CSK Auto Corp. (NYSE: CAO), the parent company of CSK Auto Inc., a specialty retailer in the automotive aftermarket, today reported its financial results for the third quarter of fiscal 2004.

Financial Results

Thirteen Weeks Ended Oct. 31, 2004

Net sales for the 13 weeks ended Oct. 31, 2004 (the "third quarter of fiscal 2004") were $401.5 million, compared to $409.8 million for the 13 weeks ended Nov. 2, 2003 (the "third quarter of fiscal 2003"). Same store sales decreased 3.2% in the third quarter of fiscal 2004 as compared to the third quarter of fiscal 2003.

Gross profit was $190.9 million, or 47.5% of net sales, in the third quarter of fiscal 2004 as compared to $192.2 million, or 46.9% of net sales, in the third quarter of fiscal 2003. Gross profit, as a percent to sales, increased over the third quarter of fiscal 2003 due to lower product acquisition costs on selected items, improvements in our balance of sales through enhanced category management, and our continued reduction in store inventory shrinkage as a result of improved store procedures and enhanced inventory control systems.

Operating profit for the third quarter of fiscal 2004 was $31.5 million compared to $36.9 million for the third quarter of fiscal 2003. The decrease in operating profit relates primarily to lower sales, slightly higher advertising expenditures and benefit-related expenses.

Interest expense for the third quarter of fiscal 2004 declined by $4.6 million to $7.8 million from $12.4 million in the third quarter of fiscal 2003 due to lower interest expense achieved as a result of our refinancing completed in January 2004.

Net income for the third quarter of fiscal 2004 was $14.4 million, or $0.32 per diluted share, compared to net income of $15.0 million, or $0.33 per diluted share, for the third quarter of fiscal 2003. Net income for the third quarter of fiscal 2003 was negatively impacted by $0.2 million of costs related to a secondary stock offering.

"Our financial performance for the third quarter, although consistent with our prior guidance, continued to be adversely impacted by a difficult sales environment," said Maynard Jenkins, chairman and chief executive officer of CSK Auto Corp. "Since the beginning of our second quarter, we have experienced lower than anticipated sales. We believe our sales have been negatively impacted by higher gas prices and general economic conditions. Although we are not satisfied with our current sales performance, our gross margin rate continued to improve due to lower product acquisition costs and improved store inventory shrinkage results. Additionally, we generated in excess of $73 million in operating cash flow for the first three quarters of the year. We are focused on our long-term objectives of maximizing the productivity within our existing stores, debt reduction, and acceleration of our new store growth, which will allow us to further leverage our fixed expenses. We remain positive about the strength and growth potential of the retail automotive aftermarket industry."

Thirty-nine Weeks Ended Oct. 31, 2004

Net sales for the 39 weeks ended Oct. 31, 2004 (the "39 weeks of fiscal 2004") were $1,207.6 million, compared to $1,205.7 million for the 39 weeks ended Nov. 2, 2003 (the "39 weeks of fiscal 2003"). Same store sales were flat as compared to the 39 weeks of fiscal 2003.

Gross profit was $570.8 million, or 47.3% of net sales, in the 39 weeks of fiscal 2004, as compared to $560.9 million, or 46.5% of net sales, in the 39 weeks of fiscal 2003. The improvement in gross margin rates year over year has resulted from lower product acquisition costs on selected items, improvements in our balance of sales through enhanced category management, and reduced store inventory shrinkage as a result of improved store procedures and enhanced inventory control systems.

Operating profit for the 39 weeks of fiscal 2004 totaled $91.3 million, or 7.6% of net sales, compared to $98.3 million, or 8.2% of net sales, for the 39 weeks of fiscal 2003. The decrease in operating profit is primarily the result of higher advertising expenditures and payroll and benefit-related expenses.

Interest expense for the 39 weeks of fiscal 2004 decreased to $23.7 million from $39.6 million in the 39 weeks of fiscal 2003 due primarily to lower interest expense achieved as a result of our refinancing completed in January 2004.

Net income for the 39 weeks of fiscal 2004 was $41.2 million, or $0.89 per diluted share, compared to net income of $33.4 million, or $0.73 per diluted share, for the 39 weeks of fiscal 2003. Net income for the 39 weeks of fiscal 2003 was negatively impacted by $4.3 million of costs related to debt retirement and $0.2 million of costs associated with a secondary stock offering.

Outlook

Based on our third quarter sales performance and the strong 7.5% same store sales increase in the fourth quarter of fiscal 2003, we now expect same store sales to decline between 1.5% and 3.5% during the fourth quarter. Assuming these results, we expect fourth quarter net income of between $9.5 million and $12.0 million, or approximately $0.21 to $0.26 per diluted share, and full-year net income of between $50.7 million to $53.2 million, or $1.11 to $1.16 per diluted share (assuming approximately 46 million diluted shares outstanding), excluding any costs associated with the planned redemption this month of the approximately $15 million remaining balance of our 12% Senior Notes. We also now expect free cash flow (a non-GAAP measure, defined and described further below) for fiscal 2004 of approximately $70 million.

Conference Call

In conjunction with this release, we will hold a quarterly conference call for the investing public commencing at 5 p.m. (ET) on Thursday, Dec. 2, 2004. Interested parties may hear a replay of the conference call from 7 p.m. (ET) Thursday, Dec. 2, 2004 through 8 p.m. (ET) Friday, Dec. 3, 2004 by dialing 877-519-4471 and using passcode 5401224. (If retrieving digital replay outside of the United States, please dial 973-341-3080, passcode 5401224.) A simultaneous webcast of the conference call will be available at www.cskauto.com by clicking on "Investors" and then "Conference Call." This webcast will be archived for five days.

CSK Auto Corp. is the parent company of CSK Auto Inc., a specialty retailer in the automotive aftermarket. As of Oct. 31, 2004, we operated 1,129 stores in 19 states under the brand names Checker Auto Parts, Schuck's Auto Supply and Kragen Auto Parts.

Certain statements contained in this release are forward-looking statements. These statements discuss, among other things, expected growth, store development and expansion 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, demand for our products, the overall condition of the economy, timing and number of equity awards issued, factors affecting the import of products, inflation, consumer debt levels, factors impacting consumer spending and driving habits, conditions affecting new store development, weather conditions, risks related to 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 is contained in the company's periodic filings with the SEC.