VIRGINIA
(State
or other jurisdiction of incorporation
or organization)
|
54-1821055
(I.R.S.
Employer Identification
No.)
|
12800
TUCKAHOE CREEK PARKWAY, RICHMOND, VIRGINIA
(Address
of principal executive offices)
|
23238
(Zip
Code)
|
Title
of each class
Common
Stock, par value $0.50
Rights
to Purchase Series A Preferred Stock,
par
value $20.00
|
Name
of each exchange on which registered
New
York Stock Exchange
New
York Stock Exchange
|
|
|
|
Page
No.
|
|
|
Business
|
4
|
||
Risk
Factors
|
11
|
|||
Unresolved
Staff Comments
|
12
|
|||
|
Properties
|
13
|
||
|
Legal
Proceedings
|
14
|
||
|
Submission
of Matters to a Vote of Security Holders
|
14
|
||
|
Market
for the Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
|
15
|
||
|
Selected
Financial Data
|
17
|
||
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
18
|
||
|
Quantitative
and Qualitative Disclosures about Market Risk
|
34
|
||
|
Consolidated
Financial Statements and Supplementary Data
|
35
|
||
|
Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure
|
61
|
||
Controls
and Procedures
|
61
|
|||
Other
Information
|
61
|
|||
|
Directors,
Executive Officers and Corporate Governance
|
62
|
||
|
Executive
Compensation
|
63
|
||
|
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
|
63
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||
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Certain
Relationships and Related Transactions, and Director
Independence
|
63
|
||
|
Principal
Accountant Fees and Services
|
63
|
||
|
Exhibits
and Financial Statement Schedules
|
64
|
||
|
65
|
· |
Our
projected future sales growth, comparable store unit sales growth,
earnings, and earnings per share.
|
· |
Our
expected future expenditures, cash needs, and financing
sources.
|
· |
The
projected number, timing, and cost of new store
openings.
|
· |
Our
sales and marketing plans.
|
· |
Our
assessment of the potential outcome and financial impact of litigation
and
the potential impact of unasserted
claims.
|
· |
Our
assessment of competitors and potential
competitors.
|
· |
Our
assessment of the effect of recent legislation and accounting
pronouncements.
|
|
Used
Car Superstores
|
|
|
||
|
Mega
|
Standard
(2)
|
Satellite(2)
|
Co-Located
New
Car Stores (1)
|
Total
|
Alabama
|
—
|
1
|
—
|
—
|
1
|
California
|
1
|
4
|
3
|
1
|
9
|
Connecticut
|
—
|
1
|
1
|
—
|
2
|
Florida
|
3
|
4
|
3
|
1
|
11
|
Georgia
|
1
|
2
|
1
|
—
|
4
|
Illinois
|
3
|
1
|
2
|
—
|
6
|
Indiana
|
—
|
1
|
1
|
—
|
2
|
Kansas
|
—
|
2
|
—
|
—
|
2
|
Kentucky
|
—
|
1
|
—
|
—
|
1
|
Maryland
|
1
|
1
|
1
|
1
|
4
|
Missouri
|
—
|
—
|
1
|
—
|
1
|
Nevada
|
—
|
1
|
1
|
—
|
2
|
New
Mexico
|
—
|
1
|
—
|
—
|
1
|
North
Carolina
|
—
|
3
|
3
|
—
|
6
|
Ohio
|
—
|
1
|
1
|
—
|
2
|
Oklahoma
|
—
|
1
|
—
|
—
|
1
|
South
Carolina
|
—
|
2
|
—
|
—
|
2
|
Tennessee
|
—
|
3
|
1
|
—
|
4
|
Texas
|
4
|
4
|
3
|
—
|
11
|
Utah
|
—
|
1
|
—
|
—
|
1
|
Virginia
|
—
|
4
|
2
|
—
|
6
|
Wisconsin
|
—
|
1
|
—
|
1
|
2
|
Total
|
13
|
40
|
24
|
4
|
81
|
(1)
|
We
currently operate seven new car franchises. Two franchises are integrated
within used car superstores and do not operate as separate stores.
The
remaining five franchises are operated from four new car stores that
are
co-located with used car
superstores.
|
(2)
|
The
Kenosha, Wisc. superstore has been reclassified from a satellite
to a
standard superstore.
|
First
Quarter
|
Second
Quarter
|
Third
Quarter
|
Fourth
Quarter
|
||||||||||
Fiscal
2007
|
|||||||||||||
High
|
$
|
18.20
|
$
|
18.95
|
$
|
23.99
|
$
|
29.44
|
|||||
Low
|
$
|
15.14
|
$
|
14.85
|
$
|
18.59
|
$
|
23.10
|
|||||
Fiscal
2006
|
|||||||||||||
High
|
$
|
17.00
|
$
|
17.12
|
$
|
16.00
|
$
|
15.92
|
|||||
Low
|
$
|
12.44
|
$
|
12.32
|
$
|
13.00
|
$
|
13.20
|
As
of February 28 or 29
|
|||||||||||||||||||
2002
|
2003
|
2004
|
2005
|
2006
|
2007
|
||||||||||||||
CarMax
|
$
|
100.00
|
$
|
56.28
|
$
|
127.15
|
$
|
123.41
|
$
|
117.50
|
$
|
197.08
|
|||||||
S&P
500 Index
|
$
|
100.00
|
$
|
77.32
|
$
|
107.10
|
$
|
114.58
|
$
|
124.20
|
$
|
139.06
|
|||||||
S&P
500 Retailing Index
|
$
|
100.00
|
$
|
72.39
|
$
|
113.21
|
$
|
125.29
|
$
|
135.97
|
$
|
149.85
|
FY07
|
FY06
|
FY05
|
FY04
|
FY03
|
FY02
|
||||||||||||||
Income
statement information
(In
millions)
|
|||||||||||||||||||
Used
vehicle sales
|
$
|
5,872.8
|
$
|
4,771.3
|
$
|
3,997.2
|
$
|
3,470.6
|
$
|
2,912.1
|
$
|
2,497.2
|
|||||||
New
vehicle sales
|
445.1
|
502.8
|
492.1
|
515.4
|
519.8
|
559.9
|
|||||||||||||
Wholesale
vehicle sales
|
918.4
|
778.3
|
589.7
|
440.6
|
366.6
|
325.6
|
|||||||||||||
Other
sales and revenues
|
229.3
|
207.6
|
181.3
|
171.1
|
171.4
|
151.1
|
|||||||||||||
Net
sales and operating revenues
|
7,465.7
|
6,260.0
|
5,260.3
|
4,597.7
|
3,969.9
|
3,533.8
|
|||||||||||||
Gross
profit
|
971.1
|
790.7
|
650.2
|
570.9
|
468.2
|
419.4
|
|||||||||||||
CarMax
Auto Finance income
|
132.6
|
104.3
|
82.7
|
85.0
|
82.4
|
66.5
|
|||||||||||||
SG&A
|
776.2
|
674.4
|
565.3
|
479.3
|
399.5
|
337.0
|
|||||||||||||
Earnings
before income taxes
|
323.3
|
217.6
|
165.8
|
178.4
|
149.6
|
143.9
|
|||||||||||||
Provision
for income taxes
|
124.8
|
83.4
|
64.5
|
68.9
|
59.2
|
54.9
|
|||||||||||||
Net
earnings
|
198.6
|
134.2
|
101.3
|
109.6
|
90.4
|
89.1
|
|||||||||||||
Share
and per share
information
(Shares
in millions)
|
|||||||||||||||||||
Weighted
average shares outstanding:
|
|||||||||||||||||||
Basic
|
212.5
|
209.3
|
208.1
|
207.0
|
206.0
|
204.1
|
|||||||||||||
Diluted
|
216.7
|
212.8
|
211.3
|
210.6
|
209.1
|
207.8
|
|||||||||||||
Net
earnings per share:
|
|||||||||||||||||||
Basic
|
$
|
0.93
|
$
|
0.64
|
$
|
0.49
|
$
|
0.53
|
$
|
0.44
|
$
|
0.44
|
|||||||
Diluted
|
$
|
0.92
|
$
|
0.63
|
$
|
0.48
|
$
|
0.52
|
$
|
0.43
|
$
|
0.43
|
|||||||
Balance
sheet information (In
millions)
|
|||||||||||||||||||
Total
current assets
|
$
|
1,150.5
|
$
|
941.7
|
$
|
853.0
|
$
|
760.5
|
$
|
697.3
|
$
|
577.7
|
|||||||
Total
assets
|
1,885.6
|
1,509.6
|
1,306.3
|
1,055.1
|
921.7
|
721.9
|
|||||||||||||
Total
current liabilities
|
512.0
|
344.9
|
317.8
|
232.2
|
237.7
|
221.1
|
|||||||||||||
Short-term
debt
|
3.3
|
0.5
|
65.2
|
4.4
|
56.1
|
9.8
|
|||||||||||||
Current
portion of long-term debt
|
148.4
|
59.8
|
0.3
|
—
|
—
|
78.6
|
|||||||||||||
Long-term
debt, excluding current portion
|
33.7
|
134.8
|
128.4
|
100.0
|
100.0
|
—
|
|||||||||||||
Total
shareholders’ equity
|
1,247.4
|
980.1
|
814.2
|
688.0
|
558.6
|
487.1
|
|||||||||||||
Unit
sales information
|
|||||||||||||||||||
Used
vehicle units sold
|
337,021
|
289,888
|
253,168
|
224,099
|
190,135
|
164,062
|
|||||||||||||
New
vehicle units sold
|
18,563
|
20,901
|
20,636
|
21,641
|
22,360
|
24,164
|
|||||||||||||
Wholesale
vehicle units sold
|
208,959
|
179,548
|
155,393
|
127,168
|
104,593
|
90,937
|
|||||||||||||
Percent
changes in
|
|||||||||||||||||||
Comparable
store used vehicle unit sales
|
9
|
4
|
1
|
6
|
8
|
24
|
|||||||||||||
Total
used vehicle unit sales
|
16
|
15
|
13
|
18
|
16
|
23
|
|||||||||||||
Total
net sales and operating revenues
|
19
|
19
|
14
|
16
|
12
|
28
|
|||||||||||||
Diluted
net earnings per share
|
46
|
31
|
(8
|
)
|
21
|
—
|
95
|
||||||||||||
Other
year-end information
|
|||||||||||||||||||
Used
car superstores
|
77
|
67
|
58
|
49
|
40
|
35
|
|||||||||||||
Retail
stores
|
81
|
71
|
61
|
52
|
44
|
40
|
|||||||||||||
Associates
|
13,736
|
11,712
|
10,815
|
9,355
|
8,263
|
7,196
|
· |
Net
sales and operating revenues increased 19% to $7.47 billion from
$6.26
billion in fiscal 2006, while net earnings increased 48% to $198.6
million, or $0.92 per share, from $134.2 million, or $0.63 per share.
|
· |
Total
used vehicle unit sales increased 16%, reflecting the combination
of our
9% increase in comparable store used unit sales and the growth in
our
store base.
|
· |
Total
wholesale vehicle unit sales increased 16%, consistent with our used
vehicle unit sales growth.
|
· |
We
opened ten used car superstores in fiscal 2007, including five standard
superstores and five satellite superstores.
|
· |
Our
total gross profit per unit increased to $2,731 from $2,544 in fiscal
2006. We realized improvements in gross profit per unit in all categories,
including used vehicles, new vehicles, wholesale vehicles, and other.
