CarMax, Inc. (NYSE:KMX) today reported record results for the fourth quarter and fiscal year ended February 29, 2012.

  • Net sales and operating revenues increased 10% to $2.48 billion from $2.25 billion in the fourth quarter of last year. For the fiscal year, net sales and operating revenues increased 11% to $10.00 billion from $8.98 billion in fiscal 2011.
  • Comparable store used unit sales increased 4% in the fourth quarter and 1% in the fiscal year.
  • Total used unit sales rose 6% in the fourth quarter and 3% in the fiscal year.
  • Total wholesale unit sales increased 13% in the fourth quarter and 20% in the fiscal year.
  • CarMax Auto Finance (CAF) income rose 22% to $66.1 million in the fourth quarter. For the fiscal year, CAF income rose 19% to $262.2 million.
  • Fourth quarter net earnings increased 7% to $95.0 million, or $0.41 per diluted share, compared with $88.8 million, or $0.39 per diluted share, in the prior year quarter.
  • Fiscal 2012 net earnings increased 10% to $413.8 million, or $1.79 per diluted share, compared with $377.5 million, or $1.65 per diluted share, in fiscal 2011.

"We are pleased to report strong fourth quarter and full year results," said Tom Folliard, president and chief executive officer. "We hit some major milestones this year, including total revenues of $10 billion and annual used retail vehicle sales in excess of 400,000 units, and we look forward to continued growth as we expand our store base in the coming years."

Fourth Quarter Business Performance Review

Sales. Comparable store used unit sales grew 4% compared with a 12% increase in last year's fourth quarter. Used unit sales benefited from strong subprime-financed sales, as well as an extra day in the current year quarter due to leap year.

For the fiscal year, our data indicates that we increased our share of the late-model (0-to 6-year old) used vehicle market by approximately 3%. We remain confident that the strength of our consumer offer and the skill of our associates, combined with our resumption of store growth, will continue to drive future share gains.

Wholesale unit sales increased 13% compared with the fourth quarter of fiscal 2011. Similar to the last several quarters, our wholesale volumes benefited from a strong increase in appraisal traffic and a solid buy percentage. We believe appraisal traffic is benefiting from the increase in industry new car sales.

Other sales and revenues declined 12% compared with the prior year's fourth quarter. The decrease was primarily due to a reduction in third-party finance fees, which resulted from a mix change among third-party finance providers. Subprime providers, who generally purchase subprime financings at a discount, originated 15% of used vehicle sales in the current year's quarter compared with 9% in the prior year's fourth quarter. At the same time, as CAF has continued to retain an increased portion of the loans that had been purchased by third-party providers, the fees received from these third parties have declined.

Gross Profit. Total gross profit increased 5% to $338.2 million from $320.7 million in the fourth quarter of fiscal 2011, reflecting a higher gross profit contribution from retail and wholesale vehicles, partly offset by a reduction in other gross profit.

Used vehicle gross profit increased 8% to $225.8 million from $209.5 million in the prior year period. The improvement resulted from the combination of the 6% increase in used units and a 2% increase in gross profit per unit, to $2,135 from $2,096 in the prior year quarter. Last year, we reported that our efforts to eliminate waste from our used vehicle reconditioning processes in recent years had allowed us to achieve a cumulative, sustainable reduction in average reconditioning costs of approximately $250 per vehicle. Adjusting for an increase in the average age of vehicles reconditioned and sold, we continued to realize $250 per unit in savings in fiscal 2012.

Wholesale gross profit increased 13% to $70.2 million compared with $62.4 million in the fourth quarter of the prior year, which was driven by the 13% increase in wholesale unit sales. Wholesale gross profit per unit of $950 was similar to the $956 in the prior year quarter. The strength of our wholesale gross profit per unit continued to be fueled by the strong demand and pricing at our auctions.

Other gross profit declined 14% to $40.8 million from $47.6 million in the prior year period. The decrease was similar to the decline in other sales and revenues and was primarily due to the change in third-party finance fees.

