Announces Temporary Suspension of Store Growth
RICHMOND, Va.--(BUSINESS WIRE)--Dec. 19, 2008--CarMax, Inc. (NYSE:KMX) today reported results for the third quarter
ended November 30, 2008.
-- Total sales decreased 23% to $1.46 billion from $1.89 billion in the
third quarter of last year.
-- Comparable store used unit sales declined 24% for the quarter.
-- Total used unit sales decreased 17% in the third quarter.
-- The company reported a net loss of $21.9 million, or $0.10 per diluted
share, compared with earnings of $29.8 million, or $0.14 per diluted
share, in the third quarter of fiscal 2008.
o Results for the third quarter of fiscal 2009 were reduced by $0.12 per
share for CarMax Auto Finance (CAF) unfavorable items, including a
write down in the fair value of retained subordinated bonds and
increases in cumulative net loss assumptions. Earnings for the third
quarter of fiscal 2008 were reduced by $0.04 per share primarily for
increases in CAF funding costs related to loans originated in previous
quarters.
Third Quarter Business Performance
Review
Sales. "During the third
quarter, the most significant factor affecting our sales was a sharp
decline in customer traffic," said
Tom Folliard
, president and chief
executive officer. We believe the slower traffic reflected the weakness
in the economy and the stress on consumer spending, which caused many
households to take a very conservative approach in anticipation of more
difficult times. While traffic fell by slightly more than our 24%
decline in comparable store used unit sales, solid execution by our
store teams allowed us to improve our conversion rate compared with last
year's third quarter. Including the contributions from stores which have
been open less than a year, total used unit sales declined 17%.
Our data for the three month period ended October 31 indicates that we
modestly gained market share in the late-model used vehicle market. Our
used vehicle average selling price decreased 7% compared with the third
quarter of fiscal 2008 primarily as a result of the significant
industry-wide decline in used car valuations, which reduced our
inventory acquisition costs.
Our total wholesale unit sales declined 15% compared with the prior year
quarter, reflecting decreases in both appraisal traffic and our
appraisal buy rate (defined as the number of appraisal purchases as a
percent of vehicles appraised). We wholesale those vehicles that are
purchased via the appraisal process that do not meet our retail
standards. Industry wholesale prices for virtually all vehicle classes
declined at an unprecedented rate during the third quarter, reflecting
the weak demand environment. The vehicle depreciation rate was
approximately three times the historical rate for this period. We
believe the significant drop in wholesale market values, combined with
the overall slowdown in customer traffic, drove the declines in our
appraisal traffic and buy rate.
Compared with the third quarter of fiscal 2008, other sales and revenues
declined 12%. Extended service plan revenues fell 16%, similar to the
decline in total used unit sales. Service department sales increased 6%.
Third-party finance fees decreased 58% due to a combination of factors
including the reduction in vehicle unit sales, a shift in mix among
providers and a change in discount arrangements with certain of the
providers that occurred in the second quarter of this year.
Collectively, the third-party providers financed a larger percentage of
our retail unit sales in the third quarter compared with the prior year,
as we chose to route more credit applications to these providers. Doing
so allowed us to slow the use of capacity in our warehouse facility,
while maximizing credit availability for our customers and optimizing
sales.
Gross Profit. Total gross
profit decreased by $43.6 million, or 18%, to $199.2 million primarily
because of the significant decline in used and wholesale unit sales.
However, our gross profit dollars per used unit declined by only $32 per
unit to $1,854 compared with $1,886 in last year's third quarter. We
believe our ability to maintain a generally consistent level of gross
profit per unit, despite the challenging sales environment and the steep
decline in wholesale market prices, was due in large part to the
effectiveness of our proprietary inventory management systems and
processes. Compared with inventory levels at stores open as of November
30, 2007, we have reduced our used vehicle inventory by more than 18,500
units, representing a reduction of more than $340 million. During this
year's third quarter, we reduced comparable store used vehicle
inventories by approximately 8,300 units, or nearly $140 million.
