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UNITED STATES SECURITIES AND EXCHANGE
COMMISSION

Washington, D.C. 20549




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Form 10-K/A






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

OF THE SECURITIES EXCHANGE ACT OF 1934


For the fiscal year ended February 3,
2002.



|  |                                                  
|- | -------------------------------------------------
|o | 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     þ     No     o

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.     o

As of April 17, 2002 the aggregate market
value of the Companys common stock held by non-affiliates
was approximately $246.6 million. For purposes of the above
statement only, all directors and executive officers of the
registrant are assumed to be affiliates. As of April 17,
2002 there were 32,477,236 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 2002 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                     
|10-K/A  
|EX-23.1 



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TABLE OF CONTENTS




|         |  |                                                                                           |  |      |    | 
|-------- |  | ----------------------------------------------------------------------------------------- |  | ---- | -- | 
|         |  |                                                                                           |  | Page
|         |  |                                                                                           |  |     
|PART I  
|Item 1.  |  | Business                                                                                  |  |      | 2  | 
|Item 2.  |  | Properties                                                                                |  |      | 10 | 
|Item 3.  |  | Legal Proceedings                                                                         |  |      | 11 | 
|Item 4.  |  | Submission of Matters to a Vote of Security
    Holders                                   |  |      | 12 | 
|PART II 
|Item 5.  |  | Market for Registrants Common Stock and
    Related Stockholder Matters                  |  |      | 12 | 
|Item 6.  |  | Selected Consolidated Financial Data                                                      |  |      | 15 | 
|Item 7.  |  | Managements Discussion and Analysis of
    Financial Condition and Results of Operations |  |      | 20 | 
|Item 7A. |  | Quantitative and Qualitative Disclosures about
    Market Risk                            |  |      | 35 | 
|Item 8.  |  | Consolidated Financial Statements and
    Supplementary Data                              |  |      | 36 | 
|Item 9.  |  | Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure  |  |      | 74 | 
|PART III
|Item 10. |  | Directors and Executive Officers of the Registrant                                        |  |      | 74 | 
|Item 11. |  | Executive Compensation                                                                    |  |      | 74 | 
|Item 12. |  | Security Ownership of Certain Beneficial Owners
    and Management                        |  |      | 74 | 
|Item 13. |  | Certain Relationships and Related Transactions                                            |  |      | 74 | 
|PART IV 
|Item 14. |  | Exhibits, Financial Statement Schedules and
    Reports on Form 8-K                       |  |      | 74 | 




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.

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PART I




Item 1.     Business

General

We are the largest specialty retailer of
automotive parts and accessories in the Western United States
and one of the largest such retailers in the United States,
based on store count. We have the number one market position in
25 of the 28 geographic markets in which we operate, based on
store count. As of February 3, 2002, we operated 1,130
stores in 19 states under one fully integrated operating format
and three brand names:



| |   |                                                                                                                                  
| | - | ---------------------------------------------------------------------------------------------------------------------------------
| |  | Checker Auto Parts,
	founded in 1969, with 418 stores in the Southwestern, Rocky
	Mountain and Northern Plains states and Hawaii;
|
| |  | Schucks Auto
	Supply, founded in 1917, with 235 stores in the Pacific
	Northwest and Alaska; and                                
|
| |  | Kragen Auto Parts,
	founded in 1947, with 477 stores primarily in California.                                                    

We offer a broad selection of national brand name
and generic automotive products for domestic and imported cars
and light trucks. Our products include new and remanufactured
automotive replacement parts, maintenance items and accessories.
Our stores average approximately 7,290 square feet in size and
typically offer a store specific mix of between 13,000 and
18,000 stock-keeping units, or SKUs. We also operate a highly
efficient network of 39 strategically located depots to provide
approximately 75% of our stores an additional 65,000 SKUs on a
same-day delivery basis. Through our extensive on-line vendor
network, we make available up to an additional 250,000 SKUs on a
same-day delivery basis to approximately 75% of our stores and
up to 1,000,000 additional SKUs on a next-day delivery basis to
substantially all of our stores.

We serve both the do-it-yourself (DIY) and
the commercial installer, or do-it-for-me (DIFM), markets. The
DIY market, which is comprised of consumers who typically repair
and maintain vehicles themselves, is the foundation of our
business. Sales to the DIY market represented approximately 82%
of our net sales for fiscal year 2001. The DIFM market is
comprised of auto repair professionals, fleet owners,
governments, and municipalities and accounted for approximately
60% of the annual sales in the U.S. automotive aftermarket
industry in 2000, according to statistics published by the
Automotive Aftermarket Industry Association. Sales to the DIFM
market represented approximately 18% of our net sales for fiscal
year 2001. In 1994, we began targeting the DIFM market to
leverage our existing store base, fixed costs, inventory, and
in-store personnel. We believe we are well positioned to
effectively and profitably further penetrate the highly
fragmented DIFM market because of our sales force dedicated to
DIFM customers, experienced in-store sales associates, high
level of customer service, conveniently located stores,
efficient depot delivery network, attractive pricing, and
ability to provide timely availability of a broad selection of
national brand name products.

Industry Overview

We compete in the approximately $98 billion
U.S. automotive aftermarket industry, which includes replacement
parts (excluding tires), accessories, maintenance items,
batteries and automotive fluids for cars and light trucks. The
industry is comprised of the $36 billion DIY market and the
$62 billion DIFM market. From 1991 to 2000, the DIY market
grew at a compound annual rate of 5.8% and the DIFM market grew
at a compound annual rate of 6.0%. We believe that the U.S.
automotive aftermarket industry is characterized by stable
demand and is growing because of increases in:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the size and age of the automotive fleet. The
	number of light vehicles in use, which includes cars and light
	trucks, has increased from 175.4 million in 1991 to
	205.3 million in 2000. From 1991 to 2000, the average age
	of cars increased from 7.9 years to 9.1 years and the
	average age of light trucks increased from 8.1 years to
	8.4 years. In the Western United States, where we operate,
	the average age of domestic cars was 10.8 years in 2000
	according to Lang Marketing Resources, Inc.
|
| |  | the number of miles driven annually per vehicle.
	Miles driven annually has grown from approximately
	2.0 trillion in 1991 to approximately 2.5 trillion in
	1999.                                                                                                                                                                                                                                                                                                                                             

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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                 
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the number of licensed drivers. Licensed drivers
	increased from 169.0 million in 1991 to approximately
	187.2 million in 1999.                                                                                                                                                                                                                                                                                 
|
| |  | the percentage of the total light vehicle fleet
	represented by light trucks, which includes SUVs. Light trucks
	comprised 37.8% of all light vehicles in use in 2000, up from
	29.7% in 1991. According to Lang Marketing Resources, Inc., in
	2000, each light truck generated an average of $480 of
	aftermarket product purchases versus $325 of such purchases
	generated per car.                         
|
| |  | the number of light vehicles coming off warranty,
	particularly leased vehicles. From 1996 to 2000, approximately
	80.2 million new light vehicles were sold and an additional
	18.6 million light vehicles were leased. Management
	believes that leased vehicles are often under-maintained and,
	therefore, may require higher-than-average maintenance and
	repair expenditures in the post-warranty period.

Despite significant consolidation of automotive
aftermarket retailers in recent years, the industry remains
highly fragmented. Our primary competitors include national and
regional automotive parts chains, wholesalers, jobber stores,
independent operators, automobile dealers, and discount stores
and mass merchandisers that carry automotive products. According
to Lang Marketing Resources, Inc., specialty automotive parts
retailers have increased their market share of U.S. DIY sales
from 31.6% in 1994 to 40.8% in 2000.

Competitive Strengths

We believe that our competitive strengths include
the following:

Leading Market Position in the Western United
States.We are the largest specialty
retailer of automotive parts and accessories in the Western
United States and have the number one market position in 25 of
the 28 geographic markets in which we operate, based on store
count. Our research indicates that we have better brand name
recognition than many of our competitors in several of our key
markets. We believe that this is due to the long operating
history of our stores, our advertising and marketing programs,
the breadth of our product selection, and our reputation for
superior customer service.

As the largest specialty retailer of automotive
parts and accessories in the Western United States, we believe
we have certain competitive advantages over smaller retail
chains and independent operators. These advantages include:
(1) our brand name recognition as a trusted source of
automotive parts and accessories, (2) our ability to make
available a broad selection of products on a timely basis,
(3) marketing and distribution efficiencies due to
economies of scale, and (4) our advanced store level
information and distribution systems, which are the result of
our significant investments in recent years. We also believe
that we enjoy a competitive advantage over mass merchandisers
due to our focus on automotive parts and accessories and our
knowledgeable sales associates.

Focus on Customer Service.Our research indicates that consumers
in our key markets rate our sales associates as the most
knowledgeable and helpful more frequently than those of
certain other well-known specialty retailers of automotive
parts. Recruiting, training and retaining high quality sales
associates is a major component of our focus on customer
service. Our training programs and incentives encourage our
sales associates to develop technical expertise, which enables
them to effectively advise customers on product selection and
use. We have an average of two Automotive Society of Engineers,
or ASE, certified mechanics per store. To further satisfy our
customers needs we also offer free testing of certain
parts, no hassle return policies, electronically
maintained warranties and a customer service call center.

Profitable and Growing Commercial Sales
Program.We believe we are well
positioned to effectively service our DIFM customers, who
typically require convenient locations, a high level of customer
service, and timely availability of brand name products.
Beginning in fiscal 1996, we significantly increased our
marketing efforts to the DIFM market, added sales personnel
dedicated to our DIFM customers, increased the breadth and depth
of our product selection, and improved and expanded our
distribution systems. We currently operate DIFM sales centers in
545 of our stores and our DIFM sales have grown from
$89.6 million, or approximately 11% of net sales in fiscal
1996, to $259.1 million, or approximately 18% of net sales
for the fiscal year ended February 3, 2002. The growth of
our commercial sales program has increased the sales base for our

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participating stores, created additional
marketing and distribution efficiencies, and allowed us to
enhance the product selection for our DIY customers.


Timely Availability of a Broad Selection of
Brand Name Products.Our stores
typically offer a store specific mix of between 13,000 and
18,000 SKUs. We also operate a highly efficient network of 39
strategically located depots to provide approximately 75% of our
stores an additional 65,000 SKUs on a same-day delivery basis.
Through our extensive on-line vendor network, we make available
up to an additional 250,000 SKUs on a same-day delivery basis to
approximately 75% of our stores and up to 1,000,000 additional
SKUs on a next-day delivery basis to substantially all of our
stores. While our stores also stock high quality generic
products that appeal to our value conscious customers, we
feature a broad selection of national brand name products that
help generate customer traffic and have strong consumer appeal,
particularly in the DIFM market.

Sophisticated Store-Level Information and
Distribution Systems.In recent years,
we have made significant investments in sophisticated
store-level information systems and warehouse and distribution
systems, in order to more effectively manage our inventory and
increase the availability of products to our customers. Our
sophisticated inventory management systems provide inventory
movement forecasting based on history, trend and seasonality.
Our systems have enhanced our ability to predict the size and
timing of product requirements by closely monitoring service
level goals, vendor lead times and cost of inventory
assumptions. Our store level replenishment system generates
orders based upon store on-hand and store model stock
quantities. Store model stock quantities are determined by an
automatic model stock adjustment system, which utilizes
historical sales patterns, seasonality and store presentation
requirements. We also maintain a store specific
precision-pricing program that seeks to optimize margins while
maintaining price competitiveness. Our fully integrated
warehouse and distribution network and our 39 strategically
located depots, which operate using state-of-the-art technology,
have allowed us to significantly improve distribution
efficiency. Additionally, these investments have allowed us to
both improve our in-stock inventory levels and reduce delivery
costs and times for products.

Business Strategy

Our business strategy includes the following key
elements:

Drive Customer Traffic and Increase Sales
Base.Our marketing and merchandising
strategy is designed to drive customer traffic and build market
share. Our strategy is to make available to our customers one of
the broadest selections of quality brand name products on a
timely basis in order to maximize customer satisfaction and
generate loyal repeat customers. We offer our products at
competitive prices, in conveniently located and attractively
designed stores. Our advertising programs are specifically
tailored to target our various customer constituencies for
maximum appeal and effectiveness.

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. 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 national brand
items.

Grow Our Commercial Sales Business.We intend to continue to grow our DIFM
business and to increase our market share by providing a high
level of customer service to our existing customers and by using
our dedicated DIFM sales force to aggressively market to
potential new customers in different sectors of the commercial
market, including independent repair garages, national repair
shops, fleet owners and municipalities. By leveraging our
existing store network, we believe we can increase store
operating profits as we expand our DIFM sales.

Maximize Customer Satisfaction.We aim to provide the highest level of
customer service in our industry to generate repeat business. We
attempt to achieve this goal by staffing our stores with well
trained

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associates, including an average of two ASE
certified technicians per store, which allows us to provide high
quality diagnostic support. Another integral part of our focus
on customer satisfaction includes utilizing our sophisticated
product distribution and store-level systems to provide our
customers with a broad selection of parts and accessories on a
timely basis.


Improve Profitability and Cash Flow.We continually review our operations
in order to ensure that we are optimally allocating our
resources and have an appropriate cost structure that will
enable us to grow our net sales, profitability, and free cash
flow. We recently completed a thorough review of our operations,
which led to the planned closure of 36 unprofitable stores (28
of which had been closed as of February 3, 2002 and 2 are
under contract for sale), personnel reductions at the corporate
and store levels, certain store operating expense reductions,
and a reprofiling of our store inventory designed to maximize
revenues by increasing our inventory turns. We refer to this
program as our Profitability Enhancement Program, or PEP.

Store Operations

Our stores are divided into eight geographic
regions: Southwest, Rocky Mountain, Northwest, Northern Plains,
Southern California, Coastal California, Los Angeles, 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 3, 2002, the geographic distribution of our stores
and the trade names under which they operated.

|             |       |            |    |             |  |            |     |         |  |  |     |     |  |  |     |       | 
|------------ | ----- | ---------- | -- | ----------- |  | ---------- | --- | ------- |  |  | --- | --- |  |  | --- | ----- | 
|             |       | Checker    |    | Schucks    |  | Kragen     |     | Company
|             |       | Auto Parts |    | Auto Supply |  | Auto Parts |     | Total  
|             |       |            |    |             |  |            |     |        
|California   |       |            | 1  |             |  |            | 2   |         |  |  | 463 |     |  |  | 466 |      
|Washington   |       |            |   |             |  |            | 150 |         |  |  |    |     |  |  | 150 |      
|Arizona      |       |            | 97 |             |  |            |    |         |  |  |    |     |  |  | 97  |      
|Colorado     |       |            | 67 |             |  |            |    |         |  |  |    |     |  |  | 67  |      
|Minnesota    |       |            | 61 |             |  |            |    |         |  |  |    |     |  |  | 61  |      
|Oregon       |       |            |   |             |  |            | 48  |         |  |  |    |     |  |  | 48  |      
|Wisconsin    |       |            | 33 |             |  |            |    |         |  |  |    |     |  |  | 33  |      
|Utah         |       |            | 38 |             |  |            |    |         |  |  |    |     |  |  | 38  |      
|Nevada       |       |            | 18 |             |  |            |    |         |  |  | 14  |     |  |  | 32  |      
|Idaho        |       |            | 7  |             |  |            | 24  |         |  |  |    |     |  |  | 31  |      
|New Mexico   |       |            | 29 |             |  |            |    |         |  |  |    |     |  |  | 29  |      
|Texas        |       |            | 27 |             |  |            |    |         |  |  |    |     |  |  | 27  |      
|Alaska       |       |            |   |             |  |            | 11  |         |  |  |    |     |  |  | 11  |      
|Montana      |       |            | 10 |             |  |            |    |         |  |  |    |     |  |  | 10  |      
|Wyoming      |       |            | 10 |             |  |            |    |         |  |  |    |     |  |  | 10  |      
|North Dakota |       |            | 7  |             |  |            |    |         |  |  |    |     |  |  | 7   |      
|Hawaii       |       |            | 8  |             |  |            |    |         |  |  |    |     |  |  | 8   |      
|South Dakota |       |            | 4  |             |  |            |    |         |  |  |    |     |  |  | 4   |      
|Michigan     |       |            | 1  |             |  |            |    |         |  |  |    |     |  |  | 1   |      
|             |       |            |    |             |  |            |     |         |  |  |     |     |  |  |     |      
|             | Total |            |    | 418         |  |            |     | 235     |  |  |     | 477 |  |  |     | 1,130 | 
|             |       |            |    |             |  |            |     |         |  |  |     |     |  |  |     |      

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.

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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 7,290 square feet in size and
offer a store specific mix of between 13,000 and 18,000 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 generally 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 3, 2002:

|                          |  |                  |       | 
|------------------------- |  | ---------------- | ----- | 
|Store Size                |  | Number of Stores
|                          |  |                 
|10,000 sq. ft. or greater |  |                  | 109   | 
|8,000  9,999 sq. ft.     |  |                  | 211   | 
|6,000  7,999 sq. ft.     |  |                  | 535   | 
|5,000  5,999 sq. ft.     |  |                  | 193   | 
|Less than 5,000 sq. ft.   |  |                  | 82    | 
|                          |  |                  |       | 
|                          |  |                  | 1,130 | 
|                          |  |                  |       | 

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 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

Our store growth 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.                                          

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.

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

|                                           |  |             |       |      |  |      |       |   |  |  |       |  
|------------------------------------------ |  | ----------- | ----- | ---- |  | ---- | ----- | - |  |  | ----- | -
|                                           |  |            
|                                           |  | Fiscal Year
|                                           |  |            
|                                           |  | 2001        |       | 2000 |  | 1999
|                                           |  |             |       |      |  |     
|Beginning stores                           |  |             | 1,152 |      |  |      | 1,120 |   |  |  | 807   |  
|New stores                                 |  |             | 10    |      |  |      | 37    |   |  |  | 84    |  
|Relocated stores                           |  |             | 13    |      |  |      | 14    |   |  |  | 26    |  
|Acquired stores                            |  |             | 0     |      |  |      | 23    |   |  |  | 280   |  
|Closed stores (including relocated stores) |  |             | (45   | )    |  |      | (42   | ) |  |  | (77   | )
|                                           |  |             |       |      |  |      |       |   |  |  |       |  
|Ending stores                              |  |             | 1,130 |      |  |      | 1,152 |   |  |  | 1,120 |  
|                                           |  |             |       |      |  |      |       |   |  |  |       |  
|Expanded stores                            |  |             | 2     |      |  |      | 9     |   |  |  | 9     |  
|Total new, relocated and expanded stores   |  |             | 25    |      |  |      | 60    |   |  |  | 119   |  

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We opened, relocated, or expanded 25 stores in
fiscal 2001 as compared to 60 stores in fiscal 2000. We expect
to open, relocate or expand approximately 25 stores in fiscal
2002.

Store Merchandising

Our store merchandising program, which classifies
our product mix into 120 separate categories, is 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. As part of our Profitability Enhancement Program, we
completed a comprehensive review of slower-selling items that
meet neither current return criteria nor our objective for
inventory turns. This review has resulted in a plan to eliminate
certain merchandise, and to transfer certain goods to stores
that are turning them satisfactorily.

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 2001.

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 generic products. Because most of our generic
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 generic
products are of a quality that is comparable to such brand name
products.

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 60% 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

7



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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 3, 2002, we operated
commercial service centers in 545 of our stores. Our sales to
commercial accounts (including sales by stores without
commercial service centers) increased 3.9% to
$259.1 million in fiscal 2001 from $249.3 million in
fiscal 2000. Fiscal 2001 has 52 weeks while fiscal 2000 had
53 weeks. On a comparable store basis and excluding the
53rd week in fiscal 2000, commercial sales increased 10% in
fiscal 2001 over fiscal 2000.

Advertising

We support our marketing and merchandising
strategy primarily 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., we provide diagnostic vehicle repair information
to automotive technicians, automotive replacement parts
manufacturers, automotive test equipment manufacturers, and to
DIY consumers. This allows us to provide our DIY, DIFM, and
Internet customers with high quality diagnostic information in
order to assist them with correctly identifying problems and
efficiently obtaining the parts they need.

Automotive Information Systems 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.  

Automotive Information Systems 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

8



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vehicle repair; (2) our staff of over
30 Master Technicians; and (3) a comprehensive on-site
library of factory vehicle service information.


In Automotive Information Systems
14 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 Automotive Information
Systems existing customer base while developing new ways
to deliver information to its customers.

Associates

As of February 3, 2002, we employed
approximately 8,620 full-time associates and approximately 5,130
part-time associates. Approximately 87% of our personnel are
employed in store level operations, 8% 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 450 associates located at approximately 40
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.

CSK Tech, 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
knowledgeable 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.

Competition

We compete in both the DIY and DIFM markets of
the automotive aftermarket industry, 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 discount
stores and mass merchandisers that carry automotive replacement
parts, maintenance items and accessories (such as Wal-Mart
Stores, Inc.). As the largest specialty retailer of automotive
parts and accessories in the Western United States, we believe
we have certain competitive advantages over smaller retail
chains and independent operators. These advantages include:
(1) our brand name recognition as a trusted source of
automotive parts and accessories, (2) our ability to make
available a broad selection of products on a timely basis,
(3) marketing and distribution efficiencies due to
economies of scale, and (4) our advanced store level
information and distribution systems, which are the result of
our significant investments in recent years. We also believe
that we enjoy a competitive advantage over mass merchandisers
due to our focus on automotive parts and accessories and our
knowledgeable sales associates.

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,

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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 have the right to exclusively use the
tradename Checker nationwide in connection with the
automotive parts retailing business pursuant to a settlement and
use agreement with the owner of the federal registration for
such trademark. 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 expect to file a renewal for this mark
prior to June 30, 2005, based on its current expiration
date. We have common law rights to use the tradename
Kragen in connection with the automotive parts
retailing business. In addition, we own and have registered
numerous trademarks with respect to many of our private label
products and advertising and marketing strategies. We believe
that our various tradenames, service marks and trademarks are
important to our merchandising strategy, but that our business
is not otherwise dependant on any particular service mark,
tradename or trademark. There are no infringing uses known by us
that materially affect the use of such marks.

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.

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). In
addition, our business is affected by weather conditions. While
unusually severe or inclement weather tends to reduce sales, as
our customers are more likely to defer elective maintenance
during such periods, extremely hot and cold temperatures tend to
enhance sales by causing auto parts to fail and sales of
seasonal products to increase.




Item 2.     Properties

The following table sets forth certain
information concerning our principal leased facilities as of
February 3, 2002:

|                                          |  |          |                     |             |  |                                                                                 |  |           |         |  |  |  |     | 
|----------------------------------------- |  | -------- | ------------------- | ----------- |  | ------------------------------------------------------------------------------- |  | --------- | ------- |  |  |  | --- | 
|                                          |  |          |                     |             |  |                                                                                 |  | Number   
|                                          |  |          |                     |             |  | Square                                                                          |  | of Stores
|Facility                                  |  | Location |                     | Area Served |  | Footage                                                                         |  | Served   
|                                          |  |          |                     |             |  |                                                                                 |  |          
|Corporate office(1)                       |  |          | Phoenix, AZ         |             |  | All                                                                             |  |           | 114,691 |  |  |  |     | 
|Distribution center(2)                    |  |          | Dixon, CA           |             |  | California, Nevada, Washington, Oregon, Idaho
	Montana, Wyoming, Alaska, Hawaii |  |           | 325,500 |  |  |  | 523 | 
|Distribution center(2)                    |  |          | Phoenix, AZ         |             |  | Arizona, Colorado, Idaho, Nevada, New Mexico,
	California, Texas, Utah          |  |           | 273,520 |  |  |  | 502 | 
|Office, warehouse and distribution center |  |          | Mendota Heights, MN |             |  | Minnesota, North Dakota, South Dakota, Wisconsin,
	Michigan                     |  |           | 125,000 |  |  |  | 105 | 

10



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|                             |  |          |               |             |  |                                                 |  |           |         |  |  |  |     | 
|---------------------------- |  | -------- | ------------- | ----------- |  | ----------------------------------------------- |  | --------- | ------- |  |  |  | --- | 
|                             |  |          |               |             |  |                                                 |  | Number   
|                             |  |          |               |             |  | Square                                          |  | of Stores
|Facility                     |  | Location |               | Area Served |  | Footage                                         |  | Served   
|                             |  |          |               |             |  |                                                 |  |          
|Regional distribution center |  |          | Auburn, WA    |             |  | Washington, Oregon, Idaho, Alaska               |  |           | 160,087 |  |  |  | 214 | 
|Regional distribution center |  |          | Denver, CO    |             |  | Colorado, Wyoming, South Dakota                 |  |           | 36,270  |  |  |  | 68  | 
|Regional distribution center |  |          | Salt Lake, UT |             |  | Colorado, Utah, Idaho, Wyoming, Montana, Oregon |  |           | 60,000  |  |  |  | 78  | 
|Regional distribution center |  |          | Commerce, CA  |             |  | California                                      |  |           | 75,000  |  |  |  | 214 | 



---



|    |                                                                                                                                                                                                                                    
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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 ours and a member of the Carmel Group.                     
|   
|(2) | Subject to time period and other restrictions, 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.

At February 3, 2002, all but two of our
operating stores were leased. The expiration dates (including
renewal options) of the store leases are summarized as follows:

|                  |  |                  |       | 
|----------------- |  | ---------------- | ----- | 
|Years             |  | Number of Stores
|                  |  |                 
|2002  2003       |  |                  | 25    | 
|2004  2006       |  |                  | 53    | 
|2007  2010       |  |                  | 106   | 
|2011  2020       |  |                  | 425   | 
|2021  2030       |  |                  | 463   | 
|2031  thereafter |  |                  | 56    | 
|                  |  |                  |       | 
|                  |  |                  | 1,128 | 
|                  |  |                  |       | 

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

We were served on March 8, 2000 with a
complaint filed in Federal Court in the Eastern District of New
York by the Coalition for a Level Playing Field, O.K. and, based
on the current amended complaint, 255 individual auto parts
dealers 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 15 of the individual plaintiffs asserted claims against us.
The complaint, which has been amended, alleges that we and other
defendants knowingly either induced or received discriminatory
prices from large suppliers, allegedly in violation of
Section 2(a) and 2(f) of the Robinson-Patman Act, as
well as received compensation from large suppliers for services
not performed for those suppliers, allegedly in violation of
Section 2(c) of the Robinson-Patman Act. 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,
along with other defendants, filed a motion to dismiss and
certain other procedural motions. In October 2001, the court
granted the motions in part and denied them in part. In March
2002, the court entered an order separating discovery with
respect to liability and damages and setting various discovery
deadlines. We do not currently believe that this complaint will
result in liabilities material to our consolidated financial
position, results of operations or cash flows.

11



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During the second quarter of fiscal 2001, we
recorded a $2.0 million charge for the settlement of
certain other legal claims.

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 condition, results of operations or
cash flows.

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 the
handling, storage and disposal of hazardous substances, the
recycling of batteries and used lubricants, and the ownership
and operation of real property. For example, 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 substances in soil or groundwater. Such laws often
impose joint and several liability and liability may be imposed
without regard to whether the owner or operator knew of, or was
responsible for, the release of such hazardous substances. We
have recorded no liabilities to provide for the cost of
environmental remediation activities, as we do not believe that
we have incurred any such liabilities pursuant to the existing
accounting literature.

At some of our acquired locations, automobiles
are serviced in automotive service facilities that we sublease
to third parties. As a result of investigations undertaken in
connection with such acquisitions, we are aware that soil or
groundwater may be contaminated at some of these properties.
Although there can be no assurance, based on current information
and, in some cases, indemnities we obtained from the former
operators of these facilities, we believe that any such
contamination will not have a material adverse effect on our
financial position, results of operations or cash flows.

As part of our operations, we handle hazardous
materials in the ordinary course of business and our customers
may bring hazardous materials onto our property in connection
with, for example, our oil recycling program. 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. In general, our
agreements with such vendors contain provisions that are
designed to limit our potential liability under applicable
environmental regulations for any damage or contamination that
may be caused by the batteries and lubricants to off-site
properties (including as a result of waste disposal) and to our
properties, when caused by the vendor.

We do not believe that compliance with
environmental 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 our 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 2001.




PART II






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



| |                                
| | -------------------------------
| | (a) Market Price and
	Dividends

Our common stock has been listed on the New York
Stock Exchange under the symbol CAO since March 12, 1998.
As of April 17, 2002, there were 32,477,236 shares of our
common stock outstanding and there were approximately
94 record holders of our common stock.

12



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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 2001: |                |                |   |       |  |  |   |     
|             | First Quarter  |                | $ | 6.97  |  |  | $ | 5.60 | 
|             | Second Quarter |                |   | 8.25  |  |  |   | 5.74 | 
|             | Third Quarter  |                |   | 8.65  |  |  |   | 5.50 | 
|             | Fourth Quarter |                |   | 10.48 |  |  |   | 7.40 | 
|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 | 

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 indentures governing its 11%
Senior Subordinated Notes and 12% Senior Notes contain
restrictions on CSK Auto, Inc.s ability to pay dividends
or make payments or other distributions to us.



| |                                      
| | -------------------------------------
| | (b) Sales of Unregistered
	Securities

7% Convertible Subordinated Debentures and
Make-Whole Warrants



| |                                        
| | ---------------------------------------
| | 7% Convertible Subordinated
	Debentures

On December 21, 2001, pursuant to a
Securities Purchase Agreement by and among us, Investcorp CSK
Holdings L.P., and LBI Group Inc. (the Purchase
Agreement), we sold $50 million principal amount of
7% Convertible Subordinated Debentures (the Convertible
Debentures) and associated warrants (the Make-Whole
Warrants), including $30 million of Convertible
Debentures and one Make-Whole Warrant to Investcorp CSK Holdings
L.P., and $20 million of Convertible Debentures and one
Make-Whole Warrant to Lehman Brothers Inc. The Convertible
Debentures and Make-Whole Warrants were issued in reliance on
the exemption from securities registration afforded by
Rule 506 of Regulation D of the Securities Act. A
Form D was filed with respect to these sales on
January 4, 2002.

The holders of the Convertible Debentures may
convert them into our common stock at any time. Additionally, we
may require the conversion of the Convertible Debentures into
our common stock following satisfaction of certain conditions,
including the effectiveness of a registration statement covering
the shares of common stock to be issued upon conversion, absence
of any event of default, and absence of specified changes in
management. We currently expect that the registration statement
will be declared effective by the SEC prior to May 20, 2002
and we intend to require conversion of the Convertible
Debentures shortly thereafter. The conversion price for the
Convertible Debentures is subject to certain anti-dilution
provisions and other adjustments that may result in the issuance
of additional shares of our common stock.

13



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If the Convertible Debentures have not been
converted at maturity in 2006, we can, at our option, either
redeem the convertible subordinated debentures for 100% of the
principal amount in cash or convert the Convertible Debentures
into our common stock on an agreed basis.

Agreements relating to the Convertible Debentures
include provisions for conversion price adjustments and specific
requirements for treatment of the Convertible Debentures in the
event of a merger, sale of substantially all assets or similar
transaction. In addition, in the event of a change of control,
such agreements require us to make an offer to purchase the
Convertible Debentures at a redemption price equal to 125% of
the principal amount until December, 2002 and 112.5% thereafter.
The Convertible Debentures also provide for monetary penalties
if we fail to convert them into common stock upon the
holders request.



| |                    
| | -------------------
| | Make-Whole Warrants

The Make-Whole Warrants are automatically
exercisable into shares of our common stock on the earlier of
(i) a change of control, and (ii) November 21,
2002, only if the following two events have occurred:
(1) we have previously required the conversion of the
Convertible Debentures; and (2) the conversion price of the
Convertible Debentures at the time of such required conversion
is greater than the adjusted conversion price.

The adjusted conversion price is an
amount equal to the greater of (i) the average of the
closing sale prices of our common stock on the trading days from
December 21, 2001 through November 20, 2002 and
(ii) $4.94, as adjusted in the case of a change of control
and for specified dilutive events.

The number of shares of our common stock issuable
upon exercise of the Make-Whole Warrants is equal to the
following amount, subject to adjustment in accordance with the
provisions of the Convertible Debentures and Make-Whole
Warrants, and less a number of shares so as to have a cashless
exercise of the warrants based on an exercise price of $0.01:
(1) the quotient determined by dividing (A) the
$50.0 million principal amount of the Convertible
Debentures initially issued, plus any interest payments added to
the principal of the Convertible Debentures, by (B) the
adjusted conversion price; minus (2) the number of shares
of our common stock we have issued upon conversion of the
Convertible Debentures prior to the exercise of the warrants.

7% Convertible Subordinated Notes

We sold a $30 million principal amount 7%
convertible subordinated note in August 2001 to Oppenheimer
Capital Income Fund pursuant to a Note Purchase Agreement dated
August 14, 2001. This Note Purchase Agreement was executed
and delivered in reliance on the exemption from securities
registration afforded by Section 4(2) of the Securities
Act. This note was converted into 4,524,886 shares of our common
stock on December 21, 2001, and the issuance of these
shares upon such conversion relied upon the exemption from
securities registration afforded by Section 3(a)(9) of the
Securities Act.

12% Senior Notes Due 2006

On December 21, 2001, we issued a Guarantee
with respect to $280.0 million aggregate principal amount
of 12% Senior Notes due June 15, 2006 issued by our wholly
owned subsidiary, CSK Auto, Inc., in a private offering
underwritten by Credit Suisse First Boston Corp.,
J.P. Morgan Securities, Inc., and UBS Warburg, LLC.
The Guarantee is an unregistered security which is exempt from
registration under the exemption afforded by Regulation S
and Section 4(2) of the Securities Act of 1933.

