FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1994
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 (I.R.S. Employer Identification No.)
incorporation or organization)
200 Bailey Avenue, Fort Worth, Texas 76107
(Address of principal executive offices)
(Zip Code)
(817) 332-7000
(Registrant's telephone number, including area code)
777 Taylor Street, Suite 800, Fort Worth, Texas 76102
(Former name, former address and former fiscal year, if
changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
There were 28,838,433 shares of common stock, $.01 par value outstanding as of
May 9, 1994.
AMERICREDIT CORP.
INDEX TO FORM 10-Q
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements Page
Consolidated Balance Sheets
March 31, 1994 and June 30, 1993. . . . . . . . 3
Consolidated Statements of Operations
for Three Months Ended March 31, 1994
and 1993 and Nine Months Ended
March 31, 1994 and 1993 . . . . . . . . . . . . 4
Consolidated Statements of
Cash Flows - Nine Months
Ended March 31, 1994 and 1993 . . . . . . . . . 5
Notes to Consolidated Financial
Statements. . . . . . . . . . . . . . . . . . . 6
Item 2. Management's Discussion and
Analysis of Financial Condition
and Results of Operations . . . . . . . . . 9
Part II. OTHER INFORMATION
Item 1. Legal Proceedings . . . . . . . . . . . . .17
Item 6. Exhibits and Reports on Form 8-K. . . . . .17
SIGNATURE . . . . . . . . . . . . . . . . . . . . . . .18
/TABLE
PART I - FINANCIAL INFORMATION
Item I. FINANCIAL STATEMENTS
AMERICREDIT CORP.
Consolidated Balance Sheets
(Unaudited, Dollars in Thousands)
March 31, June 30,
1994 1993
--------- --------
ASSETS
Cash and cash equivalents $ 33,911 $ 33,268
Investment securities 33,393 35,157
Finance receivables, net 55,986 43,889
Property and equipment, net 5,892 5,582
Other assets 2,019 1,931
Investment in affiliate 11,300
-------- --------
Total assets $131,201 $131,127
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Notes payable $ 438 $ 1,278
Accrued taxes and expenses 4,733 7,065
------- -------
Total liabilities 5,171 8,343
------- -------
Contingencies (Note 4)
Shareholders' equity:
Common stock, $.01 par value
per share; 120,000,000 shares
authorized; 31,755,733 and
31,723,733 shares issued,
respectively 318 317
Additional paid-in capital 189,817 189,695
Accumulated deficit ( 57,103) ( 60,782)
------- -------
133,032 129,230
Treasury stock, at cost
(2,712,200 and 2,614,200 shares,
respectively) ( 7,002) ( 6,446)
------- --------
Total shareholders' equity 126,030 122,784
------- --------
Total liabilities and shareholders'
equity $131,201 $131,127
======= =======
The accompanying notes are an integral part
of these consolidated financial statements
AMERICREDIT CORP.
Consolidated Statements of Operations
(Unaudited, Dollars in Thousands, Except Per Share Data)
Three Months Ended Nine Months Ended
March 31, March 31,
1994 1993 1994 1993
------ ------ ------ ------
Revenue:
Finance charge
income $ 3,099 $ 3,123 $ 9,001 $ 11,024
Investment income 558 530 2,157 1,469
Other income 255 18 431 102
Sales 8,271
Equity in income
of affiliate 210 341
--------- --------- --------- ----------
3,912 3,881 11,589 21,207
--------- --------- --------- ----------
Costs and expenses:
Operating expenses 1,614 1,617 4,595 7,715
General and admin-
istrative expenses 712 968 2,298 3,418
Provision for losses 336 78 888 7,803
Interest expense 40 49 129 163
Cost of sales 6,986
Restructuring
charges 15,404
---------- --------- ---------- ----------
2,702 2,712 7,910 41,489
---------- --------- ---------- ---------
Income (loss) before
income taxes 1,210 1,169 3,679 ( 20,282)
Provision for
income taxes
---------- ---------- ---------- ----------
Net income (loss)$ 1,210 $ 1,169 $ 3,679 ($ 20,282)
========== ========== ========== ==========
Earnings (loss) per
share $ .04 $ .04 $ .11 ($ .69)
========== ========== ========== ==========
Weighted average
shares and share
equivalents 32,487,816 30,148,691 32,324,556 29,333,652
========== ========== ========== ==========
The accompanying notes are an integral part
of these consolidated financial statements
AMERICREDIT CORP.
