CarMax 2000 Annual Report Download - page 77

CIRCUIT CITY STORES, INC. 2000 ANNUAL REPORT 75
CARMAX GROUP
6. PROPERTY AND EQUIPMENT
Property and equipment, at cost,at February 29 or 28 is summarized as
follows:
(Amounts in thousands) 2000 1999
Land and buildings (20 to 25 years)............... $ 81,885 $ 16,052
Land held for sale ........................................... 41,850 31,435
Land held for development............................. 17,697 28,781
Construction in progress................................ 18,010 76,355
Furniture, fixtures and equipment
(3 to 8 years)............................................. 60,225 51,504
Leasehold improvements
(10 to 15 years) ......................................... 19,902 15,658
239,569 219,785
Less accumulated depreciation ...................... 27,713 15,839
Property and equipment,net.......................... $211,856 $203,946
Land held for development is land owned for future sites that are sched-
uled to open more than one year beyond the fiscal year reported.
7. DEBT
Long-term debt of the Company at February 29 or 28 is summarized as
follows:
(Amounts in thousands) 2000 1999
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%....................... 5,419 6,564
Obligations under capital leases..................... 12,416 12,728
Note payable................................................... 3,750 5,000
Total long-term debt....................................... 426,585 429,292
Less current installments............................... 177,344 2,707
Long-term debt,excluding
current installments ................................. $249,241 $426,585
Portion of long-term debt allocated
to the CarMax Group ................................ $212,866 $140,970
In July 1994,the Company entered into a seven-year,$100,000,000,unse-
cured bank term loan. The loan was restructured 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 29, 2000, the interest rate on the term loan was 6.29 percent.
In May 1995,the Company entered into a five-year,$175,000,000,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. This term loan is due in
May 2000 and has been classified as a current liability as of February 29,
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.
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.
In November 1998,the CarMax Group entered into a four-year,unsecured
$5,000,000 promissory note. Principal is due annually with interest
payable periodically at 8.25 percent.
In fiscal 1999,the CarMax Group entered into a one-year,renewable
inventory financing arrangement with an asset-backed commercial paper
conduit. The arrangement had a total program capacity of $160 million at
February 29, 2000, and was created to provide funding for the acquisition
of vehicle inventory through the use of a non-affiliated special-purpose
company. During fiscal years 2000 and 1999,no inventory was financed
by the CarMax Group under this arrangement. This financing arrange-
ment was terminated in the first quarter of fiscal 2001.
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 CarMax Group,exclud-
ing interest capitalized,was $10,362,000 in fiscal 2000,$6,393,000 in fis-
cal 1999 and $1,789,000 in fiscal 1998. The CarMax Group capitalizes
interest in connection with the construction of certain facilities. In fiscal
2000,interest capitalized amounted to $1,254,000 ($2,674,000 in fiscal
1999 and $4,879,000 in fiscal 1998).