CarMax 2008 Annual Report Download - page 59

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Continuing Involvement with Securitized Receivables
We continue to manage the auto loan receivables that we securitize. We receive servicing fees of approximately 1%
of the outstanding principal balance of the securitized receivables. We believe that the servicing fees specified in
the securitization agreements adequately compensate us for servicing the securitized receivables. No servicing asset
or liability has been recorded. We are at risk for the retained interest in the securitized receivables and, if the
securitized receivables do not perform as originally projected, the value of the retained interest would be impacted.
PAST DUE ACCOUNT INFORMATION
As of February 29 or 28
(In millions) 2008 2007 2006
Accounts 31+ days past due....................................................... $ 86.1 $ 56.9 $ 37.4
Ending managed receivables...................................................... $ 3,838.5 $ 3,311.0 $ 2,772.5
Past due accounts as a percentage of ending managed
receivables.............................................................................. 2.24% 1.72% 1.35%
CREDIT LOSS INFORMATION
Years Ended February 29 or 28
(In millions) 2008 2007 2006
Net credit losses on managed receivables.................................. $ 38.3 $ 20.7 $ 18.4
Average managed receivables ................................................... $3,608.4 $ 3,071.1 $ 2,657.7
Net credit losses as a percentage of average managed
receivables.............................................................................. 1.06% 0.67% 0.69%
Recovery rate............................................................................. 50% 51% 51%
SELECTED CASH FLOWS FROM SECURITIZED RECEIVABLES
Years Ended February 29 or 28
(In millions) 2008 2007 2006
Proceeds from new securitizations ............................................ $2,040.2 $1,867.5 $1,513.5
Proceeds from collections reinvested in revolving period
securitizations ........................................................................ $1,095.0 $1,011.8 $ 757.5
Servicing fees received.............................................................. $ 37.0 $ 32.0 $ 27.3
Other cash flows received from the retained interest:
Interest-only strip receivables ................................................ $ 98.6 $ 88.4 $ 82.1
Reserve account releases........................................................ $ 9.4 $ 15.2 $ 19.7
Proceeds from new securitizations. Proceeds from new securitizations include proceeds from receivables that are
newly securitized in or refinanced through the warehouse facility during the indicated period. Balances previously
outstanding in public securitizations that were refinanced through the warehouse facility totaled $103.6 million in
fiscal 2008, $82.5 million in fiscal 2007 and $94.8 million in fiscal 2006. Proceeds received when we refinance
receivables in public securitizations are excluded from this table as they are not considered new securitizations.
Proceeds from collections. Proceeds from collections reinvested in revolving period securitizations represent
principal amounts collected on receivables securitized through the warehouse facility that are used to fund new
originations.
Servicing fees. Servicing fees received represent cash fees paid to us to service the securitized receivables.
Other cash flows received from the retained interest. Other cash flows received from the retained interest
represents cash that we receive from the securitized receivables other than servicing fees. It includes cash collected
on interest-only strip receivables and amounts released to us from reserve accounts.
Financial Covenants and Performance Triggers
The securitization agreement related to the warehouse facility includes various financial covenants and performance
triggers. This agreement requires us to meet financial covenants related to a maximum total liabilities to tangible net
worth ratio and a minimum fixed charge coverage ratio. Performance triggers require that the pool of securitized
receivables in the warehouse facility achieve specified thresholds related to portfolio yield, loss rate and delinquency
rate. If these financial covenants and/or thresholds are not met, we could be unable to continue to securitize
receivables through the warehouse facility. In addition, the warehouse facility investors could have us replaced as
servicer and charge us a higher rate of interest. Further, we may be forced to deposit collections on the securitized