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) |
Yes x | No ¨ |
Yes x | No ¨ |
Large accelerated filer x | Accelerated filer ¨ | |
Non-accelerated filer ¨ | Smaller reporting company ¨ |
Yes ¨ | No x |
Class | Outstanding as of December 31, 2015 | |
Common Stock, par value $0.50 | 195,729,323 |
Page No. | |||
PART I. | FINANCIAL INFORMATION | ||
Item 1. | Financial Statements: | ||
Consolidated Statements of Earnings – | |||
Three and Nine Months Ended November 30, 2015 and 2014 | |||
Consolidated Statements of Comprehensive Income – | |||
Three and Nine Months Ended November 30, 2015 and 2014 | |||
Consolidated Balance Sheets – | |||
November 30, 2015 and February 28, 2015 | |||
Consolidated Statements of Cash Flows – | |||
Nine Months Ended November 30, 2015 and 2014 | |||
Notes to Consolidated Financial Statements | |||
Item 2. | Management's Discussion and Analysis of Financial Condition and | ||
Results of Operations | |||
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | ||
Item 4. | Controls and Procedures | ||
PART II. | OTHER INFORMATION | ||
Item 1. | Legal Proceedings | ||
Item 1A. | Risk Factors | ||
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | ||
Item 6. | Exhibits | ||
SIGNATURES | |||
EXHIBIT INDEX |
Three Months Ended November 30 | Nine Months Ended November 30 | |||||||||||||||||||||||
(In thousands except per share data) | 2015 | %(1) | 2014 | %(1) | 2015 | %(1) | 2014 | %(1) | ||||||||||||||||
SALES AND OPERATING REVENUES: | ||||||||||||||||||||||||
Used vehicle sales | $ | 2,908,963 | 82.1 | $ | 2,794,515 | 82.1 | $ | 9,351,841 | 81.7 | $ | 8,775,021 | 81.6 | ||||||||||||
New vehicle sales | 42,291 | 1.2 | 54,561 | 1.6 | 162,832 | 1.4 | 194,294 | 1.8 | ||||||||||||||||
Wholesale vehicle sales | 513,796 | 14.5 | 481,676 | 14.1 | 1,682,195 | 14.7 | 1,557,191 | 14.5 | ||||||||||||||||
Other sales and revenues | 79,019 | 2.2 | 74,482 | 2.2 | 247,002 | 2.2 | 228,118 | 2.1 | ||||||||||||||||
NET SALES AND OPERATING REVENUES | 3,544,069 | 100.0 | 3,405,234 | 100.0 | 11,443,870 | 100.0 | 10,754,624 | 100.0 | ||||||||||||||||
Cost of sales | 3,079,738 | 86.9 | 2,958,614 | 86.9 | 9,914,375 | 86.6 | 9,342,934 | 86.9 | ||||||||||||||||
GROSS PROFIT | 464,331 | 13.1 | 446,620 | 13.1 | 1,529,495 | 13.4 | 1,411,690 | 13.1 | ||||||||||||||||
CARMAX AUTO FINANCE INCOME | 92,316 | 2.6 | 89,722 | 2.6 | 299,703 | 2.6 | 276,911 | 2.6 | ||||||||||||||||
Selling, general and administrative expenses | 337,512 | 9.5 | 316,632 | 9.3 | 1,018,075 | 8.9 | 927,716 | 8.6 | ||||||||||||||||
Interest expense | 10,021 | 0.3 | 7,338 | 0.2 | 24,574 | 0.2 | 22,290 | 0.2 | ||||||||||||||||
Other expense | 1,157 | — | 1,536 | — | 2,791 | — | 2,096 | — | ||||||||||||||||
Earnings before income taxes | 207,957 | 5.9 | 210,836 | 6.2 | 783,758 | 6.8 | 736,499 | 6.8 | ||||||||||||||||
Income tax provision | 79,758 | 2.3 | 80,787 | 2.4 | 301,357 | 2.6 | 282,279 | 2.6 | ||||||||||||||||
NET EARNINGS | $ | 128,199 | 3.6 | $ | 130,049 | 3.8 | $ | 482,401 | 4.2 | $ | 454,220 | 4.2 | ||||||||||||
WEIGHTED AVERAGE COMMON SHARES: | ||||||||||||||||||||||||
Basic | 201,291 | 214,228 | 205,760 | 217,568 | ||||||||||||||||||||
Diluted | 203,383 | 217,025 | 208,242 | 220,585 | ||||||||||||||||||||
NET EARNINGS PER SHARE: | ||||||||||||||||||||||||
Basic | $ | 0.64 | $ | 0.61 | $ | 2.34 | $ | 2.09 | ||||||||||||||||
Diluted | $ | 0.63 | $ | 0.60 | $ | 2.32 | $ | 2.06 |
Three Months Ended November 30 | Nine Months Ended November 30 | ||||||||||||||
(In thousands) | 2015 | 2014 | 2015 | 2014 | |||||||||||
NET EARNINGS | $ | 128,199 | $ | 130,049 | $ | 482,401 | $ | 454,220 | |||||||
Other comprehensive (loss) income, net of taxes: | |||||||||||||||
Net change in retirement benefit plan | |||||||||||||||
unrecognized actuarial losses | 322 | 214 | 967 | 640 | |||||||||||
Net change in cash flow hedge | |||||||||||||||
unrecognized losses | (837 | ) | (1,605 | ) | (2,240 | ) | (227 | ) | |||||||
Other comprehensive (loss) income, net of taxes | (515 | ) | (1,391 | ) | (1,273 | ) | 413 | ||||||||
TOTAL COMPREHENSIVE INCOME | $ | 127,684 | $ | 128,658 | $ | 481,128 | $ | 454,633 |
(Unaudited) | |||||||
As of November 30 | As of February 28 | ||||||
(In thousands except share data) | 2015 | 2015 | |||||
ASSETS | |||||||
CURRENT ASSETS: | |||||||
Cash and cash equivalents | $ | 33,346 | $ | 27,606 | |||
Restricted cash from collections on auto loan receivables | 316,186 | 294,122 | |||||
Accounts receivable, net | 88,530 | 137,690 | |||||
Inventory | 2,153,270 | 2,086,874 | |||||
Deferred income taxes | 10,878 | 8,100 | |||||
Other current assets | 32,673 | 44,646 | |||||
TOTAL CURRENT ASSETS | 2,634,883 | 2,599,038 | |||||
Auto loan receivables, net | 9,318,313 | 8,435,504 | |||||
Property and equipment, net | 2,105,807 | 1,862,538 | |||||
Deferred income taxes | 174,059 | 167,638 | |||||
Other assets | 148,103 | 133,483 | |||||
TOTAL ASSETS | $ | 14,381,165 | $ | 13,198,201 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
CURRENT LIABILITIES: | |||||||
Accounts payable | $ | 420,856 | $ | 454,810 | |||
Accrued expenses and other current liabilities | 211,833 | 250,307 | |||||
Accrued income taxes | 328 | 1,554 | |||||
Short-term debt | 36 | 785 | |||||
Current portion of long-term debt | — | 10,000 | |||||
Current portion of finance and capital lease obligations | 14,673 | 21,554 | |||||
Current portion of non-recourse notes payable | 275,828 | 258,163 | |||||
TOTAL CURRENT LIABILITIES | 923,554 | 997,173 | |||||
Long-term debt, excluding current portion | 864,000 | 300,000 | |||||
Finance and capital lease obligations, excluding current portion | 391,856 | 306,284 | |||||
Non-recourse notes payable, excluding current portion | 9,060,090 | 8,212,466 | |||||
Other liabilities | 229,910 | 225,493 | |||||
TOTAL LIABILITIES | 11,469,410 | 10,041,416 | |||||
Commitments and contingent liabilities | — | — | |||||
SHAREHOLDERS’ EQUITY: | |||||||
Common stock, $0.50 par value; 350,000,000 shares authorized; 197,563,192 and 208,869,688 shares issued and outstanding as of November 30, 2015 and February 28, 2015, respectively | 98,781 | 104,435 | |||||
Capital in excess of par value | 1,136,607 | 1,123,520 | |||||
Accumulated other comprehensive loss | (66,664 | ) | (65,391 | ) | |||
Retained earnings | 1,743,031 | 1,994,221 | |||||
TOTAL SHAREHOLDERS’ EQUITY | 2,911,755 | 3,156,785 | |||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 14,381,165 | $ | 13,198,201 |
Nine Months Ended November 30 | |||||||
(In thousands) | 2015 | 2014 | |||||
OPERATING ACTIVITIES: | |||||||
Net earnings | $ | 482,401 | $ | 454,220 | |||
Adjustments to reconcile net earnings to net cash | |||||||
used in operating activities: | |||||||
Depreciation and amortization | 100,504 | 84,994 | |||||
Share-based compensation expense | 45,284 | 57,192 | |||||
Provision for loan losses | 70,165 | 60,274 | |||||
Provision for cancellation reserves | 61,048 | 53,764 | |||||
Deferred income tax benefit | (8,322 | ) | (13,347 | ) | |||
Loss on disposition of assets and other | 3,007 | 2,486 | |||||
Net decrease (increase) in: | |||||||
Accounts receivable, net | 49,160 | (8,257 | ) | ||||
Inventory | (66,396 | ) | (323,249 | ) | |||
Other current assets | 12,397 | (22,061 | ) | ||||
Auto loan receivables, net | (952,974 | ) | (1,050,733 | ) | |||
Other assets | 268 | (2,910 | ) | ||||
Net decrease in: | |||||||
Accounts payable, accrued expenses and other current | |||||||
liabilities and accrued income taxes | (109,243 | ) | (16,321 | ) | |||
Other liabilities | (68,878 | ) | (60,667 | ) | |||
NET CASH USED IN OPERATING ACTIVITIES | (381,579 | ) | (784,615 | ) | |||
INVESTING ACTIVITIES: | |||||||
Capital expenditures | (240,835 | ) | (238,860 | ) | |||
Proceeds from sales of assets | 1,520 | 5,833 | |||||
Increase in restricted cash from collections on auto loan receivables | (22,064 | ) | (16,419 | ) | |||
Increase in restricted cash in reserve accounts | (8,383 | ) | (11,323 | ) | |||
Release of restricted cash from reserve accounts | 5,907 | 6,340 | |||||
Purchases of money market securities, net | (6,106 | ) | (8,604 | ) | |||
Purchases of trading securities | (4,759 | ) | (3,468 | ) | |||
Sales of trading securities | 101 | 333 | |||||
NET CASH USED IN INVESTING ACTIVITIES | (274,619 | ) | (266,168 | ) | |||
FINANCING ACTIVITIES: | |||||||
(Decrease) increase in short-term debt, net | (749 | ) | 1,992 | ||||
Proceeds from issuance of long-term debt | 1,137,300 | 300,000 | |||||
Payments on long-term debt | (583,300 | ) | — | ||||
Cash paid for debt issuance costs | (3,104 | ) | (496 | ) | |||
Payments on finance and capital lease obligations | (13,310 | ) | (13,395 | ) | |||
Issuances of non-recourse notes payable | 7,430,805 | 5,882,000 | |||||
Payments on non-recourse notes payable | (6,565,516 | ) | (4,950,011 | ) | |||
Repurchase and retirement of common stock | (816,181 | ) | (695,582 | ) | |||
Equity issuances | 44,855 | 54,293 | |||||
Excess tax benefits from share-based payment arrangements | 31,138 | 33,961 | |||||
NET CASH PROVIDED BY FINANCING ACTIVITIES | 661,938 | 612,762 | |||||
Increase (decrease) in cash and cash equivalents | 5,740 | (438,021 | ) | ||||
Cash and cash equivalents at beginning of year | 27,606 | 627,901 | |||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 33,346 | $ | 189,880 | |||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | |||||||
Cash paid for interest | $ | 30,511 | $ | 22,232 | |||
Cash paid for income taxes | $ | 268,076 | $ | 287,905 | |||
Non-cash investing and financing activities: | |||||||
Increase in accrued capital expenditures | $ | 6,563 | $ | 16,538 | |||
Increase in finance and capital lease obligations | $ | 92,001 | $ | 11,697 |
Three Months Ended November 30 | Nine Months Ended November 30 | ||||||||||||||||||||||||||
(In millions) | 2015 | % (1) | 2014 | % (1) | 2015 | % (1) | 2014 | % (1) | |||||||||||||||||||
Interest margin: | |||||||||||||||||||||||||||
Interest and fee income | $ | 172.3 | 7.4 | $ | 152.7 | 7.6 | $ | 507.0 | 7.5 | $ | 450.4 | 7.8 | |||||||||||||||
Interest expense | (33.0 | ) | (1.4 | ) | (24.8 | ) | (1.2 | ) | (91.9 | ) | (1.4 | ) | (71.8 | ) | (1.2 | ) | |||||||||||
Total interest margin | 139.3 | 6.0 | 127.9 | 6.4 | 415.1 | 6.2 | 378.6 | 6.5 | |||||||||||||||||||
Provision for loan losses | (30.9 | ) | (1.3 | ) | (24.1 | ) | (1.2 | ) | (70.2 | ) | (1.0 | ) | (60.3 | ) | (1.0 | ) | |||||||||||
Total interest margin after | |||||||||||||||||||||||||||
provision for loan losses | 108.4 | 4.7 | 103.8 | 5.2 | 344.9 | 5.1 | 318.3 | 5.5 | |||||||||||||||||||
Total other expense | (0.3 | ) | — | — | — | (0.4 | ) | — | — | — | |||||||||||||||||
Direct expenses: | |||||||||||||||||||||||||||
Payroll and fringe benefit expense | (7.1 | ) | (0.3 | ) | (6.3 | ) | (0.3 | ) | (21.0 | ) | (0.3 | ) | (18.8 | ) | (0.3 | ) | |||||||||||
Other direct expenses | (8.7 | ) | (0.4 | ) | (7.8 | ) | (0.4 | ) | (23.8 | ) | (0.4 | ) | (22.6 | ) | (0.4 | ) | |||||||||||
Total direct expenses | (15.8 | ) | (0.7 | ) | (14.1 | ) | (0.7 | ) | (44.8 | ) | (0.7 | ) | (41.4 | ) | (0.7 | ) | |||||||||||
CarMax Auto Finance income | $ | 92.3 | 4.0 | $ | 89.7 | 4.5 | $ | 299.7 | 4.5 | $ | 276.9 | 4.8 | |||||||||||||||
Total average managed receivables | $ | 9,261.4 | $ | 8,026.2 | $ | 8,973.3 | $ | 7,713.6 |
As of November 30 | As of February 28 | ||||||
