VIRGINIA
|
54-1821055
|
(State
or other jurisdiction of
|
(I.R.S.
Employer
|
incorporation
or organization)
|
Identification
No.)
|
12800
TUCKAHOE CREEK PARKWAY, RICHMOND, VIRGINIA
|
23238
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Yes
X
|
No __
|
Large
accelerated filer X
|
Accelerated
filer __
|
Non-accelerated
filer __
|
Smaller
reporting
company __
|
Yes
__
|
No
X
|
Class
|
Outstanding as of June
30, 2008
|
|
Common
Stock, par value $0.50
|
220,374,201
|
|
Page
No.
|
|||
PART
I.
|
FINANCIAL
INFORMATION
|
||
Item
1. Financial Statements:
|
|||
Consolidated
Statements of Earnings - Three
Months Ended May 31, 2008 and 2007
|
3
|
||
Consolidated
Balance Sheets - May
31, 2008, and February 29, 2008
|
4
|
||
Consolidated Statements of Cash Flows - Three Months Ended May 31, 2008 and 2007 |
5
|
||
Notes
to Consolidated Financial Statements
|
6
|
||
Item
2. Management's Discussion and Analysis of
Financial Condition and Results
of Operations
|
20
|
||
Item
3. Quantitative and Qualitative Disclosures About
Market Risk
|
33
|
||
Item
4. Controls and Procedures
|
34
|
||
PART
II.
|
OTHER
INFORMATION
|
||
Item
1. Legal Proceedings
|
35
|
||
Item
1A. Risk Factors
|
35
|
||
Item
4. Submission of Matters to a Vote of Security
Holders
|
35
|
||
Item
6. Exhibits
|
36
|
||
SIGNATURES
|
37
|
||
EXHIBIT
INDEX
|
38
|
Three
Months Ended May 31
|
||||||||||||||||
2008
|
% | (1) |
2007
|
% | (1) | |||||||||||
Sales
and operating revenues:
|
||||||||||||||||
Used
vehicle sales
|
$ | 1,816,848 | 82.3 | $ | 1,708,391 | 79.6 | ||||||||||
New
vehicle sales
|
82,070 | 3.7 | 112,615 | 5.2 | ||||||||||||
Wholesale
vehicle sales
|
242,327 | 11.0 | 261,152 | 12.2 | ||||||||||||
Other
sales and revenues
|
67,518 | 3.1 | 64,976 | 3.0 | ||||||||||||
Net
sales and operating revenues
|
2,208,763 | 100.0 | 2,147,134 | 100.0 | ||||||||||||
Cost
of sales
|
1,926,049 | 87.2 | 1,862,913 | 86.8 | ||||||||||||
Gross
profit
|
282,714 | 12.8 | 284,221 | 13.2 | ||||||||||||
CarMax
Auto Finance income
|
9,819 | 0.4 | 37,068 | 1.7 | ||||||||||||
Selling,
general and administrative expenses
|
242,984 | 11.0 | 213,814 | 10.0 | ||||||||||||
Interest
expense
|
2,058 | 0.1 | 2,016 | 0.1 | ||||||||||||
Interest
income
|
264 | – | 378 | – | ||||||||||||
Earnings
before income taxes
|
47,755 | 2.2 | 105,837 | 4.9 | ||||||||||||
Provision
for income taxes
|
18,197 | 0.8 | 40,482 | 1.9 | ||||||||||||
Net
earnings
|
$ | 29,558 | 1.3 | $ | 65,355 | 3.0 | ||||||||||
Weighted average common
shares:
|
||||||||||||||||
Basic
|
217,094 | 215,293 | ||||||||||||||
Diluted
|
221,346 | 220,130 | ||||||||||||||
Net
earnings per share:
|
||||||||||||||||
Basic
|
$ | 0.14 | $ | 0.30 | ||||||||||||
Diluted
|
$ | 0.13 | $ | 0.30 |
(1)
Percents are calculated as a percentage of net sales and operating
revenues and may not equal totals due to
rounding.
