-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OS3ep46fgnK5gk0EQJqkRttHX/L6Ra8fgBUFbXUyesTk3R17kwRu0WRhUM6N9f8y 01z59s+UHOvpDniDN0itLw== 0001047469-97-004761.txt : 19971117 0001047469-97-004761.hdr.sgml : 19971117 ACCESSION NUMBER: 0001047469-97-004761 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971114 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICREDIT CORP CENTRAL INDEX KEY: 0000804269 STANDARD INDUSTRIAL CLASSIFICATION: FINANCE SERVICES [6199] IRS NUMBER: 752291093 STATE OF INCORPORATION: TX FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-10667 FILM NUMBER: 97719004 BUSINESS ADDRESS: STREET 1: 200 BAILEY AVENUE CITY: FORT WORTH STATE: TX ZIP: 76107 BUSINESS PHONE: 817-332-70 MAIL ADDRESS: STREET 1: 200 BAILEY AVENUE CITY: FORT WORTH STATE: TX ZIP: 76107 FORMER COMPANY: FORMER CONFORMED NAME: URCARCO INC DATE OF NAME CHANGE: 19920703 10-Q 1 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________________ to ___________________ Commission file number 1-10667 ---------------------------------------------------- AmeriCredit Corp. - -------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Texas 75-2291093 - ------------------------------- -------------------- (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 200 Bailey Avenue, Fort Worth, Texas 76107 - -------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (817) 332-7000 - -------------------------------------------------------------------------- (Registrant's telephone number, including area code) - --------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- There were 29,889,673 shares of common stock, $.01 par value outstanding as of October 31, 1997. AMERICREDIT CORP. INDEX TO FORM 10-Q Part I. FINANCIAL INFORMATION Item 1. Financial Statements Page ---- Consolidated Balance Sheets - September 30, 1997 and June 30, 1997. . . . . . . . . . . . . . . 3 Consolidated Statements of Income - Three Months Ended September 30, 1997 and 1996. . . . . . . . . . 4 Consolidated Statements of Cash Flows - Three Months Ended September 30, 1997 and 1996. . . . . . . . . . 5 Notes to Consolidated Financial Statements . . . . . . . . . . . . 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . . . . . . . . . 17 Item 3. Quantitative and Qualitative Disclosures About Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . 25 Part II. OTHER INFORMATION SIGNATURE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 2 PART I - FINANCIAL INFORMATION Item I. FINANCIAL STATEMENTS AMERICREDIT CORP. Consolidated Balance Sheets (Unaudited, Dollars in Thousands) September 30, June 30, ASSETS 1997 1997 ---- ---- Cash and cash equivalents $ 2,165 $ 6,027 Investment securities 6,500 6,500 Finance receivables, net 276,170 266,657 Excess servicing receivable 148,009 114,376 Restricted cash 79,890 67,895 Property and equipment, net 15,901 13,884 Goodwill 7,186 7,260 Other assets 12,745 10,854 -------- -------- Total assets $548,566 $493,453 -------- -------- -------- -------- LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Bank line of credit $ 97,000 $ 71,700 Mortgage warehouse facility 6,295 345 Automobile receivables-backed notes 18,407 23,689 9 1/4% Senior Notes 125,000 125,000 Notes payable 4,000 3,517 Accrued taxes and expenses 40,112 39,362 Deferred income taxes 20,114 13,304 -------- -------- Total liabilities 310,928 276,917 -------- -------- Shareholders' equity: Common stock, $.01 par value per share; 120,000,000 shares authorized; 33,695,603 and 33,255,173 shares issued 337 333 Additional paid-in capital 210,465 203,544 Unrealized gain on excess servicing receivable, net of income taxes 3,709 2,954 Retained earnings 46,660 33,466 -------- -------- 261,171 240,297 Treasury stock, at cost (3,921,028 and 3,959,071 shares) (23,533) (23,761) -------- -------- Total shareholders' equity 237,638 216,536 -------- -------- Total liabilities and shareholders' equity $548,566 $493,453 -------- -------- -------- -------- The accompanying notes are an integral part of these consolidated financial statements 3 AMERICREDIT CORP. Consolidated Statements of Income (Unaudited, Dollars in Thousands, Except Per Share Data) Three Months Ended September 30, --------------------- 1997 1996 ---- ---- Revenue: Finance charge income $ 13,061 $ 10,764 Gain on sale of receivables 26,042 12,590 Servicing fee income 8,713 3,643 Investment income 1,280 468 Other income 194 330 ----------- ----------- 49,290 27,795 ----------- ----------- Costs and expenses: Operating expenses 20,091 9,827 Provision for losses 1,906 1,617 Interest expense 5,839 3,226 ----------- ----------- 27,836 14,670 ----------- ----------- Income before income taxes 21,454 13,125 Income tax provision 8,260 5,053 ----------- ----------- Net income $ 13,194 $ 8,072 ----------- ----------- ----------- ----------- Earnings per share $ .41 $ .27 ----------- ----------- ----------- ----------- Weighted average shares and share equivalents 31,991,958 30,118,939 ----------- ----------- ----------- ----------- The accompanying notes are an integral part of these consolidated financial statements 4 AMERICREDIT CORP. Consolidated Statements of Cash Flows (Unaudited, Dollars in Thousands) Three Months Ended September 30, ------------------ 1997 1996 ---- ---- Cash flows from operating activities: Net income $ 13,194 $ 8,072 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 853 433 Provision for losses 1,906 1,617 Deferred income taxes 8,121 4,501 Gain on sale of auto receivables (24,852) (12,590) Amortization of excess servicing receivable 9,655 5,493 Changes in assets and liabilities: Other assets (1,891) (180) Accrued taxes and expenses 750 7,361 --------- --------- Net cash provided by operating activities 7,736 14,707 --------- --------- Cash flows from investing activities: Purchases of auto receivables (350,359) (172,549) Originations of mortgage receivables (27,393) Principal collections and recoveries on receivables 10,118 18,727 Net proceeds from sale of auto receivables 314,075 151,953 Net proceeds from sale of mortgage receivables 24,969 Purchases of property and equipment (2,028) (1,120) Proceeds from maturities of investment securities 55 Increase in