Consolidated Statements of Cash Flows
(Unaudited, Dollars in Thousands)
Nine Months Ended
March 31,
1994 1993
---- ----
Cash flows from operating activities:
Net income (loss) $ 3,679 ($20,282)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization 979 1,443
Provision for losses 888 7,803
Equity in income of affiliate ( 341)
Restructuring charges 2,401
Changes in assets and liabilities:
Income tax refunds receivable 10,546
Other assets 389 9,885
Accrued taxes and expenses ( 2,332) 4,282
------ ------
Net cash provided by
operating activities 3,603 15,737
------ ------
Cash flows from investing activities:
Purchases and originations of finance
receivables ( 46,298) ( 14,890)
Principal collections and recoveries
on finance receivables 33,313 32,647
Purchases of property and equipment ( 2,286) ( 429)
Proceeds from disposition of property
and equipment 520 252
Purchases of investment securities ( 21,402) ( 16,423)
Proceeds from sales and maturities
of investment securities 23,166 3,198
Proceeds from sale of investment
in affiliate 11,300
------ ------
Net cash provided (used)
by investing activities ( 1,687) 4,355
------ ------
Cash flows from financing activities:
Payments on notes payable ( 840) ( 388)
Proceeds from issuance of common stock 123 256
Purchase of treasury stock ( 556) ( 5,852)
------ ------
Net cash used by
financing activities ( 1,273) ( 5,984)
------ ------
Net increase in cash and cash
equivalents 643 14,108
Cash and cash equivalents at beginning
of period 33,268 29,762
------ ------
Cash and cash equivalents at
end of period $33,911 $43,870
====== ======
The accompanying notes are an integral part
of these consolidated financial statements
AMERICREDIT CORP.
Notes to Consolidated Financial Statements
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
==============================
The accompanying consolidated financial statements include the accounts of
AmeriCredit Corp. and its wholly-owned subsidiaries ("the Company"). All
significant intercompany accounts and transactions have been eliminated in
consolidation.
The consolidated financial statements as of March 31, 1994 and for the periods
ended March 31, 1994 and 1993 are unaudited, but in management's opinion,
include all adjustments necessary for a fair presentation of the results for
such interim periods. The results for interim periods are not necessarily
indicative of results for a full year.
The interim period financial statements, including the notes thereto, are
condensed and do not include all disclosures required by generally accepted
accounting principles. Such interim period financial statements should be read
in conjunction with the Company's consolidated financial statements which were
included in the Company's 1993 Annual Report to Shareholders.
NOTE 2 - FINANCE RECEIVABLES
============================
Finance receivables consist of the following (in thousands):
March 31, June 30,
1994 1993
---- ----
Indirect consumer lending contracts:
Precomputed interest $39,207 $17,892
Simple interest 16,757 2,180
------ ------
55,964 20,072
Direct lending contracts 14,033 45,071
Premium finance contracts 5,207 1,700
------ ------
Total finance receivables 75,204 66,843
Less:
Unearned finance charges and fees ( 10,348) ( 10,373)
Allowance for losses ( 8,870) ( 12,581)
------ ------
Finance receivables, net $55,986 $43,889
====== ======
The Company's finance contracts typically provide for finance charges on either
a precomputed or simple interest basis. Precomputed interest finance
receivables include principal and unearned finance charges. Simple interest
finance receivables include principal only. Finance charge income related to
both types of finance receivables is recognized in future periods using the
interest method. All direct lending and premium finance contracts are
precomputed interest finance receivables.
