EX-99.1 2 kmx083115earningsrelease.htm EXHIBIT 99.1 Exhibit














CARMAX REPORTS RECORD SECOND QUARTER RESULTS

Richmond, Va., September 22, 2015 – CarMax, Inc. (NYSE:KMX) today reported record second quarter results for the quarter ended August 31, 2015.

▪
Net sales and operating revenues increased 7.9% to $3.88 billion.

▪
Used unit sales in comparable stores increased 4.6%.

▪
Total used unit sales rose 9.2%.

▪
Total wholesale unit sales increased 8.7%.

▪
CarMax Auto Finance (CAF) income increased 6.2% to $98.3 million.

▪
Net earnings grew 11.5% to $172.2 million. Net earnings per diluted share rose 17.1% to $0.82.

o
In the prior year's second quarter, net income per diluted share included a $0.06 benefit from the receipt of settlement proceeds in a class action lawsuit. In the current year's second quarter, net income per diluted share included a $0.03 benefit related to a change in timing of our recognition of reconditioning overhead costs. Excluding these items, second quarter net earnings grew 17.1% and net earnings per diluted share grew 23.4%.

“We are pleased to report record second quarter results,” said Tom Folliard, president and chief executive officer. “The continued expansion of our store base and growth across our used, wholesale and CAF operations, as well as our share repurchase program, all contributed to our record second quarter earnings per share.”

Second Quarter Business Performance Review

Sales. Total used vehicle unit sales grew 9.2% and comparable store used unit sales increased 4.6% versus the prior year’s second quarter. Comparable store used unit sales were driven by improved conversion, which benefited from the strong execution of our store teams.

Wholesale vehicle unit sales grew 8.7% versus the second quarter of fiscal 2015. Wholesale unit sales benefited from the growth in our store base and a calendar shift that resulted in one extra Monday auction date compared with the prior year's quarter. We hold a majority of our wholesale auctions on Mondays. Excluding the extra Monday, wholesale vehicle unit sales would have increased approximately 5.0% year-over-year.

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Other sales and revenues increased 4.6% year-over-year. Extended protection plan revenues rose 1.8% reflecting the growth in our retail unit sales, partially offset by an increase in estimated cancellation reserves. Net third-party finance fee payments increased 14.1% due to the increase in retail units sold, as well as some shifts in the mix among providers. Vehicles financed by the Tier 3 providers (those providers to whom we pay a fee) and those included in the CAF loan origination test represented 13.5% of retail unit sales in the current quarter versus 13.8% in the prior year's second quarter.

Gross Profit. Total gross profit increased 12.5% versus last year's second quarter, to $521.4 million. Used vehicle gross profit rose 8.8%, primarily driven by the 9.2% increase in total used unit sales. Used vehicle gross profit per unit was relatively flat at $2,166 compared with $2,173 in the corresponding prior year period. Wholesale vehicle gross profit increased 18.2% versus the prior year’s quarter, driven by the combination of the 8.7% increase in wholesale vehicle unit sales and an 8.8% improvement in wholesale vehicle gross profit per unit to $951 from $874. Other gross profit rose 24.8% reflecting the increase in other sales and revenues and a $10.4 million one-time increase in service department gross profits. This increase resulted from a change in timing in our recognition of reconditioning overhead costs. These costs, which previously had been expensed as incurred, are now allocated to the carrying cost of inventory.

SG&A. Compared with the second quarter of fiscal 2015, SG&A expenses increased 11.1% to $330.8 million. In the prior year's quarter, SG&A was reduced by $20.9 million, representing our receipt of settlement proceeds in a class action lawsuit. Excluding this item, SG&A expenses increased 3.9% year-over-year due to the 12% increase in our store base since the beginning of last year’s second quarter (representing the addition of 16 stores), partially offset by a $10.5 million decrease in share-based compensation expense. Excluding the prior year legal settlement gain, SG&A per retail unit decreased $100 to $2,083, with $78 of this decrease resulting from the decline in share-based compensation expense.

CarMax Auto Finance.(1) Compared with last year's second quarter, CAF income increased 6.2% to $98.3 million, driven by an increase in average managed receivables, partly offset by a lower total interest margin percentage. Average managed receivables grew 16.4% to $8.99 billion. The total interest margin, which reflects the spread between interest and fees charged to consumers and our funding costs, declined to 6.2% of average managed receivables from 6.6% in last year’s second quarter.