|
May
31, 2008
|
February
29, 2008
|
|||||||
ASSETS
|
||||||||
Current
assets:
|
||||||||
Cash
and cash
equivalents
|
$ | 11,891 | $ | 12,965 | ||||
Accounts
receivable,
net
|
75,393 | 73,228 | ||||||
Auto
loan receivables held for
sale
|
10,009 | 4,984 | ||||||
Retained
interest in securitized
receivables
|
268,613 | 270,761 | ||||||
Inventory
|
933,957 | 975,777 | ||||||
Prepaid
expenses and other current
assets
|
23,324 | 19,210 | ||||||
Total
current
assets
|
1,323,187 | 1,356,925 | ||||||
Property
and equipment,
net
|
926,348 | 862,497 | ||||||
Deferred
income
taxes
|
79,352 | 67,066 | ||||||
Other
assets
|
47,186 | 46,673 | ||||||
TOTAL
ASSETS
|
$ | 2,376,073 | $ | 2,333,161 | ||||
LIABILITIES AND
SHAREHOLDERS’ EQUITY
|
||||||||
Current
liabilities:
|
||||||||
Accounts
payable
|
$ | 274,560 | $ | 306,013 | ||||
Accrued
expenses and other current
liabilities
|
70,393 | 58,054 | ||||||
Accrued
income
taxes
|
28,943 | 7,569 | ||||||
Deferred
income
taxes
|
15,804 | 17,710 | ||||||
Short-term
debt
|
8,403 | 21,017 | ||||||
Current
portion of long-term
debt
|
79,988 | 79,661 | ||||||
Total
current
liabilities
|
478,091 | 490,024 | ||||||
Long-term
debt, excluding current
portion
|
227,017 | 227,153 | ||||||
Deferred
revenue and other
liabilities
|
134,124 | 127,058 | ||||||
TOTAL
LIABILITIES
|
839,232 | 844,235 | ||||||
Commitments
and contingent
liabilities
|
||||||||
Shareholders’
equity:
|
||||||||
Common
stock, $0.50 par value; 350,000,000 shares authorized;
|
||||||||
220,294,040
and 218,616,069 shares issued and outstanding as of
|
||||||||
May
31, 2008, and February 29, 2008, respectively
|
110,147 | 109,308 | ||||||
Capital
in excess of par
value
|
659,115 | 641,766 | ||||||
Accumulated
other comprehensive
loss
|
(16,559 | ) | (16,728 | ) | ||||
Retained
earnings
|
784,138 | 754,580 | ||||||
TOTAL
SHAREHOLDERS’
EQUITY
|
1,536,841 | 1,488,926 | ||||||
TOTAL
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
$ | 2,376,073 | $ | 2,333,161 |
Three
Months Ended May 31
|
||||||||
2008
|
2007
|
|||||||
Operating
Activities:
|
||||||||
Net
earnings
|
$ | 29,558 | $ | 65,355 | ||||
Adjustments
to reconcile net earnings to net cash provided by operating
activities:
|
||||||||
Depreciation
and
amortization
|
13,248 | 10,835 | ||||||
Share-based
compensation
expense
|
9,921 | 9,332 | ||||||
Loss
on disposition of
assets
|
519 | 46 | ||||||
Deferred
income tax
benefit
|
(14,290 | ) | (6,486 | ) | ||||
Net
(increase) decrease in:
|
||||||||
Accounts
receivable, net
|
(2,165 | ) | 3,046 | |||||
Auto
loan receivables held for sale, net
|
(5,025 | ) | 4,752 | |||||
Retained
interest in securitized receivables
|
2,148 | (19,592 | ) | |||||
Inventory
|
41,820 | (27,395 | ) | |||||
Prepaid
expenses and other current assets
|
(4,122 | ) | 3,952 | |||||
Other
assets
|
350 | 335 | ||||||
Net
increase in:
|
||||||||
Accounts
payable, accrued expenses and other current liabilities and accrued income
taxes
|
328 | 10,522 | ||||||
Deferred
revenue and other liabilities
|
7,066 | 20,697 | ||||||
Net
cash provided by operating
activities
|
79,356 | 75,399 | ||||||
Investing
Activities:
|
||||||||
Capital
expenditures
|
(75,732 | ) | (60,883 | ) | ||||
Proceeds
from sales of
assets
|
225 | 4 | ||||||
(Purchases)
sales of money market
securities
|
(863 | ) | 4,000 | |||||
Purchases
of investments
available-for-sale
|
– | (4,000 | ) | |||||
Net
cash used in investing
activities
|
(76,370 | ) | (60,879 | ) | ||||
Financing
Activities:
|
||||||||
(Decrease)
increase in short-term debt,
net
|
(12,614 | ) | 390 | |||||
Issuances
of long-term debt
|
193,200 | 191,600 | ||||||
Payments
on long-term
debt
|
(193,009 | ) | (209,054 | ) | ||||
Equity
issuances,
net
|
8,229 | 3,725 | ||||||
Excess
tax benefits from share-based payment arrangements
|
134 | 1,393 | ||||||
Net
cash used in financing
activities
|
(4,060 | ) | (11,946 | ) | ||||
(Decrease)
increase in cash and cash equivalents
|
(1,074 | ) | 2,574 | |||||
Cash
and cash equivalents at beginning of year
|
12,965 | 19,455 | ||||||
Cash
and cash equivalents at end of
period
|
$ | 11,891 | $ | 22,029 | ||||
See
accompanying notes to consolidated financial statements.
