CarMax Group Reports Record Q4 And Fiscal Year 2001 Sales and
Earnings
RICHMOND, Va., April 2 In a separate release, Circuit City
Stores, Inc. today released fourth quarter and fiscal year results for the
company, including record sales and earnings for the CarMax Group .
FOURTH QUARTER AND FISCAL YEAR RESULTS
Sales: Total sales for the CarMax Group rose 27 percent for the quarter
ended February 28, 2001, to $640.0 million from $504.2 million in the fourth
quarter of the prior year. Comparable store sales rose 23 percent. For the
fiscal year ended February 28, 2001, total sales for the CarMax Group rose 24
percent to $2.50 billion from $2.01 billion in the prior year, and comparable
store sales rose 17 percent.
Earnings: Net earnings for the CarMax Group rose to $7.8 million in the
fourth quarter ended February 28, 2001, from a net loss of $1.7 million in the
fourth quarter of the prior year. The fiscal 2001 earnings reflect a write-
off of goodwill associated with two under performing new-car franchises, which
reduced net earnings by $5.4 million. The fiscal 2000 results reflect lease
termination costs on undeveloped property and a write-down of assets
associated with excess property for sale, which reduced net earnings by $3.0
million. The net earnings attributed to the CarMax Group stock were $2.0
million in the fourth quarter of fiscal 2001, compared with a net loss of
$408,000 in the fourth quarter of fiscal 2000. The remainder of the CarMax
Group's net earnings are attributed to the Inter-Group Interest held by the
Circuit City Group and thus to the Circuit City Group shares. Net earnings
per CarMax Group share rose to 7 cents from a net loss of 2 cents in the same
prior year period.
Net earnings for the CarMax Group rose to $45.6 million in the fiscal year
ended February 28, 2001, from $1.1 million in the prior fiscal year; net
earnings attributed to the CarMax Group stock increased to $11.6 million from
$256,000. The fiscal 2001 net earnings reflect the $5.4 million reduction
resulting from the goodwill write-off discussed above. The fiscal 2000 net
earnings include the $3.0 million lease termination costs and write-down of
assets discussed above. The remainder of the CarMax Group's net earnings are
attributed to the Inter-Group Interest held by the Circuit City Group and thus
to the Circuit City Group shares. Net earnings per CarMax Group share rose to
43 cents in fiscal year 2001 from 1 cent per share in fiscal year 2000.
CarMax Group Earnings (Loss)
(Amounts in millions
except per share data) Quarter Ended Fiscal Year Ended
February 28 or 29 February 28 or 29
2001 2000 2001 2000
CarMax Group Net
Earnings (Loss) $7.78 $(1.71) $45.56 $1.12
Net Earnings (Loss)
Attributed to the
Circuit City Group 5.81 (1.30) 34.01 0.86
Net Earnings (Loss)
Attributed to the
CarMax Group 1.97 (0.41) 11.55 0.26
CarMax Group
Diluted Weighted
Average Shares
Outstanding 27.03 26.18 26.98 25.79
Net Earnings (Loss)
per CarMax Group
Share $0.07 $(0.02) $0.43 $0.01
BUSINESS PERFORMANCE REVIEW
"CarMax generated strong sales growth throughout the year, including the
second half when our unique store concept produced strong used-car sales
growth despite an industry-wide slowdown in new-car sales," said W. Austin
Ligon, president of CarMax. "Sales growth remained strong in the fourth
quarter, even against the anniversary of a significant competitor's exit from
the used-car superstore business. We believe the sales performance throughout
the year reflects our focus over the past two years on sales and profit
improvement in our existing store base. During the fourth quarter, we
benefited from the lack of severe winter weather in most all our markets.
"The increase in used-car sales as a percent of our total sales mix and
continued strong inventory management throughout the year, but especially
during the second half when the model-year transition occurs in the new-car
segment, contributed to a higher gross profit margin of 13.2 percent of sales
in fiscal 2001, compared with 11.9 percent of sales in fiscal 2000," said
Ligon. "The significantly better expense ratio of 9.8 percent in fiscal 2001
versus 11.3 percent in fiscal 2000 reflects the leverage achieved from strong
total and comparable store sales growth; more efficient advertising
expenditures; overall improvements in store productivity, including those
achieved through the hub and satellite strategy we adopted in multi-store
markets; and a favorable contribution from CarMax Auto Finance." The
improvements in CarMax's fiscal 2001 expense ratio were partly offset by an
$8.7 million pretax write-off of goodwill associated with two under performing
new-car franchises.
