CarMax Reports Record Third Quarter Results

  CarMax Reports Record Third Quarter Results

Business Wire

RICHMOND, Va. -- December 20, 2012

CarMax, Inc. (NYSE:KMX) today reported record results for the third quarter
ended November 30, 2012.

  *Net sales and operating revenues increased 15% to $2.60 billion from $2.26
    billion in the third quarter of last year.
  *Used unit sales in comparable stores increased 12% for the quarter.
  *Total used unit sales rose 16% in the third quarter.
  *Total wholesale unit sales increased 10% in the third quarter.
  *CarMax Auto Finance (CAF) income increased 16% to $72.5 million in the
    third quarter.
  *Net earnings grew 15% to $94.7 million, or $0.41 per diluted share,
    compared with $82.1 million, or $0.36 per diluted share, in the third
    quarter of fiscal 2012.

Third Quarter Business Performance Review

“We are pleased to report strong increases in used and wholesale vehicle unit
sales and CAF income, which drove solid bottom-line earnings growth,” said Tom
Folliard, president and chief executive officer. “Our strong comparable store
sales growth allowed us to leverage SG&A expenses, even as we expanded our
store base.”

Sales. Used vehicle sales improved significantly, with total used units
climbing 16% and comparable store used units up 12%. The comparable store used
unit growth was driven by improved conversion, which we believe benefited from
a variety of factors, including more compelling credit offers from third-party
finance providers and CAF, increased inventory selection, improved customer
sentiment and continued strong in-store execution. The used vehicle average
selling price was similar to the prior year’s quarter.

Wholesale vehicle unit sales grew 10% compared with last year’s quarter.
Wholesale unit sales benefited from an increase in appraisal traffic, while
the appraisal buy rate was similar to the prior year’s quarter.

Other sales and revenues increased 5% compared with the prior year’s third
quarter, as an increase in extended service plan (ESP) revenues was largely
offset by a reduction in net third-party finance fees. Third-party subprime
providers, who purchase subprime financings at a discount, originated 14% of
used vehicle unit sales in the current quarter compared with 9% in the prior
year quarter. ESP revenues climbed 22% due to both the growth in used vehicle
sales and an increase in ESP penetration.

Gross Profit. Total gross profit increased 14% to $345.2 million from $303.2
million in the third quarter of fiscal 2012, primarily reflecting the
increased used and wholesale vehicle unit sales, as well as higher other gross
profit.

Used vehicle gross profit rose 15% to $227.0 million driven by the 16%
increase in used unit sales. Used vehicle gross profit per unit was relatively
consistent at $2,146 versus $2,171 in last year’s third quarter.

Wholesale gross profit increased 11% to $73.6 million, driven by the 10%
increase in wholesale unit sales. Wholesale vehicle gross profit per unit
remained stable at $923 compared with $914 in the prior year quarter.

Other gross profit rose 18% to $43.7 million, as improved ESP and service
department profits were partially offset by the lower net third-party finance
fees.

CarMax Auto Finance. CAF income increased 16% to $72.5 million compared with
$62.6 million in last year’s third quarter. The growth in CAF income was
largely attributable to the 15% increase in average managed receivables, which
grew to $5.48 billion from $4.77 billion in the prior year period. The
increase in average managed receivables reflected the rise in CAF origination
volume throughout fiscal 2012 and fiscal 2013 as we transitioned back to our
pre-recession origination strategy, higher average amounts financed and the
growth in retail unit sales.

The allowance for loan losses was 1.0% of managed receivables as of
November30,2012, compared with 0.9% as of November 30, 2011. Continued
favorable loss experience partially offset the effect of the change in credit
mix resulting from the transition in origination strategy.

SG&A. Selling, general and administrative expenses increased 14% to
$257.3million from $225.8million in the prior year’s third quarter. The
increase primarily reflected the combination of the 9%increase in our store
base since the beginning of last year’s third quarter (representing the
addition of 10 stores) and higher variable selling costs resulting from the
12% increase in comparable store used unit sales. SG&A per retail unit
declined to $2,393 versus $2,436 in the prior year’s quarter as the leverage
resulting from the comparable store unit sales growth was partially offset by
higher costs related to growing our store base.

