CarMax 2014 Annual Report Download - page 70

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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 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 notes payable outstanding related to our
warehouse facilities do not have scheduled maturities, instead the principal payments depend upon the repayment
rate of the underlying auto loan receivables. The return requirements of investors could fluctuate significantly
depending on market conditions. Therefore, at renewal, the cost, structure and capacity of the facilities could
change. These changes could have a significant impact on our funding costs.
See Notes 2(F) and 4 for additional information on the related securitized auto loan receivables.
Financial Covenants. The credit facility agreement contains representations and warranties, conditions and
covenants. We must also meet financial covenants in conjunction with certain of the sale-leaseback transactions.
Our securitization agreements contain representations and warranties, financial covenants and performance triggers.
As of February 28, 2014, we were in compliance with all financial covenants and our securitized receivables were in
compliance with the related performance triggers.
12. STOCK AND STOCK-BASED INCENTIVE PLANS
(A) Preferred Stock
Under the terms of our Articles of Incorporation, the board of directors may determine the rights, preferences and
terms of our authorized but unissued shares of preferred stock. We have authorized 20,000,000 shares of preferred
stock, $20 par value. In 2002, we created a series of preferred stock designated as “Cumulative Participating
Preferred Stock, Series A” in connection with the shareholder rights plan adopted by the company. The number of
shares constituting such series is 300,000. The shareholders rights plan expired in 2012, and no shares of such
Series A Cumulative Participating Preferred Stock or any other preferred stock are currently outstanding.
(B) Share Repurchase Program
In fiscal 2013, our board of directors authorized the repurchase of up to $800 million of our common stock. Of the
total authorized, $300 million was scheduled to expire on December 31, 2013, with the remaining $500 million
scheduled to expire on December 31, 2014. Purchases may be made in the 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 6,859,518 shares of common stock at an average purchase price of $44.61 per
share. During fiscal 2013, we repurchased 5,762,000 shares of common stock at an average purchase price of
$36.77 per share. As of February 28, 2014, $282.1 million was available for repurchase under the authorizations.
Subsequent to the end of fiscal 2014, in March 2014, our board of directors authorized the repurchase of up to an
additional $1 billion of our common stock through December 31, 2015.
(C) Stock Incentive Plans
We maintain long-term incentive plans for management, key employees and the nonemployee members of our board
of directors. The plans allow for the granting of equity-based compensation awards, including nonqualified stock
options, incentive stock options, stock appreciation rights, restricted stock awards, stock- and cash-settled restricted
stock units, stock grants or a combination of awards. To date, we have not awarded any incentive stock options.
As of February 28, 2014, a total of 50,200,000 shares of our common stock had been authorized to be issued under
the long-term incentive plans. The number of unissued common shares reserved for future grants under the long-
term incentive plans was 10,637,303 as of that date.
Prior to fiscal 2007, the majority of associates who received share-based compensation awards primarily received
nonqualified stock options. From fiscal 2007 through fiscal 2009, these associates primarily received restricted
stock instead of stock options, and beginning in fiscal 2010, these associates primarily receive cash-settled restricted
stock units instead of restricted stock awards. Senior management and other key associates receive awards of
nonqualified stock options and, starting in fiscal 2010, stock-settled restricted stock units. Nonemployee directors
receive awards of nonqualified stock options and stock grants.