General Motors Financial (ACF) 10-Q 2007 Q3 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 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, 2007

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 Incorporation or organization)	(I.R.S. Employer Identification No.)

801 Cherry Street, Suite 3900, Fort Worth, Texas 76102

(Address of principal executive offices, including Zip Code)

(817) 302-7000

(Registrant’s telephone number, including area code)

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  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  x    Accelerated filer  ¨    Non-accelerated filer  ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes  ¨    No  x

There were114,162,314shares of common stock, $0.01 par value outstanding as of October 31, 2007.

AMERICREDIT CORP.

INDEX TO FORM 10-Q

		Page
Part I. FINANCIAL INFORMATION
Item 1.	CONDENSED FINANCIAL STATEMENTS (UNAUDITED)	3
	Consolidated Balance Sheets – September 30, 2007 and June 30, 2007	3
	Consolidated Statements of Income and Comprehensive Income – Three Months Ended September 30, 2007 and 2006	4
	Consolidated Statements of Cash Flows – Three Months Ended September 30, 2007 and 2006	5
	Notes to Consolidated Financial Statements	6
Item 2.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	24
Item 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	45
Item 4.	CONTROLS AND PROCEDURES	45
Part II. OTHER INFORMATION
Item 1.	LEGAL PROCEEDINGS	46
Item 1A.	RISK FACTORS	46
Item 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	47
Item 3.	DEFAULTS UPON SENIOR SECURITIES	47
Item 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	47
Item 5.	OTHER INFORMATION	47
Item 6.	EXHIBITS	47
SIGNATURE		48

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Part I. FINANCIAL INFORMATION

Item 1. CONDENSED FINANCIAL STATEMENTS

AMERICREDIT CORP.

Consolidated Balance Sheets

(Unaudited, Dollars in Thousands)

	September 30, 2007			June 30, 2007
ASSETS
Cash and cash equivalents	$	637,070		$	910,304
Finance receivables, net		15,532,786			15,102,370
Restricted cash – securitization notes payable		994,813			1,014,353
Restricted cash – credit facilities		374,378			166,884
Property and equipment, net		58,717			58,572
Leased vehicles, net		169,701			33,968
Deferred income taxes		239,812			151,704
Goodwill		209,417			208,435
Other assets		211,529			164,430
Total assets	$	18,428,223		$	17,811,020
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Credit facilities	$	2,212,780		$	2,541,702
Securitization notes payable		12,881,613			11,939,447
Senior notes		200,000			200,000
Convertible senior notes		750,000			750,000
Funding payable		70,438			87,474
Accrued taxes and expenses		265,435			199,059
Other liabilities		37,564			18,188
Total liabilities		16,417,830			15,735,870
Commitments and contingencies (Note 7)
Shareholders’ equity:
Preferred stock, $0.01 par value per share; 20,000,000 shares authorized, none issued
Common stock, $0.01 par value per share; 230,000,000 shares authorized; 121,807,545 and 120,590,473 shares issued		1,218			1,206
Additional paid-in capital		91,780			71,323
Accumulated other comprehensive income		27,013			45,694
Retained earnings		2,061,422			2,000,066
		2,181,433			2,118,289
Treasury stock, at cost (7,668,911 and 1,934,061 shares)		(171,040	)		(43,139	)
Total shareholders’ equity		2,010,393			2,075,150
Total liabilities and shareholders’ equity	$	18,428,223		$	17,811,020

The accompanying notes are an integral part of these consolidated financial statements.

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AMERICREDIT CORP.

Consolidated Statements of Income and Comprehensive Income

(Unaudited, Dollars in Thousands, Except Per Share Data)

	Three Months Ended September 30,
	2007			2006
Revenue
Finance charge income	$	611,858		$	484,357
Servicing income		376			7,459
Other income		40,440			31,805
		652,674			523,621
Costs and expenses
Operating expenses		104,965			88,288
Depreciation expense – leased vehicles		5,585
Provision for loan losses		244,645			173,905
Interest expense		211,261			143,471
Restructuring charges, net		(130	)		309
		566,326			405,973
Income before income taxes		86,348			117,648
Income tax provision		24,529			43,412
Net income		61,819			74,236
Other comprehensive loss
Unrealized losses on credit enhancement assets		(198	)		(2,610	)
Unrealized losses on cash flow hedges		(36,143	)		(8,255	)
Foreign currency translation adjustment		7,400			(161	)
Income tax benefit		10,260			3,995
Other comprehensive loss		(18,681	)		(7,031	)
Comprehensive income	$	43,138		$	67,205
Earnings per share
Basic	$	0.53		$	0.59
Diluted	$	0.49		$	0.54
Weighted average shares
Basic		115,550,318			125,278,738
Diluted		128,111,826			139,718,283

The accompanying notes are an integral part of these consolidated financial statements.

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AMERICREDIT CORP.

Consolidated Statements of Cash Flows

(Unaudited, in Thousands)

	Three Months Ended September 30,
	2007			2006
Cash flows from operating activities
Net income	$	61,819		$	74,236
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		16,955			6,078
Accretion and amortization of loan fees		4,688			(7,487	)
Provision for loan losses		244,645			173,905
Deferred income taxes		24,529			43,412
Stock-based compensation expense		7,032			3,886
Other		438			(3,343	)
Changes in assets and liabilities:
Other assets		(39,057	)		(35,822	)
Accrued taxes and expenses		(40,810	)		(38,528	)
Net cash provided by operating activities		280,239			216,337
Cash flows from investing activities
Purchases of receivables		(2,290,411	)		(1,790,828	)
Principal collections and recoveries on receivables		1,585,813			1,331,107
Distributions from gain on sale Trusts		173			76,017
Purchases of property and equipment		(2,877	)		(1,064	)
Net purchases of leased vehicles		(131,713	)
Change in restricted cash – securitization notes payable		19,540			(489,640	)
Change in restricted cash – credit facilities		(207,180	)		(619,369	)
Change in other assets		(8,604	)		4,212
Net cash used by investing activities		(1,035,259	)		(1,489,565	)
Cash flows from financing activities
Net change in credit facilities		(333,457	)		(135,187	)
Issuance of securitization notes payable		2,500,000			2,550,000
Payments on securitization notes payable		(1,559,673	)		(988,590	)
Issuance of convertible senior notes					550,000
Debt issuance costs		(8,985	)		(16,299	)
Proceeds from sale of warrants related to convertible debt					93,086
Purchase of call option related to convertible debt					(145,710	)
Repurchase of common stock		(127,901	)		(323,964	)
Proceeds from issuance of common stock		10,199			14,020
Other net changes		(79	)		3,500
Net cash provided by financing activities		480,104			1,600,856
Net (decrease) increase in cash and cash equivalents		(274,916	)		327,628
Effect of Canadian exchange rate changes on cash and cash equivalents		1,682			(101	)
Cash and cash equivalents at beginning of period		910,304			513,240
Cash and cash equivalents at end of period	$	637,070		$	840,767

The accompanying notes are an integral part of these consolidated financial statements.

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AMERICREDIT CORP.

Notes to Consolidated Financial Statements

(Unaudited)

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The consolidated financial statements include our accounts and the accounts of our wholly-owned subsidiaries, including certain special purpose financing trusts utilized in securitization transactions (“Trusts”) which are considered variable interest entities. All significant intercompany transactions and accounts have been eliminated in consolidation.

The consolidated financial statements as of September 30, 2007, and for the three months ended September 30, 2007 and 2006, are unaudited, and 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. Certain prior year amounts have been reclassified to conform to current year presentation. The results for interim periods are not necessarily indicative of results for a full year.

The interim period consolidated financial statements, including the notes thereto, are condensed and do not include all disclosures required by generally accepted accounting principles in the United States of America. These interim period financial statements should be read in conjunction with our consolidated financial statements that are included in our Annual Report on Form 10-K for the year ended June 30, 2007.

Income Taxes

In July 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 48 (“FIN 48”), “Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement 109.” FIN 48 prescribes a comprehensive model for recognizing, measuring, presenting and disclosing in the financial statements tax positions taken or expected to be taken on a tax return, including a decision whether to file or not to file in a particular jurisdiction. The transition adjustment recognized on the date of adoption is recorded as an adjustment to retained earnings as of the beginning of the adoption period. We adopted FIN 48 on July 1, 2007. See Note 9 – “Income Taxes” for a discussion of the impact of implementing FIN 48.

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NOTE 2 – FINANCE RECEIVABLES

Finance receivables consist of the following (in thousands):

	September 30, 2007			June 30, 2007
Finance receivables unsecuritized, net of fees	$	2,464,806		$	3,054,183
Finance receivables securitized, net of fees		13,912,722			12,868,275
Less nonaccretable acquisition fees		(88,750	)		(120,425	)
Less allowance for loan losses		(755,992	)		(699,663	)
	$	15,532,786		$	15,102,370

Finance receivables securitized represent receivables transferred to our special purpose finance subsidiaries in securitization transactions accounted for as secured financings. Finance receivables unsecuritized include $2,165.6 million and $2,797.4 million pledged under our credit facilities as of September 30 and June 30, 2007, respectively.

Finance receivables are collateralized by vehicle titles and we have the right to repossess the vehicle in the event the consumer defaults on the payment terms of the contract.

The accrual of finance charge income has been suspended on $700.0 million and $632.9 million of delinquent finance receivables as of September 30 and June 30, 2007, respectively.

Finance contracts are generally purchased by us from auto dealers without recourse, and accordingly, the dealer usually has no liability to us if the consumer defaults on the contract. Depending upon the contract structure and consumer credit attributes, we may pay dealers a participation fee or we may charge dealers a non-refundable acquisition fee when purchasing individual finance contracts. We record the amortization of participation fees and the accretion of acquisition fees on loans purchased subsequent to June 30, 2004, to finance charge income using the effective interest method. We recorded acquisition fees on loans purchased prior to July 1, 2004, as nonaccretable fees available to cover losses inherent in the loan portfolio. Additionally, we record a discount on finance receivables repurchased upon the exercise of a clean-up call option from our gain on sale securitization transactions and account for such discounts as nonaccretable discounts.

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A summary of the nonaccretable acquisition fees is as follows (in thousands):

	Three Months Ended September 30,
	2007			2006
Balance at beginning of period	$	120,425		$	203,128
Purchases of receivables					7,484
Net charge-offs		(31,675	)		(7,138	)
Balance at end of period	$	88,750		$	203,474

A summary of the allowance for loan losses is as follows (in thousands):

	Three Months Ended September 30,
	2007			2006
Balance at beginning of period	$	699,663		$	475,529
Provision for loan losses		244,645			173,905
Net charge-offs		(188,316	)		(154,726	)
Balance at end of period	$	755,992		$	494,708

NOTE 3 – SECURITIZATIONS

A summary of our securitization activity and cash flows from special purpose entities used for securitizations is as follows (in thousands):

	Three Months Ended September 30,
	2007		2006
Receivables securitized	$	2,688,182	$	2,373,941
Net proceeds from securitization		2,500,000		2,550,000	(b)
Servicing fees:
Sold		91		2,168
Secured financing(a)		80,783		62,118
Distributions:
Sold		173		76,017
Secured financing		243,627		215,084

^(a) Servicing fees earned on securitizations accounted for as secured financings are included in finance charge income on the consolidated statements of income and comprehensive income.

