UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended DECEMBER 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________ to _____________
Commission file number 1-10667
AMERICREDIT CORP.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
TEXAS 75-2291093
------------------------------- --------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
200 BAILEY AVENUE, FORT WORTH, TEXAS 76107
--------------------------------------------
(Address of principal executive offices)
(Zip Code)
(817) 332-7000
----------------------------------------------------
(Registrant's telephone number, including area code)
--------------------------------------------------------------
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
----- -----
There were 28,443,364 shares of common stock, $.01 par value outstanding as of
February 5, 1996.
AMERICREDIT CORP.
INDEX TO FORM 10-Q
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements PAGE
----
Consolidated Balance Sheets -
December 31, 1995 and June 30, 1995........................ 3
Consolidated Income Statements -
Three Months and Six Months Ended
December 31, 1995 and 1994................................. 4
Consolidated Statements of Cash Flows -
Six Months Ended
December 31, 1995 and 1994................................. 5
Notes to Consolidated Financial Statements................. 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations....................... 12
Part II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders........ 22
Item 6. Exhibits and Reports on Form 8-K........................... 22
SIGNATURE.............................................................. 24
2
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
AMERICREDIT CORP.
Consolidated Balance Sheets
(Unaudited, Dollars in Thousands)
DECEMBER 31, JUNE 30,
ASSETS 1995 1995
------------ ---------
Cash and cash equivalents $ 2,464 $ 18,314
Restricted cash 7,380 5,007
Investment securities 7,278 10,265
Finance receivables, net 253,277 221,888
Excess servicing receivable 9,243
Property and equipment, net 6,520 6,036
Deferred income taxes 16,404 19,788
Other assets 5,495 4,427
-------- --------
Total assets $308,061 $285,725
-------- --------
-------- --------
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Automobile receivables-backed notes $ 99,361 $134,520
Bank line of credit 54,600
Notes payable 570 716
Accrued taxes and expenses 3,976 3,263
-------- --------
Total liabilities 158,507 138,499
-------- --------
Shareholders' equity:
Common stock, $.01 par value
per share; 120,000,000 shares
authorized; 32,415,170 and
32,117,201 shares issued,
respectively 324 321
Additional paid-in capital 187,851 185,573
Accumulated deficit (18,718) (26,824)
-------- --------
169,457 159,070
Treasury stock, at cost
(4,029,039 and 3,400,039 shares) (19,903) (11,844)
-------- --------
Total shareholders' equity 149,554 147,226
-------- --------
Total liabilities and shareholders'
equity $308,061 $285,725
-------- --------
-------- --------
The accompanying notes are an integral part
of these consolidated financial statements
3
AMERICREDIT CORP.
Consolidated Income Statements
(Unaudited, Dollars in Thousands, Except Per Share Data)
THREE MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31, DECEMBER 31,
-------------------- --------------------
1995 1994 1995 1994
------- ------- ------- -------
Revenue:
Finance charge income $13,852 $6,312 $27,229 $11,138
Gain on sale of receivables 5,621 5,621
Servicing fee income 215 215
Investment income 275 299 556 647
Other income 298 167 563 654
------- ------- ------- -------
20,261 6,778 34,184 12,439
------- ------- ------- -------
Costs and expenses:
Operating expenses 5,538 3,396 10,442 6,517
Provision for losses 2,145 883 4,112 1,537
Interest expense 3,748 364 6,862 413
------- ------- ------- -------
11,431 4,643 21,416 8,467
------- ------- ------- -------
Income before income taxes 8,830 2,135 12,768 3,972
Provision for income taxes 3,244 43 4,662 79
------- ------- ------- -------
Net income $ 5,586 $ 2,092 $ 8,106 $ 3,893
------- ------- ------- -------
------- ------- ------- -------
Earnings per share $ .18 $ .07 $ .26 $ .13
------- ------- ------- -------
------- ------- ------- -------
Weighted average shares
and share equivalents 31,120,461 30,191,179 31,130,423 30,126,388
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
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,
--------------------
1995 1994
------- -------
Cash flows from operating activities:
Net income $ 8,106 $ 3,893
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 778 642