CarMax Auto Finance. CAF income increased 22% to $66.1 million compared with $54.1 million in last year's fourth quarter, primarily due to an increase in interest margin, which rose to $88.9 million from $74.6 million. The growth in interest margin was driven by increases in both average managed receivables and the spread between the interest charged to consumers and our related funding costs.

CAF net loans originated increased 36% compared with the prior year quarter. The increase reflected our previously reported decision to retain an increased portion of the loans that third-party providers had been purchasing. As of January 2012, CAF had transitioned back to retaining all of these loans. The provision for loan losses was 0.9% of average receivables in both the current year and prior year quarter, as favorable loss experience in fiscal 2012 largely offset the cumulative effect of the origination and retention of loans with greater credit risk.

SG&A. Selling, general and administrative expenses increased 7% to $243.5 million from $226.9 million in the prior year's fourth quarter. The increase in SG&A expenses reflected the expansion of our store base, increases in sales commissions and other variable costs, and higher growth-related costs, partly offset by lower advertising expense. Growth-related costs include store pre-opening expenses, relocation expenses and costs of maintaining management bench strength to support future growth. SG&A per used unit increased slightly, to $2,302 versus $2,270 in the prior year's quarter. The SG&A ratio improved to 9.8% compared with 10.1% in the prior year quarter, reflecting the leverage associated with the increases in used and wholesale vehicle sales, and average selling prices.

Superstore Openings. During the fourth quarter of fiscal 2012, we entered the Chattanooga, Tennessee market. Subsequent to the end of the fiscal year, we opened a store in Lancaster, Pennsylvania.

Supplemental Financial Information

   

 

Sales Components

 
Three Months Ended Fiscal Year Ended

(In millions)

February 29 or 28 (1)

February 29 or 28 (1)

2012

  

2011

  

Change

2012

  

2011

  

Change

Used vehicle sales $ 1,973.7 $ 1,799.9 9.7 % $ 7,826.9 $ 7,210.0 8.6 %
New vehicle sales 45.8 48.9 (6.3 )% 200.6 198.5 1.0 %
Wholesale vehicle sales 395.7 335.2 18.1 % 1,721.6 1,301.7 32.3 %
Other sales and revenues:
Extended service plan revenues 48.6 47.3 2.7 % 179.6 173.8 3.3 %
Service department sales 24.0 23.3 3.0 % 98.6 100.6 (2.0 )%
Third-party finance fees, net   (12.0 )     (1.9 )   (520.4 )%   (23.8 )     (9.1 )   (160.1 )%
Total other sales and revenues   60.6       68.6     (11.7 )%   254.5       265.3     (4.1 )%
Net sales and operating revenues $ 2,475.8     $ 2,252.6     9.9 % $ 10,003.6     $ 8,975.6     11.5 %
 

(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 Fiscal Year Ended
February 29 or 28 February 29 or 28

2012

  

2011

2012

  

2011

Comparable store vehicle sales:
Used vehicle units 4 % 12 % 1 % 10 %
New vehicle units (2 )% 30 % 1 % 5 %
Total units 4 % 13 % 1 % 10 %
 
Used vehicle dollars 7 % 16 % 7 % 15 %
New vehicle dollars 4 % 37 % 9 % 7 %
Total dollars 7 % 17 % 7 % 15 %
 
Total vehicle sales:
Used vehicle units 6 % 14 % 3 % 11 %
New vehicle units (12 )% 27 % (7 )% 5 %
Total units 5 % 14 % 3 % 11 %
 
Used vehicle dollars 10 % 18 % 9 % 16 %
New vehicle dollars (6 )% 34 % 1 % 6 %
Total dollars 9 % 18 % 8 % 16 %
 
   

 

Unit Sales

 
Three Months Ended Fiscal Year Ended
February 29 or 28 February 29 or 28

2012

  

2011

2012

  

