CARMAX REPORTS RECORD FOURTH QUARTER AND
FISCAL YEAR 2007 RESULTS
Releases Fiscal 2008 Expectations
Richmond, Va., March 29, 2007 - CarMax, Inc. (NYSE:KMX) today reported record results for the fourth quarter and fiscal year ended February 28, 2007. All share and per share amounts have been adjusted for the effect of the 2-for-1 stock split on March 26, 2007.
| § | Total fourth quarter sales increased 16% to $1.88 billion from $1.62 billion in the fourth quarter of fiscal 2006. For the fiscal year, total sales increased 19% to $7.47 billion from $6.26 billion. |
| § | Comparable store used unit sales increased 12% for the fourth quarter. For the fiscal year, comparable store used unit sales increased 9%. |
| § | Total used unit sales grew 18% in the fourth quarter and 16% for the fiscal year. |
| § | For the fourth quarter, net earnings increased 15% to $42.1 million, or 19 cents per share, compared with $36.7 million, or 17 cents per share, in the fourth quarter of fiscal 2006. For the fiscal year, net earnings increased 48% to $198.6 million, or 92 cents per share, compared with $134.2 million, or 63 cents per share, in fiscal 2006. |
| § | Results for the fourth quarter of fiscal 2007 included an asset impairment charge of 1 cent per share related to one of our new car franchises. Results for the fourth quarter of fiscal 2006 included a benefit of 1 cent per share for favorable CarMax Auto Finance items. |
Fourth Quarter Business Performance Review
“We’ve had a great year at CarMax and are pleased to wrap up fiscal 2007 with another quarter of solid performance,” said Tom Folliard, president and chief executive officer.
Sales. “We posted our second consecutive quarter of double-digit used unit comp growth, up 12% in the fourth quarter,” said Folliard. “Similar to the first nine months of the year, we benefited from strong store and Internet traffic and continued excellent execution by our store teams.” Compared with earlier quarters of this year, our average used vehicle selling price moderated slightly in the fourth quarter. In the fourth quarter of last year, our average selling price reflected the rebound in SUV and truck sales, which had been adversely affected by the spike in gasoline prices earlier that year.
Wholesale vehicle sales were relatively flat in the fourth quarter, as the increase in unit sales was offset by a decline in our average wholesale selling price. We believe the decline in wholesale price reflects the difficult comparison with last year’s fourth quarter. Our wholesale selling prices were unusually strong in the second half of last year, due in part to the large number of vehicles destroyed by Hurricanes Katrina, Rita, and Wilma, which caused a supply/demand imbalance, particularly for older, higher mileage cars that make up the majority of our wholesale sales.
CarMax, Inc.
Page 2 of 10
Gross Profit. Our total gross profit per unit of $2,651 was slightly below the prior year’s quarter, primarily because of a $60 per unit decline in wholesale vehicle profits. As expected, our wholesale profit per unit was lower than in last year’s fourth quarter, which had benefited from the unusually strong demand and pricing for older cars in the wake of Hurricane Katrina. However, our wholesale profit per unit did strengthen compared with the third quarter of fiscal 2007, as we typically generate our highest wholesale margins in the fourth quarter when the seasonal demand for older, higher mileage cars normally peaks.
CarMax Auto Finance. “We again reported strong financial results at CarMax Auto Finance,” said Folliard. CAF income rose 25%, to $31.7 million, despite the 1 cent per share of favorable valuation adjustments recorded last year. CAF income benefited from our strong sales performance and an improvement in the gain on loans originated and sold.
The gain on loans originated and sold as a percent of loans originated and sold (the gain percentage) increased to 4.0% in this year’s fourth quarter compared with 3.6% in the fourth quarter of fiscal 2006. Over the long-term, we expect our gain percentage to be in the range of 3.5% to 4.5%. We were at or below the lower end of this range throughout fiscal 2006. Our gain percentage began returning to more normalized levels last summer, coincident with the general stabilization in our funding costs.
