, incorporated herein by reference to CSK Auto,
	Inc.s Registration Statement on Form S-4 (File
	No.  333-22511).
|        | 10.18.2 |                         |  | Form of Supplemental Stockholders Agreement Signature
	Page, Incorporated herein by reference to our Registration
	Statement on Form S-1 (File No. 333-43211).                                                                                                                                                     
|        | 10.18.3 |                         |  | Amendment to the Stockholders Agreement, dated
	June 12, 1998, incorporated herein by reference to our
	Registration Statement on Form S-1 (File
	No. 333-67231).                                                                                                                                                  
|        | 10.18.4 |                         |  | Letter Agreement re: Stockholders Agreement, incorporated
	herein by reference to our Annual Report on Form 10-K,
	filed on April 28, 1999 (File No. 001-13927).                                                                                                                                                   
|        | 10.19   |                         |  | CSK Auto Corporation 1997 Senior Executive Stock Loan Plan,
	Incorporated herein by reference to our Registration Statement
	on Form S-1 (File No. 333-43211).                                                                                                                                                      
|        | 10.20   |                         |  | Form of Stock Purchase Agreement pursuant to the CSK Auto
	Corporation 1997 Stock Loan Plan, incorporated herein by
	reference to our Registration Statement on Form S-1 (File
	No. 333-43211).                                                                                                                     
|        | 10.21   |                         |  | Employment Agreement, dated October 13, 1995, between CSK
	Auto, Inc. and Don Watson.                                                                                                                                                                                                                               
|        | 10.22   |                         |  | Employment Agreement between CSK Auto, Inc. and Lon B. Novatt.                                                                                                                                                                                                                                                      
|        | 10.23   |                         |  | Employment Agreement, dated February 25, 1997, between CSK
	Auto, Inc. and Dale E. Ward.                                                                                                                                                                                                                            
|        | 21.01   |                         |  | Subsidiaries of the Company.                                                                                                                                                                                                                                                                                        
|        | 23.01   |                         |  | Consent of PricewaterhouseCoopers LLP.                                                                                                                                                                                                                                                                              

62