10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended November 30, 2019

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number:  1-31420

CARMAX, INC.

(Exact name of registrant as specified in its charter)

Virginia		54-1821055
(State or other jurisdiction of incorporation)		(I.R.S. Employer Identification No.)
12800 Tuckahoe Creek Parkway		23238
Richmond,	Virginia
(Address of Principal Executive Offices)		(Zip Code)

(804) 747-0422

(Registrant’s telephone number, including area code)

N/A

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

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	KMX	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes  ☒    No  ☐ 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐ 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. 

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes  ☐     No  ☒

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

Class	Outstanding as of December 31, 2019
Common Stock, par value $0.50	163,385,139

Page 1

CARMAX, INC. AND SUBSIDIARIES

TABLE OF CONTENTS

			Page No.
PART I.	FINANCIAL INFORMATION
	Item 1.	Financial Statements:
		Consolidated Statements of Earnings (Unaudited) –
		Three and Nine Months Ended November 30, 2019 and 2018	3
		Consolidated Statements of Comprehensive Income (Unaudited) –
		Three and Nine Months Ended November 30, 2019 and 2018	4
		Consolidated Balance Sheets (Unaudited) –
		November 30, 2019 and February 28, 2019	5
		Consolidated Statements of Cash Flows (Unaudited) –
		Nine Months Ended November 30, 2019 and 2018	6
		Consolidated Statements of Shareholders’ Equity (Unaudited) –
		Three and Nine Months Ended November 30, 2019 and 2018	7
		Notes to Consolidated Financial Statements (Unaudited)	9
	Item 2.	Management’s Discussion and Analysis of Financial Condition and
		Results of Operations	25
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41
	Item 4.	Controls and Procedures	41
PART II.	OTHER INFORMATION
	Item 1.	Legal Proceedings	42
	Item 1A.	Risk Factors	42
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	42
	Item 6.	Exhibits	43
SIGNATURES			44

Page 2

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CARMAX, INC. AND SUBSIDIARIES

Consolidated Statements of Earnings

(Unaudited)

	Three Months Ended November 30								Nine Months Ended November 30
(In thousands except per share data)	2019			%(1)		2018		%(1)	2019			%(1)	2018		%(1)
SALES AND OPERATING REVENUES:
Used vehicle sales	$	4,028,811		84.1		$	3,547,925	82.6	$	12,915,763		84.1	$	11,544,340	83.3
Wholesale vehicle sales	610,983			12.8		603,584		14.1	1,951,718			12.7	1,849,225		13.3
Other sales and revenues	150,234			3.1		144,362		3.4	490,016			3.2	460,933		3.3
NET SALES AND OPERATING REVENUES	4,790,028			100.0		4,295,871		100.0	15,357,497			100.0	13,854,498		100.0
COST OF SALES:
Used vehicle cost of sales	3,615,704			75.5		3,177,953		74.0	11,549,445			75.2	10,305,945		74.4
Wholesale vehicle cost of sales	504,177			10.5		498,840		11.6	1,601,573			10.4	1,518,698		11.0
Other cost of sales	56,500			1.2		49,841		1.2	156,996			1.0	148,642		1.1
TOTAL COST OF SALES	4,176,381			87.2		3,726,634		86.7	13,308,014			86.7	11,973,285		86.4
GROSS PROFIT	613,647			12.8		569,237		13.3	2,049,483			13.3	1,881,213		13.6
CARMAX AUTO FINANCE INCOME	114,033			2.4		109,725		2.6	344,123			2.2	334,985		2.4
Selling, general and administrative expenses	484,848			10.1		409,520		9.5	1,455,339			9.5	1,301,308		9.4
Interest expense	21,843			0.5		18,814		0.4	60,700			0.4	54,816		0.4
Other (income) expense	(6,570		)	(0.1	)	2,820		0.1	(6,786		)	—	3,097		—
Earnings before income taxes	227,559			4.8		247,808		5.8	884,353			5.8	856,977		6.2
Income tax provision	54,403			1.1		57,497		1.3	210,854			1.4	207,120		1.5
NET EARNINGS	$	173,156		3.6		$	190,311	4.4	$	673,499		4.4	$	649,857	4.7
WEIGHTED AVERAGE COMMON SHARES:
Basic	164,273					173,816			165,321				176,088
Diluted	166,534					175,321			167,154				177,656
NET EARNINGS PER SHARE:
Basic	$	1.05				$	1.09		$	4.07			$	3.69
Diluted	$	1.04				$	1.09		$	4.03			$	3.66

⁽¹⁾    Percents are calculated as a percentage of net sales and operating revenues and may not total due to rounding. 

See accompanying notes to consolidated financial statements.

Page 3

CARMAX, INC. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

(Unaudited)

	Three Months Ended November 30					Nine Months Ended November 30
(In thousands)	2019		2018			2019			2018
NET EARNINGS	$	173,156	$	190,311		$	673,499		$	649,857
Other comprehensive income (loss), net of taxes
Net change in retirement benefit plan unrecognized actuarial losses	355		370			1,066			1,109
Net change in cash flow hedge unrecognized losses	9,268		(72		)	(15,063		)	(934		)
Other comprehensive income (loss), net of taxes	9,623		298			(13,997		)	175
TOTAL COMPREHENSIVE INCOME	$	182,779	$	190,609		$	659,502		$	650,032

See accompanying notes to consolidated financial statements.

Page 4

CARMAX, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(Unaudited)

	As of November 30			As of February 28
(In thousands except share data)	2019			2019
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	56,583		$	46,938
Restricted cash from collections on auto loan receivables	458,493			440,669
Accounts receivable, net	142,737			139,850
Inventory	2,682,574			2,519,455
Other current assets	109,857			67,101
TOTAL CURRENT ASSETS	3,450,244			3,214,013
Auto loan receivables, net	13,276,654			12,428,487
Property and equipment, net of accumulated depreciation of $1,239,443 and $1,297,393 as of November 30, 2019 and February 28, 2019, respectively	3,036,663			2,828,058
Deferred income taxes	67,162			61,346
Operating lease assets	454,708			—
Other assets	201,799			185,963
TOTAL ASSETS	$	20,487,230		$	18,717,867
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	641,434		$	593,171
Accrued expenses and other current liabilities	340,475			318,204
Accrued income taxes	1,497			3,784
Current portion of operating lease liabilities	30,813			—
Short-term debt	421			1,129
Current portion of long-term debt	8,541			10,177
Current portion of non-recourse notes payable	397,860			385,044
TOTAL CURRENT LIABILITIES	1,421,041			1,311,509
Long-term debt, excluding current portion	1,704,284			1,649,244
Non-recourse notes payable, excluding current portion	12,899,970			12,127,290
Operating lease liabilities, excluding current portion	446,302			—
Other liabilities	317,580			272,796
TOTAL LIABILITIES	16,789,177			15,360,839
Commitments and contingent liabilities
SHAREHOLDERS’ EQUITY:
Common stock, $0.50 par value; 350,000,000 shares authorized; 163,795,082 and 167,478,924 shares issued and outstanding as of November 30, 2019 and February 28, 2019, respectively	81,897			83,739
Capital in excess of par value	1,321,567			1,237,153
Accumulated other comprehensive loss	(82,007		)	(68,010		)
Retained earnings	2,376,596			2,104,146
TOTAL SHAREHOLDERS’ EQUITY	3,698,053			3,357,028
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	20,487,230		$	18,717,867

See accompanying notes to consolidated financial statements.

Page 5

CARMAX, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(Unaudited)

	Nine Months Ended November 30
(In thousands)	2019			2018
OPERATING ACTIVITIES:
Net earnings	$	673,499		$	649,857
Adjustments to reconcile net earnings to net cash (used in) provided by operating activities:
Depreciation and amortization	158,226			135,609
Share-based compensation expense	98,177			61,403
Provision for loan losses	132,650			111,703
Provision for cancellation reserves	65,166			54,952
Deferred income tax (benefit) provision	(744		)	909
Other	(72		)	4,104
Net (increase) decrease in:
Accounts receivable, net	(2,887		)	22,165
Inventory	(163,119		)	(34,006		)
Other current assets	(41,869		)	40,952
Auto loan receivables, net	(980,817		)	(875,269		)
Other assets	10,185			(6,734		)
Net increase (decrease) in:
Accounts payable, accrued expenses and other
current liabilities and accrued income taxes	20,604			22,236
Other liabilities	(86,905		)	(73,251		)
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES	(117,906		)	114,630
INVESTING ACTIVITIES:
Capital expenditures	(249,177		)	(243,311		)
Proceeds from disposal of property and equipment	3			680
Purchases of investments	(8,438		)	(5,470		)
Sales of investments	1,025			1,104
NET CASH USED IN INVESTING ACTIVITIES	(256,587		)	(246,997		)
FINANCING ACTIVITIES:
(Decrease) increase in short-term debt, net	(708		)	309
Proceeds from issuances of long-term debt	4,707,500			2,758,000
Payments on long-term debt	(4,702,807		)	(2,768,419		)
Cash paid for debt issuance costs	(14,849		)	(12,329		)
Payments on finance lease obligations	(2,813		)	(528		)
Issuances of non-recourse notes payable	8,596,000			8,183,502
Payments on non-recourse notes payable	(7,810,958		)	(7,435,128		)
Repurchase and retirement of common stock	(458,587		)	(633,170		)
Equity issuances	96,367			54,580
NET CASH PROVIDED BY FINANCING ACTIVITIES	409,145			146,817
Increase in cash, cash equivalents, and restricted cash	34,652			14,450
Cash, cash equivalents, and restricted cash at beginning of year	595,377			554,898
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD	$	630,029		$	569,348
RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH TO THE CONSOLIDATED BALANCE SHEETS:
Cash and cash equivalents	$	56,583		$	35,049
Restricted cash from collections on auto loan receivables	458,493			426,613
Restricted cash included in other assets	114,953			107,686
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD	$	630,029		$	569,348

See accompanying notes to consolidated financial statements.

Page 6

CARMAX, INC. AND SUBSIDIARIES

Consolidated Statements of Shareholders’ Equity

(Unaudited)

	Nine Months Ended November 30, 2019
												Accumulated
	Common					Capital in						Other
	Shares		Common			Excess of			Retained			Comprehensive
(In thousands)	Outstanding		Stock			Par Value			Earnings			Loss			Total
Balance as of February 28, 2019	167,479		$	83,739		$	1,237,153		$	2,104,146		$	(68,010	)	$	3,357,028
Net earnings	—		—			—			266,744			—			266,744
Other comprehensive loss	—		—			—			—			(13,196		)	(13,196		)
Share-based compensation expense	—		—			18,912			—			—			18,912
Repurchases of common stock	(2,953	)	(1,476		)	(21,991		)	(181,368		)	—			(204,835		)
Exercise of common stock options	727		363			32,888			—			—			33,251
Stock incentive plans, net shares issued	142		71			(5,220		)	—			—			(5,149		)
Balance as of May 31, 2019	165,395		$	82,697		$	1,261,742		$	2,189,522		$	(81,206	)	$	3,452,755
Net earnings	—		—			—			233,599			—			233,599
Other comprehensive loss	—		—			—			—			(10,424		)	(10,424		)
Share-based compensation expense	—		—			10,757			—			—			10,757
Repurchases of common stock	(1,526	)	(763		)	(11,933		)	(115,666		)	—			(128,362		)
Exercise of common stock options	1,008		504			52,766			—			—			53,270
Stock incentive plans, net shares issued	9		4			(42		)	—			—			(38		)
Balance as of August 31, 2019	164,886		$	82,442		$	1,313,290		$	2,307,455		$	(91,630	)	$	3,611,557
Net earnings	—		—			—			173,156			—			173,156
Other comprehensive income	—		—			—			—			9,623			9,623
Share-based compensation expense	—		—			8,745			—			—			8,745
Repurchases of common stock	(1,270	)	(635		)	(10,170		)	(104,015		)	—			(114,820		)
Exercise of common stock options	178		89			9,757			—			—			9,846
Stock incentive plans, net shares issued	1		1			(55		)	—			—			(54		)
Balance as of November 30, 2019	163,795		$	81,897		$	1,321,567		$	2,376,596		$	(82,007	)	$	3,698,053

See accompanying notes to consolidated financial statements.

Page 7

CARMAX, INC. AND SUBSIDIARIES

Consolidated Statements of Shareholders’ Equity

(Unaudited)

	Nine Months Ended November 30, 2018
												Accumulated
	Common					Capital in						Other
	Shares		Common			Excess of			Retained			Comprehensive
(In thousands)	Outstanding		Stock			Par Value			Earnings			Loss			Total
Balance as of February 28, 2018	179,748		$	89,874		$	1,234,047		$	2,047,240		$	(54,312	)	$	3,316,849
Net earnings	—		—			—			238,656			—			238,656
Other comprehensive loss	—		—			—			—			(733		)	(733		)
Share-based compensation expense	—		—			16,645			—			—			16,645
Repurchases of common stock	(3,308	)	(1,654		)	(22,824		)	(182,926		)	—			(207,404		)
Exercise of common stock options	212		106			8,946			—			—			9,052
Stock incentive plans, net shares issued	68		34			(2,202		)	—			—			(2,168		)
Adoption of ASU 2014-09	—		—			—			12,864			—			12,864
Balance as of May 31, 2018	176,720		$	88,360		$	1,234,612		$	2,115,834		$	(55,045	)	$	3,383,761
Net earnings	—		—			—			220,890			—			220,890
Other comprehensive income	—		—			—			—			610			610
Share-based compensation expense	—		—			9,695			—			—			9,695
Repurchases of common stock	(2,291	)	(1,146		)	(16,334		)	(153,746		)	—			(171,226		)
Exercise of common stock options	860		430			38,019			—			—			38,449
Stock incentive plans, net shares issued	1		1			(62		)	—			—			(61		)
Balance as of August 31, 2018	175,290		$	87,645		$	1,265,930		$	2,182,978		$	(54,435	)	$	3,482,118
Net earnings	—		—			—			190,311			—			190,311
Other comprehensive income	—		—			—			—			298			298
Share-based compensation expense	—		—			9,654			—			—			9,654
Repurchases of common stock	(3,658	)	(1,829		)	(26,601		)	(225,898		)	—			(254,328		)
Exercise of common stock options	153		77			7,002			—			—			7,079
Stock incentive plans, net shares issued	—		—			(19		)	—			—			(19		)
Balance as of November 30, 2018	171,785		$	85,893		$	1,255,966		$	2,147,391		$	(54,137	)	$	3,435,113

See accompanying notes to consolidated financial statements.

Page 8

CARMAX, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

1.    Background

Business. 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 financing to customers buying retail vehicles from CarMax.

We deliver an unrivaled customer experience by offering a broad selection of quality used vehicles and related products and services at competitive, no-haggle prices using a customer-friendly sales process in an attractive, modern sales facility, as well as through carmax.com and our mobile apps.  We provide customers with a range of related products and services, including the appraisal and purchase of vehicles directly from consumers; the financing of retail vehicle purchases through CAF and third-party finance providers; the sale of extended protection plan (“EPP”) products, which include extended service plans (“ESPs”) 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.

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.  

The accounting policies followed in the presentation of our interim financial results are consistent with those included in the company’s Annual Report on Form 10-K for the fiscal year ended February 28, 2019 (the “2019 Annual Report”), with the exception of those related to recent accounting pronouncements adopted in the current fiscal year. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and footnotes included in our 2019 Annual Report.

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.

In connection with our adoption of Accounting Standards Update (“ASU”) 2016-02, Leases (“ASC 842”) during the current fiscal year, certain prior period amounts have been reclassified to conform to the current period’s presentation. In the consolidated balance sheets, financing obligations have been reclassified to current portion of long-term debt and long-term debt, excluding current portion. Also, capital lease obligations have been reclassified to accrued expenses and other current liabilities and other liabilities. In the consolidated statements of cash flows, payments on financing obligations have been reclassified to payments on long-term debt. See Notes 9 and 13 for additional information on financing obligations and leases, respectively.

Recent Accounting Pronouncements.

Effective in Future Periods.

In June 2016, the Financial Accounting Standards Board (“FASB”) issued an accounting pronouncement (FASB ASU 2016-13) related to the measurement of credit losses on financial instruments. This pronouncement, along with subsequent ASUs issued to clarify certain provisions of ASU 2016-13, changes the impairment model for most financial assets and will require the use of an “expected loss” model for instruments measured at amortized cost. Under this model, entities will be required to estimate the lifetime expected credit loss on such instruments and record an allowance to offset the amortized cost basis of the financial asset, resulting in a net presentation of the amount expected to be collected on the financial asset. In developing the estimate for lifetime expected credit loss, entities must incorporate historical experience, current conditions, and reasonable and supportable forecasts. This pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2019.

Page 9

We have designed an allowance for loan loss methodology to comply with these new requirements, which will be adopted for our fiscal year beginning March 1, 2020. Based on information as of November 30, 2019, we expect to record a $200-250 million increase in the allowance for loan losses on our opening consolidated balance sheet as of March 1, 2020, with a corresponding net-of-tax adjustment to retained earnings. The expected increase in the allowance for loan losses is primarily the result of extending the loan loss forecast period from 12 months to the entire lifetime of the loan portfolio. The final adoption impact may vary depending on the company’s portfolio at the adoption date, as well as macroeconomic conditions and forecasts at that time. We expect this new methodology could increase volatility in our quarterly provision for loan losses, as we will be estimating loan losses over a longer forecast period. We are finalizing testing of the effectiveness of our new allowance for loan loss methodology, as well as designing the relevant controls and governance structure.

In December 2019, the FASB issued an accounting pronouncement (FASB ASU 2019-12) related to simplifying the accounting for income taxes. The pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. We are currently in the process of evaluating the effects of this pronouncement on our consolidated financial statements, including potential early adoption.

2.    Revenue

We recognize revenue when control of the good or service has been transferred to the customer, generally either at the time of sale or upon delivery to a customer.  Our contracts have a fixed contract price and revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services. 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. We generally expense sales commissions when incurred because the amortization period would have been less than one year. These costs are recorded within selling, general and administrative expenses. We do not have any significant payment terms as payment is received at or shortly after the point of sale.

Disaggregation of Revenue

	Three Months Ended November 30						Nine Months Ended November 30
(In millions)	2019			2018			2019			2018
Used vehicle sales	$	4,028.8		$	3,547.9		$	12,915.8		$	11,544.3
Wholesale vehicle sales	611.0			603.6			1,951.7			1,849.2
Other sales and revenues:
Extended protection plan revenues	97.0			85.6			321.7			284.2
Third-party finance fees, net	(9.4		)	(8.4		)	(35.2		)	(32.5		)
Service revenues	28.9			32.4			96.3			105.1
Other	33.7			34.8			107.2			104.1
Total other sales and revenues	150.2			144.4			490.0			460.9
Total net sales and operating revenues	$	4,790.0		$	4,295.9		$	15,357.5		$	13,854.5

Used Vehicle Sales. Revenue from the sale of used vehicles is recognized upon transfer of control of the vehicle to the customer. As part of our customer service strategy, we guarantee the retail vehicles we sell with a 7-day, money-back guarantee.  We record a reserve for estimated returns based on historical experience and trends. The reserve for estimated returns is presented gross on the consolidated balance sheets, with a return asset recorded in other current assets and a refund liability recorded in accrued expenses and other current liabilities. We also guarantee the used vehicles we sell with a 90-day/4,000 mile limited warranty. These warranties are deemed assurance-type warranties and accounted for as warranty obligations. See Note 15 for additional information on this warranty and its related obligation.

Wholesale Vehicle Sales. Wholesale vehicles are sold at our auctions, and revenue from the sale of these vehicles is recognized upon transfer of control of the vehicle to the customer. Dealers also pay a fee to us based on the sale price of the vehicles they purchase. This fee is recognized as revenue at the time of sale. While we provide condition disclosures on each wholesale vehicle sold, the vehicles are subject to a limited right of return. We record a reserve for estimated returns based on historical experience and trends. The reserve for estimated returns is presented gross on the consolidated balance sheets, with a return asset recorded in other current assets and a refund liability recorded in accrued expenses and other current liabilities.

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EPP Revenues. We also sell ESP and GAP products on behalf of unrelated third parties, who are primarily responsible for fulfilling the contract, to customers who purchase a retail vehicle.  The ESPs we currently offer on all used vehicles provide coverage up to 60 months (subject to mileage limitations), while GAP covers the customer for the term of their finance contract. We recognize revenue, on a net basis, at the time of sale. We also record a reserve for estimated contract cancellations. 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 revenue 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.

We are contractually entitled to receive profit-sharing revenues based on the performance of the ESPs administered by third parties. These revenues are a form of variable consideration included in EPP revenues to the extent that it is probable that it will not result in a significant revenue reversal. An estimate of the amount to which we expect to be entitled, subject to various constraints, is recognized upon satisfying the performance obligation of selling the ESP. These constraints include factors that are outside of the company’s influence or control and the length of time until settlement. We apply the expected value method, utilizing historical claims and cancellation data from CarMax customers, as well as external data and other qualitative assumptions. This estimate is reassessed each reporting period with changes reflected in other sales and revenues on our consolidated statements of earnings and other assets on our consolidated balance sheets. As of November 30, 2019 and February 28, 2019, we recognized a contract asset of $32.2 million and $25.7 million, respectively, related to cumulative profit-sharing payments to which we expect to be entitled. During the second quarter of fiscal 2020, this amount was reclassified from other assets to other current assets on our consolidated balance sheets, as we expect to begin receiving ESP profit-sharing payments in the first calendar quarter of 2020. While the initial payment could be up to $50 million, the revenue recognized to-date represents the amount for which we have determined it is probable it will not result in a significant revenue reversal. The first payment reflects the accumulation of profit-sharing for four years under our current contracts with the providers, while any subsequent profit-sharing payments we receive will only reflect one year of incremental earnings.

Third-Party Finance Fees. Customers applying for financing who are not approved or are conditionally approved by CAF are generally evaluated by other 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.

Service Revenues. Service revenue consists of labor and parts income related to vehicle repair service, including repairs of vehicles covered under an ESP we sell or warranty program. Service revenue is recognized at the time the work is completed.

Other Revenues. Other revenues consist primarily of new vehicle sales at our two new car franchise locations and sales of accessories. Revenue in this category is recognized upon transfer of control to the customer.

3.    CarMax Auto Finance

CAF provides financing to qualified retail customers purchasing vehicles from CarMax.  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 or other funding arrangements to fund loans originated by CAF.  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.  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.

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Components of CAF Income

	Three Months Ended November 30										Nine Months Ended November 30
(In millions)	2019			% (1)		2018			% (1)		2019			% (1)		2018			% (1)
Interest margin:
Interest and fee income	$	278.9		8.4		$	247.8		8.0		$	820.8		8.4		$	722.3		8.0
Interest expense	(90.4		)	(2.7	)	(75.3		)	(2.4	)	(268.4		)	(2.8	)	(208.2		)	(2.3	)
Total interest margin	188.5			5.7		172.5			5.6		552.4			5.7		514.1			5.7
Provision for loan losses	(49.0		)	(1.5	)	(40.8		)	(1.3	)	(132.7		)	(1.4	)	(111.7		)	(1.2	)
Total interest margin after provision for loan losses	139.5			4.2		131.7			4.3		419.7			4.3		402.4			4.5
Total other expense	—			—		(0.1		)	—		—			—		(0.4		)	—
Direct expenses:
Payroll and fringe benefit expense	(10.8		)	(0.3	)	(9.4		)	(0.3	)	(31.3		)	(0.3	)	(28.6		)	(0.3	)
Other direct expenses	(14.7		)	(0.4	)	(12.5		)	(0.4	)	(44.3		)	(0.5	)	(38.4		)	(0.4	)
Total direct expenses	(25.5		)	(0.8	)	(21.9		)	(0.7	)	(75.6		)	(0.8	)	(67.0		)	(0.7	)
CarMax Auto Finance income	$	114.0		3.4		$	109.7		3.6		$	344.1		3.5		$	335.0		3.7
Total average managed receivables	$	13,239.2				$	12,321.0				$	12,986.2				$	12,054.6

⁽¹⁾   Annualized percentage of total average managed receivables.     

4.    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 an asset-backed term funding transaction, such as a term securitization or alternative funding arrangement.  We recognize transfers of auto loan receivables into the warehouse facilities and asset-backed term funding transactions (together, “non-recourse funding 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 majority of the auto loan receivables serve as collateral for the related non-recourse notes payable of $13.32 billion as of November 30, 2019 and $12.54 billion as of February 28, 2019. See Note 9 for additional information on non-recourse notes payable.

Auto Loan Receivables, Net

	As of November 30			As of February 28
(In millions)	2019			2019
Asset-backed term funding	$	10,616.9		$	10,273.4
Warehouse facilities	2,305.7			1,877.0
Overcollateralization (1)	296.3			273.3
Other managed receivables (2)	133.7			86.5
Total ending managed receivables	13,352.6			12,510.2
Accrued interest and fees	59.9			49.6
Other	17.8			6.9
Less allowance for loan losses	(153.6		)	(138.2		)
Auto loan receivables, net	$	13,276.7		$	12,428.5

⁽¹⁾   Represents receivables restricted as excess collateral for the non-recourse funding vehicles.

⁽²⁾ Other managed receivables includes receivables not funded through the non-recourse funding vehicles.

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

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likelihood of repayment.  Customers assigned a grade of “A” are determined to have the highest probability of repayment, and customers assigned a lower grade are determined to have a lower probability of repayment.  For loans that are approved, the credit grade influences the terms of the agreement, such as the required loan-to-value ratio and interest rate.

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

Ending Managed Receivables by Major Credit Grade

	As of November 30			As of February 28
(In millions)	2019 (1)		% (2)	2019 (1)		% (2)
A	$	6,691.4	50.1	$	6,225.6	49.8
B	4,813.9		36.1	4,488.2		35.9
C and other	1,847.3		13.8	1,796.4		14.3
Total ending managed receivables	$	13,352.6	100.0	$	12,510.2	100.0

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

⁽²⁾   Percent of total ending managed receivables.

Allowance for Loan Losses

	Three Months Ended November 30								Nine Months Ended November 30
(In millions)	2019			% (1)	2018			% (1)	2019			% (1)	2018			% (1)
Balance as of beginning of period	$	150.4		1.15	$	138.1		1.13	$	138.2		1.10	$	128.6		1.11
Charge-offs	(81.2		)		(74.3		)		(223.4		)		(198.1		)
Recoveries	35.4				33.7				106.1				96.1
Provision for loan losses	49.0				40.8				132.7				111.7
Balance as of end of period	$	153.6		1.15	$	138.3		1.12	$	153.6		1.15	$	138.3		1.12

⁽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 expected to become evident during the following 12 months.  The allowance is primarily based on the composition of the portfolio of managed receivables, historical loss trends and forecasted forward loss curves.  We also take into account recent trends in delinquencies and defaults, recovery rates and the economic environment.  The provision for loan losses is the periodic expense of maintaining an adequate allowance.

Past Due Receivables

	As of November 30			As of February 28
(In millions)	2019		% (1)	2019		% (1)
Total ending managed receivables	$	13,352.6	100.0	$	12,510.2	100.0
Delinquent loans:
31-60 days past due	$	323.0	2.4	$	276.5	2.2
61-90 days past due	152.3		1.1	141.4		1.1
Greater than 90 days past due	35.6		0.3	33.9		0.3
Total past due	$	510.9	3.8	$	451.8	3.6

⁽¹⁾   Percent of total ending managed receivables. 

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5.    Derivative Instruments and Hedging Activities

We use derivatives to manage certain risks arising from both our business operations and economic conditions, particularly with regard to issuances of 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, and designate these derivative instruments as cash flow hedges for accounting purposes.  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.

For the derivatives associated with our non-recourse funding vehicles, changes in fair value are initially recorded in accumulated other comprehensive loss (“AOCL”).  For the majority of these derivatives, the 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 debt. During the next 12 months, we estimate that an additional $7.1 million will be reclassified in AOCL as a decrease to CAF income.