SG&A. The SG&A ratio increased 10 basis points to 10.7% from 10.6% in the fourth quarter of fiscal 2006. As expected, we had significantly higher pre-opening costs in this year’s fourth quarter due to differences in the timing of store openings. In addition, this year’s fourth quarter SG&A expense included an impairment charge of approximately $4.9 million, or 1 cent per share, related to the write down of intangible assets associated with one of our new car franchises. Excluding the impairment loss and assuming pre-opening costs at a level similar to the prior year, we estimate the SG&A ratio would have declined approximately 30 basis points versus last year’s fourth quarter.
As previously reported, we adopted the new accounting rules for stock-based compensation in the first quarter of fiscal 2007, and results for the prior year were restated to enhance comparability. We recognized $6.5 million, or 2 cents per share, of share-based compensation in the fourth quarter of fiscal 2007, $5.9 million of which was included in SG&A, compared with $6.1 million, or 2 cents per share, in last year’s fourth quarter, all of which was included in SG&A.
Superstore Openings. We opened four stores during the fourth quarter: a standard superstore in Fresno; satellite superstores in Austin and East Haven; and a satellite superstore in Charlottesville, Va., which was our first entry into a small market. We adjusted our store footprint, inventory level, and staffing model in Charlottesville to accommodate the expected smaller aggregate sales opportunity in this market. We believe this store will help us better understand our long-term opportunities in smaller markets, as well as having possible application in larger markets in fill-in situations or where real estate availability is constrained. For the fiscal year, we opened a total of ten superstores, including five standard and five satellite superstores, expanding our store base by 15%.
Supplemental Financial Information
Sales Components
(in millions) | | Three Months Ended February 28 (1) | | Fiscal Years Ended February 28 (1) | |
| | | 2007 | | 2006 | | Change | | 2007 | | 2006 | | Change | |
Used vehicle sales | | $ | 1,507.4 | | $ | 1,243.9 | | | 21.2 | % | $ | 5,872.8 | | $ | 4,771.3 | | | 23.1 | % |
New vehicle sales | | | 95.6 | | | 103.5 | | | (7.7 | )% | | 445.1 | | | 502.8 | | | (11.5 | )% |
Wholesale vehicle sales | | | 222.5 | | | 223.8 | | | (0.6 | )% | | 918.4 | | | 778.3 | | | 18.0 | % |
Other sales and revenues: Extended service plan revenues Service department sales Third-party finance fees, net | | | 29.3 22.0 6.1 | | | 25.1 23.0 4.5 | | | 16.5 (4.1) 35.3 | % % % | | 114.4 90.6 24.3 | | | 97.9 93.4 16.3 | | | 16.9 (3.0) 49.3 | % % % |
Total other sales and revenues | | | 57.4 | | | 52.6 | | | 9.1 | % | | 229.3 | | | 207.6 | | | 10.5 | % |
Net sales and operating revenues | | $ | 1,882.8 | | $ | 1,623.8 | | | 16.0 | % | $ | 7,465.7 | | $ | 6,260.0 | | | 19.3 | % |
| (1) | Percent calculations and amounts shown are based on amounts presented on the attached consolidated statements of earnings and may not sum due to rounding. |
