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, 2000
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) 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 [ ]
There were 80,040,100 shares of common stock, $0.01 par value outstanding as
of January 31, 2001.
AMERICREDIT CORP.
INDEX TO FORM 10-Q
Part I. FINANCIAL INFORMATION PAGE
Item 1. Financial Statements (unaudited)
Consolidated Balance Sheets - December 31, 2000
and June 30, 2000 3
Consolidated Statements of Income and Comprehensive
Income - Three Months and Six Months Ended December
31, 2000 and 1999 4
Consolidated Statements of Cash Flows - Six Months
Ended December 31, 2000 and 1999 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 19
Item 3. Quantitative and Qualitative Disclosures About
Market Risk 35
Part II. OTHER INFORMATION
Item 1. Legal Proceedings 36
Item 2. Changes in Securities 36
Item 3. Defaults upon Senior Securities 37
Item 4. Submission of Matters to a Vote of Security Holders 37
Item 5. Other Information 37
Item 6. Exhibits and Reports on Form 8-K 37
SIGNATURE 39
2
Part I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
AMERICREDIT CORP.
Consolidated Balance Sheets
(Unaudited, Dollars in Thousands)
DECEMBER 31, 2000 JUNE 30, 2000
----------------- -------------
ASSETS
Cash and cash equivalents $ 40,587 $ 42,916
Receivables held for sale, net 1,144,552 871,511
Interest-only receivables from Trusts 237,401 229,059
Investments in Trust receivables 446,329 341,707
Restricted cash 289,364 253,852
Property and equipment, net 42,680 44,535
Other assets 114,097 78,689
---------------------- ----------------------
Total assets $2,315,010 $1,862,269
====================== ======================
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Warehouse credit facilities $ 756,650 $ 487,700
Credit enhancement facility 74,840 66,606
Senior notes 375,000 375,000
Other notes payable 15,404 19,691
Funding payable 44,131 61,664
Accrued taxes and expenses 112,029 70,627
Deferred income taxes 105,036 92,402
---------------------- ----------------------
Total liabilities 1,483,090 1,173,690
---------------------- ----------------------
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;
120,000,000 shares authorized; 85,276,200
and 83,726,534 shares issued 853 837
Additional paid-in capital 431,033 401,979
Accumulated other comprehensive income 67,702 44,803
Retained earnings 352,826 262,111
---------------------- ----------------------
852,414 709,730
Treasury stock, at cost (6,636,637 and
7,008,859 shares) (20,494) (21,151)
---------------------- ----------------------
Total shareholders' equity 831,920 688,579
---------------------- ----------------------
Total liabilities and shareholders' equity $2,315,010 $1,862,269
====================== ======================
The accompanying notes are an integral part of
these consolidated financial statements
3
AMERICREDIT CORP.
Consolidated Statements of Income and Comprehensive Income
(Unaudited, Dollars in Thousands, Except Per Share Data)
Three Months Ended Six Months Ended
December 31, December 31,
------------ ------------
2000 1999 2000 1999
------------------------------------------------------------------------
Revenue
Finance charge income $ 52,095 $ 27,458 $ 97,495 $ 54,994
Gain on sale of receivables 71,173 49,314 132,759 98,242
Servicing fee income 63,435 41,096 122,705 75,883
Other income 1,906 1,376 4,991 2,744
------------------------------------------------------------------------
188,609 119,244 357,950 231,863
------------------------------------------------------------------------
Costs and expenses
Operating expenses 73,201 52,865 140,495 106,543
Provision for loan losses 7,271 3,756 13,325 7,243
Interest expense 29,370 16,129 56,626 30,405
Charge for closing
mortgage operations 10,500 10,500
------------------------------------------------------------------------
109,842 83,250 210,446 154,691
------------------------------------------------------------------------
Income before income taxes 78,767 35,994 147,504 77,172
Income tax provision 30,325 16,385 56,789 32,239
------------------------------------------------------------------------
Net income 48,442 19,609 90,715 44,933
------------------------------------------------------------------------
Other comprehensive income
Unrealized gain (loss) on
credit enhancement assets 53,203 (2,113) 83,517 12,868
Unrealized (loss) gain on cash
flow hedges (30,323) 8,393 (46,284) 9,207
Less related income tax provision (8,809) (2,417) (14,334) (8,472)
------------------------------------------------------------------------
Comprehensive income $ 62,513 $ 23,472 $ 113,614 $ 58,536
========================================================================
Earnings per share
Basic $0.62 $0.27 $1.17 $0.64
========================================================================
Diluted $0.57 $0.25 $1.08 $0.60
========================================================================
Weighted average shares outstanding 78,261,907 73,988,228 77,757,716 70,745,962
========================================================================
Weighted average shares and
assumed incremental shares 84,418,806 78,958,413 83,888,520 75,318,456
========================================================================
The accompanying notes are an integral part of
these consolidated financial statements
4
AMERICREDIT CORP.
Consolidated Statements of Cash Flows
(Unaudited, Dollars in Thousands)
Six Months Ended December 31,
-------------------------------------------------
2000 1999
----------------------- -----------------------
Cash flows from operating activities
Net income $ 90,715 $ 44,933
Adjustments to reconcile net income to
net cash provided by operating activities:
Non-cash charge for closing mortgage operations 6,566
Depreciation and amortization 9,997 9,357
Provision for loan losses 13,325 7,243
Deferred income taxes 9,617 7,414
Non-cash servicing fee income (39,532) (20,165)
Non-cash gain on sale of auto receivables (103,546) (92,670)
Distributions from Trusts 107,069 36,711
Changes in assets and liabilities:
Other assets (14,634) (11,264)
Accrued taxes and expenses 29,563 12,618
----------------------- -----------------------
Net cash provided by operating activities 102,574 743
----------------------- -----------------------
Cash flows from investing activities
Purchases of auto receivables (2,807,219) (2,040,093)
Originations of mortgage receivables (108,950)
Principal collections and recoveries on receivables 36,797 17,547
Net proceeds from sale of auto receivables 2,466,076 1,881,645
Net proceeds from sale of mortgage receivables 447 113,660
Initial deposits to restricted cash (75,234) (92,000)
Net change in credit enhancement facility 8,234 35,000
Purchases of property and equipment (7,056) (5,279)
Change in other assets (8,935) (5,653)
----------------------- -----------------------
Net cash used by investing activities (386,890) (204,123)
----------------------- -----------------------
Cash flows from financing activities
Net change in warehouse credit facilities 268,950 241,558
Payments on other notes payable (5,373) (5,740)
Proceeds from issuance of common stock 18,410 123,045
----------------------- -----------------------
Net cash provided by financing activities 281,987 358,863
----------------------- -----------------------
Net (decrease) increase in cash and cash equivalents (2,329) 155,483
Cash and cash equivalents at beginning of period 42,916 21,189
----------------------- -----------------------
Cash and cash equivalents at end of period $ 40,587 $ 176,672
======================= =======================
The accompanying notes are an integral part of
these consolidated financial statements
5
AMERICREDIT CORP.
Notes to Consolidated Financial Statements
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts of
AmeriCredit Corp. and its wholly-owned subsidiaries ("the Company"). All
significant intercompany transactions and accounts have been eliminated in
consolidation.
The consolidated financial statements as of December 31, 2000, and for the
periods ended December 31, 2000 and 1999, are unaudited, but in management's
opinion include all adjustments necessary for a fair presentation of the
results for such interim periods. Certain prior year amounts have been
reclassified to conform to the current period presentation. 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. These interim period financial statements should be
read in conjunction with the Company's consolidated financial statements
which are included in the Company's Annual Report on Form 10-K for the year
ended June 30, 2000.
In September 2000, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 140, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities, a
replacement of Financial Accounting Standards Board Statement No. 125" ("SFAS
140"), which revises the standards for accounting for securitizations and
other transfers of financial assets and collateral and requires certain
disclosures, but, carries over most of Statement No. 125's provisions without
reconsideration. SFAS 140 is effective for transfers and servicing of
financial assets and extinguishments of liabilities occurring after March 31,
2001, and is effective for disclosures relating to securitization
transactions and collateral and for recognition and reclassification of
collateral for fiscal years ending after December 15, 2000. The Company does
not believe that the adoption of this statement will have a material effect
on the Company's financial position or results of operations.
6
NOTE 2 - RECEIVABLES HELD FOR SALE
Receivables held for sale consist of the following (in thousands):
DECEMBER 31, 2000 JUNE 30, 2000
------------------------- --------------------------
Auto receivables $1,175,094 $891,672
Less allowance for loan losses (33,350) (24,374)
------------------------- --------------------------
Auto receivables, net 1,141,744 867,298
Mortgage receivables 2,808 4,213
------------------------- --------------------------
$1,144,552 $871,511
========================= ==========================
A summary of the allowance for loan losses is as follows (in thousands):
Three Months Ended Six Months Ended
December 31, December 31,
------------ ------------
2000 1999 2000 1999
------------------------------------------------------------------------
Balance at beginning of period $30,994 $16,712 $24,374 $11,841
Provision for loan losses 7,271 3,756 13,325 7,243
Acquisition fees 32,184 20,785 64,216 42,498
Allowance related to receivables
sold to Trusts (33,711) (22,666) (62,342) (41,337)
Net charge-offs (3,388) (1,726) (6,223) (3,384)
------------------------------------------------------------------------
Balance at end of period $33,350 $16,861 $33,350 $16,861
========================================================================
NOTE 3 - CREDIT ENHANCEMENT ASSETS
As of December 31, 2000 and June 30, 2000, the Company was servicing
$7,050.4 million and $5,758.3 million, respectively, of auto receivables
which have been sold to certain special purpose financing trusts (the
"Trusts"). The Company has retained an interest in these receivables in the
form of credit enhancement assets.