restricted cash (11,995) (15,864) --------- --------- Net cash used by investing activities (42,613) (18,798) --------- --------- Cash flows from financing activities: Borrowings on bank line of credit 264,000 142,800 Payments on bank line of credit (238,700) (119,000) Net increase in mortgage warehouse facility 5,950 Payments on automobile receivables-backed notes (5,282) (13,416) Payments on notes payable (285) (92) Proceeds from issuance of common stock 5,332 1,962 Purchase of treasury stock (4,387) --------- --------- Net cash provided by financing activities 31,015 7,867 --------- --------- Net increase (decrease) in cash and cash equivalents (3,862) 3,776 Cash and cash equivalents at beginning of period 6,027 2,145 --------- --------- Cash and cash equivalents at end of period $ 2,165 $ 5,921 --------- --------- --------- --------- The accompanying notes are an integral part of these consolidated financial statements 5 AMERICREDIT CORP. Notes to Consolidated Financial Statements (Unaudited) NOTE 1 - BASIS OF PRESENTATION The accompanying consolidated financial statements include the accounts of AmeriCredit Corp. and its wholly-owned subsidiaries ("the Company"). All significant intercompany accounts and transactions have been eliminated in consolidation. The consolidated financial statements as of September 30, 1997 and for the periods ended September 30, 1997 and 1996 are unaudited, but in management's opinion, include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results for such interim periods. The results for interim periods are not necessarily indicative of results for a full year. The interim period financial statements, including the notes thereto, are condensed and do not include all disclosures required by generally accepted accounting principles. Such interim period financial statements should be read in conjunction with the Company's consolidated financial statements which were included in the Company's 1997 Annual Report to Shareholders. NOTE 2 - FINANCE RECEIVABLES Finance receivables consist of the following (in thousands): September 30, June 30, 1997 1997 ---- ---- Auto receivables $282,939 $275,249 Less allowance for losses (13,549) (12,946) -------- -------- Auto receivables, net 269,390 262,303 Mortgage receivables 6,780 4,354 -------- -------- Finance receivables, net $276,170 $266,657 -------- -------- -------- -------- 6 A summary of the allowance for losses is as follows (in thousands): Three Months Ended September 30, ---------------------- 1997 1996 ------- ------- Balance at beginning of period $12,946 $13,602 Provision for losses 1,906 1,617 Acquisition fees 11,365 6,572 Allowance related to auto receivables sold to Trusts (9,766) (4,442) Net charge-offs (2,902) (4,751) ------- ------- Balance at end of period $13,549 $12,598 ------- ------- ------- ------- NOTE 3 - EXCESS SERVICING RECEIVABLE As of September 30, 1997 and June 30, 1997, the Company was servicing $1,101,312,000 and $863,006,000, respectively, of auto receivables which have been sold to certain special purpose financing trusts (the "Trusts"). The components of excess servicing receivable are as follows (in thousands): September 30, June 30, 1997 1997 ------------- -------- Interest-only strips $ 77,503 $ 59,933 Subordinated interests: Retained asset-backed securities 11,278 12,589 Excess of auto receivables in Trusts over asset-backed securities outstanding 59,228 41,854 -------- -------- $148,009 $114,376 -------- -------- -------- -------- 7 Excess servicing receivable consists of the following (in thousands): September 30, June 30, 1997 1997 ------------- -------- Estimated future excess cash flows before allowance for credit losses $257,812 $200,869 Allowance for credit losses (94,549) (74,925) -------- -------- Estimated future excess cash flows 163,263 125,944 Discount to present value (15,254) (11,568) -------- -------- $148,009 $114,376 -------- -------- -------- -------- A summary of excess servicing receivable is as follows (in thousands): Three Months Ended September 30, ---------------------- 1997 1996 -------- ------- Balance at beginning of period $114,376 $33,093 Additions 42,059 15,056 Increase in unrealized gain 1,229 Amortization (9,655) (5,493) -------- ------- Balance at end of period $148,009 $42,656 -------- ------- -------- ------- NOTE 4 - DEBT In October 1997, the Company entered into a restated revolving credit agreement with a group of banks under which the Company may borrow up to $310 million, subject to a defined borrowing base. Aggregate borrowings of $97,000,000 and $71,700,000 were outstanding as of September 30, 1997 and June 30, 1997, respectively. Borrowings under the credit agreement are collateralized by certain auto receivables and bear interest at various market London Interbank Offered Rates ("LIBOR") plus 1.25%. The Company is also required to pay an annual commitment fee equal to 1/4% of the unused portion of the credit agreement. The credit agreement, which expires in October 1998, contains various restrictive covenants requiring certain minimum financial ratios and results and placing certain limitations on payment of cash dividends and repurchase of common stock. In October 1997, the Company entered into a funding agreement with a funding agent on behalf of an institutionally managed commercial paper conduit and a group of banks under which up to $245 million of structured warehouse financing is available to the Company. Under the funding agreement, the Company transfers auto receivables to CP Funding Corp. ("CPFC"), a special purpose finance subsidiary of the Company, and CPFC in turn issues a note, 8 collateralized by such auto receivables, to the funding agent. The funding agent provides funding under the note to CPFC pursuant to an advance formula and CPFC forwards the funds to the Company in consideration for the transfer of auto receivables. While CPFC is a consolidated subsidiary of the Company, CPFC is a separate legal entity and the auto receivables transferred to CPFC and the other assets of CPFC are legally owned by CPFC and not available to creditors of AmeriCredit Corp. or its other subsidiaries. Advances under the note bear