UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended JUNE 30, 1997
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[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ___________________ to ___________________
Commission file number 1-10667
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AMERICREDIT CORP.
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(Exact name of registrant as specified in its charter)
Texas 75-2291093
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
200 Bailey Avenue, Fort Worth, Texas 76107
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (817) 332-7000
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Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
Common Stock, $.01 Par Value New York Stock Exchange
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Securities registered pursuant to Section 12(g) of the Act:
9 1/4 % Senior Notes Due 2004/Guarantee of 9 1/4% Senior Notes Due 2004
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(Title of class)
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 .
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Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of Registrant's knowledge in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ X ]
The aggregate market value of 23,677,056 shares of the Registrant's Common
Stock held by non-affiliates based upon the closing price of the Registrant's
Common Stock on the New York Stock Exchange on September 12, 1997 was
approximately $696,993,336. For purposes of this computation, all officers,
directors and 5 percent beneficial owners of the Registrant are deemed to be
affiliates. Such determination should not be deemed an admission that such
officers, directors and beneficial owners are, in fact, affiliates of the
Registrant.
There were 29,657,163 shares of Common Stock, $.01 par value outstanding as
of September 12, 1997.
DOCUMENTS INCORPORATED BY REFERENCE
The Registrant's Annual Report to Shareholders for the year ended June 30,
1997 ("the Annual Report") furnished to the Commission pursuant to Rule
14a-3(b) and the definitive Proxy Statement pertaining to the 1997 Annual
Meeting of Shareholders ("the Proxy Statement") and filed pursuant to
Regulation 14A are incorporated herein by reference into Parts II and IV, and
Part III, respectively.
AMERICREDIT CORP.
INDEX TO FORM 10-K
ITEM PAGE
NO. NO.
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PART I
1. Business 4
2. Properties 25
3. Legal Proceedings 26
4. Submission of Matters to a Vote of Security Holders 26
PART II
5. Market for Registrant's Common Equity and Related Stockholder
Matters 27
6. Selected Financial Data 27
7. Management's Discussion and Analysis of Financial Condition
and Results of Operations 27
8. Financial Statements and Supplementary Data 27
9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure 38
PART III
10. Directors and Executive Officers of the Registrant 39
11. Executive Compensation 39
12. Security Ownership of Certain Beneficial Owners and
Management 39
13. Certain Relationships and Related Transactions 39
PART IV
14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K 40
SIGNATURES 41
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PART I
ITEM 1. BUSINESS
GENERAL
AmeriCredit Corp. was incorporated in Texas on May 18, 1988 and succeeded to
the business, assets and liabilities of a predecessor corporation formed
under the laws of Texas on August 1, 1986. The Company's predecessor began
the Company's business in March 1987, and the business has been operated
continuously since that time. As used herein, the term "Company" refers to
the Company, its wholly owned subsidiaries and its predecessor corporation.
The Company's principal executive offices are located at 200 Bailey Avenue,
Fort Worth, Texas, 76107 and its telephone number is (817) 332-7000.
In July 1992, the Company formed a subsidiary, AmeriCredit Financial
Services, Inc. ("AFSI"), a Delaware corporation, to engage in the indirect
automobile finance business. AFSI began operating in the indirect automobile
finance business in September 1992. Through its AFSI branch network, the
Company purchases loans made by franchised and select independent dealers to
consumers buying late model used and, to a lesser extent, new automobiles.
The Company targets consumers who are typically unable to obtain financing
from traditional sources. Funding for the Company's auto lending activities
is obtained primarily through the sale of loans in securitization
transactions. The Company services its automobile lending portfolio at
regional centers using automated loan servicing and collection systems.
In November 1996, the Company acquired Americredit Corporation of California
(formerly Rancho Vista Mortgage Corporation), a California corporation. This
subsidiary, which operates as AmeriCredit Mortgage Services ("AMS"), originates
home equity loans and sells the loans and related servicing rights in the
wholesale markets.
The Company previously operated a chain of "we finance" used car retail lots
in Texas, selling used cars and typically financing sales to customers. The
Company restructured its operations and withdrew from the retail used car
sales business effective December 31, 1992.
INDIRECT AUTOMOBILE FINANCE OPERATIONS
TARGET MARKET. The Company's indirect lending programs are designed to serve
consumers who have limited access to traditional automobile financing. The
Company's typical borrowers have experienced prior credit difficulties or
have limited credit histories. Because the Company serves consumers who are
unable to meet the credit standards imposed by most traditional automobile
financing sources, the Company generally charges interest at rates higher
than those
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charged by traditional automobile financing sources. The Company also
expects to sustain a higher level of credit losses than traditional
automobile financing sources since the Company provides financing in a
relatively high risk market.
