CarMax Reports Record Third Quarter Results

Fourth Quarter and Fiscal Year 2013 Earnings Release Date

We currently plan to release fourth quarter and fiscal year 2013 results on Wednesday, April 10, 2013, before the opening of the New York Stock Exchange. We will host a conference call for investors at 9:00 a.m. ET on that date. Information on this conference call will be available on our investor information home page at investor.carmax.com in March 2013.

About CarMax

CarMax, a member of the Fortune 500 and the S&P 500 , and one of the Fortune “100 Best Companies to Work For,” for eight consecutive years, is the nation’s largest retailer of used vehicles. Headquartered in Richmond, Va., CarMax currently operates 117 used car superstores in 58 markets. The CarMax consumer offer features low, no-haggle prices, a broad selection of CarMax Quality Certified used vehicles and superior customer service. During the twelve months ended February 29, 2012, the company retailed 408,080 used vehicles and sold 316,649 wholesale vehicles at our in-store auctions. For more information, access the CarMax website at www.carmax.com.

Forward-Looking Statements

We caution readers that the statements contained in this release about our future business plans, operations, opportunities or prospects, including without limitation any statements or factors regarding expected sales, margins or earnings, are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based upon management’s current knowledge and assumptions about future events and involve risks and uncertainties that could cause actual results to differ materially from anticipated results. Among the factors that could cause actual results and outcomes to differ materially from those contained in the forward-looking statements are the following:

• Changes in general or regional U.S. economic conditions.
• Changes in the availability or cost of capital and working capital financing, including changes related to the asset-backed securitization market.
• Changes in consumer credit availability related to our third-party financing providers.
• Changes in the competitive landscape within our industry.
• Significant changes in retail prices for used and new vehicles.
• A reduction in the availability of or access to sources of inventory.
• Factors related to the regulatory and legislative environment in which we operate.
• Security breaches or other events that result in the misappropriation, loss or other unauthorized disclosure of confidential customer information.
• Events that damage our reputation or harm the perception of the quality of our brand.
• Factors related to geographic growth, including the inability to acquire or lease suitable real estate at favorable terms or to effectively manage our growth.
• The loss of key employees from our store, regional or corporate management teams or a significant increase in labor costs.
• The failure of key information systems.
• The effect of new accounting requirements or changes to U.S. generally accepted accounting principles.
• The effect of various litigation matters.
• Adverse conditions affecting one or more automotive manufacturers or manufacturer recalls.
• The occurrence of severe weather events.
• Factors related to the seasonal fluctuations in our business.
• Factors related to the geographic concentration of our superstores.
• Acts of terrorism, the outbreak of war, or other significant national or international events.

For more details on factors that could affect expectations, see our Annual Report on Form 10-K for the fiscal year ended February 29, 2012, and our quarterly or current reports as filed with or furnished to the Securities and Exchange Commission. Our filings are publicly available on our investor information home page at investor.carmax.com. Requests for information may also be made to the Investor Relations Department by email to [e-mail] or by calling 1-804-747-0422 ext. 4287. We disclaim any intent or obligation to update our forward-looking statements.

CARMAX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
			Three Months Ended November 30										Nine Months Ended November 30
(In thousands except per share data)		2012			% (1)		2011 (2)			% (1)		2012			% (1)		2011 (2)			% (1)
SALES AND OPERATING REVENUES:
Used vehicle sales		$	2,068,742		79.5		$	1,766,690		78.2		$	6,449,613		79.3		$	5,853,213		77.8
New vehicle sales			45,693		1.8			45,997		2.0			162,543		2.0			154,736		2.1
Wholesale vehicle sales			427,650		16.4			390,262		17.3			1,332,495		16.4			1,325,926		17.6
Other sales and revenues			60,361		2.3			57,565		2.5			190,219		2.3			193,875		2.6
NET SALES AND OPERATING REVENUES			2,602,446		100.0			2,260,514		100.0			8,134,870		100.0			7,527,750		100.0
Cost of sales			2,257,227		86.7			1,957,295		86.6			7,039,743		86.5			6,487,161		86.2
GROSS PROFIT			345,219		13.3			303,219		13.4			1,095,127		13.5			1,040,589		13.8
CARMAX AUTO FINANCE INCOME			72,454		2.8			62,625		2.8			223,309		2.7			196,112		2.6
Selling, general and administrative expenses			257,282		9.9			225,765		10.0			765,559		9.4			697,307		9.3
Interest expense			8,065		0.3			8,359		0.4			24,360		0.3			25,363		0.3
Other income (expense)			139		―			(94)		―			683		―			119		―
Earnings before income taxes			152,465		5.9			131,626		5.8			529,200		6.5			514,150		6.8
Income tax provision			57,784		2.2			49,516		2.2			202,137		2.5			195,386		2.6
NET EARNINGS		$	94,681		3.6		$	82,110		3.6		$	327,063		4.0		$	318,764		4.2
WEIGHTED AVERAGE COMMON SHARES:
Basic			228,904					226,446					228,346					226,104
Diluted			232,656					230,632					232,048					230,529
NET EARNINGS PER SHARE:
Basic		$	0.41				$	0.36				$	1.43				$	1.41
Diluted		$	0.41				$	0.36				$	1.41				$	1.38

(1)		Calculated as a percentage of net sales and operating revenues and sums may not equal totals due to rounding.
(2)		As disclosed in our Annual Report on Form 10-K for the fiscal year ended February 29, 2012, fiscal 2012 reflects the revisions to correct our accounting for sale-leaseback transactions.