^(b) Net proceeds related to the pre-funding of the 2006-B-G transaction of $436.9 million was held in restricted cash – securitization notes payable until the remaining receivables were delivered.

As of September 30 and June 30, 2007, we were servicing $13,938.8 million and $12,899.7 million, respectively, of finance receivables that have been transferred or sold to securitization Trusts.

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NOTE 4 – CREDIT FACILITIES

Amounts outstanding under our credit facilities are as follows (in thousands):

	September 30, 2007		June 30, 2007
Master warehouse facility			$	822,955
Medium term note facility	$	750,000		750,000
Repurchase facility		384,618		440,561
Prime/Near prime facility		1,012,363
Bay View facility				106,949
Long Beach facility				371,902
Canadian facility		65,799		49,335
	$	2,212,780	$	2,541,702

Further detail regarding terms and availability of the credit facilities as of September 30, 2007, follows (in thousands):

Maturity(a)	Facility Amount		Advances Outstanding		Finance Receivables Pledged		Restricted Cash Pledged(d)
Master warehouse facility:
October 2009	$	2,500,000					$	1,000
Medium term note facility:
October 2009(b)		750,000	$	750,000	$	561,019		245,189
Repurchase facility:
August 2008		500,000		384,618		461,152		31,775
Prime/Near prime facility:
September 2008		1,500,000		1,012,363		1,063,152		6,479
Canadian facility:
May 2008(c)		151,157		65,799		80,308		1,586
	$	5,401,157	$	2,212,780	$	2,165,631	$	286,029

^(a) At the maturity date, the outstanding debt balance can either be repaid in full or over time based on the amortization of receivables pledged.

^(b) This facility is a revolving facility through the date stated above. During the revolving period, we have the ability to substitute receivables for cash, or vice versa.

^(c) Facility amount represents Cdn $150.0 million.

^(d) These amounts do not include cash collected on finance receivables pledged of $88.3 million which is also included in restricted cash – credit facilities on the consolidated balance sheets.

Generally, our credit facilities are administered by agents on behalf of institutionally managed commercial paper or medium term note conduits. Under these funding agreements, we transfer finance receivables to our special purpose finance subsidiaries. These subsidiaries, in turn, issue notes to the agents, collateralized by such finance receivables and cash. The agents provide funding under the notes to the subsidiaries pursuant to an advance formula, and the subsidiaries forward the funds to us in consideration for the transfer of finance receivables. While these subsidiaries are included in our consolidated financial statements, these subsidiaries are separate legal entities and the finance receivables and other assets held by these subsidiaries are legally owned by these subsidiaries and are not available to

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our creditors or our other subsidiaries. Advances under the funding agreements bear interest at commercial paper, LIBOR or prime rates plus specified fees depending upon the source of funds provided by the agents.

We are required to hold certain funds in restricted cash accounts to provide additional collateral for borrowings under the facilities. Additionally, certain funding agreements contain various covenants requiring minimum financial ratios, asset quality and portfolio performance ratios (portfolio net loss and delinquency ratios, and pool level cumulative net loss ratios) as well as limits on deferment levels. Failure to meet any of these covenants could result in an event of default under these agreements. If an event of default occurs under these agreements, the lenders could elect to declare all amounts outstanding under these agreements to be immediately due and payable, enforce their interests against collateral pledged under these agreements or restrict our ability to obtain additional borrowings under these agreements. As of September 30, 2007, we were in compliance with all covenants in our credit facilities.

Debt issuance costs are being amortized to interest expense over the expected term of the credit facilities. Unamortized costs of $6.8 million and $6.5 million as of September 30 and June 30, 2007, respectively, are included in other assets on the consolidated balance sheets.

NOTE 5 – SECURITIZATION NOTES PAYABLE

Securitization notes payable represents debt issued by us in securitization transactions accounted for as secured financings. Debt issuance costs are being amortized over the expected term of the securitizations; accordingly, unamortized costs of $26.4 million and $23.6 million as of September 30 and June 30, 2007, respectively, are included in other assets on the consolidated balance sheets.

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Securitization notes payable as of September 30, 2007, consists of the following (dollars in thousands):

Transaction	Maturity Date (b)	Original Note Amount		Original Weighted Average Interest Rate		Receivables Pledged		Note Balance
2004-A-F	February 2011	$	750,000	2.3	%	$	95,238	$	83,742
2004-B-M	March 2011		900,000	2.2	%		136,778		122,464
2004-1	July 2010		575,000	3.7	%		122,218		88,766
2004-C-A	May 2011		800,000	3.2	%		186,030		167,178
2004-D-F	July 2011		750,000	3.1	%		194,295		176,295
2005-A-X	October 2011		900,000	3.7	%		264,824		239,640
2005-1	May 2011		750,000	4.5	%		242,847		177,353
2005-B-M	May 2012		1,350,000	4.1	%		505,321		449,798
2005-C-F	June 2012		1,100,000	4.5	%		471,554		427,418
2005-D-A	November 2012		1,400,000	4.9	%		679,002		619,836
2006-1	May 2013		945,000	5.3	%		502,474		421,216
2006-RM	January 2014		1,200,000	5.4	%		1,116,344		1,015,126
2006-A-F	September 2013		1,350,000	5.6	%		915,987		838,236
2006-B-G	September 2013		1,200,000	5.2	%		908,285		834,721
2007-A-X	October 2013		1,200,000	5.2	%		1,001,313		926,426
2007-B-F	December 2013		1,500,000	5.2	%		1,394,740		1,287,380
2007-1	March 2016		1,000,000	5.4	%		891,568		892,208
2007-C-M	April 2014		1,500,000	5.5	%		1,543,312		1,440,489
2007-D-F	June 2014		1,000,000	5.5	%		1,066,819		999,972
BV2005-LJ-1 (a)	May 2012		232,100	5.1	%		72,780		74,562
BV2005-LJ-2 (a)	February 2014		185,596	4.6	%		67,713		69,639
BV2005-3 (a)	June 2014		220,107	5.1	%		100,477		103,900
LB2003-C (a)	April 2010		250,000	2.6	%		25,156		25,136
LB2004-A (a)	July 2010		300,000	2.3	%		39,761		41,181
LB2004-B (a)	April 2011		250,000	3.5	%		44,267		45,869
LB2004-C (a)	July 2011		350,000	3.5	%		87,506		86,725
LB2005-A (a)	April 2012		350,000	4.1	%		114,482		110,876
LB2005-B (a)	June 2012		350,000	4.4	%		145,480		139,102
LB2006-A (a)	May 2013		450,000	5.4	%		245,506		245,284
LB2006-B (a)	September 2013		500,000	5.2	%		332,110		325,273
LB2007-A	January 2014		486,000	5.0	%		398,535		405,802
		$	24,093,803			$	13,912,722	$	12,881,613

(a) Transactions relate to securitization Trusts acquired by us.

(b) Maturity date represents final legal maturity of securitization notes payable. Securitization notes payable are expected to be paid based on amortization of the finance receivables pledged to the Trusts.

At the time of securitization of finance receivables, we are required to pledge assets equal to a specified percentage of the securitization pool to support the securitization transaction. Typically, the assets pledged consist of cash deposited to a restricted account and additional receivables delivered to the Trust, which create overcollateralization. The securitization transactions require the percentage of assets pledged to support the transaction to increase until a specified level is attained. Excess cash flows generated by the Trusts are added to the restricted cash account or used to pay down outstanding debt in the Trusts, creating overcollateralization until the targeted percentage level of assets has been reached. Once the targeted percentage level of assets is reached and maintained, excess cash flows generated by the Trusts are released to us as distributions from Trusts. Additionally, as the balance of the securitization pool declines, the amount

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of pledged assets needed to maintain the required percentage level is reduced. Assets in excess of the required percentage are also released to us as distributions from Trusts.

With respect to our securitization transactions covered by a financial guaranty insurance policy, agreements with the insurers provide that if portfolio performance ratios (delinquency, cumulative default or cumulative net loss) in a Trust’s pool of receivables exceed certain targets, the specified credit enhancement levels would be increased.

Agreements with our financial guaranty insurance providers contain additional specified targeted portfolio performance ratios that are higher than those described in the preceding paragraph. If, at any measurement date, the targeted portfolio performance ratios with respect to any insured Trust were to exceed these higher levels, provisions of the agreements permit our financial guaranty insurance providers to terminate our servicing rights to the receivables sold to that Trust.

NOTE 6 – DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES

As of September 30 and June 30, 2007, we had interest rate swap agreements with underlying notional amounts of $3,417.7 million and $2,355.1 million, respectively. The fair value of our interest rate swap agreements of $22.2 million as of September 30, 2007, is included in other liabilities on the consolidated balance sheets. The fair value of our interest rate swap agreements of $14.9 million as of June 30, 2007, is included in other assets on the consolidated balance sheets. Interest rate swap agreements designated as hedges had unrealized losses of $22.0 million and unrealized gains of $14.2 million included in accumulated other comprehensive income as of September 30 and June 30, 2007, respectively. The ineffectiveness related to the interest rate swap agreements designated as hedges was not material for the three month periods ended September 30, 2007 and 2006. We estimate approximately $4.3 million of unrealized losses included in other comprehensive income will be reclassified into earnings within the next twelve months.

As of September 30 and June 30, 2007, we had interest rate cap agreements with underlying notional amounts of $3,981.0 million and $4,323.7 million, respectively. The fair value of our interest rate cap agreements purchased by our special purpose finance subsidiaries of $10.9 million and $13.4 million as of September 30 and June 30, 2007, respectively, are included in other assets on the consolidated balance sheets. The fair value of our interest rate cap agreements sold by us of $10.9 million and $13.4 million as of September 30 and June 30, 2007, respectively, are included in other liabilities on the consolidated balance sheets.

Under the terms of our derivative financial instruments, we are required to pledge certain funds to be held in restricted cash accounts as collateral for the outstanding derivative transactions. As of September 30 and June 30, 2007, these restricted cash accounts totaled $20.0 million and $10.2 million, respectively, and are included in other assets on the consolidated balance sheets.

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NOTE 7 – COMMITMENTS AND CONTINGENCIES

Guarantees of Indebtedness

The payments of principal and interest on our senior notes and convertible senior notes are guaranteed by certain of our subsidiaries. The carrying value of the senior notes and convertible senior notes was $950.0 million as of September 30 and June 30, 2007. See guarantor consolidating financial statements in Note 13.