interest at commercial paper, LIBOR or prime rates plus specified fees depending upon the source of funds provided by the funding agent to CPFC. The funding agreement, which expires in October 1998, contains various covenants requiring certain minimum financial ratios and results. The Company also has a mortgage warehouse facility with a bank under which the Company may borrow up to $75 million, subject to a defined borrowing base. Aggregate borrowings of $6,295,000 and $345,000 were outstanding as of September 30, 1997 and June 30, 1997, respectively. Borrowings under the facility are collateralized by certain mortgage receivables and bear interest at LIBOR plus 1.25%. The Company is also required to pay an annual commitment fee equal to 1/8% of the unused portion of the facility. The facility expires in February 1998. NOTE 5 - SUPPLEMENTAL CASH FLOW INFORMATION Cash payments for interest costs and income taxes consist of the following (in thousands): Three Months Ended September 30, ------------------ 1997 1996 ------ ------ Interest costs (none capitalized) $8,630 $2,995 Income taxes 29 4 During the three months ended September 30, 1997, the Company entered into capital lease obligations of $768,000 for the purchase of certain equipment. NOTE 6 - RECENT ACCOUNTING DEVELOPMENTS In February 1997, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 128, "Earnings per Share" ("SFAS 128"). SFAS 128 establishes standards for computing and presenting earnings per share, replacing existing accounting standards. The new standard requires dual presentation of basic and diluted earnings per share and a reconciliation between the two amounts. Basic earnings per share excludes dilution, and diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised and converted into common stock. SFAS 128 is effective for financial statements issued for periods ending after December 15, 1997. The Company's basic earnings per share computed pursuant to the new standard would have been 9 .45 and .28 for the three months ended September 30, 1997 and 1996, respectively. Diluted earnings per share computed pursuant to the new standard would not be materially different from earnings per share presented in the consolidated statements of income. NOTE 7 - GUARANTOR CONSOLIDATING FINANCIAL STATEMENTS The payment of principal, premium, if any, and interest on the Company's 9 1/4% Senior Notes is guaranteed by certain of the Company's subsidiaries (the "Subsidiary Guarantors"). The separate financial statements of the Subsidiary Guarantors are not included herein because the Subsidiary Guarantors are wholly-owned consolidated subsidiaries of the Company and are jointly, severally and unconditionally liable for the obligations represented by the 9 1/4% Senior Notes. The Company believes that the condensed consolidating financial information for the Company, the combined Subsidiary Guarantors and the combined Non-Guarantor Subsidiaries provide information that is more meaningful in understanding the financial position of the Subsidiary Guarantors than separate financial statements of the Subsidiary Guarantors. Therefore, the separate financial statements of the Subsidiary Guarantors are not deemed material. The following supplemental schedules present consolidating financial information for (i) AmeriCredit Corp. (on a parent only basis), (ii) the combined Subsidiary Guarantors, (iii) the combined Non-Guarantor Subsidiaries, (iv) an elimination column for adjustments to arrive at the information for the Company and its subsidiaries on a consolidated basis and (v) the Company and its subsidiaries on a consolidated basis. Investments in subsidiaries are accounted for by the parent company on the equity method for purposes of the presentation set forth below. Earnings of subsidiaries are therefore reflected in the parent company's investment accounts and earnings. The principal elimination entries set forth below eliminate investments in subsidiaries and intercompany balances and transactions. 10 AmeriCredit Corp. Consolidating Balance Sheet September 30, 1997 (Unaudited, Dollars in Thousands) AmeriCredit Corp. Guarantors Non-Guarantors Eliminations Consolidated ----------- ---------- -------------- ------------ ------------ ASSETS Cash and cash equivalents $ $ 488 $ 1,677 $ $ 2,165 Investment securities 6,500 6,500 Finance receivables, net 255,329 20,841 276,170 Excess servicing receivable (1,351) 11,383 137,977 148,009 Restricted cash 79,890 79,890 Property and equipment, net 152 15,749 15,901 Goodwill 7,186 7,186 Other assets 6,231 5,316 1,198 12,745 Due (to) from affiliates 264,389 (165,641) (98,748) Investment in affiliates 85,022 1 2 (85,025) -------- --------- -------- --------- -------- Total assets $360,943 $ 129,811 $142,837 $(85,025) $548,566 -------- --------- -------- --------- -------- -------- --------- -------- --------- -------- LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Bank line of credit $ $ 97,000 $ $ $ 97,000 Mortgage warehouse facility 6,295 6,295 Automobile receivables-backed notes 18,407 18,407 9 1/4% Senior Notes 125,000 125,000 Notes payable 3,969 31 4,000 Accrued taxes and expenses 5,451 32,701 1,960 40,112 Deferred income taxes (11,115) (6,483) 37,712 20,114 -------- --------- -------- --------- -------- Total liabilities 123,305 129,544 58,079 310,928 -------- --------- -------- --------- -------- Shareholders' equity: Common stock 337 203 3 (206) 337 Additional paid-in capital 210,465 108,336 (108,336) 210,465 Unrealized gain on excess servicing receivable 3,709 3,709 (3,709) 3,709 Retained earnings 46,660 (108,272) 81,046 27,226 46,660 -------- --------- -------- --------- -------- 261,171 267 84,758 (85,025) 261,171 Treasury stock (23,533) (23,533) -------- --------- -------- --------- -------- Total shareholders' equity 237,638 267 84,758 (85,025) 237,638 -------- --------- -------- --------- -------- Total liabilities and shareholders' equity $360,943 $ 129,811 $142,837 $ (85,025) $548,566 -------- --------- -------- --------- -------- -------- --------- -------- --------- --------
