CarMax 2009 Annual Report Download - page 19

13
Litigation. We are subject to various litigation matters, which could adversely affect our business. Claims arising
out of actual or alleged violations of law could be asserted against us by individuals, either individually or through
class actions, or by governmental entities in civil or criminal investigations and proceedings. These actions could
expose us to adverse publicity and to substantial monetary damages and legal defense costs, injunctive relief and
criminal and civil fines and penalties, including suspension or revocation of licenses to conduct business.
Domestic-based Automotive Manufacturers. Adverse conditions affecting one or more domestic-based automotive
manufacturers could impact our profitability. Recently, the financial condition and operating results of these
manufacturers have deteriorated significantly, and it is possible that one or more of these manufacturers could file
for bankruptcy protection. Certain actions that these manufacturers may take, including bankruptcy filing, could
adversely affect consumer demand for and values of used vehicles produced by these manufacturers, which could
have a material effect on our business, results of operations and financial condition.
Weather. The occurrence of severe weather events, such as rain, snow, wind, storms, hurricanes or other natural
disasters, could cause store closures, adversely affecting consumer traffic, and could adversely affect our results of
operations.
Seasonal Fluctuations. Our business is subject to seasonal fluctuations. We generally realize a higher proportion
of revenue and operating profit during the first and second fiscal quarters. If conditions arise that impair vehicle
sales during the first or second fiscal quarters, these conditions could have a disproportionately large adverse effect
on annual results of operations.
Geographic Concentration. Our performance is subject to local economic, competitive and other conditions
prevailing in geographic areas where we operate. Since a large number of our superstores are located in the
Southeastern U.S. and in the Chicago, Los Angeles and Washington, D.C./Baltimore markets, our results of
operations depend substantially on general economic conditions and consumer spending habits in these markets. In
the event that any of these geographic areas experienced a downturn in economic conditions, it could adversely
affect our business and results of operations.
Real Estate. Our inability to acquire or lease suitable real estate at favorable terms could limit our expansion, when
resumed, and could have a material adverse affect on our business and results of operations.
Other Material Events. The occurrence of certain material events including acts of terrorism, the outbreak of war or
other significant national or international events could adversely affect our business, results of operations or
financial condition.