CarMax's operating margin before interest and taxes rose to 3.4 percent in
fiscal 2001 from 0.6 percent in fiscal 2000. Excluding the goodwill write-
off, the operating margin before interest and taxes was 3.8 percent.
CarMax Group Operating Ratios
Quarter Ended Fiscal Year Ended
February 28 or 29 February 28 or 29
2001 2000 2001 2000
Net Sales and
Operating Revenues 100.0% 100.0% 100.0% 100.0%
Gross Profit Margin 12.8% 12.3% 13.2% 11.9%
Expense Ratio 10.4% 12.2% 9.8% 11.3%
Operating Margin Before
Interest and Taxes 2.4% 0.1% 3.4% 0.6%
For the year, the CarMax business produced pretax earnings of $73.5
million in fiscal 2001, compared with pretax earnings of $1.8 million in
fiscal 2000. The pretax profit margin was 2.9 percent this year, compared
with 0.1 percent last year.
"We believe that our fiscal 2001 growth and profitability indicate that
CarMax has developed a firm foundation for sustained, profitable growth and
our used-car superstore concept is well positioned to succeed in economic down
cycles," said Ligon. "We expect to resume geographic expansion this fiscal
year with two store openings in single-store markets. We would expect to open
another four to six superstores in fiscal 2003 and six to eight superstores
per year from fiscal 2004 through fiscal 2006, assuming that we continue to
achieve success with our new-market openings. We will focus our expansion
plans on openings in single-store markets, which are the markets where we
historically have achieved the highest returns, and satellite fill-ins, where
we can improve the productivity of our existing multi-store markets, for the
next several years."
CIRCUIT CITY STORES, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
PERIODS ENDED FEBRUARY 28 OR 29
(Amounts in thousands except per share data)
Three Months Twelve Months
2001 2000 2001 2000
NET SALES AND
OPERATING REVENUES $3,817,127 $3,980,407 $12,959,028 $12,614,390
Cost of sales,
buying and
warehousing 2,960,660 3,059,770 10,135,380 9,751,833
Appliance exit
costs - - 28,326 -
GROSS PROFIT 856,467 920,637 2,795,322 2,862,557
Selling, general
and administrative
expenses 685,555 655,883 2,514,912 2,309,593
Appliance exit costs - - 1,670 -
Interest expense 4,518 7,108 19,383 24,206
EARNINGS FROM
CONTINUING
OPERATIONS BEFORE
INCOME TAXES 166,394 257,646 259,357 528,758
Provision for
income taxes 63,230 97,905 98,555 200,928
EARNINGS FROM
CONTINUING
OPERATIONS 103,164 159,741 160,802 327,830
Discontinued
operations:
Loss from
discontinued
operations of
Divx, less
income tax
benefit - - - (16,215)
Loss on disposal
of Divx, less
income tax benefit - - - (114,025)
LOSS FROM DISCONTINUED
OPERATIONS - - - (130,240)
NET EARNINGS $103,164 $159,741 $160,802 $197,590
Net earnings (loss)
attributed to:
Circuit City Group
common stock:
Continuing operations $101,190 $160,149 $149,247 $327,574
Discontinued
operations $- $- $- $(130,240)
CarMax Group
common stock $1,974 $(408) $11,555 $256
Weighted average
common shares:
Circuit City
Group basic 204,401 201,999 203,774 201,345
Circuit City
Group diluted 206,380 204,749 205,830 204,321
CarMax Group basic 25,579 24,611 25,554 23,778
CarMax Group diluted 27,026 26,181 26,980 25,788
NET EARNINGS (LOSS)
PER SHARE:
Circuit City
Group basic:
Continuing operations $0.50 $0.79 $0.73 $1.63
Discontinued operations $- $- $- $(0.65)
Net earnings $0.50 $0.79 $0.73 $0.98
Circuit City Group
diluted:
Continuing operations $0.49 $0.78 $0.73 $1.60
Discontinued operations $- $- $- $(0.64)
Net earnings $0.49 $0.78 $0.73 $0.96
CarMax Group basic $0.08 $(0.02) $0.45 $0.01
CarMax Group diluted $0.07 $(0.02) $0.43 $0.01
CIRCUIT CITY STORES, INC.