11 AmeriCredit Corp. Consolidating Balance Sheet June 30, 1997 (Unaudited, Dollars in Thousands) AmeriCredit Corp. Guarantors Non-Guarantors Eliminations Consolidated ----------- ---------- -------------- ------------ ------------ ASSETS Cash and cash equivalents $ $ 3,988 $ 2,039 $ 6,027 Investment securities 6,500 6,500 Finance receivables, net 240,912 25,745 266,657 Excess servicing receivable (777) 12,096 103,057 114,376 Restricted cash 67,895 67,895 Property and equipment, net 136 13,748 13,884 Goodwill 7,260 7,260 Other assets 4,447 5,304 1,103 10,854 Due (to) from affiliates 277,369 (197,656) (79,713) Investment in affiliates 56,764 $(56,764) -------- --------- -------- -------- -------- Total assets $344,439 $ 85,652 $120,126 $(56,764) $493,453 -------- --------- -------- -------- -------- -------- --------- -------- -------- -------- LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Bank line of credit $ $ 71,700 $ $ $ 71,700 Mortgage warehouse facility 345 345 Automobile receivables-backed notes 23,689 23,689 9 1/4% Senior Notes 125,000 125,000 Notes payable 3,484 33 3,517 Deferred income taxes (8,669) (5,547) 27,520 13,304 Accrued taxes and expenses 8,088 27,987 3,287 39,362 -------- --------- -------- -------- -------- Total liabilities 127,903 94,518 54,496 276,917 -------- --------- -------- -------- -------- Shareholders' equity: Common stock 333 203 3 (206) 333 Additional paid-in capital 203,544 98,336 (98,336) 203,544 Unrealized gain on excess servicing receivable 2,954 2,954 (2,954) 2,954 Retained earnings 33,466 (107,405) 62,673 44,732 33,466 -------- --------- -------- -------- -------- 240,297 (8,866) 65,630 (56,764) 240,297 Treasury stock (23,761) (23,761) -------- --------- -------- -------- -------- Total shareholders'equity 216,536 (8,866) 65,630 (56,764) 216,536 -------- --------- -------- -------- -------- Total liabilities and shareholders' equity $344,439 $ 85,652 $120,126 $(56,764) $493,453 -------- --------- -------- -------- -------- -------- --------- -------- -------- --------
12 AmeriCredit Corp. Consolidating Income Statement Three Months Ended September 30, 1997 (Unaudited, Dollars in Thousands) AmeriCredit Corp. Guarantors Non-Guarantors Eliminations Consolidated ----------- ---------- -------------- ------------ ------------ Revenue: Finance charge income $ $12,084 $ 977 $ $13,061 Gain on sale of receivables (1,737) 2,070 25,709 26,042 Servicing fee income 11,380 1,760 (4,427) 8,713 Investment income 2,609 28 1,101 (2,458) 1,280 Other income 118 76 194 Equity in income of affiliates 17,502 (17,502) ------- ------- ------- -------- ------- 18,374 25,680 29,623 (24,387) 49,290 ------- ------- ------- -------- ------- Costs and expenses: Operating expenses 2,630 21,908 (20) (4,427) 20,091 Provision for losses 1,906 1,906 Interest expense 3,174 3,567 1,556 (2,458) 5,839 ------- ------- ------- -------- ------- 5,804 27,381 1,536 (6,885) 27,836 ------- ------- ------- -------- ------- Income before income taxes 12,570 (1,701) 28,087 (17,502) 21,454 Provision for income taxes (624) (794) 9,678 8,260 ------- ------- ------- -------- ------- Net income $13,194 $ (907) $18,409 $(17,502) $13,194 ------- ------- ------- -------- ------- ------- ------- ------- -------- -------
13 AmeriCredit Corp. Consolidating Income Statement Three Months Ended September 30, 1996 (Unaudited, Dollars in Thousands) AmeriCredit Corp. Guarantors Non-Guarantors Eliminations Consolidated ----------- ---------- -------------- ------------ ------------ Revenue: Finance charge income $ $ 7,909 $ 2,855 $ $10,764 Gain on sale of receivables 12,590 12,590 Servicing fee income 11,848 124 (8,329) 3,643 Investment income 3,317 102 299 (3,250) 468 Other income 28 120 182 330 Equity in income of affiliates 6,384 (6,384) ------- ------- ------- -------- ------- 9,729 19,979 16,050 (17,963) 27,795 ------- ------- ------- -------- ------- Costs and expenses: Operating expenses 948 17,235 (27) (8,329) 9,827 Provision for losses 1,617 1,617 Interest expense 15 2,777 3,684 (3,250) 3,226 ------- ------- ------- -------- ------- 963 21,629 3,657 (11,579) 14,670 ------- ------- ------- -------- ------- Income before income taxes 8,766 (1,650) 12,393 (6,384) 13,125 Provision for income taxes 694 42 4,317 5,053 ------- ------- ------- -------- ------- Net income (loss) $ 8,072 $(1,692) $ 8,076 $ (6,384) $ 8,072 ------- ------- ------- -------- ------- ------- ------- ------- -------- -------
14 AmeriCredit Corp. Consolidating Statement of Cash Flow Three Months Ended September 30, 1997 (Unaudited, Dollars in Thousands) AmeriCredit Corp. Guarantors Non-Guarantors Eliminations Consolidated ----------- ---------- -------------- ------------ ------------ Cash flow from operating activities: Net income $ 13,194 $ (907) $ 18,409 $ (17,502) $ 13,194 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 6 847 853 Provision for losses 1,906 1,906 Deferred income taxes (625) (1,446) 10,192 8,121 Gain on sale of auto receivables 1,737 (880) (25,709) (24,852) Amortization of excess servicing receivable (1,163) 2,783 8,035 9,655 Equity in income of affiliates (17,502) 17,502 Changes in assets and liabilities: Other assets (1,784) (12) (95) (1,891) Accrued taxes and expenses (2,637) 4,714 (1,327) 750 -------- --------- --------- --------- --------- Net cash provided by operating activities (8,774) 7,005 9,505 7,736 -------- --------- --------- --------- --------- Cash flows from investing activities: Purchases of auto receivables (350,359) (331,246) 331,246 (350,359) Originations of mortgage receivables (27,393) (27,393) Principal collections and recoveries on receivables 5,214 4,904 10,118 Net proceeds from sale of auto receivables 331,246 314,075 (331,246) 314,075 Net proceeds from sale of mortgage receivables 24,969 24,969 Purchases of property and equipment (22) (2,006) (2,028) Increase in restricted cash (11,995) (11,995) Net change in investment in affiliates (10,000) 10,000 -------- --------- --------- --------- --------- Net cash used by investing activities (10,022) (8,329) (24,262) (42,613) -------- --------- --------- --------- --------- Cash flows from financing activities: Borrowings on bank line of credit 264,000 264,000 Payments on bank line of credit (238,700) (238,700) Net increase in mortgage warehouse facility 5,950 5,950 Payments on automobile receivables-backed notes (5,282) (5,282) Payments on notes payable (283) (2) (285) Net change in due (to) from affiliates 13,747 (33,424) 19,677 Proceeds from issuance of common stock 5,332 5,332 -------- --------- --------- --------- --------- Net cash provided by financing activities 18,796 (2,176) 14,395 31,015 -------- --------- --------- --------- --------- Net increase (decrease) in cash and cash equivalents (3,500) (362) (3,862) Cash and cash equivalents at beginning of period 3,988 2,039 6,027 -------- --------- --------- --------- --------- Cash and cash equivalents at end of period $ $ 488 $ 1,677 $ $ 2,165 -------- --------- --------- --------- --------- -------- --------- --------- --------- ---------