As of November 30, 2019 and February 28, 2019, we had interest rate swaps outstanding with a combined notional amount of $2.59 billion and $2.23 billion, respectively, that were designated as cash flow hedges of interest rate risk.

See Note 6 for discussion of fair values of financial instruments and Note 12 for the effect on comprehensive income.

6.    Fair Value Measurements

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

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

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

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

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

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

Valuation Methodologies

Money Market Securities.  Money market securities are cash equivalents, which are included in cash and cash equivalents, restricted cash from collections on auto loan receivables and other assets.  They consist of highly liquid investments with original maturities of three months or less and are classified as Level 1.

Mutual Fund Investments.  Mutual fund investments consist of publicly traded mutual funds that primarily include diversified equity investments in large-, mid- and small-cap domestic and international companies or investment grade debt securities.  The investments, which are included in other assets, are held in a rabbi trust established to fund informally our executive deferred compensation plan and are classified as Level 1.

Derivative Instruments.  The fair values of our derivative instruments are included in either other current assets, other assets, accounts payable or other liabilities.  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.

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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

	As of November 30, 2019
(In thousands)	Level 1			Level 2			Total
Assets:
Money market securities	$	234,676		$	—		$	234,676
Mutual fund investments	21,905			—			21,905
Derivative instruments	—			3,711			3,711
Total assets at fair value	$	256,581		$	3,711		$	260,292
Percent of total assets at fair value	98.6		%	1.4		%	100.0		%
Percent of total assets	1.3		%	—		%	1.3		%
Liabilities:
Derivative instruments	$	—		$	(1,653	)	$	(1,653	)
Total liabilities at fair value	$	—		$	(1,653	)	$	(1,653	)
Percent of total liabilities	—		%	—		%	—		%

	As of February 28, 2019
(In thousands)	Level 1			Level 2			Total
Assets:
Money market securities	$	372,448		$	—		$	372,448
Mutual fund investments	19,263			—			19,263
Derivative instruments	—			1,844			1,844
Total assets at fair value	$	391,711		$	1,844		$	393,555
Percent of total assets at fair value	99.5		%	0.5		%	100.0		%
Percent of total assets	2.1		%	—		%	2.1		%
Liabilities:
Derivative instruments	$	—		$	(6,120	)	$	(6,120	)
Total liabilities at fair value	$	—		$	(6,120	)	$	(6,120	)
Percent of total liabilities	—		%	—		%	—		%

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Fair Value of Financial Instruments

The carrying value of our cash and cash equivalents, accounts receivable, other restricted cash deposits and accounts payable approximates fair value due to the short-term nature and/or variable rates associated with these financial instruments. Auto loan receivables are presented net of an allowance for estimated loan losses. We believe that the carrying value of our revolving credit facility and term loan approximates fair value due to the variable rates associated with these obligations. The fair value of our senior unsecured notes, which are not carried at fair value on our consolidated balance sheets, was determined using Level 2 inputs based on quoted market prices. The carrying value and fair value of the senior unsecured notes as of November 30, 2019 and February 28, 2019, respectively, are as follows:

(In thousands)	As of November 30, 2019		As of February 28, 2019
Carrying value	$	500,000	$	500,000
Fair value	$	527,394	$	488,590

7.    Cancellation Reserves

We recognize revenue for EPP products, on a net basis, at the time of sale. We also record 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

	Three Months Ended November 30						Nine Months Ended November 30
(In millions)	2019			2018			2019			2018
Balance as of beginning of period	$	111.6		$	110.6		$	102.8		$	105.2
Cancellations	(18.4		)	(17.2		)	(55.1		)	(50.5		)
Provision for future cancellations	19.6			16.3			65.1			55.0
Balance as of end of period	$	112.8		$	109.7		$	112.8		$	109.7

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, 2019 and February 28, 2019, the current portion of cancellation reserves was $60.8 million and $55.6 million, respectively.

8.    Income Taxes

We had $31.0 million of gross unrecognized tax benefits as of November 30, 2019, and $30.3 million as of February 28, 2019.  There were no significant changes to the gross unrecognized tax benefits as reported for the year ended February 28, 2019.

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9.    Debt

(In thousands)		As of November 30			As of February 28
Debt Description (1)	Maturity Date	2019			2019
Revolving credit facility (2)	June 2024	$	377,521		$	366,529
Term loan (2)	June 2024	300,000			300,000
3.86% Senior notes	April 2023	100,000			100,000
4.17% Senior notes	April 2026	200,000			200,000
4.27% Senior notes	April 2028	200,000			200,000
Financing obligations	Various dates through February 2059	537,311			495,626
Non-recourse notes payable	Various dates through April 2026	13,320,447			12,535,405
Total debt		15,035,279			14,197,560
Less: current portion		(406,822		)	(396,350		)
Less: unamortized debt issuance costs		(24,203		)	(24,676		)
Long-term debt, net		$	14,604,254		$	13,776,534

 ⁽¹⁾  Interest is payable monthly, with the exception of our senior notes, which are payable semi-annually.

 ⁽²⁾  Borrowings accrue interest at variable rates based on the Eurodollar rate (LIBOR), the federal funds rate, or the prime rate, depending on the type of borrowing.

Revolving Credit Facility. Borrowings under our $1.45 billion unsecured revolving credit facility (the “credit facility”) are available for working capital and general corporate purposes. We pay a commitment fee on 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 as no repayments are expected to be made within the next 12 months.  As of November 30, 2019, the unused capacity of $1.07 billion was fully available to us.

Term Loan.    Borrowings under our $300 million term loan are available for working capital and general corporate purposes. The term loan was classified as long-term debt, as no repayments are scheduled to be made within the next 12 months.    

Senior Notes. Borrowings under our unsecured senior notes totaling $500 million are available for working capital and general corporate purposes. These notes were classified as long-term debt as no repayments are scheduled to be made within the next 12 months.

Financing Obligations.  Financing obligations relate to stores subject to sale-leaseback transactions that did not qualify for sale accounting.  The financing obligations were structured at varying interest rates and generally have initial lease terms ranging from 15 to 20 years with payments made monthly.  We have not entered into any new sale-leaseback transactions since fiscal 2009. In the event the agreements are modified or extended beyond their original term, the related obligation is adjusted based on the present value of the revised future payments, with a corresponding change to the assets subject to these transactions. Upon modification, the amortization of the obligation is reset, resulting in more of the payments being applied to interest expense in the initial years following the modification.

Non-Recourse Notes Payable.  The non-recourse notes payable relate to auto loan receivables funded through non-recourse funding vehicles.  The timing of principal payments on the non-recourse notes payable is based on the timing of principal collections and defaults on the related auto loan receivables. The current portion of non-recourse notes payable represents principal payments that are due to be distributed in the following period.

Notes payable related to our asset-backed term funding transactions accrue interest predominantly at fixed rates and have scheduled maturities through April 2026, but may mature earlier, depending upon the repayment rate of the underlying auto loan receivables. 

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Information on our funding vehicles for non-recourse notes payable as of November 30, 2019, are as follows:

(In billions)	Capacity
Warehouse facilities:
February 2020 expiration	$	1.95
August 2020 expiration	1.40
September 2020 expiration	0.15
Combined warehouse facility limit	$	3.50
Unused capacity	$	1.19
Non-recourse notes payable outstanding:
Warehouse facilities	$	2.31
Asset-backed term funding transactions	11.01
Non-recourse notes payable	$	13.32

We enter into warehouse facility agreements for one-year terms and generally renew the agreements annually. 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 Note 4 for additional information on the related auto loan receivables.

Capitalized Interest.    We capitalize interest in connection with the construction of certain facilities.  For the nine months ended November 30, 2019 and 2018, we capitalized interest of $5.0 million and $4.8 million, respectively.

Financial Covenants.  The credit facility, term loan and senior note agreements contain representations and warranties, conditions and covenants.  We must also meet financial covenants in conjunction with certain financing obligations.  The agreements governing our non-recourse funding vehicles contain representations and warranties, financial covenants and performance triggers.  As of November 30, 2019, we were in compliance with all financial covenants and our non-recourse funding vehicles were in compliance with the related performance triggers.

10.    Stock and Stock-Based Incentive Plans

(A) Share Repurchase Program

As of November 30, 2019, a total of $2.0 billion of board authorizations for repurchases of our common stock was outstanding, with no expiration date, of which $1.67 billion remained available for repurchase.

Common Stock Repurchases

	Three Months Ended				Nine Months Ended
	November 30				November 30
	2019		2018		2019		2018
Number of shares repurchased (in thousands)	1,270.3		3,657.8		5,748.9		9,257.1
Average cost per share	$	90.38	$	69.52	$	77.92	$	68.36
Available for repurchase, as of end of period (in millions)	$	1,666.0	$	2,384.0	$	1,666.0	$	2,384.0

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(B) Share-Based Compensation

Composition of Share-Based Compensation Expense

	Three Months Ended					Nine Months Ended
	November 30					November 30
(In thousands)	2019		2018			2019		2018
Cost of sales	$	2,128	$	(343	)	$	6,293	$	2,551
CarMax Auto Finance income	1,317		596			4,166		3,030
Selling, general and administrative expenses	26,251		7,275			89,047		57,027
Share-based compensation expense, before income taxes	$	29,696	$	7,528		$	99,506	$	62,608

Composition of Share-Based Compensation Expense – By Grant Type

	Three Months Ended						Nine Months Ended
	November 30						November 30
(In thousands)	2019			2018			2019		2018
Nonqualified stock options	$	6,151		$	6,230		$	24,314	$	23,838
Cash-settled restricted stock units (RSUs)	20,545			(2,485		)	59,763		25,409
Stock-settled market stock units (MSUs)	2,837			2,681			10,298		9,960
Other share-based incentives:
Stock-settled performance stock units (PSUs)	(244		)	317			1,389		1,043
Restricted stock (RSAs)	—			—			—		433
Stock-settled deferred stock units (DSUs)	—			426			2,412		720
Employee stock purchase plan	407			359			1,330		1,205
Total other share-based incentives	$	163		$	1,102		$	5,131	$	3,401
Share-based compensation expense, before income taxes	$	29,696		$	7,528		$	99,506	$	62,608

(C) Stock Incentive Plan Information

Share/Unit Activity

	Nine Months Ended November 30, 2019
	Equity Classified									Liability Classified
(Shares/units in thousands)	Options			MSUs			Other			RSUs
Outstanding as of February 28, 2019	7,869			509			164			1,609
Granted	1,595			131			83			562
Exercised or vested and converted	(1,913		)	(150		)	(81		)	(504		)
Cancelled	(16		)	(5		)	—			(89		)
Outstanding as of November 30, 2019	7,535			485			166			1,578
Weighted average grant date fair value per share/unit:
Granted	$	22.10		$	98.63		$	80.55		$	78.61
Ending outstanding	$	18.16		$	84.02		$	70.97		$	66.85
	As of November 30, 2019
Unrecognized compensation (in millions)	$	47.0		$	15.6		$	3.1

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11.    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

	Three Months Ended				Nine Months Ended
	November 30				November 30
(In thousands except per share data)	2019		2018		2019		2018
Net earnings	$	173,156	$	190,311	$	673,499	$	649,857
Weighted average common shares outstanding	164,273		173,816		165,321		176,088
Dilutive potential common shares:
Stock options	1,820		1,109		1,466		1,165
Stock-settled stock units and awards	441		396		367		403
Weighted average common shares and dilutive potential common shares	166,534		175,321		167,154		177,656
Basic net earnings per share	$	1.05	$	1.09	$	4.07	$	3.69
Diluted net earnings per share	$	1.04	$	1.09	$	4.03	$	3.66

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, 2019 and 2018, options to purchase 1,235,575 shares and 2,808,555 shares of common stock, respectively, were not included. For the nine months ended November 30, 2019 and 2018, options to purchase 1,272,429 shares and 3,904,738 shares of common stock, respectively, were not included.

12.    Accumulated Other Comprehensive Loss

Changes in Accumulated Other Comprehensive Loss By Component

							Total
	Net			Net			Accumulated
	Unrecognized			Unrecognized			Other
	Actuarial			Hedge Gains			Comprehensive
(In thousands, net of income taxes)	Losses			(Losses)			Loss
Balance as of February 28, 2019	$	(70,478	)	$	2,468		$	(68,010	)
Other comprehensive loss before reclassifications	—			(16,807		)	(16,807		)
Amounts reclassified from accumulated other comprehensive loss	1,066			1,744			2,810
Other comprehensive income (loss)	1,066			(15,063		)	(13,997		)
Balance as of November 30, 2019	$	(69,412	)	$	(12,595	)	$	(82,007	)

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Changes In and Reclassifications Out of Accumulated Other Comprehensive Loss

	Three Months Ended November 30						Nine Months Ended November 30
(In thousands)	2019			2018			2019			2018
Retirement Benefit Plans:
Actuarial loss amortization reclassifications recognized in net pension expense:
Cost of sales	$	203		$	206		$	601		$	611
CarMax Auto Finance income	12			13			36			38
Selling, general and administrative expenses	253			268			768			812
Total amortization reclassifications recognized in net pension expense	468			487			1,405			1,461
Tax expense	(113		)	(117		)	(339		)	(352		)
Amortization reclassifications recognized in net pension expense, net of tax	355			370			1,066			1,109
Net change in retirement benefit plan unrecognized actuarial losses, net of tax	355			370			1,066			1,109
Cash Flow Hedges (Note 5):
Changes in fair value	10,529			1,986			(22,844		)	3,786
Tax (expense) benefit	(2,782		)	(523		)	6,037			(998		)
Changes in fair value, net of tax	7,747			1,463			(16,807		)	2,788
Reclassifications to CarMax Auto Finance income	2,067			(2,084		)	2,370			(5,054		)
Tax (expense) benefit	(546		)	549			(626		)	1,332
Reclassification of hedge losses (gains), net of tax	1,521			(1,535		)	1,744			(3,722		)
Net change in cash flow hedge unrecognized losses, net of tax	9,268			(72		)	(15,063		)	(934		)
Total other comprehensive income (loss), net of tax	$	9,623		$	298		$	(13,997	)	$	175

Changes in the funded status of our retirement plans and 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 $26.5 million as of November 30, 2019 and $21.4 million as of February 28, 2019.

13.    Leases

Our leases primarily consist of operating and finance leases related to retail stores, office space, land and equipment. We also have stores subject to sale-leaseback transactions that did not qualify for sale accounting and are accounted for as financing obligations. For more information on these financing obligations see Note 9.

The initial term for real property leases is typically 5 to 20 years. For equipment leases, the initial term generally ranges from 3 to 8 years. Most leases include one or more options to renew, with renewal terms that can extend the lease term from 1 to 20 years or more. We include options to renew (or terminate) in our lease term, and as part of our right-of-use ("ROU") assets and lease liabilities, when it is reasonably certain that we will exercise that option.

ROU assets and the related lease liabilities are initially measured at the present value of future lease payments over the lease term. As most of our leases do not provide an implicit rate, we use our collateralized incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments. We include variable lease payments in the initial measurement of ROU assets and lease liabilities only to the extent they depend on an index or rate. Changes in such indices or rates are accounted for in the period the change occurs, and do not result in the remeasurement of the ROU asset or liability. We are also responsible for payment of certain real estate taxes, insurance and other expenses on our leases. These amounts are generally considered to be variable and are not included in the measurement of the ROU asset and lease liability. We generally account for non-lease components, such as maintenance, separately from lease components. For certain equipment leases, we apply a portfolio approach to account for the lease assets and liabilities.

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Our lease agreements do not contain any material residual value guarantees or material restricted covenants. Leases with a term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term.

The components of lease expense were as follows:

(In thousands)	Three Months Ended November 30, 2019		Nine Months Ended November 30, 2019
Operating lease cost (1)	$	14,262	$	43,074
Finance lease cost:
Depreciation of lease assets	1,563		4,114
Interest on lease liabilities	2,053		5,499
Total finance lease cost	3,616		9,613
Total lease cost	$	17,878	$	52,687

⁽¹⁾ Includes short-term leases and variable lease costs, which are immaterial.

Supplemental balance sheet information related to leases was as follows:

(In thousands)	Classification	As of November 30, 2019
Assets:
Operating lease assets	Operating lease assets	$	454,708
Finance lease assets	Property and equipment, net (1)	77,304
Total lease assets		$	532,012
Liabilities:
Current:
Operating leases	Current portion of operating lease liabilities	$	30,813
Finance leases	Accrued expenses and other current liabilities	4,512
Long-term:
Operating leases	Operating lease liabilities, excluding current portion	446,302
Finance leases	Other liabilities	79,551
Total lease liabilities		$	561,178

⁽¹⁾ Finance lease assets are recorded net of accumulated depreciation of $7.5 million as of November 30, 2019.

Lease term and discount rate information related to leases was as follows:

Lease Term and Discount Rate	As of November 30, 2019
Weighted Average Remaining Lease Term (in years)
Operating leases	20.06
Finance leases	13.78
Weighted Average Discount Rate
Operating leases	5.40	%
Finance leases	10.30	%

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Supplemental cash flow information related to leases was as follows:

(In thousands)	Nine Months Ended November 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	42,712
Operating cash flows from finance leases	2,572
Financing cash flows from finance leases	2,813
Lease assets obtained in exchange for lease obligations:
Operating leases	25,029
Finance leases	52,102

Maturities of lease liabilities were as follows:

	As of November 30, 2019
(In thousands)	Operating Leases (1)			Finance Leases (1)
Fiscal 2020, remaining	$	13,741		$	2,793
Fiscal 2021	54,334			12,869
Fiscal 2022	50,796			13,662
Fiscal 2023	48,188			13,879
Fiscal 2024	46,985			16,534
Thereafter	615,224			102,802
Total lease payments	829,268			162,539
Less: interest	(352,153		)	(78,476		)
Present value of lease liabilities	$	477,115		$	84,063

⁽¹⁾ Lease payments exclude $36.9 million of legally binding minimum lease payments for leases signed but not yet commenced.

As previously disclosed in our 2019 Annual Report and under the previous lease accounting standard, future minimum lease obligations were as follows:

	As of February 28, 2019
	Capital			Operating Lease
(In thousands)	Leases (1)			Commitments (1)
Fiscal 2020	$	5,139		$	55,295
Fiscal 2021	6,055			52,142
Fiscal 2022	6,185			48,886
Fiscal 2023	6,288			46,235
Fiscal 2024	5,186			45,067
Fiscal 2025 and thereafter	11,445			595,047
Total minimum lease payments	40,298			$	842,672
Less amounts representing interest	(8,518		)
Present value of net minimum lease payments	$	31,780

⁽¹⁾ Excludes taxes, insurance and other costs payable directly by us. These costs vary from year to year and are incurred in the ordinary course of business.

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14.    Supplemental Cash Flow Information

Supplemental disclosures of cash flow information:

	Nine Months Ended November 30
(In thousands)	2019		2018
Non-cash investing and financing activities:
Increase (decrease) in accrued capital expenditures	$	4,603	$	(1,847	)
Increase in financing obligations	$	47,930	$	21,854

See Note 13 for supplemental cash flow information related to leases.

15.    Contingent Liabilities

Litigation.  CarMax entities are defendants in four proceedings asserting wage and hour claims with respect to CarMax sales consultants and non-exempt employees in California. The asserted claims include failure to pay minimum wage, provide meal periods and rest breaks, pay statutory/contractual wages, reimburse for work-related expenses and provide accurate itemized wage statements; unfair competition; and Private Attorney General Act claims. On September 4, 2015, Craig Weiss et al., v. CarMax Auto Superstores California, LLC, and CarMax Auto Superstores West Coast, Inc., a putative class action, was filed in the Superior Court of California, County of Placer. The Weiss lawsuit seeks civil penalties, fines, cost of suit, and the recovery of attorneys’ fees. On June 29, 2016, Ryan Gomez et al. v. CarMax Auto Superstores California, LLC, and CarMax Auto Superstores West Coast, Inc., a putative class action, was filed in the Superior Court of the State of California, Los Angeles. The Gomez lawsuit seeks declaratory relief, unspecified damages, restitution, statutory penalties, interest, cost and attorneys’ fees. On October 31, 2017, Joshua Sabanovich v. CarMax Superstores California, LLC et. al., a putative class action, was filed in the Superior Court of California, County of Stanislaus. The Sabanovich lawsuit seeks unspecified damages, restitution, statutory penalties, interest, cost and attorneys’ fees.  On November 21, 2018, Derek Mcelhannon et al v. CarMax Auto Superstores California, LLC and CarMax Auto Superstores West Coast, Inc., a putative class action, was filed in Superior Court of California, County of Alameda. On February 1, 2019, the Mcelhannon lawsuit was removed to the U.S. District Court, Northern District of California, San Francisco Division. The lawsuit was remanded back to the Superior Court of California, County of Alameda on June 4, 2019. The Mcelhannon lawsuit seeks unspecified damages, restitution, statutory and/or civil penalties, interest, cost and attorneys’ fees.  Based upon our evaluation of information currently available, we believe that the ultimate resolution of the foregoing proceedings will not have a material adverse effect, either individually or in the aggregate, on our financial condition, results of operations or cash flows.

Since April 25, 2017, the company has met and corresponded with representatives from multiple California municipality district attorney offices as part of an inquiry by those offices into the handling, storage and disposal of certain types of hazardous waste at our store locations in those municipalities. CarMax is cooperating with this inquiry and we do not expect the outcome of this matter to have a material adverse effect on our financial condition, results of operations or cash flows.

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 a 90-day/4,000 mile 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 $8.6 million as of November 30, 2019, and $7.4 million as of February 28, 2019, and is included in accrued expenses and other current liabilities.

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ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is provided as a supplement to, and should be read in conjunction with, our audited consolidated financial statements, the accompanying notes and the MD&A included in our Annual Report on Form 10-K for the fiscal year ended February 28, 2019 (“fiscal 2019”), as well as our consolidated financial statements and the accompanying notes included in Item 1 of this Form 10-Q.  Note references are to the notes to consolidated financial statements included in Item 1.  All references to net earnings per share are to diluted net earnings per share.  Certain prior year amounts have been reclassified to conform to the current year’s presentation.  Amounts and percentages may not total due to rounding.

OVERVIEW

CarMax is the nation’s largest retailer of used vehicles.  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 financing to customers buying retail vehicles from CarMax.

CarMax Sales Operations

Our sales operations segment consists of retail sales of used vehicles and related products and services, such as wholesale vehicle sales; the sale of extended protection plan (“EPP”) products, which include extended service plans (“ESPs”) and guaranteed asset protection (“GAP”); and vehicle repair service. We offer competitive, no-haggle prices; a broad selection of CarMax Quality Certified used vehicles; value-added EPP products; and superior customer service. Our website and related mobile apps are tools for communicating the CarMax consumer offer in detail; sophisticated search engines for finding the right vehicle; and sales channels for customers who prefer to shop online. 

Our customers finance the majority of the retail vehicles purchased from us, and availability of on-the-spot financing is a critical component of the sales process.  We provide financing to qualified retail customers through CAF and our arrangements with industry-leading third-party finance providers.  All of the finance offers, whether by CAF or our third-party providers, are backed by a 3-day payoff option. 

As of November 30, 2019, we operated 213 used car stores in 105 U.S. television markets, as well as 2 new car franchises.  As of that date, we also conducted wholesale auctions at 74 used car stores, down from 76 stores in the prior quarter as we moved auction activity to other locations to unlock additional retail and production capacity. 

CarMax Auto Finance

In addition to third-party finance providers, we provide vehicle financing through CAF, which offers financing solely to customers buying retail vehicles from CarMax.  CAF allows us to manage our reliance on third-party finance providers and to leverage knowledge of our business to provide qualifying customers a competitive financing option.  As a result, we believe CAF enables us to capture additional profits, cash flows and sales.  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 expenses.  CAF income does not include any allocation of indirect costs.  After the effect of 3-day payoffs and vehicle returns, CAF financed 42.3% of our retail used vehicle unit sales in the first nine months of fiscal 2020.  As of November 30, 2019, CAF serviced approximately 1,019,000 customer accounts in its $13.35 billion portfolio of managed receivables. 

Management regularly analyzes CAF’s operating results by assessing the competitiveness of our consumer offer, profitability, the performance of the auto loan receivables, including trends in credit losses and delinquencies, and CAF direct expenses.

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Revenues and Profitability

The sources of revenue and gross profit from the CarMax Sales Operations segment for the first nine months of fiscal 2020 are as follows:

Net Sales and Operating Revenues Gross Profit

A high-level summary of our financial results for the third quarter and first nine months of fiscal 2020 as compared to the third quarter and first nine months of fiscal 2019 is as follows:

(Dollars in millions except per share or per unit data)	Three Months Ended November 30, 2019			Change from Three Months Ended November 30, 2018		Nine Months Ended November 30, 2019			Change from Nine Months Ended November 30, 2018
Income statement information
Net sales and operating revenues	$	4,790.0		11.5	%	$	15,357.5		10.8	%
Gross profit	$	613.6		7.8	%	$	2,049.5		8.9	%
CAF income	$	114.0		3.9	%	$	344.1		2.7	%
Selling, general and administrative expenses	$	484.8		18.4	%	$	1,455.3		11.8	%
Net earnings	$	173.2		(9.0	)%	$	673.5		3.6	%
Unit sales information
Used unit sales	192,563			11.0	%	625,922			10.1	%
Change in used unit sales in comparable stores	7.5		%	N/A		6.7		%	N/A
Wholesale unit sales	113,996			3.3	%	361,277			4.8	%
Per unit information
Used gross profit per unit	$	2,145		0.6	%	$	2,183		0.3	%
Wholesale gross profit per unit	$	937		(1.3	)%	$	969		1.0	%
SG&A per used vehicle unit	$	2,518		6.6	%	$	2,325		1.6	%
Per share information
Net earnings per diluted share	$	1.04		(4.6	)%	$	4.03		10.1	%

The decline in net earnings and net earnings per diluted share for the third quarter of fiscal 2020 was largely the result of increased share-based compensation expense due to an increasing stock price during the quarter, combined with a planned increase in advertising expense during the quarter related to the launch of our new national advertising campaign and incremental marketing to support our omni-channel roll-out.

Refer to “Results of Operations” for further details on our revenues and profitability.

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Liquidity

Our primary ongoing sources of liquidity include funds provided by operations, proceeds from non-recourse funding vehicles, and borrowings under our revolving credit facility or through other financing sources.  During the first nine months of fiscal 2020, net cash used in operations totaled $117.9 million. This amount, combined with $785.0 million of net issuances of non-recourse notes payable, resulted in $667.1 million of adjusted net cash provided by operating activities (a non-GAAP measure). This liquidity was primarily used to fund the repurchase of 5.7 million common shares under our share repurchase program and our store growth.

When considering cash from operating activities, management does not include increases in auto loan receivables that have been funded with non-recourse notes payable, which are separately reflected as cash provided by (used in) financing activities.  For a reconciliation of adjusted net cash provided by operating activities to net cash (used in) provided by operating activities, the most directly comparable GAAP financial measure, see “Reconciliation of Adjusted Net Cash from Operating Activities” included in “FINANCIAL CONDITION – Liquidity and Capital Resources.”

Future Outlook

Our long-term strategy is to complete the rollout of our retail concept, including our new omni-channel experience, and to increase our share of used vehicle unit sales in each of the markets in which we operate. Our omni-channel experience empowers customers to buy a car on their own terms, whether completely from home, in-store, or through a seamlessly integrated combination of online and in-store experiences. We believe that, over the long term, used vehicle unit sales are the primary driver for earnings growth. We also believe that increased used vehicle unit sales will drive increased sales of wholesale vehicles and ancillary products and, over time, increased CAF income.

In calendar 2018, we estimate we sold approximately 4.4% of the age 0- to 10-year old vehicles sold in the comparable store markets in which we were operating and approximately 3.3% of the age 0- to 10-year old vehicles sold on a nationwide basis. Our strategy to increase our market share includes continuing to focus on:

• Opening stores in new markets and expanding our presence in existing markets.