We
believe our used vehicle gross profit benefited from our strong,
consistent sales performance, which resulted in fewer pricing markdowns
being made, as well as a more stable underlying economic environment.
|
· |
CAF
income increased 27% to $132.6 million from $104.3 million in fiscal
2006.
The improvement reflected the growth in retail vehicle sales and
managed
receivables, an improvement in the gain on loans originated and sold,
and
an increase in the average amount financed. CAF income included a
benefit
of $13.0 million, or $0.04 per share for favorable items, primarily
valuation adjustments of our retained interest, in fiscal 2007, compared
with a benefit of $15.2 million, or $0.04 per share in fiscal 2006.
|
· |
Selling,
general, and administrative expenses as a percent of net sales and
operating revenues (the “SG&A ratio”) declined to 10.4% from 10.8% in
fiscal 2006. We benefited from the leverage of fixed expenses generated
by
our strong comparable store sales growth.
|
· |
As
a result of adopting SFAS 123(R) in fiscal 2007, we recognized share-based
compensation expense of $0.09 per share in fiscal 2007 compared with
$0.07
per share in fiscal 2006, as restated. The fiscal 2007 expense includes
costs of $0.02 per share resulting from the retirement of our former
chief
executive officer.
|
· |
Net
cash provided by operations increased to $136.8 million from $117.5
million in fiscal 2006, primarily reflecting the improved net earnings
offset by increased investment in working
capital.
|
Years
Ended February 28
|
|||||||||||||||||||
(In
millions)
|
2007
|
%
|
2006
|
%
|
2005
|
%
|
|||||||||||||
Used
vehicle sales
|
$
|
5,872.8
|
78.7
|
$
|
4,771.3
|
76.2
|
$
|
3,997.2
|
76.0
|
||||||||||
New
vehicle sales
|
445.1
|
6.0
|
502.8
|
8.0
|
492.1
|
9.4
|
|||||||||||||
Wholesale
vehicle sales
|
918.4
|
12.3
|
778.3
|
12.4
|
589.7
|
11.2
|
|||||||||||||
Other
sales and revenues:
|
|||||||||||||||||||
Extended
service plan revenues
|
114.4
|
1.5
|
97.9
|
1.6
|
84.6
|
1.6
|
|||||||||||||
Service
department sales
|
90.6
|
1.2
|
93.4
|
1.5
|
82.3
|
1.6
|
|||||||||||||
Third-party
finance fees, net
|
24.3
|
0.3
|
16.3
|
0.3
|
14.4
|
0.3
|
|||||||||||||
Total
other sales and revenues
|
229.3
|
3.1
|
207.6
|
3.3
|
181.3
|
3.4
|
|||||||||||||
Total
net sales and operating revenues
|
$
|
7,465.7
|
100.0
|
$
|
6,260.0
|
100.0
|
$
|
5,260.3
|
100.0
|
Years
Ended February 28
|
||||||||||
2007
|
2006
|
2005
|
||||||||
Vehicle
units:
|
||||||||||
Used
vehicles
|
16
|
%
|
15
|
%
|
13
|
%
|
||||
New
vehicles
|
(11
|
)%
|
1
|
%
|
(5
|
)%
|
||||
Total
|
14
|
%
|
14
|
%
|
11
|
%
|
||||
Vehicle
dollars:
|
||||||||||
Used
vehicles
|
23
|
%
|
19
|
%
|
15
|
%
|
||||
New
vehicles
|
(11
|
)%
|
2
|
%
|
(5
|
)%
|
||||
Total
|
20
|
%
|
17
|
%
|
13
|
%
|
Years
Ended February 28
|
||||||||||
2007
|
2006
|
2005
|
||||||||
Vehicle
units:
|
||||||||||
Used
vehicles
|
9
|
%
|
4
|
%
|
1
|
%
|
||||
New
vehicles
|
(11
|
)%
|
1
|
%
|
8
|
%
|
||||
Total
|
8
|
%
|
4
|
%
|
1
|
%
|
||||
Vehicle
dollars:
|
||||||||||
Used
vehicles
|
16
|
%
|
8
|
%
|
3
|
%
|
||||
New
vehicles
|
(12
|
)%
|
1
|
%
|
8
|
%
|
||||
Total
|
13
|
%
|
8
|
%
|
3
|
%
|
Years
Ended February 28
|
||||||||||
2007
|
2006
|
2005
|
||||||||
Used
car superstores, beginning of year
|
67
|
|
|
58
|
|
|
49
|
|||
Superstore
openings:
|
||||||||||
Standard
superstores
|
5
|
|
|
5
|
|
|
5
|
|||
Satellite
superstores
|
5
|
|
|
4
|
|
|
4
|
|||
Total
superstore openings
|
10
|
|
|
9
|
|
|
9
|
|||
Used
car superstores, end of year
|
77
|
67
|
58
|
|||||||
Openings
as a percent of the beginning-of-year store base
|
15
|
%
|
16
|
%
|
18
|
%
|
Years
Ended February 28
|
||||||||||
2007
|
|
2006
|
|
2005
|
||||||
Used
vehicles
|
337,021
|
289,888
|
253,168
|
|||||||
New
vehicles
|
18,563
|
20,901
|
20,636
|
|||||||
Wholesale
vehicles
|
208,959
|
179,548
|
155,393
|
Years
Ended February 28
|
||||||||||
2007
|
2006
|
2005
|
||||||||
Used
vehicles
|
$
|
17,249
|
$
|
16,298
|
$
|
15,663
|
||||
New
vehicles
|
$
|
23,833
|
$
|
23,887
|
$
|
23,671
|
||||
Wholesale
vehicles
|
$
|
4,286
|
$
|
4,233
|
$
|
3,712
|
Years
Ended February 28
|
||||||||||
2007
|
2006
|
2005
|
||||||||
Vehicle
units:
|
||||||||||
Used
vehicles
|
95
|
%
|
93
|
%
|
92
|
%
|
||||
New
vehicles
|
5
|
7
|
8
|
|||||||
Total
|
100
|
%
|
100
|
%
|
100
|
%
|
||||
Vehicle
dollars:
|
||||||||||
Used
vehicles
|
93
|
%
|
90
|
%
|
89
|
%
|
||||
New
vehicles
|
7
|
10
|
11
|
|||||||
Total
|
100
|
%
|
100
|
%
|
100
|
%
|
As
of February 28
|
||||||||||
2007
|
2006
|
2005
|
||||||||
Mega
superstores (1)
|
13
|
13
|
13
|
|||||||
Standard
superstores (2)
(4)
|
40
|
35
|
30
|
|||||||
Satellite
superstores (3)
(4)
|
24
|
19
|
15
|
|||||||
Total
used car superstores
|
77
|
67
|
58
|
|||||||
Co-located
new car stores
|
4
|
4
|
3
|
|||||||
Total
|
81
|
71
|
61
|
(1) |
Generally
70,000 to 95,000 square feet on 20 to 35 acres.
|
(2) |
Generally
40,000 to 60,000 square feet on 10 to 25
acres.
|
(3) |
Generally
10,000 to 20,000 square feet on 4 to 10
acres.
|
(4)
|
The
Kenosha, Wisc. superstore has been reclassified from a satellite
to a
standard superstore.
|
Years
Ended February 28
|
|||||||||||||||||||
2007
|
2006
|
2005
|
|||||||||||||||||
$
per unit (1)
|
%
(2)
|
$
per unit (1)
|
%
(2)
|
$
per unit (1)
|
%
(2)
|
||||||||||||||
Used
vehicle gross profit
|
$
|
1,903
|
10.9
|
$
|
1,808
|
11.0
|
$
|
1,817
|
11.5
|
||||||||||
New
vehicle gross profit
|
$
|
1,169
|
4.9
|
$
|
934
|
3.9
|
$
|
860
|
3.6
|
||||||||||
Wholesale
vehicle gross profit
|
$
|
742
|
16.9
|
$
|
700
|
16.1
|
$
|
464
|
12.2
|
||||||||||
Other
gross profit
|
$
|
431
|
66.8
|
$
|
391
|
58.5
|
$
|
366
|
55.3
|
||||||||||
Total
gross profit
|
$
|
2,731
|
13.0
|
$
|
2,544
|
12.6
|
$
|
2,375
|
12.4
|
(1) |
Calculated
as category gross profit divided by its respective units sold, except
the
other and total categories, which are divided by total retail units
sold.
|
(2) |
Calculated
as a percentageof its respective sales or
revenue.
|
Years
Ended February 28
|
|||||||||||||||||||
(In
millions)
|
2007
|
%
|
2006
|
%
|
2005
|
%
|
|||||||||||||
Total
gain income (1)
|
$
|
99.7
|
4.3
|
$
|
77.1
|
4.1
|
$
|
58.3
|
3.8
|
||||||||||
Other
CAF income: (2)
|
|||||||||||||||||||
Servicing
fee income
|
32.4
|
1.1
|
27.6
|
1.0
|
24.7
|
1.0
|
|||||||||||||
Interest
income
|
26.6
|
0.9
|
21.4
|
0.8
|
19.0
|
0.8
|
|||||||||||||
Total
other CAF income
|
59.0
|
1.9
|
49.0
|
1.8
|
43.7
|
1.8
|
|||||||||||||
Direct
CAF expenses: (2)
|
|||||||||||||||||||
CAF
payroll and fringe benefit
expense
|
12.0
|
0.4
|
10.3
|
0.4
|
9.0
|
0.4
|
|||||||||||||
Other
direct CAF expenses
|
14.0
|
0.5
|
11.5
|
0.4
|
10.3
|
0.4
|
|||||||||||||
Total
direct CAF expenses
|
26.0
|
0.9
|
21.8
|
0.8
|
19.3
|
0.8
|
|||||||||||||
CarMax
Auto Finance income (3)
|
$
|
132.6
|
1.8
|
$
|
104.3
|
1.7
|
$
|
82.7
|
1.6
|
||||||||||
Total
loans sold
|
$
|
2,322.7
|
$
|
1,887.5
|
$
|
1,534.8
|
|||||||||||||
Average
managed receivables
|
$
|
3,071.1
|
$
|
2,657.7
|
$
|
2,383.6
|
|||||||||||||
Ending
managed receivables
|
$
|
3,311.0
|
$
|
2,772.5
|
$
|
2,494.9
|
|||||||||||||
Total
net sales and operating revenues
|
$
|
7,465.7
|
$
|
6,260.0
|
$
|
5,260.3
|
(1) |
Percent
of loans sold.
|
(2) |
Percent
of average managed
receivables.
|
(3) |
Percent
of net sales and operating
revenues.
|
Years
Ended February 28
|
||||||||||
(In
millions)
|
2007
|
2006
|
2005
|
|||||||
Gains
on sales of loans originated and sold
|
$
|
86.7
|
$
|
61.9
|
$
|
54.9
|
||||
Other
gain income
|
13.0
|
15.2
|
3.3
|
|||||||
Total
gain income
|
$
|
99.7
|
$
|
77.1
|
$
|
58.3
|
||||
Loans
originated and sold
|
$
|
2,240.2
|
$
|
1,792.6
|
$
|
1,483.8
|
||||
Receivables
repurchased from public securitizations and
resold
|
82.5
|
94.8
|
51.0
|
|||||||
Total
loans sold
|
$
|
2,322.7
|
$
|
1,887.5
|
$
|
1,534.8
|
||||
Gain
percentage on loans originated and sold
|
3.9
|
%
|
3.5
|
%
|
3.7
|
%
|
||||
Total
gain income as a percentage of total loans sold
|
4.3
|
%
|
4.1
|
%
|
3.8
|
%
|
· |
Valuation
adjustments.