14



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|        |                                         
|------- | ----------------------------------------
|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)                                                  
|                                                                                                                  |                                             |                                                                 
|                                                                                                                  |                                             | 2001(2)                                                          |           | 2000(3) |  | 1999(4) |           | 1998(5) |  | 1997(6)
|                                                                                                                  |                                             |                                                                  |           |         |  |         |           |         |  |        
|                                                                                                                  |                                             |                                                                 
|                                                                                                                  |                                             | (In thousands, except per share amounts and selected store data)
|Statement of Operations Data                                                                                      |                                             |                                                                  |           |         |  |         |           |         |  |         |           |         |  |   |           |         |  |   |         |        
|Net sales                                                                                                         |                                             | $                                                                | 1,438,585 |         |  | $       | 1,452,109 |         |  | $       | 1,231,455 |         |  | $ | 1,004,385 |         |  | $ | 845,815 |        
|Cost of sales                                                                                                     |                                             |                                                                  | 790,585   |         |  |         | 769,043   |         |  |         | 636,239   |         |  |   | 531,073   |         |  |   | 468,171 |        
|                                                                                                                  |                                             |                                                                  |           |         |  |         |           |         |  |         |           |         |  |   |           |         |  |   |         |        
|Gross profit                                                                                                      |                                             |                                                                  | 648,000   |         |  |         | 683,066   |         |  |         | 595,216   |         |  |   | 473,312   |         |  |   | 377,644 |        
|Other costs and expenses:                                                                                         |                                             |                                                                  |           |         |  |         |           |         |  |         |           |         |  |   |           |         |  |   |         |        
|                                                                                                                  | Operating and administrative                |                                                                  |           | 580,134 |  |         |           | 592,691 |  |         |           | 501,527 |  |   |           | 399,016 |  |   |         | 330,514 | 
|                                                                                                                  | Store closing and other restructuring costs |                                                                  |           | 22,392  |  |         |           | 6,060   |  |         |           | 4,900   |  |   |           | 335     |  |   |         | 1,640   | 
|                                                                                                                  | Legal settlement                            |                                                                  |           | 2,000   |  |         |           | 8,800   |  |         |           |        |  |   |           |        |  |   |         |        | 
|                                                                                                                  | Goodwill amortization                       |                                                                  |           | 4,807   |  |         |           | 4,799   |  |         |           | 1,941   |  |   |           |        |  |   |         |        | 
|                                                                                                                  |                                             |                                                                  |           |         |  |         |           |         |  |         |           |         |  |   |           |         |  |   |         |        
|Operating profit                                                                                                  |                                             |                                                                  | 38,667    |         |  |         | 70,716    |         |  |         | 86,848    |         |  |   | 73,961    |         |  |   | 45,490  |        
|Certain 1996 Recapitalization charges                                                                             |                                             |                                                                  |          |         |  |         |          |         |  |         |          |         |  |   |          |         |  |   | 1,009   |        
|Interest expense                                                                                                  |                                             |                                                                  | 61,608    |         |  |         | 62,355    |         |  |         | 41,300    |         |  |   | 30,730    |         |  |   | 40,680  |        
|Equity in loss on joint venture                                                                                   |                                             |                                                                  |          |         |  |         | 3,168     |         |  |         |          |         |  |   |          |         |  |   |        |        
|                                                                                                                  |                                             |                                                                  |           |         |  |         |           |         |  |         |           |         |  |   |           |         |  |   |         |        
|Income (loss) before income taxes, extraordinary
    loss and cumulative effect of change in accounting principle |                                             |                                                                  | (22,941   | )       |  |         | 5,193     |         |  |         | 45,548    |         |  |   | 43,231    |         |  |   | 3,801   |        
|Income tax expense (benefit)                                                                                      |                                             |                                                                  | (8,886    | )       |  |         | 193       |         |  |         | 17,436    |         |  |   | 15,746    |         |  |   | 1,557   |        
|                                                                                                                  |                                             |                                                                  |           |         |  |         |           |         |  |         |           |         |  |   |           |         |  |   |         |        
|Income (loss) before extraordinary loss and
    cumulative effect of change in accounting principle               |                                             |                                                                  | (14,055   | )       |  |         | 5,000     |         |  |         | 28,112    |         |  |   | 27,485    |         |  |   | 2,244   |        
|Extraordinary loss, net of income taxes                                                                           |                                             |                                                                  | (3,137    | )       |  |         |          |         |  |         |          |         |  |   | (6,767    | )       |  |   | (3,015  | )      
|                                                                                                                  |                                             |                                                                  |           |         |  |         |           |         |  |         |           |         |  |   |           |         |  |   |         |        
|Income (loss) before cumulative effect of change
    in accounting principle                                      |                                             |                                                                  | (17,192   | )       |  |         | 5,000     |         |  |         | 28,112    |         |  |   | 20,718    |         |  |   | (771    | )      
|Cumulative effect of change in accounting
    principle, net of income taxes                                      |                                             |                                                                  |          |         |  |         |          |         |  |         | (741      | )       |  |   |          |         |  |   |        |        
|                                                                                                                  |                                             |                                                                  |           |         |  |         |           |         |  |         |           |         |  |   |           |         |  |   |         |        
|Net income (loss)                                                                                                 |                                             | $                                                                | (17,192   | )       |  | $       | 5,000     |         |  | $       | 27,371    |         |  | $ | 20,718    |         |  | $ | (771    | )      
|                                                                                                                  |                                             |                                                                  |           |         |  |         |           |         |  |         |           |         |  |   |           |         |  |   |         |        
|Diluted earnings (loss) per share                                                                                 |                                             | $                                                                | (0.61     | )       |  | $       | 0.18      |         |  | $       | 0.96      |         |  | $ | 0.75      |         |  | $ | (0.04   | )      
|                                                                                                                  |                                             |                                                                  |           |         |  |         |           |         |  |         |           |         |  |   |           |         |  |   |         |        
|Shares used for computation                                                                                       |                                             |                                                                  | 28,391    |         |  |         | 27,839    |         |  |         | 28,627    |         |  |   | 27,640    |         |  |   | 18,012  |        
|                                                                                                                  |                                             |                                                                  |           |         |  |         |           |         |  |         |           |         |  |   |           |         |  |   |         |        
|Other Data                                                                                                        |                                             |                                                                  |           |         |  |         |           |         |  |         |           |         |  |   |           |         |  |   |         |        
|Adjusted EBITDA(7)                                                                                                |                                             | $                                                                | 131,041   |         |  | $       | 156,902   |         |  | $       | 148,966   |         |  | $ | 103,861   |         |  | $ | 70,173  |        
|Adjusted EBITDAR(8)                                                                                               |                                             |                                                                  | 247,994   |         |  |         | 274,175   |         |  |         | 242,295   |         |  |   | 175,549   |         |  |   | 124,695 |        
|Net cash provided by (used in) operating
    activities                                                           |                                             |                                                                  | (7,914    | )       |  |         | 32,469    |         |  |         | (4,031    | )       |  |   | 3,403     |         |  |   | (62,703 | )      
|Net cash used in investing activities                                                                             |                                             |                                                                  | (10,143   | )       |  |         | (34,542   | )       |  |         | (260,221  | )       |  |   | (37,524   | )       |  |   | (56,727 | )      
|Net cash provided by financing activities                                                                         |                                             |                                                                  | 23,010    |         |  |         | 1,442     |         |  |         | 268,524   |         |  |   | 36,759    |         |  |   | 119,059 |        
|Capital expenditures                                                                                              |                                             |                                                                  | 12,200    |         |  |         | 32,080    |         |  |         | 41,358    |         |  |   | 37,846    |         |  |   | 20,132  |        
|Depreciation and amortization                                                                                     |                                             |                                                                  | 41,146    |         |  |         | 40,827    |         |  |         | 29,375    |         |  |   | 22,412    |         |  |   | 20,367  |        
|Commercial sales(9)                                                                                               |                                             |                                                                  | 259,096   |         |  |         | 249,314   |         |  |         | 217,696   |         |  |   | 155,845   |         |  |   | 115,378 |        
|Ratio of earnings to fixed charges(10)                                                                            |                                             |                                                                  |          |         |  |         | 1.05      | x       |  |         | 1.63      | x       |  |   | 1.79      | x       |  |   | 1.06    | x      
|Selected Store Data                                                                                               |                                             |                                                                  |           |         |  |         |           |         |  |         |           |         |  |   |           |         |  |   |         |        
|Number of stores (end of period)                                                                                  |                                             |                                                                  | 1,130     |         |  |         | 1,152     |         |  |         | 1,120     |         |  |   | 807       |         |  |   | 718     |        
|Stores with commercial sales centers                                                                              |                                             |                                                                  | 545       |         |  |         | 548       |         |  |         | 554       |         |  |   | 509       |         |  |   | 360     |        
|Percentage increase in comparable store net
    sales(11)                                                         |                                             |                                                                  | 1         | %       |  |         | 2         | %       |  |         | 4         | %       |  |   | 2         | %       |  |   | 4       | %      
|Balance Sheet Data (end of period)                                                                                |                                             |                                                                  |           |         |  |         |           |         |  |         |           |         |  |   |           |         |  |   |         |        
|Cash and cash equivalents                                                                                         |                                             | $                                                                | 16,084    |         |  | $       | 11,131    |         |  | $       | 11,762    |         |  | $ | 7,490     |         |  | $ | 4,852   |        
|Net working capital                                                                                               |                                             |                                                                  | 498,914   |         |  |         | 401,523   |         |  |         | 456,594   |         |  |   | 306,879   |         |  |   | 235,651 |        
|Total assets                                                                                                      |                                             |                                                                  | 1,068,577 |         |  |         | 1,066,806 |         |  |         | 1,035,652 |         |  |   | 634,022   |         |  |   | 563,251 |        
|Total debt (including current maturities)                                                                         |                                             |                                                                  | 670,843   |         |  |         | 647,881   |         |  |         | 627,133   |         |  |   | 333,293   |         |  |   | 439,962 |        
|Stockholders equity (deficit)                                                                                    |                                             |                                                                  | 154,286   |         |  |         | 139,613   |         |  |         | 134,547   |         |  |   | 105,389   |         |  |   | (75,055 | )      




See accompanying notes on pages 16 and 17.

15



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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, which had
53 weeks.




(2) The results of operations in fiscal 2001
shown are calculated in accordance with GAAP and include
$51.2 million of items that we believe will not occur on a
regular basis and which we are allowed to exclude when we
calculate our operating results for purposes of measuring
compliance under our debt covenants. They consist of:



| |   |                                                                                                                   
| | - | ------------------------------------------------------------------------------------------------------------------
| |  | $46.3 million of charges incurred in connection
    with our Profitability Enhancement Program;                   
|
| |  | $2.0 million of charges associated with certain
    legal settlements;                                            
|
| |  | $0.2 million of transition and integration costs
    incurred with respect to acquired stores;                    
|
| |  | $1.2 million loss on the disposition of
    certain fixed assets; and                                             
|
| |  | $1.5 million discrete provision for bad debt in
    connection with the bankruptcy of a large commercial customer.

(3) The results of operations in fiscal 2000
shown are calculated in accordance with GAAP and include
$48.5 million of items that we believe will not occur on a
regular basis and which we are allowed to exclude when we
calculate our operating results for purposes of measuring
compliance under our debt covenants. They consist of:



| |   |                                                                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | $3.2 million write-off of our investment in
    PartsAmerica.com;                                                                                           
|
| |  | $8.8 million of charges associated with certain
    legal settlements;                                                                                      
|
| |  | $23.8 million of transition and integration costs
    incurred with respect to acquired stores;                                                             
|
| |  | $0.4 million discrete provision for bad debt in
    connection with the bankruptcy of a large commercial customer;                                          
|
| |  | $3.7 million of store closing costs incurred in
    connection with the closure of existing stores that overlapped
    with better-situated acquired stores;
|
| |  | $5.7 million of non-cash charges associated with
    the liquidation of certain acquired inventories; and                                                   
|
| |  | $2.9 million of operating losses incurred by
    acquired automotive service centers prior to our exit from that
    business.                              

(4) The results of operations in fiscal 1999
shown are calculated in accordance with GAAP and include
$32.7 million of items that we believe will not occur on a
regular basis and which we are allowed to exclude when we
calculate our operating results for purposes of measuring
compliance under our debt covenants. They consist of:



| |   |                                                                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | $30.2 million of transition and integration costs
    incurred with respect to acquired stores; and                                                         
|
| |  | $2.5 million of store closing costs incurred in
    connection with the closure of existing stores that overlapped
    with better-situated acquired stores.

(5) The results of operations in fiscal 1998
shown are calculated in accordance with GAAP and include
$7.5 million of items that we believe will not occur on a
regular basis and which we are allowed to exclude when we
calculate our operating results for purposes of measuring
compliance under our debt covenants. They consist of:



| |   |                                                                                                                               
| | - | ------------------------------------------------------------------------------------------------------------------------------
| |  | The write-off of a $3.6 million prepaid
    management fee;                                                                   
|
| |  | $3.1 million of transition and integration
    expenses associated with 82 stores acquired from Trak Auto
    Corporation; and
|
| |  | $0.8 million of costs in connection with the
    CSK Auto Corporations secondary offering of common stock.                   




16



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##### Table of Contents



In addition, our fiscal 1998 results include an
extraordinary loss of $6.8 million (net of an income tax
benefit of $4.2 million) relating to the early
extinguishment of outstanding debt with the proceeds from our
initial public offering.




(6) In December 1997, we acquired 82 stores
from Trak Auto Corporation, which have been included in results
of operations from the date of acquisition. The results of
operations in fiscal 1997 shown are calculated in accordance
with GAAP and include $5.3 million of items that we believe
will not occur on a regular basis and which we are allowed to
exclude when we calculate our operating results for purposes of
measuring compliance under our debt covenants. They consist of:






| |   |                                                                                                                               
| | - | ------------------------------------------------------------------------------------------------------------------------------
| |  | $3.4 million of transition and integration
    expenses associated with the 82 stores acquired from Trak Auto
    Corporation;
|
| |  | $0.9 million of non-cash stock based
    compensation.                                                                        
|
| |  | $1.0 million of other expenses related to
    our recapitalization in October 1996                                            

In addition, our fiscal 1997 results include an
extraordinary loss of $3.0 million (net of an income tax
benefit of $2.1 million) relating to the early
extinguishment of outstanding debt under our previous senior
credit facility.




(7) EBITDA represents net income (loss)
before interest expense, income tax expense (benefit), and
depreciation and amortization expense. While EBITDA is not
intended to represent cash flow from operations as defined by
generally accepted accounting principles and should not be
considered as an indicator of operating performance or an
alternative to cash flow as a measure of liquidity, it is
included herein to provide additional information with respect
to our ability to meet our future debt service, capital
expenditure and working capital requirements.







Adjusted EBITDA reflects the impact of certain
items that we believe are important in evaluating our results.
Such items are included in the calculation of EBITDA as it is
defined in our senior credit facility, for purposes of measuring
our compliance with debt covenants.




17



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##### Table of Contents



Both EBITDA and adjusted EBITDA may differ in
method of calculation from similarly titled measures used by
other companies. The computation for each of the respective
periods shown is as follows:




|                                                                                                                  |  |                     |         |                |   |      |         |      |   |      |         |      |   |   |         |  |       |   |         |  |       | 
|----------------------------------------------------------------------------------------------------------------- |  | ------------------- | ------- | -------------- | - | ---- | ------- | ---- | - | ---- | ------- | ---- | - | - | ------- |  | ----- | - | ------- |  | ----- | 
|                                                                                                                  |  |                     |         |               
|                                                                                                                  |  |                     |         | Fiscal Year   
|                                                                                                                  |  |                     |         |               
|                                                                                                                  |  |                     |         | 2001           |   | 2000 |         | 1999 |   | 1998 |         | 1997
|                                                                                                                  |  |                     |         |                |   |      |         |      |   |      |         |     
|                                                                                                                  |  |                     |         |               
|                                                                                                                  |  |                     |         | (in thousands)
|                                                                                                                  |  |                    
|Income (loss) before income taxes, extraordinary
    loss and cumulative effect of change in accounting principle |  | $                   | (22,941 | )              |   | $    | 5,193   |      |   | $    | 45,548  |      |   | $ | 43,231  |  |       | $ | 3,801   | 
|Add back:                                                                                                         |  |                     |         |                |   |      |         |      |   |      |         |      |   |   |         |  |       |   |         | 
|Interest expense                                                                                                  |  |                     | 61,608  |                |   |      | 62,355  |      |   |      | 41,300  |      |   |   | 30,730  |  |       |   | 40,680  | 
|Depreciation and amortization expense                                                                             |  |                     | 41,146  |                |   |      | 40,827  |      |   |      | 29,375  |      |   |   | 22,412  |  |       |   | 20,367  | 
|                                                                                                                  |  |                     |         |                |   |      |         |      |   |      |         |      |   |   |         |  |       |   |         | 
|EBITDA                                                                                                            |  |                     | 79,813  |                |   |      | 108,375 |      |   |      | 116,223 |      |   |   | 96,373  |  |       |   | 64,848  | 
|Equity in loss of joint venture(a)                                                                                |  |                     |        |                |   |      | 3,168   |      |   |      |        |      |   |   |        |  |       |   |        | 
|Other adjustments(b):                                                                                             |  |                     |         |                |   |      |         |      |   |      |         |      |   |   |         |  |       |   |         | 
|Profitability enhancement
    program  (PEP) charges                                                              |  |                     | 46,318  |                |   |      |        |      |   |      |        |      |   |   |        |  |       |   |        | 
|Lawsuit settlements charges                                                                                       |  |                     | 2,000   |                |   |      | 8,800   |      |   |      |        |      |   |   |        |  |       |   |        | 
|Acquisition transition and integration costs                                                                      |  |                     | 250     |                |   |      | 23,818  |      |   |      | 30,187  |      |   |   |        |  |       |   |        | 
|Loss on fixed assets                                                                                              |  |                     | 1,160   |                |   |      |        |      |   |      |        |      |   |   |        |  |       |   |        | 
|Bankruptcy of commercial customers charges                                                                        |  |                     | 1,500   |                |   |      | 400     |      |   |      |        |      |   |   |        |  |       |   |        | 
|Store closings costs due to acquisitions                                                                          |  |                     |        |                |   |      | 3,727   |      |   |      | 2,556   |      |   |   |        |  |       |   |        | 
|Inventory liquidations charges                                                                                    |  |                     |        |                |   |      | 5,686   |      |   |      |        |      |   |   |        |  |       |   |        | 
|Auto service centers losses                                                                                       |  |                     |        |                |   |      | 2,928   |      |   |      |        |      |   |   |        |  |       |   |        | 
|                                                                                                                 |  | 1997 and 1998 items |         |                |  |      |         |      |  |      |         |      |  |   |         |  | 7,488 |   |         |  | 5,325 | 
|                                                                                                                  |  |                     |         |                |   |      |         |      |   |      |         |      |   |   |         |  |       |   |         |  |       | 
|Total                                                                                                             |  |                     | 51,228  |                |   |      | 48,527  |      |   |      | 32,743  |      |   |   | 7,488   |  |       |   | 5,325   | 
|                                                                                                                  |  |                     |         |                |   |      |         |      |   |      |         |      |   |   |         |  |       |   |         | 
|Adjusted EBITDA                                                                                                   |  | $                   | 131,041 |                |   | $    | 156,902 |      |   | $    | 148,966 |      |   | $ | 103,861 |  |       | $ | 70,173  | 
|                                                                                                                  |  |                     |         |                |   |      |         |      |   |      |         |      |   |   |         |  |       |   |         | 
|Operating lease rent expense                                                                                      |  |                     | 116,953 |                |   |      | 117,273 |      |   |      | 93,329  |      |   |   | 71,688  |  |       |   | 54,522  | 
|                                                                                                                  |  |                     |         |                |   |      |         |      |   |      |         |      |   |   |         |  |       |   |         | 
|Adjusted EBITDAR                                                                                                  |  | $                   | 247,994 |                |   | $    | 274,175 |      |   | $    | 242,295 |      |   | $ | 175,549 |  |       | $ | 124,695 | 
|                                                                                                                  |  |                     |         |                |   |      |         |      |   |      |         |      |   |   |         |  |       |   |         | 






---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | In March 2000, we participated in the formation
    of a new joint venture, PartsAmerica.com (PA), with
    Advance Stores Company Incorporated (Advance) and
    Sequoia Capital. PA engaged in the sale of automotive parts and
    accessories via e-commerce. Results of operations for fiscal
    2000 reflect the write off our investment in PA (a total of
    $3.2 million) due to extremely poor operating results.
    During the second quarter of fiscal 2001, PA ceased operations.
|   
|   
|(b) | See notes 2 through 6 above for a discussion
    of these items.                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   

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##### Table of Contents






(8) Adjusted EBITDAR represents adjusted
EBITDA plus operating lease rental expense. Because the
proportion of stores leased versus owned varies among industry
competitors, we believe that adjusted EBITDAR permits a
meaningful comparison of operating performance among industry
competitors. We lease substantially all of our stores.







(9) Represents sales to commercial accounts,
including sales from stores without commercial sales centers.







(10) For purposes of the ratio, earnings
means the sum of:






| |   |                                                                                            
| | - | -------------------------------------------------------------------------------------------
| |  | our income (loss) before income taxes from
    continuing operations;                      
|
| |  | our proportionate share of the income or loss of
    any fifty-percent owned companies; and
|
| |  | our fixed charges.                                                                         

Fixed charges means the sum of:



| |   |                                                                                                        
| | - | -------------------------------------------------------------------------------------------------------
| |  | the interest we pay on borrowed funds;                                                                 
|
| |  | the amount we amortize for debt discount,
    premium, and issuance expense; and                       
|
| |  | one-third (the proportion deemed representative
    of the interest factor) of all our rental expenses.

For the year ended February 3, 2002,
earnings were $22.9 million less than needed to cover our
fixed charges.




(11) 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.




19



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##### 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 that is 53 weeks
long. When we refer to a particular fiscal year, we mean the
following:






| |   |                                                               
| | - | --------------------------------------------------------------
|
| |  | Fiscal 2001 means the 52 weeks ended
    February 3, 2002;    
|
|
|
| |  | Fiscal 2000 means the 53 weeks ended
    February 4, 2001; and
|
|
|
| |  | Fiscal 1999 means the 52 weeks ended
    January 30, 2000.    
|

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 3, 2002, we operated 1,130 stores under one fully
integrated operating format and three brand names:



| |   |                                                                                                                                        
| | - | ---------------------------------------------------------------------------------------------------------------------------------------
| |  | Checker Auto Parts, founded in 1969, with 418
    stores in the Southwestern, Rocky Mountain and Northern Plains
    states and Hawaii;
|
| |  | Schucks Auto Supply, founded in 1917, with
    235 stores in the Pacific Northwest and Alaska; and                                    
|
|
| |  | Kragen Auto Parts, founded in 1947, with 477
    stores 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 August 2001, we initiated a Refinancing of our
    capital structure. We refer to this as our
    Refinancing.                                                                                                                                           
|
|
|
| |  | In July 2001, we implemented a Profitability
    Enhancement Program to reduce costs, improve operating
    efficiencies and close under-performing stores. We refer to this
    as our PEP.                                                                
|
|
|
| |  | 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.                                      
|

20



---



##### 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
|                                                                                                                  |  |            
|                                                                                                                  |  | 2001        |       | 2000 |  | 1999
|                                                                                                                  |  |             |       |      |  |     
|Net sales                                                                                                         |  |             | 100.0 | %    |  |      | 100.0 | % |  |  | 100.0 | %
|Cost of sales                                                                                                     |  |             | 55.0  |      |  |      | 53.0  |   |  |  | 51.7  |  
|                                                                                                                  |  |             |       |      |  |      |       |   |  |  |       |  
|Gross profit                                                                                                      |  |             | 45.0  |      |  |      | 47.0  |   |  |  | 48.3  |  
|Operating and administrative expenses                                                                             |  |             | 40.3  |      |  |      | 40.9  |   |  |  | 40.7  |  
|Store closing costs and other restructuring costs                                                                 |  |             | 1.6   |      |  |      | 0.4   |   |  |  | 0.4   |  
|Legal settlement                                                                                                  |  |             | 0.1   |      |  |      | 0.6   |   |  |  |      |  
|Goodwill amortization                                                                                             |  |             | 0.3   |      |  |      | 0.3   |   |  |  | 0.1   |  
|                                                                                                                  |  |             |       |      |  |      |       |   |  |  |       |  
|Operating profit                                                                                                  |  |             | 2.7   |      |  |      | 4.8   |   |  |  | 7.1   |  
|Interest expense                                                                                                  |  |             | 4.3   |      |  |      | 4.3   |   |  |  | 3.4   |  
|Equity in loss of joint venture                                                                                   |  |             |      |      |  |      | 0.2   |   |  |  |      |  
|                                                                                                                  |  |             |       |      |  |      |       |   |  |  |       |  
|Income (loss) before income taxes, extraordinary
    loss and cumulative effect of change in accounting principle |  |             | (1.6  | )    |  |      | 0.3   |   |  |  | 3.7   |  
|Income tax expense (benefit)                                                                                      |  |             | (0.6  | )    |  |      |      |   |  |  | 1.4   |  
|                                                                                                                  |  |             |       |      |  |      |       |   |  |  |       |  
|Income (loss) before extraordinary loss and
    cumulative effect of change in accounting principle               |  |             | (1.0  | )    |  |      | 0.3   |   |  |  | 2.3   |  
|Extraordinary loss, net of income taxes                                                                           |  |             | (0.2  | )    |  |      |      |   |  |  |      |  
|                                                                                                                  |  |             |       |      |  |      |       |   |  |  |       |  
|Income (loss) before cumulative effect of change
    in accounting principle                                      |  |             | (1.2  | )    |  |      | 0.3   |   |  |  | 2.3   |  
|Cumulative effect of change in accounting
    principle, net of income taxes                                      |  |             |      |      |  |      |      |   |  |  | (0.1  | )
|                                                                                                                  |  |             |       |      |  |      |       |   |  |  |       |  
|Net income (loss)                                                                                                 |  |             | (1.2  | )%   |  |      | 0.3   | % |  |  | 2.2   | %
|                                                                                                                  |  |             |       |      |  |      |       |   |  |  |       |  







Net
Sales







Net sales for fiscal 2001 were $1.44 billion
as compared to $1.45 billion for fiscal 2000 and
$1.23 billion for fiscal 1999. Fiscal 2001 and fiscal 1999
consisted of 52 weeks whereas fiscal 2000 consisted of 53
weeks. To evaluate sales levels, we have not included the 53rd
week in 2000 for comparison purposes so as to evaluate
consistent 52-week fiscal periods across all years. After such
adjustment, net sales in 2000 were $1.43 billion. On this
basis, net sales increased approximately $12.5 million
(0.9%) in 2001 over 2000, and chain-wide sales increased
$194.6 million (15.8%) in 2000 over 1999. Much of the
increase in 2000 over 1999 was due to the result of
acquisitions, as explained below.







Net sales include the results of all stores from
the date opened or acquired. We also evaluate results for
comparable (or same-store) sales. Comparable store
net sales data is calculated based on the change in net sales
commencing after the time a new or acquired store has been open
for twelve months. Therefore, sales for the first twelve months
a new or acquired store is open are not included in the
comparable store calculation. Stores that have been relocated
are included in comparable store sales. After adjusting for the
53rd week in 2000, comparable store sales increased in 2001 over
2000 by 1% and increased in 2000 over 1999 by 2%.




Commercial sales increased 4% to
$259.1 million in fiscal 2001 from $249.3 million in
fiscal 2000 and by 14.5% in 2000 over the $217.7 million
level in 1999. Comparable store commercial sales (excluding the
53rd week in 2000) increased 10% in 2001 over 2000, and 11% in
2000 over 1999, as a result of the continued expansion of our
commercial sales program.

We have driven our comparable store sales growth
by: (1) significantly expanding our commercial sales
program; (2) investing in state-of-the-art store-level
information systems and distribution systems, which have
enhanced our inventory management and our ability to make
available to our customers an expanded selection

21



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##### Table of Contents



of brand name products; (3) re-profiling our
inventory to optimize our store specific product mix;
(4) making significant investments in in-store
improvements; (5) relocating our under-performing stores;
and (6) converting acquired stores to our operating format.


Store
Acquisitions and Changes in Store Count

In addition to the Acquisitions, we have opened
new stores or relocated stores in existing markets in order to
increase our marketing and distribution efficiencies and further
solidify our market position. We have also opened stores in new
markets to increase the number of markets we serve. As part of
the PEP, we identified 36 under-performing stores for closure,
28 of which had been closed by fiscal year-end 2001 and 2 of
which are under contract for sale. The following is a summary of
our store count activity over the past three years:

|                                      |  |             |       |      |  |      |       |   |  |  |       |  
|------------------------------------- |  | ----------- | ----- | ---- |  | ---- | ----- | - |  |  | ----- | -
|                                      |  |            
|                                      |  | Store Count
|                                      |  |            
|                                      |  | 2001        |       | 2000 |  | 1999
|                                      |  |             |       |      |  |     
|Open at beginning of year             |  |             | 1,152 |      |  |      | 1,120 |   |  |  | 807   |  
|Stores opened (excluding relocations) |  |             | 10    |      |  |      | 37    |   |  |  | 84    |  
|Stores acquired, net                  |  |             |      |      |  |      | 23    |   |  |  | 243   |  
|Stores closed (excluding relocations) |  |             | (32   | )    |  |      | (28   | ) |  |  | (14   | )
|                                      |  |             |       |      |  |      |       |   |  |  |       |  
|Open at end of year                   |  |             | 1,130 |      |  |      | 1,152 |   |  |  | 1,120 |  
|                                      |  |             |       |      |  |      |       |   |  |  |       |  
|Stores relocated                      |  |             | 13    |      |  |      | 14    |   |  |  | 26    |  
|Stores expanded                       |  |             | 2     |      |  |      | 9     |   |  |  | 9     |  

The most significant impact on comparability of
our sales over the period is the impact of the net stores
obtained through the Acquisitions. The following is a summary of
the impact of the Acquisitions on our sales growth over the past
three years:




|                                                                                |  |           |           |      |  |      |           |  |  |   |           | 
|------------------------------------------------------------------------------- |  | --------- | --------- | ---- |  | ---- | --------- |  |  | - | --------- | 
|                                                                                |  |          
|                                                                                |  | Net Sales
|                                                                                |  |          
|                                                                                |  | 2001      |           | 2000 |  | 1999
|                                                                                |  |           |           |      |  |     
|Big Wheel (86 stores acquired June 1999), net of
    closings                   |  | $         | 68,675    |      |  | $    | 67,782    |  |  | $ | 40,659    | 
|AGA (194 stores acquired October 1999), net of
    closings                     |  |           | 184,619   |      |  |      | 183,176   |  |  |   | 60,603    | 
|Allcar (22 stores acquired April 2000), net of
    closings                     |  |           | 14,382    |      |  |      | 13,888    |  |  |   |          | 
|Pre-existing stores, net of store openings,
    closings, relocations and other |  |           | 1,170,909 |      |  |      | 1,161,248 |  |  |   | 1,130,193 | 
|Impact of 53rd week in 2000.                                                    |  |           |          |      |  |      | 26,015    |  |  |   |          | 
|                                                                                |  |           |           |      |  |      |           |  |  |   |           | 
|Net sales                                                                       |  | $         | 1,438,585 |      |  | $    | 1,452,109 |  |  | $ | 1,231,455 | 
|                                                                                |  |           |           |      |  |      |           |  |  |   |           | 







The increase in net sales from 2000 to 2001 of
acquired stores (excluding Allcar) and pre-existing stores
reflects the comparable store sales increase of approximately
1%. The increases in 2001 from 2000 as to sales at the Allcar
stores and in 2000 from 1999 as to sales at the Big Wheel and
AGA stores also reflect a full year of sales at these stores in
the later years as opposed to a partial year of sales in the
earlier years, which were the years in which the acquisitions
occurred. These increases were offset by the closure of acquired
service centers during fiscal 2000.




Gross
Profit




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.







Gross profit for fiscal 2001 was
$648.0 million, or 45.0% of net sales, compared to
$683.1 million, or 47.0% of net sales for fiscal 2000, and
$595.2 million, or 48.3% of net sales, for fiscal 1999.
Gross profit margin




22



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##### Table of Contents






decreased in fiscal 2001 primarily as a result of
our PEP, in which $23.1 million of charges were incurred
relating to reduction in inventory values and costs associated
with inventory review and disposal. Furthermore, although we had
anticipated that we would achieve at least 1999 gross profit
margin levels for 2001, we did not achieve this result because
of lower than expected vendor volume purchase allowances and
cash discounts during the year, due principally to lower than
typical in-stock inventory levels in the 2001 period. We have
historically utilized prompt payment and other cash discount
programs offered by vendors. Because of the need to pay for the
class action lawsuit settlement (see Note 14 to the
Consolidated Financial Statements) and the term loan
amortization payments, we took efforts to retain cash during
most of fiscal 2001 and did not take full advantage of the
contractual vendor allowances. In addition, our change of
advertising strategy to emphasize promotional discounts through
newspaper advertising to increase retail customer count had the
effect of holding down the realized gross profit margin during
the period.








Gross profit margin for fiscal 2000 declined as
compared to 1999 in large part due to the sell-through of
product obtained in connection with the Acquisitions that was
acquired without the benefit of our normal vendor allowances.







Operating
Expenses







Operating expenses consist of operating and
administrative expenses and also include the costs of store
closing and restructuring costs (including the PEP),
acquisition-related transition and integration expenses, legal
settlements, and goodwill amortization. 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.







