CSK AUTO CORP, S-1/A, 1998-11-20

CSK AUTO CORP
S-1/A, 1998-11-20
AUTO & HOME SUPPLY STORES

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 20, 1998

REGISTRATION NO. 333-67231
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549
-------------------------

AMENDMENT NO. 1

FORM S-1
-------------------------
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------------

CSK AUTO CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
-------------------------

<TABLE>
<S> <C> <C>
DELAWARE 5531 86-0765798
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION INDUSTRIAL IDENTIFICATION NUMBER)
OF INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
</TABLE>

<TABLE>
<S> <C>
645 E. MISSOURI AVENUE MAYNARD L. JENKINS
PHOENIX, ARIZONA 85012 645 E. MISSOURI AVENUE
(602) 265-9200 PHOENIX, ARIZONA 85012
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE (602) 265-9200
NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S (NAME, ADDRESS, INCLUDING ZIP CODE, AND
PRINCIPAL EXECUTIVE OFFICES) TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
</TABLE>

-------------------------

COPIES OF COMMUNICATIONS TO:

<TABLE>
<S> <C>
RICHARD M. RUSSO, ESQ. JEFFREY SMALL, ESQ.
GIBSON, DUNN & CRUTCHER LLP DEANNA L. KIRKPATRICK, ESQ.
1801 CALIFORNIA STREET DAVIS POLK & WARDWELL
SUITE 4100 450 LEXINGTON AVENUE
DENVER, COLORADO 80202 NEW YORK, NEW YORK 10017
(303) 298-5700 (212) 450-4000
(FACSIMILE) (303) 296-5310 (FACSIMILE) (212) 450-4800
</TABLE>

-------------------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:

As soon as practicable after this Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ] _________

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] _________

If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] _________

If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [ ]

-------------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY
DETERMINE.

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<PAGE> 2

SUBJECT TO COMPLETION -- NOVEMBER 20, 1998

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PROSPECTUS
, 1998

CSK LOGO
7,000,000 SHARES OF COMMON STOCK
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THE COMPANY:

- We are the largest retailer of automotive parts and accessories in the
Western United States and one of the largest such retailers in the United
States based, in each case, on our number of stores.

- CSK Auto Corporation
645 E. Missouri Avenue
Suite 400
Phoenix, AZ 85012
(602) 265-9200

- NEW YORK STOCK EXCHANGE SYMBOL: CAO

THE OFFERING:

- Existing stockholders are offering 7,000,000 shares.

- The underwriters have an option to purchase an additional 1,050,000
shares from the selling stockholders to cover over-allotments.

- There is an existing trading market for these shares. The reported last
sale price on November 19, 1998 was $28.19 per share.

- We will not receive any proceeds from the shares sold in this offering.

- Closing: , 1998.

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
Per Share Total
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Public offering price: $ $
Underwriting fees:
Proceeds to selling stockholders:
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</TABLE>

THIS INVESTMENT INVOLVES RISK. SEE "RISK FACTORS" BEGINNING ON PAGE 10.

- --------------------------------------------------------------------------------
Neither the SEC nor any state securities commission has determined whether this
prospectus is truthful or complete. Nor have they made, nor will they make, any
determination as to whether anyone should buy these securities. Any
representation to the contrary is a criminal offense.
- --------------------------------------------------------------------------------

DONALDSON, LUFKIN & JENRETTE
MERRILL LYNCH & CO. ING BARING FURMAN SELZ LLC LEHMAN BROTHERS
MORGAN STANLEY DEAN WITTER SALOMON SMITH BARNEY

WE WILL AMEND AND COMPLETE THE INFORMATION IN THIS PROSPECTUS. ALTHOUGH WE ARE
PERMITTED BY US FEDERAL SECURITIES LAWS TO OFFER THESE SECURITIES USING THIS
PROSPECTUS, WE MAY NOT SELL THEM OR ACCEPT YOUR OFFER TO BUY THEM UNTIL THE
DOCUMENTATION FILED WITH THE SEC RELATING TO THESE SECURITIES HAS BEEN DECLARED
EFFECTIVE BY THE SEC. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES
OR OUR SOLICITATION OF YOUR OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION
WHERE THAT WOULD NOT BE PERMITTED OR LEGAL.
<PAGE> 3
[MAP OF WESTERN UNITED STATES INDICATING CSK AUTO CORPORATION
STORE COUNT BY CHAIN NAME AND LOCATION]

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
<S> <C>
Prospectus Summary................ 3
Risk Factors...................... 10
Price Range of Common Stock and
Dividend Policy................. 15
Use of Proceeds................... 16
Capitalization.................... 16
Dilution.......................... 17
Selected Consolidated Financial
Data............................ 18
Management's Discussion and
Analysis of Financial Condition
and Results of Operations....... 21
Business.......................... 34
Management........................ 51
</TABLE>

<TABLE>
<CAPTION>
Page
<S> <C>
Certain Relationships and Related
Transactions.................... 62
Principal and Selling
Stockholders.................... 67
Description of Capital Stock...... 70
Description of Certain
Indebtedness.................... 72
Shares Eligible for Future Sale... 75
Available Information............. 76
Underwriting...................... 77
Legal Matters..................... 79
Experts........................... 79
Change in Accountants............. 79
Index to Consolidated Financial
Statements...................... F-1
</TABLE>

<PAGE> 4

PROSPECTUS SUMMARY

This summary is qualified by more detailed information appearing in other
sections of this prospectus. The other information is important, so please read
this entire prospectus carefully. Our fiscal year ends on the Sunday nearest to
January 31 and is named for the calendar year just ended (for example, our
fiscal year ended February 1, 1998 is called "fiscal 1997"). Occasionally, this
results in a fiscal year which is 53 weeks long. Our company is a holding
company with no business operations of its own; all of its business is conducted
through its wholly-owned subsidiary, CSK Auto, Inc. Unless otherwise indicated,
"we," "us," "our" and similar terms, as well as references to the "Company,"
refer to CSK Auto Corporation and its subsidiaries.

THE COMPANY

CSK Auto Corporation is the largest retailer of automotive parts and
accessories in the Western United States and one of the largest such retailers
in the United States based, in each case, on our number of stores. As of
November 1, 1998, we operated 773 stores as one fully integrated company under
the following three brand names:

- Checker Auto Parts, founded in 1968 and operating in the Southwestern and
Rocky Mountain states;

- Schuck's Auto Supply, founded in 1917 and operating in the Pacific
Northwest; and

- Kragen Auto Parts, founded in 1947 and operating primarily in California.

Based on our store count, we believe we are the largest retailer of
automotive parts and accessories in 19 of our 24 markets.

We offer a broad selection of national brand name and private label
automotive products, including new and remanufactured automotive replacement
parts, maintenance items and accessories. Most of our sales are to
do-it-yourself customers, although our commercial sales program focusing on
sales to auto repair professionals and fleet owners represents a significant and
increasing part of our business. Our stores typically offer between 13,000 and
17,000 stock keeping units ("SKUs"). Our operating strategy is to offer our
products at everyday low prices and at conveniently located and attractively
designed stores, supported by highly trained, efficient and courteous customer
service personnel.

OPERATING AND GROWTH STRATEGIES

Over the past several years, we have implemented a variety of operating
initiatives which have enabled us to significantly increase our productivity and
the level and quality of service we provide to our customers. These operating
initiatives include:

- EXPANDED PRODUCT SELECTION -- Our priority parts operation enables us to
provide to customers on a timely basis products not usually stocked in
each store's inventory. This has resulted in over 80% of our stores
having 200,000 additional SKUs available to customers on a same-day
delivery basis and all of our stores having an additional 1,000,000 SKUs
available on a next day basis.
3
<PAGE> 5

- IMPROVED WAREHOUSE AND DISTRIBUTION SYSTEM -- We converted our warehouse
and distribution system to a technologically advanced, fully integrated
system. Our new system has allowed us to lower our warehouse and
distribution expense as a percentage of net sales from 4.9% in fiscal
1995 to 3.3% for the first half of fiscal 1998.

- ENHANCED STORE LEVEL INFORMATION SYSTEMS -- We installed sophisticated
store-level information systems which have improved store labor
productivity and customer service.

These operating initiatives have provided us with a highly efficient,
centralized infrastructure and the foundation for continued and profitable
growth. We are currently generating growth in sales and operating profits
primarily by implementing the following growth initiatives:

- ACCELERATING STORE GROWTH -- We are accelerating our store growth
strategy so we are able to profitably increase our name recognition and
market penetration while benefiting from economies of scale in
advertising, management and distribution costs. We plan to open, relocate
or expand approximately 130 stores in fiscal 1998 and approximately 150
stores in fiscal 1999. This compares to 64 stores in fiscal 1996 and 104
stores in fiscal 1997 (in addition to 82 stores acquired from Trak Auto
Corporation).

- EXPANDING COMMERCIAL SALES PROGRAM -- Our rapidly growing and profitable
commercial sales program targets the largest and fastest growing part of
the automotive aftermarket. We believe that we have significant
competitive advantages in servicing this segment because of our
experienced sales associates, conveniently located stores, attractive
pricing and ability to consistently deliver a broad product offering. Our
commercial sales have increased 30% to $74.9 million in the first half of
fiscal 1998 from $57.7 million in the comparable period in fiscal 1997.

- INCREASING OPERATING PROFIT MARGIN -- As a result of continued
improvement in our gross profit margin and continued realization of
operating efficiencies, our operating profit margin increased to 6.2% in
the first half of fiscal 1998 from 4.6% in the comparable period of
fiscal 1997. Excluding $6.7 million of non-recurring charges, our
operating profit margin for the first half of fiscal 1998 was 7.5%. Our
gross profit margin is increasing primarily as a result of more favorable
vendor terms, taking advantage of cash discounts from vendors and
improvements in our product mix.

The success of our operating and growth initiatives has resulted in a 58%
increase in our operating profit to $30.2 million for the first half of fiscal
1998, from $19.1 million in the comparable period in fiscal 1997. Excluding $6.7
million of non-recurring charges, operating profit for the first half of fiscal
1998 was $36.9 million, an increase of 93% over the comparable period of fiscal
1997. We believe that we can continue to realize strong and profitable growth by
aggressively pursuing our operating and growth initiatives.
4
<PAGE> 6

RECENT CORPORATE TRANSACTIONS

We have completed the following significant transactions during the last
three fiscal years:

- In October 1996, INVESTCORP S.A. and certain other investors it organized
purchased a 51% equity interest in our company in a series of related
transactions resulting in a new capitalization structure for our company.
We refer to these transactions as the "1996 Recapitalization."

- In December 1997, we acquired 82 stores located in the Los Angeles market
from Trak Auto Corporation for approximately $34.5 million. We refer to
this transaction as the "Trak West Acquisition."

- In March 1998, we completed the initial public offering of our common
stock and used the net proceeds of $159.1 million to repay outstanding
debt. We refer to this transaction as our "IPO."

THE OFFERING

Common stock being offered by
the selling stockholders...... 7,000,000 shares(1)

Common stock outstanding after
this offering............... 27,742,022 shares(2)

Use of proceeds............... We will not receive any proceeds from the sale
of common stock in this offering.

NYSE symbol................... CAO
- ------------------------------

(1) Does not include 1,050,000 shares that the underwriters may purchase to
cover any overallotments.

(2) Does not include 2,111,841 shares subject to outstanding options as of
November 1, 1998 (with a weighted average exercise price of $13.99 per
share) and 552,904 additional shares reserved for issuance pursuant to
options available for future grant under our stock option plans.

RISK FACTORS

See "Risk Factors" beginning on page 10 for a description of certain risks
relevant to an investment in our common stock. These risk factors include, among
others, risks related to our growth strategy, our substantial degree of
leverage, our history of previous losses during four of the last five fiscal
years, the need to comply with restrictive covenants imposed by our loan
documents and competition in our industry.

5
<PAGE> 7

RECENT FINANCIAL RESULTS

On November 18, 1998, we publicly announced our financial results for the
third quarter of fiscal 1998. The complete financial statements for the
thirty-nine weeks ended November 1, 1998 are not presently available. Highlights
from our third quarter results include the following:

- Our net sales increased 21.3% from our third quarter of fiscal 1997
results to $263.1 million. Comparable store sales increased 3% during the
third quarter.

- Our operating profit margin increased to 8.9% in the third quarter of
fiscal 1998 from 7.9% in the third quarter of fiscal 1997.

- Our net income increased to $10.5 million or $0.37 per diluted share
compared to $4.3 million or $0.25 per diluted share for our third quarter
of fiscal 1997.

- We opened 27 new stores, relocated 5 stores and expanded 2 stores during
the third quarter of fiscal 1998.

The following table presents certain unaudited consolidated financial data
for the thirteen and thirty-nine week periods ended November 2, 1997 and
November 1, 1998. The results presented below are not necessarily indicative of
the results that may occur for the full fiscal year. You should also read the
section "Management's Discussion and Analysis of Financial Condition and Results
of Operations" and our consolidated financial statements and related notes:

<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED
-------------------------- --------------------------
NOVEMBER 2, NOVEMBER 1, NOVEMBER 2, NOVEMBER 1,
1997 1998 1997 1998
----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA
Net sales.................................. $ 216,908 $ 263,142 $ 636,465 $ 756,266
Cost of sales............................ 116,671 136,111 358,917 403,857
----------- ----------- ----------- -----------
Gross profit............................... 100,237 127,031 277,548 352,409
Other costs and expenses:
Operating and administrative expenses.... 83,129 103,521 241,324 291,966
Transition and integration expenses...... -- -- -- 3,075
Write-off of unamortized management
fee.................................... -- -- -- 3,643
----------- ----------- ----------- -----------
Operating profit........................... 17,108 23,510 36,224 53,725
Interest expense, net.................... 10,101 6,924 29,815 23,532
----------- ----------- ----------- -----------
Income before taxes and extraordinary
loss..................................... 7,007 16,586 6,409 30,193
Income tax expense....................... 2,687 6,059 2,471 11,076
----------- ----------- ----------- -----------
Income before extraordinary loss........... 4,320 10,527 3,938 19,117
Extraordinary loss, net of income
taxes.................................. -- -- -- (6,767)
----------- ----------- ----------- -----------
Net income................................. $ 4,320 $ 10,527 $ 3,938 $ 12,350(1)
=========== =========== =========== ===========
Diluted earnings per share................. $ 0.25 $ 0.37 $ 0.23 $ 0.45(1)
Shares used in computing per share
amounts.................................. 17,105,000 28,579,609 17,105,000 27,253,660
</TABLE>

- ------------------------------

(1) Results of operations for the thirty-nine weeks ended November 1, 1998
include: (1) an extraordinary loss of $6.8 million, which consisted
primarily of the premiums paid in connection with the retirement of
outstanding debt with the proceeds of our IPO and the write-off of a portion
of deferred debt issuance costs; (2) $3.1 million of transition and
integration expenses associated with the Trak West Acquisition; and (3) the
write-off of a $3.6 million prepaid management fee. Excluding these
non-recurring items, and the related income tax thereon, net income for the
thirty-nine weeks ended November 1, 1998, was $23.4 million or $0.82 per
diluted share (based on 28.6 million shares outstanding).

6
<PAGE> 8

SUMMARY CONSOLIDATED FINANCIAL DATA

You should read the following summary consolidated financial data together
with "Management's Discussion and Analysis of Financial Condition and Results of
Operations," and our consolidated financial statements and related notes
included elsewhere in this prospectus.

<TABLE>
<CAPTION>
TWENTY-SIX WEEKS
ENDED(1)
FISCAL YEAR(2) ---------------------
------------------------------ AUGUST 3, AUGUST 2,
1995(3) 1996(4) 1997(5) 1997 1998(6)
-------- -------- -------- --------- ---------
(IN THOUSANDS, EXCEPT SELECTED STORE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA
Net sales......................................... $718,352 $793,092 $845,815 $419,557 $493,124
Cost of sales................................. 433,817 463,374 468,171 242,246 267,746
-------- -------- -------- -------- --------
Gross profit...................................... 284,535 329,718 377,644 177,311 225,378
Other costs and expenses:
Operating and administrative.................. 284,697 312,908 327,838 158,195 188,445
Transition and integration expenses........... -- -- 3,407 -- 3,075
Stock-based compensation...................... -- -- 909 -- --
Write-off of unamortized management fee....... -- -- -- -- 3,643
1996 Recapitalization charge.................. -- 20,174 -- -- --
-------- -------- -------- -------- --------
Operating profit (loss)........................... (162) (3,364) 45,490 19,116 30,215
Other 1996 Recapitalization expenses.......... -- 12,463 1,009 -- --
Interest expense, net......................... 14,379 20,691 40,680 19,714 16,608
-------- -------- -------- -------- --------
Income (loss) before taxes and extraordinary
loss............................................ (14,541) (36,518) 3,801 (598) 13,607
Income tax expense (benefit).................. (5,447) (11,859) 1,557 (216) 5,017
-------- -------- -------- -------- --------
Income (loss) before extraordinary loss........... (9,094) (24,659) 2,224 (382) 8,590
Extraordinary loss............................ -- -- (3,015) -- (6,767)
-------- -------- -------- -------- --------
Net income (loss)................................. $ (9,094) $(24,659) $ (771) $ (382) $ 1,823
======== ======== ======== ======== ========
OTHER DATA
EBITDA(7)......................................... $ 16,099 $ 50,544 $ 70,173 $ 29,220 $ 48,320
EBITDAR(7)........................................ 61,453 98,450 124,695 55,946 82,774
Capital expenditures.............................. 11,640 6,317 20,132 6,781 18,640
Commercial sales(8)............................... 60,840 89,551 115,378 57,701 74,928
Net cash provided by (used in) operating
activities...................................... 1,354 (38,366) (62,703) (6,332) 15,706
Net cash used in investing activities............. (7,888) (10,686) (56,727) (10,328) (16,025)
Net cash provided by financing activities......... 8,028 49,911 119,059 18,035 3,045
SELECTED STORE DATA
New, relocated and expanded stores................ 63 64 104 35 54
Number of stores (end of period).................. 566 580 718 591 747
Stores with commercial sales centers (end of
period)......................................... 176 292 360 292 455
Percentage increase in comparable store net
sales(9)........................................ 2% 6% 4% 5% 0%
</TABLE>

<TABLE>
<CAPTION>
AUGUST 2, 1998
(IN THOUSANDS)
--------------
<S> <C>
BALANCE SHEET DATA
Cash and cash equivalents................................... $ 7,578
Net working capital......................................... 250,960
Total assets................................................ 570,344
Total debt (including current maturities)................... 292,109
Stockholders' equity........................................ 85,725
</TABLE>

See accompanying notes on pages 8 and 9.

7
<PAGE> 9

NOTES TO SUMMARY CONSOLIDATED FINANCIAL DATA
- ------------------------------

(1) The summary financial data for the first half of fiscal years 1997 and 1998
are unaudited and include, in the opinion of our management, all
adjustments, consisting only of normal recurring adjustments, necessary to
fairly present the data for such periods. The interim results are not
necessarily indicative of the results expected for a full fiscal year or for
any future period.

(2) 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 (for example, our
fiscal year ended February 1, 1998 is called "fiscal 1997"). All fiscal
years presented had 52 weeks except for fiscal 1996, which had 53 weeks.

(3) Results of operations in fiscal 1995 include pre-opening expenses of $1.6
million associated with the opening of our new distribution center in
Phoenix, Arizona. Our fiscal 1995 operating and administrative expenses also
include $5.3 million of software development costs associated with the new
store-level information systems we installed during fiscal 1995. In
addition, we believe that our operations and operating results were
adversely impacted during fiscal 1995 as a result of the start-up costs
associated with the implementation of many new initiatives.

(4) Results of operations in fiscal 1996 include certain non-recurring charges
which were incurred when the 1996 Recapitalization was consummated,
including the following: (1) amounts paid to members of management pursuant
to existing equity participation agreements of $19.9 million ($20.2 million
including a provision for estimated payroll taxes thereon), and (2) expenses
incurred in connection with the 1996 Recapitalization of $12.5 million. Our
fiscal 1996 results also include a charge of $12.9 million for store closing
costs.

(5) In December 1997, we acquired 82 Trak West stores and have included these
stores in our results of operations from the date of acquisition. Results of
operations in fiscal 1997 include: (1) an extraordinary loss of $3.0 million
to reflect the write-off of certain deferred financing costs associated with
the early extinguishment of our previous senior credit facility; (2) $3.4
million of transition and integration expenses associated with the Trak West
Acquisition; and (3) $1.0 million of other 1996 Recapitalization expenses.
The Trak West stores are not included in the number of new, relocated and
expanded stores.

(6) Results of operations for the first half of fiscal 1998 include: (1) an
extraordinary loss of $6.8 million, which consisted primarily of the
premiums paid in connection with the retirement of outstanding debt with the
proceeds of our IPO and the write-off of a portion of deferred debt issuance
costs; (2) $3.1 million of transition and integration expenses associated
with the Trak West Acquisition; and (3) the write-off of a $3.6 million
prepaid management fee. Excluding these non-recurring items, and the related
income tax thereon, net income for the first half of fiscal 1998 was $12.8
million.

(7) EBITDA represents income before net interest expense, provision for income
taxes, depreciation and amortization expense, other non-cash charges,
extraordinary items and non-recurring charges. While EBITDA is not intended
to represent cash flow from operations as defined by generally accepted
accounting principles ("GAAP") (and should not be considered as an indicator
of operating performance or an alternative to cash flow (as measured by
GAAP)), it is included herein because we believe it is a meaningful measure
which provides additional information with respect to our ability to meet
our future debt service, capital expenditure and working capital
requirements. EBITDA has been calculated as described above in accordance
with the terms of the indenture under which our 11% Senior Subordinated
Notes were issued and may differ in method of calculation from similarly
titled measures used by other companies. Our 11% Senior Subordinated Notes
are described in the "Description of Certain Indebtedness" section of this
prospectus.
8
<PAGE> 10

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

<TABLE>
<CAPTION>
TWENTY-SIX
WEEKS ENDED
FISCAL YEAR ---------------------
----------------------------- AUGUST 3, AUGUST 2,
1995 1996 1997 1997 1998
-------- -------- ------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Income (loss) before income taxes and extraordinary
loss................................................. $(14,541) $(36,518) $ 3,801 $ (598) $13,607
Add back:
Interest expense, net.............................. 14,379 20,691 40,680 19,714 16,608
Depreciation and amortization expenses............. 16,261 19,225 20,367 9,588 11,387
Non-recurring 1996 Recapitalization expenses....... -- 32,637 1,009 516 --
Other non-recurring and non-cash charges........... -- 14,509 4,316 -- 6,718
-------- -------- ------- ------- -------
Total......................................... $ 16,099 $ 50,544 $70,173 $29,220 $48,320
======== ======== ======= ======= =======
</TABLE>

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

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

(9) Comparable store net sales data is calculated based on the change in net
sales commencing after the time a new store has been open twelve months.
Therefore, sales for the first twelve months a new store is open are not
included in the comparable store calculation. As a result, the sales of the
82 acquired Trak West stores are not yet reflected in our computation of
comparable store net sales. Relocations are included in comparable store net
sales from the date of opening.
9
<PAGE> 11

RISK FACTORS

Before you invest in our common stock, you should be aware of various
risks, including those described below. You should carefully consider these risk
factors, together with all of the other information included in this prospectus,
before you decide whether to purchase shares of our common stock.

Some of the information in this prospectus 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. These events may include
future operating results, our efforts to address Year 2000 issues and potential
competition, among other things. The risk factors listed in this section, as
well as any cautionary language in this prospectus, provide examples of risks,
uncertainties and events that may cause our actual results to differ materially
from the expectations we describe in our forward-looking statements. Before you
invest in our common stock, you should be aware that the occurrence of the
events described in these risk factors and elsewhere in this prospectus could
have a material adverse effect on our business, operating results and financial
condition.

RISKS RELATED TO GROWTH STRATEGY

Our plan to increase the number of stores we operate is subject to several
business risks, including:

- We may not be able to identify or acquire new store sites that offer
attractive returns on our investment.

- We may encounter difficulties or delays in negotiating with landlords or
sellers, or in constructing new, relocated or expanded stores.

- The opening of new, relocated or expanded stores may hurt sales or
profitability at our existing stores in a particular region or market
area.

- We may encounter operating difficulties in the process of integrating
newly-acquired stores into our corporate systems, which could hurt our
profitability.

- It may be difficult to hire, train and retain the personnel to run new,
relocated or expanded stores efficiently.

10
<PAGE> 12

SUBSTANTIAL LEVERAGE AND DEBT SERVICE OBLIGATIONS

Our balance sheet is highly leveraged with approximately $292.1 million in
funded debt and $85.7 million of stockholders' equity at August 2, 1998. This
relatively high leverage could negatively affect our operations in a number of
ways, including:

- We may be unable to obtain additional financing when needed for our
operations or when desired for acquisitions or expansions.

- A large part of our cash flow from operations must be dedicated to
interest payments on our debt, thereby reducing funds available for other
corporate purposes.

- Since our bank debt (approximately $187.6 million at August 2, 1998) is
at variable or floating interest rates, if market rates rise, our debt
service obligations will become more expensive.

- The level of our debt could limit our flexibility in responding to
downturns in the economy or in our business.

HISTORY OF PREVIOUS LOSSES DURING FOUR OF THE LAST FIVE FISCAL YEARS

We incurred net losses during four of our last five fiscal years. While
income before taxes and extraordinary loss, excluding non-recurring expenses,
would have been $8.2 million for fiscal 1997 and would have been $20.3 million
for the first half of fiscal 1998, we can offer no assurance that we will be
profitable or achieve continued growth in operating profit in the future.

RESTRICTIVE LOAN COVENANTS

Our Senior Credit Facility contains covenants which require us to satisfy
ongoing financial tests and which limit our ability to borrow additional money,
pay dividends, divest assets and make additional corporate investments. If we
issue additional equity securities, a certain portion must be used to reduce
borrowings under the Senior Credit Facility. If we are unable to meet any of our
debt service obligations or to comply with these covenants, our lenders can
accelerate our debt. If that were to occur and we are unable to obtain
alternative financing, we may face bankruptcy. We discuss the material terms of
this debt in the "Description of Certain Indebtedness" section of this
prospectus.

COMPETITION

The retail sale of automotive parts and accessories is highly competitive.
We compete primarily with the following:

- national and regional retail automotive parts chains;

- wholesalers or jobber stores (some of which are associated with national
parts distributors or associations);

- automobile dealers that supply manufacturer parts; and

- mass merchandisers that carry automotive replacement parts and
accessories.

11
<PAGE> 13

Some of our competitors have more financial resources, are more
geographically diverse and have better name recognition than we have.

DEPENDENCE ON EXECUTIVE OFFICERS AND EMPLOYEES

Our success depends to a significant degree on the efforts of our
management. The loss of one or more of our executive officers could adversely
affect us. We do not maintain "key person" life insurance on our executive
officers. In addition, there have been historically low levels of unemployment
in the regions in which our stores are located. This could lead to pressure on
wage rates and make it more difficult for us to attract and retain qualified
employees. Our continued success will be dependent upon our ability to retain
existing, and attract additional, qualified executives and employees.

SENSITIVITY TO REGIONAL ECONOMIC AND WEATHER CONDITIONS

All of our stores are located in the Western United States, and therefore,
our business is sensitive to the economic and weather conditions of that region.
Unusually severe or inclement weather tends to reduce sales, particularly to our
do-it-yourself customers. However, extremely hot or cold temperatures tend to
enhance sales by causing auto parts to fail and by increasing demand for
seasonal products.

RISKS OF ACQUISITION GROWTH STRATEGY

In the past, we have expanded our business through acquisitions and intend
to continue to pursue an opportunistic acquisition strategy. There are various
risks associated with this strategy, including those associated with the
integration of the new businesses into our management structure and operational
systems and the modification of our systems to handle the increased volume and
number of store locations.

CONTROL BY PRINCIPAL STOCKHOLDERS

Upon consummation of this offering, members of the Investcorp Group, the
Carmel Group, and our senior management will own, in the aggregate,
approximately 43.7% of the outstanding shares of our common stock (39.9% if the
underwriters' overallotment option is exercised in full). These stockholders
will be able to exercise significant control over the Company through their
ability to determine the outcome of votes of stockholders regarding, among other
things, nomination and election of directors and approval of significant
transactions. The members of the Investcorp Group and the Carmel Group are party
to a stockholders' agreement which requires the groups to vote together on
certain matters, including the election of directors. We describe the Investcorp
Group and the Carmel Group in the "Principal and Selling Stockholders" section
of this prospectus and the stockholders' agreement in the "Certain Relationships
and Related Transactions" section of this prospectus.

EFFECT OF CHANGE OF CONTROL AND STATUTORY PROVISIONS

Our Senior Credit Facility and the indenture governing our 11% Senior
Subordinated Notes contain provisions that, under certain circumstances, will
cause this debt to become due upon the

12
<PAGE> 14

occurrence of a change of control, including the election to the board of
directors of a majority of directors that were not nominated by the Investcorp
Group. This offering will not cause a change of control. These provisions could
have the effect of making it more difficult for a third party to acquire control
of us.

We are subject to the anti-takeover provisions of Section 203 of the
Delaware General Corporation Law. In general, the statute prohibits a publicly
held Delaware corporation from engaging in a "business combination" with an
"interested stockholder" for a period of three years after the date of the
transaction in which the person became an interested stockholder, unless the
business combination is approved in a prescribed manner.

POSSIBLE VOLATILITY OF OUR STOCK PRICE

The stock market and the price of our common stock may be subject to
volatile fluctuations based on general economic and market conditions. The
market price for our common stock may also be affected by our ability to meet
analysts' expectations. Failure to meet such expectations, even slightly, could
have an adverse effect on the market price of our common stock. In addition,
stock market volatility has had a significant effect on the market prices of
securities issued by many companies for reasons unrelated to the operating
performance of these companies. In the past, following periods of volatility in
the market price of a company's securities, securities class action litigation
has often been instituted against such a company. If similar litigation were
instituted against us, it could result in substantial costs and a diversion of
our management's attention and resources, which could have an adverse effect on
our business.

SHARES ELIGIBLE FOR FUTURE SALE; POSSIBLE ADVERSE EFFECT ON FUTURE MARKET PRICE

The market price of our common stock may fall as a result of sales of a
large number of shares in the market after this offering, or the perception that
such sales could occur.

At November 1, 1998, there were 27,742,022 shares of common stock
outstanding. Of those shares, all of the shares sold in this offering, the
8,625,000 shares sold in our IPO and 3,634 shares issued pursuant to the
exercise of options under our stock option plans will be freely transferable
without restriction under the Securities Act of 1933, as amended (the
"Securities Act"), except for shares acquired by one of our "affiliates" as that
term is defined under the Securities Act. The remaining 12,113,388 outstanding
shares of our common stock are deemed to be "restricted securities," as that
term is defined in Rule 144 under the Securities Act and are eligible for sale
in the public market in compliance with Rule 144. The holders of 11,932,788
shares of common stock will have contractual registration rights with respect to
those shares.

Subject to certain exceptions, we and certain of our stockholders owning an
aggregate of 11,932,788 shares, have agreed that they will not offer, issue,
pledge, sell, transfer or otherwise dispose of any shares of our common stock or
securities convertible into or exercisable or exchangeable for shares of our
common stock for a period of 90 days after the date of this prospectus without
the prior written consent of Donaldson, Lufkin & Jenrette Securities
Corporation. We can offer no assurance that an increase in the number of shares
of common stock that are freely tradeable will not adversely affect the market
price of our common stock after this offering.

13
<PAGE> 15

YEAR 2000 CONVERSION

Historically, certain computerized systems have used two digits rather than
four to define the applicable year. Computer equipment and software and devices
with imbedded technology that are time-sensitive may recognize a date using "00"
as the year 1900 rather than the year 2000, resulting in system failure or
miscalculations. This problem is generally referred to as the "Year 2000 issue."

Although we anticipate minimal business disruption will occur in our
systems as a result of the Year 2000 issue, possible consequences include a loss
of communications links with certain store locations, and the inability to
process transactions, send purchase orders, or engage in similar normal business
activities. We presently believe that with modifications to existing software
and conversions to new software, the risk of our Year 2000 conversion can be
mitigated. However, if we do not make the necessary modifications and
conversions, or do not complete them in a timely manner, it could have a
material adverse effect on our operations. We discuss our Year 2000 conversion
in the "Management's Discussion and Analysis of Financial Condition and Results
of Operations" section of this prospectus.

14
<PAGE> 16

PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY

Our common stock has been listed on the New York Stock Exchange under the
symbol CAO since March 12, 1998, the date of our IPO. 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.

<TABLE>
<CAPTION>
PRICE RANGE OF
COMMON STOCK
---------------
HIGH LOW
------ ------
<S> <C> <C>
Fiscal 1998:
First Quarter (from March 12, 1998)....................... $27.81 $22.00
Second Quarter............................................ 28.50 23.13
Third Quarter............................................. 27.50 19.44
Fourth Quarter (through November 19, 1998)................ 29.00 26.00
</TABLE>

On November 19, 1998, the last reported closing sale price of our common
stock was $28.19 per share.

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 expenditures 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. The Senior Credit Facility and the indenture governing the
11% Senior Subordinated Notes contain restrictions on CSK Auto, Inc.'s ability
to pay dividends or make payments or other distributions to us.

15
<PAGE> 17

USE OF PROCEEDS

We will not receive any proceeds from the sale of common stock in this
offering. We will pay certain legal, accounting and other expenses incidental to
the sale of shares by the selling stockholders. These costs are estimated to be
$600,000.

CAPITALIZATION

The following table sets forth our cash and cash equivalents and
consolidated capitalization.

<TABLE>
<CAPTION>
AS OF AUGUST 2, 1998
--------------------
(IN THOUSANDS)
<S> <C>
Cash and cash equivalents................................... $ 7,578
=========
Long-term debt (including current portion):
Senior Credit Facility:
Revolving credit facility.............................. $ 41,000
Term loan.............................................. 146,580
11% Senior Subordinated Notes............................. 81,250
Capital lease obligations................................. 23,279
---------
Total long-term debt.............................. 292,109
---------

Stockholders' equity:
Common stock(1)........................................... 277
Additional paid-in capital................................ 289,137
Stockholder receivable.................................... (1,018)
Deferred compensation..................................... (578)
Accumulated deficit....................................... (202,093)
---------
Total stockholders' equity........................ 85,725
---------
Total capitalization.............................. $ 377,834
=========
</TABLE>

- ------------------------

(1) Does not include 2,115,465 shares of common stock issuable upon the exercise
of stock options granted under our stock option plans, and 552,914
additional shares reserved for future issuance pursuant to options under our
stock option plans.