Superstore Openings. As of November 30, 2012, we had opened eight of the ten
used car superstores that we plan to open in fiscal 2013. During the third
quarter, we opened three stores, entering the Des Moines and Denver markets,
and adding our tenth store in the Los Angeles market.

Share Repurchase Program. During the third quarter of fiscal 2013, we
repurchased 1.7 million shares of common stock for $60.2 million pursuant to
our share repurchase program. The repurchase activity had no effect on
reported third quarter net earnings per share.

Supplemental Financial Information

Sales Components


             Three Months Ended                 Nine Months Ended
              November 30^(1)                     November 30^(1)
(In          2012       2011       Change     2012       2011       Change
millions)
Used
vehicle       $ 2,068.7   $ 1,766.7  17.1    %   $ 6,449.6  $ 5,853.2  10.2    %
sales
New vehicle     45.7        46.0      (0.7)   %     162.5       154.7     5.0     %
sales
Wholesale
vehicle         427.7       390.3     9.6     %     1,332.5     1,325.9   0.5     %
sales
Other sales
and
revenues:
Extended
service         48.6        39.8      22.2    %     152.7       131.0     16.6    %
plan
revenues
Service
department      24.8        23.5      5.9     %     76.4        74.6      2.4     %
sales
Third-party
finance       (13.1)    (5.6)    (131.2) %   (38.9)    (11.8)   (229.8) %
fees, net
Total other
sales and     60.4      57.6     4.9     %   190.2     193.9    (1.9)   %
revenues
Total net
sales and    $ 2,602.4  $ 2,260.5  15.1    %  $ 8,134.9  $ 7,527.8  8.1     %
operating
revenues
                                                                                  

^(1) Percent calculations and amounts shown are based on amounts presented on
the attached consolidated statements of earnings and may not sum due to
rounding.

Comparable Store Used Vehicle Sales Changes


                      Three Months Ended  Nine Months Ended
                       November 30          November 30
                     2012      2011     2012      2011
Used vehicle units     12    %    (3)  %    5    %     0   %
Used vehicle dollars   13    %    3    %    6    %     7   %


Total Used Vehicle Sales Changes


                      Three Months Ended  Nine Months Ended
                       November 30          November 30
                     2012      2011     2012       2011
Used vehicle units     16   %    (1)  %    9     %     2  %
Used vehicle dollars   17   %     5    %    10    %     8  %
                                                        

Unit Sales

                                        
                    Three Months Ended  Nine Months Ended
                     November 30         November 30
                   2012       2011    2012     2011
Used vehicles        105,815     90,975   329,422   302,311
New vehicles         1,705       1,719    6,164     5,952
Wholesale vehicles   79,747      72,805   246,059   242,752
                                                    

Average Selling Prices


                    Three Months Ended   Nine Months Ended
                     November 30           November 30
                   2012      2011      2012      2011
Used vehicles        $ 19,344  $ 19,221   $ 19,375  $ 19,170
New vehicles         $ 26,681   $ 26,611   $ 26,241   $ 25,863
Wholesale vehicles   $ 5,214    $ 5,215    $ 5,267    $ 5,316


Selected Operating Ratios

                                                                                 
                Three Months Ended                      Nine Months Ended
                 November 30                             November 30
(In millions)   2012       %      2011 ^     %      2012       %      2011 ^     %
                             ^(1)    (2)         ^(1)                ^(1)    (2)         ^(1)
Net sales and
operating        $ 2,602.4   100.0   $ 2,260.5   100.0   $ 8,134.9   100.0   $ 7,527.8   100.0
revenues
Gross profit     $ 345.2     13.3    $ 303.2     13.4    $ 1,095.1   13.5    $ 1,040.6   13.8
CarMax Auto      $ 72.5      2.8     $ 62.6      2.8     $ 223.3     2.7     $ 196.1     2.6
Finance income
Selling,
general, and
administrative
expenses         $ 257.3     9.9     $ 225.8     10.0    $ 765.6     9.4     $ 697.3     9.3
Interest         $ 8.1       0.3     $ 8.4       0.4     $ 24.4      0.3     $ 25.4      0.3
expense
Earnings
before income    $ 152.5     5.9     $ 131.6     5.8     $ 529.2     6.5     $ 514.2     6.8
taxes
Net earnings     $ 94.7      3.6     $ 82.1      3.6     $ 327.1     4.0     $ 318.8     4.2
                                                                                         