(In millions) | 2015 | 2015 | |||||
Warehouse facilities | $ | 1,391.0 | $ | 986.0 | |||
Term securitizations | 7,669.1 | 7,226.5 | |||||
Other receivables (1) | 311.4 | 246.2 | |||||
Total ending managed receivables | 9,371.5 | 8,458.7 | |||||
Accrued interest and fees | 37.4 | 31.2 | |||||
Other | 0.3 | 27.3 | |||||
Less allowance for loan losses | (90.9 | ) | (81.7 | ) | |||
Auto loan receivables, net | $ | 9,318.3 | $ | 8,435.5 |
As of November 30 | As of February 28 | ||||||||||
(In millions) | 2015 (1) | % (2) | 2015 (1) | % (2) | |||||||
A | $ | 4,553.9 | 48.6 | $ | 4,135.6 | 48.9 | |||||
B | 3,340.1 | 35.6 | 3,055.3 | 36.1 | |||||||
C and other | 1,477.5 | 15.8 | 1,267.8 | 15.0 | |||||||
Total ending managed receivables | $ | 9,371.5 | 100.0 | $ | 8,458.7 | 100.0 |
Three Months Ended November 30 | Nine Months Ended November 30 | ||||||||||||||||||||||
(In millions) | 2015 | % (1) | 2014 | % (1) | 2015 | % (1) | 2014 | % (1) | |||||||||||||||
Balance as of beginning of period | $ | 87.8 | 0.96 | $ | 77.8 | 0.99 | $ | 81.7 | 0.97 | $ | 69.9 | 0.97 | |||||||||||
Charge-offs | (51.9 | ) | (43.8 | ) | (128.7 | ) | (112.7 | ) | |||||||||||||||
Recoveries | 24.1 | 22.3 | 67.7 | 62.9 | |||||||||||||||||||
Provision for loan losses | 30.9 | 24.1 | 70.2 | 60.3 | |||||||||||||||||||
Balance as of end of period | $ | 90.9 | 0.97 | $ | 80.4 | 0.98 | $ | 90.9 | 0.97 | $ | 80.4 | 0.98 |
As of November 30 | As of February 28 | ||||||||||
(In millions) | 2015 | % (1) | 2015 | % (1) | |||||||
Total ending managed receivables | $ | 9,371.5 | 100.0 | $ | 8,458.7 | 100.0 | |||||
Delinquent loans: | |||||||||||
31-60 days past due | $ | 201.1 | 2.1 | $ | 152.1 | 1.8 | |||||
61-90 days past due | 78.7 | 0.8 | 52.5 | 0.6 | |||||||
Greater than 90 days past due | 24.1 | 0.3 | 16.8 | 0.2 | |||||||
Total past due | $ | 303.9 | 3.2 | $ | 221.4 | 2.6 |
As of November 30, 2015 | As of February 28, 2015 | ||||||||||||
(In thousands) | Assets (1) | Liabilities (2) | Assets (1) | Liabilities (2) | |||||||||
Derivatives designated as accounting hedges: | |||||||||||||
Interest rate swaps | $ | 1,625 | (1,632 | ) | $ | 1,201 | (1,064 | ) |
Three Months Ended | Nine Months Ended | ||||||||||||||
November 30 | November 30 | ||||||||||||||
(In thousands) | 2015 | 2014 | 2015 | 2014 | |||||||||||
Derivatives designated as accounting hedges: | |||||||||||||||
Loss recognized in AOCL (1) | $ | (3,325 | ) | $ | (4,525 | ) | $ | (9,596 | ) | $ | (6,594 | ) | |||
Loss reclassified from AOCL into CAF income (1) | $ | (1,944 | ) | $ | (1,881 | ) | $ | (5,902 | ) | $ | (6,220 | ) | |||
Loss recognized in CAF Income (2) | $ | (336 | ) | $ | — | $ | (438 | ) | $ | — |
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). |
As of November 30, 2015 | |||||||||||
(In thousands) | Level 1 | Level 2 | Total | ||||||||
Assets: | |||||||||||
Money market securities | $ | 410,777 | $ | — | $ | 410,777 | |||||
Mutual fund investments | 13,989 | — | 13,989 | ||||||||
Derivative instruments | — | 1,625 | 1,625 | ||||||||
Total assets at fair value | $ | 424,766 | $ | 1,625 | $ | 426,391 | |||||
Percent of total assets at fair value | 99.6 | % | 0.4 | % | 100.0 | % | |||||
Percent of total assets | 3.0 | % | — | % | 3.0 | % | |||||
Liabilities: | |||||||||||
Derivative instruments | $ | — | $ | (1,632 | ) | $ | (1,632 | ) | |||
Total liabilities at fair value | $ | — | $ | (1,632 | ) | $ | (1,632 | ) | |||
Percent of total liabilities | — | % | — | % | — | % |
As of February 28, 2015 | |||||||||||
(In thousands) | Level 1 | Level 2 | Total | ||||||||
Assets: | |||||||||||
Money market securities | $ | 380,100 | $ | — | $ | 380,100 | |||||
Mutual fund investments | 9,242 | — | 9,242 | ||||||||
Derivative instruments | — | 1,201 | 1,201 | ||||||||
Total assets at fair value | $ | 389,342 | $ | 1,201 | $ | 390,543 | |||||
Percent of total assets at fair value | 99.7 | % | 0.3 | % | 100.0 | % | |||||
Percent of total assets | 2.9 | % | — | % | 3.0 | % | |||||
Liabilities: | |||||||||||
Derivative instruments | $ | — | $ | (1,064 | ) | $ | (1,064 | ) | |||
Total liabilities at fair value | $ | — | $ | (1,064 | ) | $ | (1,064 | ) | |||
Percent of total liabilities | — | % | — | % | — | % |
Three Months Ended November 30 | Nine Months Ended November 30 | ||||||||||||||
(In millions) | 2015 | 2014 | 2015 | 2014 | |||||||||||
Balance as of beginning of period | $ | 108.1 | $ | 86.0 | $ | 94.4 | $ | 72.5 | |||||||
Cancellations | (16.9 | ) | (12.4 | ) | (45.6 | ) | (37.4 | ) | |||||||
Provision for future cancellations | 18.6 | 15.3 | 61.0 | 53.8 | |||||||||||
Balance as of end of period | $ | 109.8 | $ | 88.9 | $ | 109.8 | $ | 88.9 |
Three Months Ended November 30 | |||||||||||||||||||||||
Pension Plan | Restoration Plan | Total | |||||||||||||||||||||
(In thousands) | 2015 | 2014 | 2015 | 2014 | 2015 | 2014 | |||||||||||||||||
Interest cost | $ | 2,168 | $ | 2,008 | $ | 107 | $ | 113 | $ | 2,275 | $ | 2,121 | |||||||||||
Expected return on plan assets | (2,463 | ) | (2,257 | ) | — | — | (2,463 | ) | (2,257 | ) | |||||||||||||
Recognized actuarial loss | 507 | 340 | 7 | — | 514 | 340 | |||||||||||||||||
Net pension expense | $ | 212 | $ | 91 | $ | 114 | $ | 113 | $ | 326 | $ | 204 |
Nine Months Ended November 30 | |||||||||||||||||||||||
Pension Plan | Restoration Plan | Total | |||||||||||||||||||||
(In thousands) | 2015 | 2014 | 2015 | 2014 | 2015 | 2014 | |||||||||||||||||
Interest cost | $ | 6,504 | $ | 6,024 | $ | 323 | $ | 339 | $ | 6,827 | $ | 6,363 | |||||||||||
Expected return on plan assets | (7,392 | ) | (6,771 | ) | — | — | (7,392 | ) | (6,771 | ) | |||||||||||||
Recognized actuarial loss | 1,524 | 1,020 | 19 | — | 1,543 | 1,020 | |||||||||||||||||
Net pension expense | $ | 636 | $ | 273 | $ | 342 | $ | 339 | $ | 978 | $ | 612 |
As of November 30 | As of February 28 | ||||||
(In thousands) | 2015 | 2015 | |||||
Short-term borrowings on revolving credit facility | $ | 36 | $ | 785 | |||
Current portion of long-term debt | — | 10,000 | |||||
Current portion of finance and capital lease obligations | 14,673 | 21,554 | |||||
Current portion of non-recourse notes payable | 275,828 | 258,163 | |||||
Total current debt | 290,537 | 290,502 | |||||
Long-term debt | 864,000 | 300,000 | |||||
Finance and capital lease obligations, excluding current portion | 391,856 | 306,284 | |||||
Non-recourse notes payable, excluding current portion | 9,060,090 | 8,212,466 | |||||
Total debt, excluding current portion | 10,315,946 | 8,818,750 | |||||
Total debt | $ | 10,606,483 | $ | 9,109,252 |
Three Months Ended | Nine Months Ended | ||||||||||||||
November 30 | November 30 | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Number of shares repurchased (in thousands) | 7,680.8 | 6,234.8 | 13,336.1 | 14,101.5 | |||||||||||
Average cost per share | $ | 58.03 | $ | 52.48 | $ | 61.14 | $ | 49.80 | |||||||
Available for repurchase, as of end of period (in millions) | $ | 1,553.8 | $ | 2,579.8 | $ | 1,553.8 | $ | 2,579.8 |
Three Months Ended | Nine Months Ended | ||||||||||||||
November 30 | November 30 | ||||||||||||||
(In thousands) | 2015 | 2014 | 2015 | 2014 | |||||||||||
Cost of sales | $ | 394 | $ | 1,159 | $ | 1,459 | $ | 2,733 | |||||||
CarMax Auto Finance income | 502 | 889 | 1,100 | 2,526 | |||||||||||
Selling, general and administrative expenses | 11,178 | 17,637 | 43,728 | 52,846 | |||||||||||
Share-based compensation expense, before income taxes | $ | 12,074 | $ | 19,685 | $ | 46,287 | $ | 58,105 |
Three Months Ended | Nine Months Ended | ||||||||||||||
November 30 | November 30 | ||||||||||||||
(In thousands) | 2015 | 2014 | 2015 | 2014 | |||||||||||
Nonqualified stock options | $ | 5,794 | $ | 6,223 | $ | 20,064 | $ | 21,230 | |||||||
Cash-settled restricted stock units | 2,960 | 10,121 | 14,358 | 24,342 | |||||||||||
Stock-settled market stock units | 2,586 | 3,004 | 8,123 | 10,597 | |||||||||||
Stock-settled performance stock units | 341 | — | 1,579 | — | |||||||||||
Employee stock purchase plan | 296 | 271 | 1,003 | 913 | |||||||||||
Restricted stock awards to non-employee directors | 97 | 66 | 1,160 | 1,023 | |||||||||||
Share-based compensation expense, before income taxes | $ | 12,074 | $ | 19,685 | $ | 46,287 | $ | 58,105 |
Weighted | ||||||||||||
Weighted | Average | |||||||||||
Average | Remaining | Aggregate | ||||||||||
Number of | Exercise | Contractual | Intrinsic | |||||||||
(Shares and intrinsic value in thousands) | Shares | Price | Life (Years) | Value | ||||||||
Outstanding as of February 28, 2015 | 7,645 | $ | 35.59 | |||||||||
Options granted | 1,391 | $ | 73.68 | |||||||||
Options exercised | (1,596 | ) | $ | 28.10 | ||||||||
Options cancelled | (21 | ) | $ | 69.68 | ||||||||
Outstanding as of November 30, 2015 | 7,419 | $ | 44.25 | 4.4 | $ | 119,328 | ||||||
Exercisable as of November 30, 2015 | 3,600 | $ | 34.51 | 3.3 | $ | 82,110 |
As of November 30, 2015 | ||||||||||||||||||||||||
Options Outstanding | Options Exercisable | |||||||||||||||||||||||
Weighted | Weighted | Weighted | ||||||||||||||||||||||
Average Remaining | Average | Average | ||||||||||||||||||||||
(Shares in thousands) | Number of | Contractual | Exercise | Number of | Exercise | |||||||||||||||||||
Range of Exercise Prices | Shares | Life (Years) | Price | Shares | Price | |||||||||||||||||||
$ | 11.43 | - | $ | 14.49 | 149 | 0.4 | $ | 11.90 | 149 | $ | 11.90 | |||||||||||||
$ | 19.98 | - | $ | 31.76 | 1,953 | 3.0 | $ | 30.41 | 1,531 | $ | 30.06 | |||||||||||||
$ | 32.69 | - | $ | 42.68 | 2,050 | 3.7 | $ | 39.30 | 1,390 | $ | 37.69 | |||||||||||||
$ | 44.96 | - | $ | 59.75 | 1,892 | 5.4 | $ | 45.07 | 525 | $ | 45.12 | |||||||||||||
$ | 67.82 | - | $ | 73.76 | 1,375 | 6.4 | $ | 73.68 | 5 | 73.76 | ||||||||||||||
Total | 7,419 | 4.4 | $ | 44.25 | 3,600 | $ | 34.51 |
Nine Months Ended November 30 | |||||||||||
2015 | 2014 | ||||||||||
Dividend yield | 0.0 | % | 0.0 | % | |||||||
Expected volatility factor (1) | 25.8 | % | — | 31.8 | % | 25.2 | % | — | 32.7 | % | |
Weighted average expected volatility | 30.6 | % | 31.8 | % | |||||||
Risk-free interest rate (2) | 0.00 | % | — | 2.1 | % | 0.01 | % | — | 2.7 | % | |
Expected term (in years) (3) | 4.7 | 4.7 |
(1) | Measured using historical daily price changes of our stock for a period corresponding to the term of the options and the implied volatility derived from the market prices of traded options on our stock. |
Weighted | ||||||
Average | ||||||
Number of | Grant Date | |||||
(Units in thousands) | Units | Fair Value | ||||
Outstanding as of February 28, 2015 | 1,530 | $ | 39.81 | |||
Stock units granted | 418 | $ | 73.76 | |||
Stock units vested and converted | (522 | ) | $ | 32.08 | ||
Stock units cancelled | (74 | ) | $ | 50.51 | ||
Outstanding as of November 30, 2015 | 1,352 | $ | 52.71 |
As of November 30, 2015 | |||||||
(In thousands) | Minimum (1) | Maximum (1) | |||||
Fiscal 2017 | $ | 13,765 | $ | 36,707 | |||
Fiscal 2018 | 16,036 | 42,762 | |||||
Fiscal 2019 | 18,922 | 50,457 | |||||
Total expected cash settlements | $ | 48,723 | $ | 129,926 |
Weighted | ||||||
Average | ||||||
Number of | Grant Date | |||||
(Units in thousands) | Units | Fair Value | ||||
Outstanding as of February 28, 2015 | 774 | $ | 48.30 | |||
Stock units granted | 107 | $ | 90.31 | |||
Stock units vested and converted | (341 | ) | $ | 41.40 | ||
Stock units cancelled | (2 | ) | $ | 90.46 | ||
Outstanding as of November 30, 2015 | 538 | $ | 60.89 |