• Delivering a customer-driven, omni-channel buying and selling experience that is a unique and powerful integration of our in-store and online capabilities.

• Hiring and developing an engaged and skilled workforce.

• Improving efficiency in our stores and our logistics operations to drive out waste.

• Leveraging data and advanced analytics to continuously improve the customer experience as well as our processes and systems.

In order to execute our long-term strategy, we are investing in various strategic initiatives to increase innovation, specifically with regards to customer facing and customer-enabling technologies. We continue to make improvements to our website and enhance customer experiences, such as finance pre-approval, home delivery, online appraisal and express pick-up. We are also developing and implementing tools that help our associates be more efficient and effective. Additionally, we are centralizing customer support in our customer experience centers (“CEC”), which we expect to provide a more seamless integration between the online and in-store experience for our customers. Our use of data is a core component of these initiatives and continues to be a strategic asset for us as we leverage data to enhance the customer experience and increase operational efficiencies.

In December 2018, we launched our omni-channel car buying experience in the Atlanta market. During the first nine months of fiscal 2020, we continued this roll-out to additional markets, making the omni-channel experience available to approximately 40% of our customer base. While we expect performance in each new omni-channel market will vary, during the third quarter and first nine months of fiscal 2020, markets offering an omni-channel experience had slightly stronger comparable store used unit sales than our non-omni markets. We previously opened CECs in Raleigh, Atlanta and Kansas City, and in December 2019 we opened another CEC in Phoenix. We anticipate staffing more than 1,000 associates across all of our CECs, and we expect to reduce store-level staffing by a commensurate level through normal attrition. We remain on track to make the omni-channel experience available to the majority of our customers by the end of fiscal 2020, and we plan to complete the roll-out in fiscal 2021.

While there are incremental costs and inefficiencies in the near term related to strategic initiatives, we have also identified potential cost savings through process changes and other improvements that can help offset these expenses over time. While in any individual period conditions may vary, over the long term, we would expect to leverage our SG&A expenses when comparable store used unit sales growth is in the mid-single digit range. With increased spending expected for fiscal 2020, we believe our comparable store used unit sales growth on an annual basis will need to be in the range of 5% to 8% to leverage SG&A. We expect the rate of growth in spending on omni-related initiatives to slow in fiscal year 2021 and taper thereafter. We will continue to look for opportunities to reduce waste and re-prioritize spend.

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As of November 30, 2019, we had used car stores located in 105 U.S. television markets, which covered approximately 77% of the U.S. population.  The format and operating models utilized in stores are continuously evaluated and may change or evolve over time based upon market and consumer expectations. During the first nine months of fiscal 2020, we opened ten stores, and during the remainder of the fiscal year, we plan to open three stores.  In fiscal 2021, we plan to open a similar number of stores as we expect to open in fiscal 2020.  For a detailed list of stores we plan to open in the 12 months following November 30, 2019, see the table included in “PLANNED FUTURE ACTIVITIES.”

While we execute our long-term strategy, there are trends and factors that could impact our strategic approach or our results in the short and medium term. For additional information about risks and uncertainties facing our company, see “Risk Factors,” included in Part I. Item 1A of the Annual Report on Form 10-K for the fiscal year ended February 28, 2019.

CRITICAL ACCOUNTING POLICIES

For information on critical accounting policies, see “Critical Accounting Policies” in MD&A included in Item 7 of the Annual Report on Form 10-K for the fiscal year ended February 28, 2019. 

RESULTS OF OPERATIONS – CARMAX SALES OPERATIONS

NET SALES AND OPERATING REVENUES

	Three Months Ended November 30								Nine Months Ended November 30
(In millions)	2019			2018			Change		2019			2018			Change
Used vehicle sales	$	4,028.8		$	3,547.9		13.6	%	$	12,915.8		$	11,544.3		11.9	%
Wholesale vehicle sales	611.0			603.6			1.2	%	1,951.7			1,849.2			5.5	%
Other sales and revenues:
Extended protection plan revenues	97.0			85.6			13.3	%	321.7			284.2			13.2	%
Third-party finance fees, net	(9.4		)	(8.4		)	(12.2	)%	(35.2		)	(32.5		)	(8.2	)%
Other	62.6			67.2			(6.7	)%	203.5			209.2			(2.7	)%
Total other sales and revenues	150.2			144.4			4.1	%	490.0			460.9			6.3	%
Total net sales and operating revenues	$	4,790.0		$	4,295.9		11.5	%	$	15,357.5		$	13,854.5		10.8	%

UNIT SALES

	Three Months Ended November 30				Nine Months Ended November 30
	2019	2018	Change		2019	2018	Change
Used vehicles	192,563	173,476	11.0	%	625,922	568,754	10.1	%
Wholesale vehicles	113,996	110,403	3.3	%	361,277	344,604	4.8	%

AVERAGE SELLING PRICES

	Three Months Ended November 30						Nine Months Ended November 30
	2019		2018		Change		2019		2018		Change
Used vehicles	$	20,710	$	20,273	2.2	%	$	20,431	$	20,109	1.6	%
Wholesale vehicles	$	5,079	$	5,214	(2.6	)%	$	5,128	$	5,120	0.2	%

COMPARABLE STORE USED VEHICLE SALES CHANGES

	Three Months Ended November 30 (1)				Nine Months Ended November 30 (1)
	2019		2018		2019		2018
Used vehicle units	7.5	%	(1.2	)%	6.7	%	(0.5	)%
Used vehicle revenues	10.0	%	0.1	%	8.5	%	1.5	%

⁽¹⁾  Stores are added to the comparable store base beginning in their fourteenth full month of operation. We do not remove renovated stores from our comparable store base. Comparable store calculations include results for a set of stores that were included in our comparable store base in both the current and corresponding prior year periods.

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VEHICLE SALES CHANGES

	Three Months Ended November 30				Nine Months Ended November 30
	2019		2018		2019		2018
Used vehicle units	11.0	%	2.3	%	10.1	%	3.2	%
Used vehicle revenues	13.6	%	3.6	%	11.9	%	5.3	%
Wholesale vehicle units	3.3	%	10.0	%	4.8	%	11.4	%
Wholesale vehicle revenues	1.2	%	9.2	%	5.5	%	11.8	%

USED VEHICLE FINANCING PENETRATION BY CHANNEL (BEFORE THE IMPACT OF 3-DAY PAYOFFS)

	Three Months Ended November 30 (1)				Nine Months Ended November 30 (1)
	2019		2018		2019		2018
CAF (2)	47.2	%	49.1	%	46.7	%	48.9	%
Tier 2 (3)	20.4	%	18.3	%	20.1	%	17.4	%
Tier 3 (4)	9.5	%	9.3	%	10.3	%	9.7	%
Other (5)	22.9	%	23.3	%	22.9	%	24.0	%
Total	100.0	%	100.0	%	100.0	%	100.0	%

⁽¹⁾   Calculated as used vehicle units financed for respective channel as a percentage of total used units sold.

⁽²⁾  Includes CAF’s Tier 3 loan originations, which represent less than 1% of total used units sold.

⁽³⁾ Third-party finance providers who generally pay us a fee or to whom no fee is paid.

⁽⁴⁾ Third-party finance providers to whom we pay a fee.

⁽⁵⁾ Represents customers arranging their own financing and customers that do not require financing.

CHANGE IN USED CAR STORE BASE

	Three Months Ended November 30		Nine Months Ended November 30
	2019	2018	2019	2018
Used car stores, beginning of period	209	194	203	188
Store openings	4	4	10	10
Used car stores, end of period	213	198	213	198

During the first nine months of fiscal 2020, we opened ten stores, including five stores in new television markets (Waco, TX; McAllen, TX; Lubbock, TX; Palm Springs, CA; and Gulfport, MS) and five stores in existing television markets (Memphis, TN; San Francisco, CA; Phoenix, AZ; Dallas, TX; and Atlanta, GA). 

Used Vehicle Sales.  The 13.6% increase in used vehicle revenues in the third quarter of fiscal 2020 was primarily due to an 11.0% increase in used unit sales. The increase in used units included a 7.5% increase in comparable store used unit sales and sales from newer stores not yet included in the comparable store base.

The 11.9% increase in used vehicle revenues in the first nine months of fiscal 2020 was primarily due to a 10.1% increase in used unit sales. The increase in used units included a 6.7% increase in comparable store used unit sales and sales from newer stores not yet included in the comparable store base.

The comparable store used unit sales performance in both the third quarter and first nine months of fiscal 2020 reflected strong conversion, which was aided by continued support from our third-party lending partners; 15% growth in web traffic; and a favorable response to our consumer initiatives. We believe that solid execution in operations, finance, customer progression and marketing, in addition to an overall favorable used car sales environment, also contributed to our sales growth for both the third quarter and first nine months of fiscal 2020.

This increase in used unit comparable sales in both the third quarter and first nine months of fiscal 2020 was slightly stronger in markets offering a full omni-channel experience. Additionally, many of our omni-channel related digital initiatives, including improved customer lead management tools, finance self-service tools and digital merchandising, have been rolled out nationwide. We believe these initiatives supported our strong used unit comparable sales performance in markets both with and without the full omni-channel experience. We also believe all stores benefited from our national marketing campaign launched in October.

The increase in average retail selling price in both the third quarter and first nine months of fiscal 2020 reflected higher vehicle acquisition costs as well as shifts in the mix of our sales by both vehicle age and class.

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Wholesale Vehicle Sales. Vehicles sold at our wholesale auctions are, on average, approximately 10 years old with more than 100,000 miles and are primarily vehicles purchased through our appraisal process that do not meet our retail standards. Our wholesale auction prices usually reflect trends in the general wholesale market for the types of vehicles we sell, although they can also be affected by changes in vehicle mix or the average age, mileage or condition of the vehicles being sold.

The 1.2% increase in wholesale vehicle revenues in the third quarter of fiscal 2020 was primarily due to a 3.3% increase in unit sales, partially offset by a 2.6% decline in average selling price. The wholesale unit growth was driven by the growth in our store base, partially offset by lower appraisal traffic.

The 5.5% increase in wholesale vehicle revenues in the first nine months of fiscal 2020 was primarily due to a 4.8% increase in unit sales. The wholesale unit growth was largely driven by an increase in our appraisal buy rate and the growth in our store base, partially offset by lower appraisal traffic.

Other Sales and Revenues.  Other sales and revenues include revenue from the sale of ESPs and GAP (collectively reported in EPP revenues, net of a reserve for estimated contract cancellations), net third-party finance fees, and other revenues, which are predominantly comprised of service department and new vehicle sales. The fees we pay to the Tier 3 providers are reflected as an offset to finance fee revenues received from the Tier 2 providers. The mix of our retail vehicles financed by CAF, Tier 2 and Tier 3 providers, or customers that arrange their own financing, may vary from quarter to quarter depending on several factors, including the credit quality of applicants, changes in providers’ credit decisioning and external market conditions. Changes in originations by one tier of credit providers may also affect the originations made by providers in other tiers.

Other sales and revenues increased 4.1% in the third quarter of fiscal 2020 and 6.3% in the first nine months of fiscal 2020, driven by the 13.3% and 13.2% increase in EPP revenues, respectively. The increase in EPP revenues for both periods reflected the combined effects of our used unit growth and increased margins.

We expect to begin receiving ESP profit-sharing payments in the first calendar quarter of 2020. While the initial payment could be up to $50 million, through November 30, 2019, we have recognized revenue of $32.2 million, which represents the cumulative amount for which we have determined it is probable it will not result in a significant revenue reversal. The first payment reflects the accumulation of profit-sharing for four years under our current contracts with the providers, while any subsequent profit-sharing payments we receive will only reflect one year of incremental earnings.

Seasonality.  Historically, our business has been seasonal.  Our stores typically experience their strongest traffic and sales in the spring and summer quarters.  Sales are typically slowest in the fall quarter.  We typically experience an increase in traffic and sales in February and March, coinciding with federal income tax refund season.

GROSS PROFIT

	Three Months Ended November 30						Nine Months Ended November 30
(In millions)	2019		2018		Change		2019		2018		Change
Used vehicle gross profit	$	413.1	$	370.0	11.7	%	$	1,366.3	$	1,238.4	10.3	%
Wholesale vehicle gross profit	106.8		104.7		2.0	%	350.1		330.5		5.9	%
Other gross profit	93.7		94.5		(0.8	)%	333.1		312.3		6.6	%
Total	$	613.6	$	569.2	7.8	%	$	2,049.5	$	1,881.2	8.9	%

GROSS PROFIT PER UNIT

	Three Months Ended November 30						Nine Months Ended November 30
	2019			2018			2019			2018
	$ per unit(1)		%(2)	$ per unit(1)		%(2)	$ per unit(1)		%(2)	$ per unit(1)		%(2)
Used vehicle gross profit	$	2,145	10.3	$	2,133	10.4	$	2,183	10.6	$	2,177	10.7
Wholesale vehicle gross profit	$	937	17.5	$	949	17.4	$	969	17.9	$	959	17.9
Other gross profit	$	487	62.4	$	545	65.5	$	532	68.0	$	549	67.8
Total gross profit	$	3,187	12.8	$	3,281	13.3	$	3,274	13.3	$	3,308	13.6

⁽¹⁾   Calculated as category gross profit divided by its respective units sold, except the other and total categories, which are divided by total used units sold.

⁽²⁾   Calculated as a percentage of its respective sales or revenue.

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Used Vehicle Gross Profit.    We target a dollar range of gross profit per used unit sold.  The gross profit dollar target for an individual vehicle is based on a variety of factors, including its probability of sale and its mileage relative to its age; however, it is not primarily based on the vehicle’s selling price.  Our ability to quickly adjust appraisal offers to be consistent with the broader market trade-in trends and the pace of our inventory turns reduce our exposure to the inherent continual fluctuation in used vehicle values and contribute to our ability to manage gross profit dollars per unit. 

We systematically adjust individual vehicle prices based on proprietary pricing algorithms in order to appropriately balance sales trends, inventory turns and gross profit achievement.  Other factors that may influence gross profit include the wholesale and retail vehicle pricing environments, vehicle reconditioning and logistics costs, and the percentage of vehicles sourced directly from consumers through our appraisal process.  Vehicles purchased directly from consumers typically generate more gross profit per unit compared with vehicles purchased at auction or through other channels.

Used vehicle gross profit rose 11.7% in the third quarter of fiscal 2020 and 10.3% in the first nine months of fiscal 2020, driven by the 11.0% and 10.1% growth in total used unit sales, respectively. Our used vehicle gross profit per unit remained relatively flat with the corresponding prior year quarter and period. We believe we can manage to a targeted gross profit per unit dollar range, subject to future changes to our business or pricing strategy.

Wholesale Vehicle Gross Profit.    Our wholesale gross profit per unit reflects the demand for older, higher mileage vehicles, which are the mainstay of our auctions, as well as strong dealer attendance and resulting high dealer-to-car ratios at our auctions.  The frequency of our auctions, which are generally held weekly or bi-weekly, minimizes the depreciation risk on these vehicles.  Our ability to adjust appraisal offers in response to the wholesale pricing environment is a key factor that influences wholesale gross profit. 

Wholesale vehicle gross profit increased 2.0% in the third quarter of fiscal 2020, driven by the 3.3% increase in wholesale unit sales, partially offset by a modest decrease in wholesale gross profit per unit as a result of increased depreciation at auctions during the third quarter. In the first nine months of fiscal 2020, wholesale vehicle gross profit increased 5.9%, driven by the 4.8% increase in wholesale unit sales and a modest increase in wholesale gross profit per unit.

Other Gross Profit.  Other gross profit includes profits related to EPP revenues, net third-party finance fees and other revenues, which are predominantly comprised of service department operations, including used vehicle reconditioning, and new vehicle sales.  We have no cost of sales related to EPP revenues or net third-party finance fees, as these represent revenues paid to us by certain third-party providers.  Third-party finance fees are reported net of the fees we pay to third-party Tier 3 finance providers.  Accordingly, changes in the relative mix of the components of other gross profit can affect the composition and amount of other gross profit.

Other gross profit declined 0.8% in the third quarter of fiscal 2020 and increased 6.6% in the first nine months of fiscal 2020, primarily reflecting the growth in EPP profits discussed above, offset by a decline in service department profits of $11.0 million and $13.9 million, respectively. Service profits were adversely affected by a recent increase in our post-sale warranty period from 30 to 90 days, near-term inefficiencies resulting from our recent ramp in technician hiring to support future sales growth, and higher share-based compensation expense for service department associates due to an increase in our stock price.

Impact of Inflation.  Historically, inflation has not had a significant impact on results.  Profitability is primarily affected by our ability to achieve targeted unit sales and gross profit dollars per vehicle rather than by changes in average retail prices.  However, we believe higher vehicle acquisition prices have adversely impacted, and could impact in the future, our comparable store used unit sales growth. Changes in average vehicle selling prices also impact CAF income, to the extent the average amount financed also changes.

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SG&A Expenses

COMPONENTS OF SG&A EXPENSES AS A PERCENTAGE OF TOTAL SG&A EXPENSES

COMPONENTS OF SG&A EXPENSES COMPARED WITH PRIOR PERIOD

	Three Months Ended November 30							Nine Months Ended November 30
(In millions except per unit data)	2019		2018		Change			2019		2018		Change
Compensation and benefits:
Compensation and benefits, excluding share-based compensation expense	$	217.2	$	197.2	10.1		%	$	674.7	$	627.8	7.5		%
Share-based compensation expense	26.3		7.3		260.3		%	89.0		57.0		56.1		%
Total compensation and benefits (1)	$	243.5	$	204.5	19.1		%	$	763.7	$	684.8	11.5		%
Store occupancy costs	98.0		90.3		8.5		%	291.2		268.9		8.3		%
Advertising expense	51.8		37.4		38.8		%	140.6		122.5		14.7		%
Other overhead costs (2)	91.5		77.3		18.3		%	259.8		225.1		15.4		%
Total SG&A expenses	$	484.8	$	409.5	18.4		%	$	1,455.3	$	1,301.3	11.8		%
SG&A per used vehicle unit (3)	$	2,518	$	2,361	$	157		$	2,325	$	2,288	$	37

⁽¹⁾   Excludes compensation and benefits related to reconditioning and vehicle repair service, which are included in cost of sales. See Note 10 for details of share-based compensation expense by grant type.

⁽²⁾   Includes IT expenses, insurance, preopening and relocation costs, non-CAF bad debt, travel, charitable contributions and other administrative expenses.

⁽³⁾   Calculated as total SG&A expenses divided by total used vehicle units.

SG&A expenses increased 18.4% in the third quarter of fiscal 2020. In addition to the 10% growth in our store base since the beginning of last year’s third quarter (representing the addition of 19 stores), higher costs associated with our comparable store unit growth, and continued spending to advance our technology platforms and support our core and omni-channel initiatives, the net increase reflected the following:

• $19.0 million increase in share-based compensation expense. The increase in share-based compensation expense was primarily related to cash-settled restricted stock units that are awarded broadly to our non-executive associates. The expense associated with these units was primarily driven by the 17% increase in our stock price during the current quarter versus the 15% decrease during the prior year quarter.

• Advertising expense increased $14.5 million due to our new national advertising campaign launched in October and incremental marketing to support our omni-channel roll out. For the full year, we expect our fiscal 2020 advertising expense per retail unit to be slightly higher than fiscal 2019.

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SG&A expenses increased 11.8% in the first nine months of fiscal 2020. In addition to the 13% growth in our store base since the beginning of fiscal 2019 (representing the addition of 25 stores), higher costs associated with our comparable store unit growth, and continued spending to advance our technology platforms and support our core and omni-channel initiatives, the net increase reflected the following:

• $32.0 million increase in share-based compensation expense. The increase in share-based compensation expense was largely related to cash-settled restricted stock units, as the expense associated with these units was primarily driven by the 57% increase in our stock price during the current period versus a 7% increase during the prior year period.

• Advertising expense increased $18.1 million due to our new national advertising campaign launched in October and incremental marketing to support our omni-channel roll out. As noted above, advertising spending per retail unit is expected to be slightly higher in fiscal 2020, as compared to fiscal 2019.

Interest Expense.  Interest expense includes the interest related to short- and long-term debt, financing obligations and finance lease obligations.  It does not include interest on the non-recourse notes payable, which is reflected within CAF income.

Interest expense rose to $21.8 million and $60.7 million in the third quarter and first nine months of fiscal 2020, respectively, from $18.8 million and $54.8 million in the third quarter and first nine months of fiscal 2019. The increase primarily reflected higher outstanding debt levels and an increase in finance lease obligations in the third quarter and first nine months of fiscal 2020.

Other (Income) Expense. Other income was $6.6 million and $6.8 million in the third quarter and first nine months of fiscal 2020, respectively, compared with expense of $2.8 million and $3.1 million in the third quarter and first nine months of fiscal 2019. The increase for both periods was primarily due to an unrealized gain on an investment recorded during fiscal 2020.

Income Taxes.  The effective income tax rate was 23.9% in the third quarter of fiscal 2020 and 23.8% in the first nine months of fiscal 2020 versus 23.2% in the third quarter of fiscal 2019 and 24.2% in the first nine months of fiscal 2019.

RESULTS OF OPERATIONS – CARMAX AUTO FINANCE

CAF income primarily reflects interest and fee income generated by CAF’s portfolio of 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. Total interest margin reflects the spread between interest and fees charged to consumers and our funding costs. Changes in the interest margin on new originations affect CAF income over time. Continued increases in interest rates, which affect CAF’s funding costs, or other competitive pressures on consumer rates, could result in compression in the interest margin on new originations. Changes in the allowance for loan losses as a percentage of ending managed receivables reflect the effect of the change in loss and delinquency experience on our outlook for net losses expected to occur over the next 12 months.

CAF’s managed portfolio is composed primarily of loans originated over the past several years.  Trends in receivable growth and interest margins primarily reflect the cumulative effect of changes in the business over a multi-year period. We strive to originate loans with an underlying risk profile that we believe will, in the aggregate and excluding CAF’s Tier 3 originations, result in cumulative net losses in the 2% to 2.5% range over the life of the loans.  Actual loss performance of the loans may fall outside of this range based on various factors, including intentional changes in the risk profile of originations, economic conditions and wholesale recovery rates.  Current period originations reflect current trends in both our retail sales and the CAF business, including the volume of loans originated, current interest rates charged to consumers, loan terms and average credit scores.   Because we recognize CAF income over the life of the underlying auto loan, loans originated in a given fiscal period generally do not have a significant effect on that period’s financial results. 

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.

See Note 3 for additional information on CAF income and Note 4 for information on auto loan receivables, including credit quality.

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SELECTED CAF FINANCIAL INFORMATION

	Three Months Ended November 30										Nine Months Ended November 30
(In millions)	2019			% (1)		2018			% (1)		2019			% (1)		2018			% (1)
Interest margin:
Interest and fee income	$	278.9		8.4		$	247.8		8.0		$	820.8		8.4		$	722.3		8.0
Interest expense	(90.4		)	(2.7	)	(75.3		)	(2.4	)	(268.4		)	(2.8	)	(208.2		)	(2.3	)
Total interest margin	$	188.5		5.7		$	172.5		5.6		$	552.4		5.7		$	514.1		5.7
Provision for loan losses	$	(49.0	)	(1.5	)	$	(40.8	)	(1.3	)	$	(132.7	)	(1.4	)	$	(111.7	)	(1.2	)
CarMax Auto Finance income	$	114.0		3.4		$	109.7		3.6		$	344.1		3.5		$	335.0		3.7

⁽¹⁾   Annualized percentage of total average managed receivables.

CAF ORIGINATION INFORMATION (AFTER THE IMPACT OF 3-DAY PAYOFFS)

	Three Months Ended November 30						Nine Months Ended November 30
	2019			2018			2019			2018
Net loans originated (in millions)	$	1,698.2		$	1,503.7		$	5,297.1		$	4,847.6
Vehicle units financed	83,448			76,460			264,691			247,956
Net penetration rate (1)	43.3		%	44.1		%	42.3		%	43.6		%
Weighted average contract rate	8.1		%	8.5		%	8.5		%	8.5		%
Weighted average credit score (2)	712			709			708			706
Weighted average loan-to-value (LTV) (3)	94.4		%	94.6		%	94.5		%	94.9		%
Weighted average term (in months)	66.0			66.0			66.2			66.0

⁽¹⁾   Vehicle units financed as a percentage of total used units sold.

⁽²⁾   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.

⁽³⁾   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.

LOAN PERFORMANCE INFORMATION

	As of and for the Three Months Ended   November 30						As of and for the Nine Months Ended   November 30
(In millions)	2019			2018			2019			2018
Total ending managed receivables	$	13,352.6		$	12,377.2		$	13,352.6		$	12,377.2
Total average managed receivables	$	13,239.2		$	12,321.0		$	12,986.2		$	12,054.6
Allowance for loan losses (1)	$	153.6		$	138.3		$	153.6		$	138.3
Allowance for loan losses as a percentage of ending managed receivables	1.15		%	1.12		%	1.15		%	1.12		%
Net credit losses on managed receivables	$	45.8		$	40.6		$	117.3		$	102.0
Annualized net credit losses as a percentage of total average managed receivables	1.38		%	1.32		%	1.20		%	1.13		%
Past due accounts as a percentage of ending managed receivables	3.83		%	3.77		%	3.83		%	3.77		%
Average recovery rate (2)	47.5		%	48.0		%	48.4		%	47.9		%

⁽¹⁾  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. 

⁽²⁾  The average recovery rate represents the average percentage of the outstanding principal balance we receive when a vehicle is repossessed and liquidated, generally at our wholesale auctions.  While in any individual period conditions may vary, over the past 10 fiscal years, the annual recovery rate has ranged from a low of 46% to a high of 60%, and it is primarily affected by the wholesale market environment.

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• CAF Income (Increase of $4.3 million, or 3.9%, and $9.1 million, or 2.7%, in the third quarter and first nine months of fiscal 2020, respectively)

◦ The increase in CAF income for the third quarter of fiscal 2020 reflects an increase in average managed receivables and a modest improvement in the total interest margin percentage, partially offset by an increase in the provision for loan losses.

◦ The increase in CAF income for the first nine months of fiscal 2020 reflects an increase in average managed receivables, partially offset by an increase in the provision for loan losses.

◦ Average managed receivables grew 7.5% to $13.24 billion in the third quarter of fiscal 2020 and 7.7% to $12.99 billion in the first nine months of fiscal 2020 driven primarily by the rise in CAF loan originations in recent years.

◦ The growth in net loan originations in both the third quarter and first nine months of fiscal 2020 resulted from our used vehicle sales growth and an increase in the average amount financed, partially offset by a decline in CAF’s penetration rate.

• Provision for Loan Losses (Increased to $49.0 million and $132.7 million in the third quarter and first nine months of fiscal 2020, respectively, from $40.8 million and $111.7 million in the third quarter and first nine months of fiscal 2019)

◦ The increase in the provision for loan losses was primarily due to the growth in average managed receivables as well as a slight increase in the allowance as a percentage of managed receivables.

◦ The allowance for loan losses as a percentage of ending managed receivables was 1.15% as of November 30, 2019, compared with 1.12% as of November 30, 2018, and 1.10% as of February 28, 2019.

◦ Net losses for both the third quarter and first nine months of fiscal 2020 remained well within our long-term targeted performance range.

• Total interest margin increased slightly as a percentage of average managed receivables to 5.7% in the third quarter of fiscal 2020 from 5.6% in the prior year quarter. Total interest margin remained flat at 5.7% of average managed receivables in the first nine months of fiscal 2020.

Tier 3 Loan Originations.  CAF also originates a small portion of auto loans to customers who typically would be financed by our Tier 3 finance providers, in order to better understand the performance of these loans, mitigate risk and add incremental profits. CAF currently targets originating approximately 5% of the total Tier 3 loan volume; however, this rate may vary over time based on market conditions. A total of $167.6 million and $162.4 million in CAF Tier 3 receivables were outstanding as of November 30, 2019 and February 28, 2019, respectively.  These loans have higher loss and delinquency rates than the remainder of the CAF portfolio, as well as higher contract rates.  As of November 30, 2019 and February 28, 2019, approximately 10% of the total allowance for loan losses related to the outstanding CAF Tier 3 loan balances.