15 AmeriCredit Corp. Consolidating Statement of Cash Flow Three Months Ended September 30, 1996 (Unaudited, Dollars in Thousands) AmeriCredit Corp. Guarantors Non-Guarantors Eliminations Consolidated ----------- ---------- -------------- ------------ ------------ Cash flow from operating activities: Net income $ 8,072 $ (1,692) $ 8,076 $ (6,384) $ 8,072 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 6 427 433 Provision for losses 1,617 1,617 Deferred income taxes (372) 134 4,739 4,501 Gain on sale of auto receivables (12,590) (12,590) Amortization of excess servicing receivable 4,361 1,132 5,493 Equity in income of affilities (6,384) 6,384 Changes in assets and liabilities: Other assets (349) 9 160 (180) Accrued taxes and expenses (2,429) 9,746 44 7,361 -------- --------- --------- --------- --------- Net cash provided by operating activities (1,456) 14,602 1,561 14,707 -------- --------- --------- --------- --------- Cash flows from investing activities: Purchases of auto receivables (172,549) (154,419) 154,419 (172,549) Principal collections and recoveries on receivables 6,012 12,715 18,727 Net proceeds from sale of auto receivables 154,419 151,953 (154,419) 151,953 Purchases of property and equipment (5) (1,115) (1,120) Proceeds from maturities of investment securities 55 55 Increase in restricted cash (15,864) (15,864) Net change in investment in affiliates 1,201 (1,201) -------- --------- --------- --------- --------- Net cash used by investing activities 1,251 (14,434) (5,615) (18,798) -------- --------- --------- --------- --------- Cash flows from financing activities: Borrowings on bank line of credit 142,800 142,800 Payments on bank line of credit (119,000) (119,000) Payments on automobile receivables- backed notes (13,416) (13,416) Payments on notes payable (92) (92) Net change in due (to) from affiliates 782 (17,686) 16,904 Proceeds from issuance of common stock 1,962 1,962 Purchase of treasury stock (4,387) (4,387) -------- --------- --------- --------- --------- Net cash provided by financing activities (1,735) 6,114 3,488 7,867 -------- --------- --------- --------- --------- Net increase (decrease) in cash and cash equivalents (1,940) 6,282 (566) 3,776 Cash and cash equivalents at beginning of period (4,913) (87) 7,145 2,145 -------- --------- --------- --------- --------- Cash and cash equivalents at end of period $ (6,853) $ 6,195 $ 6,579 $ $ 5,921 -------- --------- --------- --------- --------- -------- --------- --------- --------- ---------
16 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL The Company generates earnings and cash flow primarily through the purchase, securitization and servicing of auto receivables. The Company purchases auto finance contracts from franchised and select independent automobile dealerships. To fund the acquisition of receivables prior to securitization, the Company utilizes borrowings under its warehouse credit facilities. The Company generates finance charge income on its receivables pending securitization ("owned receivables") and pays interest expense on borrowings under its warehouse credit facilities. The Company sells receivables to securitization trusts ("Trusts") or special purpose finance subsidiaries that, in turn, sell asset-backed securities to investors. By securitizing its receivables, the Company is able to lock in the gross interest rate spread between the yield on such receivables and the interest rate payable on the asset-backed securities. The Company recognizes a gain on the sale of receivables to the Trusts, which represents the difference between the sale proceeds to the Company, net of transaction costs, and the Company's net carrying value of the receivables, plus the present value of the estimated future excess cash flows to be received by the Company over the life of the securitization. Excess cash flows result from the difference between the interest received from the obligors on the receivables and the interest paid to investors in the asset-backed securities, net of credit losses and expenses. The Company typically begins to receive excess cash flow distributions approximately seven to nine months after the receivables are securitized, although these time periods may be shorter or longer depending upon the structure of the securitization. Prior to such time as the Company begins to receive excess cash flow, excess cash flow is utilized to fund credit enhancement requirements to secure financial guaranty insurance policies issued by an insurance company to protect investors in the asset-backed securities from losses. Once predetermined credit enhancement requirements are reached and maintained, excess cash flow is distributed to the Company. In addition to excess cash flow, the Company earns monthly servicing fee income of between 2.25% and 2.50% per annum of the outstanding principal balance of receivables securitized ("serviced receivables"). In November 1996, the Company acquired AmeriCredit Mortgage Services ("AMS", formerly Rancho Vista Mortgage Company"), which originates and sells home equity mortgage loans. The acquisition was accounted for as a purchase, and the results of operations for AMS have been included in the consolidated financial statements since the acquisition date. Receivables originated in this business are referred to as mortgage receivables. Such receivables are generally packaged and sold for cash on a