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CarMax Reports Record Second Quarter Results

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CarMax, Inc. (NYSE:KMX) today reported record second quarter results for the quarter ended August 31, 2014.

  • Net sales and operating revenues increased 10.9% to $3.60 billion.
  • Used unit sales in comparable stores increased 0.2%.
  • Total used unit sales rose 6.3%.
  • Total wholesale unit sales increased 7.4%.
  • CarMax Auto Finance (CAF) income increased 9.7% to $92.6 million.
  • Net earnings grew 10.2% to $154.5 million. Net earnings per diluted share rose 12.9% to $0.70.
    • Net earnings per diluted share for the current quarter included a $0.06 benefit in connection with our receipt of settlement proceeds in a previously disclosed class action lawsuit.

“We are pleased to report record second quarter results, even before considering the benefit of the settlement proceeds,” said Tom Folliard, president and chief executive officer. “The continued growth in our store base and improvements across our used, wholesale and CAF operations, as well as our share repurchase program, all contributed to our record second quarter earnings per share.”

Second Quarter Business Performance Review

Sales. Total used vehicle unit sales grew 6.3% and comparable store used unit sales increased 0.2% versus the prior year’s second quarter. This growth was on top of increases of 21.1% in total used units and 15.9% in comparable store used units in last year’s second quarter. While we experienced our fifth consecutive quarter of improved customer traffic in comparable stores, sales were tempered by the effect of a calendar shift. We had one fewer Saturday this quarter compared with last year’s second quarter, which we estimate adversely affected comparable store used unit sales growth by approximately 1%.

The percentage of retail vehicles financed by third-party subprime providers (those who purchase financings at a discount), combined with those financed under the previously announced CAF loan origination test, declined from 18.5% in the second quarter of fiscal 2014 to 13.8% in this year’s second quarter.

Wholesale vehicle unit sales grew 7.4% versus the second quarter of fiscal 2014. Wholesale unit sales continued to benefit from a stronger wholesale vehicle buy rate and the addition of new stores.

Other sales and revenues increased $7.7 million, or 10.8%, year-over-year. Extended protection plan (EPP) revenues (which includes extended service plan and guaranteed asset protection revenues) declined $2.1 million versus the prior year’s quarter due to higher estimated cancellation reserve rates and a lower EPP penetration rate, partially offset by the growth in our store base. Net third-party finance fees improved $8.5 million versus last year’s second quarter primarily due to the reduction in the percentage of sales financed by third-party subprime providers.

Gross Profit. Total gross profit increased 6.6% to $463.3 million. Used vehicle gross profit rose 6.2%, driven by the increase in total used unit sales, while used vehicle gross profit per unit remained comparable with the prior year period. Wholesale vehicle gross profit increased 10.5% versus the prior year’s quarter, driven by the combination of the 7.4% increase in wholesale unit sales and an improvement in wholesale vehicle gross profit per unit, which rose 2.9% or $25 per unit. Other gross profit rose 2.0% reflecting the improvement in net third-party finance fees, partially offset by the change in EPP revenues and a decrease in service department gross profits. Service department gross profits were adversely affected by our relatively flat comparable store used unit sales growth and the resulting deleverage of service overhead costs.

SG&A. SG&A expenses increased 5.1% to $297.6 million. SG&A was reduced by $20.9 million, which represented our receipt of settlement proceeds in a class action lawsuit related to the economic loss associated with certain Toyota vehicles. Excluding this item, SG&A expenses increased 12.5% year-over-year, primarily due to the 15% increase in our store base since the beginning of last year’s second quarter (representing the addition of 18 stores), as well as a $6.4 million increase in share-based compensation expense. Excluding the legal settlement gain, SG&A per retail unit rose $116 to $2,183.

CarMax Auto Finance.(1) CAF income increased 9.7% to $92.6 million, driven by an increase in average managed receivables, partly offset by a lower total interest margin percentage. Average managed receivables grew 18.5% to $7.72 billion as CAF loan originations have grown in recent years. The total interest margin, which reflects the spread between interest and fees charged to consumers and our funding costs, declined to 6.6% of average managed receivables in the current quarter from 7.0% in last year’s second quarter.

