UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

Commission File Number 001-13927

CSK Auto Corporation

(Exact name of registrant as specified in its charter)

(602) 265-9200

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

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

      Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).     Yes þ          No o

      As of June 2, 2005, CSK Auto Corporation had 45,157,106 shares of common stock outstanding.

TABLE OF CONTENTS

PART I

FINANCIAL INFORMATION

CSK AUTO CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

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

CSK AUTO CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

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

CSK AUTO CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

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

CSK AUTO CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

      CSK Auto Corporation is a holding company. At May 1, 2005, CSK Auto Corporation had no business activity other than its investment in CSK Auto, Inc. (“Auto”), a wholly owned subsidiary. On a consolidated basis, CSK Auto Corporation and its subsidiaries are referred to herein as the “Company”, “we”, “us”, or “our”.

      Auto is a specialty retailer of automotive aftermarket parts and accessories. At May 1, 2005, we operated 1,138 stores in 19 states as a fully integrated company and single business segment under three brand names: Checker Auto Parts, founded in 1969 and operating in the Southwestern, Rocky Mountain and Northern Plains states and Hawaii; Schuck’s Auto Supply, founded in 1917 and operating in the Pacific Northwest and Alaska; and Kragen Auto Parts, founded in 1947 and operating primarily in California.

      We prepared the unaudited consolidated financial statements included herein in accordance with generally accepted accounting principles for interim financial information and with instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the financial statements do not include all information and footnotes required by generally accepted accounting principles for fiscal year end financial statements. In the opinion of management, the consolidated financial statements reflect all adjustments, which are of a normal recurring nature, necessary for a fair statement of our financial position and the results of our operations. The accompanying consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes thereto for the fiscal year ended January 30, 2005 (fiscal 2004) as included in our Annual Report on Form 10-K filed with the SEC on May 2, 2005 (“2004 Annual Report”).

      In the accompanying consolidated balance sheet, we have changed the classification of store operating supplies as of January 30, 2005 from inventory to prepaid expenses and other current assets to conform to the current year presentation. As these items do not represent merchandise held for sale, we believe this presentation is more appropriate. As of May 1, 2005 and January 30, 2005, store operating supplies were approximately $6.6 million. This classification has no impact on our previously reported total current assets, results of operations or cash flows.

      In March 2005, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 47 (“FIN 47”), “Accounting for Conditional Asset Retirement Obligations”. FIN 47 clarifies that the term “conditional asset retirement obligation” as used in Statement of Financial Accounting Standards (“SFAS’) No. 143, “Accounting for Asset Retirement Obligations,” refers to a legal obligation to perform an asset retirement activity in which the timing and/or method of settlement are conditional on a future event that may or may not be within the control of the Company. In addition, FIN 47 clarifies when a company would have sufficient information to reasonably estimate the fair value of an asset retirement obligation. FIN 47 is effective no later than the end of fiscal years ending after December 15, 2005. Retrospective application of interim financial information is permitted but not required. Early adoption is encouraged. We are evaluating the impact of FIN 47 on our consolidated financial statements.

      In December 2004, the FASB issued revised SFAS No. 123R, “Share-Based Payment.” SFAS No. 123R sets accounting requirements for “share-based” compensation to employees and requires companies to recognize in the income statement the grant-date fair value of stock options and other equity-based compensation. SFAS No. 123R is effective for fiscal years beginning after June 15, 2005. We will be required to adopt SFAS No. 123R in our first quarter of fiscal 2006. We currently disclose the proforma impact on net income (loss) and earnings (loss) per share under SFAS No. 123, “Accounting for Stock-Based Compensation” in Note 7 of these Consolidated Financial Statements. We are currently evaluating the impact of the adoption of SFAS No. 123R on our financial position and results of operations, including the valuation methods and support for the assumptions that will be included in the valuation of the awards.

CSK AUTO CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      In November 2004, the FASB issued SFAS No. 151, “Inventory Costs — an amendment of ARB No. 43, Chapter 4”, which clarifies the accounting for abnormal amounts of idle facility expense, freight, handling costs and wasted material (spoilage). The standard requires that such costs be excluded from the cost of inventory and expensed when incurred. SFAS No. 151 is effective for fiscal years beginning after June 15, 2005. We do not expect that the adoption of SFAS No. 151 will have a material effect on our consolidated financial statements.

      In December 2004, the FASB issued SFAS No. 153, “Exchanges of Nonmonetary Assets — an amendment of APB No. 29, Accounting for Nonmonetary Transactions”, which addresses the measurement of exchanges of nonmonetary assets and eliminates the exception from fair value measurement for nonmonetary exchanges of similar productive assets. SFAS No. 153 is effective for nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. We do not expect that the adoption of SFAS No. 153 will have a material effect on our consolidated financial statements.

