10-Q 1 kmx-20121130x10q.htm 10-Q 0afe3e144ebb443

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

 

FORM 10-Q

 

[ X ]    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended November 30, 2012

 

OR

 

 [    ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

 

Commission File Number:  1-31420

 

CARMAX, INC.

(Exact name of registrant as specified in its charter)

 

 

 

VIRGINIA

54-1821055

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification No.)

 

 

 

12800 TUCKAHOE CREEK PARKWAY, RICHMOND, VIRGINIA

23238

(Address of principal executive offices)

(Zip Code)

 

(804) 747-0422

(Registrant's telephone number, including area code)

 

N/A

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

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

 

 

Yes            x

No            o

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   

 

 

Yes            x

No            o

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.  (Check one):

.

 

 

            Large accelerated filer            x

Accelerated filer            o

 

 

            Non-accelerated filer            o

Smaller reporting company            o

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

 

 

Yes            o

No            x

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

ClassOutstanding as of December 31, 2012

 

 

 

Common Stock, par value $0.50

 

228,169,303

 

 

 

A Table of Contents is included on Page 2 and a separate Exhibit Index is included on Page 40.

 

 

 

Page 1


 

CARMAX, INC. AND SUBSIDIARIES

 

TABLE OF CONTENTS

 

 

 

 

 

Page

No.

PART I.

FINANCIAL INFORMATION

 

 

Item 1.

Financial Statements:

 

 

 

Consolidated Statements of Earnings –

 

 

 

Three Months and Nine Months Ended November 30, 2012 and 2011

3

 

 

 

 

 

 

Consolidated Statements of Comprehensive Income –

 

 

 

Three Months and Nine Months Ended November 30, 2012 and 2011

4

 

 

 

 

 

 

Consolidated Balance Sheets –

 

 

 

November 30, 2012, and February 29, 2012

5

 

 

 

 

 

 

Consolidated Statements of Cash Flows –

 

 

 

Nine Months Ended November 30, 2012 and 2011

6

 

 

 

 

 

 

Notes to Consolidated Financial Statements

7

 

Item 2.

Management's Discussion and Analysis of Financial Condition and

Results of Operations

 

 

23

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

36

 

Item 4.

Controls and Procedures

36

PART II.

OTHER INFORMATION

 

 

Item 1.

Legal Proceedings

37

 

Item 1A.

Risk Factors

37

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

38

 

Item 4.

Mine Safety Disclosures

38

 

Item 6.

Exhibits

38

SIGNATURES

39

EXHIBIT INDEX

40

 

 

 

 

 

 

 

 

Page 2


 

 

 

 

PART I. FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

CARMAX, INC. AND SUBSIDIARIES

Consolidated Statements of Earnings

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended November 30

 

Nine Months Ended November 30

(In thousands except per share data)

 

2012

% (1)

 

2011 (2)

% (1)

 

2012

% (1)

 

2011 (2)

% (1)

SALES AND OPERATING REVENUES:

 

 

 

 

 

 

 

 

 

 

 

 

Used vehicle sales

$

2,068,742 
79.5 

$

1,766,690 
78.2 

$

6,449,613 
79.3 

$

5,853,213 
77.8 

New vehicle sales

 

45,693 
1.8 

 

45,997 
2.0 

 

162,543 
2.0 

 

154,736 
2.1 

Wholesale vehicle sales

 

427,650 
16.4 

 

390,262 
17.3 

 

1,332,495 
16.4 

 

1,325,926 
17.6 

Other sales and revenues

 

60,361 
2.3 

 

57,565 
2.5 

 

190,219 
2.3 

 

193,875 
2.6 

NET SALES AND OPERATING REVENUES

 

2,602,446 
100.0 

 

2,260,514 
100.0 

 

8,134,870 
100.0 

 

7,527,750 
100.0 

Cost of sales

 

2,257,227 
86.7 

 

1,957,295 
86.6 

 

7,039,743 
86.5 

 

6,487,161 
86.2 

GROSS PROFIT 

 

345,219 
13.3 

 

303,219 
13.4 

 

1,095,127 
13.5 

 

1,040,589 
13.8 

CARMAX AUTO FINANCE INCOME 

 

72,454 
2.8 

 

62,625 
2.8 

 

223,309 
2.7 

 

196,112 
2.6 

Selling, general and administrative expenses

 

257,282 
9.9 

 

225,765 
10.0 

 

765,559 
9.4 

 

697,307 
9.3 

Interest expense

 

8,065 
0.3 

 

8,359 
0.4 

 

24,360 
0.3 

 

25,363 
0.3 

Other income (expense)

 

139 

 ―

 

(94)

 ―

 

683 

 ―

 

119 

 ―

Earnings before income taxes

 

152,465 
5.9 

 

131,626 
5.8 

 

529,200 
6.5 

 

514,150 
6.8 

Income tax provision

 

57,784 
2.2 

 

49,516 
2.2 

 

202,137 
2.5 

 

195,386 
2.6 

NET EARNINGS 

$

94,681 
3.6 

$

82,110 
3.6 

$

327,063 
4.0 

$

318,764 
4.2 

WEIGHTED AVERAGE COMMON SHARES:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

228,904 

 

 

226,446 

 

 

228,346 

 

 

226,104 

 

Diluted

 

232,656 

 

 

230,632 

 

 

232,048 

 

 

230,529 

 

NET EARNINGS PER SHARE:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

0.41 

 

$

0.36 

 

$

1.43 

 

$

1.41 

 

Diluted

$

0.41 

 

$

0.36 

 

$

1.41 

 

$

1.38 

 

 

 

 

(1)  Calculated as a percentage of net sales and operating revenues and may not equal totals due to rounding.