16
<PAGE> 18

DILUTION

Our net tangible book value as of August 2, 1998 was approximately $75.5
million or $2.72 per share. Our net tangible book value per share is determined
by subtracting the total amount of our liabilities from the total amount of our
tangible assets and dividing the remainder by the number of shares of our common
stock outstanding. Our net tangible book value per share will not be affected by
this offering. The price per share to the public of the shares of common stock
offered hereby exceeds the net tangible book value per share prior to this
offering. Therefore, purchasers of shares of common stock in this offering will
realize immediate and substantial dilution in the net tangible book value of
their shares. The following table, based upon our net tangible book value as of
August 2, 1998, illustrates the dilution to purchasers of shares of our common
stock in this offering, based on an assumed public offering price of $28.19 per
share (the last sale price on November 19, 1998).

<TABLE>
<S> <C>
Assumed public offering price per share..................... $28.19
Net tangible book value per share........................... 2.72
------
Dilution per share purchased in this offering(1)............ $25.47
======
</TABLE>

- ------------------------------

17
<PAGE> 19

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 for fiscal years 1994 through 1997 are derived
from our consolidated financial statements, which have been audited by
PricewaterhouseCoopers LLP, independent accountants. The selected statements of
operations and balance sheet data for fiscal year 1993 are derived from our
unaudited consolidated financial statements. The selected statements of
operations and balance sheet data for the first half of fiscal years 1997 and
1998 have been derived from our unaudited consolidated financial statements and
include, in the opinion of our management, all adjustments, consisting only of
normal recurring adjustments, necessary to fairly present the data for such
periods. The interim results are not necessarily indicative of the results to be
expected for a full fiscal year or for any future period. You should read the
data presented below together with our consolidated financial statements and
related notes, the other financial information, and "Management's Discussion and
Analysis of Financial Condition and Results of Operations," all included
elsewhere in this prospectus.

<TABLE>
<CAPTION>
TWENTY-SIX WEEKS
ENDED
FISCAL YEAR(1) ---------------------
---------------------------------------------------- AUGUST 3, AUGUST 2,
1993(2) 1994(3) 1995(4) 1996(5) 1997(6) 1997 1998(7)
-------- -------- -------- -------- -------- --------- ---------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS AND SELECTED STORE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA
Net sales.......................................... $744,541 $688,135 $718,352 $793,092 $845,815 $419,557 $493,124
Cost of sales...................................... 456,263 410,358 433,817 463,374 468,171 242,246 267,746
-------- -------- -------- -------- -------- -------- --------
Gross Profit....................................... 228,278 277,777 284,535 329,718 377,644 177,311 225,378
Other costs and expenses:
Operating and administrative................... 277,362 258,600 284,697 312,908 327,838 158,195 188,445
Transition and integration expenses............ -- -- -- -- 3,407 -- 3,075
Stock-based compensation....................... -- -- -- -- 909 -- --
Write-off of unamortized management fee........ -- -- -- -- -- -- 3,643
1996 Recapitalization charge................... -- -- -- 20,174 -- -- --
-------- -------- -------- -------- -------- -------- --------
Operating profit (loss)............................ 10,916 19,177 (162) (3,364) 45,490 19,116 30,215
Other 1996 Recapitalization expenses............... -- -- -- 12,463 1,009 -- --
Loss on sale of subsidiary......................... 1,056 -- -- -- -- -- --
Interest expense, net.............................. 11,752 10,343 14,379 20,691 40,680 19,714 16,608
-------- -------- -------- -------- -------- -------- --------
Income (loss) before taxes and extraordinary gain
(loss)........................................... (1,892) 8,834 (14,541) (36,518) 3,801 (598) 13,607
Income tax expense (benefit)....................... (731) 68 (5,447) (11,859) 1,557 (216) 5,017
-------- -------- -------- -------- -------- -------- --------
Income (loss) before extraordinary gain (loss)..... (1,161) 8,766 (9,094) (24,659) 2,224 (382) 8,590
Extraordinary gain (loss).......................... -- 97,186 -- -- (3,015) -- (6,767)
-------- -------- -------- -------- -------- -------- --------
Net income (loss).................................. $ (1,161) $105,952 $ (9,094) $(24,659) $ (771) $ (382) $ 1,823
======== ======== ======== ======== ======== ======== ========
Diluted earnings (loss) per share.................. $ (.13) $ 12.15 $ (1.04) $ (2.28) $ (0.04) $ (0.02) $ 0.07
======== ======== ======== ======== ======== ======== ========
Shares used for computation........................ 8,724 8,724 8,724 10,819 18,012 17,105 26,578
======== ======== ======== ======== ======== ======== ========
OTHER DATA
EBITDA(8)........................................ $ 23,102 $ 32,282 $ 16,099 $ 50,544 $ 70,173 $ 29,220 $ 48,320
EBITDAR(8)....................................... 58,595 70,964 61,453 98,450 124,695 55,946 82,774
Capital expenditures............................. 14,910 14,597 11,640 6,317 20,132 6,781 18,640
Commercial sales(9).............................. 18,602 32,630 60,840 89,551 115,378 57,701 74,928
Net cash provided by (used in) operating
activities..................................... 17,569 15,120 1,354 (38,366) (62,703) (6,332) 15,706
Net cash used in investing activities............ (14,943) (18,983) (7,888) (10,686) (56,727) (10,328) (16,025)
Net cash provided by (used in) financing
activities..................................... 227 (5,383) 8,028 49,911 119,059 18,035 3,045
SELECTED STORE DATA
Number of stores (end of period)................. 538 544 566 580 718 591 747
Percentage increase in comparable store net
sales(10)...................................... 10% 5% 2% 6% 4% 5% 0%
BALANCE SHEET DATA
Net working capital.............................. $ 78,003 $ 77,627 $ 81,048 $121,157 $235,651 $135,031 $250,960
Total assets..................................... 294,806 350,830 391,319 443,986 563,251 468,075 570,344
Total debt (including current maturities)........ 187,807 105,601 122,003 335,680 439,962 357,456 292,109
Stockholders' equity (deficit)................... (36,861) 69,091 59,997 (102,263) (75,055) (102,645) 85,725
</TABLE>

See accompanying notes on pages 19 and 20.

18
<PAGE> 20

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 1996, which had 53 weeks.

(2) Our company was formed in July 1993 as a holding company for an entity
which owned (1) CSK Auto, Inc., (2) another retailer of automotive parts
and accessories, and (3) other immaterial operations. The information
provided for fiscal 1993 prior to our formation reflects the operations of
this entity on a predecessor basis, all of which operations other than CSK
Auto, Inc. were sold, liquidated or disposed of prior to December 31, 1993.

(3) Net income in fiscal 1994 includes an extraordinary gain of $97.2 million
resulting from cancellation of a portion of our long-term debt.

(4) Results of operations in fiscal 1995 include pre-opening expenses of $1.6
million associated with the opening of our new distribution center in
Phoenix, Arizona. Our fiscal 1995 operating and administrative expenses
also include $5.3 million of software development costs associated with the
new store-level information systems we installed during fiscal 1995. In
addition, we believe that our operations and operating results were
adversely impacted during fiscal 1995 as a result of the start-up costs
associated with the implementation of many new initiatives.

(5) Results of operations in fiscal 1996 include certain non-recurring charges
which were incurred when the 1996 Recapitalization was consummated,
including the following: (1) amounts paid to members of management pursuant
to existing equity participation agreements of $19.9 million ($20.2 million
including a provision for estimated payroll taxes thereon); and (2)
expenses incurred in connection with the 1996 Recapitalization of $12.5
million. Our fiscal 1996 results also include a charge of $12.9 million for
store closing costs.

(6) In December 1997, we acquired 82 Trak West stores which have been included
in results of operations from the date of acquisition. Results of
operations in fiscal 1997 include: (1) an extraordinary loss of $3.0
million to reflect the write-off of certain deferred financing costs
associated with the early extinguishment of the our previous senior credit
facility; (2) $3.4 million of transition and integration expenses
associated with the Trak West Acquisition; and (3) $1.0 million of other
1996 Recapitalization expenses.

(7) Results of operations for the first half of fiscal 1998 include: (1) an
extraordinary loss of $6.8 million, which consisted primarily of the
premiums paid in connection with the retirement of outstanding debt with
the proceeds of our IPO and the write-off of a portion of deferred debt
issuance costs; (2) $3.1 million of transition and integration expenses
associated with the Trak West Acquisition; and (3) the write-off of a $3.6
million prepaid management fee. Excluding these non-recurring items, and
the related income tax thereon, net income for the first half of fiscal
1998 was $12.8 million, or $0.45 per diluted share.

19
<PAGE> 21

(8) EBITDA represents income before net interest expense, provision for income
taxes, depreciation and amortization expense, other non-cash charges,
extraordinary items and non-recurring charges. While EBITDA is not intended
to represent cash flow from operations as defined by GAAP (and should not
be considered as an indicator of operating performance or an alternative to
cash flow (as measured by GAAP)), it is included herein because we believe
it is a meaningful measure which provides additional information with
respect to our ability to meet our future debt service, capital expenditure
and working capital requirements. EBITDA has been calculated as described
above in accordance with the terms of the indenture under which our 11%
Senior Subordinated Notes were issued and may differ in method of
calculation from similarly titled measures used by other companies.

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

<TABLE>
<CAPTION>
TWENTY-SIX
WEEKS ENDED
FISCAL YEAR ---------------------
------------------------------------------------- AUGUST 3, AUGUST 2,
1993 1994 1995 1996 1997 1997 1998
------- ------- -------- -------- ------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Income (loss) before income taxes and
extraordinary gain (loss)...................... $(1,892) $ 8,834 $(14,541) $(36,518) $ 3,801 $ (598) $13,607
Add back:
Interest expense, net.......................... 11,762 10,343 14,379 20,691 40,680 19,714 16,608
Depreciation and amortization expense.......... 12,176 13,105 16,261 19,225 20,367 9,588 11,387
Non-recurring 1996 Recapitalization expenses... -- -- -- 32,637 1,009 516 --
Other non-recurring and non-cash charges....... 1,056 -- -- 14,509 4,316 -- 6,718
------- ------- -------- -------- ------- ------- -------
Total.................................... $23,102 $32,282 $ 16,099 $ 50,544 $70,173 $29,220 $48,320
======= ======= ======== ======== ======= ======= =======
</TABLE>

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

(10) 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. As a result, the sales of the
82 acquired Trak West stores are not yet reflected in our computation of
comparable store net sales. Relocations are included in comparable store
net sales from the date of opening.

20
<PAGE> 22

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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

- Fiscal 1998 means the 52 weeks ending January 31, 1999

- Fiscal 1997 means the 52 weeks ended February 1, 1998

- Fiscal 1996 means the 53 weeks ended February 2, 1997

- Fiscal 1995 means the 52 weeks ended January 28, 1996

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 August 2, 1998, we operated 747 stores as one fully integrated
company under three brand names:

- Checker Auto Parts, founded in 1968 and operating in the Southwestern and
Rocky Mountain states;

- Schuck's Auto Supply, founded in 1917 and operating in the Pacific
Northwest; and

- Kragen Auto Parts, founded in 1947 and operating primarily in California.

Based on store count, we believe we are the largest retailer of automotive
parts and accessories in 19 of our 24 markets.

Over the past several years, we have implemented a variety of initiatives
which have enabled us to significantly increase our productivity and the level
and quality of service we provide to customers. These initiatives include:

- Expanding our product selection and priority parts operation;

- Converting our warehouse and distribution system to a technologically
advanced, fully-integrated system;

- Installing sophisticated store-level information systems;

- Accelerating our store growth strategy; and

- Expanding our commercial sales program.

Largely as a result of the success of these programs, our profitability has
improved. We believe that these initiatives have provided the foundation for
continued and profitable growth.

21
<PAGE> 23

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

- In October 1996, INVESTCORP S.A. and certain other investors (whom we
refer to as the "Investcorp Group") purchased a 51% equity interest in
our company in a series of related transactions resulting in a new
capitalization structure for our company. We refer to these transactions
as the "1996 Recapitalization."

- In December 1997, we acquired 82 stores located in the Los Angeles market
from Trak Auto Corporation for approximately $34.5 million. We refer to
this transaction as the "Trak West Acquisition."

- In March 1998, we completed the initial public offering of our common
stock and used the net proceeds of $159.1 million to repay outstanding
debt. We refer to this transaction as our "IPO."

In connection with this offering, we expect to incur an aggregate of
approximately $600,000 in legal, accounting, printing and other costs. These
costs will be expensed in the fourth quarter of fiscal 1998.

RECENT FINANCIAL RESULTS

- Our net sales increased 21.3% from our third quarter of fiscal 1997
results to $263.1 million. Comparable store sales increased 3% during the
third quarter. During the first three quarters of fiscal 1998, comparable
store sales increased 1%. Our net sales growth was primarily due to the
increase in the number of stores operated.

- Our operating profit margin increased to 8.9% in the third quarter of
fiscal 1998 from 7.9% in the third quarter of fiscal 1997. Our operating
profit margin increased due primarily to our ability to obtain generally
better pricing and more favorable terms and support from our vendors
because of our improving operating results and financial condition.

- Our net income increased to $10.5 million or $0.37 per diluted share
compared to $4.3 million or $0.25 per diluted share for our third quarter
of fiscal 1997. Net income increased due to the factors discussed above,
together with lower interest expense resulting from our having less debt
outstanding following the repayment of debt with the proceeds of the IPO.

- We opened 27 new stores, relocated 5 stores and expanded 2 stores during
the third quarter of fiscal 1998.

22
<PAGE> 24

The following table presents certain unaudited consolidated financial data
for the thirteen and thirty-nine week periods ended November 2, 1997 and
November 1, 1998. The results presented below are not necessarily indicative of
the results that may occur for the full fiscal year. You should also read our
consolidated financial statements and related notes:

<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED
-------------------------- --------------------------
NOVEMBER 2, NOVEMBER 1, NOVEMBER 2, NOVEMBER 1,
1997 1998 1997 1998
----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales................................ $216,908 $263,142 $636,465 $756,266
Cost of sales.......................... 116,671 136,111 358,917 403,857
-------- -------- -------- --------
Gross profit............................. 100,237 127,031 277,548 352,409
Other costs and expenses:
Operating and administrative
expenses............................ 83,129 103,521 241,324 291,966
Transition and integration expenses.... -- -- -- 3,075
Write-off of unamortized management
fee................................. -- -- -- 3,643
-------- -------- -------- --------
Operating profit......................... 17,108 23,510 36,224 53,725
Interest expense, net.................. 10,101 6,924 29,815 23,532
-------- -------- -------- --------
Income before taxes and extraordinary
loss................................... 7,007 16,586 6,409 30,193
Income tax expense..................... 2,687 6,059 2,471 11,076
-------- -------- -------- --------
Income before extraordinary loss......... 4,320 10,527 3,938 19,117
Extraordinary loss, net of income
taxes............................... -- -- -- (6,767)
-------- -------- -------- --------
Net income............................... $ 4,320 $ 10,527 $ 3,938 $ 12,350(1)
======== ======== ======== ========
Diluted earnings per share............... $ 0.25 $ 0.37 $ 0.23 $ 0.45(1)
Shares used in computing per share
amounts................................ 17,105,000 28,579,609 17,105,000 27,253,660
</TABLE>

- ------------------------------

23
<PAGE> 25

RESULTS OF OPERATIONS

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

<TABLE>
<CAPTION>
TWENTY-SIX
WEEKS ENDED
FISCAL YEAR ---------------------
----------------------- AUGUST 3, AUGUST 2,
1995 1996 1997 1997 1998
----- ----- ----- --------- ---------
<S> <C> <C> <C> <C> <C>
Net sales.......................................... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales...................................... 60.4 58.4 55.4 57.7 54.3
----- ----- ----- ----- -----
Gross profit....................................... 39.6 41.6 44.6 42.3 45.7
Operating and administrative expenses.............. 39.6 39.5 38.8 37.7 38.2
Transition and integration expenses................ -- -- 0.4 -- 0.6
Stock-based compensation........................... -- -- 0.1 -- --
Write-off of unamortized management fee............ -- -- -- -- 0.7
1996 Recapitalization charge -- equity
participation agreements......................... -- 2.5 -- -- --
----- ----- ----- ----- -----
Operating profit (loss)............................ 0.0 (0.4) 5.3 4.6 6.2
Other 1996 Recapitalization expenses............... -- 1.6 0.1 -- --
Interest expense, net.............................. 2.0 2.6 4.8 4.7 3.4
Income tax expense (benefit)....................... (0.7) (1.5) 0.1 (0.1) 1.0
----- ----- ----- ----- -----
Income (loss) before
extraordinary loss............................... (1.3) (3.1) 0.3 -- 1.8
Extraordinary loss................................. -- -- (0.4) -- (1.4)
----- ----- ----- ----- -----
Net income (loss).................................. (1.3)% (3.1)% (0.1)% 0.0% 0.4%
===== ===== ===== ===== =====
</TABLE>

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

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

FIRST HALF OF FISCAL 1998 COMPARED TO FIRST HALF OF FISCAL 1997

Net sales for the first half of fiscal 1998 increased $73.6 million, or
17.5% over net sales for the first half of fiscal 1997, primarily reflecting an
increase in the number of stores operated. As a result of the acquisition of the
82 Trak West stores in December 1997 and new store openings, we operated 747
stores at the end of the first half of fiscal 1998 compared to 591 stores at the
end of the first half of fiscal 1997. Comparable store sales for the first half
of fiscal 1998 were flat compared to the prior-year period, due primarily to
unseasonably cooler temperatures and rain in many of our key markets through the
first quarter and early in the second quarter. During

24
<PAGE> 26

the first half of fiscal 1998, we opened 33 new stores, expanded 2 stores,
relocated 19 stores and closed 4 stores in addition to those closed due to
relocations.

Gross profit for the first half of fiscal 1998 was $225.4 million, or 45.7%
of net sales, compared to $177.3 million, or 42.3% of net sales, for the
comparable period of fiscal 1997. The increase in gross profit percentage
primarily resulted from our ability to obtain generally better pricing and more
favorable terms and support from our vendors due to improved financial
performance and stronger capitalization.

Operating and administrative expenses increased by $30.3 million to $188.4
million, or 38.2% of net sales, for the first half of fiscal 1998 from $158.2
million, or 37.7% of net sales, for the comparable period of fiscal 1997. The
increase is primarily the result of the operating costs of new stores that are
in the early stages of maturation and the operating costs of the Trak West
stores, which exceed our company-wide average as a percent of sales. In
addition, we incurred a $3.1 million non-recurring expense during the first
quarter of fiscal 1998 to complete the integration of the Trak West stores into
our operations and a $3.6 million non-cash charge to write off the remaining
unamortized balance of a pre-paid management consulting and advisory services
agreement that terminated by its terms upon the consummation of our IPO.

Operating profit increased to $30.2 million, or 6.2% of net sales, for the
first half of fiscal 1998 compared to $19.1 million, or 4.6% of net sales, for
the comparable period of fiscal 1997, due to the factors cited above.

Interest expense for the first half of fiscal 1998 totaled $16.6 million
compared to $19.7 million for the comparable period of fiscal 1997. The expense
decreased primarily as the result of the early retirement of approximately
$147.6 million of outstanding debt with the proceeds of our IPO. The retirement
of this debt also caused an extraordinary loss of $6.8 million, net of tax,
which consisted primarily of prepayment premiums paid in connection with the
redemption of debt and the write-off of a portion of deferred debt issuance
costs.

Income tax expense for the first half of fiscal 1998 was $5.0 million which
resulted in an effective rate of approximately 37%, as compared to an effective
rate of approximately 36% for the first half of fiscal 1997.

Net income for the first half of fiscal 1998, excluding $3.1 million of
transition and integration expenses and the $3.6 million write-off of
unamortized management fees and the extraordinary loss was $12.8 million, or
$0.45 per diluted common share (based on 28.6 million shares outstanding),
compared to a net loss of $0.4 million, or $0.02 per diluted common share (based
on 17.1 million shares outstanding), for the comparable period of fiscal 1997.
Including the non-recurring charges and extraordinary loss, we reported net
income of $1.8 million, or $0.07 per diluted common share, for the first half of
fiscal 1998.

As a result of the factors cited above, EBITDA increased by $19.1 million
to $48.3 million in the first half of fiscal 1998, compared to $29.2 million for
the comparable period of fiscal 1997.

FISCAL 1997 COMPARED TO 1996

Net sales for fiscal 1997 increased $52.7 million, or 7%, over net sales
for fiscal 1996. Comparable store sales increased $29.9 million, or 4%, and new
stores contributed $22.2 million

25
<PAGE> 27

to the increase in net sales for the fiscal year. Included in the $22.2 million
of new store sales is $10.6 million in net sales contributed by the former Trak
West stores acquired on December 8, 1997. During fiscal 1997, we opened 65 new
stores, relocated 36 stores, expanded 3 stores, sold 4 stores, closed 5 stores
in addition to those closed due to relocations and acquired the 82 Trak West
stores. At February 1, 1998, we had 718 stores in operation.

Gross profit for fiscal 1997 was $377.6 million, or 44.6% of net sales,
compared to $329.7 million, or 41.6% of net sales, for fiscal 1996. The increase
in gross profit percentage resulted from our ability to obtain generally better
pricing and more favorable terms from our vendors as a result of our improving
operating results and financial condition. In addition, we realized an increase
in sales of automotive replacement parts which produce a higher gross profit
percentage than other product categories. Gross profit percentage was also
favorably affected by efficiencies achieved by our warehousing and distribution
systems.

Operating and administrative expenses increased by $14.9 million to $327.8
million, or 38.8% of net sales, for fiscal 1997 from $312.9 million, or 39.5% of
net sales, for fiscal 1996. The increase in this expense is primarily the result
of the incremental operating costs of new stores that are in the early stages of
maturation. In addition, we incurred increased advertising costs of
approximately $1.9 million in fiscal 1997 as a result of a shift in the mix of
our advertising media from primarily print to a greater usage of radio and
television. Also, we incurred approximately $0.9 million of stock-based
compensation expense in fiscal 1997 as the result of the sale of stock to
certain members of management at a discount to its fair market value.

Operating profit increased to $45.5 million, or 5.3% of net sales, for
fiscal 1997, compared to an operating loss of $3.4 million, or 0.4% of net
sales, for fiscal 1996. Significant items that affect the comparability of these
operating results include: (1) $1.6 million of store closing costs in fiscal
1997 compared to $14.9 million of store closing costs in fiscal 1996; (2) $3.4
million of transition and integration expense in fiscal 1997 associated with the
Trak West Acquisition compared with no such expense occurring in fiscal 1996;
and (3) $20.2 million of charges in fiscal 1996 in connection with certain
equity participation agreements which became payable as a result of the 1996
Recapitalization compared with no such charges occurring in fiscal 1997. The
1996 store closing costs include a charge of $12.9 million to reflect the store
closing costs of 91 specific store sites that were included in an update of our
strategic plan for store relocation and expansion as discussed below in the
comparison of fiscal 1996 to fiscal 1995.

Interest expense for fiscal 1997 totaled $40.7 million compared to $20.7
million for fiscal 1996. The increase is the result of the issuance of new
subordinated debt and higher average bank borrowings.

Income tax expense totaled $1.6 million in fiscal 1997, an effective tax
rate of 41%, compared to an income tax benefit of $11.9 million for fiscal 1996.

We incurred an extraordinary loss of $3.0 million, net of income taxes, in
fiscal 1997 as a result of the write-off of the deferred financing costs
associated with the amendment and restatement of our Senior Credit Facility.

As a result of the factors cited above, net loss decreased to $0.8 million
for fiscal 1997, compared to a net loss of $24.7 million for fiscal 1996.

26
<PAGE> 28

As a result of the factors cited, EBITDA increased by $19.7 million to
$70.2 million for fiscal 1997 compared to $50.5 million for fiscal 1996.

FISCAL 1996 COMPARED TO FISCAL 1995

Net sales for fiscal 1996 increased by $74.7 million, or 10.4%, over net
sales for fiscal 1995. This increase was due to (1) an increase in comparable
store sales of 6%, or $42.5 million and (2) an increase in net sales from new
stores of $32.2 million. During fiscal 1996, we opened 19 new stores, relocated
37 stores, expanded 8 stores and closed five stores in addition to those closed
due to relocations.

Gross profit for fiscal 1996 was $329.7 million, or 41.6% of net sales,
compared with $284.5 million, or 39.6% of net sales, during fiscal 1995. We
increased our gross profit percentage by (1) increasing the sales of automotive
replacement parts which produce a higher gross profit percentage than other
product categories, and (2) achieving efficiencies from our new warehouse and
distribution systems, which became fully operational in the fourth quarter of
fiscal 1995. We also believe that in fiscal 1996 we obtained better pricing from
vendors as a result of improvement in our financial performance and access to
credit accomplished during the year. These favorable factors were slightly
offset in fiscal 1996 by the lower gross margins on increased commercial sales
as compared to retail sales.

Operating and administrative expenses for fiscal 1996 increased by $28.2
million over such expenses for fiscal 1995 but, as a percentage of net sales,
decreased to 39.5% from 39.6%. This decrease reflected our ability to leverage
our overhead and fixed expenses with higher sales volume despite an increase of
approximately $3.0 million in depreciation and amortization expense associated
with equipment installed as part of our investment in store-based information
systems.

In January 1997, we updated our strategic plan relating to the relocation
of certain stores. The 1996 Recapitalization provided us with greater access to
capital resources and the availability of a sale-leaseback facility, and thereby
enhanced our ability to implement such relocations. While we believe that there
will be long-term operating benefits from our store relocation strategy,
implementing the strategy will involve costs for early lease terminations or
negative sub-lease rentals for vacated stores and, accordingly, we recorded a
charge to earnings of $12.9 million in January 1997, which increased the
provision for store closing costs to $14.9 million for fiscal 1996 from $3.3
million for fiscal 1995.

The $12.9 million charge reflected store closing costs associated with 91
specific store sites included in the strategic plan. The store sites were
selected for relocation on the basis of their operating performance relative to
their size. We included stores in the plan for relocation because we identified
a larger, or otherwise more favorable, site within its market area. Stores were
scheduled to be closed at specific dates under the plan consistent with the
anticipated commencement of operations of the new store. We have historically
experienced sales growth shortly after opening the relocated stores.

The $12.9 million charge consisted principally of future lease costs under
non-cancellable leases for the 91 specifically identified store locations (from
the planned vacancy date), related

27
<PAGE> 29

estimates for vacancy periods, writeoffs of certain fixed assets and leasehold
improvements, and estimated credit losses with respect to sub-lease
arrangements. Substantially all of these relocations have been completed. Future
rents will be incurred through the expiration of the non-cancellable leases,
which range from August 1998 to May 2008.

To recognize our obligations under pre-existing equity participation
agreements with members of management which became payable as a result of the
1996 Recapitalization, we recorded a charge of approximately $20.2 million in
the fourth quarter of fiscal 1996. See note 2 to our consolidated financial
statements. In addition, we incurred non-recurring expenses totaling $12.5
million which consisted primarily of consulting, legal and accounting fees
relating to the 1996 Recapitalization.

Interest expense for fiscal 1996 was $20.7 million compared to $14.4
million for fiscal 1995. Higher average effective interest rates and the
issuance of approximately $181.9 million of new debt in connection with the 1996
Recapitalization caused the increase in interest expense.

As a result of the factors cited above, we recorded a net loss of $24.7
million for fiscal 1996 as compared to a net loss of $9.1 million for fiscal
1995.

LIQUIDITY AND CAPITAL RESOURCES

Our primary cash requirements include working capital (primarily
inventory), debt service obligations and capital expenditures. We intend to
finance our cash requirements with cash flow from operations, funds from our
leasing facility and borrowings under our revolving credit facility. We have
access to an off-balance sheet operating lease facility that is used to finance
new store construction. The facility gives us up to $125.0 million of funding to
provide for the acquisition and development of 100 to 125 new stores over the
period of February 1, 1998 through May 31, 1999. As of November 1, 1998,
approximately $33.8 million of this $125.0 million leasing facility had been
committed. Our revolving credit facility provides for borrowings of up to $125.0
million, of which $66.0 million of unused capacity was available at November 1,
1998. We believe that cash flow from operations combined with the availability
of funds under the leasing facility and the revolving credit facility will be
sufficient to support our operations and liquidity requirements for the
foreseeable future.

We opened 104 new, relocated or expanded stores in fiscal 1997 and 54 new,
relocated or expanded stores during the first half of fiscal 1998. We expect to
open, relocate or expand approximately 76 stores in the second half of fiscal
1998 (of which 34 were opened, relocated or expanded during the thirteen weeks
ended November 1, 1998) and approximately 150 stores in fiscal 1999. We
anticipate that the majority of these new, relocated or expanded stores will be
financed by sale-leaseback or similar arrangements structured as operating
leases that require no net capital expenditures except for fixtures and store
equipment. For the remainder of our planned new, relocated or expanded stores,
we expect to spend approximately $120,000 per store for leasehold improvements.
In addition to capital expenditures, each new store will require an estimated
investment in working capital, principally for inventories, of approximately
$300,000. A substantial portion of these inventories are expected to be financed
through vendor payables. New stores generally become profitable during the first
full year of operations. See note 1 to our consolidated financial statements.

28
<PAGE> 30

In addition to capital expenditures for new stores, we expect to spend
approximately $6.5 million over the next year for information systems hardware
and software (approximately $3.6 million of which is related to the "Year 2000"
issue discussed below).

In fiscal 1997, net cash used in operating activities was $62.7 million,
which consisted primarily of $0.8 million of net loss, $22.4 million of non-cash
depreciation and amortization expenses, a $3.0 million non-cash extraordinary
loss and a $1.6 million decrease in deferred tax assets, offset by a $88.9
million increase in working capital. During this period, we used $63.8 million
of cash to increase inventory levels, primarily for funding new store openings
and for expanding the number of replacement parts offered in our stores. Net
cash used in investing activities totaled $56.7 million and consisted primarily
of $34.5 million for the purchase of 82 Trak West stores and $20.1 million of
capital expenditures. Net cash provided by financing activities totaled $119.1
million and consisted primarily of net borrowings under the Senior Credit
Facility and $21.7 million of equity contributions. At February 1, 1998, we had
approximately $25.8 million of net operating loss carryforwards available which
will reduce future cash requirements for the payment of federal income taxes.

For the first half of fiscal 1998, net cash provided by operating
activities was $15.7 million which consisted primarily of $1.8 million of net
income, $11.9 million of non-cash depreciation and amortization expenses, a $5.0
million decrease in deferred tax assets and $10.4 million of non-cash losses and
write-off of deferred financing costs associated with the repayment of debt at
the time of the IPO, offset by $13.5 million used to fund working capital. Net
cash used in investing activities totaled $16.0 million and consisted primarily
of capital expenditures and assets held for sale under our new store development
program. Net cash provided by financing activities totaled $3.0 million and was
primarily related to our IPO and the repayment of debt using the net proceeds.

YEAR 2000 CONVERSION

Historically, certain computerized systems have used two digits rather than
four to define the applicable year. Computer equipment and software and devices
with imbedded technology that are time-sensitive may recognize a date using "00"
as the year 1900 rather than the year 2000, resulting in system failures or
miscalculations. This problem is generally referred to as "the Year 2000 issue."

During fiscal 1997, we began a comprehensive review of our systems and
applications for Year 2000 compliance. We also engaged an independent advisor to
evaluate and assist us with our Year 2000 program. To date, we have
substantially completed the identification and assessment phases of our Year
2000 conversion. We have included both information technology,

29
<PAGE> 31

such as purchased software and point-of-sale computer systems, and
non-information technology equipment, such as warehouse conveyor systems, in our
evaluations. In addition, we have identified our key third-party business
partners and we are coordinating with them to address potential Year 2000
issues. These issues include data exchange with us as well as their shipping and
warehousing processes.

We currently anticipate that our Year 2000 identification, assessment,
remediation and testing efforts, will be completed by July 31, 1999. To date, we
have incurred and expensed approximately $0.7 million related to the assessment
of and preliminary efforts in connection with our Year 2000 conversion project.
To date, we have also capitalized approximately $1.6 million in connection with
the replacement of certain hardware and software applications.

The following table summarizes the time frame for the initiatives and the
estimated percent completed to date:

<TABLE>
<CAPTION>
YEAR 2000 INITIATIVE TIME FRAME(MO/YR) PERCENT COMPLETE
-------------------- ------------------ ----------------
<S> <C> <C>
Initial IT system identification and assessment.......... 6/1996 to 11/1998 100%
Business Partners identification and assessment.......... 8/1997 to 12/1998 90%
Re-engineering and testing of Mainframe Applications..... 4/1996 to 6/1999 60%
Renovation and testing of Store Systems.................. 7/1997 to 6/1999 20%
Renovation and testing of AS/400 Applications............ 9/1997 to 12/1998 90%
Renovation and testing of LAN Applications............... 1/1998 to 12/1998 65%
Identification and assessment of non-IT systems issues... 5/1998 to 11/1998 95%
Remediation and testing of non-IT systems issues......... 9/1998 to 6/1999 5%
Upgrades to IT infrastructure (including
telephone/PBX)......................................... 10/1998 to 10/1999 15%
Interface files assessment and partner testing........... 11/1998 to 6/1999 *
Electronic data interchange trading partner
conversions............................................ 11/1998 to 6/1999 *
Enterprise testing....................................... 1/1999 to 12/1999 *
</TABLE>

- ---------------
* Not yet commenced.

We estimate the total remaining cost of our Year 2000 conversion to be $7.1
million, which is being funded with lease financing and operating cash flows. Of
the total project cost, we attribute approximately $3.6 million to the purchase
of new hardware and software which will be capitalized. We will expense the
remaining $3.5 million as incurred over the next two fiscal years.