      Inventories are valued at the lower of cost or market, cost being determined utilizing the First-in First-out (“FIFO”) method. In most instances, we retain the ability to return damaged, obsolete and excess merchandise inventory to our vendors. In situations where we do not have a right to return merchandise inventory (generally for certain import products), we may from time to time record an allowance representing an estimated loss for the difference between the cost of any damaged, obsolete or excess product and the estimated retail selling price. Inventory levels and margins earned on all products are monitored monthly. Quarterly, we assess whether we expect to sell any significant amount of inventory below cost and, if so, record an estimated allowance. We refer to this allowance as an obsolescence allowance.

      At each balance sheet reporting date, we adjust our inventory carrying balances by the capitalization of certain operating and overhead administrative costs associated with purchasing and handling of inventory, an estimation of vendor allowances that remain in ending inventory at period end and an estimation of allowances for inventory shrinkage and obsolescence as follows.

CSK AUTO CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 4 — Store Closing Costs

      On an on-going basis, store locations are reviewed and analyzed based on several factors including market saturation, store profitability, and store size and format. In addition, we analyze sales trends and geographical and competitive factors to determine the viability and future profitability of our store locations. If a store location does not meet our required projections, it is considered for closure.

      We account for the costs of closed stores in accordance with SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities”. Under SFAS No. 146, costs of operating lease commitments for a closed store are recorded as expense at fair value at the date we cease operating the store. Fair value of the liability is determined as the present value of future cash flows discounted using a credit-adjusted risk free rate. Accretion expense represents interest on our recorded closed store liabilities at the same credit adjusted risk free rate used to discount the cash flows. In addition, SFAS No. 146 also requires that the amount of remaining lease payments owed be reduced by estimated sublease income (but not to an amount less than zero). Sublease income in excess of costs associated with the lease is recognized as it is earned and included as a reduction to operating and administrative expense in the accompanying financial statements.

      The allowance for store closing costs is included in accrued expenses and other long term liabilities in the accompanying financial statements and primarily represents the discounted value of the following future net cash outflows related to closed stores: (1) future rents to be paid over the remaining terms of the lease agreements for the stores (net of estimated probable sublease income); (2) lease commissions associated with the anticipated store subleases; and (3) contractual expenses associated with the closed store vacancy periods. Certain operating expenses, such as utilities and repairs, are expensed as incurred and no provision is made for employee termination costs.

      As of May 1, 2005, we had a total of 191 locations included in the allowance for store closing costs consisting of 137 store locations and 54 service centers. Of the store locations included in the allowance, 11 locations were vacant and 126 locations were subleased. Of the service centers included in the allowance, 2 were vacant and 52 were subleased. Future rent expense will be incurred through the expiration of the non-cancelable leases, the longest of which runs through March 2018.

      Activity in the allowance for store closing costs and the related payments for the thirteen weeks ended May 1, 2005 is as follows ($ in thousands):

CSK AUTO CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      We expect net cash outflows for closed store locations of approximately $4.0 million during fiscal 2005 and the remainder of cash outflows to primarily occur during fiscal years 2006 through 2008. We plan to fund these outflows from normal operating cash flows. We anticipate that we will close or relocate approximately 18 stores during fiscal 2005. We anticipate that the majority of these closures will occur near the end of the lease terms, resulting in minimal closed store costs. We anticipate total cash outflows relating to these stores of $0.3 million, which includes estimated incremental costs to be measured at fair value when incurred.

      Outstanding debt, excluding capital leases, is comprised of the following ($ in thousands):

      On April 5, 2004, we entered into an interest rate swap agreement to effectively convert $100.0 million of our 7% senior subordinated notes due 2014 to a floating rate, set semi-annually in arrears, equal to the six month LIBOR + 283 basis points. The agreement is for the term of the notes. The hedge is accounted for as a “fair value” hedge; accordingly, the fair value of the derivative and changes in the fair value of the underlying debt will be reported on our consolidated balance sheet and recognized in the results of operations. Based upon our assessment of effectiveness of the hedge, changes in the fair value of this derivative and the underlying debt will not have a significant effect on our consolidated results of operations. At May 1, 2005 and January 30, 2005, the fair value of the interest rate swap approximated $5.0 million and $4.5 million, respectively, which is included as an increase in other long-term liabilities with an identical amount reflected as a basis adjustment to the 7% senior subordinated notes on the accompanying Consolidated Balance Sheet.