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PLANNED FUTURE ACTIVITIES

We currently plan to open 13 stores in fiscal 2020 and a similar number of stores in fiscal 2021. In December 2019, we opened our Phoenix CEC. We currently estimate capital expenditures will total approximately $350 million in fiscal 2020.

We currently plan to open the following stores within 12 months from November 30, 2019. During this period, we will be entering one new television market and expanding our presence in eight existing television markets. Of the 11 stores we plan to open during the 12 months ending November 30, 2020, 3 will be in Metropolitan Statistical Areas having populations of 600,000 or less, which we define as small markets. Normal construction, permitting or other scheduling delays could shift the opening dates of any of these stores into a later period. 

PLANNED STORE OPENINGS – NEXT 12 MONTHS

Location	Television Market	Metropolitan Statistical Area	Planned Opening Date
Fort Wayne, Indiana	Fort Wayne (1)	Fort Wayne	Q4 Fiscal 2020
Salem, Oregon	Portland	Salem	Q4 Fiscal 2020
Murfreesboro, Tennessee	Nashville	Nashville/Davidson/Murfreesboro	Q4 Fiscal 2020
Easton, Pennsylvania	Philadelphia	Allentown/Bethlehem/Easton	Q1 Fiscal 2021
Bradenton, Florida	Tampa	North Port/Sarasota/Bradenton	Q1 Fiscal 2021
Canoga Park, California	Los Angeles	Los Angeles	Q1 Fiscal 2021
Covington, Louisiana	New Orleans	New Orleans	Q1 Fiscal 2021
West Palm Beach, Florida	Miami/Ft. Lauderdale/W. Palm Beach	Miami/Ft. Lauderdale/W. Palm Beach	Q2 Fiscal 2021
Jacksonville, N. Carolina	Greenville/New Bern/Washington	Jacksonville	Q2 Fiscal 2021
Lakeland, Florida	Tampa	Lakeland/Winter Haven	Q3 Fiscal 2021
Norco, California	Los Angeles	Riverside/San Bernardino/Ontario	Q3 Fiscal 2021

⁽¹⁾     Represents new television market as of planned store opening date.

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FINANCIAL CONDITION

Liquidity and Capital Resources

Our primary ongoing cash requirements are to fund our existing operations, store expansion and improvement and CAF. Since fiscal 2013, we have also elected to use cash for our share repurchase program.  Our primary ongoing sources of liquidity include funds provided by operations, proceeds from non-recourse funding vehicles and borrowings under our revolving credit facility or through other financing sources.

We currently target an adjusted debt-to-total capital ratio in a range of 35% to 45%. In calculating this ratio, we utilize total debt excluding non-recourse notes payable, finance lease liabilities, a multiple of eight times rent expense and total shareholders’ equity. We expect to use our revolving credit facility and other financing sources, together with stock repurchases, to maintain this targeted ratio; however, in any period, we may be outside this range due to seasonal, market, strategic or other factors.

Operating Activities.  During the first nine months of fiscal 2020, net cash used in operating activities totaled $117.9 million, compared with net cash provided by operating activities of $114.6 million in the prior year period, which included increases in auto loan receivables of $980.8 million in the current year period and $875.3 million in the prior year period.  The majority of the increases in auto loan receivables are accompanied by increases in non-recourse notes payable, which are separately reflected as cash from financing activities. 

As of November 30, 2019, total inventory was $2.68 billion, representing an increase of $163.1 million, or 6.5%, compared with the balance as of the start of the fiscal year.  The increase primarily reflected a higher average carrying cost of inventory due to an increase in acquisition costs and changes in our vehicle mix, as well as increased inventory to support store openings and our comparable store sales growth in fiscal 2020. In addition, we typically build inventories in the late fall in order to take advantage of seasonal sales opportunities.

When considering cash from operating activities, management uses an adjusted measure of net cash from operating activities that offsets the changes in auto loan receivables with the corresponding changes in non-recourse notes payable.  This is achieved by adding back the cash provided from the net issuances of non-recourse notes payable, which represents the increase in auto loan receivables that were funded through the issuance of non-recourse notes payable during the period.  The resulting financial measure, adjusted net cash from operating activities, is a non-GAAP financial measure.  We believe adjusted net cash from operating activities is a meaningful metric for investors because it provides better visibility into the cash generated from operations.  Including the increases in non-recourse notes payable, net cash provided by operating activities would have been as follows:

RECONCILIATION OF ADJUSTED NET CASH FROM OPERATING ACTIVITIES

	Nine Months Ended November 30
(In millions)	2019			2018
Net cash (used in) provided by operating activities	$	(117.9	)	$	114.6
Add: Net issuances of non-recourse notes payable (1)	785.0			748.4
Adjusted net cash provided by operating activities	$	667.1		$	863.0

⁽¹⁾  Calculated using the gross issuances less payments on non-recourse notes payable as disclosed on the consolidated statements of cash flows.

Adjusted net cash provided by operating activities for the first nine months of the current fiscal year decreased compared with the prior year period primarily due to the changes in inventory discussed above, timing and use of non-recourse funding vehicles in relation to originations of auto loan receivables, and timing-related changes to accounts receivable and other current assets, partially offset by an increase in net earnings when excluding non-cash expenses, which include depreciation and amortization, share-based compensation expense and the provisions for loan losses and cancellation reserves.

Investing Activities. During the first nine months of the fiscal year, net cash used in investing activities totaled $256.6 million in fiscal 2020 compared with $247.0 million in fiscal 2019.  Capital expenditures were $249.2 million in the current year period versus $243.3 million in the prior year period.  Capital expenditures primarily included store construction costs, real estate acquisitions for planned future store openings, and store remodeling expenses.  We maintain a multi-year pipeline of sites to support our store growth, so portions of capital spending in one year may relate to stores that we open in subsequent fiscal years.

As of November 30, 2019, 135 of our 213 used car stores were located on owned sites and 78 were located on leased sites, including 22 land-only leases and 56 land and building leases.

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Financing Activities.  During the first nine months of fiscal 2020, net cash provided by financing activities totaled $409.1 million compared with $146.8 million in the prior year period.  Included in these amounts were net increases in total non-recourse notes payable of $785.0 million and $748.4 million, respectively, which were used to provide the financing for the majority of the increases of $980.8 million and $875.3 million, respectively, in auto loan receivables (see “Operating Activities”).

During the first nine months of fiscal 2020, cash provided by financing activities was impacted by stock repurchases of $458.6 million as well as net borrowings on our long-term debt of $4.7 million. During the first nine months of fiscal 2019, cash provided by financing activities was impacted by stock repurchases of $633.2 million as well as net repayments on our long-term debt of $10.4 million.

TOTAL DEBT AND CASH AND CASH EQUIVALENTS

(In thousands)		As of November 30		As of February 28
Debt Description (1)	Maturity Date	2019		2019
Revolving credit facility (2)	June 2024	$	377,521	$	366,529
Term loan (2)	June 2024	300,000		300,000
3.86% Senior notes	April 2023	100,000		100,000
4.17% Senior notes	April 2026	200,000		200,000
4.27% Senior notes	April 2028	200,000		200,000
Financing obligations	Various dates through February 2059	537,311		495,626
Non-recourse notes payable	Various dates through April 2026	13,320,447		12,535,405
Total debt (3)		15,035,279		14,197,560
Cash and cash equivalents		$	56,583	$	46,938

 ⁽¹⁾  Interest is payable monthly, with the exception of our senior notes, which are payable semi-annually.

 ⁽²⁾  Borrowings accrue interest at variable rates based on the Eurodollar rate (LIBOR), the federal funds rate, or the prime rate, depending on the type of borrowing.

⁽³⁾  Total debt excludes unamortized debt issuance costs. See Note 9 for additional information.

Borrowings under our $1.45 billion unsecured revolving credit facility are available for working capital and general corporate purposes, and the unused portion is fully available to us.  The credit facility, term loan and senior note agreements contain representations and warranties, conditions and covenants.  If these requirements are not met, all amounts outstanding or otherwise owed could become due and payable immediately and other limitations could be placed on our ability to use any available borrowing capacity. 

See Note 9 for additional information on our revolving credit facility, term loan, senior notes and financing obligations.

CAF auto loan receivables are primarily funded through our warehouse facilities and asset-backed term funding transactions.  These non-recourse funding vehicles are structured to legally isolate the auto loan receivables, and we would not expect to be able to access the assets of our non-recourse funding vehicles, even in insolvency, receivership or conservatorship proceedings.  Similarly, the investors in the non-recourse notes payable have no recourse to our assets beyond the related receivables, the amounts on deposit in reserve accounts and the restricted cash from collections on auto loan receivables.  We do, however, continue to have the rights associated with the interest we retain in these non-recourse funding vehicles. 

As of November 30, 2019, $11.01 billion and $2.31 billion of non-recourse notes payable were outstanding related to asset-backed term funding transactions and our warehouse facilities, respectively.  During the first nine months of fiscal 2020, we funded a total of $4.37 billion in asset-backed term funding transactions. 

We have periodically increased our warehouse facility limit over time, as our store base, sales and CAF loan originations have grown. See Note 9 for additional information on the warehouse facilities. 

We generally repurchase the receivables funded through our warehouse facilities when we enter into an asset-backed term funding transaction. If our counterparties were to refuse to permit these repurchases it could impact our ability to execute on our funding program. Additionally, the agreements related to the warehouse facilities include various representations and warranties, covenants and performance triggers.  If these requirements are not met, we could be unable to continue to fund receivables through the warehouse facilities.  In addition, warehouse facility investors could charge us a higher rate of interest and could have us replaced

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as servicer.  Further, we could be required to deposit collections on the related receivables with the warehouse facility agents on a daily basis and deliver executed lockbox agreements to the warehouse facility agents. 

We expect that adjusted net cash provided by operations, borrowings under existing, new or expanded credit facilities and other funding arrangements will be sufficient to fund CAF, capital expenditures, repurchases of stock and working capital for the foreseeable future.  We anticipate that we will be able to enter into new, or renew or expand existing, funding arrangements to meet our future funding needs.  However, based on conditions in the credit markets, the cost for these arrangements could be materially higher than historical levels and the timing and capacity of these transactions could be dictated by market availability rather than our requirements.

The timing and amount of stock repurchases are determined based on stock price, market conditions, legal requirements and other factors.  Shares repurchased are deemed authorized but unissued shares of common stock.  As of November 30, 2019, a total of $2 billion of board authorizations for repurchases were outstanding, with no expiration date, of which $1.67 billion remained available for repurchase. See Note 10 for more information on share repurchase activity.

Fair Value Measurements

We recognize money market securities, mutual fund investments and derivative instruments at fair value.  See Note 6 for more information on fair value measurements.

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FORWARD-LOOKING STATEMENTS

We caution readers that the statements contained in this report about our future business plans, operations, capital structure, opportunities, or prospects, including without limitation any statements or factors regarding expected sales, margins, expenditures, CAF income, stock repurchases, indebtedness, tax rates, earnings, or market conditions are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  You can identify these forward-looking statements by the use of words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “outlook,” “plan,” “predict,” “should,” “will” and other similar expressions, whether in the negative or affirmative.  Such forward-looking statements are based upon management’s current knowledge and assumptions about future events and involve risks and uncertainties that could cause actual results to differ materially from anticipated results.  We disclaim any intent or obligation to update these statements.  Among the factors that could cause actual results and outcomes to differ materially from those contained in the forward-looking statements are the following:

• Changes in the competitive landscape and/or our failure to successfully adjust to such changes.

• Events that damage our reputation or harm the perception of the quality of our brand.

• Changes in general or regional U.S. economic conditions.

• Our inability to realize the benefits associated with our omni-channel initiatives.

• Changes in the availability or cost of capital and working capital financing, including changes related to the asset-backed securitization market.

• 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, associate or corporate information.

• Significant changes in prices of new and used vehicles.

• Changes in economic conditions or other factors that result in greater credit losses for CAF’s portfolio of auto loan receivables than anticipated.

• A reduction in the availability of or access to sources of inventory or a failure to expeditiously liquidate inventory.

• Changes in consumer credit availability provided by our third-party finance providers.

• Changes in the availability of extended protection plan products from third-party providers.

• Factors related to the regulatory and legislative environment in which we operate.

• Factors related to geographic and sales growth, including the inability to effectively manage our growth.

• The failure of or inability to sufficiently enhance 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.

• The volatility in the market price for our common stock.

• The performance of third-party vendors we rely on for key components of our business.

• Factors related to seasonal fluctuations in our business.

• The occurrence of severe weather events.

• Factors related to the geographic concentration of our stores.

For more details on factors that could affect expectations, see Part II, Item 1A, “Risk Factors” on Page 42 of this report, our Annual Report on Form 10-K for the fiscal year ended February 28, 2019, and our quarterly or current reports as filed with or furnished to the U.S. Securities and Exchange Commission (“SEC”).  Our filings are publicly available on our investor information home page at investors.carmax.com.  Requests for information may also be made to our Investor Relations Department by email to

Page 40

investor_relations@carmax.com or by calling 1-804-747-0422, ext. 4391.  We undertake no obligation to update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise.

Item 3.    Quantitative and Qualitative Disclosures about Market Risk

There have been no material changes to our market risk since February 28, 2019.  For information on our exposure to market risk, refer to Part II, Item 7A, “Quantitative and Qualitative Disclosures about Market Risk,” contained in our Annual Report on Form 10-K for the year ended February 28, 2019.

Item 4.    Controls and Procedures

Disclosure.  We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (“Exchange Act”)) that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.  Our disclosure controls and procedures are also designed to ensure that this information is accumulated and communicated to management, including the chief executive officer (“CEO”) and the chief financial officer (“CFO”), as appropriate to allow timely decisions regarding required disclosure.

As of the end of the period covered by this report, with the participation of the CEO and CFO, we evaluated the effectiveness of our disclosure controls and procedures.  Based upon that evaluation, the CEO and CFO concluded that our disclosure controls and procedures were effective as of the end of the period.

Internal Control over Financial Reporting.    There was no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during the quarter ended November 30, 2019, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II.  OTHER INFORMATION

Item 1.    Legal Proceedings

For a discussion of legal proceedings, see Note 15 to the consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Item 1A.     Risk Factors

In connection with information set forth in this Form 10-Q, the factors discussed under “Risk Factors” in our Form  10-K for fiscal year ended February 28, 2019, should be considered.  These risks could materially and adversely affect our business, financial condition, and results of operations.  There have been no material changes to the factors discussed in our Form 10‑K.

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds

On October 23, 2018, the board authorized the repurchase of up to $2 billion of our common stock with no expiration date. Purchases may be made in open market or privately negotiated transactions at management’s discretion and the timing and amount of repurchases are determined based on stock price, market conditions, legal requirements and other factors.  Shares repurchased are deemed authorized but unissued shares of common stock. 

The following table provides information relating to the company’s repurchase of common stock for the third quarter of fiscal 2020.  The table does not include transactions related to employee equity awards or the exercise of employee stock options.

					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, 2019	473,904	$	85.90	473,904	$	1,740,059,721
October 1 - 31, 2019	471,952	$	90.88	471,952	$	1,697,167,565
November 1 - 30, 2019	324,434	$	96.19	324,434	$	1,665,961,217
Total	1,270,290			1,270,290

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Item 6.    Exhibits

10.1	CarMax, Inc. Severance Agreement, effective October 25, 2019, between CarMax, Inc. and Enrique N. Mayor-Mora, filed as Exhibit 10.1 to CarMax’s Current Report on Form 8-K, filed October 24, 2019.
10.2	CarMax, Inc. 2002 Employee Stock Purchase Plan, as amended and restated January 1, 2020, filed herewith.
31.1	Certification of the Chief Executive Officer Pursuant to Rule 13a-14(a), filed herewith.
31.2	Certification of the Chief Financial Officer Pursuant to Rule 13a-14(a), filed herewith.
32.1	Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, filed herewith.
32.2	Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, filed herewith.
101.INS	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL 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
104	Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

CARMAX, INC.
By:	/s/  William D. Nash
	William D. Nash
	President and
	Chief Executive Officer
By:	/s/  Enrique N. Mayor-Mora
	Enrique N. Mayor-Mora
	Senior Vice President and
	Chief Financial Officer

January 7, 2020

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EX-10.2

CARMAX, INC.

AMENDED AND RESTATED 2002 EMPLOYEE STOCK PURCHASE PLAN

(as amended and restated January 1, 2020)

1.    Purpose and Effective Date. The CarMax, Inc. Amended and Restated 2002 Employee Stock Purchase Plan (the “Plan”) provides eligible employees of CarMax, Inc., a Virginia corporation, an opportunity to purchase CarMax, Inc. Common Stock (“Common Stock”) through payroll deductions and to receive a Company match for a portion of their payroll deductions. The Plan was originally effective on October 1, 2002, and was amended and restated effective as of November 1, 2004, as of July 1, 2006, as of January 19, 2009 and as of June 23, 2009. The effective date of this amendment and restatement is January 1, 2020.

2.    Definitions.

(a)    Benefits Department: The employee benefits department of the Company.

(b)    Committee: The Compensation and Personnel Committee of the Company’s Board of Directors.

(c)    Company: CarMax, Inc., a Virginia corporation, and any subsidiary business entity (including, but not limited to, a corporation, a partnership, or limited liability company) that is under common control with CarMax, Inc., as determined under Section 414(b) or (c) of the Internal Revenue Code of 1986, as amended.

(d)    Compensation: All cash compensation and commissions (estimated as deemed necessary by the Plan Administrator) before any deductions or withholding and including overtime and bonuses, but exclusive of all amounts paid as reimbursements of expenses including those paid as part of commissions and those paid in the form of relocation bonuses, housing allowances or other payments in connection with employee relocations.

(e)    Eligible Employees: Employees who meet the requirements set forth in Section 4.

(f)    Employee: Any person employed by the Company as a common law employee on the United States payroll. It is expressly intended that persons not employed as common law employees on the Company’s United States payroll are to be excluded from participation in the Plan, even if a court or administrative agency determines that such individuals are common law employees and not independent contractors.

(g)    Enrollment Date: The date on which an Eligible Employee begins participation in the Plan pursuant to Section 6.

(h)    Participating Employees: Eligible Employees who participate in the Plan.

(i)    Plan Administrator: An Employee (or a group of Employees) appointed by the Committee as provided in Section 5 or, in the absence of any such specific appointment, the Chief Financial Officer of the Company.

(j)    Plan Service Provider: A plan service provider/dealer registered with the Securities and Exchange Commission and a member of the National Association of Securities Dealers or other provider of employee plan administrative services selected by the Plan Administrator as provided in Section 5.

3.    Amount of Stock Subject to the Plan. The total number of shares of Common Stock that may be purchased under the Plan shall be 8,000,000, subject to adjustment as provided in Section 16. Such shares must be shares purchased for Participating Employees on the open market.

4. Eligible Employees.

(a)Any Employee classified as a “Full-Time Associate” or “Part-Time Associate” pursuant to the Company’s policies and procedures shall become eligible to participate in the Plan after he or she has completed one year of service as an Employee of the Company; provided, however, that (i) Employees who are subject to Section 16 of the Securities Exchange Act of 1934, as amended, with respect to securities of the Company, and (ii) Employees who are officers of the Company (other than those serving as Assistant Vice Presidents, Assistant Treasurers or Assistant Secretaries), shall not be eligible to participate in the Plan.

(b)    If an Employee has one year of service but is excluded from participation in the Plan due to the requirements set forth in (i) or (ii) of the preceding paragraph, the Employee will be eligible to participate in the Plan as soon as administratively practicable,after he or she is no longer excluded because of such requirements. Continuity of service for purposes of determining if an Employee has completed one year of service is determined pursuant to the Company’s rehire/reinstatement and change of status policies in effect at the time the eligibility determination is made.

5. Administration of the Plan.

(a)The Plan shall be administered by the Committee or its designee. The Committee shall have all powers necessary to administer the Plan, including but not limited to, the power: to construe and interpret the Plan’s documents; to decide all questions relating to an Employee’s employment status and eligibility to participate in the Plan; to make adjustments to the limitations on payroll deductions set forth in Section 7; to employ such other persons as are necessary for the proper administration of the Plan; and to make all other determinations necessary or advisable in administering the Plan. Any construction, interpretation, or application of the Plan by the Committee shall be final, conclusive and binding.

(b)    The Committee shall appoint an officer or other Employee of the Company to serve as the Plan Administrator. The Plan Administrator shall be authorized to designate other Employees of the Company to assist him or her in carrying out his or her responsibilities under the Plan. The Plan Administrator and his or her designees shall be responsible for the general administration of the Plan including establishment of operating procedures, enrollment deadlines and such other matters as the Committee deems necessary for the efficient and proper administration of the Plan.

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(c)    The Plan Administrator shall appoint a Plan Service Provider in order to fulfill the duties of the Plan Service Provider set forth herein. The Plan Administrator shall also have the authority to replace any Plan Service Provider he or she has appointed for the Plan with another Plan Service Provider.

6.    Participation in the Plan.

(a)    An Eligible Employee may commence or recommence participation in the Plan as soon as administratively feasible after he or she has enrolled and that enrollment has been processed by the Plan Service Provider.

(b)    An Eligible Employee shall authorize payroll deductions from the Employee’s Compensation and authorize the Plan Service Provider to establish an employee stock purchase plan account for the Employee (“ESPP Account”).

(c)    A Participating Employee’s contributions will begin in the first pay period that is administratively practicable after the enrollment has been processed by the Plan Service Provider.

7.    Payroll Deductions and Limitations.

(a)    Payroll deductions shall be a percentage of the Participating Employee’s Compensation for each payroll period as specified by the Participating Employee according to procedures defined by the Benefits Department. Payroll deductions for each payroll period shall not be less than 2% nor more than 10% of Compensation for such payroll period. Payroll deduction specifications shall be made in 1% increments. The Plan Administrator shall have the power to change these percentage limitations.

(b)    The maximum amount that may be contributed by each Participating Employee to the Plan in any one calendar year is $10,000. When a Participating Employee’s aggregate payroll deductions for the calendar year total $10,000, the Participating Employee’s purchases of Common Stock and payroll deductions under the Plan shall be suspended for the remainder of the calendar year. However, the Participating Employee shall continue to be a participant under the Plan unless he or she elects to stop contributions in the manner described in Section 17 or his or her participation terminates under Section 18 and the Employee’s purchases of Common Stock and payroll deductions will be resumed for the first full payroll period of the next calendar year.

8.    Changes in Payroll Deductions. A Participating Employee may change the percentage of his or her payroll deductions, according to the procedures defined by the Benefits Department, subject to the minimum, maximum and allowed increments set forth in Section 7. The change will be effective as soon as administratively practicable after the change request has been processed by the Plan Service Provider. A Participating Employee may also elect to stop making contributions in the manner described in Section 17.

3

9.    Company Matching Contributions. The Company shall contribute an amount each month (the “Company Matching Contribution”) towards the purchase of shares for Participating Employees. Unless modified by the Committee, the amount of the Company Matching Contribution shall be 15% of each Participating Employee’s contribution. From time to time the Committee may modify the amount of the Company Matching Contribution; provided, however, that the Company Matching Contribution may not exceed 15% of each Participating Employee’s contribution. The Company Matching Contribution shall be used to purchase shares for Participating Employees in accordance with Section 11.Participating Employees shall be fully vested in shares purchased with Company Matching Contributions.

10.    Purchase Price. A purchase price for all shares of Common Stock to be purchased under the Plan shall be determined on a monthly basis. The purchase price shall apply to all purchases attributable to a Participating Employee’s payroll deductions for the payroll periods in the calendar month immediately preceding the date the purchase transactions take place (the “Payroll Deduction Month”). The purchase price shall be 100% of the average selling price of Common Stock on the open market during a two to three day period in which the purchases are made (the “Purchase Price”). Such purchase period shall end no later than the last business day of the month immediately following the Payroll Deduction Month.

11.    Method of Purchase. The shares of Common Stock to be purchased under the Plan shall be purchased once each month on the open market. The Company shall transmit the aggregate payroll deductions from the prior month together with the related Company Matching Contribution and information on each Participating Employee’s contribution to the Plan Service Provider promptly after the end of each month. On a date as soon as practicable following receipt of the funds, the Plan Service Provider shall arrange for the purchase of Common Stock on the open market. As soon as practicable after completing the purchase of the shares, the Plan Service Provider shall credit the ESPP Account for each Participating Employee with as many shares and fractional interests in shares as the Participating Employee’s contribution and the Company Matching Contribution will allow, based on the Purchase Price. Shares purchased pursuant to both Participating Employee contributions and Company Matching Contributions made with respect to a calendar year shall be credited to the ESPP Accounts of Participating Employees no later than March 15 following the end of such calendar year.

12. Dividend Reinvestment.

(a)Each ESPP Account shall be established with the following default dividend policy. Cash dividends, if any, paid with respect to the Common Stock held in each ESPP Account under the Plan shall be automatically reinvested in Common Stock, unless the Participating Employee directs otherwise. The Plan Service Provider shall arrange for the reinvestment of dividends on the open market at the Participating Employee’s expense as soon as the Plan Service Provider receives the cash dividends. The Company will not pay any expenses associated with reinvesting dividends.

(b)    The Committee shall have the right at any time or from time to time upon written notice to the Plan Service Provider to change the default dividend reinvestment policy for ESPP Accounts established under the Plan.

4

13.    Rights as a Shareholder. A Participating Employee shall have the right to vote full shares of Common Stock held in the Participating Employee’s ESPP Account and the right to receive annual reports, proxy statements and other documents sent to shareholders of Common Stock generally; provided, however, that so long as such shares are held for a Participating Employee by the Plan Service Provider, if a Participating Employee fails to respond in a timely manner to a request for instructions with respect to voting, the Plan Service Provider shall take such action with respect to the shares held for the Participating Employee as permitted by the New York Stock Exchange rules. To the extent that such rules and applicable law permit, the Plan Service Provider shall vote shares with respect to which no specific voting instructions are given in accordance with the recommendations of the Board of Directors of the Company. By instructing the Plan Service Provider in accordance with the terms and conditions of the Plan Agreement (defined below), a Participating Employee shall have the right at any time:

(a)    to obtain evidence of the shares of Common Stock credited to the Participating Employee’s ESPP Account;

(b)    to direct that any whole shares of Common Stock credited to the Participating Employee’s ESPP Account be sold, and that the proceeds, less selling expenses, be remitted to the Participating Employee; or

(c)    to direct that any whole shares of Common Stock credited to the Participating Employee’s ESPP Account be transferred to an individual brokerage account.

14.    Rights Not Transferable. Rights under the Plan are not assignable or transferable by a Participating Employee other than by will or by the laws of descent and distribution and, during the Participating Employee’s lifetime, are exercisable only by the Participating Employee.

15.    Joint Accounts. Participating Employees may, to the extent permitted by the Plan Service Provider, establish ESPP Accounts as joint accounts with rights therein as prescribed under applicable state law.

16.    Certain Adjustments in the Case of Stock Dividends or Splits. The Committee shall make appropriate adjustments in the number of shares of Common Stock that may be purchased under the Plan if there are changes in the Common Stock by reason of stock dividends, stock splits, reverse stock splits, recapitalizations, mergers or consolidations.

17. Stopping Contributions.

(a)A Participating Employee may stop his or her contributions in accordance with procedures defined by the Benefits Department. Payroll deductions will stop as soon as administratively practicable. In addition, contributions will be automatically stopped for any Participating Employee who goes on a leave of absence without pay, effective when the Employee ceases to be paid by the Company.

5

(b)    After contributions for an Employee have been stopped, the Plan Service Provider will leave the ESPP Account open and the Committee reserves the right to charge the Employee any account fees resulting from the ESPP Account left open. Shares may be left in the ESPP Account or the Employee may sell the shares or request evidence of ownership thereof. If dividends are being paid and reinvested at the time of withdrawal, they will continue to be reinvested (if paid) unless the Employee requests the Plan Service Provider to pay them in cash. The Employee may also ask the Plan Service Provider to close the ESPP Account.