Provision for losses 4,112 1,537
Deferred income taxes 4,126
Gain on sale of receivables (5,621)
Changes in assets and liabilities:
Other assets (1,068) (480)
Accrued taxes and expenses 713 160
--------- --------
Net cash provided by operating
activities 11,146 5,752
--------- --------
Cash flows from investing activities:
Purchases and originations of finance
receivables (155,427) (83,204)
Principal collections and recoveries on
finance receivables 51,748 29,622
Net proceeds from sale of receivables 64,556
Purchases of property and equipment (1,266) (748)
Proceeds from disposition of property
and equipment 4 60
Proceeds from sales and maturities of
investment securities 2,987 11,412
Increase in restricted cash (2,373) (2,834)
--------- --------
Net cash used by investing activities (39,771) (45,692)
--------- --------
Cash flows from financing activities:
Borrowings on bank line of credit 116,500 15,600
Payments on bank line of credit (61,900) (15,600)
Proceeds from issuance of automobile
receivables-backed notes 51,000
Payments on automobile receivables-backed
notes (35,159)
Payments on notes payable (146) (82)
Purchase of treasury stock (8,059)
Proceeds from issuance of common stock 1,539 226
--------- --------
Net cash provided by financing
activities 12,775 51,144
--------- --------
Net increase (decrease) in cash and cash
equivalents (15,850) 11,204
Cash and cash equivalents at beginning of
period 18,314 15,756
--------- --------
Cash and cash equivalents at end of period $ 2,464 $ 26,960
--------- --------
--------- --------
The accompanying notes are an integral part
of these consolidated financial statements
5
AMERICREDIT CORP.
Notes to Consolidated Financial Statements
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts of
AmeriCredit Corp. and its wholly-owned subsidiaries ("the Company"). All
significant intercompany accounts and transactions have been eliminated in
consolidation.
The consolidated financial statements as of December 31, 1995 and for the
periods ended December 31, 1995 and 1994 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 1995 Annual Report to Shareholders.
NOTE 2 - FINANCE RECEIVABLES
Finance receivables consist of the following (in thousands):
DECEMBER 31, JUNE 30,
1995 1995
------------ --------
Indirect finance receivables:
Precomputed interest $215,630 $191,700
Simple interest 108,174 95,660
-------- --------
323,804 287,360
Other finance receivables 326 1,373
-------- --------
Total finance receivables 324,130 288,733
Less unearned finance charges and fees (51,881) (46,894)
-------- --------
Principal amount of finance
receivables 272,249 241,839
Less allowance for losses (18,972) (19,951)
-------- --------
Finance receivables, net $253,277 $221,888
-------- --------
-------- --------
6
The Company's finance contracts typically provide for finance charges on
either a precompute or simple interest basis. Precomputed interest finance
receivables include principal and unearned finance charges. Simple interest
finance receivables include principal only.
A summary of the allowance for losses is as follows (in thousands):
THREE MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31, DECEMBER 31,
--------------------- -------------------
1995 1994 1995 1994
------- ------- ------ -------
Balance at beginning of period $22,174 $10,875 $19,951 $ 9,330
Provision for losses 2,145 883 4,112 1,537
Acquisition fees on indirect
finance receivables 3,670 2,876 7,555 5,216
Allowance related to receivables
sold (4,225) (4,225)
Net charge-offs-indirect (4,588) (1,353) (8,181) (2,233)
Net charge-offs-other (204) (247) (240) (816)
------- ------- ------- -------
Balance at end of period $18,972 $13,034 $18,972 $13,034
------- ------- ------- -------
------- ------- ------- -------
NOTE 3 - SALE OF FINANCE RECEIVABLES
On December 21, 1995, the Company completed a sale of finance receivables to
the AmeriCredit Automobile Receivables Trust 1995-B (the "Trust") and the
issuance to investors of $65.0 million of automobile receivables-backed
certificates of the Trust. The Company retained a subordinated interest in
the Trust. The certificates have a pass through interest rate of 6.10%.
Financial Security Assurance Inc. ("FSA") issued a financial guarantee
insurance policy for the benefit of the investors.
The Company recognized a gain on the sale of finance receivables to the
Trust. The gain represents the difference between the sales proceeds, net of
transaction costs, and the Company's net carrying value of the receivables
sold, plus excess servicing (see Note 4).