|
1.
|
Background
|
2.
|
Accounting
Policies
|
3.
|
CarMax Auto Finance
Income
|
|
Three
Months Ended May 31
|
|||||||
(In
millions)
|
2008
|
2007
|
||||||
Gain
on sales of loans originated and sold
|
$ | 17.1 | $ | 27.4 | ||||
Other
(losses)
gains
|
(20.0 | ) | 0.4 | |||||
Total
(loss)
gain
|
(2.9 | ) | 27.8 | |||||
Other
CAF income:
|
||||||||
Servicing
fee
income
|
10.2 | 8.9 | ||||||
Interest
income
|
11.1 | 7.8 | ||||||
Total
other CAF
income
|
21.3 | 16.7 | ||||||
Direct
CAF expenses:
|
||||||||
CAF
payroll and fringe benefit expense
|
4.4 | 3.6 | ||||||
Other
direct CAF
expenses
|
4.2 | 3.8 | ||||||
Total
direct CAF
expenses
|
8.6 | 7.4 | ||||||
CarMax
Auto Finance
income
|
$ | 9.8 | $ | 37.1 |
4.
|
Securitizations
|
Three
Months Ended May 31
|
||||||||
(In
millions)
|
2008
|
2007
|
||||||
Net
loans
originated
|
$ | 631.5 | $ | 642.3 | ||||
Total
loans
sold
|
$ | 626.5 | $ | 647.0 | ||||
Total
(loss) gain(1)
|
$ | (2.9 | ) | $ | 27.8 | |||
Total
(loss) gain as a percentage of total loans sold(1)
|
(0.5 | )% | 4.3 | % | ||||
(1)
Includes the effects of valuation adjustments, new securitizations
and the repurchase and resale of receivables in existing public and
private securitizations,
as
applicable.
|
(In
millions)
|
Assumptions
Used
|
Impact
on Fair
Value
of 10%
Adverse
Change
|
Impact
on Fair
Value
of 20%
Adverse
Change
|
|||||||||
Prepayment
rate
|
1.33%
- 1.50
|
% | $ | 7.9 | $ | 15.3 | ||||||
Cumulative
loss
rate
|
1.29% - 3.00 | % | $ | 8.6 | $ | 17.1 | ||||||
Annual
discount
rate
|
17.00 | % | $ | 4.5 | $ | 8.8 | ||||||
Warehouse
facility costs(1)
|
2.05 | % | $ | 2.1 | $ | 4.2 | ||||||
(1)
Expressed as a spread above appropriate benchmark
rates. Applies only to retained interest in receivables securitized
through the warehouse facility. As of May 31, 2008, there were $642.0
million receivables in the warehouse facility.
|
As
of May 31
|
As
of February 29 or 28
|
|||||||||||||||
(In
millions)
|
2008
|
2007
|
2008
|
2007
|
||||||||||||
Accounts
31+ days past
due
|
$ | 95.8 | $ | 68.4 | $ | 86.1 | $ | 56.9 | ||||||||
Ending
managed receivables
|
$ | 3,977.9 | $ | 3,475.9 | $ | 3,838.5 | $ | 3,311.0 | ||||||||
Past
due accounts as a percentage of ending managed receivables
|
2.41 | % | 1.97 | % | 2.24 | % | 1.72 | % |
Three
Months Ended May 31
|
||||||||
(In
millions)
|
2008
|
2007
|
||||||
Net
credit losses on managed
receivables
|
$ | 10.3 | $ | 5.5 | ||||
Average
managed
receivables
|
$ | 3,940.9 | $ | 3,411.4 | ||||
Annualized
net credit losses as a percentage of average managed
receivables
|
1.04 | % | 0.64 | % | ||||
Recovery
rate
|
46.9 | % | 52.8 | % |
Three
Months Ended May 31
|
||||||||
(In
millions)
|
2008
|
2007
|
||||||
Proceeds
from new
securitizations
|
$ | 530.0 | $ | 489.0 | ||||
Proceeds
from collections
|
$ | 276.6 | $ | 303.6 | ||||
Servicing
fees
received
|
$ | 10.0 | $ | 8.7 | ||||
Other
cash flows received from the retained interest:
|
||||||||
Interest-only
strip
receivables
|
$ | 31.2 | $ | 21.8 | ||||
Reserve
account
releases
|
$ | 0.2 | $ | 0.3 |
5.