Retail Vehicle Sales Changes
| | Three Months Ended February 28 | Fiscal Years Ended February 28 |
| | | | 2007 | | | 2006 | | | 2007 | | | 2006 | |
| Comparable store vehicle sales: | | | | | | | | | | | | | |
Used vehicle units | | | 12 | % | | (3 | )% | | 9 | % | | 4 | % |
New vehicle units | | | (8 | )% | | (3 | )% | | (11 | )% | | 1 | % |
Total units | | | 11 | % | | (3 | )% | | 8 | % | | 4 | % |
| | | | | | | | | | | | | | |
Used vehicle dollars | | | 14 | % | | 4 | % | | 16 | % | | 8 | % |
New vehicle dollars | | | (8 | )% | | (4 | )% | | (12 | )% | | 1 | % |
Total dollars | | | 13 | % | | 3 | % | | 13 | % | | 8 | % |
| | | | | | | | | | | | | | |
| Total vehicle sales: | | | | | | | | | | | | | |
Used vehicle units | | | 18 | % | | 6 | % | | 16 | % | | 15 | % |
New vehicle units | | | (8 | )% | | 1 | % | | (11 | )% | | 1 | % |
Total units | | | 17 | % | | 5 | % | | 14 | % | | 14 | % |
| | | | | | | | | | | | | | |
Used vehicle dollars | | | 21 | % | | 13 | % | | 23 | % | | 19 | % |
New vehicle dollars | | | (8 | )% | | 0 | % | | (11 | )% | | 2 | % |
Total dollars | | | 19 | % | | 12 | % | | 20 | % | | 17 | % |
Retail Vehicle Sales Mix
| | Three Months Ended February 28 | Fiscal Years Ended |
| | | | 2007 | | | 2006 | | | 2007 | | | 2006 | |
| Vehicle units: | | | | | | | | | | | | | |
| Used vehicles | | | 96 | % | | 94 | % | | 95 | % | | 93 | % |
| New vehicles | | | 4 | | | 6 | | | 5 | | | 7 | |
| Total | | | 100 | % | | 100 | % | | 100 | % | | 100 | % |
| | | | | | | | | | | | | | |
| Vehicle dollars: | | | | | | | | | | | | | |
| Used vehicles | | | 94 | % | | 92 | % | | 93 | % | | 90 | % |
| New vehicles | | | 6 | | | 8 | | | 7 | | | 10 | |
| Total | | | 100 | % | | 100 | % | | 100 | % | | 100 | % |
Unit Sales
| | | Three Months Ended February 28 | | Fiscal Years Ended February 28 | |
| | | 2007 | | 2006 | | 2007 | | 2006 | |
| Used vehicles | | | 86,900 | | | 73,449 | | | 337,021 | | | 289,888 | |
| New vehicles | | | 3,953 | | | 4,302 | | | 18,563 | | | 20,901 | |
| Wholesale vehicles | | | 50,692 | | | 47,191 | | | 208,959 | | | 179,548 | |
Average Selling Prices
| | | Three Months Ended February 28 | | Fiscal Years Ended February 28 | |
| | | 2007 | | 2006 | | 2007 | | 2006 | |
| Used vehicles | | $ | 17,180 | | $ | 16,715 | | $ | 17,249 | | $ | 16,298 | |
| New vehicles | | $ | 24,031 | | $ | 23,848 | | $ | 23,833 | | $ | 23,887 | |
| Wholesale vehicles | | $ | 4,277 | | $ | 4,590 | | $ | 4,286 | | $ | 4,233 | |
Selected Operating Ratios
(in millions) | | Three Months Ended February 28 | | Fiscal Years Ended February 28 | |
| | | 2007 | | % (1) | | 2006(2) | | % (1) | | 2007 | | % (1) | | 2006(2) | | % (1) | |
| | | | | | | | | | | | | | | | | | |
| Net sales and operating revenues | | $ | 1,882.8 | | | 100.0 | % | $ | 1,623.8 | | | 100.0 | % | $ | 7,465.7 | | | 100.0 | % | $ | 6,260.0 | | | 100.0 | % |
| Gross profit | | $ | 240.8 | | | 12.8 | % | $ | 207.2 | | | 12.8 | % | $ | 971.1 | | | 13.0 | % | $ | 790.7 | | | 12.6 | % |