The net favorable valuation adjustments in both fiscal 2007 and fiscal
2006 primarily resulted from lowering loss rate assumptions, mostly
on
pools of receivables securitized in calendar years 2003, 2004, and
2005.
We believe these pools of receivables experienced lower-than-expected
loss
rates as a result of a combination of factors, including
better-than-expected performance of our new credit scorecard implemented
in calendar year 2002, favorable economic conditions, operating
efficiencies resulting from systems enhancements, and an improved
recovery
rate.
|
· |
New
public securitizations.
CarMax periodically repurchases receivables from the warehouse facility
and refinances them in public securitizations. The impact of refinancing
receivables can be favorable or unfavorable depending on the relative
economics of funding structures at the time the receivables are
refinanced. These transactions did not have a material impact in
fiscal
2007. In fiscal 2006, we recognized a benefit of $0.01 per share
as we
refinanced balances from the warehouse facility into new public
securitizations.
|
· |
Repurchase
and resale of receivables.
Our securitizations typically contain an option to repurchase the
securitized receivables when the outstanding balance in a pool of
automobile loan receivables falls below 10% of the original pool
balance.
This option was exercised two times in each of fiscal 2007 and 2006.
In
each case, the remaining eligible automobile loan receivables were
subsequently resold into the warehouse facility. These transactions
did
not have a material impact in fiscal 2007. In fiscal 2006, the spread
between the APR on the loans and the then-current funding cost in
the
warehouse facility resulted in an earnings benefit.
|
As
of February 28
|
||||||||||
(In
millions)
|
2007
|
2006
|
2005
|
|||||||
Loans
securitized
|
$
|
3,242.1
|
$
|
2,710.4
|
$
|
2,427.2
|
||||
Loans
held for sale or investment
|
68.9
|
62.0
|
67.7
|
|||||||
Total
managed receivables
|
$
|
3,311.0
|
$
|
2,772.5
|
$
|
2,494.9
|
||||
Accounts
31+ days past due
|
$
|
56.9
|
$
|
37.4
|
$
|
31.1
|
||||
Past
due accounts as a percentage of total managed
receivables
|
1.72
|
%
|
1.35
|
%
|
1.24
|
%
|
Years
Ended February 28
|
||||||||||
(In
millions)
|
2007
|
2006
|
2005
|
|||||||
Net
credit losses on managed receivables
|
$
|
20.7
|
$
|
18.4
|
$
|
19.5
|
||||
Average
managed receivables
|
$
|
3,071.1
|
$
|
2,657.7
|
$
|
2,383.6
|
||||
Net
credit losses as a percentage of average managed
receivables
|
0.67
|
%
|
0.69
|
%
|
0.82
|
%
|
||||
Recovery
rate
|
51
|
%
|
51
|
%
|
46
|
%
|
Location
|
Television
Market
|
Market
Status
|
Standard
Superstores
|
Satellite
Superstores
|
Tucson,
Ariz.
|
Tucson
|
New
market
|
1
|
-
|
Milwaukee,
Wis.
|
Milwaukee
|
New
market
|
-
|
2
|
Torrance,
Calif.
|
Los
Angeles
|
Existing
market
|
-
|
1
|
Roswell,
Ga.
|
Atlanta
|
Existing
market
|
-
|
1
|
Newport
News, Va.
|
Norfolk
/ Virginia Beach
|
Existing
market
|
-
|
1
|
Gastonia,
N.C.
|
Charlotte
|
Existing
market
|
1
|
-
|
Kearney
Mesa, Calif.
|
San
Diego
|
New
market
|
-
|
1
|
Modesto,
Calif.
|
Sacramento
|
Existing
market
|
1
|
-
|
Riverside,
Calif.
|
Los
Angeles
|
Existing
market
|
-
|
1
|
Omaha,
Neb.
|
Omaha
|
New
market
|
1
|
-
|
Jackson,
Miss.
|
Jackson
|
New
market
|
1
|
-
|
Ellicott
City, Md.
|
DC
/ Baltimore
|
Existing
market
|
-
|
1
|
Total
planned openings
|
5
|
8
|
As
of February 28, 2007
|
||||||||||||||||
Total
|
Less
Than
1
Year
|
1
to 3
Years
|
3
to 5
Years
|
More
Than
5
Years
|
||||||||||||
Revolving
credit agreement (1)
|
$
|
150.7
|
$ |
—
|
$ |
—
|
$
|
150.7
|
$
|
—
|
||||||
Capital
leases (2)
|
67.0
|
|
4.5
|
|
9.1
|
9.5
|
|
43.9
|
||||||||
Operating
leases (2)
|
963.7
|
71.0
|
144.2
|
145.5
|
603.0
|
|||||||||||
Purchase
obligations (3)
|
79.0
|
38.5
|
30.8
|
9.7
|
—
|
|||||||||||
Asset
retirement obligations (4)
|
1.1
|
—
|
—
|
—
|
1.1
|
|||||||||||
Total
|
$
|
1,261.5
|
$
|
114.0
|
$
|
184.1
|
$
|
315.4
|
$
|
648.0
|
(1) |
See
Note 9 to the consolidated financial
statements.
|
(2) |
See
Note 12 to the consolidated financial
statements.
|
(3) |
Includes
certain enforceable and legally binding obligations related to
the
purchase of real property and third-party outsourcing
services.
|
(4) |
Represents
the present value of costs to retire signage, fixtures, and other
assets
at certain leased
locations.
|
As
of February 28
|
|||||||
(In
millions)
|
2007
|
2006
|
|||||
Principal
amount of:
|
|||||||
Fixed-rate
securitizations
|
$
|
2,644.1
|
$
|
2,126.4
|
|||
Floating-rate
securitizations synthetically altered to fixed
|
597.5
|
584.0
|
|||||
Floating-rate
securitizations
|
0.6
|
—
|
|||||
Loans
held for investment (1)
|
62.7
|
57.9
|
|||||
Loans
held for sale (2)
|
6.2
|
4.1
|
|||||
Total
|
$
|
3,311.0
|
$
|
2,772.5
|
(1) |
The
majority is held by a bankruptcy-remote special purpose
entity.
|
(2) |
Held
by a bankruptcy-remote special purpose
entity.
|
Years
Ended February 28
|
|||||||||||||||||||
(In
thousands except per share data)
|
2007
|
|
%(1)
|
|
2006
|
|
%(1)
|
|
2005
|
|
%(1)
|
||||||||
Restated (2)
|
Restated (2)
|
||||||||||||||||||
SALES
AND OPERATING REVENUES:
|
|||||||||||||||||||
Used
vehicle sales
|
$
|
5,872,816
|
78.7
|
$
|
4,771,325
|
76.2
|
$
|
3,997,218
|
76.0
|
||||||||||
New
vehicle sales
|
445,144
|
6.0
|
502,805
|
8.0
|
492,054
|
9.4
|
|||||||||||||
Wholesale
vehicle sales
|
918,408
|
12.3
|
778,268
|
12.4
|
589,704
|
11.2
|
|||||||||||||
Other
sales and revenues
|
229,288
|
3.1
|
207,569
|
3.3
|
181,286
|
3.4
|
|||||||||||||
NET
SALES AND OPERATING REVENUES
|
7,465,656
|
100.0
|
6,259,967
|
100.0
|
5,260,262
|
100.0
|
|||||||||||||
Cost
of sales
|
6,494,594
|
87.0
|
5,469,253
|
87.4
|
4,610,066
|
87.6
|
|||||||||||||
GROSS
PROFIT
|
971,062
|
13.0
|
790,714
|
12.6
|
650,196
|
12.4
|
|||||||||||||
CARMAX
AUTO FINANCE INCOME
|
132,625
|
1.8
|
104,327
|
1.7
|
82,656
|
1.6
|
|||||||||||||
Selling,
general, and administrative expenses
|
776,168
|
10.4
|
674,370
|
10.8
|
565,279
|
10.7
|
|||||||||||||
Gain
on franchise dispositions, net
|
—
|
—
|
—
|
—
|
633
|
—
|
|||||||||||||
Interest
expense
|
5,373
|
0.1
|
4,093
|
0.1
|
2,806
|
0.1
|
|||||||||||||
Interest
income
|
1,203
|
—
|
1,023
|
—
|
421
|
—
|
|||||||||||||
Earnings
before income taxes
|
323,349
|
4.3
|
217,601
|
3.5
|
165,821
|
3.2
|
|||||||||||||
Provision
for income taxes
|
124,752
|
1.7
|
83,381
|
1.3
|
64,506
|
1.2
|
|||||||||||||
NET
EARNINGS
|
$
|
198,597
|
2.7
|
$
|
134,220
|
2.1
|
$
|
101,315
|
1.9
|
||||||||||
Weighted
average common shares(3):
|
|||||||||||||||||||
Basic
|
212,454
|
209,270
|
208,072
|
||||||||||||||||
Diluted
|
216,739
|
212,846
|
211,294
|
||||||||||||||||
NET
EARNINGS PER SHARE (3):
|
|||||||||||||||||||
Basic
|
$
|
0.93
|
$
|
0.64
|
$
|
0.49
|
|||||||||||||
Diluted
|
$
|
0.92
|
$
|
0.63
|
$
|
0.48
|
(1) |
Percents
are calculated as a percentage of net sales and operating revenues
and may
not equal totals due to
rounding.
|
(2) |
Restated
to reflect the impact of adopting SFAS 123(R). See Notes 2(A) and
10(C)
for additional information.