We have begun, but not yet completed, a comprehensive analysis of the
operational problems and costs (including loss of revenues) that would be
reasonably likely to result from our failure and the failure of certain third
parties to complete efforts necessary to achieve Year 2000 compliance on a
timely basis. We are developing a contingency plan to address Year 2000
failures.

The costs of the Year 2000 Conversion and the date on which we plan to
complete the project are based upon our management's best estimates, which were
derived utilizing numerous assumptions of future events. We cannot guarantee
that we will achieve these estimates. Specific factors that could cause material
differences between our actual results and our estimates include: (1) the
availability and cost of personnel trained in this area; (2) the success of
third parties in their Year 2000 conversion plans; and (3) the ability to locate
and correct all relevant computer codes and similar uncertainties.

30
<PAGE> 32

QUARTERLY RESULTS AND SEASONALITY

Our business is somewhat seasonal in nature, with the highest sales
occurring in the summer months of June through August. Our business is, in
addition, affected by weather conditions. While unusually severe or inclement
weather tends to reduce sales as elective maintenance is deferred 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 1996, 1997 and the first half of fiscal 1998. The unaudited quarterly
information includes all adjustments which management considers necessary for a
fair presentation of the information shown.

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

<TABLE>
<CAPTION>
FISCAL 1996
-----------------------------------------
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
-------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Net sales.......................................... $189,185 $200,895 $202,335 $200,677
Gross profit....................................... 75,476 82,500 84,773 86,969
1996 Recapitalization charge....................... -- -- -- 20,174
Store closing provision............................ -- -- -- 12,959
Operating profit (loss)(1)......................... 6,026 7,046 8,426 (24,862)
Other 1996 Recapitalization expenses............... -- -- -- 12,463
Net income (loss)(2)............................... 1,499 2,113 2,821 (31,092)
Basic and diluted earnings (loss) per share (3).... 0.17 0.24 0.32 (1.82)
EBITDA............................................. $ 10,910 $ 11,959 $ 13,167 $ 14,508
</TABLE>

<TABLE>
<CAPTION>
FISCAL 1997
-----------------------------------------
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
-------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Net sales.......................................... $201,613 $217,944 $216,908 $209,350
Gross profit....................................... 84,112 93,199 100,237 100,096
Transition and integration expenses................ -- -- -- 3,407
Operating profit (4)............................... 7,017 12,099 17,108 9,266
Extraordinary loss, net of $2,091 of income
taxes............................................ -- -- -- (3,015)
Net income (loss)(5)............................... (1,649) 1,267 4,320 (4,709)
Basic and diluted earnings (loss) per share(3)..... (0.10) 0.07 0.25 (0.26)
EBITDA............................................. $ 11,759 $ 17,461 $ 22,454 $ 18,499
</TABLE>

31
<PAGE> 33

<TABLE>
<CAPTION>
TWENTY-SIX WEEKS ENDED
AUGUST 2, 1998
-------------------------
FIRST SECOND
QUARTER QUARTER
----------- -----------
(IN THOUSANDS, EXCEPT PER
SHARE AMOUNTS)
<S> <C> <C>
Net sales................................................... $238,423 $254,701
Gross profit................................................ 107,717 117,661
Transition and integration expenses......................... 3,075 --
Write-off of unamortized management fee..................... 3,643 --
Operating profit(6)......................................... 7,976 22,239
Extraordinary loss, net of $4,236 of income taxes........... (6,767) --
Net income (loss)(7)........................................ (7,519) 9,342
Basic earnings (loss) per share(3).......................... (0.32) 0.34
Diluted earnings (loss) per share(3)........................ (0.32) 0.33
EBITDA...................................................... $ 20,443 $ 27,877
</TABLE>

- ------------------------------

(1) Operating profit in the fourth quarter of fiscal 1996 was negatively
affected by non-recurring charges of $20.2 million related to the 1996
Recapitalization (see note 2 to our consolidated financial statements) as
well as by a provision for store closing costs totaling $12.9 million (see
note 12 to our consolidated financial statements).

(2) Net income in the fourth quarter of fiscal 1996 was negatively affected by
non-recurring charges of $12.5 million related to the 1996 Recapitalization
(see note 2 to our consolidated financial statements) as well as by the
charges discussed in note (1) above, net of income taxes. (see note 12 to
our consolidated financial statements).

(3) The sum of the quarterly earnings (loss) per share amounts within a fiscal
year differ from the total earnings (loss) per share for the fiscal year or
first half of the fiscal year due to the impact of differing weighted
average share outstanding calculations.

(4) Operating profit in the fourth quarter of fiscal 1997 was negatively
affected by $3.4 million of transition and integration expenses related to
the acquisition of 82 former Trak West stores and by $0.9 million of
stock-based compensation.

(5) Net income in the fourth quarter of fiscal 1997 was negatively affected by
an extraordinary loss of $3.0 million related to the write-off of the
deferred financing costs associated with the early retirement of debt as
well as by the charges discussed in note (4) above, net of income taxes.

(6) Operating profit in the first quarter of fiscal 1998 was negatively affected
by non-recurring charges of $3.1 million related to the transition and
integration of the 82 Trak West stores (see note 2 to our consolidated
financial statements) and the $3.6 million write-off of the remaining
unamortized balance of a pre-paid management consulting and advisory
services agreement that terminated by its terms upon consummation of our
IPO.

(7) Net income in the first quarter of fiscal 1998 was negatively affected by a
$6.8 million extraordinary loss, net of $4.2 million of income taxes, which
consisted of prepayment premiums paid in connection with redemption of debt
and the write-off of a portion of deferred debt issuance costs, as well as
by the charges discussed in note (6) above, net of income taxes.

32
<PAGE> 34

INFLATION

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

RECENT ACCOUNTING PRONOUNCEMENTS

In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information." In February 1998, the FASB issued SFAS
No. 132, "Employers Disclosures about Pensions and Other Postretirement
Benefits." We will adopt these statements during fiscal 1998. As these
statements only require additional disclosures in our financial statements,
their adoption will not have any effect on our financial position or results of
operations.

In March 1998, the Accounting Standards Executive Committee of the American
Institute of Certified Public Accountants issued Statement of Position ("SOP")
98-1, "Accounting for the Cost of Computer Software Developed or Obtained for
Internal Use." The SOP defines the characteristics of internal-use computer,
software criteria for capitalization, and financial statement disclosure
requirements. We will adopt SOP 98-1 in fiscal 1999 and do not expect that such
adoption will have a material effect on our financial position or results of
operations.

In April 1998, the Accounting Standards Executive Committee of the American
Institute of Certified Public Accountants issued SOP 98-5, "Reporting on the
Cost of Start-up Activities." The SOP broadly defines start-up activities as
those one-time activities related to opening a new facility, introducing a new
product or service, conducting business in a new territory, or commencing some
new operation. The SOP requires that the costs of start-up activities be
expensed as incurred. Our current accounting policy with respect to the cost of
start-up activities is 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. We will adopt SOP 98-5 in
fiscal 1999, which will require us to change our current accounting policy to
expense start-up costs as incurred. We do not believe that the impact of
adoption will have a material effect on our financial position or results of
operations.

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<PAGE> 35

BUSINESS

We are the largest retailer of automotive parts and accessories in the
Western United States and one of the largest retailers of such products in the
United States based, in each case, on our number of stores. As of November 1,
1998, we operated 773 stores as one fully integrated company under three brand
names:

- Checker Auto Parts, founded in 1968 and operating in the Southwestern and
Rocky Mountain states;

- Schuck's Auto Supply, founded in 1917 and operating in the Pacific
Northwest; and

- Kragen Auto Parts, founded in 1947 and operating primarily in California.

Based on our store count, we believe we are the largest retailer of
automotive parts and accessories in 19 of our 24 markets.

We offer a broad selection of national brand name and private label
automotive products for domestic and imported cars, vans and light trucks. Our
products include new and remanufactured automotive replacement parts,
maintenance items and accessories. Most of our sales are to do-it-yourself
customers, although our commercial sales program focusing on sales to auto
repair professionals and fleet owners, represents a significant and increasing
part of our business. Our stores typically offer between 13,000 and 17,000 SKUs.
Our operating strategy is to offer our products at everyday low prices and at
conveniently located and attractively designed stores, supported by highly
trained, efficient and courteous customer service personnel. We do not sell
tires or perform automotive repairs.

OPERATING AND GROWTH STRATEGIES

These operating initiatives include:

- EXPANDED PRODUCT SELECTION -- Our priority parts operation permits us to
better serve our do-it-yourself and commercial customers by making
available to more than 80% of our stores, on a same-day delivery basis,
an additional 200,000 SKUs not regularly stocked in these stores, and on
a next-day delivery basis to all of our stores, an additional 1,000,000
SKUs. We have expanded our priority parts operation by improving our
delivery system and adding 30 strategically located priority parts depots
to our two original priority parts depots. We believe that our priority
parts operation provides us with an important competitive advantage.

- IMPROVED WAREHOUSE AND DISTRIBUTION SYSTEM -- We have converted our
warehouse and distribution facilities from a manual, labor-intensive,
paper-based system to a technologically advanced, fully-integrated
system. This system became fully operational during the fourth quarter of
fiscal 1995 and has improved our in-stock levels and order fulfillment
accuracy to the highest rates in recent years. We have reduced warehouse
and distribution expense as a percentage of net sales from 4.9% for
fiscal 1995 to 3.8% for fiscal 1996,

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<PAGE> 36

3.4% for fiscal 1997 and 3.3% for the first half of fiscal 1998. We
believe we have sufficient warehouse and distribution capacity to meet
the requirements of our growth plans for the foreseeable future.

- ENHANCED STORE-LEVEL INFORMATION SYSTEMS -- We have installed several
sophisticated store-level information systems which have improved store
labor productivity and customer service. These enhanced information
system capabilities have also enabled us to achieve higher average
transaction amounts by providing employees with the information they need
to suggest appropriate add-on products, including higher margin
replacement parts. In addition, the significant investment we have made
in information systems has played an important role in our successful
penetration of the commercial market.

- TRAINING AND TECHNICAL EXPERTISE -- We have increased our focus on formal
classroom training and on-the-job training, customer service measurement
systems and incentive programs for our district managers, store managers,
and sales staff. Approximately 1,500 of our employees have passed the
ASE-P2 test, a nationally recognized certification for parts technicians.
We believe these programs have resulted in an increased level of customer
service and store-level efficiency.

- CENTRALIZED CALL CENTER -- Our centralized call center provides store
personnel at selected high-volume stores the option to reroute customer
calls to a central location during the store's busiest hours of
operation. Use of the call center allows sales associates to give their
undivided attention to customers at the store while call-in customers are
serviced directly by call center associates.

- PRECISION PRICING PROGRAM -- During fiscal 1997, we implemented a pricing
program, which allows us to establish pricing zones at the store level
rather than the market or chain level. This initiative enables us to
establish pricing levels for each store based upon that store's local
market competition.

- ACCELERATING STORE GROWTH STRATEGY -- Our store growth strategy is
focused on existing markets and includes:

- opening new stores;

- relocating smaller stores to larger stores at better locations; and

- expanding selected stores.

Our existing markets have many competitors with fewer stores than we
have. We believe that our store growth strategy will enable us to
effectively and profitably increase our name recognition and market
penetration while benefiting from economies of scale in advertising,
management and distribution costs. In addition to the 82 Trak West stores
we acquired in the Los Angeles market in December 1997 from Trak Auto
Corporation, we opened, relocated or expanded 104 stores in fiscal 1997
compared to 64 stores in fiscal 1996. We plan to continue to accelerate
our store growth strategy and expect to open,

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<PAGE> 37

relocate or expand a total of 130 stores in fiscal 1998 (88 have already
been opened, relocated or expanded as of November 1, 1998) and
approximately 150 stores in fiscal 1999. We believe that the large number
of small operators in our industry enables us to effectively pursue an
opportunistic acquisition strategy. Our acquisition strategy focuses on
(1) existing markets to achieve further market penetration in a timely
and cost-effective manner without adding additional retail square footage
(as was done in the Trak West Acquisition), and (2) contiguous markets,
to permit further leveraging of our established infrastructure over an
increasing sales base.

- EXPANDING COMMERCIAL SALES PROGRAM -- We believe that we can continue to
expand our profitable and highly successful commercial sales program for
auto repair professionals and fleet owners. The commercial market
constitutes in excess of 50% of the approximately $78 billion of annual
sales in the automotive aftermarket and is currently growing at a faster
rate than the do-it-yourself market. We believe we have significant
competitive advantages in servicing the commercial customer 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. Commercial sales centers have been
implemented in 467 of our stores as of November 1, 1998. Our sales to
commercial accounts (including sales by stores without commercial sales
centers) have increased 30% to $74.9 million in the first half of fiscal
1998, from $57.7 million in the comparable period in fiscal 1997. We
believe that significant opportunities exist to increase sales at our
existing commercial sales centers by focusing on the penetration of
certain sectors of the commercial market such as fleet owners,
municipalities and national accounts. We intend to continue installing
commercial sales centers in selected existing stores and in approximately
half of our new stores. We have already installed commercial sales
centers in 43 of the acquired Trak West stores (which did not actively
pursue commercial customers before we acquired them).

- INCREASING OPERATING PROFIT MARGIN -- We have increased our operating
margin to 6.2% in the first half of fiscal 1998, from 4.6% in the
comparable period of fiscal 1997. Excluding $6.7 million of non-recurring
charges, our operating profit margin for the first half of fiscal 1998
was 7.5%. Our gross profit margin is increasing primarily as a result of
more favorable vendor terms, taking advantage of cash discounts from
vendors, and improvements in our product mix. We believe that the
improved vendor terms are primarily the result of our improved financial
performance and stronger capitalization, a reduction in overall vendor
payables and growth in our store count. We believe that we can further
improve our operating profit margin through the continued focus on our
operating initiatives described above, and effectively leveraging our
fixed costs over an increasing sales base.

The success of our operating and growth initiatives has resulted in a 58%
increase in operating profit to $30.2 million for the first half of fiscal 1998,
from $19.1 million in the comparable period in fiscal 1997. Excluding $6.7
million of non-recurring charges, operating profit for the first half of fiscal
1998 was $36.9 million, an increase of 93% over the comparable period of fiscal
1997. We believe that we can continue to realize strong and profitable growth by
aggressively pursuing our operating and growth initiatives.
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<PAGE> 38

AUTOMOTIVE AFTERMARKET INDUSTRY

We are a retailer of aftermarket automotive products such as replacement
parts, maintenance items and accessories. The term aftermarket distinguishes our
sales from those items sold as part of the original sale of a car or truck.
According to industry estimates, the size of the automotive aftermarket for
replacement parts, maintenance items and accessories was approximately $78
billion in sales in 1996. We believe that the automotive aftermarket for these
items is growing because of increases in:

- the size and age of the country's automotive fleet;

- the number of miles driven annually per vehicle;

- the purchase prices of new cars;

- the cost of replacement parts; and

- labor costs associated with parts, installation and maintenance.

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

THE TRAK WEST ACQUISITION

On December 8, 1997, we acquired 82 stores located in the Los Angeles
market that had been owned by Trak Auto Corporation. The acquisition of these
stores provides us with a much greater presence (as of November 1, 1998, a total
of 157 stores) in the large, strategically important Los Angeles market, without
increasing the number of competing stores in the market. We completed the
conversion of these stores to our Kragen name and store format and the
integration of these stores into our operations during the first quarter of
fiscal 1998.

MARKETING AND MERCHANDISING STRATEGY

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

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<PAGE> 39

CUSTOMER SERVICE

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

We believe that the recruiting, training and retaining of high quality
sales employees is required if our business is to be successful. We operate
training and incentives programs to encourage the development of technical
expertise by our sales employees so they can effectively advise customers on
product selection and use. Well trained employees not only provide a high level
of customer satisfaction, they increase productivity and reduce labor costs.

CSK University, our sales employee 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
employee's development:

- customer service skills;

- basic automotive systems;

- advanced automotive systems; and

- management development.

Much of the training is delivered through formal classes in 16 training
centers that are fully equipped with the same systems as are in our stores. We
believe that our training programs enable sales associates to provide a high
level of service to a wide variety of customers ranging from less informed
do-it-yourself consumers to more sophisticated purchasers requiring diagnostic
advice. We also provide continuing training programs for store managers and
district managers designed to assist them in increasing store-level efficiency
and improving their potential for promotion. In addition, we require periodic
meetings of district and store managers to facilitate and enhance communications
within our organization. Approximately 1,500 of our employees have passed the
ASE-P2 test, a nationally recognized certification for parts technicians.

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

We use our centralized database as a source to make approximately 72,000
calls annually to customers inquiring as to their overall satisfaction with our
sales employees, pricing, product selection and quality. In addition, the
results of customer satisfaction surveys are provided to each store and the
appropriate management personnel to ensure that customer service levels remain a
store focus.

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<PAGE> 40

PRODUCT SELECTION

Our stores have a broad selection of national brand name products in order
to generate customer traffic and appeal to our commercial customers. In
addition, we stock a large selection of high quality private label products that
appeal to value-conscious customers. Each store offers an extensive product
line, including automotive replacement parts such as starters, alternators,
shock absorbers, mufflers, brakes, spark plugs, filters and batteries, as well
as a wide variety of maintenance items, such as motor oil, lubricants, waxes,
cleaners, polishes and antifreeze. In addition, each store offers general
accessories such as car stereos, alarms, trim, floor mats, tools and seat
covers. Sales of replacement parts account for approximately 60% of our sales.
Replacement parts typically generate higher gross profit margins than
maintenance items or general accessories. We are increasing our sales of
replacement parts, as a percentage of total sales, by offering a wider selection
of replacement parts and by increasing sales to commercial customers.

PRODUCT AVAILABILITY

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

We have continued to expand and improve our delivery system and have
increased our number of strategically located priority parts depots to 32. This
has led to better customer service by making available up to an additional
200,000 products on a same-day delivery basis to over 80% of our stores and
1,000,000 additional products on a next-day delivery basis to all of our stores.
This has also allowed us to increase sales to commercial accounts due to
availability of a greater number of replacement parts. Prior to this improvement
and expansion, this same day delivery service was available to only 80 of our
stores. Our priority parts operation handles approximately 120,000 inquiries
each week. Store associates are able to electronically inquire on price and
availability and order parts from the priority parts depots through our
electronic parts catalog and receive immediate confirmation of availability
without having to make telephone inquiries. We believe that these programs
provide us with important competitive advantages.

We have classified our product mix into 110 separate categories through a
merchandising program designed to determine the optimal inventory mix at each
individual store based on that store's historical sales. We believe that we can
improve store sales, gross profit margin and inventory turnover by tailoring
individual store inventory mix based on historical sales patterns for each of
the 110 product categories.

PRICING

Our pricing philosophy is that we should not lose a customer because of
price. Our pricing strategy is to offer everyday low prices at each of our
stores. Part of this strategy is to beat any competitor's lower price by 5%. As
a result, we closely monitor our competitors' pricing levels to ensure
competitive pricing in all of our stores. Our entry-level products offer
excellent value by meeting standard quality requirements at low prices. In
addition, our sales associates are

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<PAGE> 41

encouraged to offer alternative products at slightly higher price points. These
products typically provide extra features, improved performance, an enhanced
warranty or are of national brand recognition.

In the third quarter of fiscal 1997, we implemented 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.

ADVERTISING

We support our marketing and merchandising strategy through print
advertising, in-store promotional displays and an increasing emphasis on radio
and television advertising. The print advertising consists of monthly color
circulars produced by our in-house advertising department and which 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 primarily is 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 a National Hot Rod Association Funny Car. We have web sites on the
Internet at:

- http://www.checkerauto.com;

- http://www.schucks.com; and

- http://www.kragen.com.

STORE-BASED INFORMATION SYSTEMS

Over the past several years, we installed several store-level information
systems, which have improved store labor productivity and customer service.
These systems are described below.

ELECTRONIC PARTS CATALOG

Our electronic parts catalog is a software-based system that identifies the
location and availability of over one and a half million parts. The electronic
parts catalog is a user-friendly tool that enables our sales associates to
assist customers in parts selection and ordering based on simple input of the
year, model and engine type and application needed. The electronic parts catalog
covers vehicles with model years from 1967 through 1998. Once provided with this
basic information, the electronic parts catalog displays which part is needed
and whether it is located in the store. In the event a particular product is
unavailable at a store, the electronic parts catalog indicates whether it can be
obtained at a nearby store, priority parts depot, through certain warehouse
distributors with same-day delivery or directly from the manufacturer.
Information about the customer's car can be entered into a permanent customer
database that can be instantly accessed whenever the customer visits or phones
the store. The electronic parts catalog also displays related parts that the
sales associates can recommend to the customer for purchase and prints parts
lists for the customer. Our electronic parts catalog system is integrated

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<PAGE> 42

with our point of sale system and centralized database. This integration
improves customer service by:

- reducing check-out time by fully automating the ordering process between
the parts counter and the point of sale register;

- allowing the store associate to order parts electronically with immediate
confirmation of availability and/or delivery; and

- providing up-to-the-minute pricing of products.

POINT OF SALE SYSTEM

We installed a point of sale system consisting of cash registers and
sophisticated software in all of our stores, which electronically record and
report customer transactions and are tied to our electronic parts catalog and
the central inventory system. This point of sale system improves store
productivity and customer service by streamlining in-store procedures and
eliminating handwritten record keeping. This system also allows for paperless
transactions and electronic updating of warranty information. In addition, the
point of sale software tracks the history of individual customer purchases,
allowing us to monitor customer activity for use in regionalized marketing and
merchandising programs.

RETAIL PAPERLESS MANAGEMENT SYSTEM

Our retail paperless management system is a store-based software system
used to improve store efficiency. This system provides for interactive store
associate development and testing, communication via company-wide e-mail,
knowledge-based interviewing of associate applicants, automated associate time
and attendance recording and forms automation.

LABOR SCHEDULING SYSTEM

We utilize a sophisticated labor scheduling system that allocates labor
hours based on factors including forecasted sales and customer traffic counts.
We believe this system enables us to provide superior customer service while
providing for improved labor productivity.

SATELLITE COMMUNICATIONS NETWORK

Our satellite communications network links all of our stores with our
corporate office. The satellite network enables us to efficiently obtain and
deliver to our stores all file transfers, including pricing down-loads, sales
information updates and interactive transactions such as electronic parts
ordering. The system also broadcasts common files to all stores simultaneously
to update our electronics parts catalog. In addition, the satellite network
significantly increases the speed of credit card and check authorization.

CALL CENTER

Our centralized call center provides store personnel at selected
high-volume stores the option to reroute customer calls to a central location
during the store's busiest hours of operation. Call center associates perform
all functions that store personnel normally handle, such as store

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specific parts look-up, price look-up and inventory availability verification.
Associates in the call center can take an order from a customer and
electronically transmit it to the store, so that the customer can pick up the
requested product at his local store. Use of the call center allows sales
associates to give their undivided attention to customers at the store while
call-in customers are serviced directly by call center associates.

STORE OPERATIONS

Our stores are divided into seven geographic regions: Southwest, Rocky
Mountain, Northwest, Southern California, Coastal California, Los Angeles and
Northern California. Each region is administered by a regional manager, each of
whom oversees seven to ten district managers. Each of our district managers has
responsibility for between 11 and 18 stores.

The geographic distribution of our stores and the tradenames under which
they operated, as of November 1, 1998, are set forth in the table below.

<TABLE>
<CAPTION>
SCHUCK'S CHECKER KRAGEN COMPANY
AUTO SUPPLY AUTO PARTS AUTO PARTS TOTAL
----------- ---------- ---------- -------
<S> <C> <C> <C> <C>
California......................................... 2 1 374 377
Washington......................................... 88 -- -- 88
Arizona............................................ -- 85 -- 85
Colorado........................................... -- 63 -- 63
Utah............................................... -- 30 -- 30
Oregon............................................. 30 -- -- 30
Texas.............................................. -- 23 -- 23
Nevada............................................. -- 14 7 21
New Mexico......................................... -- 22 -- 22
Idaho.............................................. 17 4 -- 21
Montana............................................ -- 9 -- 9
Wyoming............................................ -- 4 -- 4
--- --- --- ---
Total.................................... 137 255 381 773
=== === === ===
</TABLE>

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). Each store employs
approximately 10 to 20 employees, including a store manager, two assistant store
managers and a staff of full-time and part-time employees.

STORE FORMATS

Our stores are generally located in high visibility, high traffic strip
shopping centers or in freestanding units adjacent to strip shopping centers.
The stores, which range in size from 2,800 to 27,000 square feet, average
approximately 6,900 square feet in size and offer between 13,000 and 17,000
SKUs.

We have four prototype store designs which are 6,000, 7,000, 8,000 and
12,000 square feet in size. The store size for a given new location is selected
based upon sales volume expectations determined through demographics and the
detailed market analysis that we prepare as part of

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<PAGE> 44

our site selection process. The following table categorizes our stores by size,
as of November 1, 1998:

<TABLE>
<CAPTION>
STORE SIZE NUMBER OF STORES
---------- ----------------
<S> <C>
10,000 sq. ft. or greater................................... 67
8,000-9,999 sq. ft.......................................... 148
6,000-7,999 sq. ft.......................................... 241
5,000-5,999 sq. ft.......................................... 199
Less than 5,000 sq. ft...................................... 118
</TABLE>

Approximately 60% of our stores are freestanding, with the balance
principally located within strip shopping centers. Approximately 85% to 90% of
each store's square footage is selling space, of which approximately 40% to 50%
is dedicated to automotive replacement parts inventory. The replacement parts
inventory area is fronted by a counter staffed by knowledgeable parts personnel
and is equipped with the electronic parts catalog. The remaining selling space
contains gondolas for accessories and maintenance items, including oil and air
filters, additives, waxes and other items, together with specifically designed
shelving for batteries and, in many stores, oil products.

STORE GROWTH STRATEGY

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

- opening new stores;

- relocating smaller stores to larger stores at better locations; and

- expanding selected stores.

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

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

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

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<PAGE> 45

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

<TABLE>
<CAPTION>
FISCAL 1998
FISCAL YEAR THROUGH
------------------ NOVEMBER 1,
1995 1996 1997 1998
---- ---- ---- -----------
<S> <C> <C> <C> <C>
Beginning stores............................................ 544 566 580 718
New stores.................................................. 24 19 65 60
Relocated stores............................................ 30 37 36 24
Acquired Trak West stores................................... -- -- 82 --
Closed stores (including relocated stores).................. (32) (42) (45) (29)
--- --- --- ---
Ending stores............................................... 566 580 718 773
=== === === ===
Expanded stores............................................. 9 8 3 4
Total new, relocated and expanded stores.................... 63 64 104 88
</TABLE>

We believe that substantial growth opportunities exist in our current
markets and that our store growth strategy will increase our name recognition
and market penetration while benefiting from economies of scale in advertising,
management and distribution costs. In addition to the Trak West Acquisition, we
opened, expanded or relocated 104 stores in fiscal 1997 as compared to 64 stores
in fiscal 1996. We plan to continue to accelerate our store growth strategy and
expect to open, relocate or expand approximately 130 stores in fiscal 1998 (88
have already been opened, relocated or expanded as of November 1, 1998) and
approximately 150 stores in fiscal 1999. As of November 1, 1998, we had executed
purchase contracts or leases for 68 sites, were in various stages of negotiation
for 76 additional sites and had identified numerous potential additional sites
for store growth. New stores generally become profitable during the first year
of operation.

COMMERCIAL SALES PROGRAM

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

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

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<PAGE> 46

We believe we are well positioned to effectively and profitably service
commercial customers, who typically require a high level of customer service and
broad product availability. The commercial market has traditionally been
serviced primarily by jobbers. Recently, however, automotive specialty retailing
chains, such as our company, have entered the commercial segment. 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.

At September 30, 1994, we operated commercial sales centers in five of our
stores and as of November 1, 1998, we operated commercial service centers in 467
of our stores. Our sales to commercial accounts (including sales by stores
without commercial service centers) have increased 30% to $74.9 million in the
first half of fiscal 1998 from $57.7 million in the comparable period in fiscal
1997.

We intend to continue to expand our successful marketing efforts to the
commercial segment of the automotive aftermarket. We believe that significant
opportunities exist to increase sales at our existing commercial sales centers
by focusing on the penetration of certain sectors of the commercial market such
as fleet owners, municipalities and national accounts. We intend to continue
installing commercial sales centers in selected existing stores and in
approximately half of our new stores. We have already installed commercial
service centers in 43 of the recently acquired Trak West stores (which did not
actively pursue commercial customers before we acquired them).

PURCHASING

Merchandise is selected and purchased for all stores by personnel at our
corporate headquarters in Phoenix, Arizona from over 300 suppliers. No one class
of product and no single supplier accounted for as much as 10% of our purchases
in fiscal 1997.

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,
Slick 50, Stant, Sylvania, Turtle Wax and Valvoline. In addition to brand name
products, our stores carry a wide variety of high quality private label
products. Because most of such products are produced by nationally recognized

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<PAGE> 47

manufacturers that produce similar brand name products that enjoy a high degree
of consumer acceptance, we believe that our private label products are of a
quality that is comparable to such brand name products.

We have increased our gross profit margin over the last several years
primarily as a result of more favorable vendor terms, taking advantage of cash
discounts from vendors, efficiencies from our new warehouse and distribution
system and improvements in product mix. We believe that the improved vendor
terms are primarily the result of our improved financial performance and
stronger capitalization, a reduction in overall vendor payables and growth in
our store count. Our gross profit margin increased from 39.6% in fiscal 1995 to
45.7% for the first half of fiscal 1998 and we believe we have the opportunity
to continue realizing higher gross profit margins.

WAREHOUSE AND DISTRIBUTION

We successfully converted our warehouse and distribution system from a
manual, labor intensive, paper-based system to a technologically advanced,
fully-integrated system. This system, which became operational in the fourth
quarter of fiscal 1995, has improved our in-stock levels and order fulfillment
accuracy to the highest rates in recent years. We have reduced warehouse and
distribution expenses as a percentage of net sales from 4.9% for fiscal 1995 to
3.8% for fiscal 1996, 3.4% for fiscal 1997, and 3.3% for the first half of
fiscal 1998. We have sufficient warehouse and distribution capacity to meet the
requirements of our growth plans for the foreseeable future.

Our new 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 two main distribution centers, with the regional distribution centers
handling bulk materials, such as oil received directly from vendors. 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.

The following table sets forth certain information relating to our two main
distribution centers as of November 1, 1998:

<TABLE>
<CAPTION>
NUMBER NUMBER OF
DISTRIBUTION SIZE OF STORES FULL-TIME
CENTER AREA SERVED (SQ. FT.) SERVED EMPLOYEES
- ------------ ----------- --------- --------- ---------
<S> <C> <C> <C> <C>
Phoenix, AZ Arizona, Colorado, Idaho, Nevada, New Mexico,
California, Texas, Utah.............................. 273,520 351 314
Dixon, CA California, Nevada, Washington, Oregon, Idaho,
Montana, Wyoming..................................... 325,500 422 353
------- --- ---
599,020 773 667
======= === ===
</TABLE>

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.

46
<PAGE> 48

MANAGEMENT INFORMATION SYSTEMS

Our management information systems are an important element of our
operations and growth strategy. We use one Hitachi Data System EX33 Mainframe,
four IBM AS/400's ("AS/400") and over 400 personal computers which are connected
to a local area network. A satellite communications network provides the link
from our centralized database to the stores. We are currently upgrading these
systems, as necessary, to be "Year 2000" compliant.

Our store-based information systems are on a UNIX based platform with full
connectivity between the electronic parts catalog and the point of sale systems.
This includes electronic ordering from our electronic parts catalog via the
corporate office AS/400 to our priority parts depots, third-party warehouse
distributors and directly to vendors.

EMPLOYEES

As of November 1, 1998, we employed approximately 7,200 full-time employees
and 3,500 part-time employees. Approximately 85% of these personnel are employed
in store level operations, 8% in distribution and 7% 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 very good. Except for 482 employees located at
approximately 40 stores in the San Jose, California market, who have been
represented by a union for more than 18 years, none of our personnel are
represented by a labor union.

FACILITIES

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

<TABLE>
<CAPTION>
SQUARE NATURE OF
PRIMARY USE LOCATION FOOTAGE OCCUPANCY
- ----------- ------------ ------- ---------
<S> <C> <C> <C>
Corporate office........................................ Phoenix, AZ 96,000 Leased(1)
Distribution center..................................... Dixon, CA 325,500 Leased
Distribution center..................................... Phoenix, AZ 273,520 Leased
Regional distribution center............................ Auburn, WA 52,400 Leased
Regional distribution center............................ Denver, CO 34,800 Leased
Regional distribution center............................ Salt Lake,
UT 32,000 Leased
Regional distribution center............................ Commerce, CA 48,400 Leased
</TABLE>

- ------------------------------

(1) This facility is owned by Missouri Falls Partners, an affiliate of The
Carmel Trust, a trust governed under the laws of Canada ("Carmel"). Carmel
is an affiliate of the Company and a member of the Carmel Group. We discuss
Carmel and the Carmel Group in the "Certain Relationships and Related
Transactions" and "Principal and Selling Stockholders" sections of this
prospectus.

47
<PAGE> 49

At November 1, 1998, all but two of our stores were leased. The expiration
dates (including renewal options) of the store leases are summarized as follows:

<TABLE>
<CAPTION>
YEARS STORES(1)
- ----- ---------
<S> <C>
1998-2000................................................... 14
2001-2005................................................... 52
2006-2010................................................... 74
2011-2020................................................... 302
2021-2030................................................... 290
2031-thereafter............................................. 39
</TABLE>

- ------------------------------

(1) Of these stores, 3 are owned by affiliates of Carmel.

