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UNITED STATES

FORM 10-K

[X]	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

For the fiscal year ended January 30, 2000.

[   ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 001-13927

CSK AUTO CORPORATION

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

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

      Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  [X]  No  [   ]

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

      As of April 18, 2000, the aggregate market value of the Company’s common stock held by non-affiliates was approximately $156.6 million. For purposes of the above statement only, all directors and executive officers of the registrant are assumed to be affiliates. As of April 18, 2000, there were 27,837,558 shares of the Company’s common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

	•	Portions of the Company’s definitive Proxy Statement on Schedule 14A, with respect to the Company’s 2000 Annual Meeting of Stockholders, are incorporated by reference into Part III of this Form 10-K.

TABLE OF CONTENTS

Note Concerning Forward-Looking Information

      Some of the information in this Report on Form 10-K contains forward-looking statements that involve substantial risks and uncertainties. You can identify these statements by forward-looking words such as “may,” “will,” “expect,” “anticipate,” “believe,” “estimate” and “continue” or similar words. You should read statements that contain these words carefully because they: (1) discuss our future expectations; (2) contain projections of our future results of operations or of our financial condition; or (3) state other “forward-looking” information. We believe that it is important to communicate our future expectations to our investors. However, there may be events in the future that we are not able to accurately predict or over which we have no control, the occurrence of which could have a material adverse effect on our business, operating results and financial condition. These events may include future operating results, our efforts to address Year 2000 issues and potential competition, among other things. Factors that might cause actual results to differ materially from those in such forward-looking statements include, but are not limited to, those discussed in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

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PART I

Item 1.  Business

General

      We are the largest 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 January 30, 2000, we operated 1,120 stores as one fully integrated company under three brand names:

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

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

Recent Transactions

      During March 2000, we entered into a definitive agreement to acquire substantially all of the assets of All-Car Distributors, Inc. (“AllCar”), an operator of 22 stores in Wisconsin and Michigan. Under the terms of the agreement, we will pay approximately $865,000 in cash for the assets of AllCar and will assume vendor accounts payable and certain indebtedness and accrued expenses. The closing, which is subject to the satisfaction of certain conditions, is expected to occur on April 27, 2000. The acquisition of the 22 AllCar stores gives us an immediate presence of scale in a strategically important market adjacent to our current operations. The acquired stores will be serviced out of our Minneapolis Distribution Center and will be converted to the Checker Auto Parts name.

      During January 2000, we entered into a definitive agreement with Advance Auto Parts and Sequoia Capital to form a new joint venture, PartsAmerica.com, which is expected to become one of the largest automotive parts and accessories e-commerce destinations in the $90 billion automotive parts and accessories market. PartsAmerica.com will operate independently from its partners and will utilize both CSK’s and Advance’s existing logistic systems to support its web-based operations. PartsAmerica.com will offer both retail and commercial customers the widest available selection of automotive parts and delivery options, including same-day delivery, local in-store pickup, and overnight shipment. In addition, because of 50-state coverage, customers will be able to return or exchange merchandise at their local CSK or Advance Auto Parts store. We have contributed the use of the e-commerce capabilities of our existing web site and certain other assets to the joint venture. We are a party to a service agreement with PartsAmerica.com that governs the terms of our sale of merchandise to PartsAmerica.com and certain other services that we are to provide to the joint venture. PartsAmerica.com is expected to commence operations in July 2000.

      On October 1, 1999, we acquired the common stock of Al’s and Grand Auto Supply, Inc. (“AGA”), formerly known as PACCAR Automotive, Inc., which operated 194 stores under the trade names of Al’s Auto Supply and Grand Auto Supply (collectively, the “AGA stores”) in Washington, California, Idaho, Oregon, Nevada and Alaska. We paid approximately $145.6 million in cash for the stock of AGA and associated transaction costs. The acquisition was funded with proceeds from our senior credit facility. In connection with the acquisition, we amended and restated our senior credit facility to provide an additional $150.0 million of

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      On September 7, 1999, we acquired all of the common stock of Automotive Information Systems, Inc. (“AIS”). AIS, based in St. Paul, Minnesota, is a leading provider of diagnostic vehicle repair information to automotive technicians, automotive replacement parts manufacturers, automotive test equipment manufacturers, and the do-it-yourself consumer. We paid approximately $10.3 million in cash for AIS and funded the acquisition through our senior credit facility.

