CarMax 2014 Annual Report Download - page 73

Download and view the complete annual report

Please find page 73 of the 2014 CarMax annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 92

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92

69
ASSUMPTIONS USED TO ESTIMATE OPTION VALUES
Years Ended February 28 or 29
2014 2013 2012
Dividend yield 0.0 % 0.0 % 0.0 %
Expected volatility factor (1) 27.9 % - 46.8 % 31.1 % - 51.4 % 34.8 % - 52.0 %
Weighted average expected volatility 44.7 % 49.4 % 49.3 %
Risk-free interest rate (2) 0.02 % - 2.6 % 0.02 % - 2.0 % 0.01 % - 3.5 %
Expected term (in years) (3) 4.7 4.7 4.6
(1) Measured using historical daily price changes of our stock for a period corresponding to the term of the options and the
implied volatility derived from the market prices of traded options on our stock.
(2) Based on the U.S. Treasury yield curve in effect at the time of grant.
(3) Represents the estimated number of years that options will be outstanding prior to exercise.
CASH-SETTLED RESTRICTED STOCK UNIT ACTIVITY
Weighted
Average
Number of
Grant Date
(Units in thousands) Units
Fair Value
Outstanding as of February 28, 2013 1,651 $ 29.90
Stock units granted 542 $ 42.68
Stock units vested and converted (565) $ 25.64
Stock units cancelled (97) $ 34.95
Outstanding as of February 28, 2014 1,531 $ 35.68
We granted 541,819 RSUs in fiscal 2014, 644,232 RSUs in fiscal 2013 and 575,380 RSUs in fiscal 2012. The
initial fair market value per RSU at the date of grant was $42.68 in fiscal 2014, $31.76 in fiscal 2013 and $32.69 in
fiscal 2012. The RSUs are cash-settled upon vesting. During fiscal 2014, we paid $23.3 million (before payroll tax
withholdings) to RSU holders upon the vesting of RSUs, and we realized tax benefits of $9.3 million.
EXPECTED CASH SETTLEMENT RANGE UPON RESTRICTED STOCK UNIT VESTING
As of February 28, 2014
(In thousands) Minimum (1) Maximum (1)
Fiscal 2015 $ 11,191 $ 29,843
Fiscal 2016 12,439 33,172
Fiscal 2017 14,179 37,811
Total expected cash settlements $ 37,809 $ 100,826
(1) Net of estimated forfeitures.
STOCK-SETTLED RESTRICTED STOCK UNIT ACTIVITY
Weighted
Average
Number of Grant Date
(Units in thousands) Units
Fair Value
Outstanding as of February 28, 2013 904 $ 40.78
Stock units granted 238 $ 52.02
Stock units vested and converted (285) $ 36.66
Stock units cancelled (5) $ 46.79
Outstanding as of February 28, 2014 852 $ 45.26