Company: KMX
Filing Date: 2025-04-11
Form Type: 10-K
Source: 0001170010-25-000024
Chunk: 120

Company: CARMAX INC
Filing Date: 2025-04-11
Form: 10-K
Item: Item 8
Chunk 120
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 in each of the next three fiscal years, $9.7 million in fiscal 2029 and $7.8 million in fiscal 2030.

9.    CANCELLATION RESERVES

We recognize revenue for EPP products, on a net basis, at the time of sale.  We also record a reserve, or refund liability, for estimated contract cancellations.  Cancellations of these services may result from early termination by the customer, or default or prepayment on the finance contract.  The reserve for cancellations is evaluated for each product and is based on forecasted forward cancellation curves utilizing historical experience, recent trends and credit mix of the customer base. Cancellation Reserves As of February 28 or 29(In millions)20252024Balance as of beginning of year$128.3 $139.2 Cancellations(92.1)(91.2)Provision for future cancellations97.7 80.3 Balance as of end of year$133.9 $128.3 The current portion of estimated cancellation reserves is recognized as a component of accrued expenses and other current liabilities with the remaining amount recognized in other liabilities.  As of February 28, 2025 and February 29, 2024, the current portion of cancellation reserves was $69.8 million and $69.7 million, respectively.

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10.  INCOME TAXES

Income Tax Provision Years Ended February 28 or 29(In thousands)202520242023Current:   Federal$156,819 $140,480 $128,994 State35,709 26,711 29,598 Total192,528 167,191 158,592 Deferred:   Federal(22,253)(6,542)(1,118)State(1,471)1,742 (5,432)Total(23,724)(4,800)(6,550)Income tax provision$168,804 $162,391 $152,042  Effective Income Tax Rate Reconciliation Years Ended February 28 or 29 202520242023Federal statutory income tax rate21.0 %21.0 %21.0 %State and local income taxes, net of federal benefit4.1 3.9 3.4 Share-based compensation0.6 0.2 — Nondeductible and other items1