CarMax 2009 Annual Report Download - page 70

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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 $9.9 million as of February 28, 2009, and
$9.8 million as of February 29, 2008.
14. 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 $82.1 million in fiscal 2009, $78.9 million in fiscal 2008 and
$75.4 million in fiscal 2007.
FUTURE MINIMUM LEASE OBLIGATIONS
As of February 28, 2009
(In thousands)
Capital
Leases (1)
Operating
Leases (1)
Fiscal 2010....................................................................................................................... $ 3,462 $ 82,335
Fiscal 2011....................................................................................................................... 3,608 81,988
Fiscal 2012....................................................................................................................... 3,608 81,271
Fiscal 2013....................................................................................................................... 3,608 81,237
Fiscal 2014....................................................................................................................... 3,643 81,554
Fiscal 2015 and thereafter................................................................................................ 40,804 595,909
Total minimum lease payments ....................................................................................... 58,733 $1,004,294
Less amounts representing interest.................................................................................. (30,164)
Present value of net minimum capital lease payments .................................................... $ 28,569
(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 completed sale-leaseback transactions involving two superstores valued at approximately $31.3 million in fiscal
2009. We did not enter into any sale-leaseback transactions in fiscal 2008 or 2007. 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 28, 2009.
15. 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 28, 2009,
and February 29, 2008. No impairment of goodwill or intangible assets resulted from our annual impairment tests in
fiscal 2009 or fiscal 2008. In fiscal 2007, we recognized an impairment charge of $4.9 million, included in SG&A
expenses, related to goodwill and franchise rights associated with one of our new car franchises.
(B) Restricted Investments
Restricted investments, included in other assets, consisted of $28.5 million in money market securities and $2.2
million in other debt securities as of February 28, 2009, and $24.5 million in money market securities and $2.2
million in other debt securities as of February 29, 2008. For fiscal year 2009, there were no proceeds from the sales
of other debt securities. For fiscal year 2008, proceeds from the sales of other debt securities totaled $33.1 million.
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 $46.5 million as of
February 28, 2009, and $48.1 million as of February 29, 2008.