servicing released, whole-loan basis. The Company recognizes a gain at the time of sale. 17 RESULTS OF OPERATIONS THREE MONTHS ENDED SEPTEMBER 30, 1997 AS COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 1996 REVENUE: The Company's average managed receivables outstanding consisted of the following (in thousands): Three Months Ended September 30, ------------------ 1997 1996 ---- ---- Auto: Owned $ 245,988 $218,667 Serviced 1,013,034 362,748 ---------- -------- 1,259,022 581,415 Mortgage 8,502 ---------- -------- $1,267,524 $581,415 ---------- -------- ---------- -------- Average managed receivables outstanding increased by 118% as a result of higher loan purchase volume. The Company purchased $355.1 million of auto loans during the three months ended September 30, 1997, compared to purchases of $175.9 million during the three months ended September 30, 1996. This growth resulted from loan production at branches open during both periods as well as expansion of the Company's loan production capacity. The Company operated 99 auto lending branch offices as of September 30, 1997, compared to 60 as of September 30, 1996. The Company purchased $27.4 million of mortgage loans during the three months ended September 30, 1997. Finance charge income consisted of the following (in thousands): Three Months Ended September 30, ------------------ 1997 1996 ---- ---- Auto $ 12,859 $ 10,764 Mortgage 202 -------- -------- $ 13,061 $ 10,764 -------- -------- -------- -------- The increase in finance charge income is due primarily to an increase of 12% in average owned auto receivables outstanding for the three months ended September 30, 1997 versus the three months ended September 30, 1996. 18 The Company's effective yield on its owned auto receivables increased to 20.7% for the three months ended September 30, 1997 from 19.5% for the three months ended September 30, 1996. The gain on sale of receivables consists of the following (in thousands): Three Months Ended September 30, ------------------ 1997 1996 ---- ---- Auto $24,852 $12,590 Mortgage 1,190 ------- ------- $26,042 $12,590 ------- ------- ------- ------- The increase in gain on sale of auto receivables resulted from the sale of $332.5 million of receivables in the three months ended September 30, 1997 as compared to $155.2 million of receivables sold in the three months ended September 30, 1996. The gains amounted to 7.5% and 8.1% of the sales proceeds for the three months ended September 30, 1997 and 1996, respectively. The gain on sale of mortgage receivables resulted from the sale of $25.0 million of mortgage receivables. Servicing fee income increased to $8.7 million, or 3.4% of average serviced auto receivables, for the three months ended September 30, 1997, as compared to $3.6 million, or 4.0% of average serviced auto receivables, for the three months ended September 30, 1996. Servicing fee income represents accretion of the present value discount on estimated future excess cash flows from the Trusts, base servicing fees and other fees earned by the Company as servicer of the auto receivables sold to the Trusts. The growth in servicing fee income is primarily due to the increase in average serviced auto receivables outstanding for the three months ended September 30, 1997 compared to the three months ended September 30, 1996. Investment income increased to $1,280,000 for the three months ended September 30, 1997 from $468,000 for the three months ended September 30, 1996 primarily as a result of higher restricted cash balances. Restricted cash is used as credit enhancement for the Trusts and increases as greater amounts of receivables are sold to the Trusts. COSTS AND EXPENSES: Operating expenses as an annualized percentage of average managed receivables outstanding decreased to 6.3% (5.9% excluding operating expenses of $1.3 million related to the mortgage business) for the three months ended September 30, 1997 as compared to 6.7% for the three months ended September 30, 1996. The ratio improved as a result of economies of scale realized from a growing receivables portfolio and automation of loan origination, processing and 19 servicing functions. The dollar amount of operating expenses increased by $10.3 million, or 104%, primarily due to the addition of auto lending branch offices and management, auto loan processing and servicing staff and the recently acquired mortgage business. The provision for losses increased to $1.9 million for the three months ended September 30, 1997 as compared to $1.6 million for the three months ended September 30, 1996 due to higher average owned auto receivables outstanding. Interest expense increased to $5.8 million for the three months ended September 30, 1997 from $3.2 million for the three months ended September 30, 1996 due to higher debt levels and effective interest rates. Average debt outstanding was $243.4 million and $163.3 million for the three months ended September 30, 1997 and 1996, respectively. The Company's effective rate of interest paid on its debt increased to 9.5% from 7.8% as a result of the issuance of the 9 1/4% Senior Notes in February 1997. The Company's effective income tax rate was 38.5% for the three months ended September 30, 1997 and 1996, respectively. FINANCE RECEIVABLES The Company provides financing in relatively high-risk markets, and therefore, charge-offs are anticipated. The Company records a periodic provision for losses as a charge to operations and a related allowance for losses in the consolidated balance sheets as a reserve against estimated future losses in the owned auto receivables portfolio. The Company typically purchases individual finance contracts for a non-refundable acquisition fee on a non-recourse basis. Such acquisition fees are also recorded in the consolidated balance sheets as an allowance for losses. When the Company sells auto receivables to the Trusts, the calculation of the gain on sale of receivables is reduced by an estimate of future credit losses expected over the life of the auto receivables sold. The Company sells mortgage receivables for cash on a servicing released, whole-loan basis. Such receivables are generally held by the Company for less than 90 days. Accordingly, no allowance for losses is provided by the Company for the mortgage receivables. The Company reviews static pool origination and charge-off relationships, charge-off experience factors, collections data, delinquency reports, estimates of the value of the underlying collateral, economic conditions and trends and other information in order to make the necessary judgments as to the appropriateness of the provisions for losses and the allowance for losses. Although the Company uses many resources to assess the adequacy of the allowance for losses, there is no precise method for accurately estimating the ultimate losses in the receivables portfolio. 