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 December 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
incorporation or organization) Identifiation No.)
200 Bailey Avenue, Fort Worth, Texas 76107
(Address of principal executive offices)
(Zip Code)
(817) 332-7000
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X
No
There were 28,687,473 shares of common stock, $.01 par value outstanding
as of January 31, 1995.
AMERICREDIT CORP.
INDEX TO FORM 10-Q
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements Page
Consolidated Balance Sheets -
December 31, 1994 and June 30, 1994 . . . . . 3
Consolidated Income Statements -
Three Months and Six Months Ended
December 31, 1994 and 1993. . . . . . . . . . 4
Consolidated Statements of
Cash Flows - Six Months Ended
December 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 4. Submission of Matters to a Vote
of Security Holders . . . . . . . . . . . 19
Item 6. Exhibits and Reports on Form 8-K. . . . . 19
SIGNATURE . . . . . . . . . . . . . . . . . . . 21
PART I - FINANCIAL INFORMATION
Item I. FINANCIAL STATEMENTS
AMERICREDIT CORP.
Consolidated Balance Sheets
(Unaudited, Dollars in Thousands)
December 31, June 30,
1994 1994
------------ --------
ASSETS
Cash and cash equivalents $ 26,960 $ 15,756
Restricted cash 2,834
Investment securities 15,094 26,506
Finance receivables, net 124,195 72,150
Property and equipment, net 5,105 5,345
Other assets 3,224 2,458
------- -------
Total assets $177,412 $122,215
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Automobile receivables
-backed notes $ 51,000 $
Notes payable 306 388
Accrued taxes and expenses 2,486 2,326
------- -------
Total liabilities 53,792 2,714
------- -------
Shareholders' equity:
Common stock, $.01 par value
per share; 120,000,000 shares
authorized; 31,814,033 and
31,757,333 shares issued,
respectively 318 318
Additional paid-in capital 183,814 183,588
Accumulated deficit ( 51,824) ( 55,717)
------- -------
132,308 128,189
Treasury stock, at cost
(3,008,360 shares) ( 8,688) ( 8,688)
------- -------
Total shareholders' equity 123,620 119,501
------- -------
Total liabilities and
shareholders' equity $177,412 $122,215
======= =======
The accompanying notes are an integral part
of these consolidated financial statements
AMERICREDIT CORP.
Consolidated Income Statements
(Unaudited, Dollars in Thousands, Except Per Share Data)
Three Months Ended Six Months Ended
December 31, December 31,
1994 1993 1994 1993
------------------ ------------------
Revenue:
Finance charge
income $ 6,312 $ 3,006 $ 11,138 $ 5,902
Investment income 299 877 647 1,599
Other income 167 92 654 176
---------- ---------- ---------- ----------
6,778 3,975 12,439 7,677
---------- ---------- --------- ----------
Costs and expenses:
Operating expenses 3,396 2,323 6,517 4,567
Provision for
losses 883 264 1,537 552
Interest expense 364 54 413 89
---------- ---------- ---------- ----------
4,643 2,641 8,467 5,208
---------- ---------- ---------- ----------
Income before
income taxes 2,135 1,334 3,972 2,469
Provision for
income taxes 43 79
---------- ---------- ---------- ----------
Net income $ 2,092 $ 1,334 $ 3,893 $ 2,469
========== ========== ========== ==========
Earnings per share $ .07 $ .04 $ .13 $ .08
========== ========== ========== ==========
Weighted average
shares and share
equivalents 30,191,179 32,614,405 30,126,388 32,311,118
========== ========== ========== ==========
The accompanying notes are an integral part
of these consolidated financial statements
AMERICREDIT CORP.
