CarMax 2008 Annual Report Download - page 70

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58
Effective March 1, 2007, changes in the funded status of our retirement plans are recognized in accumulated other
comprehensive loss. The cumulative balances are net of deferred tax of $9.8 million as of February 29, 2008, and
$11.9 million as of February 28, 2007.
13. LEASE COMMITMENTS
We conduct a majority of our business in leased premises. Our lease obligations are based upon contractual
minimum rates. Most leases provide that we pay taxes, maintenance, insurance and operating expenses applicable to
the premises. The initial term of most real property leases will expire within the next 20 years; however, most of the
leases have options providing for renewal periods of 5 to 20 years at terms similar to the initial terms. For operating
leases, rent is recognized on a straight-line basis over the lease term, including scheduled rent increases and rent
holidays. Rent expense for all operating leases was $78.9 million in fiscal 2008, $75.4 million in fiscal 2007 and
$72.6 million in fiscal 2006.
FUTURE MINIMUM LEASE OBLIGATIONS
As of February 29, 2008
Capital Operating Lease
(In thousands) Leases(1) Commitments(1)
Fiscal 2009................................................................................... $ 3,351 $ 73,542
Fiscal 2010................................................................................... 3,516 74,048
Fiscal 2011................................................................................... 3,665 74,216
Fiscal 2012................................................................................... 3,665 74,349
Fiscal 2013................................................................................... 3,665 74,537
Fiscal 2014 and thereafter............................................................ 36,786 561,040
Total minimum lease payments ................................................... $ 54,648 $ 931,732
Less amounts representing interest.............................................. (27,034)
Present value of net minimum capital lease payments..................... $ 27,614
(1) Excludes taxes, insurance and other costs payable directly by us. These costs vary from year to year and are incurred in the
ordinary course of business.
We did not enter into any sale-leaseback transactions in fiscal 2008 or 2007. We entered into sale-leaseback
transactions involving five superstores valued at approximately $72.7 million in fiscal 2006. All sale-leaseback
transactions are structured at competitive rates. Gains or losses on sale-leaseback transactions are recorded as
deferred rent and amortized over the lease term. We do not have continuing involvement under the sale-leaseback
transactions. In conjunction with certain sale-leaseback transactions, we must meet financial covenants relating to
minimum tangible net worth and minimum coverage of rent expense. We were in compliance with all such
covenants as of February 29, 2008.
14. SUPPLEMENTAL FINANCIAL STATEMENT INFORMATION
(A) Goodwill and Other Intangibles
Other assets included goodwill and other intangibles with a carrying value of $10.1 million as of February 29, 2008,
and February 28, 2007. We recognized an impairment charge of $4.9 million, included in selling, general and
administrative expenses, related to goodwill and franchise rights associated with one of our new car franchises in
fiscal 2007. No impairment of goodwill or intangible assets resulted from our annual impairment tests in fiscal 2008
or fiscal 2006.
(B) Restricted Investments
Restricted investments, included in other assets, consisted of $24.5 million in money market securities and $2.2
million in other debt securities as of February 29, 2008, and $4.9 million in money market securities and $16.8
million in other debt securities as of February 28, 2007. Proceeds from the sales of other debt securities were $33.1
million and $26.7 million for fiscal years 2008 and 2007, respectively. Due to the short-term nature and/or variable
rates associated with these financial instruments, the carrying value approximates fair value.
(C) Accrued Compensation and Benefits
Accrued expenses and other current liabilities included accrued compensation and benefits of $48.1 million as of
February 29, 2008, and $60.1 million as of February 28, 2007.