Weighted | ||||||
Average | ||||||
Number of | Grant Date | |||||
(Units in thousands) | Units | Fair Value | ||||
Outstanding as of February 28, 2015 | — | $ | — | |||
Stock units granted | 66 | $ | 72.58 | |||
Stock units vested | — | $ | — | |||
Stock units cancelled | — | $ | — | |||
Outstanding as of November 30, 2015 | 66 | $ | 72.58 |
Weighted | ||||||
Average | ||||||
Number of | Grant Date | |||||
(Units in thousands) | Units | Fair Value | ||||
Outstanding as of February 28, 2015 | 23 | $ | 51.18 | |||
Restricted stock granted | 19 | $ | 68.16 | |||
Restricted stock vested | (25 | ) | $ | 52.49 | ||
Restricted stock cancelled | — | — | ||||
Outstanding as of November 30, 2015 | 17 | $ | 68.16 |
Three Months Ended | Nine Months Ended | ||||||||||||||
November 30 | November 30 | ||||||||||||||
(In thousands except per share data) | 2015 | 2014 | 2015 | 2014 | |||||||||||
Net earnings | $ | 128,199 | $ | 130,049 | $ | 482,401 | $ | 454,220 | |||||||
Weighted average common shares outstanding | 201,291 | 214,228 | 205,760 | 217,568 | |||||||||||
Dilutive potential common shares: | |||||||||||||||
Stock options | 1,552 | 2,105 | 1,853 | 2,382 | |||||||||||
Stock-settled stock units and awards | 540 | 692 | 629 | 635 | |||||||||||
Weighted average common shares and dilutive | |||||||||||||||
potential common shares | 203,383 | 217,025 | 208,242 | 220,585 | |||||||||||
Basic net earnings per share | $ | 0.64 | $ | 0.61 | $ | 2.34 | $ | 2.09 | |||||||
Diluted net earnings per share | $ | 0.63 | $ | 0.60 | $ | 2.32 | $ | 2.06 |
Total | |||||||||||
Net | Accumulated | ||||||||||
Unrecognized | Net | Other | |||||||||
Actuarial | Unrecognized | Comprehensive | |||||||||
(In thousands, net of income taxes) | Losses | Hedge Losses | Loss | ||||||||
Balance as of February 28, 2015 | $ | (59,220 | ) | $ | (6,171 | ) | $ | (65,391 | ) | ||
Other comprehensive loss before reclassifications | — | (5,821 | ) | (5,821 | ) | ||||||
Amounts reclassified from accumulated other comprehensive loss | 967 | 3,581 | 4,548 | ||||||||
Other comprehensive income (loss) | 967 | (2,240 | ) | (1,273 | ) | ||||||
Balance as of November 30, 2015 | $ | (58,253 | ) | $ | (8,411 | ) | $ | (66,664 | ) |
Three Months Ended November 30 | Nine Months Ended November 30 | ||||||||||||||
(In thousands) | 2015 | 2014 | 2015 | 2014 | |||||||||||
Retirement Benefit Plans (Note 9): | |||||||||||||||
Actuarial loss amortization reclassifications recognized | |||||||||||||||
in net pension expense: | |||||||||||||||
Cost of sales | $ | 212 | $ | 139 | $ | 628 | $ | 415 | |||||||
CarMax Auto Finance income | 13 | 8 | 37 | 23 | |||||||||||
Selling, general and administrative expenses | 289 | 193 | 878 | 582 | |||||||||||
Total amortization reclassifications recognized | |||||||||||||||
in net pension expense | 514 | 340 | 1,543 | 1,020 | |||||||||||
Tax expense | (192 | ) | (126 | ) | (576 | ) | (380 | ) | |||||||
Amortization reclassifications recognized in net | |||||||||||||||
pension expense, net of tax | 322 | 214 | 967 | 640 | |||||||||||
Net change in retirement benefit plan unrecognized | |||||||||||||||
actuarial losses, net of tax | 322 | 214 | 967 | 640 | |||||||||||
Cash Flow Hedges (Note 5): | |||||||||||||||
Effective portion of changes in fair value | (3,325 | ) | (4,525 | ) | (9,596 | ) | (6,594 | ) | |||||||
Tax benefit | 1,308 | 1,779 | 3,775 | 2,593 | |||||||||||
Effective portion of changes in fair value, net of tax | (2,017 | ) | (2,746 | ) | (5,821 | ) | (4,001 | ) | |||||||
Reclassifications to CarMax Auto Finance income | 1,944 | 1,881 | 5,902 | 6,220 | |||||||||||
Tax expense | (764 | ) | (740 | ) | (2,321 | ) | (2,446 | ) | |||||||
Reclassification of hedge losses, net of tax | 1,180 | 1,141 | 3,581 | 3,774 | |||||||||||
Net change in cash flow hedge unrecognized losses, | |||||||||||||||
net of tax | (837 | ) | (1,605 | ) | (2,240 | ) | (227 | ) | |||||||
Total other comprehensive (loss) income, net of tax | $ | (515 | ) | $ | (1,391 | ) | $ | (1,273 | ) | $ | 413 |
Three Months Ended November 30 | Nine Months Ended November 30 | ||||||||||||||||||||
(In millions) | 2015 | 2014 | Change | 2015 | 2014 | Change | |||||||||||||||
Used vehicle sales | $ | 2,909.0 | $ | 2,794.5 | 4.1 | % | $ | 9,351.8 | $ | 8,775.0 | 6.6 | % | |||||||||
New vehicle sales | 42.3 | 54.6 | (22.5 | )% | 162.8 | 194.3 | (16.2 | )% | |||||||||||||
Wholesale vehicle sales | 513.8 | 481.7 | 6.7 | % | 1,682.2 | 1,557.2 | 8.0 | % | |||||||||||||
Other sales and revenues: | |||||||||||||||||||||
Extended protection plan revenues | 61.6 | 61.7 | (0.1 | )% | 197.4 | 188.4 | 4.8 | % | |||||||||||||
Service department sales | 31.0 | 28.0 | 10.8 | % | 94.8 | 84.9 | 11.6 | % | |||||||||||||
Third-party finance fees, net | (13.6 | ) | (15.2 | ) | 10.4 | % | (45.1 | ) | (45.1 | ) | — | % | |||||||||
Total other sales and revenues | 79.0 | 74.5 | 6.1 | % | 247.1 | 228.1 | 8.3 | % | |||||||||||||
Total net sales and operating revenues | $ | 3,544.1 | $ | 3,405.2 | 4.1 | % | $ | 11,443.9 | $ | 10,754.6 | 6.4 | % |
Three Months Ended November 30 | Nine Months Ended November 30 | ||||||||||||||||
2015 | 2014 | Change | 2015 | 2014 | Change | ||||||||||||
Used vehicles | 143,673 | 139,158 | 3.2 | % | 464,699 | 433,011 | 7.3 | % | |||||||||
New vehicles | 1,576 | 2,009 | (21.6 | )% | 6,039 | 7,187 | (16.0 | )% | |||||||||
Wholesale vehicles | 94,066 | 90,988 | 3.4 | % | 302,218 | 286,075 | 5.6 | % |
Three Months Ended November 30 | Nine Months Ended November 30 | ||||||||||||||||||||
2015 | 2014 | Change | 2015 | 2014 | Change | ||||||||||||||||
Used vehicles | $ | 20,094 | $ | 19,914 | 0.9 | % | $ | 19,970 | $ | 20,104 | (0.7 | )% | |||||||||
New vehicles | $ | 26,720 | $ | 27,056 | (1.2 | )% | $ | 26,851 | $ | 26,926 | (0.3 | )% | |||||||||
Wholesale vehicles | $ | 5,243 | $ | 5,124 | 2.3 | % | $ | 5,345 | $ | 5,277 | 1.3 | % |
Three Months Ended November 30 | Nine Months Ended November 30 | ||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||
Used vehicle units | (0.8 | )% | 7.4 | % | 3.0 | % | 3.5 | % | |||
Used vehicle revenues | 0.0 | % | 9.9 | % | 2.3 | % | 6.8 | % |
Three Months Ended November 30 | Nine Months Ended November 30 | ||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||
Used vehicle units | 3.2 | % | 14.0 | % | 7.3 | % | 9.9 | % | |||
Used vehicle revenues | 4.1 | % | 16.6 | % | 6.6 | % | 13.4 | % | |||
Wholesale vehicle units | 3.4 | % | 10.0 | % | 5.6 | % | 9.0 | % | |||
Wholesale vehicle revenues | 6.7 | % | 10.2 | % | 8.0 | % | 11.0 | % |
Three Months Ended November 30 | Nine Months Ended November 30 | ||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||
Used car stores, beginning of period | 151 | 139 | 144 | 131 | |||||||
Store openings | 2 | 4 | 9 | 12 | |||||||
Used car stores, end of period | 153 | 143 | 153 | 143 |
Three Months Ended November 30 | Nine Months Ended November 30 | ||||||||||||||||||||
(In millions) | 2015 | 2014 | Change | 2015 | 2014 | Change | |||||||||||||||
Used vehicle gross profit | $ | 310.4 | $ | 302.2 | 2.7 | % | $ | 1,011.2 | $ | 947.8 | 6.7 | % | |||||||||
New vehicle gross profit | 0.7 | 1.5 | (52.3 | ) | 2.7 | 5.4 | (50.5 | ) | |||||||||||||
Wholesale vehicle gross profit | 89.3 | 84.3 | 5.9 | 295.4 | 271.5 | 8.8 | |||||||||||||||
Other gross profit | 63.9 | 58.6 | 9.2 | 220.2 | 186.9 | 17.8 | |||||||||||||||
Total | $ | 464.3 | $ | 446.6 | 4.0 | % | $ | 1,529.5 | $ | 1,411.7 | 8.3 | % |
Three Months Ended November 30 | Nine Months Ended November 30 | ||||||||||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||||||||||
$ per unit(1) | %(2) | $ per unit(1) | %(2) | $ per unit(1) | %(2) | $ per unit(1) | %(2) | ||||||||||||||||
Used vehicle gross profit | $ | 2,160 | 10.7 | $ | 2,172 | 10.8 | $ | 2,176 | 10.8 | $ | 2,189 | 10.8 | |||||||||||
New vehicle gross profit | 440 | 1.6 | 724 | 2.7 | 440 | 1.6 | 747 | 2.8 | |||||||||||||||
Wholesale vehicle gross profit | 949 | 17.4 | 927 | 17.5 | 977 | 17.6 | 949 | 17.4 | |||||||||||||||
Other gross profit | 440 | 81.0 | 415 | 78.7 | 468 | 89.1 | 425 | 82.0 | |||||||||||||||
Total gross profit | $ | 3,197 | 13.1 | $ | 3,164 | 13.1 | $ | 3,249 | 13.4 | $ | 3,207 | 13.1 |
(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. |
Three Months Ended November 30 | Nine Months Ended November 30 | ||||||||||||||||||||||
(In millions, except per unit data) | 2015 | 2014 | Change | 2015 | 2014 | Change | |||||||||||||||||
Compensation and benefits (1) | $ | 176.9 | $ | 179.6 | (1.5 | )% | $ | 559.0 | $ | 540.1 | 3.5 | % | |||||||||||
Store occupancy costs | 70.1 | 61.9 | 13.2 | % | 204.0 | 180.1 | 13.3 | % | |||||||||||||||
Advertising expense | 37.5 | 28.3 | 32.5 | % | 106.0 | 88.4 | 19.9 | % | |||||||||||||||
Other overhead costs (2) | 53.0 | 46.8 | 13.2 | % | 149.1 | 119.1 | 25.2 | % | |||||||||||||||
Total SG&A expenses | $ | 337.5 | $ | 316.6 | 6.6 | % | $ | 1,018.1 | $ | 927.7 | 9.7 | % | |||||||||||
SG&A per unit (3) | $ | 2,324 | $ | 2,243 | $ | 81 | $ | 2,163 | $ | 2,107 | $ | 56 |
(2) | Includes IT expenses, insurance, non-CAF bad debt, travel, preopening and relocation costs, charitable contributions and other administrative expenses. Costs for the nine months ended November 30, 2014, were reduced by $20.9 million in connection with the receipt of settlement proceeds in a class action lawsuit. |
(3) | Calculated as total SG&A expense divided by total retail units. |
Three Months Ended November 30 | Nine Months Ended November 30 | ||||||||||||||||||||||||||
(In millions) | 2015 | % (1) | 2014 | % (1) | 2015 | % (1) | 2014 | % (1) | |||||||||||||||||||
Interest margin: | |||||||||||||||||||||||||||
Interest and fee income | $ | 172.3 | 7.4 | $ | 152.7 | 7.6 | $ | 507.0 | 7.5 | $ | 450.4 | 7.8 | |||||||||||||||
Interest expense | (33.0 | ) | (1.4 | ) | (24.8 | ) | (1.2 | ) | (91.9 | ) | (1.4 | ) | (71.8 | ) | (1.2 | ) | |||||||||||
Total interest margin | 139.3 | 6.0 | 127.9 | 6.4 | 415.1 | 6.2 | 378.6 | 6.5 | |||||||||||||||||||
Provision for loan losses | (30.9 | ) | (1.3 | ) | (24.1 | ) | (1.2 | ) | (70.2 | ) | (1.0 | ) | (60.3 | ) | (1.0 | ) | |||||||||||
Total interest margin after provision | |||||||||||||||||||||||||||
for loan losses | 108.4 | 4.7 | 103.8 | 5.2 | 344.9 | 5.1 | 318.3 | 5.5 | |||||||||||||||||||
Total other expense | (0.3 | ) | — | — | — | (0.4 | ) | — | — | — | |||||||||||||||||
Total direct expenses | (15.8 | ) | (0.7 | ) | (14.1 | ) | (0.7 | ) | (44.8 | ) | (0.7 | ) | (41.4 | ) | (0.7 | ) | |||||||||||
CarMax Auto Finance income | $ | 92.3 | 4.0 | $ | 89.7 | 4.5 | $ | 299.7 | 4.5 | $ | 276.9 | 4.8 | |||||||||||||||
Total average managed receivables | $ | 9,261.4 | $ | 8,026.2 | $ | 8,973.3 | $ | 7,713.6 |
Three Months Ended November 30 | Nine Months Ended November 30 | ||||||||||||||
2015 (1) | 2014 (1) | 2015 (1) | 2014 (1) | ||||||||||||
Net loans originated (in millions) | $ | 1,224.0 | $ | 1,152.6 | $ | 3,912.1 | $ | 3,554.3 | |||||||
Vehicle units financed | 62,251 | 58,947 | 200,347 | 181,550 | |||||||||||
Penetration rate (2) | 42.9 | % | 41.8 | % | 42.6 | % | 41.2 | % | |||||||
Weighted average contract rate | 7.3 | % | 7.0 | % | 7.3 | % | 7.1 | % | |||||||
Weighted average credit score (3) | 704 | 703 | 702 | 702 | |||||||||||
Weighted average loan-to-value (LTV) (4) | 94.8 | % | 94.8 | % | 94.7 | % | 94.1 | % | |||||||
Weighted average term (in months) | 66.0 | 65.3 | 65.9 | 65.3 |