Store Openings. During the second quarter of fiscal 2016, we opened four stores, including three stores in existing markets (one store in Providence and two stores in Denver) and one in a new market (Tallahassee). Subsequent to the end of the quarter, we opened our sixth store in Houston and our second store in Minneapolis.

Share Repurchase Program. During the second quarter, we repurchased 3.9 million shares of common stock for $249.8 million pursuant to our share repurchase program. As of August 31, 2015, we had $2.0 billion remaining available for repurchase under the program.


(1) 
Although CAF benefits from certain indirect overhead expenditures, we have not allocated indirect costs to CAF to avoid making subjective allocation decisions.



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Supplemental Financial Information
Amounts and percentage calculations may not total due to rounding.

Sales Components

 
 
 
 
 
 
 
 
 
 
 
Three Months Ended August 31
 
Six Months Ended August 31
(In millions)
2015
2014
 
Change
 
2015
2014
 
Change
Used vehicle sales
$
3,150.2

$
2,920.2

 
7.9
 %
 
$
6,442.9

$
5,980.5

 
7.7
 %
New vehicle sales
60.5

69.9

 
(13.5
)%
 
120.5

139.7

 
(13.7
)%
Wholesale vehicle sales
591.8

530.3

 
11.6
 %
 
1,168.4

1,075.5

 
8.6
 %
Other sales and revenues:
 
 
 
 
 
 
 
 
 
Extended protection plan revenues
64.1

63.0

 
1.8
 %
 
135.8

126.7

 
7.2
 %
Service department sales
32.9

28.6

 
15.0
 %
 
63.8

56.9

 
12.1
 %
Third-party finance fees, net
(14.6
)
(12.7
)
 
(14.1
)%
 
(31.6
)
(30.0
)
 
(5.3
)%
Total other sales and revenues
82.4

78.8

 
4.6
 %
 
168.0

153.6

 
9.3
 %
Total net sales and operating revenues
$
3,884.9

$
3,599.2

 
7.9
 %
 
$
7,899.8

$
7,349.4

 
7.5
 %





Unit Sales

 
 
 
 
 
 
 
 
 
 
 
Three Months Ended August 31
 
Six Months Ended August 31
 
2015
2014
 
% Change
 
2015
2014
 
% Change
Used vehicles
156,516
143,325
 
9.2
 %
 
321,026
293,853
 
9.2
 %
New vehicles
2,248
2,581
 
(12.9
)%
 
4,463
5,178
 
(13.8
)%
Wholesale vehicles
106,522
97,989
 
8.7
 %
 
208,152
195,087
 
6.7
 %



Average Selling Prices

 
 
 
 
 
 
 
 
 
 
 
Three Months Ended August 31
 
Six Months Ended August 31
 
2015
2014
 
% Change
 
2015
2014
 
% Change
Used vehicles
$
19,983

$
20,215

 
(1.1
)%
 
$
19,915

$
20,193

 
(1.4
)%
New vehicles
$
26,799

$
26,991

 
(0.7
)%
 
$
26,897

$
26,875

 
0.1
 %
Wholesale vehicles
$
5,336

$
5,249

 
1.7
 %
 
$
5,391

$
5,349

 
0.8
 %


Vehicle Sales Changes

 
 
 
 
 
 
 
Three Months Ended August 31
 
Six Months Ended August 31
 
2015
2014
 
2015
2014
Used vehicle units
9.2
%
6.3
%
 
9.2
%
8.0
%
Used vehicle revenues
7.9
%
10.6
%
 
7.7
%
12.0
%
 
 
 
 
 
 
Wholesale vehicle units
8.7
%
7.4
%
 
6.7
%
8.6
%
Wholesale vehicle revenues
11.6
%
11.7
%
 
8.6
%
11.4
%





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Comparable Store Used Vehicle Sales Changes (1) 

 
 
 
 
 
 
 
Three Months Ended August 31
 
Six Months Ended August 31
 
2015
2014
 
2015
2014
Used vehicle units
4.6
%
0.2
%
 
4.8
%
1.8
%
Used vehicle revenues
3.3
%
4.2
%
 
3.3
%
5.4
%


(1) 
Stores are added to the comparable store base beginning in their fourteenth full month of operation. Comparable store calculations include results for a set of stores that were included in our comparable store base in both the current and corresponding prior year periods.