Legal Proceedings

As a consumer finance company, we are subject to various consumer claims and litigation seeking damages and statutory penalties, based upon, among other things, usury, disclosure inaccuracies, wrongful repossession, violations of bankruptcy stay provisions, certificate of title disputes, fraud, breach of contract and discriminatory treatment of credit applicants. Some litigation against us could take the form of class action complaints by consumers and/or shareholders. As the assignee of finance contracts originated by dealers, we may also be named as a co-defendant in lawsuits filed by consumers principally against dealers. The damages and penalties claimed by consumers in these types of matters can be substantial. The relief requested by the plaintiffs varies but can include requests for compensatory, statutory and punitive damages. We believe that we have taken prudent steps to address and mitigate the litigation risks associated with our business activities. In the opinion of management, the ultimate aggregate liability, if any, arising out of any such pending or threatened litigation will not be material to our consolidated financial position or our results of operations.

NOTE 8 – COMMON STOCK AND WARRANTS

The following summarizes share repurchase activity:

	Three Months Ended September 30,
	2007		2006
Number of shares		5,734,850		13,462,430
Average price per share	$	22.30	$	24.06

As of October 31, 2007, we had repurchased $1,374.8 million of our common stock since April 2004 and we had remaining authorization to repurchase $172.0 million of our common stock. A covenant in our senior note indenture entered into in June 2007 limits our ability to repurchase stock. As of October 31, 2007, we have approximately $40 million available for share repurchases under the covenant limits.

In September 2002, we issued five-year warrants to purchase 1,287,691 shares of our common stock at $9.00 per share. In April 2005, 39,695 warrants were

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exercised, which resulted in a net settlement of 24,431 shares of our common stock. In July 2006, we repurchased 17,687 shares of these warrants for approximately $334,000. In September 2007, 1,185,225 warrants were exercised, which resulted in a net settlement of 1,065,047 shares of our common stock for approximately $8.6 million. The remaining outstanding warrants expired during the three months ended September 30, 2007.

NOTE 9 – INCOME TAXES

We adopted the provisions of FIN 48 on July 1, 2007. The adoption of FIN 48 resulted in a decrease to retained earnings of $0.5 million, an increase in deferred income taxes of $53.1 million and an increase to accrued taxes and expenses of $53.6 million.

Upon implementation of FIN 48 on July 1, 2007, unrecognized tax benefits were $42.3 million. The amount, if recognized, that would affect the effective tax rate is $17.7 million and includes the federal benefit of state taxes. We recognize accrued interest and penalties associated with uncertain tax positions as part of the income tax provision. As of July 1, 2007, accrued interest and penalties associated with uncertain tax positions was $5.6 million and $6.9 million, respectively. During the three months ended September 30, 2007, we accrued an additional $0.9 million in potential interest and $0.4 million in potential penalties associated with uncertain tax positions.

For the three months ended September 30, 2007, there were no material changes to the total amount of unrecognized tax benefits. We do not expect any significant increases or decreases for uncertain tax positions during the next twelve months.

We file income tax returns in the U.S. federal jurisdiction, and various state, local, and foreign jurisdictions. Our U.S. federal income tax returns subsequent to fiscal year 2003 remain subject to examination by the Internal Revenue Service (“IRS”). The IRS began an examination of our fiscal years 2004 and 2005 consolidated federal income tax returns in the second quarter of fiscal year 2007. We anticipate that the examination for those fiscal years will be concluded by the end of calendar year 2008. Accordingly, we have agreed to extend our statute of limitations for the 2004 tax year until September 30, 2008. Foreign and U.S. state jurisdictions have statutes of limitations that generally range from 3 to 5 years. Our tax returns are currently under examination in various U.S. state and foreign jurisdictions.

Our effective income tax rate was 28.4% and 36.9% for the three months ended September 30, 2007 and 2006, respectively. The decrease in the rate for the three months ended September 30, 2007, is primarily a result of revised estimates of our deferred tax assets and liabilities relating to state income tax rates and the exercise of warrants issued in September 2002.

14

NOTE 10 – RESTRUCTURING CHARGES

As of September 30, 2007, total costs incurred to date related to our restructuring activities include $22.3 million in personnel-related costs and $69.6 million of contract termination and other associated costs.

A summary of the liabilities, which are included in accrued taxes and expenses on the consolidated balance sheets, for restructuring charges for the three months ended September 30, 2007, is as follows (in thousands):

	Personnel- Related Costs			Contract Termination Costs		Other Associated Costs			Total
Balance at June 30, 2007	$	122		$	4,175	$	1,973		$	6,270
Cash settlements							(117	)		(117	)
Adjustments		(122	)				(8	)		(130	)
Balance at September 30, 2007				$	4,175	$	1,848		$	6,023

NOTE 11 – EARNINGS PER SHARE

A reconciliation of weighted average shares used to compute basic and diluted earnings per share is as follows (dollars in thousands, except per share data):

	Three Months Ended September 30,
	2007		2006
Net income	$	61,819	$	74,236
Interest expense related to 2003 convertible senior notes, net of related tax effects		817		719
Adjusted net income	$	62,636	$	74,955
Basic weighted average shares		115,550,318		125,278,738
Incremental shares resulting from assumed conversions:
Stock-based compensation and warrants		1,856,303		3,734,340
2003 convertible senior notes		10,705,205		10,705,205
		12,561,508		14,439,545
Diluted weighted average shares		128,111,826		139,718,283
Earnings per share:
Basic	$	0.53	$	0.59
Diluted	$	0.49	$	0.54

15

Basic earnings per share have been computed by dividing net income by weighted average shares outstanding.

Diluted earnings per share have been computed by dividing net income, adjusted for interest expense (net of related tax effects) related to our convertible senior notes issued in November 2003, by the weighted average shares and assumed incremental shares. The treasury stock method was used to compute the assumed incremental shares related to our outstanding stock-based compensation and warrants and will be used to compute the shares related to our convertible senior notes issued in September 2006 on assumed incremental shares. The average common stock market prices for the periods were used to determine the number of incremental shares. Options to purchase approximately 1.7 million and 0.8 million shares of common stock at September 30, 2007 and 2006, respectively, were not included in the computation of diluted earnings per share because the option exercise price was greater than the average market price of the common shares. Warrants to purchase approximately 30.0 million shares of common stock for the three months ended September 30, 2007 and 2006, were not included in the computation of diluted earnings per share because the exercise price was greater than the average market price of the common shares.

The if-converted method was used to calculate the impact of our convertible senior notes issued in November 2003 on assumed incremental shares.

NOTE 12 – SUPPLEMENTAL CASH FLOW INFORMATION

Cash payments for interest costs and income taxes consist of the following (in thousands):

	Three Months Ended September 30,
	2007		2006
Interest costs (none capitalized)	$	207,392	$	152,525
Income taxes		31,308		27,993

NOTE 13 – GUARANTOR CONSOLIDATING FINANCIAL STATEMENTS

The payment of principal and interest on our senior notes and convertible senior notes are guaranteed by certain of our subsidiaries (the “Subsidiary Guarantors”). The separate financial statements of the Subsidiary Guarantors are not included herein because the Subsidiary Guarantors are our wholly-owned consolidated subsidiaries and are jointly, severally, fully and unconditionally liable for the obligations represented by the convertible senior notes. We believe that the consolidating financial information for AmeriCredit Corp., 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.

16

The consolidating financial statements present consolidating financial data 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 parent company and our subsidiaries on a consolidated basis and (v) the parent company and our subsidiaries on a consolidated basis.

Investments in subsidiaries are accounted for by the parent company using the equity method for purposes of this presentation. Results of operations 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.

17

AmeriCredit Corp.

Consolidating Balance Sheet

September 30, 2007

(Unaudited, in Thousands)

	AmeriCredit Corp.			Guarantors		Non- Guarantors		Eliminations			Consolidated
ASSETS
Cash and cash equivalents				$	624,428	$	12,642				$	637,070
Finance receivables, net					243,030		15,289,756					15,532,786
Restricted cash - securitization notes payable							994,813					994,813
Restricted cash - credit facilities							374,378					374,378
Property and equipment, net	$	6,110			52,607							58,717
Leased vehicles, net					169,701							169,701
Deferred income taxes		68,029			94,345		77,438					239,812
Goodwill					209,417							209,417
Other assets		15,880			103,466		92,183					211,529
Due from affiliates		900,543					2,234,492	$	(3,135,035	)
Investment in affiliates		2,105,953			4,027,244		531,281		(6,664,478	)
Total assets	$	3,096,515		$	5,524,238	$	19,606,983	$	(9,799,513	)	$	18,428,223
Liabilities:
Credit facilities						$	2,212,780				$	2,212,780
Securitization notes payable							12,881,613					12,881,613
Senior notes	$	200,000										200,000
Convertible senior notes		750,000										750,000
Funding payable				$	69,870		568					70,438
Accrued taxes and expenses		135,549			49,781		80,105					265,435
Other liabilities		573			36,991							37,564
Due to affiliates					3,134,816			$	(3,134,816	)
Total liabilities		1,086,122			3,291,458		15,175,066		(3,134,816	)		16,417,830
Shareholders’ equity:
Common stock		1,218			75,355		30,627		(105,982	)		1,218
Additional paid-in capital		91,780			75,866		1,932,078		(2,007,944	)		91,780
Accumulated other comprehensive income		27,013			7,182		43,561		(50,743	)		27,013
Retained earnings		2,061,422			2,074,377		2,425,651		(4,500,028	)		2,061,422
		2,181,433			2,232,780		4,431,917		(6,664,697	)		2,181,433
Treasury stock		(171,040	)									(171,040	)
Total shareholders’ equity		2,010,393			2,232,780		4,431,917		(6,664,697	)		2,010,393
Total liabilities and shareholders’ equity	$	3,096,515		$	5,524,238	$	19,606,983	$	(9,799,513	)	$	18,428,223

18

AmeriCredit Corp.