We continued our test to originate loans for customers who typically would be financed by our third-party subprime providers. During the second quarter of fiscal 2015, we originated $14.8 million of loans in this test, representing 0.6% of retail unit sales. As of August 31, 2014, a total of $44.4 million of loans had been originated in this test.

Store Openings. During the second quarter of fiscal 2015, we opened four stores, including three stores in new markets (Madison, Wisconsin; Lynchburg, Virginia; and Portland, Oregon) and one in an existing market (Dallas, Texas).

Share Repurchase Program. During the second quarter, we repurchased 4.0 million shares of common stock for $201.0 million pursuant to our share repurchase program. As of August 31, 2014, we had $907.0 million remaining available for repurchase under the program.

(1)

Although CAF benefits from certain indirect overhead expenditures, we have not allocated indirect costs to CAF to avoid making subjective allocation decisions.

Supplemental Financial Information

Amounts and percentage calculations may not total due to rounding.

Sales Components

Three Months Ended August 31 Six Months Ended August 31
(In millions) 2014 2013 Change 2014 2013 Change
Used vehicle sales $ 2,920.2 $ 2,639.5 10.6 % $ 5,980.5 $ 5,341.3 12.0 %
New vehicle sales 69.9 60.0 16.6 % 139.7 112.4 24.3 %
Wholesale vehicle sales 530.3 474.9 11.7 % 1,075.5 965.6 11.4 %
Other sales and revenues:
Extended protection plan revenues 63.0 65.0 (3.2 )% 126.7 129.6 (2.3 )%
Service department sales 28.6 27.3 4.7 % 56.9 54.7 4.1 %
Third-party finance fees, net (12.7 ) (21.2 ) 39.9 % (30.0 ) (47.0 ) 36.2 %
Total other sales and revenues 78.8 71.1 10.8 % 153.6 137.3 11.9 %
Total net sales and operating revenues $ 3,599.2 $ 3,245.6 10.9 % $ 7,349.4 $ 6,556.6 12.1 %

Unit Sales

Three Months Ended August 31 Six Months Ended August 31
2014 2013 % Change 2014 2013 % Change
Used vehicles 143,325 134,854 6.3 % 293,853 272,008 8.0 %
New vehicles 2,581 2,187 18.0 % 5,178 4,136 25.2 %
Wholesale vehicles 97,989 91,243 7.4 % 195,087 179,599 8.6 %

Average Selling Prices

Three Months Ended August 31 Six Months Ended August 31
2014 2013 % Change 2014 2013 % Change
Used vehicles $ 20,215 $ 19,428 4.1 % $ 20,193 $ 19,485 3.6 %
New vehicles $ 26,991 $ 27,313 (1.2 )% $ 26,875 $ 27,066 (0.7 )%
Wholesale vehicles $ 5,249 $ 5,044 4.1 % $ 5,349 $ 5,213 2.6 %

Vehicle Sales Changes

Three Months Ended Six Months Ended
August 31 August 31
2014 2013 2014 2013
Used vehicle units 6.3 % 21.1 % 8.0 % 21.6 %
Used vehicle revenues 10.6 % 20.4 % 12.0 % 21.9 %
Wholesale vehicle units 7.4 % 10.2 % 8.6 % 8.0 %
Wholesale vehicle revenues 11.7 % 8.7 % 11.4 % 6.7 %

Comparable Store Used Vehicle Sales Changes (1)

Three Months Ended Six Months Ended
August 31 August 31
2014 2013 2014 2013
Used vehicle units 0.2 % 15.9 % 1.8 % 16.3 %
Used vehicle revenues 4.2 % 15.3 % 5.4 % 16.7 %

(1)

Stores are added to the comparable store base beginning in their fourteenth full month of operation. Comparable store calculations include results for a set of stores that were included in our comparable store base in both applicable periods.