| CarMax Auto Finance income | | $ | 31.7 | | | 1.7 | % | $ | 25.5 | | | 1.6 | % | $ | 132.6 | | | 1.8 | % | $ | 104.3 | | | 1.7 | % |
| Selling, general, and administrative | | | | | | | | | | | | | | | | | | | | | | | | | |
| expenses | | $ | 201.8 | | | 10.7 | % | $ | 171.9 | | | 10.6 | % | $ | 776.2 | | | 10.4 | % | $ | 674.4 | | | 10.8 | % |
Operating profit (EBIT) (3) | | $ | 70.7 | | | 3.8 | % | $ | 60.8 | | | 3.7 | % | $ | 327.5 | | | 4.4 | % | $ | 220.7 | | | 3.5 | % |
| Net earnings | | $ | 42.1 | | | 2.2 | % | $ | 36.7 | | | 2.3 | % | $ | 198.6 | | | 2.7 | % | $ | 134.2 | | | 2.1 | % |
| (1) | Calculated as the ratio of the applicable amount to net sales and operating revenues. |
| (2) | Restated to reflect the adoption of SFAS 123R. |
| (3) | Operating profit equals earnings before interest and income taxes. |
Gross Profit
| | | Three Months Ended February 28 | | Fiscal Years Ended February 28 | |
| | | 2007 | | 2006 | | 2007 | | 2006 | |
| | | $/unit (1) | | % (2) | | $/unit (1) | | % (2) | | $/unit (1) | | % (2) | | $/unit (1) | | % (2) | |
| Used vehicle gross profit | | $ | 1,826 | | | 10.5 | % | $ | 1,810 | | | 10.7 | % | $ | 1,903 | | | 10.9 | % | $ | 1,808 | | | 11.0 | % |
| New vehicle gross profit | | $ | 1,172 | | | 4.8 | % | $ | 899 | | | 3.7 | % | $ | 1,169 | | | 4.9 | % | $ | 934 | | | 3.9 | % |
| Wholesale vehicle gross profit | | $ | 805 | | | 18.4 | % | $ | 865 | | | 18.2 | % | $ | 742 | | | 16.9 | % | $ | 700 | | | 16.1 | % |
| Other gross profit | | $ | 404 | | | 64.0 | % | $ | 380 | | | 56.2 | % | $ | 431 | | | 66.8 | % | $ | 391 | | | 58.5 | % |
| Total gross profit | | $ | 2,651 | | | 12.8 | % | $ | 2,665 | | | 12.8 | % | $ | 2,731 | | | 13.0 | % | $ | 2,544 | | | 12.6 | % |
| (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. |
Earnings Highlights
(in millions except per share data) | | Three Months Ended February 28 | | Fiscal Years Ended February 28 | |
| | | 2007 | | 2006(1) | | Change | | 2007 | | 2006(1) | | Change | |
Net earnings | | $ | 42.1 | | $ | 36.7 | | | 14.9 | % | $ | 198.6 | | $ | 134.2 | | | 48.0 | % |
Weighted average shares outstanding (2) | | | 219.8 | | | 213.3 | | | 3.0 | % | | 216.7 | | | 212.8 | | | 1.8 | % |
Net earnings per share (2) | | $ | 0.19 | | $ | 0.17 | | | 11.8 | % | $ | 0.92 | | $ | 0.63 | | | 46.0 | % |
| (1) | Restated to reflect the adoption of SFAS 123R. |
| (2) | Share and per share amounts are presented on a fully diluted basis and have been adjusted for the effect of the 2-for-1 stock split in March 2007. |
Fiscal 2008 Expectations
Superstore Openings and Capital Expenditures. We plan to expand our used car superstore base by approximately 17% in fiscal 2008, opening 13 used car superstores, including 5 standard and 8 satellite superstores. We plan to enter five new markets and expand our presence in six existing markets. The fiscal 2008 store opening plan contains a mix of market sizes, ranging from San Diego, which is our first new larger market in several years, to Omaha and Jackson, Miss.