NOTE 4 - EXCESS SERVICING RECEIVABLE
Excess servicing receivable represents the Company's subordinated interest in
the Trust, including excess servicing on the finance receivables sold to the
7
Trust. The excess servicing receivable is equal to the present value of
estimated future collections and recoveries on the finance receivables sold
to the Trust, less the present value of required principal and interest
payments to the investors, base servicing fees payable to the Company at an
annualized rate of 2.5% of finance receivables serviced and certain other
fees. The calculation of excess servicing includes estimates of future
credit losses and prepayment rates for the remaining term of the finance
receivables sold since these factors impact the amount and timing of future
collections and recoveries on the pool of finance receivables. If future
credit losses and prepayment rates exceed the Company's estimates, excess
servicing receivable will be adjusted through a charge to operations.
Favorable credit loss and prepayment experience compared to the Company's
estimates would result in additional servicing fee income. The excess
servicing receivable is amortized using the interest method against realized
excess servicing fee income.
Excess servicing receivable consists of the following (in thousands):
DECEMBER 31,
1995
------------
Estimated future net cash flows before
allowance for credit losses $16,705
Allowance for credit losses (6,219)
-------
Estimated future net cash flows 10,486
Unamortized discount at 12% (1,243)
-------
$ 9,243
-------
-------
A summary of excess servicing receivable is as follows (in thousands):
SIX MONTHS ENDED
DECEMBER 31,
1995
----------------
Balance at beginning of period $ 0
Excess servicing related to
receivables sold 9,243
Amortization 0
------
Balance at end of period $9,243
------
------
8
NOTE 5 - DEBT
Automobile receivables-backed notes consist of the following (in thousands):
DECEMBER 31, JUNE 30,
1995 1995
------------ --------
Series 1994-A notes, interest at 8.19%,
collateralized by certain finance
receivables in the principal amount
of $23,281, final maturity in
December 1999. $22,450 $ 35,350
Series 1995-A notes, interest at 6.55%,
collateralized by certain finance
receivables in the principal
amount of $79,925, final maturity
in September 2000. 76,911 99,170
------- --------
$99,361 $134,520
------- --------
------- --------
The Series 1994-A notes were issued in December 1994 and initially
aggregated $51,000,000. The Series 1995-A notes were issued in June 1995 and
initially aggregated $99,170,000. Each series of notes was 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 pools of
finance receivables. FSA issued financial guaranty insurance policies for
the benefit of the noteholders of each series.
The Company has a revolving credit agreement with a group of banks under
which the Company may borrow up to $150 million, subject to a defined
borrowing base. The Company had $54,600,000 and $-0- outstanding under this
facility as of December 31, 1995 and June 30, 1995, respectively. Borrowings
under the credit agreement are collateralized by certain indirect finance
receivables and bear interest, based upon the Company's option, at either the
reference prime rate or various market London Interbank Offered Rates plus
1.65%. The Company is also required to pay an annual commitment fee equal
to 3/8% of the unused portion of the credit agreement. The credit agreement,
which expires in October 1996, contains various restrictive covenants
requiring certain minimum financial ratios and results and placing certain
limitations on the incurrence of additional debt, capital expenditures, cash
dividends and repurchase of common stock.
9
NOTE 6 - RESTRICTED CASH
In connection with the issuance of financial guaranty insurance policies by FSA,
the Company is required to establish a cash account with a trustee for the
benefit of FSA and the investors for each issue of automobile receivables-backed
securities. Such cash accounts are shown as restricted cash on the Company's
consolidated balance sheets. Monthly collections and recoveries from each pool
of finance receivables in excess of required principal and interest payments on
the securities and servicing and other fees are added to the restricted cash
accounts until the balance reaches a specified percentage of the pool of finance
receivables, and thereafter are distributed to the Company. In the event that
monthly collections and recoveries from any pool of finance receivables are
insufficient to make required principal and interest payments to the investors
and pay servicing and other fees, any shortfall would be drawn from the
restricted cash accounts.
Certain agreements with FSA contain restrictive covenants relating to
delinquency, default and net loss ratios in the pools of finance receivables
supporting the automobile receivables-backed securities. A default on these
restrictive covenants would result in an increase in the specified levels of the
restricted cash accounts and, in certain cases, removal of the Company as
servicer of the finance receivables.