2011

Used vehicles 105,769 99,969 408,080 396,181
New vehicles 1,727 1,953 7,679 8,231
Wholesale vehicles 73,897 65,229 316,649 263,061
 
   

 

Average Selling Prices

 
Three Months Ended Fiscal Year Ended
February 29 or 28 February 29 or 28

2012

  

2011

2012

  

2011

Used vehicles $ 18,495 $ 17,862 $ 18,995 $ 18,019
New vehicles $ 26,409 $ 24,911 $ 25,986 $ 23,989
Wholesale vehicles $ 5,208 $ 5,004 $ 5,291 $ 4,816
 
     

 

 

Selected Operating Ratios

 
Three Months Ended Fiscal Year Ended

(In millions)

 February 29 or 28 February 29 or 28
2012   % (1)   2011   % (1) 2012   % (1)   2011   % (1)
 
Net sales and operating revenues $ 2,475.8 100.0 % $ 2,252.6 100.0 % $ 10,003.6 100.0 % $ 8,975.6 100.0 %
Gross profit $ 338.2 13.7 % $ 320.7 14.2 % $ 1,378.8 13.8 % $ 1,301.2 14.5 %
CarMax Auto Finance income $ 66.1 2.7 % $ 54.1 2.4 % $ 262.2 2.6 % $ 220.0 2.5 %

Selling, general, and administrative expenses

$ 243.5 9.8 % $ 226.9 10.1 % $ 940.8 9.4 % $ 878.8 9.8 %
Interest expense $ 8.4 0.3 % $ 8.6 0.4 % $ 33.7 0.3 % $ 34.7 0.4 %
Earnings before income taxes $ 152.8 6.2 % $ 139.4 6.2 % $ 666.9 6.7 % $ 608.2 6.8 %
Net earnings $ 95.0 3.8 % $ 88.8 3.9 % $ 413.8 4.1 % $ 377.5 4.2 %
 

(1)

  

Calculated as the ratio of the applicable amount to net sales and operating revenues.

     

 

Gross Profit

 
Three Months Ended Fiscal Year Ended

(In millions)

 February 29 or 28 February 29 or 28

2012

  

2011

  

Change

2012

  

2011

  

Change

Used vehicle gross profit $ 225.8 $ 209.5 7.8 % $ 888.6 $ 854.0 4.0 %
New vehicle gross profit 1.4 1.1 19.8 % 6.5 5.4 19.9 %
Wholesale vehicle gross profit 70.2 62.4 12.6 % 301.8 238.8 26.4 %
Other gross profit   40.8     47.6   (14.4 )%   181.9     203.0   (10.4 )%
Total gross profit $ 338.2   $ 320.7   5.5 % $ 1,378.8   $ 1,301.2   6.0 %
 
     

 

Gross Profit per Unit

 
Three Months Ended Fiscal Year Ended
February 29 or 28 February 29 or 28

2012

  

2011

2012

  

2011

$/unit (1)

  

% (2)

$/unit(1)

  

% (2)

  

$/unit (1)

  

% (2)

$/unit(1)

  

% (2)

Used vehicle gross profit $ 2,135 11.4 % $ 2,096 11.6 % $ 2,177 11.4 % $ 2,156 11.8 %
New vehicle gross profit $ 784 3.0 % $ 578 2.3 % $ 847 3.2 % $ 659 2.7 %
Wholesale vehicle gross profit $ 950 17.7 % $ 956 18.6 % $ 953 17.5 % $ 908 18.3 %
Other gross profit $ 379 67.3 % $ 467 69.4 % $ 438 71.5 % $ 502 76.5 %
Total gross profit $ 3,146 13.7 % $ 3,146 14.2 % $ 3,316 13.8 % $ 3,218 14.5 %
 

(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.