      On June 30, 1999, we acquired substantially all of the assets of Apsco Products Company dba Big Wheel/ Rossi (“Big Wheel”), which operated 86 stores under the trade name of Big Wheel/ Rossi in Minnesota, North Dakota and Wisconsin along with a distribution center in Minnesota. We paid approximately $62.7 million in cash for substantially all the assets and assumed certain liabilities and indebtedness of Big Wheel. The acquisition was funded with proceeds from our senior credit facility. In connection with the acquisition, we amended and restated our senior credit facility to provide an additional $125.0 million of senior term loan borrowing ability. We have substantially converted the stores to the Checker name and store format and integrated these stores into our operations.

Automotive Aftermarket Industry

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

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

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

Marketing and Merchandising Strategy

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

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.

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

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

	•	Customer service skills;
	•	Basic automotive systems;
	•	Advanced automotive systems; and
	•	Management development.

      Much of the training is delivered through formal classes in 26 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 2,278 of our current associates have passed the ASE-P2 test, a nationally recognized certification for auto parts technicians.

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

Product Selection

      Our stores have a broad selection of national brand name products in order to generate customer traffic and appeal to our commercial customers. In addition, we stock a large selection of high quality private label products that appeal to value-conscious customers. Each store offers an extensive product line, including automotive replacement parts such as starters, alternators, shock absorbers, mufflers, brakes, spark plugs, filters and batteries, as well as a wide variety of maintenance items, such as motor oil, lubricants, waxes, cleaners, polishes and antifreeze. In addition, each store offers general accessories such as car stereos, alarms, trim, floor mats, tools and seat covers. 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 associates 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 continue to expand and improve our delivery system and we have increased our number of strategically located priority parts depots to 44 and increased product selection through an increased SKU mix and access to our on-line local warehouse network. This has led to better customer service by making available up to an additional 200,000 products on a same-day delivery basis to over 75% 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

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

Pricing

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

Advertising

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

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

Store-Based Information Systems

      Over the past several years, we have 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, engine type and application needed. 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

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	•	Reducing checkout 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 have 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 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-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.

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  Diagnostic & Maintenance Repair Services

      Through our subsidiary, AIS, we are a leading provider of diagnostic vehicle repair information to automotive technicians, automotive replacement parts manufacturers, automotive test equipment manufacturers, and to the do-it-yourself consumer. This allows us to provide our retail, commercial, and Internet customers with high quality diagnostic information available in order to assist them with correctly identifying problems and efficiently obtaining the parts they need.

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

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

      AIS has evolved into one of the leading sources of knowledge about where and how vehicles break, and how to correctly repair those vehicles. This extensive automotive knowledge comes from (1) more than 250,000 calls received annually from technicians seeking diagnostic assistance for vehicle repair; (2) our staff of 32 Master Technicians who collectively have over 550 years of vehicle diagnostic experience; and (3) a comprehensive on-site library of factory vehicle service information.

      In AIS’s 12 years of operation, it has developed a customer base of more than 15,000 repair shops by providing efficient and accurate information resources for automotive diagnostics and repair. We are committed to supporting AIS’s existing customer base while developing new ways to deliver information to their customers.

Store Operations

      Our stores are divided into nine geographic regions: Southwest, Rocky Mountain, Northwest, Northern Plains, Southern California, Coastal California, Los Angeles, Pacific Coast and Northern California. Each region is administered by a regional manager, each of whom oversees seven to eleven district managers. Each of our district managers has responsibility for between 4 and 17 stores.

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      The table below sets forth, as of January 30, 2000, the geographic distribution of our stores and the tradenames under which they are or will be operated.

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

Store Formats

      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 2,600 to 24,000 square feet, average approximately 7,200 square feet in size and offer between 13,000 and 17,000 SKUs.

      We have three prototype store designs which are 6,000, 7,000 and 8,000 square feet in size. The store size for a given new location is selected based upon sales volume expectations determined through demographics and the detailed market analysis that we prepare as part of our site selection process. The following table categorizes our stores by size, as of January 30, 2000:

      Approximately 61% 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,

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Store Growth Strategy

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

	•	Acquiring existing stores;
	•	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, per capita income, vehicle traffic counts and the number and type of existing automotive-related facilities, such as automotive parts stores and other competitors within a pre-determined radius of the potential new location. These potential locations are compared to our existing locations to determine opportunities for opening new stores and relocating or expanding existing stores.

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

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

      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 we benefit from economies of scale in advertising, management and distribution costs. We opened, relocated, or expanded 119 stores in fiscal 1999 as compared to 130 stores in fiscal 1998. We plan to continue our store growth strategy and expect to open, acquire, relocate or expand approximately 100 stores in fiscal 2000. As of January 30, 2000, we had executed purchase contracts or leases for 33 sites, were in various stages of negotiation for 41 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

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

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

      As of January 30, 2000, we operated commercial service centers in 554 of our stores. Our sales to commercial accounts (including sales by stores without commercial service centers) increased 40% to $217.7 million in fiscal 1999 from $155.8 million in fiscal 1998.

