CarMax 2000 Annual Report Download - page 59

CIRCUIT CITY STORES, INC. 2000 ANNUAL REPORT 57
CIRCUIT CITY GROUP
2000. Although the Company has the ability to refinance this loan,it
intends to repay the debt using existing working capital.
In June 1996,the Company entered into a five-year,$130,000,000,unse-
cured bank term loan. Principal is due in full at maturity with interest
payable periodically at LIBOR plus 0.35 percent. At February 29, 2000, the
interest rate on the term loan was 6.23 percent.
The Company maintains a multi-year,$150,000,000,unsecured revolving
credit agreement with four banks. The agreement calls for interest based
on both committed rates and money market rates and a commitment fee
of 0.18 percent per annum. The agreement was entered into as of August
31,1996,and terminates August 31,2002. No amounts were outstanding
under the revolving credit agreement at February 29,2000,or February
28,1999.
The Industrial Development Revenue Bonds are collateralized by land,
buildings and equipment with an aggregate carrying value of approximately
$8,404,000 at February 29,2000,and $10,740,000 at February 28,1999.
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 29,2000,and February 28, 1999.
Short-term debt of the Company is funded through committed 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 29 or 28
(Amounts in thousands) 2000 1999
Average short-term debt outstanding ...... $ 44,692 $ 54,505
Maximum short-term debt outstanding.. $411,791 $463,000
Aggregate committed lines of credit ........ $370,000 $370,000
The weighted average interest rate on the outstanding short-term debt
was 5.6 percent during fiscal 2000, 5.1 percent during fiscal 1999 and 5.7
percent during fiscal 1998.
Interest expense allocated by the Company to the Circuit City Group,
excluding interest capitalized,was $13,844,000 in fiscal 2000,$21,926,000
in fiscal 1999 and $25,072,000 in fiscal 1998. The Circuit City Group capi-
talizes interest in connection with the construction of certain facilities
and the development or purchase of software for internal use. In fiscal
2000,interest capitalized amounted to $2,166,000 ($2,749,000 in fiscal
1999 and $4,759,000 in fiscal 1998).
6. INCOME TAXES
The components of the provision for income taxes on earnings from con-
tinuing operations before income taxes and Inter-Group Interest in the
CarMax Group are as follows:
Years Ended February 29 or 28
(Amounts in thousands) 2000 1999 1998
Current:
Federal ................................ $141,514 $123,001 $75,554
State..................................... 16,901 15,694 5,989
158,415 138,695 81,543
Deferred:
Federal ................................ 40,572 5,773 14,060
State..................................... 1,256 178 2,859
41,828 5,951 16,919
Provision for income taxes........ $200,243 $144,646 $98,462
The effective income tax rate differed from the Federal statutory income
tax rate as follows:
Years Ended February 29 or 28
2000 1999 1998
Federal statutory income tax rate......... 35.0% 35.0% 35.0%
State and local income taxes,
net of Federal benefit...................... 3.0 3.1 3.3
Effective income tax rate ...................... 38.0% 38.1% 38.3%
In accordance with SFAS No.109,the tax effects of temporary differences
that give rise to a significant portion of the deferred tax assets and liabili-
ties at February 29 or 28 are as follows:
(Amounts in thousands) 2000 1999
Deferred tax assets:
Deferred revenue........................................... $ 1,055 $ 8,202
Inventory capitalization................................ 7,264 7,198
Accrued expenses.......................................... 27,974 24,110
Other ............................................................. 6,112 5,246
Total gross deferred tax assets................. 42,405 44,756
Deferred tax liabilities:
Depreciation and amortization..................... 44,854 43,600
Deferred revenue........................................... 29,656 6,903
Gain on sales of receivables........................... 14,069 10,337
Other prepaid expenses................................. 23,023 18,835
Other ............................................................. 6,651 707
Total gross deferred tax liabilities ........... 118,253 80,382
Net deferred tax liability ..................................... $ 75,848 $35,626