(2)  As discussed in Note 2, fiscal 2012 reflects the revisions to correct our accounting for sale-leaseback transactions.

 

 

 

 

 

 

 

See accompanying notes to consolidated financial statements.

 

Page 3


 

 

 

 

 

 

CARMAX, INC. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended November 30

Nine Months Ended November 30

(In thousands)

 

2012

 

 

2011 (1)

 

 

2012

 

 

2011 (1)

 

NET EARNINGS

$

94,681 

 

$

82,110 

 

$

327,063 

 

$

318,764 

 

Other comprehensive income (loss), net of taxes:

 

 

 

 

 

 

 

 

 

 

 

 

Retirement plans:

 

 

 

 

 

 

 

 

 

 

 

 

Amortization recognized in net pension

 

 

 

 

 

 

 

 

 

 

 

 

expense (2)

 

188 

 

 

72 

 

 

637 

 

 

230 

 

Cash flow hedges:

 

 

 

 

 

 

 

 

 

 

 

 

Effective portion of changes in fair value (3)

 

(543)

 

 

(8,171)

 

 

4,091 

 

 

(18,783)

 

Reclassifications to CarMax Auto Finance

 

 

 

 

 

 

 

 

 

 

 

 

income (4)

 

2,021 

 

 

2,258 

 

 

5,986 

 

 

4,353 

 

Other comprehensive income (loss), net of taxes

 

1,666 

 

 

(5,841)

 

 

10,714 

 

 

(14,200)

 

TOTAL COMPREHENSIVE INCOME

$

96,347 

 

$

76,269 

 

$

337,777 

 

$

304,564 

 

 

(1)  As discussed in Note 2, fiscal 2012 reflects the revisions to correct our accounting for sale-leaseback transactions.

(2)  Net of tax of $112 and $43 for the three months ended November 30, 2012 and 2011, respectively; and $263 and $115 for the nine months ended November 30, 2012 and 2011, respectively.

(3)  Net of tax benefit of $351 for the three months ended November 30, 2012, and net of tax of $6,927 for the three months ended November 30, 2011; and net of tax benefit of $11,377 and net of tax of $421 for the nine months ended November 30, 2012 and 2011, respectively.  The nine months ended November 30, 2012, includes a tax benefit adjustment of $8,518 related to prior years.

(4)  Net of tax of $1,306 and $0 for the three months ended November 30, 2012 and 2011, respectively; and $3,869 and $0 for the nine months ended November 30, 2012 and 2011, respectively.

 

 

  

 

See accompanying notes to consolidated financial statements.

 

Page 4


 

 

CARMAX, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Unaudited)

 

 

 

 

 

 

November 30

February 29

(In thousands except share data)

 

2012

2012

ASSETS

 

 

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

445,110 

 

$

442,658 

 

 

Restricted cash from collections on auto loan receivables

 

 

204,360 

 

 

204,314 

 

 

Accounts receivable, net

 

 

62,660 

 

 

86,434 

 

 

Inventory

 

 

1,339,044 

 

 

1,092,592 

 

 

Deferred income taxes

 

 

9,315 

 

 

9,938 

 

 

Other current assets

 

 

24,875 

 

 

17,512 

 

 

TOTAL CURRENT ASSETS 

 

 

2,085,364 

 

 

1,853,448 

 

 

Auto loan receivables, net

 

 

5,552,035 

 

 

4,959,847 

 

 

Property and equipment, net

 

 

1,411,588 

 

 

1,278,722 

 

 

Deferred income taxes

 

 

147,571 

 

 

133,134 

 

 

Other assets

 

 

101,125 

 

 

106,392 

 

 

TOTAL ASSETS 

 

$

9,297,683 

 

$

8,331,543 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

 

 

Accounts payable

 

$

272,807 

 

$

324,827 

 

 

Accrued expenses and other current liabilities

 

 

116,629 

 

 

128,973 

 

 

Accrued income taxes

 

 

266 

 

 

3,125 

 

 

Short-term debt

 

 

706 

 

 

943 

 

 

Current portion of finance and capital lease obligations

 

 

15,885 

 

 

14,108 

 

 

Current portion of non-recourse notes payable

 

 

169,399 

 

 

174,337 

 

 

TOTAL CURRENT LIABILITIES 

 

 

575,692 

 

 

646,313 

 

 

Finance and capital lease obligations, excluding current portion

 

 

341,424 

 

 

353,566 

 

 

Non-recourse notes payable, excluding current portion

 

 

5,211,064 

 

 

4,509,752 

 

 

Other liabilities

 

 

145,834 

 

 

148,800 

 

 

TOTAL LIABILITIES 

 

 

6,274,014 

 

 

5,658,431 

 

 

 

 

 

 

 

 

 

 

 

Commitments and contingent liabilities

 

 

 

 

 

 

 

 

SHAREHOLDERS’ EQUITY:

 

 

 

 

 

 

 

 

Common stock, $0.50 par value; 350,000,000 shares authorized;

 

 

 

 

 

 

 

 

228,216,842 and 227,118,666 shares issued and outstanding

 

 

 

 

 

 

 

 

as of November 30, 2012 and February 29, 2012, respectively

 

 

114,108 

 

 

113,559 

 

 

Capital in excess of par value

 

 

942,017 

 

 

877,493 

 

 

Accumulated other comprehensive loss

 

 

(51,745)

 

 

(62,459)

 

 

Retained earnings

 

 

2,019,289 

 

 

1,744,519 

 

 

TOTAL SHAREHOLDERS’ EQUITY 

 

 

3,023,669 

 

 

2,673,112 

 

 

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 

 

$

9,297,683 

 

$

8,331,543 

 

 

 

 

See accompanying notes to consolidated financial statements.