|
Financial
Derivatives
|
6.
|
Fair Value
Measurements
|
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 and observable inputs such as
interest rates and yield curves.
|
Level 3
|
Inputs
that are significant to the measurement that are not observable in the
market and include management's judgments about the assumptions market
participants would use in pricing the asset or liability (including
assumptions about
risk).
|
|
As
of May 31, 2008
|
||||||||||||||||
(In
millions)
|
Level
1
|
Level
2
|
Level
3
|
Total
|
|||||||||||||
ASSETS
|
|||||||||||||||||
Money
market securities
|
$ | 27.3 | $ | – | $ | – | $ | 27.3 | |||||||||
Retained
interest in securitized
receivables
|
– | – | 268.6 | 268.6 | |||||||||||||
Financial
derivatives
|
– | 5.6 | – | 5.6 | |||||||||||||
Total
assets at fair value
|
$ | 27.3 | $ | 5.6 | $ | 268.6 | $ | 301.5 | |||||||||
Percent
of total assets at fair
value
|
9.1 | % | 1.9 | % | 89.0 | % | 100.0 | % | |||||||||
Percent
of total assets
|
1.2 | % | 0.2 | % | 11.3 | % | 12.7 | % |
(In
millions)
|
Retained
interest in securitized receivables
|
|||
Balance
as of March 1, 2008
|
$ | 270.8 | ||
Total
realized/unrealized losses
|
(16.0 | ) | ||
Purchases,
sales issuances and settlements
|
13.8 | |||
Balance
as of May 31, 2008
|
$ | 268.6 | ||
|
||||
Change
in unrealized losses on assets
still held(1)
|
$ | (8.4 | ) | |
(1)
Reported in CarMax Auto Finance income on the income
statement.
|
7.
|
Income
Taxes
|
8.
|
Retirement
Plans
|
|
Three
Months Ended May 31
|
|||||||||||||||||||||||
Pension
Plan
|
Restoration
Plan
|
Total
|
||||||||||||||||||||||
(In
thousands)
|
2008
|
2007
|
2008
|
2007
|
2008
|
2007
|
||||||||||||||||||
Service
cost
|
$ | 3,653 | $ | 3,663 | $ | 214 | $ | 93 | $ | 3,867 | $ | 3,756 | ||||||||||||
Interest
cost
|
1,766 | 1,359 | 208 | 103 | 1,974 | 1,462 | ||||||||||||||||||
Expected
return on plan assets
|
(1,175 | ) | (890 | ) | – | – | (1,175 | ) | (890 | ) | ||||||||||||||
Amortization
of prior service cost
|
9 | 9 | 30 | 6 | 39 | 15 | ||||||||||||||||||
Recognized
actuarial loss
|
129 | 522 | 99 | 46 | 228 | 568 | ||||||||||||||||||
Net
pension expense
|
$ | 4,382 | $ | 4,663 | $ | 551 | $ | 248 | $ | 4,933 | $ | 4,911 |
9.
|
Debt
|
10.
