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CSK Auto 10-K filing delay expected to prompt default on notes, credit agreement
By Caroline Salls
Pittsburgh, April 17 - CSK Auto Corp. is delaying the filing of its 10-K annual report for the fiscal year ended Jan. 29 with the Securities and Exchange Commission pending completion of an investigation into accounting errors and irregularities, which is expected to prompt a default under company notes and a credit agreement, according to a company news release.
CSK said it expects holders of CSK Auto Inc.'s $225 million of senior subordinated notes and $225 million of exchangeable senior notes and its credit agreement lenders to file notices of default in connection with the delayed filing of the financial statements.
The audit committee said it believes that the investigation should be complete before any acceleration of payment would occur under the notes indentures and credit agreement.
According to the release, the investigation is primarily focused on the company's accounting for inventories and vendor allowances, and it expects its financial results for each of the three fiscal years 2002, 2003 and 2004, selected consolidated financial data for each of the five fiscal years 2000 through 2004 and interim financial information for each of its quarters in fiscal year 2004 and for the first three quarters of fiscal 2005 will need to be restated.
In addition, failure to deliver annual financial information will result in the inability to draw on the $132 million outstanding under CSK's revolving credit facility.
The company said it is working with its lenders to obtain a temporary waiver of the filing time limit to permit continued access to the credit facility pending completion of the investigation.
The company said it is also in preliminary discussions concerning alternative financing if any of its outstanding debt is accelerated and believes it will be able to secure replacement financing if needed.
CSK is a Phoenix-based automotive aftermarket retailer.
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