Wholesale gross profit per unit increased by $20 to $794 compared with
$774 in the third quarter of fiscal 2008. Similar to the first half of
the year, we continued to experience a strong dealer-to-car ratio at our
auctions, with the normal price competition among bidders contributing
to the solid wholesale gross profit per unit. Our wholesale vehicles are
predominantly comprised of older, higher mileage units, and we believe
the demand for these vehicles remains strong from dealers who specialize
in selling to credit-challenged customers. In addition, the frequency of
our auctions and our wholesale inventory turns minimize our depreciation
risk on these vehicles.
CarMax Auto Finance. CAF
reported a pretax loss of $15.4 million compared with income of $16.3
million in last year's third quarter. In both periods, CAF results were
reduced by adjustments related to loans originated in previous fiscal
periods. The adjustments in the third quarter of fiscal 2009 totaled
$39.8 million, and they included:
-- A $23.8 million mark-to-market write-down in the carrying value of
subordinated bonds that we hold. These bonds, which have a face value of
$115 million, were part of three term securitizations completed earlier
in calendar 2008. The size of the write-down reflects the current
illiquidity in the credit markets, particularly for subordinated
asset-backed bonds. This non-cash charge primarily affects the timing of
the recognition of CAF earnings. If current conditions continue, this
adjustment should result in positive contributions to CAF earnings in
future periods.
-- $16.0 million related to increases in loss rate assumptions, partially
offset by favorability in prepayment speeds. We increased the upper end
of our cumulative loss rate assumption range to 3.9% from 3.5%.
The adjustments in the third quarter of fiscal 2008 totaled $14.8
million, and they primarily resulted from increases in funding costs for
loans originated in prior periods.
The CAF gain on loans originated and sold declined to $11.3 million
compared with $20.9 million in the prior year quarter. CAF's loan
origination volume was adversely affected by the decreases in our unit
sales and average selling price, as well as a decrease in the percentage
of sales financed by CAF. Given the inactivity in the public
asset-backed securitization market, during the second half of the
quarter we elected to slow the use of capacity in our warehouse
facility. We accomplished this by allowing our third-party finance
providers to increase their share of originations. In addition, the gain
percentage (the gain on the sale of loans originated and sold as a
percentage of loans originated and sold) decreased to 2.8% from 3.6% in
the prior year quarter primarily due to the use of higher loss rates,
higher enhancement levels and a higher discount rate assumption in the
current year.
SG&A. Selling, general
and administrative expenses were 14.9% of total revenues in the third
quarter of fiscal 2009 compared with 11.2% in the prior year's third
quarter. The increase in the SG&A ratio was mainly the result of the
significant declines in comparable store used unit sales and average
selling price. This increase was partially offset by reductions in
variable costs. In the current market environment, we continue to reduce
variable costs by reducing associate hours and allowing natural
attrition to further reduce store staffing. In addition, we have
implemented a hiring freeze at the home office and are carefully
monitoring expenses at CAF.
SG&A expenses for the current year's quarter included a number of
non-recurring items, which in the aggregate reduced results by
approximately $0.01 per share. These items included approximately $7
million of severance costs related to the October service operations
workforce reduction and $6 million of costs for the termination of store
site acquisitions resulting from our decision to slow our store growth.
These costs were partially offset by a $10 million benefit related to
our previously announced decision to freeze our pension plans as of
December 31, 2008.
Results. "We believe that
the decrease in our third quarter results stems mainly from external
conditions and that we are taking the necessary and appropriate steps to
navigate through this difficult environment," said Folliard. We have
been successful in dramatically reducing inventories to align them with
current sales. This, together with the agility of our car-buying
process, has largely allowed us to preserve our gross profit per unit.
We continue to focus on aligning costs with current sales levels, and we
expect to continue to find opportunities to further shrink costs. At the
same time, we remain committed to delivering the exceptional customer
service that underpins our long-term prospects.