Consolidating Balance Sheet

June 30, 2007

(in thousands)

	AmeriCredit Corp.			Guarantors		Non- Guarantors		Eliminations			Consolidated
ASSETS
Cash and cash equivalents				$	899,386	$	10,918				$	910,304
Finance receivables, net					201,036		14,901,334					15,102,370
Restricted cash - securitization notes payable							1,014,353					1,014,353
Restricted cash - credit facilities							166,884					166,884
Property and equipment, net	$	6,194			52,378							58,572
Leased vehicles, net					33,968							33,968
Deferred income taxes		(32,624	)		119,602		64,726					151,704
Goodwill					208,435							208,435
Other assets		16,454			75,468		72,508					164,430
Due from affiliates		1,029,444					2,273,274	$	(3,302,718	)
Investment in affiliates		2,070,684			4,070,471		529,664		(6,670,819	)
Total assets	$	3,090,152		$	5,660,744	$	19,033,661	$	(9,973,537	)	$	17,811,020
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Credit facilities						$	2,541,702				$	2,541,702
Securitization notes payable							11,939,447					11,939,447
Senior notes	$	200,000										200,000
Convertible senior notes		750,000										750,000
Funding payable				$	86,917		557					87,474
Accrued taxes and expenses		64,251			60,656		74,152					199,059
Other liabilities		751			17,437							18,188
Due to affiliates					3,302,495			$	(3,302,495	)
Total liabilities		1,015,002			3,467,505		14,555,858		(3,302,495	)		15,735,870
Shareholders’ equity:
Common stock		1,206			75,355		30,627		(105,982	)		1,206
Additional paid-in capital		71,323			75,866		2,048,885		(2,124,751	)		71,323
Accumulated other comprehensive income		45,694			27,592		37,414		(65,006	)		45,694
Retained earnings		2,000,066			2,014,426		2,360,877		(4,375,303	)		2,000,066
		2,118,289			2,193,239		4,477,803		(6,671,042	)		2,118,289
Treasury stock		(43,139	)									(43,139	)
Total shareholders’ equity		2,075,150			2,193,239		4,477,803		(6,671,042	)		2,075,150
Total liabilities and shareholders’ equity	$	3,090,152		$	5,660,744	$	19,033,661	$	(9,973,537	)	$	17,811,020

19

AmeriCredit Corp.

Consolidating Statement of Income

Three Months Ended September 30, 2007

(Unaudited, in Thousands)

	AmeriCredit Corp.		Guarantors			Non- Guarantors			Eliminations			Consolidated
Revenue
Finance charge income			$	32,206		$	579,652					$	611,858
Servicing income (loss)				13,390			(13,014	)					376
Other income	$	15,358		440,700			850,471		$	(1,266,089	)		40,440
Equity in income of affiliates		59,951		64,774						(124,725	)
		75,309		551,070			1,417,109			(1,390,814	)		652,674
Costs and expenses
Operating expenses		4,683		18,553			81,729						104,965
Depreciation expense - leased vehicles				5,585									5,585
Provision for loan losses				5,775			238,870						244,645
Interest expense		8,066		463,240			1,006,044			(1,266,089	)		211,261
Restructuring charges, net				(130	)								(130	)
		12,749		493,023			1,326,643			(1,266,089	)		566,326
Income before income taxes		62,560		58,047			90,466			(124,725	)		86,348
Income tax provision (benefit)		741		(1,904	)		25,692						24,529
Net income	$	61,819	$	59,951		$	64,774		$	(124,725	)	$	61,819

20

AmeriCredit Corp.

Consolidating Statement of Income

Three Months Ended September 30, 2006

(Unaudited, in Thousands)

	AmeriCredit Corp.			Guarantors			Non- Guarantors			Eliminations			Consolidated
Revenue
Finance charge income				$	22,949		$	461,408					$	484,357
Servicing income (loss)					9,544			(2,085	)					7,459
Other income	$	8,866			360,910			816,974		$	(1,154,945	)		31,805
Equity in income of affiliates		75,367			60,724						(136,091	)
		84,233			454,127			1,276,297			(1,291,036	)		523,621
Costs and expenses
Operating expenses		9,010			10,895			68,383						88,288
Provision for loan losses					(9,222	)		183,127						173,905
Interest expense		1,648			368,216			928,552			(1,154,945	)		143,471
Restructuring charges, net					309									309
		10,658			370,198			1,180,062			(1,154,945	)		405,973
Income before income taxes		73,575			83,929			96,235			(136,091	)		117,648
Income tax (benefit) provision		(661	)		8,562			35,511						43,412
Net income	$	74,236		$	75,367		$	60,724		$	(136,091	)	$	74,236

21

AmeriCredit Corp.

Consolidating Statement of Cash Flows

Three Months Ended September 30, 2007

(Unaudited, in Thousands)

	AmeriCredit Corp.			Guarantors			Non- Guarantors			Eliminations			Consolidated
Cash flows from operating activities:
Net income	$	61,819		$	59,951		$	64,774		$	(124,725	)	$	61,819
Adjustments to reconcile net income to net cash (used) provided by operating activities:
Depreciation and amortization		83			8,529			8,343						16,955
Accretion and amortization of loan fees					4,395			293						4,688
Provision for loan losses					5,775			238,870						244,645
Deferred income taxes		653			36,837			(12,961	)					24,529
Stock-based compensation expense		7,032												7,032
Other					804			(366	)					438
Equity in income of affiliates		(59,951	)		(64,774	)					124,725
Changes in assets and liabilities:
Other assets		574			(38,937	)		(694	)					(39,057	)
Accrued taxes and expenses		(27,333	)		(19,414	)		5,937						(40,810	)
Net cash (used) provided by operating activities		(17,123	)		(6,834	)		304,196						280,239
Cash flows from investing activities:
Purchases of receivables					(2,290,411	)		(2,190,249	)		2,190,249			(2,290,411	)
Principal collections and recoveries on receivables					35,557			1,550,256						1,585,813
Net proceeds from sale of receivables					2,190,249						(2,190,249	)
Distributions from gain on sale Trusts								173						173
Purchases of property and equipment		1			(2,878	)								(2,877	)
Net purchases of leased vehicles					(131,713	)								(131,713	)
Change in restricted cash - securitization notes payable								19,540						19,540
Change in restricted cash - credit facilities								(207,180	)					(207,180	)
Change in other assets					(9,778	)		1,174						(8,604	)
Net change in investment in affiliates		(1,400	)		118,424			(1,617	)		(115,407	)
Net cash (used) provided by investing activities		(1,399	)		(90,550	)		(827,903	)		(115,407	)		(1,035,259	)
Cash flows from financing activities:
Net change in credit facilities								(333,457	)					(333,457	)
Issuance of securitization notes payable								2,500,000						2,500,000
Payments on securitization notes payable								(1,559,673	)					(1,559,673	)
Debt issuance costs								(8,985	)					(8,985	)
Repurchase of common stock		(127,901	)											(127,901	)
Proceeds from issuance of common stock		10,199						(116,807	)		116,807			10,199
Other net changes		(78	)		(1	)								(79	)
Net change in due (to) from affiliates		128,901			(178,287	)		44,338			5,048
Net cash provided (used) by financing activities		11,121			(178,288	)		525,416			121,855			480,104
Net (decrease) increase in cash and cash equivalents		(7,401	)		(275,672	)		1,709			6,448			(274,916	)
Effect of Canadian exchange rate changes on cash and cash equivalents		7,401			714			15			(6,448	)		1,682
Cash and cash equivalents at beginning of period					899,386			10,918						910,304
Cash and cash equivalents at end of period	$			$	624,428		$	12,642		$			$	637,070

22

AmeriCredit Corp.

Consolidating Statement of Cash Flows

Three Months Ended September 30, 2006

(Unaudited, in Thousands)

	AmeriCredit Corp.			Guarantors			Non- Guarantors			Eliminations			Consolidated
Cash flows from operating activities:
Net income	$	74,236		$	75,367		$	60,724		$	(136,091	)	$	74,236
Adjustments to reconcile net income to net cash (used) provided by operating activities:
Depreciation and amortization		528			2,673			2,877						6,078
Accretion and amortization of loan fees					(771	)		(6,716	)					(7,487	)
Provision for loan losses					(9,222	)		183,127						173,905
Deferred income taxes		(745	)		5,387			38,770						43,412
Stock-based compensation expense		3,886												3,886
Other					5,532			(8,875	)					(3,343	)
Equity in income of affiliates		(75,367	)		(60,724	)					136,091
Changes in assets and liabilities:
Other assets		(126	)		(38,076	)		2,380						(35,822	)
Accrued taxes and expenses		(31,749	)		(13,406	)		6,627						(38,528	)
Net cash (used) provided by operating activities		(29,337	)		(33,240	)		278,914						216,337
Cash flows from investing activities:
Purchases of receivables					(1,790,828	)		(1,717,211	)		1,717,211			(1,790,828	)
Principal collections and recoveries on receivables					66,769			1,264,338						1,331,107
Net proceeds from sale of receivables					1,717,211						(1,717,211	)
Distributions from gain on sale Trusts								76,017						76,017
Purchases of property and equipment					(1,064	)								(1,064	)
Change in restricted cash - securitization notes payable								(489,640	)					(489,640	)
Change in restricted cash - credit facilities								(619,369	)					(619,369	)
Change in other assets					4,207			5						4,212
Net change in investment in affiliates		87			835,409			8,221			(843,717	)
Net cash provided (used) by investing activities		87			831,704			(1,477,639	)		(843,717	)		(1,489,565	)
Cash flows from financing activities:
Net change in credit facilities								(135,187	)					(135,187	)
Issuance of securitization notes payable								2,550,000						2,550,000
Payments on securitization notes payable								(988,590	)					(988,590	)
Issuance of convertible senior notes		550,000												550,000
Debt issuance costs		(12,532	)					(3,767	)					(16,299	)
Proceeds from sale of warrants related to convertible debt		93,086												93,086
Purchase of call option related to convertible debt		(145,710	)											(145,710	)
Repurchase of common stock		(323,964	)											(323,964	)
Proceeds from issuance of common stock		14,020						(822,175	)		822,175			14,020
Other net changes		3,642			(142	)								3,500
Net change in due (to) from affiliates		(149,071	)		(255,282	)		382,997			21,356
Net cash provided (used) by financing activities		29,471			(255,424	)		983,278			843,531			1,600,856
Net increase (decrease) in cash and cash equivalents		221			543,040			(215,447	)		(186	)		327,628
Effect of Canadian exchange rate changes on cash and cash equivalents		(221	)		(67	)		1			186			(101	)
Cash and cash equivalents at beginning of period					284,795			228,445						513,240
Cash and cash equivalents at end of period	$			$	827,768		$	12,999		$			$	840,767

23

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

We are a leading independent auto finance company specializing in purchasing retail automobile installment sales contracts originated by franchised and select independent dealers in connection with the sale of used and new automobiles and, to a lesser extent, making loans directly to consumers buying new and used vehicles as well as providing lease financing through our dealership network. We generate revenue and cash flows primarily through the purchase, retention, subsequent securitization and servicing of finance receivables. As used herein, “loans” include auto finance receivables originated by dealers and purchased by us as well as direct extensions of credit made by us to consumer borrowers. To fund the acquisition of receivables prior to securitization and to fund the repurchase of receivables pursuant to cleanup call options, we use available cash and borrowings under our credit facilities. We earn finance charge income on the finance receivables and pay interest expense on borrowings under our credit facilities.

We, through wholly-owned subsidiaries, periodically transfer receivables to securitization trusts (“Trusts”) that issue asset-backed securities to investors. We retain an interest in these securitization transactions in the form of restricted cash accounts and overcollateralization whereby more receivables are transferred to the Trusts than the amount of asset-backed securities issued by the Trusts as well as the estimated future excess cash flows expected to be received by us over the life of the securitization. Excess cash flows result from the difference between the finance charges received from the obligors on the receivables and the interest paid to investors in the asset-backed securities, net of credit losses and expenses.

