CarMax 2004 Annual Report Download - page 29

The total principal amount of ending managed receivables
securitized or held for investment or sale was as follows:
As of February 29 or 28
(In millions) 2004 2003
Fixed-rate securitizations $1,647.9 $1,385.1
Floating-rate securitizations
synthetically altered to fixed 551.8 473.2
Floating-rate securitizations 0.7 0.8
Held for investment(1) 29.4 16.0
Held for sale(2) 18.8 3.6
Total $2,248.6 $1,878.7
(1) The majority is held by a bankruptcy-remote special purpose entity.
(2) Held by a bankruptcy-remote special purpose entity.
Interest Rate Exposure
We also have interest rate risk from changing interest rates
related to our outstanding debt. Substantially all of the debt
is floating-rate debt based on LIBOR. A 100-basis point
increase in market interest rates would not have had a material
effect on our fiscal 2004 results of operations or cash flows.
CAUTIONARY INFORMATION ABOUT
FORWARD-LOOKING STATEMENTS
The provisions of the Private Securities Litigation Reform Act
of 1995 provide companies with a “safe harbor” when making
forward-looking statements. This “safe harbor” encourages
companies to provide prospective information about their
companies without fear of litigation. The company wishes to
take advantage of the “safe harbor” provisions of the Act.
Company statements that are not historical facts, including
statements about management’s expectations for fiscal 2005
and beyond, are forward-looking statements and involve
various risks and uncertainties.
Forward-looking statements are estimates and projections
reflecting our judgment and involve a number of risks and
uncertainties that could cause actual results to differ materially
from those suggested by the forward-looking statements.
Although we believe that the estimates and projections
reflected in the forward-looking statements are reasonable, our
expectations may prove to be incorrect. Investors are cautioned
not to place undue reliance on any forward-looking
statements, which are based on current expectations.
Important factors that could cause actual results to differ
materially from estimates or projections contained in our
forward-looking statements include:
■In the normal course of business, we are subject to changes
in general U.S. or regional U.S. economic conditions
including, but not limited to, consumer credit availability,
consumer credit delinquency and default rates, interest
rates, inflation, personal discretionary spending levels, and
consumer sentiment about the economy in general. Any
significant changes in economic conditions could adversely
affect consumer demand and increase costs resulting in
lower profitability for the company.
■The company operates in a highly competitive industry and
new entrants to the industry could result in increased
wholesale costs for used vehicles and lower-than-expected
vehicle sales and margins.
■Any significant changes in retail prices for used and
new vehicles could result in lower sales and margins for
the company.
■A reduction in the availability or access to sources of
inventory would adversely affect the company’s business.
■Should excess inventory develop, the inability to liquidate
excess inventory at prices that allow the company to meet its
margin targets or to recover its costs would adversely affect
the company’s profitability.
■The ability to attract and retain an effective management
team in a dynamic environment and the availability of a
suitable work force is vital to the company’s ability to
manage and support its service-driven operating strategies.
The inability to attract such a work-force team or a
significant increase in payroll market costs would adversely
affect the company’s profitability.
■Changes in the availability or cost of capital and working
capital financing, including the availability of long-term
financing to support development of the company and the
availability of securitization financing, could adversely affect
the company’s growth and operating strategies.
■A decrease in the availability of appropriate real estate
locations for expansion would limit the expansion of the
company’s store base and the company’s future operating
results.
■The occurrence of weather events adversely affecting traffic
at our retail locations could negatively impact the company’s
operating results.
■The occurrence of certain material events including natural
disasters, acts of terrorism, the outbreak of war or other
significant national or international events could adversely
affect the company’s operating results.
■The imposition of new restrictions or regulations
regarding the sale of products and/or services that the
company sells, changes in tax or environmental rules and
regulations applicable to the company or our competitors,
or any failure to comply with such laws or any adverse
change in such laws could increase costs and affect the
company’s profitability.
■We are subject to various litigation matters, which, if the
outcomes in any significant matters are adverse, could
negatively affect the company’s business.
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