CarMax 2002 Annual Report Download - page 45

43 CIRCUIT CITY STORES, INC. ANNUAL REPORT 2002
CIRCUIT CITY STORES, INC.
3. PROPERTY AND EQUIPMENT
Property and equipment, at cost, at February 28 is summarized
as follows:
(Amounts in thousands) 2002 2001
Land and buildings (20 to 25 years)................. $ 70,283 $ 178,042
Land held for sale ............................................. 11,521 30,730
Land held for development .............................. 8,021 4,285
Construction in progress .................................. 79,851 58,659
Furniture, fixtures and equipment
(3 to 8 years)............................................... 871,291 874,367
Leasehold improvements (10 to 15 years) ........ 680,701 619,782
Capital leases, primarily buildings (20 years).... 12,406 12,471
1,734,074 1,778,336
Less accumulated depreciation and
amortization ............................................... 880,296 789,389
Property and equipment, net............................ $ 853,778 $ 988,947
Land held for development is land owned for future sites
that are scheduled to open more than one year beyond the fiscal
year reported.
4. DEBT
Long-term debt at February 28 is summarized as follows:
(Amounts in thousands) 2002 2001
Term loans.............................................................. $100,000 $230,000
Industrial Development Revenue
Bonds due through 2006 at various
prime-based rates of interest
ranging from 3.1% to 6.7%.............................. 3,717 4,400
Obligations under capital leases [NOTE 9]................. 11,594 12,049
Note payable .......................................................... 826 2,076
Total long-term debt............................................... 116,137 248,525
Less current installments ........................................ 102,073 132,388
Long-term debt, excluding current installments..... $ 14,064 $116,137
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 six-year, $100,000,000 unsecured
bank term loan. Principal is due in full at maturity with interest
payable periodically at LIBOR plus 0.40 percent. At February 28,
2002, the interest rate on the term loan was 2.25 percent. This
term loan is due in July 2002 and was classified as a current lia-
bility at February 28, 2002. 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 unsecured bank term loan. Principal was due in
full at maturity with interest payable periodically at LIBOR
plus 0.35 percent. As scheduled, the Company used existing
working capital to repay this term loan in June 2001.
The Company maintains a multi-year, $150,000,000 unse-
cured revolving credit agreement with four banks. The agree-
ment 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 expires on August 31, 2002. No amounts were outstanding
under the revolving credit agreement at February 28, 2002 or
2001, and the Company does not plan to renew this agreement.
The Industrial Development Revenue Bonds are collateral-
ized by land, buildings and equipment with an aggregate carry-
ing value of approximately $5,144,000 at February 28, 2002,
and $6,243,000 at February 28, 2001.
In November 1998, CarMax entered into a four-year,
$5,000,000 unsecured promissory note. A portion of the prin-
cipal amount is due annually with interest payable periodically
at 8.25 percent. The outstanding balance at February 28, 2002,
was $826,000 and was included in current installments of long-
term debt.
In December 2001, CarMax entered into an $8,450,000
secured promissory note in conjunction with the purchase of
land for new store construction. This note is due in August 2002
and was classified as short-term debt at February 28, 2002.
The scheduled aggregate annual principal payments on the
Company’s long-term obligations for the next five fiscal years
are as follows: 2003 – $102,073,000; 2004 – $1,410,000;
2005 – $2,521,000; 2006 – $1,083,000; 2007– $1,010,000.
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, 2002
and 2001.
Short-term debt of the Company is funded through com-
mitted lines of credit and informal credit arrangements, as well
as the revolving credit agreement. Other information regarding
short-term financing and committed lines of credit is as follows:
Years Ended February 28
(Amounts in thousands) 2002 2001
Average short-term financing outstanding.......... $ 2,256 $ 56,065
Maximum short-term financing outstanding ..... $ 6,594 $363,199
Aggregate committed lines of credit ................... $195,000 $360,000
The weighted average interest rate on the outstanding short-
term debt was 4.4 percent during fiscal 2002, 6.8 percent dur-
ing fiscal 2001 and 5.6 percent during fiscal 2000.
The Company capitalizes interest in connection with the
construction of certain facilities and software developed or
obtained for internal use. Capitalized interest totaled
$1,807,000 in fiscal 2002, $2,121,000 in fiscal 2001 and
$3,420,000 in fiscal 2000.