 

Page 5


 

CARMAX, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended November 30

(In thousands)

 

2012

 

2011 (1)

OPERATING ACTIVITIES:

 

 

 

 

 

 

 

Net earnings

 

$

327,063 

 

$

318,764 

 

Adjustments to reconcile net earnings to net cash

 

 

 

 

 

 

 

(used in) provided by operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

 

 

70,721 

 

 

60,696 

 

Share-based compensation expense

 

 

46,597 

 

 

37,148 

 

Provision for loan losses

 

 

40,154 

 

 

24,878 

 

Loss on disposition of assets

 

 

1,554 

 

 

1,331 

 

Deferred income tax benefit

 

 

(6,569)

 

 

(5,014)

 

Net decrease (increase) in:

 

 

 

 

 

 

 

Accounts receivable, net

 

 

23,774 

 

 

65,075 

 

Inventory

 

 

(246,452)

 

 

36,294 

 

Other current assets

 

 

(7,336)

 

 

24,038 

 

Auto loan receivables, net

 

 

(632,342)

 

 

(512,107)

 

Other assets

 

 

(506)

 

 

(5,334)

 

Net decrease in:

 

 

 

 

 

 

 

Accounts payable, accrued expenses and other current

 

 

 

 

 

 

 

liabilities and accrued income taxes

 

 

(102,666)

 

 

(21,673)

 

Other liabilities

 

 

(13,220)

 

 

(17,763)

 

NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES

 

 

(499,228)

 

 

6,333 

 

INVESTING ACTIVITIES:

 

 

 

 

 

 

 

Capital expenditures

 

 

(184,942)

 

 

(105,990)

 

Increase in restricted cash from collections on auto loan receivables

 

 

(46)

 

 

(13,340)

 

Increase in restricted cash in reserve accounts

 

 

(6,912)

 

 

(8,573)

 

Release of restricted cash from reserve accounts

 

 

15,980 

 

 

12,088 

 

Purchases of money market securities, net

 

 

(2,088)

 

 

(520)

 

Purchases of investments available-for-sale

 

 

(1,525)

 

 

(2,252)

 

Sales of investments available-for-sale

 

 

318 

 

 

52 

 

NET CASH USED IN INVESTING ACTIVITIES

 

 

(179,215)

 

 

(118,535)

 

FINANCING ACTIVITIES:

 

 

 

 

 

 

 

Decrease in short-term debt, net

 

 

(237)

 

 

(243)

 

Payments on finance and capital lease obligations

 

 

(10,365)

 

 

(9,331)

 

Issuances of non-recourse notes payable

 

 

4,010,000 

 

 

3,633,000 

 

Payments on non-recourse notes payable

 

 

(3,313,626)

 

 

(3,181,432)

 

Repurchase and retirement of common stock

 

 

(51,091)

 

 

 ―

 

Equity issuances, net

 

 

29,486 

 

 

5,039 

 

Excess tax benefits from share-based payment arrangements

 

 

16,728 

 

 

7,459 

 

NET CASH PROVIDED BY FINANCING ACTIVITIES

 

 

680,895 

 

 

454,492 

 

Increase in cash and cash equivalents

 

 

2,452 

 

 

342,290 

 

Cash and cash equivalents at beginning of year

 

 

442,658 

 

 

41,121 

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

 

$

445,110 

 

$

383,411 

 

 

 

(1)  As discussed in Note 2, fiscal 2012 reflects the revisions to correct our accounting for sale-leaseback transactions.

 

 

 

 

 

CARMAX, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

 

1.   Background

 

CarMax, Inc. (“we,” “our,” “us,” “CarMax” and “the company”), including its wholly owned subsidiaries, is the largest retailer of used vehicles in the United States.  We were the first used vehicle retailer to offer a large selection of high quality used vehicles at competitively low, no-haggle prices using a customer-friendly sales process in an attractive, modern sales facility.  We provide customers with a full range of related products and services, including the appraisal and purchase of vehicles directly from consumers; the financing of vehicle purchases through our own finance operation, CarMax Auto Finance (“CAF”), and third-party financing providers; the sale of extended service plans (“ESP”), guaranteed asset protection (“GAP”) and accessories; and vehicle repair service.  Vehicles purchased through the appraisal process that do not meet our retail standards are sold to licensed dealers through on-site wholesale auctions.  At select locations we also sell new vehicles under various franchise agreements.

 

2.   Accounting Policies

 

Basis of Presentation and Use of Estimates.    The accompanying interim unaudited consolidated financial statements include the accounts of CarMax and our wholly owned subsidiaries.  All significant intercompany balances and transactions have been eliminated in consolidation.  These consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) for interim financial information.  Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements.  In the opinion of management, such interim consolidated financial statements reflect all normal recurring adjustments considered necessary to present fairly the financial position and the results of operations and cash flows for the interim periods presented.  The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full fiscal year.  These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and footnotes included in our Annual Report on Form 10-K for the fiscal year ended
February 29, 2012.

 

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities.  Actual results could differ from those estimates.  Certain prior year amounts have been reclassified to conform to the current year’s presentation.  Amounts and percentages may not total due to rounding.

 

Cash and Cash Equivalents.  Cash equivalents of $397.1 million as of November 30, 2012, and $429.3 million as of February 29, 2012, consisted of highly liquid investments with original maturities of three months or less.

