3. CarMax Auto Finance Income


		Three Months Ended Nov 30												Nine Months Ended Nov 30
(In millions)		2011		%	⁽¹	⁾		2010		%	⁽¹	⁾		2011		%	⁽¹	⁾		2010		%	⁽¹	⁾
Interest margin:
Interest and fee income	$	114.3			9.6		$	106.8			10.0		$	334.0			9.7		$	314.1			10.0
Interest expense		(25.6	)		(2.2	)		(33.0	)		(3.1	)		(80.3	)		(2.3	)		(103.4	)		(3.3	)
Total interest margin		88.7			7.4			73.8			6.9			253.7			7.4			210.7			6.7
Provision for loan losses		(15.1	)		(1.3	)		(8.6	)		(0.8	)		(24.9	)		(0.7	)		(18.5	)		(0.6	)
Total interest margin after
provision for loan losses		73.6			6.2			65.2			6.1			228.8			6.7			192.2			6.1

Other income:
Servicing fee income		0			0			0			0			0			0			0.9			0
Interest income on retained interest
in securitized receivables		0			0			0			0			0			0			1.6			0.1
Other gain		0.3			0			1.8			0.2			1.4			0			4.3			0.1
Total other income		0.3			0			1.8			0.2			1.4			0			6.8			0.2

Direct expenses:
Payroll and fringe benefit expense		(5.1	)		(0.4	)		(5.1	)		(0.5	)		(15.5	)		(0.5	)		(15.4	)		(0.5	)
Other direct expenses		(6.2	)		(0.5	)		(6.2	)		(0.6	)		(18.6	)		(0.5	)		(17.8	)		(0.6	)
Total direct expenses		(11.3	)		(0.9	)		(11.3	)		(1.1	)		(34.1	)		(1.0	)		(33.2	)		(1.1	)
CarMax Auto Finance income	$	62.6			5.3		$	55.7			5.2		$	196.1			5.7		$	165.8			5.3

Total average managed receivables,
principal only	$	4,770.9					$	4,285.3					$	4,585.1					$	4,204.6

⁽¹⁾Annualized percent of total average managed receivables, principal only.

CAF provides financing for qualified customers at competitive market rates of interest. We securitize substantially all of the loans originated by CAF as discussed in Note 5. CAF income primarily reflects the interest and fee income generated by the auto loan receivables less the interest expense associated with the non-recourse notes payable issued to fund these receivables, a provision for estimated loan losses and direct CAF expenses.

CAF income does not include any allocation of indirect costs or income. We present this information on a direct basis to avoid making arbitrary decisions regarding the indirect benefits or costs that could be attributed to CAF. Examples of indirect costs not included are retail store expenses and corporate expenses such as human resources, administrative services, marketing, information systems, accounting, legal, treasury and executive payroll.