20 The following table presents certain data related to the receivables portfolio (dollars in thousands): September 30, 1997 ---------------------------------------------------------- Balance Auto Sheet Auto Managed Owned Mortgage Total Serviced Portfolio -------- -------- -------- ---------- ---------- Principal amount of receivables $282,939 $ 6,780 $289,719 $1,101,312 $1,384,251 (2) ---------- ---------- ---------- ---------- Allowance for losses (13,549) (13,549) $ (94,549)(1) $ (108,098)(2) -------- -------- -------- ---------- ---------- ---------- ---------- Finance receivables, net $269,390 $ 6,780 $276,170 -------- -------- -------- -------- -------- -------- Number of outstanding contracts 25,594 55 108,294 133,888 (2) -------- -------- ---------- ---------- -------- -------- ---------- ---------- Average amount of outstanding contract (principal amount) (in dollars) $ 11,055 $123,272 $ 10,170 $ 10,339 (2) -------- -------- ---------- ---------- -------- -------- ---------- ---------- Allowance for losses as a percentage of receivables 4.8% 8.6% 7.8%(2) ---- ---- ---- ---- ---- ----
(1) The allowance for losses related to serviced auto receivables is netted against excess servicing receivable in the Company's consolidated balance sheets. (2) Includes auto receivables only. The following is a summary of managed auto receivables which are (i) more than 60 days delinquent, but not in repossession, and (ii) in repossession (dollars in thousands): September 30, -------------------- 1997 1996 ------- ------- Delinquent contracts $46,531 $22,446 Delinquent contracts as a percentage of managed auto receivables 3.4% 3.5% Contracts in repossession $18,571 $8,963 Contracts in repossession as a percentage of managed auto receivables 1.3% 1.4% 21 The following table presents charge-off data with respect to the Company's managed auto receivables portfolio (dollars in thousands): Three Months Ended September 30, -------------------- 1997 1996 ------- ------ Net charge-offs: Owned $ 2,902 $4,751 Serviced 14,542 3,287 ------- ------ $17,444 $8,038 ------- ------ ------- ------ Net charge-offs as an annualized percentage of average managed auto receivables outstanding 5.5% 5.5% --- --- --- --- The Company began its indirect automobile finance business in September 1992 and has grown its managed auto receivables portfolio to $1.4 billion as of September 30, 1997. The Company expects that its delinquency and charge-offs will increase over time as the portfolio matures and its portfolio growth rate moderates. Accordingly, the delinquency and charge-off data above is not necessarily indicative of delinquency and charge-off experience that could be expected for a more seasoned portfolio. 22 LIQUIDITY AND CAPITAL RESOURCES The Company's cash flows are summarized as follows (in thousands): Three Months Ended September 30, ------------------ 1997 1996 ---- ---- Operating activities $ 7,736 $ 14,707 Investing activities (42,613) (18,798) Financing activities 31,015 7,867 -------- -------- Net(decrease)increase in cash and cash equivalents $ (3,862) $ 3,776 -------- -------- -------- -------- The Company's primary sources of cash have been collections and recoveries on its receivables portfolio, borrowings under its warehouse credit facilities, sales of auto receivables to Trusts in securitization transactions, excess cash flow distributions from the Trusts and the issuance of its 9 1/4% Senior Notes. In October 1997, the Company expanded its line of credit arrangement with a group of banks to provide for borrowings up to $310 million and extended the maturity of the facility to October 1998. The Company utilizes the line of credit to fund its auto lending activities and daily operations. A total of $97.0 million was outstanding under the line of credit as of September 30, 1997. In October 1997, the Company entered into a funding agreement with a funding agent on behalf of an institutionally managed commercial paper conduit and a group of banks under which up to $245 million of structured warehouse financing is available to the Company. The Company utilizes this facility to fund auto receivables pending securitization. The facility matures in October 1998. The Company also has a mortgage warehouse facility with a bank under which the Company may borrow up to $75 million, subject to a defined borrowing base, to fund home equity loan originations. The facility expires in February 1998. A total of $6.3 million was outstanding under the mortgage warehouse facility as of September 30, 1997. In August 1997, the Company completed its tenth securitization transaction with the issuance of $325 million of asset-backed securities through the AmeriCredit Automobile Receivables Trust 1997-C. The proceeds from the transaction were used to repay the borrowings then outstanding under the Company's bank line of credit. The Company's primary use of cash has been purchases and originations of receivables. The Company purchased $355.1 million of auto finance contracts during the three months ended September 30, 1997 requiring cash of $350.4 million, net of acquisition fees and other items. The Company operated 99 auto lending branch offices as of September 30, 1997 and plans to open 26 additional 23 branches in the remainder of fiscal 1998. The Company may also expand loan production capacity at existing offices where appropriate. While the Company has been able to establish and grow its auto finance business thus far, there can be no assurance