Selected Operating Ratios

Three Months Ended August 31 Six Months Ended August 31
(In millions) 2014

% (1)

2013 % (1) 2014 % (1) 2013 % (1)
Net sales and operating revenues $ 3,599.2 100.0 $ 3,245.6 100.0 $ 7,349.4 100.0 $ 6,556.6 100.0
Gross profit $ 463.3 12.9 $ 434.7 13.4 $ 965.1 13.1 $ 882.8 13.5
CarMax Auto Finance income $ 92.6 2.6 $ 84.4 2.6 $ 187.2 2.5 $ 171.4 2.6

Selling, general, and administrative expenses

$ 297.6 8.3 $ 283.2 8.7 $ 611.1 8.3 $ 573.4 8.7
Interest expense $ 7.4 0.2 $ 7.8 0.2 $ 15.0 0.2 $ 15.6 0.2
Earnings before income taxes $ 250.6 7.0 $ 227.1 7.0 $ 525.7 7.2 $ 464.4 7.1
Net earnings $ 154.5 4.3 $ 140.3 4.3 $ 324.2 4.4 $ 286.9 4.4

(1)

Calculated as a percentage of net sales and operating revenues.

Gross Profit

Three Months Ended August 31 Six Months Ended August 31
(In millions) 2014 2013 Change 2014 2013 Change
Used vehicle gross profit $ 311.5 $ 293.2 6.2 % $ 645.6 $ 597.1 8.1 %
New vehicle gross profit 2.1 1.2 71.0 % 3.9 2.3 71.2 %
Wholesale vehicle gross profit 85.7 77.5 10.5 % 187.2 164.0 14.2 %
Other gross profit 64.1 62.9 2.0 % 128.3 119.5 7.4 %
Total $ 463.3 $ 434.7 6.6 % $ 965.1 $ 882.8 9.3 %

Gross Profit per Unit

Three Months Ended August 31 Six Months Ended August 31
2014 2013 2014 2013
$ per unit(1) %(2) $ per unit(1) %(2) $ per unit(1) %(2) $ per unit(1) %(2)
Used vehicle gross profit $ 2,173 10.7 $ 2,174 11.1 $ 2,197 10.8 $ 2,195 11.2
New vehicle gross profit $ 803 3.0 $ 554 2.0 $ 756 2.8 $ 553 2.0
Wholesale vehicle gross profit $ 874 16.2 $ 849 16.3 $ 960 17.4 $ 913 17.0
Other gross profit $ 440 81.4 $ 459 88.4 $ 429 83.5 $ 433 87.0
Total gross profit $ 3,176 12.9 $ 3,172 13.4 $ 3,227 13.1 $ 3,197 13.5

(1)

Calculated as category gross profit divided by each category’s respective units sold, except the other and total categories, which are calculated by dividing their respective gross profit by total retail units sold.

(2)

Calculated as a percentage of its respective sales or revenue.

SG&A Expenses

Three Months Ended August 31 Six Months Ended August 31
(In millions) 2014 2013 Change 2014 2013 Change
Compensation and benefits (1) $ 181.5 $ 160.9 12.8 % $ 360.5 $ 333.0 8.3 %
Store occupancy costs 60.0 54.5 10.1 % 118.3 107.0 10.6 %
Advertising expense 29.4 26.5 10.9 % 60.1 53.6 12.1 %
Other overhead costs (2) 26.7 41.3 (35.4 )% 72.2 79.8 (9.5 )%
Total SG&A expenses $ 297.6 $ 283.2 5.1 % $ 611.1 $ 573.4 6.6 %
SG&A per retail unit $ 2,040 $ 2,067 $ (27 ) $ 2,044 $ 2,076 $ (32 )

(1)

Excludes compensation and benefits related to reconditioning and vehicle repair service, which are included in cost of sales.

(2)

Includes IT expenses, insurance, non-CAF bad debt, travel, preopening and relocation costs, charitable contributions and other administrative expenses. Costs for the three and six months ended August 31, 2014, were reduced by $20.9 million in connection with the receipt of settlement proceeds in a class action lawsuit.