|
Share-Based
Compensation
|
Three
Months Ended May 31
|
||||||||
(In
thousands)
|
2008
|
2007
|
||||||
Cost
of
sales
|
$ | 475 | $ | 457 | ||||
CarMax
Auto Finance
income
|
158 | 301 | ||||||
Selling,
general and administrative expenses
|
9,288 | 8,916 | ||||||
Share-based
compensation expense, before income taxes
|
$ | 9,921 | $ | 9,674 |
(Shares
and intrinsic value in thousands)
|
Number
of Shares
|
Weighted
Average Exercise Price
|
Weighted
Average Remaining Contractual Life (Years)
|
Aggregate
Intrinsic
Value
|
||||||||||||
Outstanding
as of March 1, 2008
|
13,648 | $ | 14.55 | |||||||||||||
Options
granted
|
2,102 | $ | 19.82 | |||||||||||||
Options
exercised
|
(626 | ) | $ | 13.12 | ||||||||||||
Options
forfeited or expired
|
(67 | ) | $ | 17.09 | ||||||||||||
Outstanding
as of May 31, 2008
|
15,057 | $ | 15.34 | 5.7 | 74,598 | |||||||||||
Exercisable
as of May 31, 2008
|
8,667 | $ | 13.04 | 5.1 | $ | 59,510 |
As
of May 31, 2008
|
Options
Outstanding
|
Options
Exercisable
|
||||||||||||||||||||
(Shares
in thousands)
Range
of Exercise Prices
|
Number
of Shares
|
Weighted
Average Remaining Contractual Life (Years)
|
Weighted
Average Exercise Price
|
Number
of Shares
|
Weighted
Average Exercise Price
|
|||||||||||||||||
$ |
6.62
to $9.30
|
2,266
|
4.8 | $ | 7.16 | 2,266 | $ | 7.16 | ||||||||||||||
$ |
10.74
to $13.42
|
4,329 | 5.7 | $ | 13.20 | 2,361 | $ | 13.21 | ||||||||||||||
$ |
14.13
to $15.72
|
2,770 | 5.8 | $ | 14.70 | 2,770 | $ | 14.70 | ||||||||||||||
$ |
16.33
to $22.29
|
3,993 | 6.0 | $ | 18.61 | 866 | $ | 17.12 | ||||||||||||||
$ |
24.99
to $25.79
|
1,699 | 5.8 | $ | 25.04 | 404 | $ | 24.99 | ||||||||||||||
Total
|
15,057 | 5.7 | $ | 15.34 | 8,667 | $ | 13.04 |
Three
Months Ended May 31
|
||||||||
2008
|
2007
|
|||||||
Dividend
yield
|
0.0 | % | 0.0 | % | ||||
Expected
volatility factor(1)
|
34.8% - 60.9 | % | 28.0% - 54.0 | % | ||||
Weighted
average expected volatility
|
44.4 | % | 39.8 | % | ||||
Risk-free
interest rate(2)
|
1.5% - 3.1 | % | 4.6% - 5.0 | % | ||||
Expected
term (in years)(3)
|
4.8 - 5.2 | 4.2 - 4.4 |
(1)
|
Measured
using historical daily price changes of our stock for a period
corresponding to the term of the option and the implied volatility derived
from the market prices of traded options on our stock.
|
(2)
|
Based
on the U.S. Treasury yield curve in effect at the time of
grant.
|
(3)
|
Represents
the estimated number of years that options will be outstanding prior to
exercise.
|
(In
thousands)
|
Number
of Shares
|
Weighted
Average Grant Date Fair Value
|
||||||
Outstanding
as of March 1, 2008
|
1,721 | $ | 21.04 | |||||
Restricted
stock granted
|
1,079 | $ | 19.82 | |||||
Restricted
stock vested or cancelled
|
(29 | ) | $ | 21.14 | ||||
Outstanding
as of May 31, 2008
|
2,771 | $ | 20.56 |
11.
|
Net Earnings per
Share
|
|
Three
Months Ended May
31
|
|||||||
(In thousands except per share
data)
|
2008
|
2007
|
||||||
Net
earnings available to common shareholders
|
$ | 29,558 | $ | 65,355 | ||||
|
||||||||
Weighted
average common shares outstanding
|
217,094 | 215,293 | ||||||
Dilutive
potential common shares:
|
||||||||
Stock
options
|
3,390 | 4,416 | ||||||
Restricted
stock
|
862 | 421 | ||||||
Weighted
average common shares and dilutive potential common shares
|
221,346 | 220,130 | ||||||
Basic
net earnings per share
|
$ | 0.14 | $ | 0.30 | ||||
Diluted
net earnings per share
|
$ | 0.13 | $ | 0.30 | ||||
|
12.
|
Accumulated Other
Comprehensive Loss
|
(In
thousands)
|
Unrecognized
Actuarial Losses
|
Unrecognized
Prior Service Cost
|
Total
Accumulated Other Comprehensive Loss
|
|||||||||
Balance
as of February 29, 2008
|
$ | 15,926 | $ | 802 | $ | 16,728 | ||||||
Amortization
expense
|
(144 | ) | (25 | ) | (169 | ) | ||||||
Balance
as of May 31,
2008
|
$ | 15,782 | $ | 777 | $ | 16,559 |
13.