In fiscal 2008, we also plan to open three additional car buying centers, in the Raleigh, Tampa, and Dallas markets. These sites will expand a test begun in fiscal 2007, when we opened our first car buying center in the Atlanta market. These test stores are part of our longer-term efforts to increase both appraisal traffic and retail vehicle sourcing self-sufficiency.
We currently estimate gross capital expenditures will total approximately $300 million in fiscal 2008. Planned expenditures primarily relate to new store construction and land purchases associated with future year store openings. Compared with the approximately $192 million spent in fiscal 2007, the fiscal 2008 capital spending estimate reflects more real estate purchases for future development in larger, multi-store markets. In addition, the fiscal 2007 capital spending amount was lower than originally projected, due in part to the acquisition of some store sites pursuant to ground lease.
Fiscal 2008 Sales. “We currently anticipate comparable store used unit growth for fiscal 2008 in the range of 3% to 9%,” said Folliard. “We also expect wholesale unit sales growth to be consistent with our total used unit sales increase. Total revenues are expected to climb by between 14% and 20%, reflecting our expectations for used unit comp growth, new store openings, a modest increase in used vehicle average selling price, and a continued decline in our new vehicle sales.”
Fiscal 2008 Earnings Per Share. “We currently anticipate fiscal 2008 earnings per share in the range of $1.03 to $1.14, representing EPS growth in the range of 12% to 24%,” said Folliard. “We expect modest improvement in both used vehicle and wholesale gross profits per unit in fiscal 2008, as we continue to refine and improve our car-buying processes.
“We expect CAF income to increase modestly, but at a pace slower than anticipated sales growth, primarily reflecting the headwind created by the $13 million of favorable CAF items reported in fiscal 2007,” continued Folliard. “The CAF gain percentage is anticipated to be slightly above the midpoint of our normalized 3.5% to 4.5% range in fiscal 2008, assuming no significant change in the interest rate environment.
“We expect to begin generating SG&A leverage with comparable store used unit sales growth at the midpoint of our expectation range,” said Folliard. “This expectation reflects an increase in planned SG&A spending to support strategic, operational, and Internet initiatives, as well as an increase in pre-opening costs for the larger number of planned store openings.
“Our effective tax rate for fiscal 2008 is expected to be similar to the fiscal 2007 rate,” said Folliard. “However, our diluted share count is expected to increase by approximately 3%, reflecting the effects of the recent increase in our stock price and option exercises on the weighted average share calculation.”
First Quarter Fiscal 2008 Earnings Release Date
We currently plan to release first quarter sales and earnings results on Wednesday, June 20, 2007, before the opening of the New York Stock Exchange. We will host a conference call for investors at 9:00 a.m. Eastern time on that date. Information on this conference call will be available on our investor information home page at investor.carmax.com in early June.
Conference Call Information
We will host a conference call for investors at 9:00 a.m. Eastern time today, March 29, 2007. Domestic investors may access the call at 1-888-298-3261 (international callers dial 1-706-679-7457). The conference I.D. for both domestic and international callers is 4348025. A live webcast of the call will be available on the company’s investor information home page and at www.streetevents.com.
A webcast replay of the call will be available on the company’s investor information home page beginning at approximately 1:00 p.m. Eastern time on March 29, 2007, through April 28, 2007.
A telephone replay also will be available through April 5, 2007, and may be accessed by dialing 1-800-642-1687 (international callers dial 1-706-645-9291.) The conference I.D. for both domestic and international callers is 4348025.
CarMax, Inc.
Page 7 of 10
About CarMax
CarMax, a Fortune 500 company and one of the Fortune 2007 “100 Best Companies to Work For,” is the nation’s largest retailer of used cars. Headquartered in Richmond, Va., CarMax currently operates 79 used car superstores in 38 markets. CarMax also operates seven new car franchises, all of which are integrated or co-located with its used car superstores. During the twelve month period ended February 28, 2007, the company retailed 337,021 used cars, which is 95% of the total 355,584 vehicles the company retailed during that period. For more information, access the CarMax website at www.carmax.com.