Consolidated Statements of Cash Flows
(Unaudited, Dollars in Thousands)
Six Months Ended
December 31,
1994 1993
------------------
Cash flows from operating activities:
Net income $ 3,893 $ 2,469
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 642 631
Provision for losses 1,537 552
Changes in assets and liabilities:
Other assets ( 480) 516
Accrued taxes and expenses 160 ( 1,883)
------ ------
Net cash provided by operating activities 5,752 2,285
------ ------
Cash flows from investing activities:
Purchases and originations of finance
receivables ( 83,204) ( 27,457)
Principal collections and recoveries on
finance receivables 29,622 21,211
Purchases of property and equipment ( 748) ( 90)
Proceeds from disposition of property
and equipment 60 93
Purchases of investment securities ( 9,700)
Proceeds from sales and maturities of
investment securities 11,412 13,932
Increase in restricted cash ( 2,834)
Proceeds from sale of investment in affiliate 11,300
------ ------
Net cash provided (used) by
investing activities ( 45,692) 9,289
------ ------
Cash flows from financing activities:
Borrowings on bank line of credit 15,600
Repayments on bank line of credit ( 15,600)
Proceeds from issuance of automobile
receivables-backed notes 51,000
Payments on notes payable ( 82) ( 301)
Proceeds from issuance of common stock 226 111
------ ------
Net cash provided (used) by
financing activities 51,144 ( 190)
------ ------
Net increase in cash and cash equivalents 11,204 11,384
Cash and cash equivalents at beginning of period 15,756 33,268
------ ------
Cash and cash equivalents at end of period $26,960 $44,652
====== ======
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 December 31, 1994 and for the
periods ended December 31, 1994 and 1993 are unaudited, but in
management's opinion, include all adjustments, consisting only of normal
recurring adjustments, necessary for a fair presentation of the results
for such interim periods. The results for interim periods are not
necessarily indicative of results for a full year.
The interim period financial statements, including the notes thereto, are
condensed and do not include all disclosures required by generally
accepted accounting principles. Such interim period financial statements
should be read in conjunction with the Company's consolidated financial
statements which were included in the Company's 1994 Annual Report to
Shareholders.
NOTE 2 - FINANCE RECEIVABLES
Finance receivables consist of the following (in thousands):
December 31, June 30,
1994 1994
------------ --------
Indirect consumer lending:
Precomputed interest $104,593 $55,617
Simple interest 51,431 24,890
------- ------
156,024 80,507
Direct lending 2,656 8,467
Premium finance 3,929 6,631
------- -------
Total finance receivables 162,609 95,605
Less unearned finance charges and fees ( 25,380) ( 14,125)
------- ------
Principal amount of finance receivables 137,229 81,480
Less allowance for losses ( 13,034) ( 9,330)
------- ------
Finance receivables, net $124,195 $72,150
======= ======
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. 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 Six Months
Ended Ended
December 31, December 31,
1994 1993 1994 1993
------------- ------------
Balance at beginning
of period $10,875 $10,212 $ 9,330 $12,581
Provision for losses 883 264 1,537 552
Acquisition fees on
indirect consumer
lending contracts 2,876 927 5,216 1,866
Net charge-offs ( 1,600) ( 2,193) ( 3,049) ( 5,789)
------ ------ ------ ------
Balance at end of period $13,034 $ 9,210 $13,034 $ 9,210
====== ====== ====== ======
NOTE 3 - CREDIT AGREEMENT
In September 1994, the Company entered into a revolving credit agreement
with a group of banks under which the Company may borrow up to $75
million, subject to a defined borrowing base. No borrowings were
outstanding as of December 31, 1994. Borrowings under the credit
agreement are collateralized by the indirect finance receivables
portfolio and bear interest, based upon the Company's option, at either
the reference prime rate plus 1/2% or various market London Interbank
Offered Rates plus 2-1/4%. 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 November 1995,
contains various restrictive covenants requiring certain minimum
financial ratios and results and placing certain limitations on the
incurrence of additional debt, capital expenditures and repurchase of
common stock.
NOTE 4 - AUTOMOBILE RECEIVABLES-BACKED NOTES
In December 1994, the Company completed a private placement of $51
million of automobile receivables-backed notes. The issue, Series 1994-
A, was priced at par to yield 8.19% to the noteholders and is
collateralized by a pool of indirect finance receivables originally
totalling $56.7 million. The notes were issued by a wholly-owned special
purpose subsidiary of the Company which holds the related finance
receivables. Principal and interest on the notes are payable monthly
from collections and recoveries on the specific pool of finance
receivables. Financial Security Assurance Inc. ("FSA") issued a
financial guaranty insurance policy for the benefit of the noteholders.