Credit enhancement assets consist of the following (in thousands):
DECEMBER 31, 2000 JUNE 30, 2000
------------------------- --------------------------
Interest-only receivables from Trusts $237,401 $229,059
Investments in Trust receivables 446,329 341,707
Restricted cash 289,364 253,852
------------------------- --------------------------
$973,094 $824,618
========================= ==========================
7
A summary of activity in the credit enhancement assets is as follows (in
thousands):
Three Months Ended Six Months Ended
December 31, December 31,
------------ ------------
2000 1999 2000 1999
------------------------------------------------------------------------
Balance at beginning of period $906,512 $577,532 $824,618 $494,862
Non-cash gain on sale of auto
receivables 54,110 47,342 103,546 92,670
Accretion of present value discount 19,742 11,388 39,532 20,165
Initial deposits to restricted cash 27,859 65,000 75,234 92,000
Change in unrealized gain 22,880 6,280 37,233 22,075
Distributions from Trusts (58,009) (22,481) (107,069) (36,711)
------------------------------------------------------------------------
Balance at end of period $973,094 $685,061 $973,094 $685,061
========================================================================
A summary of the allowance for loan losses included as a component of the
interest-only receivables is as follows (in thousands):
Three Months Ended Six Months Ended
December 31, December 31,
------------ ------------
2000 1999 2000 1999
------------------------------------------------------------------------
Balance at beginning of period $623,743 $400,738 $ 563,102 $354,338
Assumptions for cumulative credit losses 139,949 102,454 263,302 195,406
Net charge-offs (67,838) (50,971) (130,550) (97,523)
------------------------------------------------------------------------
Balance at end of period $695,854 $452,221 $ 695,854 $452,221
========================================================================
NOTE 4 - WAREHOUSE CREDIT FACILITIES
Warehouse credit facilities consist of the following (in thousands):
December 31, 2000 June 30, 2000
----------------- -------------
Commercial paper facilities $246,315 $483,039
Medium term note facility 500,000
Canadian credit agreement 10,335 4,661
----------------------- -----------------------
$756,650 $487,700
======================= =======================
The Company has five separate funding agreements with administrative agents
on behalf of institutionally managed commercial paper conduits and bank
groups with aggregate structured warehouse financing availability of
approximately $2 billion. The first and second commercial paper facilities
provide for available structured warehouse financing of $525 million and $275
million, respectively, through September 2001. The third facility provides
for available structured warehouse financing of $375 million through March
2001. The fourth and fifth facilities provide for available structured
warehouse financing of $500 million and $300 million, respectively, through
June 2001.
8
Under these funding agreements, the Company transfers auto receivables to
special purpose finance subsidiaries of the Company, and these subsidiaries
in turn issue notes, collateralized by such auto receivables, to the agents.
The agents provide funding under the notes to the subsidiaries pursuant to an
advance formula and the subsidiaries forward the funds to the Company in
consideration for the transfer of auto receivables. While these subsidiaries
are included in the Company's consolidated financial statements, these
subsidiaries are separate legal entities and the auto receivables and other
assets held by the subsidiaries are legally owned by these subsidiaries and
are not available to creditors of AmeriCredit Corp. or its other
subsidiaries. Advances under the funding agreements bear interest at
commercial paper, London Interbank Offered Rates ("LIBOR") or prime rates
plus specified fees depending upon the source of funds provided by the
agents. The funding agreements contain various covenants requiring certain
minimum financial ratios and results. The funding agreements also require
certain funds to be held in restricted cash accounts to provide additional
collateral for borrowings under the facilities. As of December 31, 2000, and
June 30, 2000, these restricted cash accounts totaled $6,663,000 and
$16,262,000, respectively, and are included in other assets in the
consolidated balance sheets.
In December 2000, the Company entered into a funding agreement with an
administrative agent on behalf of an institutionally managed medium term note
conduit. Under this arrangement, the conduit sold medium term notes totaling
$500 million and delivered the proceeds to a special purpose finance
subsidiary of the Company. This subsidiary in turn issued a $500 million
note, collateralized by auto receivables and cash, to the agent. The funding
agreement allows for the substitution of auto receivables (subject to an
over-collateralization formula) for cash, or vice versa, during the term of
the agreement, thus allowing the Company to use the medium term note proceeds
to finance auto receivables on a revolving basis through December 2003. While
the special purpose finance subsidiary is included in the Company's
consolidated financial statements, the subsidiary is a separate legal entity
and the auto receivables and other assets held by the subsidiary are legally
owned by the subsidiary and are not available to creditors of AmeriCredit
Corp. or its other subsidiaries. The note issued by the subsidiary under the
funding agreement bears interest at LIBOR plus specified fees. The funding
agreement contains various covenants requiring certain minimum financial
ratios and results. The funding agreement also requires certain funds to be
held in a restricted cash account to provide additional collateral under the
note. As of December 31, 2000, this restricted cash account totaled
$7,895,000 and is included in other assets in the consolidated balance sheets.
The Company's Canadian subsidiary has a convertible revolving term credit
agreement with a bank, under which the subsidiary may borrow up to $30
million Cdn., subject to a defined borrowing base. Borrowings under the
credit agreement are collateralized by certain Canadian auto receivables and
bear interest at the Canadian prime rate. The credit agreement, which expires
in March 2001, contains various restrictive covenants requiring certain
minimum financial ratios and results.
9
NOTE 5 - CREDIT ENHANCEMENT FACILITY
The Company has a credit enhancement facility with a financial institution
under which the Company may borrow up to $225 million to fund a portion of
the initial restricted cash deposit required in its securitization
transactions. Borrowings under the credit enhancement facility are available
on a revolving basis through October 2001 and are collateralized by the
Company's credit enhancement assets. The facility contains covenants
requiring certain asset performance ratios. The Company has alternatively
utilized reinsurance arrangements to reduce the initial restricted cash
deposit. These reinsurance arrangements do not represent funded debt, and
therefore are not recorded as such on the Company's consolidated balance
sheets.
NOTE 6 - CHARGE FOR CLOSING MORTGAGE OPERATIONS
As a result of declining premiums received for the sale of mortgage loans in
the secondary markets, during the second quarter ended December 31, 1999, the
Company ceased wholesale originations of mortgage loans and closed its
mortgage loan production and processing offices.
The Company recognized a pre-tax charge of $10.5 million during the three
months ended December 31, 1999, related to the closing of the mortgage
operations. The charge consists of a $6.6 million write-off of goodwill, $2.0
million of reserves against mortgage receivables held for sale and $1.9
million of severance, facility closing and other costs. Since the goodwill
write-off is not deductible for income tax reporting purposes, the charge
amounted to approximately $9.0 million after related income tax benefits.
Reserves and accrued costs remaining at December 31, 2000, were $1.1 million.
NOTE 7 - SUPPLEMENTAL INFORMATION
Cash payments for interest costs and income taxes consist of the following
(in thousands):
Six Months Ended
December 31,
------------
2000 1999
-------------------------------------------
Interest costs (none capitalized) $55,257 $29,137
Income taxes 31,897 16,799
During the six months ended December 31, 2000 and 1999, the Company entered
into capital lease agreements for property and equipment of $1,086,000 and
$10,958,000 respectively.
NOTE 8 - DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
The Company adopted Statement of Financial Accounting Standards No. 138,
Accounting for Certain Derivative Instruments and Hedging Activities - an
10
amendment of FASB Statement No. 133" ("SFAS 138"), on July 1, 2000. Pursuant
to SFAS 138, all derivative instruments are recognized as either assets or
liabilities in the balance sheet and are measured at fair value. The Company
formally documents all relationships between hedging instruments and hedged
items, as well as its risk management objective and strategy for undertaking
various hedge transactions.
Derivative instruments are utilized to manage the gross interest rate spread
on the Company's securitization transactions, thereby hedging the estimated
future excess cash flows to be received by the Company over the life of the
securitization. The Company sells fixed rate auto receivables to Trusts that,
in turn, sell either fixed rate or floating rate securities to investors. The
interest rates on the floating rate securities issued by the Trusts are
indexed to the one-month London Interbank Offered Rates. The Company uses
interest rate swap agreements to convert the floating rate exposures on these
securities to a fixed rate. The Company monitors the cash flow hedge
effectiveness at interim and annual reporting dates. At December 31, 2000,
the amount of ineffectiveness related to the interest rate swaps is not
considered to be material. The fair value of the interest rate swaps is
included in the valuation of interest-only receivables from Trusts in the
Company's consolidated balance sheets. Changes in the fair value of the
interest rate swaps are generally offset by a change in the fair value of the
Company's credit enhancement assets.
