CarMax 2014 Annual Report Download - page 31

27
We collect sales taxes and other taxes from customers on behalf of governmental authorities at the time of sale.
These taxes are accounted for on a net basis and are not included in net sales and operating revenues or cost of sales.
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, 2014, 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 – CARMAX SALES OPERATIONS
NET SALES AND OPERATING REVENUES
Years Ended February 28 or 29
(In millions) 2014 Change 2013 Change 2012
Used vehicle sales $10,306.3 17.8 %$8,747.0 11.8 %$ 7,826.9
N
ew vehicle sales 212.0 2.1 % 207.7 3.6 % 200.6
Wholesale vehicle sales 1,823.4 3.6 %1,759.6 2.2 % 1,721.6
Other sales and revenues:
Extended service plan revenues 208.9 3.0 %202.9 13.0 % 179.6
Service department sales 106.4 4.6 % 101.8 3.2 % 98.6
Third-party finance fees, net (82.8) (47.6) %(56.1) (136.0) % (23.8)
Total other sales and revenues 232.6 (6.4) % 248.6 (2.3) % 254.5
Total net sales and operating revenues $12,574.3 14.7 %$10,962.8 9.6 %$ 10,003.6
UNIT SALES
Years Ended February 28 or 29
2014 2013 2012
Used vehicles 526,929 447,728 408,080
N
ew vehicles 7,761 7,855 7,679
Wholesale vehicles 342,576 324,779 316,649
AVERAGE SELLING PRICES
Years Ended February 28 or 29
2014 2013 2012
Used vehicles $19,408 $ 19,351 $ 18,995
N
ew vehicles $ 27,205 $ 26,316 $ 25,986
Wholesale vehicles $5,160 $ 5,268 $ 5,291