In November 2008, the United States District Court for the Eastern
District of Virginia dismissed, without prejudice, the Rangos putative
class action lawsuit in response to the plaintiff's voluntary motion to
dismiss. This lawsuit was related to alleged violations of federal
securities laws.
Credit Facilities. As of
November 30, 2008, we had $248.4 million outstanding under the revolving
credit facility. During the third quarter, due to the unprecedented
conditions in the credit markets, we felt that it was prudent to
maintain a higher-than-normal cash balance. Despite the increase in cash
and the decline in our results, during the first nine months of fiscal
2009 we reduced borrowings under this facility by $51.8 million. As of
November 30, 2008, based on then-current inventory levels, we had
additional borrowing capacity of $225.4 million under the revolving
credit facility, which expires in December 2011.
As of November 30, 2008, $907 million of auto loan receivables were
securitized through the warehouse facility and unused warehouse capacity
totaled $493 million.
We remain in compliance with the financial covenants contained in our
warehouse and revolving credit facilities, and we continue to carefully
monitor our performance relative to these covenants. Further, in
anticipation of continued limited activity in the public asset-backed
securitization market, we are currently evaluating a variety of
alternatives to preserve the sales associated with the CAF origination
channel.
Sale-Leasebacks. During the
third quarter of fiscal 2009, we entered into sale-leaseback agreements
having a total sales price of $31.3 million for our two superstores in
the Austin, Texas, market. We received total proceeds of $25.4 million
during the third quarter, and we provided short-term financing for the
remaining $5.9 million, which we expect to receive in fiscal 2010.
Superstore Openings. During
the third quarter, we expanded our presence in the Charlotte market with
a non-production superstore in Hickory, North Carolina. Through the
first nine months of fiscal 2009, we opened ten superstores, including
four production superstores and six non-production superstores.
Supplemental Financial Information
Sales Components
Three Months Ended Nine Months Ended
(In millions)
November 30 (1) November 30 (1)
2008 2007 Change 2008 2007 Change
Used vehicle sales $1,168.8 $1,514.3 (22.8)% $4,462.0 $4,909.8 (9.1)%
New vehicle sales 57.5 77.0 (25.3)% 217.4 294.4 (26.2)%
Wholesale vehicle 177.0 234.7 (24.6)% 642.6 761.2 (15.6)%
sales
Other sales and
revenues:
Extended service plan 25.2 30.1 (16.3)% 93.5 97.2 (3.9)%
revenues
Service department 24.7 23.2 6.3 % 75.7 72.6 4.3 %
sales
Third-party finance 2.5 5.9 (58.3)% 12.3 19.7 (37.4)%
fees, net
Total other sales and 52.4 59.3 (11.6)% 181.5 189.6 (4.2)%
revenues
Net sales and $1,455.6 $1,885.3 (22.8)% $5,503.4 $6,155.0 (10.6)%
operating revenues
(1) Percent calculations and amounts shown are based on
amounts presented on the attached consolidated statements of operations
and may not sum due to rounding.
