CarMax 2014 Annual Report Download - page 18

14
Our revolving credit facility and certain securitization and sale-leaseback agreements contain covenants and
performance triggers. Any failure to comply with these covenants or performance triggers could have a material
adverse effect on our business, results of operations and financial condition.
Disruptions in the capital and credit markets could adversely affect our ability to draw on our revolving credit
facility. If our ability to secure funds from the facility were significantly impaired, our access to working capital
would be impacted, our ability to maintain appropriate inventory levels could be affected and these conditions—
especially if coupled with a failure to generate significant cash flows—could have a material adverse effect on our
business, sales, results of operations and financial condition.
We rely on third-party financing providers to finance a significant portion of our customers’ vehicle purchases.
Accordingly, our sales and results of operations are partially dependent on the actions of these third parties.
We provide financing to qualified customers through CAF and a number of third-party financing providers. If one
or more of these third-party providers cease to provide financing to our customers, provide financing to fewer
customers or no longer provide financing on competitive terms, it could have a material adverse effect on our
business, sales and results of operations. Additionally, if we were unable to replace the current third-party providers
upon the occurrence of one or more of the foregoing events, it could also have a material adverse effect on our
business, sales and results of operations.
CarMax was founded on the fundamental principle of integrity. Failure to maintain a reputation of integrity and
to otherwise maintain and enhance our brand could adversely affect our business, sales and results of operations.
Our reputation as a company that is founded on the fundamental principle of integrity is critical to our success. Our
reputation as a retailer offering low, no-haggle prices, a broad selection of CarMax Quality Certified used vehicles
and superior customer service is also critical to our success. If we fail to maintain the high standards on which our
reputation is built, or if an event occurs that damages this reputation, it could adversely affect consumer demand and
have a material adverse effect on our business, sales and results of operations. Such an event could include an
isolated incident at a single store, particularly if such incident results in adverse publicity, governmental
investigations, or litigation. Even the perception of a decrease in the quality of our brand could impact results.
The growing use of social media increases the speed with which information and opinions can be shared and thus
the speed with which reputation can be affected. We monitor social media and attempt to address customer
concerns, provide accurate information and protect our reputation, but there can be no guarantee that our efforts will
succeed. If we fail to correct or mitigate misinformation or negative information, including information spread
through social media or traditional media channels, about the vehicles we offer, our customer experience, or any
aspect of our brand, it could have a material adverse effect on our business, sales and results of operations.
Our success depends upon the continued contributions of our more than 20,000 associates.
Our associates are the driving force behind our success. We believe that one of the things that sets CarMax apart is
a culture centered on valuing all associates. Our failure to maintain this culture or to continue recruiting, developing
and retaining the associates that drive our success could have a material adverse effect on our business, sales and
results of operations. Our ability to recruit associates while controlling related costs is subject to numerous external
and internal factors, including unemployment levels, prevailing wage rates, our growth plans, changes in
employment legislation, and competition for qualified employees in the industry and regions in which we operate
and for qualified service technicians in particular. Our ability to recruit associates while controlling related costs is
also subject to our ability to maintain positive associate relations. If we are unable to do so, or if despite our efforts
we become subject to successful unionization efforts, it could increase costs, limit our ability to respond to
competitive threats and have a material adverse effect on our business, sales and results of operations.
Our success also depends upon the continued contributions of our store, region and corporate management teams.
Consequently, the loss of the services of any of these associates could have a material adverse effect on our
business, sales and results of operations. In addition, an inability to build our management bench strength to support
store growth could have a material adverse effect on our business, sales and results of operations.
We collect sensitive confidential information from our customers. A breach of this confidentiality, whether due
to a cyber-security or other incident, could result in harm to our customers and damage to our brand.