COMPETITION

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

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

TRADE NAMES, SERVICE MARKS AND TRADEMARKS

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

48
<PAGE> 50

ENVIRONMENTAL MATTERS

We are subject to various federal, state and local laws and governmental
regulations relating to the operation of our business, including those governing
recycling of batteries and used lubricants, and regarding ownership and
operation of real property. We handle hazardous materials during our operations,
and our customers may also bring or use hazardous materials or used oil onto our
properties. In addition, while we do not service automobiles, we do sublease to
third parties pre-existing service bays at a small number of store locations.
These third parties are required to dispose of certain items, including used
batteries, lubricants and oils in accordance with applicable environmental
regulations. We currently provide a recycling program for batteries and for the
collection of used lubricants at certain of our stores as a service to our
customers pursuant to agreements with third-party vendors. Pursuant to the
agreements, the batteries and used lubricants are collected by our employees,
deposited into vendor-supplied containers/pallets and then disposed of by the
third-party vendors. Our agreements with such vendors are designed to limit our
potential liability under applicable environmental regulations for any harm
caused by the batteries and lubricants to off-site properties or even on-site
when such failure is the fault of the vendor. Many of the agreements provide us
with indemnification against liability that we may incur in connection with the
disposal of such items.

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

LEGAL PROCEEDINGS

We were served with a lawsuit that was filed in the Superior Court in San
Diego, California on May 4, 1998. The case is brought by two former store
managers and a former assistant manager. It purports to be a class action for
all present and former California store managers and senior assistant managers
and seeks overtime pay for a period beginning in May 1995 as well as injunctive
relief requiring overtime pay in the future. This case is in the early stages of
discovery. We were recently served with two other lawsuits purporting to be
class actions filed in California state courts in Orange and Fresno Counties by
thirteen other former and current employees. These lawsuits include similar
claims to the San Diego lawsuit, except that they also include claims for unfair
business practices and the Orange County lawsuit includes a claim for punitive
damages based on an unlawful conversion theory. If these cases are permitted by
the courts to proceed as a class action and are decided against us, our
aggregate potential exposure could be material to our results of operations for
the year in which the cases are ultimately decided. We do not believe, however,
that such an adverse outcome, if it were to happen, would materially affect our
financial position or our operations in subsequent periods. Although at this
early stage in the litigation it is difficult to predict its outcome with any
certainty, we believe that we have meritorious defenses to all of these cases
and intend to defend them vigorously.

49
<PAGE> 51

We currently and from time to time are involved in other litigation
incidental to the conduct of our business. The damages claimed against us in
some of these litigations 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 flow.

50
<PAGE> 52

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth the name, age and position of each of our
directors and executive officers. Our executive officers also have the same
titles at our subsidiary, CSK Auto, Inc.

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Maynard Jenkins(1)(2)................ 56 Chairman of the Board and Chief Executive Officer
James Bazlen......................... 48 Director, President and Chief Operating Officer
Pat Asta............................. 53 Senior Vice President -- Human Resources
Larry Buresh......................... 54 Senior Vice President and Chief Information Officer
Martin Fraser........................ 43 Senior Vice President -- Merchandising and
Distribution
Lon Novatt........................... 37 Senior Vice President -- Real Estate, General
Counsel and Secretary
Robert Shortt........................ 37 Senior Vice President -- Commercial Sales and
Marketing
Dale Ward............................ 48 Senior Vice President -- Store Operations
Don Watson........................... 43 Senior Vice President, Chief Financial Officer and
Treasurer
John Antioco(1)(2)................... 48 Director
Morton Godlas(1)(2).................. 75 Director
Jon P. Hedley........................ 37 Director
Edward G. Lord, III.................. 49 Director
Christopher J. O'Brien............... 40 Director
Charles J. Philippin(1)(2)........... 48 Director
Robert Smith(2)...................... 60 Director
Christopher J. Stadler(1)............ 34 Director
Jules Trump(1)....................... 54 Director
Eddie Trump(1)....................... 52 Director
Savio W. Tung........................ 47 Director
</TABLE>

- ------------------------------

(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.

MAYNARD JENKINS became our Chairman of the Board and Chief Executive
Officer in January 1997. Prior to joining us, Mr. Jenkins served as President
and Chief Executive Officer of Orchard Supply Hardware from December 1986 to
January 1997. Prior thereto Mr. Jenkins held various executive positions with
Gemco.

JAMES BAZLEN became our President and Chief Operating Officer and a
director in June 1994. Prior to his June 1994 promotion to President and Chief
Operating Officer, Mr. Bazlen was our Vice Chairman and Chief Financial Officer
from June 1991, one of our directors from November 1989 through June 1992 and
also served as Senior Vice President of the Trump Group, a private investment
group, from March 1986. Mr. Bazlen had been our Senior Vice President from April
1990 to June 1991. Prior to joining the Trump Group in 1986,

51
<PAGE> 53

Mr. Bazlen served in various executive positions with General Electric Company
and GE Capital for thirteen years.

PAT ASTA became our Senior Vice President -- Human Resources in May 1998.
Prior to that Ms. Asta was Vice President of Human Resources for DFS Group Ltd.
from 1997 to May 1998. From 1995 to 1997, Ms. Asta was Director of Human
Resources for The New York Times Company. From 1987 to 1995, Ms. Asta was Vice
President of Human Resources for The Great Atlantic & Pacific Tea Company, Inc.

LARRY BURESH became our Senior Vice President and Chief Information Officer
in November 1998. Prior to that Mr. Buresh was Vice President and Chief
Information Officer of Chief Auto Parts, Inc. from 1995 to November 1998. From
1994 to 1995, Mr. Buresh was Senior Director of Central Information Services for
Sears, Roebuck & Co. From 1986 to 1994, Mr. Buresh was Vice President and Chief
Information Officer of Frank's Nursery & Crafts, Inc. Prior to that Mr. Buresh
was Vice President of Management Information Services for Ben Franklin Stores
Company.

MARTIN FRASER became our Senior Vice President -- Merchandising and
Distribution in October 1997. Prior to that, Mr. Fraser had been our Vice
President of Distribution and Replenishment since August 1995. From September
1989 to August 1995, he served in several executive positions, including Vice
President of Logistics and Vice President -- Inventory Management.

LON NOVATT became our Senior Vice President -- Real Estate, General Counsel
and Secretary in June 1997. Prior to that, Mr. Novatt was our Vice
President -- Legal, General Counsel and Secretary since December 1995. From
March 1994 to November 1995, Mr. Novatt was Senior Counsel for Broadway Stores,
Inc., a department store chain. From October 1985 to February 1994, Mr. Novatt
was with the Los Angeles law firm of Freeman, Freeman & Smiley where he was a
partner from January 1992 to February 1994.

ROBERT SHORTT became our Senior Vice President -- Commercial and Marketing
in October 1997. Prior to that, Mr. Shortt was our Vice President --
Merchandising and Marketing since April 1996. From April 1995 to April 1996, Mr.
Shortt was Vice President of Marketing for the Price Pfister division of Black &
Decker Corp. From March 1993 to April 1995, Mr. Shortt was Vice President of
Marketing of the Kwikset division of Black & Decker Corp. Prior thereto, from
March 1991 to March 1993, he was Director of Marketing of Kwikset division of
Black & Decker Corp.

DALE WARD became our Senior Vice President -- Store Operations in March
1997. Prior to that Mr. Ward served as Executive Vice President and Chief
Operating Officer of Orchard Supply Hardware since April 1996. Mr. Ward served
as President and Chief Executive Officer of F&M Super Drug Stores, Inc., a drug
store chain, from 1994 to 1995. He also served as President and Chief Executive
Officer of Ben Franklin Stores, Inc., a variety and craft store chain, from 1988
to 1993 and as Chairman of Ben Franklin Crafts Inc., a craft store chain, from
1991 to 1993.

52
<PAGE> 54

DON WATSON became our Chief Financial Officer in December 1997. Prior to
that Mr. Watson had been our Senior Vice President -- Finance, Controller and
Treasurer since April 1993. From June 1988 to March 1993, he was our Vice
President and Controller.

JOHN ANTIOCO became one of our directors in June 1998. Mr. Antioco has
served as Chairman and Chief Executive Officer of Blockbuster Entertainment,
since June 1997. Mr. Antioco was President and Chief Executive Officer of Taco
Bell Corporation, from October 1996 to June 1997. Prior to joining Taco Bell,
Mr. Antioco served as Chairman and Chief Executive Officer of The Circle K
Corporation for approximately six years. Mr. Antioco began his career with the
Southland Corporation, where he held various executive positions during his
twenty-six year tenure there. Mr. Antioco is a director of Main Street and Main
Incorporated.

MORTON GODLAS became one of our directors in October 1998. Mr. Godlas has
been a consultant to the retail industry since retiring from Lucky Stores, Inc.
in 1983 as their Corporate Senior Vice President. During his tenure with Lucky
Stores, the presidents of both Kragen Auto Supply and Checker Auto reported to
Mr. Godlas. Prior to his service with Lucky Stores, Mr. Godlas held various
executive positions with Gemco over a twelve year period.

JON P. HEDLEY became one of our directors on October 30, 1996. He has been
an executive of Investcorp, its predecessor or one or more of its wholly-owned
subsidiaries since April 1990.

EDWARD G. LORD, III became one of our directors in April 1997. He has been
an executive of Investcorp, its predecessor or one or more of its wholly-owned
subsidiaries since November 1994. Prior to joining Investcorp, Mr. Lord was a
Managing Director of Dean Witter Realty. From 1991 until February 1992, Mr. Lord
was a senior officer of the Mutual Life Insurance Company of New York. Mr. Lord
is also a director of Harborside Healthcare Corp. and Werner Holding Co. (PA),
Inc.

CHRISTOPHER J. O'BRIEN became one of our directors in October 1996. He has
been an executive of Investcorp, its predecessor or one or more of its
wholly-owned subsidiaries since December 1993. Prior to joining Investcorp, Mr.
O'Brien was a Managing Director of Mancuso & Company for four years. Mr. O'Brien
is a director of Falcon Building Products, Inc., Harborside Healthcare Corp.,
Star Markets, Inc. and The William Carter Company.

CHARLES J. PHILIPPIN became one of our directors in October 1996. He has
been an executive of Investcorp, its predecessor or one or more of its
wholly-owned subsidiaries since July 1994. Prior to joining Investcorp, Mr.
Philippin was a partner of Coopers & Lybrand L.L.P. Mr. Philippin is a director
of Falcon Building Products, Inc., Harborside Healthcare Corp., Saks, Inc., Star
Markets, Inc., Werner Holding Co. (PA), Inc. and The William Carter Company.

ROBERT SMITH became one of our directors in October 1996. Mr. Smith is a
Protector of Carmel (see "Principal and Selling Stockholders"). Mr. Smith has
served as President of Newmark Capital Limited, a private investment and
consulting company since March 1992. Mr. Smith also serves as a director of
Rogers Cantel Mobile Communications Inc. and Canadian World Fund Limited.

53
<PAGE> 55

CHRISTOPHER J. STADLER became one of our directors in October 1996. He has
been an executive of Investcorp, its predecessor or one or more of its
wholly-owned subsidiaries since April 1, 1996. Prior to joining Investcorp, Mr.
Stadler was a Director with CS First Boston Corporation. Mr. Stadler is a
director of Falcon Building Products, Inc., Werner Holding Co. (PA), Inc. and
The William Carter Company.

JULES TRUMP was our Chairman of the Board from December 1986 until January
27, 1997, our Chief Executive Officer from March 1990 until January 27, 1997,
and has been one of our directors since December 1986. Mr. Trump has also served
as Chairman or Co-Chairman of The Trump Group since February 1982. Jules Trump
is Eddie Trump's brother.

EDDIE TRUMP became one of our directors in July 1994. Mr. Trump previously
served as one of our directors from December 1986 until July 1992. Since
February 1982, Mr. Trump has served as President or Co-Chairman of The Trump
Group. Eddie Trump is Jules Trump's brother.

SAVIO W. TUNG became one of our directors in October 1996. He has been an
executive of Investcorp, its predecessor or one or more of its wholly-owned
subsidiaries since September 1984. Mr. Tung is a director of Harborside
Healthcare Corp., Star Markets, Inc. and Werner Holding Co. (PA), Inc.

BOARD OF DIRECTORS AND COMMITTEES

Election of directors is subject to the provisions of a stockholders'
agreement (see "Certain Relationships and Related Transactions"). Each of our
directors will hold office until the next annual meeting of our stockholders or
until his or her successor has been elected and qualified.

In April 1997, our board of directors created a compensation committee and
an audit committee. The audit committee is responsible for reviewing our
accounting controls and recommending to our board of directors the engagement of
our outside auditors. The members of our audit committee are Messrs. Antioco,
Godlas, Philippin and Smith.

The compensation committee is responsible for reviewing and approving the
amount and type of consideration to be paid to our senior management. The
members of our compensation committee are Messrs. Jenkins, Antioco, Godlas,
Philippin, Stadler, Jules Trump and Eddie Trump.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

In April 1997, our board of directors created a compensation committee. No
current member of our compensation committee other than Mr. Jenkins is one of
our executive officers or employees. None of our executive officers serve as a
member of the board of directors or compensation committee of any entity that
has one or more executive officers serving as a member of our board of
directors.

COMPENSATION OF DIRECTORS

Directors who are employees or were nominated by the Investcorp Group or
the Carmel Group do not receive any additional compensation for serving as
directors. In October 1998, our

54
<PAGE> 56

board of directors adopted a non-employee director compensation policy. Only Mr.
Antioco and Mr. Godlas are currently compensated under this policy. This policy
provides for an annual stipend of $25,000. At least $10,000 of this annual
stipend must be paid in the form of restricted stock grants pursuant to our
directors stock plan. See "Stock Option Plans -- Directors Stock Plan." This
policy also provides for a stipend of $1,500 for attending each meeting of our
board of directors and any meeting of a committee that is not held in
conjunction with a meeting of the whole board. We also reimburse our
non-employee directors for the costs of attending board of directors meetings.

EXECUTIVE COMPENSATION

Our company is a holding company with no business operations of its own;
all of its business is conducted through its wholly-owned subsidiary, CSK Auto,
Inc. The officers of the Company receive no compensation in their capacities as
officers of the Company.

The following table sets forth information concerning the annual and
long-term compensation earned in fiscal 1996 (which was a 53-week year) and
fiscal 1997 by the most highly compensated executive officers of CSK Auto, Inc.
during fiscal 1997 (the "Named Executive Officers"):

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL AWARDS
COMPENSATION ------------
-------------------- SECURITIES
NAME AND FISCAL ANNUAL UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS COMPENSATION($)
- ------------------ ------ --------- -------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Maynard Jenkins........................... 1997 525,000 577,500* 39,940 1,014,807(1)
Chairman, Chief Executive Officer 1996 10,100 0 401,967 72(2)
James Bazlen.............................. 1997 400,000 440,000* 0 6,623,419(3)
President, Chief Operating Officer 1996 376,000 80,000 299,337 6,460,594(3)
Martin Fraser............................. 1997 161,731 66,000* 19,756 338,207(4)
Senior Vice President-- 1996 148,500 30,500 33,868 327,065(4)
Merchandising and Distribution
Don Watson................................ 1997 159,423 66,000* 6,209 178,318(5)
Senior Vice President, 1996 126,500 33,000 33,868 168,824(5)
Chief Financial Officer and Treasurer
Robert Shortt............................. 1997 185,385 59,500* 8,467 73,347(6)
Senior Vice President-- 1996 141,346 36,000 33,868 143,867(6)
Commercial Sales and Marketing
</TABLE>

- ------------------------------
* Represents amounts paid in April 1998 with respect to fiscal 1997.

(1) Represents cash bonus for future services, reimbursement for relocation
costs and insurance premiums paid by the Company with respect to term life
insurance covering Mr. Jenkins.

(2) Represents insurance premiums paid by the Company with respect to term life
insurance covering Mr. Jenkins.

55
<PAGE> 57

(3) Represents insurance premiums paid by the Company with respect to term life
insurance covering Mr. Bazlen, contributions made by the Company to its
Retirement Program based upon Mr. Bazlen's contributions and payments
pursuant to an equity participation agreement (which includes accrued
interest) in connection with the 1996 Recapitalization.

(4) Represents reimbursement of medical expenses in excess of insurance coverage
provided by the Company, insurance premiums with respect to term life
insurance covering Mr. Fraser, contributions made by the Company to its
Retirement Program based upon Mr. Fraser's contributions, payments pursuant
to an equity participation agreement (which includes accrued interest) in
connection with the 1996 Recapitalization.

(5) Represents reimbursement of medical expenses in excess of insurance coverage
provided by the Company, insurance premiums with respect to term life
insurance covering Mr. Watson, contributions made by the Company to its
Retirement Program based upon Mr. Watson's contributions, payments pursuant
to an equity participation agreement (which includes accrued interest) and
other payments in connection with the 1996 Recapitalization.

(6) Represents insurance premiums with respect to term life insurance covering
Mr. Shortt, reimbursements for relocation costs, contributions made by the
Company to its Retirement Program based upon Mr. Shortt's contributions,
payments pursuant to an equity participation agreement (which includes
accrued interest) in connection with the 1996 Recapitalization.

The following table provides information with respect to stock options
granted during the fiscal year ended February 1, 1998 to the Named Executive
Officers:

OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
------------------------- VALUE AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATE OF STOCK
SECURITIES OPTIONS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM
OPTIONS EMPLOYEES IN PRICE EXPIRATION -----------------------
NAME GRANTED FISCAL YEAR ($/SHARE) DATE 5% 10%
- ---- ---------- ------------ --------- ------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Maynard Jenkins............... 39,940 12.4% $12.04 Feb. 1, 2005 $195,746 $456,235
James Bazlen.................. 0 -- -- -- -- --
Martin Fraser................. 19,756 6.1 12.04 Dec. 23, 2004 96,834 225,664
Don Watson.................... 6,209 1.9 12.04 Dec. 23, 2004 30,430 70,925
Robert Shortt................. 8,467 2.6 12.04 Dec. 23, 2004 41,497 96,718
</TABLE>

The following table contains certain information regarding options to
purchase shares of common stock held as of February 1, 1998 by each of the Named
Executive Officers:

FISCAL YEAR END OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR END AT FISCAL YEAR END($)
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Maynard Jenkins............................... 0 441,907 0 3,517,580
James Bazlen.................................. 42,762 256,575 340,386 2,042,337
Martin Fraser................................. 0 53,624 0 426,847
Don Watson.................................... 0 40,077 0 319,013
Robert Shortt................................. 0 42,335 0 336,987
</TABLE>

56
<PAGE> 58

EXECUTIVE EMPLOYMENT ARRANGEMENTS

EMPLOYMENT AGREEMENTS

We have employment agreements with each of Messrs. Jenkins and Bazlen.
Pursuant to his employment agreement, we paid Mr. Jenkins an annual base salary
of $525,000 for 1997 and a bonus of $577,500. In 1998, Mr. Jenkins' employment
agreement was amended to increase his annual base salary to $600,000 and to
provide the Board of Directors greater discretion in determining the measures of
our operating results upon which Mr. Jenkins' annual bonus will be based. Mr.
Jenkins' employment agreement does not contain a stated termination date, but
rather is terminable at will by us or Mr. Jenkins. Mr. Jenkins' employment
agreement provides that if he is terminated without cause or if he terminates
his employment for Good Reason (as defined in his employment agreement and which
includes a change of control in the Company), he will continue to receive his
base salary and performance bonus for a period of two years from his
termination.

Pursuant to his employment agreement, we paid Mr. Bazlen an annual base
salary of $400,000 and a bonus of $440,000 for 1997. In 1998, Mr. Bazlen's
employment agreement was amended to increase his annual base salary to $450,000
and to provide the board of directors greater discretion in determining the
measures of our operating results upon which Mr. Bazlen's annual bonus will be
based. Mr. Bazlen's employment agreement does not contain a stated termination
date, but rather is terminable at will by the Company or Mr. Bazlen. Mr.
Bazlen's employment agreement provides that if we were to terminate the
employment of Mr. Bazlen without cause or if he terminates his employment for
Good Reason (as defined in his employment agreement), he will continue to
receive his annual base salary then in effect for a period of one year from his
termination.

OTHER PAYMENTS

In connection with Mr. Jenkins becoming our Chief Executive Officer, we
made the following additional payments to him:

- a cash bonus for future services of $1,000,000, which he used to purchase
shares of our common stock from the Investcorp Group (subject to vesting
restrictions expiring in full in 1999);

- a loan in the amount of $441,500, used to pay the state and federal
income taxes he incurred in connection with receipt of the cash bonus;
and

- a loan in the amount of $550,000 used for the costs of relocating to, and
purchasing a home in, the Phoenix area. See "Certain Relationships and
Related Transactions."

The Investcorp Group and the Company have agreed to accelerate the vesting
of the shares purchased by Mr. Jenkins from the Investcorp Group to permit their
sale in this offering. The loan for $441,500 will be repaid by Mr. Jenkins with
the proceeds he receives from the sale of these shares in this offering.

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<PAGE> 59

OPTION GRANTS

In connection with Mr. Jenkins becoming the Company's Chief Executive
Officer, Mr. Jenkins received an option to purchase 401,967 shares of our common
stock, exercisable at $12.04 per share. In April 1998, this option vested to the
extent of 100,491 shares. As a result of vesting acceleration triggered by our
IPO, the remainder of this option will generally vest and become exercisable on
March 17, 2000, subject to earlier vesting based upon the achievement of certain
EBITDA targets and the occurrence of other specified events.

In connection with the Trak West Acquisition, we granted Mr. Jenkins an
option to purchase 39,940 shares of our common stock, exercisable at $12.04 per
share. This option will vest and become exercisable in four equal annual
installments beginning in April 1999.

In connection with our IPO, we granted Mr. Jenkins an option to purchase
216,634 shares of our common stock, exercisable at $20.00 per share. This option
will vest and become exercisable in three equal annual installments beginning in
April 2000.

In connection with the execution of his employment agreement, we granted
Mr. Bazlen an option to purchase 299,337 shares of our common stock, exercisable
at $12.04 per share. This option has both vested and become exercisable to the
extent of 106,905 shares. As a result of vesting acceleration triggered by our
IPO, the remainder of this option will generally vest and become exercisable on
March 17, 2000, subject to earlier vesting based upon the achievement of certain
EBITDA targets and the occurrence of other specified events.

RETIREMENT PROGRAM

We sponsor the CSK Auto, Inc. Retirement Program, a defined contribution
plan that is qualified under Section 401(k) of the Internal Revenue Code of
1986, as amended (the "Code"). Participation in the retirement program is
voluntary and available to any employee who is 21 years of age and who has
worked for us for more than one year. Each participant can elect to contribute
up to 15% of his compensation on a pre-tax basis, subject to the legal maximum
of $9,500. In accordance with the provisions of the retirement program, we may
elect to make matching contributions to the retirement program. For calendar
year 1996, we matched 20% of the first 6% of compensation contributed by each
participant for the year. Contributions to the retirement program and retirement
program earnings are fully vested. We made matching contributions of
approximately $288,000 to the retirement program in fiscal 1996.

Effective October 1, 1997, we changed our matching formula under the
retirement program. We now match the first 4% of annual compensation contributed
as follows:

<TABLE>
<CAPTION>
PERCENTAGE
YEARS OF SERVICE MATCHED
- ---------------- ----------
<S> <C>
less than five.............................................. 40
between five and ten........................................ 50
more than ten............................................... 60
</TABLE>

We made matching contributions of approximately $394,500 to the retirement
program in fiscal 1997.

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<PAGE> 60

EQUITY PARTICIPATION AGREEMENTS

Prior to the 1996 Recapitalization, we entered into incentive compensation
agreements with certain of our executives. Pursuant to the agreements, Messrs.
Bazlen, Fraser, Watson and Shortt, as well as three former executive officers,
became entitled to certain payments in connection with the 1996 Recapitalization
based upon the consideration they would have been entitled to if they had owned
an aggregate of 6.4% of our common stock and had sold all of such common stock
in the 1996 Recapitalization. In satisfaction of our obligations under these
agreements, these individuals received payments on the closing of the
Acquisition 1996 Recapitalization in October 1996 and in November 1997 in the
following amounts: Mr. Bazlen: $6.5 million and $6.7 million; Mr. Fraser: $0.3
million and $0.3 million; Mr. Watson: $0.1 million and $0.1 million; and Mr.
Shortt: $0.07 million and $0.07 million. Carmel reimbursed the Company for 60%
(the estimated after-tax cost to the Company) of the amount of the payments made
in November 1997.

STOCK OPTION PLANS

We have adopted a number of stock-based incentive plans to reward our
associates, executive officers and non-employee directors. The primary
objectives of these plans are to attract and retain the services of qualified
and talented employees, executives and non-employee directors who can contribute
materially to our success and profitability. As the following descriptions are
summaries of the actual plans, they omit certain details which are not material
to a general understanding of the plans. Copies of the complete plans are filed
as exhibits to the registration statement of which this prospectus is a part.

THE 1996 ASSOCIATE STOCK OPTION PLAN

Store associates, store managers and salaried corporate and warehouse
employees are eligible to participate in this plan (the "Associate Plan"). We
may grant options to purchase up to an aggregate of 1,026,300 shares of common
stock under the Associate Plan. As of November 1, 1998, we have granted options
to purchase 773,039 shares under the Associate Plan, with exercise prices
ranging from of $12.04 to $27.69 per share.

Options granted under the Associate Plan vest and become exerciseable 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"). All options granted under the Associate Plan
expire on the seventh anniversary of the date of grant (or, under certain
circumstances, 30 days later). In the event that an optionee's employment is
terminated, depending on the reasons for such termination, the option may
terminate, or remain exercisable for a short period. In the event of a sale of
more than 80% of the outstanding shares of our capital stock, the unvested
portion of any option automatically vests.

THE 1996 EXECUTIVE STOCK OPTION PLAN

Vice Presidents and Senior Vice Presidents are eligible to participate in
this plan (the "Executive Plan"). We may grant options to purchase up to an
aggregate of 684,200 shares of common stock under the Executive Plan. As of
November 1, 1998, we have granted options to

59
<PAGE> 61

purchase 380,923 shares under the Executive Plan, with exercise prices ranging
from $12.04 to $25.50 per share.

Options granted under the Executive Plan will be 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 will be based
upon achieving specified operating results. Partial vesting of options subject
to performance vesting will occur if we achieve 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. All options granted under the
Executive Plan expire on the seventh anniversary of the date of grant (or, under
certain circumstances, 30 days later). In the event that an optionee's
employment is terminated, depending on the reasons for such termination, the
option may terminate, or remain exercisable for a short period. In the event of
a sale of more than 80% of the outstanding shares of our capital stock, the
unvested portion of any option automatically vests.

THE DIRECTORS STOCK PLAN

Our board of directors adopted this plan (the "Directors Plan") on June 12,
1998, but it will not become effective unless it is approved by our stockholders
at our next annual meeting. All of our non-employee directors will be eligible
to participate in the Directors Plan, but directors affiliated with the
Investcorp Group or the Carmel Group will not initially participate. Assuming
that our stockholders approve the Directors Plan, we will be able to make
stock-based awards of up to an aggregate of 50,000 shares. These awards may be
in the form of restricted stock grants or stock options. As of November 1, 1998,
we have granted 1,498 restricted shares under the Directors Plan, but these
grants are also subject to the approval of our stockholders at our next annual
meeting.

GENERAL

Each of the Associate Plan, the Executive Plan and the Directors Plan
(collectively, the "Plans") may be administered by a committee of the board of
directors which would have broad authority in administering and interpreting the
Plans, or, if a committee has not been appointed, by the entire board of
directors. The Associate and Executive Plans provide that the committee must
consist entirely of "Non-Employee Directors" (as defined in Rule 16b-3 under the
Securities Exchange Act of 1934, as amended). A committee has not yet been
appointed to administer any of the Plans.

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.

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<PAGE> 62

MANAGEMENT STOCK PURCHASE AGREEMENTS AND 1997 STOCK LOAN PLAN

In 1997, we established stock purchase and stock loan programs. Under these
plans, members of our senior management purchased an aggregate of 180,600 shares
of our common stock at $12.04 per share, the price per share paid by the
Investcorp Group for the shares it purchased in the 1996 Recapitalization, and
received loans from us to pay for a portion of these purchases. If a participant
used more borrowed money than cash to purchase his shares, he will have to
reduce the principal balance of the loan using 50% of the after-tax portion of
his annual bonus until it equals the amount of cash he used to purchase shares,
if any. Each loan participant entered into an agreement pledging his shares and
executed a secured promissory note. These notes mature in six years, and bear
interest at the same rate as the revolving credit portion of the Senior Credit
Facility. In addition, we loaned funds to employees who purchased shares under
the stock purchase program to pay any income taxes associated with such
purchases. For each share of our common stock purchased by a participant under
the stock purchase program for cash, such participant received an option under
the Executive Plan to purchase one share of our common stock.

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<PAGE> 63

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

TRANSACTIONS WITH RELATED PARTIES

From time to time we have entered into real property leases with related
parties.

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

- In April 1995, we assumed a lease (the "Subsequent Lease") between a
former tenant and Missouri Falls Partners for approximately 11,683 square
feet of additional office space at our corporate headquarters. In
connection with the 1996 Recapitalization, we extended the Subsequent
Lease through October 2006. At its originally scheduled termination as of
April 1998, rent under the Subsequent Lease increased to the same per
square foot rent as is charged under the Initial Lease.

- We lease approximately 5,754 square feet of additional space at the above
premises for an annual rental of $106,449 under two separate lease
documents with expiration dates of February 2000 and March 2000.

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

From time to time, we have entered into sale-leaseback or other financing
arrangements with related parties.

- Beginning in October 1995, we entered into a series of sale-leaseback
transactions with Transatlantic Realty, Inc. ("Realty"), another
affiliate of Carmel, for various real property and fixtures. The total
funding provided by Realty in these transactions through August 2, 1998
was approximately $33.1 million (of which $27.3 million was for real
property and $5.8 million was for fixtures). This amount represented our
cost of such assets. We have replaced approximately $27.3 million of the
real property sale-leasebacks and $4.6 million of the fixture
sale-leasebacks with similar arrangements with unrelated third parties.
The terms of the leases with unrelated third parties were set in
arm's-length negotiations and generally are not as favorable to us as the
original sale-leasebacks entered into with Realty. As of November 1,
1998, there were approximately $1.1 million of fixture sale-leasebacks
remaining in this facility. We intend to continue to replace such sale-
leasebacks and have agreed to use our best efforts to do so (including,
in certain cases, increasing the rent payable under such leases).

- Beginning in October 1996, we have entered into a series of
sale-leaseback transactions with Transatlantic Leasing, Inc. ("Leasing"),
another affiliate of Carmel, for certain real

62
<PAGE> 64

property. The terms of the leases under the facility with Leasing were
set in arm's-length negotiations. As of November 1, 1998, the net funding
provided by Leasing in these transactions was approximately $2.6 million.
In October 1997, we established a new sale-leaseback facility and we
terminated the facility with Leasing. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity
and Capital Resources" and note 4 to our consolidated financial
statements.

- We incurred an obligation in connection with the purchase of product from
two of our vendors. In fiscal 1996, this obligation was acquired by
Transatlantic Finance, Ltd. ("Transatlantic"), an affiliate of Carmel and
a member of the Carmel Group. At that time, we owed approximately $16.5
million (less anticipated discounts of approximately $0.8 million) to the
vendors. As of September 29, 1996, the obligation has been paid in full.

- As of December 27, 1996, we paid Transatlantic approximately $15.5
million pursuant to a promissory note dated July 24, 1996. The promissory
note was issued to evidence a loan to the Company, in the amount of $15.0
million, the proceeds of which were used for the payment of vendors.

- In connection with the 1996 Recapitalization, we issued and sold $50
million of 12% subordinated notes to the following two related parties:

- Southwest Finance Limited ("Southwest Finance"), a company in which an
affiliate of Investcorp held a minority interest. Southwest Finance
acquired $40.0 million of 12% subordinated notes and received a fee of
$4.0 million.

- Transatlantic acquired $10.0 million of the 12% subordinated notes.

We used $50.5 million of the net proceeds of our IPO to redeem the 12%
subordinated notes, including a redemption premium of $0.5 million.

- In March 1998, we paid Transatlantic $1.0 million in fees for past
financings.

From time to time, we have paid fees to related parties for financing,
management consulting, commitment and equity placement services.

- In connection with the 1996 Recapitalization, we paid Invifin S.A., an
affiliate of Investcorp ("Invifin"), a fee of $1.575 million for
providing a standby commitment to fund the amount of the Senior Credit
Facility. We also paid Investcorp International Inc. ("International")
advisory fees of $1.275 million and $3.15 million for arranging the
Senior Credit Facility.

- In connection with the 1996 Recapitalization, we entered into a five-year
agreement for management advisory and consulting services with
International. The Company paid International $5.0 million in advance for
the entire term of the management agreement. In accordance with its
terms, the management agreement terminated after our IPO.

We believe that the terms of the transactions with affiliated parties
described above in this section were no less favorable to us than terms that may
have been available from independent third parties at the time of the applicable
transaction.

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<PAGE> 65

- In connection with the Trak West Acquisition in December 1997, South Bay
Limited, a member of the Investcorp Group ("South Bay"), and
Transatlantic, purchased additional stock of the Company for
approximately $11.2 million and $10.8 million, respectively. After giving
effect to such purchases, the Investcorp Group, having sold a portion of
its common equity interest to Mr. Jenkins at its cost pursuant to a prior
agreement, owned a 50.1% common equity interest in the Company and the
Carmel Group, having sold a portion of its common equity to a different
member of management of the Company at its cost pursuant to a prior
agreement, owned a 47.1% common equity interest in the Company. In
connection with the sale of capital stock to the Investcorp Group, an
affiliate of Investcorp was paid a $1.0 million placement fee. In
connection with the negotiation of the Trak West Acquisition, TG
Investments, Ltd., an affiliate of Carmel, was paid a $1.0 million
consulting fee.

In connection with his engagement as Chief Executive Officer, we lent Mr.
Jenkins $550,000, which he used to finance the purchase of the new home required
as a result of his relocation. This loan matures in 1999 and bears interest at a
rate of 4.535%. This loan was authorized by the Board of Directors prior to the
commencement of Mr. Jenkins' employment. We also lent Mr. Jenkins $441,500 to
pay the state and federal income taxes he incurred in connection with the
$1,000,000 cash bonus that he used to purchase shares of common stock from a
member of the Investcorp Group. This loan has a three year term, is secured by a
pledge of 83,078 shares of common stock and bears interest at the same rate
applicable to borrowings under the revolving credit portion of the Senior Credit
Facility. This loan will be repaid by Mr. Jenkins with a portion of his proceeds
from this offering.