Forward-Looking Statements
The company cautions readers that the statements contained in this release about the company’s future business plans, operations, opportunities, or prospects, including without limitation any statements or factors regarding expected sales, margins, or earnings, are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based upon management’s current knowledge and assumptions about future events and involve risks and uncertainties that could cause actual results to differ materially from anticipated results. Among the factors that could cause actual results and outcomes to differ materially from those contained in the forward-looking statements are the following: changes in the general U.S. or regional U.S. economy; intense competition within the company’s industry; significant changes in retail prices for used and new vehicles; a reduction in the availability or the company’s access to sources of inventory; the significant loss of key employees from the company’s store, regional, or corporate management teams; the efficient operation of the company’s information systems; changes in the availability or cost of capital and working capital financing; the company’s ability to acquire suitable real estate; the occurrence of adverse weather events; seasonal fluctuations in the company’s business; the geographic concentration of the company’s superstores; the regulatory environment in which the company operates; the effect of various litigation matters; the effect of new accounting requirements or changes to generally accepted accounting principles; and the occurrence of certain other material events. The company disclaims any intent or obligation to update its forward-looking statements.
For more details on factors that could affect expectations, see our Annual Report on Form 10-K for the fiscal year ended February 28, 2006, and our quarterly or current reports as filed with or furnished to the Securities and Exchange Commission. Our filings are publicly available on our investor information home page at investor.carmax.com. Requests for information may also be made to the Investor Relations Department by email to investor_relations@carmax.com or by calling 1-804-747-0422 ext. 4489.
Contacts:
Investors and Financial Media:
Katharine Kenny, Assistant Vice President, Investor Relations, (804) 935-4591
Celeste Gunter, Manager, Investor Relations, (804) 935-4597
General Media:
Lisa Van Riper, Assistant Vice President, Public Affairs, (804) 935-4594
Trina Lee, Public Relations Manager, (804) 747-0422, ext. 4197
CarMax, Inc.Page 8 of 10
CARMAX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
(In thousands except per share data)
| | | Three Months Ended February 28 | | | | Twelve Months Ended February 28 | |
| | |
| | | | | | | Restated(2) | | | | | | | | Restated(2) | | | |
| | | 2007 | | %(1) | | 2006 | | %(1) | | 2007 | | %(1) | | 2006 | | %(1) | |
| | | | | | | | | | | | | | | | | | |
| Sales and operating revenues: | | | | | | | | | | | | | | | | | | | | | | | | | |
| Used vehicle sales | | $ | 1,507,407 | | | 80.1 | | $ | 1,243,909 | | | 76.6 | | $ | 5,872,816 | | | 78.7 | | $ | 4,771,325 | | | 76.2 | |
| New vehicle sales | | | 95,565 | | | 5.1 | | | 103,491 | | | 6.4 | | | 445,144 | | | 6.0 | | | 502,805 | | | 8.0 | |
| Wholesale vehicle sales | | | 222,450 | | | 11.8 | | | 223,758 | | | 13.8 | | | 918,408 | | | 12.3 | | | 778,268 | | | 12.4 | |
| Other sales and revenues | | | 57,406 | | | 3.0 | | | 52,616 | | | 3.2 | | | 229,288 | | | 3.1 | | | 207,569 | | | 3.3 | |
| Net sales and operating revenues | | | 1,882,828 | | | 100.0 | | | 1,623,774 | | | 100.0 | | | 7,465,656 | | | 100.0 | | | 6,259,967 | | | 100.0 | |
| Cost of sales | | | 1,641,995 | | | 87.2 | | | 1,416,576 | | | 87.2 | | | 6,494,594 | | | 87.0 | | | 5,469,253 | | | 87.4 | |
| Gross profit | | | 240,833 | | | 12.8 | | | 207,198 | | | 12.8 | | | 971,062 | | | 13.0 | | | 790,714 | | | 12.6 | |