A summary of the allowance for losses is as follows (in thousands):
Three Months Ended Nine Months Ended
March 31, March 31,
1994 1993 1994 1993
---- ---- ---- ----
Balance at beginning of
period $ 9,210 $22,617 $12,581 $37,468
Provision for losses 336 78 888 7,803
Purchase of indirect
consumer lending
contracts 1,228 420 3,094 742
Net charge-offs ( 1,904) ( 6,616) ( 7,693) ( 29,514)
------ ------ ------ ------
Balance at end of period $ 8,870 $16,499 $ 8,870 $16,499
====== ====== ====== ======
NOTE 3 - CREDIT AGREEMENT
=========================
In October 1993, the Company entered into a revolving credit agreement with a
bank under which the Company may borrow up to $20 million, subject to a defined
borrowing base. No borrowings were outstanding as of March 31, 1994.
Borrowings under the credit agreement will be collateralized by the indirect
finance receivables portfolio and will bear interest at prime plus 1/2%. The
Company is also required to pay an annual commitment fee equal to 3/8% of the
unused portion of the credit agreement. The credit agreement, which expires in
October 1994, contains various restrictive covenants requiring certain minimum
financial ratios and results and placing certain limitations on the
incurrence of additional debt and capital expenditures.
NOTE 4 - CONTINGENCIES
======================
Four lawsuits were filed against the Company, several of its current and former
officers and directors, and certain other defendants, alleging violations of
federal securities and other laws. The suits were originally filed in July
1990, and in October 1991, the four lawsuits were consolidated into one
action. The plaintiffs alleged, among other things, misrepresentations in
connection with the Company's public reports and statements, inadequate
disclosure in connection with the Company's May 1990 public offering,
statutory fraud under Chapter 27 of the Texas Business and Commerce Code and
conspiracy, aiding and abetting and concerted action. In May 1993, the U.S.
District Court for the Northern District of Texas, Dallas Division, dismissed
with prejudice all claims alleging securities fraud and violations of federal
securities laws. The plaintiffs' state law claims were dismissed for want of
jurisdiction. The plaintiffs have appealed the dismissal to the Court of
Appeals for the Fifth Circuit. The Company considers the suit to be without
merit and believes that the dismissal of the suit by the District Court
confirms its position. The Company will continue to vigorously defend
against the suit.
The Company is involved in other lawsuits arising in the normal course of
business. In the opinion of management, the resolution of these matters will
not have a material adverse effect on the Company's consolidated financial
position.
NOTE 5 - INCOME TAXES
=====================
The Company's effective income tax rate on income (loss) before income taxes
differs from the U.S. statutory tax rate as follows:
Three Months Ended Nine Months Ended
March 31, March 31,
1994 1993 1994 1993
---- ---- ---- ----
U.S. statutory tax rate 34% 34% 34% (34%)
Losses with no income
tax benefit 34
Utilization of net
operating loss
carryforward for
financial reporting
purposes (34%) (34%) (34%)
-- -- -- --
0% 0% 0% 0%
== == == ==
At June 30, 1993, the Company has a net operating loss carryforward of
approximately $61,000,000 for financial reporting purposes. In addition, the
Company has a net operating loss carryforward of approximately $49,000,000 for
income tax reporting purposes which expires in 2007 and 2008 and an alternative
minimum tax carryforward of approximately $900,000 with no expiration date.