STOCKHOLDERS' AGREEMENT

At the time of the 1996 Recapitalization, each of our stockholders at the
time (the "Agreeing Stockholders"), the Company and CSK Auto, Inc. entered into
a stockholders' agreement which restricts the transfer of shares of common stock
held by those stockholders. The stockholders' agreement also entitles the
Agreeing Stockholders to certain rights regarding the transfer of their shares
and corporate governance. Any party who purchased Shares from the Agreeing
Stockholders became party to the stockholders' agreement as well. In addition,
in December 1997, upon the purchase of newly issued common stock, Transatlantic
and South Bay, and their subsequent tranferees, became party to the
stockholders' agreement.

TRANSFER RESTRICTIONS

When any Agreeing Stockholder desires to sell its shares, the stockholders
agreement provides that we and each of the other Agreeing Stockholders have a
"right of first refusal" on those shares. Any proposed sales or other transfers
of shares by any Agreeing Stockholder will be subject to the first right of the
Company and each of the other Agreeing Stockholders to purchase such offered
Shares on the same terms and conditions as the proposed third-party sale, except
for (1) transfers to affiliates and certain family members ("Permitted
Transferees"), or (2) pursuant to a registered public offering (such as this
offering) or (3) pursuant to Rule 144 under the Securities Act. Any Agreeing
Stockholder wishing to sell any of its shares, whether or not it has received a
third-party offer, may offer to sell those shares to us and the other Agreeing

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<PAGE> 66

Stockholders on terms and conditions established by the selling Agreeing
Stockholder. In the event that we and/or the other Agreeing Stockholders do not
purchase the shares, the selling Agreeing Stockholder may sell the shares to
third parties on terms and conditions specified in the stockholders' agreement.

The stockholders' agreement also provides the Original Investcorp Group and
the Original Carmel Group (each as defined below) with "Drag-Along" rights. If
members of the Original Investcorp Group or the Original Carmel Group were to
desire to sell all of their Shares to an unaffiliated third-party who has
offered to acquire all of our outstanding shares, then the selling Agreeing
Stockholders would have the right to require each of the other Agreeing
Stockholders to sell all of their Shares in the same transaction and upon the
same terms and conditions; provided that the other Agreeing Stockholders would
have the right to purchase, and/or have us purchase, from the selling Agreeing
Stockholders all of the shares held by the selling Agreeing Stockholders upon
the terms and conditions of the third-party offer. For purposes of this
prospectus, the "Original Investcorp Group" shall mean the members of the
Investcorp Group (except South Bay and its transferees) and each of their
Permitted Transferees; the "Original Carmel Group" shall mean Carmel and each of
its Permitted Transferees; the "Investcorp Group" shall mean the members of the
Investcorp Group and each of their respective transferees and subsequent
transferees; and the "Carmel Group" shall mean Carmel, Transatlantic and each of
their transferees and subsequent transferees.

The stockholders' agreement also provides Agreeing Stockholders with
"Tag-Along Rights." If any Agreeing Stockholder (the "Proposed Transferor")
proposed to transfer any Shares (other than to Permitted Transferees, or
pursuant to a registered public offering or under Rule 144) to any person (the
"Proposed Purchaser"), each of the other Agreeing Stockholders would have the
right to require the Proposed Purchaser to purchase a pro rata portion of its
shares, and the Proposed Transferor would have to make a corresponding reduction
in the number of its Shares to be purchased. Each Agreeing Stockholder also has
preemptive rights under certain circumstances to acquire a portion of any
additional Shares we offer at any time, other than in connection with a public
offering and certain non-cash issuances, in order to enable such Agreeing
Stockholder to maintain its percentage equity ownership.

The stockholders' agreement also contains "Buy-Sell" provisions. Members of
the Investcorp Group or the Carmel Group have the right to offer all of their
shares for sale to the other Agreeing Stockholders who are members of the other
group at a price established by the offering Agreeing Stockholders. If the
Company and/or the offeree Agreeing Stockholders do not purchase the offered
shares, the offering Agreeing Stockholders must then purchase all of the shares
held by the members of the other group at the price first offered by the
offering Agreeing Stockholders.

Pursuant to the stockholders' agreement, the Agreeing Stockholders have
demand registration rights ("Demand Rights") and piggy-back registration rights
("Piggy-back Rights"). The Demand Rights entitle the Agreeing Stockholders to
require us to register all or any of the unregistered shares held by the
exercising Agreeing Stockholders. The Investcorp Group as a whole may exercise
Demand Rights up to four times. The Carmel Group as a whole may also exercise
Demand Rights up to four times. The Piggy-back Rights entitle the Agreeing

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<PAGE> 67

Stockholders, at any time that we propose to sell any equity securities in a
transaction registered under the Securities Act, to include a portion of their
unregistered stock in such offering. This offering is being made pursuant to an
exercise of these Demand Rights.

The stockholder's agreement provides that the Agreeing Stockholders will
agree to restrictions on their ability to sell or otherwise transfer their
shares for 90 days following certain registered public offerings by the Company.

CORPORATE GOVERNANCE

The stockholders' agreement provides that the Investcorp Group will have
the right to nominate a majority of the members of our boards of directors of
the Company, CSK Auto, Inc. and their respective subsidiaries so long as it
holds a greater number of shares than the Carmel Group, and the Carmel Group
will have the right to nominate a majority of the members of such boards of
directors during any period in which the Carmel Group holds a greater number of
shares. Pursuant to the stockholders' agreement, each of the Agreeing
Stockholders agrees to vote all of its shares in favor of each of the persons
nominated to such boards by each group.

In addition, at least one member of the boards of directors nominated by
each group must approve certain fundamental corporate actions and significant
transactions proposed to be taken by us or CSK Auto, Inc. These provisions
terminate after either (1) the Investcorp Group and the Carmel Group hold in the
aggregate Shares representing less than 50% of the outstanding shares of common
stock or (2) either the Original Investcorp Group or the Original Carmel Group
holds less than 50% of the number of shares held by such group immediately after
the 1996 Recapitalization. After this offering, these provisions will terminate.

The rest of the stockholders' agreement, other than the registration rights
provisions, will terminate after either the Investcorp Group or the Carmel Group
holds less than the lesser of (1) 5% of the then current voting power or (2) 10%
of the voting power held by such group at the time of the 1996 Recapitalization.

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<PAGE> 68

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth certain information concerning beneficial
ownership of our capital stock as of November 12, 1998, and as adjusted to
reflect the sale of the common stock in this offering, by (1) each person we
know to be a beneficial owner of more than 5% of the outstanding voting stock,
(2) each director of the Company who could be deemed to be the beneficial owner
of shares of the Company's capital stock, (3) each current Named Executive
Officer who could be deemed to be the beneficial owner of shares of the
Company's capital stock, (4) all directors and executive officers of the Company
as a group, and (5) each stockholder selling shares in this offering:

<TABLE>
<CAPTION>
SHARES SHARES BENEFICIALLY
BENEFICIALLY OWNED OWNED
PRIOR TO THE NUMBER OF AFTER THE
OFFERING(1) SHARES OFFERING(1)(2)
------------------- BEING -------------------
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER PERCENT OFFERED(2) NUMBER PERCENT
- ------------------------------------ --------- ------- ---------- --------- -------
<S> <C> <C> <C> <C> <C>
INVESTCORP S.A.(3).............................. 3,034,053 10.9% 1,122,534 1,686,224 6.8%
SIPCO Limited(4)................................ 3,034,053 10.9 1,122,534 1,686,224 6.8
CSK Investments Limited......................... 1,217,126 4.4 450,311 766,815 2.8
Auto Parts Limited.............................. 1,199,487 4.3 443,785 755,702 2.7
Auto Investments Limited........................ 1,199,487 4.3 443,785 755,702 2.7
CSK Equity Limited.............................. 1,199,487 4.3 443,785 755,702 2.7
Auto Equity Limited............................. 1,199,487 4.3 443,785 755,702 2.7
Investcorp CSK Holdings L.P.(3)(5).............. 1,212,799 4.3 448,610 764,089 3.2
Equity CSKA Limited............................. 650,202 2.3 240,561 409,641 1.5
Equity CSKB Limited............................. 650,202 2.3 240,561 409,641 1.5
New CSK Equity Limited.......................... 599,037 2.2 221,631 377,406 1.4
South Bay Limited............................... 194,193 * 71,847 122,346 *
CSK International Limited....................... 171,583 * 63,482 108,101 *
Chase Bank (C.I.) Nominees Limited.............. 171,015 * 63,272 107,743 *
Equity CSKC Limited............................. 138,950 * 51,408 87,542 *
Ballet Limited.................................. 7,868 * 2,911 4,957 *
Denary Limited.................................. 7,868 * 2,911 4,957 *
Gleam Limited................................... 7,868 * 2,911 4,957 *
Highlands Limited............................... 7,868 * 2,911 4,957 *
Noble Limited................................... 7,868 * 2,911 4,957 *
Outrigger Limited............................... 7,868 * 2,911 4,957 *
Quill Limited................................... 7,868 * 2,911 4,957 *
Radial Limited.................................. 7,868 * 2,911 4,957 *
Shoreline Limited............................... 7,868 * 2,911 4,957 *
Zinnia Limited.................................. 7,868 * 2,911 4,957 *
Investcorp Investment Equity Limited............ 6,842 * 2,531 4,311 *
The Carmel Trust(6)(7).......................... 8,955,216 32.3 3,313,249 5,641,967 20.3
Transatlantic Finance, Ltd.(7).................. 864,551 3.1 319,866 544,685 2.0
John F. Antioco(8).............................. 3,000 * -- 3,000 *
James Bazlen(9)................................. 428,762 1.5 62,000 366,762 1.3
Morton Godlas(9)................................ 900 * -- 900 *
Maynard Jenkins(9).............................. 183,569 * 83,078 100,491 *
Christopher J. O'Brien(10)...................... 5,000 * -- 5,000 *
Charles J. Philippin(10)........................ 6,000 * -- 6,000 *
Robert Smith(6)(7).............................. -- -- -- -- --
Christopher J. Stadler(10)...................... 5,000 * -- 5,000 *
</TABLE>

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<PAGE> 69

- ------------------------------

* Less than 1%.

(1) Prior to this offering the Investcorp Group, as defined in the
stockholders' agreement, owned 9,655,715 shares, or 34.8%, of the
outstanding shares of common stock and will own 6,030,964 shares, or 21.7%
after this offering. Also prior to this offering the Carmel Group, as
defined in the stockholders' agreement, owns 9,277,073 shares, or 33.4%, of
the outstanding shares of common stock and will own 5,901,824 shares, or
21.3%, after this offering. As the parties to the stockholders' agreement
have agreed to vote with respect to certain matters as set forth therein,
all of them may be deemed to be a control group. As a result, each
stockholder may be deemed to beneficially own all shares of common stock
owned by all of the parties to the stockholders' agreement. The number of
shares shown as owned by the Investcorp Group does not include any shares
which Maynard Jenkins has the right to acquire upon exercise of options,
and the number of shares shown as owned by the Carmel Group does not
include any shares which James Bazlen has the right to acquire upon
exercise of options (see note (9) below). See "Certain Relationships and
Related Transactions -- Stockholders' Agreement." Because we believe that
our presentation more accurately reflects ownership of the Company's
capital stock, this table does not reflect shares which may be deemed to be
beneficially owned by any entity solely by virtue of the stockholders'
agreement.

(2) The calculations of shares being offered and shares beneficially owned
after the offering assume the underwriters do not exercise their
overallotment option to purchase 1,050,000 shares of common stock from
certain of the selling stockholders.

(3) Investcorp does not own any stock in the Company. The number of shares of
common stock shown as beneficially owned by Investcorp includes all of the
shares beneficially owned by Investcorp Investment Equity Limited, a Cayman
Islands corporation and a wholly-owned subsidiary of Investcorp and by
Investcorp CSK Holdings L.P., a Cayman Islands Limited Partnership in which
Investcorp both owns a majority economic ownership interest and is the sole
general partner. The number of shares of common stock shown as beneficially
owned by Investcorp prior to the offering includes 247,110 shares of
outstanding common stock that Investcorp CSK Holdings L.P. has the right,
pursuant to an option, to acquire from other stockholders of the Company.
The number of shares of common stock shown as being offered by Investcorp
includes 91,425 of such option shares, and the number of shares of common
stock shown as beneficially owned by Investcorp after the offering includes
155,685 of such option shares. Investcorp owns no stock in Equity CSKA
Limited, Equity CSKB Limited, Equity CSKC Limited, South Bay Limited,
Ballet Limited, Denary Limited, Gleam Limited, Highlands Limited, Noble
Limited, Outrigger Limited, Quill Limited, Radial Limited, Shoreline
Limited, Zinnia Limited, Chase Bank (C.I.) Nominees Limited, or the
beneficial owners of these entities. Each of Equity CSKA Limited, Equity
CSKB Limited, Equity CSKC Limited, South Bay Limited, Ballet Limited,
Denary Limited, Gleam Limited, Highlands Limited, Noble Limited, Outrigger
Limited, Quill Limited, Radial Limited, Shoreline Limited and Zinnia
Limited is a Cayman Islands corporation. Investcorp may be deemed to share
beneficial ownership of the shares of voting stock held by these entities
because the entities or their shareholders or principals have entered into
revocable management services or similar agreements with an affiliate of
Investcorp pursuant to which each of such entities or their shareholders or
principals has granted such affiliate

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<PAGE> 70

the authority to direct the voting and disposition of the common stock
owned by such entity for so long as such agreement is in effect. Investcorp
is a Luxembourg corporation with its registered address at 37 Rue Notre
Dame, Luxembourg.

(4) SIPCO Limited may be deemed to control Investcorp through its ownership of
a majority of the stock of a company that indirectly owns a majority of
Investcorp.

(5) The number of shares of common stock shown as beneficially owned prior to
the offering includes 315,940 shares of outstanding common stock that
Investcorp CSK Holdings, L.P. has the right, pursuant to an option, to
acquire from other stockholders of the Company. The number of shares of
common stock shown as being offered by Investcorp CSK Holdings L.P.
includes 116,891 of such option shares, and the number of shares
beneficially owned after the offering includes 199,049 of such option
shares.

(6) c/o Sonnenschein Nath & Rosenthal, Suite 8000, Sears Tower, 233 S. Wacker
Drive, Chicago, Illinois 60606.

(7) The trustee of Carmel is Chiltern Trustees Limited. The agreement pursuant
to which Carmel was established in 1977 (the "Carmel Agreement") designates
certain "protectors" who must authorize any action taken by the trustee and
who have the authority to discharge the trustee and to appoint substitute
trustees. These protectors are Saul Tobias Bernstein, Gerrit Van Riemsdijk
and Robert Smith (who is also a director of the Company). These individuals
are not otherwise associated with us or Carmel. The Carmel Agreement
provides that Carmel shall continue until 21 years after the death of the
last survivor of the descendants of certain persons living on the date it
was established (the "Carmel Term"). Certain members of the families of
Jules Trump (a director of the Company) and Eddie Trump (a director of the
Company) may under limited circumstances appoint beneficiaries or
themselves become beneficiaries (by appointment or at the end of the Carmel
Term without appointment). If there are no such beneficiaries at the end of
the Carmel Term, the assets of Carmel will be paid out to certain
charitable institutions. The number of shares shown as owned by Carmel
includes all of the shares owned by Transatlantic Finance, Ltd., an
affiliate of Carmel. Jules Trump, Eddie Trump and Robert Smith each
disclaim beneficial ownership of all shares shown as owned by Carmel.

(8) c/o Blockbuster Entertainment Group, 1201 East Elm Street, Dallas, Texas
75270.

(9) c/o CSK Auto Corporation, 645 E. Missouri Avenue, Suite 400, Phoenix,
Arizona 85012. Includes the following shares of our common stock which the
following individuals have the right to acquire upon exercise of options:
Maynard Jenkins (100,491); James Bazlen (106,905); Martin Fraser (9,483);
Robert Shortt (9,483); Don Watson (9,483); and other executive officers
(14,224).

(10) c/o Investcorp International Inc., 280 Park Avenue, New York, New York
10017.

(11) c/o The Trump Group, 4000 Island Boulevard, Williams Island, Florida 33160.

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<PAGE> 71

DESCRIPTION OF CAPITAL STOCK

GENERAL

As of November 1, 1998, we had 50,000,000 authorized shares of common
stock, $.01 par value per share, of which 27,742,022 shares are issued and
outstanding. The material terms of our certificate of incorporation and bylaws
are discussed below.

COMMON STOCK

Our stockholders are entitled to one vote per share in the election of
directors and on all other matters on which stockholders are entitled or
permitted to vote. Our stockholders are not entitled to vote cumulatively for
the election of directors. Except as set forth in the stockholders' agreement,
our stockholders have no redemption, conversion, preemptive or other
subscription rights. There are no sinking fund provisions relating the common
stock. In the event of the liquidation, dissolution or winding up of the
Company, our stockholders are entitled to share ratably in all of our assets of,
if any, remaining after satisfaction of our debts and liabilities. The
outstanding shares of common stock are validly issued, fully paid and
nonassessable.

Our stockholders are entitled to receive dividends when and as declared by
our board of directors out of funds legally available therefor. We do not
anticipate paying cash dividends on the common stock in the foreseeable future.
See "Price Range of Common Stock and Dividend Policy."

CERTAIN PROVISIONS OF DELAWARE LAW

The Company is incorporated under the Delaware General Corporation Law (the
"DGCL"). Section 203 of the DGCL restricts certain transactions and "business
combinations" between a company and an "interested stockholder" (in general, a
stockholder owning 15% or more of a company's outstanding voting stock) or an
affiliate or associate of an interested stockholder, for a period of three years
from the date the stockholder becomes an interested stockholder. A "business
combination" includes mergers, asset sales and other transactions resulting in a
financial benefit to the interested stockholder. Subject to certain exceptions,
unless the transaction is approved by the board of directors and the holders of
at least 66 2/3% of the outstanding voting stock of a company (excluding shares
held by the interested stockholder), Section 203 prohibits significant business
transactions such as a merger with, disposition of assets to, or receipt of
disproportionate financial benefits by, the interested stockholder, or any other
transaction that would increase the interested stockholder's proportionate
ownership of any class or series of a company's stock. The statutory ban does
not apply if, upon consummation of the transaction in which any person becomes
an interested stockholder, the interested stockholder owns at least 85% of the
outstanding voting stock of a company (excluding shares held by persons who are
both directors and officers or by certain employee stock plans).

Our certificate of incorporation contains certain provisions permitted
under the DGCL relating to the liability of directors. The certificate of
incorporation provides that, to the fullest extent permitted by the DGCL, no
director will be liable to us or any of our stockholders for monetary damages
for breach of fiduciary duty as a director. Our certificate of incorporation and

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<PAGE> 72

bylaws also contain provisions indemnifying the directors and officers to the
fullest extent permitted by the DGCL.

Section 203 and the provisions of our certificate of incorporation and
bylaws described above may make it more difficult for a third party to acquire,
or discourage acquisition bids for, the Company. Section 203 and these
provisions could have the effect of inhibiting attempts to change the membership
of the board of directors. In addition, the limited liability provisions in our
certificate of incorporation and the indemnification provisions in both the
certificate of incorporation and bylaws, may discourage stockholders from
bringing a lawsuit against directors for breach of their fiduciary duty
(including breaches resulting from grossly negligent conduct) and may have the
effect of reducing the likelihood of derivative litigation against directors and
officers, even though such an action, if successful, might otherwise have
benefited us and our stockholders. Furthermore, a stockholder's investment in
the Company may be adversely affected to the extent we pay the costs of
settlement and damage awards against our directors and officers pursuant to the
indemnification provisions in our bylaws. The limited liability provisions in
our certificate of Incorporation will not limit the liability of the Company's
directors under federal securities laws.

SHARES RESERVED FOR ISSUANCE

As of November 1, 1998, we have 1,710,500 shares of common stock reserved
for issuance upon the exercise of options granted or to be granted under the
Plans. An additional 957,878 shares of common stock are reserved for issuance
upon the exercise of options granted outside of the Plans, 207,486 of which are
currently exercisable.

TRANSFER AGENT

The transfer agent and registrar for our common stock is ChaseMellon
Shareholder Services, L.L.C.

LISTING

Our common stock is listed on the New York Stock Exchange under the symbol
"CAO."

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<PAGE> 73

DESCRIPTION OF CERTAIN INDEBTEDNESS

CSK Auto, Inc., our primary subsidiary, has two significant items of
indebtedness: its "Senior Credit Facility," and its "11% Senior Subordinated
Notes." The material terms of these debt obligations are described below. As a
summary, the following discussion necessarily omits many of the details of these
arrangements. For a full and complete understanding of these obligations, we
strongly urge investors to read the specific provisions of these agreements and
instruments. Copies of these documents have been filed as exhibits to the
Registration Statement of which this prospectus is a part.

SENIOR CREDIT FACILITY

On December 8, 1997, CSK Auto, Inc. entered into the Amended and Restated
Credit Agreement (the "Senior Credit Facility") with several lenders, with The
Chase Manhattan Bank acting as the administrative agent. This $300.0 million
facility provides for a term loan in the aggregate amount of $175.0 million, and
a revolving credit facility in the amount of $125.0 million. We have guaranteed
these obligations. The Senior Credit Facility will be similarly guaranteed by
any future United States subsidiaries of CSK Auto, Inc.

To secure the obligations under the Senior Credit Facility, CSK Auto, Inc.
has granted a first priority security interest in substantially all of its
personal property. Similarly, we have pledged the issued and outstanding capital
stock of CSK Auto, Inc. CSK Auto, Inc. will also pledge the issued and
outstanding capital stock of any future United States subsidiaries.

TERM LOAN

As of August 2, 1998, $146.6 million was outstanding under the term loan,
which matures on October 31, 2003, with aggregate annual principal installments
scheduled as follows:

<TABLE>
<CAPTION>
YEAR AGGREGATE INSTALLMENTS
- ---- ----------------------
(MILLIONS)
<S> <C>
1998........................................................ $ 0.6
1999........................................................ $ 0.8
2000........................................................ $ 0.8
2001........................................................ $38.6
2002........................................................ $52.9
2003........................................................ $52.9
</TABLE>

REVOLVING CREDIT FACILITY

As of August 2, 1998, $41.0 million was outstanding under the revolving
credit facility, which matures on October 31, 2001. CSK Auto, Inc. is entitled
to draw amounts under the revolving credit facility to use for general corporate
purposes, including:

- The redemption, repayment or repurchase of up to $20.0 million aggregate
principal amount of the 11% Senior Subordinated Notes;

- Acquisitions of companies engaged in similar businesses, in an aggregate
amount of $50.0 million, subject to pro forma compliance with financial
covenants; and

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<PAGE> 74

- Investments in the development of new or relocated stores in an aggregate
amount not to exceed at any one time $50.0 million.

The 11% Senior Subordinated Notes limit the amount CSK Auto, Inc. can draw
on the revolving credit facility. See "-- 11% Senior Subordinated Notes Due
2006 -- Certain Covenants."

INTEREST RATES AND FEES

The loans under the Senior Credit Facility accrue interest at a variable
rate. As of November 1, 1998, this rate was 6.75% for the term loan, and
approximately 6.90% for loans under the revolving credit facility. The
applicable interest rate is set at a specified margin above one of two agreed
upon fluctuating benchmark rates which we may elect from time to time. The first
benchmark rate is the highest of the federal funds rate plus 0.5%, the secondary
rate for 3-month certificates of deposit plus 1%, or The Chase Manhattan Bank's
prime rate. The second benchmark rate is an adjusted eurodollar rate. The
interest rate margins are subject to quarterly adjustment based upon the ratio
of CSK Auto, Inc.'s "consolidated funded indebtedness" at the end of a fiscal
quarter to its "consolidated EBITDA" for the four preceding fiscal quarters (as
such terms are defined in the Senior Credit Facility loan documents).

CSK Auto, Inc. is required to pay to the lenders an annual commitment fee
equal to .375% of the average daily amount of the available revolving credit
commitment. The commitment fee is also subject to period adjustment in the same
manner as are the interest rate margins. CSK Auto, Inc. is also required to pay
to The Chase Manhattan Bank an annual agent's fee of $100,000.

MANDATORY AND OPTIONAL PREPAYMENTS

The Senior Credit Facility must be prepaid as follows:

- 50% of the net proceeds of any sale of voting stock to anyone
other than a current stockholder or their affiliates, must be
applied toward the prepayment of the term loan.

- 100% of the net proceeds of certain asset sales and exchanges,
and the incurrence of any additional indebtedness (other than
indebtedness permitted under the Senior Credit Facility) must
be applied first to the prepayment of the term loan and then to
permanently reduce the revolving credit commitments.

- 50% of CSK Auto, Inc.'s excess cash flow (as defined in the
Senior Credit Facility) must be applied toward the prepayment
of the term loan.

Subject to certain conditions, CSK Auto, Inc. may, from time to time, make
optional prepayments of the Senior Credit Facility obligations without premium
or penalty.

CERTAIN COVENANTS; EVENTS OF DEFAULT

The Senior Credit Facility imposes standard affirmative and negative
covenants and financial tests, and specifies customary events of default. In
addition, a "change of control" allows the

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<PAGE> 75

lenders to accelerate the loans. A change of control occurs whenever anyone
acquires the power to vote at least 30% of the common stock, on a fully diluted
basis, and holds a greater percentage of shares of common stock than the
Investcorp Group. A change of control also occurs if a majority of the board of
directors ceases to be composed of Investcorp Group nominees. This offering will
not result in a change of control under the Senior Credit Facility.

11% SENIOR SUBORDINATED NOTES DUE 2006

On October 30, 1996, CSK Auto, Inc. issued and sold in a private placement
$125.0 million aggregate principal amount of 11% Senior Subordinated Notes due
2006 under an indenture between CSK Auto, Inc. and The Bank of New York (as
successor to Wells Fargo Bank, N.A.), as trustee. On June 18, 1997, all of these
notes were exchanged for a like principal amount of CSK Auto, Inc.'s 11% Series
A Senior Subordinated Notes due 2006 (the "11% Senior Subordinated Notes") a
transaction registered under the Securities Act. In March 1997, we used the
proceeds of our IPO to prepay approximately $43.8 million of these notes.

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. These notes are general, unsecured senior subordinated obligations of CSK
Auto, Inc. and will be guaranteed by any of its future United States
subsidiaries.

MANDATORY AND OPTIONAL REDEMPTION

On and after November 1, 2001, the 11% Senior Subordinated Notes will be
redeemable, at our option, in whole or in part, at the redemption prices set
forth below (expressed in percentages of principal amount), plus accrued and
unpaid interest, if any, to the applicable redemption date:

<TABLE>
<CAPTION>
REDEEMED DURING THE 12-MONTHS BEGINNING: REDEMPTION PRICE
---------------------------------------- ----------------
<S> <C>
November 1, 2001............................................ 105.500%
November 1, 2002............................................ 103.667%
November 1, 2003............................................ 101.833%
November 1, 2004 and thereafter............................. 100.000%
</TABLE>

CERTAIN COVENANTS; EVENTS OF DEFAULT

The indenture contains certain standard covenants by and restrictions on
CSK Auto, Inc., as well as standard events of default. In addition, the
indenture restricts CSK Auto, Inc. from making additional borrowings under its
revolving credit facility 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 CSK Auto, Inc.'s consolidated EBITDA
to fixed charges (as such terms are defined in the indenture) exceeds 2.25 to 1.
As of August 2, 1998 this ratio was 2.79 to 1.

REPURCHASE AT THE OPTION OF HOLDERS

The indenture provides that upon a "change of control," each holder of 11%
Senior Subordinated Notes will have the right to require CSK Auto, Inc. to
repurchase all or any part

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<PAGE> 76

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. A "change of control" is deemed to occur if any person other than the
Investcorp Group or its affiliates, or members of senior management of the
Company or CSK Auto, Inc. acquires or obtains the right to acquire, directly or
indirectly, 35% or more of the total voting power of the Company or CSK Auto,
Inc. However, this is not a "change of control" if the Investcorp Group, or its
affiliates, or members of senior management of the Company and CSK Auto, Inc.
collectively hold at least the same percentage of total voting power as the
acquiring person and are still able to designate for election a majority of the
board members of the Company and CSK Auto, Inc. A "change of control" also will
occur if any person (other than the Investcorp Group or its affiliates, or
members of senior management of the Company and CSK Auto, Inc.) nominates, in
one or more elections, directors of the Company or CSK Auto, Inc., who are then
elected and become a majority of the board of directors of the Company or CSK
Auto, Inc., as the case may be. Because of restrictive covenants contained in
the Senior Credit Facility, we may not be able to fund this change of control
obligation without refinancing our indebtedness.

SHARES ELIGIBLE FOR FUTURE SALE

The market price of our stock may fall as a result of sales of a large
number of shares of common stock in the market after this offering or the
perception that such sales could occur.

There are 27,742,022 shares of common stock outstanding. All of the shares
sold in this offering, the 8,625,000 shares sold in our IPO and 3,634 shares
issued pursuant to the exercise of options under our stock option plans will be
fully transferable without restriction or further registration under the
Securities Act, except that shares purchased by an "affiliate" of the Company
(in general, any person who has a control relationship to the Company) may be
resold only if registered under the Securities Act or if transferred pursuant to
an exemption from registration, including resales pursuant to Rule 144 under the
Securities Act ("Rule 144") and Regulation S under the Securities Act
("Regulation S"). The remaining 12,113,388 outstanding shares of common stock
are deemed to be "restricted securities" as that term is defined in Rule 144,
and are eligible for sale in the public market in compliance with Rule 144. As
each of the members of the Investcorp Group, the Carmel Group and their
respective transferees are party to the stockholders' agreement, all such
stockholders may be deemed to be affiliates of the Company and resales of common
stock by such stockholders may be subject to the volume limitations of Rule 144.
See "Certain Relationships and Related Transactions -- Stockholders' Agreement."
Subject to certain exceptions, the Company and stockholders of the Company
owning an aggregate of 11,932,788 shares have agreed that they will not offer,
sell or otherwise dispose of any of the shares of our common stock or any
securities convertible into or exercisable for our common stock, for a period of
90 days after the date of this prospectus without the prior written consent of
Donaldson, Lufkin & Jenrette Securities Corporation. At the expiration of the
90-day period described above, the holders of 11,932,788 shares of our common
stock will have contractual rights to sell such shares in a registered public
offering. See "Certain Relationships and Related Transactions -- Stockholders'
Agreement."

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<PAGE> 77

Up to 2,111,841 shares of common stock may be issued upon exercise of
outstanding employee stock options. An additional 552,904 shares of common stock
are reserved for issuance pursuant to options available for future grant under
our stock option plans. We filed a registration statement on Form S-8 under the
Securities Act to register the 2,668,379 shares of common stock reserved for
issuance under these stock options and the 50,000 shares of common stock which
we will be able to issue pursuant to grants of options or restricted stock if
our stockholders approve our Directors Plan at our next annual meeting. As a
result, any shares issued upon exercise of stock options are available for
resale in the public market, subject to special rules for affiliates, and to
applicable lock-up arrangements. See "Underwriting" and "Management -- Stock
Option Plans."

AVAILABLE INFORMATION

We have filed with the Securities and Exchange Commission (the
"Commission") a registration statement relating to the common stock offered
hereby (herein, together with all amendments and exhibits, referred to as the
"registration statement") under the Securities Act. This prospectus does not
contain all of the information set forth in the registration statement, certain
parts of which are omitted in accordance with the rules and regulations of the
Commission. For further information, reference is hereby made to the
registration statement. Statements made in this prospectus as to the contents of
any contract, agreement or other document referred to are not necessarily
complete. With respect to each such contract, agreement or other document filed
as an exhibit to the registration statement, reference is made to such exhibit
for a more complete description thereof, and each such statement shall be deemed
qualified in its entirety by such reference. The registration statement and the
exhibits and schedules thereto may be inspected without charge and copied at
prescribed rates at the Public Reference Section of the Commission at Room 1024,
450 Fifth Street, N.W., Washington, D.C. 20549 and at the Commission's regional
offices at 7 World Trade Center, Suite 1300, New York, New York 10048, and
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. The Commission maintains a website that contains reports, proxy
and information statements and other information filed electronically with the
Commission at http://www.sec.gov.

We own the federally registered service mark "Schuck's" for use in
connection with the automotive parts retailing business and owns rights to use
the tradenames "Checker" and "Kragen." This prospectus also includes product
names and other tradenames and service marks of the Company and of other
companies.

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<PAGE> 78

UNDERWRITING

Subject to the terms and conditions of an Underwriting Agreement, dated
, 1998, the underwriters named below, who are represented by
Donaldson, Lufkin & Jenrette Securities Corporation, Merrill Lynch, Pierce,
Fenner & Smith Incorporated, ING Baring Furman Selz LLC, Lehman Brothers Inc.,
Morgan Stanley & Co. Incorporated and Salomon Smith Barney Inc., have severally
agreed to purchase from the selling stockholders the respective number of shares
set forth opposite their names below.

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS: SHARES
------------- ----------------
<S> <C>
Donaldson, Lufkin & Jenrette Securities Corporation.......
Merrill Lynch, Pierce, Fenner & Smith Incorporated........
ING Baring Furman Selz LLC................................
Lehman Brothers Inc.......................................
Morgan Stanley & Co. Incorporated.........................
Salomon Smith Barney Inc..................................

-----------
Total............................................. 7,000,000
===========
</TABLE>

The underwriting agreement provides that the obligations of the several
underwriters to purchase and accept delivery of the shares included in this
offering are subject to approval of certain legal matters by their counsel and
to certain other conditions. The underwriters are obligated to purchase and
accept delivery of all the shares (other than those shares covered by the
over-allotment option described below) if they purchase any of the shares.

The underwriters initially propose to offer some of the shares directly to
the public at the public offering price set forth on the cover page of this
prospectus and some of the shares to certain dealers at the public offering
price less a concession not in excess of $ per share. The underwriters may
allow, and such dealers may re-allow, a concession not in excess of $ per
share on sales to certain other dealers. After the initial offering of the
shares to the public, the representatives may change the public offering price
and such concessions at any time without notice.