^(1)  Calculated as the ratio of the applicable amount to net sales and
       operating revenues.
       As disclosed in our Annual Report on Form 10-K for the fiscal year
^(2)   ended February 29, 2012, fiscal 2012 reflects the revisions to correct
       our accounting for sale-leaseback transactions.

Gross Profit

                                                               
               Three Months Ended             Nine Months Ended
               November 30                    November 30
(In           2012     2011     Change    2012       2011       Change
millions)
Used vehicle   $ 227.0   $ 197.5   15.0   %   $ 718.2     $ 662.7     8.4    %
gross profit
New vehicle      0.9       2.0     (55.9) %     4.1         5.1       (21.1) %
gross profit
Wholesale
vehicle          73.6      66.5    10.6   %     230.5       231.6     (0.4)  %
gross profit
Other gross    43.7    37.2   17.5   %   142.3     141.2    0.8    %
profit
Total         $ 345.2  $ 303.2  13.9   %  $ 1,095.1  $ 1,040.6  5.2    %
                                                                             

Gross Profit per Unit

                                                                       
            Three Months Ended                    Nine Months Ended
            November 30                           November 30
          2012              2011              2012              2011
          $ per     %^(2)  $ per     %^(2)  $ per     %^(2)  $ per     %^(2)
            unit^(1)           unit^(1)           unit^(1)           unit^(1)
Used
vehicle     $  2,146   11.0    $  2,171   11.2    $  2,180   11.1    $  2,192   11.3
gross
profit
New
vehicle     $  518     1.9     $  1,164   4.4     $  659     2.5     $  865     3.3
gross
profit
Wholesale
vehicle     $  923     17.2    $  914     17.0    $  937     17.3    $  954     17.5
gross
profit
Other
gross       $  407     72.4    $  401     64.6    $  424     74.8    $  458     72.8
profit
Total
gross       $  3,211   13.3    $  3,271   13.4    $  3,263   13.5    $  3,376   13.8
profit
                                                                                

       Calculated as category gross profit divided by its respective units
^(1)  sold, except the other and total categories, which are divided by total
       retail units sold.
^(2)   Calculated as a percentage of its respective sales or revenue.

Components of CAF Income and Other CAF Information

                                                                        
               Three Months Ended November 30             Nine Months Ended November 30
(In           2012         %      2011         %      2012       %      2011       %
millions)                    ^(1)                  ^(1)                ^(1)                ^(1)
Interest
margin:
Interest and   $ 125.1       9.1     $ 114.3       9.6     $ 368.9     9.3     $ 334.0     9.7
fee income
Interest       (23.3)    (1.7)   (25.6)    (2.2)   (72.4)   (1.8)   (80.3)   (2.3)
expense
Total
interest         101.8       7.4       88.7        7.4       296.5     7.5       253.7     7.4
margin
Provision
for loan       (18.1)    (1.3)   (15.1)    (1.3)   (40.2)   (1.0)   (24.9)   (0.7)
losses
Total
interest
margin after
provision
for loan       83.7      6.1     73.6      6.2     256.3    6.5     228.8    6.7
losses
                                                                                           
Other income     0.2         ―         0.3         ―         ―         ―         1.4      ―
Total direct   (11.4)    (0.8)   (11.3)    (0.9)   (33.0)   (0.8)   (34.1)   (1.0)
expenses
CarMax Auto
Finance       $ 72.5      5.3    $ 62.6      5.3    $ 223.3    5.7    $ 196.1    5.7
income
                                                                                           