|
(3) |
Share
and per share amounts
have been adjusted for the effect of the 2-for-1 stock split in March
2007. See Note 2(A) for additional
information.
|
At
February 28
|
|||||||
(In
thousands except share data)
|
2007
|
2006
|
|||||
Restated (1)
|
|||||||
ASSETS
|
|||||||
CURRENT
ASSETS:
|
|||||||
Cash
and cash equivalents
|
$
|
19,455
|
$
|
21,759
|
|||
Accounts
receivable, net
|
71,413
|
76,621
|
|||||
Automobile
loan receivables held for sale
|
6,162
|
4,139
|
|||||
Retained
interest in securitized receivables
|
202,302
|
158,308
|
|||||
Inventory
|
836,116
|
669,700
|
|||||
Prepaid
expenses and other current assets
|
15,068
|
11,211
|
|||||
TOTAL
CURRENT ASSETS
|
1,150,516
|
941,738
|
|||||
Property
and equipment, net
|
651,850
|
499,298
|
|||||
Deferred
income taxes
|
40,174
|
24,576
|
|||||
Other
assets
|
43,033
|
44,000
|
|||||
TOTAL
ASSETS
|
$
|
1,885,573
|
$
|
1,509,612
|
|||
LIABILITIES
AND SHAREHOLDERS’ EQUITY
|
|||||||
CURRENT
LIABILITIES:
|
|||||||
Accounts
payable
|
$
|
254,895
|
$
|
188,614
|
|||
Accrued
expenses and other current liabilities
|
68,885
|
66,871
|
|||||
Accrued
income taxes
|
23,377
|
5,598
|
|||||
Deferred
income taxes
|
13,132
|
23,562
|
|||||
Short-term
debt
|
3,290
|
463
|
|||||
Current
portion of long-term debt
|
148,443
|
59,762
|
|||||
TOTAL
CURRENT LIABILITIES
|
512,022
|
344,870
|
|||||
Long-term
debt, excluding current portion
|
33,744
|
134,787
|
|||||
Deferred
revenue and other liabilities
|
92,432
|
49,852
|
|||||
TOTAL
LIABILITIES
|
638,198
|
529,509
|
|||||
Commitments
and contingent liabilities
|
—
|
—
|
|||||
SHAREHOLDERS’
EQUITY (2):
|
|||||||
Common
stock, $0.50 par value; 350,000,000 shares authorized;
|
|||||||
216,028,166
and 209,909,966 shares issued and outstanding at
|
|||||||
February
28, 2007 and 2006, respectively
|
108,014
|
104,954
|
|||||
Capital
in excess of par value
|
587,546
|
501,599
|
|||||
Accumulated
other comprehensive loss
|
(20,332
|
)
|
—
|
||||
Retained
earnings
|
572,147
|
373,550
|
|||||
TOTAL
SHAREHOLDERS’ EQUITY
|
1,247,375
|
980,103
|
|||||
TOTAL
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
$
|
1,885,573
|
$
|
1,509,612
|
(1) |
Restated
to reflect the impact of adopting SFAS 123(R). See Notes 2(A) and
10(C)
for additional information.
|
(2) |
Share
amounts have been adjusted for the effect of the 2-for-1 stock split
in
March 2007. See Note 2(A) for additional
information.
|
Years
Ended February 28
|
||||||||||
(In
thousands)
|
2007
|
2006
|
2005
|
|||||||
Restated (1)
|
Restated (1)
|
|||||||||
OPERATING
ACTIVITIES:
|
||||||||||
Net
earnings
|
$
|
198,597
|
$
|
134,220
|
$
|
101,315
|
||||
Adjustments
to reconcile net earnings to net cash provided by operating
activities:
|
||||||||||
Depreciation
and amortization
|
34,551
|
26,692
|
20,145
|
|||||||
Share-based
compensation expense
|
31,826
|
21,632
|
18,063
|
|||||||
Loss
(gain) on disposition of assets
|
88
|
(764
|
)
|
(1,486
|
)
|
|||||
Deferred
income tax benefit
|
(14,169
|
)
|
(19,088
|
)
|
(7,251
|
)
|
||||
Impairment
of long-lived assets
|
4,891
|
—
|
—
|
|||||||
Net
decrease (increase) in:
|
||||||||||
Accounts
receivable, net
|
5,208
|
(454
|
)
|
(3,809
|
)
|
|||||
Automobile
loan receivables held for sale, net
|
(2,023
|
)
|
18,013
|
(3,371
|
)
|
|||||
Retained
interest in securitized receivables
|
(43,994
|
)
|
(10,345
|
)
|
(1,975
|
)
|
||||
Inventory
|
(166,416
|
)
|
(93,133
|
)
|
(110,506
|
)
|
||||
Prepaid
expenses and other current assets
|
(3,857
|
)
|
1,797
|
(4,358
|
)
|
|||||
Other
assets
|
(3,924
|
)
|
(5,975
|
)
|
1,042
|
|||||
Net
increase in:
|
||||||||||
Accounts
payable, accrued expenses and other current liabilities, and accrued
income taxes
|
85,633
|
35,133
|
30,382
|
|||||||
Deferred
revenue and other liabilities
|
10,389
|
9,785
|
3,655
|
|||||||
NET
CASH PROVIDED BY OPERATING ACTIVITIES
|
136,800
|
117,513
|
41,846
|
|||||||
INVESTING
ACTIVITIES:
|
||||||||||
Capital
expenditures
|
(191,760
|
)
|
(194,433
|
)
|
(230,080
|
)
|
||||
Proceeds
from sales of assets
|
4,569
|
78,340
|
88,999
|
|||||||
Sales
of money market securities
|
16,765
|
—
|
—
|
|||||||
Purchases
of investment securities available-for-sale
|
(16,765
|
)
|
—
|
—
|
||||||
NET
CASH USED IN INVESTING ACTIVITIES
|
(187,191
|
)
|
(116,093
|
)
|
(141,081
|
)
|
||||
FINANCING
ACTIVITIES:
|
||||||||||
Increase
(decrease) in short-term debt, net
|
2,827
|
(64,734
|
)
|
60,751
|
||||||
Issuance
of long-term debt
|
64,000
|
174,929
|
—
|
|||||||
Payments
on long-term debt
|
(76,362
|
)
|
(116,993
|
)
|
(509
|
)
|
||||
Equity
issuances, net
|
35,411
|
6,035
|
4,306
|
|||||||
Excess
tax benefits from share-based payment arrangements
|
22,211
|
3,978
|
3,143
|
|||||||
NET
CASH PROVIDED BY FINANCING ACTIVITIES
|
48,087
|
3,215
|
67,691
|
|||||||
(Decrease)
increase in cash and cash equivalents
|
(2,304
|
)
|
4,635
|
(31,544
|
)
|
|||||
Cash
and cash equivalents at beginning of year
|
21,759
|
17,124
|
48,668
|
|||||||
CASH
AND CASH EQUIVALENTS AT END OF YEAR
|
$
|
19,455
|
$
|
21,759
|
$
|
17,124
|
||||
SUPPLEMENTAL
DISCLOSURES OF CASH FLOW INFORMATION
|
||||||||||
Cash
paid during the year for:
|
||||||||||
Interest
|
$
|
9,768
|
$
|
7,928
|
$
|
5,726
|
||||
Income
taxes
|
$
|
99,380
|
$
|
94,112
|
$
|
72,022
|
||||
Non-cash
investing and financing activities:
|
||||||||||
Asset
acquisitions from capitalization of leases
|
$
|
—
|
$
|
7,864
|
$
|
29,258
|
||||
Long-term
debt obligations from capitalization of leases
|
$
|
—
|
$
|
7,864
|
$
|
29,258
|
||||
Adjustment
to initially apply SFAS 158, net of tax
|
$
|
20,332
|
$
|
—
|
$
|
—
|
Accumulated
|
|||||||||||||||||||
Common
|
Capital
in
|
Other
|
|||||||||||||||||
Shares
|
Common
|
Excess
of
|
Retained
|
Comprehensive
|
|||||||||||||||
(In
thousands)
|
Outstanding
|
Stock
|
Par
Value
|
Earnings
|
Loss
|
Total
|
|||||||||||||
BALANCE
AT FEBRUARY 29, 2004, previously reported
|
103,778
|
$
|
51,889
|
$
|
482,132
|
$
|
146,732
|
$
|
680,753
|
||||||||||
Restatement
for adoption of SFAS 123(R) (1)
|
—
|
—
|
15,918
|
(8,717
|
)
|
7,201
|
|||||||||||||
Common
stock issued in March 2007 2-for-1 stock split
(1)
|
103,778
|
51,889
|
(51,889
|
)
|
—
|
—
|
|||||||||||||
BALANCE
AT FEBRUARY 29, 2004, Restated (1)
|
207,556
|
103,778
|
446,161
|
138,015
|
687,954
|
||||||||||||||
Net
earnings
|
—
|
—
|
—
|
101,315
|
101,315
|
||||||||||||||
Share-based
compensation expense for stock options and restricted
stock
|
—
|
—
|
18,063
|
—
|
18,063
|
||||||||||||||
Exercise
of common stock options
|
1,044
|
524
|
3,693
|
—
|
4,217
|
||||||||||||||
Shares
issued under stock incentive plans
|
8
|
4
|
102
|
—
|
106
|
||||||||||||||
Shares
cancelled upon reacquisition
|
(2
|
)
|
(2
|
)
|
(15
|
)
|
—
|
(17
|
)
|
||||||||||
Tax
benefit from the exercise of stock options
|
—
|
—
|
2,606
|
—
|
2,606
|
||||||||||||||
BALANCE
AT FEBRUARY 28, 2005, Restated (1)
|
208,606
|
104,304
|
470,610
|
239,330
|
814,244
|
||||||||||||||
Net
earnings
|
—
|
—
|
—
|
134,220
|
134,220
|
||||||||||||||
Share-based
compensation expense for stock options and restricted
stock
|
—
|
—
|
21,632
|
—
|
21,632
|
||||||||||||||
Exercise
of common stock options
|
1,302
|
650
|
5,295
|
—
|
5,945
|
||||||||||||||
Shares
issued under stock incentive plans
|
6
|
2
|
101
|
—
|
103
|
||||||||||||||
Shares
cancelled upon reacquisition
|
(4
|
)
|
(2
|
)
|
(11
|
)
|
—
|
(13
|
)
|
||||||||||
Tax
benefit from the exercise of common stock options
|
—
|
—
|
3,972
|
—
|
3,972
|
||||||||||||||
BALANCE
AT FEBRUARY 28, 2006, Restated (1)
|
209,910
|
104,954
|
501,599
|
373,550
|
980,103
|
||||||||||||||
Net
earnings
|
—
|
—
|
—
|
198,597
|
198,597
|
||||||||||||||
Adjustment
to initially apply SFAS No. 158, net of taxes of $11,858
|
—
|
—
|
—
|
—
|
$
|
(20,332
|
)
|
(20,332
|
)
|
||||||||||
Share-based
compensation expense for stock options and restricted
stock
|
—
|
—
|
31,526
|
—
|
—
|
31,526
|
|||||||||||||
Exercise
of common stock options
|
5,280
|
2,640
|
34,383
|
—
|
—
|
37,023
|
|||||||||||||
Shares
issued under stock incentive plans
|
1,002
|
502
|
(201
|
)
|
—
|
—
|
301
|
||||||||||||
Shares
cancelled upon reacquisition
|
(164
|
)
|
(82
|
)
|
(1,531
|
)
|
—
|
—
|
(1,613
|
)
|
|||||||||
Tax
benefit from the exercise of common stock options
|
—
|
—
|
21,770
|
—
|
—
|
21,770
|
|||||||||||||
BALANCE
AT FEBRUARY 28, 2007
|
216,028
|
$
|
108,014
|
$
|
587,546
|
$
|
572,147
|
$
|
(20,332
|
)
|
$
|
1,247,375
|
(1) |
Restated
to reflect the impact of adopting SFAS 123(R) and adjusted for
the March
2007 stock split, as applicable. See Notes 2(A) and 10(C) for additional
information.