Operating expenses decreased by approximately
$3.1 million to $609.3 million, or 42.4% of net sales,
for fiscal 2001 from $612.4 million, or 42.2% of net sales,
for fiscal 2000. Operating expenses increased by
$104.0 million to $612.4 million, or 42.2% of net
sales, for fiscal 2000 from $508.4 million, or 41.3% of net
sales, for fiscal 1999. The following items impacted operating
expenses for the fiscal years indicated:






| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | During fiscal 2001, we implemented our PEP to
    reduce costs, improve operating efficiencies and close
    under-performing stores. We recorded approximately
    $21.5 million of store closing and restructuring charges.
    We also recorded $1.7 million of other adjustments to prior
    estimates affecting the closed store reserve that were unrelated
    to the PEP.                                                                                                                                                                                                                                                                     
|
|
|
| |  | In fiscal 2001 and 2000 we settled two separate
    but similar lawsuits. The lawsuits sought overtime pay for
    personnel that we had believed were exempt from overtime because
    they were part of our store management. Our operating results
    reflect the costs of settlement of $2.0 million (2001) and
    $8.8 million (2000). We have changed the manner in which we
    compensate certain members of our store management to avoid
    similar litigation in future periods.                                                                                                                                                         
|
|
|
| |  | In the fourth quarter of 2001, we reached an
    agreement to sell certain of our stores that we had planned to
    close as part of the PEP. We had expected to leave the stores
    vacant and incur rents through the expiration of the contracted
    leases, or to incur rental costs while negotiating with
    potential sub-tenants. These costs are no longer expected and,
    accordingly, we reversed the store closing allowance for these
    sites. Results of operations in fiscal 2001 reflect a reduction
    in expenses of $1.5 million resulting from this agreement.                                                             
|
|
|
| |  | Over the past several years, we have completed a
    series of acquisitions. Upon completion of each acquisition, we
    incurred direct and incremental expenses for the transition of
    acquired stores to our operating format. These expenses included
    the cost of re-merchandising acquired inventories, training
    employees, grand opening advertising (to generate name brand
    awareness in new markets) and other expenses. These expenses
    were typically incurred for a period of approximately six months
    following the acquisition, and totaled $0.2 million (2001),
    $23.8 million (2000), and $30.2 million (1999).
|
|
|
| |  | In fiscal 2001, we incurred charges of
    $1.2 million relating to a loss on disposition of certain
    fixed assets.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|

23



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##### Table of Contents





| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Two of our commercial customers declared
    bankruptcy, requiring us to provide discrete provisions for bad
    debts of $1.5 million in 2001 and $0.4 million in 2000.                                                                                                                                                                                                                                                                                                                                                          
|
|
|
| |  | In connection with the Acquisitions, we
    identified certain stores in our existing chain for closure
    because they overlapped with better-situated acquired stores. We
    incurred related charges of $3.7 million (2000) and
    $2.5 million (1999). We also incurred other store closing
    costs of $2.3 million for fiscal 2000 and 1999, but have
    not identified these costs as special items because they were
    incurred in the normal course of updating and relocating stores
    to improve our business.
|




In addition to the items discussed above,
operating expenses were affected by generally higher payroll
related costs and increased store rent expense in each period
due to increases in the number of stores operated, offset in
fiscal 2001 by the impact of the PEP.




Interest
Expense

Net interest expense for fiscal 2001 totaled
$61.6 million compared to $62.4 million for the
53 weeks of fiscal 2000. Higher outstanding loan balances
in fiscal 2001 increased interest expense by approximately
$4.5 million. As a result of our Refinancing, amortization
of deferred financing fees increased in fiscal 2001. This added
approximately $1.4 million to interest expense in fiscal
2001. Finally, due to our liquidity issues during the year, we
incurred $1.7 million in fiscal 2001 for vendor interest on
accounts payable because we extended merchandise payment terms.
These increases in interest expense were offset by lower
interest rates, which reduced interest expense by approximately
$7.3 million, and an approximately $1.1 million
reduction in interest expense associated with there being one
less week in fiscal 2001 (52 weeks) relative to fiscal 2000
(53 weeks).

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 (approximately
$14.8 million), higher variable interest rates
(approximately $3.2 million), higher outstanding balances
(approximately $2.0 million) and an additional week of
expense accrual during fiscal 2000 (approximately
$1.1 million).

Income Tax
Expense

Income tax benefit for fiscal 2001 was
$8.9 million, reflecting the loss we incurred, compared to
income tax expense of $0.2 million for the 2000 fiscal
period and $17.4 million in expense in fiscal 1999. Our
effective tax rate was 38.7% during fiscal 2001, which was
substantially consistent with the rate of 38.3% in 1999. Our
effective tax rate of 4.0% in fiscal 2000 was not representative
of our typical rate as a result of certain permanent items and
tax credits that were relatively higher in proportion to our
income before income taxes than in other years. The rate also
decreased in 2000 as a result of a reversal of prior reserves no
longer required.

Profitability Enhancement Program
(PEP)

During the second quarter of fiscal 2001, we
implemented our PEP to reduce costs, improve operating
efficiencies and close under-performing stores. As a result of
the PEP, we recorded total restructuring and

24



---



##### Table of Contents



other charges of $44.6 million, which are
detailed in the following paragraphs. The table below summarizes
the charges relating to the PEP:


|                                                                 |                                                                                            |   |        |        | 
|---------------------------------------------------------------- | ------------------------------------------------------------------------------------------ | - | ------ | ------ | 
|Amounts recorded as store closing and
    restructuring charges: |                                                                                            |   |        |       
|                                                                 | Reserve for store closing costs                                                            |   | $      | 13,698 | 
|                                                                 | Write down for impairment of store site costs and
    store-related property and equipment |   |        | 6,649  | 
|                                                                 | Reserve for workforce reduction                                                            |   |        | 400    | 
|                                                                 | Other                                                                                      |   |        | 729    | 
|                                                                 |                                                                                            |   |        |       
|                                                                 |                                                                                            |   |        | 21,476 | 
|                                                                 |                                                                                            |   |        |       
|Amounts recorded as charges to cost of
    sales:                |                                                                                            |   |        |       
|                                                                 | Provision for excess inventories                                                           |   |        | 17,292 | 
|                                                                 | Actual costs incurred for inventory review and
    disposal                                |   |        | 5,800  | 
|                                                                 |                                                                                            |   |        |       
|                                                                 |                                                                                            |   | 23,092 |       
|                                                                 |                                                                                            |   |        |       
|                                                                 |                                                                                            | $ | 44,568 |       
|                                                                 |                                                                                            |   |        |       

Store Closing
Costs

Under the PEP, we increased the store closing
reserve by approximately $13.7 million. Approximately
$6.8 million of the charge relates to the planned closure
of 36 stores based on several factors including market
saturation, store profitability, and store size and format. Of
these planned closures, 28 were closed as of February 3,
2002 and 2 stores were subsequently removed from the reserve as
they are currently under contract for sale. In addition, we
recorded an increase to the reserve for prior years plans
of approximately $6.9 million relating to existing closed
stores that have longer than anticipated vacancy periods as a
result of the continued economic slowdown. The PEP charge also
includes a $6.6 million write-down for impairment of
leasehold improvements and other store-related property and
equipment, which has been recorded as a direct reduction of net
property and equipment balances. See Store Closures
for further discussion regarding the events and decisions made
that result in strategic store closing plans and the related
impact on our results of operations, liquidity and capital
resources.

Other
Profitability Enhancement Program Costs

As a result of the consolidation of certain
regional operations and general and administrative functions
under our PEP, we terminated 36 employees and eliminated 84 open
positions. The terminated employees worked primarily in human
resources, information technology and real estate. As a result
of these actions, the restructuring charges included a provision
for severance and benefits of approximately $0.4 million.

We have also accrued other costs and charges
incidental to the restructuring. These costs include early
termination fees for operating lease commitments and other asset
impairments aggregating approximately $0.7 million.

Inventory and
Related Charges

We completed an inventory review to:
(1) increase inventory turnover; (2) provide an
optimal inventory level at each store location;
(3) liquidate inventory not meeting our new asset return
levels; and (4) write down the inventory of the 36 stores
planned for closure. As a result of the analysis, we elected to
establish a reserve for excess inventories resulting from the
decision to eliminate certain product lines and to liquidate
inventory from closed stores. In conjunction with this decision,
a provision of $17.3 million was recorded to reduce
inventory values. In addition, we incurred actual costs during
the year of approximately $5.8 million related to labor,
warehouse and distribution, freight and other operating costs
associated with the inventory review and disposal. These costs
are reflected as cost of sales in the accompanying statement of
operations for fiscal 2001.

25



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##### Table of Contents



Expected
Impact of the PEP

Based on the initiatives described above, we
expect the PEP to directly increase operating profit in fiscal
2002 by approximately $7.9 million, in addition to indirect
benefits resulting from improved inventory turnover. The
components of the increase are as follows ($ in thousands):

|                                      |  |   |       | 
|------------------------------------- |  | - | ----- | 
|Expected operating profit impact:     |  |   |       | 
|Operating loss of 36 stores(1)        |  | $ | 4,429 | 
|Personnel reductions(2)               |  |   | 2,286 | 
|Store operating expense reductions(3) |  |   | 1,188 | 
|                                      |  |   |       | 
|                                      |  | $ | 7,903 | 
|                                      |  |   |       | 



---



|    |                                                                                                                                                                 
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Represents the elimination of operating losses
    for 36 stores planned for closure.                                                                           
|   
|(2) | Represents the annual salaries and benefits for
    the 36 terminated employees. No expense reduction has been
    assumed for the 84 eliminated open positions.
|   
|(3) | Represents a reduction in our store-based
    satellite communication costs and a reduction in operating
    expenses related to transportation services.       

Liquidity and Capital Resources

Refinancing

During the third quarter of fiscal 2001, we
initiated our Refinancing of our capital structure by issuing a
$30.0 million principal amount 7% convertible subordinated
note due September 1, 2006 in a private placement. In
connection with the completion of the Refinancing, the note was
converted into approximately 4.5 million shares of CSK Auto
Corporation common stock at a conversion price of $6.63 per
share. At the time of conversion, the accrued and unpaid
interest of approximately $0.7 million was converted to
additional paid in capital.

In December 2001, we completed the Refinancing,
which resulted in the elimination of scheduled bank debt
amortization payments prior to the end of 2004, the extension of
debt maturities and enhanced liquidity. In connection with the
Refinancing, we entered into a new three-year
$300.0 million senior secured, asset-based credit facility
due in December 2004 and issued $280.0 million of senior notes
due 2006. The new three-year $300.0 million senior credit
facility is comprised of a $170.0 million non-amortizing
term loan and a $130.0 million revolving credit facility
with availability subject to a borrowing base formula. Interest
on the $300.0 million senior credit facility is
approximately LIBOR plus 3.5%. The effective interest rate on
the $280.0 million senior notes is approximately 12.5% per
annum, which includes the stated interest rate of 12%, plus
amortization of the discount of approximately $4.7 million.

Prior to the Refinancing, during the second
quarter of fiscal 2001, we obtained $27.0 million of
additional funding under our prior senior credit facility and
obtained amendments to that facility to permit the increased
borrowing and to amend certain covenant restrictions relating to
outstanding debt levels. These funds were used to pay the
$27.3 million principal payment that was due on the prior
senior credit facility on June 30, 2001.

As a result of the increased borrowing and based
on our financial results for the third quarter of fiscal 2001,
our ratio of debt to Adjusted EBITDA (as defined in our prior
senior credit facility) and our Interest Coverage Ratio (as
defined in our prior senior credit facility) would not have been
in compliance with corresponding covenants under our then
existing senior credit facility. Accordingly, we negotiated a
waiver to these covenants effective for the third quarter ending
November 4, 2001. The proceeds of the Refinancing,
including the proceeds received from the issuance of the
$30 million convertible note, were used to refinance the
indebtedness under our prior senior credit facility. We
anticipate meeting all required covenants under the new credit
facility in fiscal 2002.

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Overview of
Liquidity

|                                            |  |                |         |      |  |   |         | 
|------------------------------------------- |  | -------------- | ------- | ---- |  | - | ------- | 
|                                            |  |               
|                                            |  | As of year-end
|                                            |  |               
|                                            |  | 2001           |         | 2000
|                                            |  |                |         |     
|Net current assets                          |  | $              | 498,914 |      |  | $ | 401,523 | 
|                                            |  |                |         |      |  |   |         | 
|Cash                                        |  | $              | 16,084  |      |  | $ | 11,131  | 
|Availability under revolving line of credit |  |                | 35,885  |      |  |   | 10,891  | 
|                                            |  |                |         |      |  |   |         | 
|Total liquidity                             |  | $              | 51,969  |      |  | $ | 22,022  | 
|                                            |  |                |         |      |  |   |         | 

Our primary cash requirements include working
capital (primarily inventory), interest on our debt and capital
expenditures. Due to the Refinancing, we will not be required to
make any debt amortization payments prior to December 2004 other
than capital lease payments. We intend to finance our cash
requirements with cash flow from operations and borrowings under
our new senior credit facility.

At February 3, 2002, we had net working
capital of approximately $498.9 million, an increase of
$97.4 million, or 24%, compared to February 4, 2001.
Inventory levels were reduced slightly, to $619.6 million
at the end of fiscal 2001 from $621.8 million at the end of
fiscal 2000. The increase in working capital primarily relates
to the following: (1) $54.6 million of current maturities
on our prior senior credit facility outstanding at
February 4, 2001 that were refinanced to long-term
consistent with our Refinancing; (2) a $31.1 million
decrease in accounts payable consistent with improved liquidity
associated with our Refinancing; and (3) a
$16.0 million increase in accounts receivable consistent
with increased vendor allowance programs.

At February 3, 2002, we had total liquidity
(cash plus availability under our existing revolving credit
facility) of approximately $52.0 million. Our liquidity was
limited by borrowing base calculations associated with our new
senior credit facility. The borrowing base formula is equal to
the lesser of $300.0 million and the sum of certain
percentages of our eligible inventory and accounts receivable.
As a result of the limitations imposed by the borrowing base
formula, at February 3, 2002 we could only borrow up to
$270.5 million of the total $300.0 million facility.
Accordingly, we have $29.5 million of additional borrowing
capacity that has not been included in our liquidity calculation
but that may be, in the future, subject to the borrowing base
calculation.

Debt is an important part of our overall
capitalization and we have been highly leveraged. Our total
outstanding debt balances have increased to fund working capital
requirements; however, our debt to equity ratio has improved. In
addition to providing liquidity, the Refinancing significantly
reduced our leverage, as shown in the following table.

|                                                                        |  |                |         |      |  |   |         | 
|----------------------------------------------------------------------- |  | -------------- | ------- | ---- |  | - | ------- | 
|                                                                        |  |               
|                                                                        |  | As of year-end
|                                                                        |  |               
|                                                                        |  | 2001           |         | 2000
|                                                                        |  |                |         |     
|Debt, including capital lease obligations                               |  | $              | 670,843 |      |  | $ | 647,881 | 
|Equity                                                                  |  |                | 154,286 |      |  |   | 139,613 | 
|                                                                        |  |                |         |      |  |   |         | 
|Debt to equity ratio                                                    |  |                | 4.3     |      |  |   | 4.6     | 
|                                                                        |  |                |         |      |  |   |         | 
|Debt to equity ratio, assuming conversion of
    $49.1 million in notes |  |                | 3.1     |      |  |   |         | 
|                                                                        |  |                |         |      |  |   |         | 

As part of the Refinancing, during the fourth
quarter of fiscal 2001 we sold to certain investors, including
Investcorp CSK Holdings L.P., an affiliate of Investcorp S.A.
(one of our principal stockholders), $50.0 million in
principal amount of 7% convertible subordinated debentures due
December 2006 and make-whole warrants (carried at
$49.1 million after discount for a beneficial conversion
feature). The convertible subordinated debentures are
convertible into CSK Auto Corporation common stock at $8.69 per
share subject to certain anti-dilution adjustment provisions and
other adjustments that may result in the issuance of additional
shares of common stock of CSK Auto Corporation under certain
circumstances. We will require conversion of the entire unpaid
principal amount of the convertible subordinated debentures into
approximately 5.75 million shares of our common stock. If
these debentures had been converted by the end of fiscal

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2001, our debt to equity ratio at
February 3, 2002 would have been 3.1 as compared to 4.6 at
the end of the prior fiscal year.


The conversion of the convertible subordinated
debentures is subject to certain conditions, including the
effectiveness of a registration statement covering the resale of
the stock to be issued, which is expected to be satisfied by
May 19, 2002. Interest on the convertible subordinated
debentures is payable quarterly. For the first quarterly
interest payment, we elected to pay such interest in additional
shares of CSK Auto Corporations common stock. If the
conditions to conversion are not satisfied, the convertible
subordinated debentures will remain convertible at the option of
the holders.

Analysis of Cash Flows

Operating
Activities

In fiscal 2001, net cash used in operating
activities was $7.9 million compared to $32.5 million
provided by operating activities during fiscal 2000. The largest
components of the change in cash flow from operations relate to:
(1) a net loss of $17.2 million during fiscal 2001
compared to net income of $5.0 million during fiscal 2000;
(2) a non-cash provision during fiscal 2001 of
$25.4 million comprised of a $17.3 million provision
for write down of inventory and a $8.1 million impairment
of fixed and other assets primarily as a result of our PEP; and
(3) a decrease in accounts payable of $32.0 million in
fiscal 2001 compared to an increase in accounts payable of
$25.2 million in fiscal 2000 due to our improved liquidity
arising from our Refinancing.

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.

During fiscal 2000, we 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
was approximately $8.8 million (which includes
plaintiffs attorneys fees and costs and other
miscellaneous expenses) and was paid during the first quarter of
fiscal 2001. The settlement was funded through our prior
revolving credit facility. During the second quarter of fiscal
2001, we also reserved $2.0 million for certain other legal
claims. Of this amount, we paid $0.6 million during fiscal
2001 and expect to pay the remaining $1.4 million during
fiscal 2002.

Investing
Activities

Net cash used in investing activities totaled
$10.1 million for fiscal 2001, compared to
$34.5 million used in fiscal 2000, and $260.2 million
in fiscal 1999. The 1999 levels reflect $218.2 million used
in the Big Wheel, AGA and AIS acquisitions. The decrease in cash
used in investing activities for fiscal 2001 as compared to
fiscal 2000 was primarily the result of $19.9 million less
in capital expenditures, and the $3.2 million investment in
the PartsAmerica joint venture during fiscal 2000.

In fiscal 2000, we invested approximately
$32.0 million in capital expenditures, including new store
fixtures and information systems hardware and software. We
invested $12.2 million in fiscal 2001. We invested a
greater amount in fiscal 2000 as part of the transition and
integration of the Acquisitions, and do not expect such levels
to be required again in the near future.

We are budgeting approximately the same amount
for capital expenditures for fiscal 2002 that we spent in 2001,
primarily for new stores. We opened 25 new, relocated or
expanded stores in fiscal 2001 and expect to open, relocate or
expand approximately 25 stores in fiscal 2002. We anticipate
that the majority of these stores will be financed under
arrangements structured as operating leases that require minimal
capital expenditures 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

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expenditures, each new store will require an
estimated investment in working capital, principally for
inventories, of approximately $300,000.


We made no acquisitions during fiscal 2001 nor do
we anticipate any significant acquisitions during fiscal 2002.
The table below details the cash paid and transition and
integration costs incurred (consisting primarily of grand
opening advertising, training and re-merchandising costs) by
fiscal year as a result of our acquisitions ($ in thousands):

|                  |                            |        |   |       |  |     |   |           |  |       |   |        |  |  |   |        |  |  |   |     |  |  |   |         | 
|----------------- | -------------------------- | ------ | - | ----- |  | --- | - | --------- |  | ----- | - | ------ |  |  | - | ------ |  |  | - | --- |  |  | - | ------- | 
|                  |                            | Allcar |   | AGA   |  | AIS |   | Big Wheel |  | Other |   | Total 
|                  |                            |        |   |       |  |     |   |           |  |       |   |       
|Fiscal year 2001: |                            |        |   |       |  |     |   |           |  |       |   |        |  |  |   |        |  |  |   |     |  |  |   |        
|                  | Cash paid                  |        | $ |      |  |     | $ |          |  |       | $ |       |  |  | $ |       |  |  | $ |    |  |  | $ |        | 
|                  | Transition and integration |        |   | 250   |  |     |   |          |  |       |   |       |  |  |   |       |  |  |   |    |  |  |   | 250     | 
|Fiscal year 2000: |                            |        |   |       |  |     |   |           |  |       |   |        |  |  |   |        |  |  |   |     |  |  |   |        
|                  | Cash paid                  |        |   | 917   |  |     |   |          |  |       |   |       |  |  |   |       |  |  |   | 373 |  |  |   | 1,290   | 
|                  | Transition and integration |        |   | 2,980 |  |     |   | 15,658    |  |       |   |       |  |  |   | 5,180  |  |  |   |    |  |  |   | 23,818  | 
|Fiscal year 1999: |                            |        |   |       |  |     |   |           |  |       |   |        |  |  |   |        |  |  |   |     |  |  |   |        
|                  | Cash paid                  |        |   |      |  |     |   | 145,587   |  |       |   | 10,316 |  |  |   | 62,694 |  |  |   |    |  |  |   | 218,597 | 
|                  | Transition and integration |        |   |      |  |     |   | 21,283    |  |       |   |       |  |  |   | 8,904  |  |  |   |    |  |  |   | 30,187  | 
|                  |                            |        |   |       |  |     |   |           |  |       |   |        |  |  |   |        |  |  |   |     |  |  |   |        
|Total:            |                            |        |   |       |  |     |   |           |  |       |   |        |  |  |   |        |  |  |   |     |  |  |   |        
|                  | Cash paid                  |        | $ | 917   |  |     | $ | 145,587   |  |       | $ | 10,316 |  |  | $ | 62,694 |  |  | $ | 373 |  |  | $ | 219,887 | 
|                  |                            |        |   |       |  |     |   |           |  |       |   |        |  |  |   |        |  |  |   |     |  |  |   |        
|                  | Transition and integration |        | $ | 3,230 |  |     | $ | 36,941    |  |       | $ |       |  |  | $ | 14,084 |  |  | $ |    |  |  | $ | 54,255  | 
|                  |                            |        |   |       |  |     |   |           |  |       |   |        |  |  |   |        |  |  |   |     |  |  |   |        



| |                     
| | --------------------
| | Financing Activities

Net cash provided by financing activities totaled
$23.0 million for fiscal 2001 compared to $1.4 million
of net cash provided by financing activities in fiscal 2000.
This increase primarily relates to our Refinancing. The
following table highlights the components of our Refinancing and
its effect on our financing activities for fiscal 2001 ($ in
thousands):

|                                                                |                                           |             |          |          |  |       |          |         |   |   |          |        | 
|--------------------------------------------------------------- | ----------------------------------------- | ----------- | -------- | -------- |  | ----- | -------- | ------- | - | - | -------- | ------ | 
|                                                                |                                           |             |          | Other    |  |      
|                                                                |                                           | Refinancing |          | Activity |  | Total
|                                                                |                                           |             |          |          |  |      
|Borrowings under senior credit facility                         |                                           | $           | 217,000  |          |  | $     | 321,000  |         |   | $ | 538,000  |       
|Payments under senior credit facility                           |                                           |             | (515,160 | )        |  |       | (322,320 | )       |   |   | (837,480 | )     
|Payment of debt issuance costs                                  |                                           |             | (19,917  | )        |  |       | (2,102   | )       |   |   | (22,019  | )     
|Issuance of convertible subordinated note in
    August 2001    |                                           |             | 30,000   |          |  |       |         |         |   |   | 30,000   |       
|Issuance of convertible subordinated notes in
    December 2001 |                                           |             | 50,000   |          |  |       |         |         |   |   | 50,000   |       
|Borrowings under 12% Senior Notes                               |                                           |             | 275,317  |          |  |       |         |         |   |   | 275,317  |       
|Payments on capital lease obligations                           |                                           |             |         |          |  |       | (10,149  | )       |   |   | (10,149  | )     
|Recovery of stockholder receivable                              |                                           |             |         |          |  |       | 29       |         |   |   | 29       |       
|Exercise of stock options                                       |                                           |             |         |          |  |       | 4        |         |   |   | 4        |       
|Other financing activities                                      |                                           |             |         |          |  |       | (692     | )       |   |   | (692     | )     
|                                                                |                                           |             |          |          |  |       |          |         |   |   |          |       
|                                                                | Net cash provided by financing activities |             | $        | 37,240   |  |       | $        | (14,230 | ) |   | $        | 23,010 | 
|                                                                |                                           |             |          |          |  |       |          |         |   |   |          |       

Based on the table above, our Refinancing
generated $37.2 million in net financing cash inflows as
compared to a net cash outflow of $14.2 million relating to
other financing activities. The decrease in cash flows relating
to other financing activities as compared to fiscal 2000
primarily relates to net payments on the senior credit facility
during fiscal 2001 of $1.3 million as compared to
$17.7 million of net borrowings on the senior credit
facility during fiscal 2000.

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Net cash provided by financing activities totaled
$1.4 million in fiscal 2000 compared to $268.5 million
in fiscal 1999. In 1999, we used $283.7 million of net
borrowings under the existing 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.

Operating Lease Arrangements and Contractual
Obligations

We lease our office and warehouse facilities, all
but two of our retail stores, and a majority of our equipment.
Certain of the equipment leases are classified as capital leases
and, accordingly, the equipment and related obligation are
recorded on our balance sheet. However, substantially all of our
store leases are operating leases with private landlords and
provide for monthly rental payments based on a contractual
amount. The majority of these lease agreements are for base
lease periods ranging from 10 to 20 years, with three to
five renewal options of five years each. Certain store leases
also provide for contingent rentals based upon a percentage of
sales in excess of a stipulated minimum. We believe that the
long duration of our store leases offer security for our store
locations without the risks associated with real estate
ownership.

We currently have leases with a related party for
our corporate headquarters and an adjacent parking lot.
Previously we had entered into sale-leaseback or other financing
arrangements with related parties. We believe that the terms of
the transactions with the related parties were no less favorable
than terms we may have been able to receive from independent
third parties at the time of the applicable transaction. We also
believe that these transactions as a whole are not material to
our financial statements. For more information on related party
transactions, refer to Note 5 of the Consolidated Financial
Statements.

Historically, we had an arrangement with a real
estate investment company, under which we would identify a
location for a new store and then that company would acquire the
property. We would then build our new store and lease the store
from the real estate investment company under an operating
lease. This arrangement expired on December 31, 2000.
During fiscal 2001, two stores, which were previously committed
under this facility, were funded. We do not plan on negotiating
another similar facility and do not believe that such a lease
facility is critical to our store development plans for fiscal
2002 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 funded our remaining new and relocated
stores during fiscal 2001 under separate agreements with
landlords and individual investors.

In order to facilitate an understanding of our
contractual obligations and commercial commitments, the
following data is provided ($ in thousands):

|                              |  |                        |           |        |  |       |         |       |  |         |         |  |  |   |         |  |  |   |         | 
|----------------------------- |  | ---------------------- | --------- | ------ |  | ----- | ------- | ----- |  | ------- | ------- |  |  | - | ------- |  |  | - | ------- | 
|                              |  |                       
|                              |  | Payments Due by Period
|                              |  |                       
|                              |  |                        |           | Within |  | 2-3   |         | 4-5   |  | After 5
|                              |  | Total                  |           | 1 year |  | Years |         | Years |  | Years  
|                              |  |                        |           |        |  |       |         |       |  |        
|Contractual obligations       |  |                        |           |        |  |       |         |       |  |         |         |  |  |   |         |  |  |   |         | 
|Long term debt                |  | $                      | 632,766   |        |  | $     |        |       |  | $       | 227,000 |  |  | $ | 405,766 |  |  | $ |        | 
|Capital lease obligations     |  |                        | 51,349    |        |  |       | 16,402  |       |  |         | 26,796  |  |  |   | 5,239   |  |  |   | 2,912   | 
|Operating lease obligations   |  |                        | 858,499   |        |  |       | 125,927 |       |  |         | 212,043 |  |  |   | 164,626 |  |  |   | 355,903 | 
|                              |  |                        |           |        |  |       |         |       |  |         |         |  |  |   |         |  |  |   |         | 
|Total contractual obligations |  | $                      | 1,542,614 |        |  | $     | 142,329 |       |  | $       | 465,839 |  |  | $ | 575,631 |  |  | $ | 358,815 | 
|                              |  |                        |           |        |  |       |         |       |  |         |         |  |  |   |         |  |  |   |         | 

Our commercial commitments consist of standby
letters of credit totaling approximately $7.6 million, of
which $1.3 million expires in 2002 and $6.3 million
expires in 2004.

Store Closures

On an on-going basis, store locations are
reviewed and analyzed based on several factors including market
saturation, store profitability, and store size and format. In
addition, we analyze sales trends and geographical and
competitive factors to determine the viability and future
profitability of our store locations. If a store location does
not meet our required projections, it is identified for closure.
As a result of our acquisitions over the last several years, we
have closed numerous locations as a result of store overlap with
previously existing

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store locations. To the extent possible, we
negotiate with the landlord to cancel the lease or we sublease
the store to a third party to reduce our future exposure.


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

As of February 3, 2002, we had a total of
245 store locations and service centers included in the
allowance for store closing costs. Of this total, 65 locations
were vacant, 173 locations were subleased and 7 locations were
identified for closure but remained open as of year-end. Future
rents will be incurred through the expiration of the
non-cancelable leases, the longest of which runs through March
2018. During fiscal 2002, we expect cash outflows related to
these store locations of approximately $7.0 million for
rent on vacant stores, related occupancy expenses, leasing
commissions and net shortfalls on cash rents from subleased
locations.

Activity in the provision for store closings and
the related store closing costs for the three fiscal years ended
February 3, 2002, including the PEP, is as follows ($ in
thousands):

|                                 |                                          |                                       |       |        |        |      |       |        |         |   |       |        |        |  
|-------------------------------- | ---------------------------------------- | ------------------------------------- | ----- | ------ | ------ | ---- | ----- | ------ | ------- | - | ----- | ------ | ------ | -
|                                 |                                          |                                      
|                                 |                                          | Fiscal year                          
|                                 |                                          |                                      
|                                 |                                          | 2001                                  |       | 2000   |        | 1999
|                                 |                                          |                                       |       |        |        |     
|Balance, beginning of year       |                                          | $                                     | 1,552 |        |        | $    | 4,802 |        |         | $ | 2,670 |       
|Store closing costs:             |                                          |                                       |       |        |        |      |       |        |         |   |       |       
|                                 | Store closing costs, gross               |                                       |       | 7,530  |        |      |       | 6,101  |         |   |       | 5,252  |       
|                                 | Adjustments to prior plans               |                                       |       | (1,536 | )      |      |       | (41    | )       |   |       | (387   | )     
|                                 | Revisions in estimates                   |                                       |       | 8,638  |        |      |       |       |         |   |       | 35     |       
|                                 |                                          |                                       |       |        |        |      |       |        |         |   |       |       
|                                 |                                          | Store closing costs, net              |       |        | 14,632 |      |       |        | 6,060   |   |       |        | 4,900  |  
|Purchase accounting adjustments: |                                          |                                       |       |        |        |      |       |        |         |   |       |       
|                                 | Big Wheel/ Rossi                         |                                       |       |       |        |      |       |       |         |   |       | 98     |       
|                                 | Als and Grand Auto Supply               |                                       |       |       |        |      |       | 2,744  |         |   |       | 4,080  |       
|                                 |                                          |                                       |       |        |        |      |       |        |         |   |       |       
|                                 |                                          | Total purchase accounting adjustments |       |        |       |      |       |        | 2,744   |   |       |        | 4,178  |  
|Payments:                        |                                          |                                       |       |        |        |      |       |        |         |   |       |       
|                                 | Rent expense, net of sublease recoveries |                                       |       | (6,051 | )      |      |       | (6,570 | )       |   |       | (3,518 | )     
|                                 | Occupancy and other expenses             |                                       |       | (2,839 | )      |      |       | (4,846 | )       |   |       | (3,150 | )     
|                                 | Sublease commissions and buyouts         |                                       |       | (523   | )      |      |       | (638   | )       |   |       | (278   | )     
|                                 |                                          |                                       |       |        |        |      |       |        |         |   |       |       
|                                 |                                          | Total payments                        |       |        | (9,413 | )    |       |        | (12,054 | ) |       |        | (6,946 | )
|                                 |                                          |                                       |       |        |        |      |       |        |         |   |       |       
|Balance, end of year             |                                          | $                                     | 6,771 |        |        | $    | 1,552 |        |         | $ | 4,802 |       
|                                 |                                          |                                       |       |        |        |      |       |        |         |   |       |       

During fiscal 2001, we recorded the following
charges: (1) gross store closing costs of $7.5 million
($6.8 million from the PEP) relating to the identification
of 46 stores for closure; (2) an adjustment to prior plans
of $1.5 million due to two stores previously identified for
closure under our PEP that were subsequently removed as they are
currently under contract for sale; and (3) revisions in
estimates of $8.6 million ($1.3 million for plan year
2000, $0.8 million for plan year 1999 and $6.5 million
for plan years prior to 1999)

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relating to existing closed stores that have had
longer than anticipated vacancy periods as a result of the
economic slowdown.


During fiscal 2000, we recorded the following
significant charges: (1) gross store closing costs of
$6.1 million relating to the identification of 24 stores
for closure ($3.7 million of which relates to a 1999
closure plan for our own stores that overlapped with the
acquired AGA stores); and (2) purchase accounting
adjustments of $2.7 million relating to a 1999 closure plan
of certain acquired AGA stores.