Purchasing

      Merchandise is selected from over 300 suppliers and purchased for all stores by personnel at our corporate headquarters in Phoenix, Arizona. No one class of product and no single supplier accounted for as much as 10% of our purchases in fiscal 1999.

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

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

      We have increased our gross profit margin over the last several years primarily as a result of obtaining lower product acquisition costs, more favorable vendor terms, cash discounts from vendors, efficiencies from our warehouse and distribution system and improvements in product mix. We believe that the improved vendor terms are primarily the result of our improved financial performance and growth in our store count and purchase volume. Our gross profit margin increased from 44.6% of net sales in fiscal 1997 to 48.3% of net sales in fiscal 1999.

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Warehouse and Distribution

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

      The following table sets forth certain information relating to our three main distribution centers as of January 30, 2000:

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

Associates

      As of January 30, 2000, we employed approximately 9,890 full-time associates and 4,920 part-time associates. Approximately 86% of the personnel are employed in store level operations, 7% 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 good. Except for approximately 700 associates located at 75 stores in the Northern California market, who have been represented by two unions for many years, none of our personnel are represented by a labor union.

Competition

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

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

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Trade Names, Service Marks and Trademarks

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

Environmental Matters

      We are subject to various federal, state and local laws and governmental regulations relating to the operation of our business, including those governing recycling of batteries and used lubricants, and regarding ownership and operation of real property. We handle hazardous materials during our operations, and our customers may also use or bring hazardous materials onto our properties. In addition, in a small number of recently acquired store locations we service automobiles and we sublease to third parties other pre-existing service bays. These service bays 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 associates, deposited into vendor-supplied containers/pallets and then disposed of by the third-party vendors. Our agreements with such vendors are designed to limit our potential liability under applicable environmental regulations for any harm caused by the batteries and lubricants to off-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.

Item 2.  Properties

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

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      At January 30, 2000, all but four of our stores were leased. The expiration dates (including renewal options) of the store leases are summarized as follows:

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

Item 3.  Legal Proceedings

      On May 4, 1998, a lawsuit was filed against us in the Superior Court in San Diego, California. The case was brought by two former store managers and a former senior assistant manager. It 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. We have also been 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 which seek overtime from October 1994. The Orange County lawsuit initially included claims for punitive damages and unlawful conversion, but the Court subsequently dismissed both of these claims.

      The three cases have been “coordinated” before one judge in San Diego County. Discovery has been conducted by the parties. On January 19, 2000, as amended on January 27, 2000, the judge issued an order allowing the coordinated lawsuits to proceed as class actions, with class periods of May 1994 through January 2000 for store managers and October 1994 through July 1997 for senior assistant managers. We filed a Petition for Writ of Mandate seeking appellate review of the foregoing order which was not successful. On March 23, 2000, we filed a Petition for Review by the California Supreme Court to have the trial court’s order reversed.

      Although we cannot estimate the potential loss or range of loss at this time, if these cases are permitted to proceed as class actions and are decided against us, we believe that the aggregate potential exposure could be material to results of operations or cash flows for the year in which the cases are ultimately decided. However, we do not believe that such an adverse outcome, if it were to happen, would materially affect our financial position, operations or cash flows in subsequent periods. Although at this stage in the litigation it is difficult to predict its outcome with any certainty, we believe that there are meritorious defenses to these cases and intend to defend them vigorously.

      We were served on March 8, 2000 with a complaint filed in Federal Court in the Eastern District of New York by the Coalition for a Level Playing Field, L.L.C. and 179 individual auto parts dealers alleging that we and seven other auto parts dealers (AutoZone, Inc., Wal-Mart Stores, Inc., Advance Stores Company, Inc., Discount Auto, Inc., The Pep Boys — Manny, Moe and Jack, Inc., O’Reilly Automotive, Inc., and Keystone Automotive Operations, Inc.) violated the Robinson-Patman Act. Only 14 of the individual plaintiffs asserted claims against us, and three of those have voluntarily dismissed their claims without prejudice. The complaint alleges that we and other defendants knowingly either induced or received discriminatory prices from large suppliers, allegedly in violation of Section 2(a) and 2(f) of the Robinson-Patman Act, as well as receiving

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

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

      No matters were submitted to a vote of our stockholders during the fourth quarter of fiscal 1999.

PART II

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

      Our common stock has been listed on the New York Stock Exchange under the symbol CAO since March 12, 1998. As of April 18, 2000, there were 27,837,558 shares of our common stock outstanding. As of April 18, 2000, there were approximately 78 record holders of our common stock.

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

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

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

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Item 6.  Selected Consolidated Financial Data

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