     

Components of CAF Income and Other CAF Information

 
Three Months Ended Fiscal Year Ended

(In millions)

 February 29 or 28 February 29 or 28

2012

  

2011

2012

  

2011

$  

% (1)

$  

% (1)

$  

% (1)

$  

% (1)

Interest and fee income $ 114.7 9.4 $ 104.9 9.7 $ 448.7 9.6 $ 419.1 9.9
Interest expense   (25.8 )   (2.1 )     (30.3 )   (2.8 )       (106.1 )   (2.3 )     (133.8 )   (3.2 )
Interest margin 88.9 7.3 74.6 6.9 342.6 7.3 285.3 6.7
Provision for loan losses   (11.5 )   (0.9 )     (9.3 )   (0.9 )       (36.4 )   (0.8 )     (27.7 )   (0.7 )

Interest margin after provision for loan losses

77.4 6.3 65.3 6.1 306.2 6.6 257.6 6.1
Other gain(2) 0.1 -- 0.7 0.1 1.5 -- 7.5 0.2
Direct CAF expenses   (11.4 )   (0.9 )     (11.9 )   (1.1 )       (45.5 )   (1.0 )     (45.1 )   (1.1 )
CarMax Auto Finance income $ 66.1     5.4     $ 54.1     5.0       $ 262.2     5.6     $ 220.0     5.2  
 
Total average managed receivables (3) $ 4,894.4 $ 4,305.9 $ 4,662.4 $ 4,229.9
Net loans originated $ 717.7 $ 527.1 $ 2,842.9 $ 2,147.4
 
Ending allowance for loan losses $ 43.3 $ 38.9 $ 43.3 $ 38.9
 
Warehouse facility information:
Ending funded receivables $ 553.0 $ 943.0 $ 553.0 $ 943.0
Ending unused capacity $ 1,047.0 $ 657.0 $ 1,047.0 $ 657.0
 

(1)

  

Annualized percent of total average managed receivables.

(2)

The amount for the fiscal year ended February 28, 2011, includes $2.5 million of servicing fee income and interest income on retained interest in securitized receivables that previously was reported separately.

(3)

Principal balance only.

   

 

Earnings Highlights

 
Three Months Ended Fiscal Year Ended

(In millions except per share data)

 February 29 or 28 February 29 or 28

2012

  

2011

  

Change

2012

  

2011

  

Change

Net earnings $ 95.0 $ 88.8 7.1% $413.8 $377.5 9.6%
Diluted weighted average shares outstanding

231.3

229.7

0.7%

230.7

227.6

1.4%

Net earnings per share $ 0.41 $ 0.39 5.1% $ 1.79 $ 1.65 8.5%
 

Store Opening Plan

We currently plan to open the following ten superstores during the fiscal year ending February 28, 2013:

                 
Television Market Planned
Location       Market       Status       Opening Date
Lancaster, Pennsylvania (1) Harrisburg New Q1 Fiscal 2013
Bakersfield, California Bakersfield New Q1 Fiscal 2013
Nashville, Tennessee Nashville Existing Q2 Fiscal 2013
Fort Myers, Florida Fort Myers New Q2 Fiscal 2013
Naples, Florida Fort Myers New Q2 Fiscal 2013
Oxnard, California Los Angeles Existing Q3 Fiscal 2013
Des Moines, Iowa Des Moines New Q3 Fiscal 2013
Denver, Colorado (2 stores) Denver New Q3 Fiscal 2013
Jacksonville, Florida Jacksonville Existing Q4 Fiscal 2013
 

(1) Opened in March 2012.

 

Normal construction, permitting or other scheduling delays could shift the opening dates of any of these stores into a later period. We expect to open between 10 and 15 superstores during each of the three fiscal years following fiscal 2013.

We currently estimate capital expenditures will total approximately $280 million in fiscal 2013.

Lease Accounting Revisions

We have revised our previously issued consolidated financial statements to correct our accounting for sale-leasebacks entered into between 1995 and 2009. As a result of the revision, we have recorded certain properties subject to the sale-leasebacks as assets and the related sale proceeds as financing liabilities. Depreciation is being recognized on the assets. Payments on the leases are now recognized as interest expense and a reduction in the financing liabilities, rather than being recognized as rent expense. We have determined that our financial statements were not materially affected by the revision. As a result of the correction, reported net earnings per diluted share were reduced by $0.02 in both fiscal 2012 and fiscal 2011.