During fiscal 1999, we recorded the following
significant charges relating to the identification of
87 stores for closure: (1) gross store closing costs
of $5.3 million ($2.5 million of which relates to a
1999 closure plan for our own stores that overlapped with the
acquired AGA stores); (2) an adjustment to prior plans of
$0.4 million ($0.2 million for plan year 1998 and $0.2
million for plan year 1997) relating to costs for store closures
that were accrued in previously established plans but withdrawn
from our allowance 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; and
(3) purchase accounting adjustments of $4.2 million
relating to a 1999 closure plan of certain acquired AGA and Big
Wheel 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 |    |       
|                           |  |                               |    |       
|                           |  | Beginning                     |    | Stores |  | Plan       |    | Stores |  | Balance to
|Store Count by Fiscal Year |  | Balance                       |    | Added  |  | Amendments |    | Closed |  | be Closed 
|                           |  |                               |    |        |  |            |    |        |  |           
|1999                       |  |                               | 29 |        |  |            | 87 |        |  |            | (11 | ) |  |  | (77 | ) |  |  | 28 | 
|2000                       |  |                               | 28 |        |  |            | 24 |        |  |            | (1  | ) |  |  | (42 | ) |  |  | 9  | 
|2001                       |  |                               | 9  |        |  |            | 46 |        |  |            | (2  | ) |  |  | (46 | ) |  |  | 7  | 

At February 3, 2002, there were 7 stores
remaining to be closed under our store closing plans, comprised
of the following:

|                                      |  |              |    |            |  |        |    |            |  |  |     |   |  |  |   | 
|------------------------------------- |  | ------------ | -- | ---------- |  | ------ | -- | ---------- |  |  | --- | - |  |  | - | 
|                                      |  | Stores in    |    | Plan       |  | Stores |    | Balance to
|Store Count by Fiscal Year of Accrual |  | Closing Plan |    | Amendments |  | Closed |    | Be Closed 
|                                      |  |              |    |            |  |        |    |           
|1999                                  |  |              | 87 |            |  |        | (2 | )          |  |  | (84 | ) |  |  | 1 | 
|2000                                  |  |              | 24 |            |  |        |   |            |  |  | (24 | ) |  |  | 0 | 
|2001                                  |  |              | 46 |            |  |        | (2 | )          |  |  | (38 | ) |  |  | 6 | 
|                                      |  |              |    |            |  |        |    |            |  |  |     |   |  |  | 7 | 

Stores under Contract for Sale

During the first quarter of fiscal 2002, we
entered into an agreement to sell 13 stores in Texas. The stores
are being sold as they are in relatively remote locations that
do not allow us warehousing and distribution efficiencies. This
transaction is scheduled to close in the second quarter of
fiscal 2002 and is estimated to result in net proceeds of
approximately $4.0 million. This sale is not expected to
have a material effect on our results of operations in fiscal
2002.

Risk Factors Affecting Liquidity and Capital
Resources

Sales
Trends

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). In
addition, our business is affected by weather conditions. While
unusually severe or inclement weather tends to reduce sales, as
our customers are more likely to defer elective maintenance
during such periods, extremely hot and cold temperatures tend to
enhance sales by causing auto parts to fail and sales of
seasonal products to increase.

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

Considering our improved financial position, we
expect fiscal 2002 net sales to increase by approximately 4% to
6% on a same-store basis. However, any unusual weather
conditions, competitive pressures, or other adverse changes to
our business could materially affect our financial position and
results of operations.

Inflation

We do not believe our operations have been
materially affected by inflation. We believe that we will be
able to mitigate the effects of future merchandise cost
increases principally through economies of scale resulting from
increased volumes of purchases, selective forward buying and the
use of alternative suppliers.

Debt Covenant
Compliance

Our new senior credit facility contains negative
covenants and restrictions on actions by us and our subsidiaries
including, without limitation, restrictions on indebtedness,
liens, guarantee obligations, mergers, asset dispositions not in
the ordinary course of business, investments, loans, advances
and acquisitions, dividends and other restricted junior
payments, transactions with affiliates, change in business
conducted, and certain prepayments and amendments of
subordinated indebtedness. Our new revolving credit facility
requires that we meet certain financial covenants, ratios and
tests, including a maximum leverage ratio and a minimum interest
coverage ratio.

A breach of the covenants, ratios, or
restrictions contained in our new senior credit facility could
result in an event of default thereunder. Upon the occurrence of
such an event of default, the lenders under our new senior
credit facility could elect to declare all amounts outstanding
under the new senior credit facility, together with accrued
interest, to be immediately due and payable. If we were unable
to repay those amounts, the lenders could proceed against the
collateral granted to them to secure the indebtedness. If the
lenders under the new senior credit facility accelerate the
payment of the indebtedness, we cannot be assured that our
assets would be sufficient to repay in full that indebtedness,
which is secured by substantially all of our assets.

We are highly leveraged. The degree to which we
are leveraged could have important consequences on our ability
to obtain additional financing for working capital, capital
expenditures, acquisitions or general corporate purposes. A
substantial portion of our cash flow from operations must be
dedicated to the payment of interest on our indebtedness,
thereby reducing the funds available for other purposes. We are
substantially more leveraged than some of our competitors, which
might place us at a competitive disadvantage to those
competitors that have lower debt service obligations and
significantly greater operating and financial flexibility than
we do. We may not be able to adjust rapidly to changing market
conditions and we may be more vulnerable in the event of a
downturn in general economic conditions or in our business.

Interest
Rates

Financial market risks relating to our operations
result primarily from changes in interest rates. Interest earned
on our cash equivalents as well as interest paid on our variable
rate debt is sensitive to changes in interest rates. Our
variable rate debt relates to borrowings under our senior credit
facility, which is primarily vulnerable to movements in the
LIBOR rate. See item 7A. Quantitative and Qualitative
Disclosures about Market Risk below for a more detailed
explanation about our variable interest rate risk.

Critical Accounting Matters

Vendor Rebate
Programs

We enter into agreements with our vendors for
allowance and rebate programs. Amounts earned are either tied to
a contract period or recognized over the course of the fiscal
year, or tied to purchase volumes and

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recognized as inventory is sold. Sliding scale
rebates are often based on estimated purchase levels and
collection is often completed over extended time periods,
usually a fiscal quarter, but sometimes up to one year. In
exchange for rebates, we provide cooperative advertising and
other marketing related services to vendors. On an on-going
basis, we record allowances and monitor vendor relationships.


Inventories

Inventories are valued at the lower of cost or
market, cost being determined utilizing the last-in, first-out
(LIFO) method. The carrying value of the inventory exceeds
the current replacement cost primarily as a result of the
application of the LIFO inventory method of accounting. Our
costs of acquiring inventories through normal purchasing
activities have been decreasing in recent years as our increased
size has enabled us to take advantage of volume discounts and
lower product acquisition costs.

On a quarterly basis, we perform an analysis of
the net realizable value of inventory, after consideration of
expected disposal costs and normal profit margins, to determine
if the LIFO carrying value of the inventory is impaired. Should
an impairment be indicated, the carrying value of the inventory
would be reduced.

Periodic cycle counts are conducted at all store
locations and warehouses and a complete physical count is
conducted annually. A provision for shrink, based on a
percentage of net sales, is recorded every month and is adjusted
based upon the actual physical count results. Our actual shrink
expense has averaged approximately 1.7% of normalized net sales
over the last several years.

Deferred Tax
Asset

We have recorded deferred tax assets of
approximately $24.0 million as of February 3, 2002,
reflecting the benefit of federal and state tax loss
carryforwards approximating $65.2 million and
$37.5 million, which begin to expire in 2014 and 2007,
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 of the deferred tax assets
will be realized. Accordingly, we believe 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.

Legal
Matters

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.
Based on an internal review, we accrue reserves using our best
estimate of our probable and reasonably estimable contingent
liabilities. We do not believe that any of these legal claims,
individually or in the aggregate, will have a material adverse
effect upon our consolidated financial position, results of
operations or cash flows. However, if our estimates related to
these contingent liabilities are incorrect, the future results
of operations for any particular fiscal quarter or year could be
materially adversely affected.

Store Closing
Costs

If a store location does not meet our required
standards, it is designated for closure. We provide an allowance
for estimated costs and losses to be incurred in connection with
store closures. We establish this allowance based on an
assessment of market conditions for rents, and include
assumptions for vacancy periods and sublease rentals. In 2001,
we were required to make adjustments to the allowance because
actual market conditions were different than the assumptions we
made at the time we established the allowance. We may be
required to make further adjustments in future periods.

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Recent Accounting Pronouncements

In June 2001, the Financial Accounting Standards
Board (FASB or the Board) issued Statement of
Financial Accounting Standards No. 141 (SFAS 141),
Business Combinations, and No. 142 (SFAS 142),
Goodwill and Other Intangible Assets, collectively referred to
as the Standards. SFAS 141 supersedes
Accounting Principles Board Opinion
(APB) No. 16, Business Combinations. The
provisions of SFAS 141 (1) require that the purchase
method of accounting be used for all business combinations
initiated after June 30, 2001, (2) provide specific
criteria for the initial recognition and measurement of
intangible assets apart from goodwill, and (3) generally
require that unamortized negative goodwill be written off
immediately as an extraordinary gain instead of being deferred
and amortized. SFAS 141 also requires that upon adoption of
SFAS 142 we reclassify the carrying amounts of certain
intangible assets into or out of goodwill, based on certain
criteria. SFAS 142 supersedes APB 17, Intangible
Assets, and is effective for fiscal years beginning after
December 15, 2001. SFAS 142 primarily addresses the
accounting for goodwill and intangible assets subsequent to
their initial recognition. The provisions of SFAS 142:
(1) prohibit the amortization of goodwill and
indefinite-lived intangible assets, (2) require that
goodwill and indefinite-lived intangibles assets be tested
annually for impairment (and in interim periods if certain
events occur indicating that the carrying value of goodwill
and/or indefinite-lived intangible assets may be impaired),
(3) require that reporting units be identified for the
purpose of assessing potential future impairments of goodwill,
and (4) remove the forty-year limitation on the
amortization period of intangible assets that have finite lives.

We will adopt the provisions of SFAS 142 in
our first quarter ended May 5, 2002. We are in the process
of preparing for our adoption of SFAS 142 and are making
the determinations as to what our reporting units are and what
amounts of goodwill, intangible assets, other assets, and
liabilities should be allocated to those reporting units. We
expect that we will no longer record approximately
$4.8 million of amortization expense relating to our
existing goodwill. Our intangible assets primarily consist of
favorable leasehold interests. As such, FAS 142 did not
impact the useful lives assigned to our intangible assets.

SFAS 142 requires that goodwill be tested
annually for impairment using a two-step process. The first step
is to identify a potential impairment and, in transition, this
step must be measured as of the beginning of the fiscal year.
However, a company has six months from the date of adoption to
complete the first step. Accordingly, we expect to complete that
first step of the goodwill impairment test before the end of the
second quarter of 2002. The second step of the goodwill
impairment test measures the amount of the impairment loss
(measured as of the beginning of the year of adoption), if any,
and must be completed by the end of our fiscal year. Intangible
assets deemed to have an indefinite life will be tested for
impairment using a one-step process which compares the fair
value to the carrying amount of the asset as of the beginning of
the fiscal year, and pursuant to the requirements of
SFAS 142 will be completed during the first quarter of
2002. Any impairment loss resulting from the transitional
impairment tests will be reflected as the cumulative effect of a
change in accounting principle. We have not yet determined what
effect these impairment tests will have on our earnings and
financial position.

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




Item 7A.     Quantitative
and Qualitative Disclosures about Market Risk

Financial market risks relating to our operations
result primarily from changes in interest rates. We hold no
securities for purposes of trading. Interest earned on our cash
equivalents as well as interest paid on our variable rate debt
is sensitive to changes in interest rates. Our variable rate
debt relates to borrowings under

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our senior credit facility, which is primarily
vulnerable to movements in the LIBOR rate. Our variable and
fixed rate debt at February 3, 2002 consisted of the
following ($ in thousands):


|                                  |  |         |         |          |  |          |      |    |  |         
|--------------------------------- |  | ------- | ------- | -------- |  | -------- | ---- | -- |  | --------
|                                  |  |         |         | Average  |  | Fixed   
|                                  |  |         |         | Interest |  | or      
|Debt Facility                     |  | Balance |         | Rate     |  | Variable
|                                  |  |         |         |          |  |         
|Senior credit facility  term     |  | $       | 170,000 |          |  |          | 5.7  | %  |  | Variable
|Senior credit facility  revolver |  |         | 57,000  |          |  |          | 8.5  | %  |  | Variable
|12% Senior Notes                  |  |         | 275,416 |          |  |          | 12.5 | %* |  | Fixed   
|11% Senior Subordinated Notes     |  |         | 81,250  |          |  |          | 11.0 | %  |  | Fixed   
|7% convertible subordinated notes |  |         | 49,100  |          |  |          | 7.0  | %  |  | Fixed   
|Capital leases                    |  |         | 38,077  |          |  |          | 13.9 | %  |  | Fixed   
|                                  |  |         |         |          |  |          |      |    |  |         
|Total debt                        |  | $       | 670,843 |          |  |          |      |    |  |         
|                                  |  |         |         |          |  |          |      |    |  |         



---



|  |                                                                                                                                                                              
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|* | The coupon rate of these notes is 12%, however
    the effective interest rate is 12.5% due to the amortization of
    a discount of approximately $4.7 million on the notes.

At the end of fiscal 2001, 34% of our debt had
variable interest rates and 66% had fixed interest rates. With
$227.0 million in variable rate debt outstanding, a 1%
change in the LIBOR rate to which this variable rate debt is
tied would result in a $2.3 million change in our annual
interest expense. This estimate assumes that our debt balances
remains constant for an annual period and the interest rate
change occurs at the beginning of the period.

During February 2002, we entered into an interest
rate swap contract to convert $100.0 million of our 12%
Senior Notes to a floating rate, set quarterly, equal to the
3 month LIBOR + 760 basis points. As such, based
on our debt balances at February  3, 2002, 49% of our debt
is at variable interest rates and 51% of our debt is at fixed
interest rates. The hedge is considered to qualify as a
fair value hedge; accordingly, the fair value of the
derivative and changes in the fair value of the underlying debt
will be reported on the balance sheet. Based upon our assessment
of effectiveness of the hedge, changes in the fair value of this
derivative and the underlying debt are not expected to result in
a material impact on net income.

Our cost of funds is affected by a variety of
general economic conditions, including the level and volatility
of interest rates. We try to manage this interest rate risk
through the use of fixed and variable rate debt and the above
mentioned interest rate swap. Currently we have no plans to
refinance our existing debt structure; however a negative change
in our debt rating could limit our ability to acquire needed
funding or, at a minimum, would result in an increase in our
cost of funds.




Item 8.     Consolidated
Financial Statements and Supplementary Data

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Report of Independent Accountants

To the Board of Directors and Stockholders

of CSK Auto
Corporation:


In our opinion, the accompanying consolidated
balance sheets and the related consolidated statements of
operations, stockholders equity and cash flows present
fairly, in all material respects, the financial position of CSK
Auto Corporation and its subsidiaries at February 3, 2002
and February 4, 2001, and the results of their operations
and their cash flows for each of the three fiscal years in the
period ended February 3, 2002 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

April 16, 2002


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CSK AUTO CORPORATION AND
SUBSIDIARIES

CONSOLIDATED STATEMENTS OF
OPERATIONS

|                                                                                                                  |                                                                                                     |                                                 |           |             |   |             |           |            |  |   |           |            |  
|----------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------- | ----------------------------------------------- | --------- | ----------- | - | ----------- | --------- | ---------- |  | - | --------- | ---------- | -
|                                                                                                                  |                                                                                                     |                                                
|                                                                                                                  |                                                                                                     | Fiscal Year Ended                              
|                                                                                                                  |                                                                                                     |                                                
|                                                                                                                  |                                                                                                     | February 3,                                     |           | February 4, |   | January 30,
|                                                                                                                  |                                                                                                     | 2002                                            |           | 2001        |   | 2000       
|                                                                                                                  |                                                                                                     |                                                 |           |             |   |            
|                                                                                                                  |                                                                                                     |                                                
|                                                                                                                  |                                                                                                     | (in thousands, except share and per share data)
|Net sales                                                                                                         |                                                                                                     | $                                               | 1,438,585 |             |   | $           | 1,452,109 |            |  | $ | 1,231,455 |           
|Cost of sales                                                                                                     |                                                                                                     |                                                 | 790,585   |             |   |             | 769,043   |            |  |   | 636,239   |           
|                                                                                                                  |                                                                                                     |                                                 |           |             |   |             |           |            |  |   |           |           
|Gross profit                                                                                                      |                                                                                                     |                                                 | 648,000   |             |   |             | 683,066   |            |  |   | 595,216   |           
|Other costs and expenses:                                                                                         |                                                                                                     |                                                 |           |             |   |             |           |            |  |   |           |           
|                                                                                                                  | Operating and administrative                                                                        |                                                 |           | 580,134     |   |             |           | 592,691    |  |   |           | 501,527    |  
|                                                                                                                  | Store closing costs and other restructuring costs                                                   |                                                 |           | 22,392      |   |             |           | 6,060      |  |   |           | 4,900      |  
|                                                                                                                  | Legal settlement                                                                                    |                                                 |           | 2,000       |   |             |           | 8,800      |  |   |           |           |  
|                                                                                                                  | Goodwill amortization                                                                               |                                                 |           | 4,807       |   |             |           | 4,799      |  |   |           | 1,941      |  
|                                                                                                                  |                                                                                                     |                                                 |           |             |   |             |           |            |  |   |           |           
|Operating profit                                                                                                  |                                                                                                     |                                                 | 38,667    |             |   |             | 70,716    |            |  |   | 86,848    |           
|Interest expense                                                                                                  |                                                                                                     |                                                 | 61,608    |             |   |             | 62,355    |            |  |   | 41,300    |           
|Equity in loss of joint venture                                                                                   |                                                                                                     |                                                 |          |             |   |             | 3,168     |            |  |   |          |           
|                                                                                                                  |                                                                                                     |                                                 |           |             |   |             |           |            |  |   |           |           
|Income (loss) before income taxes, extraordinary
    loss and cumulative effect of change in accounting principle |                                                                                                     |                                                 | (22,941   | )           |   |             | 5,193     |            |  |   | 45,548    |           
|Income tax expense (benefit)                                                                                      |                                                                                                     |                                                 | (8,886    | )           |   |             | 193       |            |  |   | 17,436    |           
|                                                                                                                  |                                                                                                     |                                                 |           |             |   |             |           |            |  |   |           |           
|Income (loss) before extraordinary loss and
    cumulative effect of change in accounting principle               |                                                                                                     |                                                 | (14,055   | )           |   |             | 5,000     |            |  |   | 28,112    |           
|Extraordinary loss, net of $1,964 of income taxes                                                                 |                                                                                                     |                                                 | (3,137    | )           |   |             |          |            |  |   |          |           
|                                                                                                                  |                                                                                                     |                                                 |           |             |   |             |           |            |  |   |           |           
|Income (loss) before cumulative effect of change
    in accounting principle                                      |                                                                                                     |                                                 | (17,192   | )           |   |             | 5,000     |            |  |   | 28,112    |           
|Cumulative effect of change in accounting
    principle, net of $468 of income taxes                              |                                                                                                     |                                                 |          |             |   |             |          |            |  |   | (741      | )         
|                                                                                                                  |                                                                                                     |                                                 |           |             |   |             |           |            |  |   |           |           
|Net income (loss)                                                                                                 |                                                                                                     | $                                               | (17,192   | )           |   | $           | 5,000     |            |  | $ | 27,371    |           
|                                                                                                                  |                                                                                                     |                                                 |           |             |   |             |           |            |  |   |           |           
|Basic earnings (loss) per share:                                                                                  |                                                                                                     |                                                 |           |             |   |             |           |            |  |   |           |           
|                                                                                                                  | Income (loss) before extraordinary loss and
    cumulative effect of change in accounting principle |                                                 | $         | (0.50       | ) |             | $         | 0.18       |  |   | $         | 1.01       |  
|                                                                                                                  | Extraordinary loss, net of income taxes                                                             |                                                 |           | (0.11       | ) |             |           |           |  |   |           |           |  
|                                                                                                                  |                                                                                                     |                                                 |           |             |   |             |           |            |  |   |           |           
|                                                                                                                  | Income (loss) before cumulative effect of change
    in accounting principle                        |                                                 |           | (0.61       | ) |             |           | 0.18       |  |   |           | 1.01       |  
|                                                                                                                  | Cumulative effect of change in accounting
    principle, net of income taxes                        |                                                 |           |            |   |             |           |           |  |   |           | (0.03      | )
|                                                                                                                  |                                                                                                     |                                                 |           |             |   |             |           |            |  |   |           |           
|                                                                                                                  | Net income (loss) per share                                                                         |                                                 | $         | (0.61       | ) |             | $         | 0.18       |  |   | $         | 0.98       |  
|                                                                                                                  |                                                                                                     |                                                 |           |             |   |             |           |            |  |   |           |           
|                                                                                                                  | Shares used in computing per share amounts                                                          |                                                 |           | 28,390,582  |   |             |           | 27,839,348 |  |   |           | 27,815,160 |  
|                                                                                                                  |                                                                                                     |                                                 |           |             |   |             |           |            |  |   |           |           
|Diluted earnings (loss) per share:                                                                                |                                                                                                     |                                                 |           |             |   |             |           |            |  |   |           |           
|                                                                                                                  | Income (loss) before extraordinary loss and
    cumulative effect of change in accounting principle |                                                 | $         | (0.50       | ) |             | $         | 0.18       |  |   | $         | 0.98       |  
|                                                                                                                  | Extraordinary loss, net of income taxes                                                             |                                                 |           | (0.11       | ) |             |           |           |  |   |           |           |  
|                                                                                                                  |                                                                                                     |                                                 |           |             |   |             |           |            |  |   |           |           
|                                                                                                                  | Income (loss) before cumulative effect of change
    in accounting principle                        |                                                 |           | (0.61       | ) |             |           | 0.18       |  |   |           | 0.98       |  
|                                                                                                                  | Cumulative effect of change in accounting
    principle, net of income taxes                        |                                                 |           |            |   |             |           |           |  |   |           | (0.02      | )
|                                                                                                                  |                                                                                                     |                                                 |           |             |   |             |           |            |  |   |           |           
|                                                                                                                  | Net income (loss) per share                                                                         |                                                 | $         | (0.61       | ) |             | $         | 0.18       |  |   | $         | 0.96       |  
|                                                                                                                  |                                                                                                     |                                                 |           |             |   |             |           |            |  |   |           |           
|                                                                                                                  | Shares used in computing per share amounts                                                          |                                                 |           | 28,390,582  |   |             |           | 27,839,348 |  |   |           | 28,626,776 |  
|                                                                                                                  |                                                                                                     |                                                 |           |             |   |             |           |            |  |   |           |           

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

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CSK AUTO CORPORATION AND
SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

|                                                                      |                                                                                                                                                                                         |                                            |         |             |           |   |         |          |           | 
|--------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ------- | ----------- | --------- | - | ------- | -------- | --------- | 
|                                                                      |                                                                                                                                                                                         | February 3,                                |         | February 4,
|                                                                      |                                                                                                                                                                                         | 2002                                       |         | 2001       
|                                                                      |                                                                                                                                                                                         |                                            |         |            
|                                                                      |                                                                                                                                                                                         |                                           
|                                                                      |                                                                                                                                                                                         | (in thousands, except share data)         
|ASSETS                                                               
|Cash and cash equivalents                                             |                                                                                                                                                                                         | $                                          | 16,084  |             |           | $ | 11,131  |         
|Receivables, net of allowances of $5,230 and
    $4,236, respectively |                                                                                                                                                                                         |                                            | 84,793  |             |           |   | 69,726  |         
|Inventories                                                           |                                                                                                                                                                                         |                                            | 619,629 |             |           |   | 621,814 |         
|Deferred income taxes                                                 |                                                                                                                                                                                         |                                            | 2,718   |             |           |   | 3,133   |         
|Assets held for sale                                                  |                                                                                                                                                                                         |                                            | 1,710   |             |           |   | 1,497   |         
|Prepaid expenses and other current assets                             |                                                                                                                                                                                         |                                            | 19,847  |             |           |   | 19,169  |         
|                                                                      |                                                                                                                                                                                         |                                            |         |             |           |   |         |         
|                                                                      |                                                                                                                                                                                         | Total current assets                       |         |             | 744,781   |   |         |          | 726,470   | 
|                                                                      |                                                                                                                                                                                         |                                            |         |             |           |   |         |         
|Property and equipment, net                                           |                                                                                                                                                                                         |                                            | 150,381 |             |           |   | 175,358 |         
|Leasehold interests, net                                              |                                                                                                                                                                                         |                                            | 16,581  |             |           |   | 20,244  |         
|Goodwill, net                                                         |                                                                                                                                                                                         |                                            | 126,846 |             |           |   | 130,544 |         
|Deferred income taxes                                                 |                                                                                                                                                                                         |                                            | 739     |             |           |   |        |         
|Other assets, net                                                     |                                                                                                                                                                                         |                                            | 29,249  |             |           |   | 14,190  |         
|                                                                      |                                                                                                                                                                                         |                                            |         |             |           |   |         |         
|                                                                      |                                                                                                                                                                                         | Total assets                               |         | $           | 1,068,577 |   |         | $        | 1,066,806 | 
|                                                                      |                                                                                                                                                                                         |                                            |         |             |           |   |         |         
|LIABILITIES AND STOCKHOLDERS
    EQUITY                             
|Accounts payable                                                      |                                                                                                                                                                                         | $                                          | 157,284 |             |           | $ | 189,308 |         
|Accrued payroll and related expenses                                  |                                                                                                                                                                                         |                                            | 33,055  |             |           |   | 27,673  |         
|Accrued expenses and other current liabilities                        |                                                                                                                                                                                         |                                            | 44,529  |             |           |   | 42,448  |         
|Current maturities of amounts due under senior
    credit facility    |                                                                                                                                                                                         |                                            |        |             |           |   | 54,640  |         
|Current maturities of capital lease obligations                       |                                                                                                                                                                                         |                                            | 10,999  |             |           |   | 10,878  |         
|                                                                      |                                                                                                                                                                                         |                                            |         |             |           |   |         |         
|                                                                      |                                                                                                                                                                                         | Total current liabilities                  |         |             | 245,867   |   |         |          | 324,947   | 
|                                                                      |                                                                                                                                                                                         |                                            |         |             |           |   |         |         
|Amounts due under senior credit facility                              |                                                                                                                                                                                         |                                            | 227,000 |             |           |   | 471,840 |         
|Obligations under 12% Senior Notes                                    |                                                                                                                                                                                         |                                            | 275,416 |             |           |   |        |         
|Obligations under 11% Senior Subordinated Notes                       |                                                                                                                                                                                         |                                            | 81,250  |             |           |   | 81,250  |         
|Convertible 7% Subordinated Notes                                     |                                                                                                                                                                                         |                                            | 49,100  |             |           |   |        |         
|Obligations under capital leases                                      |                                                                                                                                                                                         |                                            | 27,078  |             |           |   | 29,273  |         
|Deferred income taxes                                                 |                                                                                                                                                                                         |                                            |        |             |           |   | 10,544  |         
|Other liabilities                                                     |                                                                                                                                                                                         |                                            | 8,580   |             |           |   | 9,339   |         
|                                                                      |                                                                                                                                                                                         |                                            |         |             |           |   |         |         
|                                                                      |                                                                                                                                                                                         | Total non-current liabilities              |         |             | 668,424   |   |         |          | 602,246   | 
|                                                                      |                                                                                                                                                                                         |                                            |         |             |           |   |         |         
|Commitments and contingencies                                         |                                                                                                                                                                                         |                                            |         |             |           |   |         |         
|Stockholders equity:                                                 |                                                                                                                                                                                         |                                            |         |             |           |   |         |         
|                                                                      | Common stock, $0.01 par value, 50,000,000 shares
    authorized, 32,370,746 and 27,841,178 shares issued and
    outstanding at February 3, 2002 and February 4, 2001,
    respectively |                                            |         | 324         |           |   |         | 278      |          
|                                                                      | Additional paid-in capital                                                                                                                                                              |                                            |         | 322,667     |           |   |         | 291,063  |          
|                                                                      | Stockholder receivable                                                                                                                                                                  |                                            |         | (686        | )         |   |         | (745     | )        
|                                                                      | Deferred compensation                                                                                                                                                                   |                                            |         |            |           |   |         | (156     | )        
|                                                                      | Accumulated deficit                                                                                                                                                                     |                                            |         | (168,019    | )         |   |         | (150,827 | )        
|                                                                      |                                                                                                                                                                                         |                                            |         |             |           |   |         |         
|                                                                      |                                                                                                                                                                                         | Total stockholders equity                 |         |             | 154,286   |   |         |          | 139,613   | 
|                                                                      |                                                                                                                                                                                         |                                            |         |             |           |   |         |         
|                                                                      |                                                                                                                                                                                         | Total liabilities and stockholders equity |         | $           | 1,068,577 |   |         | $        | 1,066,806 | 
|                                                                      |                                                                                                                                                                                         |                                            |         |             |           |   |         |         

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

39



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##### Table of Contents



CSK AUTO CORPORATION AND
SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS
EQUITY

|                                               |  |                                   |            |            |  |             |     |            |  |              |         |         |  |        |        |   |  |   |      |   |  |   |          |   |  |   |         |  
|---------------------------------------------- |  | --------------------------------- | ---------- | ---------- |  | ----------- | --- | ---------- |  | ------------ | ------- | ------- |  | ------ | ------ | - |  | - | ---- | - |  | - | -------- | - |  | - | ------- | -
|                                               |  |                                   |            |            |  |             |     |            |  |              |         |        
|                                               |  | Common Stock                      |            | Additional |  |             |     |            |  |              |         |        
|                                               |  |                                   |            | Paid-in    |  | Stockholder |     | Deferred   |  | Accumulated  |         | Total  
|                                               |  | Shares                            |            | Amount     |  | Capital     |     | Receivable |  | Compensation |         | Deficit |  | Equity
|                                               |  |                                   |            |            |  |             |     |            |  |              |         |         |  |       
|                                               |  |                                  
|                                               |  | (in thousands, except share data)
|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 |  
|Amortization of deferred compensation          |  |                                   |           |            |  |             |    |            |  |              |        |         |  |        |       |   |  |   | 156  |   |  |   |         |   |  |   | 156     |  
|Conversion of notes                            |  |                                   | 4,524,886  |            |  |             | 45  |            |  |              | 30,701  |         |  |        |       |   |  |   |     |   |  |   |         |   |  |   | 30,746  |  
|Issuances of restricted stock                  |  |                                   | 3,764      |            |  |             |    |            |  |              |        |         |  |        |       |   |  |   |     |   |  |   |         |   |  |   |        |  
|Beneficial conversion feature of note          |  |                                   |           |            |  |             |    |            |  |              | 900     |         |  |        |       |   |  |   |     |   |  |   |         |   |  |   | 900     |  
|Recovery of stockholder receivable             |  |                                   |           |            |  |             |    |            |  |              |        |         |  |        | 59     |   |  |   |     |   |  |   |         |   |  |   | 59      |  
|Exercise of options                            |  |                                   | 918        |            |  |             | 1   |            |  |              | 3       |         |  |        |       |   |  |   |     |   |  |   |         |   |  |   | 4       |  
|Net loss                                       |  |                                   |           |            |  |             |    |            |  |              |        |         |  |        |       |   |  |   |     |   |  |   | (17,192  | ) |  |   | (17,192 | )
|                                               |  |                                   |            |            |  |             |     |            |  |              |         |         |  |        |        |   |  |   |      |   |  |   |          |   |  |   |         |  
|Balances at February 3, 2002                   |  |                                   | 32,370,746 |            |  | $           | 324 |            |  | $            | 322,667 |         |  | $      | (686   | ) |  | $ |     |   |  | $ | (168,019 | ) |  | $ | 154,286 |  
|                                               |  |                                   |            |            |  |             |     |            |  |              |         |         |  |        |        |   |  |   |      |   |  |   |          |   |  |   |         |  