NOTE 6 - SUPPLEMENTAL CASH FLOW INFORMATION
===========================================
Cash payments for interest costs consist of the following (in thousands):
Nine Months Ended
March 31,
1994 1993
Interest costs (none capitalized) $129 $163
NOTE 7 - SUBSEQUENT EVENT
=========================
On April 4, 1994, the Company purchased and cancelled the stock option to
purchase up to 3,500,000 shares of its common stock held by Rainwater Management
Partners, Ltd. for $1.782 per option share or $6,237,000. The stock option had
an exercise price of $3.218 per share and was exercisable through April 24,
1994. A management services agreement with Rainwater Management Partners, Ltd.
was terminated in connection with the stock option purchase and cancellation.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
=====================
General
- - -------
Since September 1992, the Company has been in the business of purchasing finance
contracts originated by franchised and independent car dealers, generally
referred to as indirect consumer lending. The Company operated 14 indirect
consumer lending branch offices in eleven states as of March 31, 1994. Since
April 1993, the Company has also financed insurance premiums for consumers
purchasing car insurance through independent insurance agents.
The Company previously engaged primarily in the retail used car sales and
finance business. However, in connection with a restructuring during the year
ended June 30, 1993, the Company withdrew from the retail used car sales
business effective December 31, 1992. The finance receivables originated in
this previous business are referred to as the direct lending portfolio and
are being liquidated over time as the contracts are collected or charged-off.
Three Months Ended March 31, 1994 as compared to
Three Months Ended March 31, 1993
- - ------------------------------------------------
Revenue:
- - -------
The Company's overall finance charge income was $3.1 million for both the three
months ended March 31, 1994 and 1993. However, the contribution of the indirect
consumer lending portfolio to total finance charge income increased from period
to period, while the proportion of finance charge income from the direct lending
portfolio decreased correspondingly. Finance charge income from the Company's
indirect consumer lending business increased to $2,089,000, or 67% of total
finance charge income for the three months ended March 31, 1994, as compared to
$309,000, or 10% of total finance charge income for the three months ended March
31, 1993. Finance charge income from the Company's direct lending portfolio
decreased to $686,000, or 22% of total finance charge income for the three
months ended March 31, 1994, as compared to $2,814,000, or 90% of total
finance charge income for the three months ended March 31, 1993. The
Company's premium finance business contributed $324,000, or 11% of total
finance charge income for the three months ended March 31, 1994, as compared
to none for the three months ended March 31, 1993. Future trends in the
Company's overall level of finance charge income are dependent upon the
Company's ability to continue to grow its indirect consumer lending and
premium finance businesses in order to offset the effect of the continued
run-off of the direct lending portfolio.
The Company's overall effective yield on its finance receivables increased to
20.2% from 18.8% as a result of higher finance charge rates realized in the
Company's indirect consumer lending and premium finance businesses. The
effective yield for both periods differs from the annual percentage rates
specified in the finance contracts because of, among other factors, suspension
of finance charge accruals on delinquent contracts and amortization of deferred
loan origination costs.
Investment income increased due to higher average cash and cash equivalents and
investment securities balances during the three months ended March 31, 1994.
The Company's annualized yield on its cash and cash equivalents and investment
securities was 3.1% for the three months ended March 31, 1994 as compared to
3.3% for the three months ended March 31, 1993.
Other income for the three months ended March 31, 1994 included $105,000 related
to the Company's participation in certain joint ventures which acquire and
collect distressed receivables portfolios.
The Company's share of operating results of its affiliate, Pacific Automart
Inc., resulted in income of $210,000 for the three months ended March 31,
1993. The Company sold its entire interest in Pacific Automart Inc. for
$11,300,000 in cash on August 3, 1993.
Costs and Expenses:
- - ------------------
Operating and general and administrative expenses as a percentage of average net
finance receivables outstanding decreased to 3.8% for the three months ended
March 31, 1994 as compared to 3.9% for the three months ended March 31, 1993.
The dollar amount of operating and general and administrative expenses decreased
by 10%, or $259,000 to $2.3 million from $2.6 million. These expenses decreased
due to the Company's exit from the retail used car sales business and resultant
reduction in overhead related to these operations.
The provision for losses increased to $336,000 as compared to $78,000. Further
discussion concerning the provision for losses is included under the caption,
"Finance Receivables".
