CarMax 2011 Annual Report Download - page 32

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Income Taxes
Estimates and judgments are used in the calculation of certain tax liabilities and in the determination of the
recoverability of certain deferred tax assets. In the ordinary course of business, transactions occur for which the
ultimate tax outcome is uncertain at the time of the transactions. We adjust our income tax provision in the period in
which we determine that it is probable that our actual results will differ from our estimates. Tax law and rate
changes are reflected in the income tax provision in the period in which such changes are enacted. See Note 9 for
additional information on income taxes.
We evaluate the need to record valuation allowances that would reduce deferred tax assets to the amount that will
more likely than not be realized. When assessing the need for valuation allowances, we consider available
carrybacks, future reversals of existing temporary differences and future taxable income. Except for a valuation
allowance recorded for capital loss carryforwards that may not be utilized before their expiration, we believe that
our recorded deferred tax assets as of February 28, 2011, will more likely than not be realized. However, if a change
in circumstances results in a change in our ability to realize our deferred tax assets, our tax provision would be
affected in the period when the change in circumstances occurs.
In addition, the calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax
regulations. We recognize potential liabilities for anticipated tax audit issues in the U.S. and other tax jurisdictions
based on our estimate of whether, and the extent to which, additional taxes will be due. If payments of these
amounts ultimately prove to be unnecessary, the reversal of the liabilities would result in tax benefits being
recognized in the period when we determine the liabilities are no longer necessary. If our estimate of tax liabilities
proves to be less than the ultimate assessment, a further charge to expense would result in the period of
determination.
RESULTS OF OPERATIONS
NET SALES AND OPERATING REVENUES
(In millions)
% % %
Used vehicle sales 7,210.0$ 80.3 6,192.3$ 82.9 5,690.7$ 81.6
New vehicle sales 198.5 2.2 186.5 2.5 261.9 3.8
Wholesale vehicle sales 1,301.7 14.5 844.9 11.3 779.8 11.2
Other sales and revenues:
Extended service plan revenues 173.8 1.9 144.5 1.9 125.2 1.8
Service department sales 100.6 1.1 101.1 1.4 101.2 1.5
Third-party finance fees, net (9.1) (0.1) 0.9 ― 15.3 0.2
Total other sales and revenues 265.3 3.0 246.6 3.3 241.6 3.5
Total net sales and operating revenues 8,975.6$ 100.0 7,470.2$ 100.0 6,974.0$ 100.0
2011
2010
2009
Years Ended February 28
UNIT SALES
Used vehicles 396,181 357,129 345,465
New vehicles 8,231 7,851 11,084
Wholesale vehicles 263,061 197,382 194,081
2011
2010
2009
Years Ended February 28
AVERAGE SELLING PRICES
Used vehicles 18,019$ 17,152$ 16,291$
New vehicles 23,989$ 23,617$ 23,490$
Wholesale vehicles 4,816$ 4,155$ 3,902$
Years Ended February 28
2011
2010
2009