NOTE 7 - 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 ENDED SIX MONTHS ENDED
DECEMBER 31, DECEMBER 31,
------------------ ----------------
1995 1994 1995 1994
---- ---- ---- ----
U.S. statutory tax rate 35% 35% 35% 35%
Change in valuation allowance (35) (35)
Other 2 2 2 2
-- --- -- ---
37% 2% 37% 2%
-- --- -- ---
-- --- -- ---
At June 30, 1995, the Company has net operating loss carryforwards of
approximately $50,000,000 for income tax reporting purposes which expire
10
between 2007 and 2009 and an alternative minimum tax carryforward of
$1,047,000 with no expiration date.
NOTE 8 - SUPPLEMENTAL CASH FLOW INFORMATION
Cash payments for interest costs and income taxes consist of the following (in
thousands):
SIX MONTHS ENDED
DECEMBER 31,
----------------
1995 1994
------ ----
Interest costs (none capitalized) $6,369 $309
Income taxes $ 898
During the six months ended December 31, 1994, the Company sold certain property
and equipment for cash and a note receivable of $184,000.
11
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTHS ENDED DECEMBER 31, 1995 AS COMPARED TO
THREE MONTHS ENDED DECEMBER 31, 1994
REVENUE:
The Company's average net owned and serviced finance receivables outstanding
consisted of the following (in thousands):
THREE MONTHS ENDED
DECEMBER 31,
--------------------
1995 1994
-------- --------
Indirect-owned $277,222 $113,300
Indirect-serviced 34,836
-------- --------
312,058 113,300
Other 533 8,306
-------- --------
$312,591 $121,606
-------- --------
-------- --------
The Company's finance charge income consisted of the following (in thousands):
THREE MONTHS ENDED
DECEMBER 31,
---------------------------------
1995 1994
------- ------
Indirect $13,846 100% $5,925 94%
Other 6 0% 387 6%
------- --- ------ ---
$13,852 100% $6,312 100%
------- --- ------ ---
------- --- ------ ---
The increase in indirect finance charge income is due to growth of 145% in
average net indirect-owned finance receivables outstanding. The Company
purchased $86.6 million of indirect loans during the three months ended December
31, 1995, compared to $46.7 million during the three months ended December 31,
1994. This growth resulted from loan production at branches open during both
periods as well as expansion of the Company's loan production capacity. The
Company operated 42 branch offices as of December 31, 1995, compared to 24 as of
December 31, 1994. The decrease in other finance charge income is due to the
ongoing liquidation of the related receivables portfolios.
12
The Company's effective yield on its finance receivables decreased to 19.8% from
20.8%.
Gain on sale of receivables resulted from the transfer of finance receivables to
the AmeriCredit Automobile Receivables Trust 1995-B (the "Trust") in December
1995 and the issuance to investors of $65.0 million of automobile receivables-
backed certificates of the Trust. The gain on sale of receivables represented
8.6% of the original certificate balance. The Company's previous issuances of
automobile receivables-backed securities were structured as debt issuances by
subsidiaries of the Company and thus were accounted for as borrowings. Since
the Company intends to structure future issuances of automobile receivables-
backed securities in a manner which will result in the recognition of a gain on
sale of receivables, the amount and timing of such future transactions will
significantly impact the Company's earnings from quarter to quarter.
Servicing fee income represents the Company's base servicing fee on the finance
receivables sold to the Trust.
Investment income decreased as a result of lower average cash and cash
equivalents and investment securities balances for the three months ended
December 31, 1995.
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. There was no income from these
joint ventures in the three months ended December 31, 1995.
COST AND EXPENSES:
Operating expenses as an annualized percentage of average net owned and serviced
finance receivables outstanding decreased to 7.0% for the three months ended
December 31, 1995 as compared to 11.2% for the three months ended December 31,
1994. 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 $2.1 million, or 63%, primarily due to
the addition of branch offices and branch management and portfolio servicing
staff.
13
The provision for losses increased to $2,145,000 as compared to $883,000.
Further discussion concerning the provision for losses is included under the
caption, "Finance Receivables".