| CarMax Auto Finance income | | | 31,745 | | | 1.7 | | | 25,461 | | | 1.6 | | | 132,625 | | | 1.8 | | | 104,327 | | | 1.7 | |
| Selling, general, and | | | | | | | | | | | | | | | | | | | | | | | | | |
| administrative expenses | | | 201,835 | | | 10.7 | | | 171,853 | | | 10.6 | | | 776,168 | | | 10.4 | | | 674,370 | | | 10.8 | |
| Interest expense | | | 924 | | | __ | | | 2,094 | | | 0.1 | | | 5,373 | | | 0.1 | | | 4,093 | | | 0.1 | |
| Interest income | | | 230 | | | — | | | 435 | | | — | | | 1,203 | | | — | | | 1,023 | | | — | |
| Earnings before income taxes | | | 70,049 | | | 3.7 | | | 59,147 | | | 3.6 | | | 323,349 | | | 4.3 | | | 217,601 | | | 3.5 | |
| Provision for income taxes | | | 27,911 | | | 1.5 | | | 22,474 | | | 1.4 | | | 124,752 | | | 1.7 | | | 83,381 | | | 1.3 | |
| Net earnings | | $ | 42,138 | | | 2.2 | | $ | 36,673 | | | 2.3 | | $ | 198,597 | | | 2.7 | | $ | 134,220 | | | 2.1 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Weighted average common | | | | | | | | | | | | | | | | | | | | | | | | | |
shares: (3) | | | | | | | | | | | | | | | | | | | | | | | | | |
| Basic | | | 214,482 | | | | | | 209,796 | | | | | | 212,454 | | | | | | 209,270 | | | | |
| Diluted | | | 219,828 | | | | | | 213,322 | | | | | | 216,739 | | | | | | 212,846 | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Net earnings per share: (3) | | | | | | | | | | | | | | | | | | | | | | | | | |
| Basic | | $ | 0.20 | | | | | $ | 0.17 | | | | | $ | 0.93 | | | | | $ | 0.64 | | | | |
| Diluted | | $ | 0.19 | | | | | $ | 0.17 | | | | | $ | 0.92 | | | | | $ | 0.63 | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
(1) Percents are calculated as a percentage of net sales and operating revenues and may not equal totals due to rounding.
(2) Restated to reflect the adoption of SFAS 123R.
| (3) | Share and per share amounts have been adjusted for the effect of the 2-for-1 stock split in March 2007. |
CarMax, Inc.
Page 9 of 10
CARMAX, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
UNAUDITED
(In thousands)
| | | | | Restated(1) | |
| | | February 28 | | February 28 | |
| | | 2007 | | 2006 | |
ASSETS | | | | | | | |
| Current assets: | | | | | | | |
| Cash and cash equivalents | | $ | 19,455 | | $ | 21,759 | |
| Accounts receivable, net | | | 71,413 | | | 76,621 | |
| Automobile loan receivables held for sale | | | 6,162 | | | 4,139 | |
| Retained interest in securitized receivables | | | 202,302 | | | 158,308 | |
| Inventory | | | 836,116 | | | 669,700 | |
| Prepaid expenses and other current assets | | | 15,068 | | | 11,211 | |
| | | | | | | | |
| Total current assets | | | 1,150,516 | | | 941,738 | |
| | | | | | | | |
| Property and equipment, net | | | 651,850 | | | 499,298 | |
| Deferred income taxes | | | 40,174 | | | 24,576 | |
| Other assets | | | 43,033 | | | 44,000 | |
| | | | | | | | |
| TOTAL ASSETS | | $ | 1,885,573 | | $ | 1,509,612 | |
| | | | | | | | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | |
| Current liabilities: | | | | | | | |
| Accounts payable | | $ | 254,895 | | $ | 188,614 | |
| Accrued expenses and other current liabilities | | | 68,885 | | | 66,871 | |
| Accrued income taxes | | | 23,377 | | | 5,598 | |
| Deferred income taxes | | | 13,132 | | | 23,562 | |
| Short-term debt | | | 3,290 | | | 463 | |
| Current portion of long-term debt | | | 148,443 | | | 59,762 | |
| Total current liabilities | | | 512,022 | | | 344,870 | |
| | | | | | | | |
| Long-term debt, excluding current portion | | | 33,744 | | | 134,787 | |
| Deferred revenue and other liabilities | | | 92,432 | | | 49,852 | |
| | | | | | | | |
| TOTAL LIABILITIES | | | 638,198 | | | 529,509 | |
| | | | | | | | |
| SHAREHOLDERS’ EQUITY | | | 1,247,375 | | | 980,103 | |
| | | | | | | | |
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | | $ | 1,885,573 | | $ | 1,509,612 | |
(1)Restated to reflect the adoption of SFAS 123R.