|
Contingent
Liabilities
|
14.
|
Recent Accounting
Pronouncements
|
15.
|
SUBSEQUENT
EVENTS
|
§
|
We
believe the slowdown in the economy, the dramatic rise in gasoline and
food costs and the related impact on consumer spending adversely affected
industry-wide sales in the automotive retail market in the first
quarter.
|
§
|
Net
sales and operating revenues increased 3% to $2.21 billion from $2.15
billion in the first quarter of fiscal 2008, while net earnings decreased
55% to $29.6 million, or $0.13 per share, from $65.4 million, or $0.30 per
share.
|
§
|
Total
used vehicle unit sales increased 10%, reflecting the combination of the
growth in our store base and a 1% increase in comparable store used unit
sales. Wholesale vehicle unit sales decreased 2%, reflecting a
decrease in both our appraisal traffic and our appraisal buy rate (defined
as appraisal purchases as a percent of vehicles appraised). New
vehicle unit sales declined 26%, reflecting a combination of the softer
new car industry trends and the sale of one of our new car franchises in
the second quarter of fiscal 2008.
|
§
|
We
opened six used car superstores in the first quarter, entering three new
markets with four superstores and expanding our presence in two existing
markets.
|
§
|
Our
total gross profit per retail unit decreased $237 to $2,564 from $2,801 in
the prior year’s first quarter. The majority of the decline
resulted from a $192 decrease in gross profit per used
vehicle. Our used vehicle gross profit per unit was pressured
by a combination of factors, including the slowing sales environment, the
decline in our appraisal buy rate and the rapid decline in wholesale
market values for SUVs and trucks that led us to take supplemental pricing
markdowns on these vehicles.
|
§
|
CAF
income decreased to $9.8 million from $37.1 million in the first quarter
of fiscal 2008, reflecting the continuing effects of the disruption in
global credit markets and the more challenging economic
environment. CAF income for the first quarter of fiscal 2009
was reduced by $20.0 million for adjustments primarily related to
increases in funding costs for loans originated during prior fiscal years,
$14 million of which was
anticipated.
|
§
|
Selling,
general and administrative expenses as a percent of net sales and
operating revenues (the “SG&A ratio”) increased to 11.0% from 10.0% in
the first quarter of fiscal 2008. The majority of this increase
was expected, and it largely resulted from the combination of the modest
level of comparable store used unit sales growth, our continued commitment
to our store growth plan and the decline in the used vehicle average
selling price. In addition, in the first quarter of fiscal 2009
we accrued costs related to litigation that reduced net earnings by $0.02
per share.
|
§
|
Net
cash provided by operations increased to $79.4 million compared with $75.4
million in the first quarter of fiscal 2008, primarily reflecting the
benefit of a decrease in inventories in fiscal 2009 partially offset by
the decline in net earnings.
|
Three
Months Ended May 31
|
||||||||||||||||
(In
millions)
|
2008
|
%
|
2007
|
%
|
||||||||||||
Used
vehicle sales
|
$ | 1,816.8 | 82.3 | $ | 1,708.4 | 79.6 | ||||||||||
New
vehicle sales
|