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

40



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##### Table of Contents



CSK AUTO CORPORATION AND
SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH
FLOWS

|                                                           |                                                                           |                                                                                                 |                                                                                 |                                                                     |   |             |         |          |   |        |         |          |   |        |          |  
|---------------------------------------------------------- | ------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------- | ------------------------------------------------------------------- | - | ----------- | ------- | -------- | - | ------ | ------- | -------- | - | ------ | -------- | -
|                                                           |                                                                           |                                                                                                
|                                                           |                                                                           | Fiscal Year Ended                                                                              
|                                                           |                                                                           |                                                                                                
|                                                           |                                                                           | February 3,                                                                                     |                                                                                 | February 4,                                                         |   | January 30,
|                                                           |                                                                           | 2002                                                                                            |                                                                                 | 2001                                                                |   | 2000       
|                                                           |                                                                           |                                                                                                 |                                                                                 |                                                                     |   |            
|                                                           |                                                                           |                                                                                                
|                                                           |                                                                           | (in thousands)                                                                                 
|Cash flows provided by (used in) operating
    activities: |                                                                           |                                                                                                 |                                                                                 |                                                                     |   |             |         |          |   |        |         |         
|                                                           | Net income (loss)                                                         |                                                                                                 | $                                                                               | (17,192                                                             | ) |             | $       | 5,000    |   |        | $       | 27,371   |  
|                                                           |                                                                           | Adjustments to reconcile net income to net cash
    provided by (used in) operating activities: |                                                                                 |                                                                     |   |             |         |          |   |        |         |          |   |       
|                                                           |                                                                           |                                                                                                 | Depreciation and amortization of property and
    equipment                     |                                                                     |   | 32,799      |         |          |   | 33,120 |         |          |   | 26,066 |         
|                                                           |                                                                           |                                                                                                 | Amortization of deferred financing costs                                        |                                                                     |   | 3,741       |         |          |   | 2,224  |         |          |   | 1,406  |         
|                                                           |                                                                           |                                                                                                 | Amortization of other items                                                     |                                                                     |   | 8,347       |         |          |   | 7,707  |         |          |   | 3,309  |         
|                                                           |                                                                           |                                                                                                 | Accretion of discount                                                           |                                                                     |   | 98          |         |          |   |       |         |          |   |       |         
|                                                           |                                                                           |                                                                                                 | Provision for write down of inventory                                           |                                                                     |   | 17,292      |         |          |   |       |         |          |   |       |         
|                                                           |                                                                           |                                                                                                 | Write downs on disposal of fixed and other assets                               |                                                                     |   | 8,133       |         |          |   |       |         |          |   |       |         
|                                                           |                                                                           |                                                                                                 | Tax benefit relating to stock option exercises                                  |                                                                     |   |            |         |          |   |       |         |          |   | 393    |         
|                                                           |                                                                           |                                                                                                 | Equity in loss of joint venture                                                 |                                                                     |   |            |         |          |   | 3,168  |         |          |   |       |         
|                                                           |                                                                           |                                                                                                 | Extraordinary loss on early retirement of debt,
    net of income taxes         |                                                                     |   | 3,137       |         |          |   |       |         |          |   |       |         
|                                                           |                                                                           |                                                                                                 | Cumulative effect of change in accounting
    principle, net of income taxes    |                                                                     |   |            |         |          |   |       |         |          |   | 741    |         
|                                                           |                                                                           |                                                                                                 | Deferred income taxes                                                           |                                                                     |   | (8,905      | )       |          |   | 193    |         |          |   | 15,637 |         
|                                                           |                                                                           |                                                                                                 | Change in operating assets and liabilities, net
    of effects of acquisitions: |                                                                     |   |             |         |          |   |        |         |          |   |        |         
|                                                           |                                                                           |                                                                                                 |                                                                                 | Receivables                                                         |   |             | (15,067 | )        |   |        | (11,915 | )        |   |        | (5,812   | )
|                                                           |                                                                           |                                                                                                 |                                                                                 | Inventories                                                         |   |             | (16,316 | )        |   |        | (7,577  | )        |   |        | (93,567  | )
|                                                           |                                                                           |                                                                                                 |                                                                                 | Prepaid expenses and other current assets                           |   |             | (771    | )        |   |        | (208    | )        |   |        | 7,240    |  
|                                                           |                                                                           |                                                                                                 |                                                                                 | Accounts payable                                                    |   |             | (32,024 | )        |   |        | 25,172  |          |   |        | 11,203   |  
|                                                           |                                                                           |                                                                                                 |                                                                                 | Accrued payroll, accrued expenses and other
    current liabilities |   |             | 9,240   |          |   |        | (23,332 | )        |   |        | 2,793    |  
|                                                           |                                                                           |                                                                                                 |                                                                                 | Other operating activities                                          |   |             | (426    | )        |   |        | (1,083  | )        |   |        | (811     | )
|                                                           |                                                                           |                                                                                                 |                                                                                 |                                                                     |   |             |         |          |   |        |         |         
|                                                           |                                                                           |                                                                                                 |                                                                                 | Net cash provided by (used in) operating
    activities             |   |             | (7,914  | )        |   |        | 32,469  |          |   |        | (4,031   | )
|                                                           |                                                                           |                                                                                                 |                                                                                 |                                                                     |   |             |         |          |   |        |         |         
|Cash flows provided by (used in) investing
    activities: |                                                                           |                                                                                                 |                                                                                 |                                                                     |   |             |         |          |   |        |         |         
|                                                           | Business acquisitions, net of cash acquired                               |                                                                                                 |                                                                                 |                                                                    |   |             |         | (1,182   | ) |        |         | (218,201 | )
|                                                           | Capital expenditures                                                      |                                                                                                 |                                                                                 | (12,200                                                             | ) |             |         | (32,080  | ) |        |         | (41,358  | )
|                                                           | Expenditures for assets held for sale                                     |                                                                                                 |                                                                                 | (16                                                                 | ) |             |         | (5       | ) |        |         | (7,400   | )
|                                                           | Proceeds from sale of property and equipment and
    assets held for sale |                                                                                                 |                                                                                 | 5,454                                                               |   |             |         | 5,029    |   |        |         | 8,760    |  
|                                                           | Investment in joint venture                                               |                                                                                                 |                                                                                 |                                                                    |   |             |         | (3,168   | ) |        |         |         |  
|                                                           | Other investing activities                                                |                                                                                                 |                                                                                 | (3,381                                                              | ) |             |         | (3,136   | ) |        |         | (2,022   | )
|                                                           |                                                                           |                                                                                                 |                                                                                 |                                                                     |   |             |         |          |   |        |         |         
|                                                           |                                                                           |                                                                                                 |                                                                                 | Net cash used in investing activities                               |   |             | (10,143 | )        |   |        | (34,542 | )        |   |        | (260,221 | )
|                                                           |                                                                           |                                                                                                 |                                                                                 |                                                                     |   |             |         |          |   |        |         |         
|Cash flows provided by (used in) financing
    activities: |                                                                           |                                                                                                 |                                                                                 |                                                                     |   |             |         |          |   |        |         |         
|                                                           | Borrowings under senior credit facility                                   |                                                                                                 |                                                                                 | 538,000                                                             |   |             |         | 309,500  |   |        |         | 502,000  |  
|                                                           | Payments under senior credit facility                                     |                                                                                                 |                                                                                 | (837,480                                                            | ) |             |         | (291,840 | ) |        |         | (218,340 | )
|                                                           | Payment of debt issuance costs                                            |                                                                                                 |                                                                                 | (22,019                                                             | ) |             |         | (1,815   | ) |        |         | (4,730   | )
|                                                           | Issuance of convertible subordinated notes                                |                                                                                                 |                                                                                 | 80,000                                                              |   |             |         |         |   |        |         |         |  
|                                                           | Borrowings under 12% Senior Notes                                         |                                                                                                 |                                                                                 | 275,317                                                             |   |             |         |         |   |        |         |         |  
|                                                           | Payments on capital lease obligations                                     |                                                                                                 |                                                                                 | (10,149                                                             | ) |             |         | (10,934  | ) |        |         | (10,905  | )
|                                                           | Advances to stockholders                                                  |                                                                                                 |                                                                                 |                                                                    |   |             |         | (189     | ) |        |         |         |  
|                                                           | Recovery of stockholder receivable                                        |                                                                                                 |                                                                                 | 29                                                                  |   |             |         | 28       |   |        |         | 434      |  
|                                                           | Exercise of stock options                                                 |                                                                                                 |                                                                                 | 4                                                                   |   |             |         | 59       |   |        |         | 791      |  
|                                                           | Other financing activities                                                |                                                                                                 |                                                                                 | (692                                                                | ) |             |         | (3,367   | ) |        |         | (726     | )
|                                                           |                                                                           |                                                                                                 |                                                                                 |                                                                     |   |             |         |          |   |        |         |         
|                                                           |                                                                           |                                                                                                 |                                                                                 | Net cash provided by financing activities                           |   |             | 23,010  |          |   |        | 1,442   |          |   |        | 268,524  |  
|                                                           |                                                                           |                                                                                                 |                                                                                 |                                                                     |   |             |         |          |   |        |         |         
|                                                           |                                                                           |                                                                                                 |                                                                                 | Net increase (decrease) in cash and cash
    equivalents            |   |             | 4,953   |          |   |        | (631    | )        |   |        | 4,272    |  
|Cash and cash equivalents, beginning of period             |                                                                           |                                                                                                 | 11,131                                                                          |                                                                     |   |             | 11,762  |          |   |        | 7,490   |         
|                                                           |                                                                           |                                                                                                 |                                                                                 |                                                                     |   |             |         |          |   |        |         |         
|Cash and cash equivalents, end of period                   |                                                                           | $                                                                                               | 16,084                                                                          |                                                                     |   | $           | 11,131  |          |   | $      | 11,762  |         
|                                                           |                                                                           |                                                                                                 |                                                                                 |                                                                     |   |             |         |          |   |        |         |         
|Supplemental Disclosures of Cash Flow
    Information      |                                                                           |                                                                                                 |                                                                                 |                                                                     |   |             |         |          |   |        |         |         
|Cash paid during the year for:                             |                                                                           |                                                                                                 |                                                                                 |                                                                     |   |             |         |          |   |        |         |         
|                                                           | Interest                                                                  |                                                                                                 |                                                                                 | 56,776                                                              |   |             |         | 61,463   |   |        |         | 36,741   |  
|                                                           | Income taxes                                                              |                                                                                                 |                                                                                 |                                                                    |   |             |         | 658      |   |        |         | 6,776    |  
|Non-cash investing and financing activities:               |                                                                           |                                                                                                 |                                                                                 |                                                                     |   |             |         |          |   |        |         |         
|                                                           | Fixed assets acquired under capital leases                                |                                                                                                 |                                                                                 | 8,075                                                               |   |             |         | 13,462   |   |        |         | 17,178   |  
|                                                           | Conversion of subordinated debt to equity
    (including interest)        |                                                                                                 |                                                                                 | 30,746                                                              |   |             |         |         |   |        |         |         |  
|                                                           | Beneficial conversion feature of note                                     |                                                                                                 |                                                                                 | 900                                                                 |   |             |         |         |   |        |         |         |  

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

41



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##### Table of Contents



CSK AUTO CORPORATION AND
SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

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

Auto is a specialty retailer of automotive
aftermarket parts and accessories. At February 3, 2002, the
Company operated 1,130 stores in 19 states as a fully integrated
company and single business segment under three brand names:
Checker Auto Parts, founded in 1969 and operating in the
Southwestern, Rocky Mountain and Northern Plains states and
Hawaii; Schucks Auto Supply, founded in 1917 and operating
in the Pacific Northwest and Alaska; and Kragen Auto Parts,
founded in 1947 and operating primarily in California.

Note 1  Summary of Significant
Accounting Policies

Principles of
Consolidation

The consolidated financial statements include the
accounts of the Company and Auto for all years presented. In
addition, the consolidated financial statements include the
accounts of the following wholly-owned subsidiaries of Auto for
the periods indicated:



| |   |                                                                                                                                                                                                                                
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Automotive Information Systems, Inc.
    (AIS) from September 7, 1999, the date of
    acquisition. As more fully explained in Note 4, AIS is a
    leading provider of diagnostic vehicle repair information.               
|
| |  | CSKAUTO.COM, Inc. (Auto.com) from
    February 24, 1999, the date of formation. Auto.com operated
    the Companys Internet web site that sells automotive
    aftermarket parts and accessories, but is currently inactive.

As more fully described in Note 3, Auto also
participated in a joint venture in which it had less than a 50%
ownership interest. The investment in joint venture was
accounted for by the equity method. All significant intercompany
balances and transactions have been eliminated in consolidation.

Basis of
Presentation

As more fully explained in Note 8, bank
borrowings by Auto are guaranteed by Corporate, which guarantee
is full and unconditional. Auto.com and AIS (collectively, the
Subsidiary Guarantors) have also jointly and
severally guaranteed such debt on a full and unconditional
basis. Corporate is a holding company and has no other direct
subsidiaries or independent assets or operations. The Subsidiary
Guarantors are minor subsidiaries and have no significant
independent operations. Summarized financial statements and
other disclosures concerning each of Auto and the Subsidiary
Guarantors are not presented because management believes that
they are not material to investors. The consolidated amounts in
the accompanying financial statements are representative of the
combined guarantors and issuer.

The Company is highly leveraged. In December
2001, the Company completed the Refinancing (see Note 8),
which resulted in the elimination of scheduled bank debt
amortization payments prior to the end of 2004, the extension of
debt maturities and enhanced liquidity. The Companys new
revolving credit facility requires that the Company meet certain
financial covenants, ratios and tests, including a maximum
leverage ratio and a minimum interest coverage ratio. A breach
of the covenants, ratios, or restrictions contained in the new
senior credit facility could result in an event of default
thereunder. The Company anticipates meeting all required
covenants under the new credit facility in fiscal 2002.

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 3, 2002 (fiscal
2001) and the fiscal year ended January 30, 2000
(fiscal 1999) each consisted of 52 weeks, while
the fiscal year ended February 4, 2001 (fiscal
2000) consists of 53 weeks.

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CSK AUTO CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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.

The Companys vendors are primarily
responsible for warranty claims. Warranty costs not covered by
vendors warranty are not material for merchandise and
services sold under warranty by the Company.

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. The Company records an estimated
provision for bad debts based on a percentage of sales and
reviews the provision periodically for adequacy. Specific
accounts are written off against the allowance when management
determines the account is uncollectible.

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 3, 2002, 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.

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 3, 2002 and February 4, 2001 were
approximately $31.5 million and $31.7 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 $23.5 million and $23.6 million as of
February 3, 2002 and February 4, 2001, respectively.
The replacement cost of inventories approximated
$527.6 million and $539.4 million at February 3,
2002 and February 4, 2001, respectively. The carrying value
of the inventory exceeds the current replacement cost primarily
as a result of the application of the LIFO inventory method of
accounting. The Companys costs of

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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

acquiring inventories through normal purchasing
activities have been decreasing in recent years as the
Companys increased size and cash flows have enabled it to
take advantage of volume discounts and lower product acquisition
costs.

From time to time, the Company performs an
analysis of the net realizable value of the inventory, after
consideration of expected disposal costs and normal profit
margins, to determine if the LIFO carrying value of the
inventory is impaired. Should impairment be indicated, the
carrying value of the inventory is reduced. No such impairment
is indicated based on current market conditions.

Inventories at February 3, 2002 are
presented net of an allowance of approximately
$0.9 million. This allowance results from the
Companys decision during the second quarter of fiscal year
2001 to eliminate certain product lines (resulting in excess
inventories) and to close certain retail stores (resulting in
some excess inventories that are not economical to redistribute
within the retail chain). See Note 13.

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.
When property, equipment or software is retired or sold, the net
book value of the asset, reduced by any proceeds, is charged to
gain or loss on the retirement of fixed assets.

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 2001, 2000 and 1999 were
$3.0 million, $2.6 million and $1.7 million,
respectively. Accumulated amortization as of February 3,
2002 and February 4, 2001 was $2.2 million and
$0.7 million, respectively.

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 $9.7 million and
$10.3 million as of February 3, 2002 and
February 4, 2001, respectively.

Goodwill

The cost in excess of the fair value 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 3,
2002 and February 4, 2001 was $11.5 million and
$6.7 million, respectively. Beginning with fiscal 2002, the
Company will follow Statement of Financial Accounting Standards
(SFAS) No. 142 to account for its goodwill.
See Note 2.

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CSK AUTO CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Store Closing
Costs

The Company provides an allowance for estimated
costs 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 2001, 2000 and 1999
totaled $20.4 million, $18.6 million and
$16.5 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

Long-lived assets and certain identifiable
intangible assets to be held and used or disposed of are
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. Assets to be disposed of are
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 is 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 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

The Company has chosen to account for stock-based
compensation using the intrinsic value method. 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 11.

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CSK AUTO CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Earnings
(Loss) per Share

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

|                                              |                      |                       |            |             |           |             |            |            |  |  |            |            |  | 
|--------------------------------------------- | -------------------- | --------------------- | ---------- | ----------- | --------- | ----------- | ---------- | ---------- |  |  | ---------- | ---------- |  | 
|                                              |                      |                      
|                                              |                      | Fiscal Year Ended    
|                                              |                      |                      
|                                              |                      | February 3,           |            | February 4, |           | January 30,
|                                              |                      | 2002                  |            | 2001        |           | 2000       
|                                              |                      |                       |            |             |           |            
|Common stock outstanding:                     |                      |                       |            |             |           |             |            |            |  |  |            |           
|                                              | Beginning of period  |                       |            | 27,841,178  |           |             |            | 27,834,574 |  |  |            | 27,768,832 | 
|                                              |                      |                       |            |             |           |             |            |            |  |  |            |           
|                                              | End of period        |                       |            | 32,370,746  |           |             |            | 27,841,178 |  |  |            | 27,834,574 | 
|                                              |                      |                       |            |             |           |             |            |            |  |  |            |           
|                                              | Issued during period |                       |            | 4,529,568   |           |             |            | 6,604      |  |  |            | 65,742     | 
|                                              |                      |                       |            |             |           |             |            |            |  |  |            |           
|Weighted average number of shares (basic)     |                      |                       | 28,390,582 |             |           |             | 27,839,348 |            |  |  | 27,815,160 |           
|Effects of dilutive securities                |                      |                       |           |             |           |             |           |            |  |  | 811,616    |           
|                                              |                      |                       |            |             |           |             |            |            |  |  |            |           
|Weighted average number of shares (diluted)   |                      |                       | 28,390,582 |             |           |             | 27,839,348 |            |  |  | 28,626,776 |           
|                                              |                      |                       |            |             |           |             |            |            |  |  |            |           
|Shares excluded as a result of anti-dilution: |                      |                       |            |             |           |             |            |            |  |  |            |           
|                                              | Stock options        |                       |            | 2,439,989   |           |             |            |            |  |  |            |            | 
|                                              | Conversion of notes  |                       |            | 3,976,415   |           |             |            |            |  |  |            |            | 
|                                              |                      |                       |            |             |           |             |            |            |  |  |            |           
|                                              |                      | Total shares excluded |            |             | 6,416,404 |             |            |            |  |  |            |            |  | 
|                                              |                      |                       |            |             |           |             |            |            |  |  |            |           

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.

Basis of
Presentation

Certain amounts in the 2000 and 1999 financial
statements have been reclassified to conform to the current year
presentation. This has no impact on previously reported
financial position, results of operation or cash flow.

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

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

In June 2001, the FASB issued SFAS No. 141
(SFAS 141), Business Combinations,
and No. 142 (SFAS 142), Goodwill and
Other Intangible Assets. SFAS 141 supersedes
Accounting Principles Board Opinion
(APB) No. 16, Business
Combinations. The provisions of SFAS 141: (1) require
that the purchase method of accounting be used for all business
combinations initiated after June 30, 2001, (2) provide

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CSK AUTO CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

specific criteria for the initial recognition and
measurement of intangible assets apart from goodwill, and
(3) generally require that unamortized negative goodwill be
written off immediately as an extraordinary gain instead of
being deferred and amortized. SFAS 141 also requires that
upon adoption of SFAS 142 the Company reclassify the
carrying amounts of certain intangible assets into or out of
goodwill, based on certain criteria. SFAS 142 supersedes
APB 17, Intangible Assets, and is effective for fiscal
years beginning after December 15, 2001. SFAS 142
primarily addresses the accounting for goodwill and intangible
assets subsequent to their initial recognition. The provisions
of SFAS 142: (1) prohibit the amortization of goodwill
and indefinite-lived intangible assets, (2) require that
goodwill and indefinite-lived intangible assets be tested
annually for impairment (and in interim periods if certain
events occur indicating that the carrying value of goodwill
and/or indefinite-lived intangible assets may be impaired),
(3) require that reporting units be identified for the
purpose of assessing potential future impairments of goodwill,
and (4) remove the forty-year limitation on the
amortization period of intangible assets that have finite lives.

The Company will adopt the provisions of
SFAS 142 in the first quarter ended May 5, 2002. The
Company is in the process of preparing for the adoption of
SFAS 142 and is making the determinations as to what the
reporting units are and what amounts of goodwill, intangible
assets, other assets, and liabilities should be allocated to
those reporting units. The Company expects that it will no
longer record approximately $4.8 million of amortization
relating to the existing goodwill. The Companys intangible
assets consist primarily of favorable leasehold interests. As
such, SFAS 142 did not impact the useful lives assigned to
the intangible assets.

SFAS 142 requires that goodwill be tested
annually for impairment using a two-step process. The first step
is to identify a potential impairment and, in transition, this
step must be measured as of the beginning of the fiscal year.
However, a company has six months from the date of adoption to
complete the first step. Accordingly, the Company expects to
complete that first step of the goodwill impairment test before
the end of the second quarter of 2002. The second step of the
goodwill impairment test measures the amount of the impairment
loss (measured as of the beginning of the year of adoption), if
any, and must be completed by the end of the fiscal year.
Intangible assets deemed to have an indefinite life will be
tested for impairment using a one-step process which compares
the fair value to the carrying amount of the asset as of the
beginning of the fiscal year, and pursuant to the requirements
of SFAS 142 will be completed during the first quarter of
2002. Any impairment loss resulting from the transitional
impairment tests will be reflected as the cumulative effect of a
change in accounting principle. The Company has not yet
determined what effect these impairment tests will have on
earnings and financial position.

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.

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CSK AUTO CORPORATION AND
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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Note 3  Investment in Joint
Venture

On March 1, 2000, the Company participated
in the formation of a new joint venture, PartsAmerica.com, Inc.
(PA), with Advance Stores Company Incorporated and
Sequoia Capital. PA engaged in the sale of automotive parts and
accessories via e-commerce. During the second quarter of fiscal
2001, PA ceased operations. The Company wrote off its investment
in PA during fiscal 2000 and has no material financial
obligations with respect to PA.

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
transition and integration expenses of approximately
$0.3 million and $3.0 million during fiscal 2001 and
fiscal 2000, respectively. These expenses consisted primarily of
grand opening advertising, training and re-merchandising costs.
In addition, the Company incurred capital expenditures of
approximately $3.1 million during fiscal 2000, 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 allocation of the purchase
price, based on estimated fair values at the date of
acquisition. Approximately $3.8 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 $5.5 million.

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 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 its then senior credit facility
to provide an additional

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CSK AUTO CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

$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 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
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
analyzed its store locations in California and the Pacific
Northwest and closed 39 of the formerly owned AGA stores based
on several factors including: (1) market saturation;
(2) store profitability; and (3) store size and
format. In addition, the Company finalized a store closure plan
for its own stores that overlapped with AGA stores, which
resulted in 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. 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 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 fair values of net assets at the date
of acquisition. Approximately $127.7 million was allocated
to inventory, leasehold improvements, fixed assets and favorable
lease rights. The 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.

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 then 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.

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 its then senior credit
facility. In connection with the acquisition, the Company
amended and restated its then

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CSK AUTO CORPORATION AND
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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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 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 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.

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 previously
identified stores. The final allocations of the fair value of
the assets and liabilities recorded as a result of the above
mentioned acquisitions are as follows (in thousands):

|                              |                           |             |        |       |  |   |         |         | 
|----------------------------- | ------------------------- | ----------- | ------ | ----- |  | - | ------- | ------- | 
|                              |                           |            
|                              |                           | Fiscal Year
|                              |                           |            
|                              |                           | 2000        |        | 1999 
|                              |                           |             |        |      
|Cash and cash equivalents     |                           | $           | 108    |       |  | $ | 145     |        
|Receivables                   |                           |             | 171    |       |  |   | 3,161   |        
|Inventories                   |                           |             | 3,290  |       |  |   | 103,023 |        
|Assets held for sale          |                           |             |       |       |  |   | 3,238   |        
|Property and equipment        |                           |             | 1,180  |       |  |   | 30,049  |        
|Goodwill                      |                           |             | 5,841  |       |  |   | 132,499 |        
|Leasehold interests           |                           |             |       |       |  |   | 14,655  |        
|Prepaids and other assets     |                           |             | 219    |       |  |   | 2,244   |        
|Deferred income taxes         |                           |             |       |       |  |   | 3,137   |        
|Accounts payable              |                           |             | (3,702 | )     |  |   | (36,851 | )      
|Accrued liabilities and other |                           |             | (5,817 | )     |  |   | (29,781 | )      
|Closed store reserves         |                           |             |       |       |  |   | (6,922  | )      
|                              |                           |             |        |       |  |   |         |        
|                              | Total cash purchase price |             | $      | 1,290 |  |   | $       | 218,597 | 
|                              |                           |             |        |       |  |   |         |        

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

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CSK AUTO CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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;
(2) depreciation expense based on the allocation of
purchase price to fixed assets of $1.4 million;
(3) interest expense and amortization of deferred financing
costs associated with the additional borrowings under the senior
credit facility of $11.4 million; and (4) amortization
of leasehold rights of $1.3 million. Although cost savings
and other future synergy benefits of the combined companies are
expected, no such benefits are reflected in this pro forma
financial information (in thousands, except per share data).

|                                                                                                 |                                                                                                  |             |           |      | 
|------------------------------------------------------------------------------------------------ | ------------------------------------------------------------------------------------------------ | ----------- | --------- | ---- | 
|                                                                                                 |                                                                                                  | Fiscal Year
|                                                                                                 |                                                                                                  | Ended      
|                                                                                                 |                                                                                                  | January 30,
|                                                                                                 |                                                                                                  | 2000       
|                                                                                                 |                                                                                                  |            
|                                                                                                 |                                                                                                  | (unaudited)
|Net sales                                                                                        |                                                                                                  | $           | 1,423,907 |     
|Net income before extraordinary loss and
    cumulative effect of change in accounting principle |                                                                                                  |             | 20,138    |     
|Net income                                                                                       |                                                                                                  |             | 19,397    |     
|                                                                                                 |                                                                                                  |             |           |     
|Basic earnings per share:                                                                        |                                                                                                  |             |           |     
|                                                                                                 | Net income before extraordinary loss and
    cumulative effect of change in accounting principle |             | $         | 0.72 | 
|                                                                                                 |                                                                                                  |             |           |     
|                                                                                                 | Net income                                                                                       |             | $         | 0.70 | 
|                                                                                                 |                                                                                                  |             |           |     
|Diluted earnings per share:                                                                      |                                                                                                  |             |           |     
|                                                                                                 | Net income before extraordinary loss and
    cumulative effect of change in accounting principle |             | $         | 0.70 | 
|                                                                                                 |                                                                                                  |             |           |     
|                                                                                                 | Net income                                                                                       |             | $         | 0.68 | 
|                                                                                                 |                                                                                                  |             |           |     

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 the period presented, nor are they necessarily
indicative of future consolidated results.

Note 5  Transactions and
Relationships with Related Parties

Lease
Transactions

The Company has entered into several lease
agreements with related parties for approximately
125,000 square feet of office space and real property and
certain store fixtures. These lease agreements are subject to
certain inflation based adjustments that could affect the rent
expense in future periods. The agreements are with affiliates of
The Carmel Trust (Carmel), one of the Companys
principal stockholders. The table below describes the
Companys related party transactions ($ in thousands):

|                                |  |                |               |             |  |                          |               |      |  |      |       |  |  |   |       |  |  |   |       | 
|------------------------------- |  | -------------- | ------------- | ----------- |  | ------------------------ | ------------- | ---- |  | ---- | ----- |  |  | - | ----- |  |  | - | ----- | 
|                                |  |                |               |             |  |                         
|                                |  |                |               |             |  | Fiscal Year Rent Expense
|                                |  |                |               |             |  |                         
|Description                     |  | Beginning Date |               | Ending Date |  | 2001                     |               | 2000 |  | 1999
|                                |  |                |               |             |  |                          |               |      |  |     
|Corporate headquarters          |  |                | October 1989  |             |  |                          | October 2012  |      |  | $    | 1,536 |  |  | $ | 1,490 |  |  | $ | 1,490 | 
|Corporate office space          |  |                | April 1995    |             |  |                          | October 2012  |      |  |      | 725   |  |  |   | 603   |  |  |   | 328   | 
|Headquarters parking lot        |  |                | April 1995    |             |  |                          | October 2012  |      |  |      | 63    |  |  |   | 63    |  |  |   | 63    | 
|Real property sale-leaseback(1) |  |                | February 1997 |             |  |                          | November 2000 |      |  |      |      |  |  |   | 83    |  |  |   | 99    | 
|Fixture sale-leaseback(2)       |  |                | July 1996     |             |  |                          | July 2001     |      |  |      | 192   |  |  |   | 463   |  |  |   | 463   | 
|                                |  |                |               |             |  |                          |               |      |  |      |       |  |  |   |       |  |  |   |       | 
|                                |  |                |               |             |  |                          |               |      |  | $    | 2,516 |  |  | $ | 2,702 |  |  | $ | 2,443 | 
|                                |  |                |               |             |  |                          |               |      |  |      |       |  |  |   |       |  |  |   |       | 

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CSK AUTO CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



---



|    |                                                                                                             
|--- | ------------------------------------------------------------------------------------------------------------
|(1) | Represents a sale-leaseback transaction for
    $0.9 million in funding which was paid off in November 2000.
|   
|(2) | Represents a sale-leaseback transaction for
    $1.9 million in funding which was paid off in July 2001.    

The Company believes that the terms of the
leasing transactions with related parties described above were
no less favorable to it than terms that may have been available
from independent third parties at the time of the applicable
transaction. The Company is currently not planning on entering
into additional sale-leaseback transactions with related parties
and no such sale-leaseback transactions with a related party
have resulted in any gain or loss.

Other
Transactions

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).

In December 2001, in connection with the
Companys refinancing of its then existing credit facility,
CSK Auto Corporation sold $50.0 million aggregate principal
amount of 7% convertible subordinated debentures due December
2006 (the convertible debentures) and related
contingently exercisable warrants (the make-whole
warrants), consisting of $30.0 million in principal
amount and one make-whole warrant to Investcorp CSK Holdings
L.P., an affiliate of Investcorp S.A., which through its
relationship with several of the Companys stockholders is
deemed to be one of its principal stockholders, and
$20 million in principal amount and one make-whole warrant
to an unrelated third party investor in a private placement.
Interest on the debentures is payable quarterly, either in cash
or, at the Companys election, additional shares of its
common stock. The convertible debentures and make-whole warrants
issued to Investcorp CSK Holdings L.P. were on the same terms as
those issued to the unrelated third party. The Company expects
to convert these debentures for both Investcorp CSK Holdings
L.P. and the third party into approximately 5.75 million shares
of its common stock (approximately 3.45 million shares to
Investcorp CSK Holdings L.P. and 2.3 million shares to the
third party), based on a conversion price of $8.69 per share,
within thirty days following the effectiveness of the
registration statement relating to such shares, which is
currently pending before the Securities and Exchange Commission.
The actual number of shares to be issued to Investcorp CSK
Holdings L.P. and the third party pursuant to the agreements
relating to the issuance of the convertible debentures and
make-whole warrants will depend on a number of factors,
including the Companys future average stock price, whether
one of these holders voluntarily converts its convertible
debentures prior to the time that the Company requires
conversion, and to what extent the Company elects to pay
interest on the convertible debentures in shares of its common
stock rather than cash prior to the conversion of the
convertible debentures.

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. During fiscal 2000 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
the Companys remaining investment in the joint venture. In
addition, the Company recorded sales to PA of approximately
$0.2 million and $0.5 million during fiscal 2001 and
2000, respectively, and incurred reimbursable costs of
$0.3 million during fiscal 2000. As of February 4,
2001, the Company had a receivable from PA of approximately

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CSK AUTO CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

$0.4 million, which includes reimbursable
costs and advances. During the second quarter of fiscal 2001, PA
ceased operations and, accordingly, there is no outstanding
receivable from PA as of February 3, 2002.

Note 6  Receivables

Accounts receivable consist of the following ($
in thousands):

|                                                                                      |                         |             |        |             |  |   |        |        | 
|------------------------------------------------------------------------------------- | ----------------------- | ----------- | ------ | ----------- |  | - | ------ | ------ | 
|                                                                                      |                         | February 3, |        | February 4,
|                                                                                      |                         | 2002        |        | 2001       
|                                                                                      |                         |             |        |            
|Trade receivables from commercial and other
    customers                             |                         | $           | 29,567 |             |  | $ | 25,756 |       
|Amounts due under vendor rebate programs and
    cooperative advertising arrangements |                         |             | 57,691 |             |  |   | 43,296 |       
|Landlord and subtenant receivables                                                    |                         |             | 2,030  |             |  |   | 4,149  |       
|Other                                                                                 |                         |             | 735    |             |  |   | 761    |       
|                                                                                      |                         |             |        |             |  |   |        |       
|                                                                                      | Gross receivables       |             |        | 90,023      |  |   |        | 73,962 | 
|Allowance for doubtful accounts                                                       |                         |             | (5,230 | )           |  |   | (4,236 | )     
|                                                                                      |                         |             |        |             |  |   |        |       
|                                                                                      | Net accounts receivable |             | $      | 84,793      |  |   | $      | 69,726 | 
|                                                                                      |                         |             |        |             |  |   |        |       

The Company reflects amounts to be paid or
credited to the Company by vendors as receivables. Pursuant to
contract terms, the Company has the right to offset vendor
receivables against corresponding accounts payables, thus
minimizing the risk of non-collection of these receivables.

Note 7  Property and
Equipment

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

|                                                |  |             |          |             |  |                       |          |   |  |  |                               | 
|----------------------------------------------- |  | ----------- | -------- | ----------- |  | --------------------- | -------- | - |  |  | ----------------------------- | 
|                                                |  | February 3, |          | February 4, |  |                      
|                                                |  | 2002        |          | 2001        |  | Estimated Useful Life
|                                                |  |             |          |             |  |                      
|Land                                            |  | $           | 553      |             |  | $                     | 893      |   |  |  |                               | 
|Buildings                                       |  |             | 743      |             |  |                       | 1,244    |   |  |  | 25 years                      | 
|Leasehold improvements                          |  |             | 93,935   |             |  |                       | 96,246   |   |  |  | 15 years or life of lease     | 
|Furniture, fixtures and equipment               |  |             | 117,300  |             |  |                       | 124,998  |   |  |  | 10 years                      | 
|Property under capital leases                   |  |             | 88,743   |             |  |                       | 80,667   |   |  |  | 5  15 years or life of lease | 
|Purchased software                              |  |             | 12,044   |             |  |                       | 10,585   |   |  |  | 5 years                       | 
|                                                |  |             |          |             |  |                       |          |   |  |  |                               | 
|                                                |  |             | 313,318  |             |  |                       | 314,633  |   |  |  |                               | 
|Less: accumulated depreciation and amortization |  |             | (162,937 | )           |  |                       | (139,275 | ) |  |  |                               | 
|                                                |  |             |          |             |  |                       |          |   |  |  |                               | 
|Property and equipment, net                     |  | $           | 150,381  |             |  | $                     | 175,358  |   |  |  |                               | 
|                                                |  |             |          |             |  |                       |          |   |  |  |                               | 

Accumulated amortization of property under
capital leases totaled $54.1 million and $42.6 million at
February 3, 2002 and February 4, 2001, respectively.

