UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 30, 2005
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CARMAX, INC.
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(Exact name of registrant as specified in its charter)
Virginia 1-31420 54-1821055
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(State or other (Commission (IRS Employer
jurisdiction File No.) Identification No.)
of incorporation)
4900 Cox Road, Glen Allen, Virginia 23060
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 804-747-0422
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N/A
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(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement
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On August 24, 2005, CarMax Auto Superstores, Inc. ("CASI"),
a subsidiary of CarMax, Inc. (the "Registrant") and certain of
their subsidiaries named therein (the "Subsidiaries"), entered
into a Credit Agreement for a revolving credit facility (the
"Credit Agreement"), among CASI, the Subsidiaries, Bank of
America, N.A. as a lender and Administrative Agent and various
other financial institutions named therein (collectively, the
"Lenders"). Banc of America Securities LLC acted as Sole Lead
Arranger and Sole Book Manager. The funds available under
the Credit Agreement represent senior secured indebtedness of
CASI and the Subsidiaries.
Pursuant to the terms of the Credit Agreement and a related
Security Agreement dated as of August 24, 2005, among the
Registrant, CASI, the Subsidiaries, certain other subsidiaries
of the Registrant named therein, and the Administrative Agent,
borrowings under the Credit Agreement are secured by vehicle
inventory held by the Registrant or its subsidiaries. In
addition, pursuant to the terms of the Credit Agreement and a
related Guaranty Agreement dated as of August 24, 2005, between
the Registrant and the Administrative Agent, the Registrant has
guaranteed the obligations of CASI and the Subsidiaries under
the Credit Agreement.
The Credit Agreement, which has a four-year term, provides for
aggregate borrowings of up to $450 million. Borrowings under the
Credit Agreement are available for working capital and general
corporate purposes. The aggregate $450 million borrowing limit
includes a $25 million limitation on new vehicle swing line
loans, a $25 million limitation on other swing line loans, and a
$30 million limitation on standby letters of credit. Borrowings
under the Credit Agreement bear interest at variable rates based
on LIBOR, the federal funds rate or the prime rate, depending
on the type of borrowing. CASI pays a commitment fee on the
unused portion of the funds available under the Credit
Agreement. Interest and fees are payable monthly. All
outstanding principal amounts borrowed under the Credit
Agreement will be due and payable on August 24, 2009. As of
August 26, 2005, the amount outstanding under the Credit
Agreement was approximately $129.9 million.
The Credit Agreement contains customary representations and
warranties, conditions, and negative and affirmative covenants,
including requirements for maintaining certain financial ratios
and limitations on acquisitions and investments. Management does
not believe that the limitations contained in the Credit
Agreement will, in the foreseeable future, adversely affect the
Registrant's ability to use the Credit Agreement and execute its
business plan. However, there can be no assurance in this
regard.
In addition to participation in the Credit Agreement, certain of
the Lenders provide other services to the Registrant, CASI and
the Subsidiaries, including cash management and treasury
services, asset-backed securitization transactions, retail
installment financing to the Registrant's customers, derivative
transactions (interest rate swaps), and other corporate
financial services. Bank of America, N.A. is the second largest
provider of prime-rated financing for the Registrant's
customers, as determined by total retail installment contract
dollars, after CarMax Auto Finance, the Registrant's financing
operation.
Item 1.02 Termination of a Material Definitive Agreement
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On February 10, 2003, the Registrant (which, for this Item 1.02,
includes CASI) entered into an Amended and Restated Credit
Agreement as amended from time to time, (the "Previous Credit
Agreement") with DaimlerChrysler Services North America, LLC and
Toyota Motor Credit Corporation (the "Previous Lenders"). On
August 24, 2005, the Registrant terminated the Previous Credit
Agreement by payment in full of all loans and other obligations
outstanding thereunder. The termination of the Previous Credit
Agreement occured in connection with the entry into the Credit
Agreement, as described in Item 1.01 above. There were no
penalties to the Registrant in connection with terminating the
Previous Credit Agreement. In connection with terminating the
Previous Credit Agreement, the Registrant terminated an Amended
and Restated Security Agreement between the Registrant and the
Previous Lenders, dated as of February 10, 2003, as amended, and
a Guaranty between the Registrant and the Previous Lenders,
dated as of May 17, 2002, as amended.
The Previous Credit Agreement included a $200 million revolving
loan commitment and a $100 million term loan. Principal was due
in full at maturity with interest payable monthly at a
LIBOR-based rate. The Previous Credit Agreement had been
scheduled to terminate on May 17, 2006. Borrowings under the
Previous Credit Agreement were secured by the Registrant's
vehicle inventory.
Signature
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 hereunto duly authorized.
CARMAX, INC.
By: /s/ Keith D. Browning
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Keith D. Browning
Executive Vice President
and Chief Financial Officer
Date: August 30, 2005