Components of CAF Income and Other CAF Information

Three Months Ended August 31 Six Months Ended August 31
(In millions) 2014 % (1) 2013 % (1) 2014 % (1) 2013 % (1)
Interest margin:
Interest and fee income $ 150.7 7.8 $ 137.2 8.4 $ 297.6 7.9 $ 270.7 8.5
Interest expense (23.9 ) (1.2 ) (22.6 ) (1.4 ) (47.0 ) (1.2 ) (45.4 ) (1.4 )
Total interest margin 126.8 6.6 114.6 7.0 250.6 6.6 225.3 7.1
Provision for loan losses (20.4 ) (1.1 ) (18.0 ) (1.1 ) (36.2 ) (1.0 ) (29.3 ) (0.9 )

Total interest margin after provision for loan losses

106.4 5.5 96.6 5.9 214.4 5.7 196.0 6.2
Other income 0.1 0.1
Total direct expenses (13.8 ) (0.7 ) (12.3 ) (0.7 ) (27.2 ) (0.7 ) (24.7 ) (0.8 )
CarMax Auto Finance income $ 92.6 4.8 $ 84.4 5.2 $ 187.2 5.0 $ 171.4 5.4
Total average managed receivables $ 7,724.5 $ 6,516.3 $ 7,557.3 $ 6,334.4
Net loans originated $ 1,165.3 $ 1,088.0 $ 2,401.7 $ 2,208.2
Net CAF penetration rate 40.7 % 41.4 % 41.0 % 41.4 %
Weighted average contract rate 7.0 % 6.8 % 7.1 % 6.9 %
Ending allowance for loan losses $ 77.8 $ 65.9 $ 77.8 $ 65.9
Warehouse facility information:
Ending funded receivables $ 1,045.0 $ 947.0 $ 1,045.0 $ 947.0
Ending unused capacity $ 1,055.0 $ 753.0 $ 1,055.0 $ 753.0

(1)

Annualized percentage of total average managed receivables.

Earnings Highlights

Three Months Ended August 31 Six Months Ended August 31
(In millions except per share data) 2014 2013 Change 2014 2013 Change
Net earnings $ 154.5 $ 140.3 10.2 % $ 324.2 $ 286.9 13.0 %
Diluted weighted average shares outstanding 221.1 227.6 (2.9 )% 222.4 228.1 (2.5 )%
Net earnings per diluted share $ 0.70 $ 0.62 12.9 % $ 1.46 $ 1.26 15.9 %

Planned Store Openings

We currently plan to open the following stores within 12 months from August 31, 2014:

Location Television Market Market Status Planned Opening Date
Beaverton, Oregon Portland Existing Q3 Fiscal 2015
Saltillo, Mississippi Tupelo New Q3 Fiscal 2015
Reno, Nevada Reno New Q3 Fiscal 2015
Raleigh, North Carolina Raleigh Existing Q3 Fiscal 2015
Warrensville Heights, Ohio Cleveland New Q4 Fiscal 2015
Brooklyn Park, Minnesota Minneapolis/St Paul New Q1 Fiscal 2016
Sicklerville, New Jersey Philadelphia Existing Q1 Fiscal 2016
Gainesville, Florida Gainesville New Q1 Fiscal 2016
Cranston, Rhode Island Providence Existing Q2 Fiscal 2016
Parker, Colorado Denver Existing Q2 Fiscal 2016
Loveland, Colorado Denver Existing Q2 Fiscal 2016
Tallahassee, Florida Tallahassee New Q2 Fiscal 2016
Richmond, Texas Houston Existing Q2 Fiscal 2016

Normal construction, permitting or other scheduling delays could shift the opening dates of any of these stores into a later period. We currently estimate total capital expenditures will be approximately $325 million in fiscal 2015. We plan to open 13 stores in fiscal 2015 and between 10 and 15 stores in each of the following two fiscal years.

Conference Call Information

We will host a conference call for investors at 9:00 a.m. ET today, September 23, 2014. 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 53275084. 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 through December 18, 2014. A telephone replay also will be available through September 30, 2014, 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 53275084.

Third Quarter Fiscal 2015 Earnings Release Date

We currently plan to release results for the third quarter ending November 30, 2014, on Friday, December 19, 2014, before the opening of trading on the New York Stock Exchange. We plan to 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 December 2014.