	CARMAX, INC. AND SUBSIDIARIES
	CONSOLIDATED BALANCE SHEETS
			(Unaudited)						(Unaudited)
			November 30			February 29			November 30
(In thousands except share data)			2012			2012			2011 (1)
ASSETS
	CURRENT ASSETS:
	Cash and cash equivalents		$	445,110		$	442,658		$	383,411
	Restricted cash from collections on auto loan receivables			204,360			204,314			174,392
	Accounts receivable, net			62,660			86,434			54,522
	Inventory			1,339,044			1,092,592			1,013,183
	Deferred income taxes			9,315			9,938			13,085
	Other current assets			24,875			17,512			9,806
	TOTAL CURRENT ASSETS			2,085,364			1,853,448			1,648,399
	Auto loan receivables, net			5,552,035			4,959,847			4,807,804
	Property and equipment, net			1,411,588			1,278,722			1,230,897
	Deferred income taxes			147,571			133,134			120,268
	Other assets			101,125			106,392			100,413
	TOTAL ASSETS		$	9,297,683		$	8,331,543		$	7,907,781
LIABILITIES AND SHAREHOLDERS’ EQUITY
	CURRENT LIABILITIES:
	Accounts payable		$	272,807		$	324,827		$	246,393
	Accrued expenses and other current liabilities			116,629			128,973			125,683
	Accrued income taxes			266			3,125			13,069
	Short-term debt			706			943			759
	Current portion of finance and capital lease obligations			15,885			14,108			13,615
	Current portion of non-recourse notes payable			169,399			174,337			147,183
	TOTAL CURRENT LIABILITIES			575,692			646,313			546,702
	Finance and capital lease obligations, excluding current portion			341,424			353,566			357,288
	Non-recourse notes payable, excluding current portion			5,211,064			4,509,752			4,318,046
	Other liabilities			145,834			148,800			103,487
	TOTAL LIABILITIES			6,274,014			5,658,431			5,325,523
	Commitments and contingent liabilities
	SHAREHOLDERS’ EQUITY:
	Common stock, $0.50 par value; 350,000,000 shares authorized;
	228,216,842 and 227,118,666 shares issued and outstanding
	as of November 30, 2012 and February 29, 2012, respectively			114,108			113,559			113,237
	Capital in excess of par value			942,017			877,493			858,790
	Accumulated other comprehensive loss			(51,745)			(62,459)			(39,257)
	Retained earnings			2,019,289			1,744,519			1,649,488
	TOTAL SHAREHOLDERS’ EQUITY			3,023,669			2,673,112			2,582,258
	TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$	9,297,683		$	8,331,543		$	7,907,781

⁽¹⁾ As disclosed in our Annual Report on Form 10-K for the fiscal year ended February 29, 2012, fiscal 2012 reflects the revisions to correct our accounting for sale-leaseback transactions.

CARMAX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
		Nine Months Ended November 30
(In thousands)		2012			2011 (1)
OPERATING ACTIVITIES:
Net earnings		$	327,063		$	318,764
Adjustments to reconcile net earnings to net cash
(used in) provided by operating activities:
Depreciation and amortization			70,721			60,696
Share-based compensation expense			46,597			37,148
Provision for loan losses			40,154			24,878
Loss on disposition of assets			1,554			1,331
Deferred income tax benefit			(6,569)			(5,014)
Net decrease (increase) in:
Accounts receivable, net			23,774			65,075
Inventory			(246,452)			36,294
Other current assets			(7,336)			24,038
Auto loan receivables, net			(632,342)			(512,107)
Other assets			(506)			(5,334)
Net decrease in:
Accounts payable, accrued expenses and other current
liabilities and accrued income taxes			(102,666)			(21,673)
Other liabilities			(13,220)			(17,763)
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES			(499,228)			6,333
INVESTING ACTIVITIES:
Capital expenditures			(184,942)			(105,990)
Increase in restricted cash from collections on auto loan receivables			(46)			(13,340)
Increase in restricted cash in reserve accounts			(6,912)			(8,573)
Release of restricted cash from reserve accounts			15,980			12,088
Purchases of money market securities, net			(2,088)			(520)
Purchases of investments available-for-sale			(1,525)			(2,252)
Sales of investments available-for-sale			318			52
NET CASH USED IN INVESTING ACTIVITIES			(179,215)			(118,535)
FINANCING ACTIVITIES:
Decrease in short-term debt, net			(237)			(243)
Payments on finance and capital lease obligations			(10,365)			(9,331)
Issuances of non-recourse notes payable			4,010,000			3,633,000
Payments on non-recourse notes payable			(3,313,626)			(3,181,432)
Repurchase and retirement of common stock			(51,091)			―
Equity issuances, net			29,486			5,039
Excess tax benefits from share-based payment arrangements			16,728			7,459
NET CASH PROVIDED BY FINANCING ACTIVITIES			680,895			454,492
Increase in cash and cash equivalents			2,452			342,290
Cash and cash equivalents at beginning of year			442,658			41,121
CASH AND CASH EQUIVALENTS AT END OF PERIOD		$	445,110		$	383,411

⁽¹⁾ As disclosed in our Annual Report on Form 10-K for the fiscal year ended February 29, 2012, fiscal 2012 reflects the revisions to correct our accounting for sale-leaseback transactions.

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