Excess cash flows from the Trusts are initially utilized to fund credit enhancement requirements in order to attain specific credit ratings for the asset-backed securities issued by the Trusts. Once predetermined credit enhancement requirements are reached and maintained, excess cash flows are distributed to us. In addition to excess cash flows, we receive monthly base servicing fees and we collect other fees, such as late charges, as servicer for securitization Trusts. For securitization transactions that involve the purchase of a financial guaranty insurance policy, credit enhancement requirements will increase if targeted portfolio performance ratios are exceeded.

We structure our securitization transactions as secured financings. Accordingly, following a securitization, the finance receivables and the related securitization notes payable remain on the consolidated balance sheets. We recognize finance charge and fee income on the receivables and interest expense on the securities issued in the securitization transaction and record a provision for loan losses to cover probable loan losses on the receivables.

24

Prior to October 1, 2002, securitization transactions were structured as sales of finance receivables. We also acquired two securitization Trusts which were accounted for as sales of finance receivables. Receivables sold under this structure are referred to herein as “gain on sale receivables.” At September 30, 2007, we had one outstanding gain on sale securitization that represents less than one percent of our managed receivables.

On May 1, 2006, we acquired the stock of Bay View Acceptance Corporation (“BVAC”). BVAC serves auto dealers offering specialized auto finance products, including extended term financing and higher loan-to-value advances primarily to consumers with prime credit scores.

On January 1, 2007, we acquired the stock of Long Beach Acceptance Corp. (“LBAC”). LBAC serves auto dealers by offering auto finance products primarily to consumers with near-prime credit bureau scores.

CRITICAL ACCOUNTING ESTIMATES

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions which affect the reported amounts of assets and liabilities and the disclosures of contingent assets and liabilities as of the date of the financial statements and the amount of revenue and costs and expenses during the reporting periods. Actual results could differ from those estimates and those differences may be material. The accounting estimates that we believe are the most critical to understanding and evaluating our reported financial results include the following:

Allowance for loan losses

The allowance for loan losses is established systematically based on the determination of the amount of probable credit losses inherent in the finance receivables as of the reporting date. We review charge-off experience factors, delinquency reports, historical collection rates, estimates of the value of the underlying collateral, economic trends, such as unemployment rates, and other information in order to make the necessary judgments as to the probable credit losses. We also use historical charge-off experience to determine a loss confirmation period, which is defined as the time between when an event, such as delinquency status, giving rise to a probable credit loss occurs with respect to a specific account and when such account is charged off. This loss confirmation period is applied to the forecasted probable credit losses to determine the amount of losses inherent in finance receivables at the reporting date. Assumptions regarding credit losses and loss confirmation periods are reviewed periodically and may be impacted by actual performance of finance receivables and changes in any of the factors discussed above. Should the credit loss assumption or loss confirmation period increase, there would be an increase in the amount of allowance for loan losses required, which would decrease the net carrying value of finance receivables and increase the amount of provision for loan losses recorded on the consolidated statements of income

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and comprehensive income. A 10% and 20% increase in cumulative net credit losses over the loss confirmation period would increase the allowance for loan losses as of September 30, 2007, as follows (in thousands):

	10% adverse change		20% adverse change
Impact on allowance for loan losses	$	84,474	$	168,948

We believe that the allowance for loan losses is adequate to cover probable losses inherent in our receivables; however, because the allowance for loan losses is based on estimates, there can be no assurance that the ultimate charge-off amount will not exceed such estimates or that our credit loss assumptions will not increase.

Income Taxes

We are subject to income tax in the United States and Canada. In the ordinary course of our business, there may be transactions, calculations, structures and filing positions where the ultimate tax outcome is uncertain. At any point in time, multiple tax years are subject to audit by various taxing jurisdictions and we record liabilities for anticipated tax issues based on the requirements of Financial Accounting Standards Board Interpretation No. 48 (“FIN 48”), “Accounting for Uncertainty in Income Taxes–an interpretation of FASB Statement 109.” Management believes that the estimates are reasonable. However, due to expiring statutes of limitations, audits, settlements, changes in tax law or new authoritative rulings, no assurance can be given that the final outcome of these matters will be comparable to what was reflected in the historical income tax provisions and accruals. We may need to adjust our accrued tax assets or liabilities if actual results differ from estimated results or if we adjust these assumptions in the future, which could materially impact the effective tax rate, earnings, accrued tax balances and cash.

As a part of our financial reporting process, we must assess the likelihood that our deferred tax assets can be recovered. If recovery is not likely, the provision for taxes must be increased by recording a reserve in the form of a valuation allowance for the deferred tax assets that are estimated to be unrecoverable. In this process, certain criteria are evaluated including the existence of deferred tax liabilities that can be used to absorb deferred tax assets, taxable income in prior carryback years that can be used to absorb net operating losses, credit carrybacks, and estimated taxable income in future years. Based upon our earnings history and earnings projections, management believes it is more likely than not that the tax benefits of the asset will be fully realized. Accordingly, no valuation allowance has been provided on deferred taxes. Our judgment regarding future taxable income may change due to future market conditions, changes in U.S. or international tax laws and other factors. These changes, if any, may require adjustments to these deferred tax assets and an accompanying reduction or increase in net income in the period in which such determinations are made.

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Since July 1, 2007, we have accounted for uncertainty in income taxes recognized in the financial statements in accordance with FIN 48. FIN 48 requires that a more-likely-than-not threshold be met before the benefit of a tax position may be recognized in the financial statements and prescribes how such benefit should be measured. It also provides guidance on derecognition, classification, accrual of interest and penalties, accounting in interim periods, disclosure and transition.

RESULTS OF OPERATIONS

Three Months Ended September 30, 2007 as compared to Three Months Ended September 30, 2006

Changes in Finance Receivables:

A summary of changes in our finance receivables is as follows (in thousands):

	Three Months Ended September 30,
	2007			2006
Balance at beginning of period	$	15,922,458		$	11,775,665
Loans purchased		2,239,619			1,683,969
Loans repurchased from gain on sale Trusts					251,093
Liquidations and other		(1,784,549	)		(1,492,014	)
Balance at end of period	$	16,377,528		$	12,218,713
Average finance receivables	$	16,188,641		$	11,953,970

The increase in loans purchased during the three months ended September 30, 2007, as compared to the three months ended September 30, 2006, was primarily due to originations of $272.2 million through the LBAC platform, an increase in originations to $251.3 million from $134.0 million through the BVAC platform and an increase in the number of our relationships with auto dealers. The increase in liquidations and other resulted primarily from increased collections and charge-offs on finance receivables due to the increase in average finance receivables.

The average new loan size increased to $19,159 for the three months ended September 30, 2007, from $17,825 for the three months ended September 30, 2006, due to loans purchased through the BVAC and LBAC platforms which are generally larger in size. The average annual percentage rate for finance receivables purchased during the three months ended September 30, 2007, decreased to 15.4% from 16.4% during the three months ended September 30, 2006, due to lower average percentage rates on the BVAC and LBAC loans purchased.

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Net Margin:

Net margin is the difference between finance charge and other income earned on our receivables and the cost to fund the receivables as well as the cost of debt incurred for general corporate purposes.

Our net margin as reflected on the consolidated statements of income is as follows (in thousands):

	Three Months Ended September 30,
	2007			2006
Finance charge income	$	611,858		$	484,357
Other income		40,440			31,805
Interest expense		(211,261	)		(143,471	)
Net margin	$	441,037		$	372,691

Net margin as a percentage of average finance receivables is as follows:

	Three Months Ended September 30,
	2007		2006
Finance charge income	15.0	%	16.1	%
Other income	1.0		1.1
Interest expense	(5.2	)	(4.8	)
Net margin as a percentage of average finance receivables	10.8	%	12.4	%

The decrease in net margin for the three months ended September 30, 2007, as compared to the three months ended September 30, 2006, was a result of the lower effective yield on the higher quality BVAC and LBAC portfolios, combined with an increase in interest expense caused by higher market interest rates affecting the cost of short-term borrowings on our credit facilities, higher leverage and a continued run-off of older securitizations with lower interest costs. The net margin as a percentage of average finance receivables of 10.8%, would be 11.5% for the three months ended September 30, 2007, excluding the LBAC portfolio.

Revenue:

Finance charge income increased by 26% to $611.9 million for the three months ended September 30, 2007, from $484.4 million for the three months ended September 30, 2006, primarily due to the 35% increase in average finance receivables. The effective yield on our finance receivables decreased to 15.0% for the three months ended September 30, 2007, from 16.1% for the three months ended September 30, 2006. The effective yield represents finance charges and fees taken into earnings during the period as a percentage of average finance receivables and may be lower than the contractual rates of our finance

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contracts due to finance receivables in nonaccrual status. The decrease in the effective yield is due mainly to a lower effective yield on the BVAC and LBAC portfolios.

Servicing income decreased for the three months ended September 30, 2007, as compared to the three months ended September 30, 2006, as a result of the runoff of our gain on sale receivables portfolio.

Other income consists of the following (in thousands):

	Three Months Ended September 30,
	2007		2006
Investment income	$	18,957	$	21,040
Late fees and other income		21,483		10,765
	$	40,440	$	31,805

Investment income decreased as a result of lower invested cash balances. Late fees and other income increased primarily as a result of $6.6 million of income earned during the three months ended September 30, 2007, on leased vehicles.

Costs and Expenses:

Operating Expenses

Operating expenses increased by 19% to $105.0 million for the three months ended September 30, 2007, from $88.3 million for the three months ended September 30, 2006, as a result of increased loans purchased and higher average finance receivables outstanding. Our operating expenses are predominately related to personnel costs that include base salary and wages, performance incentives and benefits as well as related employment taxes. Personnel costs represented 77.1% and 74.8% of total operating expenses for the three months ended September 30, 2007 and 2006, respectively.

Operating expenses as an annualized percentage of average finance receivables were 2.6% for the three months ended September 30, 2007, as compared to 2.9% for the three months ended September 30, 2006. The decrease in operating expenses as an annualized percentage of average finance receivables resulted from cost synergies from the integration of the LBAC portfolio.

Provision for Loan losses

Provisions for loan losses are charged to income to bring our allowance for loan losses to a level which management considers adequate to absorb probable credit losses inherent in the portfolio of finance receivables. The provision for loan losses recorded for the three months ended September 30, 2007 and 2006, reflects inherent losses on receivables originated during those quarters and changes in the amount of inherent losses on receivables originated in prior periods. The provision for loan losses increased to $244.6 million for

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the three months ended September 30, 2007, from $173.9 million for the three months ended September 30, 2006, mainly as a result of increased origination volume. As an annualized percentage of average finance receivables, the provision for loan losses was 6.0% and 5.8% for the three months ended September 30, 2007 and 2006, respectively. The increase in the provision for loan losses as an annualized percentage of average finance receivables was a result of weaker than expected results primarily from the LBAC portfolio and loans originated in calendar year 2006.