 

Restricted Cash from Collections on Auto Loan Receivables.  Cash accounts totaling $204.4 million as of
November 30, 2012, and $204.3 million as of February 29, 2012, consisted of collections of principal and interest payments on securitized auto loan receivables that are restricted for payment to the securitization investors pursuant to the applicable securitization agreements.

 

Securitizations.  We maintain a revolving securitization program composed of two warehouse facilities (“warehouse facilities”) that we use to fund auto loan receivables originated by CAF until they are funded through a term securitization or alternative funding arrangement.  We sell the auto loan receivables to a wholly owned, bankruptcy-remote, special purpose entity that transfers an undivided percentage ownership interest in the receivables, but not the receivables themselves, to entities formed by third-party investors (“bank conduits”).  The bank conduits generally issue asset-backed commercial paper or utilize other funding sources supported by the transferred receivables, and the proceeds are used to finance the securitized receivables.

 

We typically use term securitizations to provide long-term funding for the auto loan receivables initially securitized through the warehouse facilities.  In these transactions, a pool of auto loan receivables is sold to a bankruptcy-remote, special purpose entity that, in turn, transfers the receivables to a special purpose securitization trust.  The securitization trust issues asset-backed securities, secured or otherwise supported by the transferred receivables, and the proceeds from the sale of the asset-backed securities are used to finance the securitized receivables.

 

We are required to evaluate term securitization trusts for consolidation.  In our capacity as servicer, we have the power to direct the activities of the trusts that most significantly impact the economic performance of the receivables.  In addition, we have the obligation to absorb losses (subject to limitations) and the rights to receive any returns of the trusts, which could be significant.  Accordingly, we are the primary beneficiary of the trusts and are required to consolidate them.

 

We recognize transfers of auto loan receivables into the warehouse facilities and term securitizations (“securitization vehicles”) as secured borrowings, which result in recording the auto loan receivables and the related non-recourse notes payable to the investors on our consolidated balance sheets.

 

The securitized receivables can only be used as collateral to settle obligations of the securitization vehicles.  The securitization vehicles and investors have no recourse to our assets beyond the securitized receivables, the amounts on deposit in reserve accounts and the restricted cash from collections on auto loan receivables.  We have not provided financial or other support to the securitization vehicles or investors that was not previously contractually required, and there are no additional arrangements, guarantees or other commitments that could require us to provide financial support to the securitization vehicles.

 

See Notes 4 and 9 for additional information on auto loan receivables and non-recourse notes payable.

 

Auto Loan Receivables, Net.  Auto loan receivables include amounts due from customers primarily related to used retail vehicle sales financed through CAF and are presented net of an allowance for estimated loan losses.  The allowance for loan losses represents an estimate of the amount of net losses inherent in our portfolio of managed receivables as of the applicable reporting date and anticipated to occur during the following 12 months.  The allowance is primarily based on the credit quality of the underlying receivables, historical loss trends and forecasted forward loss curves.  We also take into account recent trends in delinquencies and losses, recovery rates and the economic environment.  The provision for loan losses is the periodic expense of maintaining an adequate allowance.

 

An account is considered delinquent when the related customer fails to make a substantial portion of a scheduled payment on or before the due date.  In general, accounts are charged-off on the last business day of the month during which the earliest of the following occurs:  the receivable is 120 days or more delinquent as of the last business day of the month, the related vehicle is repossessed and liquidated or the receivable is otherwise deemed uncollectible.  For purposes of determining impairment, auto loans are evaluated collectively, as they represent a large group of smaller-balance homogeneous loans, and therefore, are not individually evaluated for impairment.  See Note 4 for additional information on auto loan receivables.

 

Interest income and expenses related to auto loans are included in CAF income.  Interest income on auto loan receivables is recognized when earned based on contractual loan terms.  All loans continue to accrue interest until repayment or charge-off.  Direct costs associated with loan originations are not considered material.  See Note 3 for additional information on CAF income.

 

Other Assets.  Other assets includes amounts classified as restricted cash on deposit in reserve accounts and restricted investments.  The restricted cash on deposit in reserve accounts is for the benefit of holders of non-recourse notes payable, and these funds are not expected to be available to the company or its creditors.  In the event that the cash generated by the securitized receivables in a given period was insufficient to pay the interest, principal and other required payments, the balances on deposit in the reserve accounts would be used to pay those amounts.  Restricted cash on deposit in reserve accounts was $36.2 million as of November 30, 2012, and $45.3 million as of February 29, 2012.

 

Restricted investments includes money market securities primarily held to satisfy certain insurance program requirements, as well as mutual funds held in a rabbi trust established to fund informally our executive deferred compensation plan.  Restricted investments was $34.7 million as of November 30, 2012, and $31.4 million as of February 29, 2012.

 

Finance Lease Obligations.  As reported in our Annual Report on Form 10-K for fiscal 2012, we revised our consolidated financial statements to correct our accounting for sale-leaseback transactions.  The revisions resulted from the misapplication of the sale-leaseback provisions of Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) Topic 840, Leases, related to transactions we entered into between fiscal 1995 and fiscal 2009. We determined that our financial statements were not materially affected by the correction.  The following tables summarize the effect of the revisions on the major financial statement line items for the three months and nine months ended November 30, 2011.