|
1. |
BUSINESS
AND BACKGROUND
|
2. |
SUMMARY
OF SIGNIFICANT ACCOUNTING
POLICIES
|
Life
|
|
Buildings
|
25
- 40 years
|
Capital
leases
|
10
- 20 years
|
Leasehold
improvements
|
8
-
15 years
|
Furniture,
fixtures, and equipment
|
5
-
15 years
|
3. |
CARMAX
AUTO FINANCE INCOME
|
Years
Ended February 28
|
||||||||||
(In
millions)
|
2007
|
2006
|
2005
|
|||||||
Total
gain income
|
$
|
99.7
|
$
|
77.1
|
$
|
58.3
|
||||
Other
CAF income:
|
||||||||||
Servicing fee income
|
32.4
|
27.6
|
24.7
|
|||||||
Interest income
|
26.6
|
21.4
|
19.0
|
|||||||
Total
other CAF income
|
59.0
|
49.0
|
43.7
|
|||||||
|
||||||||||
Direct
CAF expenses:
|
||||||||||
CAF payroll and fringe benefit expense
|
12.0
|
10.3
|
9.0
|
|||||||
Other direct CAF expenses
|
14.0
|
11.5
|
10.3
|
|||||||
Total
direct CAF expenses
|
26.0
|
21.8
|
19.3
|
|||||||
CarMax
Auto Finance income
|
$
|
132.6
|
$
|
104.3
|
$
|
82.7
|
4. |
SECURITIZATIONS
|
Years
Ended February 28
|
||||||||||
(In
millions)
|
2007
|
2006
|
2005
|
|||||||
Net
loans originated
|
$
|
2,242.3
|
$
|
1,774.6
|
$
|
1,490.3
|
||||
Total
loans sold
|
$
|
2,322.7
|
$
|
1,887.5
|
$
|
1,534.8
|
||||
Total
gain income(1)
|
$
|
99.7
|
$
|
77.1
|
$
|
58.3
|
||||
Total
gain income as a percentage of total loans sold (1)
|
4.3
|
%
|
4.1
|
%
|
3.8
|
%
|
(1) |
Includes
the effects of valuation adjustments, new public securitizations,
and the
repurchase and resale of receivables in existing public securitizations,
as applicable.
|
(In
millions)
|
Assumptions
Used
|
Impact
on Fair Value of 10% Adverse Change
|
Impact
on Fair Value of 20% Adverse Change
|
|||||||
Prepayment
rate
|
1.40%-1.52
|
%
|
$
|
7.7
|
$
|
14.8
|
||||
Cumulative
loss rate
|
1.25%-2.45
|
%
|
$
|
5.9
|
$
|
11.7
|
||||
Annual
discount rate
|
12.0
|
%
|
$
|
3.0
|
$
|
5.9
|
As
of February 28
|
||||||||||
(In
millions)
|
2007
|
2006
|
2005
|
|||||||
Accounts
31+ days past due
|
$
|
56.9
|
$
|
37.4
|
$
|
31.1
|
||||
Ending
managed receivables
|
$
|
3,311.0
|
$
|
2,772.5
|
$
|
2,494.9
|
||||
Past
due accounts as a percentage of ending managed receivables
|
1.72
|
%
|
1.35
|
%
|
1.24
|
%
|
Years
Ended February 28
|
||||||||||
(In
millions)
|
2007
|
2006
|
2005
|
|||||||
Net
credit losses on managed receivables
|
$
|
20.7
|
$
|
18.4
|
$
|
19.5
|
||||
Average
managed receivables
|
$
|
3,071.1
|
$
|
2,657.7
|
$
|
2,383.6
|
||||
Net
credit losses as a percentage of average managed
receivables
|
0.67
|
%
|
0.69
|
%
|
0.82
|
%
|
||||
Recovery
rate
|
51
|
%
|
51
|
%
|
46
|
%
|
Years
Ended February 28
|
||||||||||
(In
millions)
|
2007
|
2006
|
2005
|
|||||||
Proceeds
from new securitizations
|
$
|
1,867.5
|
$
|
1,513.5
|
$
|
1,260.0
|
||||
Proceeds
from collections reinvested in revolving period
securitizations
|
$
|
1,011.8
|
$
|
757.5
|
$
|
590.8
|
||||
Servicing
fees received
|
$
|
32.0
|
$
|
27.3
|
$
|
24.5
|
||||
Other
cash flows received from the retained interest:
|
||||||||||
Interest-only
strip receivables
|
$
|
88.4
|
$
|
82.1
|
$
|
79.8
|
||||
Reserve
account releases
|
$
|
15.2
|
$
|
19.7
|
$
|
14.1
|
5. |
FINANCIAL
DERIVATIVES
|
6. |
PROPERTY
AND EQUIPMENT
|
As
of February 28
|
|||||||
(In
thousands)
|
2007
|
2006
|
|||||
Land
|
$
|
138,211
|
$
|
85,814
|
|||
Land
held for sale
|
918
|
1,515
|
|||||
Land
held for development
|
14,461
|
6,084
|
|||||
Buildings
|
265,159
|
146,738
|
|||||
Capital
leases
|
37,122
|
37,122
|
|||||
Leasehold
improvements
|
53,696
|
47,513
|
|||||
Furniture,
fixtures, and equipment
|
174,884
|
154,378
|
|||||
Construction
in progress
|
104,771
|
124,381
|
|||||
Total
property and equipment
|
789,222
|
603,545
|
|||||
Less
accumulated depreciation and amortization
|
137,372
|
104,247
|
|||||
Property
and equipment, net
|
$
|
651,850
|
$
|
499,298
|
7. |
INCOME
TAXES
|
Years
Ended February 28
|
||||||||||
(In
thousands)
|
2007
|
2006
|
2005
|
|||||||
Current:
|
||||||||||
Federal
|
$
|
116,125
|
$
|
92,488
|
$
|
62,662
|
||||
State
|
18,031
|
11,431
|
10,117
|
|||||||
Total
|
134,156
|
103,919
|
72,779
|
|||||||
Deferred:
|
||||||||||
Federal
|
(9,024
|
)
|
(18,764
|
)
|
(7,463
|
)
|
||||
State
|
(380
|
)
|
(1,774
|
)
|
(810
|
)
|
||||
Total
|
(9,404
|
)
|
(20,538
|
)
|
(8,273
|
)
|
||||
Provision
for income taxes
|
$
|
124,752
|
$
|
83,381
|
$
|
64,506
|
Years
Ended February 28
|
||||||||||
2007
|
2006
|
2005
|
||||||||
Federal
statutory income tax rate
|
35.0
|
%
|
35.0
|
%
|
35.0
|
%
|
||||
State
and local income taxes, net of federal benefit
|
3.5
|
3.0
|
3.6
|
|||||||
Nondeductible
items
|
0.1
|
0.3
|
0.3
|
|||||||
Effective
income tax rate
|
38.6
|
%
|
38.3
|
%
|
38.9
|
%
|
As
of February 28
|
|||||||
(In
thousands)
|
2007
|
2006
|
|||||
Deferred
tax assets:
|
|||||||
Accrued
expenses
|
$
|
20,954
|
$
|
16,887
|
|||
Partnership
basis
|
6,138
|
6,229
|
|||||
Inventory
|
2,036
|
—
|
|||||
Stock
compensation
|
24,282
|
20,365
|
|||||
Total
gross deferred tax assets
|
53,410
|
43,481
|
|||||
Deferred
tax liabilities:
|
|||||||
Securitized
receivables
|
18,540
|
19,699
|
|||||
Prepaid
expenses
|
7,295
|
10,757
|
|||||
Inventory
|
—
|
7,476
|
|||||
Depreciation
and amortization
|
504
|
4,508
|
|||||
Other
|
29
|
27
|
|||||
Total
gross deferred tax liabilities
|
26,368
|
42,467
|
|||||
Net
deferred tax asset
|
$
|
27,042
|
$
|
1,014
|
8. |
BENEFIT
PLANS
|
· |
Recognize
the funded status of postretirement benefit plans - measured as the
difference between the fair value of plan assets and the projected
benefit
obligation - on our balance sheet.
|
· |
Recognize
changes in the funded status in accumulated other comprehensive loss
(a
component of shareholders’ equity) in the year in which the change occurs.
|
· |
Measure
postretirement benefit plan assets and obligations as of the date
of our
fiscal year end. We had already been using our fiscal year end as
our
measurement date.
