CarMax 2015 Annual Report Download - page 18

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environment in the wake of the continued implementation of the Dodd-Frank Act and the expansion of the CFPB’s
authority may increase the cost of regulatory compliance or result in changes to business practices that could have a
material adverse effect on our results of operations.
The Patient Protection and Affordable Care Act of 2010, as it is phased in over time, significantly affects the provision
of health care services and will increase the costs we incur to provide our associates with health coverage. Current
federal labor policy could lead to increased unionization efforts, which could increase labor costs, disrupt store
operations, and have a material adverse effect on our business, sales and results of operations.
Private plaintiffs and federal, state and local regulatory and law enforcement authorities continue to scrutinize
advertising, sales, financing and insurance activities in the sale and leasing of motor vehicles. If, as a result, other
automotive retailers adopt more transparent, consumer-oriented business practices, our differentiation versus those
retailers could be reduced. See the risk factor titled “We operate in a highly competitive industry” for discussion of
this risk.
We are a growth retailer. Our failure to manage our growth and the related challenges could have a material
adverse effect on our business, sales and results of operations.
The expansion of our store base places significant demands on our management team, our associates and our
information systems. If we fail to effectively or efficiently manage our growth, it could have a material adverse effect
on our business, sales and results of operations. The expansion of our store base also requires us to recruit and retain
the associates necessary to support that expansion. See the risk factor above titled “Our success depends upon the
continued contributions of our more than 22,000 associates” for discussion of this risk. The expansion of our store
base also requires real estate. Our inability to acquire or lease suitable real estate at favorable terms could limit our
expansion and could have a material adverse effect on our business and results of operations.
If we are forced to curtail or stop growth it could have a material adverse effect on our business and results of
operations.
We rely on sophisticated information systems to run our business. The failure of these systems could have a
material adverse effect on our business, sales and results of operations.
Our business is dependent upon the integrity and efficient operation of our information systems. In particular, we rely
on our information systems to manage sales, inventory, our customer-facing websites (carmax.com and
carmaxauctions.com), consumer financing and customer information. The failure of these systems to perform as
designed, or the failure to maintain or update these systems as necessary, could disrupt our business operations and
have a material adverse effect on our sales and results of operations.
In addition, despite our ongoing efforts to maintain and enhance the integrity and security of these systems, we could
be subjected to attacks by hackers, including denial-of-service attacks directed at our websites or other system breaches
or malfunctions due to associate error or misconduct or other disruptions. Such incidents could disrupt our business
and have a material adverse effect on sales and results of operations. See the risk factor above titled “We collect
sensitive confidential information from our customers” for the risks associated with a breach of confidential customer
or associate information.
We are subject to numerous legal proceedings. If the outcomes of these proceedings are adverse to CarMax, it
could have a material adverse effect on our business, results of operations and financial condition.
We are subject to various litigation matters from time to time, which could have a material adverse effect on our
business, results of operations and financial condition. Claims arising out of actual or alleged violations of law could
be asserted against us by individuals, either individually or through class actions, or by governmental entities in civil
or criminal investigations and proceedings. These claims could be asserted under a variety of laws, including but not
limited to consumer finance laws, consumer protection laws, intellectual property laws, privacy laws, labor and
employment laws, securities laws and employee benefit laws. These actions could expose us to adverse publicity and
to substantial monetary damages and legal defense costs, injunctive relief and criminal and civil fines and penalties,
including but not limited to suspension or revocation of licenses to conduct business.