Nine Months Ended March 31, 1994 as compared to
Nine Months Ended March 31, 1993
- - -----------------------------------------------
Revenue:
- - --------
The Company's overall finance charge income decreased to $9.0 million as
compared to $11.0 million. The decrease in finance charge income related to
liquidating the direct lending portfolio was greater than the increase in
finance charge income associated with growth in the indirect consumer
lending and premium finance businesses. Finance charge income from the
Company's direct lending portfolio decreased to $3,315,000, or 37% of total
finance charge income for the nine months ended March 31, 1994, as compared
to $10,597,000, or 96% of total finance charge income for the nine months
ended March 31, 1993. Finance charge income from the Company's indirect
consumer lending business increased to $4,810,000, or 53% of total finance
charge income for the nine months ended March 31, 1994, as compared to
$427,000, or 4% of total finance charge income for the nine months ended
March 31, 1993. The Company's premium finance business contributed $876,000,
or 10% of total finance charge income for the nine months ended March 31, 1994,
as compared to none for the nine months ended March 31,1993. Future trends
in the Company's overall level of finance charge income are dependent upon the
Company's ability to continue to grow its indirect consumer lending and
premium finance businesses in order to offset the effect of the continued
run-off of the direct lending portfolio.
The Company's overall effective yield on its finance receivables increased to
20.4% from 18.2% as a result of higher finance charge rates realized in the
Company's indirect consumer lending and premium finance businesses. The
effective yield for both periods differs from the annual percentage rates
specified in the finance contracts because of, among other factors, suspension
of finance charge accruals on delinquent contracts and amortization of deferred
loan origination costs.
Investment income increased due to higher average cash and cash equivalents
and investment securities balances during the nine months ended March 31,
1994. The Company's annualized yield on its cash and cash equivalents and
investment securities was 3.9% for the nine months ended March 31, 1994
as compared to 3.7% for the nine months ended March 31, 1993.
Other income for the nine months ended March 31, 1994 included $105,000 related
to the Company's participation in certain joint ventures which acquire and
collect distressed receivables portfolios.
The Company's share of operating results of its affiliate, Pacific Automart
Inc., resulted in income of $341,000 for the nine months ended March 31,
1993. The Company sold its entire interest in Pacific Automart Inc. for
$11,300,000 in cash on August 3, 1993. No gain or loss was recognized on
the sale.
Costs and Expenses:
- - -------------------
Operating and general and administrative expenses as a percentage of average net
finance receivables outstanding decreased to 11.7% for the nine months ended
March 31, 1994 as compared to 13.8% for the nine months ended March 31, 1993.
The dollar amount of operating and general and administrative expenses decreased
by 38%, or $4.2 million to $6.9 million from $11.1 million. These expenses
decreased due to the Company's exit from the retail used car sales business and
resultant reduction in overhead related to these operations.
The provision for losses decreased to $888,000 as compared to $7.8 million.
Further discussion concerning the provision for losses is included under the
caption, "Finance Receivables".
The restructuring charges of $15.4 million in the nine months ended March 31,
1993 related to the Company's exit from the retail used car sales business.
These restructuring charges included an accrual of future retail lease and other
facility costs, a write-down of used car inventories, a write-down of property
and equipment and other assets and an accrual of other costs necessary to
complete the liquidation of the retail sales operations. In addition, the
Company recorded a provision for losses of $5.0 million in the second quarter of
fiscal 1993 in light of the impact that closure of the Company's retail sales
locations may have on the Company's direct finance customer base.