Note 8  Long Term Debt and
Extraordinary Loss

On December 21, 2001, the Company completed
several transactions to refinance its capital structure (the
Refinancing). The Company used the proceeds from a
note offering, which were approximately $275.3 million, net
of a discount of $4.7 million, together with borrowings
under a new $300.0 million senior collateralized, asset
based credit facility and the gross proceeds of a
$50.0 million private placement of new 7% convertible
subordinated debentures to refinance its prior credit facility
and to pay fees and expenses in

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CSK AUTO CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

connection with these transactions. Additionally,
upon the closing of the new senior credit facility, the Company
converted its existing $30.0 million 7% convertible
subordinated note due September 1, 2006 into approximately
4.5 million shares of CSK Auto Corporations common stock.
Also as part of the Refinancing, the Company incurred an
extraordinary loss of $3.1 million, which was a write off
of $5.1 million of unamortized deferred financing costs
associated with the prior senior credit facility, net of a
$2.0 million income tax benefit.

As a result of the increased borrowing and based
on the Companys financial results for the third quarter of
fiscal 2001, the Companys ratio of debt to Adjusted EBITDA
(as defined in the prior senior credit facility) and the
Companys Interest Coverage Ratio (as defined in the prior
senior credit facility) would not have been in compliance with
corresponding covenants under the then existing senior credit
facility. Accordingly, the Company negotiated a waiver to these
covenants effective for the third quarter ending
November 4, 2001. The proceeds of the Refinancing,
including the proceeds received from the issuance of the
$30 million convertible note, were used to refinance the
indebtedness under the prior senior credit facility. The Company
anticipates meeting all required covenants under the new credit
facility in fiscal 2002.

New Senior
Credit Facility

In connection with the Refinancing, Auto entered
into a new $300.0 million senior collateralized, asset
based credit facility that matures December 21, 2004. The
new senior credit facility is comprised of a $130 million
revolving credit facility and a $170.0 million
non-amortizing term loan. Availability under the new senior
credit facility is subject to a borrowing base formula equal to
the lesser of $300.0 million and the sum of certain
percentages of eligible inventory and eligible accounts
receivable owned by the Company and its subsidiaries. Under the
borrowing base formula, the borrowing capacity at
February 3, 2002 was limited to approximately
$270.5 million. Loans under the new senior credit facility
are collateralized by a first priority security interest in
substantially all of the Companys and its
subsidiaries assets and in all of the Companys and
its subsidiaries capital stock. The loans are guaranteed
by each of the Companys subsidiaries and by the Company.

Interest may accrue quarterly on the loans with
reference to the base rate (the Base Rate)
plus the applicable Base Rate interest margin. The Company may
elect that all or a portion of the loans bear interest at the
Eurodollar rate (the Eurodollar Rate) plus the
applicable Eurodollar interest margin. The Base Rate is defined
as the highest of (i) the Federal Funds Rate plus 0.50%,
(ii) the secondary market rate for three-month certificates
of deposit of money center banks plus 1%, or (iii) the
prime commercial lending rate of the administrative agent. The
Eurodollar Rate is defined as the rate at which eurodollar
deposits for one, two, three or six months or (if and when
available to all of the relevant lenders) nine or twelve months
are offered to the administrative agent in the interbank
eurodollar market. The interest margin for the new senior credit
facility is 2.50% for Base Rate loans and 3.50% for Eurodollar
Rate loans.

The new senior credit facility provides that the
Company may from time to time make optional prepayments of loans
in whole or in part without penalty, subject to minimum
prepayments and reimbursement of the lenders breakage
costs in the case of prepayment of Eurodollar Rate loans.

The new senior credit facility contains covenants
and other requirements of the Company and its subsidiaries. In
general, the affirmative covenants provide for, among other
requirements, mandatory reporting of financial and other
information to the lenders and notice to the lenders upon the
occurrence of certain events. The affirmative covenants also
include standard covenants requiring the Company to operate its
business in an orderly manner.

The new senior credit facility contains negative
covenants and restrictions on actions by the Company and its
subsidiaries including, without limitation, restrictions on
indebtedness, liens, guarantee obligations, mergers, asset
dispositions not in the ordinary course of business,
investments, loans, advances and

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CSK AUTO CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

acquisitions, dividends and other restricted
junior payments, transactions with affiliates, change in
business conducted, and certain prepayments and amendments of
subordinated indebtedness. The new revolving credit facility
requires that the Company meet certain financial covenants,
ratios and tests, including a maximum leverage ratio and a
minimum interest coverage ratio. The Company believes it was in
compliance with all such covenants at February 3, 2002.

The new senior credit facility specifies certain
customary events of default including, without limitation,
non-payment of principal, interest or fees, violation of
covenants, inaccuracy of representations and warranties in any
material respect, cross default to certain other indebtedness
and agreements, bankruptcy and insolvency events, material
judgments and liabilities, change of control and
unenforceability of certain documents under the new senior
credit facility.

The Company is required to pay certain fees in
connection with the new senior credit facility, including:
(1) letter of credit fees; (2) agency fees; and
(3) commitment fees. Commitment fees are payable quarterly,
at a rate per annum of 0.5% on the average daily unused portion
of the new senior credit facility.

12% Senior
Notes Due 2006

The Company issued $280.0 million of new 12%
Senior Notes due June 15, 2006 (the 12% Senior
Notes) in connection with the Refinancing. Interest is
payable semi-annually in arrears on December 15 and
June 15 of each year commencing June 15, 2002. The
effective interest rate, including amortization of the original
issue discount, is approximately 12.5% per annum. The proceeds
received, after deducting the original issue discount of $4.7
million, were $275.3 million.

The Company will not have the right to redeem any
notes prior to December 15, 2004 (other than out of the net cash
proceeds of any equity offering). At any time or from time to
time on or prior to December 15, 2004, upon the
consummation of an equity offering of the Companys common
stock for cash, up to 35% of the aggregate principal amount of
the notes issued pursuant to the Indenture may be redeemed at
the Companys option within 90 days of such equity
offering with cash received by the Company from the net cash
proceeds of such equity offering, at a redemption price equal to
112.00% of principal, together with accrued and unpaid interest
and liquidated damages, if any, thereon to the redemption date;
provided, however, that immediately following such redemption
not less than 65% of the aggregate principal amount of the notes
originally issued pursuant to the Indenture remain outstanding.
At any time on or after December 15, 2004, the Company may
redeem the notes for cash at its option, in whole or in part, at
the following redemption prices (expressed as percentages of the
principal amount) if redeemed during the periods indicated
below, in each case together with accrued and unpaid interest
and liquidated damages, if any, thereon to the date of
redemption of the notes:

|                                                |  |            |         |  
|----------------------------------------------- |  | ---------- | ------- | -
|Period                                          |  | Percentage
|                                                |  |           
|December 15, 2004 through December 15,
    2005 |  |            | 106.000 | %
|December 15, 2005 through maturity              |  |            | 100.000 | %

If the Company experiences a change of control,
holders of the notes will have the right to require the Company
to repurchase their notes at a purchase price of 101% of the
principal amount of the notes, plus accrued and unpaid interest
to the date of the repurchase.

The payment of the principal, premium and
interest on the notes is irrevocably and unconditionally
guaranteed on a senior basis by the Company and its subsidiaries.

The notes are unsecured senior obligations of CSK
Auto, Inc. They rank senior in right of payment to the
Companys subordinated indebtedness and effectively junior
to the Companys senior secured indebtedness, including
borrowings under the new senior credit facility, to the extent
of the collateral securing such secured indebtedness.

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CSK AUTO CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

The indenture governing the notes limits Auto and
its subsidiaries ability to, among other things, incur
additional indebtedness or issue disqualified capital stock, pay
dividends on capital stock or redeem, repurchase or retire
capital stock or subordinated indebtedness, make investments,
create any consensual limitation on the ability of its
Subsidiaries to pay dividends, make loans or transfer property
to the Company, incur liens, engage in transactions with the
Companys affiliates, sell assets, including capital stock
of the Companys subsidiaries and consolidate, merge or
transfer all or substantially all of assets of the Company or
its subsidiaries.




$50.0 million
7% Convertible Subordinated Debentures Due December 1,
2006




Also in connection with the Refinancing, the
Company sold $50.0 million aggregate principal amount of 7%
convertible subordinated debentures due December 2006 (the
convertible subordinated debentures) and related
contingently exercisable warrants to an unrelated third party
investor and an affiliate of Investcorp, S.A., one of the
Companys principal stockholders (Investcorp).

Interest is payable quarterly. The Company may
elect to pay such interest in cash or additional shares of its
stock. The Company is a holding company that derives all its
operating income from its subsidiaries, which are restricted,
pursuant to the terms of other financing obligations, from
transferring funds to it to pay cash interest on the convertible
subordinated debentures except under certain circumstances.
These restrictions may limit the Companys ability to pay
interest on the convertible subordinated debentures in cash.
However, interest must be paid in cash in certain circumstances,
including following the occurrence of an event of default or
certain other events. Upon and during the continuance of an
event of default, interest on the convertible subordinated
debentures and any overdue payments increases to 12%, with
further monthly increases up to 16%.

The convertible subordinated debentures are not
redeemable by the Company at any time prior to maturity on
December 1, 2006, except in the event of a change of
control, as defined in such debentures. In the event the
convertible subordinated debentures have not been converted at
maturity in 2006, then the Company must, at its option, either
redeem the convertible subordinated debentures for 100% of the
principal amount in cash or convert the convertible subordinated
debentures into its common stock at a conversion price equal to
the average of the closing sale price of the common stock on
each trading day during the 120 trading days preceding
December 21, 2006.

The convertible subordinated debentures are
subordinated to the principal and interest obligations owed
under CSK Auto Corporations guarantee of Autos new
senior credit facility and to the guarantee of the 12% Senior
Notes. The terms of such subordination will be similar to the
terms of the subordination of Autos 11% Senior
Subordinated Notes to the 12% Senior Notes.

Subject to certain limitations, these investors
can convert their convertible subordinated debentures into the
Companys common stock at any time. Pursuant to the NYSE
rules, the Company obtained shareholder approval for the
issuance of its common stock upon the conversion of, and in lieu
of cash interest payments on, the convertible subordinated
debentures, and upon the exercise of certain related warrants
(including any additional shares of common stock that may be
issued as a result of certain adjustment provisions of the
convertible subordinated debentures and the related warrants)
(collectively, the Conversion Stock) at a special
meeting of its shareholders held February 26, 2002.




The Company issued the convertible subordinated
debentures with certain registration rights. Consequently, the
Company filed a resale shelf registration statement with the SEC
on January 18, 2002 relating to approximately
12.7 million shares of Conversion Stock and
4.5 million shares that were issued upon conversion of the
$30 million 7% convertible note. The Company is required to
use its best efforts to have such registration statement
declared effective by the SEC as soon as practicable, on or
before May 19, 2002.




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CSK AUTO CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Within 30 days of the effectiveness of the
registration statement, the Company intends to require the
holders to convert all of their convertible subordinated
debentures into the Companys common stock. The Company may
require this conversion, provided (i) no event of default
has occurred and is continuing, and (ii) there have not
occurred certain specified changes in management. The conversion
price for the convertible subordinated debentures, currently set
at $8.69 per share, is subject to certain anti-dilution
provisions and other adjustments that may result in the issuance
of additional shares of its common stock under certain
circumstances.

The agreements include provisions for conversion
price adjustments and specific requirements for treatment of the
convertible subordinated debentures in the event of a merger,
sale of substantially all assets or similar transaction
involving the Company. In addition, in the event of a change of
control of the Company, the agreements require the Company to
make an offer to purchase the convertible subordinated
debentures at a redemption price equal to 125% of the principal
amount until December 2002 and 112.5% thereafter. The
convertible subordinated debentures include customary events of
default and, if an event of default occurs, each holder of
convertible subordinated debentures may require the convertible
subordinated debentures to be redeemed at a redemption price
equal to 105%. The convertible subordinated debentures also
provide for monetary penalties if the Company fails to convert
them into common stock upon the holders request.

The warrants are automatically exercisable into
shares of our common stock on the earlier of (i) a change
of control, and (ii) November 21, 2002, only if the
following two events have occurred: (1) we have previously
required the conversion of the convertible debentures; and
(2) the conversion price of the convertible debentures at
the time of such required conversion is greater than the
adjusted conversion price.

The adjusted conversion price is an
amount equal to the greater of (i) the average of the
closing sale prices of our common stock on the trading days from
December 21, 2001 through November 20, 2002 and
(ii) $4.94, as adjusted in the case of a change of control
and for specified dilutive events.

The number of shares of our common stock issuable
upon exercise of the warrants is equal to the following amount,
subject to adjustment in accordance with the provisions of the
convertible debentures and warrants, and less a number of shares
so as to have a cashless exercise of the warrants based on an
exercise price of $0.01: (1) the quotient determined by
dividing (A) the $50.0 million principal amount of the
convertible debentures initially issued, plus any interest
payments added to the principal of the convertible debentures,
by (B) the adjusted conversion price; minus (2) the
number of shares of our common stock we have issued upon
conversion of the convertible debentures prior to the exercise
of the warrants.

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.

The provisions of the indenture limit the
Companys and its subsidiaries ability to, among
other things, incur additional indebtedness or issue
disqualified capital stock, pay dividends on capital stock or
redeem, repurchase or retire capital stock or indebtedness, make
investments, create any consensual limitation on the

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CSK AUTO CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

ability of its subsidiaries to pay dividends,
make loans or transfer property to the Company, incur liens,
engage in transactions with affiliates, sell assets, including
capital stock of subsidiaries and consolidate, merge or transfer
all or substantially all of the Companys assets.

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.

Beginning November 1, 2001, the 11% Senior
Subordinated Notes are 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 | %

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CSK AUTO CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Outstanding debt, excluding capital leases, is as
follows ($ in thousands):

|                                                                                                                                                                                                                         |       |             |         |             |  |   |         |         | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ----- | ----------- | ------- | ----------- |  | - | ------- | ------- | 
|                                                                                                                                                                                                                         |       | February 3, |         | February 4,
|                                                                                                                                                                                                                         |       | 2002        |         | 2001       
|                                                                                                                                                                                                                         |       |             |         |            
|Term Loan, variable interest rate, average rate
    5.7% for fiscal 2001 due in full December 2004                                                                                                                       |       | $           | 170,000 |             |  | $ |        |        
|New Revolving Credit Commitment, variable
    interest rate, average rate 6.2% for fiscal 2001 and
    $130.0 million maximum capacity at February 3, 2002                                                               |       |             | 57,000  |             |  |   |        |        
|Prior Revolving Credit Commitment, variable
    interest rate, average rate 8.3% for fiscal 2000, paid in full
    December 2001                                                                                         |       |             |        |             |  |   | 110,000 |        
|Term Loan (Tranche B), variable interest rates,
    average rate 7.3% and 8.9% for fiscal 2001 and 2000,
    respectively, semi-annual installments payable each June 30
    and December 31, paid in full December 2001 |       |             |        |             |  |   | 144,480 |        
|Term Loan (Tranche B1), variable interest rates,
    average rate 7.4% and 8.9% for fiscal 2001 and 2000
    respectively, semi-annual installments payable each June 30
    and December 31, paid in full December 2001 |       |             |        |             |  |   | 123,500 |        
|Term Loan (Tranche B2), variable interest rates,
    average rate 7.5% and 8.9% for fiscal 2001 and 2000
    respectively, semi-annual installments payable each June 30
    and December 31, paid in full December 2001 |       |             |        |             |  |   | 148,500 |        
|Convertible notes, net of $0.9 million
    discount due to beneficial conversion feature, interest rate 7%,
    due December 2006                                                                                        |       |             | 49,100  |             |  |   |        |        
|Notes, $81.25 million, interest rate 11%,
    due November 2006                                                                                                                                                          |       |             | 81,250  |             |  |   | 81,250  |        
|Notes, $280.0, net of $4.6 million discount,
    effective interest rate approximates 12.5%, due June 2006                                                                                                               |       |             | 275,416 |             |  |   |        |        
|                                                                                                                                                                                                                         |       |             |         |             |  |   |         |        
|                                                                                                                                                                                                                         | Total |             |         | 632,766     |  |   |         | 607,730 | 
|Less: current maturities                                                                                                                                                                                                 |       |             |        |             |  |   | 54,640  |        
|                                                                                                                                                                                                                         |       |             |         |             |  |   |         |        
|                                                                                                                                                                                                                         |       | $           | 632,766 |             |  | $ | 553,090 |        
|                                                                                                                                                                                                                         |       |             |         |             |  |   |         |        

At February 3, 2002, the estimated
maturities of long term debt, excluding capital leases, were ($
in thousands):

|            |  |        |         | 
|----------- |  | ------ | ------- | 
|Fiscal Year |  | Amount
|            |  |       
|2002        |  | $      |        | 
|2003        |  |        |        | 
|2004        |  |        | 227,000 | 
|2005        |  |        |        | 
|2006        |  |        | 405,766 | 
|Thereafter  |  |        |        | 
|            |  |        |         | 
|            |  | $      | 632,766 | 
|            |  |        |         | 

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CSK AUTO CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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 3, |        | February 4,
|                                  |       | 2002        |        | 2001       
|                                  |       |             |        |            
|11% Senior Subordinated Notes     |       | $           | 5,341  |             |  | $ | 5,341  |      
|12% Senior Notes                  |       |             | 9,952  |             |  |   |       |      
|7% convertible subordinated notes |       |             | 2,570  |             |  |   |       |      
|New senior credit facility        |       |             | 7,411  |             |  |   |       |      
|Prior senior credit facility      |       |             |       |             |  |   | 7,880  |      
|Accumulated amortization          |       |             | (3,916 | )           |  |   | (5,411 | )    
|                                  |       |             |        |             |  |   |        |      
|                                  | Total |             | $      | 21,358      |  |   | $      | 7,810 | 
|                                  |       |             |        |             |  |   |        |      

Note 9  Leases

The Company leases its office and warehouse
facilities, for all but two 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 10 to 20 years, with three to five
renewal options of five years each.

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

|                                                                             |  |             |         |      |  |      |         |   |  |   |        |  
|---------------------------------------------------------------------------- |  | ----------- | ------- | ---- |  | ---- | ------- | - |  | - | ------ | -
|                                                                             |  |            
|                                                                             |  | Fiscal Year
|                                                                             |  |            
|                                                                             |  | 2001        |         | 2000 |  | 1999
|                                                                             |  |             |         |      |  |     
|Minimum rentals                                                              |  | $           | 124,751 |      |  | $    | 123,298 |   |  | $ | 97,748 |  
|Contingent rentals                                                           |  |             | 1,261   |      |  |      | 945     |   |  |   | 976    |  
|Sublease rentals                                                             |  |             | (9,059  | )    |  |      | (6,970  | ) |  |   | (5,395 | )
|                                                                             |  |             |         |      |  |      |         |   |  |   |        |  
|                                                                             |  | $           | 116,953 |      |  | $    | 117,273 |   |  | $ | 93,329 |  
|                                                                             |  |             |         |      |  |      |         |   |  |   |        |  
|The above amounts include rental expense under
    leases with affiliates of |  | $           | 2,516   |      |  | $    | 2,702   |   |  | $ | 2,443  |  

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CSK AUTO CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Future minimum lease obligations (income) under
non-cancelable leases at February 3, 2002 are as follows ($
in thousands):

|                                    |  |         |         |           |  |          |         |  |  |   |         |  
|----------------------------------- |  | ------- | ------- | --------- |  | -------- | ------- |  |  | - | ------- | -
|                                    |  | Capital |         | Operating |  | Sublease
|For Fiscal Years                    |  | Leases  |         | Leases    |  | Rentals 
|                                    |  |         |         |           |  |         
|2002                                |  | $       | 16,402  |           |  | $        | 125,927 |  |  | $ | (9,647  | )
|2003                                |  |         | 15,148  |           |  |          | 114,009 |  |  |   | (7,982  | )
|2004                                |  |         | 11,648  |           |  |          | 98,034  |  |  |   | (5,931  | )
|2005                                |  |         | 4,562   |           |  |          | 86,961  |  |  |   | (4,673  | )
|2006                                |  |         | 677     |           |  |          | 77,665  |  |  |   | (3,651  | )
|Thereafter                          |  |         | 2,912   |           |  |          | 355,903 |  |  |   | (4,069  | )
|                                    |  |         |         |           |  |          |         |  |  |   |         |  
|                                    |  |         | 51,349  |           |  | $        | 858,499 |  |  | $ | (35,953 | )
|                                    |  |         |         |           |  |          |         |  |  |   |         |  
|Less: amounts representing interest |  |         | (13,272 | )         |  |          |         |  |  |   |         |  
|                                    |  |         |         |           |  |          |         |  |  |   |         |  
|Present value of obligations        |  |         | 38,077  |           |  |          |         |  |  |   |         |  
|Less: current portion               |  |         | (10,999 | )         |  |          |         |  |  |   |         |  
|                                    |  |         |         |           |  |          |         |  |  |   |         |  
|Long term obligation                |  | $       | 27,078  |           |  |          |         |  |  |   |         |  
|                                    |  |         |         |           |  |          |         |  |  |   |         |  

The above amounts include future minimum lease
obligations under operating leases with affiliates totaling
$27.2 million at February 3, 2002.

Note 10  Capital Stock

On August 14, 2001, the Company issued a
$30.0 million aggregate principal amount 7% convertible
subordinated note due September 1, 2006 to Oppenheimer
Capital Income Fund. In connection with the Refinancing, the
note was converted, into approximately 4.5 million shares
of the Companys common stock at a conversion price of
$6.63 per share, which represents a 10% premium to the
average closing price of the Companys stock on the NYSE
for the 10 days preceding the issuance of the note. At the
time of the conversion the $30.0 million principal and
approximately $0.7 million of accrued interest were
converted to common stock and additional paid in capital.

Note 11  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.

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. Participant contributions
are subject to certain restrictions as set forth in the Internal
Revenue Code. The Companys matching contributions totaled
$1,237,200, $1,377,300, and $1,422,400 for fiscal years 2001,
2000, and 1999, 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

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CSK AUTO CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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 Companys initial public
offering (the IPO) in 1998, 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). As of fiscal 1999, all options have three 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 and 18,000 were granted in April 2001 and 2000,
respectively. Specified results were not met in fiscal 2001 and,
accordingly, no additional options will be granted in fiscal
2002.

As of February 3, 2002, the Company has
granted options to purchase 925,712 shares under the Associate
Plan and 287,826 shares under the Executive Plan, net of
cancellations (including cancellations in fiscal 2001 associated
with the option cancellation program discussed further below)
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.

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
seventh anniversary of the date of grant (or, under certain
circumstances, 30 days later).

As of February 3, 2002, the Company has
granted options to purchase 485,207 shares under the 1999
Plan, net of cancellations and exercises. The exercise prices
represent the fair market value at the date of grant

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CSK AUTO CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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.

Option
Cancellation Program

During the third quarter of fiscal 2001, the
Company cancelled outstanding stock options to purchase an
aggregate of 496,296 shares of the Companys common stock
that had been granted to certain Company executives under all of
the Companys option plans. The options covered by such
cancellations had exercise prices ranging from $17.50 to
$32.25 per share, with a weighted average exercise price of
$26.34 per share. During fiscal 2002, new stock options to
purchase an aggregate of 496,296 shares of the Companys
common stock were granted to these executives. Consistent with
terms of the program, the exercise price of the new stock
options was generally $11 which was the greater of:
(a) $11.00 per share; or (b) the fair market value of
CSK Auto Corporation common stock on the date of grant. These
options were granted six months and one day after cancellation
and, consistent with the guidance in FASB Interpretation
No. 44 Accounting for Certain Transactions Involving
Stock Compensation: An Interpretation of APB Opinion
No. 25, no stock compensation expense was recorded.

Directors
Stock Plan

Directors who are currently associated with the
Investcorp Group or the Carmel Group do not 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 three
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, these Directors
were granted a total of 3,764, 1,854 and 1,534 shares of
restricted stock during fiscal years 2001, 2000 and 1999,
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 5), $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 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 3, 2002, 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 has recognized 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

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CSK AUTO CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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 3, 2002,
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 issued 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 96,062 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 resulted in 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.

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CSK AUTO CORPORATION AND
SUBSIDIARIES


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    |       | Options    
|                            |                            | Shares    |           | Exercise Price |   | Fair Value |       | Exercisable
|                            |                            |           |           |                |   |            |       |            
|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 |             |  |  |   |       |  |  | 601,038   | 
|                            | 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 |             |  |  |   |       |  |  | 1,613,574 | 
|                            | Granted at market price    |           |           | 156,380        |   |            |       | 7.50        |  |  | $ | 4.20  |  |  |           |  | 
|                            | Granted above market price |           |           | 60,719         |   |            |       | 8.59        |  |  | $ | 3.39  |  |  |           |  | 
|                            | Exercised                  |           |           | (918           | ) |            |       | 3.88        |  |  |   |       |  |  |           |  | 
|                            | Cancelled                  |           |           | (772,382       | ) |            |       | 23.76       |  |  |   |       |  |  |           |  | 
|                            |                            |           |           |                |   |            |       |             |  |  |   |       |  |  |           | 
|Balance at February 3, 2002 |                            |           | 2,439,989 |                |   | $          | 14.07 |             |  |  |   |       |  |  | 1,752,258 | 
|                            |                            |           |           |                |   |            |       |             |  |  |   |       |  |  |           | 

The following table summarizes information about
the Companys stock options at February 3, 2002:

|                         |                 |                     |  |                     |           |                  |  |             |      |                   |  |   |       |  |  |  |           |  |  |   |       | 
|------------------------ | --------------- | ------------------- |  | ------------------- | --------- | ---------------- |  | ----------- | ---- | ----------------- |  | - | ----- |  |  |  | --------- |  |  | - | ----- | 
|                         |                 |                     |  |                    
|                         |                 | Options Outstanding |  | Options Exercisable
|                         |                 |                     |  |                    
|                         |                 |                     |  | Weighted Average    |           |                  |  |             |      | Weighted         
|                         |                 | Number              |  | Remaining           |           | Weighted Average |  |             |      | Average          
|Range of Exercise Prices |                 | Outstanding         |  | Contractual Life    |           | Exercise Price   |  | Exercisable |      | Exercisable Price
|                         |                 |                     |  |                     |           |                  |  |             |      |                  
|                         | $ 2.72  $11.88 |                     |  |                     | 320,846   |                  |  |             | 6.19 |                   |  | $ | 7.27  |  |  |  | 42,894    |  |  | $ | 7.06  | 
|                         | $11.94  $12.04 |                     |  |                     | 1,394,330 |                  |  |             | 2.10 |                   |  |   | 12.04 |  |  |  | 1,348,428 |  |  |   | 12.04 | 
|                         | $12.06  $20.00 |                     |  |                     | 418,645   |                  |  |             | 4.67 |                   |  |   | 15.52 |  |  |  | 224,555   |  |  |   | 16.08 | 
|                         | $20.13  $36.53 |                     |  |                     | 306,168   |                  |  |             | 4.11 |                   |  |   | 28.46 |  |  |  | 136,381   |  |  |   | 28.17 | 
|                         |                 |                     |  |                     |           |                  |  |             |      |                   |  |   |       |  |  |  |           |  |  |   |       | 
|                         | $ 2.72  $36.53 |                     |  |                     | 2,439,989 |                  |  |             | 3.33 |                   |  | $ | 14.07 |  |  |  | 1,752,258 |  |  | $ | 13.69 | 
|                         |                 |                     |  |                     |           |                  |  |             |      |                   |  |   |       |  |  |  |           |  |  |   |       | 

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 (loss) and diluted
earnings (loss) per share would have been changed to the pro
forma amounts indicated below ($ in thousands except per share
data):

|                                   |             |             |   |         |   |      |   |       |  |  |   |        | 
|---------------------------------- | ----------- | ----------- | - | ------- | - | ---- | - | ----- |  |  | - | ------ | 
|                                   |             |            
|                                   |             | Fiscal Year
|                                   |             |            
|                                   |             | 2001        |   | 2000    |   | 1999
|                                   |             |             |   |         |   |     
|Net income (loss):                 |             |             |   |         |   |      |   |       |  |  |   |       
|                                   | As reported |             | $ | (17,192 | ) |      | $ | 5,000 |  |  | $ | 27,371 | 
|                                   | Pro forma   |             |   | (19,523 | ) |      |   | 1,852 |  |  |   | 24,471 | 
|Diluted earnings (loss) per share: |             |             |   |         |   |      |   |       |  |  |   |       
|                                   | As reported |             | $ | (0.61   | ) |      | $ | 0.18  |  |  | $ | 0.96   | 
|                                   | Pro forma   |             |   | (0.69   | ) |      |   | 0.07  |  |  |   | 0.85   | 

65



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CSK AUTO CORPORATION AND
SUBSIDIARIES


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
|                         |  |            
|                         |  | 2001        |              | 2000 |  | 1999
|                         |  |             |              |      |  |     
|Dividend yield           |  |             | 0%           |      |  |      | 0%           |  |  |  | 0%           | 
|Risk free interest rate  |  |             | 4.15  4.92% |      |  |      | 5.35  6.65% |  |  |  | 4.75  5.94% | 
|Expected life of options |  |             | 6 years      |      |  |      | 6 years      |  |  |  | 6 years      | 
|Expected volatility      |  |             | 55%          |      |  |      | 98%          |  |  |  | 49%          | 

Note 12  Income Taxes

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

|          |         |             |        |        |        |      |     |       |     |  |        |        |        | 
|--------- | ------- | ----------- | ------ | ------ | ------ | ---- | --- | ----- | --- |  | ------ | ------ | ------ | 
|          |         |            
|          |         | Fiscal Year
|          |         |            
|          |         | 2001        |        | 2000   |        | 1999
|          |         |             |        |        |        |     
|Current:  |         |             |        |        |        |      |     |       |     |  |        |       
|          | Federal |             | $      |       |        |      | $   |      |     |  | $      | 450    |       
|          | State   |             |        |       |        |      |     |      |     |  |        | 387    |       
|          |         |             |        |        |        |      |     |       |     |  |        |       
|          |         |             |       |        |        |      |    |       |     |  | 837    |       
|          |         |             |        |        |        |      |     |       |     |  |        |       
|Deferred: |         |             |        |        |        |      |     |       |     |  |        |       
|          | Federal |             |        | (7,327 | )      |      |     | 1,052 |     |  |        | 13,707 |       
|          | State   |             |        | (1,559 | )      |      |     | (859  | )   |  |        | 2,892  |       
|          |         |             |        |        |        |      |     |       |     |  |        |       
|          |         |             | (8,886 | )      |        |      | 193 |       |     |  | 16,599 |       
|          |         |             |        |        |        |      |     |       |     |  |        |       
|          |         | Total       |        | $      | (8,886 | )    |     | $     | 193 |  |        | $      | 17,436 | 
|          |         |             |        |        |        |      |     |       |     |  |        |       

Included in fiscal 2001 results of operations is
$1,964,000 of tax benefit relating to the extraordinary loss
incurred in connection with the Refinancing. 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).