 

Consolidated Statements of Earnings

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended November 30, 2011

 

Previously

 

 

 

 

 

 

(In thousands except per share data)

Reported

Adjustments

Revised

Selling, general and administrative expenses

$

232,304 

 

$

(6,539)

 

$

225,765 

 

Interest expense

$

780 

 

$

7,579 

 

$

8,359 

 

Earnings before income taxes

$

132,666 

 

$

(1,040)

 

$

131,626 

 

Income tax provision

$

49,872 

 

$

(356)

 

$

49,516 

 

Net earnings

$

82,794 

 

$

(684)

 

$

82,110 

 

 

 

 

 

 

 

 

 

 

 

Net Earnings Per Share:

 

 

 

 

 

 

 

 

 

Basic

$

0.37 

 

$

(0.01)

 

$

0.36 

 

Diluted

$

0.36 

 

$

 ―

 

$

0.36 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended November 30, 2011

 

Previously

 

 

 

 

 

 

(In thousands except per share data)

Reported

Adjustments

Revised

Selling, general and administrative expenses

$

716,944 

 

$

(19,637)

 

$

697,307 

 

Interest expense

$

2,358 

 

$

23,005 

 

$

25,363 

 

Earnings before income taxes

$

517,518 

 

$

(3,368)

 

$

514,150 

 

Income tax provision

$

196,541 

 

$

(1,155)

 

$

195,386 

 

Net earnings

$

320,977 

 

$

(2,213)

 

$

318,764 

 

 

 

 

 

 

 

 

 

 

 

Net Earnings Per Share:

 

 

 

 

 

 

 

 

 

Basic

$

1.42 

 

$

(0.01)

 

$

1.41 

 

Diluted

$

1.39 

 

$

(0.01)

 

$

1.38 

 

 

Consolidated Statement of Cash Flows

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended November 30, 2011

 

Previously

 

 

 

 

 

 

(In thousands)

Reported

Adjustments

Revised

Net cash (used in) provided by operating activities

$

(2,427)

 

$

8,760 

 

$

6,333 

 

Net cash provided by financing activities

$

463,252 

 

$

(8,760)

 

$

454,492 

 

Increase in cash and cash equivalents

$

342,290 

 

$

 ―

 

$

342,290 

 

 

Derivative Instruments and Hedging Activities.  We enter into derivative instruments to manage exposures that arise from business activities that result in the future known receipt or payment of uncertain cash amounts, the values of which are impacted by interest rates.  We recognize the derivatives at fair value as either current assets or current liabilities on the consolidated balance sheets.  Where applicable, such contracts covered by master netting agreements are reported net.  Gross positive fair values are netted with gross negative fair values by counterparty.  The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether we have elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting.  We may enter into derivative contracts that are intended to economically hedge certain risks, even though hedge accounting may not apply or we do not elect to apply hedge accounting.  See Note 5 for additional information on derivative instruments and hedging activities.

 

Recent Accounting Pronouncements.  In December 2011, the Financial Accounting Standards Board (“FASB”) issued an accounting pronouncement related to offsetting of assets and liabilities on the balance sheet (FASB ASC Topic 210).  The amendments require additional disclosures related to offsetting either in accordance with U.S. GAAP or master netting arrangements.  The provisions of this pronouncement are effective for fiscal years, and interim periods within those years, beginning after January 1, 2013.  We will adopt this pronouncement for our fiscal year beginning March 1, 2013.  We do not expect this pronouncement to have a material effect on our consolidated financial statements.

 

In July 2012, the FASB issued an accounting pronouncement related to intangibles – goodwill and other (FASB ASC Topic 350), which permits companies to first consider qualitative factors as a basis for assessing impairment and determining the necessity of a detailed impairment test of indefinite-lived intangible assets.  The provisions of this pronouncement are effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012.  We will adopt this pronouncement for our fiscal year beginning March 1, 2013.  We do not expect this pronouncement to have a material effect on our consolidated financial statements.

 

3.   CarMax Auto Finance Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended November 30

Nine Months Ended November 30

(In millions)

2012

%  (1)

2011

% (1)

2012

%  (1)

2011

% (1)

Interest margin:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and fee income

 

$

125.1 

 

9.1 

 

$

114.3 

 

9.6 

 

$

368.9 

 

9.3 

 

$

334.0 

 

9.7 

Interest expense

 

 

(23.3)

 

(1.7)

 

 

(25.6)

 

(2.2)

 

 

(72.4)

 

(1.8)

 

 

(80.3)

 

(2.3)

Total interest margin

 

 

101.8 

 

7.4 

 

 

88.7 

 

7.4 

 

 

296.5 

 

7.5 

 

 

253.7 

 

7.4 

Provision for loan losses

 

 

(18.1)

 

(1.3)

 

 

(15.1)

 

(1.3)

 

 

(40.2)

 

(1.0)

 

 

(24.9)

 

(0.7)

Total interest margin after

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

provision for loan losses

 

 

83.7 

 

6.1 

 

 

73.6 

 

6.2 

 

 

256.3 

 

6.5 

 

 

228.8 

 

6.7 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income

 

 

0.2 

 

 ―

 

 

0.3 

 

 ―

 

 

 ―

 

 ―

 

 

1.4 

 

 ―

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Payroll and fringe benefit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

expense

 

 

(5.2)

 

(0.4)

 

 

(5.1)

 

(0.4)

 

 

(15.9)

 

(0.4)

 

 

(15.5)

 

(0.5)

Other direct expenses

 

 

(6.2)

 

(0.5)

 

 

(6.2)

 

(0.5)

 

 

(17.1)

 

(0.4)

 

 

(18.6)

 

(0.5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total direct expenses

 

 

(11.4)

 

(0.8)

 

 

(11.3)

 

(0.9)

 

 

(33.0)

 

(0.8)

 

 

(34.1)

 

(1.0)

CarMax Auto Finance income

 

$

72.5 

 

5.3 

 

$

62.6 

 

5.3 

 

$

223.3 

 

5.7 

 

$

196.1 

 

5.7 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total average managed

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

receivables

 

$

5,477.4 

 

 

 

$

4,770.9 

 

 

 

$

5,266.0 

 

 

 

$

4,585.1 

 

 

 

(1)  Annualized percent of total average managed receivables.