(c)    An Employee for whom contributions have been stopped may start contributions again pursuant to Section 6 at any time when the Employee is an Eligible Employee.

18.    Termination of Participation in the Plan. An Employee’s participation in the Plan shall terminate when the Employee ceases to be employed by the Company, whether by reason of retirement, termination of employment, death, or otherwise (“Terminated Participant”). Payroll deductions shall cease immediately or as soon as administratively feasible after the Plan Service Provider processes the termination. Purchases shall be made for the calendar month in which the last payroll deduction is made in accordance with Section 11. The Terminated Participant may elect to: (i) obtain evidence of the whole shares of Common Stock credited to his or her ESPP Account; (ii) direct the Plan Service Provider to sell all whole shares of Common Stock credited to his or her ESPP Account and remit the proceeds, less selling expenses, to the Terminated Participant, or (iii) direct the Plan Service Provider to transfer all whole shares of Common Stock credited to his or her ESPP Account to an individual brokerage account. In any event, the Plan Service Provider will sell any fractional interest held in the Terminated Participant’s ESPP Account to the Company and remit the proceeds of such sale, less selling expenses to the Terminated Participant. In the event of an Employee’s death, the distribution shall be made to the Employee’s designated beneficiary or, in the absence of a designated beneficiary, to the Employee’s estate, in accordance with procedures established by the Plan Service Provider.

19.    Amendment of the Plan. The Committee may, at any time, or from time to time, amend the Plan in any respect; provided, however, that the Company shall obtain shareholder approval of an amendment to the extent necessary to comply with any applicable law, regulation or stock exchange rule.

20.    Termination of the Plan. The Plan and all rights of Employees hereunder shall terminate:

(a)    on the last business day of any month that Participating Employees become entitled to purchase a number of shares of Common Stock greater than the number of shares remaining unpurchased out of the total number of authorized shares under Section 3; or

(b)    at any earlier date at the discretion of the Board of Directors of the Company.

In the event that the Plan terminates under circumstances described in (a) above, the Common Stock remaining unpurchased as of the termination date shall be allocated to Participating Employees for purchase on a pro rata basis. Upon termination of the Plan, ESPP Accounts shall

6

remain open subject to the same limitations and conditions set forth in the second paragraph of Section 17.

21.    ESPP Account. The relationship between the Plan Service Provider and each Participating Employee shall be governed by a separate agreement of terms and conditions between them (“Plan Agreement”). In electing to participate in the Plan, a Participating Employee shall be deemed to have accepted the terms of the Plan Agreement.

22.    Payment of Expenses. The Company shall pay all expenses associated with purchases under the Plan, including brokerage commissions, if any.

23.    Notices. Any notice or instruction to be given to the Company shall be in writing and delivered by hand, Company office mail or U.S. mail to the address below:

CarMax, Inc.

c/o Secretary, CarMax, Inc.

12800 Tuckahoe Creek Parkway

Richmond, Virginia 23238

Any signature submitted to the Company electronically or by facsimile will have the same force and effect as an original signature.

24.    Government and Other Regulations. The Plan, and the rights to purchase Common Stock hereunder, and the Company’s obligation to sell and deliver Common Stock hereunder shall be subject to all applicable federal, state and foreign laws, rules and regulations, and to such approvals by any regulatory or government agency as may, in the opinion of counsel for the Company, be required. Any provision of this Plan that violates or conflicts with Section 409A of the Internal Revenue Code of 1986, as amended, shall be null and void and of no effect.

25.    Severability. If any provision of this Plan is not valid or enforceable, that validity or enforceability shall not affect the remaining provisions of the Plan.

26.    Indemnification of Committee. Service on the Committee shall constitute service as a member of the Board of Directors of the Company so that members of the Committee shall be entitled to indemnification and reimbursement as members of the Board of Directors of the Company pursuant to its Articles of Incorporation and Bylaws.

27.    Tax Matters.

(a)    Each Employee shall make provision satisfactory to the Plan Administrator for payment of any taxes required by law to be withheld in respect of the purchase or disposition of Common Stock. In the Plan Administrator’s discretion and subject to applicable law, such tax obligations may be paid in whole or in part by the withholding or delivery of shares of Common Stock, including shares purchased under this Plan, valued at fair market value on the date of withholding or delivery. The Company may, to the extent permitted by law, deduct any such tax obligations from any payment of any kind otherwise due to the Employee.

7

(b)    The Company does not represent or guarantee that any particular federal, state, or local income or payroll tax consequence will result to Participating Employees as a result of participation in the Plan.

28.    Designation of Beneficiary. An Eligible or Participating Employee may file a written designation of a beneficiary in the manner prescribed by the Plan Administrator to receive shares of Common Stock or cash allocated to the Employee’s ESPP Account in the event of the Employee’s death. In the absence of a beneficiary designation, or if the designated beneficiary has predeceased the Employee, the Company shall deliver the shares of Common Stock and cash allocated to the Employee’s ESPP Account to the executor or administrator of the Participating Employee’s estate.

29.    Governing Law. The Plan shall be construed, enforced, and administered in accordance with the laws of the Commonwealth of Virginia to the extent such laws are not preempted by federal law.

IN WITNESS HEREOF, this plan has been executed as of the 1^st day of January, 2020.

CARMAX, INC.

By:    /s/ Enrique Mayor-Mora     

Name: Enrique Mayor-Mora_________

Title: SVP and Chief Financial Officer_

8

EX-31.1

EXHIBIT 31.1

Certification of the Chief Executive Officer

Pursuant to Rule 13a-14(a)

I, William D. Nash, certify that:

1. I have reviewed this quarterly report on Form 10-Q of CarMax, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:  January 7, 2020

/s/ William D. Nash

William D. Nash

President and

Chief Executive Officer

EX-31.2

EXHIBIT 31.2

Certification of the Chief Financial Officer

Pursuant to Rule 13a-14(a)

I, Enrique N. Mayor-Mora, certify that:

1. I have reviewed this quarterly report on Form 10-Q of CarMax, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:  January 7, 2020

/s/ Enrique N. Mayor-Mora 

Enrique N. Mayor-Mora

Senior Vice President and

Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350

In connection with the CarMax, Inc. (the "company") Quarterly Report on Form 10-Q for the period ended November 30, 2019, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, William D. Nash, President and Chief Executive Officer of the company, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

1.  The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2.  The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the company as of, and for, the periods presented in the Report.

Date:	January 7, 2020	By:	/s/ William D. Nash
			William D. Nash
			President and Chief Executive Officer

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350

In connection with the CarMax, Inc. (the "company") Quarterly Report on Form 10-Q for the period ended November 30, 2019, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Enrique N. Mayor-Mora,  Senior Vice President and Chief Financial Officer of the company, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

1.  The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2.  The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the company as of, and for, the periods presented in the Report.

Date:	January 7, 2020	By:	/s/ Enrique N. Mayor-Mora
			Enrique N. Mayor-Mora
			Senior Vice President and
			Chief Financial Officer

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Net Earnings Per Share

9 Months Ended

Nov. 30, 2019

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

	Three Months Ended				Nine Months Ended
	November 30				November 30
(In thousands except per share data)	2019		2018		2019		2018
Net earnings	$	173,156	$	190,311	$	673,499	$	649,857
Weighted average common shares outstanding	164,273		173,816		165,321		176,088
Dilutive potential common shares:
Stock options	1,820		1,109		1,466		1,165
Stock-settled stock units and awards	441		396		367		403
Weighted average common shares and dilutive potential common shares	166,534		175,321		167,154		177,656
Basic net earnings per share	$	1.05	$	1.09	$	4.07	$	3.69
Diluted net earnings per share	$	1.04	$	1.09	$	4.03	$	3.66

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, 2019 and 2018, options to purchase 1,235,575 shares and 2,808,555 shares of common stock, respectively, were not included. For the nine months ended November 30, 2019 and 2018, options to purchase 1,272,429 shares and 3,904,738 shares of common stock, respectively, were not included.

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Cancellation Reserves

9 Months Ended

Nov. 30, 2019

Cancellation Reserves [Abstract]

Cancellation Reserves

Cancellation Reserves

We recognize revenue for EPP products, on a net basis, at the time of sale. We also record 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

	Three Months Ended November 30						Nine Months Ended November 30
(In millions)	2019			2018			2019			2018
Balance as of beginning of period	$	111.6		$	110.6		$	102.8		$	105.2
Cancellations	(18.4		)	(17.2		)	(55.1		)	(50.5		)
Provision for future cancellations	19.6			16.3			65.1			55.0
Balance as of end of period	$	112.8		$	109.7		$	112.8		$	109.7

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, 2019 and February 28, 2019, the current portion of cancellation reserves was $60.8 million and $55.6 million, respectively.

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CarMax Auto Finance

9 Months Ended

Nov. 30, 2019

CarMax Auto Finance Income [Abstract]

CarMax Auto Finance

CarMax Auto Finance

CAF provides financing to qualified retail customers purchasing vehicles from CarMax.  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 or other funding arrangements to fund loans originated by CAF.  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.  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

	Three Months Ended November 30										Nine Months Ended November 30
(In millions)	2019			% (1)		2018			% (1)		2019			% (1)		2018			% (1)
Interest margin:
Interest and fee income	$	278.9		8.4		$	247.8		8.0		$	820.8		8.4		$	722.3		8.0
Interest expense	(90.4		)	(2.7	)	(75.3		)	(2.4	)	(268.4		)	(2.8	)	(208.2		)	(2.3	)
Total interest margin	188.5			5.7		172.5			5.6		552.4			5.7		514.1			5.7
Provision for loan losses	(49.0		)	(1.5	)	(40.8		)	(1.3	)	(132.7		)	(1.4	)	(111.7		)	(1.2	)
Total interest margin after provision for loan losses	139.5			4.2		131.7			4.3		419.7			4.3		402.4			4.5
Total other expense	—			—		(0.1		)	—		—			—		(0.4		)	—
Direct expenses:
Payroll and fringe benefit expense	(10.8		)	(0.3	)	(9.4		)	(0.3	)	(31.3		)	(0.3	)	(28.6		)	(0.3	)
Other direct expenses	(14.7		)	(0.4	)	(12.5		)	(0.4	)	(44.3		)	(0.5	)	(38.4		)	(0.4	)
Total direct expenses	(25.5		)	(0.8	)	(21.9		)	(0.7	)	(75.6		)	(0.8	)	(67.0		)	(0.7	)
CarMax Auto Finance income	$	114.0		3.4		$	109.7		3.6		$	344.1		3.5		$	335.0		3.7
Total average managed receivables	$	13,239.2				$	12,321.0				$	12,986.2				$	12,054.6

⁽¹⁾  

Annualized percentage of total average managed receivables.

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Consolidated Statements Of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Nov. 30, 2019	Nov. 30, 2018
OPERATING ACTIVITIES:
Net earnings	$ 673,499	$ 649,857
Adjustments to reconcile net earnings to net cash (used in) provided by operating activities:
Depreciation and amortization	158,226	135,609
Share-based compensation expense	98,177	61,403
Provision for loan losses	132,650	111,703
Provision for cancellation reserves	65,166	54,952
Deferred income tax (benefit) provision	(744)	909
Other	(72)	4,104
Net (increase) decrease in:
Accounts receivable, net	(2,887)	22,165
Inventory	(163,119)	(34,006)
Other current assets	(41,869)	40,952
Auto loan receivables, net	(980,817)	(875,269)
Other assets	10,185	(6,734)
Net increase (decrease) in:
Accounts payable, accrued expenses and other current liabilities and accrued income taxes	20,604	22,236
Other liabilities	(86,905)	(73,251)
Net Cash Provided by (Used in) Operating Activities	(117,906)	114,630
INVESTING ACTIVITIES:
Capital expenditures	(249,177)	(243,311)
Proceeds from disposal of property and equipment	3	680
Purchases of investments	(8,438)	(5,470)
Sales of investments	1,025	1,104
Net Cash Provided by (Used in) Investing Activities	(256,587)	(246,997)
FINANCING ACTIVITIES:
(Decrease) increase in short-term debt, net	(708)	309
Proceeds from issuances of long-term debt	4,707,500	2,758,000
Payments on long-term debt	(4,702,807)	(2,768,419)
Cash paid for debt issuance costs	(14,849)	(12,329)
Payments on finance lease obligations	(2,813)	(528)
Issuances of non-recourse notes payable	8,596,000	8,183,502
Payments on non-recourse notes payable	(7,810,958)	(7,435,128)
Repurchase and retirement of common stock	(458,587)	(633,170)
Equity issuances	96,367	54,580
Net Cash Provided by (Used in) Financing Activities	409,145	146,817
Increase in cash, cash equivalents, and restricted cash	34,652	14,450
Cash, cash equivalents, and restricted cash at beginning of year	595,377	554,898
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD	630,029	569,348
RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH TO THE CONSOLIDATED BALANCE SHEETS:
Cash and cash equivalents	56,583	35,049
Restricted cash from collections on auto loan receivables	458,493	426,613
Restricted cash included in other assets	114,953	107,686
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD	$ 630,029	$ 569,348

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Consolidated Statements Of Earnings - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Nov. 30, 2019	Nov. 30, 2018	Nov. 30, 2019	Nov. 30, 2018
SALES AND OPERATING REVENUES:
NET SALES AND OPERATING REVENUES	$ 4,790,028	$ 4,295,871	$ 15,357,497	$ 13,854,498
TOTAL COST OF SALES	4,176,381	3,726,634	13,308,014	11,973,285
GROSS PROFIT	613,647	569,237	2,049,483	1,881,213
CARMAX AUTO FINANCE INCOME	114,033	109,725	344,123	334,985
Selling, general and administrative expenses	484,848	409,520	1,455,339	1,301,308
Interest expense	21,843	18,814	60,700	54,816
Other (income) expense	(6,570)	2,820	(6,786)	3,097
Earnings before income taxes	227,559	247,808	884,353	856,977
Income tax provision	54,403	57,497	210,854	207,120
NET EARNINGS	$ 173,156	$ 190,311	$ 673,499	$ 649,857
WEIGHTED AVERAGE COMMON SHARES:
Basic, shares	164,273	173,816	165,321	176,088
Diluted, shares	166,534	175,321	167,154	177,656
NET EARNINGS PER SHARE:
Basic (in dollars per share)	$ 1.05	$ 1.09	$ 4.07	$ 3.69
Diluted (in dollars per share)	$ 1.04	$ 1.09	$ 4.03	$ 3.66
Used vehicle sales
SALES AND OPERATING REVENUES:
NET SALES AND OPERATING REVENUES	$ 4,028,811	$ 3,547,925	$ 12,915,763	$ 11,544,340
TOTAL COST OF SALES	3,615,704	3,177,953	11,549,445	10,305,945
Wholesale vehicle sales
SALES AND OPERATING REVENUES:
NET SALES AND OPERATING REVENUES	610,983	603,584	1,951,718	1,849,225
TOTAL COST OF SALES	504,177	498,840	1,601,573	1,518,698
Total other sales and revenues
SALES AND OPERATING REVENUES:
NET SALES AND OPERATING REVENUES	150,234	144,362	490,016	460,933
TOTAL COST OF SALES	$ 56,500	$ 49,841	$ 156,996	$ 148,642
NET SALES AND OPERATING REVENUES
Percentage of Sales
Item as a percent of net sales and operating revenues	100.00%	100.00%	100.00%	100.00%
TOTAL COST OF SALES
Percentage of Sales
Item as a percent of net sales and operating revenues	87.20%	86.70%	86.70%	86.40%
GROSS PROFIT
Percentage of Sales
Item as a percent of net sales and operating revenues	12.80%	13.30%	13.30%	13.60%
CARMAX AUTO FINANCE INCOME
Percentage of Sales
Item as a percent of net sales and operating revenues	2.40%	2.60%	2.20%	2.40%
Selling, general and administrative expenses
Percentage of Sales
Item as a percent of net sales and operating revenues	10.10%	9.50%	9.50%	9.40%
Interest expense
Percentage of Sales
Item as a percent of net sales and operating revenues	0.50%	0.40%	0.40%	0.40%
Other (income) expense
Percentage of Sales
Item as a percent of net sales and operating revenues	(0.10%)	0.10%	0.00%	0.00%
Earnings before income taxes
Percentage of Sales
Item as a percent of net sales and operating revenues	4.80%	5.80%	5.80%	6.20%
Income tax provision
Percentage of Sales
Item as a percent of net sales and operating revenues	1.10%	1.30%	1.40%	1.50%
NET EARNINGS
Percentage of Sales
Item as a percent of net sales and operating revenues	3.60%	4.40%	4.40%	4.70%
NET SALES AND OPERATING REVENUES | Used vehicle sales
Percentage of Sales
Item as a percent of net sales and operating revenues	84.10%	82.60%	84.10%	83.30%
NET SALES AND OPERATING REVENUES | Wholesale vehicle sales
Percentage of Sales
Item as a percent of net sales and operating revenues	12.80%	14.10%	12.70%	13.30%
NET SALES AND OPERATING REVENUES | Total other sales and revenues
Percentage of Sales
Item as a percent of net sales and operating revenues	3.10%	3.40%	3.20%	3.30%
TOTAL COST OF SALES | Used vehicle sales
Percentage of Sales
Item as a percent of net sales and operating revenues	75.50%	74.00%	75.20%	74.40%
TOTAL COST OF SALES | Wholesale vehicle sales
Percentage of Sales
Item as a percent of net sales and operating revenues	10.50%	11.60%	10.40%	11.00%
TOTAL COST OF SALES | Total other sales and revenues
Percentage of Sales
Item as a percent of net sales and operating revenues	1.20%	1.20%	1.00%	1.10%

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Leases (Tables)

9 Months Ended

12 Months Ended

Nov. 30, 2019

Feb. 28, 2019

Leases [Abstract]

Lease, Cost [Table Text Block]

(In thousands)	Three Months Ended November 30, 2019		Nine Months Ended November 30, 2019
Operating lease cost (1)	$	14,262	$	43,074
Finance lease cost:
Depreciation of lease assets	1,563		4,114
Interest on lease liabilities	2,053		5,499
Total finance lease cost	3,616		9,613
Total lease cost	$	17,878	$	52,687

⁽¹⁾ Includes short-term leases and variable lease costs, which are immaterial.

Supplemental Balance Sheet Disclosures [Text Block]

(In thousands)	Classification	As of November 30, 2019
Assets:
Operating lease assets	Operating lease assets	$	454,708
Finance lease assets	Property and equipment, net (1)	77,304
Total lease assets		$	532,012
Liabilities:
Current:
Operating leases	Current portion of operating lease liabilities	$	30,813
Finance leases	Accrued expenses and other current liabilities	4,512
Long-term:
Operating leases	Operating lease liabilities, excluding current portion	446,302
Finance leases	Other liabilities	79,551
Total lease liabilities		$	561,178

⁽¹⁾ Finance lease assets are recorded net of accumulated depreciation of $7.5 million as of November 30, 2019.

Other Lease Disclosures [Table Text Block]

(In thousands)	Nine Months Ended November 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	42,712
Operating cash flows from finance leases	2,572
Financing cash flows from finance leases	2,813
Lease assets obtained in exchange for lease obligations:
Operating leases	25,029
Finance leases	52,102

Lease Term and Discount Rate	As of November 30, 2019
Weighted Average Remaining Lease Term (in years)
Operating leases	20.06
Finance leases	13.78
Weighted Average Discount Rate
Operating leases	5.40	%
Finance leases	10.30	%

Schedule Of Future Minimum Lease Obligations [Table Text Block]

	As of November 30, 2019
(In thousands)	Operating Leases (1)			Finance Leases (1)
Fiscal 2020, remaining	$	13,741		$	2,793
Fiscal 2021	54,334			12,869
Fiscal 2022	50,796			13,662
Fiscal 2023	48,188			13,879
Fiscal 2024	46,985			16,534
Thereafter	615,224			102,802
Total lease payments	829,268			162,539
Less: interest	(352,153		)	(78,476		)
Present value of lease liabilities	$	477,115		$	84,063

⁽¹⁾ Lease payments exclude $36.9 million of legally binding minimum lease payments for leases signed but not yet commenced.

	As of February 28, 2019
	Capital			Operating Lease
(In thousands)	Leases (1)			Commitments (1)
Fiscal 2020	$	5,139		$	55,295
Fiscal 2021	6,055			52,142
Fiscal 2022	6,185			48,886
Fiscal 2023	6,288			46,235
Fiscal 2024	5,186			45,067
Fiscal 2025 and thereafter	11,445			595,047
Total minimum lease payments	40,298			$	842,672
Less amounts representing interest	(8,518		)
Present value of net minimum lease payments	$	31,780

⁽¹⁾ Excludes taxes, insurance and other costs payable directly by us. These costs vary from year to year and are incurred in the ordinary course of business.

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Revenue (Narrative) (Details) - USD ($) $ in Millions	9 Months Ended
	Nov. 30, 2019	Feb. 28, 2019
Revenue from Contract with Customer [Abstract]
Receivables, Long-term Contracts or Programs	$ 32.2	$ 25.7
Estimated ESP Profit-Sharing Payment	$ 50.0

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Stock and Stock-Based Incentive Plans Schedule of Stock-based Compensation Activity (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions	9 Months Ended
	Nov. 30, 2019	Feb. 28, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number	7,535	7,869
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross	1,595
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period	(1,913)
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures and Expirations in Period	(16)
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value	$ 22.10
Options Outstanding Weighted Average Grant Date Fair Value	$ 18.16
Equity Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount	$ 47.0
Stock-settled market stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number	485	509
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period	131
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period	(150)
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeited in Period	(5)
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value	$ 98.63
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value	$ 84.02
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount	$ 15.6
Other share-based incentives
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number	166	164
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period	83
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period	(81)
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeited in Period	0
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value	$ 80.55
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value	$ 70.97
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount	$ 3.1
Cash-settled restricted stock units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number	1,578	1,609
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period	562
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period	(504)
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeited in Period	(89)
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value	$ 78.61
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value	$ 66.85

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Stock and Stock-Based Incentive Plans Stock and Stock-Based Incentive Plans (Narrative) (Details) - Share Repurchase Program - USD ($) $ in Millions	Nov. 30, 2019	Nov. 30, 2018
Stock and Stock-Based Incentive Plans
Stock Repurchase Program, Authorized Amount	$ 2,000.0
Available for repurchase, as of end of period	$ 1,666.0	$ 2,384.0

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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, 2019	Feb. 28, 2019
Derivative [Line Items]
Additional reclassification from AOCL to CAF income within the next 12 months	$ 7.1
Derivative, Notional Amount	$ 2,590.0	$ 2,230.0

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Cancellation Reserves (Schedule Of Cancellation Reserves Accrual) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Nov. 30, 2019	Nov. 30, 2018	Nov. 30, 2019	Nov. 30, 2018
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward]
Balance as of beginning of period	$ 111.6	$ 110.6	$ 102.8	$ 105.2
Cancellations	(18.4)	(17.2)	(55.1)	(50.5)
Provision for future cancellations	19.6	16.3	65.1	55.0
Balance as of end of period	$ 112.8	$ 109.7	$ 112.8	$ 109.7

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Leases Leases - Prior Period Disclosures (Details) $ in Thousands	Feb. 28, 2019 USD ($)
Leases [Abstract]
Capital Leases, Future Minimum Payments Due, Next Twelve Months	$ 5,139
Capital Leases, Future Minimum Payments Due in Two Years	6,055
Capital Leases, Future Minimum Payments Due in Three Years	6,185
Capital Leases, Future Minimum Payments Due in Four Years	6,288
Capital Leases, Future Minimum Payments Due in Five Years	5,186
Capital Leases, Future Minimum Payments Due Thereafter	11,445
Capital Leases, Future Minimum Payments Due	40,298
Capital Leases, Future Minimum Payments, Interest Included in Payments	(8,518)
Capital Leases, Future Minimum Payments, Present Value of Net Minimum Payments	31,780
Operating Leases, Future Minimum Payments Due, Next Twelve Months	55,295
Operating Leases, Future Minimum Payments, Due in Two Years	52,142
Operating Leases, Future Minimum Payments, Due in Three Years	48,886
Operating Leases, Future Minimum Payments, Due in Four Years	46,235
Operating Leases, Future Minimum Payments, Due in Five Years	45,067
Operating Leases, Future Minimum Payments, Due Thereafter	595,047
Operating Leases, Future Minimum Payments Due	$ 842,672

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Leases - Supplemental Balance Sheet (Details) - USD ($) $ in Thousands	Nov. 30, 2019	Feb. 28, 2019
Leases [Abstract]
Operating lease assets	$ 454,708	$ 0
Finance Lease, Right-of-Use Asset	77,304
Total lease assets	532,012
Current portion of operating lease liabilities	30,813	0
Finance Lease, Liability, Current	4,512
Operating lease liabilities, excluding current portion	446,302	$ 0
Finance Lease, Liability, Noncurrent	79,551
Total lease liabilities	561,178
Finance Lease Accumulated Depreciation	$ 7,500

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Accumulated Other Comprehensive Loss (Changes In and Reclassifications Out of Accumulated Other Comprehensive Loss) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Nov. 30, 2019	Nov. 30, 2018	Nov. 30, 2019	Nov. 30, 2018
Total amortization reclassifications recognized in net pension expense	$ 468	$ 487	$ 1,405	$ 1,461
Tax expense	(113)	(117)	(339)	(352)
Amortization reclassifications recognized in net pension expense, net of tax	355	370	1,066	1,109
Net change in retirement benefit plan unrecognized actuarial losses, net of tax	355	370	1,066	1,109
Changes in fair value	10,529	1,986	(22,844)	3,786
Tax (expense) benefit	(2,782)	(523)	6,037	(998)
Changes in fair value, net of tax	7,747	1,463	(16,807)	2,788
Reclassifications to CarMax Auto Finance income	2,067	(2,084)	2,370	(5,054)
Tax (expense) benefit	(546)	549	(626)	1,332
Reclassification of hedge losses (gains), net of tax	1,521	(1,535)	1,744	(3,722)
Net change in cash flow hedge unrecognized losses, net of tax	9,268	(72)	(15,063)	(934)
Total other comprehensive income (loss), net of tax	9,623	298	(13,997)	175
Cost of sales
Total amortization reclassifications recognized in net pension expense	203	206	601	611
CarMax Auto Finance income
Total amortization reclassifications recognized in net pension expense	12	13	36	38
Selling, general and administrative expenses
Total amortization reclassifications recognized in net pension expense	$ 253	$ 268	$ 768	$ 812

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Auto Loan Receivables (Tables)

9 Months Ended

Nov. 30, 2019

Loans and Leases Receivable, Net Amount [Abstract]

Auto Loan Receivables, Net

Auto Loan Receivables, Net

	As of November 30			As of February 28
(In millions)	2019			2019
Asset-backed term funding	$	10,616.9		$	10,273.4
Warehouse facilities	2,305.7			1,877.0
Overcollateralization (1)	296.3			273.3
Other managed receivables (2)	133.7			86.5
Total ending managed receivables	13,352.6			12,510.2
Accrued interest and fees	59.9			49.6
Other	17.8			6.9
Less allowance for loan losses	(153.6		)	(138.2		)
Auto loan receivables, net	$	13,276.7		$	12,428.5

⁽¹⁾   Represents receivables restricted as excess collateral for the non-recourse funding vehicles.

⁽²⁾

Other managed receivables includes receivables not funded through the non-recourse funding vehicles.

Ending Managed Receivables By Major Credit Grade

Ending Managed Receivables by Major Credit Grade

	As of November 30			As of February 28
(In millions)	2019 (1)		% (2)	2019 (1)		% (2)
A	$	6,691.4	50.1	$	6,225.6	49.8
B	4,813.9		36.1	4,488.2		35.9
C and other	1,847.3		13.8	1,796.4		14.3
Total ending managed receivables	$	13,352.6	100.0	$	12,510.2	100.0

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

⁽²⁾  

Percent of total ending managed receivables.