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
|                                                                                                           |  |            
|                                                                                                           |  | 2001        |         | 2000 |  | 1999
|                                                                                                           |  |             |         |      |  |     
|Income before income taxes, extraordinary loss
    and cumulative effect of change in accounting principle |  | $           | (22,941 | )    |  | $    | 5,193  |   |  | $ | 45,548 |  
|Federal income tax rate                                                                                    |  |             | 35      | %    |  |      | 34     | % |  |   | 35     | %
|                                                                                                           |  |             |         |      |  |      |        |   |  |   |        |  
|Expected provision (benefit) for income taxes                                                              |  |             | (8,029  | )    |  |      | 1,766  |   |  |   | 15,942 |  
|Non-deductible goodwill and other permanent
    differences                                                |  |             | 702     |      |  |      | 406    |   |  |   | 521    |  
|State taxes, net of federal benefit                                                                        |  |             | (734    | )    |  |      | 243    |   |  |   | 2,131  |  
|Reversal of reserves no longer required                                                                    |  |             |        |      |  |      | (1,222 | ) |  |   |       |  
|Tax credits and other                                                                                      |  |             | (825    | )    |  |      | (1,000 | ) |  |   | (1,158 | )
|                                                                                                           |  |             |         |      |  |      |        |   |  |   |        |  
|Actual provision (benefit) for income taxes                                                                |  | $           | (8,886  | )    |  | $    | 193    |   |  | $ | 17,436 |  
|                                                                                                           |  |             |         |      |  |      |        |   |  |   |        |  

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CSK AUTO CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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

|                                   |                                    |                                      |       |             |        |   |        |        |        | 
|---------------------------------- | ---------------------------------- | ------------------------------------ | ----- | ----------- | ------ | - | ------ | ------ | ------ | 
|                                   |                                    | February 3,                          |       | February 4,
|                                   |                                    | 2002                                 |       | 2001       
|                                   |                                    |                                      |       |            
|Gross deferred tax assets:         |                                    |                                      |       |             |        |   |        |       
|                                   | Store closing costs                |                                      | $     | 2,686       |        |   | $      | 616    |       
|                                   | Accrued employee benefits          |                                      |       | 7,028       |        |   |        | 5,654  |       
|                                   | Capital lease expenditures         |                                      |       | 857         |        |   |        | 389    |       
|                                   | Reserve for legal settlement       |                                      |       | 13          |        |   |        | 3,491  |       
|                                   | Provision for bad debts            |                                      |       | 2,606       |        |   |        | 949    |       
|                                   | Tax loss carryforwards             |                                      |       | 24,037      |        |   |        | 11,239 |       
|                                   | Other                              |                                      |       | 5,296       |        |   |        | 5,025  |       
|                                   |                                    |                                      |       |             |        |   |        |       
|                                   |                                    | Total gross deferred tax assets      |       |             | 42,523 |   |        |        | 27,363 | 
|                                   |                                    |                                      |       |             |        |   |        |       
|Gross deferred tax liabilities:    |                                    |                                      |       |             |        |   |        |       
|                                   | Inventory                          |                                      |       | 23,929      |        |   |        | 20,602 |       
|                                   | Depreciation                       |                                      |       | 9,073       |        |   |        | 8,663  |       
|                                   | Provision for site selection costs |                                      |       | 5,013       |        |   |        | 4,443  |       
|                                   | Other                              |                                      |       | 1,051       |        |   |        | 1,066  |       
|                                   |                                    |                                      |       |             |        |   |        |       
|                                   |                                    | Total gross deferred tax liabilities |       |             | 39,066 |   |        |        | 34,774 | 
|                                   |                                    |                                      |       |             |        |   |        |       
|Net deferred tax asset (liability) |                                    | $                                    | 3,457 |             |        | $ | (7,411 | )     
|                                   |                                    |                                      |       |             |        |   |        |       

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

|                                               |  |             |       |             |  |   |         |  
|---------------------------------------------- |  | ----------- | ----- | ----------- |  | - | ------- | -
|                                               |  | February 3, |       | February 4,
|                                               |  | 2002        |       | 2001       
|                                               |  |             |       |            
|Current deferred tax assets (liabilities), net |  | $           | 2,718 |             |  | $ | 3,133   |  
|Non-current deferred tax assets (liabilities)  |  |             | 739   |             |  |   | (10,544 | )
|                                               |  |             |       |             |  |   |         |  
|Net deferred tax asset (liability)             |  | $           | 3,457 |             |  | $ | (7,411  | )
|                                               |  |             |       |             |  |   |         |  

The Company has recorded deferred tax assets of
approximately $24.0 million as of February 3, 2002
reflecting the benefit of federal and state tax loss
carryforwards approximating $65.2 million and
$37.5 million, which begin to expire in 2014 and 2007,
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,
Restructuring and Other Profitability Enhancement Program
Charges

During the second quarter of fiscal 2001, the
Company implemented a Profitability Enhancement Program
(PEP) to reduce costs, improve operating
efficiencies and close under-performing stores. As a

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CSK AUTO CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

result of the PEP, the Company recorded total
restructuring and other charges of $44.6 million, which is
detailed in the following paragraphs. The table below summarizes
the charges relating to the PEP:

|                                                                 |                                                                                            |   |        |        | 
|---------------------------------------------------------------- | ------------------------------------------------------------------------------------------ | - | ------ | ------ | 
|Amounts recorded as store closing and
    restructuring charges: |                                                                                            |   |        |       
|                                                                 | Reserve for store closing costs                                                            |   | $      | 13,698 | 
|                                                                 | Write down for impairment of store site costs and
    store related property and equipment |   |        | 6,649  | 
|                                                                 | Reserve for workforce reduction                                                            |   |        | 400    | 
|                                                                 | Other                                                                                      |   |        | 729    | 
|                                                                 |                                                                                            |   |        |       
|                                                                 |                                                                                            |   | 21,476 |       
|                                                                 |                                                                                            |   |        |       
|Amounts recorded as charges to cost of
    sales:                |                                                                                            |   |        |       
|                                                                 | Provision for excess inventories                                                           |   |        | 17,292 | 
|                                                                 | Actual costs incurred for inventory review and
    disposal                                |   |        | 5,800  | 
|                                                                 |                                                                                            |   |        |       
|                                                                 |                                                                                            |   | 23,092 |       
|                                                                 |                                                                                            |   |        |       
|                                                                 |                                                                                            | $ | 44,568 |       
|                                                                 |                                                                                            |   |        |       



| |                    
| | -------------------
| | Store Closing Costs

The Company provides an allowance for estimated
costs and losses to be incurred in connection with store
closures. On an on-going basis, store locations are reviewed and
analyzed based on several factors including market saturation,
store profitability, and store size and format. In addition, the
Company analyzes sales trends and geographical and competitive
factors to determine the viability and future profitability of
its store locations. If a store location does not meet the
Companys required projections, it is designated for
closure. As a result of its acquisitions over the last several
years, the Company has closed numerous locations as a result of
store overlap with previously existing store locations.

The allowance for store closing costs is included
in accrued expenses and other long term liabilities in the
accompanying financial statements and primarily consists of
three components: (1) future rents to be paid over the
remaining terms of the lease agreements for the stores (net of
estimated probable sublease recoveries); (2) lease
commissions associated with the anticipated store subleases; and
(3) occupancy expenses associated with the closed store
vacancy periods. Such costs are recognized when a store is
specifically identified, costs can be estimated and closure is
planned to be completed within the next twelve months. No
provision is made for employee termination costs. For stores to
be relocated, such costs are recognized when an agreement for
the new location has been reached with a landlord and site plans
meet preliminary municipal approvals. During the period that
they remain open for business, the rent and other operating
expenses for the stores to be closed continue to be reflected in
normal operating expenses.

As of February 3, 2002, the Company had a
total of 245 store locations and service centers included in the
allowance for store closing costs. Of this total, 65 locations
were vacant, 173 locations were sub-leased and 7 locations were
identified for closure but remained open as of year end. Future
rents will be incurred through the expiration of the
non-cancelable leases, the longest of which runs through March
2018. During fiscal 2002, we expect cash outflows related to the
store locations of approximately $7.0 million for rent on
vacant stores, related occupancy expenses, leasing commissions
and net shortfalls on cash rents from subleased locations.

68



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CSK AUTO CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Activity in the provision for store closings and
the related store closing costs for the three fiscal years ended
February 3, 2002, including the PEP, is as follows ($ in
thousands):

|                                 |                                          |                                       |       |        |        |      |       |        |         |   |       |        |        |  
|-------------------------------- | ---------------------------------------- | ------------------------------------- | ----- | ------ | ------ | ---- | ----- | ------ | ------- | - | ----- | ------ | ------ | -
|                                 |                                          |                                      
|                                 |                                          | Fiscal Year                          
|                                 |                                          |                                      
|                                 |                                          | 2001                                  |       | 2000   |        | 1999
|                                 |                                          |                                       |       |        |        |     
|Balance, beginning of year       |                                          | $                                     | 1,552 |        |        | $    | 4,802 |        |         | $ | 2,670 |       
|Store closing costs:             |                                          |                                       |       |        |        |      |       |        |         |   |       |       
|                                 | Store closing costs, gross               |                                       |       | 7,530  |        |      |       | 6,101  |         |   |       | 5,252  |       
|                                 | Adjustments to prior plans               |                                       |       | (1,536 | )      |      |       | (41    | )       |   |       | (387   | )     
|                                 | Revisions in estimates                   |                                       |       | 8,638  |        |      |       |       |         |   |       | 35     |       
|                                 |                                          |                                       |       |        |        |      |       |        |         |   |       |       
|                                 |                                          | Store closing costs, net              |       |        | 14,632 |      |       |        | 6,060   |   |       |        | 4,900  |  
|Purchase accounting adjustments: |                                          |                                       |       |        |        |      |       |        |         |   |       |       
|                                 | Big Wheel/Rossi                          |                                       |       |       |        |      |       |       |         |   |       | 98     |       
|                                 | Als and Grand Auto Supply               |                                       |       |       |        |      |       | 2,744  |         |   |       | 4,080  |       
|                                 |                                          |                                       |       |        |        |      |       |        |         |   |       |       
|                                 |                                          | Total purchase accounting adjustments |       |        |       |      |       |        | 2,744   |   |       |        | 4,178  |  
|Payments:                        |                                          |                                       |       |        |        |      |       |        |         |   |       |       
|                                 | Rent expense, net of sublease recoveries |                                       |       | (6,051 | )      |      |       | (6,570 | )       |   |       | (3,518 | )     
|                                 | Occupancy and other expenses             |                                       |       | (2,839 | )      |      |       | (4,846 | )       |   |       | (3,150 | )     
|                                 | Sublease commissions and buyouts         |                                       |       | (523   | )      |      |       | (638   | )       |   |       | (278   | )     
|                                 |                                          |                                       |       |        |        |      |       |        |         |   |       |       
|                                 |                                          | Total payments                        |       |        | (9,413 | )    |       |        | (12,054 | ) |       |        | (6,946 | )
|                                 |                                          |                                       |       |        |        |      |       |        |         |   |       |       
|Balance, end of year             |                                          | $                                     | 6,771 |        |        | $    | 1,552 |        |         | $ | 4,802 |       
|                                 |                                          |                                       |       |        |        |      |       |        |         |   |       |       

During fiscal 2001, the Company recorded the
following charges: (1) gross store closing costs of
$7.5 million ($6.8 million from the PEP) relating to
the identification of 46 stores for closure; (2) an
adjustment to prior plans of $1.5 million due to two stores
previously identified for closure under its PEP that were
subsequently removed as they are currently under contract for
sale; and (3) revisions in estimates of $8.6 million
($1.3 million for plan year 2000, $0.8 million for
plan year 1999 and $6.5 million for plan years prior to
1999) relating to existing closed stores that have had longer
than anticipated vacancy periods as a result of the economic
slowdown.

During fiscal 2000, the Company recorded the
following significant charges: (1) gross store closing
costs of $6.1 million relating to the identification of 24
stores for closure ($3.7 million of which relates to a 1999
closure plan for current stores that overlapped with the
acquired AGA stores); and (2) purchase accounting
adjustments of $2.7 million relating to a 1999 closure plan
of certain acquired AGA stores.

During fiscal 1999, the Company recorded the
following significant charges relating to the identification of
87 stores for closure: (1) gross store closing costs
of $5.3 million ($2.5 million of which relates to a
1999 closure plan for its own stores that overlapped with the
acquired AGA stores); (2) an adjustment to prior plans of
$0.4 million ($0.2 million for plan year 1998 and
$0.2 million for plan year 1997) relating to costs for
store closures that were accrued in previously established plans
but withdrawn from its allowance 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; and (3) purchase accounting adjustments of
$4.2 million relating to a 1999 closure plan of certain
acquired AGA and Big Wheel stores.

69



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##### Table of Contents



CSK AUTO CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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 |    |             
|                           |  |                               |    |             
|                           |  | Beginning                     |    |              |  | Plan       |    |               |  | Balance to
|Store Count by Fiscal Year |  | Balance                       |    | Stores Added |  | Amendments |    | Stores Closed |  | be Closed 
|                           |  |                               |    |              |  |            |    |               |  |           
|1999                       |  |                               | 29 |              |  |            | 87 |               |  |            | (11 | ) |  |  | (77 | ) |  |  | 28 | 
|2000                       |  |                               | 28 |              |  |            | 24 |               |  |            | (1  | ) |  |  | (42 | ) |  |  | 9  | 
|2001                       |  |                               | 9  |              |  |            | 46 |               |  |            | (2  | ) |  |  | (46 | ) |  |  | 7  | 

At February 3, 2002, there were 7 stores
remaining to be closed under the Companys store closing
plans, comprised of the following:

|                                      |  |              |    |            |  |               |    |            |  |  |     |   |  |  |   | 
|------------------------------------- |  | ------------ | -- | ---------- |  | ------------- | -- | ---------- |  |  | --- | - |  |  | - | 
|                                      |  | Stores in    |    | Plan       |  |               |    | Balance to
|Store Count by Fiscal Year of Accrual |  | Closing Plan |    | Amendments |  | Stores Closed |    | be Closed 
|                                      |  |              |    |            |  |               |    |           
|1999                                  |  |              | 87 |            |  |               | (2 | )          |  |  | (84 | ) |  |  | 1 | 
|2000                                  |  |              | 24 |            |  |               |   |            |  |  | (24 | ) |  |  | 0 | 
|2001                                  |  |              | 46 |            |  |               | (2 | )          |  |  | (38 | ) |  |  | 6 | 
|                                      |  |              |    |            |  |               |    |            |  |  |     |   |  |  | 7 | 



| |                    
| | -------------------
| | Workforce Reduction

As a result of an internal review of general and
administrative functions, the Company terminated 36 employees.
The terminated employees worked primarily in human resources,
information technology and real estate. As a result of these
actions, a provision has been made for estimated severance and
benefits of approximately $0.4 million, all of which was
paid prior to February 3, 2002.



| |                            
| | ---------------------------
| | Other Restructuring Charges

Other restructuring costs include estimates for
early terminations of equipment operating leases
($0.5 million) and other costs. All such costs were paid
prior to February 3, 2002.



| |                                                       
| | ------------------------------------------------------
| | Provision for Excess Inventory and Related
    Charges

In conjunction with the PEP, the Company
completed an inventory review to: (1) increase inventory
turnover; (2) provide an optimal inventory level at each
store and depot location; (3) write down the inventory of
the 36 stores planned for closure; and (4) liquidate
inventory not meeting the Companys new asset return
levels. As a result of the analysis, the Company has established
a reserve for excess inventories resulting from the decision to
eliminate certain products and to liquidate inventory from
closed stores. In conjunction with this decision, a provision of
$17.3 million was recorded to reduce inventory values. In
addition, the Company incurred actual costs of approximately
$5.8 million related to labor, warehouse and distribution,
freight and other operating costs associated with the inventory
review and disposal. These costs are reflected as cost of sales
in the accompanying statement of operations for the fiscal year
ended February 3, 2002. All costs incurred for inventory
review and disposal were paid prior to February 3, 2002.
The balance in the inventory reserve as of February 3, 2002
was $0.9 million.

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

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CSK AUTO CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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., 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. In October 2001, the court granted the
motions in part and denied them in part. In March 2002, the
court entered an order separating discovery with respect to
liability and damages and setting various discovery deadlines.
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.

During fiscal 2001, the Company recorded a $2.0
million charge for the settlement of certain legal claims.

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 3, 2002 |         | February 4, 2001
|                                                           |  |                  |         |                 
|                                                           |  | Carrying         |         | Estimated        |  | Carrying |         | Estimated 
|                                                           |  | Amount           |         | Fair Value       |  | Amount   |         | Fair Value
|                                                           |  |                  |         |                  |  |          |         |           
|Receivables                                                |  |                  | 84,793  |                  |  |          | 84,793  |            |  |  | 69,726  |  |  |  | 69,726  | 
|Amounts due under senior credit facility                   |  |                  | 227,000 |                  |  |          | 227,000 |            |  |  | 526,480 |  |  |  | 526,480 | 
|Obligations under 12% Senior Notes(1)                      |  |                  | 275,416 |                  |  |          | 275,416 |            |  |  |        |  |  |  |        | 
|Obligations under 11% Senior Subordinated Notes            |  |                  | 81,250  |                  |  |          | 76,680  |            |  |  | 81,250  |  |  |  | 55,656  | 
|Obligations under 7% convertible subordinated
    notes(1) |  |                  | 49,100  |                  |  |          | 49,100  |            |  |  |        |  |  |  |        | 



---



|    |                                                                                                                                                                          
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Given the proximity of the issuance date of these
    instruments to the Companys fiscal year-end, no variation
    in the carrying value versus the fair value existed.

71



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CSK AUTO CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



|          |                  
|--------- | -----------------
|Note 16  | Subsequent Events

During February 2002, the Company entered into an
interest rate swap contract to convert $100.0 million of
its 12% Senior Notes to a floating rate, set quarterly, equal to
the 3 month LIBOR + 760 basis points. Based on debt
balances at February 3, 2002 this will result in 49% of the
Companys debt at variable interest rates and 51% at fixed
interest rates. The hedge is considered to qualify as a
fair value hedge; accordingly, the fair value of the
derivative and changes in the fair value of the underlying debt
will be reported on the balance sheet. Based upon the
Companys assessment of effectiveness of the hedge, changes
in the fair value of this derivative and the underlying debt are
not expected to result in a material impact on net income.

During the first quarter of fiscal 2002, the
Company entered into an agreement to sell 13 stores in Texas.
The stores are being sold as they are in relatively remote
locations that do not allow warehousing and distribution
efficiencies. This sale is expected to close in the second
quarter of fiscal 2002 and is estimated to result in net
proceeds of approximately $4.0 million. This sale is not
expected to have a material effect on results of operations in
fiscal 2002.



|          |                              
|--------- | -----------------------------
|Note 17  | Quarterly Results (unaudited)

The Companys business is somewhat seasonal
in nature, with the highest sales occurring in the summer months
of June through August (overlapping its second and third fiscal
quarters). In addition, its business is affected by weather
conditions. While unusually severe or inclement weather tends to
reduce sales as customers are more likely to defer elective
maintenance during such periods, extremely hot and cold
temperatures tend to enhance sales by causing auto parts to fail
and sales of seasonal products to increase.

The following table sets forth certain quarterly
unaudited operating data for fiscal 2001 and 2000. The unaudited
quarterly information includes all adjustments which management
considers necessary for a fair presentation of the information
shown.

|                                                                   |  |                                            |         |            |  |         |         |         |  |   |         |  |  |   |         |  
|------------------------------------------------------------------ |  | ------------------------------------------ | ------- | ---------- |  | ------- | ------- | ------- |  | - | ------- |  |  | - | ------- | -
|                                                                   |  |                                           
|                                                                   |  | Fiscal 2001                               
|                                                                   |  |                                           
|                                                                   |  | First                                      |         | Second     |  | Third   |         | Fourth 
|                                                                   |  | Quarter                                    |         | Quarter(1) |  | Quarter |         | Quarter
|                                                                   |  |                                            |         |            |  |         |         |        
|                                                                   |  |                                           
|                                                                   |  | ($ in thousands, except per share amounts)
|Net sales                                                          |  | $                                          | 356,121 |            |  | $       | 381,722 |         |  | $ | 366,741 |  |  | $ | 334,001 |  
|Gross profit                                                       |  |                                            | 168,586 |            |  |         | 147,074 |         |  |   | 171,113 |  |  |   | 161,227 |  
|Store closing and restructuring costs                              |  |                                            | 2,295   |            |  |         | 21,476  |         |  |   | 11      |  |  |   | (1,390  | )
|Legal settlement                                                   |  |                                            |        |            |  |         | 2,000   |         |  |   |        |  |  |   |        |  
|Operating profit (loss)                                            |  |                                            | 20,187  |            |  |         | (23,959 | )       |  |   | 23,663  |  |  |   | 18,776  |  
|Income (loss) before extraordinary loss                            |  |                                            | 2,253   |            |  |         | (23,837 | )       |  |   | 5,934   |  |  |   | 1,595   |  
|Extraordinary loss net of $1,964 of income taxes                   |  |                                            |        |            |  |         |        |         |  |   |        |  |  |   | (3,137  | )
|Net income (loss)                                                  |  | $                                          | 2,253   |            |  | $       | (23,837 | )       |  | $ | 5,934   |  |  | $ | (1,542  | )
|Basic earnings (loss) per share before
    extraordinary loss(3)   |  | $                                          | 0.08    |            |  | $       | (0.86   | )       |  | $ | 0.21    |  |  | $ | 0.05    |  
|Diluted earnings (loss) per share before
    extraordinary loss(3) |  | $                                          | 0.08    |            |  | $       | (0.86   | )       |  | $ | 0.19    |  |  | $ | 0.05    |  
|Basic earnings (loss) per share(3)                                 |  | $                                          | 0.08    |            |  | $       | (0.86   | )       |  | $ | 0.21    |  |  | $ | (0.05   | )
|Diluted earnings (loss) per share(3)                               |  | $                                          | 0.08    |            |  | $       | (0.86   | )       |  | $ | 0.19    |  |  | $ | (0.05   | )

72



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CSK AUTO CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

|                                      |  |                                          |         |         |  |         |         |         |  |   |         |  |  |   |         |  
|------------------------------------- |  | ---------------------------------------- | ------- | ------- |  | ------- | ------- | ------- |  | - | ------- |  |  | - | ------- | -
|                                      |  |                                         
|                                      |  | 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 |  
|Store closing and restructuring costs |  |                                          | 1,845   |         |  |         | 4,018   |         |  |   | 149     |  |  |   | 48      |  
|Legal settlement(2)                   |  |                                          |        |         |  |         |        |         |  |   |        |  |  |   | 8,800   |  
|Operating profit                      |  |                                          | 23,785  |         |  |         | 13,558  |         |  |   | 25,709  |  |  |   | 7,664   |  
|Equity in loss of joint venture       |  |                                          |        |         |  |         | 716     |         |  |   | 1,188   |  |  |   | 1,264   |  
|Net income (loss)                     |  |                                          | 5,675   |         |  |         | (1,495  | )       |  |   | 5,892   |  |  |   | (5,072  | )
|Basic earnings (loss) per share(3)    |  | $                                        | 0.20    |         |  | $       | (0.05   | )       |  | $ | 0.21    |  |  | $ | (0.18   | )
|Diluted earnings (loss) per share(3)  |  | $                                        | 0.20    |         |  | $       | (0.05   | )       |  | $ | 0.21    |  |  | $ | (0.18   | )



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | During the second quarter of fiscal 2001 the
    Company recorded a charge of $23.1 million to cost of
    sales, reducing gross profit and a charge of $21.5 million
    for store closing and restructuring costs as part of the
    Profitability Enhancement Program. See the Profitability
    Enhancement Program discussion in Item 7 Management
    Discussion and Analysis of Financial Condition and Results of
    Operations.
|   
|(2) | During the fourth quarter of 2000, the Company
    settled a lawsuit. The estimated amount of the settlement was
    recorded during the quarter. See Note 14.                                                                                                                                                                                                                                                                           
|   
|(3) | 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.                                                                                                                                                                                      

73



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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 the Companys definitive proxy statement in
connection with the solicitation of proxies for its 2002 Annual
Meeting of Stockholders to be held on June 12, 2002 (the
Proxy Statement).

The required information concerning the
Companys 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 Statements of Operations 
    Fiscal Years Ended February 3, 2002, February 4, 2001,
    and January 30, 2000          
|
| | Consolidated Balance Sheets 
    February 3, 2002 and February 4, 2001                                                              
|
| | Consolidated Statements of Stockholders
    Equity  Fiscal Years Ended February 3, 2002,
    February 4, 2001, and January 30, 2000
|
| | Consolidated Statements of Cash Flows 
    Fiscal Years Ended February 3, 2002, February 4, 2001,
    and January 30, 2000          

Notes to Consolidated Financial Statements

(a)(2) The following financial statement
schedules of CSK Auto Corporation for the three years ended
February 3, 2002 are included in this Report on
Form 10-K, as required by Item 14(d):
Schedule I  Financial Information of the
Registrant; 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
Consolidated Financial Statements.

74



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##### Table of Contents



(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, incorporated herein by reference to
    Exhibit 3.03.1 of our annual report on Form 10-K,
    filed on May 1, 2001 (File No. 001-13927) 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,
    incorporated herein by reference to Exhibit 4.01.1 of our
    Annual Report on Form 10-K, filed on May 1, 2001
    (File No. 001-13927).                                                                                                                                                                                                                                                                                                                                                           
|        | 4.01.2 |                         |  | Amendment No. 2 to the Third Amended and
    Restated Credit Agreement, dated as of December 4, 2000,
    incorporated herein by reference to Exhibit 4.01.2 of our
    Annual Report on Form 10-K, filed on May 1, 2001
    (File No. 001-13927).                                                                                                                                                                                                                                                                                                                                                            
|        | 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).                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|        | 4.04   |                         |  | Securities Purchase Agreement dated as of
    December 7, 2001 by and among CSK Auto Corporation, LBI
    Group Inc. and Investcorp CSK Holdings L.P., including form of
    Debenture and form of Make Whole Warrant, incorporated herein by
    reference to Exhibit 99.2 of our Current Report on
    Form 8-K, filed December 11, 2001.                                                                                                                                                                                                                                                                   
|        | 4.04.1 |                         |  | Registration Rights Agreement dated as of
    December 7, 2001 by and among CSK Auto Corporation, LBI
    Group Inc. and Investcorp CSK Holdings L.P., incorporated herein
    by reference to Exhibit 99.3 of our Current Report on
    Form 8-K, filed December 11, 2001.                                                                                                                                                                                                                                                                                                                                   
|        | 4.04.2 |                         |  | Purchase Agreement, dated December 7, 2001,
    by and among CSK Auto, Inc; CSK Auto Corporation, Automotive
    Information Systems, Inc. and CSKAUTO.COM, Inc., as Guarantors;
    and Credit Suisse First Boston Corporation, J.P. Morgan
    Securities Inc. and UBS Warburg LLC as Purchasers, incorporated
    herein by reference to Exhibit 99.4 of our Current Report
    on Form 8-K, filed January 18, 2002.                                                                                                                                                                                       
|        | 4.05   |                         |  | Credit Agreement, dated as of December 21,
    2001, by and among CSK Auto, Inc., the lenders from time to time
    a party thereto, and JP Morgan Chase Bank, Credit Suisse First
    Boston, and UBS AG, Stamford Branch, incorporated herein by
    reference to Exhibit 99.2 of our Current Report on
    Form 8-K, filed January 18, 2002.                                                                                                                                                                                                                                                               
|        | 4.05.1 |                         |  | Indenture, dated December 21, 2001, by and
    among CSK Auto, Inc.; CSK Auto Corporation, as guarantor;
    Automotive Information Systems, Inc. and CSKAUTO.COM, Inc., as
    subsidiary guarantors; and the Bank of New York, as Trustee,
    incorporated herein by reference to Exhibit 99.3 of our
    Current Report on Form 8-K, filed January 18, 2002.                                                                                                                                                                                                                                              

75



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|        |         |                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                        
|------- | ------- | ----------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |         |                        
|Number  |         | Description of Exhibits
|        |         |                        
|        | 4.05.2  |                         |  | Registration Rights Agreement, dated
    December 21, 2001, by and among CSK Auto, Inc; CSK Auto
    Corporation, Automotive Information Systems, Inc. and
    CSKAUTO.COM, Inc., as Guarantors; and Credit Suisse First Boston
    Corporation, J.P. Morgan Securities Inc. and UBS Warburg LLC as
    Purchasers, incorporated herein by reference to
    Exhibit 99.5 of our Current Report on Form 8-K, filed
    January 18, 2002.
|        | 4.06    |                         |  | ISDA master agreement executed as of March 2002
    between Lehman Brothers Special Financing Inc. and CSK Auto,
    Inc., incorporated herein by reference to our Annual Report on
    Form 10-K, filed on April 23, 2002 (File
    No. 001-13927).                                                                                                                                                                                   
|        | 10.01.1 |                         |  | Amended and Restated Employment Agreement, dated
    as of June 12, 1998, between CSK Auto, Inc. 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 CSK Auto, Inc. 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 CSK Auto, Inc. 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).                                                                                                                                                                                                                                                                                      
|        | 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, incorporated herein by reference to
    Exhibit 10.11 of our Annual Report on Form 10-K, filed
    on May 1, 2001 (File No. 001-13927).                                                                                                                                                                                                                                
|        | 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).                                                                                                                                                                                




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|        |         |                         |  |                                                                                                                                                                                                                                                                                                                                   
|------- | ------- | ----------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |         |                        
|Number  |         | Description of Exhibits
|        |         |                        
|        | 10.15   |                         |  | Lease dated July 31, 1997 between Missouri
    Falls Partners and CSK Auto, Inc.; First Amendment to Lease
    dated April 1, 2000, incorporated herein by reference to
    Exhibit 10.15 of our Annual Report on Form 10-K filed
    on May 1, 2001 (File No. 001-13927).                                                        
|        | 10.16   |                         |  | Lease dated April 20, 2000 between Missouri
    Falls Partners and CSK Auto, Inc.; First Amendment to Lease
    dated February 23, 2000, incorporated herein by reference to
    Exhibit 10.15 of our Annual Report on Form 10-K filed
    on May 1, 2001 (File No. 001-13927).                                                   
|        | 10.17   |                         |  | Lease dated April 20, 2000 between Missouri
    Falls Partners and CSK Auto, Inc.; First Amendment to Lease
    dated August 20, 2000, incorporated herein by reference to
    Exhibit 10.15 of our Annual Report on Form 10-K filed
    on May 1, 2001 (File No. 001-13927).                                                     
|        | 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).                                                                                                                                                       
|        | 10.18.5 |                         |  | Second Amendment to Stockholders Agreement dated
    December 7, 2001, incorporated herein by reference to our
    Registration Statement on Form S-4 filed February 11,
    2002.                                                                                                                                                
|        | 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, incorporated herein
    by reference to Exhibit 10.21 of our Annual Report on
    Form 10-K, filed on May 1, 2001
    (File No. 001-13927).                                                                                              
|        | 10.22   |                         |  | Employment Agreement between CSK Auto, Inc. and
    Lon B. Novatt, incorporated herein by reference to
    Exhibit 10.22 of our Annual Report on Form 10-K, filed
    on May 1, 2001 (File No. 001-13927).                                                                                                                        
|        | 10.23   |                         |  | Employment Agreement, dated February 25,
    1997, between CSK Auto, Inc. and Dale E. Ward, incorporated
    herein by reference to Exhibit 10.23 of our Annual Report
    on Form 10-K, filed on May 1, 2001
    (File No. 001-13927).                                                                                           
|        | 10.24   |                         |  | Severance and Retention Agreement between CSK
    Auto, Inc. and Don Watson, incorporated herein by reference to
    Exhibit 10.03 of our Quarterly Report on Form 10-Q,
    filed on December 19, 2001 (File No. 001-13927).                                                                                                     
|        | 10.25   |                         |  | Severance and Retention Agreement between CSK
    Auto, Inc. and Lon Novatt, incorporated herein by reference to
    Exhibit 10.02 of our Quarterly Report on Form 10-Q,
    filed on December 19, 2001 (File No. 001-13927).                                                                                                     
|        | 10.26   |                         |  | Severance and Retention Agreement between CSK
    Auto, Inc. and Dale Ward, incorporated herein by reference to
    Exhibit 10.04 of our Quarterly Report on Form 10-Q,
    filed on December 19, 2001 (File No. 001-13927).                                                                                                      
|        | 10.27   |                         |  | Severance and Retention Agreement between CSK
    Auto, Inc. and Martin Fraser, incorporated herein by reference
    to Exhibit 10.01 of our Quarterly Report on Form 10-Q,
    filed on December 19, 2001 (File No. 001-13927).                                                                                                  

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|        |       |                         |  |                                                                                                                                                                                                                                                                                
|------- | ----- | ----------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |                        
|Number  |       | Description of Exhibits
|        |       |                        
|        | 10.28 |                         |  | Severance and Retention Agreement between CSK
    Auto, Inc. and Larry Buresh, incorporated herein by reference to
    Exhibit 10.05 of our Quarterly Report on Form 10-Q,
    filed on December 19, 2001 (File No. 001-13927).                                                
|        | 10.29 |                         |  | Severance and Retention Agreement between CSK
    Auto, Inc. and Larry Ellis, incorporated herein by reference to
    Exhibit 10.06 of our Quarterly Report on Form 10-Q,
    filed on December 19, 2001 (File No. 001-13927).                                                 
|        | 10.30 |                         |  | Severance and Retention Agreement between CSK
    Auto, Inc. and Bill Evans, incorporated herein by reference to
    Exhibit 10.07 of our Quarterly Report on Form 10-Q,
    filed on December 19, 2001 (File No. 001-13927).                                                  
|        | 10.31 |                         |  | Amended and Restated Severance and Retention
    Agreement between CSK Auto, Inc. and Lon Novatt, dated
    February 14, 2002, incorporated herein by reference to our
    Annual Report on Form 10-K, filed on April 23, 2002
    (File No. 001-13927).                       
|        | 10.32 |                         |  | Amended and Restated Severance and Retention
    Agreement between CSK Auto, Inc. and Dale Ward, dated
    February 14, 2002                                                                                                                                                   
|        | 10.33 |                         |  | Amended and Restated Severance and Retention
    Agreement between CSK Auto, Inc. and Don Watson, dated
    February 14, 2002, incorporated herein by reference to our
    Annual Report on Form 10-K, filed on April 23, 2002
    (File No. 001-13927).                       
|        | 10.34 |                         |  | Amended and Restated Severance and Retention
    Agreement between CSK Auto, Inc. and Martin Fraser, dated
    February 14, 2002, incorporated herein by reference to our
    Annual Report on Form 10-K, filed on April 23, 2002
    (File No. 001-13927).                    
|        | 10.35 |                         |  | Amended and Restated Severance and Retention
    Agreement between CSK Auto, Inc. and Larry Ellis, dated
    February 14, 2002, incorporated herein by reference to our
    Annual Report on Form 10-K, filed on April 23, 2002
    (File No. 001-13927).                      
|        | 10.36 |                         |  | Amended and Restated Severance and Retention
    Agreement between CSK Auto, Inc. and Larry Buresh, dated
    February 14, 2002, incorporated herein by reference to our
    Annual Report on Form 10-K, filed on April 23, 2002
    (File No. 001-13927).                     
|        | 10.37 |                         |  | Amended and Restated Severance and Retention
    Agreement between CSK Auto, Inc. and Bill Evans, dated
    February 14, 2002, incorporated herein by reference to our
    Annual Report on Form 10-K, filed on April 23, 2002
    (File No. 001-13927).                       
|        | 10.38 |                         |  | Severance and Retention Agreement between CSK
    Auto, Inc. and Hal Smith, dated February 14, 2002.                                                                                                                                                                           
|        | 10.39 |                         |  | Amendment to all CSK Auto, Inc. Leases at
    Missouri Falls, dated December 6, 2001, by and between
    Missouri Falls Partners and MFP Holdings, LLC and CSK Auto,
    Inc., incorporated by reference to our Registration Statement on
    Form S-4 filed February 11, 2002.
|        | 10.40 |                         |  | Voting Agreement dated December 7, 2001,
    incorporated by reference to our Registration Statement on
    Form S-4 filed February 11, 2002.                                                                                                                                  
|        | 10.41 |                         |  | Form of CSK Auto Corporation Option Exchange
    Agreement, incorporated herein by reference to our Annual Report
    on Form 10-K, filed on April 23, 2002 (File
    No. 001-13927).                                                                                          
|        | 21.01 |                         |  | Subsidiaries of the Company, incorporated herein
    by reference to our Annual Report on Form 10-K, filed on
    April 23, 2002 (File No. 001-13927).                                                                                                                         
|        | 23.01 |                         |  | Consent of Independent Accountants.                                                                                                                                                                                                                                            






| |     |                     
| | --- | --------------------
| | (b) | Reports on Form 8-K:



| |                                                                                                                                                                                                                                 
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | On December 11, 2001, the Company filed a
    current report on Form 8-K to report, under Item 5
    thereof, the Companys entry into an agreement concerning
    the private placement of convertible subordinated debentures.