In connection with the issuance of the financial guaranty insurance
policy by FSA, the Company was required to establish a cash account with
a trustee for the benefit of FSA and the noteholders. Such cash account
is shown as restricted cash on the Company's consolidated balance sheets.
Monthly collections and recoveries from the pool of finance receivables
in excess of required principal and interest payments on the notes will
be added to the restricted cash account until the balance reaches a
specified percentage of the pool of finance receivables, and thereafter
will be distributed to the Company. In the event that monthly
collections and recoveries from the pool of finance receivables are
insufficient to make required principal and interest payments on the
notes, any shortfall will be drawn from the restricted cash account.
Certain agreements with FSA contain restrictive covenants relating to
delinquency, default and net loss ratios in the pool of finance
receivables which collateralize the automobile receivables-backed notes.
NOTE 5 - INCOME TAXES
The Company's effective income tax rate on income before income taxes
differs from the U.S. statutory tax rate as follows:
Three Months Six Months
Ended Ended
December 31, December 31,
1994 1993 1994 1993
------------ ------------
U.S. statutory tax rate 34% 34% 34% 34%
Utilization of net operating
loss carryforward ( 34 ) ( 34 ) ( 34 ) ( 34 )
State income taxes 2 2
-- -- -- --
2% 0% 2% 0%
== == == ==
At June 30, 1994, the Company has net operating loss carryforwards of
$52,000,000 for income tax reporting purposes which expire between 2007
and 2009 and an alternative minimum tax carryforward of $900,000 with no
expiration date.
NOTE 6 - SUPPLEMENTAL CASH FLOW INFORMATION
Cash payments for interest costs consist of the following (in thousands):
Six Months
Ended
December 31,
1994 1993
------------
Interest costs (none capitalized) $309 $89
During the six months ended December 31, 1994, the Company sold certain
property and equipment for cash and a note receivable of $184,000.
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.
Since April 1993, the Company has also financed insurance premiums for
consumers purchasing car insurance through independent insurance agents.
However, the Company has recently curtailed its activities in this
business in order to concentrate its resources on the core indirect
consumer lending business.
The Company previously engaged in the retail used car sales and finance
business. However, in connection with a restructuring, 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 December 31, 1994 as compared to
Three Months Ended December 31, 1993
----------------------------------------------------
Revenue:
The Company's overall finance charge income consisted of the following
(in thousands):
Three Months
Ended
December 31,
1994 1993
---------------------------------
Indirect consumer lending $ 5,925 94% $ 1,624 54%
Direct lending 146 2 1,076 36
Premium financing 241 4 306 10
------ --- ------ ---
$ 6,312 100% $ 3,006 100%
====== === ====== ===
The increase in finance charge income for the indirect consumer lending
business is due to growth in average net finance receivables outstanding.
The indirect consumer lending portfolio was $131.0 million at December
31, 1994, compared to $34.3 million at December 31, 1993. The Company
purchased $46.7 million of indirect loans during the three months ended
December 31, 1994, compared to $11.0 million during the three months
ended December 31, 1993. This increased lending activity is a result of
additional loan production at branches open during both periods as well
as expansion of the Company's loan production capacity. The Company
operated 24 branch offices as of December 31, 1994, compared to 13 as of
December 31, 1993.
The decrease in direct lending finance charge income is due to
liquidation of the direct lending portfolio.
The Company's overall effective yield on its finance receivables
increased to 20.8% from 20.6% primarily as a result of higher finance
charge rates realized in the Company's indirect consumer lending
business. The effective yield on indirect consumer lending receivables
was 20.9% for the three months ended December 31, 1994.
Investment income decreased as a result of lower average cash and cash
equivalents and investment securities balances for the three months ended
December 31, 1994. The Company's yield on its cash and cash equivalents
and investment securities was 5.2% for the three months ended December
31, 1994 as compared to 4.6% for the three months ended December 31,
1993.
Other income for the three months ended December 31, 1994 included
$32,000 related to the Company's participation in certain joint ventures
which acquire and collect distressed receivables portfolios. These joint
ventures were formed during December 1993.