The Company also utilizes interest rate caps as part of its interest-rate
risk-management strategy for securitization transactions as well as for
warehouse credit facilities. The purchaser of the interest rate cap 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 interest rate cap purchaser bears no obligation or
liability if interest rates fall below the "cap" rate. The Company's special
purpose finance subsidiaries are contractually required to purchase interest
rate cap agreements as credit enhancement in connection with securitization
transactions and warehouse credit facilities. The Company simultaneously
sells a corresponding interest rate cap agreement in order to offset the
purchased interest rate cap agreement. The fair value of the interest rate
cap agreements is included in other assets and accrued taxes and expenses on
the Company's consolidated balance sheets.
NOTE 9 - GUARANTOR CONSOLIDATING FINANCIAL STATEMENTS
The payment of principal, premium, if any, and interest on the Company's
senior notes is guaranteed by certain of the Company's subsidiaries (the
"Subsidiary Guarantors"). The separate financial statements of the Subsidiary
Guarantors are not included herein because the Subsidiary Guarantors are
wholly-owned consolidated subsidiaries of the Company and are jointly,
severally and unconditionally liable for the obligations represented by the
senior notes.
11
The following consolidating financial statement schedules 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 Company and its subsidiaries on a
consolidated basis and (v) the Company and its subsidiaries on a consolidated
basis.
Investments in subsidiaries are accounted for by the parent company using the
equity method for purposes of this presentation. Earnings of subsidiaries are
therefore reflected in the parent company's investment accounts and earnings.
The principal elimination entries set forth below eliminate investments in
subsidiaries and intercompany balances and transactions.
12
AmeriCredit Corp.
Consolidating Balance Sheet
December 31, 2000
(Unaudited, Dollars in Thousands)
AmeriCredit Non-
Corp. Guarantors Guarantors Eliminations Consolidated
----------------- ------------------ ----------------- ------------------ -----------------
ASSETS
Cash and cash equivalents $ 40,587 $ 40,587
Receivables held for sale, net 335,153 $ 809,399 1,144,552
Interest-only receivables
from Trusts $ 422 236,979 237,401
Investments in Trust
receivables 446,329 446,329
Restricted cash 289,364 289,364
Property and equipment, net 349 42,331 42,680
Other assets 11,314 80,564 22,219 114,097
Due (to) from affiliates 654,319 (1,409,498) 755,179
Investment in affiliates 435,764 1,349,879 8,905 $(1,794,548)
----------------- ------------------ ----------------- ------------------ -----------------
Total assets $1,102,168 $ 439,016 $2,568,374 $(1,794,548) $2,315,010
================= ================== ================= ================== =================
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Warehouse credit facilities $ 10,335 $ 746,315 $ 756,650
Credit enhancement facility 74,840 74,840
Senior notes $ 375,000 375,000
Other notes payable 15,404 15,404
Funding payable 43,820 311 44,131
Accrued taxes and expenses 29,605 74,916 7,508 112,029
Deferred income taxes (149,761) (58,117) 312,914 105,036
----------------- ------------------ ----------------- ------------------ -----------------
Total liabilities 270,248 70,954 1,141,888 1,483,090
----------------- ------------------ ----------------- ------------------ -----------------
Shareholders' equity:
Common stock 853 30 $ (30) 853
Additional paid-in capital 431,033 40,088 904,498 (944,586) 431,033
Accumulated other
comprehensive income 67,702 67,702 (67,702) 67,702
Retained earnings 352,826 327,944 454,286 (782,230) 352,826
----------------- ------------------ ----------------- ------------------ -----------------
852,414 368,062 1,426,486 (1,794,548) 852,414
Treasury stock (20,494) (20,494)
----------------- ------------------ ----------------- ------------------ -----------------
Total shareholders' equity 831,920 368,062 1,426,486 (1,794,548) 831,920
----------------- ------------------ ----------------- ------------------ -----------------
Total liabilities and
shareholders' equity $1,102,168 $ 439,016 $2,568,374 $(1,794,548) $2,315,010
================= ================== ================= ================== =================
13
AmeriCredit Corp.
Consolidating Balance Sheet
June 30, 2000
(Unaudited, Dollars in Thousands)
AmeriCredit Non-
Corp. Guarantors Guarantors Eliminations Consolidated
----------------- ------------------ ----------------- ------------------ -----------------
ASSETS
Cash and cash equivalents $ 30,705 $ 12,211 $ 42,916
Receivables held for sale, net 284,851 586,660 871,511
Interest-only receivables
from Trusts $ 1,019 228,040 229,059
Investments in Trust
receivables 341,707 341,707
Restricted cash 253,852 253,852
Property and equipment, net 349 44,186 44,535
Other assets 11,529 40,781 26,379 78,689
Due (to) from affiliates 675,339 (701,473) 26,134
Investment in affiliates 318,749 632,534 2,641 $(953,924)
----------------- ------------------ ----------------- ------------------ -----------------
Total assets $1,006,985 $ 331,584 $1,477,624 $(953,924) $1,862,269
================= ================== ================= ================== =================
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Warehouse credit facilities $ 4,661 $ 483,039 $ 487,700
Credit enhancement facility 66,606 66,606
Senior notes $ 375,000 375,000
Other notes payable 19,691 19,691
Funding payable 61,519 145 61,664
Accrued taxes and expenses 14,058 49,837 6,732 70,627
Deferred income taxes (90,343) (60,323) 243,068 92,402
----------------- ------------------ ----------------- ------------------ -----------------
Total liabilities 318,406 55,694 799,590 1,173,690
----------------- ------------------ ----------------- ------------------ -----------------
Shareholders' equity:
Common stock 837 30 $ (30) 837
Additional paid-in capital 401,979 40,096 267,618 (307,714) 401,979
Accumulated other
comprehensive income 44,803 44,803 (44,803) 44,803
Retained earnings 262,111 235,764 365,613 (601,377) 262,111
----------------- ------------------ ----------------- ------------------ -----------------
709,730 275,890 678,034 (953,924) 709,730
Treasury stock (21,151) (21,151)
----------------- ------------------ ----------------- ------------------ -----------------
Total shareholders' equity 688,579 275,890 678,034 (953,924) 688,579
----------------- ------------------ ----------------- ------------------ -----------------
Total liabilities and
shareholders' equity $1,006,985 $ 331,584 $1,477,624 $(953,924) $1,862,269
================= ================== ================= ================== =================
14
AmeriCredit Corp.
Consolidating Income Statement
Six Months Ended December 31, 2000
(Unaudited, Dollars in Thousands)
AmeriCredit Non-
Corp. Guarantors Guarantors Eliminations Consolidated
----------------- ------------------ ----------------- ------------------ -----------------
Revenue
Finance charge income $ 41,009 $ 56,486 $ 97,495
Gain on sale of receivables $ (263) 18,611 114,411 132,759
Servicing fee income 119,813 35,543 $ (32,651) 122,705
Other income 22,526 3,912 1,079 (22,526) 4,991
Equity in income of
affiliates 92,180 88,673 (180,853)
----------------- ------------------ ----------------- ------------------ -----------------
114,443 272,018 207,519 (236,030) 357,950
----------------- ------------------ ----------------- ------------------ -----------------
Costs and expenses
Operating expenses 142 172,927 77 (32,651) 140,495
Provision for loan losses 4,054 9,271 13,325
Interest expense 24,503 662 53,987 (22,526) 56,626
----------------- ------------------ ----------------- ------------------ -----------------
24,645 177,643 63,335 (55,177) 210,446
----------------- ------------------ ----------------- ------------------ -----------------
Income before income taxes 89,798 94,375 144,184 (180,853) 147,504
Income tax provision (917) 2,195 55,511 56,789
----------------- ------------------ ----------------- ------------------ -----------------
Net income $ 90,715 $ 92,180 $ 88,673 $(180,853) $ 90,715
================= ================== ================= ================== =================
15
AmeriCredit Corp.
Consolidating Income Statement
Six Months Ended December 31, 1999
(Unaudited, Dollars in Thousands)
AmeriCredit Non-
Corp. Guarantors Guarantors Eliminations Consolidated
----------------- ------------------ ----------------- ------------------ -----------------
Revenue
Finance charge income $ 36,490 $ 18,504 $ 54,994
Gain on sale of receivables $ (126) 6,684 91,684 98,242
Servicing fee income 73,032 19,273 $ (16,422) 75,883
Other income 22,338 2,386 351 (22,331) 2,744
Equity in income of
affiliates 44,781 60,544 (105,325)
----------------- ------------------ ----------------- ------------------ -----------------
66,993 179,136 129,812 (144,078) 231,863
----------------- ------------------ ----------------- ------------------ -----------------
Costs and expenses
Operating expenses 1,568 121,389 8 (16,422) 106,543
Provision for loan losses 4,087 3,156 7,243
Interest expense 20,397 4,137 28,202 (22,331) 30,405
Charge for closing
mortgage operations 10,500 10,500
----------------- ------------------ ----------------- ------------------ -----------------
21,965 140,113 31,366 (38,753) 154,691
----------------- ------------------ ----------------- ------------------ -----------------
Income before income taxes 45,028 39,023 98,446 (105,325) 77,172
Income tax provision 95 (5,758) 37,902 32,239
----------------- ------------------ ----------------- ------------------ -----------------
Net income $ 44,933 $ 44,781 $ 60,544 $(105,325) $ 44,933
================= ================== ================= ================== =================
16
AmeriCredit Corp.