CSK AUTO CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

      We have stock-based employee compensation plans, which are described more fully in Note 12 of the Notes to Consolidated Financial Statements in our 2004 Annual Report on Form 10-K filed with the SEC on May 2, 2005. We continue to apply the recognition and measurement provisions of Accounting Principles Board (APB) Opinion No. 25, “Accounting for Stock Issued to Employees” and related interpretations in accounting for those plans. No material stock-based employee compensation expense is reflected in net income (loss) for the quarters ended May 1, 2005 or May 2, 2004 as the intrinsic value of all options granted under those plans was zero. The following table illustrates the effect on net income and earnings per share if we had applied the fair value recognition provisions of SFAS No. 123 “Accounting for Stock-Based Compensation” ($ in thousands, except per share amounts):

CSK AUTO CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      During the third quarter of fiscal 2003, we received notification from the State of California Board of Equalization (the “Board”) of an assessment for approximately $1.2 million for sales tax and approximately $0.6 million for related interest based on the Board’s audit findings for the tax periods of October 1997 through September 2000. During this time period, we refunded the sales tax associated with battery cores to customers who returned a battery core to our stores. The Board believes that the sales tax associated with the battery cores should have been remitted to the taxing authority rather than refunded to the customers. Based on the Board’s position, we could be responsible for the sales tax and related interest associated with this matter for the audited periods of October 1997 through September 2000, plus the additional unaudited time period through December 2002, when we changed our business practices in this area to mitigate potential future tax related liability.

      We believe that we have a strong basis under California law for disputing the payment of this assessment, and in October 2003 we timely filed a Petition for Redetermination with the Board. In May 2004, we received a response from the Board indicating that the district office that conducted the audit upheld its position. We attended an appeals conference on April 4, 2005 and are awaiting the decision from the appeals conference. Our practices through December 2002 relative to the handling of taxes on battery cores had been consistent for over a decade, and it is our position that our consistent treatment of battery core charges, together with prior tax audits and tax auditors’ written commentary concerning our handling of such charges, permits us to rely upon precedent set in prior audits. Reliance on prior audits is a position that is supportable under California law. We also have other defenses and intend to vigorously defend our position with regard to this matter. A liability for the potential sales tax and related interest payments has not been recorded in our consolidated financial statements.

      We were served on October 26, 2004 with a lawsuit that was filed in the Superior Court in San Diego, California. The case was brought by a former sales associate in California who resigned in January 2003, and purports to be a class action on behalf of all current and former California hourly store employees claiming that plaintiff and those similarly situated were not paid for: (i) all time worked (i.e. “off the clock” work), (ii) the minimum reporting time pay when they reported to work a second time in a day, (iii) all overtime due, (iv) all wages due at termination, and (v) amounts due for late or missed meal periods or rest breaks. Plaintiff also alleges that we violated certain record keeping requirements arising out of the foregoing alleged violations. The lawsuit claims these alleged practices are unfair business practices, and requests back pay, restitution, penalties for violations of various Labor Code sections and for failure to pay all wages due on termination, and interest for the last four years, plus attorney fees and that the Company be enjoined from committing further unfair business practices. We believe we have meritorious defenses to all of these claims and intend to defend the claims vigorously. If one or more of the claims is permitted by the court to proceed as a class action and is decided against us, the aggregate potential financial exposure could be material to our annual results of operations. We do not believe an adverse outcome would materially affect our liquidity or consolidated financial position. However, the litigation is in its early stages and we cannot predict the outcome with any certainty. A liability for this matter has not been recorded in our consolidated financial statements.

      We currently and from time to time are involved in other litigation incidental to the conduct of our business, including asbestos and similar product liability claims, slip and fall and other general liability claims, discrimination and employment claims, vendor disputes, and miscellaneous environmental and real estate claims. The damages claimed in some of this litigation are substantial. Based on internal review, we accrue reserves using our best estimate of the probable and reasonably estimable contingent liabilities. We do not currently believe that any of these other legal claims incidental to the conduct of our business, individually or in the aggregate, will result in liabilities material to our consolidated financial position, results of operations or cash flows.

Overview

      CSK Auto Corporation is the largest specialty 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 May 1, 2005, through our wholly owned subsidiary CSK Auto, Inc., we operated 1,138 stores in 19 states under one fully integrated operating format and three brand names:

      During the thirteen weeks ended May 1, 2005 (the “first quarter of fiscal 2005”), we opened 6 stores, relocated 2 stores and closed 2 stores in addition to the 2 stores closed upon relocation. Our goal for fiscal 2005 is to open approximately 50 stores, consisting of approximately 40 new stores and 10 relocated stores. During fiscal 2005, we expect to close approximately 8 stores at or close to their lease expiration (in addition to approximately 10 stores closed due to relocation) for a net increase of approximately 32 new stores.