FINANCE RECEIVABLES
===================
Net finance receivables represented 42.7% of the Company's total assets at March
31, 1994. The following table presents certain data related to the finance
receivables portfolio (dollars in thousands):
March 31,
1994
Indirect Direct Premium Total
-------- ------ ------- -----
Finance receivables $55,964 $14,033 $ 5,207 $75,204
Unearned finance charges and fees ( 8,604)( 1,388) ( 356)( 10,348)
------ ------ ------ ------
Finance receivables
(principal amount) 47,360 12,645 4,851 64,856
Allowance for losses ( 4,841)( 3,968) ( 61)( 8,870)
------ ------ ------ ------
Finance receivables, net $42,519 $ 8,677 $ 4,790 $55,986
====== ====== ====== ======
Number of outstanding
contracts 6,804 5,992 11,709 24,505
====== ====== ====== ======
Allowance for losses as a
percentage of finance
receivables (principal amount) 10.2% 31.4% 1.3% 13.7%
====== ====== ====== ======
Average amount of outstanding
contract (principal amount)
(in dollars) $ 6,961 $ 2,110 $ 414 $ 2,647
====== ====== ====== ======
The Company provides financing in relatively high-risk markets, and therefore,
charge-offs and related losses are anticipated. The Company records a periodic
provision for losses as a charge to operations and a related allowance for
losses in the consolidated balance sheet as a reserve against estimated future
losses in the finance receivables portfolio. In the indirect consumer
lending business, the Company typically purchases individual finance contracts
at less than face value on a non-recourse basis, and such purchase allowance
is also set up directly in the consolidated balance sheet as an allowance for
losses. The Company reviews historical origination and charge-off
relationships, charge-off experience factors, collections information,
delinquency reports, estimates of the value of the underlying collateral,
economic conditions and trends and other information in order to make the
necessary judgements as to the appropriateness of the periodic provision for
losses and the allowance for losses. Although the Company uses many resources
to assess the adequacy of the allowance for losses, there is no precise
method for accurately estimating the ultimate losses in the finance
receivables portfolio.
Indirect Finance Receivables:
- - -----------------------------
The following is a summary of indirect consumer lending contracts which are more
than 60 days delinquent (dollars in thousands):
March 31,
1994 1993
---- ----
Principal amount of delinquent contracts * $1,019 $ 32
Principal amount of delinquent contracts
as a percentage of total indirect
finance receivables outstanding
(principal amount) * 2.2% .4%
* Excludes unearned finance charges and fees
The following table presents charge-off data with respect to the Company's
indirect finance receivables portfolio (dollars in thousands):
Three Months Ended Nine Months Ended
March 31, March 31,
1994 1993 1994 1993
---- ---- ---- ----
Net charge-offs $411 $ 5 $811 $ 5
Net charge-offs as a
percentage of the
average outstanding
amount of indirect
finance receivables
(principal amount) 1.0% - 2.7% -
The Company recorded periodic provisions for losses as charges to operations of
$301,000 and $783,000 related to its indirect finance receivables portfolio for
the three month and nine month periods ended March 31, 1994, respectively. In
addition, the Company recorded $1,228,000 and $3,094,000 of purchase allowances
on indirect consumer lending contracts as additions to the allowance for losses
in the consolidated balance sheets for the three month and nine month periods
ended March 31, 1994, respectively.
The Company began its indirect consumer lending business in September 1992.
Accordingly, the delinquency and charge-off data above is not necessarily
indicative of delinquency and charge-off experience that could be expected for
a more seasoned portfolio.