 

CAF provides financing for qualified customers at competitive market rates of interest.  We securitize substantially all of the loans originated by CAF, as discussed in Note 2.  CAF income primarily reflects the interest and fee income generated by the auto loan receivables less the interest expense associated with the debt issued to fund these receivables, a provision for estimated loan losses and direct CAF expenses.

 

CAF income does not include any allocation of indirect costs or income.  We present this information on a direct basis to avoid making arbitrary decisions regarding the indirect benefits or costs that could be attributed to CAF.  Examples of indirect costs not included are retail store expenses and corporate expenses such as human resources, administrative services, marketing, information systems, accounting, legal, treasury and executive payroll.

 

4.   Auto Loan Receivables

 

Auto loan receivables include amounts due from customers primarily related to used retail vehicle sales financed through CAF and are presented net of an allowance for estimated loan losses.  We use warehouse facilities to fund auto loan receivables originated by CAF until they are funded through a term securitization or alternative funding arrangement.  The majority of these amounts serve as collateral for the related non-recourse notes payable of $5.38 billion as of
November 30, 2012, and $4.68 billion as of February 29, 2012.  See Notes 2 and 9 for additional information on securitizations and non-recourse notes payable.

 

Auto Loan Receivables, Net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of November 30

 

As of February 29 or 28

 

(In millions)

 

2012

 

 

2011

 

 

2012

 

 

2011

 

Warehouse facilities

$

876.0 

 

$

876.0 

 

$

553.0 

 

$

943.0 

 

Term securitizations

 

4,475.1 

 

 

3,697.1 

 

 

4,211.8 

 

 

3,193.1 

 

Other receivables (1)

 

232.3 

 

 

250.7 

 

 

217.0 

 

 

198.5 

 

Total ending managed receivables

 

5,583.4 

 

 

4,823.8 

 

 

4,981.8 

 

 

4,334.6 

 

Accrued interest and fees

 

25.8 

 

 

24.3 

 

 

23.1 

 

 

20.9 

 

Other

 

(2.9)

 

 

1.1 

 

 

(1.8)

 

 

4.0 

 

Less allowance for loan losses

 

(54.3)

 

 

(41.4)

 

 

(43.3)

 

 

(38.9)

 

Auto loan receivables, net

$

5,552.0 

 

$

4,807.8 

 

$

4,959.8 

 

$

4,320.6 

 

 

(1)  Other receivables includes receivables not funded through the warehouse facilities or term securitizations.

 

Credit Quality.  When customers apply for financing, CAF uses proprietary scoring models that rely on the customers’ credit history and certain application information to evaluate and rank their risk.  Credit histories are obtained from credit bureau reporting agencies and include information such as number, age, type of and payment history for prior or existing credit accounts.  The application information that is used includes income, collateral value and down payment.  Our scoring models yield credit grades that represent the relative likelihood of repayment.  Customers assigned a grade of “A” are determined to have the highest probability of repayment, and customers assigned a lower grade are determined to have a lower probability of repayment.  For loans that are approved, the credit grade influences the terms of the agreement, such as the required loan-to-value ratio and interest rate.

 

CAF uses a combination of the initial credit grades and historical performance to monitor the credit quality of the auto loan receivables on an ongoing basis.  We validate the accuracy of the scoring models periodically.  Loan performance is reviewed on a recurring basis to identify whether the assigned grades adequately reflect the customers’ likelihood of repayment.

 

Ending Managed Receivables by Major Credit Grade

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of November 30

As of February 29 or 28

(In millions)

 

 

2012 (1)

 

%  (2)

 

 

2011 (1)

 

%  (2)

 

 

2012 (1)

 

%  (2)

 

 

2011 (1)

 

% (2)

A

 

$

2,644.9 

 

47.4 

 

$

2,401.4 

 

49.8 

 

$

2,452.8 

 

49.2 

 

$

2,234.1 

 

51.5 

B

 

 

2,174.1 

 

38.9 

 

 

1,860.3 

 

38.6 

 

 

1,923.6 

 

38.6 

 

 

1,668.0 

 

38.5 

C and other

 

 

764.4 

 

13.7 

 

 

562.1 

 

11.6 

 

 

605.4 

 

12.2 

 

 

432.5 

 

10.0 

Total ending managed receivables

 

$

5,583.4 

 

100.0 

 

$

4,823.8 

 

100.0 

 

$

4,981.8 

 

100.0 

 

$

4,334.6 

 

100.0 

 

(1)  Classified based on credit grade assigned when customers were initially approved for financing.

(2)  Percent of total ending managed receivables.

 

Allowance for Loan Losses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended November 30

 

 

Nine Months Ended November 30

(In millions)

 

 

2012

 

%  (1)

 

 

2011

 

%  (1)

 

 

2012

 

%  (1)

 

 

2011

 

%  (1)

Balance as of beginning of period

 

$

49.5

 

0.9 

 

$

36.2

 

0.8 

 

$

43.3

 

0.9 

 

$

38.9

 

0.9 

Charge-offs

 

 

(28.2)

 

 

 

 

(24.6)

 

 

 

 

(73.1)

 

 

 

 

(67.1)

 

 

Recoveries

 

 

14.9

 

 

 

 

14.7

 

 

 

 

43.9

 

 

 

 

44.7

 

 

Provision for loan losses

 

 

18.1

 

 

 

 

15.1

 

 

 

 

40.2

 

 

 

 

24.9

 

 

Balance as of end of period

 

$

54.3

 

1.0 

 

$

41.4

 

0.9 

 

$

54.3

 

1.0 

 

$

41.4

 

0.9 

 

(1)  Percent of total ending managed receivables as of the corresponding reporting date.