Selected Operating Ratios

 
 
 
 
 
 
 
 
 
 
 
Three Months Ended August 31
 
Six Months Ended August 31
(In millions)
2015
% (1)
2014
% (1)
 
2015
% (1)
2014
% (1)
Net sales and operating revenues
$
3,884.9

100.0
$
3,599.2

100.0
 
$
7,899.8

100.0
$
7,349.4

100.0
Gross profit
$
521.4

13.4
$
463.3

12.9
 
$
1,065.2

13.5
$
965.1

13.1
CarMax Auto Finance income
$
98.3

2.5
$
92.6

2.6
 
$
207.4

2.6
$
187.2

2.5
Selling, general, and administrative
 
 
 
 
 
 
 
 
 
expenses
$
330.8

8.5
$
297.6

8.3
 
$
680.6

8.6
$
611.1

8.3
Interest expense
$
7.5

0.2
$
7.4

0.2
 
$
14.6

0.2
$
15.0

0.2
Earnings before income taxes
$
279.8

7.2
$
250.6

7.0
 
$
575.8

7.3
$
525.7

7.2
Net earnings
$
172.2

4.4
$
154.5

4.3
 
$
354.2

4.5
$
324.2

4.4



(1) 
Calculated as a percentage of net sales and operating revenues.

Gross Profit

 
 
 
 
 
 
 
 
 
Three Months Ended August 31
 
Six Months Ended August 31
(In millions)
2015
2014
Change
 
2015
2014
Change
Used vehicle gross profit
$
338.9

$
311.5

8.8
 %
 
$
700.8

$
645.6

8.6
 %
New vehicle gross profit
1.1
2.1
(44.9
)%
 
2.0
3.9
(49.8
)%
Wholesale vehicle gross profit
101.3
85.7
18.2
 %
 
206.2
187.2
10.1
 %
Other gross profit
80.1
64.1
24.8
 %
 
156.2
128.3
21.7
 %
Total
$
521.4

$
463.3

12.5
 %
 
$
1,065.2

$
965.1

10.4
 %



Gross Profit per Unit

 
 
 
 
 
 
 
 
 
 
 
Three Months Ended August 31
 
Six Months Ended August 31
 
2015
2014
 
2015
2014
 
$ per unit(1)
%(2)
$ per unit(1)
%(2)
 
$ per unit(1)
%(2)
$ per unit(1)
%(2)
Used vehicle gross profit
$
2,166

10.8
$
2,173

10.7
 
$
2,183

10.9
$
2,197

10.8
New vehicle gross profit
$
508

1.9
$
803

3.0
 
$
440

1.6
$
756

2.8
Wholesale vehicle gross profit
$
951

17.1
$
874

16.2
 
$
990

17.6
$
960

17.4
Other gross profit
$
504

97.1
$
440

81.4
 
$
480

93.0
$
429

83.5
Total gross profit
$
3,284

13.4
$
3,176

12.9
 
$
3,273

13.5
$
3,227

13.1



(1) 
Calculated as category gross profit divided by each category’s respective units sold, except the other and total categories, which are calculated by dividing their respective gross profit by total retail units sold.
(2) 
Calculated as a percentage of its respective sales or revenue.

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SG&A Expenses


 
 
 
 
 
 
 
 
 
Three Months Ended August 31
 
Six Months Ended August 31
(In millions)
2015
2014
Change
 
2015
2014
Change
Compensation and benefits (1)
$
180.3

$
181.5

(0.7
)%
 
$
382.1

$
360.5

6.0
%
Store occupancy costs
68.6
60.0
14.3
 %
 
133.9
118.3
13.2
%
Advertising expense
34.8
29.4
18.4
 %
 
68.5
60.1
14.0
%
Other overhead costs (2)
47.1
26.7
76.4
 %
 
96.1
72.2
33.1
%
Total SG&A expenses
$
330.8

$
297.6

11.1
 %
 
$
680.6

$
611.1

11.4
%
SG&A per retail unit
$
2,083

$
2,040

$
43

 
$
2,091

$
2,044

$
47



(1) 
Excludes compensation and benefits related to reconditioning and vehicle repair service, which are included in cost of sales.
(2) 
Includes IT expenses, insurance, non-CAF bad debt, travel, preopening and relocation costs, charitable contributions and other administrative expenses. Costs for the three and six months ended August 31, 2014, were reduced by $20.9 million in connection with the receipt of settlement proceeds in a class action lawsuit.