      During fiscal 2005, we plan to open approximately 4 new test stores in the Phoenix market named Pay N Save. These new stores openings are in addition to the store openings mentioned above. These stores will target a broader demographic than our CSK stores and sell primarily tools, hardware, housewares and other household goods, and seasonal items. We believe that these test stores allow us to develop new sourcing, particularly import sourcing, for merchandise in our auto parts stores and potentially broaden the inventory mix in our existing auto parts stores. We do not expect that these stores will have a material impact on our consolidated financial statements.

      During the first quarter of fiscal 2005, our financial performance was negatively impacted by lower than anticipated sales resulting from a difficult sales environment, as discussed below. Although net sales increased slightly, same store sales declined 1.2% compared to the thirteen weeks ended May 2, 2004 (the “first quarter of fiscal 2004”). We continue to monitor our operating and administrative expenses as evidenced by a slight decrease in those expenses as a percent to sales. Increasing sales and controlling inventory and expenses will be our primary operational focus for the balance of fiscal 2005.

      The following discussion and analysis presents factors that affected our consolidated results of operations for the quarter ended May 1, 2005 and our consolidated financial position at that date. The following information should be read in conjunction with the Consolidated Financial Statements and Notes included in this Form 10-Q as well as our 2004 Annual Report.

Results of Operations

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

Thirteen Weeks Ended May 1, 2005 Compared to Thirteen Weeks Ended May 2, 2004

      Net sales for the first quarter of fiscal 2005 were essentially flat compared to the first quarter of fiscal 2004. Same store sales decreased 1.2% overall. Same store retail sales declined 2.6% while same store commercial sales increased 5.6%. The decline in same store sales was impacted by a decline in customer count (measured by the number of in-store transactions), partially offset by an increase in our average transaction size (measured by dollars spent per sale) over the first quarter of fiscal 2004. Sales of core items such as brakes, shocks, batteries, fuel pumps, wiper blades and coolant increased compared to the first quarter of fiscal 2004. Sales in other categories such as clutches, truck accessories, jacks and ramps, and power tools declined significantly.

      Gross profit was $180.0 million, or 45.3% of net sales, for the first quarter of fiscal 2005, as compared to $188.7 million, or 47.5% of net sales, for the first quarter of fiscal 2004. The change in gross profit is primarily due to: (1) lower recognition of vendor allowances during the first quarter of fiscal 2005, primarily attributable to lower sales levels and a related decline in purchase volumes; (2) incremental commercial sales carrying a lower gross profit percentage; and (3) a $1.0 million inventory adjustment made during the first quarter of fiscal 2005 relating to prior periods that was not material to any previously reported prior period.

      Operating profit for the first quarter of fiscal 2005 totaled $21.8 million, or 5.5% of net sales, compared to $29.7 million, or 7.5% of net sales, for the first quarter of fiscal 2004. Operating profit was negatively impacted by our lower gross profit as described above. Operating and administrative expenses declined by approximately $0.8 million, even with the addition of 21 new stores compared to the first quarter of fiscal 2004. On a percentage basis, expenses declined by 20 basis points to 39.7% of sales in the first quarter of fiscal 2005 as compared to 39.9% of sales in the same quarter of fiscal 2004. This decrease in operating and administrative expenses primarily resulted from improved management of certain store expenses, which we will continue to focus on in the future.

      Income tax expense for the first quarter of fiscal 2005 was $5.2 million, compared to $8.2 million for the comparable period of fiscal 2004. Our effective tax rate remained at 39.1% year over year.

      As a result of the above factors, net income decreased to $8.0 million, or $0.18 per diluted common share, for the first quarter of fiscal 2005, compared to net income of $12.8 million, or $0.27 per diluted common share, for the first quarter of fiscal 2004.

Liquidity and Capital Resources

      Our primary cash requirements include working capital (primarily inventory), interest on our debt and capital expenditures. We are required to make only minimal debt amortization payments prior to fiscal 2009 other than payments on capital leases and seller financing arrangements. We intend to fund our cash requirements with cash flows from operating activities, borrowings under our senior credit facility and short-term trade credit relating to payment terms for merchandise inventory purchases. The following table outlines our liquidity:

      We lease our corporate office and warehouse facilities, all but one of our retail stores, and some of our equipment. Substantially all of our store leases are operating leases with private landlords and provide for monthly rental payments based on a contractual amount. These leases generally require minimal initial cash outlay and we expect to use similar leases for new store locations in the near future. There are no material changes to the contractual obligations table disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2004 Annual Report.

