CarMax 1999 Annual Report Download - page 59

5. DEBT
Long-term debt of the Company at February 28 is summarized as
follows:
(Amounts in thousands) 1999 1998
Term loans.................................................... $405,000 $405,000
Industrial Development Revenue
Bonds due through 2006 at various
prime-based rates of interest ranging
from 5.0% to 7.0% .................................. 6,564 7,665
Obligations under capital leases [NOTE 10] ..... 12,728 12,928
Note payable................................................ 5,000 –
Total long-term debt .................................... 429,292 425,593
Less current installments .............................. 2,707 1,301
Long-term debt, excluding
current installments................................. $426,585 $424,292
Portion of long-term debt allocated
to the Circuit City Group........................ $288,322 $398,207
In July 1994, the Company entered into a seven-year,
$100,000,000, unsecured bank term loan. The loan was restruc-
tured in August 1996 as a $100,000,000, six-year unsecured bank
term loan. Principal is due in full at maturity with interest payable
periodically at LIBOR plus 0.40 percent. At February 28, 1999,
the interest rate on the term loan was 5.76 percent.
In May 1995, the Company entered into a five-year,
$175,000,000, unsecured bank term loan. Principal is due in full at
maturity with interest payable periodically at LIBOR plus 0.35
percent. At February 28, 1999, the interest rate on the term loan
was 5.67 percent.
In June 1996, the Company entered into a five-year,
$130,000,000, unsecured bank term loan. Principal is due in full at
maturity with interest payable periodically at LIBOR plus 0.35
percent. At February 28, 1999, the interest rate on the term loan
was 5.29 percent.
The Company maintains a multi-year, $150,000,000, unse-
cured revolving credit agreement with four banks. The agreement
calls for interest based on both committed rates and money mar-
ket rates and a commitment fee of 0.13 percent per annum. The
agreement was entered into as of August 31, 1996, and terminates
August 31, 2002. No amounts were outstanding under the revolv-
ing credit agreement at February 28, 1999 or 1998.
The Industrial Development Revenue Bonds are collateral-
ized by land, buildings and equipment with an aggregate carrying
value of approximately $10,740,000 at February 28, 1999, and
$10,879,000 at February 28, 1998.
Under certain of the debt agreements, the Company must
meet financial covenants relating to minimum tangible net worth,
current ratios and debt-to-capital ratios. The Company was in
compliance with all such covenants at February 28, 1999 and 1998.
Short-term debt of the Company is funded through commit-
ted lines of credit and informal credit arrangements, as well as the
revolving credit agreement. Amounts outstanding and committed
lines of credit available are as follows:
Years Ended February 28
(Amounts in thousands) 1999 1998
Average short-term debt outstanding ........... $ 54,505 $ 48,254
Maximum short-term debt outstanding........ $463,000 $414,000
Aggregate committed lines of credit............. $370,000 $410,000
The weighted average interest rate on the outstanding short-
term debt was 5.1 percent during fiscal 1999, 5.7 percent during
fiscal 1998 and 5.4 percent during fiscal 1997.
Interest expense allocated by the Company to the Circuit
City Group, excluding interest capitalized, was $21,926,000 in
fiscal 1999, $25,072,000 in fiscal 1998 and $23,503,000 in fiscal
1997. The Circuit City Group capitalizes interest in connection
with the construction of certain facilities and software developed
or obtained for internal use. In fiscal 1999, interest capitalized
amounted to $2,749,000 ($4,759,000 in fiscal 1998 and
$6,072,000 in fiscal 1997).
6. INCOME TAXES
The components of the provision for income taxes on earnings
before income taxes and Inter-Group Interest in the CarMax
Group are as follows:
Years Ended February 28
(Amounts in thousands) 1999 1998 1997
Current:
Federal ....................................... $ 82,907 $63,576 $62,649
State........................................... 10,379 5,319 8,265
93,286 68,895 70,914
Deferred:
Federal ....................................... 9,068 14,060 18,150
State........................................... 280 2,859 1,157
9,348 16,919 19,307
Provision for income taxes .............. $102,634 $85,814 $90,221
The effective income tax rate differed from the Federal statu-
tory income tax rate as follows:
Years Ended February 28
1999 1998 1997
Federal statutory income
tax rate ....................................... 35.0% 35.0% 35.0%
State and local income taxes,
net of Federal benefit.................. 3.1%3.3%3.2%
Effective income tax rate................. 38.1% 38.3% 38.2%
CIRCUIT CITY GROUP
CIRCUIT CITY STORES, INC. 1999 ANNUAL REPORT 57