Total
average
managed
receivables    $ 5,477.4             $ 4,770.9             $ 5,266.0           $ 4,585.1
Net loans      $ 856.2               $ 664.0               $ 2,465.4           $ 2,125.2
originated
Net CAF
penetration      41.2    %             38.1    %             38.3    %           36.7    %
rate
Weighted
average          7.7     %             8.7     %             8.2     %           8.8     %
contract
rate
                                                                                           
Ending
allowance      $ 54.3                $ 41.4                $ 54.3              $ 41.4
for loan
losses
                                                                                           
Warehouse
facility
information:
Ending
funded         $ 876.0               $ 876.0               $ 876.0             $ 876.0
receivables
Ending
unused         $ 724.0               $ 724.0               $ 724.0             $ 724.0
capacity
                                                                                           

(1) Annualized percent of total average managed receivables.

SG&A Expenses

                                                             
                                  Three Months Ended    Nine Months Ended
                                  November 30           November 30
(In millions)                    2012     2011 ^(1)  2012     2011 ^(1)
Compensation and benefits ^ (2)   $ 144.0   $  124.0    $ 427.1   $  384.2
Store occupancy costs               51.1       48.5       149.8      142.4
Advertising expense                 22.5       22.4       76.7       75.4
Other overhead costs ^ (3)        39.7     30.9     112.0    95.3
Total SG&A expenses              $ 257.3  $  225.8   $ 765.6  $  697.3
                                                                     

       As disclosed in our Annual Report on Form 10-K for the fiscal year
^(1)  ended February 29, 2012, fiscal 2012 reflects the revisions to correct
       our accounting for sale-leaseback transactions.
^(2)   Excludes compensation and benefits related to reconditioning and
       vehicle repair service, which is included in cost of sales.
       Includes IT expenses, insurance, bad debt, travel, preopening and
^(3)   relocation costs, charitable contributions and other administrative
       expenses.

Earnings Highlights

                                                                 
                  Three Months Ended              Nine Months Ended
                  November 30                     November 30
(In millions                                                2011 ^
except per       2012     2011 ^ (1)  Change  2012     (1)        Change
share data)
Net earnings      $ 94.7    $   82.1     15.3 %   $ 327.1   $  318.8    2.6  %
Diluted
weighted            232.7       230.6    0.9  %     232.0      230.5    0.7  %
average shares
outstanding
Net earnings
per diluted       $ 0.41    $   0.36     13.9 %   $ 1.41    $  1.38     2.2  %
share
                                                                             

^(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.

Planned Store Openings

We currently plan to open the following superstores within 12 months from
November 30, 2012:

                                                             
Location                 Television Market     Market Status  Planned
                                                                 Opening Date
Denver (Littleton),       Denver                 Existing        Q4 fiscal
Colorado ^(1)                                                    2013
Jacksonville, Florida     Jacksonville           Existing        Q4 fiscal
                                                                 2013
Harrisonburg, Virginia    Harrisonburg           New             Q1 Fiscal
                                                                 2014
Columbus, Georgia         Columbus               New             Q1 Fiscal
                                                                 2014
Savannah, Georgia         Savannah               New             Q1 Fiscal
                                                                 2014
Houston, Texas            Houston                Existing        Q2 Fiscal
                                                                 2014
Sacramento, California    Sacramento             Existing        Q2 Fiscal
                                                                 2014
Frederick, Maryland       Washington/Baltimore   Existing        Q2 Fiscal
                                                                 2014
Jackson, Tennessee        Jackson                New             Q3 Fiscal
                                                                 2014
Waldorf, Maryland         Washington/Baltimore   Existing        Q3 Fiscal
                                                                 2014
St. Louis (St. Peters),   St. Louis              New             Q3 Fiscal
Missouri                                                         2014
St. Louis (Lindbergh),    St. Louis              New             Q3 Fiscal
Missouri                                                         2014
                                                                 

^(1) Store opened in December 2012.