Allowance For Loan Losses

Allowance for Loan Losses

	Three Months Ended November 30								Nine Months Ended November 30
(In millions)	2019			% (1)	2018			% (1)	2019			% (1)	2018			% (1)
Balance as of beginning of period	$	150.4		1.15	$	138.1		1.13	$	138.2		1.10	$	128.6		1.11
Charge-offs	(81.2		)		(74.3		)		(223.4		)		(198.1		)
Recoveries	35.4				33.7				106.1				96.1
Provision for loan losses	49.0				40.8				132.7				111.7
Balance as of end of period	$	153.6		1.15	$	138.3		1.12	$	153.6		1.15	$	138.3		1.12

⁽¹⁾  

Percent of total ending managed receivables.

Past Due Receivables

Past Due Receivables

	As of November 30			As of February 28
(In millions)	2019		% (1)	2019		% (1)
Total ending managed receivables	$	13,352.6	100.0	$	12,510.2	100.0
Delinquent loans:
31-60 days past due	$	323.0	2.4	$	276.5	2.2
61-90 days past due	152.3		1.1	141.4		1.1
Greater than 90 days past due	35.6		0.3	33.9		0.3
Total past due	$	510.9	3.8	$	451.8	3.6

⁽¹⁾  

Percent of total ending managed receivables.

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Contingent Liabilities

9 Months Ended

Nov. 30, 2019

Commitments and Contingencies Disclosure [Abstract]

Contingent Liabilities

Contingent Liabilities

Litigation.  CarMax entities are defendants in four proceedings asserting wage and hour claims with respect to CarMax sales consultants and non-exempt employees in California. The asserted claims include failure to pay minimum wage, provide meal periods and rest breaks, pay statutory/contractual wages, reimburse for work-related expenses and provide accurate itemized wage statements; unfair competition; and Private Attorney General Act claims. On September 4, 2015, Craig Weiss et al., v. CarMax Auto Superstores California, LLC, and CarMax Auto Superstores West Coast, Inc., a putative class action, was filed in the Superior Court of California, County of Placer. The Weiss lawsuit seeks civil penalties, fines, cost of suit, and the recovery of attorneys’ fees. On June 29, 2016, Ryan Gomez et al. v. CarMax Auto Superstores California, LLC, and CarMax Auto Superstores West Coast, Inc., a putative class action, was filed in the Superior Court of the State of California, Los Angeles. The Gomez lawsuit seeks declaratory relief, unspecified damages, restitution, statutory penalties, interest, cost and attorneys’ fees. On October 31, 2017, Joshua Sabanovich v. CarMax Superstores California, LLC et. al., a putative class action, was filed in the Superior Court of California, County of Stanislaus. The Sabanovich lawsuit seeks unspecified damages, restitution, statutory penalties, interest, cost and attorneys’ fees.  On November 21, 2018, Derek Mcelhannon et al v. CarMax Auto Superstores California, LLC and CarMax Auto Superstores West Coast, Inc., a putative class action, was filed in Superior Court of California, County of Alameda. On February 1, 2019, the Mcelhannon lawsuit was removed to the U.S. District Court, Northern District of California, San Francisco Division. The lawsuit was remanded back to the Superior Court of California, County of Alameda on June 4, 2019. The Mcelhannon lawsuit seeks unspecified damages, restitution, statutory and/or civil penalties, interest, cost and attorneys’ fees.  Based upon our evaluation of information currently available, we believe that the ultimate resolution of the foregoing proceedings will not have a material adverse effect, either individually or in the aggregate, on our financial condition, results of operations or cash flows.

Since April 25, 2017, the company has met and corresponded with representatives from multiple California municipality district attorney offices as part of an inquiry by those offices into the handling, storage and disposal of certain types of hazardous waste at our store locations in those municipalities. CarMax is cooperating with this inquiry and we do not expect the outcome of this matter to have a material adverse effect on our financial condition, results of operations or cash flows.

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 a 90-day/4,000 mile 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 $8.6 million as of November 30, 2019, and $7.4 million as of February 28, 2019, and is included in accrued expenses and other current liabilities.

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Auto Loan Receivables (Past Due Receivables) (Details) - USD ($) $ in Millions	Nov. 30, 2019	Feb. 28, 2019
Financing Receivable, Past Due [Line Items]
Total ending managed receivables	$ 13,352.6	$ 12,510.2
Total past due	$ 510.9	$ 451.8
Past due receivables as a percentage of total ending managed receivables	3.80%	3.60%
Total ending managed receivables, percent
Financing Receivable, Past Due [Line Items]
Item as percent of total ending managed receivables	100.00%	100.00%
Thirty One To Sixty Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Total past due	$ 323.0	$ 276.5
Past due receivables as a percentage of total ending managed receivables	2.40%	2.20%
Sixty One To Ninety Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Total past due	$ 152.3	$ 141.4
Past due receivables as a percentage of total ending managed receivables	1.10%	1.10%
Greater Than Ninety Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Total past due	$ 35.6	$ 33.9
Past due receivables as a percentage of total ending managed receivables	0.30%	0.30%

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Cancellation Reserves (Narrative) (Details) - USD ($) $ in Millions	Nov. 30, 2019	Feb. 28, 2019
Cancellation Reserves [Abstract]
Cancellation reserves, current portion	$ 60.8	$ 55.6

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Lease Term and Discount Rate (Details)	Nov. 30, 2019 Rate
Leases [Abstract]
Operating Lease, Weighted Average Remaining Lease Term	20 years 21 days
Finance Lease, Weighted Average Remaining Lease Term	13 years 9 months 10 days
Operating Lease, Weighted Average Discount Rate, Percent	5.40%
Finance Lease, Weighted Average Discount Rate, Percent	10.30%

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Accumulated Other Comprehensive Loss (Narrative) (Details) - USD ($) $ in Millions	Nov. 30, 2019	Feb. 28, 2019
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract]
Deferred tax	$ 26.5	$ 21.4

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Supplemental Cash Flow Information Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands	9 Months Ended
	Nov. 30, 2019	Nov. 30, 2018
Supplemental Cash Flow Elements [Abstract]
Increase (decrease) in accrued capital expenditures	$ 4,603	$ (1,847)
Increase in financing obligations	$ 47,930	$ 21,854

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Fair Value Measurements (Tables)

9 Months Ended

Nov. 30, 2019

Fair Value Disclosures [Abstract]

Schedule Of Items Measured At Fair Value On A Recurring Basis

Items Measured at Fair Value on a Recurring Basis

	As of November 30, 2019
(In thousands)	Level 1			Level 2			Total
Assets:
Money market securities	$	234,676		$	—		$	234,676
Mutual fund investments	21,905			—			21,905
Derivative instruments	—			3,711			3,711
Total assets at fair value	$	256,581		$	3,711		$	260,292
Percent of total assets at fair value	98.6		%	1.4		%	100.0		%
Percent of total assets	1.3		%	—		%	1.3		%
Liabilities:
Derivative instruments	$	—		$	(1,653	)	$	(1,653	)
Total liabilities at fair value	$	—		$	(1,653	)	$	(1,653	)
Percent of total liabilities	—		%	—		%	—		%

	As of February 28, 2019
(In thousands)	Level 1			Level 2			Total
Assets:
Money market securities	$	372,448		$	—		$	372,448
Mutual fund investments	19,263			—			19,263
Derivative instruments	—			1,844			1,844
Total assets at fair value	$	391,711		$	1,844		$	393,555
Percent of total assets at fair value	99.5		%	0.5		%	100.0		%
Percent of total assets	2.1		%	—		%	2.1		%
Liabilities:
Derivative instruments	$	—		$	(6,120	)	$	(6,120	)
Total liabilities at fair value	$	—		$	(6,120	)	$	(6,120	)
Percent of total liabilities	—		%	—		%	—		%

Schedule of Carrying Values and Estimated Fair Values of Debt Instruments [Table Text Block]

(In thousands)	As of November 30, 2019		As of February 28, 2019
Carrying value	$	500,000	$	500,000
Fair value	$	527,394	$	488,590

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Background Basis of Accounting (Policies)

9 Months Ended

Nov. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Background

Business. 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 financing to customers buying retail vehicles from CarMax.

We deliver an unrivaled customer experience by offering a broad selection of quality used vehicles and related products and services at competitive, no-haggle prices using a customer-friendly sales process in an attractive, modern sales facility, as well as through carmax.com and our mobile apps.  We provide customers with a range of related products and services, including the appraisal and purchase of vehicles directly from consumers; the financing of retail vehicle purchases through CAF and third-party finance providers; the sale of extended protection plan (“EPP”) products, which include extended service plans (“ESPs”) 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.

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.  

The accounting policies followed in the presentation of our interim financial results are consistent with those included in the company’s Annual Report on Form 10-K for the fiscal year ended February 28, 2019 (the “2019 Annual Report”), with the exception of those related to recent accounting pronouncements adopted in the current fiscal year. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and footnotes included in our 2019 Annual Report.

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.

Recent Accounting Pronouncements

Recent Accounting Pronouncements.

Effective in Future Periods.

In June 2016, the Financial Accounting Standards Board (“FASB”) issued an accounting pronouncement (FASB ASU 2016-13) related to the measurement of credit losses on financial instruments. This pronouncement, along with subsequent ASUs issued to clarify certain provisions of ASU 2016-13, changes the impairment model for most financial assets and will require the use of an “expected loss” model for instruments measured at amortized cost. Under this model, entities will be required to estimate the lifetime expected credit loss on such instruments and record an allowance to offset the amortized cost basis of the financial asset, resulting in a net presentation of the amount expected to be collected on the financial asset. In developing the estimate for lifetime expected credit loss, entities must incorporate historical experience, current conditions, and reasonable and supportable forecasts. This pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2019.

We have designed an allowance for loan loss methodology to comply with these new requirements, which will be adopted for our fiscal year beginning March 1, 2020. Based on information as of November 30, 2019, we expect to record a $200-250 million increase in the allowance for loan losses on our opening consolidated balance sheet as of March 1, 2020, with a corresponding net-of-tax adjustment to retained earnings. The expected increase in the allowance for loan losses is primarily the result of extending the loan loss forecast period from 12 months to the entire lifetime of the loan portfolio. The final adoption impact may vary depending on the company’s portfolio at the adoption date, as well as macroeconomic conditions and forecasts at that time. We expect this new methodology could increase volatility in our quarterly provision for loan losses, as we will be estimating loan losses over a longer forecast period. We are finalizing testing of the effectiveness of our new allowance for loan loss methodology, as well as designing the relevant controls and governance structure.

In December 2019, the FASB issued an accounting pronouncement (FASB ASU 2019-12) related to simplifying the accounting for income taxes. The pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. We are currently in the process of evaluating the effects of this pronouncement on our consolidated financial statements, including potential early adoption.

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Income Taxes

9 Months Ended

Nov. 30, 2019

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

We had $31.0 million of gross unrecognized tax benefits as of November 30, 2019, and $30.3 million as of February 28, 2019.  There were no significant changes to the gross unrecognized tax benefits as reported for the year ended February 28, 2019.

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Auto Loan Receivables

9 Months Ended

Nov. 30, 2019

Loans and Leases Receivable, Net Amount [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 an asset-backed term funding transaction, such as a term securitization or alternative funding arrangement.  We recognize transfers of auto loan receivables into the warehouse facilities and asset-backed term funding transactions (together, “non-recourse funding 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 majority of the auto loan receivables serve as collateral for the related non-recourse notes payable of $13.32 billion as of November 30, 2019 and $12.54 billion as of February 28, 2019. See Note 9 for additional information on non-recourse notes payable.

Auto Loan Receivables, Net

	As of November 30			As of February 28
(In millions)	2019			2019
Asset-backed term funding	$	10,616.9		$	10,273.4
Warehouse facilities	2,305.7			1,877.0
Overcollateralization (1)	296.3			273.3
Other managed receivables (2)	133.7			86.5
Total ending managed receivables	13,352.6			12,510.2
Accrued interest and fees	59.9			49.6
Other	17.8			6.9
Less allowance for loan losses	(153.6		)	(138.2		)
Auto loan receivables, net	$	13,276.7		$	12,428.5

⁽¹⁾   Represents receivables restricted as excess collateral for the non-recourse funding vehicles.

⁽²⁾ Other managed receivables includes receivables not funded through the non-recourse funding vehicles.

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

	As of November 30			As of February 28
(In millions)	2019 (1)		% (2)	2019 (1)		% (2)
A	$	6,691.4	50.1	$	6,225.6	49.8
B	4,813.9		36.1	4,488.2		35.9
C and other	1,847.3		13.8	1,796.4		14.3
Total ending managed receivables	$	13,352.6	100.0	$	12,510.2	100.0

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

⁽²⁾   Percent of total ending managed receivables.

Allowance for Loan Losses

	Three Months Ended November 30								Nine Months Ended November 30
(In millions)	2019			% (1)	2018			% (1)	2019			% (1)	2018			% (1)
Balance as of beginning of period	$	150.4		1.15	$	138.1		1.13	$	138.2		1.10	$	128.6		1.11
Charge-offs	(81.2		)		(74.3		)		(223.4		)		(198.1		)
Recoveries	35.4				33.7				106.1				96.1
Provision for loan losses	49.0				40.8				132.7				111.7
Balance as of end of period	$	153.6		1.15	$	138.3		1.12	$	153.6		1.15	$	138.3		1.12

⁽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 expected to become evident during the following 12 months.  The allowance is primarily based on the composition of the portfolio of managed receivables, historical loss trends and forecasted forward loss curves.  We also take into account recent trends in delinquencies and defaults, recovery rates and the economic environment.  The provision for loan losses is the periodic expense of maintaining an adequate allowance.

Past Due Receivables

	As of November 30			As of February 28
(In millions)	2019		% (1)	2019		% (1)
Total ending managed receivables	$	13,352.6	100.0	$	12,510.2	100.0
Delinquent loans:
31-60 days past due	$	323.0	2.4	$	276.5	2.2
61-90 days past due	152.3		1.1	141.4		1.1
Greater than 90 days past due	35.6		0.3	33.9		0.3
Total past due	$	510.9	3.8	$	451.8	3.6

⁽¹⁾  

Percent of total ending managed receivables.

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Accumulated Other Comprehensive Loss

9 Months Ended

Nov. 30, 2019

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

							Total
	Net			Net			Accumulated
	Unrecognized			Unrecognized			Other
	Actuarial			Hedge Gains			Comprehensive
(In thousands, net of income taxes)	Losses			(Losses)			Loss
Balance as of February 28, 2019	$	(70,478	)	$	2,468		$	(68,010	)
Other comprehensive loss before reclassifications	—			(16,807		)	(16,807		)
Amounts reclassified from accumulated other comprehensive loss	1,066			1,744			2,810
Other comprehensive income (loss)	1,066			(15,063		)	(13,997		)
Balance as of November 30, 2019	$	(69,412	)	$	(12,595	)	$	(82,007	)

Changes In and Reclassifications Out of Accumulated Other Comprehensive Loss

	Three Months Ended November 30						Nine Months Ended November 30
(In thousands)	2019			2018			2019			2018
Retirement Benefit Plans:
Actuarial loss amortization reclassifications recognized in net pension expense:
Cost of sales	$	203		$	206		$	601		$	611
CarMax Auto Finance income	12			13			36			38
Selling, general and administrative expenses	253			268			768			812
Total amortization reclassifications recognized in net pension expense	468			487			1,405			1,461
Tax expense	(113		)	(117		)	(339		)	(352		)
Amortization reclassifications recognized in net pension expense, net of tax	355			370			1,066			1,109
Net change in retirement benefit plan unrecognized actuarial losses, net of tax	355			370			1,066			1,109
Cash Flow Hedges (Note 5):
Changes in fair value	10,529			1,986			(22,844		)	3,786
Tax (expense) benefit	(2,782		)	(523		)	6,037			(998		)
Changes in fair value, net of tax	7,747			1,463			(16,807		)	2,788
Reclassifications to CarMax Auto Finance income	2,067			(2,084		)	2,370			(5,054		)
Tax (expense) benefit	(546		)	549			(626		)	1,332
Reclassification of hedge losses (gains), net of tax	1,521			(1,535		)	1,744			(3,722		)
Net change in cash flow hedge unrecognized losses, net of tax	9,268			(72		)	(15,063		)	(934		)
Total other comprehensive income (loss), net of tax	$	9,623		$	298		$	(13,997	)	$	175

Changes in the funded status of our retirement plans and 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 $26.5 million as of November 30, 2019 and $21.4 million as of February 28, 2019.

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Accumulated Other Comprehensive Loss (Tables)

9 Months Ended

Nov. 30, 2019

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

							Total
	Net			Net			Accumulated
	Unrecognized			Unrecognized			Other
	Actuarial			Hedge Gains			Comprehensive
(In thousands, net of income taxes)	Losses			(Losses)			Loss
Balance as of February 28, 2019	$	(70,478	)	$	2,468		$	(68,010	)
Other comprehensive loss before reclassifications	—			(16,807		)	(16,807		)
Amounts reclassified from accumulated other comprehensive loss	1,066			1,744			2,810
Other comprehensive income (loss)	1,066			(15,063		)	(13,997		)
Balance as of November 30, 2019	$	(69,412	)	$	(12,595	)	$	(82,007	)

Changes In And Reclassifications Out Of Accumulated Other Comprehensive Loss

Changes In and Reclassifications Out of Accumulated Other Comprehensive Loss

	Three Months Ended November 30						Nine Months Ended November 30
(In thousands)	2019			2018			2019			2018
Retirement Benefit Plans:
Actuarial loss amortization reclassifications recognized in net pension expense:
Cost of sales	$	203		$	206		$	601		$	611
CarMax Auto Finance income	12			13			36			38
Selling, general and administrative expenses	253			268			768			812
Total amortization reclassifications recognized in net pension expense	468			487			1,405			1,461
Tax expense	(113		)	(117		)	(339		)	(352		)
Amortization reclassifications recognized in net pension expense, net of tax	355			370			1,066			1,109
Net change in retirement benefit plan unrecognized actuarial losses, net of tax	355			370			1,066			1,109
Cash Flow Hedges (Note 5):
Changes in fair value	10,529			1,986			(22,844		)	3,786
Tax (expense) benefit	(2,782		)	(523		)	6,037			(998		)
Changes in fair value, net of tax	7,747			1,463			(16,807		)	2,788
Reclassifications to CarMax Auto Finance income	2,067			(2,084		)	2,370			(5,054		)
Tax (expense) benefit	(546		)	549			(626		)	1,332
Reclassification of hedge losses (gains), net of tax	1,521			(1,535		)	1,744			(3,722		)
Net change in cash flow hedge unrecognized losses, net of tax	9,268			(72		)	(15,063		)	(934		)
Total other comprehensive income (loss), net of tax	$	9,623		$	298		$	(13,997	)	$	175

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Revenue (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Nov. 30, 2019	Nov. 30, 2018	Nov. 30, 2019	Nov. 30, 2018
Disaggregation of Revenue [Line Items]
Revenue from Contract with Customer, Excluding Assessed Tax	$ 4,790.0	$ 4,295.9	$ 15,357.5	$ 13,854.5
Used vehicle sales
Disaggregation of Revenue [Line Items]
Revenue from Contract with Customer, Excluding Assessed Tax	4,028.8	3,547.9	12,915.8	11,544.3
Wholesale vehicle sales
Disaggregation of Revenue [Line Items]
Revenue from Contract with Customer, Excluding Assessed Tax	611.0	603.6	1,951.7	1,849.2
Extended protection plan revenues
Disaggregation of Revenue [Line Items]
Revenue from Contract with Customer, Excluding Assessed Tax	97.0	85.6	321.7	284.2
Third-party finance fees, net
Disaggregation of Revenue [Line Items]
Revenue from Contract with Customer, Excluding Assessed Tax	(9.4)	(8.4)	(35.2)	(32.5)
Service revenues
Disaggregation of Revenue [Line Items]
Revenue from Contract with Customer, Excluding Assessed Tax	28.9	32.4	96.3	105.1
Other
Disaggregation of Revenue [Line Items]
Revenue from Contract with Customer, Excluding Assessed Tax	33.7	34.8	107.2	104.1
Total other sales and revenues
Disaggregation of Revenue [Line Items]
Revenue from Contract with Customer, Excluding Assessed Tax	$ 150.2	$ 144.4	$ 490.0	$ 460.9

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Consolidated Statements of Shareholders' Equity Statement - USD ($) $ in Thousands	Total	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	AOCI Attributable to Parent [Member]	Stockholders' Equity, Total [Member]
BALANCE, SHARES at Feb. 28, 2018		179,748,000
BALANCE at Feb. 28, 2018	$ 3,316,849	$ 89,874	$ 1,234,047	$ 2,047,240	$ (54,312)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net earnings	238,656			238,656
Other Comprehensive Income (Loss), Net of Tax	(733)				(733)
APIC, Share-based Payment Arrangement, Increase for Cost Recognition	16,645		16,645
Stock Repurchased and Retired During Period, Shares		(3,308,000)
Stock Repurchased and Retired During Period, Value	(207,404)	$ (1,654)	(22,824)	(182,926)
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period		212,000
Stock Issued During Period, Value, Stock Options Exercised	9,052	$ 106	8,946
Shares Issued, Shares, Share-based Payment Arrangement, after Forfeiture		68,000
Shares Issued, Value, Share-based Payment Arrangement, after Forfeiture	(2,168)	$ 34	(2,202)
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification				12,864		$ 12,864
BALANCE, SHARES at May. 31, 2018		176,720,000
BALANCE at May. 31, 2018	3,383,761	$ 88,360	1,234,612	2,115,834	(55,045)
BALANCE, SHARES at Feb. 28, 2018		179,748,000
BALANCE at Feb. 28, 2018	3,316,849	$ 89,874	1,234,047	2,047,240	(54,312)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net earnings	649,857
Other Comprehensive Income (Loss), Net of Tax	175
BALANCE, SHARES at Nov. 30, 2018		171,785,000
BALANCE at Nov. 30, 2018	3,435,113	$ 85,893	1,255,966	2,147,391	(54,137)
BALANCE, SHARES at May. 31, 2018		176,720,000
BALANCE at May. 31, 2018	3,383,761	$ 88,360	1,234,612	2,115,834	(55,045)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net earnings	220,890			220,890
Other Comprehensive Income (Loss), Net of Tax	610				610
APIC, Share-based Payment Arrangement, Increase for Cost Recognition	9,695		9,695
Stock Repurchased and Retired During Period, Shares		(2,291,000)
Stock Repurchased and Retired During Period, Value	(171,226)	$ (1,146)	(16,334)	(153,746)
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period		860,000
Stock Issued During Period, Value, Stock Options Exercised	38,449	$ 430	38,019
Shares Issued, Shares, Share-based Payment Arrangement, after Forfeiture		1,000
Shares Issued, Value, Share-based Payment Arrangement, after Forfeiture	(61)	$ 1	(62)
BALANCE, SHARES at Aug. 31, 2018		175,290,000
BALANCE at Aug. 31, 2018	3,482,118	$ 87,645	1,265,930	2,182,978	(54,435)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net earnings	190,311			190,311
Other Comprehensive Income (Loss), Net of Tax	298				298
APIC, Share-based Payment Arrangement, Increase for Cost Recognition	9,654		9,654
Stock Repurchased and Retired During Period, Shares		(3,658,000)
Stock Repurchased and Retired During Period, Value	(254,328)	$ (1,829)	(26,601)	(225,898)
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period		153,000
Stock Issued During Period, Value, Stock Options Exercised	7,079	$ 77	7,002
Shares Issued, Shares, Share-based Payment Arrangement, after Forfeiture		0
Shares Issued, Value, Share-based Payment Arrangement, after Forfeiture	(19)	$ 0	(19)
BALANCE, SHARES at Nov. 30, 2018		171,785,000
BALANCE at Nov. 30, 2018	$ 3,435,113	$ 85,893	1,255,966	2,147,391	(54,137)
BALANCE, SHARES at Feb. 28, 2019	167,478,924	167,479,000
BALANCE at Feb. 28, 2019	$ 3,357,028	$ 83,739	1,237,153	2,104,146	(68,010)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net earnings	266,744			266,744
Other Comprehensive Income (Loss), Net of Tax	(13,196)				(13,196)
APIC, Share-based Payment Arrangement, Increase for Cost Recognition	18,912		18,912
Stock Repurchased and Retired During Period, Shares		(2,953,000)
Stock Repurchased and Retired During Period, Value	(204,835)	$ (1,476)	(21,991)	(181,368)
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period		727,000
Stock Issued During Period, Value, Stock Options Exercised	33,251	$ 363	32,888
Shares Issued, Shares, Share-based Payment Arrangement, after Forfeiture		142,000
Shares Issued, Value, Share-based Payment Arrangement, after Forfeiture	(5,149)	$ 71	(5,220)
BALANCE, SHARES at May. 31, 2019		165,395,000
BALANCE at May. 31, 2019	$ 3,452,755	$ 82,697	1,261,742	2,189,522	(81,206)
BALANCE, SHARES at Feb. 28, 2019	167,478,924	167,479,000
BALANCE at Feb. 28, 2019	$ 3,357,028	$ 83,739	1,237,153	2,104,146	(68,010)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net earnings	673,499
Other Comprehensive Income (Loss), Net of Tax	$ (13,997)
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period	1,913,000
BALANCE, SHARES at Nov. 30, 2019	163,795,082	163,795,000
BALANCE at Nov. 30, 2019	$ 3,698,053	$ 81,897	1,321,567	2,376,596	(82,007)
BALANCE, SHARES at May. 31, 2019		165,395,000
BALANCE at May. 31, 2019	3,452,755	$ 82,697	1,261,742	2,189,522	(81,206)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net earnings	233,599			233,599
Other Comprehensive Income (Loss), Net of Tax	(10,424)				(10,424)
APIC, Share-based Payment Arrangement, Increase for Cost Recognition	10,757		10,757
Stock Repurchased and Retired During Period, Shares		(1,526,000)
Stock Repurchased and Retired During Period, Value	(128,362)	$ (763)	(11,933)	(115,666)
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period		1,008,000
Stock Issued During Period, Value, Stock Options Exercised	53,270	$ 504	52,766
Shares Issued, Shares, Share-based Payment Arrangement, after Forfeiture		9,000
Shares Issued, Value, Share-based Payment Arrangement, after Forfeiture	(38)	$ 4	(42)
BALANCE, SHARES at Aug. 31, 2019		164,886,000
BALANCE at Aug. 31, 2019	3,611,557	$ 82,442	1,313,290	2,307,455	(91,630)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net earnings	173,156			173,156
Other Comprehensive Income (Loss), Net of Tax	9,623				9,623
APIC, Share-based Payment Arrangement, Increase for Cost Recognition	8,745		8,745
Stock Repurchased and Retired During Period, Shares		(1,270,000)
Stock Repurchased and Retired During Period, Value	(114,820)	$ (635)	(10,170)	(104,015)
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period		178,000
Stock Issued During Period, Value, Stock Options Exercised	9,846	$ 89	9,757
Shares Issued, Shares, Share-based Payment Arrangement, after Forfeiture		1,000
Shares Issued, Value, Share-based Payment Arrangement, after Forfeiture	$ (54)	$ 1	(55)
BALANCE, SHARES at Nov. 30, 2019	163,795,082	163,795,000
BALANCE at Nov. 30, 2019	$ 3,698,053	$ 81,897	$ 1,321,567	$ 2,376,596	$ (82,007)

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Consolidated Statements Of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Nov. 30, 2019	Nov. 30, 2018	Nov. 30, 2019	Nov. 30, 2018
Statement of Comprehensive Income [Abstract]
NET EARNINGS	$ 173,156	$ 190,311	$ 673,499	$ 649,857
Other comprehensive income (loss), net of taxes
Net change in retirement benefit plan unrecognized actuarial losses	355	370	1,066	1,109
Net change in cash flow hedge unrecognized losses	9,268	(72)	(15,063)	(934)
Other comprehensive income (loss), net of taxes	9,623	298	(13,997)	175
TOTAL COMPREHENSIVE INCOME	$ 182,779	$ 190,609	$ 659,502	$ 650,032