82.1 | 3.7 | 112.6 | 5.2 | ||||||||||||
Wholesale
vehicle sales
|
242.3 | 11.0 | 261.2 | 12.2 | ||||||||||||
Other
sales and revenues:
|
||||||||||||||||
Extended
service plan revenues
|
36.5 | 1.7 | 33.9 | 1.6 | ||||||||||||
Service
department sales
|
24.5 | 1.1 | 24.1 | 1.1 | ||||||||||||
Third-party
finance fees, net
|
6.5 | 0.3 | 7.0 | 0.3 | ||||||||||||
Total
other sales and revenues
|
67.5 | 3.1 | 65.0 | 3.0 | ||||||||||||
Total
net sales and operating revenues
|
$ | 2,208.8 | 100.0 | $ | 2,147.1 | 100.0 |
Three
Months Ended May 31
|
||||||||
2008
|
2007
|
|||||||
Vehicle
units:
|
||||||||
Used
vehicles
|
10 | % | 15 | % | ||||
New
vehicles
|
(26 | )% | (5 | )% | ||||
Total
|
9 | % | 14 | % | ||||
Vehicle
dollars:
|
||||||||
Used
vehicles
|
6 | % | 17 | % | ||||
New
vehicles
|
(27 | )% | (5 | )% | ||||
Total
|
4 | % | 15 | % |
Three
Months Ended May 31
|
||||||||
2008
|
2007
|
|||||||
Vehicle
units:
|
||||||||
Used
vehicles
|
1 | % | 6 | % | ||||
New
vehicles
|
(18 | )% | (5 | )% | ||||
Total
|
0 | % | 5 | % | ||||
Vehicle
dollars:
|
||||||||
Used
vehicles
|
(3 | )% | 8 | % | ||||
New
vehicles
|
(20 | )% | (5 | )% | ||||
Total
|
(4 | )% | 7 | % |
Three
Months Ended May 31
|
||||||||
2008
|
2007
|
|||||||
Used
car superstores, beginning of
year
|
89 | 77 | ||||||
Superstore
openings:
|
||||||||
Production
superstores
|
3 | 1 | ||||||
Non-production
superstores
|
3 | 2 | ||||||
Total
superstore
openings
|
6 | 3 | ||||||
Used
car superstores, end of
period
|
95 | 80 |
Three
Months Ended May 31
|
||||||||
2008
|
2007
|
|||||||
Used
vehicles
|
106,747 | 96,766 | ||||||
New
vehicles
|
3,515 | 4,720 | ||||||
Wholesale
vehicles
|
56,329 | 57,714 |
Three
Months Ended May 31
|
||||||||
2008
|
2007
|
|||||||
Used
vehicles
|
$ | 16,852 | $ | 17,480 | ||||
New
vehicles
|
$ | 23,211 | $ | 23,717 | ||||
Wholesale
vehicles
|
$ | 4,184 | $ | 4,413 |
Three
Months Ended May 31
|
||||||||
2008
|
2007
|
|||||||
Vehicle
units:
|
||||||||
Used
vehicles
|
97 | % | 95 | % | ||||
New
vehicles
|
3 | 5 | ||||||
Total
|
100 | % | 100 | % | ||||
Vehicle
dollars:
|
||||||||
Used
vehicles
|
96 | % | 94 | % | ||||
New
vehicles
|
4 | 6 | ||||||
Total
|
100 | % | 100 | % |
Estimate
Feb.
28, 2009
|
May
31, 2008
|
Feb.
29, 2008
|
May
31, 2007
|
|||||||||||||
Production
|
64 | 60 | 57 | 54 | ||||||||||||
Non-production
superstores
|
39 | 35 | 32 | 26 | ||||||||||||
Total
used car superstores
|
103 | 95 | 89 | 80 | ||||||||||||
Co-located
new car stores
|
3 | 3 | 3 | 4 | ||||||||||||
Total
|
106 | 98 | 92 | 84 |
Three
Months Ended May 31
|
||||||||||||||||
2008
|
2007
|
|||||||||||||||
$
per unit(1)
|
% | (2) |
$
per unit(1)
|
% | (2) | |||||||||||
Used
vehicle gross
profit
|
$ | 1,742 | 10.2 | $ | 1,934 | 11.0 | ||||||||||
New
vehicle gross
profit
|
$ | 860 | 3.7 | $ | 1,008 | 4.2 | ||||||||||
Wholesale
vehicle gross
profit
|
$ | 784 | 18.2 | $ | 800 | 17.7 | ||||||||||
Other
gross
profit
|
$ | 449 | 73.4 | $ | 455 | 71.0 | ||||||||||
Total
gross
profit
|
$ | 2,564 | 12.8 | $ | 2,801 | 13.2 |
(1)
Calculated as category gross profit divided by its respective units
sold, except the other and total categories, which are divided
by total retail units sold.
|
(2)
Calculated as a percentage of its respective sales or
revenue.