Consolidating Statement of Cash Flows
Six Months Ended December 31, 2000
(Unaudited, Dollars in Thousands)
AmeriCredit Non-
Corp. Guarantors Guarantors Eliminations Consolidated
----------------- ------------------ ----------------- ------------------ -----------------
Cash flow from operating activities:
Net income $ 90,715 $ 92,180 $ 88,673 $(180,853) $ 90,715
Adjustments to reconcile net income
To net cash provided by operating
activities:
Depreciation and amortization 9,997 9,997
Provision for loan losses 4,054 9,271 13,325
Deferred income taxes (48,101) 2,206 55,512 9,617
Non-cash servicing fee income (39,532) (39,532)
Non-cash gain on sale of
auto receivables (103,546) (103,546)
Distributions from Trusts 107,069 107,069
Equity in income of affiliates (92,180) (88,673) 180,853
Changes in assets and
liabilities:
Other assets 215 (16,774) 1,925 (14,634)
Accrued taxes and expenses 15,547 13,240 776 29,563
----------------- ------------------ ----------------- ------------------ -----------------
Net cash (used) provided by
operating activities (33,804) 16,230 120,148 102,574
----------------- ------------------ ----------------- ------------------ -----------------
Cash flows from investing
activities:
Purchase of auto receivables (2,807,219) (2,748,778) 2,748,778 (2,807,219)
Principal collections and
recoveries on receivables (14,061) 50,858 36,797
Net proceeds from sale of
auto receivables 2,748,778 2,466,076 (2,748,778) 2,466,076
Net proceeds from sale of
mortgage receivables 447 447
Initial deposits to
restricted cash (75,234) (75,234)
Net change in credit
enhancement facility 8,234 8,234
Purchases of property and
equipment (7,056) (7,056)
Change in other assets (11,170) 2,235 (8,935)
Net change in investment in
affiliates (1,936) (628,673) (6,369) 636,978
----------------- ------------------ ----------------- ------------------ -----------------
Net cash used by investing
activities (1,936) (718,954) (302,978) 636,978 (386,890)
----------------- ------------------ ----------------- ------------------ -----------------
Cash flows from financing
activities:
Net change in warehouse
credit facilities 5,674 263,276 268,950
Payments on other notes payable (5,373) (5,373)
Proceeds from issuance of
common stock 18,410 (7) 636,985 (636,978) 18,410
Net change in due (to) from
affiliates 22,703 706,939 (729,642)
----------------- ------------------ ----------------- ------------------ -----------------
Net cash provided by financing
activities 35,740 712,606 170,619 (636,978) 281,987
----------------- ------------------ ----------------- ------------------ -----------------
Net increase (decrease) in cash
and cash equivalents 9,882 (12,211) (2,329)
Cash and cash equivalents at
beginning of period 30,705 12,211 42,916
----------------- ------------------ ----------------- ------------------ -----------------
Cash and cash equivalents at
end of period $ $ 40,587 $ $ $ 40,587
================= ================== ================= ================== =================
17
AmeriCredit Corp.
Consolidating Statement of Cash Flows
Six Months Ended December 31, 1999
(Unaudited, Dollars in Thousands)
AmeriCredit Non-
Corp. Guarantors Guarantors Eliminations Consolidated
----------------- ------------------ ----------------- ------------------ -----------------
Cash flow from operating activities:
Net income $ 44,933 $ 44,781 $ 60,544 $ (105,325) $ 44,933
Adjustments to reconcile net income
To net cash provided by operating
activities:
Non-cash charge for closing
mortgage operations 6,566 6,566
Depreciation and amortization 9,357 9,357
Provision for loan losses 4,087 3,156 7,243
Deferred income taxes (24,721) (5,767) 37,902 7,414
Non-cash servicing fee income (20,165) (20,165)
Non-cash gain on sale of
auto receivables (92,670) (92,670)
Distributions from Trusts 36,711 36,711
Equity in income of affiliates (44,781) (60,544) 105,325
Changes in assets and
liabilities:
Other assets (394) (8,369) (2,501) (11,264)
Accrued taxes and expenses 9,459 1,415 1,744 12,618
----------------- ------------------ ----------------- ------------------ -----------------
Net cash (used) provided by
operating activities (15,504) (8,474) 24,721 743
----------------- ------------------ ----------------- ------------------ -----------------
Cash flows from investing
activities:
Purchase of auto receivables (2,040,093) (2,084,943) 2,084,943 (2,040,093)
Originations of mortgage
receivables (108,950) (108,950)
Principal collections and
recoveries on receivables (4,698) 22,245 17,547
Net proceeds from sale of
auto receivables 2,084,943 1,881,645 (2,084,943) 1,881,645
Net proceeds from sale of
mortgage receivables 113,660 113,660
Initial deposits to
restricted cash (92,000) (92,000)
Net change in credit
enhancement facility 35,000 35,000
Purchases of property and
equipment (5,279) (5,279)
Change in other assets 1,214 (6,867) (5,653)
Net change in investment in
affiliates (1,004) (71,015) (709) 72,728
----------------- ------------------ ----------------- ------------------ -----------------
Net cash used by investing
activities (1,004) (30,218) (245,629) 72,728 (204,123)
----------------- ------------------ ----------------- ------------------ -----------------
Cash flows from financing
activities:
Net change in warehouse
credit facilities (6,934) 248,492 241,558
Payments on other notes payable (5,740) (5,740)
Proceeds from issuance of
common stock 123,045 1,685 71,043 (72,728) 123,045
Net change in due (to) from
affiliates (100,797) 201,903 (101,106)
----------------- ------------------ ----------------- ------------------ -----------------
Net cash provided by financing
activities 16,508 196,654 218,429 (72,728) 358,863
----------------- ------------------ ----------------- ------------------ -----------------
Net increase (decrease) in cash
and cash equivalents 157,962 (2,479) 155,483
Cash and cash equivalents at
beginning of period 20,246 943 21,189
----------------- ------------------ ----------------- ------------------ -----------------
Cash and cash equivalents at
end of period $ $ 178,208 $ (1,536) $ $ 176,672
================= ================== ================= ================== =================
18
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The Company generates earnings and cash flow primarily from the purchase,
securitization and servicing of auto receivables. The Company purchases auto
finance contracts from franchised and select independent automobile
dealerships. To fund the acquisition of receivables prior to securitization,
the Company utilizes borrowings under its warehouse credit facilities. The
Company generates finance charge income on its receivables pending
securitization ("receivables held for sale") and pays interest expense on
borrowings under its warehouse credit facilities.
The Company sells receivables to securitization trusts ("Trusts") that, in
turn sell asset-backed securities to investors. By securitizing its
receivables, the Company is able to lock in the gross interest rate spread
between the yield on such receivables and the interest rate payable on the
asset-backed securities. The Company recognizes a gain on the sale of
receivables to the Trusts, which represents the difference between the sale
proceeds to the Company, net of transaction costs, and the Company's net
carrying value of the receivables, plus the present value of the estimated
future excess cash flows to be received by the Company over the life of the
securitization. Excess cash flows result from the difference between the
interest received from the obligors on the receivables and the interest paid
to investors in the asset-backed securities, net of credit losses and
expenses.
Excess cash flows from the Trusts are initially utilized to fund credit
enhancement requirements to secure financial guaranty insurance policies
issued by an insurance company and protect investors in the asset-backed
securities from losses. Once predetermined credit enhancement requirements
are reached and maintained, excess cash flows are distributed to the Company.
In addition to excess cash flows, the Company earns monthly base servicing
fee income of 2.25% per annum on the outstanding principal balance of
receivables securitized ("serviced receivables").
In November 1996, the Company acquired AmeriCredit Mortgage Services ("AMS"),
which originated and sold mortgage loans. Receivables originated in this
business are referred to as mortgage receivables. Such receivables were
generally packaged and sold for cash on a servicing released whole-loan
basis. Deterioration in the wholesale loan markets caused premiums received
by AMS for the sale of mortgage loans to decrease. As a result, during
October 1999, Company management assessed various options with respect to the
operations of AMS and decided to cease the operations of AMS. The AMS
wholesale mortgage loan production and processing offices were closed, and
the assets of AMS are being liquidated.
19
RESULTS OF OPERATIONS
THREE MONTHS ENDED DECEMBER 31, 2000 AS COMPARED TO
THREE MONTHS ENDED DECEMBER 31, 1999
REVENUE:
The Company's average managed receivables outstanding consisted of the following
(in thousands):
Three Months Ended
December 31,
-------------------------------------------
2000 1999
--------------------- --------------------
Auto:
Held for sale $961,780 $496,578
Serviced 6,894,906 4,542,046
--------------------- --------------------
7,856,686 5,038,624
Mortgage 3,498 29,949
--------------------- --------------------
$7,860,184 $5,068,573
===================== ====================
Average managed receivables outstanding increased by 55% as a result of
higher loan purchase volume. The Company purchased $1,381.0 million of auto
loans during the three months ended December 31, 2000, compared to purchases
of $980.9 million during the three months ended December 31, 1999. This
growth resulted from loan production at branches open during both periods as
well as expansion of the Company's branch network. Loan purchases at branch
offices opened prior to December 31, 1998, were 21% higher for the twelve
months ended December 31, 2000, versus the twelve months ended December 31,
1999. The Company operated 202 auto lending branch offices as of December 31,
2000, compared to 184 as of December 31, 1999.