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
February 28 or 29
2001 2000
ASSETS
Current Assets:
Cash and cash equivalents $446,131 $643,933
Net accounts receivable 585,761 593,276
Inventory 1,757,664 1,689,209
Prepaid expenses and other current assets 57,623 16,197
Total Current Assets 2,847,179 2,942,615
Property and equipment, net 988,947 965,181
Other assets 35,207 47,552
TOTAL ASSETS $3,871,333 $3,955,348
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current installments of long-term debt $132,388 $177,344
Accounts payable 902,560 960,131
Short-term debt 1,200 3,005
Accrued expenses and other
current liabilities 162,972 204,561
Deferred income taxes 92,479 61,118
Total Current Liabilities 1,291,599 1,406,159
Long-term debt, excluding
current installments 116,137 249,241
Deferred revenue and other liabilities 92,165 130,020
Deferred income taxes 14,949 27,754
TOTAL LIABILITIES 1,514,850 1,813,174
STOCKHOLDERS' EQUITY 2,356,483 2,142,174
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $3,871,333 $3,955,348
CARMAX GROUP
STATEMENTS OF OPERATIONS
PERIODS ENDED February 28 or 29
(Amounts in thousands except per share data)
Three Months Twelve Months
2001 2000 2001 2000
NET SALES AND
OPERATING REVENUES $639,996 $504,236 $2,500,991 $2,014,984
Cost of sales 557,927 442,375 2,171,232 1,774,619
GROSS PROFIT 82,069 61,861 329,759 240,365
Selling, general
and administrative
expenses 66,566 61,399 244,167 228,200
Interest expense 2,960 3,224 12,110 10,362
EARNINGS (loss)
BEFORE INCOME TAXES 12,543 (2,762) 73,482 1,803
Income tax provision
(benefit) 4,762 (1,050) 27,918 685
NET EARNINGS (loss) $7,781 $(1,712) $45,564 $1,118
Net earnings (loss)
attributed to:
Circuit City Group
common stock $5,807 $(1,304) $34,009 $862
CarMax Group
common stock $1,974 $(408) $11,555 $256
Weighted average
common shares:
Basic 25,579 24,611 25,554 23,778
Diluted 27,026 26,181 26,980 25,788
NET EARNINGS (loss)
PER SHARE:
Basic $0.08 $(0.02) $0.45 $0.01
Diluted $0.07 $(0.02) $0.43 $0.01
CARMAX GROUP
BALANCE SHEETS
(Amounts in thousands)
February 28 or 29
2001 2000
ASSETS
Current Assets:
Cash and cash equivalents $8,802 $9,981
Net accounts receivable 134,662 129,253
Inventory 347,137 283,592
Prepaid expenses and other current assets 2,306 2,844
Total Current Assets 492,907 425,670
Property and equipment, net 192,158 211,856
Other assets 25,888 37,969
TOTAL ASSETS $710,953 $675,495
LIABILITIES AND GROUP EQUITY
Current Liabilities:
Current installments of long-term debt $108,151 $91,609
Accounts payable 82,483 75,959
Short-term debt 987 1,552
Accrued expenses and other
current liabilities 16,154 19,856
Deferred income taxes 18,162 7,147
Total Current Liabilities 225,937 196,123
Long-term debt, excluding
current installments 83,057 121,257
Deferred revenue and other liabilities 6,836 7,249
Deferred income taxes 3,620 5,877
TOTAL LIABILITIES 319,450 330,506
GROUP EQUITY 391,503 344,989
TOTAL LIABILITIES AND GROUP EQUITY $710,953 $675,495