|
At
February 28, 2007
|
||||||||||
Prior
to
|
Effect
of
|
As
|
||||||||
(In
thousands)
|
SFAS
158
|
SFAS
158
|
Reported
|
|||||||
Deferred
income tax asset (partnership basis)
|
$
|
—
|
$
|
11,858
|
$
|
11,858
|
||||
Accrued
expenses and other current liabilities
|
$
|
173
|
$
|
89
|
$
|
262
|
||||
Deferred
revenue and other liabilities
|
$
|
23,593
|
$
|
32,101
|
$
|
55,694
|
||||
Accumulated
other comprehensive loss
|
$
|
—
|
$
|
20,332
|
$
|
20,332
|
Years
Ended February 28
|
|||||||||||||||||||
Pension
Plan
|
Restoration
Plan
|
Total
|
|||||||||||||||||
(In
thousands)
|
2007
|
2006
|
2007
|
2006
|
2007
|
2006
|
|||||||||||||
Change
in projected benefit obligation:
|
|||||||||||||||||||
Obligation
at beginning of year
|
$
|
71,352
|
$
|
48,674
|
$
|
6,864
|
$
|
4,508
|
$
|
78,216
|
$
|
53,182
|
|||||||
Service
cost
|
12,048
|
8,780
|
411
|
480
|
12,459
|
9,260
|
|||||||||||||
Interest
cost
|
4,096
|
2,794
|
393
|
259
|
4,489
|
3,053
|
|||||||||||||
Actuarial
loss (gain)
|
7,624
|
11,317
|
(459
|
)
|
1,617
|
7,165
|
12,934
|
||||||||||||
Benefits
paid
|
(467
|
)
|
(213
|
)
|
(14
|
)
|
—
|
(481
|
)
|
(213
|
)
|
||||||||
Obligation
at end of year
|
94,653
|
71,352
|
7,195
|
6,864
|
101,848
|
78,216
|
|||||||||||||
Change
in fair value of plan assets:
|
|||||||||||||||||||
Plan
assets at beginning of year
|
31,960
|
25,316
|
—
|
—
|
31,960
|
25,316
|
|||||||||||||
Actual
return on plan assets
|
3,670
|
2,357
|
—
|
—
|
3,670
|
2,357
|
|||||||||||||
Employer
contributions
|
10,729
|
4,500
|
14
|
—
|
10,743
|
4,500
|
|||||||||||||
Benefits
paid
|
(467
|
)
|
(213
|
)
|
(14
|
)
|
—
|
(481
|
)
|
(213
|
)
|
||||||||
Plan
assets at end of year
|
45,892
|
31,960
|
—
|
—
|
45,892
|
31,960
|
|||||||||||||
Funded
status:
|
|||||||||||||||||||
Benefit
obligation in excess of plan assets
|
(48,761
|
)
|
(39,392
|
)
|
(7,195
|
)
|
(6,864
|
)
|
(55,956
|
)
|
(46,256
|
)
|
|||||||
Unrecognized
actuarial loss
|
—
|
23,947
|
—
|
3,427
|
—
|
27,374
|
|||||||||||||
Unrecognized
prior service cost
|
—
|
220
|
—
|
217
|
—
|
437
|
|||||||||||||
Net
amount recognized
|
$
|
(48,761
|
)
|
$
|
(15,225
|
)
|
$
|
(7,195
|
)
|
$
|
(3,220
|
)
|
$
|
(55,956
|
)
|
$
|
(18,445
|
)
|
|
Amounts
recognized in the consolidated balance sheets:
|
|||||||||||||||||||
Deferred
income tax asset
|
$
|
10,785
|
$
|
—
|
$
|
1,073
|
$
|
—
|
$
|
11,858
|
$
|
—
|
|||||||
Current
liability (funded status)
|
—
|
—
|
(262
|
)
|
—
|
(262
|
)
|
—
|
|||||||||||
Noncurrent
liability (funded status)
|
(48,761
|
)
|
(15,225
|
)
|
(6,933
|
)
|
(3,220
|
)
|
(55,694
|
)
|
(18,445
|
)
|
|||||||
Shareholders’
equity (accumulated
other
comprehensive loss):
|
|||||||||||||||||||
Unrecognized
actuarial losses
|
29,095
|
—
|
2,719
|
—
|
31,814
|
—
|
|||||||||||||
Unrecognized
prior service cost
|
183
|
—
|
193
|
—
|
376
|
—
|
|||||||||||||
Related
deferred tax benefit
|
(10,785
|
)
|
—
|
(1,073
|
)
|
—
|
(11,858
|
)
|
—
|
||||||||||
Net
shareholders’ equity
|
18,493
|
—
|
1,839
|
—
|
20,332
|
—
|
|||||||||||||
Net
amount recognized
|
$
|
(19,483
|
)
|
$
|
(15,225
|
)
|
$
|
(4,283
|
)
|
$
|
(3,220
|
)
|
$
|
(23,766
|
)
|
$
|
(18,445
|
)
|
|
Accumulated
benefit obligation
|
$
|
60,560
|
$
|
45,151
|
$
|
4,832
|
$
|
3,805
|
$
|
65,392
|
$
|
48,956
|
As
of February 28
|
|||||||||||||
Pension
Plan
|
Restoration
Plan
|
||||||||||||
2007
|
2006
|
2007
|
2006
|
||||||||||
Discount
rate
|
5.75
|
%
|
5.75
|
%
|
5.75
|
%
|
5.75
|
%
|
|||||
Rate
of compensation increase
|
5.00
|
%
|
5.00
|
%
|
7.00
|
%
|
7.00
|
%
|
(In
thousands)
|
Pension
Plan
|
Restoration
Plan
|
|||||
Fiscal
2008
|
$
|
326
|
$
|
262
|
|||
Fiscal
2009
|
$
|
484
|
$
|
299
|
|||
Fiscal
2010
|
$
|
703
|
$
|
322
|
|||
Fiscal
2011
|
$
|
999
|
$
|
334
|
|||
Fiscal
2012
|
$
|
1,314
|
$
|
350
|
|||
Fiscal
2013 to 2017
|
$
|
14,359
|
$
|
2,011
|
As
of February 28
|
|||||||||||||
2007
|
2006
|
||||||||||||
Target
|
Actual
|
Target
|
Actual
|
||||||||||
Allocation
|
Allocation
|
Allocation
|
Allocation
|
||||||||||
Equity
securities
|
75
|
%
|
78
|
%
|
75
|
%
|
78
|
%
|
|||||
Fixed
income securities
|
25
|
22
|
25
|
22
|
|||||||||
Total
|
100
|
%
|
100
|
%
|
100
|
%
|
100
|
%
|
Years
Ended February 28
|
||||||||||||||||||||||||||||
Pension
Plan
|
Restoration
Plan
|
Total
|
||||||||||||||||||||||||||
(In
thousands)
|
2007
|
2006
|
2005
|
2007
|
2006
|
2005
|
2007
|
2006
|
2005
|
|||||||||||||||||||
Service
cost
|
$
|
12,048
|
$
|
8,780
|
$
|
6,557
|
$
|
411
|
$
|
480
|
$
|
343
|
$
|
12,459
|
$
|
9,260
|
$
|
6,900
|
||||||||||
Interest
cost
|
4,096
|
2,794
|
2,152
|
393
|
259
|
232
|
4,489
|
3,053
|
2,384
|
|||||||||||||||||||
Expected
return on plan assets
|
(2,949
|
)
|
(2,071
|
)
|
(1,523
|
)
|
—
|
—
|
—
|
(2,949
|
)
|
(2,071
|
)
|
(1,523
|
)
|
|||||||||||||
Amortization
of prior service cost
|
37
|
37
|
37
|
24
|
24
|
24
|
61
|
61
|
61
|
|||||||||||||||||||
Recognized
actuarial loss
|
1,754
|
961
|
736
|
249
|
136
|
149
|
2,003
|
1,097
|
885
|
|||||||||||||||||||
Net
pension expense
|
$
|
14,986
|
$
|
10,501
|
$
|
7,959
|
$
|
1,077
|
$
|
899
|
$
|
748
|
$
|
16,063
|
$
|
11,400
|
$
|
8,707
|
Years
Ended February 28
|
|||||||||||||||||||
Pension
Plan
|
Restoration
Plan
|
||||||||||||||||||
2007
|
2006
|
2005
|
2007
|
2006
|
2005
|
||||||||||||||
Discount
rate
|
5.75
|
%
|
5.75
|
%
|
6.00
|
%
|
5.75
|
%
|
5.75
|
%
|
6.00
|
%
|
|||||||
Expected
rate of return on plan assets
|
8.00
|
%
|
8.00
|
%
|
8.00
|
%
|
—
|
—
|
—
|
||||||||||
Rate
of compensation increase
|
5.00
|
%
|
5.00
|
%
|
5.00
|
%
|
7.00
|
%
|
7.00
|
%
|
7.00
|
%
|
9. |
DEBT
|
As
of February 28
|
|||||||
(In
thousands)
|
2007
|
2006
|
|||||
Revolving
credit agreement
|
$
|
150,690
|
$
|
159,263
|
|||
Obligations
under capital leases
|
34,787
|
35,749
|
|||||
Total
debt
|
185,477
|
195,012
|
|||||
Less
current portion:
|
|||||||
Revolving
credit agreement
|
150,690
|
59,263
|
|||||
Obligations
under capital leases
|
1,043
|
962
|
|||||
Total
long-term debt, excluding current portion
|
$
|
33,744
|
$
|
134,787
|
10. |
STOCK
AND STOCK-BASED INCENTIVE
PLANS
|
|
Years
Ended February 28
|
|||||||||
(In
thousands)
|
2007
|
2006
|
2005
|
|||||||
Cost
of sales
|
$
|
1,392
|
||||||||
CarMax
Auto Finance income
|
917
|
|||||||||
Selling,
general, and administrative expenses
|
30,379
|
$
|
22,436
|
$
|
18,810
|
|||||
Share-based
compensation expense, before income taxes
|
$
|
32,688
|
$
|
22,436
|
$
|
18,810
|
Years
Ended February 28
|
|||||||||||||
2006
|
2005
|
||||||||||||
(In
thousands, except per share data)
|
As
Restated
|
Previously
Reported
|
As
Restated
|
Previously
Reported
|
|||||||||
Selling,
general, and administrative expenses
|
$
|
674,370
|
$
|
651,988
|
$
|
565,279
|
$
|
546,577
|
|||||
Earnings
before income taxes
|
$
|
217,601
|
$
|
239,983
|
$
|
165,821
|
$
|
184,523
|
|||||
Net
earnings
|
$
|
134,220
|
$
|
148,055
|
$
|
101,315
|
$
|
112,928
|
|||||
Basic
earnings per share
|
$
|
0.64
|
$
|
0.71
|
$
|
0.49
|
$
|
0.54
|
|||||
Diluted
earnings per share
|
$
|
0.63
|
$
|
0.70
|
$
|
0.48
|
$
|
0.53
|
|||||
Net
cash provided by operating activities
|
$
|
117,513
|
$
|
122,295
|
$
|
41,846
|
$
|
45,736
|
|||||
Net
cash provided by (used in) financing activities
|
$
|
3,215
|
$
|
(1,567
|
)
|
$
|
67,691
|
$
|
63,801
|
|
As
of February 28, 2006
|
||||||
(In
thousands)
|
As
Restated
|
Previously
Reported
|
|||||
Deferred
income taxes
|
$
|
24,576
|
$
|
4,211
|
|||
Total
assets
|
$
|
1,509,612
|
$
|
1,489,247
|
|||
Capital
in excess of par value
|
$
|
501,599
|
$
|
447,069
|
|||
Retained
earnings
|
$
|
373,550
|
$
|
407,715
|
|||
Total
shareholders’ equity
|
$
|
980,103
|
$
|
959,738
|
|||
Total
liabilities and shareholders’ equity
|
$
|
1,509,612
|
$
|
1,489,247
|
(Shares
and intrinsic value in thousands)
|
Number
of Shares
|
Weighted
Average
Exercise
Price
|
Weighted
Average Remaining Contractual Life (Years)
|
Aggregate
Intrinsic Value
|
|||||||||
Outstanding
as of March 1, 2006
|
17,538
|
$
|
10.28
|
||||||||||
Options
granted
|
1,905
|
$
|
17.14
|
||||||||||
Options
exercised
|
(5,281
|
)
|
$
|
7.01
|
|||||||||
Options
forfeited or expired
|
(387
|
)
|
$
|
13.18
|
|||||||||
Outstanding
as of February 28, 2007
|
13,775
|
$
|
12.39
|
6.3
|
$
|
195,134
|
|||||||
Exercisable
as of February 28, 2007
|
6,301
|
$
|
10.60
|
5.2
|
$
|
100,545
|
As
of February 28, 2007
|
Options
Outstanding
|
Options
Exercisable
|
||||||||||||||
(Shares
in thousands)
Range
of Exercise Prices
|
Number
of Shares
|
Weighted
Average Remaining Contractual Life (Years)
|
Weighted
Average
Exercise
Price
|
Number
of Shares
|
Weighted
Average
Exercise
Price
|
|||||||||||
$0.81
to $2.44
|
679
|
1.0
|
$
|
2.43
|
679
|
$
|
2.43
|
|||||||||
$6.62
to $9.30
|
2,692
|
6.0
|
$
|
7.16
|
1,916
|
$
|
7.16
|
|||||||||
$10.00
to $13.42
|
5,231
|
6.8
|
$
|
13.21
|
2,060
|
$
|
13.27
|
|||||||||
$14.13
to $15.72
|
3,278
|
7.1
|
$
|
14.71
|
1,639
|
$
|
14.62
|
|||||||||
$16.33
to $22.29
|
1,895
|
6.2
|
$
|
17.15
|
7
|
$
|
19.19
|
|||||||||
Total
|
13,775
|
6.3
|
$
|
12.39
|
6,301
|
$
|
10.60
|
|
Years
Ended February 28
|
|||||||||
2007
|
2006
|
2005
|
||||||||
Dividend
yield
|
0.0
|
%
|
0.0
|
%
|
0.0
|
%
|
||||
Expected
volatility factor(1)
|
29.8%-63.4
|
%
|
51.6
|
%
|
73.0
|
%
|
||||
Weighted
average expected volatility
|
47.4
|
%
|
51.6
|
%
|
73.0
|
%
|
||||
Risk-free
interest rate(2)
|
4.5%-5.1
|
%
|
3.7
|
%
|
2.8
|
%
|
||||
Expected
term (in years)(3)
|
4.5-4.6
|
4.8
|
4.6
|
(1)
|
Measured
using historical daily price changes of our stock for a period
corresponding to the term of the
option.