Direct Finance Receivables:
- - ---------------------------
The following is a summary of direct lending contracts which are more than three
payments delinquent if payment terms are weekly, biweekly or semi-monthly, and
60 days delinquent if payment terms are monthly (dollars in thousands):
March 31,
1994 1993
---- ----
Number of delinquent contracts 431 902
Number of delinquent contracts as a
percentage of the total number of
outstanding contracts 7.2% 6.6%
Amount of delinquent contracts * $1,401 $5,047
Amount of delinquent contracts as a
percentage of total direct
finance receivables outstanding
(principal amount plus
unearned finance charges) * 10.0% 8.3%
* Includes unearned finance charges
The following table presents repossession and charge-off data with respect to
the Company's direct finance receivables portfolio:
Three Months Ended Nine Months Ended
March 31, March 31,
1994 1993 1994 1993
---- ---- ---- ----
Repossessions and other
charge-offs 564 1,679 2,229 6,308
Repossessions and other
charge-offs as a
percentage of the
average outstanding
number of contracts 8.0% 11.4% 25.1% 37.7%
Net charge-offs
(in thousands) $1,450 $6,611 $6,831 $29,509
Average net charge-off $2,571 $3,937 $3,065 $ 4,678
Net charge-offs as a
percentage of the
average outstanding
amount of direct
finance receivables
(principal amount) 8.9% 11.0% 27.8% 37.9%
Net charge-offs as a percentage of the average outstanding amount of direct
finance receivables has decreased as the portfolio has become more seasoned and
average outstanding contract balances have decreased.
Premium Finance Receivables:
- - ----------------------------
Premium finance loans made by the Company are collateralized by the unearned
premium value of the car insurance policies financed. If the consumer defaults
on the payment terms of the loan, the Company has the right to cancel the
insurance policy and obtain a refund of the unearned premium from the insurance
carrier. While the Company generally requires a sufficient down payment and
limits the terms of loans so that the unearned premium value typically exceeds
the outstanding principal balance of the loan, charge-offs may still result from
untimely policy cancellations, short rate insurance premium refunds, non-
refundable policy fees, insurance company or agency insolvencies or other
factors. The Company recorded periodic provisions for losses as charges to
operations of $35,000 and $105,000 related to its premium finance receivables
portfolio for the three month and nine month periods ended March 31, 1994,
respectively.
The following table presents charge-off data with respect to the Company's
premium finance receivables portfolio (dollars in thousands):
Three Months Ended Nine Months Ended
March 31, 1994 March 31, 1994
-------------- --------------
Net charge-offs $43 $51
Net charge-offs as a
percentage of the average
outstanding amount of
premium finance receivables
(principal amount) .9% 1.3%
LIQUIDITY AND CAPITAL RESOURCES
===============================
The Company's cash flows are summarized as follows (in thousands):
Nine Months Ended
March 31,
1994 1993
---- ----
Operating activities $ 3,603 $15,737
Investing activities ( 1,687) 4,355
Financing activities ( 1,273) ( 5,984)
------ ------
Net increase in cash and
cash equivalents $ 643 $14,108
====== ======
In addition to the net change in cash and cash equivalents shown above, the
Company also had a net decrease in investment securities of $1,764,000 for the
nine months ended March 31, 1994 as compared to a net increase in investment
securities of $13,225,000 for the nine months ended March 31, 1993. Such
amounts are included as investing activities in the above table.
The Company's primary source of cash has been collections and recoveries on its
finance receivables portfolio. The Company also received an income tax refund
of $10.5 million in October 1992 and proceeds from the sale of its interest in
Pacific Automart Inc. of $11.3 million in August 1993.
The Company's primary use of cash has been purchases and originations of finance
receivables. The Company entered the indirect consumer lending business in
September 1992 and has grown the indirect finance receivables portfolio to $47.4
million as of March 31, 1994. Fourteen indirect consumer lending branches in
eleven states were open as of March 31, 1994. The Company entered the
premium finance business in April 1993 and has grown the premium finance
receivables portfolio to $4.9 million as of March 31, 1994. The Company
plans to open additional consumer lending branches in fiscal 1994 and
continue to expand its indirect consumer lending and premium finance
businesses. In addition, the Company may invest additional capital in
joint ventures to acquire and collect distressed receivables portfolios.
While the Company has been able to establish and grow these new businesses
thus far, there can be no assurance that future expansion will be successful
due to competitive, regulatory, market, economic or other factors.