(3) | The credit scores represent FICO scores, and reflect only receivables with obligors that have a FICO score at the time of application. The FICO score with respect to any receivable with co-obligors is calculated as the average of each obligor’s FICO score at the time of application. FICO scores are not a significant factor in our primary scoring model which relies on information from credit bureaus and other application information as discussed in Note 4. FICO® is a federally registered servicemark of Fair Isaac Corporation. |
(4) | LTV represents the ratio of the amount financed to the total collateral value, which is measured as the vehicle selling price plus applicable taxes, title and fees. |
Three Months Ended November 30 | Nine Months Ended November 30 | ||||||||||||||||||||||
(In millions) | 2015 | % (1) | 2014 | % (1) | 2015 | % (1) | 2014 | % (1) | |||||||||||||||
Balance as of beginning of period | $ | 87.8 | 0.96 | $ | 77.8 | 0.99 | $ | 81.7 | 0.97 | $ | 69.9 | 0.97 | |||||||||||
Charge-offs | (51.9 | ) | (43.8 | ) | (128.7 | ) | (112.7 | ) | |||||||||||||||
Recoveries | 24.1 | 22.3 | 67.7 | 62.9 | |||||||||||||||||||
Provision for loan losses | 30.9 | 24.1 | 70.2 | 60.3 | |||||||||||||||||||
Balance as of end of period | $ | 90.9 | 0.97 | $ | 80.4 | 0.98 | $ | 90.9 | 0.97 | $ | 80.4 | 0.98 |
Three Months Ended November 30 | Nine Months Ended November 30 | ||||||||||||||
(In millions) | 2015 | 2014 | 2015 | 2014 | |||||||||||
Net credit losses on managed receivables | $ | 27.8 | $ | 21.5 | $ | 61.0 | $ | 49.8 | |||||||
Total average managed receivables | $ | 9,261.4 | $ | 8,026.2 | $ | 8,973.3 | $ | 7,713.6 | |||||||
Annualized net credit losses as a percentage of | |||||||||||||||
total average managed receivables | 1.20 | % | 1.07 | % | 0.91 | % | 0.86 | % | |||||||
Total ending managed receivables | $ | 9,371.5 | $ | 8,186.5 | $ | 9,371.5 | $ | 8,186.5 | |||||||
Past due accounts as a percentage of ending | |||||||||||||||
managed receivables | 3.24 | % | 3.07 | % | 3.24 | % | 3.07 | % | |||||||
Average recovery rate | 49.7 | % | 51.9 | % | 52.0 | % | 54.7 | % |
Location | Television Market | Market Status | Planned Opening Date |
Norwood, Massachusetts (1) | Boston | New | Q4 Fiscal 2016 |
Danvers, Massachusetts (1) | Boston | New | 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 |
Meridian, Idaho | Boise | New | Q3 Fiscal 2017 |
Maple Shade, New Jersey | Philadelphia | Existing | Q3 Fiscal 2017 |
Daytona Beach, Florida | Orlando - Daytona Beach | Existing | Q3 Fiscal 2017 |
Kentwood, Michigan | Grand Rapids - Kalamazoo | New | Q3 Fiscal 2017 |
Nine Months Ended November 30 | |||||||
(In millions) | 2015 | 2014 | |||||
Net cash used in operating activities | $ | (381.6 | ) | $ | (784.6 | ) | |
Add: Net issuances of non-recourse notes payable (1) | 865.3 | 932.0 | |||||
Adjusted net cash provided by operating activities | $ | 483.7 | $ | 147.4 |
(1) | Calculated using the gross issuances less payments on non-recourse notes payable as disclosed on the consolidated statements of cash flows. |
As of November 30 | As of February 28 | ||||||
(In thousands) | 2015 | 2015 | |||||
Borrowings under revolving credit facility | $ | 564,036 | $ | 10,785 | |||
Other long-term debt | 300,000 | 300,000 | |||||
Finance and capital lease obligations | 406,529 | 327,838 | |||||
Non-recourse notes payable | 9,335,918 | 8,470,629 | |||||
Total debt | $ | 10,606,483 | $ | 9,109,252 | |||
Cash and cash equivalents | $ | 33,346 | $ | 27,606 |
• | 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 the attractiveness or availability of consumer credit 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. |
• | 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 the seasonal fluctuations in our business. |
• | The occurrence of severe weather events. |
• | Factors related to the geographic concentration of our stores. |
Approximate | ||||||||||||||
Dollar Value | ||||||||||||||
Total Number | of Shares that | |||||||||||||
Total Number | Average | of Shares Purchased | May Yet Be | |||||||||||
of Shares | Price Paid | as Part of Publicly | Purchased Under | |||||||||||
Period | Purchased | per Share | Announced Program | the Program | ||||||||||
September 1 - 30, 2015 | 2,301,677 | $ | 59.73 | 2,301,677 | $ | 1,862,075,452 | ||||||||
October 1 - 31, 2015 | 2,714,631 | $ | 57.99 | 2,714,631 | $ | 1,704,645,942 | ||||||||
November 1 - 30, 2015 | 2,664,509 | $ | 56.60 | 2,664,509 | $ | 1,553,846,841 | ||||||||
Total | 7,680,817 | 7,680,817 |
3.1 | CarMax, Inc. Bylaws, as amended and restated December 8, 2015, filed as Exhibit 3.1 to CarMax’s Current Report on Form 8-K, filed December 8, 2015 (File No. 1-31420), and incorporated by this reference. |
31.1 | Certification of the Chief Executive Officer Pursuant to Rule 13a-14(a), filed herewith. |
31.2 | Certification of the Chief Financial Officer Pursuant to Rule 13a-14(a), filed herewith. |
32.1 | Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, filed herewith. |
32.2 | Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, filed herewith. |
101.INS | XBRL Instance Document |
101.SCH | XBRL Taxonomy Extension Schema Document |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
CARMAX, INC. | |
By: | /s/ Thomas J. Folliard |
Thomas J. Folliard | |
President and | |
Chief Executive Officer | |
By: | /s/ Thomas W. Reedy |
Thomas W. Reedy | |
Executive Vice President and | |
Chief Financial Officer |
3.1 | CarMax, Inc. Bylaws, as amended and restated December 8, 2015, filed as Exhibit 3.1 to CarMax’s Current Report on Form 8-K, filed December 8, 2015 (File No. 1-31420), and incorporated by this reference. |
31.1 | Certification of the Chief Executive Officer Pursuant to Rule 13a-14(a), filed herewith. |
31.2 | Certification of the Chief Financial Officer Pursuant to Rule 13a-14(a), filed herewith. |
32.1 | Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, filed herewith. |
32.2 | Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, filed herewith. |
101.INS | XBRL Instance Document |
101.SCH | XBRL Taxonomy Extension Schema Document |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
Date: | January 7, 2016 | By: | /s/ Thomas J. Folliard |
Thomas J. Folliard | |||
President and | |||
Chief Executive Officer |
Date: | January 7, 2016 | By: | /s/ Thomas W. Reedy |
Thomas W. Reedy | |||
Executive Vice President and | |||
Chief Financial Officer |
Document And Entity Information - shares |
9 Months Ended | |
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Nov. 30, 2015 |
Dec. 31, 2015 |
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Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Nov. 30, 2015 | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q3 | |
Entity Registrant Name | CARMAX INC | |
Entity Central Index Key | 0001170010 | |
Entity Current Reporting Status | Yes | |
Entity Well-known Seasoned Issuer | Yes | |
Entity Voluntary Filers | No | |
Current Fiscal Year End Date | --02-29 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 195,729,323 |
Consolidated Statements Of Comprehensive Income - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
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Nov. 30, 2015 |
Nov. 30, 2014 |
Nov. 30, 2015 |
Nov. 30, 2014 |
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Statement of Comprehensive Income [Abstract] | ||||
NET EARNINGS | $ 128,199 | $ 130,049 | $ 482,401 | $ 454,220 |
Other comprehensive (loss) income, net of taxes: | ||||
Net change in retirement benefit plan unrecognized actuarial losses | 322 | 214 | 967 | 640 |
Net change in cash flow hedge unrecognized losses | (837) | (1,605) | (2,240) | (227) |
Other comprehensive (loss) income, net of taxes | (515) | (1,391) | (1,273) | 413 |
TOTAL COMPREHENSIVE INCOME | $ 127,684 | $ 128,658 | $ 481,128 | $ 454,633 |
Consolidated Balance Sheets (Parenthetical) - $ / shares |
Nov. 30, 2015 |
Feb. 28, 2015 |
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Statement of Financial Position [Abstract] | ||
Common stock, par value (in dollars per share) | $ 0.5 | $ 0.5 |
Common stock, shares authorized | 350,000,000 | 350,000,000 |
Common stock, shares issued | 197,563,192 | 208,869,688 |
Common stock, shares outstanding | 197,563,192 | 208,869,688 |
Background |
9 Months Ended |
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Nov. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Background | 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 operate in two reportable segments: CarMax Sales Operations and CarMax Auto Finance (“CAF”). Our CarMax Sales Operations segment consists of all aspects of our auto merchandising and service operations, excluding financing provided by CAF. Our CAF segment consists solely of our own finance operation that provides vehicle financing through CarMax stores. We seek to deliver an unrivaled customer experience by offering a broad selection of high quality used vehicles and related products and services at 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 CAF and third-party financing providers; the sale of extended protection plan (“EPP”) products, which include extended service plans (“ESP”) and guaranteed asset protection (“GAP”); 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 two locations we also sell new vehicles under franchise agreements. |
Accounting Policies |
9 Months Ended |
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Nov. 30, 2015 | |
Accounting Policies [Abstract] | |
Accounting Policies | 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 28, 2015. 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 $78,000 as of November 30, 2015, and $48,000 as of February 28, 2015, consisted of highly liquid investments with original maturities of three months or less. Restricted Cash from Collections on Auto Loan Receivables. Cash equivalents totaling $316.2 million as of November 30, 2015, and $294.1 million as of February 28, 2015, consisted of collections of principal, interest and fee 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 we elect to fund them through a term securitization or alternative funding arrangement. We sell the auto loan receivables to one of two wholly owned, bankruptcy-remote, special purpose entities that transfer an undivided percentage ownership interest in the receivables, but not the receivables themselves, to entities formed by third-party investors. These entities 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 most of 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 trusts. 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 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 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 10 for additional information on auto loan receivables and non-recourse notes payable. Auto Loan Receivables, Net. Auto loan receivables include amounts due from customers related to retail vehicle sales financed through CAF. The receivables 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, 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, and thus, are expensed as incurred. See Note 3 for additional information on CAF income. Property and Equipment. Property and equipment is stated at cost less accumulated depreciation and amortization of $901.6 million and $822.7 million as of November 30, 2015 and February 28, 2015, respectively. 