CarMax 2005 Annual Report Download - page 29

CARMAX 2005 27
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 2005 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
business 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 2006 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:
3In 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,
gasoline prices, 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 /or increase
costs resulting in lower profitability for the company.
3The 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.
3Any significant changes in retail prices for used and new vehicles
could result in lower sales and margins for the company.
3A reduction in the availability or access to sources of
inventory would adversely affect the company’s business.
3Should 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.
3The 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 workforce team or a
significant increase in payroll market costs would adversely
affect the company’s profitability.
3The company’s business is dependent upon the efficient
operation of our information systems. The failure of our
information systems to perform as designed or the failure to
maintain and continually enhance or protect the integrity of
these systems could disrupt the company’s business, impact
sales and profitability, or expose us to customer or third-
party claims.
3Changes 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.
3A 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.
3The occurrence of weather events adversely affecting traffic
at our retail locations could negatively impact the company’s
operating results.
3The 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.
3The 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.
3We are subject to various litigation matters, which, if the
outcomes in any significant matters are adverse, could
negatively affect the company’s business.