 

The allowance for loan losses represents an estimate of the amount of net losses inherent in our portfolio of managed receivables as of the applicable reporting date and anticipated to occur during the following 12 months.  The allowance is primarily based on the credit quality of the underlying receivables, historical loss trends and forecasted forward loss curves.  We also take into account recent trends in delinquencies and losses, recovery rates and the economic environment.  The provision for loan losses is the periodic expense of maintaining an adequate allowance.

 

Past Due Receivables

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of November 30

As of February 29 or 28

(In millions)

2012

%  (1)

2011

%  (1)

2012

%  (1)

2011

%  (1)

Total ending managed receivables

 

$

5,583.4 

 

100.0 

 

$

4,823.8 

 

100.0 

 

$

4,981.8 

 

100.0 

 

$

4,334.6 

 

100.0 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Delinquent loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

31-60 days past due

 

$

118.4 

 

2.2 

 

$

103.3 

 

2.2 

 

$

85.1 

 

1.7 

 

$

86.6 

 

2.0 

61-90 days past due

 

 

35.0 

 

0.6 

 

 

28.4 

 

0.6 

 

 

21.8 

 

0.4 

 

 

24.2 

 

0.6 

Greater than 90 days past due

 

 

11.5 

 

0.2 

 

 

10.6 

 

0.2 

 

 

9.6 

 

0.2 

 

 

10.5 

 

0.2 

Total past due

 

$

164.9 

 

3.0 

 

$

142.3 

 

3.0 

 

$

116.5 

 

2.3 

 

$

121.3 

 

2.8 

 

(1)  Percent of total ending managed receivables.

 

5.   Derivative Instruments and Hedging Activities

 

Risk Management Objective of Using Derivatives.  We are exposed to certain risks arising from both our business operations and economic conditions, particularly with regard to future issuances of fixed-rate debt and existing and future issuances of floating-rate debt.  Primary exposures include LIBOR and other rates used as benchmarks in our securitizations.  We enter into derivative instruments to manage exposures that arise from business activities that result in the future known receipt or payment of uncertain cash amounts, the values of which are impacted by interest rates.  Our derivative instruments are used to manage differences in the amount of our known or expected cash receipts and our known or expected cash payments principally related to the funding of our auto loan receivables.

 

We do not anticipate significant market risk from derivatives as they are predominantly used to match funding costs to the use of the funding.  However, disruptions in the credit or interest rate markets could impact the effectiveness of our hedging strategies. 

 

Credit risk is the exposure to nonperformance of another party to an agreement.  We mitigate credit risk by dealing with highly rated bank counterparties.

 

Cash Flow Hedges of Interest Rate Risk.  Our objectives in using interest rate derivatives are to add stability to interest expense, to manage our exposure to interest rate movements and to better match funding costs to the interest received on the fixed-rate receivables being securitized.  To accomplish these objectives, we primarily use interest rate swaps.  Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for our making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.  These interest rate swaps are designated as cash flow hedges of forecasted interest payments in anticipation of permanent funding in the term securitization market. 

 

For derivatives that are designated and qualify as cash flow hedges, the effective portion of changes in the fair value is initially recorded in accumulated other comprehensive loss (“AOCL”) and is subsequently reclassified into CAF income in the period that the hedged forecasted transaction affects earnings.  The ineffective portion of the change in fair value of the derivatives is recognized directly in CAF income.  Amounts reported in AOCL related to derivatives will be reclassified to CAF income as interest expense is incurred on our future issuances of fixed-rate debt.  During the next 12 months, we estimate that an additional $11.9 million will be reclassified as a decrease to CAF income.

 

As of November 30, 2012, we had interest rate swaps outstanding with a combined notional amount of $926.0 million that were designated as cash flow hedges of interest rate risk.

 

Non-designated Hedges.  Derivative instruments not designated as accounting hedges, including interest rate swaps and interest rate caps, are not speculative. These instruments are used to limit risk for investors in the warehouse facilities, to minimize the funding costs related to certain term securitization vehicles and to mitigate interest rate risk associated with related financial instruments.  Changes in the fair value of derivatives not designated as accounting hedges are recorded directly in CAF income.

 

As of November 30, 2012, we had interest rate caps outstanding with offsetting (asset and liability) notional amounts of $700.8 million that were not designated as accounting hedges.  As of November 30, 2012, there were no interest rate swaps outstanding that were not designated as accounting hedges.

 

Fair Values of Derivative Instruments on the Consolidated Balance Sheets.  The table below presents the fair value of our derivative instruments as well as their classification on the consolidated balance sheets.  See Note 6 for additional information on fair value measurements.