Analysis of Cash Flows

      During the first quarter of fiscal 2005, net cash provided by operating activities was $48.8 million compared to $15.2 million of cash provided by operating activities during the first quarter of fiscal 2004. Net income in the first quarter of fiscal 2005 decreased $4.8 million compared to the first quarter of fiscal 2004. The most significant component of the change relates to a $30.4 million increase of accounts payable in excess of the increase in inventory. Inventories increased by $7.6 million during the first quarter of fiscal 2005 as compared to the first quarter of fiscal 2004; however, during fiscal 2005 accounts payable increased $38.0 million as compared to the first quarter of fiscal 2004 as a result of improved payment terms and the timing of our seasonal inventory purchases.

      Net cash used in investing activities totaled $6.7 million for the first quarter of fiscal 2005, compared to $5.6 million used during the comparable period of fiscal 2004. Capital expenditures during the first quarter of fiscal 2005 were $1.6 million higher than in the first quarter of fiscal 2004 as a result of investments made to support new store growth and additional capital upgrades to existing stores.

      Net cash used in financing activities totaled $0.9 million for the first quarter of fiscal 2005 compared to $3.2 million used in financing activities in the comparable period of fiscal 2004. During the first quarter of fiscal 2004, $0.9 million was paid for debt issuance costs relating to our refinancing completed in January 2004. No such payment was made during the first quarter of fiscal 2005. Payments on capital lease obligations decreased by $0.5 million in the first quarter of fiscal 2005 due to our declining outstanding capital lease obligations. Also, $0.9 million was received as construction reimbursements from landlords in the first quarter of fiscal 2005 relating to new store build outs that resulted in capitalization of the construction costs as an asset and recording the reimbursement as debt under Emerging Issues Task Force (“EITF”) No. 97-10 “the Effect of Lease Involvement in Asset Construction”. No such payments were received in the first quarter of fiscal 2004.

Store Closures

      On an on-going basis, store locations are reviewed and analyzed based on several factors including market saturation, store profitability, and store size and format. In addition, we analyze sales trends and geographical

and competitive factors to determine the viability and future profitability of our store locations. If a store location does not meet our required projections, it is considered for closure.

      We account for the costs of closed stores in accordance with Statement of Financial Accounting Standard (“SFAS”) No. 146, “Accounting for Costs Associated with Exit or Disposal Activities”. Under SFAS No. 146, costs of operating lease commitments for a closed store are recognized as expense at fair value at the time we cease operating the store. Fair value of the liability is determined as the present value of future cash flows discounted using a credit-adjusted risk free rate. Accretion expense represents interest on our recorded closed store liabilities at the same credit adjusted risk free rate used to discount the cash flows. In addition, SFAS No. 146 also requires that the amount of remaining lease payments owed be reduced by estimated sublease income (but not to an amount less than zero). Sublease income in excess of costs associated with the lease is recognized as it is earned and included as a reduction to operating and administrative expense in the accompanying financial statements.

      The allowance for store closing costs is included in accrued expenses and other long term liabilities in the accompanying financial statements and primarily represents the discounted value of the following future net cash outflows related to closed stores: (1) future rents to be paid over the remaining terms of the lease agreements for the stores (net of estimated probable sublease income); (2) lease commissions associated with the anticipated store subleases; and (3) contractual expenses associated with the closed store vacancy periods. Certain operating expenses, such as utilities and repairs, are expensed as incurred and no provision is made for employee termination costs.

      As of May 1, 2005, we had a total of 191 locations included in the allowance for store closing costs, consisting of 137 store locations and 54 service centers. Of the store locations included in the allowance, 11 locations were vacant and 126 locations were subleased. Of the service centers included in the allowance, 2 were vacant and 52 were subleased. Future rent expense will be incurred through the expiration of the non-cancelable leases, the longest of which runs through March 2018.

      Activity in the allowance for store closing costs and the related payments for the thirteen weeks ended May 1, 2005 is as follows ($ in thousands):

      We expect net cash outflows for closed store locations of approximately $4.0 million during fiscal 2005 and the remainder of cash outflows to primarily occur during fiscal years 2006 through 2008. We plan to fund these outflows from normal operating cash flows. We anticipate that we will close or relocate approximately 18 stores during fiscal 2005. We anticipate that the majority of these closures will occur near the end of the lease terms, resulting in minimal closed store costs. We anticipate total cash outflows relating to these stores of $0.3 million, which includes estimated incremental costs to be measured at fair value when incurred.