The selling stockholders have granted to the underwriters an option,
exercisable for 30 days from the date of this prospectus, to purchase, from time
to time, in whole or in part, up to 1,050,000 additional shares at the public
offering price less the underwriting fees. The underwriters may exercise such
option solely to cover overallotments, if any, made in connection with this
offering. To the extent that the underwriters exercise such option, each
underwriter will become obligated, subject to certain conditions, to purchase a
number of additional shares approximately proportionate to such underwriter's
initial purchase commitment.

The following table shows the underwriting fees to be paid to the
underwriters by the selling stockholders in connection with this offering. These
amounts are shown assuming both no

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<PAGE> 79

exercise and full exercise of the underwriters' option to purchase additional
shares of common stock.

<TABLE>
<CAPTION>
NO EXERCISE FULL EXERCISE
----------- -------------
<S> <C> <C>
Per share................................................... $ $
Total....................................................... $ $
</TABLE>

The Company and the selling stockholders have agreed to indemnify the
underwriters against certain civil liabilities, including liabilities under the
Securities Act of 1933, or to contribute to payments that the underwriters may
be required to make in respect of any of those liabilities.

The Company, the executive officers and directors and certain stockholders
of the Company (including the selling stockholders) have agreed that, for a
period of 90 days from the date of this prospectus, they will not, without the
prior written consent of Donaldson, Lufkin & Jenrette Securities Corporation:
(1) offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or
warrant to purchase or otherwise transfer or dispose of, directly or indirectly,
any shares of common stock or any securities convertible into or exercisable or
exchangeable for common stock; or (2) enter into any swap or other arrangement
that transfers all or a portion of the economic consequences associated with the
ownership of any common stock (regardless of whether any of the transactions
described in clause (1) or (2) is to be settled by the delivery of common stock,
or such other securities, in cash or otherwise). In addition, during such
period, the Company has also agreed not to file any registration statement with
respect to, and each of its executive officers, directors and certain
stockholders of the Company (including the selling stockholders) has agreed not
to make any demand for, or exercise any right with respect to, the registration
of any shares of common stock or any securities convertible into or exercisable
or exchangeable for common stock without the prior written consent of Donaldson,
Lufkin & Jenrette Securities Corporation.

The common stock is listed on the New York Stock Exchange under the symbol
"CAO."

Other than in the United States, no action has been taken by the Company,
the selling stockholders or the underwriters that would permit a public offering
of the shares of common stock included in this offering in any jurisdiction
where action for that purpose is required. The shares included in this offering
may not be offered or sold, directly or indirectly, nor may this prospectus or
any other offering material or advertisements in connection with the offer and
sale of any such shares be distributed or published in any jurisdiction, except
under circumstances that will result in compliance with the applicable rules and
regulations of such jurisdiction. Persons who receive this prospectus are
advised to inform themselves about and to observe any restrictions relating to
the offering and the distribution of this prospectus. This prospectus is not an
offer to sell or a solicitation of an offer to buy any shares of common stock
included in this offering in any jurisdiction where that would not be permitted
or legal.

In connection with this offering, certain underwriters may engage in
transactions that stabilize, maintain or otherwise affect the price of the
common stock. Specifically, the underwriters may overallot this offering,
creating a syndicate short position. In addition, the underwriters may bid for
and purchase shares of common stock in the open market to cover such
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<PAGE> 80

syndicate short position or to stabilize the price of the common stock. These
activities may stabilize or maintain the market price of the common stock above
independent market levels. The underwriters are not required to engage in these
activities, and may end any of these activities at any time.

Donaldson, Lufkin & Jenrette Capital Funding, Inc., an affiliate of
Donaldson, Lufkin & Jenrette Securities Corporation, is a lender under the
Senior Credit Facility. Merrill Lynch Senior Floating Rate Fund, Inc., Merrill
Lynch Prime Rate Portfolio and Merrill Lynch Debt Strategies Portfolio, each an
affiliate of Merrill Lynch, Pierce, Fenner & Smith Incorporated, are lenders
under the Senior Credit Facility. Lehman Commercial Paper Inc., an affiliate of
Lehman Brothers Inc., is a lender and the documentation agent under the Senior
Credit Facility. Lehman Syndicated Loans Inc., an affiliate of Lehman Brothers
Inc., is a lender under the revolving credit portion of the Senior Credit
Facility. An affiliate of Chase Securities Inc. is an agent and a lender under
the Senior Credit Facility.

LEGAL MATTERS

The validity of the shares of common stock being offered will be passed
upon for the Company by Gibson, Dunn & Crutcher LLP. Certain legal matters will
be passed on for the underwriters by Davis Polk & Wardwell.

EXPERTS

The consolidated balance sheets of the Company as of February 2, 1997 and
February 1, 1998 and the related consolidated statements of operations,
stockholders' equity (deficit) and cash flows for each of the three years in the
period ended February 1, 1998 included in this prospectus have been so included
in reliance on the report of PricewaterhouseCoopers LLP, independent
accountants, given on the authority of said firm as experts in accounting and
auditing.

CHANGE IN ACCOUNTANTS

The consolidated statements of operations, stockholders' equity (deficit)
and cash flows of the Company for the year ended January 28, 1996 were audited
by Price Waterhouse LLP. The financial statements for the years ended February
2, 1997 and February 1, 1998 were audited by Coopers & Lybrand L.L.P., which was
first engaged effective December 5, 1996. In connection with the completion of
the 1996 Recapitalization, and with the approval of the Board of Directors,
Price Waterhouse LLP was dismissed by management as the Company's independent
accountants on December 5, 1996. Price Waterhouse LLP and Coopers & Lybrand
L.L.P. subsequently merged to form PricewaterhouseCoopers LLP on July 1, 1998.

79
<PAGE> 81

The report of Price Waterhouse LLP with respect to the financial statements
of the Company for the fiscal year ended January 28, 1996 did not contain any
adverse opinion or disclaimer of opinion, and was not qualified or modified as
to uncertainty, audit scope or accounting principles. In connection with its
audit for the fiscal year ended January 28, 1996 and through December 5, 1996
there were no disagreements between the Company and Price Waterhouse LLP on any
matter of accounting principles or practices, financial statement disclosure or
auditing scope or procedures, which disagreements, if not resolved to the
satisfaction of Price Waterhouse LLP, would have caused it to make reference to
the subject matter thereof in connection with its report on the financial
statements for such year.

80
<PAGE> 82

CSK AUTO CORPORATION AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Accountants......................... F-2
Report of Independent Accountants......................... F-3
Consolidated Statements of Operations..................... F-4
Consolidated Balance Sheets............................... F-5
Consolidated Statements of Stockholders' Equity
(Deficit).............................................. F-6
Consolidated Statements of Cash Flows..................... F-7
Notes to Consolidated Financial Statements................ F-8
</TABLE>

F-1
<PAGE> 83

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of
CSK Auto Corporation

We have audited the accompanying consolidated balance sheets of CSK Auto
Corporation and subsidiaries (the "Company") as of February 2, 1997 and February
1, 1998 and the related consolidated statements of operations, stockholders'
equity (deficit), and cash flows for the years then ended. 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 in accordance with generally accepted auditing
standards. Those standards 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. An audit includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of CSK Auto
Corporation and subsidiaries as of February 2, 1997 and February 1, 1998 and the
consolidated results of their operations and their cash flows for the years then
ended, in conformity with generally accepted accounting principles.

COOPERS & LYBRAND L.L.P.

Phoenix, Arizona
April 10, 1998

F-2
<PAGE> 84

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of
CSK Auto Corporation

In our opinion, the accompanying consolidated statements of operations, of
stockholders' equity (deficit) and of cash flows for the year ended January 28,
1996 present fairly, in all material respects, the results of operations of CSK
Auto Corporation and its subsidiaries for the year ended January 28, 1996, in
conformity with generally accepted accounting principles. 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 audit. We conducted our audit of these statements in accordance with
generally accepted auditing standards 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 audit provides a reasonable basis for the opinion expressed
above.

PRICE WATERHOUSE LLP

Phoenix, Arizona
December 23, 1997

F-3
<PAGE> 85

CSK AUTO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>
FISCAL YEAR ENDED TWENTY-SIX WEEKS ENDED
--------------------------------------- -------------------------
JANUARY 28, FEBRUARY 2, FEBRUARY 1, AUGUST 3, AUGUST 2,
1996 1997 1998 1997 1998
----------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net sales............................ $ 718,352 $ 793,092 $ 845,815 $ 419,557 $ 493,124
Cost of sales........................ 433,817 463,374 468,171 242,246 267,746
---------- ----------- ----------- ----------- -----------
Gross profit......................... 284,535 329,718 377,644 177,311 225,378
Other costs and expenses:
Operating and administrative....... 284,697 312,908 327,838 158,195 188,445
Transition and integration
expenses........................ -- -- 3,407 -- 3,075
Stock-based compensation........... -- -- 909 -- --
Write-off of unamortized management
fee............................. -- -- -- -- 3,643
1996 Recapitalization
charge -- equity participation
agreements...................... -- 20,174 -- -- --
---------- ----------- ----------- ----------- -----------
Operating profit (loss).............. (162) (3,364) 45,490 19,116 30,215
Other 1996 Recapitalization
expenses........................... -- 12,463 1,009 -- --
Interest expense, net................ 14,379 20,691 40,680 19,714 16,608
---------- ----------- ----------- ----------- -----------
Income (loss) before income taxes and
extraordinary loss................. (14,541) (36,518) 3,801 (598) 13,607
Income tax expense (benefit)......... (5,447) (11,859) 1,557 (216) 5,017
---------- ----------- ----------- ----------- -----------
Income (loss) before extraordinary
loss............................... (9,094) (24,659) 2,244 (382) 8,590
Extraordinary loss, net of $2,091
(fiscal 1997) and $4,236 (fiscal
1998) of income taxes.............. -- -- (3,015) -- (6,767)
---------- ----------- ----------- ----------- -----------
Net income (loss).................... $ (9,094) $ (24,659) $ (771) $ (382) $ 1,823
========== =========== =========== =========== ===========
Basic earnings (loss) per share:
Income (loss) before extraordinary
loss............................ $ (1.04) $ (2.28) $ 0.13 $ (0.02) $ 0.33
Extraordinary loss, net of income
taxes........................... -- -- (0.17) -- (0.26)
---------- ----------- ----------- ----------- -----------
Net income (loss)............... $ (1.04) $ (2.28) $ (0.04) $ (0.02) $ 0.07
========== =========== =========== =========== ===========
Shares used in computing per share
amounts......................... 8,723,550 10,818,913 17,400,214 17,105,000 25,653,223
========== =========== =========== =========== ===========
Diluted earnings (loss) per share:
Income (loss) before extraordinary
loss............................ $ (1.04) $ (2.28) $ 0.12 $ (0.02) $ 0.32
Extraordinary loss, net of income
taxes........................... -- -- (0.16) -- (0.25)
---------- ----------- ----------- ----------- -----------
Net income (loss)............... $ (1.04) $ (2.28) $ (0.04) $ (0.02) $ 0.07
========== =========== =========== =========== ===========
Shares used in computing per share
amounts......................... 8,723,550 10,818,913 18,011,666 17,105,000 26,578,154
========== =========== =========== =========== ===========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE> 86

CSK AUTO CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
FEBRUARY 2, FEBRUARY 1, AUGUST 2,
1997 1998 1998
----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents................................... $ 5,223 $ 4,852 $ 7,578
Receivables, net of allowances of $1,768, $2,403 and $2,433,
respectively.............................................. 28,511 37,566 41,420
Inventories................................................. 268,214 367,366 368,534
Assets held for sale........................................ 5,971 2,418 6,316
Prepaid expenses and other current assets................... 10,139 14,143 16,906
--------- --------- ---------
Total current assets.............................. 318,058 426,345 440,754
--------- --------- ---------
Property and equipment, net................................. 71,363 85,940 90,410
Leasehold interests, net.................................... 12,683.... 10,934 10,266
Deferred income taxes....................................... 18,615 22,021 21,240
Other assets, net........................................... 23,267 18,011 7,674
--------- --------- ---------
Total assets...................................... $ 443,986 $ 563,251 $ 570,344
========= ========= =========
LIABILITIES AND
STOCKHOLDERS' EQUITY (DEFICIT)
Accounts payable............................................ $ 120,998 $ 109,962 $ 105,086
Outstanding checks.......................................... 7,004 4,308 11,910
Accrued payroll and related expenses........................ 15,851 20,869 21,576
Accrued expenses and other current liabilities.............. 44,444 40,818 36,992
Due to affiliates........................................... -- 1,000 --
Current maturities of amounts due under Senior Credit
Facility.................................................. 1,000 1,000 1,000
Current maturities of capital lease obligations............. 7,007 8,671 9,164
Deferred income taxes....................................... 597 4,066 4,066
--------- --------- ---------
Total current liabilities......................... 196,901 190,694 189,794
--------- --------- ---------
Amounts due under Senior Credit Facility.................... 137,000 239,050 186,580
Obligations under 11% Senior Subordinated Notes............. 125,000 125,000 81,250
Obligations under 12% Subordinated Notes.................... 50,000 50,000 --
Obligations under capital leases............................ 15,673 16,241 14,115
Due to affiliates........................................... 1,000 -- --
Other....................................................... 20,675 17,321 12,880
--------- --------- ---------
Total non-current liabilities..................... 349,348 447,612 294,825
--------- --------- ---------
Commitments and contingencies
Stockholders' equity (deficit):
Common stock, $0.01 par value, 41,666,752 shares
authorized (fiscal 1996 and 1997), 50,000,000 shares
authorized (fiscal 1998); 17,105,000, 19,113,388 and
27,738,388 shares issued and outstanding at February 2,
1997, February 1, 1998 and August 2, 1998,
respectively........................................... 171 191 277
Additional paid-in capital................................ 106,677 130,513 289,137
Stockholder receivable.................................... (5,966) (1,168) (1,018)
Deferred compensation..................................... -- (675) (578)
Accumulated deficit....................................... (203,145) (203,916) (202,093)
--------- --------- ---------
Total stockholders' equity (deficit).............. (102,263) (75,055) 85,725
--------- --------- ---------
Total liabilities and stockholders' equity
(deficit)....................................... $ 443,986 $ 563,251 $ 570,344
========= ========= =========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.
F-5
<PAGE> 87

CSK AUTO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
(IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL TOTAL
------------------- PAID-IN ACCUMULATED STOCKHOLDER DEFERRED EQUITY
SHARES AMOUNT CAPITAL DEFICIT RECEIVABLE COMPENSATION (DEFICIT)
---------- ------ ---------- ----------- ----------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at January 29,
1995..................... 100 $ -- $ 81,680 $ (12,589) $ -- $ -- $ 69,091
Net loss................... -- -- -- (9,094) -- -- (9,094)
---------- ---- -------- --------- ------- ----- ---------
Balance at January 28,
1996..................... 100 -- 81,680 (21,683) -- -- 59,997
Conversion of common stock
into Class A, Class C,
Class D, and Class F
stock.................... 8,723,550 87 (87) -- -- -- --
Redemption of Class F
stock.................... (100) -- (81,675) (156,803) -- -- (238,478)
Issuance of Class E
stock.................... 8,381,450 84 100,793 -- -- -- 100,877
Stockholder receivable..... -- -- 5,966 -- (5,966) -- --
Net loss................... -- -- -- (24,659) -- -- (24,659)
---------- ---- -------- --------- ------- ----- ---------
Balance at February 2,
1997..................... 17,105,000 171 106,677 (203,145) (5,966) -- (102,263)
Recovery of stockholder
receivable............... -- -- -- -- 5,966 -- 5,966
Sale of Class B stock...... 180,600 2 2,172 -- (1,168) -- 1,006
Sale of stock -- Trak West
Acquisition.............. 1,827,788 18 20,989 -- -- -- 21,007
Deferred compensation...... -- -- 675 -- -- (675) --
Net loss................... -- -- -- (771) -- -- (771)
---------- ---- -------- --------- ------- ----- ---------
Balance at February 1,
1998..................... 19,113,388 191 130,513 (203,916) (1,168) (675) (75,055)
Amortization of deferred
compensation
(unaudited).............. -- -- -- -- -- 97 97
Recovery of stockholder
receivable (unaudited)... -- -- -- -- 150 -- 150
Issuance of common stock in
initial public offering,
net of transaction costs
(unaudited).............. 8,625,000 86 158,624 -- -- -- 158,710
Net income (unaudited)..... -- -- -- 1,823 -- -- 1,823
---------- ---- -------- --------- ------- ----- ---------
Balance at August 2, 1998
(unaudited).............. 27,738,388 $277 $289,137 $(202,093) $(1,018) $(578) $ 85,725
========== ==== ======== ========= ======= ===== =========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.
F-6
<PAGE> 88

CSK AUTO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
TWENTY-SIX WEEKS
FISCAL YEAR ENDED ENDED
--------------------------------------- ---------------------
JANUARY 28, FEBRUARY 2, FEBRUARY 1, AUGUST 3, AUGUST 2,
1996 1997 1998 1997 1998
----------- ----------- ----------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows provided by (used in) operating activities:
Net income (loss)....................................... $ (9,094) $ (24,659) $ (771) $ (382) $ 1,823
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization of property and
equipment........................................... 14,343 17,290 18,078 8,585 10,552
Amortization of leasehold interests................... 1,647 1,749 1,176 675 475
Amortization of other deferred charges................ 271 186 1,113 328 360
Amortization of deferred financing costs.............. 737 1,504 2,043 1,070 539
Extraordinary loss on early retirement of debt, net... -- -- 3,015 -- 6,767
Write-off of unamortized deferred charge.............. -- -- -- -- 3,643
Deferred income taxes................................. (5,448) (11,859) 1,557 (216) 5,017
Change in operating assets and liabilities, net of
effects of Trak West Acquisition:
Accounts receivable................................. (7,057) (3,063) (9,055) (6,608) (3,854)
Inventories......................................... (23,081) (19,250) (63,830) (12,695) (1,168)
Prepaid expenses and other current assets........... 542 (5,316) (4,057) (508) (2,881)
Accounts payable.................................... 14,170 (24,250) (11,036) (5,971) (4,876)
Outstanding checks.................................. 8,461 (1,457) (2,696) 8,527 7,602
Accrued payroll, accrued expenses and other current
liabilities....................................... (943) 29,120 (1,760) 2,201 (2,990)
Due to affiliates................................... 5,530 (4,530) -- -- (1,000)
Other............................................... 1,276 6,169 3,520 (1,338) (4,303)
--------- --------- --------- -------- --------
Net cash provided by (used in) operating activities... 1,354 (38,366) (62,703) (6,332) 15,706
--------- --------- --------- -------- --------
Cash flows used in investing activities:
Capital expenditures.................................... (11,640) (6,317) (20,132) (6,781) (18,640)
Expenditures for assets held for sale................... (24,203) (19,023) (12,335) (6,505) (12,156)
Proceeds from sale of property and equipment and assets
held for sale......................................... 28,257 14,667 10,966 2,980 14,910
Acquisition of the Trak West stores..................... -- -- (34,504) -- --
Other investing activities............................ (302) (13) (722) (22) (139)
--------- --------- --------- -------- --------
Net cash used in investing activities................. (7,888) (10,686) (56,727) (10,328) (16,025)
--------- --------- --------- -------- --------
Cash flows provided by financing activities:
Borrowings under Senior Credit Facility................. 809,663 805,242 325,550 32,000 65,000
Payments of debt........................................ (795,807) (763,304) (223,500) (9,500) (63,645)
Issuance of common stock in initial public offering, net
of transaction costs.................................. -- -- -- -- 158,711
Premiums paid upon early retirement of debt............. -- -- -- -- (4,875)
Retirement of 11% Senior Subordinated Notes............. -- -- -- -- (43,750)
Retirement of 12% Subordinated Notes.................... -- -- -- -- (50,000)
Payment of Senior Credit Facility with public offering
proceeds.............................................. -- -- -- -- (53,825)
Issuance of 11% Senior Subordinated Notes............... -- 125,000 -- -- --
Issuance of 12% Subordinated Notes...................... -- 50,000 -- -- --
Payments on capital lease obligations................... (4,976) (5,888) (7,478) (3,600) (4,472)
Redemption of Class F stock............................. -- (238,468) -- -- --
Issuance of Class E stock............................... -- 100,882 -- -- --
Issuance of Class B stock............................... -- -- 21,714 -- --
Recovery of stockholder receivable...................... -- -- 5,966 -- 150
Note issuance costs..................................... -- (18,632) -- -- --
Other financing activities.............................. (852) (4,921) (3,193) (865) (249)
--------- --------- --------- -------- --------
Net cash provided by financing activities............. 8,028 49,911 119,059 18,035 3,045
--------- --------- --------- -------- --------
Net increase (decrease) in cash and cash
equivalents......................................... 1,494 859 (371) 1,375 2,726
Cash and cash equivalents, beginning of period............ 2,870 4,364 5,223 5,223 4,852
--------- --------- --------- -------- --------
Cash and cash equivalents, end of period.................. $ 4,364 $ 5,223 $ 4,852 $ 6,598 $ 7,578
========= ========= ========= ======== ========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.
F-7
<PAGE> 89

CSK AUTO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION AS OF AUGUST 2, 1998 AND FOR THE TWENTY-SIX
WEEKS ENDED AUGUST 3, 1997 AND AUGUST 2, 1998 IS UNAUDITED.)

CSK Auto Corporation is a holding company. At August 2, 1998, CSK Auto
Corporation had no business activity other than its investment in CSK Auto,
Inc., a wholly-owned subsidiary ("Auto"). On a consolidated basis, CSK Auto
Corporation and subsidiaries are referred to herein as "the Company".

CSK Auto, Inc. is a specialty retailer of automotive aftermarket parts and
accessories. At August 2, 1998, the Company operated 747 stores in 12 Western
states as a fully integrated company under three brand names: Checker Auto
Parts, founded in 1968 and operating in the Southwestern and Rocky Mountain
states; Schuck's Auto Supply, founded in 1917 and operating in the Pacific
Northwest; and Kragen Auto Parts, founded in 1947 and operating primarily in
California.

NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of CSK Auto
Corporation, Auto and Auto's wholly-owned subsidiaries, Schuck's Distribution
Co. and Kragen Auto Supply Co., for all years presented. In addition, the
accounts of TRK Socal, Inc. (the former Trak West stores) are included in the
accompanying financial statements from December 9, 1997, the date of acquisition
(see Note 3). During the fiscal year ended January 28, 1996, the consolidated
financial statements include the accounts of certain former subsidiaries of CSK
Auto Corporation. Such subsidiaries were inactive and were sold or liquidated
during the fiscal year ended January 28, 1996. All intercompany accounts and
transactions are eliminated in consolidation. On April 8, 1998, Schuck's
Distribution Co., Kragen Auto Supply Co. and TRK Socal, Inc. were merged into
Auto.

INTERIM FINANCIAL STATEMENTS

The financial statements as of August 2, 1998 and for the twenty-six weeks
ended August 3, 1997 and August 2, 1998 are unaudited, and in the opinion of
management, include all adjustments (consisting only of normal recurring
adjustments) necessary for the fair presentation of results for these interim
periods. The results for the twenty-six weeks ended August 2, 1998, are not
necessarily indicative of the results to be expected for the entire fiscal year.

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 2, 1997 ("fiscal 1996")
consisted of 53 weeks, while the fiscal years ended February 1, 1998 ("fiscal
1997") and January 28, 1996 ("fiscal 1995") each consisted of 52 weeks.

F-8
<PAGE> 90
CSK AUTO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF AUGUST 2, 1998 AND FOR THE TWENTY-SIX
WEEKS ENDED AUGUST 3, 1997 AND AUGUST 2, 1998 IS UNAUDITED.)

NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
CASH EQUIVALENTS

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

ACCOUNTS RECEIVABLE

Accounts receivable is primarily comprised of amounts due from vendors for
rebates or allowances and from commercial sales customers.

CONCENTRATION OF CREDIT RISK

Financial instruments that potentially subject the Company to concentration
of credit risk consist principally of cash and cash equivalents and trade
receivables. As of February 1, 1998, 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 recognized immediately,
amortized over the life of the applicable agreements, or recognized as inventory
is sold. Certain operating and administrative costs are capitalized in
inventories. The amounts of capitalized operating and administrative costs
included in inventories as of February 2, 1997 and February 1, 1998 were
approximately $9.7 million and $11.8 million, respectively. The replacement cost
of inventories approximated $225.6 million, $316.2 million, and $314.4 million
at February 2, 1997, February 1, 1998, and August 2, 1998, respectively.

PROPERTY AND EQUIPMENT

Property, equipment and purchased software are recorded at cost.
Depreciation and amortization are computed for financial reporting purposes
utilizing primarily the straight-line method over the estimated useful lives of
the related assets, which range from 5 to 25 years, or

F-9
<PAGE> 91
CSK AUTO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF AUGUST 2, 1998 AND FOR THE TWENTY-SIX
WEEKS ENDED AUGUST 3, 1997 AND AUGUST 2, 1998 IS UNAUDITED.)

NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
for leasehold improvements and property under capital lease, the base lease term
or estimated useful life, if shorter. Maintenance and repairs are charged to
earnings when incurred.

STORE PREOPENING COSTS

Store preopening costs, consisting primarily of incremental labor, supplies
and occupancy costs directly related to the opening of specific stores, are
capitalized as prepaid expenses and other current assets and expensed during the
month in which the store is opened.

INTERNAL SOFTWARE DEVELOPMENT COSTS

Internal software development costs, consisting primarily of incremental
internal labor costs and benefits, are expensed as incurred. Total amounts
charged to operations for fiscal years 1995, 1996 and 1997 were approximately
$6.2 million, $1.5 million and $1.3 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 $16.3 million and $16.2 million at
February 2, 1997 and February 1, 1998, respectively.

STORE CLOSING COSTS

The Company provides an allowance for estimated costs and losses to be
incurred in connection with store closures and losses on the disposal of
store-related assets, which is net of anticipated sublease income. See Note 12.

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 years 1995,
1996 and 1997 totaled approximately $19.8 million, $21.8 million and $23.7
million, 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 operating lease
arrangements.

F-10
<PAGE> 92
CSK AUTO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF AUGUST 2, 1998 AND FOR THE TWENTY-SIX
WEEKS ENDED AUGUST 3, 1997 AND AUGUST 2, 1998 IS UNAUDITED.)

NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
LONG-LIVED ASSETS

The Company evaluates the carrying value of long-lived assets on a
quarterly basis to determine whether events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable and an impairment
loss should be recognized.

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

Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting
for Stock-Based Compensation", encourages but does not require companies to
record compensation cost for stock-based employee compensation plans at fair
value. The Company has chosen to continue to account for stock-based
compensation using the intrinsic value method prescribed in Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" and
related interpretations thereof. Accordingly, compensation cost for stock
options is measured as the excess, if any, of the market price of the Company's
stock at the date of grant over the amount an employee must pay to acquire the
stock. See Note 9.

EARNINGS PER SHARE

In February 1997, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 128, "Earnings per Share". SFAS No. 128 establishes standards for
computing and presenting earnings per share ("EPS") and supercedes Accounting
Principles Board Opinion No. 15, "Earnings per Share" ("APB 15"). SFAS No. 128
replaces the presentation of primary EPS with a presentation of basic EPS which
excludes dilution and is computed by dividing income available to common
shareholders by the weighted-average of common shares outstanding during the
period. This statement also requires dual presentation of basic EPS and diluted
EPS on the face of the income statement for all periods presented. Diluted EPS
is calculated similarly to fully diluted EPS pursuant to APB 15, with some
modifications. SFAS No. 128 is effective for financial statements issued for
periods ending after December 15, 1997, including interim periods. The Company
adopted SFAS No. 128 in fiscal 1997 and has restated all prior period EPS data
presented within these financial statements.

F-11
<PAGE> 93
CSK AUTO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF AUGUST 2, 1998 AND FOR THE TWENTY-SIX
WEEKS ENDED AUGUST 3, 1997 AND AUGUST 2, 1998 IS UNAUDITED.)

NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
Calculation of shares used in computing per share amounts under the
provisions of SFAS No. 128 and Securities and Exchange Commission Staff
Accounting Bulletin No. 98 is summarized as follows:

<TABLE>
<CAPTION>
FISCAL YEAR ENDED TWENTY-SIX WEEKS ENDED
--------------------------------------- -----------------------
JANUARY 28, FEBRUARY 2, FEBRUARY 1, AUGUST 3, AUGUST 2,
1996 1997 1998 1997 1998
----------- ----------- ----------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Common stock outstanding:
Beginning of period................. 8,723,550 8,723,550 17,105,000 17,105,000 19,113,388
========= ========== ========== ========== ==========
End of period....................... 8,723,550 17,105,000 19,113,388 17,105,000 27,738,388
========= ========== ========== ========== ==========
Issued or acquired during period.... -- 8,381,450 2,008,388 -- 8,625,000
========= ========== ========== ========== ==========
Weighted average number of shares
(basic)............................. 8,723,550 10,818,913 17,400,214 17,105,000 25,653,223
Effects of dilutive securities........ -- -- 611,452 -- 924,931
--------- ---------- ---------- ---------- ----------
Weighted average number of shares
(diluted)........................... 8,723,550 10,818,913 18,011,666 17,105,000 26,578,154
========= ========== ========== ========== ==========
</TABLE>

Shares issuable under employee stock options are excluded from the shares
used in computing per share amounts for fiscal 1995 and 1996 and the twenty-six
weeks ended August 3, 1997 because their effect is anti-dilutive. A nominal
issuance of 8,723,550 shares of common stock occurred during fiscal 1995.

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.

RECLASSIFICATIONS

Certain prior year financial statement amounts have been reclassified to
conform to the current year presentation.

NEW ACCOUNTING STANDARDS

During fiscal 1997, the Company adopted SFAS No. 129, "Disclosure of
Information about Capital Structure," which had no effect on the Company's
financial position or results of

F-12
<PAGE> 94
CSK AUTO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF AUGUST 2, 1998 AND FOR THE TWENTY-SIX
WEEKS ENDED AUGUST 3, 1997 AND AUGUST 2, 1998 IS UNAUDITED.)

NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
operations. During fiscal 1998, the Company adopted SFAS No. 130, "Reporting
Comprehensive Income," which had no effect on the Company's financial position
or results of operations.

In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information." In February 1998, the FASB issued SFAS
No. 132, "Employers Disclosures about Pensions and Other Postretirement
Benefits." The Company will adopt these statements during fiscal 1998. As these
statements only require additional disclosures in the Company's financial
statements, their adoption will not have any effect on the Company's financial
position or results of operations.

In March 1998, the Accounting Standards Executive Committee of the American
Institute of Certified Public Accountants issued Statement of Position ("SOP")
98-1, "Accounting for the Cost of Computer Software Developed or Obtained for
Internal Use". The SOP defines the characteristics of internal-use computer,
software criteria for capitalization, and financial statement disclosure
requirements. The SOP is effective for fiscal years beginning after December 15,
1998, with earlier application encouraged. The Company will adopt SOP 98-1 in
fiscal 1999 and does not expect that such adoption will have a material effect
on the Company's financial position or results of operations.

In April 1998, the Accounting Standards Executive Committee of the American
Institute of Certified Public Accountants issued SOP 98-5, "Reporting on the
Cost of Start-up Activities." The SOP broadly defines start-up activities as
those one-time activities related to opening a new facility, introducing a new
product or service, conducting business in a new territory, or commencing some
new operation. The SOP requires that the costs of start-up activities be
expensed as incurred and is effective for financial statements for fiscal years
beginning after December 15, 1998, with earlier application encouraged. The
Company's current accounting policy with respect to the cost of start-up
activities is 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 will adopt SOP 98-5 in
fiscal 1999, which will require the Company to change its current accounting
policy to expense start-up costs as incurred. The Company does not believe that
the impact of adoption will have a material effect on the Company's financial
position or results of operations.

NOTE 2 -- 1996 RECAPITALIZATION

In October 1996, certain affiliates of INVESTCORP S.A. ("Investcorp") and
certain other investors (collectively with Investcorp, the "Investcorp Group")
acquired a 51% common equity interest in the Company for $105.0 million in cash
from the Carmel Trust ("Carmel"), which previously had held 100% of the common
equity interests in the Company. A corporation in which an affiliate of
Investcorp held a minority interest also purchased $40.0 million in aggregate
principal amount of the Company's 12% Subordinated Notes for $40.0 million in
cash, and the

F-13
<PAGE> 95
CSK AUTO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF AUGUST 2, 1998 AND FOR THE TWENTY-SIX
WEEKS ENDED AUGUST 3, 1997 AND AUGUST 2, 1998 IS UNAUDITED.)

NOTE 2 -- 1996 RECAPITALIZATION, CONTINUED
Company in turn purchased $40.0 million of preferred stock of Auto.
Transatlantic Finance, Ltd., an affiliate of Carmel ("Transatlantic," and with
Carmel, the "Carmel Group") purchased $10.0 million in aggregate principal
amount of the Company's 12% Subordinated Notes, and the Company in turn
purchased $10.0 million of preferred stock of Auto. Auto then borrowed $100.0
million under the Senior Credit Facility, which together with the net proceeds
from the sale of $125.0 million of Auto's 11% Senior Subordinated Notes due 2006
and the net proceeds from the sale by Auto to the Company of $50.0 million of
preferred stock, following a dividend to the Company by Auto, was used to redeem
the stock of the Company held by Carmel for $238.5 million. Carmel then
purchased from the Company for $100.9 million a 49% common equity interest in
the Company. Auto then repaid amounts outstanding under a then existing credit
agreement, which was terminated, and paid $9.9 million to members of management
pursuant to previously existing equity participation agreements and incurred
additional expenses of $22.7 million related to the foregoing. The foregoing
transactions are referred to individually and collectively as the "1996
Recapitalization." Following the 1996 Recapitalization, the Investcorp Group
owned a 51% common equity interest in the Company, a corporation in which an
affiliate of Investcorp held a minority interest owned $40.0 million in
aggregate principal amount of the Company's 12% Subordinated Notes, Carmel owned
a 49% common equity interest in the Company, Transatlantic owned $10.0 million
in aggregate principal amount of the Company's 12% Subordinated Notes and the
Company owned 100% of the common equity and $50.0 million of preferred stock of
Auto.