Costs and Expenses:
Operating expenses as an annualized percentage of average net finance
receivables outstanding decreased to 11.2% for the three months ended
December 31, 1994 as compared to 15.9% for the three months ended
December 31, 1993. The ratio improved as a result of the Company's
ability to leverage its fixed overhead costs by growing its finance
receivables portfolio. The dollar amount of operating expenses increased
by $1.1 million, or 46% primarily due to the addition of branch offices,
marketing representatives, branch supervisory personnel and portfolio
servicing and analysis staff.
The provision for losses increased to $883,000 as compared to $264,000.
Further discussion concerning the provison for losses is included under
the caption, "Finance Receivables".
Interest expense for the three months ended December 31, 1994 resulted
from borrowings on the Company's bank line of credit and issuance of $51
million of automobile receivables-backed notes on December 22, 1994. The
Company did not have any bank borrowings during the three months ended
December 31, 1993.
Six Months Ended December 31, 1994 as compared to
Six Months Ended December 31, 1993
-------------------------------------------------
Revenue:
The Company's overall finance charge income consisted of the following
(in thousands):
Six Months
Ended
December 31,
1994 1993
----------------------------
Indirect consumer lending $10,152 91% $2,721 46%
Direct lending 396 4 2,630 45
Premium financing 590 5 551 9
------ --- ----- ---
$11,138 100% $5,902 100%
====== === ===== ===
The increase in finance charge income for the indirect consumer lending
business is due to growth in average net finance receivables
outstanding. The indirect consumer lending portfolio was $131.0 million
at December 31, 1994, compared to $34.3 million at December 31, 1993.
The Company purchased $83.5 million of indirect loans during the six
months ended December 31, 1994, compared to $22.6 million during the six
months ended December 31, 1993. This increased lending activity is a
result of additional loan production at branches open during both periods
as well as expansion of the Company's loan production capacity. The
Company operated 24 branch offices as of December 31, 1994, compared to
13 as of December 31, 1993.
The decrease in direct lending finance charge income is due to
liquidation of the direct lending portfolio.
The Company's overall effective yield on its finance receivables
increased to 20.7% from 20.6% primarily as a result of higher finance
charge rates realized in the Company's indirect consumer lending
business. The effective yield on indirect consumer lending receivables
was 20.8% for the six months ended December 31, 1994.
Investment income decreased as a result of lower average cash and cash
equivalents and investment securities balances for the six months ended
December 31, 1994. The Company's yield on its cash and cash equivalents
and investment securities was 4.8% for the six months ended December 31,
1994 as compared to 4.4% for the six months ended December 31, 1993.
Other income for the six months ended December 31, 1994 included $392,000
related to the Company's participation in certain joint ventures which
acquire and collect distressed receivables portfolios. These joint
ventures were formed during December 1993.
Costs and Expenses:
Operating expenses as an annualized percentage of average net finance
receivables outstanding decreased to 12.1% for the six months ended
December 31, 1994 as compared to 15.9% for the six months ended December
31, 1993. The ratio improved as a result of the Company's ability to
leverage its fixed overhead costs by growing its finance receivables
portfolio. The dollar amount of operating expenses increased by $1.9
million, or 43% primarily due to the addition of branch offices,
marketing representatives, branch supervisory personnel and portfolio
servicing and analysis staff.
The provision for losses increased to $1,537,000 as compared to $552,000.
Further discussion concerning the provison for losses is included under
the caption, "Finance Receivables".
Interest expense for the six months ended December 31, 1994 resulted from
borrowings on the Company's bank line of credit and issuance of $51
million of automobile receivables-backed notes on December 22, 1994. The
Company did not have any bank borrowings during the six months ended
December 31, 1993.