Factors Affecting Liquidity and Capital Resources

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

      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 merchandise purchases, selective forward buying and the use of alternative suppliers.

      Our credit agreement contains negative covenants and restrictions on actions by us and our subsidiaries including, without limitation, restrictions and limitations on indebtedness, liens, guarantees, mergers, asset dispositions not in the ordinary course of business, investments, loans, advances, acquisitions, payment of dividends, transactions with affiliated parties, change in business conducted, and certain prepayments (other than in the ordinary course of business) and amendments of subordinated indebtedness. Our credit agreement requires that we meet certain financial covenants, ratios and tests, including a maximum leverage ratio and a minimum interest coverage ratio. The Consolidated Leverage Ratio is “Consolidated Total Funded Debt”, as defined in the credit agreement, divided by “Consolidated EBITDA” as defined in the credit agreement. The Interest Coverage Ratio is “Consolidated EBITDA”, as defined in the credit agreement, divided by “cash interest expense”, as defined in the credit agreement. At May 1, 2005, we were in compliance with the related covenants.

      During the review of our lease accounting practices at the end of fiscal 2004, we identified a small number of stores where the extent of our monetary investment in the construction of the stores requires capitalization of the improvements as assets and recording of the landlord reimbursement of costs as construction debt under EITF 97-10. In light of this addition of incremental debt to our balance sheet required by EITF 97-10 as well as the reduction in the required Consolidated Leverage Ratio (i.e., Debt to EBITDA, as specifically defined in our credit agreement) from 4.0 to 3.0 over the four fiscal quarters ended May 1, 2005, we entered into a waiver effective May 1, 2005, to our credit agreement (“Waiver”). The Waiver provides for the lenders’ waiver with respect to the first quarter of fiscal year 2005 ended May 1, 2005, of the Company’s compliance with the Consolidated Leverage Ratio covenant; provided that the ratio for the four consecutive fiscal quarters ended May 1, 2005, does not exceed 3.50 to 1.0. In addition, the Waiver provides for the exclusion from Indebtedness (as defined in the credit agreement) of all items that would be considered indebtedness under EITF 97-10 for all purposes on and after May 1, 2005, not to exceed $15 million in the aggregate. With this Waiver, we anticipate meeting all required covenants under our existing credit agreement in fiscal 2005.

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

      We have significantly reduced our outstanding debt over recent years. The degree to which we are leveraged could have important consequences on our ability to obtain additional financing for working capital, capital expenditures, acquisitions or general corporate purposes. A substantial portion of our cash flow from

operations must be dedicated to the payment of interest on our indebtedness, thereby reducing the funds available for other purposes. We may not be able to adjust rapidly to changing market conditions and we may be more vulnerable in the event of a downturn in general economic conditions or in our business.

      Financial market risks relating to our operations result primarily from changes in interest rates. Interest earned on our cash equivalents as well as interest paid on our variable rate debt and amounts received or paid on our interest rate swap are sensitive to changes in interest rates. Our variable rate debt relates to borrowings under our senior credit facility and the $100.0 million amount of our rate swap, which are vulnerable to movements in the LIBOR rate. On April 5, 2004, we entered into an interest rate swap agreement which converted the interest payment obligation on $100.0 million of our 7% senior subordinated notes to a floating rate, set semi-annually in arrears, equal to the six month LIBOR rate plus 283 basis points.

      At May 1, 2005, including the $100.0 million of senior subordinated notes that are part of the interest rate swap agreement, 70% of our outstanding debt was at variable interest rates and 30% of our outstanding debt was at fixed interest rates. With $347.0 million in variable rate debt outstanding, a 1% change in the LIBOR rate to which this variable rate debt is tied would result in a $3.5 million change in our annual interest expense. This estimate assumes that our debt balance remains constant for an annual period and the interest rate change occurs at the beginning of the period.

Critical Accounting Matters

      For a discussion of our critical accounting matters, please refer to our 2004 Annual Report.

Recent Accounting Pronouncements

      In March 2005, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 47 (“FIN 47”), “Accounting for Conditional Asset Retirement Obligations”. FIN 47 clarifies that the term “conditional asset retirement obligation” as used in Statement of Financial Accounting Standards (“SFAS”) No. 143, “Accounting for Asset Retirement Obligations,” refers to a legal obligation to perform an asset retirement activity in which the timing and/or method of settlement are conditional on a future event that may or may not be within the control of the Company. In addition, FIN 47 clarifies when a company would have sufficient information to reasonably estimate the fair value of an asset retirement obligation. FIN 47 is effective no later than the end of fiscal years ending after December 15, 2005. Retrospective application of interim financial information is permitted but not required. Early adoption is encouraged. We are evaluating the impact of FIN 47 on our consolidated financial statements.

