CarMax 2011 Annual Report Download - page 25

15
Expansion
Since opening our first used car superstore in 1993, we have grown organically, through the construction and
opening of company-operated stores. We do not franchise our operations. As of February 28, 2011, we operated
103 used car superstores in 49 U.S. markets, which represented approximately 48% of the U.S. population. We
believe that further geographic expansion and additional fill-in opportunities in existing markets will provide a
foundation for future sales and earnings growth.
In December 2008, as a result of the weak economic and sales environment, we temporarily suspended store growth.
We resumed growth in fiscal 2011, opening three superstores that had been constructed in fiscal 2009, but which we
chose not to open until market conditions improved. We expect to open five superstores in fiscal 2012 and between
eight and ten superstores in fiscal 2013.
For additional details on our future expansion plans, see “Fiscal 2012 Planned Superstore Openings,” included in
Part II, Item 7, of this Form 10-K.
Item 3. Legal Proceedings.
On April 2, 2008, Mr. John Fowler filed a putative class action lawsuit against CarMax Auto Superstores California,
LLC and CarMax Auto Superstores West Coast, Inc. in the Superior Court of California, County of Los Angeles.
Subsequently, two other lawsuits, Leena Areso et al. v. CarMax Auto Superstores California, LLC and Justin
Weaver v. CarMax Auto Superstores California, LLC, were consolidated as part of the Fowler case. The allegations
in the consolidated case involved: (1) failure to provide meal and rest breaks or compensation in lieu thereof; (2)
failure to pay wages of terminated or resigned employees related to meal and rest breaks and overtime; (3) failure to
pay overtime; (4) failure to comply with itemized employee wage statement provisions; and (5) unfair competition.
The putative class consisted of sales consultants, sales managers, and other hourly employees who worked for the
company in California from April 2, 2004, to the present. On May 12, 2009, the court dismissed all of the class
claims with respect to the sales manager putative class. On June 16, 2009, the court dismissed all claims related to
the failure to comply with the itemized employee wage statement provisions. The court also granted CarMax's
motion for summary adjudication with regard to CarMax's alleged failure to pay overtime to the sales consultant
putative class. The plaintiffs have appealed the court's ruling regarding the sales consultant overtime claim. In
addition to the plaintiffs' appeal of the overtime claim, the claims currently remaining in the lawsuit regarding the
sales consultant putative class are: (1) failure to provide meal and rest breaks or compensation in lieu thereof; (2)
failure to pay wages of terminated or resigned employees related to meal and rest breaks; and (3) unfair competition.
On June 16, 2009, the court entered a stay of these claims pending the outcome of a California Supreme Court case
involving unrelated third parties but related legal issues. The Fowler lawsuit seeks compensatory and special
damages, wages, interest, civil and statutory penalties, restitution, injunctive relief and the recovery of attorneys’
fees. We are unable to make a reasonable estimate of the amount or range of loss that could result from an
unfavorable outcome in these matters.
We are involved in various other legal proceedings in the normal course of business. Based upon our evaluation of
information currently available, we believe that the ultimate resolution of any such proceedings will not have a
material adverse effect, either individually or in the aggregate, on our financial condition or results of operations.
Item 4. Reserved.