|
(2)
|
Based
on the U.S. Treasury yield curve in effect at the time of
grant.
|
(3)
|
Representsthe
estimated number of years that options will be outstanding prior
to
exercise.
|
(In
thousands)
|
Number
of Shares
|
Weighted
Average Grant Date Fair Value
|
||||||||
Outstanding
as of March 1, 2006
|
-
|
$
-
|
||||||||
Restricted
stock granted
|
984
|
$17.20
|
||||||||
Restricted
stock vested or cancelled
|
(64
|
)
|
$17.20
|
|||||||
Outstanding
as of February 28, 2007
|
920
|
$17.20
|
11. |
NET
EARNINGS PER SHARE
|
Years
Ended February 28
|
||||||||||
(In
thousands except per share data)
|
2007
|
2006
|
2005
|
|||||||
Net
earnings available to common shareholders
|
$
|
198,597
|
$
|
134,220
|
$
|
101,315
|
||||
Weighted
average common shares outstanding
|
212,454
|
209,270
|
208,072
|
|||||||
Dilutive
potential common shares:
|
||||||||||
Stock
options
|
4,111
|
3,555
|
3,192
|
|||||||
Restricted
stock
|
174
|
21
|
30
|
|||||||
Weighted
average common shares and dilutive potential common shares
|
216,739
|
212,846
|
211,294
|
|||||||
Basic
net earnings per share
|
$
|
0.93
|
$
|
0.64
|
$
|
0.49
|
||||
Diluted
net earnings per share
|
$
|
0.92
|
$
|
0.63
|
$
|
0.48
|
12. |
LEASE
COMMITMENTS
|
As
of February 28, 2007
|
|||||||
Capital
|
Operating
Lease
|
||||||
(In
thousands)
|
Leases(1)
|
Commitments(1)
|
|||||
Fiscal
2008
|
$
|
4,453
|
$
|
71,041
|
|||
Fiscal
2009
|
4,462
|
71,784
|
|||||
Fiscal
2010
|
4,627
|
72,418
|
|||||
Fiscal
2011
|
4,777
|
72,705
|
|||||
Fiscal
2012
|
4,777
|
72,821
|
|||||
Fiscal
2013 and thereafter
|
43,914
|
602,955
|
|||||
Total
minimum lease payments
|
$
|
67,010
|
$
|
963,725
|
|||
Less
amounts representing interest
|
(32,223
|
)
|
|||||
Present
value of net minimum capital lease payments [Note
9]
|
$
|
34,787
|
(1) |
Excludes
taxes, insurance, and other costs payable directly by the
company.
|
13. |
SUPPLEMENTAL
FINANCIAL STATEMENT
INFORMATION
|
14. |
CONTINGENT
LIABILITIES
|
15. |
RECENT
ACCOUNTING PRONOUNCEMENTS
|
16. |
SELECTED
QUARTERLY FINANCIAL DATA
(UNAUDITED)
|
|
First
Quarter
|
Second
Quarter
|
Third
Quarter
|
Fourth
Quarter
|
Fiscal
Year
|
(In
thousands except per share data)
|
2007
|
2007
|
2007
|
2007
|
2007
|
|||||||||||
Net
sales and operating revenues
|
$
|
1,885,139
|
$
|
1,929,542
|
$
|
1,768,147
|
$
|
1,882,828
|
$
|
7,465,656
|
||||||
Gross
profit
|
$
|
248,255
|
$
|
253,365
|
$
|
228,609
|
$
|
240,833
|
$
|
971,062
|
||||||
CarMax
Auto Finance income
|
$
|
32,394
|
$
|
36,512
|
$
|
31,974
|
$
|
31,745
|
$
|
132,625
|
||||||
Selling,
general, and
administrative
expenses
|
$
|
186,966
|
$
|
200,049
|
$
|
187,318
|
$
|
201,835
|
$
|
776,168
|
||||||
Net
earnings
|
$
|
56,776
|
$
|
54,264
|
$
|
45,419
|
$
|
42,138
|
$
|
198,597
|
||||||
Net
earnings per share:
|
||||||||||||||||
Basic
|
$
|
0.27
|
$
|
0.26
|
$
|
0.21
|
$
|
0.20
|
$
|
0.93
|
||||||
Diluted
|
$
|
0.27
|
$
|
0.25
|
$
|
0.21
|
$
|
0.19
|
$
|
0.92
|
|
First
Quarter
|
Second
Quarter
|
Third
Quarter
|
Fourth
Quarter
|
Fiscal
Year
|
(In
thousands except per share data)
|
2006
|
2006
|
2006
|
2006
|
2006
|
Net
sales and operating revenues
|
$
|
1,578,360
|
$
|
1,633,853
|
$
|
1,423,980
|
$
|
1,623,774
|
$
|
6,259,967
|
||||||
Gross
profit
|
$
|
197,759
|
$
|
208,584
|
$
|
177,173
|
$
|
207,198
|
$
|
790,714
|
||||||
CarMax
Auto Finance income
|
$
|
27,071
|
$
|
23,824
|
$
|
27,971
|
$
|
25,461
|
$
|
104,327
|
||||||
Selling,
general, and
administrative
expenses
|
$
|
163,765
|
$
|
171,401
|
$
|
167,351
|
$
|
171,853
|
$
|
674,370
|
||||||
Net
earnings
|
$
|
36,980
|
$
|
37,636
|
$
|
22,931
|
$
|
36,673
|
$
|
134,220
|
||||||
Net
earnings per share:
|
||||||||||||||||
Basic
|
$
|
0.18
|
$
|
0.18
|
$
|
0.11
|
$
|
0.17
|
$
|
0.64
|
||||||
Diluted
|
$
|
0.17
|
$
|
0.18
|
$
|
0.11
|
$
|
0.17
|
$
|
0.63
|
Name
|
Age
|
Office
|
Thomas
J. Folliard
|
42
|
President,
Chief Executive Officer, and Director
|
Keith
D. Browning
|
54
|
Executive
Vice President, Chief Financial Officer, Corporate Secretary, and
Director
|
Michael
K. Dolan
|
57
|
Executive
Vice President and Chief Administrative Officer
|
Joseph
S. Kunkel
|
44
|
Senior
Vice President, Marketing and Strategy
|
Richard
M. Smith
|
49
|
Senior
Vice President and Chief Information
Officer
|
|
1.
|
|
Financial
Statements. All
financial statements as set forth under Item 8 of this Form 10-K.
|
|
2.
|
Financial
Statement Schedules.“Schedule
II - Valuation and Qualifying Accounts and Reserves” and the accompanying
Report of Independent Registered Public Accounting Firm on CarMax,
Inc.
Financial Statement Schedule for the fiscal years ended February
28, 2007,
2006, and 2005, are filed as part of this Form 10-K and should be
read in
conjunction with the Consolidated Financial Statements of CarMax,
Inc. and
Notes thereto, included in Item 8 of this Form
10-K.
|
Schedules not listed above have been omitted because they are not applicable, are not required, or the information required to be set forth therein is included in the Consolidated Financial Statements and Notes thereto. |
|
3.
|
|
Exhibits.
The Exhibits listed on the accompanying Index to Exhibits immediately
following the financial statement schedule are filed as part of,
or
incorporated by reference into, this Form
10-K.
|
CARMAX,
INC.
|
|
|
|
||||
By:
|
/s/ THOMAS
J.
FOLLIARD
Thomas
J. Folliard
President
and Chief Executive Officer
April
25, 2007
|
|
|
By:
|
/s/ KEITH
D.
BROWNING
Keith D. Browning Executive
Vice President and Chief Financial Officer
April
25, 2007
|
/s/ THOMAS
J.
FOLLIARD
Thomas
J. Folliard
President,
Chief Executive Officer, and Director
April
25, 2007
|
|
|
/s/ HUGH
G.
ROBINSON*
Hugh
G. Robinson
Director
April
25, 2007
|
/s/ KEITH
D.
BROWNING
Keith
D. Browning
Executive
Vice President, Chief Financial Officer,
Chief
Accounting Officer, and Director
April
25, 2007
|
|
|
/s/ RICHARD
L.