Retail Vehicle Sales Changes
Three Months Ended Nine Months Ended
November 30 November 30
2008 2007 2008 2007
Comparable store vehicle sales:
Used vehicle units (24)% 0 % (13)% 3 %
New vehicle units (26)% (20)% (21)% (12)%
Total units (25)% (1)% (13)% 2 %
Used vehicle dollars (30)% 0 % (18)% 4 %
New vehicle dollars (25)% (21)% (22)% (12)%
Total dollars (30)% (1)% (18)% 3 %
Total vehicle sales:
Used vehicle units (17)% 9 % (4)% 11 %
New vehicle units (26)% (29)% (25)% (16)%
Total units (17)% 7 % (5)% 10 %
Used vehicle dollars (23)% 10 % (9)% 12 %
New vehicle dollars (25)% (30)% (26)% (16)%
Total dollars (23)% 7 % (10)% 10 %
Retail Vehicle Sales Mix
Three Months Ended Nine Months Ended
November 30 November 30
2008 2007 2008 2007
Vehicle units:
Used vehicles 97% 96% 97% 96%
New vehicles 3 4 3 4
Total 100% 100% 100% 100%
Vehicle dollars:
Used vehicles 95% 95% 95% 94%
New vehicles 5 5 5 6
Total 100% 100% 100% 100%
Unit Sales
Three Months Ended Nine Months Ended
November 30 November 30
2008 2007 2008 2007
Used vehicles 71,426 85,973 267,837 278,841
New vehicles 2,397 3,224 9,212 12,309
Wholesale vehicles 45,139 52,960 156,592 171,150
Average Selling Prices
Three Months Ended Nine Months Ended
November 30 November 30
2008 2007 2008 2007
Used vehicles $16,146 $17,433 $16,472 $17,434
New vehicles $23,845 $23,751 $23,456 $23,778
Wholesale vehicles $ 3,805 $ 4,322 $ 3,987 $ 4,337
Selected
Operating
Ratios
Three Months Ended Nine Months Ended
(In millions)
November 30 November 30
2008 % (1) 2007 % (1) 2008 % (1) 2007 % (1)
Net sales and
operating $ 1,455.6 100.0% $ 1,885.3 100.0% $ 5,503.4 100.0% $ 6,155.0 100.0%
revenues
Gross profit $ 199.2 13.7% $ 242.9 12.9% $ 737.9 13.4% $ 815.3 13.2%
CarMax Auto
Finance (loss) $ (15.4) (1.1)% $ 16.3 0.9% $ (12.7) (0.2)% $ 86.8 1.4%
income
Selling,
general, and $ 217.5 14.9% $ 210.5 11.2% $ 685.6 12.5% $ 638.5 10.4%
administrative
expenses
Operating
(loss) profit $ (33.6) (2.3)% $ 48.7 2.6% $ 39.6 0.7% $ 264.3 4.3%
(EBIT) (2)
Net (loss) $ (21.9) (1.5)% $ 29.8 1.6% $ 21.7 0.4% $ 160.2 2.6%
earnings
(1) Calculated as the ratio of the applicable amount to net
sales and operating revenues.
(2) Operating (loss) profit equals earnings before interest
and income taxes.
Gross
Profit
Three Months Ended Nine Months Ended
November 30 November 30
2008 2007 2008 2007
$/unit % (2) $/unit % (2) $/unit (1) % (2) $/unit (1) % (2)
(1) (1)
Used
vehicle $ 1,854 11.3% $ 1,886 10.7% $ 1,815 10.9% $ 1,936 11.0%
gross
profit
New
vehicle $ 684 2.9% $ 1,043 4.4% $ 832 3.5% $ 1,040 4.3%
gross
profit
Wholesale
vehicle $ 794 20.2% $ 774 17.5% $ 827 20.2% $ 790 17.8%
gross
profit
Other
gross $ 397 56.0% $ 408 61.4% $ 414 63.2% $ 438 67.2%
profit
Total
gross $ 2,699 13.7% $ 2,723 12.9% $ 2,663 13.4% $ 2,800 13.2%
profit
(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 percentage of its respective sales or
revenue.
