Business Context and Reporting Period
CarMax, Inc. filed this Form 8-K on November 10, 2009, to report the completion of a significant financing transaction. The company, incorporated in Virginia, operates as a used car retailer and auto finance provider.
Key Financial Metrics
This filing details a specific asset-backed securitization event rather than general operating results. Key metrics include:
- Notes Sold: $591 million principal amount of CarMax Auto Owner Trust 2009-2 Asset-Backed Notes.
- Underlying Collateral: $600 million of auto loan receivables originated by CarMax Auto Finance.
- Initial Reserve Account: $1.5 million (0.25% of collateral).
- Initial Overcollateralization: $9.0 million (1.5% of collateral).
The filing text does not provide clear values for overall company revenue, profit, cash flow, margins, or total debt levels outside of this specific transaction.
Material Changes
The primary material change is the execution of the securitization transaction on November 10, 2009. This event converts $600 million in auto loan receivables into $591 million in notes sold to investors, with the remaining $9 million serving as initial overcollateralization.
Transaction Structure and Outlook
The transaction was structured with multiple tranches rated by Standard & Poor's and Fitch. The notes range from Class A-1 to Class C, with interest rates varying from 0.28% to 6.21% and average lives ranging from 0.28 to 3.93 years.
- Class A-1: $111 million, 0.28% interest, A-1+ / F1+ rating.
- Class A-2, A-3, A-4: Combined $427.5 million, AAA / AAA ratings.
- Class B: $42 million, 4.65% interest, A+ / A+ rating.
- Class C: $10.5 million, 6.21% interest, BBB+ / BBB+ rating.
Credit enhancement mechanisms include a reserve account and overcollateralization. The structure is designed to increase the reserve account to $3.0 million (0.50% of collateral) and overcollateralization to a target of 3.35% of the outstanding balance over time, subject to performance tests regarding cumulative net losses.
Investor Verification Checklist
- Verify the actual cash proceeds received from the $591 million note sale versus the $600 million collateral pool.
- Confirm the impact of this transaction on the company's consolidated balance sheet and liquidity position.
- Review the specific performance tests that could reduce the required overcollateralization percentages.
- Assess the credit quality of the $600 million auto loan receivables backing the notes.