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Net Earnings Per Share (Basic And Dilutive Net Earnings Per Share Reconciliations) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended						9 Months Ended
	Nov. 30, 2019	Aug. 31, 2019	May 31, 2019	Nov. 30, 2018	Aug. 31, 2018	May 31, 2018	Nov. 30, 2019	Nov. 30, 2018
Schedule of Basic and Dilutive Net Earnings Per Share Reconciliation [Line Items]
Net earnings	$ 173,156	$ 233,599	$ 266,744	$ 190,311	$ 220,890	$ 238,656	$ 673,499	$ 649,857
Weighted average common shares outstanding, shares	164,273			173,816			165,321	176,088
Weighted average common shares and dilutive potential common shares, shares	166,534			175,321			167,154	177,656
Basic net earnings per share (in dollars per share)	$ 1.05			$ 1.09			$ 4.07	$ 3.69
Diluted net earnings per share (in dollars per share)	$ 1.04			$ 1.09			$ 4.03	$ 3.66
Stock options
Schedule of Basic and Dilutive Net Earnings Per Share Reconciliation [Line Items]
Dilutive potential common shares, shares	1,820			1,109			1,466	1,165
Stock-settled stock units and awards
Schedule of Basic and Dilutive Net Earnings Per Share Reconciliation [Line Items]
Dilutive potential common shares, shares	441			396			367	403

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Stock and Stock-Based Incentive Plans 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, 2019	Nov. 30, 2018	Nov. 30, 2019	Nov. 30, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares repurchased	1,270,300	3,657,800	5,748,900	9,257,100
Average Cost Per Share	$ 90.38	$ 69.52	$ 77.92	$ 68.36
Available for repurchase, as of end of period	$ 1,666.0	$ 2,384.0	$ 1,666.0	$ 2,384.0

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Contingent Liabilities (Details) - USD ($) $ in Millions	Nov. 30, 2019	Feb. 28, 2019
Commitments and Contingencies Disclosure [Abstract]
Liability associated with guarantee	$ 8.6	$ 7.4

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Leases Maturities of Lease Liabilities (Details) $ in Thousands	Nov. 30, 2019 USD ($)
Leases [Abstract]
Lessee, Operating Lease, Liability, Payments, Remainder of Fiscal Year	$ 13,741
Lessee, Operating Lease, Liability, Payments, Due Year Two	54,334
Lessee, Operating Lease, Liability, Payments, Due Year Three	50,796
Lessee, Operating Lease, Liability, Payments, Due Year Four	48,188
Lessee, Operating Lease, Liability, Payments, Due Year Five	46,985
Lessee, Operating Lease, Liability, Payments, Due after Year Five	615,224
Lessee, Operating Lease, Liability, Payments, Due	829,268
Lessee, Operating Lease, Liability, Undiscounted Excess Amount	(352,153)
Operating Lease, Liability	477,115
Finance Lease, Liability, Payments, Remainder of Fiscal Year	2,793
Finance Lease, Liability, Payments, Due Year Two	12,869
Finance Lease, Liability, Payments, Due Year Three	13,662
Finance Lease, Liability, Payments, Due Year Four	13,879
Finance Lease, Liability, Payments, Due Year Five	16,534
Finance Lease, Liability, Payments, Due after Year Five	102,802
Finance Lease, Liability, Payment, Due	162,539
Finance Lease, Liability, Undiscounted Excess Amount	(78,476)
Finance Lease, Liability	84,063
Lessee Lease Not Yet Commenced Amount	$ 36,900

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Leases Components of Lease Cost (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Nov. 30, 2019	Nov. 30, 2019
Leases [Abstract]
Operating Lease, Cost	$ 14,262	$ 43,074
Finance Lease, Right-of-Use Asset, Amortization	1,563	4,114
Finance Lease, Interest Expense	2,053	5,499
Finance Lease, Cost	3,616	9,613
Lease, Cost	$ 17,878	$ 52,687

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Auto Loan Receivables (Ending Managed Receivables By Major Credit Grade) (Details) - USD ($) $ in Millions	Nov. 30, 2019	Feb. 28, 2019
Financing Receivable, By Major Credit Grade [Line Items]
Total ending managed receivables	$ 13,352.6	$ 12,510.2
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	$ 6,691.4	$ 6,225.6
Total ending managed receivables as percentage by major credit grade	50.10%	49.80%
Credit Grade B
Financing Receivable, By Major Credit Grade [Line Items]
Total ending managed receivables	$ 4,813.9	$ 4,488.2
Total ending managed receivables as percentage by major credit grade	36.10%	35.90%
Credit Grade C And Other
Financing Receivable, By Major Credit Grade [Line Items]
Total ending managed receivables	$ 1,847.3	$ 1,796.4
Total ending managed receivables as percentage by major credit grade	13.80%	14.30%

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Fair Value Measurements (Schedule Of Items Measured At Fair Value On A Recurring Basis) (Details) - USD ($) $ in Thousands	Nov. 30, 2019	Feb. 28, 2019
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market securities	$ 234,676	$ 372,448
Mutual fund investments	21,905	19,263
Derivative instruments	3,711	1,844
Total assets at fair value	$ 260,292	$ 393,555
Percent of total assets at fair value	100.00%	100.00%
Percent of total assets	1.30%	2.10%
Liabilities: Derivative instruments	$ (1,653)	$ (6,120)
Total liabilities at fair value	$ (1,653)	$ (6,120)
Percent of total liabilities	0.00%	0.00%
Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market securities	$ 234,676	$ 372,448
Mutual fund investments	21,905	19,263
Derivative instruments	0	0
Total assets at fair value	$ 256,581	$ 391,711
Percent of total assets at fair value	98.60%	99.50%
Percent of total assets	1.30%	2.10%
Liabilities: Derivative instruments	$ 0	$ 0
Total liabilities at fair value	$ 0	$ 0
Percent of total liabilities	0.00%	0.00%
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market securities	$ 0	$ 0
Mutual fund investments	0	0
Derivative instruments	3,711	1,844
Total assets at fair value	$ 3,711	$ 1,844
Percent of total assets at fair value	1.40%	0.50%
Percent of total assets	0.00%	0.00%
Liabilities: Derivative instruments	$ (1,653)	$ (6,120)
Total liabilities at fair value	$ (1,653)	$ (6,120)
Percent of total liabilities	0.00%	0.00%

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Income Taxes (Narrative) (Details) - USD ($) $ in Millions	Nov. 30, 2019	Feb. 28, 2019
Federal Income Tax Note
Unrecognized tax benefits, gross	$ 31.0	$ 30.3

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Debt (Tables)

9 Months Ended

Nov. 30, 2019

Debt Disclosure [Abstract]

Schedule Of Debt

Debt

(In thousands)		As of November 30			As of February 28
Debt Description (1)	Maturity Date	2019			2019
Revolving credit facility (2)	June 2024	$	377,521		$	366,529
Term loan (2)	June 2024	300,000			300,000
3.86% Senior notes	April 2023	100,000			100,000
4.17% Senior notes	April 2026	200,000			200,000
4.27% Senior notes	April 2028	200,000			200,000
Financing obligations	Various dates through February 2059	537,311			495,626
Non-recourse notes payable	Various dates through April 2026	13,320,447			12,535,405
Total debt		15,035,279			14,197,560
Less: current portion		(406,822		)	(396,350		)
Less: unamortized debt issuance costs		(24,203		)	(24,676		)
Long-term debt, net		$	14,604,254		$	13,776,534

 ⁽¹⁾  Interest is payable monthly, with the exception of our senior notes, which are payable semi-annually.

 ⁽²⁾ 

Borrowings accrue interest at variable rates based on the Eurodollar rate (LIBOR), the federal funds rate, or the prime rate, depending on the type of borrowing.

Schedule of Funding Vehicles [Table Text Block]

(In billions)	Capacity
Warehouse facilities:
February 2020 expiration	$	1.95
August 2020 expiration	1.40
September 2020 expiration	0.15
Combined warehouse facility limit	$	3.50
Unused capacity	$	1.19
Non-recourse notes payable outstanding:
Warehouse facilities	$	2.31
Asset-backed term funding transactions	11.01
Non-recourse notes payable	$	13.32

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CarMax Auto Finance (Tables)

9 Months Ended

Nov. 30, 2019

CarMax Auto Finance Income [Abstract]

Components Of CarMax Auto Finance Income

Components of CAF Income

	Three Months Ended November 30										Nine Months Ended November 30
(In millions)	2019			% (1)		2018			% (1)		2019			% (1)		2018			% (1)
Interest margin:
Interest and fee income	$	278.9		8.4		$	247.8		8.0		$	820.8		8.4		$	722.3		8.0
Interest expense	(90.4		)	(2.7	)	(75.3		)	(2.4	)	(268.4		)	(2.8	)	(208.2		)	(2.3	)
Total interest margin	188.5			5.7		172.5			5.6		552.4			5.7		514.1			5.7
Provision for loan losses	(49.0		)	(1.5	)	(40.8		)	(1.3	)	(132.7		)	(1.4	)	(111.7		)	(1.2	)
Total interest margin after provision for loan losses	139.5			4.2		131.7			4.3		419.7			4.3		402.4			4.5
Total other expense	—			—		(0.1		)	—		—			—		(0.4		)	—
Direct expenses:
Payroll and fringe benefit expense	(10.8		)	(0.3	)	(9.4		)	(0.3	)	(31.3		)	(0.3	)	(28.6		)	(0.3	)
Other direct expenses	(14.7		)	(0.4	)	(12.5		)	(0.4	)	(44.3		)	(0.5	)	(38.4		)	(0.4	)
Total direct expenses	(25.5		)	(0.8	)	(21.9		)	(0.7	)	(75.6		)	(0.8	)	(67.0		)	(0.7	)
CarMax Auto Finance income	$	114.0		3.4		$	109.7		3.6		$	344.1		3.5		$	335.0		3.7
Total average managed receivables	$	13,239.2				$	12,321.0				$	12,986.2				$	12,054.6

⁽¹⁾  

Annualized percentage of total average managed receivables.

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Supplemental Cash Flow Information

9 Months Ended

Nov. 30, 2019

Supplemental Cash Flow Elements [Abstract]

Schedule of Cash Flow, Supplemental Disclosures [Table Text Block]

Supplemental Cash Flow Information

Supplemental disclosures of cash flow information:

	Nine Months Ended November 30
(In thousands)	2019		2018
Non-cash investing and financing activities:
Increase (decrease) in accrued capital expenditures	$	4,603	$	(1,847	)
Increase in financing obligations	$	47,930	$	21,854

See Note 13 for supplemental cash flow information related to leases.

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Revenue

9 Months Ended

Nov. 30, 2019

Revenue from Contract with Customer [Abstract]

Revenue from Contract with Customer [Text Block]

We recognize revenue when control of the good or service has been transferred to the customer, generally either at the time of sale or upon delivery to a customer.  Our contracts have a fixed contract price and revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services. 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. We generally expense sales commissions when incurred because the amortization period would have been less than one year. These costs are recorded within selling, general and administrative expenses. We do not have any significant payment terms as payment is received at or shortly after the point of sale.

Disaggregation of Revenue

	Three Months Ended November 30						Nine Months Ended November 30
(In millions)	2019			2018			2019			2018
Used vehicle sales	$	4,028.8		$	3,547.9		$	12,915.8		$	11,544.3
Wholesale vehicle sales	611.0			603.6			1,951.7			1,849.2
Other sales and revenues:
Extended protection plan revenues	97.0			85.6			321.7			284.2
Third-party finance fees, net	(9.4		)	(8.4		)	(35.2		)	(32.5		)
Service revenues	28.9			32.4			96.3			105.1
Other	33.7			34.8			107.2			104.1
Total other sales and revenues	150.2			144.4			490.0			460.9
Total net sales and operating revenues	$	4,790.0		$	4,295.9		$	15,357.5		$	13,854.5

Used Vehicle Sales. Revenue from the sale of used vehicles is recognized upon transfer of control of the vehicle to the customer. As part of our customer service strategy, we guarantee the retail vehicles we sell with a 7-day, money-back guarantee.  We record a reserve for estimated returns based on historical experience and trends. The reserve for estimated returns is presented gross on the consolidated balance sheets, with a return asset recorded in other current assets and a refund liability recorded in accrued expenses and other current liabilities. We also guarantee the used vehicles we sell with a 90-day/4,000 mile limited warranty. These warranties are deemed assurance-type warranties and accounted for as warranty obligations. See Note 15 for additional information on this warranty and its related obligation.

Wholesale Vehicle Sales. Wholesale vehicles are sold at our auctions, and revenue from the sale of these vehicles is recognized upon transfer of control of the vehicle to the customer. Dealers also pay a fee to us based on the sale price of the vehicles they purchase. This fee is recognized as revenue at the time of sale. While we provide condition disclosures on each wholesale vehicle sold, the vehicles are subject to a limited right of return. We record a reserve for estimated returns based on historical experience and trends. The reserve for estimated returns is presented gross on the consolidated balance sheets, with a return asset recorded in other current assets and a refund liability recorded in accrued expenses and other current liabilities.

EPP Revenues. We also sell ESP and GAP products on behalf of unrelated third parties, who are primarily responsible for fulfilling the contract, to customers who purchase a retail vehicle.  The ESPs we currently offer on all used vehicles provide coverage up to 60 months (subject to mileage limitations), while GAP covers the customer for the term of their finance contract. We recognize revenue, on a net basis, at the time of sale. We also record a reserve for estimated contract cancellations. 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 revenue 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.

We are contractually entitled to receive profit-sharing revenues based on the performance of the ESPs administered by third parties. These revenues are a form of variable consideration included in EPP revenues to the extent that it is probable that it will not result in a significant revenue reversal. An estimate of the amount to which we expect to be entitled, subject to various constraints, is recognized upon satisfying the performance obligation of selling the ESP. These constraints include factors that are outside of the company’s influence or control and the length of time until settlement. We apply the expected value method, utilizing historical claims and cancellation data from CarMax customers, as well as external data and other qualitative assumptions. This estimate is reassessed each reporting period with changes reflected in other sales and revenues on our consolidated statements of earnings and other assets on our consolidated balance sheets. As of November 30, 2019 and February 28, 2019, we recognized a contract asset of $32.2 million and $25.7 million, respectively, related to cumulative profit-sharing payments to which we expect to be entitled. During the second quarter of fiscal 2020, this amount was reclassified from other assets to other current assets on our consolidated balance sheets, as we expect to begin receiving ESP profit-sharing payments in the first calendar quarter of 2020. While the initial payment could be up to $50 million, the revenue recognized to-date represents the amount for which we have determined it is probable it will not result in a significant revenue reversal. The first payment reflects the accumulation of profit-sharing for four years under our current contracts with the providers, while any subsequent profit-sharing payments we receive will only reflect one year of incremental earnings.

Third-Party Finance Fees. Customers applying for financing who are not approved or are conditionally approved by CAF are generally evaluated by other 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.

Service Revenues. Service revenue consists of labor and parts income related to vehicle repair service, including repairs of vehicles covered under an ESP we sell or warranty program. Service revenue is recognized at the time the work is completed.

Other Revenues. Other revenues consist primarily of new vehicle sales at our two new car franchise locations and sales of accessories. Revenue in this category is recognized upon transfer of control to the customer.

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Stock and Stock-Based Incentive Plans (Tables)

9 Months Ended

Nov. 30, 2019

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Schedule of Common Stock Repurchases

Common Stock Repurchases

	Three Months Ended				Nine Months Ended
	November 30				November 30
	2019		2018		2019		2018
Number of shares repurchased (in thousands)	1,270.3		3,657.8		5,748.9		9,257.1
Average cost per share	$	90.38	$	69.52	$	77.92	$	68.36
Available for repurchase, as of end of period (in millions)	$	1,666.0	$	2,384.0	$	1,666.0	$	2,384.0

Composition of Share-Based Compensation Expense

Composition of Share-Based Compensation Expense

	Three Months Ended					Nine Months Ended
	November 30					November 30
(In thousands)	2019		2018			2019		2018
Cost of sales	$	2,128	$	(343	)	$	6,293	$	2,551
CarMax Auto Finance income	1,317		596			4,166		3,030
Selling, general and administrative expenses	26,251		7,275			89,047		57,027
Share-based compensation expense, before income taxes	$	29,696	$	7,528		$	99,506	$	62,608

Composition Of Share-Based Compensation Expense - By Grant Type

Composition of Share-Based Compensation Expense – By Grant Type

	Three Months Ended						Nine Months Ended
	November 30						November 30
(In thousands)	2019			2018			2019		2018
Nonqualified stock options	$	6,151		$	6,230		$	24,314	$	23,838
Cash-settled restricted stock units (RSUs)	20,545			(2,485		)	59,763		25,409
Stock-settled market stock units (MSUs)	2,837			2,681			10,298		9,960
Other share-based incentives:
Stock-settled performance stock units (PSUs)	(244		)	317			1,389		1,043
Restricted stock (RSAs)	—			—			—		433
Stock-settled deferred stock units (DSUs)	—			426			2,412		720
Employee stock purchase plan	407			359			1,330		1,205
Total other share-based incentives	$	163		$	1,102		$	5,131	$	3,401
Share-based compensation expense, before income taxes	$	29,696		$	7,528		$	99,506	$	62,608

Share-based Payment Arrangement, Activity [Table Text Block]

	Nine Months Ended November 30, 2019
	Equity Classified									Liability Classified
(Shares/units in thousands)	Options			MSUs			Other			RSUs
Outstanding as of February 28, 2019	7,869			509			164			1,609
Granted	1,595			131			83			562
Exercised or vested and converted	(1,913		)	(150		)	(81		)	(504		)
Cancelled	(16		)	(5		)	—			(89		)
Outstanding as of November 30, 2019	7,535			485			166			1,578
Weighted average grant date fair value per share/unit:
Granted	$	22.10		$	98.63		$	80.55		$	78.61
Ending outstanding	$	18.16		$	84.02		$	70.97		$	66.85
	As of November 30, 2019
Unrecognized compensation (in millions)	$	47.0		$	15.6		$	3.1

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Supplemental Cash Flow Information Supplemental Cash Flow Information (Tables)

9 Months Ended

Nov. 30, 2019

Supplemental Cash Flow Elements [Abstract]

Cash Flow, Supplemental Disclosures [Text Block]

	Nine Months Ended November 30
(In thousands)	2019		2018
Non-cash investing and financing activities:
Increase (decrease) in accrued capital expenditures	$	4,603	$	(1,847	)
Increase in financing obligations	$	47,930	$	21,854

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Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Nov. 30, 2019	Feb. 28, 2019
Statement of Financial Position [Abstract]
Common Stock, Par or Stated Value Per Share	$ 0.5	$ 0.5
Common Stock, Shares Authorized	350,000,000	350,000,000
Common Stock, Shares, Issued	163,795,082	167,478,924
Common stock, shares outstanding	163,795,082	167,478,924
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment	$ 1,239,443	$ 1,297,393

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Document And Entity Information - shares	9 Months Ended
	Nov. 30, 2019	Dec. 31, 2019
Entity Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Nov. 30, 2019
Document Transition Report	false
Entity File Number	1-31420
Entity Registrant Name	CARMAX, INC.
Entity Central Index Key	0001170010
Current Fiscal Year End Date	--02-29
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q3
Amendment Flag	false
Entity Incorporation, State or Country Code	VA
Entity Tax Identification Number	54-1821055
Entity Address, Address Line One	12800 Tuckahoe Creek Parkway
Entity Address, City or Town	Richmond,
Entity Address, State or Province	VA
Entity Address, Postal Zip Code	23238
City Area Code	804
Local Phone Number	747-0422
Title of 12(b) Security	Common Stock
Trading Symbol	KMX
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		163,385,139

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CarMax Auto Finance (Components Of CarMax Auto Finance Income) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Nov. 30, 2019	Nov. 30, 2018	Nov. 30, 2019	Nov. 30, 2018
Auto Finance Income [Line Items]
Interest and fee income	$ 278,900	$ 247,800	$ 820,800	$ 722,300
Interest expense	(90,400)	(75,300)	(268,400)	(208,200)
Total interest margin	188,500	172,500	552,400	514,100
Provision for loan losses	(49,000)	(40,800)	(132,700)	(111,700)
Total interest margin after provision for loan losses	139,500	131,700	419,700	402,400
Total other expense	0	(100)	0	(400)
Payroll and fringe benefit expense	(10,800)	(9,400)	(31,300)	(28,600)
Other direct expenses	(14,700)	(12,500)	(44,300)	(38,400)
Total direct expenses	(25,500)	(21,900)	(75,600)	(67,000)
CarMax Auto Finance income	114,033	109,725	344,123	334,985
Total average managed receivables	$ 13,239,200	$ 12,321,000	$ 12,986,200	$ 12,054,600
Interest and fee income, percent
Auto Finance Income [Line Items]
Item as percent of total average managed receivables	8.40%	8.00%	8.40%	8.00%
Interest expense, percent
Auto Finance Income [Line Items]
Item as percent of total average managed receivables	(2.70%)	(2.40%)	(2.80%)	(2.30%)
Total interest margin, percent
Auto Finance Income [Line Items]
Item as percent of total average managed receivables	5.70%	5.60%	5.70%	5.70%
Provision for loan losses, percent
Auto Finance Income [Line Items]
Item as percent of total average managed receivables	(1.50%)	(1.30%)	(1.40%)	(1.20%)
Total interest margin after provision for loan losses, percent
Auto Finance Income [Line Items]
Item as percent of total average managed receivables	4.20%	4.30%	4.30%	4.50%
Total other expense, percent
Auto Finance Income [Line Items]
Item as percent of total average managed receivables	0.00%	0.00%	0.00%	0.00%
Payroll and fringe benefit expense, percent
Auto Finance Income [Line Items]
Item as percent of total average managed receivables	(0.30%)	(0.30%)	(0.30%)	(0.30%)
Other direct expenses, percent
Auto Finance Income [Line Items]
Item as percent of total average managed receivables	(0.40%)	(0.40%)	(0.50%)	(0.40%)
Total direct expenses, percent
Auto Finance Income [Line Items]
Item as percent of total average managed receivables	(0.80%)	(0.70%)	(0.80%)	(0.70%)
CarMax Auto Finance income, percent
Auto Finance Income [Line Items]
Item as percent of total average managed receivables	3.40%	3.60%	3.50%	3.70%

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Stock and Stock-Based Incentive Plans Stock And Stock-Based Incentive Plans

9 Months Ended

Nov. 30, 2019

Share-based Payment Arrangement [Abstract]

Stock and Stock-Based Incentive Plans

Stock and Stock-Based Incentive Plans

(A) Share Repurchase Program

As of November 30, 2019, a total of $2.0 billion of board authorizations for repurchases of our common stock was outstanding, with no expiration date, of which $1.67 billion remained available for repurchase.

Common Stock Repurchases

	Three Months Ended				Nine Months Ended
	November 30				November 30
	2019		2018		2019		2018
Number of shares repurchased (in thousands)	1,270.3		3,657.8		5,748.9		9,257.1
Average cost per share	$	90.38	$	69.52	$	77.92	$	68.36
Available for repurchase, as of end of period (in millions)	$	1,666.0	$	2,384.0	$	1,666.0	$	2,384.0

(B) Share-Based Compensation

Composition of Share-Based Compensation Expense

	Three Months Ended					Nine Months Ended
	November 30					November 30
(In thousands)	2019		2018			2019		2018
Cost of sales	$	2,128	$	(343	)	$	6,293	$	2,551
CarMax Auto Finance income	1,317		596			4,166		3,030
Selling, general and administrative expenses	26,251		7,275			89,047		57,027
Share-based compensation expense, before income taxes	$	29,696	$	7,528		$	99,506	$	62,608

Composition of Share-Based Compensation Expense – By Grant Type

	Three Months Ended						Nine Months Ended
	November 30						November 30
(In thousands)	2019			2018			2019		2018
Nonqualified stock options	$	6,151		$	6,230		$	24,314	$	23,838
Cash-settled restricted stock units (RSUs)	20,545			(2,485		)	59,763		25,409
Stock-settled market stock units (MSUs)	2,837			2,681			10,298		9,960
Other share-based incentives:
Stock-settled performance stock units (PSUs)	(244		)	317			1,389		1,043
Restricted stock (RSAs)	—			—			—		433
Stock-settled deferred stock units (DSUs)	—			426			2,412		720
Employee stock purchase plan	407			359			1,330		1,205
Total other share-based incentives	$	163		$	1,102		$	5,131	$	3,401
Share-based compensation expense, before income taxes	$	29,696		$	7,528		$	99,506	$	62,608

(C) Stock Incentive Plan Information

Share/Unit Activity

	Nine Months Ended November 30, 2019
	Equity Classified									Liability Classified
(Shares/units in thousands)	Options			MSUs			Other			RSUs
Outstanding as of February 28, 2019	7,869			509			164			1,609
Granted	1,595			131			83			562
Exercised or vested and converted	(1,913		)	(150		)	(81		)	(504		)
Cancelled	(16		)	(5		)	—			(89		)
Outstanding as of November 30, 2019	7,535			485			166			1,578
Weighted average grant date fair value per share/unit:
Granted	$	22.10		$	98.63		$	80.55		$	78.61
Ending outstanding	$	18.16		$	84.02		$	70.97		$	66.85
	As of November 30, 2019
Unrecognized compensation (in millions)	$	47.0		$	15.6		$	3.1

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Fair Value Measurements

9 Months Ended

Nov. 30, 2019

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.

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

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

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

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

Valuation Methodologies

Money Market Securities.  Money market securities are cash equivalents, which are included in cash and cash equivalents, restricted cash from collections on auto loan receivables and other assets.  They consist of highly liquid investments with original maturities of three months or less and are classified as Level 1.

Mutual Fund Investments.  Mutual fund investments consist of publicly traded mutual funds that primarily include diversified equity investments in large-, mid- and small-cap domestic and international companies or investment grade debt securities.  The investments, which are included in other assets, are held in a rabbi trust established to fund informally our executive deferred compensation plan and are classified as Level 1.