Interest Expense

Interest expense increased to $211.3 million for the three months ended September 30, 2007, from $143.5 million for the three months ended September 30, 2006. Average debt outstanding was $15,373.4 million and $11,134.1 million for the three months ended September 30, 2007 and 2006, respectively. Our effective rate of interest paid on our debt increased to 5.5% for the three months ended September 30, 2007, compared to 5.1% for the three months ended September 30, 2006, due to higher borrowing costs on our credit facilities and a continued run-off of older securitizations with lower interest cost.

Taxes

Our effective income tax rate was 28.4% and 36.9% for the three months ended September 30, 2007 and 2006, respectively. The decrease in the rate for the three months ended September 30, 2007, is primarily a result of revised estimates of our deferred tax assets and liabilities relating to state income tax rates and the exercise of warrants issued in September 2002.

Other Comprehensive Loss:

Other comprehensive loss consisted of the following (in thousands):

	Three Months Ended September 30,
	2007			2006
Unrealized losses on credit enhancement assets	$	(198	)	$	(2,610	)
Unrealized losses on cash flow hedges		(36,143	)		(8,255	)
Canadian currency translation adjustment		7,400			(161	)
Income tax benefit		10,260			3,995
	$	(18,681	)	$	(7,031	)

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Cash Flow Hedges

Unrealized losses on cash flow hedges consisted of the following (in thousands):

	Three Months Ended September 30,
	2007			2006
Unrealized losses related to changes in fair value	$	(32,702	)	$	(2,696	)
Reclassification of net unrealized gains into earnings		(3,441	)		(5,559	)
	$	(36,143	)	$	(8,255	)

Unrealized losses related to changes in fair value for the three months ended September 30, 2007 and 2006, were due to changes in the fair value of interest rate swap agreements that were designated as cash flow hedges for accounting purposes. The fair value of the interest rate swap agreements fluctuates based upon changes in forward interest rate expectations.

Unrealized gains or losses on cash flow hedges of our floating rate debt are reclassified into earnings when interest rate fluctuations on securitization notes payable or other hedged items affect earnings.

Canadian Currency Translation Adjustment

Canadian currency translation adjustment gains of $7.4 million and losses of $161,000 for the three months ended September 30, 2007 and 2006, respectively, were included in other comprehensive loss. The translation adjustment is due to the change in the value of our Canadian dollar denominated assets related to the change in the U.S. dollar to Canadian dollar conversion rates during the three months ended September 30, 2007 and 2006. We do not anticipate the settlement of intercompany transactions with our Canadian subsidiaries in the foreseeable future.

CREDIT QUALITY

Generally, we provide financing in relatively high-risk markets, and, therefore, anticipate a corresponding high level of delinquencies and charge-offs.

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The following tables present certain data related to the receivables portfolio (dollars in thousands):

	September 30, 2007
	Finance Receivables			Gain on Sale		Total Managed
Principal amount of receivables, net of fees	$	16,377,528		$	19,844	$	16,397,372
Nonaccretable acquisition fees		(88,750	)
Allowance for loan losses		(755,992	)
Receivables, net	$	15,532,786
Number of outstanding contracts		1,154,221			1,817		1,156,038
Average carrying amount of outstanding contract (in dollars)	$	14,189		$	10,921	$	14,184
Allowance for loan losses and nonaccretable acquisition fees as a percentage of receivables		5.2	%

	June 30, 2007
	Finance Receivables			Gain on Sale		Total Managed
Principal amount of receivables, net of fees	$	15,922,458		$	24,091	$	15,946,549
Nonaccretable acquisition fees		(120,425	)
Allowance for loan losses		(699,663	)
Receivables, net	$	15,102,370
Number of outstanding contracts		1,143,713			2,028		1,145,741
Average carrying amount of outstanding contract (in dollars)	$	13,922		$	11,879	$	13,918
Allowance for loan losses and nonaccretable acquisition fees as a percentage of receivables		5.2	%

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Delinquency

The following is a summary of managed finance receivables that are (i) more than 30 days delinquent, but not yet in repossession, and (ii) in repossession, but not yet charged off (dollars in thousands):

	September 30, 2007
	Finance Receivables				Total Managed
	Amount		Percent		Amount		Percent
Delinquent contracts: 31 to 60 days	$	903,950	5.5	%	$	904,207	5.5	%
Greater than 60 days		424,228	2.6			424,381	2.6
		1,328,178	8.1			1,328,588	8.1
In repossession		60,328	0.4			60,328	0.4
	$	1,388,506	8.5	%	$	1,388,916	8.5	%

	September 30, 2006
	Finance Receivables				Total Managed
	Amount		Percent		Amount		Percent
Delinquent contracts: 31 to 60 days	$	732,239	6.0	%	$	740,277	6.0	%
Greater than 60 days		305,900	2.5			309,315	2.5
		1,038,139	8.5			1,049,592	8.5
In repossession		54,056	0.4			54,721	0.5
	$	1,092,195	8.9	%	$	1,104,313	9.0	%

An account is considered delinquent if a substantial portion of a scheduled payment has not been received by the date such payment was contractually due. Delinquencies in our managed receivables portfolio may vary from period to period based upon the average age or seasoning of the portfolio, seasonality within the calendar year and economic factors. Due to our target customer base, a relatively high percentage of accounts become delinquent at some point in the life of a loan and there is a high rate of account movement between current and delinquent status in the portfolio.

Delinquencies in finance receivables were lower at September 30, 2007, as compared to September 30, 2006, as a result of the inclusion of the LBAC portfolio.

Deferrals

In accordance with our policies and guidelines, we, at times, offer payment deferrals to consumers whereby the consumer is allowed to move up to two

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delinquent payments to the end of the loan generally by paying a fee (approximately the interest portion of the payment deferred, except where state law provides for a lesser amount). Our policies and guidelines limit the number and frequency of deferments that may be granted. Additionally, we generally limit the granting of deferments on new accounts until a requisite number of payments have been received. Due to the nature of our customer base and policies and guidelines of the deferral program, approximately 50% of accounts historically comprising the managed portfolio received a deferral at some point in the life of the account; however, we anticipate that the level of deferments will decline as higher quality loans are added to the portfolio, such as those originated through our LBAC and BVAC platforms, and comprise a greater percentage of the total.

An account for which all delinquent payments are deferred is classified as current at the time the deferment is granted and therefore is not included as a delinquent account. Thereafter, such account is aged based on the timely payment of future installments in the same manner as any other account.

Contracts receiving a payment deferral as an average quarterly percentage of average receivables outstanding were as follows:

	Three Months Ended September 30,
	2007		2006
Finance receivables (as a percentage of average finance receivables)	6.0	%	6.3	%
Total managed portfolio (as a percentage of average managed receivables)	6.0	%	6.3	%

The decrease in the accounts receiving a payment deferral as a percentage of average receivables for the three months ended September 30, 2007, as compared to the three months ended September 30, 2006, is primarily a result of the addition of the LBAC portfolio.

The following is a summary of deferrals as a percentage of receivables outstanding:

	September 30, 2007
	Finance Receivables		Total Managed
Never deferred	80.4	%	80.4	%
Deferred:
1-2 times	16.6		16.6
3-4 times	3.0		3.0
Greater than 4 times
Total deferred	19.6		19.6
Total	100.0	%	100.0	%

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	June 30, 2007
	Finance Receivables		Total Managed
Never deferred	80.5	%	80.6	%
Deferred:
1-2 times	16.3		16.3
3-4 times	3.1		3.1
Greater than 4 times	0.1
Total deferred	19.5		19.4
Total	100.0	%	100.0	%

We evaluate the results of our deferment strategies based upon the amount of cash installments that are collected on accounts after they have been deferred versus the extent to which the collateral underlying the deferred accounts has depreciated over the same period of time. Based on this evaluation, we believe that payment deferrals granted according to our policies and guidelines are an effective portfolio management technique and result in higher ultimate cash collections from the portfolio.

Changes in deferment levels do not have a direct impact on the ultimate amount of finance receivables charged off by us. However, the timing of a charge-off may be affected if the previously deferred account ultimately results in a charge-off. To the extent that deferrals impact the ultimate timing of when an account is charged off, historical charge-off ratios and loss confirmation periods used in the determination of the adequacy of our allowance for loan losses are also impacted. Increased use of deferrals may result in a lengthening of the loss confirmation period, which would increase expectations of credit losses inherent in the loan portfolio and therefore increase the allowance for loan losses and related provision for loan losses. Changes in these ratios and periods are considered in determining the appropriate level of allowance for loan losses and related provision for loan losses.

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Charge-offs

The following table presents charge-off data with respect to our finance receivables portfolio (dollars in thousands):

	Three Months Ended September 30,
	2007			2006
Finance receivables:
Repossession charge-offs	$	289,883		$	223,093
Less: Recoveries		(141,501	)		(108,789	)
Mandatory charge-offs (a)		71,609			47,560
Net charge-offs	$	219,991		$	161,864
Total managed:
Repossession charge-offs	$	289,987		$	232,647
Less: Recoveries		(141,567	)		(112,956	)
Mandatory charge-offs (a)		71,593			46,705
Net charge-offs	$	220,013		$	166,396
Net charge-offs as an annualized percentage of average receivables:
Finance receivables		5.4	%		5.4	%
Total managed portfolio		5.4	%		5.4	%
Recoveries as a percentage of gross repossession charge-offs:
Finance receivables		48.8	%		48.8	%
Total managed portfolio		48.8	%		48.6	%

(a) Mandatory charge-offs represent accounts 120 days delinquent that are charged off in full with no recovery amounts realized at time of charge-off and the net write-down of finance receivables in repossession to the net realizable value of the repossessed vehicle when the repossessed vehicle is legally available for sale.

Net charge-offs as an annualized percentage of average receivables outstanding may vary from period to period based upon the average age or seasoning of the portfolio and economic factors. Total managed portfolio charge-offs of 5.4% would be 5.7% excluding LBAC for the three months ended September 30, 2007. The increase in the total managed portfolio charge-offs, excluding LBAC, for the three months ended September 30, 2007, was a result of the weaker than expected results from loans originated in calendar year 2006.

LIQUIDITY AND CAPITAL RESOURCES

General

Our primary sources of cash are finance charge income, servicing fees, distributions from securitization Trusts, net proceeds from senior notes and convertible senior notes transactions, borrowings under credit facilities, transfers of finance receivables to Trusts in securitization transactions and

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collections and recoveries on finance receivables. Our primary uses of cash are purchases of finance receivables, repayment of credit facilities and securitization notes payable, funding credit enhancement requirements for securitization transactions and credit facilities, operating expenses, income taxes and stock repurchases.

We used cash of $2,290.4 million and $1,790.8 million for the purchase of finance receivables during the three months ended September 30, 2007 and 2006, respectively. These purchases were funded initially utilizing cash and credit facilities and subsequently through long-term financing in securitization transactions.