Prior to the 1996 Recapitalization, the Company had entered into incentive
compensation agreements with certain of its executives pursuant to which they
would be compensated in a sale of the Company's equity securities as if they
owned specified percentages of the Company's outstanding common stock. Pursuant
to these agreements, two former and five current executive officers received
certain payments in connection with the 1996 Recapitalization based upon the
consideration they would have been entitled to if they had owned an aggregate of
6.4% of the Company's common stock and had sold all of such common stock in
connection with the 1996 Recapitalization at the price per share paid for such
shares in the 1996 Recapitalization. Upon closing of the 1996 Recapitalization,
the Company became obligated to pay approximately $19.9 million under these
equity participation agreements. The Company expensed this full amount plus a
provision for estimated payroll taxes thereon during the fourth quarter of
fiscal 1996 when the 1996 Recapitalization was consummated and paid $9.9 million
(approximately 50% of the total obligation) with proceeds from the 1996
Recapitalization. The Company paid the remaining balance in November 1997 and
Carmel reimbursed the Company for approximately 60% (the estimated after-tax
cost to the Company) of the amount of such final payment. Prior to payment, such
estimated reimbursement was recorded as a "Stockholder Receivable" and as
"Additional Paid-in Capital".

F-14
<PAGE> 96
CSK AUTO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF AUGUST 2, 1998 AND FOR THE TWENTY-SIX
WEEKS ENDED AUGUST 3, 1997 AND AUGUST 2, 1998 IS UNAUDITED.)

NOTE 2 -- 1996 RECAPITALIZATION, CONTINUED
In addition, the Company incurred legal, accounting, consulting, bridge
loan commitment and other 1996 Recapitalization fees and expenses of
approximately $12.5 million.

The sources and uses of cash in the 1996 Recapitalization which transpired
on October 30, 1996 were as follows (in thousands):

<TABLE>
<S> <C>
SOURCES OF CASH
Issuance of 11% Senior Subordinated Notes................... $125,000
Senior Credit Facility -- Term Loan......................... 100,000
Issuance of 12% Subordinated Notes.......................... 50,000
Capital Contribution from Carmel............................ 100,882
--------
$375,882
========
USES OF CASH
Redemption of stock held by Carmel.......................... $238,468
Payments under Equity Participation Agreements.............. 10,121
Retirement of then existing credit agreement................ 93,072
Payments for debt issuance costs............................ 18,632
Payments for advisory and financing fees.................... 14,542
Increase in working capital................................. 1,047
--------
$375,882
========
</TABLE>

NOTE 3 -- TRAK WEST ACQUISITION

On December 8, 1997, the Company acquired a newly formed subsidiary ("Trak
West") of Trak Auto Corporation ("Trak Auto"). Upon its formation, Trak Auto
contributed to Trak West the fixtures and equipment, merchandise inventories and
store leases of 82 specific store sites in Southern California, together with
the merchandise inventory of the Ontario, California distribution center
operated by Trak Auto. After this contribution, Trak West had no liabilities and
owned no other assets than those previously described.

The Company acquired Trak West for a total cost of approximately $34.5
million and financed its acquisition with a $22.0 million equity investment by
affiliates of the Company's existing stockholders and borrowings under the
Senior Credit Facility. In connection therewith, an affiliate of Investcorp was
paid a $1.0 million placement fee. In connection with the negotiation of the
Trak West acquisition, TG Investments, Ltd., an affiliate of Carmel, was paid a
$1.0 million consulting fee.

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

F-15
<PAGE> 97
CSK AUTO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF AUGUST 2, 1998 AND FOR THE TWENTY-SIX
WEEKS ENDED AUGUST 3, 1997 AND AUGUST 2, 1998 IS UNAUDITED.)

NOTE 3 -- TRAK WEST ACQUISITION, CONTINUED
results of the Company from December 9, 1997, the first day of operations
subsequent to the acquisition, and were not material to the Company's
consolidated results of operations for fiscal 1997.

The purchase price was allocated based upon the fair market values of
assets acquired at December 8, 1997 as follows (in thousands):

<TABLE>
<S> <C>
Inventories............................................ $35,322
Closed store reserves.................................. (625)
Benefits costs......................................... (193)
-------
Total............................................. $34,504
=======
</TABLE>

No goodwill was recorded in connection with this acquisition.

The Company incurred $3.4 million and $3.1 million of one time transition
and integration expenses during fiscal year 1997 and the twenty-six weeks ended
August 2, 1998, respectively, associated with the Trak West acquisition. Such
expenses included the costs of employee training, remerchandising and grand
opening advertising for the former Trak West stores.

NOTE 4 -- TRANSACTIONS AND RELATIONSHIPS WITH RELATED PARTIES

During the years ended January 28, 1996 and February 2, 1997, the Company
received approximately $14.1 million and $18.5 million, respectively, of
proceeds from the sale of realty and fixtures to an affiliate at amounts that
equaled the Company's cost, which approximated fair market value. The related
assets were subsequently leased back by the Company under operating lease
arrangements. No such transactions occurred during fiscal 1997.

In October 1989, the Company entered into a nine-year lease (the "Initial
Lease") for its corporate headquarters in Phoenix, Arizona, with an unaffiliated
landlord. The lease relates to approximately 78,577 square feet and provides for
a current base rent of approximately $1.49 million per year. During January
1994, Missouri Falls Holdings Corp., an affiliate of Carmel, acquired an
interest in the partnership ("Missouri Falls Partners") which acquired the
building and assumed the lease between the Company and the former landlord. In
April 1995, the Company assumed a lease (the "Subsequent Lease") between a
former tenant and Missouri Falls Partners for approximately 11,683 square feet
of additional office space at a current lease rent of $148,958 per year. In
connection with the 1996 Recapitalization, both the Initial Lease and the
Subsequent Lease were extended through October 2006. Additionally, the Company
rents approximately 5,754 square feet of additional space at these premises for
an annual rental of $106,449 under two separate lease documents with expiration
dates of February and March, 2000, respectively. The Company also leases certain
other facilities from related parties. The Company also leases from MFP
Holdings, LLC, an affiliate of Carmel, a parking lot

F-16
<PAGE> 98
CSK AUTO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF AUGUST 2, 1998 AND FOR THE TWENTY-SIX
WEEKS ENDED AUGUST 3, 1997 AND AUGUST 2, 1998 IS UNAUDITED.)

NOTE 4 -- TRANSACTIONS AND RELATIONSHIPS WITH RELATED PARTIES, CONTINUED
adjacent to its corporate headquarters for an annual rental of $62,506 under a
separate lease document with an expiration date of October 2006.

The sum of approximately $15.5 million was paid to Transatlantic as of
December 27, 1996 pursuant to the Company's promissory note dated July 24, 1996.
The promissory note was issued to evidence a loan to the Company in the amount
of $15.0 million, the proceeds of which were used for the payment of amounts due
vendors.

The Company paid Transatlantic, in April of 1998, the sum of $1.0 million
on account of fees for past financings.

Pursuant to an agreement (the "Real Estate Agreement") entered into at the
closing of the 1996 Recapitalization, Transatlantic Finance, Ltd., an affiliate
of Carmel, or one or more of its affiliates (each a "Funding Company" and,
collectively, the "Funding Companies") may acquire and develop land and
buildings on sites selected by the Company and lease such sites to the Company
under operating leases. At the closing of each land purchase, a Funding Company,
as landlord, and the Company, as tenant, will enter into a triple net lease with
respect to such land and the buildings and improvements erected or to be erected
thereon. The obligation of the Funding Companies to acquire and develop
additional properties will cease when the cost of all such acquisitions
(including construction costs) exceeds $50.0 million, provided that as leased
properties are disposed of to third parties by the Funding Companies, funds
available to purchase additional properties will be replenished. The term of the
commitment for the investment in such land purchases and leases commenced on
October 30, 1996. On October 30, 1997, the Company notified Transatlantic of its
intent to terminate its participation in the facility as of February 1, 1998,
and replace it with the leasing facility more fully described in Note 7. As of
February 1, 1998, the Funding Company had 35 properties (which were undertaken
prior to the termination) in various stages of completion which reduced
availability under this facility by approximately $25.5 million.

In connection with the 1996 Recapitalization, $40.0 million of the
Company's 12% Senior Subordinated Notes were acquired by a designee of the
Investcorp Group, Southwest Finance Limited ("Southwest Finance"), a company in
which an affiliate of Investcorp holds a minority interest. In connection with
the purchase of the 12% Subordinated Notes, Southwest Finance Limited received a
fee of $4.0 million. In addition, Transatlantic acquired $10.0 million of the
12% Subordinated Notes. Also, in connection with the 1996 Recapitalization,
Invifin S.A., an affiliate of Investcorp ("Invifin"), received a fee of $1.575
million for providing a standby commitment to fund the amount of the Senior
Credit Facility and the Company paid Investcorp International Inc.
("International") advisory fees of $1.275 million. The Company also paid $3.15
million to International for arranging the Senior Credit Facility.

F-17
<PAGE> 99
CSK AUTO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF AUGUST 2, 1998 AND FOR THE TWENTY-SIX
WEEKS ENDED AUGUST 3, 1997 AND AUGUST 2, 1998 IS UNAUDITED.)

NOTE 4 -- TRANSACTIONS AND RELATIONSHIPS WITH RELATED PARTIES, CONTINUED
In addition, in connection with the 1996 Recapitalization, the Company
entered into a five-year agreement for management advisory and consulting
services (the "Management Agreement") with International pursuant to which the
Company paid International at the closing of the 1996 Recapitalization $5.0
million for the entire term of the Management Agreement in accordance with its
terms. The Management Agreement was terminated in connection with the completion
of an initial public offering of the common stock of the Company, as more fully
described in Note 8. In connection with the termination of the agreement, the
Company recognized a charge to earnings of approximately $3.6 million during the
first quarter of fiscal 1998.

NOTE 5 -- PROPERTY AND EQUIPMENT

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

<TABLE>
<CAPTION>
FEBRUARY 2, FEBRUARY 1,
1997 1998 ESTIMATED USEFUL LIFE
----------- ----------- ---------------------
<S> <C> <C> <C>
Land........................................... $ 1,114 $ 921
Buildings...................................... 1,301 1,155 25 years
Leasehold improvements......................... 43,694 47,136 15 years or life of lease
Furniture, fixtures and equipment.............. 53,889 70,150 10 years
Property under capital leases.................. 46,488 45,013 5-15 years or life of lease
Purchased software............................. 5,009 5,720 5 years
-------- --------
151,495 170,095
Less accumulated depreciation and
amortization................................. (80,132) (84,155)
-------- --------
Property and equipment, net.................... $ 71,363 $ 85,940
======== ========
</TABLE>

Accumulated amortization of property under capital leases totaled $25.8
million and $22.3 million at February 2, 1997 and February 1, 1998,
respectively.

F-18
<PAGE> 100
CSK AUTO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF AUGUST 2, 1998 AND FOR THE TWENTY-SIX
WEEKS ENDED AUGUST 3, 1997 AND AUGUST 2, 1998 IS UNAUDITED.)

NOTE 6 -- LONG TERM DEBT

SENIOR CREDIT FACILITY

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

<TABLE>
<CAPTION>
FEBRUARY 2, FEBRUARY 1,
1997 1998
----------- -----------
<S> <C> <C>
Term Loan, variable interest rates, average rate 8.6% and
8.7%, for fiscal 1996 and 1997, respectively, semi-annual
installments payable June 30 and December 31 through 2003,
final installment is due October 31, 2003................. $100,000 $175,000
Revolving Credit Commitment, variable interest rates,
average rate 8.1% and 8.2%, for fiscal 1996 and 1997,
respectively, $125.0 million maximum capacity at February
1, 1998, $59.95 million undrawn availability at February
1, 1998................................................... 38,000 65,050
-------- --------
Total............................................. 138,000 240,050
Less: Current maturities.................................... 1,000 1,000
-------- --------
$137,000 $239,050
======== ========
</TABLE>

On December 8, 1997, in connection with the consummation of the Trak West
acquisition, Auto amended and restated its Senior Credit Facility to provide
maximum borrowings of $300.0 million, subject to the limitations on the
incurrence of indebtedness under the indenture for Auto's 11% Senior
Subordinated Notes. As amended and restated, the Senior Credit Facility provides
for a $175.0 million term loan and a revolving credit facility with maximum
borrowings of $125.0 million. In addition to increasing the term loan and
revolving credit facility availability by $75.5 million and $25.0 million,
respectively, the amendment and restatement primarily provided for: (i) an
initial reduction in the interest rate for the term loan and the revolving
credit facility and the introduction of a pricing grid which periodically
permits adjustment based upon Auto's degree of leverage; (ii) the elimination of
the previous borrowing base restrictions on revolving credit borrowings; (iii)
capital expenditure "baskets" for the Trak West acquisition and for up to $50.0
million of other acquisitions subject to pro forma compliance with financial
covenants; and (iv) a $50.0 million revolving capital expenditure "basket" of
funds that can be used by Auto to finance store purchase and development
activities. The term loan portion of the Senior Credit Facility matures on
October 31, 2003 and the revolving credit portion matures on October 31, 2001.

The Company recognized an extraordinary charge of $5.1 million ($3.0
million net of income taxes) in the fourth quarter of fiscal 1997 to reflect the
write-off of certain deferred financing costs associated with the early
extinguishment of the original Senior Credit Facility.

Borrowings under the Senior Credit Facility are collateralized by a first
priority security interest in substantially all of the personal property of
Auto, subject to certain permitted liens. The Company also issued a guarantee of
such borrowings under the Senior Credit Facility, which guarantee is
collateralized by a pledge by the Company of all issued and outstanding capital

F-19
<PAGE> 101
CSK AUTO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF AUGUST 2, 1998 AND FOR THE TWENTY-SIX
WEEKS ENDED AUGUST 3, 1997 AND AUGUST 2, 1998 IS UNAUDITED.)

NOTE 6 -- LONG TERM DEBT, CONTINUED
stock of Auto. Each of the United States subsidiaries of Auto, Schuck's
Distribution Co., Kragen Auto Supply Co. and TRK Socal, Inc., also issued a
guarantee under the Senior Credit Facility which is collateralized by a first
priority security interest in substantially all personal property of such
subsidiary, and Auto pledged the issued and outstanding capital stock of each of
these subsidiaries. On April 8, 1998, Schuck's Distribution Co., Kragen Auto
Supply Co. and TRK Socal, Inc. were merged into Auto.

The Senior Credit Facility prohibits, with certain limited exceptions, the
optional or mandatory prepayment or other defeasance of Auto's 11% Senior
Subordinated Notes. The Senior Credit Facility further requires that, under
certain circumstances, Auto make prepayments of the term loan outstanding
thereunder with (i) 50% of any Excess Cash Flow (as defined therein) and (ii)
50% of the Net Proceeds (as defined therein) from certain offerings of the
Company's voting stock. In addition, a "change of control" allows the lenders to
accelerate the loans. A change of control occurs whenever anyone acquires the
power to vote at least 30% of the common stock, on a fully diluted basis (as
defined), and holds a greater percentage of shares of common stock than the
Investcorp Group. A change of control also occurs if a majority of the Board of
Directors ceases to be composed of Investcorp Group nominees.

Commitment fees on available funds under the Revolving Credit Commitment
are payable quarterly in arrears on the average daily unused amount of the total
commitment at the rate of 1/2 of 1% per annum. Commitment fees totaling $104,000
and $194,000 were incurred in fiscal 1996 and 1997, respectively. The commitment
fee rate decreased to 3/8 of 1% per annum in December 1997.

The terms of the Senior Credit Facility include restrictions on
investments, capital expenditures, dividends and certain other payments and
require the Company to meet certain financial covenants. The Company believes it
was in compliance with all such covenants at February 1, 1998.

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.

F-20
<PAGE> 102
CSK AUTO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF AUGUST 2, 1998 AND FOR THE TWENTY-SIX
WEEKS ENDED AUGUST 3, 1997 AND AUGUST 2, 1998 IS UNAUDITED.)

NOTE 6 -- LONG TERM DEBT, CONTINUED
The indenture 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.

The indenture also provides that upon a "change of control," each holder of
11% Senior Subordinated Notes will have the right to require CSK Auto, Inc. 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 were guaranteed
fully, unconditionally and jointly and severally by all of Auto's subsidiaries
and will be similarly guaranteed by any future United States subsidiaries of
Auto, on a senior subordinated basis. On April 8, 1998, Auto's subsidiaries were
merged into Auto.

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

<TABLE>
<CAPTION>
REDEMPTION
PERIOD PRICE
- ------ ----------
<S> <C>
2001........................................................ 105.500%
2002........................................................ 103.667%
2003........................................................ 101.833%
2004 and thereafter......................................... 100.000%
</TABLE>

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

12% SUBORDINATED NOTES DUE 2008

On October 30, 1996, the Company issued and sold in a private placement
$10.0 million aggregate principal amount of 12% Subordinated Series A Notes due
2008 (the "Series A

F-21
<PAGE> 103
CSK AUTO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF AUGUST 2, 1998 AND FOR THE TWENTY-SIX
WEEKS ENDED AUGUST 3, 1997 AND AUGUST 2, 1998 IS UNAUDITED.)

NOTE 6 -- LONG TERM DEBT, CONTINUED
Notes") pursuant to an Indenture between the Company and Transatlantic Finance,
Ltd., as Trustee, and $40.0 million aggregate principal amount of 12%
Subordinated Series B Notes due 2008 (the "Series B Notes", and together with
the Series A Notes, the "12% Subordinated Notes") pursuant to an Indenture
between the Company and AIBC, N.V., as Trustee. The terms of the Series A Notes
and the Series B Notes are identical.

The 12% Subordinated Notes bear interest at 12% per year, payable
semiannually in arrears on each April 30 and October 31, and mature on October
31, 2008. The 12% Subordinated Notes are general, unsecured senior subordinated
obligations of the Company. The 12% Subordinated Notes are subordinated to all
senior indebtedness of the Company, including the Company's guarantee of the
Senior Credit Facility. The Series A Notes and Series B Notes rank pari passu
with one another.

The 12% Subordinated Notes are redeemable at any time and from time to
time, at the option of the Company, in whole or in part, upon not less than 30
nor more than 60 days' notice, at a redemption price of 101% of the principal
amount redeemed, plus accrued and unpaid interest thereon, if any, to the
redemption date.

Included in other assets are the following charges associated with the 1996
Recapitalization which have been deferred and are being amortized over the life
of the related debt instrument (in thousands):

<TABLE>
<CAPTION>
FEBRUARY 2, FEBRUARY 1,
1997 1998
----------- -----------
<S> <C> <C>
11% Senior Subordinated Notes............................... $ 7,369 $ 7,711
12% Subordinated Notes...................................... 4,000 4,000
Senior Credit Facility...................................... 6,263 1,418
Accumulated amortization.................................... (282) (1,222)
------- -------
Total............................................. $17,350 $11,907
======= =======
</TABLE>

At February 1, 1998, the estimated maturities of long term debt were (in
thousands):

<TABLE>
<CAPTION>
FISCAL YEAR
<S> <C>
1998........................................................ $ 1,000
1999........................................................ 1,000
2000........................................................ 1,000
2001........................................................ 111,050
2002........................................................ 63,000
Thereafter.................................................. 238,000
--------
$415,050
========
</TABLE>

F-22
<PAGE> 104
CSK AUTO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF AUGUST 2, 1998 AND FOR THE TWENTY-SIX
WEEKS ENDED AUGUST 3, 1997 AND AUGUST 2, 1998 IS UNAUDITED.)

NOTE 6 -- LONG TERM DEBT, CONTINUED
As more fully described in Note 9, the Company completed an initial public
offering of its common stock in March 1998. Net proceeds from the offering were
used to reduce outstanding debt of the Company, as follows (in millions):

<TABLE>
<S> <C>
12% Subordinated Notes...................................... $ 50.0
11% Senior Subordinated Notes............................... 43.8
Senior Credit Facility...................................... 53.8
Premiums on retirement...................................... 4.9
Accrued interest............................................ 6.6
------
$159.1
======
</TABLE>

Upon the consummation of the offering, the Company recorded an
extraordinary loss of approximately $6.9 million, net of taxes. Such
extraordinary loss consists primarily of the premiums paid in connection with
the redemption of indebtedness and the write-off of a portion of deferred debt
issuance costs.

NOTE 7 -- LEASES

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

On November 18, 1997, the Company reached an agreement with an unrelated
third party for the establishment of a $125.0 million operating lease facility
for the acquisition and development of approximately 100 to 125 new stores over
the period from February 1, 1998 through May 31, 1999.

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

<TABLE>
<CAPTION>
FISCAL YEAR
---------------------------
1995 1996 1997
------- ------- -------
<S> <C> <C> <C>
Minimum rentals............................................. $48,629 $51,214 $57,900
Contingent rentals.......................................... 1,094 1,455 1,251
Sublease rentals............................................ (4,369) (4,763) (4,629)
------- ------- -------
$45,354 $47,906 $54,522
======= ======= =======
</TABLE>

F-23
<PAGE> 105
CSK AUTO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF AUGUST 2, 1998 AND FOR THE TWENTY-SIX
WEEKS ENDED AUGUST 3, 1997 AND AUGUST 2, 1998 IS UNAUDITED.)

NOTE 7 -- LEASES, CONTINUED
Future minimum lease obligations under non-cancelable leases at February 1,
1998, are as follows (in thousands):

<TABLE>
<CAPTION>
OPERATING CAPITAL
FOR FISCAL YEARS LEASES LEASES
---------------- --------- -------
<S> <C> <C>
1998........................................................ $ 64,325 $11,571
1999........................................................ 59,126 9,720
2000........................................................ 54,289 3,785
2001........................................................ 51,726 2,854
2002........................................................ 44,551 2,157
Thereafter.................................................. 239,703 1,051
-------- -------
$513,720 31,138
========
Less amounts representing interest.......................... (6,226)
-------
Present value of obligations................................ 24,912
Less current portion........................................ (8,671)
-------
Long term obligation........................................ $16,241
=======
</TABLE>

The above amounts include future minimum lease obligations under operating
leases with affiliates totaling $61.9 million at February 1, 1998. Operating
lease rental expense under leases with affiliates totaled $1.8 million for the
year ended January 28, 1996, $3.2 million for the year ended February 2, 1997,
and $2.4 million for the year ended February 1, 1998.

The implicit interest rate of capital leases varies from 4.3% to 14.8% with
an average implicit rate of approximately 11.0%.

NOTE 8 -- CAPITAL STOCK AND INITIAL PUBLIC OFFERING

In connection with the 1996 Recapitalization, the Company completed a
recapitalization of its common stock. All 100 shares of common stock outstanding
at the date of the Acquisition were converted into 8,723,550 shares of Class A,
Class C, Class D and Class F capital stock. All of the Class F stock (consisting
of 100 shares) was then redeemed at an aggregate redemption price of
approximately $238.5 million. Concurrently therewith, the Company issued
8,381,450 shares of Class E stock to Carmel at an issue price of $100.9 million.
See Note 2.

In December 1997, the Company sold 180,600 shares of its Class B stock to
certain executives of the Company. See Note 9. Also in December 1997, in
connection with the acquisition of Trak West, the Company sold 1,827,788 shares
of stock to affiliates of the Company's existing stockholders. See Note 3.

F-24
<PAGE> 106
CSK AUTO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF AUGUST 2, 1998 AND FOR THE TWENTY-SIX
WEEKS ENDED AUGUST 3, 1997 AND AUGUST 2, 1998 IS UNAUDITED.)

NOTE 8 -- CAPITAL STOCK AND INITIAL PUBLIC OFFERING, CONTINUED
On March 17, 1998, the Company completed an initial public offering (the
"Offering") of approximately 8.6 million shares of its common stock, generating
proceeds of approximately $159.1 million, net of offering expenses. The offering
proceeds were used to retire the Company's 12% Subordinated Notes and other
indebtedness as more fully described in Note 6. Upon retirement of the 12%
Subordinated Notes, all of the outstanding preferred stock of Auto was
cancelled.

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

The Company's capital stock, as adjusted for the stock split discussed
above, consists of the following:

<TABLE>
<CAPTION>
SHARES ISSUED AND OUTSTANDING
---------------------------------------
SHARES FEBRUARY 2, FEBRUARY 1, AUGUST 2,
TYPE OF STOCK AUTHORIZED(1) 1997 1998 1998
------------- ------------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Class A, $.01 par value..................... 7,318,135 7,318,135 7,318,135 --
Class B, $.01 par value..................... 1,900,554 -- 180,600 --
Class C, $.01 par value..................... 2,252,078 1,319,890 2,252,061 --
Class D, $.01 par value..................... 85,525 85,525 85,525 --
Class E, $.01 par value..................... 9,277,084 8,381,450 9,277,067 --
Class F, $.01 par value..................... -- -- -- --
Common stock, $.01 par value................ 20,833,376 -- -- 27,738,388
---------- ---------- ---------- ----------
41,666,752 17,105,000 19,113,388 27,738,388
========== ========== ========== ==========
</TABLE>

- ------------------------

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

NOTE 9 -- 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.

F-25
<PAGE> 107
CSK AUTO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF AUGUST 2, 1998 AND FOR THE TWENTY-SIX
WEEKS ENDED AUGUST 3, 1997 AND AUGUST 2, 1998 IS UNAUDITED.)

NOTE 9 -- EMPLOYEE BENEFIT PLANS, CONTINUED
RETIREMENT PROGRAM

The Company sponsors a 401(k) plan which is available to all employees of
the Company who have completed one year of continuous service. Effective October
1, 1997, the Company matches from 40% to 60% of employee contributions in 10%
increments, based on years of service with the Company, up to 4% of the
participant's base salary. Prior to October 1, 1997, the Company matched 20% of
employee contributions, up to 6% of the participant's base salary, without
regard to years of service. Participant contributions are subject to certain
restrictions as set forth in the Internal Revenue Code. The Company's matching
contributions totaled $267,000, $288,000 and $394,500 for fiscal years 1995,
1996 and 1997, respectively.

1996 STOCK OPTION PLANS

On October 30, 1996, the Company awarded options to purchase shares of
common stock under its Associate Stock Option Plan (the "Associate Plan") and
its Executive Stock Option Plan (the "Executive Plan" and together with the
Associate Plan, the "Plans") in order to provide incentives to store managers
and salaried corporate and warehouse employees of the Company. In October 1996
and February 1997, the Company's Board of Directors approved the Associate Plan
and the Executive Plan, respectively.

The Plans may be administered by a committee of the Board of Directors of
the Company, which would have broad authority in administering and interpreting
the Plans, or, if a committee has not been appointed, by the entire Board of
Directors. The Plans provide that, at such time as the Company has a class of
equity securities registered under Section 12 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), the committee must consist entirely of
"Non-Employee Directors" (as defined in Rule 16b-3 under the Exchange Act). A
committee has not yet been appointed to administer the Plans.

Options to purchase up to an aggregate of 1,026,300 and 684,200 shares of
common stock may be granted under the Associate Plan and the Executive Plan,
respectively. 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, the vested portion of an option and, under certain
circumstances, the unvested portion will be purchased by the Company. All
options expire on the seventh anniversary of the date of grant (or, under
certain circumstances, 30 days later).

As a result of the Offering, each option granted under the Plans will
become exercisable upon vesting. Options granted under the Associate Plan vest
in three equal installments on the second, third and fourth anniversaries of the
date of their grant, assuming the associate's employment continues during this
period ("Four Year Vesting"). Options granted under the

F-26
<PAGE> 108
CSK AUTO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF AUGUST 2, 1998 AND FOR THE TWENTY-SIX
WEEKS ENDED AUGUST 3, 1997 AND AUGUST 2, 1998 IS UNAUDITED.)

NOTE 9 -- EMPLOYEE BENEFIT PLANS, CONTINUED
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 (no such additional options have been granted).

As of February 1, 1998, the Company has granted options to purchase 679,151
shares under the Associate Plan and 385,622 shares under the Executive Plan, net
of cancellations. The exercise price applicable to these options is $12.04 per
share with respect to 993,833 shares and the exercise price is $20.00 with
respect to 70,940 shares. Except for 96,062 options granted under the Executive
Plan (see "Employment Agreements" below), these exercise prices represent the
fair market value at the date of grant based upon the price paid for such shares
in the 1996 Recapitalization and other valuation analyses performed by the
Company, or the Offering, as applicable.

DIRECTORS STOCK PLAN

In June 1998 the Company's Board of Directors adopted a non-employee
director compensation plan, subject to shareholder approval. 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
each non-employee director with an annual stipend of $25,000, of which at least
$10,000 must be paid in the form of restricted stock grants.

EMPLOYMENT AGREEMENTS

Auto has entered into employment agreements with the Chairman and the
President pursuant to which they are paid fixed base salaries and are eligible
for bonuses based upon earnings before interest, taxes, depreciation and
amortization ("EBITDA") and, in the case of the Chairman, an additional bonus at
the discretion of the Board of Directors. The agreements do not contain stated
termination dates, but rather are terminable at will by either party. If Auto
were to terminate the employment of the Chairman and President without cause, or
if they terminate their employment for good reason, Auto has agreed to pay to
the Chairman his base salary and performance bonus for a period of 24 months and
to the President his base salary for one year. The Chairman also received a loan
of $550,000 from the Company, bearing interest at 4.535% and due in 1999.

F-27
<PAGE> 109
CSK AUTO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF AUGUST 2, 1998 AND FOR THE TWENTY-SIX
WEEKS ENDED AUGUST 3, 1997 AND AUGUST 2, 1998 IS UNAUDITED.)

NOTE 9 -- EMPLOYEE BENEFIT PLANS, CONTINUED
In connection with the commencement of his employment, the Company agreed
to pay the Chairman $1.0 million which, in turn, was used by the Chairman to
purchase 83,079 shares of common stock from a member of the Investcorp Group,
reflecting a share value of $12.04, the fair market value at the date of the
agreement, based on the price paid for such shares in the 1996 Recapitalization.
Under the Chairman's employment agreement, the shares vested 50% upon
commencement of employment with an additional 25% vesting at each of the first
and second anniversary of the agreement. The Company has also loaned the
Chairman approximately $440,000 to pay the income tax consequences of the award.
The loan bears interest at the rate applicable to borrowings under the Revolving
Credit Commitment, and is due in 2000.

In connection with the execution of his employment agreement, the Company's
Chairman received an option for 401,967 shares of common stock, exercisable at
$12.04 per share. As a result of vesting acceleration triggered by the Offering,
this option will generally vest and become exercisable in March 2000, subject to
earlier vesting based upon the achievement of certain EBITDA targets and the
occurrence of other specified events. In connection with the Trak West
acquisition, the Company's Chairman received an option for 39,940 shares of
common stock, exercisable at $12.04 per share, effective as of February 1, 1998.
This option will vest and become exercisable in four equal annual installments
beginning in April 1999. In connection with the issuance of these options, the
Company will recognize a charge to earnings of approximately $0.2 million over
the vesting period for the difference between the exercise price and the fair
market value of the common stock at the date of grant. In connection with the
Offering, the Company's Chairman received an option for 216,634 shares of common
stock, exercisable at $20.00 per share, the fair market value at the date of
grant based on the Offering. This option will vest and become exercisable in
three equal annual installments beginning in April 2000.

In connection with the execution of his employment agreement, the Company's
President received an option for 299,337 shares of common stock, exercisable at
$12.04 per share. This option has both vested and become exercisable to the
extent of 42,762 shares. As a result of vesting acceleration triggered by the
Offering, the remainder of this option will generally vest and become
exercisable in March 2000, subject to earlier vesting based upon the achievement
of certain EBITDA targets and the occurrence of other specified events.

MANAGEMENT STOCK PURCHASE AGREEMENTS AND LOANS PLANS

In December 1997, the Company entered into stock purchase agreements with
certain executives of the Company. Under the terms of the agreements, the
Company agreed to issue a total of 180,600 shares of its common stock at a price
of $12.04 per share, the same price paid in the 1996 Recapitalization. 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

F-28
<PAGE> 110
CSK AUTO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF AUGUST 2, 1998 AND FOR THE TWENTY-SIX
WEEKS ENDED AUGUST 3, 1997 AND AUGUST 2, 1998 IS UNAUDITED.)

NOTE 9 -- EMPLOYEE BENEFIT PLANS, CONTINUED
Executive Stock Option Plan. In connection with issuance of these shares, the
Company recognized a charge to earnings of $0.9 million in the fourth quarter of
fiscal 1997 for the difference between the issuance price and the fair market
value of the stock at the date of sale. In addition, in the fourth quarter of
fiscal 1997, the Company recorded deferred compensation of approximately $0.5
million to reflect the difference between the exercise price and the fair market
value of stock associated with the options granted to certain executives. The
deferred compensation will produce a charge to earnings over the vesting period
of the options.

Of the total consideration paid to the Company of $2.2 million in
connection with the purchase of the Company's common stock by certain
executives, approximately $1.0 million was loaned by the Company to certain
executives to purchase 84,550 of the shares (the "Stock Loans"). 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.

OPTIONS ACTIVITY

Options activity is summarized as follows:

<TABLE>
<CAPTION>
NUMBER OF
SHARES EXERCISE PRICE
--------- --------------
<S> <C> <C>
Balance at Jan. 28, 1996.................................... -- --
Granted................................................... 1,549,441 $ 12.04
Exercised................................................. -- --
Canceled.................................................. (8,980) 12.04
---------
Balance at Feb. 2, 1997..................................... 1,540,461 12.04
Granted................................................... 561,709 12.04-20.00
Exercised................................................. -- --
Canceled.................................................. (79,518) 12.04
---------
Balance at Feb. 1, 1998..................................... 2,022,652 $12.04-$20.00
=========
</TABLE>

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 loss
would have been changed to the pro forma amounts indicated below (in thousands):

<TABLE>
<CAPTION>
FISCAL YEAR
----------------
1996 1997
------- ------
<S> <C> <C>
Net loss:
As reported............................................... (24,659) (771)
Pro forma................................................. (24,803) (1,230)
</TABLE>

F-29
<PAGE> 111
CSK AUTO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF AUGUST 2, 1998 AND FOR THE TWENTY-SIX
WEEKS ENDED AUGUST 3, 1997 AND AUGUST 2, 1998 IS UNAUDITED.)