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 ten consecutive years, is the nation’s largest retailer of used vehicles. Headquartered in Richmond, Va., CarMax currently operates 139 used car stores in 70 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 fiscal year ended February 28, 2014, the company retailed 526,929 used vehicles and sold 342,576 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 the competitive landscape and/or our failure to successfully adjust to such changes.
  • 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 provided by our third-party financing providers.
  • Events that damage our reputation or harm the perception of the quality of our brand.
  • Our inability to recruit, develop and retain associates and maintain positive associate relations.
  • The loss of key associates from our store, regional or corporate management teams or a significant increase in labor costs.
  • Security breaches or other events that result in the misappropriation, loss or other unauthorized disclosure of confidential customer or associate information.
  • Significant changes in prices of new and used vehicles.
  • A reduction in the availability of or access to sources of inventory or a failure to expeditiously liquidate inventory.
  • Factors related to the regulatory and legislative environment in which we operate.
  • 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 failure of key information systems.
  • The effect of various litigation matters.
  • Adverse conditions affecting one or more automotive manufacturers, and manufacturer recalls.
  • The inaccuracy of estimates and assumptions used in the preparation of our financial statements, or the effect of new accounting requirements or changes to U.S. generally accepted accounting principles.
  • Factors related to seasonal fluctuations in our business.
  • The occurrence of severe weather events.
  • Factors related to the geographic concentration of our stores.

For more details on factors that could affect expectations, see our Annual Report on Form 10-K for the fiscal year ended February 28, 2014, and our quarterly or current reports as filed with or furnished to the U.S. 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. 4391. We undertake no obligation to update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise.

CARMAX, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

(UNAUDITED)

Three Months Ended August 31 Six Months Ended August 31
(In thousands except per share data)

2014

% (1)

2013 % (1) 2014 % (1) 2013 % (1)
SALES AND OPERATING REVENUES:
Used vehicle sales $ 2,920,165 81.1 $ 2,639,523 81.3 $ 5,980,506 81.4 $ 5,341,278 81.5
New vehicle sales 69,944 1.9 60,002 1.8 139,733 1.9 112,429 1.7
Wholesale vehicle sales 530,270 14.7 474,907 14.6 1,075,515 14.6 965,566 14.7
Other sales and revenues 78,815 2.2 71,120 2.2 153,636 2.1 137,336 2.1
NET SALES AND OPERATING REVENUES 3,599,194 100.0 3,245,552 100.0 7,349,390 100.0 6,556,609 100.0
Cost of sales 3,135,855 87.1 2,810,809 86.6 6,384,320 86.9 5,673,770 86.5
GROSS PROFIT 463,339 12.9 434,743 13.4 965,070 13.1 882,839 13.5
CARMAX AUTO FINANCE INCOME 92,574 2.6 84,422 2.6 187,189 2.5 171,441 2.6
Selling, general and administrative expenses 297,638 8.3 283,206 8.7 611,084 8.3 573,395 8.7
Interest expense 7,351 0.2 7,761 0.2 14,952 0.2 15,639 0.2
Other expense 283 - 1,073 560 - 832
Earnings before income taxes 250,641 7.0 227,125 7.0 525,663 7.2 464,414 7.1
Income tax provision 96,123 2.7 86,851 2.7 201,492 2.7 177,489 2.7
NET EARNINGS $ 154,518 4.3 $ 140,274 4.3 $ 324,171 4.4 $ 286,925 4.4
WEIGHTED AVERAGE COMMON SHARES:
Basic 218,180 223,610 219,224 224,114
Diluted 221,070 227,634 222,351 228,093
NET EARNINGS PER SHARE:
Basic $ 0.71 $ 0.63 $ 1.48 $ 1.28
Diluted $ 0.70 $ 0.62 $ 1.46 $ 1.26

(1)

Calculated as a percentage of net sales and operating revenues and sums may not equal totals due to rounding.