Components of CAF Income and Other CAF Information

 
 
 
 
 
 
 
 
 
 
 
Three Months Ended August 31
 
Six Months Ended August 31
(In millions)
2015
% (1)
2014
% (1)
 
2015
% (1)
2014
% (1)
Interest margin:
 
 
 
 
 
 
 
 
 
Interest and fee income
$
169.8

7.6

$
150.7

7.8

 
$
334.6

7.6

$
297.6

7.9

Interest expense
(30.8
)
(1.4
)
(23.9
)
(1.2
)
 
(58.8
)
(1.3
)
(47.0
)
(1.2
)
Total interest margin
139.0

6.2

126.8

6.6

 
275.8

6.2

250.6

6.6

Provision for loan losses
(25.6
)
(1.1
)
(20.4
)
(1.1
)
 
(39.2
)
(0.9
)
(36.2
)
(1.0
)
Total interest margin after provision
 
 
 
 
 
 
 
 
 
for loan losses
113.4

5.1

106.4

5.5

 
236.6

5.4

214.4

5.7

 
 
 
 
 
 
 
 
 
 
Total other income
(0.1
)
—

—

—

 
(0.1
)
—

—

—

 
 
 
 
 
 
 
 
 
 
Total direct expenses
(15.0
)
(0.7
)
(13.8
)
(0.7
)
 
(29.1
)
(0.7
)
(27.2
)
(0.7
)
CarMax Auto Finance income
$
98.3

4.4

$
92.6

4.8

 
$
207.4

4.7

$
187.2

5.0

 
 
 
 
 
 
 
 
 
 
Total average managed receivables
$
8,993.9

 
$
7,724.5

 
 
$
8,829.3

 
$
7,557.3

 
Net loans originated
$
1,323.5

 
$
1,165.3

 
 
$
2,688.1

 
$
2,401.7

 
Net CAF penetration rate
42.7
%
 
40.7
%
 
 
42.4
%
 
41.0
%
 
Weighted average contract rate
7.2
%
 
7.0
%
 
 
7.3
%
 
7.1
%
 
 
 
 
 
 
 
 
 
 
 
Ending allowance for loan losses
$
87.8

 
$
77.8

 
 
$
87.8

 
$
77.8

 
 
 
 
 
 
 
 
 
 
 
Warehouse facility information:
 
 
 
 
 
 
 
 
 
Ending funded receivables
$
1,243.0

 
$
1,045.0

 
 
$
1,243.0

 
$
1,045.0

 
Ending unused capacity
$
1,257.0

 
$
1,055.0

 
 
$
1,257.0

 
$
1,055.0

 
 
 
 
 
 
 
 
 
 
 


(1) 
Annualized percentage of total average managed receivables.



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Earnings Highlights

 
 
 
 
 
 
 
 
 
Three Months Ended August 31
 
Six Months Ended August 31
(In millions except per share data)
2015
2014
Change
 
2015
2014
Change
Net earnings
$
172.2

$
154.5

11.5
 %
 
$
354.2

$
324.2

9.3
 %
Diluted weighted average shares outstanding
209.6
221.1
(5.2
)%
 
210.6
222.4
(5.3
)%
Net earnings per diluted share
$
0.82

$
0.70

17.1
 %
 
$
1.68

$
1.46

15.1
 %


Planned Store Openings

We currently plan to open the following stores within 12 months from August 31, 2015:

 
 
 
 
 
 
 
 
Location
Television Market
Market Status
Planned Opening Date
Richmond, Texas (1)
Houston
Existing
Q3 Fiscal 2016
Gaithersburg, Maryland (1)(2)
Washington/Baltimore
Existing
Q3 Fiscal 2016
Maplewood, Minnesota (1)
Minneapolis/St Paul
Existing
Q3 Fiscal 2016
Norwood, Massachusetts
Boston
New
Q4 Fiscal 2016
Danvers, Massachusetts
Boston
Existing
Q4 Fiscal 2016
Bloomington, Illinois
Peoria/Bloomington
New
Q4 Fiscal 2016
Buford, Georgia
Atlanta
Existing
Q4 Fiscal 2016
O'Fallon, Illinois
St. Louis
Existing
Q4 Fiscal 2016
Springfield, Illinois
Champaign/Springfield
New
Q1 Fiscal 2017
Pleasanton, California
San Francisco
New
Q1 Fiscal 2017
El Paso, Texas
El Paso
New
Q2 Fiscal 2017
Westborough, Massachusetts
Boston
Existing
Q2 Fiscal 2017
Fremont, California
San Francisco
Existing
Q2 Fiscal 2017
Santa Rosa, California
San Francisco
Existing
Q2 Fiscal 2017
Bristol, Tennessee
Tri-Cities TN/VA
New
Q2 Fiscal 2017

(1) Store opened in September 2015
(2) Represents a store relocation being made in connection with the expiration of the lease on our Rockville, Maryland store.