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 is invested in money market securities and was $45.2 million as of November 30, 2015, and $42.7 million as of February 28, 2015. 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 totaled $63.3 million as of November 30, 2015, and $52.4 million as of February 28, 2015. Revenue Recognition. We recognize revenue when the earnings process is complete, generally either at the time of sale to a customer or upon delivery to a customer. As part of our customer service strategy, we guarantee the retail vehicles we sell with a 5‑day, money-back guarantee. We record a reserve for estimated returns based on historical experience and trends. We also sell ESP and GAP products on behalf of unrelated third parties, who are the primary obligors, to customers who purchase a vehicle. The ESPs we currently offer on all used vehicles provide coverage of up to 60 months (subject to mileage limitations), while GAP covers the customer for the term of their finance contract. We recognize commission revenue at the time of sale, net of a reserve for estimated contract cancellations. Periodically, we may receive additional commissions based upon the level of underwriting profits of the third parties who administer the products. These additional commissions are recognized as revenue when received. The reserve for cancellations is evaluated for each product, and is based on forecasted forward cancellation curves utilizing historical experience, recent trends and credit mix of the customer base. Our risk related to contract cancellations is limited to the commissions that we receive. Cancellations fluctuate depending on the volume of EPP sales, customer financing default or prepayment rates, and shifts in customer behavior, including those related to changes in the coverage or term of the product. The current portion of estimated cancellation reserves is recognized as a component of accrued expenses and other current liabilities with the remaining amount recognized in other liabilities. See Note 7 for additional information on cancellation reserves. Customers applying for financing who are not approved or are conditionally approved by CAF are generally evaluated by third-party finance providers. These providers generally either pay us or are paid a fixed, pre-negotiated fee per contract. We recognize these fees at the time of sale. We collect sales taxes and other taxes from customers on behalf of governmental authorities at the time of sale. These taxes are accounted for on a net basis and are not included in net sales and operating revenues or cost of sales. Derivative Instruments and Hedging Activities. We enter into derivative instruments to manage exposures that arise from business activities and economic conditions 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, and 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. Effective in Future Periods. In November 2015, the Financial Accounting Standards Board (“FASB”) issued an accounting pronouncement (FASB ASU 2015-17) which simplifies the balance sheet classification of deferred taxes. This pronouncement requires that all deferred tax assets and liabilities be classified as noncurrent in the classified balance sheet, rather than separating such deferred taxes into current and noncurrent amounts, as is required under current guidance. This pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2016, and may be applied either prospectively or retrospectively. This pronouncement would be effective for our fiscal year beginning March 1, 2017, but early adoption is permitted. We are currently in the process of evaluating the effects of this pronouncement on our consolidated financial statements, including potential early adoption. In January 2016, the FASB issued an accounting pronouncement (FASB ASU 2016-01) related to financial instruments (FASB ASC Subtopic 825-10). This pronouncement requires that most equity investments be measured at fair value, with subsequent changes in fair value recognized in net income. The pronouncement also impacts financial liabilities under the fair value option and the presentation and disclosure requirements for financial instruments. The pronouncement is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. We will adopt this pronouncement for our fiscal year beginning March 1, 2018, and are currently evaluating the effect on our consolidated financial statements. |
CarMax Auto Finance |
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CarMax Auto Finance Income [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CarMax Auto Finance | CarMax Auto Finance CAF provides financing to qualified retail customers purchasing vehicles at CarMax stores. CAF provides us the opportunity to capture additional profits, cash flows and sales while managing our reliance on third-party finance sources. Management regularly analyzes CAF's operating results by assessing profitability, the performance of the auto loan receivables including trends in credit losses and delinquencies, and CAF direct expenses. This information is used to assess CAF's performance and make operating decisions including resource allocation. We typically use securitizations to fund 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. Although CAF benefits from certain indirect overhead expenditures, we have not allocated indirect costs to CAF to avoid making subjective allocation decisions. Examples of indirect costs not allocated to CAF include retail store expenses and corporate expenses such as human resources, administrative services, marketing, information systems, accounting, legal, treasury and executive payroll. In addition, except for auto loan receivables, which are disclosed in Note 4, CAF assets are not separately reported nor do we allocate assets to CAF because such allocation would not be useful to management in making operating decisions. Components of CAF Income
(1) Annualized percentage of total average managed receivables. |
Auto Loan Receivables |
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Loans Receivable, Net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Auto Loan Receivables | Auto Loan Receivables Auto loan receivables include amounts due from customers related to retail vehicle sales financed through CAF and are presented net of an allowance for estimated loan losses. We generally use warehouse facilities to fund auto loan receivables originated by CAF until we elect to fund them through a term securitization or alternative funding arrangement. The majority of the auto loan receivables serve as collateral for the related non-recourse notes payable of $9.34 billion as of November 30, 2015 and $8.47 billion as of February 28, 2015. See Notes 2 and 10 for additional information on securitizations and non-recourse notes payable. Auto Loan Receivables, Net
(1) Other receivables includes receivables not funded through the warehouse facilities or term securitizations. Credit Quality. When customers apply for financing, CAF’s proprietary scoring models rely on the customers’ credit history and certain application information to evaluate and rank their risk. We obtain credit histories and other credit data that includes 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. The 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
(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
(1) Percent of total ending managed receivables. 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
(1) Percent of total ending managed receivables. |
Derivative Instruments And Hedging Activities |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments And Hedging Activities | Derivative Instruments and Hedging Activities Risk Management Objective of Using Derivatives. We use derivatives to manage certain risks arising from both our business operations and economic conditions, particularly with regard to future issuances of fixed-rate debt and existing issuances of floating-rate debt. Primary exposures include LIBOR and other rates used as benchmarks in our securitizations and other debt financing. We enter into derivative instruments to manage exposures related to 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 (i) 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, and (ii) exposure to variable interest rates associated with our term loan, as further discussed in Note 10. 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 on our derivative transactions by dealing with highly rated bank counterparties. Designated Cash Flow Hedges – Securitizations. Our objectives in using interest rate derivatives in conjunction with our securitization program are to add stability to CAF’s interest expense, to manage our exposure to interest rate movements and to better match funding costs to the interest received on the receivables being securitized. To accomplish these objectives, we primarily use interest rate swaps that 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 hedges of forecasted interest payments in anticipation of permanent funding in the term securitization market. For these derivatives, the effective portion of changes in the fair value is initially recorded in accumulated other comprehensive loss (“AOCL”). These amounts are subsequently reclassified into CAF income in the period that the hedged forecasted transaction affects earnings, which occurs as interest expense is recognized on those future issuances of fixed-rate debt. During the next 12 months, we estimate that an additional $7.2 million will be reclassified from AOCL as a decrease to CAF income. In addition, we have issued floating rate notes in connection with some of our term securitizations. To manage our exposure to interest rate movements, we have entered into interest rate swaps that involve the receipt of variable amounts from a counterparty in exchange for making fixed-rate payments over the estimated life of the note. The effective portion of the change in fair value for these derivatives is recorded in AOCL. Any ineffective portion of these derivatives is recognized directly in CAF income. Designated Cash Flow Hedge – Other Debt. Our objective in using an interest rate derivative for our term loan is to manage our exposure to interest rate movements. To accomplish this objective, we use an interest rate swap that involves the receipt of variable amounts from a counterparty in exchange for our making fixed-rate payments without exchange of the underlying notional amount. The effective portion of the change in fair value for this derivative is recorded in AOCL. Any ineffective portion of the change in fair value is recognized in current income. Fair Values of Derivative Instruments
(1) Reported in other current assets on the consolidated balance sheets. (2) Reported in accounts payable on the consolidated balance sheets. As of November 30, 2015 and February 28, 2015, we had interest rate swaps outstanding with a combined notional amount of $2.30 billion and $1.40 billion, respectively, that were designated as cash flow hedges of interest rate risk. Effect of Derivative Instruments on Comprehensive Income
(1) Represents the effective portion. (2) Represents the ineffective portion. |
Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | 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.