More detailed information will be provided in the annual consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended February 29, 2012. In addition, for the convenience of investors, a summary of our revised consolidated statements of earnings for each of the interim quarters in the fiscal years ended February 29, 2012, and February 28, 2011, is included in this release.

Conference Call Information

We will host a conference call for investors at 9:00 a.m. ET today, April 5, 2012. 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 89939336. A live webcast of the call will be available on our investor information home page at investor.carmax.com and at www.streetevents.com.

A webcast replay of the call will be available at investor.carmax.com beginning at approximately 1:00 p.m. ET on April 5, 2012, through June 20, 2012. A telephone replay also will be available through April 13, 2012, and may be accessed by dialing 1-855-859-2056 (international callers dial 1-404-537-3406). The conference I.D. for both domestic and international callers is 89939336.

First Quarter Fiscal 2013 Earnings Release Date

We currently plan to release first quarter fiscal 2013 sales and earnings on Thursday, June 21, 2012, before the opening of the New York Stock Exchange. We will host a conference call for investors at 9:00 a.m. ET on that date. Information on this conference call will be available on our investor information home page at investor.carmax.com in early June 2012.

About CarMax

CarMax, a member of the Fortune 500 and the S&P 500, and one of the Fortune 2012 "100 Best Companies to Work For," is the nation's largest retailer of used cars. Headquartered in Richmond, Va., CarMax currently operates 109 used car superstores in 54 markets. The CarMax consumer offer is structured around four customer benefits: low, no-haggle prices; a broad selection; high quality vehicles; and customer-friendly service. During the twelve months ended February 29, 2012, the company retailed 408,080 used cars and sold 316,649 wholesale vehicles at our in-store auctions. For more information, access the CarMax website at www.carmax.com.

Forward-Looking Statements

We caution readers that the statements contained in this release about our 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 general or regional U.S. economic conditions.
  • Changes in the availability or cost of capital and working capital financing, including changes related to the asset-backed securitization market.
  • Changes in consumer credit availability related to our third-party financing providers.
  • Changes in the competitive landscape within our industry.
  • Significant changes in retail prices for used and new vehicles.
  • A reduction in the availability of or access to sources of inventory.
  • Factors related to the regulatory and legislative environment in which we operate.
  • Factors related to geographic growth, including the inability to acquire or lease suitable real estate at favorable terms or to effectively manage our growth.
  • The loss of key employees from our store, regional or corporate management teams.
  • The failure of key information systems.
  • The effect of new accounting requirements or changes to U.S. generally accepted accounting principles.
  • Security breaches or other events that result in the misappropriation, loss or other unauthorized disclosure of confidential customer information.
  • The effect of various litigation matters.
  • Adverse conditions affecting one or more automotive manufacturers.
  • The occurrence of severe weather events.
  • Factors related to the seasonal fluctuations in our business.
  • Factors related to the geographic concentration of our superstores.
  • The occurrence of certain other material events.

For more details on factors that could affect expectations, see our Annual Report on Form 10-K for the fiscal year ended February 28, 2011, 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. 4287. We disclaim any intent or obligation to update our forward-looking statements.