Interest expense of $3,748,000 for the three months ended December 31, 1995
resulted from borrowings on the Company's bank line of credit and the issuance
of $51 million and $99.2 million of automobile receivables-backed notes in
December 1994 and June 1995, respectively. Interest expense of $365,000 for the
three months ended December 31, 1994 resulted primarily from borrowings on the
Company's bank line of credit.
The provision for income taxes in the three months ended December 31, 1995
resulted primarily from amortization of the Company's deferred tax asset at the
federal statutory income tax rate. In the fourth quarter of fiscal 1995, the
Company recognized a deferred tax asset equal to the expected future tax savings
from using its net operating loss carryforward and other future tax benefits.
Based on the Company's trend of positive operating results since entering the
indirect automobile finance business in September 1992 and future expectations,
the Company determined that it was more likely than not that its net operating
loss carryforward and other future tax benefits would be fully utilized prior to
expiration of the carryforward periods. The deferred tax asset is being
amortized through a non-cash income tax provision against the Company's earnings
as the net operating loss carryforward and other future tax benefits are
utilized. The Company will not pay regular federal income taxes until the net
operating loss carryforward and other future tax benefits have been fully
recovered. Prior to the fourth quarter of fiscal 1995, the Company had offset
the deferred tax asset with a valuation allowance. Accordingly, there was no
provision for federal income taxes in the three months ended December 31, 1994.
14
SIX MONTHS ENDED DECEMBER 31, 1995 AS COMPARED TO
SIX MONTHS ENDED DECEMBER 31, 1994
REVENUE:
The Company's average net owned and serviced finance receivables outstanding
consisted of the following (in thousands):
SIX MONTHS ENDED
DECEMBER 31,
------------------------------
1995 1994
-------- --------
Indirect-owned $268,571 $ 97,564
Indirect-serviced 19,906
-------- --------
288,477 97,564
Other 774 10,319
-------- --------
$289,251 $107,883
-------- --------
-------- --------
The Company's finance charge income consisted of the following (in thousands):
SIX MONTHS ENDED
DECEMBER 31,
--------------------------------
1995 1994
------- -------
Indirect $27,208 100% $10,152 91%
Other 21 0% 986 9%
------- --- ------- ---
$27,229 100% $11,138 100%
------- --- ------- ---
------- --- ------- ---
The increase in indirect finance charge income is due to growth of 175% in
average net indirect-owned finance receivables outstanding. The Company
purchased $161.3 million of indirect loans during the six months ended December
31, 1995, compared to $83.5 million during the six months ended December 31,
1994. This growth resulted from loan production at branches open during both
periods as well as expansion of the Company's loan production capacity. The
decrease in other finance charge income is due to the ongoing liquidation of the
related receivables portfolios.
The Company's effective yield on its finance receivables decreased to 20.1%
from 20.7%.
15
Gain on sale of receivables resulted from the transfer of finance receivables to
the AmeriCredit Automobile Receivables Trust 1995-B and the issuance to
investors of $65.0 million of automobile receivables-backed certificates of the
Trust. The gain on sale of receivables represented 8.6% of the original
certificate balance.
Servicing fee income represents the Company's base servicing fee on the finance
receivables sold to the Trust.
Investment income decreased as a result of lower average cash and cash
equivalents and investment securities balances for the six months ended December
31, 1995.
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. There was no income from these
joint ventures in the six months ended December 31, 1995.
COSTS AND EXPENSES:
Operating expenses as an annualized percentage of average net owned and serviced
finance receivables outstanding decreased to 7.2% for the six months ended
December 31, 1995 as compared to 12.1% for the six months ended December 31,
1994. 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 $3.9 million, or 60.0%, primarily due
to the addition of branch offices and branch management and portfolio servicing
staff.
The provision for losses increased to $4,112,000 as compared to $1,537,000.
Further discussion concerning the provision for losses is included under the
caption, "Finance Receivables".
Interest expense of $6,862,000 for the six months ended December 31, 1995
resulted from borrowings on the Company's bank line of credit and the issuance
of $51 million and $99.2 million of automobile receivables-backed notes in
December 1994 and June 1995, respectively. Interest expense of $413,000 for the
six months ended December 31, 1994 resulted primarily from borrowings on the
Company's bank line of credit.