Credit Facilities

In the normal course of business, in addition to using our available cash, we pledge receivables and borrow under our credit facilities to fund our operations and repay these borrowings as appropriate under our cash management strategy.

As of September 30, 2007, credit facilities consisted of the following (in millions):

Facility Type	Maturity (a)	Facility Amount		Advances Outstanding
Master warehouse facility	October 2009	$	2,500.0
Medium term note facility	October 2009 (b)		750.0	$	750.0
Repurchase facility	August 2008		500.0		384.6
Prime/Near prime facility	September 2008		1,500.0		1,012.4
Canadian facility	May 2008 (c)		151.2		65.8
		$	5,401.2	$	2,212.8

(a) At the maturity date, the outstanding debt balance can either be repaid in full or over time based on the amortization of receivables pledged.

(b) This facility is a revolving facility through the date stated above. During the revolving period, we have the ability to substitute receivables for cash, or vice versa.

(c) Facility amount represents Cdn $150.0 million.

In August 2007, we renewed our repurchase facility, extending the maturing to August 2008.

In September 2007, we terminated a $400.0 million near-prime facility, a $450.0 million BVAC facility and a $600.0 million LBAC facility, and we entered into the prime/near prime facility, which provides up to $1,500.0 million through September 2008 for the financing of prime and near-prime credit quality receivables.

Our credit facilities contain various covenants requiring certain minimum financial ratios, asset quality and portfolio performance ratios (portfolio net loss and delinquency ratios, and pool level cumulative net loss) as well as limits on deferment levels. As of September 30, 2007, we were in compliance with all covenants in our credit facilities.

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Securitizations

We have completed 61 securitization transactions through September 30, 2007, excluding securitization Trusts entered into by BVAC and LBAC prior to their acquisition by us. The proceeds from the transactions were primarily used to repay borrowings outstanding under our credit facilities.

A summary of the active transactions is as follows (in millions):

Transaction	Date	Original Amount		Balance at September 30, 2007
Gain on sale:
BV2003-LJ-1	August 2003	$	193.3	$	19.6
Secured financing:
2004-A-F	February 2004		750.0		83.7
2004-B-M	April 2004		900.0		122.5
2004-1	June 2004		575.0		88.8
2004-C-A	August 2004		800.0		167.2
2004-D-F	November 2004		750.0		176.3
2005-A-X	February 2005		900.0		239.6
2005-1	April 2005		750.0		177.4
2005-B-M	June 2005		1,350.0		449.8
2005-C-F	August 2005		1,100.0		427.4
2005-D-A	November 2005		1,400.0		619.8
2006-1	March 2006		945.0		421.2
2006-R-M	May 2006		1,200.0		1,015.1
2006-A-F	July 2006		1,350.0		838.2
2006-B-G	September 2006		1,200.0		834.7
2007-A-X	January 2007		1,200.0		926.4
2007-B-F	April 2007		1,500.0		1,287.4
2007-1	May 2007		1,000.0		892.2
2007-C-M	July 2007		1,500.0		1,440.5
2007-D-F	September 2007		1,000.0		1,000.0
BV2005-LJ-1	February 2005		232.1		74.6
BV2005-LJ-2	July 2005		185.6		69.6
BV2005-3	December 2005		220.1		103.9
LB2003-C	October 2003		250.0		25.1
LB2004-A	March 2004		300.0		41.2
LB2004-B	July 2004		250.0		45.9
LB2004-C	December 2004		350.0		86.7
LB2005-A	June 2005		350.0		110.9
LB2005-B	October 2005		350.0		139.1
LB2006-A	May 2006		450.0		245.3
LB2006-B	September 2006		500.0		325.3
LB2007-A	March 2007		486.0		405.8
Total secured financing transactions			24,093.8		12,881.6
Total active securitizations		$	24,287.1	$	12,901.2

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We structure our securitization transactions as secured financings. Finance receivables are transferred to a securitization Trust, which is one of our special purpose finance subsidiaries, and the Trusts issue one or more series of asset-backed securities (securitization notes payable). While these Trusts are included in our consolidated financial statements, these Trusts are separate legal entities; thus the finance receivables and other assets held by these Trusts are legally owned by these Trusts, are available to satisfy the related securitization notes payable and are not available to our creditors or our other subsidiaries.

At the time of securitization of finance receivables, we are required to pledge assets equal to a specified percentage of the securitization pool to provide credit enhancement required for specific credit ratings for the asset-backed securities issued by the Trusts.

Generally, we employ two types of securitization structures. The structure we have utilized most frequently involves the purchase of a financial guaranty insurance policy issued by an insurer. Our most recent transaction for sub-prime receivables, completed in September 2007, had an initial cash deposit and overcollateralization level of 9.0% and target credit enhancement of 13.0%. Under this structure, we typically expect to begin to receive cash distributions approximately six to eight months after receivables are securitized. Our most recent transaction for prime and near-prime receivables, completed in October 2007, had an initial cash deposit and overcollateralization level of 3.5% and target credit enhancement of 7.75%. Under this structure, we typically expect to begin to receive cash distributions approximately ten to twelve months after receivables are securitized.

The second type of securitization structure we use involves the sale of subordinated asset-backed securities in order to provide credit enhancement for the senior asset-backed securities.

Our most recent securitization transaction for primarily sub-prime receivables involving the sale of subordinated asset-backed securities was completed in March 2006 and required an initial cash deposit and overcollateralization level of 7.0% of the original receivable pool balance, and a target credit enhancement level of 16.5% of the receivable pool balance must be reached before excess cash is used to repay the Class E bonds. Subsequent to the payoff of Class E bonds, excess cash is distributed to us. Under this structure, we typically expect to begin to receive cash distributions approximately 22 to 26 months after receivables are securitized.

In May 2007, we executed our first transaction under our securitization program for near-prime and prime receivables. This securitization transaction involved the sale of subordinated asset-backed securities. Additionally, this transaction required an initial cash deposit and overcollateralization level of 0.5% of the original receivable pool balance, and a target credit enhancement level of 4.5% of the receivable pool balance must be reached before excess cash is used to paydown the principal balance of the Class E

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bonds to maintain a specified amount outstanding. Excess cash not utilized to paydown the Class E bonds will be released to us. Under this structure, we typically expect to begin to receive cash distributions approximately ten to twelve months after receivables are securitized.

Increases or decreases to the credit enhancement level required in future securitization transactions will depend on the net interest margin of the finance receivables transferred, the collateral characteristics of the receivables transferred, credit performance trends of our finance receivables, our financial condition and the economic environment.

Cash flows related to securitization transactions were as follows (in millions):

	Three Months Ended September 30,
	2007		2006
Initial credit enhancement deposits:
Restricted cash	$	53.8	$	45.7
Overcollateralization		188.2		109.5
Distributions from Trusts:
Gain on sale Trusts		0.2		76.0
Secured financing Trusts		243.6		215.1

The agreements with the insurers of our securitization transactions covered by a financial guaranty insurance policy provide that if portfolio performance ratios (delinquency, cumulative default or cumulative net loss) in a Trust’s pool of receivables exceed certain targets, the specified credit enhancement levels would be increased.

Generally, our securitization transactions insured by financial guaranty insurance providers and entered into prior to September 2005 are cross-collateralized to a limited extent. In the event of a shortfall in the original target credit enhancement requirement for any of these securitization Trusts after a certain period of time, excess cash flows from other transactions insured by the same insurance provider would be used to satisfy the shortfall amount. Our securitization transactions insured by financial guaranty insurance providers after August 2005 do not contain any cross-collateralization provisions.

The agreements that we enter into with our financial guaranty insurance providers in connection with securitization transactions contain additional specified targeted portfolio performance ratios (delinquency, cumulative default and cumulative net loss) that are higher than the limits referred to above. If, at any measurement date, the targeted portfolio performance ratios with respect to any insured Trust were to exceed these additional levels, provisions of the agreements permit the financial guaranty insurance providers to terminate our servicing rights to the receivables sold to that Trust. In addition, the servicing agreements on certain insured securitization Trusts

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are cross-defaulted so that a default under one servicing agreement would allow the financial guaranty insurance provider to terminate our servicing rights under all servicing agreements for securitization Trusts in which they issued a financial guaranty insurance policy. Additionally, if these higher targeted portfolio performance levels were exceeded, the financial guaranty insurance providers may elect to retain all excess cash generated by other securitization transactions insured by them as additional credit enhancement. This, in turn, could result in defaults under our other securitizations and other material indebtedness. Although we have never exceeded these additional targeted portfolio performance ratios, and do not anticipate violating any event of default triggers for our securitizations, there can be no assurance that our servicing rights with respect to the automobile receivables in such Trusts or any other Trusts will not be terminated if (i) such targeted portfolio performance ratios are breached, (ii) we breach our obligations under the servicing agreements, (iii) the financial guaranty insurance providers are required to make payments under a policy, or (iv) certain bankruptcy or insolvency events were to occur. As of September 30, 2007, no such termination events have occurred with respect to any of the Trusts formed by us.

Stock Repurchases

During the three months ended September 30, 2007 and 2006, we repurchased 5,734,850 shares of our common stock at an average cost of $22.30 per share and 13,462,430 shares of our common stock at an average cost of $24.06 per share, respectively.

As of October 31, 2007, we had repurchased $1,374.8 million of our common stock since April 2004 and we had remaining authorization to repurchase $172.0 million of our common stock. A covenant in our senior note indenture entered into in June 2007 limits our ability to repurchase stock. As of October 31, 2007, we have approximately $40 million available for share repurchases under the covenant limits.

Contractual Obligations

We adopted the provisions of FIN 48 on July 1, 2007. As a result of the implementation of FIN 48, we have liabilities associated with uncertain tax positions of $53.6 million. Due to uncertainty regarding the timing of future cash flows associated with FIN 48 liabilities, a reasonable estimate of the period of cash settlement is not determinable.

Operating Plan

We believe that we have sufficient liquidity to achieve our growth strategies. As of September 30, 2007, we had unrestricted cash balances of $637.1 million. Assuming that origination volume ranges from $9.0 billion to $9.5 billion during fiscal 2008 and the initial credit enhancement requirement for our securitization transactions remains the same as recent transactions, we expect that cash distributions from our securitization transactions combined with

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cash generated from unsecuritized receivables will exceed the funding requirement for initial credit enhancement deposits during fiscal 2008. We will continue to require the execution of additional securitization transactions during fiscal 2008. There can be no assurance that funding will be available to us through the execution of securitization transactions or, if available, that the funding will be on acceptable terms. If we are unable to execute securitization transactions on a regular basis, and are otherwise unable to issue any other debt or equity, we would not have sufficient funds to finance new loan originations and, in such event, we would be required to revise the scale of our business, including possible discontinuation of loan origination activities, which would have a material adverse effect on our ability to achieve our business and financial objectives.