   

CARMAX, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

(UNAUDITED)

(In thousands except per share data)

 

 
Three Months Ended February 29 or 28   Fiscal Year Ended February 29 or 28

2012

  

% (2)

  

2011

  

% (2)

  

2012(1)

  

% (2)

  

2011(1)

  

% (2)

           
Sales and operating revenues:
Used vehicle sales $ 1,973,698 79.7 $ 1,799,884 79.9 $ 7,826,911 78.2 $ 7,210,017 80.3
New vehicle sales 45,848 1.9 48,906 2.2 200,584 2.0 198,532 2.2
Wholesale vehicle sales 395,721 16.0 335,208 14.9 1,721,647 17.2 1,301,703 14.5
Other sales and revenues   60,582   2.4     68,635   3.0     254,457     2.5     265,302     3.0
Net sales and operating revenues 2,475,849 100.0 2,252,633 100.0 10,003,599 100.0 8,975,554 100.0
Cost of sales   2,137,677   86.3     1,931,981   85.8     8,624,838     86.2     7,674,326     85.5
Gross profit 338,172 13.7 320,652 14.2 1,378,761 13.8 1,301,228 14.5
CarMax Auto Finance income 66,073 2.7 54,139 2.4 262,185 2.6 219,983 2.5

Selling, general and administrative expenses

243,479 9.8 226,906 10.1 940,786 9.4 878,805 9.8
Interest expense 8,351 0.3 8,554 0.4 33,714 0.3 34,680 0.4
Other income   345   --     100   --     464     --     480     --
Earnings before income taxes 152,760 6.2 139,431 6.2 666,910 6.7 608,206 6.8
Income tax provision   57,729   2.3     50,677   2.2     253,115     2.5     230,711     2.6
Net earnings $ 95,031   3.8   $ 88,754   3.9   $ 413,795     4.1   $ 377,495     4.2
 
Weighted average common shares:
Basic 226,822 224,801 226,282 223,449
Diluted 231,300 229,656 230,721 227,601
 
Net earnings per share:
Basic $ 0.42 $ 0.39 $ 1.83 $ 1.68
Diluted $ 0.41 $ 0.39 $ 1.79 $ 1.65
 

(1)

  

Revisions to correct our accounting for sale-leasebacks reduced reported net earnings per diluted share by $0.02 in both fiscal 2012 and fiscal 2011.

(2)

Percents are calculated as a percentage of net sales and operating revenues and may not equal totals due to rounding.

   

CARMAX, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(In thousands)

 

February 29

February 28

2012

  

2011 (1)

ASSETS

Current assets:
Cash and cash equivalents $ 442,658 $ 41,121
Restricted cash from collections on auto loan receivables 204,314 161,052
Accounts receivable, net 86,434 119,597
Inventory 1,092,592 1,049,477
Deferred income taxes 9,938 5,191
Other current assets   17,512     33,660
 
Total current assets 1,853,448 1,410,098
 
Auto loan receivables, net 4,959,847 4,320,575
Property and equipment, net 1,278,722 1,175,317
Deferred income taxes 133,134 123,685
Other assets   106,392     95,874
 
TOTAL ASSETS $ 8,331,543   $ 7,125,549
 

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
Accounts payable $ 324,827 $ 269,763
Accrued expenses and other current liabilities 128,973 105,998
Accrued income taxes 3,125 772
Short-term debt 943 1,002
Current portion of financing and capital lease obligations 14,108 12,617
Current portion of non-recourse notes payable   174,337     132,519
 
Total current liabilities 646,313 522,671
 
Financing and capital lease obligations, excluding current portion 353,566 367,617
Non-recourse notes payable, excluding current portion 4,509,752 3,881,142
Other liabilities   148,800     114,870
 
TOTAL LIABILITIES 5,658,431 4,886,300
 
TOTAL SHAREHOLDERS' EQUITY   2,673,112     2,239,249
 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 8,331,543   $ 7,125,549
 

(1)

  

Revisions to correct our accounting for sale-leasebacks increased total assets by $285.6 million and total liabilities by $338.0 million, and reduced total shareholders' equity by $52.4 million as of February 28, 2011.