CARMAX, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited) (Unaudited)
August 31 February 28 August 31
(In thousands except share data) 2014 2014 2013
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 354,600 $ 627,901 $ 750,032
Restricted cash from collections on auto loan receivables 297,068 259,299 251,340
Accounts receivable, net 108,859 79,923 85,549
Inventory 1,708,955 1,641,424 1,364,016
Deferred income taxes 8,275 7,866 4,300
Other current assets 38,685 26,811 26,173
TOTAL CURRENT ASSETS 2,516,442 2,643,224 2,481,410
Auto loan receivables, net 7,844,268 7,147,848 6,665,985
Property and equipment, net 1,753,992 1,652,977 1,535,431
Deferred income taxes 157,175 152,199 146,167
Other assets 128,036 110,909 104,781
TOTAL ASSETS $ 12,399,913 $ 11,707,157 $ 10,933,774
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable $ 418,269 $ 427,492 $ 346,152
Accrued expenses and other current liabilities 205,480 202,588 144,949
Accrued income taxes 244 2,438 1,808
Short-term debt 2,229 582 1,739
Current portion of finance and capital lease obligations 20,280 18,459 17,167
Current portion of non-recourse notes payable 260,425 223,938 218,104
TOTAL CURRENT LIABILITIES 906,927 875,497 729,919
Finance and capital lease obligations, excluding current portion 310,689 315,925 325,492
Non-recourse notes payable, excluding current portion 7,648,284 7,024,506 6,512,328
Other liabilities 176,026 174,232 181,256
TOTAL LIABILITIES 9,041,926 8,390,160 7,748,995
Commitments and contingent liabilities
SHAREHOLDERS’ EQUITY:

Common stock, $0.50 par value; 350,000,000 shares authorized; 216,704,250 and 221,685,984 shares issued and outstanding as of August 31, 2014 and February 28, 2014, respectively

108,352 110,843 111,665
Capital in excess of par value 1,089,317 1,038,209 1,000,258
Accumulated other comprehensive loss (44,467 ) (46,271 ) (53,909 )
Retained earnings 2,204,785 2,214,216 2,126,765
TOTAL SHAREHOLDERS’ EQUITY 3,357,987 3,316,997 3,184,779
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 12,399,913 $ 11,707,157 $ 10,933,774

CARMAX, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

Six Months Ended August 31
(In thousands) 2014 2013
OPERATING ACTIVITIES:
Net earnings $ 324,171 $ 286,925

Adjustments to reconcile net earnings to net cash used in operating activities:

Depreciation and amortization 55,766 49,160
Share-based compensation expense 37,778 38,002
Provision for loan losses 36,208 29,318
Provision for cancellation reserves 38,463 18,324
Deferred income tax benefit (6,530 ) (3,200 )
Loss on disposition of assets and other 917

930
Net (increase) decrease in:
Accounts receivable, net (28,936 ) 6,412
Inventory (67,531 ) 153,797
Other current assets (11,706 ) (746 )
Auto loan receivables, net (732,628 ) (799,385 )
Other assets (313 ) (6,736 )
Net decrease in:

Accounts payable, accrued expenses and other current liabilities and accrued income taxes

(36,052 ) (13,913 )
Other liabilities (46,226 ) (22,497 )
NET CASH USED IN OPERATING ACTIVITIES (436,619 ) (263,609 )
INVESTING ACTIVITIES:
Capital expenditures (135,293 ) (136,011 )
Proceeds from sales of assets 5,829 4,716
Increase in restricted cash from collections on auto loan receivables (37,769 ) (27,053 )
Increase in restricted cash in reserve accounts (6,640 ) (5,319 )
Release of restricted cash from reserve accounts 1,634 15,017
(Purchases) sales of money market securities, net (8,753 ) 1,337
Purchases of trading securities (3,107 ) (1,405 )
Sales of trading securities 306 33
NET CASH USED IN INVESTING ACTIVITIES (183,793 ) (148,685 )
FINANCING ACTIVITIES:
Increase in short-term debt, net 1,647 1,384
Payments on finance and capital lease obligations (8,712 ) (10,932 )
Issuances of non-recourse notes payable 3,803,000 3,530,000
Payments on non-recourse notes payable (3,142,735 ) (2,654,658 )
Repurchase and retirement of common stock (373,362 ) (179,278 )
Equity issuances, net 37,483 14,753
Excess tax benefits from share-based payment arrangements 29,790 11,693
NET CASH PROVIDED BY FINANCING ACTIVITIES 347,111 712,962
(Decrease) increase in cash and cash equivalents (273,301 ) 300,668
Cash and cash equivalents at beginning of year 627,901 449,364
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 354,600 $ 750,032

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