CAF Income
Three Months Ended Nine Months Ended
(In millions)
November 30 November 30
2008 2007 2008 2007
Gain on sales of loans $ 11.3 $ 20.9 $ 32.5 $ 57.8
originated and sold
Other (losses) gains (39.8 ) (14.8 ) (82.6 ) 1.0
Total (loss) gain (28.5 ) 6.1 (50.1 ) 58.8
Servicing fee and interest 23.0 18.7 65.9 52.4
income
Direct CAF expenses 9.9 8.4 28.4 24.4
CarMax Auto Finance (loss) $ (15.4 ) $ 16.3 $ (12.7 ) $ 86.8
income
Loans originated and sold $ 407.0 $ 575.6 $ 1,560.4 $ 1,840.5
Gain on sales of loans
originated and sold as a 2.8 % 3.6 % 2.1 % 3.1 %
percentage of loans originated
and sold
Earnings Highlights
(In millions except Three Months Ended Nine Months Ended
per share data)
November 30 November 30
2008 2007 Change 2008 2007 Change
Net (loss) earnings $ (21.9 ) $ 29.8 (173.3 )% $ 21.7 $ 160.2 (86.5 )%
Diluted weighted
average shares 217.7 220.6 (1.3 )% 220.7 220.4 0.1 %
outstanding
Net (loss) earnings $ (0.10 ) $ 0.14 (171.4 )% $ 0.10 $ 0.73 (86.3 )%
per share
Fiscal 2009 Expectations
"As a result of the unprecedented declines in traffic and sales and the
continuing volatility in the asset-backed credit markets, we do not
believe we can make a meaningful projection of fiscal 2009 earnings,"
said Folliard.
Suspending Future Store Openings
In August 2008, we announced that we would temporarily slow our store
growth as a result of the weak economic and sales environment. In the
intervening months, conditions have further deteriorated, and as a
consequence, we have now decided to temporarily suspend our store
growth. We plan to open one non-production store, which is currently
under construction in the Washington, D.C., market, in either late
fiscal 2009 or early fiscal 2010. We have three other stores that are
currently under construction in Augusta, Georgia; Cincinnati, Ohio; and
Dayton, Ohio. These stores will be completed but they will not be opened
until market conditions improve. The suspension of store growth will
both reduce our capital needs and aid profitability in the near term.
Conference Call Information
We will host a conference call for investors at 9:00 a.m. ET today,
December 19, 2008. Domestic investors may access the call at
1-888-298-3261 (international callers dial 1-706-679-7457). The
conference I.D. for both domestic and international callers is 26914250.
A live webcast of the call will be available on our investor information
home page at investor.carmax.com and at www.streetevents.com.
A webcast replay of the call will be available at investor.carmax.com
beginning at approximately 1:00 p.m. ET on December 19, 2008 through
April 1, 2009. A telephone replay also will be available through
December 31, 2008, and may be accessed by dialing 1-800-642-1687
(international callers dial 1-706-645-9291). The conference I.D. for
both domestic and international callers is 26914250.
Fourth Quarter Fiscal 2009 Earnings
Release Date
We currently plan to release fourth quarter sales and earnings on
Thursday, April 2, 2009, before the opening of the New York Stock
Exchange. We will host a conference call for investors at 9:00 a.m. ET
on that date. Information on this conference call will be available on
our investor information home page at investor.carmax.com in March 2009.
About CarMax
CarMax, a Fortune 500 company, and one of the Fortune
2008 "100 Best Companies to Work For," is the nation's largest
retailer of used cars. Headquartered in Richmond, Va., we currently
operate 99 used car superstores in 46 markets. The CarMax consumer offer
is structured around four customer benefits: low, no-haggle prices; a
broad selection; high quality vehicles; and customer-friendly service.
During the twelve months ended February 29, 2008, we retailed 377,244
used cars and sold 222,406 wholesale vehicles at our in-store auctions.
For more information, access the CarMax website at www.carmax.com.
Forward-Looking Statements
We caution readers that the statements contained in this release about
our future business plans, operations, opportunities or prospects,
including without limitation any statements or factors regarding
expected sales, margins or earnings, are forward-looking statements made
pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements are based
upon management's current knowledge and assumptions about future events
and involve risks and uncertainties that could cause actual results to
differ materially from anticipated results. Among the factors that could
cause actual results and outcomes to differ materially from those
contained in the forward-looking statements are the following:
-- Changes in the general U.S. or regional U.S. economy.