The average new loan size was $15,307 for the three months ended December 31,
2000, compared to $14,269 for the three months ended December 31, 1999. The
average annual percentage rate for loans purchased during the three months
ended December 31, 2000, was 19.2%, compared to 18.4% during the three months
ended December 31, 1999. The increased annual percentage rate is the result
of pricing increases implemented in the third quarter of fiscal 2000 in
response to rising short-term interest rates.
Finance charge income increased by 90% to $52.1 million for the three months
ended December 31, 2000, from $27.5 million for the three months ended
December 31, 1999. Finance charge income was higher due primarily to an
increase of 94% in average auto receivables held for sale in the three months
ended December 31, 2000, versus the three months ended December 31, 1999. The
Company's effective yield on its auto receivables held for sale decreased to
21.5% for the three months ended December 31, 2000, from 21.9% for the three
months ended December 31, 1999. The effective yield is higher than the
contractual rates of the Company's auto finance contracts as a result of
finance charge income
20
earned between the date the auto finance contract is originated by the
automobile dealership and the date the auto finance contract is funded by the
Company.
The gain on sale of receivables rose by 44% to $71.2 million for the three
months ended December 31, 2000, from $49.3 million for the three months ended
December 31, 1999. The increase in gain on sale of auto receivables resulted
from the sale of $1,300.0 million of receivables in the three months ended
December 31, 2000, as compared to $1,000.0 million of receivables sold in the
three months ended December 31, 1999. The gain as a percentage of the sales
proceeds increased to 5.5% for the three months ended December 31, 2000, from
4.9% for the three months ended December 31, 1999, as a result of higher
average annual percentage rates received by the Company on new loan purchases.
Significant assumptions used in determining the gain on sale of auto
receivables and fair value of credit enhancement assets were as follows:
Three Months Ended
December 31,
-------------------------------------------
2000 1999
--------------------- --------------------
Cumulative credit losses (including
deferred gains) 11.0% 10.9%
Discount rate used to estimate
present value:
Interest-only receivables from Trusts 14.0% 12.0%
Investment in Trust receivables 9.8% 7.8%
Restricted cash 9.8% 7.8%
The discount rates used to estimate the present value of credit enhancement
assets are based on the relative risks of each asset type. Interest-only
receivables represent estimated future excess cash flows in the Trusts, which
involves a greater degree of risk than investments in Trust receivables and
restricted cash. Investments in Trust receivables and restricted cash
represent assets currently held by the Trustee and are senior to the
interest-only receivables for credit enhancement purposes.
As a result of generally higher market interest rates and wider credit
spreads, the Company increased the discount rate used in determining the gain
on sale of auto receivables effective for auto receivables sold subsequent to
June 1, 2000. The discount rate used to estimate the present value of
interest-only receivables from Trusts increased to 14.0% from 12.0% and the
discount rate used to estimate the present value of investments in Trust
receivables and restricted cash increased to 9.8% from 7.8%. The increased
discount rate results only in a difference in the timing of revenue
recognition from securitizations and has no effect on the Company's estimate
of expected excess cash flows from such transactions. While the total amount
of revenue recognized over the term of a securitization transaction is the
same, a higher discount rate results in (i) lower initial gains on the sale
of receivables and
21
(ii) higher subsequent servicing fee income from accretion of the additional
discount.
Servicing fee income increased to $63.4 million, or 3.7% of average serviced
auto receivables, for the three months ended December 31, 2000, compared to
$41.1 million, or 3.6% of average serviced auto receivables, for the three
months ended December 31, 1999. Servicing fee income represents accretion of
the present value discount on estimated future excess cash flows from the
Trusts, base servicing fees and other fees earned by the Company as servicer
of the auto receivables sold to the Trusts. The growth in servicing fee
income is attributable to the increase in average serviced auto receivables
outstanding for the three months ended December 31, 2000, compared to the
three months ended December 31, 1999.
COSTS AND EXPENSES:
Operating expenses as an annualized percentage of average managed receivables
outstanding decreased to 3.7% for the three months ended December 31, 2000,
compared to 4.2% for the three months ended December 31, 1999. The ratio
improved as a result of economies of scale realized from a growing
receivables portfolio and automation of loan origination, processing and
servicing functions. The dollar amount of operating expenses increased by
$20.3 million, or 38%, primarily due to the addition of auto branch offices
and loan processing and servicing staff.
The provision for loan losses increased to $7.3 million for the three months
ended December 31, 2000, from $3.8 million for the three months ended
December 31, 1999, due to higher average amounts of receivables held for
sale. As a percentage of average receivables held for sale, the provision for
loan losses was 3.0% for the three months ended December 31, 2000 and 1999.
Interest expense increased to $29.4 million for the three months ended
December 31, 2000, from $16.1 million for the three months ended December 31,
1999, due to higher debt levels. Average debt outstanding was $1,177.9
million and $643.9 million for the three months ended December 31, 2000 and
1999, respectively. The Company's effective rate of interest paid on its debt
was 9.9% for the three months ended December 31, 2000 and 1999.
The Company's effective income tax rate was 38.5% and 45.5% for the three
months ended December 31, 2000 and 1999, respectively. The effective income
tax rate was higher for the three months ended December 31, 1999, due to the
non-deductible write-off of goodwill from the closing of the mortgage
operations.
22
SIX MONTHS ENDED DECEMBER 31, 2000 AS COMPARED TO
SIX MONTHS ENDED DECEMBER 31, 1999
REVENUE:
The Company's average managed receivables outstanding consisted of the following
(in thousands):
Six Months Ended
December 31,
-------------------------------------------
2000 1999
--------------------- --------------------
Auto:
Held for sale $ 881,232 $ 478,566
Serviced 6,566,758 4,245,948
--------------------- --------------------
7,447,990 4,724,514
Mortgage 3,755 35,137
--------------------- --------------------
$7,451,745 $4,759,651
===================== ====================
Average managed receivables outstanding increased by 57% as a result of
higher loan purchase volume. The Company purchased $2,787.7 million of auto
loans during the six months ended December 31, 2000, compared to purchases of
$2,012.7 million during the six months ended December 31, 1999. This growth
resulted from loan production at branches open during both periods as well as
expansion of the Company's branch network. Loan purchases at branch offices
opened prior to December 31, 1998, were 21% higher for the twelve months
ended December 31, 2000, versus the twelve months ended December 31, 1999.
The Company operated 202 auto lending branch offices as of December 31, 2000,
compared to 184 as of December 31, 1999.
The average new loan size was $15,195 for the six months ended December 31,
2000, compared to $14,117 for the six months ended December 31, 1999. The
average annual percentage rate for loans purchased during the six months
ended December 31, 2000, was 19.2%, compared to 18.4% during the six months
ended December 31, 1999. The increased annual percentage rate is the result
of pricing increases implemented in the third quarter of fiscal 2000 in
response to rising short-term interest rates.
Finance charge income consisted of the following (in thousands):
Six Months Ended
December 31,
-------------------------------------------
2000 1999
--------------------- --------------------
Auto $97,495 $53,937
Mortgage 1,057
--------------------- --------------------
$97,495 $54,994
===================== ====================
23
The increase in finance charge income is due primarily to an increase of 84%
in average auto receivables held for sale in the six months ended December
31, 2000, versus the six months ended December 31, 1999. The Company's
effective yield on its auto receivables held for sale decreased to 22.0% for
the six months ended December 31, 2000, from 22.4% for the six months ended
December 31, 1999. The effective yield is higher than the contractual rates
of the Company's auto finance contracts as a result of finance charge income
earned between the date the auto finance contract is originated by the
automobile dealership and the date the auto finance contract is funded by the
Company.
The gain on sale of receivables consisted of the following (in thousands):
Six Months Ended
December 31,
-------------------------------------------
2000 1999
--------------------- --------------------
Auto $132,759 $96,731
Mortgage 1,511
--------------------- --------------------
$132,759 $98,242
===================== ====================
The increase in gain on sale of auto receivables resulted from the sale of
$2,500.0 million of receivables in the six months ended December 31, 2000, as
compared to $1,900.0 million of receivables sold in the six months ended
December 31, 1999. The gain as a percentage of the sales proceeds increased
to 5.3% for the six months ended December 31, 2000, from 5.1% for the six
months ended December 31, 1999, as a result of higher average annual
percentage rates received by the Company on new loan purchases.
Significant assumptions used in determining the gain on sale of auto
receivables were as follows:
Six Months Ended
December 31,
-------------------------------------------
2000 1999
--------------------- --------------------
Cumulative credit losses (including
deferred gains) 10.9% 10.9%
Discount rate used to estimate
present value:
Interest-only receivables from Trusts 14.0% 12.0%
Investment in Trust receivables 9.8% 7.8%
Restricted cash 9.8% 7.8%
The discount rates used to estimate the present value of credit enhancement
assets are based on the relative risks of each asset type. Interest-only
receivables represent estimated future excess cash flows in the Trusts, which
involves a greater degree of risk than investments in Trust receivables and
restricted cash. Investments in Trust receivables and restricted cash
24
represent assets currently held by the Trustee and are senior to the
interest-only receivables for credit enhancement purposes.