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| |                                                                                                                                                                 
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------
| | On January 17, 2002, the Company filed a
    current report on Form 8-K to report, under Item 5
    thereof, the Companys refinancing of its capital structure.

78.1



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##### Table of Contents



Report of Independent Accountants on

Financial Statement Schedules


To the Board of Directors


of CSK Auto
Corporation:


Our audits of the consolidated financial
statements referred to in our report dated April 16, 2002
appearing in this Annual Report on Form 10-K of CSK Auto
Corporation and its subsidiaries also included an audit of the
financial statement schedules listed in Item 14(a)(2) of
this Form 10-K. In our opinion, these financial statement
schedules present fairly, in all material respects, the
information set forth therein when read in conjunction with the
related consolidated financial statements.

PRICEWATERHOUSECOOPERS LLP

Phoenix, Arizona

April 16, 2002


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Schedule I

CSK AUTO CORPORATION

(Parent Company Only)


BALANCE SHEETS

|                                         |                                                                                                                                                                                         |                                            |         |             |         |   |         |          |         | 
|---------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ------- | ----------- | ------- | - | ------- | -------- | ------- | 
|                                         |                                                                                                                                                                                         | February 3,                                |         | February 4,
|                                         |                                                                                                                                                                                         | 2002                                       |         | 2001       
|                                         |                                                                                                                                                                                         |                                            |         |            
|                                         |                                                                                                                                                                                         |                                           
|                                         |                                                                                                                                                                                         | (in thousands,                            
|                                         |                                                                                                                                                                                         | except share data)                        
|ASSETS                                  
|Investment in subsidiaries               |                                                                                                                                                                                         | $                                          | 154,286 |             |         | $ | 139,613 |         
|                                         |                                                                                                                                                                                         |                                            |         |             |         |   |         |         
|                                         |                                                                                                                                                                                         | Total assets                               |         | $           | 154,286 |   |         | $        | 139,613 | 
|                                         |                                                                                                                                                                                         |                                            |         |             |         |   |         |         
|LIABILITIES AND STOCKHOLDERS
    EQUITY
|Commitments and contingencies            |                                                                                                                                                                                         |                                            |         |             |         |   |         |         
|Stockholders equity:                    |                                                                                                                                                                                         |                                            |         |             |         |   |         |         
|                                         | Common stock, $0.01 par value, 50,000,000 shares
    authorized, 32,370,746 and 27,841,178 shares issued and
    outstanding at February 3, 2002 and February 4, 2001,
    respectively |                                            |         | 324         |         |   |         | 278      |        
|                                         | Additional paid-in capital                                                                                                                                                              |                                            |         | 322,667     |         |   |         | 291,063  |        
|                                         | Stockholder receivable                                                                                                                                                                  |                                            |         | (686        | )       |   |         | (745     | )      
|                                         | Deferred compensation                                                                                                                                                                   |                                            |         |            |         |   |         | (156     | )      
|                                         | Accumulated deficit                                                                                                                                                                     |                                            |         | (168,019    | )       |   |         | (150,827 | )      
|                                         |                                                                                                                                                                                         |                                            |         |             |         |   |         |         
|                                         |                                                                                                                                                                                         | Total stockholders equity                 |         |             | 154,286 |   |         |          | 139,613 | 
|                                         |                                                                                                                                                                                         |                                            |         |             |         |   |         |         
|                                         |                                                                                                                                                                                         | Total liabilities and stockholders equity |         | $           | 154,286 |   |         | $        | 139,613 | 
|                                         |                                                                                                                                                                                         |                                            |         |             |         |   |         |         

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

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Schedule I

CSK AUTO CORPORATION

(Parent Company Only)


STATEMENTS OF OPERATIONS

|                                                                                                                      |                                                                                                     |                                                   |         |             |   |             |       |            |  |   |        |            |  
|--------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------- | ------------------------------------------------- | ------- | ----------- | - | ----------- | ----- | ---------- |  | - | ------ | ---------- | -
|                                                                                                                      |                                                                                                     |                                                  
|                                                                                                                      |                                                                                                     | Fiscal Year Ended                                
|                                                                                                                      |                                                                                                     |                                                  
|                                                                                                                      |                                                                                                     | February 3,                                       |         | February 4, |   | January 30,
|                                                                                                                      |                                                                                                     | 2002                                              |         | 2001        |   | 2000       
|                                                                                                                      |                                                                                                     |                                                   |         |             |   |            
|                                                                                                                      |                                                                                                     |                                                  
|                                                                                                                      |                                                                                                     | ($ in thousands, except share and per share data)
|Equity interest in income (loss) from
    subsidiaries                                                                |                                                                                                     |                                                   | (22,941 | )           |   |             | 5,193 |            |  |   | 45,548 |           
|                                                                                                                      |                                                                                                     |                                                   |         |             |   |             |       |            |  |   |        |           
|Income (loss) before income taxes,
    extraordinary loss and cumulative effect of change in accounting
    principle |                                                                                                     |                                                   | (22,941 | )           |   |             | 5,193 |            |  |   | 45,548 |           
|Income tax expense (benefit)                                                                                          |                                                                                                     |                                                   | (8,886  | )           |   |             | 193   |            |  |   | 17,436 |           
|                                                                                                                      |                                                                                                     |                                                   |         |             |   |             |       |            |  |   |        |           
|Income (loss) before extraordinary loss and
    cumulative effect of change in accounting principle                   |                                                                                                     |                                                   | (14,055 | )           |   |             | 5,000 |            |  |   | 28,112 |           
|Extraordinary loss, net of $1,964 of income taxes                                                                     |                                                                                                     |                                                   | (3,137  | )           |   |             |      |            |  |   |       |           
|                                                                                                                      |                                                                                                     |                                                   |         |             |   |             |       |            |  |   |        |           
|Income (loss) before cumulative effect of
    change in accounting principle                                          |                                                                                                     |                                                   | (17,192 | )           |   |             | 5,000 |            |  |   | 28,112 |           
|Cumulative effect of change in accounting
    principle, net of $468 of income taxes                                  |                                                                                                     |                                                   |        |             |   |             |      |            |  |   | (741   | )         
|                                                                                                                      |                                                                                                     |                                                   |         |             |   |             |       |            |  |   |        |           
|Net income (loss)                                                                                                     |                                                                                                     | $                                                 | (17,192 | )           |   | $           | 5,000 |            |  | $ | 27,371 |           
|                                                                                                                      |                                                                                                     |                                                   |         |             |   |             |       |            |  |   |        |           
|Basic earnings (loss) per share:                                                                                      |                                                                                                     |                                                   |         |             |   |             |       |            |  |   |        |           
|                                                                                                                      | Income (loss) before extraordinary loss and
    cumulative effect of change in accounting principle |                                                   | $       | (0.50       | ) |             | $     | 0.18       |  |   | $      | 1.01       |  
|                                                                                                                      | Extraordinary loss, net of income taxes                                                             |                                                   |         | (0.11       | ) |             |       |           |  |   |        |           |  
|                                                                                                                      |                                                                                                     |                                                   |         |             |   |             |       |            |  |   |        |           
|                                                                                                                      | Income (loss) before cumulative effect of
    change in accounting principle                        |                                                   |         | (0.61       | ) |             |       | 0.18       |  |   |        | 1.01       |  
|                                                                                                                      | Cumulative effect of change in accounting
    principle, net of income taxes                        |                                                   |         |            |   |             |       |           |  |   |        | (0.03      | )
|                                                                                                                      |                                                                                                     |                                                   |         |             |   |             |       |            |  |   |        |           
|                                                                                                                      | Net income (loss)                                                                                   |                                                   | $       | (0.61       | ) |             | $     | 0.18       |  |   | $      | 0.98       |  
|                                                                                                                      |                                                                                                     |                                                   |         |             |   |             |       |            |  |   |        |           
|                                                                                                                      | Shares used in computing per share amounts                                                          |                                                   |         | 28,390,582  |   |             |       | 27,839,348 |  |   |        | 27,815,160 |  
|                                                                                                                      |                                                                                                     |                                                   |         |             |   |             |       |            |  |   |        |           
|Diluted earnings (loss) per share:                                                                                    |                                                                                                     |                                                   |         |             |   |             |       |            |  |   |        |           
|                                                                                                                      | Income (loss) before extraordinary loss and
    cumulative effect of change in accounting principle |                                                   | $       | (0.50       | ) |             | $     | 0.18       |  |   | $      | 0.98       |  
|                                                                                                                      | Extraordinary loss, net of income taxes                                                             |                                                   |         | (0.11       | ) |             |       |           |  |   |        |           |  
|                                                                                                                      |                                                                                                     |                                                   |         |             |   |             |       |            |  |   |        |           
|                                                                                                                      | Income (loss) before cumulative effect of
    change in accounting principle                        |                                                   |         | (0.61       | ) |             |       | 0.18       |  |   |        | 0.98       |  
|                                                                                                                      | Cumulative effect of change in accounting
    principle, net of income taxes                        |                                                   |         |            |   |             |       |           |  |   |        | (0.02      | )
|                                                                                                                      |                                                                                                     |                                                   |         |             |   |             |       |            |  |   |        |           
|                                                                                                                      | Net income (loss)                                                                                   |                                                   | $       | (0.61       | ) |             | $     | 0.18       |  |   | $      | 0.96       |  
|                                                                                                                      |                                                                                                     |                                                   |         |             |   |             |       |            |  |   |        |           
|                                                                                                                      | Shares used in computing per share amounts                                                          |                                                   |         | 28,390,582  |   |             |       | 27,839,348 |  |   |        | 28,626,776 |  
|                                                                                                                      |                                                                                                     |                                                   |         |             |   |             |       |            |  |   |        |           

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

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Schedule I

CSK AUTO CORPORATION

(Parent Company Only)


STATEMENTS OF STOCKHOLDERS
EQUITY

|                                               |  |                                     |            |            |  |             |     |            |  |              |         |         |  |        |        |   |  |   |      |   |  |   |          |   |  |   |         |  
|---------------------------------------------- |  | ----------------------------------- | ---------- | ---------- |  | ----------- | --- | ---------- |  | ------------ | ------- | ------- |  | ------ | ------ | - |  | - | ---- | - |  | - | -------- | - |  | - | ------- | -
|                                               |  |                                     |            |            |  |             |     |            |  |              |         |        
|                                               |  | Common Stock                        |            | Additional |  |             |     |            |  |              |         |        
|                                               |  |                                     |            | Paid-in    |  | Stockholder |     | Deferred   |  | Accumulated  |         | Total  
|                                               |  | Shares                              |            | Amount     |  | Capital     |     | Receivable |  | Compensation |         | Deficit |  | Equity
|                                               |  |                                     |            |            |  |             |     |            |  |              |         |         |  |       
|                                               |  |                                    
|                                               |  | ($ in thousands, except share data)
|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 |  
|Amortization of deferred compensation          |  |                                     |           |            |  |             |    |            |  |              |        |         |  |        |       |   |  |   | 156  |   |  |   |         |   |  |   | 156     |  
|Conversion of notes                            |  |                                     | 4,524,886  |            |  |             | 45  |            |  |              | 30,701  |         |  |        |       |   |  |   |     |   |  |   |         |   |  |   | 30,746  |  
|Issuances of restricted stock                  |  |                                     | 927        |            |  |             |    |            |  |              |        |         |  |        |       |   |  |   |     |   |  |   |         |   |  |   |        |  
|Beneficial conversion feature of note          |  |                                     |           |            |  |             |    |            |  |              | 900     |         |  |        |       |   |  |   |     |   |  |   |         |   |  |   | 900     |  
|Recovery of stockholder receivable             |  |                                     |           |            |  |             |    |            |  |              |        |         |  |        | 59     |   |  |   |     |   |  |   |         |   |  |   | 59      |  
|Exercise of options                            |  |                                     | 3,755      |            |  |             | 1   |            |  |              | 3       |         |  |        |       |   |  |   |     |   |  |   |         |   |  |   | 4       |  
|Net loss                                       |  |                                     |           |            |  |             |    |            |  |              |        |         |  |        |       |   |  |   |     |   |  |   | (17,192  | ) |  |   | (17,192 | )
|                                               |  |                                     |            |            |  |             |     |            |  |              |         |         |  |        |        |   |  |   |      |   |  |   |          |   |  |   |         |  
|Balances at February 3, 2002                   |  |                                     | 32,370,746 |            |  | $           | 324 |            |  | $            | 322,667 |         |  | $      | (686   | ) |  | $ |      |   |  | $ | (168,019 | ) |  | $ | 154,286 |  
|                                               |  |                                     |            |            |  |             |     |            |  |              |         |         |  |        |        |   |  |   |      |   |  |   |          |   |  |   |         |  

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Schedule I

CSK AUTO CORPORATION

(Parent Company Only)


STATEMENTS OF CASH FLOWS

|                                                           |                   |                                                                                                 |                                                 |                                                          |   |             |   |       |  |        |   |        |  |         |   | 
|---------------------------------------------------------- | ----------------- | ----------------------------------------------------------------------------------------------- | ----------------------------------------------- | -------------------------------------------------------- | - | ----------- | - | ----- |  | ------ | - | ------ |  | ------- | - | 
|                                                           |                   |                                                                                                
|                                                           |                   | Fiscal Year Ended                                                                              
|                                                           |                   |                                                                                                
|                                                           |                   | February 3,                                                                                     |                                                 | February 4,                                              |   | January 30,
|                                                           |                   | 2002                                                                                            |                                                 | 2001                                                     |   | 2000       
|                                                           |                   |                                                                                                 |                                                 |                                                          |   |            
|                                                           |                   |                                                                                                
|                                                           |                   | ($ in thousands)                                                                               
|Cash flows provided by (used in) operating
    activities: |                   |                                                                                                 |                                                 |                                                          |   |             |   |       |  |        |   |       
|                                                           | Net income (loss) |                                                                                                 | $                                               | (17,192                                                  | ) |             | $ | 5,000 |  |        | $ | 27,371 | 
|                                                           |                   | Adjustments to reconcile net income to net cash
    provided by (used in) operating activities: |                                                 |                                                          |   |             |   |       |  |        |   |        |  |        
|                                                           |                   |                                                                                                 | Equity interest in net income from subsidiaries |                                                          |   | 17,192      |   |       |  | (5,000 | ) |        |  | (27,371 | )
|                                                           |                   |                                                                                                 |                                                 |                                                          |   |             |   |       |  |        |   |       
|                                                           |                   |                                                                                                 |                                                 | Net cash provided by (used in) operating
    activities  |   |             |  |       |  |        |  |        |  |         |  | 
|                                                           |                   |                                                                                                 |                                                 |                                                          |   |             |   |       |  |        |   |       
|Cash flows provided by (used in) investing
    activities: |                   |                                                                                                 |                                                 |                                                          |   |             |   |       |  |        |   |       
|                                                           |                   |                                                                                                 |                                                 | Net cash provided by (used) in investing
    activities  |   |             |  |       |  |        |  |        |  |         |  | 
|                                                           |                   |                                                                                                 |                                                 |                                                          |   |             |   |       |  |        |   |       
|Cash flows provided by (used in) financing
    activities: |                   |                                                                                                 |                                                 |                                                          |   |             |   |       |  |        |   |       
|                                                           |                   |                                                                                                 |                                                 | Net cash provided by financing activities                |   |             |  |       |  |        |  |        |  |         |  | 
|                                                           |                   |                                                                                                 |                                                 |                                                          |   |             |   |       |  |        |   |       
|                                                           |                   |                                                                                                 |                                                 | Net increase (decrease) in cash and cash
    equivalents |   |             |  |       |  |        |  |        |  |         |  | 
|Cash and cash equivalents, beginning of period             |                   |                                                                                                 |                                                |                                                          |   |             |  |       |  |        |  |       
|                                                           |                   |                                                                                                 |                                                 |                                                          |   |             |   |       |  |        |   |       
|Cash and cash equivalents, end of period                   |                   | $                                                                                               |                                                |                                                          |   | $           |  |       |  | $      |  |       
|                                                           |                   |                                                                                                 |                                                 |                                                          |   |             |   |       |  |        |   |       

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

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Schedule I

CSK AUTO CORPORATION

(Parent Company Only)


NOTE TO FINANCIAL STATEMENT SCHEDULE

The accompanying financial statement schedule
presents the financial position, results of operations and cash
flows of CSK Auto Corporation (Corporate) as a
parent company only, and thus includes Corporates
investment in CSK Auto, Inc. (Auto) as well as
Corporates interest in the results of Autos
operations, accounted for under the equity method of accounting.
Corporate has not received any dividends from Auto during the
periods presented.

This financial statement schedule should be read
in conjunction with the consolidated financial statements of CSK
Auto Corporation and Subsidiaries for descriptions of
significant accounting policies and other matters, including
guarantees by Corporate.

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CSK AUTO CORPORATION AND
SUBSIDIARIES

SCHEDULE II  VALUATION AND
QUALIFYING ACCOUNTS

For the Fiscal Years 2001, 2000, and
1999


|                                |                             |                |   |            |  |             |  |            |  |            |  |       |  |  |  |         |   |  |   |        | 
|------------------------------- | --------------------------- | -------------- | - | ---------- |  | ----------- |  | ---------- |  | ---------- |  | ----- |  |  |  | ------- | - |  | - | ------ | 
|                                |                             | 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 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  | 
|                                | Year Ended February 3, 2002 |                | $ | 4,236      |  |             |  | 5,353      |  |            |  |      |  |  |  | (4,359  | ) |  | $ | 5,230  | 
|                               
|Allowance for Closed Stores:    |                             |                |   |            |  |             |  |            |  |            |  |       |  |  |  |         |   |  |   |       
|                                | Year Ended January 30, 2000 |                | $ | 2,670      |  |             |  | 4,900      |  |            |  | 4,178 |  |  |  | (6,946  | ) |  | $ | 4,802  | 
|                                | Year Ended February 4, 2001 |                | $ | 4,802      |  |             |  | 6,060      |  |            |  | 2,744 |  |  |  | (12,054 | ) |  | $ | 1,552  | 
|                                | Year Ended February 3, 2002 |                | $ | 1,552      |  |             |  | 14,632     |  |            |  |      |  |  |  | (9,413  | ) |  | $ | 6,771  | 
|                               
|Allowance for Inventory Shrink: |                             |                |   |            |  |             |  |            |  |            |  |       |  |  |  |         |   |  |   |       
|                                | Year Ended January 30, 2000 |                | $ | 5,520      |  |             |  | 22,270     |  |            |  |      |  |  |  | (19,052 | ) |  | $ | 8,738  | 
|                                | Year Ended February 4, 2001 |                | $ | 8,738      |  |             |  | 20,769     |  |            |  |      |  |  |  | (17,683 | ) |  | $ | 11,824 | 
|                                | Year Ended February 3, 2002 |                | $ | 11,824     |  |             |  | 25,878     |  |            |  |      |  |  |  | (17,052 | ) |  | $ | 20,650 | 

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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
8th day of May 2002.






| |                     
| | --------------------
| | 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 8th
day of May 2002.




|                                                 |  |                                                                                         |  |  |  | 
|------------------------------------------------ |  | --------------------------------------------------------------------------------------- |  |  |  | 
|                                                
|/s/ MAYNARD JENKINSMaynard Jenkins               |  | Chairman of the Board and
    Chief Executive Officer
    (Principal Executive Officer) |  | 
|                                                
|                                                
|/s/ JAMES G. BAZLENJames Bazlen                  |  | Director                                                                                |  | 
|                                                
|                                                
|/s/ JAMES O. EGANJames O. Egan                   |  | Director                                                                                |  | 
|                                                
|                                                
|/s/ MORTON GODLASMorton Godlas                   |  | Director                                                                                |  | 
|                                                
|                                                
|/s/ CHARLES K. MARQUISCharles K. Marquis         |  | Director                                                                                |  | 
|                                                
|                                                
|/s/ SIMON MOORESimon Moore                       |  | Director                                                                                |  | 
|                                                
|                                                
|Frederick Johnson Rowan II                       |  | Director                                                                                |  | 
|                                                
|                                                
|/s/ ROBERT SMITHRobert Smith                     |  | Director                                                                                |  | 
|                                                
|                                                
|/s/ CHRISTOPHER J. STADLERChristopher J. Stadler |  | Director                                                                                |  | 
|                                                
|                                                
|Jules Trump                                      |  | Director                                                                                |  | 
|                                                

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|                               |  |                                                                                                                                     |  |  |  | 
|------------------------------ |  | ----------------------------------------------------------------------------------------------------------------------------------- |  |  |  | 
|                              
|Eddie 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, incorporated herein by reference to
    Exhibit 3.03.1 of our annual report on Form 10-K,
    filed on May 1, 2001 (File No. 001-13927)                                                                                                                                                                                                            
|        | 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,
    incorporated herein by reference to Exhibit 4.01.1 of our
    Annual Report on Form 10-K filed on May 1, 2001 (File
    No. 001-13927).                                                                                                                                                                     
|        | 4.01.2 |                         |  | Amendment No. 2 to the Third Amended and
    Restated Credit Agreement, dated as of December 4, 2000,
    incorporated herein by reference to Exhibit 4.01.2 of our
    Annual Report on Form 10-K filed on May 1, 2001 (File
    No. 001-13927).                                                                                                                                                                      
|        | 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).                                                                                                                                                                                                                                                                             
|        | 4.04   |                         |  | Securities Purchase Agreement dated as of
    December 7, 2001 by and among CSK Auto Corporation, LBI
    Group Inc. and Investcorp CSK Holdings L.P., including form of
    Debenture and form of Make Whole Warrant, incorporated herein by
    reference to Exhibit 99.2 of our Current Report on
    Form 8-K, filed December 11, 2001.                                                                            
|        | 4.04.1 |                         |  | Registration Rights Agreement dated as of
    December 7, 2001 by and among CSK Auto Corporation, LBI
    Group Inc. and Investcorp CSK Holdings L.P., incorporated herein
    by reference to Exhibit 99.3 of our Current Report on
    Form 8-K, filed December 11, 2001.                                                                                                                                            
|        | 4.04.2 |                         |  | Purchase Agreement, dated December 7, 2001,
    by and among CSK Auto, Inc; CSK Auto Corporation, Automotive
    Information Systems, Inc. and CSKAUTO.COM, Inc., as Guarantors;
    and Credit Suisse First Boston Corporation, J.P. Morgan
    Securities Inc. and UBS Warburg LLC as Purchasers, incorporated
    herein by reference to Exhibit 99.4 of our Current Report
    on Form 8-K, filed January 18, 2002.
|        | 4.05   |                         |  | Credit Agreement, dated as of December 21,
    2001, by and among CSK Auto, Inc., the lenders from time to time
    a party thereto, and JP Morgan Chase Bank, Credit Suisse First
    Boston, and UBS AG, Stamford Branch, incorporated herein by
    reference to Exhibit 99.2 of our Current Report on
    Form 8-K, filed January 18, 2002.                                                                        



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##### Table of Contents






|        |         |                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                        
|------- | ------- | ----------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |         |                        
|Number  |         | Description of Exhibits
|        |         |                        
|        | 4.05.1  |                         |  | Indenture, dated December 21, 2001, by and
    among CSK Auto, Inc.; CSK Auto Corporation, as guarantor;
    Automotive Information Systems, Inc. and CSKAUTO.COM, Inc., as
    subsidiary guarantors; and the Bank of New York, as Trustee,
    incorporated herein by reference to Exhibit 99.3 of our
    Current Report on Form 8-K, filed January 18, 2002.                                                                       
|        | 4.05.2  |                         |  | Registration Rights Agreement, dated
    December 21, 2001, by and among CSK Auto, Inc; CSK Auto
    Corporation, Automotive Information Systems, Inc. and
    CSKAUTO.COM, Inc., as Guarantors; and Credit Suisse First Boston
    Corporation, J.P. Morgan Securities Inc. and UBS Warburg LLC as
    Purchasers, incorporated herein by reference to
    Exhibit 99.5 of our Current Report on Form 8-K, filed
    January 18, 2002.
|        | 4.06    |                         |  | ISDA master agreement executed as of March 2002
    between Lehman Brothers Special Financing Inc. and CSK Auto,
    Inc., incorporated here by reference to our Annual Report on
    Form 10-K, filed on April 23, 2002 (File
    No. 001-13927).                                                                                                                                                                                     
|        | 10.01.1 |                         |  | Amended and Restated Employment Agreement, dated
    as of June 12, 1998, between CSK Auto, Inc. 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 CSK Auto, Inc. 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 CSK Auto, Inc. 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).                                                                                                                                                                                                                                                                                      
|        | 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, incorporated herein by reference to
    Exhibit 10.11 of our Annual Report on Form 10-K, filed
    on May 1, 2001 (File No. 001-13927).                                                                                                                                                                                                                                
|        | 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).                                                                                                                                                                    






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##### Table of Contents



|        |         |                         |  |                                                                                                                                                                                                                                                                                                                                   
|------- | ------- | ----------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |         |                        
|Number  |         | Description of Exhibits
|        |         |                        
|        | 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, incorporated herein by reference to
    Exhibit 10.15 of our Annual Report on Form 10-K filed
    on May 1, 2001 (File No. 001-13927).                                                        
|        | 10.16   |                         |  | Lease dated April 20, 2000 between Missouri
    Falls Partners and CSK Auto, Inc.; First Amendment to Lease
    dated February 23, 2000, incorporated herein by reference
    to Exhibit 10.15 of our Annual Report on Form 10-K
    filed on May 1, 2001 (File No. 001-13927).                                                   
|        | 10.17   |                         |  | Lease dated April 20, 2000 between Missouri
    Falls Partners and CSK Auto, Inc.; First Amendment to Lease
    dated August 20, 2000, incorporated herein by reference to
    Exhibit 10.15 of our Annual Report on Form 10-K filed
    on May 1, 2001 (File No. 001-13927).                                                     
|        | 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).                                                                                                                                                       
|        | 10.18.5 |                         |  | Second Amendment to Stockholders Agreement dated
    December 7, 2001, incorporated herein by reference to our
    Registration Statement on Form S-4 filed February 11,
    2002.                                                                                                                                                
|        | 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, incorporated herein
    by reference to Exhibit 10.21 of our Annual Report on
    Form 10-K, filed on May 1, 2001 (File
    No. 001-13927).                                                                                              
|        | 10.22   |                         |  | Employment Agreement between CSK Auto, Inc. and
    Lon B. Novatt, incorporated herein by reference to
    Exhibit 10.22 of our Annual Report on Form 10-K filed
    on May 1, 2001 (File No. 001-13927).                                                                                                                         
|        | 10.23   |                         |  | Employment Agreement, dated February 25,
    1997, between CSK Auto, Inc. and Dale E. Ward, incorporated
    herein by reference to Exhibit 10.23 of our Annual Report
    on Form 10-K filed on May 1, 2001 (File
    No. 001-13927).                                                                                            
|        | 10.24   |                         |  | Severance and Retention Agreement between CSK
    Auto, Inc. and Don Watson, incorporated herein by reference to
    Exhibit 10.03 of our Quarterly Report on Form 10-Q,
    filed on December 19, 2001 (File No. 001-13927).                                                                                                     
|        | 10.25   |                         |  | Severance and Retention Agreement between CSK
    Auto, Inc. and Lon Novatt incorporated herein by reference to
    Exhibit 10.02 of our Quarterly Report on Form 10-Q,
    filed on December 19, 2001 (File No. 001-13927).                                                                                                      
|        | 10.26   |                         |  | Severance and Retention Agreement between CSK
    Auto, Inc. and Dale Ward, incorporated herein by reference to
    Exhibit 10.04 of our Quarterly Report on Form 10-Q,
    filed on December 19, 2001 (File No. 001-13927).                                                                                                      



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##### Table of Contents






|        |       |                         |  |                                                                                                                                                                                                                                                                                
|------- | ----- | ----------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |                        
|Number  |       | Description of Exhibits
|        |       |                        
|        | 10.27 |                         |  | Severance and Retention Agreement between CSK
    Auto, Inc. and Martin Fraser, incorporated herein by reference
    to Exhibit 10.01 of our Quarterly Report on Form 10-Q,
    filed on December 19, 2001 (File No. 001-13927).                                               
|        | 10.28 |                         |  | Severance and Retention Agreement between CSK
    Auto, Inc. and Larry Buresh, incorporated herein by reference to
    Exhibit 10.05 of our Quarterly Report on Form 10-Q,
    filed on December 19, 2001 (File No. 001-13927).                                                
|        | 10.29 |                         |  | Severance and Retention Agreement between CSK
    Auto, Inc. and Larry Ellis, incorporated herein by reference to
    Exhibit 10.06 of our Quarterly Report on Form 10-Q,
    filed on December 19, 2001 (File No. 001-13927).                                                 
|        | 10.30 |                         |  | Severance and Retention Agreement between CSK
    Auto, Inc. and Bill Evans, incorporated herein by reference to
    Exhibit 10.07 of our Quarterly Report on Form 10-Q,
    filed on December 19, 2001 (File No. 001-13927).                                                  
|        | 10.31 |                         |  | Amended and Restated Severance and Retention
    Agreement between CSK Auto, Inc. and Lon Novatt, dated
    February 14, 2002, incorporated herein by reference to our
    Annual Report on Form 10-K, filed on April 23, 2002
    (File No. 001-13927).                       
|        | 10.32 |                         |  | Amended and Restated Severance and Retention
    Agreement between CSK Auto, Inc. and Dale Ward, dated
    February 14, 2002, incorporated herein by reference to our
    Annual Report on Form 10-K, filed on April 23, 2002
    (File No. 001-13927).                        
|        | 10.33 |                         |  | Amended and Restated Severance and Retention
    Agreement between CSK Auto, Inc. and Don Watson, dated
    February 14, 2002, incorporated herein by reference to our
    Annual Report on Form 10-K, filed on April 23, 2002
    (File No. 001-13927).                       
|        | 10.34 |                         |  | Amended and Restated Severance and Retention
    Agreement between CSK Auto, Inc. and Martin Fraser, dated
    February 14, 2002, incorporated herein by reference to our
    Annual Report on Form 10-K, filed on April 23, 2002
    (File No. 001-13927).                    
|        | 10.35 |                         |  | Amended and Restated Severance and Retention
    Agreement between CSK Auto, Inc. and Larry Ellis, dated
    February 14, 2002, incorporated herein by reference to our
    Annual Report on Form 10-K, filed on April 23, 2002
    (File No. 001-13927).                      
|        | 10.36 |                         |  | Amended and Restated Severance and Retention
    Agreement between CSK Auto, Inc. and Larry Buresh, dated
    February 14, 2002, incorporated herein by reference to our
    Annual Report on Form 10-K, filed on April 23, 2002
    (File No. 001-13927).                     
|        | 10.37 |                         |  | Amended and Restated Severance and Retention
    Agreement between CSK Auto, Inc. and Bill Evans, dated
    February 14, 2002, incorporated herein by reference to our
    Annual Report on Form 10-K, filed on April 23, 2002
    (File No. 001-13927).                       
|        | 10.38 |                         |  | Severance and Retention Agreement between CSK
    Auto, Inc. and Hal Smith, dated February 14, 2002,
    incorporated herein by reference to our Annual Report on
    Form 10-K, filed on April 23, 2002 (File
    No. 001-13927).                                             
|        | 10.39 |                         |  | Amendment to all CSK Auto, Inc. Leases at
    Missouri Falls, dated December 6, 2001, by and between
    Missouri Falls Partners and MFP Holdings, LLC and CSK Auto,
    Inc., incorporated by reference to our Registration Statement on
    Form S-4 filed February 11, 2002.
|        | 10.40 |                         |  | Voting Agreement dated December 7, 2001,
    incorporated by reference to our Registration Statement on
    Form S-4 filed February 11, 2002.                                                                                                                                  
|        | 10.41 |                         |  | Form of CSK Auto Corporation Option Exchange
    Agreement, incorporated herein by reference to our Annual Report
    on Form 10-K, filed on April 23, 2002 (File
    No. 001-13927).                                                                                          
|        | 21.01 |                         |  | Subsidiaries of the Company, incorporated herein
    by reference to our Annual Report on Form 10-K, filed on
    April 23, 2002 (File No. 001-13927).                                                                                                                         
|        | 23.01 |                         |  | Consent of Independent Accountants