OFF-BALANCE SHEET ARRANGEMENTS

We currently have one securitization transaction structured to meet the accounting criteria for a sale of finance receivables. Under this structure, notes issued by our unconsolidated qualified special purpose finance subsidiaries are not recorded as liabilities on our consolidated balance sheets. See Liquidity and Capital Resources – Securitizations for a detailed discussion of our securitization transactions.

INTEREST RATE RISK

Fluctuations in market interest rates impact our credit facilities and securitization transactions. Our gross interest rate spread, which is the difference between interest earned on our finance receivables and interest paid, is affected by changes in interest rates as a result of our dependence upon the issuance of variable rate securities and the incurrence of variable rate debt to fund our purchases of finance receivables.

Credit Facilities

Finance receivables purchased by us and pledged to secure borrowings under our credit facilities bear fixed interest rates. Amounts borrowed under our credit facilities bear interest at variable rates that are subject to frequent adjustments to reflect prevailing market interest rates. To protect the interest rate spread within each credit facility, our special purpose finance subsidiaries are contractually required to purchase interest rate cap agreements in connection with borrowings under our credit facilities. The purchaser of the interest rate cap agreement pays a premium in return for the right to receive the difference in the interest cost at any time a specified index of market interest rates rises above the stipulated “cap” rate. The purchaser of the interest rate cap agreement bears no obligation or liability if interest rates fall below the “cap” rate. As part of our interest rate risk management strategy and when economically feasible, we may simultaneously sell a corresponding interest rate cap agreement in order to offset the premium paid by our special purpose finance subsidiary to purchase the interest rate cap agreement and thus retain the interest rate risk. The fair value of the interest rate cap agreement purchased by the special purpose

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finance subsidiary is included in other assets and the fair value of the interest rate cap agreement sold by us is included in other liabilities on our consolidated balance sheets.

Securitizations

The interest rate demanded by investors in our securitization transactions depends on prevailing market interest rates for comparable transactions and the general interest rate environment. We utilize several strategies to minimize the impact of interest rate fluctuations on our gross interest rate margin, including the use of derivative financial instruments, the regular sale or pledging of receivables to securitization Trusts, pre-funding of securitization transactions and the use of revolving structures.

In our securitization transactions, we transfer fixed rate finance receivables to Trusts that, in turn, sell either fixed rate or floating rate securities to investors. The fixed rates on securities issued by the Trusts are indexed to market interest rate swap spreads for transactions of similar duration or various London Interbank Offered Rates (“LIBOR”) and do not fluctuate during the term of the securitization. The floating rates on securities issued by the Trusts are indexed to LIBOR and fluctuate periodically based on movements in LIBOR. Derivative financial instruments, such as interest rate swap and cap agreements, are used to manage the gross interest rate spread on these transactions. We use interest rate swap agreements to convert the variable rate exposures on securities issued by our securitization Trusts to a fixed rate, thereby locking in the gross interest rate spread to be earned by us over the life of a securitization. Interest rate swap agreements purchased by us do not impact the amount of cash flows to be received by holders of the asset-backed securities issued by the Trusts. The interest rate swap agreements serve to offset the impact of increased or decreased interest paid by the Trusts on floating rate asset-backed securities on the cash flows to be received by us from the Trusts. We utilize such arrangements to modify our net interest sensitivity to levels deemed appropriate based on our risk tolerance. In circumstances where the interest rate risk is deemed to be tolerable, usually if the risk is less than one year in term at inception, we may choose not to hedge potential fluctuations in cash flows due to changes in interest rates. Our special purpose finance subsidiaries are contractually required to purchase a financial instrument to protect the net spread in connection with the issuance of floating rate securities even if we choose not to hedge our future cash flows. Although the interest rate cap agreements are purchased by the Trusts, cash outflows from the Trusts ultimately impact our retained interests in the securitization transactions as cash expended by the securitization Trusts will decrease the ultimate amount of cash to be received by us. Therefore, when economically feasible, we may simultaneously sell a corresponding interest rate cap agreement to offset the premium paid by the Trust to purchase the interest rate cap agreement. The fair value of the interest rate cap agreements purchased by the special purpose finance subsidiaries in connection with securitization transactions are included in other assets and the fair value of the interest rate cap agreements sold by us are included in other liabilities on our consolidated balance sheets. Changes in the fair value of the interest rate cap agreements are reflected in interest expense on our consolidated statements of income and comprehensive income.

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Pre-funding securitizations is the practice of issuing more asset-backed securities than needed to cover finance receivables initially sold or pledged to the Trust. The proceeds from the pre-funded portion are held in an escrow account until additional receivables are delivered to the Trust in amounts up to the pre-funded balance held in the escrow account. The use of pre-funded securitizations allows us to lock in borrowing costs with respect to the finance receivables subsequently delivered to the Trust. However, we incur an expense in pre-funded securitizations during the period between the initial delivery of finance receivables and the subsequent delivery of finance receivables equal to the difference between the interest earned on the proceeds held in the escrow account and the interest rate paid on the asset-backed securities outstanding.

Additionally, in May 2006, we issued a “revolving” securitization transaction that allows us to replace receivables as they amortize down rather than paying down the outstanding debt balance for a period of one year subject to compliance with certain covenants. The use of this type of transaction allows us to lock in borrowing costs for the revolving period and allows us to finance approximately 50% more receivables than in our typical amortizing securitization structure at that borrowing cost.

We have entered into interest rate swap agreements to hedge the variability in interest payments on our most recent securitization transactions. Portions of these interest rate swap agreements are designated and qualify as cash flow hedges.

Management monitors our hedging activities to ensure that the value of derivative financial instruments, their correlation to the contracts being hedged and the amounts being hedged continue to provide effective protection against interest rate risk. However, there can be no assurance that our strategies will be effective in minimizing interest rate risk or that increases in interest rates will not have an adverse effect on our profitability. All transactions are entered into for purposes other than trading.

FORWARD LOOKING STATEMENTS

The preceding Management’s Discussion and Analysis of Financial Condition and Results of Operations section contains several “forward-looking statements.” Forward-looking statements are those that use words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “may,” “likely,” “should,” “estimate,” “continue,” “future” or other comparable expressions. These words indicate future events and trends. Forward-looking statements are our current views with respect to future events and financial performance. These forward-looking statements are subject to many assumptions, risks and uncertainties that could cause actual results to differ significantly from historical results or from those anticipated by us. The most significant risks are

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detailed from time to time in our filings and reports with the Securities and Exchange Commission including our Annual Report on Form 10-K for the year ended June 30, 2007. It is advisable not to place undue reliance on our forward-looking statements. We undertake no obligation to, and do not, publicly update or revise any forward-looking statements, except as required by federal securities laws, whether as a result of new information, future events or otherwise.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Because our funding strategy is dependent upon the issuance of interest-bearing securities and the incurrence of debt, fluctuations in interest rates impact our profitability. Therefore, we employ various hedging strategies to minimize the risk of interest rate fluctuations. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Interest Rate Risk” for additional information regarding such market risks.

Item 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports we file under the Securities and Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms. Such controls include those designed to ensure that information for disclosure is communicated to management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate to allow timely decisions regarding required disclosure.

The CEO and CFO, with the participation of management, have evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2007. Based on their evaluation, they have concluded that the disclosure controls and procedures are effective.

Internal Control Over Financial Reporting

There were no changes made in our internal control over financial reporting during the three months ended September 30, 2007, that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

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Limitations Inherent in all Controls

Our management, including the CEO and CFO, recognize that the disclosure controls and internal controls (discussed above) cannot prevent all errors or all attempts at fraud. Any controls system, no matter how well crafted and operated, can only provide reasonable, and not absolute, assurance of achieving the desired control objectives, and management was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Because of the inherent limitations in any control system, no evaluation or implementation of a control system can provide complete assurance that all control issues and all possible instances of fraud have been or will be detected.

Part II. OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

As a consumer finance company, we are subject to various consumer claims and litigation seeking damages and statutory penalties, based upon, among other things, usury, disclosure inaccuracies, wrongful repossession, violations of bankruptcy stay provisions, certificate of title disputes, fraud, breach of contract and discriminatory treatment of credit applicants. Some litigation against us could take the form of class action complaints by consumers and/or shareholders. As the assignee of finance contracts originated by dealers, we may also be named as a co-defendant in lawsuits filed by consumers principally against dealers. The damages and penalties claimed by consumers in these types of matters can be substantial. The relief requested by the plaintiffs varies but can include requests for compensatory, statutory and punitive damages. We believe that we have taken prudent steps to address and mitigate the litigation risks associated with our business activities. In the opinion of management, the ultimate aggregate liability, if any, arising out of any such pending or threatened litigation will not be material to our consolidated financial position or our results of operations.

Item 1A. RISK FACTORS

In addition to the other information set forth in this report, the factors discussed in Part I, Item 1, “Risk Factors” in our Annual Report on Form 10-K for the year ended June 30, 2007, should be carefully considered as these risk factors could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may adversely affect our business, financial condition and/or operating results.

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Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During the three months ended September 30, 2007, we repurchased shares as follows (dollars in thousands, except per share amounts):

Date	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Program	Approximate Dollar of Shares That May Yet Be Purchased Under the Plans or Program
July 2007 (a)	3,663,700	$	23.85	3,663,700	$	212,538
August 2007 (a)	568,350	$	22.06	568,350	$	200,001
September 2007 (a)	1,502,800	$	18.63	1,502,800	$	172,009

(a) On September 12, 2006, we announced the approval of a stock repurchase plan by our Board of Directors which authorized us to repurchase up to $300.0 million of our common stock in the open market or in privately negotiated transactions, based on market conditions.

Item 3. DEFAULTS UPON SENIOR SECURITIES

Not Applicable

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The Annual Meeting of Shareholders was held on October 25, 2007.

The following proposals were adopted by the margins indicated:

1. Election of three directors to terms of office expiring at the Annual Meeting of Shareholders in 2009, or until their successors are elected and qualified.

Nominees for Terms Expiring in 2009	For	Withheld
A.R. Dike	100,442,279	645,348
Douglas K. Higgins	100,257,840	829,787
Kenneth H. Jones, Jr.	100,123,852	963,775

The directors who are continuing to hold office are Daniel E. Berce, John R. Clay, James H. Greer and Clifton H. Morris, Jr.

2. Ratification of the appointment of independent auditors for fiscal year ending June 30, 2008.

For	Against	Withheld
99,237,062	989,504	16,258

Item 5. OTHER INFORMATION

Not Applicable

Item 6. EXHIBITS

31.1	Officers’ Certifications of Periodic Report pursuant to Section 302 of Sarbanes-Oxley Act of 2002
32.1	Officers’ Certifications of Periodic Report pursuant to Section 906 of Sarbanes-Oxley Act of 2002

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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 9, 2007	By:	/s/ Chris A. Choate
		(Signature)
		Chris A. Choate
		Executive Vice President,
		Chief Financial Officer and Treasurer

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