|
Three
Months Ended May 31
|
||||||||||||||||
(In
millions)
|
2008
|
%
|
2007
|
%
|
||||||||||||
Total
(loss) gain(1)
|
$ | (2.9 | ) | (0.5 | ) | $ | 27.8 | 4.3 | ||||||||
Other
CAF income:(2)
|
||||||||||||||||
Servicing
fee
income
|
10.2 | 1.0 | 8.9 | 1.0 | ||||||||||||
Interest
income
|
11.1 | 1.1 | 7.8 | 0.9 | ||||||||||||
Total
other CAF
income
|
21.3 | 2.2 | 16.7 | 2.0 | ||||||||||||
Direct
CAF expenses:(2)
|
||||||||||||||||
CAF
payroll and fringe benefit expense
|
4.4 | 0.5 | 3.6 | 0.4 | ||||||||||||
Other
direct CAF
expenses
|
4.2 | 0.4 | 3.8 | 0.5 | ||||||||||||
Total
direct CAF
expenses
|
8.6 | 0.9 | 7.4 | 0.9 | ||||||||||||
CarMax
Auto Finance income(3)
|
$ | 9.8 | 0.4 | $ | 37.1 | 1.7 | ||||||||||
Total
loans
sold
|
$ | 626.5 | $ | 647.0 | ||||||||||||
Average
managed
receivables
|
$ | 3,940.9 | $ | 3,411.4 | ||||||||||||
Ending
managed
receivables
|
$ | 3,977.9 | $ | 3,475.9 | ||||||||||||
Total
net sales and operating revenues
|
$ | 2,208.8 | $ | 2,147.1 | ||||||||||||
Percent
columns indicate:
(1)
Percent of loans sold.
(2)
Annualized percent of average managed receivables.
(3)
Percent of total net sales and operating revenues.
|
Three
Months Ended May 31
|
||||||||
(In
millions)
|
2008
|
2007
|
||||||
Gain
on sales of loans originated and
sold
|
$ | 17.1 | $ | 27.4 | ||||
Other
(losses)
gains
|
(20.0 | ) | 0.4 | |||||
Total
(loss)
gain
|
$ | (2.9 | ) | $ | 27.8 | |||
Loans
originated and
sold
|
$ | 626.5 | $ | 647.0 | ||||
Receivables
repurchased from public securitizations and resold
|
- | - | ||||||
Total
loans
sold
|
$ | 626.5 | $ | 647.0 | ||||
Gain
percentage on loans originated and
sold
|
2.7 | % | 4.2 | % | ||||
Total
(loss) gain as a percentage of total loans sold
|
(0.5 | )% | 4.3 | % |
As
of May 31
|
As
of February 29 or 28
|
|||||||||||||||
(In
millions)
|
2008
|
2007
|
2008
|
2007
|
||||||||||||
Loans
securitized
|
$ | 3,893.8 | $ | 3,399.6 | $ | 3,764.5 | $ | 3,242.1 | ||||||||
Loans
held for sale or investment
|
84.1 | 76.3 | 74.0 | 68.9 | ||||||||||||
Ending
managed
receivables
|
$ | 3,977.9 | $ | 3,475.9 | $ | 3,838.5 | $ | 3,311.0 | ||||||||
Accounts
31+ days past
due
|
$ | 95.8 | $ | 68.4 | $ | 86.1 | $ | 56.9 | ||||||||
Past
due accounts as a percentage of ending
managed receivables
|
2.41 | % | 1.97 | % | 2.24 | % | 1.72 | % |
Three
Months Ended May 31
|
||||||||
(In
millions)
|
2008
|
2007
|
||||||
Net
credit losses on managed
receivables
|
$ | 10.3 | $ | 5.5 | ||||
Average
managed
receivables
|
$ | 3,940.9 | $ | 3,411.4 | ||||
Annualized
net credit losses as a percentage of average
managed receivables
|
1.04 | % | 0.64 | % | ||||
Recovery
rate
|
46.9 | % | 52.8 | % |
Location
|
Television
Market
|
Market
Status
|
Production
Superstores
|
Non-Production
Superstores
|
Colorado
Springs, Colorado(1)
|
Colorado
Springs
|
New
|
1
|
-
|
Costa
Mesa, California(1)
|
Los
Angeles
|
Existing
|
-
|
1
|
Tulsa,
Oklahoma(1)
|
Tulsa
|
New
|
1
|
-
|
Hickory,
North Carolina
|
Charlotte
|
Existing
|
-
|
1
|
Augusta,
Georgia
|
Augusta
|
New
|
-
|
1
|
Dayton,
Ohio
|
Dayton
|
New
|
1
|
-
|
Cincinnati,
Ohio
|
Cincinnati
|
New
|
1
|
-
|
Potomac
Mills, Virginia
|
D.C.
/ Baltimore
|
Existing
|
-
|
1
|
Total
remaining FY09 planned superstore openings
|
4
|
4
|