The Company's Board of Directors has authorized the repurchase of up to
6,000,000 shares of the Company's common stock. A total of 2,614,200 shares
of common stock at an aggregate purchase price of $6,446,000 were purchased
pursuant to this program between June 1992 and September 1992. In March
1994, the Company purchased 98,000 shares of its common stock for $556,000
and has purchased another 205,000 shares of its common stock for $1,160,000
in April 1994.
On April 4, 1994, the Company purchased and cancelled the stock option to
purchase up to 3,500,000 shares of its common stock held by Rainwater Management
Partners, Ltd. for $1.782 per option share or $6,237,000. The stock option had
an exercise price of $3.218 per share and was exercisable through April 24,
1994.
As of March 31, 1994, the Company had $67.3 million in cash and cash equivalents
and investment securities. The Company utilized approximately $7.4 million of
these funds in April 1994 on the common stock repurchase and stock option
purchase and cancellation transactions described above. The Company also
has a revolving credit agreement with a bank under which the Company may
borrow up to $20 million. The Company estimates that these existing capital
resources, along with collections and recoveries on its finance receivables
portfolio, will exceed the funding required for its indirect consumer lending
and premium finance businesses, capital expenditures, additional common stock
repurchases and other costs and expenses through June 30, 1994.
The Company's expansion plans for its indirect consumer lending and premium
finance businesses will require external funding beyond the current fiscal year
ending June 30, 1994. The Company anticipates that such funding could be
in the form of an expanded bank line of credit, medium term debt, commercial
paper or securitization of its finance receivables portfolio. There can be
no assurance that external funding will be available, or if available, that
it will be on terms acceptable to the Company.
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
Reference should be made to information contained in
Note 4 of the Notes to Consolidated Financial
Statements in response to this Item 1.
Item 2. CHANGES IN SECURITIES
Not Applicable
Item 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable
Item 5. OTHER INFORMATION
Not Applicable
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) Exhibits:
11.1 - Statement Re Computation of Per Share
Earnings
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K
during the quarterly period ended March 31, 1994.
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: May 13, 1994 By: /s/ Daniel E. Berce
(Signature)
Daniel E. Berce
Chief Financial Officer
EXHIBIT 11.1
AMERICREDIT CORP.
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
(dollars in thousands, except per share amounts)
Three Months Ended Nine Months Ended
March 31, March 31,
1994 1993 1994 1993
---- ---- ---- ----
PRIMARY:
Average common
shares outstanding 29,130,782 28,965,857 29,131,348 29,333,652
Common share equivalents
resulting from
assumed exercise
of stock options
and warrants 3,357,034 1,182,834 3,193,208
---------- ---------- ---------- ----------
Average common shares
and share
equivalents
outstanding 32,487,816 30,148,691 32,324,556 29,333,652
========== ========== ========== ==========
FULLY DILUTED:
Average common shares
outstanding 29,130,782 28,965,857 29,131,348 29,333,652
Common share equivalents
resulting from
assumed exercise
of stock options
and warrants 3,046,636 1,182,834 3,049,434
---------- ---------- ---------- ----------
Average common shares
and share equiv-
alents outstanding 32,177,418 30,148,691 32,180,782 29,333,652
========== ========== ========== ==========
NET INCOME (LOSS) $ 1,210 $ 1,169 $ 3,679 ($ 20,282)
========== ========== ========== ==========
EARNINGS (LOSS) PER SHARE:
Primary $ .04 $ .04 $ .11 ($ .69)
========== ========== ========== ==========
Fully diluted $ .04 $ .04 $ .11 ($ .69)
========== ========== ========== ==========
Primary earnings (loss) per share has been computed by dividing net income
(loss) by the average common shares and share equivalents outstanding.
Common share equivalents were computed using the treasury stock method. The
average common stock market price for the period was used to determine the
number of common share equivalents.
Fully diluted earnings (loss) per share has been computed in the same manner as
primary earnings (loss) per share except that the higher of the average or end
of period common stock market price was used to determine the number of common
share equivalents.