CarMax, Inc.
Page 10 of 10
CARMAX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In thousands)
| | |
| | |
| | | Twelve Months Ended February 28 | |
| | |
| | | | | Restated(1) | |
| | 2007 | | 2006 | |
Operating Activities: | | | | | |
| Net earnings | | $ | 198,597 | | $ | 134,220 | |
| Adjustments to reconcile net earnings to net | | | | | | | |
| cash provided by operating activities: | | | | | | | |
| Depreciation and amortization | | | 34,551 | | | 26,692 | |
| Share-based compensation expense | | | 31,826 | | | 21,632 | |
| Loss (gain) on disposition of assets | | | 88 | | | (764 | ) |
| Deferred income tax benefit | | | (14,169 | ) | | (19,088 | ) |
| Impairment of long-lived assets | | | 4,891 | | | __ | |
| Net decrease (increase) in: | | | | | | | |
| Accounts receivable, net | | | 5,208 | | | (454 | ) |
| Automobile loan receivables held for sale, net | | | (2,023 | ) | | 18,013 | |
| Retained interest in securitized receivables | | | (43,994 | ) | | (10,345 | ) |
| Inventory | | | (166,416 | ) | | (93,133 | ) |
| Prepaid expenses and other current assets | | | (3,857 | ) | | 1,797 | |
| Other assets | | | (3,924 | ) | | (5,975 | ) |
| Net increase (decrease) in: | | | | | | | |
| Accounts payable, accrued expenses and | | | | | | | |
| other current liabilities, and accrued income taxes | | | 85,633 | | | 35,133 | |
| Deferred revenue and other liabilities | | | 10,389 | | | 9,785 | |
| Net cash provided by operating activities | | | 136,800 | | | 117,513 | |
| | | | | | | | |
Investing Activities: | | | | | | | |
| Capital expenditures | | | (191,760 | ) | | (194,433 | ) |
| Proceeds from sales of assets | | | 4,569 | | | 78,340 | |
| Net cash used in investing activities | | | (187,191 | ) | | (116,093 | ) |
| | | | | | | | |
Financing Activities: | | | | | | | |
| Increase (decrease) in short-term debt, net | | | 2,827 | | | (64,734 | ) |
| Issuance of long-term debt | | | 64,000 | | | 174,929 | |
| Payments on long-term debt | | | (76,362 | ) | | (116,993 | ) |
| Equity issuances, net | | | 35,411 | | | 6,035 | |
| Excess tax benefits from share-based payment arrangements | | | 22,211 | | | 3,978 | |
| Net cash provided by financing activities | | | 48,087 | | | 3,215 | |
| | | | | | | | |
| (Decrease) increase in cash and cash equivalents | | | (2,304 | ) | | 4,635 | |
| Cash and cash equivalents at beginning of year | | | 21,759 | | | 17,124 | |
| Cash and cash equivalents at end of period | | $ | 19,455 | | $ | 21,759 | |
| | |
(1) Restated to reflect the adoption of SFAS 123R.
###