      In December 2004, the FASB issued revised SFAS No. 123R, “Share-Based Payment.” SFAS No. 123R sets accounting requirements for “share-based” compensation to employees and requires companies to recognize in the income statement the grant-date fair value of stock options and other equity-based compensation. SFAS No. 123R is effective for fiscal years beginning after June 15, 2005. We will be required to adopt SFAS No. 123R in our first quarter of fiscal 2006. We currently disclose the proforma impact on net income (loss) and earnings (loss) per share under SFAS No. 123, “Accounting for Stock-Based Compensation” in Note 7 of the Consolidated Financial Statements. We are currently evaluating the impact of the adoption of SFAS No. 123R on our financial position and results of operations, including the valuation methods and support for the assumptions that will be included in the valuation of the awards.

      In November 2004, the FASB issued SFAS No. 151, “Inventory Costs — an amendment of ARB No. 43, Chapter 4”, which clarifies the accounting for abnormal amounts of idle facility expense, freight, handling costs and wasted material (spoilage). The standard requires that such costs be excluded from the cost of inventory and expensed when incurred. SFAS No. 151 is effective for fiscal years beginning after June 15, 2005. We do not expect that the adoption of SFAS No. 151 will have a material effect on our consolidated financial statements.

      In December 2004, the FASB issued SFAS No. 153, “Exchanges of Nonmonetary Assets — an amendment of APB No. 29, Accounting for Nonmonetary Transactions”, which addresses the measurement of exchanges of nonmonetary assets and eliminates the exception from fair value measurement for nonmonetary exchanges of similar productive assets. SFAS No. 153 is effective for nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. We do not expect that the adoption of SFAS No. 153 will have a material effect on our consolidated financial statements.

Forward-looking Statements

      Certain statements contained in the foregoing Management’s Discussion and Analysis of Financial Condition and Results of Operations are forward-looking statements. They discuss, among other things, expected growth, future store development and relocation strategy, business strategies, future revenues and future performance. The forward-looking statements are subject to risks, uncertainties and assumptions, including, but not limited to, competitive pressures and impacts, demand for our products, factors impacting procurement of import products, fluctuations in and the overall condition of the economy, timing and number of equity awards issued and the market value of such awards, inflation, consumer debt levels, factors impacting consumer spending and driving habits, conditions affecting new store development, weather conditions, compliance with Section 404 of the Sarbanes-Oxley Act, and litigation and regulatory matters. Actual results may differ materially from anticipated results described in these forward-looking statements. Additional information regarding these and other risks that may cause differences are contained in our periodic and other filings with the Securities and Exchange Commission.

      See “Factors Affecting Liquidity and Capital Resources” above.

      As previously disclosed under Item 8. Consolidated Financial Statements and Supplementary Data, in our Annual Report on Form 10-K for the fiscal year ended January 30, 2005 filed with the Securities and Exchange Commission on May 2, 2005, management concluded that as of January 30, 2005 the Company did not maintain effective internal control over financial reporting based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations (“COSO”), as the Company had identified the following material weaknesses:

      These material weaknesses could result in a misstatement of the Company’s accounts in a future period that would result in a material misstatement to the Company’s annual or interim financial statements that would not be prevented or detected.

      In our fiscal 2004 Annual Report, management outlined the following plan for remediation of the material weaknesses:

      The Company has made and will continue to make improvements to internal control over financial reporting that we believe will remediate the material weaknesses described above. Specifically, with regard to our lease accounting practices, management intends to:

      With regard to our accounting for vendor allowances, management intends to address the material weaknesses in the accounting and estimation for vendor allowances as follows:

      With regard to our estimation and calculation of the required inventory shrink and obsolescence allowances, management will reassign the review responsibility to permit a more complete review and require that certain data inputs be verified by the reviewer.

      With regard to the capabilities and experience of our accounting organization, we intend to:

      Although the Company has begun to implement certain of the above-described actions, it is still evaluating the appropriate remediation measures required in order to address the above-described deficiencies. Progress relative to our remediation measures with respect to the above material weaknesses will be disclosed in our subsequent Exchange Act reports.

      Nevertheless, in light of the material weaknesses described above, the Company has implemented additional processes and procedures and performed additional analysis and other post-closing procedures to ensure that our consolidated financial statements were prepared in accordance with generally accepted accounting principles. With regard to accounting for lease related assets in particular, we changed our procedures regarding the review, analysis and recording of new and amended leases, including the selection and monitoring of appropriate assumptions and factors affecting lease accounting and leasehold depreciation practices. Accordingly, management believes that the financial statements included in this Form 10-Q fairly present in all material respects our financial position, results of operations and cash flows for the periods presented.