Normal construction, permitting or other scheduling delays could shift the opening dates of any of these stores into a later period. We currently estimate total capital expenditures will be approximately $360 million in fiscal 2016. We plan to open 14 stores and relocate one store whose lease is expiring in fiscal 2016 and between 13 and 16 stores in each of the following two fiscal years.


Conference Call Information

We will host a conference call for investors at 9:00 a.m. ET today, September 22, 2015. 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 84444035. A live webcast of the call will be available on our investor information home page at investors.carmax.com.


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A webcast replay of the call will be available at investors.carmax.com through December 17, 2015. A telephone replay also will be available through September 29, 2015, and may be accessed by dialing 1-855-859-2056 (international callers dial 1-404-537-3406). The conference I.D. for both domestic and international callers is 84444035.

Third Quarter Fiscal 2016 Earnings Release Date

We currently plan to release results for the third quarter ending November 30, 2015, on Friday, December 18, 2015, before the opening of trading on the New York Stock Exchange. We plan to 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 investors.carmax.com in December 2015.

About CarMax

CarMax, a member of the Fortune 500 and the S&P 500, and one of the Fortune “100 Best Companies to Work For,” for 11 consecutive years, is the nation’s largest retailer of used vehicles. Headquartered in Richmond, Va., CarMax currently operates 153 used car stores in 76 markets. The CarMax consumer offer features low, no-haggle prices, a broad selection of CarMax Quality Certified used vehicles and superior customer service. During the fiscal year ended February 28, 2015, the company retailed 582,282 used vehicles and sold 376,186 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. You can identify these forward-looking statements by use of words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “outlook,” “plan,” “predict,” “should,” “will” and other similar expressions, whether in the negative or affirmative. 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 competitive landscape and/or our failure to successfully adjust to such changes.
•
Events that damage our reputation or harm the perception of the quality of our brand.
•
Changes in general or regional U.S. economic conditions.
•
Changes in the availability or cost of capital and working capital financing, including changes related to the asset-backed securitization market.
•
Changes in consumer credit availability provided by our third-party financing providers.
•
Changes in the availability of extended protection plan products from third-party providers.
•
Our inability to recruit, develop and retain associates and maintain positive associate relations.
•
The loss of key associates from our store, regional or corporate management teams or a significant increase in labor costs.
•
Security breaches or other events that result in the misappropriation, loss or other unauthorized disclosure of confidential customer or associate information.
•
Significant changes in prices of new and used vehicles.
•
A reduction in the availability of or access to sources of inventory or a failure to expeditiously liquidate inventory.
•
Factors related to the regulatory and legislative environment in which we operate.

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•
Factors related to geographic growth, including the inability to acquire or lease suitable real estate at favorable terms or to effectively manage our growth.
•
The failure of key information systems.
•
The effect of various litigation matters.
•
Adverse conditions affecting one or more automotive manufacturers, and manufacturer recalls.
•
The inaccuracy of estimates and assumptions used in the preparation of our financial statements, or the effect of new accounting requirements or changes to U.S. generally accepted accounting principles.
•
Factors related to seasonal fluctuations in our business.
•
The occurrence of severe weather events.
•
Factors related to the geographic concentration of our stores.