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 cash and cash equivalents, restricted cash from collections on auto loan receivables or other assets. They 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 established to fund 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 as well as to manage exposure to variable interest rates on our term loan. 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. Quotes from third-party valuation services and quotes received from bank counterparties 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. The models do not require significant judgment and model inputs can typically be observed in a liquid market; however, because the models include inputs other than quoted prices in active markets, all 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
There were no transfers between Levels 1 and 2 for the three and nine months ended November 30, 2015. |
Cancellation Reserves |
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Cancellation Reserves | Cancellation Reserves We recognize commission revenue for EPP products at the time of sale, net of a reserve for estimated contract cancellations. Cancellations of these services may result from early termination by the customer, or default or prepayment on the finance contract. The reserve for cancellations is evaluated for each product, and is based on forecasted forward cancellation curves utilizing historical experience, recent trends and credit mix of the customer base. Cancellation Reserves
The current portion of estimated cancellation reserves is recognized as a component of accrued expenses and other current liabilities with the remaining amount recognized in other liabilities. As of November 30, 2015 and February 28, 2015, the current portion of cancellation reserves was $53.1 million and $44.8 million, respectively. |
Income Taxes |
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Nov. 30, 2015 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes We had $27.5 million of gross unrecognized tax benefits as of November 30, 2015, and $25.0 million as of February 28, 2015. There were no significant changes to the gross unrecognized tax benefits as reported for the year ended February 28, 2015, as all activity was related to positions taken on tax returns filed or intended to be filed in the current fiscal year. |
Retirement Plans |
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Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Plans | Retirement Plans Effective December 31, 2008, we froze both of our noncontributory defined benefit plans: our pension plan (the “pension plan”) and our unfunded, nonqualified plan (the “restoration plan”), which restores retirement benefits for certain associates who are affected by Internal Revenue Code limitations on benefits provided under the pension plan. No additional benefits have accrued under these plans since that date. In connection with benefits earned prior to December 31, 2008, we have a continuing obligation to fund the pension plan and will continue to recognize net periodic pension expense for both plans. We use a fiscal year end measurement date for both the pension plan and the restoration plan. Components of Net Pension Expense
We made no contributions to the pension plan during the nine months ended November 30, 2015, and do not anticipate making any contributions during the remainder of fiscal 2016. The expected long-term rate of return on plan assets for the pension plan was 7.75% as of February 28, 2015. |
Debt |
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Debt | Debt
Revolving Credit Facility. We have a $1.2 billion unsecured revolving credit facility (the “credit facility”) with various financial institutions that expires in August 2020. Borrowings under the credit facility are available for working capital and general corporate purposes. Borrowings accrue interest at variable rates based on LIBOR, the federal funds rate, or the prime rate, depending on the type of borrowing, and we pay a commitment fee on the unused portions of the available funds. Borrowings under the credit facility are either due "on demand" or at maturity depending on the type of borrowing. Borrowings with "on demand" repayment terms are presented as short-term debt while amounts due at maturity are presented as long-term debt with expected repayments within the next twelve months presented as a component of current portion of long-term debt. Outstanding borrowings of $564.0 million at November 30, 2015 are classified as long-term debt as no repayments are scheduled to be made within the next twelve months. However, conditions may change and we may elect to make payments. As of November 30, 2015, the unused capacity of $636.0 million was fully available to us. Term Loan. We have a $300 million term loan that expires in August 2020. The term loan accrues interest at variable rates based on the LIBOR rate, the federal funds rate, or the prime rate. As of November 30, 2015, $300 million remained outstanding and was classified as long-term debt as no repayments are scheduled to be made within the next 12 months. Borrowings under the term loan are available for working capital and general corporate purposes. We have entered into an interest rate derivative contract to manage our exposure to variable interest rates associated with this term loan. Finance and Capital Lease Obligations. Finance and capital lease obligations relate primarily to stores subject to sale-leaseback transactions that did not qualify for sale accounting, and therefore, are accounted for as financings. The leases were structured at varying interest rates and generally have initial lease terms ranging from 15 to 20 years with payments made monthly. Payments on the leases are recognized as interest expense and a reduction of the obligations. We have not entered into any new sale-leaseback transactions since fiscal 2009. During fiscal 2016, finance lease obligations were increased by $92.0 million related to leases that were modified or extended beyond the original lease term. Non-Recourse Notes Payable. The non-recourse notes payable relate to auto loan receivables funded through term securitizations and our warehouse facilities. The timing of principal payments on the non-recourse notes payable is based on the timing of principal collections and defaults on the securitized auto loan receivables. The current portion of non-recourse notes payable represents principal payments that are due to be distributed in the following period. As of November 30, 2015, $7.94 billion of non-recourse notes payable was outstanding related to term securitizations. These notes payable accrue interest predominantly at fixed rates and have scheduled maturities through May 2022, but may mature earlier, depending upon the repayment rate of the underlying auto loan receivables. As of November 30, 2015, $1.39 billion of non-recourse notes payable was outstanding related to our warehouse facilities. During the first nine months of fiscal 2016, we increased the combined limit of our warehouse facilities by $200 million to $2.5 billion. As of November 30, 2015, the unused warehouse capacity totaled $1.11 billion. Of the combined warehouse facility limit, $1.5 billion will expire in February 2016 and $1.0 billion will expire in August 2016. The return requirements of warehouse facility investors could fluctuate significantly depending on market conditions. At renewal, the cost, structure and capacity of the facilities could change. These changes could have a significant impact on our funding costs. See Notes 2 and 4 for additional information on the related securitized auto loan receivables. Capitalized Interest. We capitalize interest in connection with the construction of certain facilities. We capitalized interest of $7.6 million in the first nine months of fiscal 2016; no interest was capitalized in the first nine months of fiscal 2015. Financial Covenants. The credit facility and term loan agreements contain representations and warranties, conditions and covenants. We must also meet financial covenants in conjunction with certain of the sale-leaseback transactions. Our securitization agreements contain representations and warranties, financial covenants and performance triggers. As of November 30, 2015, we were in compliance with all financial covenants and our securitized receivables were in compliance with the related performance triggers. |
Stock And Stock-Based Incentive Plans |
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Share-based Compensation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock And Stock-Based Incentive Plans | Stock and Stock-Based Incentive Plans (A) Share Repurchase Program In fiscal 2013, our board of directors authorized the repurchase of up to $800 million of our common stock which was exhausted in fiscal 2015. In fiscal 2015, our board of directors authorized the repurchase of up to an additional $3 billion of our common stock of which $1 billion was exhausted during the quarter ended August 31, 2015, and $2 billion expires on December 31, 2016. Common Stock Repurchases
(B) Stock Incentive Plans We maintain long-term incentive plans for management, key employees and the nonemployee members of our board of directors. The plans allow for the granting of equity-based compensation awards, including nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock awards, stock- and cash-settled restricted stock units, stock grants or a combination of awards. To date, we have not awarded any incentive stock options. The majority of associates who receive share-based compensation awards primarily receive cash-settled restricted stock units. Senior management and other key associates receive awards of nonqualified stock options, stock-settled restricted stock units and stock-settled performance stock units. Nonemployee directors receive awards of nonqualified stock options, stock grants and/or restricted stock awards. Excluding stock grants, all share-based compensation awards, including any associated dividend rights, are subject to forfeiture. Nonqualified Stock Options. Nonqualified stock options are awards that allow the recipient to purchase shares of our common stock at a fixed price. Stock options are granted at an exercise price equal to the fair market value of our common stock on the grant date. The stock options generally vest annually in equal amounts over periods of one to four years. These options expire no later than ten years after the date of the grant. Cash-Settled Restricted Stock Units. Also referred to as restricted stock units, or RSUs, these are restricted stock unit awards that entitle the holder to a cash payment equal to the fair market value of a share of our common stock for each unit granted. Conversion generally occurs at the end of a three-year vesting period. However, the cash payment per RSU will not be greater than 200% or less than 75% of the fair market value of a share of our common stock on the grant date. RSUs are liability awards and do not have voting rights. Stock-Settled Market Stock Units. Also referred to as market stock units, or MSUs, these are restricted stock unit awards with market conditions granted to eligible key associates that are converted into between zero and two shares of common stock for each unit granted. Conversion generally occurs at the end of a three-year vesting period. The conversion ratio is calculated by dividing the average closing price of our stock during the final 40 trading days of the three-year vesting period by our stock price on the grant date, with the resulting quotient capped at two. This quotient is then multiplied by the number of MSUs granted to yield the number of shares awarded. MSUs do not have voting rights. Stock-Settled Performance Stock Units. Also referred to as performance stock units, or PSUs, these are restricted stock unit awards with performance conditions granted to eligible key associates that are converted into between zero and two shares of common stock for each unit granted. Conversion generally occurs at the end of a three-year vesting period. The conversion ratio is based on the company reaching certain target levels set by the board of directors for cumulative three-year earnings before interest and taxes at the end of the three-year vesting period, with the resulting quotient subject to meeting a minimum 25% threshold and capped at 200%. This quotient is then multiplied by the number of PSUs granted to yield the number of shares awarded. PSUs do not have voting rights. Restricted Stock Awards. Restricted stock awards (RSAs) are awards of our common stock that are subject to specified restrictions that generally lapse after a one year period from date of grant. Participants holding restricted stock are entitled to vote on matters submitted to holders of our common stock for a vote. (C) Share-Based Compensation Composition of Share-Based Compensation Expense
Composition of Share-Based Compensation Expense – By Grant Type
We recognize compensation expense for stock options, MSUs, PSUs and RSAs on a straight-line basis (net of estimated forfeitures) over the requisite service period, which is generally the vesting period of the award. The PSU expense is adjusted for any change in management’s assessment of the performance target level that is probable of being achieved. The variable expense associated with RSUs is recognized over their vesting period (net of estimated forfeitures) and is calculated based on the volume-weighted average price of our common stock on the last trading day of each reporting period. The total costs for matching contributions for our employee stock purchase plan are included in share-based compensation expense. There were no capitalized share-based compensation costs as of or for the nine months ended November 30, 2015 or 2014. Stock Option Activity
During the nine months ended November 30, 2015 and 2014, we granted nonqualified options to purchase 1,390,948 and 2,050,919 shares of common stock, respectively. The total cash received as a result of stock option exercises for the nine months ended November 30, 2015 and 2014, was $44.9 million and $54.3 million, respectively. We settle stock option exercises with authorized but unissued shares of our common stock. The total intrinsic value of options exercised for the nine months ended November 30, 2015 and 2014, was $67.0 million and $99.9 million, respectively. We realized related tax benefits of $26.8 million and $40.2 million during the nine months ended November 30, 2015 and 2014, respectively. Outstanding Stock Options
For stock options, the fair value of each award is estimated as of the date of grant using a binomial valuation model. In computing the value of the option, the binomial model considers characteristics of fair-value option pricing that are not available for consideration under a closed-form valuation model (for example, the Black-Scholes model), such as the contractual term of the option, the probability that the option will be exercised prior to the end of its contractual life and the probability of termination or retirement of the option holder. For this reason, we believe that the binomial model provides a fair value that is more representative of actual experience and future expected experience than the value calculated using a closed-form model. Estimates of fair value are not intended to predict actual future events or the value ultimately realized by the recipients of share-based awards. The weighted average fair value per share at the date of grant for options granted during the nine months ended November 30, 2015 and 2014, was $20.59 and $13.25, respectively. The unrecognized compensation costs related to nonvested options totaled $39.3 million as of November 30, 2015. These costs are expected to be recognized on a straight-line basis over a weighted average period of 2.2 years. Assumptions Used to Estimate Option Values
(2) Based on the U.S. Treasury yield curve at the time of grant. (3) Represents the estimated number of years that options will be outstanding prior to exercise. Cash-Settled Restricted Stock Unit Activity
