CarMax 2016 Annual Report Download - page 64
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Plan Assets. Our pension plan assets are held in trust and a fiduciary committee sets the investment policies and strategies. Long-
term strategic investment objectives include achieving reasonable returns while prudently balancing risk and return, and controlling
costs. We target allocating approximately 75% of plan assets to equity and equity-related instruments and approximately 25% to
fixed income securities. Equity securities are currently composed of mutual funds that include highly diversified investments in
large-, mid- and small-cap companies located in the United States and internationally. The fixed income securities are composed
of mutual funds that include investments in debt securities, mortgage-backed securities, corporate bonds and other debt obligations
primarily in the United States. We do not expect any plan assets to be returned to us during fiscal 2017.
The fair values of the plan’s assets are provided by the plan’s trustee and the investment managers. Within the fair value hierarchy
(see Note 6), the mutual funds are classified as Level 1 as quoted active market prices for identical assets are used to measure fair
value. The collective funds are public investment vehicles valued using a net asset value (“NAV”). The collective funds may be
liquidated with minimal restrictions and are classified as Level 2.
(B) Retirement Savings 401(k) Plan
We sponsor a 401(k) plan for all associates meeting certain eligibility criteria. In conjunction with the pension plan curtailments,
enhancements were made to the 401(k) plan effective January 1, 2009. The enhancements increased the maximum salary
contribution for eligible associates and increased our matching contribution. Additionally, an annual discretionary company-
funded contribution regardless of associate participation was implemented, as well as an additional discretionary company-funded
contribution to those associates meeting certain age and service requirements. The total cost for company contributions was $29.8
million in fiscal 2016, $27.9 million in fiscal 2015 and $25.0 million in fiscal 2014.
(C) Retirement Restoration Plan
Effective January 1, 2009, we replaced the frozen restoration plan with a new non-qualified retirement plan for certain senior
executives who are affected by Internal Revenue Code limitations on benefits provided under the Retirement Savings 401(k)
Plan. Under this plan, these associates may continue to defer portions of their compensation for retirement savings. We match
the associates’ contributions at the same rate provided under the 401(k) plan, and also may provide the annual discretionary
company-funded contribution made regardless of associate participation, as well as the additional discretionary company-funded
contribution to the associates meeting the same age and service requirements. This plan is unfunded with lump sum payments to
be made upon the associate’s retirement. The total cost for this plan was not significant in fiscal 2016, fiscal 2015 and fiscal 2014.
(D) Executive Deferred Compensation Plan
Effective January 1, 2011, we established an unfunded nonqualified deferred compensation plan to permit certain eligible associates
to defer receipt of a portion of their compensation to a future date. This plan also includes a restorative company contribution
designed to compensate the plan participants for any loss of company contributions under the Retirement Savings 401(k) Plan
and the Retirement Restoration Plan due to a reduction in their eligible compensation resulting from deferrals into the Executive
Deferred Compensation Plan. The total cost for this plan was not significant in fiscal 2016, fiscal 2015 and fiscal 2014.
11. DEBT
As of February 29 or 28
(In thousands) 2016 2015
Revolving credit facility $ 415,428 $ 10,785
Term loan 300,000 300,000
Finance and capital lease obligations 414,654 327,838
Non-recourse notes payable 9,527,750 8,470,629
Total debt 10,657,832 9,109,252
Less: current portion (315,509)(290,502)
Long-term debt, net of current portion $ 10,342,323 $ 8,818,750
Revolving Credit Facility. We have a $1.20 billion unsecured revolving credit facility (the “credit facility”) with various financial
institutions that expires in August 2020. Borrowings under the credit facility are available for working capital and general corporate
purposes. Borrowings accrue interest at variable rates based on LIBOR, the federal funds rate, or the prime rate, depending on
the type of borrowing, and we pay a commitment fee on the unused portions of the available funds. Borrowings under the credit
facility are either due “on demand” or at maturity depending on the type of borrowing. Borrowings with “on demand” repayment
terms are presented as short-term debt while amounts due at maturity are presented as long-term debt with expected repayments
within the next twelve months presented as a component of current portion of long-term debt. Outstanding borrowings of $415.0
million at February 29, 2016 are classified as long-term debt as no repayments are scheduled to be made within the next 12 months.