For more details on factors that could affect expectations, see our Annual Report on Form 10-K for the fiscal year ended February 28, 2015, and our quarterly or current reports as filed with or furnished to the U.S. Securities and Exchange Commission. Our filings are publicly available on our investor information home page at investors.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. 4391. We undertake no obligation to update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise.
Contacts:

Investors and Financial Media:    
Katharine Kenny, Vice President, Investor Relations, (804) 935-4591
Celeste Gunter, Manager, Investor Relations, (804) 935-4597

Media:
pr@carmax.com, (855) 887-2915


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CARMAX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)





 
 
 
 
 
 
 
 
 
 
 
Three Months Ended August 31
 
Six Months Ended August 31
(In thousands except per share data)
2015
% (1)
2014
% (1)
 
2015
% (1)
2014
% (1)
SALES AND OPERATING REVENUES:
 
 
 
 
 
 
 
 
 
Used vehicle sales
$
3,150,220

81.1
$
2,920,165

81.1
 
$
6,442,878

81.6
$
5,980,506

81.4
New vehicle sales
60,493

1.6
69,944

1.9
 
120,541

1.5
139,733

1.9
Wholesale vehicle sales
591,774

15.2
530,270

14.7
 
1,168,399

14.8
1,075,515

14.6
Other sales and revenues
82,426

2.1
78,815

2.2
 
167,983

2.1
153,636

2.1
NET SALES AND OPERATING REVENUES
3,884,913

100.0
3,599,194

100.0
 
7,899,801

100.0
7,349,390

100.0
Cost of sales
3,363,543

86.6
3,135,855

87.1
 
6,834,637

86.5
6,384,320

86.9
GROSS PROFIT
521,370

13.4
463,339

12.9
 
1,065,164

13.5
965,070

13.1
CARMAX AUTO FINANCE INCOME
98,279

2.5
92,574

2.6
 
207,387

2.6
187,189

2.5
Selling, general and administrative expenses
330,784

8.5
297,638

8.3
 
680,563

8.6
611,084

8.3
Interest expense
7,450

0.2
7,351

0.2
 
14,553

0.2
14,952

0.2
Other expense
1,593

—
283

—
 
1,634

—
560

—
Earnings before income taxes
279,822

7.2
250,641

7.0
 
575,801

7.3
525,663

7.2
Income tax provision
107,594

2.8
96,123

2.7
 
221,599

2.8
201,492

2.7
NET EARNINGS
$
172,228

4.4
$
154,518

4.3
 
$
354,202

4.5
$
324,171

4.4
WEIGHTED AVERAGE COMMON SHARES:
 
 
 
 
 
 
 
 
 
Basic
207,249
 
218,180
 
 
207,969
 
219,224
 
Diluted
209,648
 
221,070
 
 
210,645
 
222,351
 
NET EARNINGS PER SHARE:
 
 
 
 
 
 
 
 
 
Basic
$
0.83

 
$
0.71

 
 
$
1.70

 
$
1.48

 
Diluted
$
0.82

 
$
0.70

 
 
$
1.68

 
$
1.46

 

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


-more-



CARMAX, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS


 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
(Unaudited)
 
 
August 31
 
February 28
 
August 31
(In thousands except share data)
2015
 
2015
 
2014
ASSETS
 
 
 
 
 
 
CURRENT ASSETS:
 
 
 
 
 
 
Cash and cash equivalents
$
100,477

 
$
27,606

 
$
354,600

 
Restricted cash from collections on auto loan receivables
335,075

 
294,122

 
297,068

 
Accounts receivable, net
100,832

 
137,690

 
108,859

 
Inventory
1,911,549

 
2,086,874

 
1,708,955

 
Deferred income taxes
10,333

 
8,100

 
8,275

 
Other current assets
45,459

 
44,646

 
38,685

 
TOTAL CURRENT ASSETS
2,503,725

 
2,599,038

 
2,516,442

 
Auto loan receivables, net
9,116,512

 
8,435,504

 
7,844,268

 
Property and equipment, net
2,016,520

 
1,862,538

 
1,753,992

 
Deferred income taxes
166,669

 
167,638

 
157,175

 
Other assets
149,139

 
133,483

 
128,036

 
TOTAL ASSETS
$
13,952,565

 
$
13,198,201

 
$
12,399,913

 
 
 
 
 
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
 
 
 
CURRENT LIABILITIES:
 
 
 
 
 
 
Accounts payable
$
453,864

 
$
454,810

 
$
418,269

 
Accrued expenses and other current liabilities
226,371

 
250,307

 
205,480

 
Accrued income taxes
1,169

 
1,554

 
244

 
Short-term debt
2,122

 
785

 
2,229

 
Current portion of long-term debt
—

 
10,000

 
—

 
Current portion of finance and capital lease obligations
21,584

 
21,554

 
20,280

 
Current portion of non-recourse notes payable
296,867

 
258,163

 
260,425

 
TOTAL CURRENT LIABILITIES
1,001,977

 
997,173

 
906,927

 
Long-term debt, excluding current portion
300,000

 
300,000

 
—

 
Finance and capital lease obligations, excluding current portion
357,825

 
306,284

 
310,689

 
Non-recourse notes payable, excluding current portion
8,856,227

 
8,212,466

 
7,648,284

 
Other liabilities
225,552

 
225,493

 
176,026

 
TOTAL LIABILITIES
10,741,581

 
10,041,416

 
9,041,926

 
 