Evaluation of Effectiveness of Disclosure Controls and Procedures

      Under the supervision and with the participation of our management, including our Chairman and Chief Executive Officer and our Chief Financial Officer, we evaluated the effectiveness of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended. In making this evaluation, we considered the material weaknesses in our internal control over financial reporting that we previously identified (as more fully described above). Based on that evaluation, our Chairman and Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were ineffective as of the end of the period covered by this quarterly report.

Changes in Internal Control Over Financial Reporting

      During the fiscal quarter ended May 1, 2005, there has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) that has materially affected or is reasonably likely to materially affect, our internal control over financial reporting.

PART II

OTHER INFORMATION

      During the third quarter of fiscal 2003, we received notification from the State of California Board of Equalization (the “Board”) of an assessment for approximately $1.2 million for sales tax and approximately $0.6 million for related interest based on the Board’s audit findings for the tax periods of October 1997 through September 2000. During this time period, we refunded the sales tax associated with battery cores to customers who returned a battery core to our stores. The Board believes that the sales tax associated with the battery cores should have been remitted to the taxing authority rather than refunded to the customers. Based on the Board’s position, we could be responsible for the sales tax and related interest associated with this matter for the audited periods of October 1997 through September 2000, plus the additional unaudited time period through December 2002, when we changed our business practices in this area to mitigate potential future tax related liability.

      We believe that we have a strong basis under California law for disputing the payment of this assessment, and in October 2003 we timely filed a Petition for Redetermination with the Board. In May 2004, we received a response from the Board indicating that the district office that conducted the audit upheld its position. We attended an appeals conference on April 4, 2005 and are awaiting the decision from the appeals conference. Our practices through December 2002 relative to the handling of taxes on battery cores had been consistent for over a decade, and it is our position that our consistent treatment of battery core charges, together with prior tax audits and tax auditors’ written commentary concerning our handling of such charges, permits us to rely upon precedent set in prior audits. Reliance on prior audits is a position that is supportable under California law. We also have other defenses and intend to vigorously defend our position with regard to this matter. A liability for the potential sales tax and related interest payments has not been recorded in our consolidated financial statements.

      We were served on October 26, 2004 with a lawsuit that was filed in the Superior Court in San Diego, California. The case was brought by a former sales associate in California who resigned in January 2003, and purports to be a class action on behalf of all current and former California hourly store employees claiming that plaintiff and those similarly situated were not paid for: (i) all time worked (i.e. “off the clock” work), (ii) the minimum reporting time pay when they reported to work a second time in a day, (iii) all overtime due, (iv) all wages due at termination, and (v) amounts due for late or missed meal periods or rest breaks. Plaintiff also alleges that we violated certain record keeping requirements arising out of the foregoing alleged violations. The lawsuit claims these alleged practices are unfair business practices, and requests back pay, restitution, penalties for violations of various Labor Code sections and for failure to pay all wages due on termination, and interest for the last four years, plus attorney fees and that the Company be enjoined from committing further unfair business practices. We believe we have meritorious defenses to all of these claims and intend to defend the claims vigorously. If one or more of the claims is permitted by the court to proceed as a class action and is decided against us, the aggregate potential financial exposure could be material to our annual results of operations. We do not believe an adverse outcome would materially affect our liquidity or consolidated financial position. However, the litigation is in its early stages and we cannot predict the outcome with any certainty. A liability for this matter has not been recorded in our consolidated financial statements.

      We currently and from time to time are involved in other litigation incidental to the conduct of our business, including asbestos and similar product liability claims, slip and fall and other general liability claims, discrimination and employment claims, vendor disputes, and miscellaneous environmental and real estate claims. The damages claimed in some of this litigation are substantial. Based on internal review, we accrue reserves using our best estimate of the probable and reasonably estimable contingent liabilities. We do not currently believe that any of these other legal claims incidental to the conduct of our business, individually or in the aggregate, will result in liabilities material to our consolidated financial position, results of operations or cash flows.

      On June 8, 2004, our Board of Directors approved a share repurchase program authorizing us to acquire up to $25.0 million of our common stock. The program expires in December 2005. We did not purchase any shares of our common stock during the first quarter of fiscal 2005.

      NONE

      NONE

      NONE

      (a) Exhibits:

SIGNATURE

      Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

DATED: June 10, 2005

EXHIBIT INDEX