 
 

CARMAX, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(In thousands)

 
Fiscal Year Ended February 29 or 28
2012  

2011(1)

Operating Activities:

  
Net earnings $ 413,795 $ 377,495
Adjustments to reconcile net earnings to net cash used in operating activities:
Depreciation and amortization 82,812 76,321
Share-based compensation expense 48,089 43,606
Provision for loan losses 36,439 27,749
Loss on disposition of assets 2,817 1,143
Deferred income tax (benefit) provision (872 ) 17,493
Net decrease (increase) in:
Accounts receivable, net 33,163 (40,538 )
Retained interest in securitized receivables -- 43,746
Inventory (43,115 ) (206,344 )
Other current assets 15,919 (27,403 )
Auto loan receivables, net (675,711 ) (304,729 )
Other assets (6,986 ) (7,173 )
Net increase (decrease) in:

Accounts payable, accrued expenses and other current liabilities and accrued income taxes

43,138 (8,802 )
Other liabilities   (11,652 )     678  
Net cash used in operating activities   (62,164 )     (6,758 )

Investing Activities:

Capital expenditures (172,616 ) (76,580 )
Proceeds from sales of assets 8 8
(Increase) decrease in restricted cash from collections on auto loan receivables (43,262 ) 1,556
Increase in restricted cash in reserve accounts (12,364 ) (12,631 )
Release of restricted cash from reserve accounts 12,096 11,434
(Purchases) sales of money market securities, net (678 ) 4,001
Purchase of investments available-for-sale (2,638 ) --
Sales of investments available-for-sale   52       --  
Net cash used in investing activities   (219,402 )     (72,212 )

Financing Activities:

(Decrease) increase in short-term debt, net (59 ) 119
Issuances of long-term debt -- 243,300
Payments on long-term debt -- (364,900 )
Payments on financing and capital lease obligations (12,560 ) (11,145 )
Issuances of non-recourse notes payable 5,130,000 3,348,000
Payments on non-recourse notes payable (4,459,572 ) (3,160,749 )
Equity issuances, net 15,577 38,277
Excess tax benefits from share-based payment arrangements   9,717       8,911  
Net cash provided by financing activities   683,103       101,813  
 
Increase in cash and cash equivalents 401,537 22,843
Cash and cash equivalents at beginning of year   41,121       18,278  
Cash and cash equivalents at end of year $ 442,658     $ 41,121  

 

(1)

  

Revisions to correct our accounting for sale-leasebacks reduced fiscal 2011 net cash used in operating activities by $10.4 million and net cash provided by financing activities by an equal amount.

 

CARMAX, INC. AND SUBSIDIARIES

SUPPLEMENTAL FINANCIAL INFORMATION

REVISED CONSOLIDATED QUARTERLY STATEMENTS OF EARNINGS (1)

FISCAL YEAR ENDED FEBRUARY 29, 2012

(UNAUDITED)

(In thousands except per share data)

 

               
Q1 FY12   % (2)   Q2 FY12   % (2)   Q3 FY12   % (2)   Q4 FY12   % (2)
 
Sales and operating revenues:
Used vehicle sales $ 2,071,540 77.3 $ 2,014,983 77.9 $ 1,766,690 78.2 $ 1,973,698 79.7
New vehicle sales 61,886 2.3 46,853 1.8 45,997 2.0 45,848 1.9
Wholesale vehicle sales 477,794 17.8 457,870 17.7 390,262 17.3 395,721 16.0
Other sales and revenues   68,197   2.5     68,113   2.6     57,565     2.5     60,582   2.4
Net sales and operating revenues 2,679,417 100.0 2,587,819 100.0 2,260,514 100.0 2,475,849 100.0
Cost of sales   2,296,322   85.7     2,233,544   86.3     1,957,295     86.6     2,137,677   86.3
Gross profit 383,095 14.3 354,275 13.7 303,219 13.4 338,172 13.7
CarMax Auto Finance income 69,661 2.6 63,826 2.5 62,625 2.8 66,073 2.7

Selling, general and administrative expenses

241,655 9.0 229,887 8.9 225,765 10.0 243,479 9.8
Interest expense 8,540 0.3 8,464 0.3 8,359 0.4 8,351 0.3
Other income (expense)   103   --     110   --     (94 )   --     345   --
Earnings before income taxes 202,664 7.6 179,860 7.0 131,626 5.8 152,760 6.2
Income tax provision   77,164   2.9     68,706   2.7     49,516     2.2     57,729   2.3
Net earnings $ 125,500   4.7   $ 111,154   4.3   $ 82,110     3.6   $ 95,031   3.8
 