 
 
 
 
 
 
Commitments and contingent liabilities
—

 
—

 
—

 
SHAREHOLDERS’ EQUITY:
 
 
 
 
 
 
Common stock, $0.50 par value; 350,000,000 shares authorized; 204,930,606 and 208,869,688 shares issued and outstanding as of August 31, 2015 and February 28, 2015, respectively
102,465

 
104,435

 
108,352

 
Capital in excess of par value
1,161,678

 
1,123,520

 
1,089,317

 
Accumulated other comprehensive loss
(66,149
)
 
(65,391
)
 
(44,467
)
 
Retained earnings
2,012,990

 
1,994,221

 
2,204,785

 
TOTAL SHAREHOLDERS’ EQUITY
3,210,984

 
3,156,785

 
3,357,987

 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
$
13,952,565

 
$
13,198,201

 
$
12,399,913



-more-


CARMAX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
 
Six Months Ended August 31
(In thousands)
2015
 
2014
OPERATING ACTIVITIES:
 
 
 
Net earnings
$
354,202

 
$
324,171

Adjustments to reconcile net earnings to net cash
 
 
 
used in operating activities:
 
 
 
Depreciation and amortization
65,188

 
55,766

Share-based compensation expense
33,506

 
37,778

Provision for loan losses
39,244

 
36,208

Provision for cancellation reserves
42,459

 
38,463

Deferred income tax benefit
(738
)
 
(6,530
)
Loss on disposition of assets and other
1,810

 
917

Net decrease (increase) in:
 
 
 
Accounts receivable, net
36,858

 
(28,936
)
Inventory
175,325

 
(67,531
)
Other current assets
(1,923
)
 
(11,706
)
Auto loan receivables, net
(720,252
)
 
(732,628
)
Other assets
371

 
(313
)
Net decrease in:
 
 
 
Accounts payable, accrued expenses and other current
 
 
 
liabilities and accrued income taxes
(58,705
)
 
(36,052
)
Other liabilities
(52,089
)
 
(46,226
)
NET CASH USED IN OPERATING ACTIVITIES
(84,744
)
 
(436,619
)
INVESTING ACTIVITIES:
 
 
 
Capital expenditures
(145,727
)
 
(135,293
)
Proceeds from sales of assets
1,419

 
5,829

Increase in restricted cash from collections on auto loan receivables
(40,953
)
 
(37,769
)
Increase in restricted cash in reserve accounts
(5,484
)
 
(6,640
)
Release of restricted cash from reserve accounts
1,643

 
1,634

Purchases of money market securities, net
(6,126
)
 
(8,753
)
Purchases of trading securities
(4,355
)
 
(3,107
)
Sales of trading securities
101

 
306

NET CASH USED IN INVESTING ACTIVITIES
(199,482
)
 
(183,793
)
FINANCING ACTIVITIES:
 
 
 
Increase in short-term debt, net
1,337

 
1,647

Proceeds from revolving line of credit and long-term debt
20,000

 
—

Payments on revolving line of credit and long-term debt
(30,000
)
 
—

Cash paid for debt issuance costs
(2,981
)
 
—

Payments on finance and capital lease obligations
(9,741
)
 
(8,712
)
Issuances of non-recourse notes payable
5,106,805

 
3,803,000

Payments on non-recourse notes payable
(4,424,340
)
 
(3,142,735
)
Repurchase and retirement of common stock
(369,210
)
 
(380,149
)
Equity issuances
37,157

 
44,270

Excess tax benefits from share-based payment arrangements
28,070

 
29,790

NET CASH PROVIDED BY FINANCING ACTIVITIES
357,097

 
347,111

Increase (decrease) in cash and cash equivalents
72,871

 
(273,301
)
Cash and cash equivalents at beginning of year
27,606

 
627,901

CASH AND CASH EQUIVALENTS AT END OF PERIOD
$
100,477

 
$
354,600


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