FINANCE RECEIVABLES
Net finance receivables represented 70.0% of the Company's total assets
at December 31, 1994. The following table presents certain data related
to the finance receivables portfolio (dollars in thousands):
December 31,
1994
Indirect Direct Premium Total
-----------------------------------
Gross finance receivables $156,024 $2,656 $ 3,929 $162,609
Unearned finance charges
and fees ( 25,041)( 132) ( 207) ( 25,380)
------- ----- ------ -------
Finance receivables
(principal amount) 130,983 2,524 3,722 137,229
Allowance for losses ( 12,154) ( 556)( 324) ( 13,034)
------- ----- ------ -------
Finance receivables, net $118,829 $1,968 $ 3,398 $124,195
======= ===== ====== =======
Number of outstanding
contracts 17,222 1,778 10,320 29,320
======= ===== ====== =======
Allowance for losses as a
percentage of finance
receivables (principal
amount) 9.3% 22.0% 8.7% 9.5%
======= ===== ====== =======
Average amount of out-
standing contract
(principal amount)
(in dollars) $ 7,606 $1,420 $ 361 $ 4,680
======= ===== ====== =======
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 for a non-refundable
acquisition fee on a non-recourse basis, and such acquisition fees are
also recorded 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):
December 31,
1994 1993
------------------
Principal amount of delinquent contracts $2,947 $710
Principal amount of delinquent contracts
as a percentage of total net indirect
finance receivables outstanding 2.3% 2.1%
The following presents charge-off data with respect to the Company's
indirect finance receivables portfolio (dollars in thousands):
Three Months Six Months
Ended Ended
December 31, December 31,
1994 1993 1994 1993
------------ ------------
Net charge-offs $1,353 $ 256 $2,233 $ 400
Net charge-offs as an
annualized percentage
of average net indirect
finance receivables
outstanding 4.8% 3.4% 4.6% 3.2%
The Company recorded periodic provisions for losses as charges to
operations of $844,000 and $1,450,000 related to its indirect finance
receivables portfolio for the three and six month periods ended December
31, 1994, respectively. The provisions for losses were $228,000 and
$482,000 for the three and six month periods ended December 31, 1993,
respectively. The increased loss provisions are a result of higher
average net indirect finance receivables balances. The Company also
accounts for acquisition fees on indirect consumer lending contracts as
additional allowances for losses.
The Company began its indirect consumer lending business in September
1992 and has grown its receivables portfolio to $131.0 million as of
December 31, 1994. The Company expects that its aggregate portfolio
delinquency and charge-offs will increase over time as its portfolio
gains more maturity. Delinquency and charge-offs typically tend to occur
after a loan has been outstanding for several months. 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):
December 31,
1994 1993
-----------------
Number of delinquent contracts 231 749
Number of delinquent contracts
as a percentage of the total
number of contracts outstanding 13.0% 9.3%
Amount of delinquent contracts * $436 $2,564
Amount of delinquent contracts as
a percentage of total gross
direct finance receivables
outstanding * 16.4% 11.5%
* 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 Six Months
Ended Ended
December 31, December 31,
1994 1993 1994 1993
------------ ------------
Repossessions and other
charge-offs 167 669 427 1,665
Repossessions and other
charge-offs as an
annualized percentage
of the average number of
contracts outstanding 29.8% 30.1% 29.6% 34.0%
Net charge-offs
(in thousands) $ 167 $1,936 $ 617 $5,381
Average net charge-off $1,000 $2,894 $1,445 $3,232
Net charge-offs as an
annualized percentage of
average direct finance
receivables outstanding,
less unearned finance
charges 19.8% 32.3% 26.0% 37.4%
Net charge-offs as an annualized percentage of the average direct finance
receivables outstanding has decreased as the portfolio has become more
seasoned and average outstanding contract balances have decreased. The
Company did not record any periodic provisions for losses related to its
direct finance receivables portfolio for the three and six month periods
ended December 31, 1994 and 1993.
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 of $39,000 and
$87,000 related to its premium finance receivables portfolio for the
three month and six month periods ended December 31, 1994, respectively.
The provisions for losses were $36,000 and $70,000 for the three and six
month periods ended December 31, 1993, respectively.
The following table presents charge-off data with respect to the
Company's premium finance receivables portfolio (dollars in thousands):
Three Months Six Months
Ended Ended
December 31, December 31,
1994 1993 1994 1993
------------ ------------
Net charge-offs $ 80 $ 1 $ 199 $ 8
Net charge-offs as an
annualized percentage
of average net premium
finance receivables
outstanding 6.5% .1% 7.1% .9%
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash flows are summarized as follows (in thousands):
Six Months Ended
December 31,
1994 1993
----------------
Operating activities $ 5,752 $ 2,285
Investing activities ( 45,692) 9,289
Financing activities 51,144 ( 190)
------ -------
Net increase in cash and cash equivalents $11,204 $11,384
====== ======
In addition to the net change in cash and cash equivalents shown above,
the Company also had net decreases in investment securities of $11.4
million and $4.2 million for the six months ended December 31, 1994 and
1993, respectively. Such amounts are included as investing activities in
the above table.