The provision for income taxes in the six months ended December 31, 1995
resulted primarily from amortization of the Company's deferred tax asset at the
16
federal statutory income tax rate. In the fourth quarter of fiscal 1995, the
Company recognized a deferred tax asset equal to the expected future tax savings
from using its net operating loss carryforward and other future tax benefits.
Prior to the fourth quarter of fiscal 1995, the Company had offset the deferred
tax asset with a vaulation allowance. Accordingly, there was no provision for
federal income taxes in the six months ended December 31, 1994.
FINANCE RECEIVABLES
The Company provides financing in relatively high-risk markets, and therefore,
charge-offs are anticipated. The Company records a periodic provision for
losses as a charge to operations and a related allowance for losses in the
consolidated balance sheet as a reserve against estimated future losses in the
owned finance receivables portfolio. The Company typically purchases individual
finance contracts with a non-refundable acquisition fee on a non-recourse basis.
Such acquisition fees are also recorded in the consolidated balance sheet as an
allowance for losses. The calculation of excess servicing receivable includes
an allowance for estimated future losses over the remaining term of the finance
receivables sold and currently serviced by the Company.
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 judgments 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.
Net finance receivables represented 82.2% of the Company's total assets at
December 31, 1995. The following table presents certain data related to the
finance receivables portfolio (dollars in thousands):
17
DECEMBER 31, 1995
---------------------------------------------------------
TOTAL
INDIRECT OWNED INDIRECT TOTAL
OWNED OTHER PORTFOLIO SERVICED PORTFOLIO
-------- ----- --------- -------- ---------
Gross finance receivables $323,804 $ 326 $324,130 $ 82,327 $406,457
Unearned finance charges
and fees (51,878) (3) (51,881) (13,823) (65,704)
-------- ----- -------- -------- --------
Finance receivables
(principal amount) 271,926 323 272,249 $ 68,504 $340,753
-------- --------
-------- --------
Allowance for losses (18,649) (323) (18,972) $ 6,219 (1)
-------- ---- -------- --------
--------
Finance receivables, net $253,277 $ 0 $253,277
-------- ---- --------
-------- ---- --------
Number of outstanding contracts 34,096 8,579
-------- --------
-------- --------
Average amount of outstanding
contract (principal amount) $ 7,975 $ 7,985
(in dollars) -------- --------
-------- --------
Allowance for losses as a
percentage of finance receivables
(principal amount) 6.9% 9.1%
--- ---
--- ---
(1) The allowance for losses related to indirect-serviced finance receivables
is netted against excess servicing receivable in the Company's consolidated
balance sheets.
The following is a summary of total net indirect owned and serviced finance
receivables which are more than 60 days delinquent (dollars in thousands):
DECEMBER 31,
-------------------
1995 1994
------- ------
Principal amount of delinquent contracts $12,625 $2,947
------- ------
------- ------
Principal amount of delinquent contracts
as a percentage of total net indirect
owned and serviced finance receivables
outstanding 3.7% 2.3%
--- ---
--- ---
18
The following table presents charge-off data with respect to the Company's total
net owned and serviced indirect finance receivables portfolio (dollars in
thousands):
THREE MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31, DECEMBER 31,
-------------------- -----------------
1995 1994 1995 1994
------ ------ ------ ------
Net charge-offs:
Indirect-owned $4,588 $1,353 $8,181 $2,233
Indirect-serviced 34 34
------ ------ ------ ------
$4,622 $1,353 $8,215 $2,233
------ ------ ------ ------
------ ------ ------ ------
Net charge-offs as a percentage
of average net owned and
serviced indirect finance
receivables outstanding 5.9% 4.8% 5.7% 4.6%
--- --- --- ---
--- --- --- ---
The Company recorded periodic provisions for losses as charges to operations of
$2,145,000 and $4,112,000 for the three and six month periods ended December 31,
1995, respectively. The provisions for losses were $844,000 and $1,450,000 for
the three and six month periods ended December 31, 1994, respectively.
(Provisions for losses of $39,000 and $87,000 for the three and six months
periods ended December 31, 1994 were recorded with respect to other finance
receivables). The increased loss provisions are a result of higher average net
indirect-owned finance receivables outstanding.