Servicing fee income increased to $122.7 million, or 3.7% of average serviced
auto receivables, for the six months ended December 31, 2000, as compared to
$75.9 million, or 3.5% of average serviced auto receivables, for the six
months ended December 31, 1999. Servicing fee income represents accretion of
the present value discount on estimated future excess cash flows from the
Trusts, base servicing fees and other fees earned by the Company as servicer
of the auto receivables sold to the Trusts. The growth in servicing fee
income is attributable to the increase in average serviced auto receivables
outstanding for the six months ended December 31, 2000, compared to the six
months ended December 31, 1999.
COSTS AND EXPENSES:
Operating expenses as an annualized percentage of average managed receivables
outstanding decreased to 3.7% (due to the closing of the mortgage business
there were no mortgage operating expenses incurred) for the six months ended
December 31, 2000, compared to 4.5% (4.4% excluding operating expenses of
$2.1 million related to the mortgage business) for the six months ended
December 31, 1999. The ratio improved as a result of economies of scale
realized from a growing receivables portfolio and automation of loan
origination, processing and servicing functions. The dollar amount of
operating expenses increased by $34.0 million, or 32%, primarily due to the
addition of auto lending branch offices and management and auto loan
processing and servicing staff.
The provision for losses increased to $13.3 million for the six months ended
December 31, 2000, from $7.2 million for the six months ended December 31,
1999, due to higher average amounts of auto receivables held for sale. As a
percentage of average receivables held for sale, the provision for losses was
3.0% for the six months ended December 31, 2000 and 1999.
Interest expense increased to $56.6 million for the six months ended December
31, 2000, from $30.4 million for the six months ended December 31, 1999, due
to higher debt levels and effective interest rates. Average debt outstanding
was $1,099.4 million and $619.6 million for the six months ended December 31,
2000 and 1999, respectively. The Company's effective rate of interest paid on
its debt increased to 10.2% from 9.7% as a result of higher short-term market
interest rates and fees paid on higher unutilized borrowing capacity under
the Company's warehouse credit facilities.
The Company's effective income tax rate was 38.5% and 41.8% for the six
months ended December 31, 2000 and 1999, respectively. The effective income
tax rate was higher for the six months ended December 31, 1999, due to the
non-deductible write-off of goodwill from the closing of the mortgage
operations.
25
PRO FORMA PORTFOLIO-BASED EARNINGS DATA
In addition to reporting results of operations in accordance with generally
accepted accounting principles ("GAAP"), the Company has elected to present
pro forma results of operations which treat securitization transactions as
financings rather than sales of receivables. The Company refers to this
presentation as pro forma portfolio-based earnings data.
In its consolidated financial statements prepared in accordance with GAAP,
the Company records a gain on the sale of receivables in securitization
transactions primarily representing the present value of estimated future
excess cash flows related to the receivables sold. Future excess cash flows
consist of finance charges and fees to be collected on the receivables less
interest payable on the asset-backed securities, credit losses and expenses
of the Trusts. The Company also earns servicing fees for managing the
receivables sold.
The pro forma portfolio-based earnings data presents the Company's operating
results under the assumption that securitization transactions are financings
and no gain on sale or servicing fee income is recognized. Instead, finance
charges and fees are recognized over the life of the securitized receivables
as accrued and interest and other costs related to the asset-backed
securities are also recognized as accrued. Credit losses are recorded as
incurred.
While the pro forma portfolio-based earnings data does not purport to present
the Company's operating results in accordance with GAAP, the Company believes
such presentation provides another measure for assessing the Company's
performance.
The pro forma portfolio-based earnings data were as follows(in thousands,
except per share data):
Three Months Ended Six Months Ended
December 31, December 31,
--------------------------------------------------------------------
2000 1999 (1) 2000 1999 (1)
--------------------------------------------------------------------
Finance charge, fee and other income $386,749 $246,745 $ 742,575 $ 465,070
Funding costs (153,701) (96,579) (296,098) (174,751)
--------------------------------------------------------------------
Net margin 233,048 150,166 446,477 290,319
Credit losses (71,226) (52,697) (136,773) (100,907)
Operating expenses (73,201) (52,865) (140,495) (106,543)
--------------------------------------------------------------------
Pre-tax portfolio-based income 88,621 44,604 169,209 82,869
Income taxes (34,119) (17,173) (65,145) (31,905)
--------------------------------------------------------------------
Net portfolio-based income $ 54,502 $ 27,431 $ 104,064 $ 50,964
====================================================================
Diluted portfolio-based earnings per share $ 0.65 $ 0.35 $ 1.24 $ 0.68
====================================================================
(1) The pro forma portfolio-based earnings data for the periods ended
December 31, 1999, exclude the charge for the closing of the Company's
mortgage business.
26
The pro forma return on managed assets for the Company's auto business was as
follows:
Three Months Ended Six Months Ended
December 31, December 31,
------------------------------------------------------------------------
2000 1999 2000 1999
------------------------------------------------------------------------
Finance charge, fee and other income 19.5% 19.4% 19.8% 19.4%
Funding costs (7.7) (7.6) (7.9) (7.3)
------------------------------------------------------------------------
Net margin 11.8 11.8 11.9 12.1
Credit losses (3.6) (4.1) (3.6) (4.2)
------------------------------------------------------------------------
Risk adjusted margin 8.2 7.7 8.3 7.9
Operating expenses (3.7) (4.2) (3.7) (4.4)
------------------------------------------------------------------------
Pre-tax return on managed assets 4.5 3.5 4.6 3.5
Income taxes (1.7) (1.3) (1.8) (1.3)
------------------------------------------------------------------------
Return on managed assets 2.8% 2.2% 2.8% 2.2%
========================================================================
CREDIT QUALITY
The Company provides financing in relatively high-risk markets, and,
therefore, charge-offs are anticipated. The Company records a periodic
provision for loan losses as a charge to operations and a related allowance
for loan losses in the consolidated balance sheets as a reserve against
estimated probable losses which may occur in the receivables held for sale
portfolio prior to the sale of such receivables in securitization
transactions. The Company typically purchases individual finance contracts
and collects a non-refundable acquisition fee on a non-recourse basis. Such
acquisition fees are also recorded in the consolidated balance sheets as an
allowance for loan losses. When the Company sells auto receivables to the
Trusts, the calculation of the gain on sale of receivables is reduced by an
estimate of cumulative credit losses expected over the life of the auto
receivables sold.
The Company reviews static pool origination and charge-off relationships,
charge-off experience factors, collection data, delinquency reports,
estimates of the value of the underlying collateral, economic conditions and
trends and other information in order to make the necessary judgments as to
the appropriateness of the assumptions for cumulative credit losses,
provisions for loan losses and allowance for loan losses. Although the
Company uses many resources to assess the adequacy of loss reserves, there is
no precise method for estimating the ultimate losses in the receivables
portfolio.
27
The following table presents certain data related to the receivables portfolio
(dollars in thousands):
December 31, 2000
-------------------------------------------------------------------------------------
Held for Sale
----------------------------------------------- Auto Managed Auto
Auto Mortgage Total Serviced Portfolio
---------------- ------------- ---------------- ---------------- -----------------
Principal amount of receivables $1,175,094 $2,808 $1,177,902 $7,050,415 $8,225,509
================ =================
Allowance for loan losses (33,350) (33,350) $(695,854) (a) $(729,204)
---------------- ------------- ---------------- ================ =================
Receivables, net $1,141,744 $2,808 $1,144,552
================ ============= ================
Number of outstanding contracts 78,348 24 604,365 682,713
================ ============= ================ =================
Average principal amount of
outstanding contract (in dollars) $ 14,998 $117,000 $11,666 $12,048
================ ============= ================ =================
Allowance for loan losses as a
percentage of receivables 2.8% 9.9% 8.9%
================ ================ =================
(a) The allowance for loan losses related to serviced auto receivables is
factored into the valuation of interest-only receivables from Trusts in
the Company's consolidated balance sheets.
The following is a summary of managed auto receivables which are (i) more than
30 days delinquent, but not yet in repossession, and (ii) in repossession
(dollars in thousands):
December 31, 2000 December 31, 1999
-------------------------------------- --------------------------------------
Amount Percent Amount Percent
--------------------- --------------- --------------------- ---------------
Delinquent contracts:
31 to 60 days $642,655 7.8% $402,436 7.6%
Greater than 60 days 224,634 2.7 131,486 2.5
--------------------- --------------- --------------------- ---------------
867,289 10.5 533,922 10.1
In repossession 85,422 1.0 48,003 0.9
--------------------- --------------- --------------------- ---------------
$952,711 11.5% $581,925 11.0%
===================== =============== ===================== ===============
In accordance with its policies and guidelines, the Company at times offers
payment deferrals to consumers, whereby the consumer is allowed to move a
delinquent payment to the end of the loan by paying a fee (approximately the
interest portion of the payment deferred). Contracts receiving a payment
deferral as an average quarterly percentage of average managed auto
receivables outstanding were 4.9% and 4.8% for the three and six months ended
December 31, 2000, respectively, and 4.5% for both the three and six months
ended December 31, 1999. The Company believes that payment deferrals granted
according to its policies and guidelines are an effective portfolio
management technique and result in higher ultimate cash collections from the
portfolio.