During the nine months ended November 30, 2015 and 2014, we granted 418,281 and 587,990 RSUs, respectively. The initial fair market value per RSU at the date of grant for the RSUs granted during the nine months ended November 30, 2015 and 2014, was $73.76 and $44.96, respectively. The RSUs are cash-settled upon vesting. During the nine months ended November 30, 2015 and 2014, we paid $33.2 million and $21.6 million, respectively (before payroll tax withholdings), to RSU holders upon the vesting of RSUs. We realized tax benefits of $13.3 million and $8.7 million during the nine months ended November 30, 2015 and 2014, respectively. Expected Cash Settlement Range Upon Restricted Stock Unit Vesting
(1) Net of estimated forfeitures. Stock-Settled Market Stock Unit Activity
During the nine months ended November 30, 2015 and 2014, we granted 107,274 and 249,291 MSUs, respectively. The weighted average fair value per MSU at the date of grant during the nine months ended November 30, 2015 and 2014, was $90.31 and $55.42, respectively. The fair values were determined using a Monte-Carlo simulation and were based on the expected market price of our common stock on the vesting date and the expected number of converted common shares. We realized related tax benefits of $17.1 million and $7.5 million for the nine months ended November 30, 2015 and 2014, respectively, from the vesting of market stock units. The unrecognized compensation costs related to nonvested MSUs totaled $14.1 million as of November 30, 2015. These costs are expected to be recognized on a straight-line basis over a weighted average period of 1.1 years. Stock-Settled Performance Stock Unit Activity
During the nine months ended November 30, 2015, we granted 66,446 PSUs. No PSUs were granted in fiscal 2015. The weighted average fair value per PSU at the date of grant for PSUs granted during the nine months ended November 30, 2015, was $72.58. The fair value was the fair market value of a share of common stock on the date of the grant. The unrecognized compensation costs related to nonvested PSUs totaled $3.2 million as of November 30, 2015. These costs are expected to be recognized on a straight-line basis over a weighted average period of 2.4 years. Restricted Stock Awards
During the nine months ended November 30, 2015 and 2014, we granted 19,070 and 22,860 shares of RSAs, respectively. The fair value per RSA at the grant date for RSAs granted during the nine months ended November 30, 2015 and 2014, was $68.16 and $51.18, respectively. We realized related tax benefits of $0.7 million for the nine months ended November 30, 2015. No shares vested during fiscal 2015. The unrecognized compensation costs related to nonvested RSAs totaled $0.2 million as of November 30, 2015. These costs are expected to be recognized on a straight-line basis over a weighted average period of 0.6 years. |
Net Earnings Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Earnings Per Share | Net Earnings per Share Basic net earnings per share is computed by dividing net earnings available for basic common shares by the weighted average number of shares of common stock outstanding. Diluted net earnings per share is computed by dividing net earnings available for diluted common shares by the sum of weighted average number of shares of common stock outstanding and dilutive potential common stock. Diluted net earnings per share is calculated using the “if-converted” treasury stock method. Basic and Dilutive Net Earnings Per Share Reconciliations
Certain options to purchase shares of common stock were outstanding and not included in the calculation of diluted net earnings per share because their inclusion would have been antidilutive. On a weighted average basis, for the three months ended November 30, 2015 and 2014, options to purchase 1,383,861 shares and 1,707,581 shares of common stock, respectively, were not included. For the nine months ended November 30, 2015 and 2014, weighted average options to purchase 1,195,011 shares and 2,617,453 shares, respectively, were not included. |
Accumulated Other Comprehensive Loss |
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Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss Changes in Accumulated Other Comprehensive Loss by Component
Changes In and Reclassifications Out of Accumulated Other Comprehensive Loss
Changes in the funded status of our retirement plans and the effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are recognized in accumulated other comprehensive loss. The cumulative balances are net of deferred taxes of $39.9 million as of November 30, 2015, and $39.0 million as of February 28, 2015. |
Contingent Liabilities |
9 Months Ended |
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Nov. 30, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingent Liabilities | Contingent Liabilities Litigation. On April 2, 2008, Mr. John Fowler filed a putative class action lawsuit against CarMax Auto Superstores California, LLC and CarMax Auto Superstores West Coast, Inc. in the Superior Court of California, County of Los Angeles. Subsequently, two other lawsuits, Leena Areso et al. v. CarMax Auto Superstores California, LLC and Justin Weaver v. CarMax Auto Superstores California, LLC, were consolidated as part of the Fowler case. The allegations in the consolidated case involved: (1) failure to provide meal and rest breaks or compensation in lieu thereof; (2) failure to pay wages of terminated or resigned employees related to meal and rest breaks and overtime; (3) failure to pay overtime; (4) failure to comply with itemized employee wage statement provisions; (5) unfair competition; and (6) California’s Labor Code Private Attorney General Act. The putative class consisted of sales consultants, sales managers, and other hourly employees who worked for the company in California from April 2, 2004, to the present. On May 12, 2009, the court dismissed all of the class claims with respect to the sales manager putative class. On June 16, 2009, the court dismissed all claims related to the failure to comply with the itemized employee wage statement provisions. The court also granted CarMax’s motion for summary adjudication with regard to CarMax’s alleged failure to pay overtime to the sales consultant putative class. The claims currently remaining in the lawsuit regarding the sales consultant putative class are: (1) failure to provide meal and rest breaks or compensation in lieu thereof; (2) failure to pay wages of terminated or resigned employees related to meal and rest breaks; (3) unfair competition; and (4) California’s Labor Code Private Attorney General Act. On November 21, 2011, the court granted CarMax’s motion to compel the plaintiffs’ remaining claims into arbitration on an individual basis. The plaintiffs appealed the court’s ruling and on March 26, 2013, the California Court of Appeal reversed the trial court's order granting CarMax's motion to compel arbitration. On October 8, 2013, CarMax filed a petition for a writ of certiorari seeking review in the United States Supreme Court. On February 24, 2014, the United States Supreme Court granted CarMax's petition for certiorari, vacated the California Court of Appeal decision and remanded the case to the California Court of Appeal for further consideration. The California Court of Appeal determined that the plaintiffs’ Labor Code Private Attorney General Act claim is not subject to arbitration, but the remaining claims are subject to arbitration on an individual basis. CarMax appealed this decision with respect to the Private Attorney General Act claim on March 9, 2015 by filing a petition for review with the California Supreme Court. On April 22, 2015, the California Supreme Court denied the petition for review. On August 20, 2015, CarMax filed a petition for a writ of certiorari seeking review in the United States Supreme Court, which was denied. Therefore, the Private Attorney General Act claim may proceed in the California state court. The Fowler lawsuit seeks compensatory and special damages, wages, interest, civil and statutory penalties, restitution, injunctive relief and the recovery of attorneys’ fees. We are unable to make a reasonable estimate of the amount or range of loss that could result from an unfavorable outcome in this matter. We are involved in various other legal proceedings in the normal course of business. Based upon our evaluation of information currently available, we believe that the ultimate resolution of any such proceedings will not have a material adverse effect, either individually or in the aggregate, on our financial condition, results of operations or cash flows. Other Matters. In accordance with the terms of real estate lease agreements, we generally agree to indemnify the lessor from certain liabilities arising as a result of the use of the leased premises, including environmental liabilities and repairs to leased property upon termination of the lease. Additionally, in accordance with the terms of agreements entered into for the sale of properties, we generally agree to indemnify the buyer from certain liabilities and costs arising subsequent to the date of the sale, including environmental liabilities and liabilities resulting from the breach of representations or warranties made in accordance with the agreements. We do not have any known material environmental commitments, contingencies or other indemnification issues arising from these arrangements. As part of our customer service strategy, we guarantee the used vehicles we retail with at least a 30-day limited warranty. A vehicle in need of repair within this period will be repaired free of charge. As a result, each vehicle sold has an implied liability associated with it. Accordingly, based on historical trends, we record a provision for estimated future repairs during the guarantee period for each vehicle sold. The liability for this guarantee was $4.8 million as of November 30, 2015, and $6.2 million as of February 28, 2015, and is included in accrued expenses and other current liabilities. |
Accounting Policies (Policy) |
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Nov. 30, 2015 | |
Accounting Policies [Abstract] | |
Basis of Presentation | 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 28, 2015. |
Use Of Estimates | 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 and Cash Equivalents. Cash equivalents of $78,000 as of November 30, 2015, and $48,000 as of February 28, 2015, consisted of highly liquid investments with original maturities of three months or less. |
Restricted Cash from Collections on Auto Loan Receivables | Restricted Cash from Collections on Auto Loan Receivables. Cash equivalents totaling $316.2 million as of November 30, 2015, and $294.1 million as of February 28, 2015, consisted of collections of principal, interest and fee payments on securitized auto loan receivables that are restricted for payment to the securitization investors pursuant to the applicable securitization agreements. |
Securitizations | 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 we elect to fund them through a term securitization or alternative funding arrangement. We sell the auto loan receivables to one of two wholly owned, bankruptcy-remote, special purpose entities that transfer an undivided percentage ownership interest in the receivables, but not the receivables themselves, to entities formed by third-party investors. These entities 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 most of 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 trusts. 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 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 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 10 for additional information on auto loan receivables and non-recourse notes payable. |
Auto Loan Receivables, Net | Auto Loan Receivables, Net. Auto loan receivables include amounts due from customers related to retail vehicle sales financed through CAF. The receivables 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, 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, and thus, are expensed as incurred. See Note 3 for additional information on CAF income. |
Property And Equipment | Property and Equipment. Property and equipment is stated at cost less accumulated depreciation and amortization of $901.6 million and $822.7 million as of November 30, 2015 and February 28, 2015, respectively. |
Other Assets | 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 is invested in money market securities and was $45.2 million as of November 30, 2015, and $42.7 million as of February 28, 2015. 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 totaled $63.3 million as of November 30, 2015, and $52.4 million as of February 28, 2015. |
Revenue Recognition | Revenue Recognition. We recognize revenue when the earnings process is complete, generally either at the time of sale to a customer or upon delivery to a customer. As part of our customer service strategy, we guarantee the retail vehicles we sell with a 5‑day, money-back guarantee. We record a reserve for estimated returns based on historical experience and trends. We also sell ESP and GAP products on behalf of unrelated third parties, who are the primary obligors, to customers who purchase a vehicle. The ESPs we currently offer on all used vehicles provide coverage of up to 60 months (subject to mileage limitations), while GAP covers the customer for the term of their finance contract. We recognize commission revenue at the time of sale, net of a reserve for estimated contract cancellations. Periodically, we may receive additional commissions based upon the level of underwriting profits of the third parties who administer the products. These additional commissions are recognized as revenue when received. The reserve for cancellations is evaluated for each product, and is based on forecasted forward cancellation curves utilizing historical experience, recent trends and credit mix of the customer base. Our risk related to contract cancellations is limited to the commissions that we receive. Cancellations fluctuate depending on the volume of EPP sales, customer financing default or prepayment rates, and shifts in customer behavior, including those related to changes in the coverage or term of the product. The current portion of estimated cancellation reserves is recognized as a component of accrued expenses and other current liabilities with the remaining amount recognized in other liabilities. See Note 7 for additional information on cancellation reserves. Customers applying for financing who are not approved or are conditionally approved by CAF are generally evaluated by third-party finance providers. These providers generally either pay us or are paid a fixed, pre-negotiated fee per contract. We recognize these fees at the time of sale. We collect sales taxes and other taxes from customers on behalf of governmental authorities at the time of sale. These taxes are accounted for on a net basis and are not included in net sales and operating revenues or cost of sales. |
Derivative Instruments And Hedging Activities | Derivative Instruments and Hedging Activities. We enter into derivative instruments to manage exposures that arise from business activities and economic conditions 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, and 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 | Recent Accounting Pronouncements. Effective in Future Periods. In November 2015, the Financial Accounting Standards Board (“FASB”) issued an accounting pronouncement (FASB ASU 2015-17) which simplifies the balance sheet classification of deferred taxes. This pronouncement requires that all deferred tax assets and liabilities be classified as noncurrent in the classified balance sheet, rather than separating such deferred taxes into current and noncurrent amounts, as is required under current guidance. This pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2016, and may be applied either prospectively or retrospectively. This pronouncement would be effective for our fiscal year beginning March 1, 2017, but early adoption is permitted. We are currently in the process of evaluating the effects of this pronouncement on our consolidated financial statements, including potential early adoption. In January 2016, the FASB issued an accounting pronouncement (FASB ASU 2016-01) related to financial instruments (FASB ASC Subtopic 825-10). This pronouncement requires that most equity investments be measured at fair value, with subsequent changes in fair value recognized in net income. The pronouncement also impacts financial liabilities under the fair value option and the presentation and disclosure requirements for financial instruments. The pronouncement is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. We will adopt this pronouncement for our fiscal year beginning March 1, 2018, and are currently evaluating the effect on our consolidated financial statements. |