that future expansion will be successful due to competitive, regulatory, market, economic or other factors. The Company's Board of Directors has authorized the repurchase of up to 6,000,000 shares of the Company's common stock. A total of 4,594,700 shares at an aggregate purchase price of $27.4 million had been purchased pursuant to this program through September 30, 1997. Certain restrictions contained in the Indenture pursuant to which the 9 1/4% Senior Notes were issued limit the amount of common stock which may be repurchased by the Company. As of September 30, 1997, the Company had $8.7 million in cash and cash equivalents and investment securities. The Company also had available borrowing capacity of $75.6 million under its bank line of credit pursuant to the borrowing base requirement of such credit agreement. The Company estimates that it will require additional external capital for the remainder of fiscal 1998 in addition to these existing capital resources and collections and recoveries on its receivables portfolio and excess cash flow distributions from the Trusts in order to fund expansion of its lending activities, capital expenditures, and other costs and expenses. The Company anticipates that such funding will be in the form of additional securitization transactions and the issuance of debt or equity securities. There can be no assurance that funding will be available to the Company through these sources, or if available, that it will be on terms acceptable to the Company. Since the Company's funding strategy is dependent upon the issuance of interest-bearing securities and the incurrence of debt, fluctuations in interest rates impact the Company's profitability. The Company utilizes several strategies to minimize the risk of interest rate fluctuations, including the use of hedging instruments, the regular sale of auto receivables to the Trusts and pre-funding securitizations, whereby the amount of asset-backed securities issued in a securitization exceeds the amount of receivables initially sold to the Trust. The proceeds from the pre-funded portion are held in an escrow account until the Company sells additional receivables to the Trust in amounts up to the balance of the pre-funded escrow account. In pre-funded securitizations, the Company locks in the borrowing costs with respect to the loans it subsequently delivers to the Trust. However, the Company incurs an expense in pre-funded securitizations equal to the difference between the money market yields earned on the proceeds held in escrow prior to subsequent delivery of receivables and the interest rate paid on the asset-backed securities outstanding. There can be no assurance that these strategies will be effective in minimizing interest rate risk or that increases in interest rates will not have an adverse effect on the Company's profitability. 24 Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The disclosures required pursuant to Item 305 of Regulation S-K are not yet effective for the Company. Such disclosures will be included in the Company's filings commencing with its Annual Report on Form 10-K for the year ending June 30, 1998. 25 PART II. OTHER INFORMATION Item 1. LEGAL PROCEEDINGS Not Applicable Item 2. CHANGES IN SECURITIES Not Applicable Item 3. DEFAULTS UPON SENIOR SECURITIES Not Applicable Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not Applicable Item 5. OTHER INFORMATION Not Applicable Item 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits: 11.1 Statement Re Computation of Per Share Earnings 27.1 Financial Data Schedule (b) Reports on Form 8-K The Company did not file any reports on Form 8-K during the quarterly period ended September 30, 1997. Certain subsidiaries and affiliates of the Company filed reports on Form 8-K during the quarterly period ended September 30, 1997 reporting monthly information related to securitization trusts. 26 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. AmeriCredit Corp. --------------------------------------- (Registrant) Date: November 12, 1997 By: /s/ Daniel E. Berce ----------------------------------- (Signature) Daniel E. Berce Chief Financial Officer 27 EX-11.1 2 EXHIBIT 11.1 EXHIBIT 11.1 AMERICREDIT CORP. STATEMENT RE COMPUTATION OF PER SHARE EARNINGS (dollars in thousands, except per share amounts) Three Months Ended September 30, ------------------ 1997 1996 ---- ---- PRIMARY: Average common shares outstanding 29,479,547 28,372,506 Common share equivalents resulting from assumed exercise of stock options 2,512,411 1,746,433 ---------- ---------- Average common shares and share equivalents outstanding 31,991,958 30,118,939 ---------- ---------- ---------- ---------- FULLY DILUTED: Average common shares outstanding 29,479,547 28,372,506 Common share equivalents resulting from assumed exercise of stock options 2,729,403 2,006,421 ---------- ---------- Average common shares and share equivalents outstanding 32,208,950 30,378,927 ---------- ---------- ---------- ---------- NET INCOME $13,194 $8,072 ------- ------ ------- ------ EARNINGS PER SHARE: Primary $ .41 $ .27 ------- ------ ------- ------ Fully diluted $ .41 $ .27 ------- ------ ------- ------ Primary earnings per share has been computed by dividing net income by the average common shares and share equivalents outstanding. Common share equivalents were computed using the treasury stock method. The average common stock market price for the period was used to determine the number of common share equivalents. Fully diluted earnings per share has been computed in the same manner as primary earnings per share except that the higher of the average or end of 28 period common stock market price was used to determine the number of common share equivalents. 29 EX-27.1 3 FDS
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED FINANCIAL STATEMENTS OF AMERICREDIT CORP. INCLUDED IN ITS QUARTERLY REPORT ON FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS JUN-30-1998 JUL-01-1997 SEP-30-1997 82,055 6,500 289,719 (13,549) 0 0 20,510 (4,609) 548,566 0 250,702 0 0 337 237,301 548,566 0 49,290 0 20,091 0 1,906 5,839 21,454 8,260 0 0 0 0 13,194 .41 .41
-----END PRIVACY-ENHANCED MESSAGE-----