The Company's primary sources of cash have been collections and
recoveries on its finance receivables portfolio, borrowings under its
bank line of credit and the issuance in December 1994 of automobile
receivables-backed notes. The Company also received 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 $131.0 million as of December 31, 1994. The Company
operated 24 indirect consumer lending branches in seventeen states and
had a group of marketing representatives as of December 31, 1994. The
Company plans to open six additional consumer lending branches, add
marketing representatives and expand loan production capacity at existing
branch offices in the remainder of fiscal 1995. While the Company has
been able to establish and grow this business thus far, there can be no
assurance that future expansion will be successful due to competitive,
regulatory, market, economic or other factors.
The Company's Board of Directors has authorized the repurchase of up to
6,000,000 shares of the Company's common stock. A total of 3,017,300
shares of common stock had been purchased pursuant to this program
through December 31, 1994. The Company purchased an additional 128,200
shares at an aggregate price of $699,000 in January 1995.
In December 1994, the Company completed a private placement of $51
million of automobile receivables-backed notes. The issue, Series 1994-
A, was priced at par to yield 8.19% to the noteholders and is
collateralized by a pool of indirect finance receivables originally
totalling $56.7 million. The notes were issued by a wholly-owned special
purpose subsidiary of the Company which holds the related finance
receivables. Principal and interest on the notes are payable monthly
from collections and recoveries on the specific pool of finance
receivables. The notes are rated "Aaa" by Moody's Investors Services
Inc. and "AAA" by Standard & Poor's Corp. Financial Security Assurance
Inc. ("FSA") issued a financial guaranty insurance policy for the benefit
of the noteholders.
As of December 31, 1994, the Company had $42.1 million in cash and cash
equivalents and investment securities. The Company also has a revolving
credit agreement with a group of banks under which the Company may borrow
up to $75 million. No borrowings were outstanding under this facility at
December 31, 1994. The Company estimates that it will require additional
external capital in calendar year 1995 in addition to these existing
capital resources and collections and recoveries on its finance
receivables portfolio in order to fund expansion of its indirect consumer
lending business, capital expenditures, any additional stock repurchases,
and other costs and expenses.
The Company anticipates that such funding will be in the form of an
expanded bank line of credit and additional issuances of automobile
receivables-backed notes. 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
Not Applicable
Item 2. CHANGES IN SECURITIES
Not Applicable
Item 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On November 9, 1994, the Company held its Annual
Meeting of Shareholders. The shareholders voted upon the
election of six directors, the approval and adoption of the
AmeriCredit Corp. Employee Stock Purchase Plan, and the
ratification of the appointment of the Company's independent
auditors. Each of the six nominees identified in the
Company's proxy statement, filed pursuant to Rule 14a-6 of
the Securities Exchange Act of 1934, were elected at the
meeting to hold office until the next annual meeting or until
their successors are duly elected and qualified. The
shareholders approved and adopted the AmeriCredit Corp.
Employee Stock Purchase Plan, with 21,689,087 shares voting
in favor, 355,501 shares voting against and 62,569 shares
withheld. The Company's selection of independent auditors
was also ratified.
Item 5. OTHER INFORMATION
Not Applicable
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) Exhibits:
10.1 - Indenture, dated December 1, 1994, between
AmeriCredit Receivables Finance Corp. and LaSalle
National Bank as Trustee and Indenture Collateral
Agent.
10. 2 - Sale and Servicing Agreement, dated December 1,
1994, between AmeriCredit Receivables Finance Corp.,
AmeriCredit Financial Services, Inc., AmeriCredit
Receivables Corp. and LaSalle National Bank as
Backup Servicer.
11.1 - Statement Re Computation of Per Share
Earnings
27.1 - Financial Data Schedule
(B) Reports on Form 8-K
The Company did not file any reports on Form
8-K during the quarterly period ended December 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: February 10, 1994 By: /s/ Daniel E. Berce
(Signature)
Daniel E. Berce
Chief Financial Officer