Conference Call Information

We will host a conference call for investors at 9:00 a.m. ET today, December
20, 2012. Domestic investors may access the call at 1-888-298-3261
(international callers dial 1-706-679-7457). The conference I.D. for both
domestic and international callers is 89964196. A live webcast of the call
will be available on our investor information home page at investor.carmax.com
and at www.streetevents.com.

A webcast replay of the call will be available at investor.carmax.com
beginning at approximately 1:00 p.m. ET on December 20, 2012, through April 9,
2013. A telephone replay also will be available through December 31, 2012, and
may be accessed by dialing 1-855-859-2056 (international callers dial
1-404-537-3406). The conference I.D. for both domestic and international
callers is 89964196.

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 9:00a.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
investor_relations@carmax.com 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      2012         ^(1)   2011 ^ (2)   ^(1)   2012         ^(1)   2011 ^ (2)   ^(1)
share data)
SALES AND
OPERATING
REVENUES:
Used vehicle     $ 2,068,742   79.5    $ 1,766,690   78.2    $ 6,449,613   79.3    $ 5,853,213   77.8
sales
New vehicle        45,693      1.8       45,997      2.0       162,543     2.0       154,736     2.1
sales
Wholesale          427,650     16.4      390,262     17.3      1,332,495   16.4      1,325,926   17.6
vehicle sales
Other sales      60,361     2.3     57,565     2.5     190,219    2.3     193,875    2.6
and revenues
NET SALES AND
OPERATING          2,602,446   100.0     2,260,514   100.0     8,134,870   100.0     7,527,750   100.0
REVENUES
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        72,454      2.8       62,625      2.8       223,309     2.7       196,112     2.6
FINANCE INCOME
Selling,
general and        257,282     9.9       225,765     10.0      765,559     9.4       697,307     9.3
administrative
expenses
Interest           8,065       0.3       8,359       0.4       24,360      0.3       25,363      0.3
expense
Other income     139        ―       (94)       ―       683        ―       119        ―
(expense)
Earnings
before income      152,465     5.9       131,626     5.8       529,200     6.5       514,150     6.8
taxes
Income tax       57,784     2.2     49,516     2.2     202,137    2.5     195,386    2.6
provision
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.
       As disclosed in our Annual Report on Form 10-K for the fiscal year
^(2)   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       204,360       204,314       174,392
  on auto loan receivables
  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     116,629       128,973       125,683
  liabilities
  Accrued income taxes                   266           3,125         13,069
  Short-term debt                        706           943           759
  Current portion of finance and         15,885        14,108        13,615
  capital lease obligations
 Current portion of non-recourse      169,399     174,337     147,183
  notes payable
  TOTAL CURRENT LIABILITIES              575,692       646,313       546,702
  Finance and capital lease
  obligations, excluding current         341,424       353,566       357,288
  portion
  Non-recourse notes payable,            5,211,064     4,509,752     4,318,046
  excluding current portion
 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            114,108       113,559       113,237
  February 29, 2012, respectively
  Capital in excess of par value         942,017       877,493       858,790
  Accumulated other comprehensive        (51,745)      (62,459)      (39,257)
  loss
 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               $ 9,297,683  $ 8,331,543  $ 7,907,781
  SHAREHOLDERS’ EQUITY
                                                                     

^(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         (499,228)     6,333
ACTIVITIES
INVESTING ACTIVITIES:
Capital expenditures                               (184,942)       (105,990)
Increase in restricted cash from collections       (46)            (13,340)
on auto loan receivables
Increase in restricted cash in reserve             (6,912)         (8,573)
accounts
Release of restricted cash from reserve            15,980          12,088
accounts
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              (10,365)        (9,331)
obligations
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     16,728        7,459
arrangements
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.

Contact:

CarMax, Inc.
Investors and Financial Media:
Katharine Kenny, Vice President, Investor Relations, (804) 935-4591
Celeste Gunter, Manager, Investor Relations, (804) 935-4597
or
General Media:
Trina Lee, Director, Public Relations, (855) 887-2915
Britt Farrar, Manager, Public Relations, (855) 887-2915
 
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