NOTE 9 -- EMPLOYEE BENEFIT PLANS, CONTINUED
The fair value of each option grant is estimated on the date of grant using
the Minimum Value Method of option pricing, based upon the following input
assumptions:

<TABLE>
<CAPTION>
FISCAL YEAR
-----------------
1996 1997
------- -------
<S> <C> <C>
Dividend yield.............................................. 0% 0%
Risk free interest rate..................................... 6.07% 5.95%
Expected life of options.................................... 5 years 4 years
</TABLE>

NOTE 10 -- SUPPLEMENTAL SCHEDULE OF CASH FLOWS

Interest paid during fiscal years 1995, 1996 and 1997 amounted to $13.4
million, $13.4 million and $36.2 million, respectively. No income taxes were
paid in fiscal years 1995, 1996 and 1997.

The Company acquired certain fixtures and other equipment under capital
lease arrangements totaling approximately $5.8 million, $2.6 million and $9.7
million in fiscal 1995, 1996 and 1997, respectively.

NOTE 11 -- INCOME TAXES

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

<TABLE>
<CAPTION>
FISCAL YEAR
---------------------------
1995 1996 1997
------- -------- ------
<S> <C> <C> <C>
Current:
Federal................................................... $(1,801) $ -- $ --
State..................................................... (406) -- --
------- -------- ------
(2,207) -- --
------- -------- ------
Deferred:
Federal................................................... (2,922) (9,750) 1,260
State..................................................... (318) (2,109) 297
------- -------- ------
(3,240) (11,859) 1,557
------- -------- ------
Total............................................. $(5,447) $(11,859) $1,557
======= ======== ======
</TABLE>

F-30
<PAGE> 112
CSK AUTO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF AUGUST 2, 1998 AND FOR THE TWENTY-SIX
WEEKS ENDED AUGUST 3, 1997 AND AUGUST 2, 1998 IS UNAUDITED.)

NOTE 11 -- INCOME TAXES, CONTINUED
The following table summarizes the differences between the Company's
provision (benefit) for income taxes and the expected provision (benefit),
exclusive of extraordinary items (in thousands):

<TABLE>
<CAPTION>
FISCAL YEAR
----------------------------
1995 1996 1997
-------- -------- ------
<S> <C> <C> <C>
Income before taxes......................................... $(14,541) $(36,518) $3,801
Federal income tax rate..................................... 34% 34% 34%
-------- -------- ------
Expected provision for income taxes......................... (4,944) (12,416) 1,292
State taxes, net of federal benefit......................... (671) (1,634) 196
Other....................................................... 168 2,191 69
-------- -------- ------
Actual (benefit) provision for income taxes................. $ (5,447) $(11,859) $1,557
======== ======== ======
</TABLE>

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

<TABLE>
<CAPTION>
FEBRUARY 2, FEBRUARY 1,
1997 1998
----------- -----------
<S> <C> <C>
Gross deferred tax assets:
Store closing costs....................................... $ 6,118 $ 4,503
Salaries and benefits..................................... 7,710 3,481
Capital lease expenditures................................ 743 824
Internally developed software............................. 2,538 2,798
Preopening costs.......................................... 2,267 360
Provision for site selection costs........................ 3,243 1,783
Provision for bad debts................................... 684 953
Tax loss carryforwards.................................... 4,142 10,216
Other..................................................... 716 2,184
------- -------
Total gross deferred tax assets................... 28,161 27,102
------- -------
Gross deferred tax liabilities:
Inventory................................................. 8,991 8,500
Depreciation.............................................. 1,152 647
------- -------
Total gross deferred tax liabilities.............. 10,143 9,147
------- -------
Net deferred tax assets..................................... $18,018 $17,955
======= =======
</TABLE>

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

<TABLE>
<CAPTION>
FEBRUARY 2, FEBRUARY 1,
1997 1998
----------- -----------
<S> <C> <C>
Current deferred tax liabilities, net....................... $ (597) $(4,066)
Non-current deferred tax assets, net........................ 18,615 22,021
------- -------
Net deferred tax assets..................................... $18,018 $17,955
======= =======
</TABLE>

The Company has recorded deferred tax assets of approximately $10.2 million
as of February 1, 1998 reflecting the benefit of tax loss carryforwards totaling
$25.8 million which expire in 2013. Realization is dependent on generating
sufficient taxable income prior to

F-31
<PAGE> 113
CSK AUTO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF AUGUST 2, 1998 AND FOR THE TWENTY-SIX
WEEKS ENDED AUGUST 3, 1997 AND AUGUST 2, 1998 IS UNAUDITED.)

NOTE 11 -- INCOME TAXES, CONTINUED
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 12 -- STORE CLOSING COSTS

Activity in the provision for store closings and the related store closing
costs is as follows (in thousands):

<TABLE>
<CAPTION>
STORE PURCHASE PAYMENTS
BEGINNING CLOSING ACCOUNTING AND NON-CASH ENDING
FISCAL YEAR BALANCE COSTS ADJUSTMENT CHARGES BALANCE
- ----------- --------- ------- ---------- ------------ -------
<S> <C> <C> <C> <C> <C>
1995.................................... $ 5,745 $ 3,310 $ -- $(3,757) $ 5,298
1996.................................... 5,298 14,904 -- (4,360) 15,842
1997.................................... 15,842 1,640 625 (6,755) 11,352
</TABLE>

In January 1997, the Company updated its strategic plan relating to the
relocation of certain stores. As a result of the 1996 Recapitalization, the
Company obtained greater access to capital resources including the availability
of a sale-leaseback facility for new stores, thereby improving the Company's
ability to implement such relocations. While management believes that there will
be long-term operating benefits from this strategy, the Company will incur costs
for early lease terminations or negative sub-lease rentals for stores vacated
under this plan and, accordingly, a charge to earnings of approximately $12.9
million was recorded in January 1997.

Store closing costs include estimates for vacancy periods of the related
stores through the expiration of the underlying leases, collectibility of rents
due from sub-tenants, and similar factors.

NOTE 13 -- LEGAL MATTERS

The Company was served with a lawsuit that was filed in the Superior Court
in San Diego, California on May 4, 1998. The case is brought by two former store
managers and a former assistant manager. It purports to be a class action for
all present and former California store managers and senior assistant managers
and seeks overtime pay for a period beginning in May of 1995 as well as
injunctive relief requiring overtime pay in the future. This case is in early
stages of discovery. The Company has recently been served with two other
lawsuits purporting to be class actions filed in California state courts in
Orange County and Fresno, California by thirteen other former and current
employees. These lawsuits include similar claims to the San Diego

F-32
<PAGE> 114
CSK AUTO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF AUGUST 2, 1998 AND FOR THE TWENTY-SIX
WEEKS ENDED AUGUST 3, 1997 AND AUGUST 2, 1998 IS UNAUDITED.)

NOTE 13 -- LEGAL MATTERS, CONTINUED

lawsuit, except that they also include claims for unfair business practices, and
the Orange County lawsuit includes a claim for punitive damages based on an
unlawful conversion theory. If these cases are permitted by the courts to
proceed as a class action and are decided adversely, the Company's aggregate
potential exposure could be material to its results of operations for the year
in which the cases are ultimately decided. The Company does not believe,
however, that such an adverse outcome, if it were to happen, would materially
affect its financial position or its operations in subsequent periods. The
Company believes it has meritorious defenses to all of these cases and intends
to defend them vigorously.

The Company is a defendant in various other legal matters arising from
normal business activities. Management believes that the ultimate outcome of
these matters will not have a material effect on the Company's results of
operations, financial position or cash flows.

NOTE 14 -- 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):

<TABLE>
<CAPTION>
FEBRUARY 2, 1997 FEBRUARY 1, 1998
--------------------- ---------------------
CARRYING ESTIMATED CARRYING ESTIMATED
AMOUNT FAIR VALUE AMOUNT FAIR VALUE
-------- ---------- -------- ----------
<S> <C> <C> <C> <C>
Receivables........................................ $ 28,511 $ 28,511 $ 37,566 $ 37,566
Amounts due under Senior Credit Facility........... 138,000 138,000 240,050 240,050
Obligations under 11% Senior Subordinated Notes.... 125,000 125,000 125,000 137,500
Obligations under 12% Subordinated Notes........... 50,000 50,000 50,000 50,000
</TABLE>

F-33
<PAGE> 115
[Photo of delivery person] [Photo of warehouse]
The Company has expanded its The Company operates
operations to specifically target technologically advanced,
commercial customers. fully integrated
distribution centers.

[CSK AUTO LOGO]

[Photo of aisles] [Photo of point of sale system]
The Company's The Company has implemented
stores offer up to several systems which have
17,000 SKUs. enabled it to provide
enhanced customer service.

<PAGE> 116
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
, 1998

[CSK LOGO]

7,000,000 SHARES OF COMMON STOCK

-------------------------

PROSPECTUS
-------------------------

DONALDSON, LUFKIN & JENRETTE

MERRILL LYNCH & CO.

ING BARING FURMAN SELZ LLC

LEHMAN BROTHERS

MORGAN STANLEY DEAN WITTER

SALOMON SMITH BARNEY

- --------------------------------------------------------------------------------
We have not authorized any dealer, salesperson or other person to give you
written information other than this prospectus or to make representations as to
matters not stated in this prospectus. You must not rely on unauthorized
information. This prospectus is not an offer to sell these securities or our
solicitation of your offer to buy the securities in any jurisdiction where that
would not be permitted or legal. Neither the delivery of this prospectus nor any
sales made hereunder after the date of this prospectus shall create an
implication that the information contained herein or the affairs of the Company
have not changed since the date hereof.
- --------------------------------------------------------------------------------
<PAGE> 117

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The registrant's expenses in connection with this Offering are set forth
below. All amounts except the Securities and Exchange Commission registration
fee, the NASD filing fee and the NYSE listing fee are estimated.

<TABLE>
<S> <C>
Securities and Exchange Commission registration fee......... $ 60,775
NASD filing fee............................................. 22,631
Printing expenses........................................... 150,000
Accounting fees and expenses................................ 100,000
Legal fees and expenses..................................... 200,000
Miscellaneous............................................... 66,594
--------
Total............................................. $600,000
========
</TABLE>

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 145 of the Delaware General Corporation Law (the "DGCL") makes
provisions for the indemnification of officers and directors of corporations in
terms sufficiently broad to indemnify the officers and directors of the
registrant under certain circumstances from liabilities (including reimbursement
of expenses incurred) arising under the Securities Act of 1933, as amended (the
"Securities Act").

As permitted by the DGCL, the registrant's Amended and Restated Certificate
of Incorporation, as amended (the "Charter"), provides that, to the fullest
extent permitted by the DGCL, no director shall be liable to the registrant or
to its stockholders for monetary damages for breach of his fiduciary duty as a
director. Delaware law does not permit the elimination of liability (i) for any
breach of the director's duty of loyalty to the registrant or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) in respect of certain unlawful
dividend payments or stock redemptions or repurchases, or (iv) for any
transaction from which the director derives an improper personal benefit. The
effect of this provision in the Charter is to eliminate the rights of the
registrant and its stockholders (through stockholders' derivative suits on
behalf of the registrant) to recover monetary damages against a director for
breach of fiduciary duty as a director thereof (including breaches resulting
from negligent or grossly negligent behavior) except in the situations described
in clauses (i)-(iv), inclusive, above. These provisions will not alter the
liability of directors under federal securities laws.

In addition, the Charter provides that the registrant may indemnify any
person who was or is a party or who was or is threatened to be made a party to
or is otherwise involved in any threatened, pending or completed action, suit or
proceeding (including, without limitation, one by or in the right of the
registrant to procure judgment in its favor), whether civil, criminal,
administrative or investigative, by reason of the fact the he or she is or was a
director, officer, employee or agent of the registrant or is or was serving at
the request of the registrant as a director, officer, employee or agent of any
other corporation or enterprise, from and against any

II-1
<PAGE> 118

and all expenses (including attorney's fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by such person. The Charter also
provides that the indemnification provided in the Charter shall not be deemed
exclusive of any other rights to which the indemnified party may be entitled and
that the registrant may maintain insurance, at its expense, to protect itself
and any director, officer, employee or agent of the registrant or any other
corporation or enterprise against expense liability or loss whether or not the
Registrant would have the power to indemnify such person against such expense,
liability or loss under the DGCL or under the Charter.

The registrant's Amended and Restated By-Laws (the "Bylaws") provide that
the registrant may indemnify any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other than
an action by or in the right of the registrant) by reason of the fact that he is
or was a director, officer, employee or agent of the registrant or is or was
serving at the request of the registrant as a director, officer, employee or
agent of any other corporation or enterprise, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action, suit or
proceeding if such person acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the registrant, and,
with respect to any criminal action or proceeding, had no reasonable cause to
believe such person's conduct was unlawful.

The Bylaws also provide that the registrant may indemnify any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action or suit by or in the right of the registrant to procure
judgment in its favor by reason of the fact that such person acted in any of the
capacities set forth above, against expenses (including attorneys' fees)
actually and reasonably incurred by such person in connection with the defense
or settlement of such action or suit if such person acted under similar
standards, except that no indemnification may be made in respect of any claim,
issue or matter as to which such person shall have been adjudged to be liable to
the registrant unless and only to the extent that the Court of Chancery of the
State of Delaware or the court in which such action or suit was brought shall
determine that despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to be
indemnified for such expenses which the Court of Chancery of the State of
Delaware or the court in which such action was brought shall deem proper.

The Bylaws also provide that to the extent a director or officer of the
registrant has been successful in the defense of any action, suit or proceeding
referred to in the previous paragraphs or in the defense of any claim, issue, or
matter therein, he shall be indemnified against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection therewith and that
indemnification provided for in the Bylaws shall not be deemed exclusive of any
other rights to which the indemnified party may be entitled.

II-2
<PAGE> 119

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

The registrant has not issued or sold securities within the past three
years pursuant to offerings that were not registered under the Securities Act,
except as follows:

(a) On October 30, 1996, the registrant converted all of its issued
and outstanding shares of common stock into 427,836 (7,318,135 giving
effect to the 17.105-for-1 stock split (the "Stock Split")) shares of Class
A Common Stock, 77,164 (1,319,890 giving effect to the Stock Split) shares
of Class C Common Stock, 5,000 (85,525 giving effect to the Stock Split)
shares of Class D Common Stock and 100 (1,710 giving effect to the Stock
Split) shares of Class F Common Stock.

(b) On October 30, 1996, the registrant issued and sold 490,000
(8,381,450 giving effect to the Stock Split) shares of Class E Common Stock
to Cantrade Trust Company Limited, in its capacity as trustee of the Carmel
Trust, at approximately $206 ($12.04 giving effect to the Stock Split) per
share, or an aggregate offering price of approximately $100,940,000.

(c) On October 30, 1996, the registrant issued and sold a Class A
Stock Purchase Warrant to Investcorp Bank E.C. for $10.00.

(d) On October 30, 1996, the registrant issued and sold $10,000,000
aggregate principal amount of 12% Subordinated Series A Notes due October
31, 2008 to TransAtlantic Finance, Ltd.

(e) On October 30, 1996, the registrant issued and sold $40,000,000
aggregate principal amount of 12% Subordinated Series B Notes due October
31, 2008 to Southwest Finance, Ltd. In connection with this transaction, a
$4,000,000 fee was paid to Southwest Finance, Ltd.

(f) On December 8, 1997, the registrant issued and sold approximately
54,498 (932,181 giving effect to the Stock Split) shares of Class C Common
Stock to South Bay Limited at approximately $206 ($12.04 giving effect to
the Stock Split) per share, or an aggregate offering price of approximately
$11,226,588. In connection with this transaction, a $1,000,000 equity
placement fee was paid to Investcorp Bank E.C.

(g) On December 8, 1997, the registrant issued and sold approximately
52,360 (895,618 giving effect to the Stock Split) shares of Class E Common
Stock to Transatlantic Finance, Inc. at approximately $206 ($12.04 giving
effect to the Stock Split) per share, or an aggregate offering price of
approximately $10,786,160.

(h) On various dates from October 30, 1996 through November 2, 1997,
pursuant to the registrant's 1996 Associate Stock Option Plan and the
registrant's 1996 Executive Stock Option Plan (collectively, and as amended
from time to time, the "Plans"), the Company awarded to key employees of
CSK Auto, Inc. non-qualified incentive stock options, exercisable in whole
or in part at approximately $206 ($12.04 giving effect to the Stock Split)
per share, to purchase an aggregate of 52,691 (901,279 giving effect to the
Stock Split) shares of Class B Common Stock ("Class B Shares"). On the
closing of the registrant's initial public offering, each option became
exercisable for an identical number of

II-3
<PAGE> 120

shares of common stock to the number of Class B Shares for which it was
exercisable prior to the offering, at the same price per share.

(i) On various dates from November 3, 1997 through February 16, 1998,
pursuant to the 1996 Executive Stock Option Plan, the registrant issued
additional non-qualified incentive stock options, exercisable in whole or
in part at approximately $206 ($12.04 giving effect to the Stock Split) per
share, to purchase 99 (1,693 giving effect to the Stock Split) Class B
Shares. On the closing of the registrant's initial public offering, each
option became exercisable for an identical number of shares of common stock
as the number of Class B Shares for which it was exercisable prior to the
offering, at the same price per share.

(j) On various dates from November 3, 1998 through February 16, 1998,
pursuant to the 1996 Associate Stock Option Plan, the registrant issued
additional non-qualified incentive stock options, exercisable in whole or
in part at approximately $342 ($20.00 giving effect to the Stock Split) per
share, to purchase 4,689 (80,205 giving effect to the Stock Split) Class B
Shares. On the closing of the registrant's initial public offering, each
option became exercisable for an identical number of shares of common stock
as the number of Class B Shares for which it was exercisable prior to the
offering, at the same price per share.

(k) In connection with the execution of his employment agreement in
November 1996, the registrant granted James Bazlen an option exercisable in
whole or in part at a price of approximately $206 ($12.04 giving effect to
the Stock Split) per share for 17,500 (299,337 giving effect to the Stock
Split) shares of Class B Stock. On the closing of the registrant's initial
public offering, each option became exercisable for an identical number of
shares of common stock as the number of Class B Shares for which it was
exercisable prior to the offering, at the same price per share.

(l) In connection with the execution of his employment agreement in
January 1997, the registrant granted Maynard Jenkins an option exercisable
in whole or in part at a price of approximately $206 ($12.04 giving effect
to the Stock Split) per share for 23,500 (401,967 giving effect to the
Stock Split) shares of Class B Stock. On the closing of the registrant's
initial public offering, each option became exercisable for an identical
number of shares of common stock as the number of Class B Shares for which
it was exercisable prior to the offering, at the same price per share.

(m) In December 1997, 22 members of the registrant's management
purchased an aggregate of 10,559 (180,600 giving effect to the Stock Split)
Class B Shares at a price of approximately $206 ($12.04 giving effect to
the Stock Split) per share, or an aggregate offering price of approximately
$2,175,154, pursuant to Management Stock Purchase Agreements. These
individuals received secured loans from the registrant pursuant to its 1997
Stock Loan Program in an aggregate amount equal to the purchase price of
4,943 (84,550 giving effect to the Stock Split) Class B Shares, or an
aggregate principal amount of approximately $1,018,258. At the time of
these purchases, the registrant agreed to grant one non-qualified stock
option exercisable in whole or in part at approximately $206 ($12.04 giving
effect to the Stock Split) in respect of each Class B Share, purchased
without the benefit of the 1997 Stock Loan Program, to such purchasers, for
a total of 5,616 (96,061

II-4
<PAGE> 121

giving effect to the Stock Split) Class B Shares. On the closing of the
registrant's initial public offering, each option became exercisable for an
identical number of shares of common stock as the number of Class B Shares for
which it was exercisable prior to the offering, at the same price per share.

(n) In February 1998, the registrant granted Maynard Jenkins an
option, exercisable in whole or in part at a price of approximately $206
($12.04 giving effect to the Stock Split) per share for 2,335 (39,940
giving effect to the Stock Split) shares of Class B Stock. On the closing
of the registrant's initial public offering, each option became exercisable
for an identical number of shares of common stock as the number of Class B
Shares for which it was exercisable prior to the offering, at the same
price per share.

(o) In February 1998, the registrant granted Maynard Jenkins an
option, exercisable in whole or in part at a price of approximately $342
($20.00 giving effect to the Stock Split) per share for 12,665 (216,634
giving effect to the Stock Split) shares of Class B Stock. On the closing
of the registrant's initial public offering, each option became exercisable
for an identical number of shares of common stock as the number of Class B
Shares for which it was exercisable prior to the offering, at the same
price per share.

The transaction set forth in paragraph (a) above was undertaken in reliance
upon the exemption from the registration requirements of the Securities Act
afforded by Section 3(a)(9) thereof. The transactions set forth in paragraphs
(b) through (g) above were undertaken in reliance upon the exemption from the
registration requirements of the Securities Act afforded by Section 4(2) thereof
and/or Regulation D promulgated thereunder, as sales not involving a public
offering. The transactions set forth in paragraphs (h) through (o) above were
undertaken in reliance upon the exemption from the registration requirements of
the Securities Act afforded by Rule 701 promulgated under the Securities Act, as
sales by an issuer to employees, directors, officers, consultants or advisors
pursuant to written compensatory benefit plans or written contracts relating to
the compensation of such persons. The purchasers of the securities described
above acquired them for their own account and not with a view to any
distribution thereof to the public. The certificates evidencing the securities
bear legends stating that the shares may not be offered, sold or transferred
other than pursuant to an effective registration statement under the Securities
Act or an exemption from such registration requirements. The registrant believes
that exemptions other than those specified above may exist with respect to the
transactions set forth above. On September 15, 1998, the registrant filed a
registration statement on Form S-8 to register the issuance of shares of common
stock pursuant to the exercise of options granted in the transactions described
in paragraphs (h) through (j) and (m) above.

II-5
<PAGE> 122

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits:

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
<S> <C>
1.01+ Form of Underwriting Agreement.
3.01*** Restated Certificate of Incorporation of the Company.
3.02*** Certificate of Correction to the Restated Certificate of
Incorporation of the Company.
3.03*** Amended and Restated By-laws of the Company.
4.01* 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.
4.02** Amended and Restated Credit Agreement, dated as of December
8, 1997, among Auto, the several Lenders from time to time
parties thereto, The Chase Manhattan Bank, as administrative
agent for the Lenders, and Lehman Commercial Paper Inc., as
documentation agent for the Lenders and Chase Securities
Inc., as arranger.
4.03** Form of Common Stock certificate.
5.01+ Opinion of Gibson, Dunn & Crutcher LLP.
10.01**** Amended and Restated Employment Agreement, dated as of June
12, 1998, between Auto and James Bazlen.
10.02++ Stock Option Agreement, dated November 1, 1996, between the
Company and James Bazlen.
10.03* Amended and Restated Participation Agreement, dated June 19,
1996, between Auto and James Bazlen.
10.04**** Amended and Restated Employment Agreement, dated as of June
12, 1998, between Auto and Maynard Jenkins.
10.05** Promissory Note of Maynard Jenkins, dated December 21, 1997.
10.06** Stock Pledge Agreement between the Company and Maynard
Jenkins, dated December 21, 1997.
10.07** Stock Acquisition Agreement, dated January 27, 1997, among
Maynard Jenkins, Auto and the Company.
10.08++ Stock Option Agreement, dated January 27, 1997, between the
Company and Maynard Jenkins.
10.09** Stock Option Agreement, dated February 1, 1998, between the
Company and Maynard Jenkins.
10.10** Stock Option Agreement, dated March 9, 1998, between the
Company and Maynard Jenkins.
10.11++ Restated 1996 Associate Stock Option Plan.
10.12++ Restated 1996 Executive Stock Option Plan.
</TABLE>

II-6
<PAGE> 123

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
<S> <C>
10.13* 1996 General and Administrative Staff Incentive Compensation
Plan.
10.14**** CSK Auto Corporation Directors Stock Plan.
10.15+ Restricted Stock Agreement, dated as of June 12, 1998,
between the Company and John F. Antioco.
10.16+ Restricted Stock Agreement, dated as of October 7, 1998,
between the Company and Morton Godlas.
10.17* Real Estate Financing Agreement, dated as of October 30,
1996, between Cantrade Trust Company Limited, in its
capacity as trustee of The Carmel Trust, and Auto.
10.18* Amended and Restated Lease, dated October 23, 1989 (the
'Missouri Falls Lease'), between Auto and Missouri Falls
Associates Limited Partnership.
10.19* First Amendment to the Missouri Falls Lease, dated November
22, 1991, between Auto and Missouri Falls Associates Limited
Partnership.
10.20* Amendment to Leases, dated as of October 30, 1996, by and
between Missouri Falls Associates Limited Partnership and
Auto.
10.21* Financing Advisory Agreement, dated October 30, 1996,
between Auto and Investcorp International Inc.
10.22* Financial Advisory Services Letter Agreement, dated October
30, 1996, between Auto and Investcorp International Inc.
10.23* Standby Loan Commitment Letter Agreement, dated October 30,
1996, between Auto and Invifin S.A.
10.24* Agreement for Management Advisory, Strategic Planning and
Consulting Services, dated October 30, 1996, between Auto
and Investcorp International Inc.
10.25* 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.
10.25.1** Form of Supplemental Stockholders' Agreement Signature Page.
10.25.2++ Amendment to the Stockholders' Agreement, dated June 12,
1998.
10.26* Stock Purchase Agreement, dated September 29, 1996.
10.27** Senior Executive Stock Loan Plan.
10.28** Form of Stock Purchase Agreement.
16.01** Letter of Price Waterhouse LLP re: Change in Certifying
Accountant.
21.01++ Subsidiaries of the Company.
23.01 Consent of PricewaterhouseCoopers LLP.
23.02+ Consent of Gibson, Dunn & Crutcher LLP (included in Exhibit
5.01).
24.01++ Powers of Attorney (included on Signature Pages of
Registration Statement).
</TABLE>

- ------------------------------
+ To be filed by amendment.

++ Previously filed.

II-7
<PAGE> 124

* Incorporated herein by reference to CSK Auto, Inc.'s Registration Statement
on Form S-4 (File No. 333-22511).

** Incorporated herein by reference to the Company's Registration Statement on
Form S-1 (File No. 333-43211).

*** Incorporated herein by reference to the Company's Annual Report on Form
10-K, filed on May 4, 1998 (Reg. No. 001-13927).

**** Incorporated herein by reference to the Company's Quarterly Report on Form
10-Q, filed on September 11, 1998 (Reg. No. 001-13927).

(b) Financial Statement Schedule for the three years ended February 1,
1998: Schedule II -- Valuation and Qualifying Accounts and reports of
independent accountants thereon.

ITEM 17. UNDERTAKINGS

(a) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.

(b) The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

II-8
<PAGE> 125

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
Company has duly caused this Amendment No. 1 to be signed on its behalf by the
undersigned, thereunto duly authorized, in Phoenix, Arizona, on November 19,
1998.

CSK AUTO CORPORATION

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

Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment No. 1 has been signed by the following persons in the capacities
indicated on November 19, 1998.

<TABLE>
<CAPTION>
NAME TITLE
<S> <C>

/s/ MAYNARD L. JENKINS Chairman of the Board and Chief Executive
- ----------------------------------------- Officer (Principal Executive Officer)
Maynard L. Jenkins

/s/ JAMES G. BAZLEN President, Chief Operating Officer and
- ----------------------------------------- Director
James G. Bazlen

* Director
- -----------------------------------------
John F. Antioco

* Director
- -----------------------------------------
Morton Godlas

* Director
- -----------------------------------------
Jon P. Hedley

* Director
- -----------------------------------------
Edward G. Lord, III

* Director
- -----------------------------------------
Christopher J. O'Brien

* Director
- -----------------------------------------
Charles J. Philippin
</TABLE>

II-9
<PAGE> 126

<TABLE>
<CAPTION>
NAME TITLE
<S> <C>
* Director
- -----------------------------------------
Robert Smith

* Director
- -----------------------------------------
Christopher J. Stadler

* Director
- -----------------------------------------
Eddie Trump

* Director
- -----------------------------------------
Jules Trump

* Director
- -----------------------------------------
Savio W. Tung

/s/ DON W. WATSON Senior Vice President, Chief Financial
- ----------------------------------------- Officer and Treasurer (Principal
Don W. Watson Financial Officer and Principal
Accounting Officer)

*By: /s/ DON W. WATSON
------------------------------------
Don W. Watson
Attorney-in-fact
</TABLE>

II-10
<PAGE> 127

REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULE

To the Board of Directors
of CSK Auto Corporation

Our audits of the consolidated financial statements referred to in our
report dated April 10, 1998 appearing on Page F-2 of the Prospectus constituting
part of this Registration Statement on Form S-1 of CSK Auto Corporation also
included an audit of the financial statement schedule listed in Item 16(b) of
this Registration Statement on Form S-1. In our opinion, this financial
statement schedule presents fairly, in all material respects, the information
set forth therein when read in conjunction with the related consolidated
financial statements for the periods referred to in our report.

COOPERS & LYBRAND L.L.P.

Phoenix, Arizona
April 10, 1998

S-1
<PAGE> 128

REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULE

To the Board of Directors
of CSK Auto Corporation

Our audit of the consolidated financial statements referred to in our
report dated December 23, 1997 appearing on page F-3 of the Prospectus
constituting part of this Registration Statement on Form S-1 of CSK Auto
Corporation also included an audit of the financial statement schedule listed in
Item 16(b) of this Registration Statement on Form S-1. In our opinion, this
financial statement schedule presents fairly, in all material respects, the
information set forth therein when read in conjunction with the related
consolidated financial statements for the period referred to in our report.

PRICE WATERHOUSE LLP

Phoenix, Arizona
December 23, 1997

S-2
<PAGE> 129

CSK AUTO CORPORATION AND SUBSIDIARIES
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
FOR THE FISCAL YEARS 1995, 1996 AND 1997

<TABLE>
<CAPTION>
BALANCE AT CHARGED TO BALANCE AT
BEGINNING OF COSTS AND END OF
PERIOD EXPENSES DEDUCTIONS PERIOD
DESCRIPTION (IN THOUSANDS)
<S> <C> <C> <C> <C>
Reserve for Closed Stores
Year End January 28, 1996..................... $ 5,745 $ 3,310 $(3,757) $ 5,298
Year End February 2, 1997..................... 5,298 14,904 (4,360) 15,842
Year End February 1, 1998..................... 15,842 1,640 (6,130) 11,352

Reserve for Bad Debts
Year End January 28, 1996..................... 1,488 1,437 (972) 1,953
Year End February 2, 1997..................... 1,953 1,290 (1,475) 1,768
Year End February 1, 1998..................... 1,768 2,033 (1,398) 2,403
</TABLE>

S-3
<PAGE> 130

INDEX OF EXHIBITS

<PAGE> 131

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
<S> <C>
10.15+ Restricted Stock Agreement, dated as of June 12, 1998,
between the Company and John F. Antioco.
10.16+ Restricted Stock Agreement, dated as of October 7, 1998,
between the Company and Morton Godlas.
10.17* Real Estate Financing Agreement, dated as of October 30,
1996, between Cantrade Trust Company Limited, in its
capacity as trustee of The Carmel Trust, and Auto.
10.18* Amended and Restated Lease, dated October 23, 1989 (the
'Missouri Falls Lease'), between Auto and Missouri Falls
Associates Limited Partnership.
10.19* First Amendment to the Missouri Falls Lease, dated November
22, 1991, between Auto and Missouri Falls Associates Limited
Partnership.
10.20* Amendment to Leases, dated as of October 30, 1996, by and
between Missouri Falls Associates Limited Partnership and
Auto.
10.21* Financing Advisory Agreement, dated October 30, 1996,
between Auto and Investcorp International Inc.
10.22* Financial Advisory Services Letter Agreement, dated October
30, 1996, between Auto and Investcorp International Inc.
10.23* Standby Loan Commitment Letter Agreement, dated October 30,
1996, between Auto and Invifin S.A.
10.24* Agreement for Management Advisory, Strategic Planning and
Consulting Services, dated October 30, 1996, between Auto
and Investcorp International Inc.
10.25* 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.
10.25.1** Form of Supplemental Stockholders' Agreement Signature Page.
10.25.2++ Amendment to the Stockholders' Agreement, dated June 12,
1998.
10.26* Stock Purchase Agreement, dated September 29, 1996.
10.27** Senior Executive Stock Loan Plan.
10.28** Form of Stock Purchase Agreement.
16.01** Letter of Price Waterhouse LLP re: Change in Certifying
Accountant.
21.01++ Subsidiaries of the Company.
23.01 Consent of PricewaterhouseCoopers LLP.
23.02+ Consent of Gibson, Dunn & Crutcher LLP (included in Exhibit
5.01).
24.01++ Powers of Attorney (included on Signature Pages of
Registration Statement).
</TABLE>

- ------------------------------

+ To be filed by amendment.

++ Previously filed.

* Incorporated herein by reference to CSK Auto, Inc.'s Registration Statement
on Form S-4

(File No. 333-22511).

** Incorporated herein by reference to the Company's Registration Statement on
Form S-1 (File No. 333-43211).

*** Incorporated herein by reference to the Company's Annual Report on Form
10-K, filed on May 4, 1998

<PAGE> 132

(Reg. No. 001-13927).

**** Incorporated herein by reference to the Company's Quarterly Report on Form
10-Q, filed on September 11, 1998 (Reg. No. 001-13927).

<PAGE> 1

EXHIBIT 23.01

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-1 of CSK Auto Corporation of our reports dated
December 23, 1997 and April 10, 1998 relating to the financial statements of CSK
Auto Corporation, which appear in such Prospectus. We also consent to the use in
the Prospectus constituting part of this Registration Statement on Form S-1 of
CSK Auto Corporation of our reports dated December 23, 1997 and April 10, 1998
related to the financial statement schedule of CSK Auto Corporation, which
appear in such Prospectus. We also consent to the references to us under the
headings "Experts" and "Selected Consolidated Financial Data" in such
Prospectus. However, it should be noted that PricewaterhouseCoopers LLP has not
prepared or certified such "Selected Consolidated Financial Data."

PricewaterhouseCoopers LLP

Phoenix, Arizona

November 19, 1998