28
The following table presents charge-off data with respect to the Company's
managed auto receivables portfolio (dollars in thousands):
Three Months Ended Six Months Ended
December 31, December 31,
------------------------------------------------------------------------
2000 1999 2000 1999
------------------------------------------------------------------------
Net charge-offs:
Held for sale $ 3,388 $ 1,726 $6,223 $3,384
Serviced 67,838 50,971 130,550 97,523
------------------------------------------------------------------------
$71,226 $52,697 $136,773 $100,907
========================================================================
Net charge-offs as an annualized
percentage of average managed
auto receivables outstanding 3.6% 4.1% 3.6% 4.2%
========================================================================
Net recoveries as a percentage of
gross repossession charge-offs 50.8% 51.7% 51.6% 53.1%
========================================================================
Delinquency and charge-off ratios typically fluctuate over time as a
portfolio matures. Accordingly, the delinquency and charge-off data above is
not necessarily indicative of delinquency and charge-off experience that
could be expected for a portfolio with a different level of seasoning.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash flows are summarized as follows (in thousands):
Six Months Ended
December 31,
-------------------------------------------
2000 1999
--------------------- --------------------
Operating activities $ 102,574 $ 743
Investing activities (386,890) (204,123)
Financing activities 281,987 358,863
--------------------- --------------------
Net (decrease) increase in cash and
cash equivalents $ (2,329) $ 155,483
===================== ====================
The Company's primary sources of cash have been cash flows from operating
activities, including cash distributions from the Trusts, borrowings under
its warehouse credit facilities, sales of auto receivables to Trusts in
securitization transactions, and proceeds from issuance of debt and equity.
The Company's primary uses of cash have been purchases of receivables and
funding credit enhancement requirements for securitization transactions.
The Company required cash of $2,807.2 million and $2,040.1 million for the
purchase of auto finance contracts during the six months ended December 31,
2000 and 1999, respectively. These purchases were funded initially utilizing
warehouse credit facilities and subsequently through the sale of auto
receivables in securitization transactions.
29
The Company has five separate warehouse credit facilities with combined
funding capacity of approximately $2.0 billion, which are used to fund
domestic auto receivables pending securitization.
The first funding agreement is with an administrative agent on behalf of an
institutionally managed commercial paper conduit and a bank and provides for
up to $500 million of available structured warehouse financing. The facility
matures in June 2001. A total of $60.7 million was outstanding under this
facility as of December 31, 2000.
The second funding agreement is with an administrative agent on behalf of an
institutionally managed commercial paper conduit and a bank and provides for
up to $300 million of available structured warehouse financing. The facility
matures in June 2001. A total of $64.3 million was outstanding under this
facility as of December 31, 2000.
The third funding agreement is with an administrative agent on behalf of an
institutionally managed commercial paper conduit and a group of banks and
provides for up to $525 million of available structured warehouse financing.
The facility matures in September 2001. A total of $4.9 million was
outstanding under this facility as of December 31, 2000.
The fourth funding agreement is with an administrative agent on behalf of an
institutionally managed commercial paper conduit and a bank and provides for
up to $275 million of available structured warehouse financing. The facility
matures in September 2001. A total of $99.4 million was outstanding under
this facility as of December 31, 2000.
The fifth funding agreement is with an administrative agent on behalf of an
institutionally managed commercial paper conduit and a bank and provides for
up to $375 million of available structured warehouse financing. The facility
matures in March 2001. A total of $17.0 million was outstanding under this
facility as of December 31, 2000.
The Company also has a funding agreement with an administrative agent on
behalf of an institutionally managed medium term note conduit under which
$500 million of proceeds are available to invest in auto receivables or cash
through the term of the agreement. This facility matures in December 2003.
The funding agreement allows for the substitution of auto receivables
(subject to an over-collateralization formula) for cash, or vice versa, thus
allowing the Company to use the proceeds to finance auto receivables on a
revolving basis.
The Company's Canadian subsidiary has a convertible revolving term credit
agreement with a bank that provides for borrowings thereunder of up to $30.0
million Cdn., subject to a defined borrowing base. The Company utilizes this
facility to fund Canadian auto lending activities. The facility matures in
March 2001. A total of $10.3 million was outstanding under the Canadian
facility as of December 31, 2000.
30
As is customary in the Company's industry, the majority of the Company's
warehouse credit facilities need to be renewed on an annual basis. The
Company has historically been successful in renewing and expanding these
facilities on an annual basis. If the Company was unable to renew these
facilities on acceptable terms, there could be a material adverse effect on
the Company's financial position, results of operations and liquidity.
The Company has completed twenty-four auto receivable securitization
transactions through December 31, 2000. The proceeds from the transactions
were primarily used to repay borrowings outstanding under the Company's
warehouse credit facilities.
A summary of these transactions is as follows:
Original Balance at
Amount December 31, 2000
Transaction Date (in millions) (in millions)
- ------------------------ ----------------------------- -------------------------- ---------------------------------
1994-A December 1994 $ 51.0 Paid in full
1995-A June 1995 99.2 Paid in full
1995-B December 1995 65.0 Paid in full
1996-A March 1996 89.4 Paid in full
1996-B May 1996 115.9 Paid in full
1996-C August 1996 175.0 Paid in full
1996-D November 1996 200.0 Paid in full
1997-A March 1997 225.0 Paid in full
1997-B May 1997 250.0 $ 25.2
1997-C August 1997 325.0 45.1
1997-D November 1997 400.0 71.5
1998-A February 1998 425.0 93.1
1998-B May 1998 525.0 136.5
1998-C August 1998 575.0 182.4
1998-D November 1998 625.0 228.9
1999-A February 1999 700.0 295.6
1999-B May 1999 1,000.0 499.9
1999-C August 1999 1,000.0 606.4
1999-D October 1999 900.0 595.3
2000-A February 2000 1,300.0 978.0
2000-B May 2000 1,200.0 1,017.6
2000-C August 2000 1,100.0 1,018.6
2000-1 November 2000 495.0 474.1
2000-D November 2000 600.0 592.2
-------------------------- ---------------------------------
$12,440.5 $6,860.4
========================== =================================
31
In connection with securitization transactions, the Company is required to
fund certain credit enhancement levels in order to attain specific credit
ratings for the asset-backed securities issued by the Trusts. The Company
typically makes an initial deposit to a restricted cash account and
subsequently uses excess cash flows generated by the Trusts to either
increase the restricted cash account or repay the outstanding asset-backed
securities on an accelerated basis, thus creating additional credit
enhancement through overcollateralization in the Trusts. When the credit
enhancement levels reach specified percentages of the Trust's pool of
receivables, excess cash flows are distributed to the Company.
Although the aggregate amount of excess cash flow does not change, the timing
of the Company's receipt of excess cash flow distributions is dependent on
the type of structure used. Since November 1997, the Company has employed
structures that utilize reinsurance and other alternative credit
enhancements. Under these structures, the Company expects to begin to receive
excess cash flow distributions approximately 14 to 16 months after
receivables are securitized. The reinsurance used to reduce the Company's
initial cash deposit in a type of structure described above has typically
been arranged by the insurer of the asset-backed securities. As of December
31, 2000, the Company had commitments from the insurer for an additional
$385.5 million of reinsurance to reduce initial cash deposits in future
securitization transactions. These commitments expire in December 2002. In
addition, the Company has a credit enhancement facility with a financial
institution under which the Company may borrow up to $225 million to fund a
portion of the initial cash deposit in future securitization transactions,
similar to the amount covered by the reinsurance described above. Borrowings
under the credit enhancement facility, which matures in October 2001, are
collateralized by the Company's credit enhancement assets. A total of $74.8
million was outstanding under this facility at December 31, 2000.
In November 2000, the Company completed a securitization transaction (2000-1)
involving the sale of subordinate asset-backed securities in order to provide
credit enhancement for the senior asset-backed securities and protect
investors from losses. Each of the Company's previous securitization
transactions included the sale of senior asset-backed securities only and the
purchase of a financial guarantee insurance policy for the benefit of
investors. The subordinate asset-backed securities replace a portion of the
Company's initial credit enhancement deposit otherwise required in a
securitization transaction in a manner similar to the utilization of
reinsurance described in the preceding paragraph.
Initial deposits for credit enhancement purposes were $75.2 million ($67.0
million net of borrowings under the credit enhancement facility) and $92.0
million ($57.0 million net of borrowings under the credit enhancement
facility) for the six months ended December 31, 2000 and 1999, respectively.
Excess cash flows distributed to the Company were $107.1 million and $36.7
million for the six months ended December 31, 2000 and 1999, respectively.
32
Certain agreements with the insurer provide that if delinquency, default and
net loss ratios in a Trust's pool of receivables exceed certain targets, the
specified credit enhancement levels would be increased. As of December 31,
2000, none of the Company's securitizations had default or net loss ratios in
excess of the targeted levels.
The Company operated 202 auto lending branch offices as of December 31, 2000,
and plans to open an additional 15 to 20 branches through the remainder of
fiscal 2001 and expand loan production capacity at existing auto lending
branch offices where appropriate. While the Company has been able to
establish and grow its auto finance business thus far, there can be no
assurance that future expansion will be successful due to competitive,
regulatory, market, economic or other factors.