Derivative Instruments.  The fair values of our derivative instruments are included in either other current assets, other assets, accounts payable or other liabilities.  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

	As of November 30, 2019
(In thousands)	Level 1			Level 2			Total
Assets:
Money market securities	$	234,676		$	—		$	234,676
Mutual fund investments	21,905			—			21,905
Derivative instruments	—			3,711			3,711
Total assets at fair value	$	256,581		$	3,711		$	260,292
Percent of total assets at fair value	98.6		%	1.4		%	100.0		%
Percent of total assets	1.3		%	—		%	1.3		%
Liabilities:
Derivative instruments	$	—		$	(1,653	)	$	(1,653	)
Total liabilities at fair value	$	—		$	(1,653	)	$	(1,653	)
Percent of total liabilities	—		%	—		%	—		%

	As of February 28, 2019
(In thousands)	Level 1			Level 2			Total
Assets:
Money market securities	$	372,448		$	—		$	372,448
Mutual fund investments	19,263			—			19,263
Derivative instruments	—			1,844			1,844
Total assets at fair value	$	391,711		$	1,844		$	393,555
Percent of total assets at fair value	99.5		%	0.5		%	100.0		%
Percent of total assets	2.1		%	—		%	2.1		%
Liabilities:
Derivative instruments	$	—		$	(6,120	)	$	(6,120	)
Total liabilities at fair value	$	—		$	(6,120	)	$	(6,120	)
Percent of total liabilities	—		%	—		%	—		%

Fair Value of Financial Instruments

The carrying value of our cash and cash equivalents, accounts receivable, other restricted cash deposits and accounts payable approximates fair value due to the short-term nature and/or variable rates associated with these financial instruments. Auto loan receivables are presented net of an allowance for estimated loan losses. We believe that the carrying value of our revolving credit facility and term loan approximates fair value due to the variable rates associated with these obligations. The fair value of our senior unsecured notes, which are not carried at fair value on our consolidated balance sheets, was determined using Level 2 inputs based on quoted market prices. The carrying value and fair value of the senior unsecured notes as of November 30, 2019 and February 28, 2019, respectively, are as follows:

(In thousands)	As of November 30, 2019		As of February 28, 2019
Carrying value	$	500,000	$	500,000
Fair value	$	527,394	$	488,590

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Accumulated Other Comprehensive Loss (Accumulated Other Comprehensive Loss) (Details) - USD ($) $ in Thousands	3 Months Ended						9 Months Ended
	Nov. 30, 2019	Aug. 31, 2019	May 31, 2019	Nov. 30, 2018	Aug. 31, 2018	May 31, 2018	Nov. 30, 2019	Nov. 30, 2018
Schedule of Accumulated Other Comprehensive Loss [Line Items]
Beginning balance			$ (68,010)				$ (68,010)
Other comprehensive loss before reclassifications							(16,807)
Amounts reclassified from accumulated other comprehensive loss							2,810
Other comprehensive income (loss), net of taxes	$ 9,623	$ (10,424)	(13,196)	$ 298	$ 610	$ (733)	(13,997)	$ 175
Ending balance	(82,007)						(82,007)
Net Unrecognized Actuarial Losses
Schedule of Accumulated Other Comprehensive Loss [Line Items]
Beginning balance			(70,478)				(70,478)
Other comprehensive loss before reclassifications							0
Amounts reclassified from accumulated other comprehensive loss							1,066
Other comprehensive income (loss), net of taxes							1,066
Ending balance	(69,412)						(69,412)
Net Unrecognized Hedge Gains (Losses)
Schedule of Accumulated Other Comprehensive Loss [Line Items]
Beginning balance			$ 2,468				2,468
Other comprehensive loss before reclassifications							(16,807)
Amounts reclassified from accumulated other comprehensive loss							1,744
Other comprehensive income (loss), net of taxes							(15,063)
Ending balance	$ (12,595)						$ (12,595)

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Stock and Stock-Based Incentive Plans Stock and Stock-Based Incentive Plans (Composition of Share-Based Compensation Expense - By Grant Type) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Nov. 30, 2019	Nov. 30, 2018	Nov. 30, 2019	Nov. 30, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense, before income taxes	$ 29,696	$ 7,528	$ 99,506	$ 62,608
Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense, before income taxes	6,151	6,230	24,314	23,838
Cash-settled restricted stock units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense, before income taxes	20,545	(2,485)	59,763	25,409
Stock-settled market stock units (MSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense, before income taxes	2,837	2,681	10,298	9,960
Stock-settled performance stock units (PSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense, before income taxes	(244)	317	1,389	1,043
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense, before income taxes	0	0	0	433
Stock-settled deferred stock units (DSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense, before income taxes	0	426	2,412	720
Employee stock purchase plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense, before income taxes	407	359	1,330	1,205
Other share-based incentives
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense, before income taxes	$ 163	$ 1,102	$ 5,131	$ 3,401

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Debt (Narrative) (Details) - USD ($) $ in Thousands	9 Months Ended
	Nov. 30, 2019	Nov. 30, 2018	Feb. 28, 2019
Debt Instrument [Line Items]
Non-recourse notes payable	$ 13,320,447		$ 12,535,405
Capitalized interest	5,000	$ 4,800
Credit Facility
Debt Instrument [Line Items]
Maximum borrowing capacity	1,450,000
Unused capacity	1,070,000
Term Loan [Member]
Debt Instrument [Line Items]
Outstanding Balance	300,000
Senior Notes [Member]
Debt Instrument [Line Items]
Outstanding Balance	$ 500,000
Financing obligation | Minimum
Debt Instrument [Line Items]
Initial lease terms, in years	15 years
Financing obligation | Maximum
Debt Instrument [Line Items]
Initial lease terms, in years	20 years

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Consolidated Balance Sheets - USD ($) $ in Thousands	Nov. 30, 2019	Feb. 28, 2019
CURRENT ASSETS:
Cash and cash equivalents	$ 56,583	$ 46,938
Restricted cash from collections on auto loan receivables	458,493	440,669
Accounts receivable, net	142,737	139,850
Inventory	2,682,574	2,519,455
Other current assets	109,857	67,101
TOTAL CURRENT ASSETS	3,450,244	3,214,013
Auto loan receivables, net	13,276,654	12,428,487
Property and equipment, net of accumulated depreciation of $1,239,443 and $1,297,393 as of November 30, 2019 and February 28, 2019, respectively	3,036,663	2,828,058
Deferred income taxes	67,162	61,346
Operating lease assets	454,708	0
Other assets	201,799	185,963
TOTAL ASSETS	20,487,230	18,717,867
CURRENT LIABILITIES:
Accounts payable	641,434	593,171
Accrued expenses and other current liabilities	340,475	318,204
Accrued income taxes	1,497	3,784
Current portion of operating lease liabilities	30,813	0
Short-term debt	421	1,129
Current portion of long-term debt	8,541	10,177
Current portion of non-recourse notes payable	397,860	385,044
TOTAL CURRENT LIABILITIES	1,421,041	1,311,509
Long-term debt, excluding current portion	1,704,284	1,649,244
Non-recourse notes payable, excluding current portion	12,899,970	12,127,290
Operating lease liabilities, excluding current portion	446,302	0
Other liabilities	317,580	272,796
TOTAL LIABILITIES	16,789,177	15,360,839
Commitments and contingent liabilities
SHAREHOLDERS’ EQUITY:
Common stock, $0.50 par value; 350,000,000 shares authorized; 163,795,082 and 167,478,924 shares issued and outstanding as of November 30, 2019 and February 28, 2019, respectively	81,897	83,739
Capital in excess of par value	1,321,567	1,237,153
Accumulated other comprehensive loss	(82,007)	(68,010)
Retained earnings	2,376,596	2,104,146
TOTAL SHAREHOLDERS’ EQUITY	3,698,053	3,357,028
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$ 20,487,230	$ 18,717,867

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Auto Loan Receivables (Auto Loan Receivables, Net) (Details) - USD ($) $ in Thousands	Nov. 30, 2019	Aug. 31, 2019	Feb. 28, 2019	Nov. 30, 2018	Aug. 31, 2018	Feb. 28, 2018
Non-recourse notes payable	$ 13,320,447		$ 12,535,405
Total ending managed receivables	13,352,600		12,510,200
Accrued interest and fees	59,900		49,600
Other	17,800		6,900
Less allowance for loan losses	(153,600)	$ (150,400)	(138,200)	$ (138,300)	$ (138,100)	$ (128,600)
Auto loan receivables, net	13,276,654		12,428,487
Asset-backed term funding
Total ending managed receivables	10,616,900		10,273,400
Warehouse facilities
Total ending managed receivables	2,305,700		1,877,000
Overcollateralization
Total ending managed receivables	296,300		273,300
Other managed receivables
Total ending managed receivables	$ 133,700		$ 86,500

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Background

9 Months Ended

Nov. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Business Description and Accounting Policies [Text Block]

Background

Business. 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 financing to customers buying retail vehicles from CarMax.

We deliver an unrivaled customer experience by offering a broad selection of quality used vehicles and related products and services at competitive, no-haggle prices using a customer-friendly sales process in an attractive, modern sales facility, as well as through carmax.com and our mobile apps.  We provide customers with a range of related products and services, including the appraisal and purchase of vehicles directly from consumers; the financing of retail vehicle purchases through CAF and third-party finance providers; the sale of extended protection plan (“EPP”) products, which include extended service plans (“ESPs”) 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.

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.  

The accounting policies followed in the presentation of our interim financial results are consistent with those included in the company’s Annual Report on Form 10-K for the fiscal year ended February 28, 2019 (the “2019 Annual Report”), with the exception of those related to recent accounting pronouncements adopted in the current fiscal year. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and footnotes included in our 2019 Annual Report.

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.

In connection with our adoption of Accounting Standards Update (“ASU”) 2016-02, Leases (“ASC 842”) during the current fiscal year, certain prior period amounts have been reclassified to conform to the current period’s presentation. In the consolidated balance sheets, financing obligations have been reclassified to current portion of long-term debt and long-term debt, excluding current portion. Also, capital lease obligations have been reclassified to accrued expenses and other current liabilities and other liabilities. In the consolidated statements of cash flows, payments on financing obligations have been reclassified to payments on long-term debt. See Notes 9 and 13 for additional information on financing obligations and leases, respectively.

Recent Accounting Pronouncements.

Effective in Future Periods.

In June 2016, the Financial Accounting Standards Board (“FASB”) issued an accounting pronouncement (FASB ASU 2016-13) related to the measurement of credit losses on financial instruments. This pronouncement, along with subsequent ASUs issued to clarify certain provisions of ASU 2016-13, changes the impairment model for most financial assets and will require the use of an “expected loss” model for instruments measured at amortized cost. Under this model, entities will be required to estimate the lifetime expected credit loss on such instruments and record an allowance to offset the amortized cost basis of the financial asset, resulting in a net presentation of the amount expected to be collected on the financial asset. In developing the estimate for lifetime expected credit loss, entities must incorporate historical experience, current conditions, and reasonable and supportable forecasts. This pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2019.

We have designed an allowance for loan loss methodology to comply with these new requirements, which will be adopted for our fiscal year beginning March 1, 2020. Based on information as of November 30, 2019, we expect to record a $200-250 million increase in the allowance for loan losses on our opening consolidated balance sheet as of March 1, 2020, with a corresponding net-of-tax adjustment to retained earnings. The expected increase in the allowance for loan losses is primarily the result of extending the loan loss forecast period from 12 months to the entire lifetime of the loan portfolio. The final adoption impact may vary depending on the company’s portfolio at the adoption date, as well as macroeconomic conditions and forecasts at that time. We expect this new methodology could increase volatility in our quarterly provision for loan losses, as we will be estimating loan losses over a longer forecast period. We are finalizing testing of the effectiveness of our new allowance for loan loss methodology, as well as designing the relevant controls and governance structure.

In December 2019, the FASB issued an accounting pronouncement (FASB ASU 2019-12) related to simplifying the accounting for income taxes. The pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. We are currently in the process of evaluating the effects of this pronouncement on our consolidated financial statements, including potential early adoption.

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Net Earnings Per Share (Tables)

9 Months Ended

Nov. 30, 2019

Earnings Per Share [Abstract]

Basic And Dilutive Net Earnings Per Share Reconciliations

Basic and Dilutive Net Earnings Per Share Reconciliations

	Three Months Ended				Nine Months Ended
	November 30				November 30
(In thousands except per share data)	2019		2018		2019		2018
Net earnings	$	173,156	$	190,311	$	673,499	$	649,857
Weighted average common shares outstanding	164,273		173,816		165,321		176,088
Dilutive potential common shares:
Stock options	1,820		1,109		1,466		1,165
Stock-settled stock units and awards	441		396		367		403
Weighted average common shares and dilutive potential common shares	166,534		175,321		167,154		177,656
Basic net earnings per share	$	1.05	$	1.09	$	4.07	$	3.69
Diluted net earnings per share	$	1.04	$	1.09	$	4.03	$	3.66

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Background (Narrative) (Details) $ in Millions	9 Months Ended
	Nov. 30, 2019 USD ($) segment
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Reportable segments | segment	2
Minimum | Accounting Standards Update 2016-13 [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification	$ 200
Maximum | Accounting Standards Update 2016-13 [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification	$ 250

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Debt

9 Months Ended

Nov. 30, 2019

Debt Disclosure [Abstract]

Debt

Debt

(In thousands)		As of November 30			As of February 28
Debt Description (1)	Maturity Date	2019			2019
Revolving credit facility (2)	June 2024	$	377,521		$	366,529
Term loan (2)	June 2024	300,000			300,000
3.86% Senior notes	April 2023	100,000			100,000
4.17% Senior notes	April 2026	200,000			200,000
4.27% Senior notes	April 2028	200,000			200,000
Financing obligations	Various dates through February 2059	537,311			495,626
Non-recourse notes payable	Various dates through April 2026	13,320,447			12,535,405
Total debt		15,035,279			14,197,560
Less: current portion		(406,822		)	(396,350		)
Less: unamortized debt issuance costs		(24,203		)	(24,676		)
Long-term debt, net		$	14,604,254		$	13,776,534

 ⁽¹⁾  Interest is payable monthly, with the exception of our senior notes, which are payable semi-annually.

 ⁽²⁾  Borrowings accrue interest at variable rates based on the Eurodollar rate (LIBOR), the federal funds rate, or the prime rate, depending on the type of borrowing.

Revolving Credit Facility. Borrowings under our $1.45 billion unsecured revolving credit facility (the “credit facility”) are available for working capital and general corporate purposes. We pay a commitment fee on 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 as no repayments are expected to be made within the next 12 months.  As of November 30, 2019, the unused capacity of $1.07 billion was fully available to us.

Term Loan.    Borrowings under our $300 million term loan are available for working capital and general corporate purposes. The term loan was classified as long-term debt, as no repayments are scheduled to be made within the next 12 months.    

Senior Notes. Borrowings under our unsecured senior notes totaling $500 million are available for working capital and general corporate purposes. These notes were classified as long-term debt as no repayments are scheduled to be made within the next 12 months.

Financing Obligations.  Financing obligations relate to stores subject to sale-leaseback transactions that did not qualify for sale accounting.  The financing obligations were structured at varying interest rates and generally have initial lease terms ranging from 15 to 20 years with payments made monthly.  We have not entered into any new sale-leaseback transactions since fiscal 2009. In the event the agreements are modified or extended beyond their original term, the related obligation is adjusted based on the present value of the revised future payments, with a corresponding change to the assets subject to these transactions. Upon modification, the amortization of the obligation is reset, resulting in more of the payments being applied to interest expense in the initial years following the modification.

Non-Recourse Notes Payable.  The non-recourse notes payable relate to auto loan receivables funded through non-recourse funding vehicles.  The timing of principal payments on the non-recourse notes payable is based on the timing of principal collections and defaults on the related auto loan receivables. The current portion of non-recourse notes payable represents principal payments that are due to be distributed in the following period.

Notes payable related to our asset-backed term funding transactions accrue interest predominantly at fixed rates and have scheduled maturities through April 2026, but may mature earlier, depending upon the repayment rate of the underlying auto loan receivables. 

Information on our funding vehicles for non-recourse notes payable as of November 30, 2019, are as follows:

(In billions)	Capacity
Warehouse facilities:
February 2020 expiration	$	1.95
August 2020 expiration	1.40
September 2020 expiration	0.15
Combined warehouse facility limit	$	3.50
Unused capacity	$	1.19
Non-recourse notes payable outstanding:
Warehouse facilities	$	2.31
Asset-backed term funding transactions	11.01
Non-recourse notes payable	$	13.32

We enter into warehouse facility agreements for one-year terms and generally renew the agreements annually. 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 Note 4 for additional information on the related auto loan receivables.

Capitalized Interest.    We capitalize interest in connection with the construction of certain facilities.  For the nine months ended November 30, 2019 and 2018, we capitalized interest of $5.0 million and $4.8 million, respectively.

Financial Covenants.  The credit facility, term loan and senior note agreements contain representations and warranties, conditions and covenants.  We must also meet financial covenants in conjunction with certain financing obligations.  The agreements governing our non-recourse funding vehicles contain representations and warranties, financial covenants and performance triggers.  As of November 30, 2019, we were in compliance with all financial covenants and our non-recourse funding vehicles were in compliance with the related performance triggers.

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Derivative Instruments And Hedging Activities

9 Months Ended

Nov. 30, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments And Hedging Activities

Derivative Instruments and Hedging Activities

We use derivatives to manage certain risks arising from both our business operations and economic conditions, particularly with regard to issuances of 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, and designate these derivative instruments as cash flow hedges for accounting purposes.  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.

For the derivatives associated with our non-recourse funding vehicles, changes in fair value are initially recorded in accumulated other comprehensive loss (“AOCL”).  For the majority of these derivatives, the 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 debt. During the next 12 months, we estimate that an additional $7.1 million will be reclassified in AOCL as a decrease to CAF income.

As of November 30, 2019 and February 28, 2019, we had interest rate swaps outstanding with a combined notional amount of $2.59 billion and $2.23 billion, respectively, that were designated as cash flow hedges of interest rate risk.

See Note 6 for discussion of fair values of financial instruments and Note 12 for the effect on comprehensive income.

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Stock and Stock-Based Incentive Plans Stock And Stock-Based Incentive Plans (Composition of Share-Based Compensation Expense) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Nov. 30, 2019	Nov. 30, 2018	Nov. 30, 2019	Nov. 30, 2018
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Share-based compensation expense, before income taxes	$ 29,696	$ 7,528	$ 99,506	$ 62,608
Cost of sales
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Share-based compensation expense, before income taxes	2,128	(343)	6,293	2,551
Carmax Auto Finance Income
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Share-based compensation expense, before income taxes	1,317	596	4,166	3,030
Selling, general and administrative expenses
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Share-based compensation expense, before income taxes	$ 26,251	$ 7,275	$ 89,047	$ 57,027

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Debt (Schedule of Funding Vehicles) (Details) - USD ($) $ in Thousands	Nov. 30, 2019	Feb. 28, 2019
Schedule of Funding Vehicles [Line Items]
Non-Recourse Debt	$ 13,320,447	$ 12,535,405
Warehouse Facility One
Schedule of Funding Vehicles [Line Items]
Warehouse Facilities Maximum Borrowing Capacity	1,950,000
Warehouse Facility Three
Schedule of Funding Vehicles [Line Items]
Warehouse Facilities Maximum Borrowing Capacity	1,400,000
Warehouse Facility Two
Schedule of Funding Vehicles [Line Items]
Warehouse Facilities Maximum Borrowing Capacity	150,000
Warehouse Facilities [Member]
Schedule of Funding Vehicles [Line Items]
Warehouse Facilities Maximum Borrowing Capacity	3,500,000
Debt Instrument, Unused Borrowing Capacity, Amount	1,190,000
Non-Recourse Debt	2,310,000
Asset-backed term funding transactions
Schedule of Funding Vehicles [Line Items]
Non-Recourse Debt	$ 11,010,000

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Net Earnings Per Share (Narrative) (Details) - shares	3 Months Ended		9 Months Ended
	Nov. 30, 2019	Nov. 30, 2018	Nov. 30, 2019	Nov. 30, 2018
Earnings Per Share [Abstract]
Anti-dilutive securities not included in calculation of diluted net earnings per share	1,235,575	2,808,555	1,272,429	3,904,738

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Lease Supplemental Cash Flow Information (Details) $ in Thousands	9 Months Ended
	Nov. 30, 2019 USD ($)
Leases [Abstract]
Operating Lease, Payments	$ 42,712
Finance Lease, Interest Payment on Liability	2,572
Finance Lease, Principal Payments	2,813
Right-of-Use Asset Obtained in Exchange for Operating Lease Liability	25,029
Right-of-Use Asset Obtained in Exchange for Finance Lease Liability	$ 52,102

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Leases Narrative (Details)	9 Months Ended
	Nov. 30, 2019
Minimum
Lessee, Lease, Description [Line Items]
Lease renewal term	1 year
Maximum
Lessee, Lease, Description [Line Items]
Lease renewal term	20 years
Real Estate [Member] | Minimum
Lessee, Lease, Description [Line Items]
Lease term	5 years
Real Estate [Member] | Maximum
Lessee, Lease, Description [Line Items]
Lease term	20 years
Equipment [Member] | Minimum
Lessee, Lease, Description [Line Items]
Lease term	3 years
Equipment [Member] | Maximum
Lessee, Lease, Description [Line Items]
Lease term	8 years

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Debt (Schedule Of Debt) (Details) - USD ($) $ in Thousands	Nov. 30, 2019	Feb. 28, 2019
Debt Instrument [Line Items]
Financing obligations	$ 537,311	$ 495,626
Non-Recourse Debt	13,320,447	12,535,405
Total debt	15,035,279	14,197,560
Less: current portion	(406,822)	(396,350)
Unamortized Debt Issuance Expense	(24,203)	(24,676)
Long-term debt, net	14,604,254	13,776,534
Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Long-term Debt	377,521	366,529
Term Loan [Member]
Debt Instrument [Line Items]
Long-term Debt	300,000	300,000
3.86% senior notes dues 2023 [Member]
Debt Instrument [Line Items]
Long-term Debt	100,000	100,000
4.17% senior notes due 2026 [Member]
Debt Instrument [Line Items]
Long-term Debt	200,000	200,000
4.27% senior notes due 2028 [Member]
Debt Instrument [Line Items]
Long-term Debt	$ 200,000	$ 200,000

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Auto Loan Receivables (Allowance For Loan Losses) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Nov. 30, 2019	Nov. 30, 2018	Nov. 30, 2019	Nov. 30, 2018	Aug. 31, 2019	Feb. 28, 2019	Aug. 31, 2018	Feb. 28, 2018
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Balance as of beginning of period	$ 150.4	$ 138.1	$ 138.2	$ 128.6
Charge-offs	(81.2)	(74.3)	(223.4)	(198.1)
Recoveries	35.4	33.7	106.1	96.1
Provision for loan losses	49.0	40.8	132.7	111.7
Balance as of end of period	$ 153.6	$ 138.3	$ 153.6	$ 138.3
Allowance For Loan Losses, percent
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Item as percent of total ending managed receivables	1.15%	1.12%	1.15%	1.12%	1.15%	1.10%	1.13%	1.11%

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Fair Value Measurements Fair Value Measurements (Schedule of Carrying Values and Estimated Fair Values of Debt Instruments) (Details) - USD ($) $ in Thousands	Nov. 30, 2019	Feb. 28, 2019
Fair Value Disclosures [Abstract]
Senior Notes	$ 500,000	$ 500,000
Debt Instrument, Fair Value Disclosure	$ 527,394	$ 488,590

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Revenue (Tables)

9 Months Ended

Nov. 30, 2019

Revenue from Contract with Customer [Abstract]

Disaggregation of Revenue

Disaggregation of Revenue

	Three Months Ended November 30						Nine Months Ended November 30
(In millions)	2019			2018			2019			2018
Used vehicle sales	$	4,028.8		$	3,547.9		$	12,915.8		$	11,544.3
Wholesale vehicle sales	611.0			603.6			1,951.7			1,849.2
Other sales and revenues:
Extended protection plan revenues	97.0			85.6			321.7			284.2
Third-party finance fees, net	(9.4		)	(8.4		)	(35.2		)	(32.5		)
Service revenues	28.9			32.4			96.3			105.1
Other	33.7			34.8			107.2			104.1
Total other sales and revenues	150.2			144.4			490.0			460.9
Total net sales and operating revenues	$	4,790.0		$	4,295.9		$	15,357.5		$	13,854.5

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Leases (Notes)

9 Months Ended

Nov. 30, 2019

Leases [Abstract]

Leases of Lessee Disclosure [Text Block]

Leases

Our leases primarily consist of operating and finance leases related to retail stores, office space, land and equipment. We also have stores subject to sale-leaseback transactions that did not qualify for sale accounting and are accounted for as financing obligations. For more information on these financing obligations see Note 9.

The initial term for real property leases is typically 5 to 20 years. For equipment leases, the initial term generally ranges from 3 to 8 years. Most leases include one or more options to renew, with renewal terms that can extend the lease term from 1 to 20 years or more. We include options to renew (or terminate) in our lease term, and as part of our right-of-use ("ROU") assets and lease liabilities, when it is reasonably certain that we will exercise that option.

ROU assets and the related lease liabilities are initially measured at the present value of future lease payments over the lease term. As most of our leases do not provide an implicit rate, we use our collateralized incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments. We include variable lease payments in the initial measurement of ROU assets and lease liabilities only to the extent they depend on an index or rate. Changes in such indices or rates are accounted for in the period the change occurs, and do not result in the remeasurement of the ROU asset or liability. We are also responsible for payment of certain real estate taxes, insurance and other expenses on our leases. These amounts are generally considered to be variable and are not included in the measurement of the ROU asset and lease liability. We generally account for non-lease components, such as maintenance, separately from lease components. For certain equipment leases, we apply a portfolio approach to account for the lease assets and liabilities.

Our lease agreements do not contain any material residual value guarantees or material restricted covenants. Leases with a term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term.

The components of lease expense were as follows:

(In thousands)	Three Months Ended November 30, 2019		Nine Months Ended November 30, 2019
Operating lease cost (1)	$	14,262	$	43,074
Finance lease cost:
Depreciation of lease assets	1,563		4,114
Interest on lease liabilities	2,053		5,499
Total finance lease cost	3,616		9,613
Total lease cost	$	17,878	$	52,687

⁽¹⁾ Includes short-term leases and variable lease costs, which are immaterial.

Supplemental balance sheet information related to leases was as follows:

(In thousands)	Classification	As of November 30, 2019
Assets:
Operating lease assets	Operating lease assets	$	454,708
Finance lease assets	Property and equipment, net (1)	77,304
Total lease assets		$	532,012
Liabilities:
Current:
Operating leases	Current portion of operating lease liabilities	$	30,813
Finance leases	Accrued expenses and other current liabilities	4,512
Long-term:
Operating leases	Operating lease liabilities, excluding current portion	446,302
Finance leases	Other liabilities	79,551
Total lease liabilities		$	561,178

⁽¹⁾ Finance lease assets are recorded net of accumulated depreciation of $7.5 million as of November 30, 2019.

Lease term and discount rate information related to leases was as follows:

Lease Term and Discount Rate	As of November 30, 2019
Weighted Average Remaining Lease Term (in years)
Operating leases	20.06
Finance leases	13.78
Weighted Average Discount Rate
Operating leases	5.40	%
Finance leases	10.30	%

Supplemental cash flow information related to leases was as follows:

(In thousands)	Nine Months Ended November 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	42,712
Operating cash flows from finance leases	2,572
Financing cash flows from finance leases	2,813
Lease assets obtained in exchange for lease obligations:
Operating leases	25,029
Finance leases	52,102

Maturities of lease liabilities were as follows:

	As of November 30, 2019
(In thousands)	Operating Leases (1)			Finance Leases (1)
Fiscal 2020, remaining	$	13,741		$	2,793
Fiscal 2021	54,334			12,869
Fiscal 2022	50,796			13,662
Fiscal 2023	48,188			13,879
Fiscal 2024	46,985			16,534
Thereafter	615,224			102,802
Total lease payments	829,268			162,539
Less: interest	(352,153		)	(78,476		)
Present value of lease liabilities	$	477,115		$	84,063

⁽¹⁾ Lease payments exclude $36.9 million of legally binding minimum lease payments for leases signed but not yet commenced.

As previously disclosed in our 2019 Annual Report and under the previous lease accounting standard, future minimum lease obligations were as follows:

	As of February 28, 2019
	Capital			Operating Lease
(In thousands)	Leases (1)			Commitments (1)
Fiscal 2020	$	5,139		$	55,295
Fiscal 2021	6,055			52,142
Fiscal 2022	6,185			48,886
Fiscal 2023	6,288			46,235
Fiscal 2024	5,186			45,067
Fiscal 2025 and thereafter	11,445			595,047
Total minimum lease payments	40,298			$	842,672
Less amounts representing interest	(8,518		)
Present value of net minimum lease payments	$	31,780

⁽¹⁾ Excludes taxes, insurance and other costs payable directly by us. These costs vary from year to year and are incurred in the ordinary course of business.

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Cancellation Reserves (Tables)

9 Months Ended

Nov. 30, 2019

Cancellation Reserves [Abstract]

Schedule Of Cancellation Reserves Accrual

Cancellation Reserves

	Three Months Ended November 30						Nine Months Ended November 30
(In millions)	2019			2018			2019			2018
Balance as of beginning of period	$	111.6		$	110.6		$	102.8		$	105.2
Cancellations	(18.4		)	(17.2		)	(55.1		)	(50.5		)
Provision for future cancellations	19.6			16.3			65.1			55.0
Balance as of end of period	$	112.8		$	109.7		$	112.8		$	109.7