SHARP
*
Richard
L. Sharp
Director
April
25, 2007
|
/s/ JAMES
F.
CLINGMAN,
JR.*
James
F. Clingman, Jr.
Director
April
25, 2007
|
|
|
/s/ THOMAS
G.
STEMBERG
*
Thomas
G. Stemberg
Director
April
25, 2007
|
/s/ JEFFREY
E.
GARTEN
*
Jeffrey
E. Garten
Director
April
25, 2007
|
|
|
/s/ VIVIAN
M.
STEPHENSON*
Vivian
M. Stephenson
Director
April
25, 2007
|
/s/ W.
ROBERT
GRAFTON
*
W.
Robert Grafton
Director
April
25, 2007
|
|
|
/s/ BETH
A.
STEWART*
Beth
A. Stewart
Director
April
25, 2007
|
/s/ EDGAR
H.
GRUBB
*
Edgar H. Grubb Director
April
25, 2007
|
|
/s/ WILLIAM
R.
TIEFEL*
William R. Tiefel Director
April
25, 2007
|
|
/s/ WILLIAM
S.
KELLOGG
*
William
S. Kellogg
Director
April
25, 2007
|
|
*By:
|
|
/s/ THOMAS
J.
FOLLIARD
Thomas
J. Folliard
Attorney-In-Fact
|
(In
thousands)
|
Balance
at Beginning
of
Fiscal Year
|
Charged
To
Income
|
Charge-offs
Less
Recoveries
|
Balance
at
End
of
Fiscal
Year
|
|||||||||
Year
ended February 28, 2005:
|
|||||||||||||
Allowance
for doubtful accounts
|
$
|
2,149
|
$
|
3,903
|
$
|
(2,472
|
)
|
$
|
3,580
|
||||
Year
ended February 28, 2006:
|
|||||||||||||
Allowance
for doubtful accounts
|
$
|
3,580
|
$
|
5,854
|
$
|
(3,802
|
)
|
$
|
5,632
|
||||
Year
ended February 28, 2007:
|
|||||||||||||
Allowance
for doubtful accounts
|
$
|
5,632
|
$
|
5,856
|
$
|
(4,405
|
)
|
$
|
7,083
|
2.1
|
|
Separation
Agreement, dated May 21, 2002, between Circuit City Stores, Inc.
and
CarMax, Inc., filed as Exhibit 2.1 to CarMax’s Registration Statement on
Form S-4/A, filed June 6, 2002 (File No. 333-85240), is incorporated
by
this reference.
|
3.1
|
|
CarMax,
Inc. Amended and Restated Articles of Incorporation, effective June
6,
2002, filed as Exhibit 3.1 to CarMax’s Current Report on Form 8-K, filed
October 3, 2002 (File No. 1-31420), is incorporated by this
reference.
|
3.2
|
CarMax,
Inc. Articles of Amendment to the Amended and Restated Articles of
Incorporation, effective June 6, 2002, filed as Exhibit 3.2 to CarMax’s
Current Report on Form 8-K, filed October 3, 2002 (File No. 1-31420),
is
incorporated by this reference.
|
|
3.3
|
|
CarMax,
Inc. Bylaws, as amended and restated January 22, 2007, filed as Exhibit
3.1 to CarMax’s Current Report on Form 8-K, filed January 26, 2007 (File
No. 1-31420), is incorporated by this reference.
|
4.1
|
|
Rights
Agreement, dated as of May 21, 2002, between CarMax, Inc. and Wells
Fargo
Bank Minnesota, N.A., as Rights Agent, filed as Exhibit 4.1 to CarMax’s
Registration Statement on Form S-4/A, filed June 6, 2002 (File No.
333-85240), is incorporated by this reference.
|
10.1
|
|
Employment
Agreement between CarMax, Inc. and Thomas J. Folliard, filed as Exhibit
10.1 to CarMax’s Current Report on Form 8-K/A, filed October 23, 2006
(File No. 1-31420) is incorporated by this reference. *
|
10.2
|
|
Severance
Agreement between CarMax, Inc. and Keith D. Browning, filed as Exhibit
10.1 to CarMax’s Current Report on Form 8-K, filed February 21, 2007 (File
No. 1-31420) is incorporated by this reference. *
|
10.3
|
|
Severance
Agreement between CarMax, Inc. and Michael K. Dolan, filed as Exhibit
10.2
to CarMax’s Current Report on Form 8-K, filed February 21, 2007 (File No.
1-31420) is incorporated by this reference. *
|
10.4
|
|
Severance
Agreement between CarMax, Inc. and Joseph S. Kunkel, filed as Exhibit
10.3
to CarMax’s Current Report on Form 8-K, filed February 21, 2007 (File No.
1-31420) is incorporated by this reference. *
|
10.5
|
|
Severance
Agreement between CarMax, Inc. and Richard M. Smith, filed as Exhibit
10.4
to CarMax’s Current Report on Form 8-K, filed February 21, 2007 (File No.
1-31420) is incorporated by this reference. *
|
10.6
|
|
CarMax,
Inc. Benefit Restoration Plan, as amended and restated October 19,
2004,
filed as Exhibit 10.2 to CarMax’s Annual Report on Form 10-K, filed May
13, 2005 (File No. 1-31420), is incorporated by this reference.
*
|
10.7
|
|
CarMax,
Inc. 2002 Non-Employee Directors Stock Incentive Plan, as amended
and
restated April 24, 2006, filed as Exhibit 10.4 to CarMax’s Current Report
on Form 8-K, filed April 28, 2006 (File No. 1-31420), is incorporated
by
this reference. *
|
10.8
|
|
CarMax,
Inc. 2002 Stock Incentive Plan, as amended and restated April 24,
2006,
filed as Exhibit 10.2 to CarMax’s Current Report on Form 8-K, filed April
28, 2006 (File No. 1-31420), is incorporated by this reference.
*
|
10.9
|
|
CarMax,
Inc. Annual Performance-Based Bonus Plan, as amended and restated
April
24, 2006, filed as Exhibit 10.1 to CarMax’s Current Report on Form 8-K,
filed April 28, 2006 (File No. 1-31420), is incorporated by this
reference. *
|
10.10
|
|
CarMax,
Inc. 2002 Employee Stock Purchase Plan, as amended and restated July
1,
2006, filed as Exhibit 10.1 to CarMax's Current Report on Form 8-K,
filed
June 22, 2006 (File No. 1-31420), is incorporated by this
reference.
|
10.11
|
|
Credit
Agreement, dated August 24, 2005, among CarMax Auto Superstores,
Inc.,
CarMax, Inc., various subsidiaries of CarMax, various Lenders named
therein and Bank of America N.A., as Administrative Agent, filed
as
Exhibit 10.1 to CarMax’s Quarterly Report on Form 10-Q, filed October 7,
2005 (File No. 1-31420), is incorporated by this reference. Certain
non-material schedules and exhibits have been omitted from the Credit
Agreement as filed. CarMax agrees to furnish supplementally to the
Commission upon request a copy of such schedules and
exhibits.
|
10.12
|
|
Security
Agreement, dated August 24, 2005, among CarMax, Inc., CarMax Auto
Superstores, Inc., various subsidiaries of CarMax named therein,
and Bank
of America N.A., as Administrative Agent, filed as Exhibit 10.2 to
CarMax’s Quarterly Report on Form 10-Q, filed October 7, 2005 (File No.
1-31420), is incorporated by this reference.
|
10.13
|
|
Company
Guaranty Agreement, dated August 24, 2005, between CarMax, Inc. and
Bank
of America N.A., as Administrative Agent, filed as Exhibit 10.3 to
CarMax's Quarterly Report on Form 10-Q, filed October 7, 2005 (File
No.
1-31420), is incorporated by this reference.
|
10.14
|
|
Amendment
No. 1 to Credit Agreement and Joinder Agreement, dated December 8,
2006,
among CarMax Auto Superstores, Inc., CarMax, Inc, various subsidiaries
of
CarMax, various Lenders named therein and Bank of America N.A., as
Administrative Agent, filed as Exhibit 10.1 to CarMax’s Current Report on
Form 8-K, filed December 14, 2006 (File No. 1-31420), is incorporated
by
this reference. Certain non-material schedules and exhibits have
been
omitted from Amendment No.1 as filed. CarMax agrees to furnish
supplementally to the Commission upon request a copy of such schedules
and
exhibits.
|
10.15
|
Amended
and Restated Tax Allocation Agreement between Circuit City Stores,
Inc.
and CarMax, Inc., dated October 1, 2002, filed as Exhibit 99.2 to
CarMax’s
Current Report on Form 8-K, filed October 3, 2002 (File No. 1-31420),
is
incorporated by this reference.
|
|
10.16
|
Employee
Benefits Agreement between Circuit City Stores, Inc. and CarMax,
Inc.,
dated October 1, 2002, filed as Exhibit 99.4 to CarMax’s Current Report on
Form 8-K, filed October 3, 2002 (File No. 1-31420), is incorporated
by
this reference.
|
|
10.17
|
Confidentiality
Agreement between Circuit City Stores, Inc. and CarMax, Inc., dated
October 1, 2002, filed as Exhibit 99.5 to CarMax’s Current Report on Form
8-K, filed October 3, 2002 (File No. 1-31420), is incorporated by
this
reference.
|
|
10.18
|
Form
of Notice of Stock Option Grant between CarMax, Inc. and certain
named and
other executive officers, filed as Exhibit 10.2 to CarMax’s Current Report
on Form 8-K, filed October 20, 2006 (File No. 1-31420), is incorporated
by
this reference. *
|
|
10.19
|
Form
of Directors Stock Option Grant Agreement between CarMax, Inc. and
certain
non-employee directors of the CarMax, Inc. board of directors, filed
as
Exhibit 10.5 to CarMax’s Current Report on Form 8-K, filed April 28, 2006
(File No. 1-31420), is incorporated by this reference.
*
|
|
10.20
|
Form
of Stock Grant Notice Letter from CarMax, Inc. to certain non-employee
directors of the CarMax, Inc. board of directors, filed as Exhibit
10.20
to CarMax’s Annual Report on Form 10-K, filed May 13, 2005 (File No.
1-31420), is incorporated by this reference. *
|
|
21.1
|
|
CarMax,
Inc. Subsidiaries, filed herewith.
|
23.1
|
|
Consent
of KPMG LLP, filed herewith.
|
24.1
|
|
Powers
of Attorney, filed herewith.
|
||
|
||||
31.1
|
Certification
of the Chief Executive Officer Pursuant to Rule 13a-14(a), filed
herewith.
|
|||
31.2
|
Certification
of the Chief Financial Officer Pursuant to Rule 13a-14(a), filed
herewith.
|
|||
32.1
|
Certification
of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350,
filed
herewith.
|
|||
32.2
|
Certification
of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350,
filed
herewith.
|