-- Changes in the availability or cost of capital and working capital
financing, including the availability or cost of long-term financing to
support our geographic growth and the availability or cost of financing
auto loan receivables.
-- Changes in consumer credit availability related to our third-party
financing providers.
-- Changes in the competitive landscape within our industry.
-- Significant changes in retail prices for used and new vehicles.
-- A reduction in the availability of or access to sources of inventory.
-- Factors related to the regulatory environment in which we operate.
-- The loss of key employees from our store, regional or corporate
management teams.
-- The failure of key information systems.
-- The effect of new accounting requirements or changes to U.S. generally
accepted accounting principles.
-- Security breaches or other events that result in the misappropriation,
loss or other unauthorized disclosure of confidential customer
information.
-- The effect of various litigation matters.
-- Our inability to acquire or lease suitable real estate at favorable
terms.
-- The occurrence of severe weather events.
-- Factors related to the seasonal fluctuations in our business.
-- Factors related to the geographic concentration of our superstores.
-- The occurrence of certain other material events.
For more details on factors that could affect expectations, see our
Annual Report on Form 10-K for the fiscal year ended February 29, 2008,
and our quarterly or current reports as filed with or furnished to the
Securities and Exchange Commission. Our filings are publicly available
on our investor information home page at investor.carmax.com. Requests
for information may also be made to the Investor Relations Department by
email to investor_relations@carmax.com
or by calling 1-804-747-0422 ext. 4489. We disclaim any intent or
obligation to update our forward-looking statements.
CARMAX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(In thousands except per share data)
Three Months Ended November 30 Nine Months Ended November 30
2008 %(1) 2007 %(1) 2008 %(1) 2007 %(1)
Sales and
operating
revenues:
Used vehicle $ 1,168,804 80.3 $ 1,514,302 80.3 $ 81.1 $ 4,909,835 79.8
sales 4,461,969
New vehicle 57,508 4.0 76,999 4.1 217,396 4.0 294,393 4.8
sales
Wholesale 176,956 12.2 234,739 12.5 642,552 11.7 761,173 12.4
vehicle sales
Other sales 52,364 3.6 59,260 3.1 181,532 3.3 189,563 3.1
and revenues
Net sales and
operating 1,455,632 100.0 1,885,300 100.0 5,503,449 100.0 6,154,964 100.0
revenues
Cost of sales 1,256,396 86.3 1,642,417 87.1 4,765,586 86.6 5,339,666 86.8
Gross profit 199,236 13.7 242,883 12.9 737,863 13.4 815,298 13.2
CarMax Auto
Finance (loss) (15,360 ) (1.1 ) 16,347 0.9 (12,682 ) (0.2 ) 86,827 1.4
income
Selling,
general and 217,482 14.9 210,508 11.2 685,614 12.5 638,518 10.4
administrative
expenses
Gain on
franchise -- -- -- -- -- -- 740 --
disposition
Interest 1,525 0.1 44 -- 5,060 0.1 3,010 --
expense
Interest 735 0.1 285 -- 1,353 -- 908 --
income
(Loss)
earnings (34,396 ) (2.4 ) 48,963 2.6 35,860 0.7 262,245 4.3
before income
taxes
Income tax
(benefit) (12,522 ) (0.9 ) 19,117 1.0 14,170 0.3 102,049 1.7
expense
Net (loss) $ (21,874 ) (1.5 ) $ 29,846 1.6 $ 21,690 0.4 $ 160,196 2.6
earnings
Weighted
average common
shares:
Basic 217,712 216,301 217,468 215,826
Diluted 217,712 220,558 220,692 220,421
Net (loss)
earnings per
share:
Basic $ (0.10 ) $ 0.14 $ 0.10 $ 0.74
Diluted $ (0.10 ) $ 0.14 $ 0.10 $ 0.73
(1)Percents are calculated as a percentage of net sales and operating revenues and may not equal
totals due to rounding.