Weighted average common shares:
Basic 225,570 226,300 226,446 226,822
Diluted 230,278 230,681 230,632 231,300
 
Net earnings per share:
Basic $ 0.56 $ 0.49 $ 0.36 $ 0.42
Diluted $ 0.54 $ 0.48 $ 0.36 $ 0.41
 

(1)

  

The consolidated statements of earnings for the interim quarters in the fiscal year ended February 29, 2012, have been revised to correct our accounting for sale-leasebacks entered into between 1995 and 2009.

(2)

Percents are calculated as a percentage of net sales and operating revenues and may not equal totals due to rounding.

 

CARMAX, INC. AND SUBSIDIARIES

SUPPLEMENTAL FINANCIAL INFORMATION

REVISED CONSOLIDATED QUARTERLY STATEMENTS OF EARNINGS (1)

FISCAL YEAR ENDED FEBRUARY 28, 2011

(UNAUDITED)

(In thousands except per share data)

 

               
Q1 FY11   % (2)   Q2 FY11   % (2)   Q3 FY11   % (2)   Q4 FY11   % (2)
 
Sales and operating revenues:
Used vehicle sales $ 1,832,066 81.0 $ 1,889,598 80.7 $ 1,688,469 79.7 $ 1,799,884 79.9
New vehicle sales 50,898 2.3 51,057 2.2 47,671 2.2 48,906 2.2
Wholesale vehicle sales 316,489 14.0 329,889 14.1 320,117 15.1 335,208 14.9
Other sales and revenues   62,459   2.8     71,336   3.0     62,872   3.0     68,635   3.0
Net sales and operating revenues 2,261,912 100.0 2,341,880 100.0 2,119,129 100.0 2,252,633 100.0
Cost of sales   1,928,364   85.3     1,992,762   85.1     1,821,219   85.9     1,931,981   85.8
Gross profit 333,548 14.7 349,118 14.9 297,910 14.1 320,652 14.2
CarMax Auto Finance income 57,495 2.5 52,604 2.2 55,745 2.6 54,139 2.4

Selling, general and administrative expenses

220,079 9.7 218,664 9.3 213,156 10.1 226,906 10.1
Interest expense 8,081 0.4 9,361 0.4 8,684 0.4 8,554 0.4
Other income (expense)   80   --     102   --     198   --     100   --
Earnings before income taxes 162,963 7.2 173,799 7.4 132,013 6.2 139,431 6.2
Income tax provision   62,738   2.8     66,794   2.9     50,502   2.4     50,677   2.2
Net earnings $ 100,225   4.4   $ 107,005   4.6   $ 81,511   3.8   $ 88,754   3.9
 
Weighted average common shares:
Basic 222,221 222,857 223,953 224,801
Diluted 226,179 226,132 228,471 229,656
 
Net earnings per share:
Basic $ 0.45 $ 0.48 $ 0.36 $ 0.39
Diluted $ 0.44 $ 0.47 $ 0.36 $ 0.39
 

(1)

  

The consolidated statements of earnings for the interim quarters in the fiscal year ended February 28, 2011, have been revised to correct our accounting for sale-leasebacks entered into between 1995 and 2009.

(2)

Percents are calculated as a percentage of net sales and operating revenues and may not equal totals due to rounding.

CarMax, Inc.
Investors and Financial Media:
Katharine Kenny, Vice President, Investor Relations, (804) 935-4591
Celeste Gunter, Manager, Investor Relations, (804) 935-4597
or
General Media:
Trina Lee, Director, Public Relations (804) 747-0422, ext. 4197
Britt Farrar, Manager, Public Relations, (804)747-0422, ext. 3473