CarMax Auto Finance (Tables) |
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CarMax Auto Finance Income [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components Of CarMax Auto Finance Income | Components of CAF Income
(1) Annualized percentage of total average managed receivables. |
Auto Loan Receivables (Tables) |
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Loans Receivable, Net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Auto Loan Receivables, Net | Auto Loan Receivables, Net
(1) Other receivables includes receivables not funded through the warehouse facilities or term securitizations. |
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Ending Managed Receivables By Major Credit Grade | Ending Managed Receivables by Major Credit Grade
(1) Classified based on credit grade assigned when customers were initially approved for financing. (2) Percent of total ending managed receivables. |
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Allowance For Loan Losses | Allowance for Loan Losses
(1) Percent of total ending managed receivables. |
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Past Due Receivables | Past Due Receivables
(1) Percent of total ending managed receivables. |
Derivative Instruments And Hedging Activities (Tables) |
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Fair Values Of Derivative Instruments On The Consolidated Balance Sheets | Fair Values of Derivative Instruments
(1) Reported in other current assets on the consolidated balance sheets. (2) Reported in accounts payable on the consolidated balance sheets. |
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Schedule Of Effect Of Derivative Instruments On Comprehensive Income | Effect of Derivative Instruments on Comprehensive Income
(1) Represents the effective portion. (2) Represents the ineffective portion. |
Fair Value Measurements (Tables) |
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Schedule Of Items Measured At Fair Value On A Recurring Basis | Items Measured at Fair Value on a Recurring Basis
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Cancellation Reserves (Tables) |
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Schedule Of Cancellation Reserves Accrual | Cancellation Reserves
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Retirement Plans (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Nov. 30, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components Of Net Pension Expense | Components of Net Pension Expense
|
Debt (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Nov. 30, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Debt | Debt
|
Stock And Stock-Based Incentive Plans (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Nov. 30, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Composition Of Share-Based Compensation Expense | Composition of Share-Based Compensation Expense
|
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Composition Of Share-Based Compensation Expense - By Grant Type | Composition of Share-Based Compensation Expense – By Grant Type
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Share Repurchase Program | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Common Stock Repurchases | Common Stock Repurchases
|
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Stock Option | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Option Activity | Stock Option Activity
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Outstanding Stock Options | Outstanding Stock Options
|
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Assumptions Used To Estimate Option Values | Assumptions Used to Estimate Option Values
(2) Based on the U.S. Treasury yield curve at the time of grant. (3) Represents the estimated number of years that options will be outstanding prior to exercise. |
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Cash-Settled Restricted Stock Unit | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted Stock Awards And Restricted Stock Unit Activity | Cash-Settled Restricted Stock Unit Activity
|
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Expected Cash Settlement Range Upon Restricted Stock Unit Vesting | Expected Cash Settlement Range Upon Restricted Stock Unit Vesting
(1) Net of estimated forfeitures. |
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Stock-settled market stock units | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted Stock Awards And Restricted Stock Unit Activity | Stock-Settled Market Stock Unit Activity
|
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Stock-settled performance stock units | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Stock Settled Performance Stock Unit Activity | Stock-Settled Performance Stock Unit Activity
|
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Restricted stock awards to non-employee directors | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted Stock Awards | Restricted Stock Awards
|
Net Earnings Per Share (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Nov. 30, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basic And Dilutive Net Earnings Per Share Reconciliations | Basic and Dilutive Net Earnings Per Share Reconciliations
|
Accumulated Other Comprehensive Loss (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes In Accumulated Other Comprehensive Loss By Component | Changes in Accumulated Other Comprehensive Loss by Component
|
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Changes In And Reclassifications Out Of Accumulated Other Comprehensive Loss | Changes In and Reclassifications Out of Accumulated Other Comprehensive Loss
|
Background Background (Narrative) (Details) |
9 Months Ended |
---|---|
Nov. 30, 2015
segment
| |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Reportable segments | 2 |
New car locations | 2 |
Accounting Policies (Narrative) (Details) $ in Thousands |
9 Months Ended | |
---|---|---|
Nov. 30, 2015
USD ($)
warehouse
|
Feb. 28, 2015
USD ($)
|
|
Accounting Policies [Abstract] | ||
Cash equivalents | $ 78 | $ 48 |
Restricted cash from collections on auto loan receivables | $ 316,186 | 294,122 |
Number of warehouses | warehouse | 2 | |
Required benchmark for account delinquency | 120 days | |
Accumulated depreciation and amortization | $ 901,600 | 822,700 |
Restricted cash on deposit in reserve accounts | 45,200 | 42,700 |
Restricted investments | $ 63,300 | $ 52,400 |
Auto Loan Receivables (Auto Loan Receivables, Net) (Details) - USD ($) $ in Thousands |
Nov. 30, 2015 |
Aug. 31, 2015 |
Feb. 28, 2015 |
Nov. 30, 2014 |
Aug. 31, 2014 |
Feb. 28, 2014 |
---|---|---|---|---|---|---|
Non-recourse notes payable | $ 9,340,000 | $ 8,470,000 | ||||
Total ending managed receivables | 9,371,500 | 8,458,700 | ||||
Accrued interest and fees | 37,400 | 31,200 | ||||
Other | 300 | 27,300 | ||||
Less allowance for loan losses | (90,900) | $ (87,800) | (81,700) | $ (80,400) | $ (77,800) | $ (69,900) |
Auto loan receivables, net | 9,318,313 | 8,435,504 | ||||
Warehouse facilities | ||||||
Total ending managed receivables | 1,391,000 | 986,000 | ||||
Term securitizations | ||||||
Total ending managed receivables | 7,669,100 | 7,226,500 | ||||
Other receivables | ||||||
Total ending managed receivables | $ 311,400 | $ 246,200 |
Auto Loan Receivables (Ending Managed Receivables By Major Credit Grade) (Details) - USD ($) $ in Millions |
Nov. 30, 2015 |
Feb. 28, 2015 |
---|---|---|
Financing Receivable, By Major Credit Grade [Line Items] | ||
Total ending managed receivables | $ 9,371.5 | $ 8,458.7 |
Total ending managed receivables as percentage by major credit grade | 100.00% | 100.00% |
Credit Grade A | ||
Financing Receivable, By Major Credit Grade [Line Items] | ||
Total ending managed receivables | $ 4,553.9 | $ 4,135.6 |
Total ending managed receivables as percentage by major credit grade | 48.60% | 48.90% |
Credit Grade B | ||
Financing Receivable, By Major Credit Grade [Line Items] | ||
Total ending managed receivables | $ 3,340.1 | $ 3,055.3 |
Total ending managed receivables as percentage by major credit grade | 35.60% | 36.10% |
Credit Grade C And Other | ||
Financing Receivable, By Major Credit Grade [Line Items] | ||
Total ending managed receivables | $ 1,477.5 | $ 1,267.8 |
Total ending managed receivables as percentage by major credit grade | 15.80% | 15.00% |
Auto Loan Receivables (Allowance For Loan Losses) (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Nov. 30, 2015 |
Nov. 30, 2014 |
Nov. 30, 2015 |
Nov. 30, 2014 |
|
Financing Receivable, Allowance for Credit Losses [Line Items] | ||||
Balance as of beginning of period | $ 87.8 | $ 77.8 | $ 81.7 | $ 69.9 |
Charge-offs | (51.9) | (43.8) | (128.7) | (112.7) |
Recoveries | 24.1 | 22.3 | 67.7 | 62.9 |
Provision for loan losses | 30.9 | 24.1 | 70.2 | 60.3 |
Balance as of end of period | $ 90.9 | $ 80.4 | $ 90.9 | $ 80.4 |
Allowance For Loan Losses, percent | ||||
Financing Receivable, Allowance for Credit Losses [Line Items] | ||||
Item as percent of total ending managed receivables, balance as of beginning of period | 0.96% | 0.99% | 0.97% | 0.97% |
Item as percent of total ending managed receivables, balance as of end of period | 0.97% | 0.98% | 0.97% | 0.98% |
Derivative Instruments And Hedging Activities (Narrative) (Details) - Designated As Hedging Instrument - Interest Rate Swaps - Cash Flow Hedging - USD ($) $ in Millions |
9 Months Ended | |
---|---|---|
Nov. 30, 2015 |
Feb. 28, 2015 |
|
Derivative [Line Items] | ||
Additional reclassification as decrease from AOCL to CAF income within the next 12 months | $ 7.2 | |
Derivative notional amount | $ 2,300.0 | $ 1,400.0 |
Derivative Instruments And Hedging Activities (Fair Values Of Derivative Instruments On The Consolidated Balance Sheets) (Details) - Designated As Hedging Instrument - Interest Rate Swaps - USD ($) $ in Thousands |
Nov. 30, 2015 |
Feb. 28, 2015 |
---|---|---|
Other Current Assets | ||
Derivatives, Fair Value [Line Items] | ||
Assets | $ 1,625 | $ 1,201 |
Accounts Payable | ||
Derivatives, Fair Value [Line Items] | ||
Liabilities | $ (1,632) | $ (1,064) |
Derivative Instruments And Hedging Activities (Schedule Of Effect Of Derivative Instruments On Comprehensive Income) (Details) - Designated As Hedging Instrument - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Nov. 30, 2015 |
Nov. 30, 2014 |
Nov. 30, 2015 |
Nov. 30, 2014 |
|
Derivative [Line Items] | ||||
Loss recognized in AOCL | $ (3,325) | $ (4,525) | $ (9,596) | $ (6,594) |
Loss reclassified from AOCL into CAF Income | (1,944) | (1,881) | (5,902) | (6,220) |
Loss recognized in CAF Income | $ (336) | $ 0 | $ (438) | $ 0 |
Cancellation Reserves (Narrative) (Details) - USD ($) $ in Millions |
9 Months Ended | |
---|---|---|
Nov. 30, 2015 |
Nov. 30, 2014 |
|
Cancellation Reserves [Abstract] | ||
Cancellation reserves, current portion | $ 53.1 | $ 44.8 |
Cancellation Reserves (Schedule Of Cancellation Reserves Accrual) (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Nov. 30, 2015 |
Nov. 30, 2014 |
Nov. 30, 2015 |
Nov. 30, 2014 |
|
Cancellation Reserves [Abstract] | ||||
Balance as of beginning of period | $ 108.1 | $ 86.0 | $ 94.4 | $ 72.5 |
Cancellations | (16.9) | (12.4) | (45.6) | (37.4) |
Provision for future cancellations | 18.6 | 15.3 | 61.0 | 53.8 |
Balance as of end of period | $ 109.8 | $ 88.9 | $ 109.8 | $ 88.9 |
Income Taxes (Narrative) (Details) - USD ($) $ in Millions |
Nov. 30, 2015 |
Feb. 28, 2015 |
---|---|---|
Income Tax Disclosure [Abstract] | ||
Unrecognized tax benefits, gross | $ 27.5 | $ 25.0 |
Retirement Plans (Narrative) (Details) - USD ($) |
9 Months Ended | 12 Months Ended |
---|---|---|
Nov. 30, 2015 |
Feb. 28, 2015 |
|
Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract] | ||
Contributions to pension plan | $ 0 | |
Anticipated contribution during remainder of fiscal year | $ 0 | |
Expected rate of return on plan assets | 7.75% |
Retirement Plans (Components Of Net Pension Expense) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Nov. 30, 2015 |
Nov. 30, 2014 |
Nov. 30, 2015 |
Nov. 30, 2014 |
|
Defined Benefit Plan Disclosure [Line Items] | ||||
Interest cost | $ 2,275 | $ 2,121 | $ 6,827 | $ 6,363 |
Expected return on plan assets | (2,463) | (2,257) | (7,392) | (6,771) |
Recognized actuarial loss | 514 | 340 | 1,543 | 1,020 |
Net pension expense | 326 | 204 | 978 | 612 |
Pension Plan | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Interest cost | 2,168 | 2,008 | 6,504 | 6,024 |
Expected return on plan assets | (2,463) | (2,257) | (7,392) | (6,771) |
Recognized actuarial loss | 507 | 340 | 1,524 | 1,020 |
Net pension expense | 212 | 91 | 636 | 273 |
Restoration Plan | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Interest cost | 107 | 113 | 323 | 339 |
Expected return on plan assets | 0 | 0 | 0 | 0 |
Recognized actuarial loss | 7 | 0 | 19 | 0 |
Net pension expense | $ 114 | $ 113 | $ 342 | $ 339 |
Debt (Schedule Of Debt) (Details) - USD ($) $ in Thousands |
Nov. 30, 2015 |
Feb. 28, 2015 |
---|---|---|
Debt Disclosure [Abstract] | ||
Short-term borrowings on revolving credit facility | $ 36 | $ 785 |
Current portion of long-term debt | 0 | 10,000 |
Current portion of finance and capital lease obligations | 14,673 | 21,554 |
Current portion of non-recourse notes payable | 275,828 | 258,163 |
Total current debt | 290,537 | 290,502 |
Long-term debt | 864,000 | 300,000 |
Finance and capital lease obligations, excluding current portion | 391,856 | 306,284 |
Non-recourse notes payable, excluding current portion | 9,060,090 | 8,212,466 |
Total debt, excluding current portion | 10,315,946 | 8,818,750 |
Total debt | $ 10,606,483 | $ 9,109,252 |
Stock And Stock-Based Incentive Plans (Schedule Of Common Stock Repurchases) (Details) - Share Repurchase Program - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Nov. 30, 2015 |
Nov. 30, 2014 |
Nov. 30, 2015 |
Nov. 30, 2014 |
|
Number of shares repurchased, shares | 7,680,800 | 6,234,800 | 13,336,100 | 14,101,500 |
Average cost per share (in dollars per share) | $ 58.03 | $ 52.48 | $ 61.14 | $ 49.80 |
Available for repurchase, as of end of period | $ 1,553.8 | $ 2,579.8 | $ 1,553.8 | $ 2,579.8 |
Stock And Stock-Based Incentive Plans (Assumptions Used To Estimate Option Values) (Details) |
9 Months Ended | |
---|---|---|
Nov. 30, 2015 |
Nov. 30, 2014 |
|
Share-based Compensation [Abstract] | ||
Dividend yield | 0.00% | 0.00% |
Expected volatility factor, Minimum | 25.80% | 25.20% |
Expected volatility factor, Maximum | 31.80% | 32.70% |
Weighted average expected volatility | 30.60% | 31.80% |
Risk-free interest rate, Minimum | 0.00% | 0.01% |
Risk-free interest rate, Maximum | 2.10% | 2.70% |
Expected term (in years) | 4 years 8 months 12 days | 4 years 8 months 12 days |
Stock And Stock-Based Incentive Plans (Expected Cash Settlement Range Upon Restricted Stock Unit Vesting) (Details) $ in Thousands |
Nov. 30, 2015
USD ($)
|
---|---|
Minimum | |
Fiscal 2017 | $ 13,765 |
Fiscal 2018 | 16,036 |
Fiscal 2019 | 18,922 |
Total expected cash settlements | 48,723 |
Maximum | |
Fiscal 2017 | 36,707 |
Fiscal 2018 | 42,762 |
Fiscal 2019 | 50,457 |
Total expected cash settlements | $ 129,926 |
Net Earnings Per Share (Narrative) (Details) - shares |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Nov. 30, 2015 |
Nov. 30, 2014 |
Nov. 30, 2015 |
Nov. 30, 2014 |
|
Earnings Per Share [Abstract] | ||||
Anti-dilutive securities not included in calculation of diluted net earnings per share | 1,383,861 | 1,707,581 | 1,195,011 | 2,617,453 |
Accumulated Other Comprehensive Loss (Narrative) (Details) - USD ($) $ in Millions |
9 Months Ended | 12 Months Ended |
---|---|---|
Nov. 30, 2015 |
Feb. 28, 2015 |
|
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | ||
Deferred tax | $ 39.9 | $ 39.0 |
Contingent Liabilities (Details) - USD ($) $ in Millions |
Nov. 30, 2015 |
Feb. 28, 2015 |
---|---|---|
Commitments and Contingencies Disclosure [Abstract] | ||
Liability associated with guarantee | $ 4.8 | $ 6.2 |
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