CarMax 2014 Annual Report Download - page 41

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As of February 28, 2014, $6.37 billion of non-recourse notes payable was outstanding related to term securitizations.
These notes payable accrue interest at fixed rates and have scheduled maturities through August 2020, but may
mature earlier or later, depending on the repayment rate of the underlying auto loan receivables. During fiscal 2014,
we completed four term securitizations, funding a total of $3.86 billion of auto loan receivables.
Our term securitizations typically contain an option to repurchase the securitized receivables when the outstanding
balance in the pool of auto loan receivables falls below 10% of the original pool balance. During fiscal 2014, we
exercised this option on four term securitizations that had originally been issued in 2009 and 2010, including one
securitization for which CarMax had provided $140.0 million of capital, or 14% of the transaction, in the form of
subordinated bonds. Upon the exercise of this option, we funded substantially all of the remaining receivables
through our warehouse facilities.
As of February 28, 2014, $879.0 million of non-recourse notes payable was outstanding related to our warehouse
facilities. The combined warehouse facility limit is $1.8 billion, and the unused warehouse capacity totaled
$921.0 million. During the third quarter of fiscal 2014, we increased the limit of our $900 million warehouse
facility that was scheduled to expire in February 2014 to $1 billion, and during the fourth quarter of fiscal 2014, we
renewed the facility for an additional 364 day term. Of the combined warehouse facility limit, $800 million will
expire in August 2014 and $1 billion will expire in February 2015. The return requirements of the warehouse
facility investors could fluctuate significantly depending on market conditions. At renewal, the cost, structure and
capacity of the facilities could change. These changes could have a significant effect on our funding costs. See
Notes 2(F) and 11 for additional information on the warehouse facilities.
The securitization agreements related to the warehouse facilities include various representations and warranties,
covenants and performance triggers. If these requirements are not met, we could be unable to continue to securitize
receivables through the warehouse facilities. In addition, warehouse facility investors could charge us a higher rate
of interest and could have us replaced as servicer. Further, we could be required to deposit collections on the
securitized receivables with the warehouse facility agents on a daily basis and deliver executed lockbox agreements
to the warehouse facility agents.
We expect that cash generated by operations and proceeds from securitization transactions or other funding
arrangements, sale-leaseback transactions and borrowings under existing, new or expanded credit facilities will be
sufficient to fund CAF, capital expenditures and working capital for the foreseeable future. We anticipate that we
will be able to enter into new, or renew or expand existing, funding arrangements to meet our future funding needs.
However, based on conditions in the credit markets, the cost for these arrangements could be materially higher than
historical levels and the timing and capacity of these transactions could be dictated by market availability rather than
our requirements.
In fiscal 2013, our board of directors authorized the repurchase of up to $800 million of our common stock.
Purchases may be made in open market or privately negotiated transactions at management’s discretion, and the
timing and amount of repurchases are determined based on share price, market conditions, legal requirements and
other factors. Shares repurchased are deemed authorized but unissued shares of common stock.
During fiscal 2014, we repurchased 6.9 million shares of common stock for $306.0 million, or an average purchase
price of $44.61 per share. As of February 28, 2014, $282.1 million was available for repurchase under the
authorization, expiring on December 31, 2014. Amounts reported as the repurchase and retirement of common
stock on our statement of cash flows may reflect timing differences in trade and settlement dates on stock repurchase
transactions occurring at the end of a reporting period. Subsequent to the end of fiscal 2014, our board of directors
authorized the repurchase of up to an additional $1.0 billion of CarMax common stock through December 31, 2015.
Fair Value Measurements. We report money market securities, mutual fund investments and derivative
instruments at fair value. See Note 6 for more information on fair value measurements.