CARMAX, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In thousands)
November 30 November 30 February 29
2008 2007 2008
ASSETS
Current assets:
Cash and cash equivalents $ 138,144 $ 8,380 $ 12,965
Accounts receivable, net 45,816 52,769 73,228
Auto loan receivables held for sale 20,910 4,700 4,984
Retained interest in securitized 314,995 233,662 270,761
receivables
Inventory 601,506 892,228 975,777
Prepaid expenses and other current assets 8,885 20,498 19,210
Total current assets 1,130,256 1,212,237 1,356,925
Property and equipment, net 948,106 804,545 862,497
Deferred income taxes 89,315 45,607 67,066
Other assets 50,505 47,003 46,673
TOTAL ASSETS $ 2,218,182 $ 2,109,392 $ 2,333,161
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 177,144 $ 265,933 $ 306,013
Accrued expenses and other current 70,783 69,113 58,054
liabilities
Accrued income taxes 17,672 232 7,569
Deferred income taxes 14,926 16,132 17,710
Short-term debt 12,073 3,137 21,017
Current portion of long-term debt 86,895 155,541 79,661
Total current liabilities 379,493 510,088 490,024
Long-term debt, excluding current portion 176,683 27,280 227,153
Deferred revenue and other liabilities 98,303 117,695 127,058
TOTAL LIABILITIES 654,479 655,063 844,235
SHAREHOLDERS' EQUITY 1,563,703 1,454,329 1,488,926
TOTAL LIABILITIES AND SHAREHOLDERS' $ 2,218,182 $ 2,109,392 $ 2,333,161
EQUITY
CARMAX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
(In thousands)
Nine Months Ended November 30
2008 2007
Operating Activities:
Net earnings $ 21,690 $ 160,196
Adjustments to reconcile net earnings to net cash
provided
by operating activities:
Depreciation and amortization 41,379 34,168
Share-based compensation expense 27,038 25,856
Loss on disposition of assets 8,263 35
Deferred income tax benefit (34,604 ) (3,332 )
Net decrease (increase) in:
Accounts receivable, net 27,412 18,644
Auto loan receivables held for sale, net (15,926 ) 1,462
Retained interest in securitized receivables (44,234 ) (31,360 )
Inventory 374,271 (56,112 )
Prepaid expenses and other current assets 10,317 (5,430 )
Other assets 177 1,030
Net (decrease) increase in:
Accounts payable, accrued expenses and other (104,495 ) (11,881 )
current liabilities and accrued income taxes
Deferred revenue and other liabilities (4,660 ) 25,641
Net cash provided by operating activities 306,628 158,917
Investing Activities:
Capital expenditures (163,964 ) (192,440 )
Proceeds from sales of assets 28,355 1,457
(Purchases) sales of money market securities (4,009 ) 5,000
Purchases of investments available-for-sale -- (10,000 )
Net cash used in investing activities (139,618 ) (195,983 )
Financing Activities:
Decrease in short-term debt, net (8,944 ) (153 )
Issuances of long-term debt 487,800 692,200
Payments on long-term debt (531,036 ) (685,011 )
Equity issuances, net 9,962 13,157
Excess tax benefits from share-based payment 387 5,798
arrangements
Net cash (used in) provided by financing (41,831 ) 25,991
activities
Increase (decrease) in cash and cash equivalents 125,179 (11,075 )
Cash and cash equivalents at beginning of year 12,965 19,455
Cash and cash equivalents at end of period $ 138,144 $ 8,380
CONTACT: CarMax
Investors and Financial Media:
Katharine Kenny
, 804-935-4591
Assistant Vice President, Investor Relations
or
Celeste Gunter
, 804-935-4597
Manager, Investor Relations
or
General Media:
Lisa Van Riper, 804-935-4594
Assistant Vice President, Public Affairs
or
Trina Lee
, 804-747-0422, ext. 4197
Director, Public Relations
Source: CarMax, Inc.