The Company began its indirect automobile finance business in September 1992 and
has grown its total net owned and serviced finance receivables portfolio to
$340.8 million as of December 31, 1995. The Company expects that its
delinquency and charge-offs will increase over time as the 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
more seasoned portfolio.
19
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash flows are summarized as follows (in thousands):
SIX MONTHS ENDED
DECEMBER 31,
---------------------
1995 1994
-------- --------
Operating activities $ 11,146 $ 5,752
Investing activities (39,771) (45,692)
Financing activities 12,775 51,144
-------- --------
Net increase (decrease) in
cash and cash equivalents $(15,850) $ 11,204
-------- --------
-------- --------
In addition to the net change in cash and cash equivalents shown above, the
Company also had net decreases in investment securities of $3.0 million and
$11.4 million for the six months ended December 31, 1995 and 1994,
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 of automobile receivables-backed securities.
In January 1996, the Company expanded the available borrowings under its bank
credit agreement by $25 million to $150 million and extended the maturity
date of the facility to October 31, 1996. The Company utilized the line of
credit to fund its lending activities during the six months ended December
31, 1995. A total of $54.6 million was outstanding under the line of credit
as of December 31, 1995.
In December 1995, the Company completed the issuance of $65.0 million of
automobile receivables-backed certificates through the AmeriCredit Automobile
Receivables Trust 1995-B. The certificates have a pass through interest rate
of 6.10% and are rated "Aaa" by Moody's Investors Service, Inc. and "AAA" by
Standard & Poor's Rating Services. Financial Security Assurance Inc. issued
a financial guarantee insurance policy for the benefit of the investors. The
proceeds from the issuance of the certificates were used to repay a portion
of the borrowings outstanding under the Company's bank line of credit.
20
The Company's primary use of cash has been purchases and originations of
finance receivables. The Company purchased $161.3 million of finance
contracts during the six months ended December 31, 1995 requiring cash of
$155.4 million net of acquisition fees and other factors. The Company
operated 42 branch offices and had a number of marketing representatives as
of December 31, 1995. The Company plans to open eight additional branches and
expand loan production capacity at existing offices through the remainder of
fiscal 1996. While the Company has been able to establish and grow its
indirect automobile finance business thus far, there can be no assurance that
future expansion will be successful due to competitive, regulatory, market,
economic or other factors.
The Company's Board of Directors has authorized the repurchase of up to
6,000,000 shares of the Company's common stock. A total of 4,079,500 shares
at an aggregate purchase price of $20,214,000 had been purchased pursuant to
this program through December 31, 1995. The Company purchased an additional
25,000 shares in January 1996.
As of December 31, 1995, the Company had $9.7 million in cash and cash
equivalents and investment securities. The Company also had available
borrowing capacity of $95.4 million under its recently expanded bank line of
credit. The Company estimates that it will require additional external
capital for the remainder of fiscal 1996 in addition to these existing
capital resources and collections and recoveries on its finance receivables
portfolio in order to fund expansion of its indirect automobile lending
business, capital expenditures, additional common stock repurchases and other
costs and expenses.
The Company anticipates that such funding will be in the form of additional
issuances of automobile receivables-backed securities. There can be no
assurance that funding will be available to the Company through the issuance
of automobile receivables-backed securities, or if available, that it will be
on terms acceptable to the Company.
21
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 14, 1995, the Company held its Annual Meeting of
Shareholders. The shareholders voted upon the election of
six directors, the approval and adoption of the 1995 Omnibus
Stock and Incentive Plan for AmeriCredit Corp. 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 1995 Omnibus Stock and
Incentive Plan for AmeriCredit Corp., with 11,700,379 shares
voting in favor, 4,100,020 shares voting against and 582,185
shares withheld. The Company's selection of independent
auditors was also ratified.
Not Applicable
Item 5. OTHER INFORMATION
Not Applicable
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
22
10.1 - Pooling and Servicing Agreement Relating to
AmeriCredit Automobile Receivables Trust 1995-B,
dated November 20, 1995, among AmeriCredit Financial
Services, Inc., AmeriCredit Receivables Corp. and
LaSalle National Bank.
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, 1995.
23
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, 1996 By: /s/ DANIEL E. BERCE
-------------------------------------
(Signature)
Daniel E. Berce
Chief Financial Officer
24