As of December 31, 2000, the Company had $40.6 million in cash and cash
equivalents. The Company also had available borrowing capacity of $267.2
million under its warehouse credit facilities pursuant to the borrowing base
requirements of such agreements. The Company believes that its existing
capital resources along with expected cash flows from operating activities
will be sufficient to fund the Company's liquidity needs, exclusive of the
purchase of auto finance contracts, for fiscal 2001.
However, the Company anticipates that it will require additional external
capital in the form of securitization transactions, renewal and expansion of
its existing warehouse credit facilities and implementation of new warehouse
credit facilities in order to fund auto loan purchases in fiscal 2001. There
can be no assurance that funding will be available to the Company through
these sources or, if available, that it will be on terms acceptable to the
Company.
INTEREST RATE RISK
The Company's earnings are affected by changes in interest rates as a result
of its dependence upon the issuance of interest-bearing securities and the
incurrence of debt to fund its lending activities. Several factors can
influence the Company's ability to manage interest rate risk. First, auto
finance contracts are purchased at fixed interest rates, while the amounts
borrowed under warehouse credit facilities bear interest at variable rates
that are subject to frequent adjustment to reflect prevailing market interest
rates. Second, the interest rate demanded by investors in securitizations is
a function of prevailing market rates for comparable transactions and the
general interest rate environment. Because the auto finance contracts
purchased by the Company have fixed interest rates, the Company bears the
risk of smaller gross interest rate spreads in the event interest rates
increase during the period between the date receivables are purchased and the
completion and pricing of securitization transactions.
The Company utilizes several strategies to minimize the risk of interest rate
fluctuations, including the use of derivative financial instruments, the
33
regular sale of auto receivables to the Trusts and pre-funding of
securitization transactions. Pre-funding securitizations is the practice of
issuing more asset-backed securities than the amount of receivables initially
sold to the Trust. The proceeds from the pre-funded portion are held in an
escrow account until additional receivables are sold to the Trust in amounts
up to the balance of the pre-funded escrow account. In pre-funded
securitizations, borrowing costs are locked in with respect to the loans
subsequently delivered to the Trust. However, the Company incurs an expense
in pre-funded securitizations equal to the difference between the money
market yields earned on the proceeds held in escrow prior to subsequent
delivery of receivables and the interest rate paid on the asset-backed
securities outstanding.
Derivative financial instruments are utilized to manage the gross interest
rate spread on the Company's securitization transactions. The Company sells
fixed rate auto 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 either rates on U.S. Treasury Notes with
similar average maturities, market interest rate swap spreads for
transactions of similar duration, or various London Interbank Offered Rates
("LIBOR"). The interest rates on the floating rate securities issued by the
Trusts are indexed to LIBOR. The Company uses Interest Rate Swap agreements
to convert the floating rate exposures on these securities to a fixed rate.
The Company utilizes these derivative financial instruments to modify its net
interest sensitivity to levels deemed appropriate based on the Company's risk
tolerance.
The Company also utilizes interest rate caps as part of its interest-rate
risk-management strategy for securitization transactions as well as for
warehouse credit facilities. The purchaser of the interest rate cap 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 interest rate cap purchaser bears no obligation or
liability if interest rates fall below the "cap" rate. The Company's special
purpose finance subsidiaries are contractually required to purchase interest
rate cap agreements as credit enhancement in connection with securitization
transactions and warehouse credit facilities. The Company simultaneously
sells a corresponding interest rate cap agreement in order to offset the
purchased interest rate cap agreement.
Management monitors the Company's hedging activities to ensure that the value
of hedges, their correlation to the contracts being hedged and the amounts
being hedged continue to provide effective protection against interest rate
risk. All transactions are entered into for purposes other than trading.
There can be no assurance that the Company's strategies will be effective in
minimizing interest rate risk or that increases in interest rates will not
have an adverse effect on the Company's profitability.
34
CURRENT ACCOUNTING PRONOUNCEMENTS
In September 2000, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 140, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities, a
replacement of Financial Accounting Standards Board Statement No. 125" ("SFAS
140"), which revises the standards for accounting for securitizations and
other transfers of financial assets and collateral and requires certain
disclosures, but, carries over most of Statement No. 125's provisions without
reconsideration. SFAS 140 is effective for transfers and servicing of
financial assets and extinguishments of liabilities occurring after March 31,
2001, and is effective for disclosures relating to securitization
transactions and collateral and for the recognition and reclassification of
collateral for fiscal years ending after December 15, 2000. The Company does
not believe that the adoption of this statement will have a material effect on
the Company's financial position or results of operations.
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 which use words such as "believe",
"expect", "anticipate", "intend", "plan", "may", "will", "should",
"estimate", "continue" or other comparable expressions. These words indicate
future events and trends. Forward-looking statements are the Company's
current views with respect to future events and financial performance. These
forward-looking statements are subject to many risks and uncertainties which
could cause actual results to differ significantly from historical results or
from those anticipated by the Company. The most significant risks are
detailed from time to time in the Company's filings and reports with the
Securities and Exchange Commission including the Company's Annual Report on
Form 10-K for the year ended June 30, 2000. It is advisable not to place
undue reliance on the Company's forward-looking statements. The Company
undertakes no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events, or
otherwise.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Because the Company's funding strategy is dependent upon the issuance of
interest-bearing securities and the incurrence of debt, fluctuations in
interest rates impact the Company's profitability. Therefore, the Company
employs various hedging strategies to minimize the risk of interest rate
fluctuations. See "Management's Discussion and Analysis - Interest Rate Risk"
for additional information regarding such market risks.
35
Part II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
As a consumer finance company, the Company is subject to various consumer
claims and litigation seeking damages and statutory penalties, based upon,
among other things, usury, disclosure inaccuracies, wrongful repossession,
fraud and discriminatory treatment of credit applicants, which could take the
form of a plaintiffs' class action complaint. The Company, as the assignee of
finance contracts originated by dealers, 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 includes requests for
compensatory, statutory and punitive damages.
One proceeding in which the Company is a defendant has been brought in the
form of a class action complaint. This lawsuit, pending in Superior Court in
the State of California, claims that certain loan pricing structures used by
the Company and other banks and finance companies violate various California
laws. In the opinion of management, this lawsuit is without merit and the
Company intends to defend vigorously.
Management believes that the Company has taken prudent steps to address the
litigation risks associated with the Company's business activities. However,
there can be no assurance that the Company will be able to successfully
defend against all such claims or that the determination of any such claim in
a manner adverse to the Company would not have a material adverse effect on
the Company's automobile finance business.
On April 8, 1999, a putative class action complaint was filed against the
Company and certain of the Company's officers and directors alleging
violations of Section 10(b) of the Securities Exchange Act of 1934 arising
from the Company's use of the cash-in method of measuring and accounting for
credit enhancement assets in the Company's financial statements through the
first quarter of fiscal 1999. The United States District Court dismissed this
lawsuit in April 2000 and, in November 2000, the United States Court of
Appeals for the Fifth Circuit affirmed the dismissal. Consequently, the
Company considers this matter to be concluded.
In the opinion of management, the resolution of the proceedings described in
this section will not have a material adverse effect on the Company's
consolidated financial position, liquidity or results of operations.
Item 2. CHANGES IN SECURITIES
Not Applicable
36
Item 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On November 7, 2000, the Company held its Annual Meeting of Shareholders. The
Shareholders voted upon the election of three directors, the adoption of the
2000 Limited Omnibus Incentive Plan for AmeriCredit Corp. (the "2000 Plan")
and the ratification of the appointment of the Company's independent
auditors. Each of the three nominees identified in the Company's proxy
statement filed pursuant to Rule 14a-b of the Securities Exchange Act of
1934, were elected at the meeting to hold office for a three-year term or
until their successors are duly elected and qualified. The shareholders
adopted the 2000 Plan, with 37,089,849 shares voting in favor, 28,138,893
shares voting against and 176,638 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 Servicing and Custodian Agreement, dated as of
December 18, 2000, by and among AmeriCredit MTN
Receivables Trust, AmeriCredit Financial Services, Inc.,
and The Chase Manhattan Bank.
10.2 Security Agreement, dated as of December 18, 2000, by
and among AmeriCredit MTN Receivables Trust, AmeriCredit
Financial Services, Inc., AmeriCredit MTN Corp., and The
Chase Manhattan Bank.
10.3 Master Receivables Purchase Agreement, dated as of
December 18, 2000, by and among AmeriCredit MTN Receivables
Trust, AmeriCredit Financial Services, Inc., AmeriCredit
MTN Corp., and The Chase Manhattan Bank.
11.1 Statement Re: Computation of Per Share Earnings
37
(b) Reports on Form 8-K
A report on Form 8-K was filed October 12,
2000, with the Commission to report under
Item 5 the Company's earnings for its
quarterly period ended September 30, 2000.
Certain subsidiaries and affiliates of the
Company filed reports on Form 8-K during the
quarterly period ended December 31, 2000,
reporting monthly information related to
securitization trusts.
38
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 14, 2001 By: /s/ Daniel E. Berce
-----------------------------
(Signature)
Daniel E. Berce
Vice Chairman and
Chief Financial Officer
39