 

Fair Values of Derivative Instruments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of November 30, 2012

As of February 29, 2012

(In thousands)

Assets

Liabilities

Assets

Liabilities

Derivatives designated as accounting hedges:

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate swaps (1)

 

$

 ―

 

$

 ―

 

$

11 

 

$

 ―

 

Interest rate swaps (2)

 

 

 ―

 

 

(1,512)

 

 

 ―

 

 

(1,643)

 

Total derivatives designated as accounting hedges

 

 

 ―

 

 

(1,512)

 

 

11 

 

 

(1,643)

 

Derivatives not designated as accounting hedges:

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate swaps (1)

 

 

 ―

 

 

 ―

 

 

304 

 

 

 ―

 

Interest rate swaps (2)

 

 

 ―

 

 

 ―

 

 

 ―

 

 

(335)

 

Interest rate caps (1)

 

 

22 

 

 

(22)

 

 

83 

 

 

(81)

 

Total derivatives not designated as accounting hedges

 

 

22 

 

 

(22)

 

 

387 

 

 

(416)

 

Total

 

$

22 

 

$

(1,534)

 

$

398 

 

$

(2,059)

 

 

 

(1)  Reported in other current assets on the consolidated balance sheets.

(2)  Reported in accounts payable on the consolidated balance sheets.

 

Effect of Derivative Instruments on the Consolidated Statements of Earnings.  The table below presents the effect of the company’s derivative instruments on the consolidated statements of earnings.

 

Effect on the Consolidated Statements of Earnings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

November 30

 

 

November 30

(In thousands)

 

2012

 

 

2011

 

 

2012

 

 

2011

Derivatives designated as accounting hedges:

 

 

 

 

 

 

 

 

 

 

 

Loss recognized in AOCL (1)

$

(894)

 

$

(1,244)

 

$

(7,286)

 

$

(18,362)

Loss reclassified from AOCL into CAF income (1)

$

(3,327)

 

$

(2,258)

 

$

(9,855)

 

$

(4,353)

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives not designated as accounting hedges:

 

 

 

 

 

 

 

 

 

 

 

Loss recognized in CAF income (2)

$

(1)

 

$

(8)

 

$

(2)

 

$

(83)

 

(1)  Represents the effective portion.

(2)  Represents the loss on interest rate swaps, the net periodic settlements and accrued interest.

 

6.   Fair Value Measurements

 

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the principal market or, if none exists, the most advantageous market, for the specific asset or liability at the measurement date (referred to as the “exit price”).  The fair value should be based on assumptions that market participants would use, including a consideration of nonperformance risk.

 

We assess the inputs used to measure fair value using the three-tier hierarchy.  The hierarchy indicates the extent to which inputs used in measuring fair value are observable in the market.

 

Level 1       Inputs include unadjusted quoted prices in active markets for identical assets or liabilities that we can access at the measurement date.

 

Level 2       Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets in active markets, quoted prices from identical or similar assets in inactive markets and observable inputs such as interest rates and yield curves.

 

Level 3       Inputs that are significant to the measurement that are not observable in the market and include management's judgments about the assumptions market participants would use in pricing the asset or liability (including assumptions about risk).

 

Our fair value processes include controls that are designed to ensure that fair values are appropriate.  Such controls include model validation, review of key model inputs, analysis of period-over-period fluctuations and reviews by senior management.

 

Valuation Methodologies

 

Money market securities.  Money market securities are cash equivalents, which are included in either cash and cash equivalents or other assets, and consist of highly liquid investments with original maturities of three months or less.  We use quoted market prices for identical assets to measure fair value.  Therefore, all money market securities are classified as Level 1.

 

Mutual fund investments.    Mutual fund investments consist of publicly traded mutual funds that primarily include diversified investments in large-, mid- and small-cap domestic and international companies.  The investments, which are included in other assets, are held in a rabbi trust and are restricted to funding informally our executive deferred compensation plan.  We use quoted active market prices for identical assets to measure fair value.  Therefore, all mutual fund investments are classified as Level 1.

 

Derivative instruments.  The fair values of our derivative instruments are included in either other current assets or accounts payable.  As described in Note 5, as part of our risk management strategy, we utilize derivative instruments to manage differences in the amount of our known or expected cash receipts and our known or expected cash payments principally related to the funding of our auto loan receivables.  Our derivatives are not exchange-traded and are over-the-counter customized derivative instruments.  All of our derivative exposures are with highly rated bank counterparties.

 

We measure derivative fair values assuming that the unit of account is an individual derivative instrument and that derivatives are sold or transferred on a stand-alone basis.  We estimate the fair value of our derivatives using quotes determined by the derivative counterparties and third-party valuation services.  We validate certain quotes using our own internal models.  Quotes from third-party valuation services, quotes received from bank counterparties and our internal models project future cash flows and discount the future amounts to a present value using market-based expectations for interest rates and the contractual terms of the derivative instruments.  Because model inputs can typically be observed in the liquid market and the models do not require significant judgment, these derivatives are classified as Level 2.

 

Our derivative fair value measurements consider assumptions about counterparty and our own nonperformance risk.  We monitor counterparty and our own nonperformance risk and, in the event that we determine that a party is unlikely to perform under terms of the contract, we would adjust the derivative fair value to reflect the nonperformance risk.

 

Items Measured at Fair Value on a Recurring Basis

 

 

 

 

 

 

 

 

 

 

 

As of November 30, 2012

(In thousands)

Level 1

Level 2

Total

Assets:

 

 

 

 

 

 

 

 

 

Money market securities

$

427,952 

 

$

 ―

 

$

427,952 

 

Mutual fund investments

 

3,793 

 

 

 ―

 

 

3,793 

 

Derivative instruments

 

 ―

 

 

 ―

 

 

 ―

 

Total assets at fair value

$

431,745 

 

$

 ―

 

$

431,745 

 

 

 

 

 

 

 

 

 

 

 

Percent of total assets at fair value

 

100.0 

%

 

 ―

%

 

100.0