DEALERSHIP MARKETING. Since the Company is an indirect lender, the Company
focuses its marketing activities on automobile dealerships. The Company is
selective in choosing the dealers with whom it conducts business and
primarily pursues manufacturer franchised dealerships with used car
operations and select independent dealerships. The Company selects these
dealers because they sell the type of used cars the Company prefers to
finance, specifically later model, low mileage used cars. Of the contracts
purchased by the Company during the fiscal year ended June 30, 1997,
approximately 84% were originated by manufacturer franchised dealers with
used car operations and 16% by select independent dealers. The Company
purchased contracts from 5,657 dealers during the fiscal year ended June 30,
1997. No dealer accounted for more than 2% of the total volume of contracts
purchased by the Company for that same period.
The Company's financing programs are marketed to dealers through branch
office personnel, including branch managers, assistant managers and in some
cases marketing representatives. The Company believes that the personal
relationships its branch managers and other branch office personnel establish
with the dealership personnel are an important factor in creating and
maintaining productive relationships with its dealership customer base.
Branch office personnel are responsible for the solicitation, enrollment and
education of new dealers regarding the Company's financing programs. Branch
office personnel visit dealerships to present information regarding the
Company's financing programs and capabilities. These personnel explain the
Company's underwriting philosophy, including its preference for sub-prime
quality contracts secured by later model, lower mileage used vehicles, and
its practice of underwriting in the local branch office.
Prior to entering into a relationship with a dealer, the Company considers
the dealer's operating history and reputation in the marketplace. The
Company then maintains a non-exclusive relationship with the dealer. This
relationship is actively monitored with the objective of maximizing the
volume of applications received from the dealer that meet the Company's
underwriting standards and profitability objectives. Due to the
non-exclusive nature of the Company's relationships with dealerships, the
dealerships retain discretion to determine whether to obtain financing from
the Company or from another source for a customer seeking to finance a
vehicle purchase. Branch managers and other branch office personnel
regularly telephone and visit dealers to solicit new business and to answer
any questions dealers may have regarding the Company's financing programs and
capabilities. To increase the effectiveness of these contacts, the branch
managers and other branch office personnel have access to the Company's
management information systems which
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detail current information regarding the number of applications submitted by
dealership, the Company's response and the reasons why a particular
application was rejected.
Finance contracts are generally purchased by the Company without recourse to
the dealer, and accordingly, the dealer usually has no liability to the
Company if the consumer defaults on the contract. To mitigate the Company's
risk from potential credit losses, the Company typically charges dealers an
acquisition fee when purchasing finance contracts. Such acquisition fees are
negotiated with dealers on a contract-by-contract basis and are usually
non-refundable. Although finance contracts are purchased without recourse to
the dealer, the dealer typically makes certain representations as to the
validity of the contract and compliance with certain laws, and indemnifies
the Company against any claims, defenses and set-offs that may be asserted
against the Company because of assignment of the contract. Recourse based
upon such representations and indemnities would be limited in circumstances
in which the dealer has insufficient financial resources to perform upon such
representations and indemnities. The Company does not view recourse against
the dealer on these representations and indemnities to be of material
significance in its decision to purchase finance contracts from a dealer.
BRANCH OFFICE NETWORK. The Company uses a branch office network to market
its financing programs to selected dealers and develop relationships with
these dealers throughout the country. Additionally, the branch office
network is used for the underwriting of contracts submitted by dealerships.
The Company believes a local presence enables the Company to more fully
service dealers and be more responsive to dealer concerns and local market
conditions. The Company selects markets for branch office locations based
upon numerous factors, including demographic trends and data, competitive
conditions and the regulatory environment, in addition to the availability of
qualified personnel. Branch offices are typically situated in suburban
office buildings which are accessible to local dealers.
Each branch office solicits dealers for contracts and maintains the Company's
relationship with the dealers in the geographic vicinity of that branch
office. Branch office locations are typically staffed by a branch manager,
an assistant manager and one or more dealer and customer service
representatives. Larger branch offices may also have an additional assistant
manager and/or dealer marketing representative. Branch managers are
compensated with base salaries, annual incentives based primarily on branch
level credit quality and, if the credit quality objectives are met, loan
volume. The incentives are typically paid in cash and stock option grants.
The branch manager reports to a regional vice president.
The Company's regional vice presidents monitor branch office compliance with
the Company's underwriting guidelines. The Company's automated application
processing system and loan accounting system provide the regional vice
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presidents access to credit application information enabling them to consult
with the branch managers on daily credit decisions and review exceptions to
the Company's underwriting guidelines. The regional vice presidents also
make periodic visits to the branch offices to conduct operating reviews. The
regional vice presidents receive incentives based on the overall performance
of the Company.
The following table sets forth information with respect to the number of
branches, dollar volume of contracts purchased and number of producing
dealerships for the periods set forth below.
YEARS ENDED JUNE 30,
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1997 1996 1995
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(dollars in thousands)
Number of branch offices 85 51 31
Dollar volume of contracts
purchased $906,794 $432,442 $230,176
Number of producing
dealerships (1) 5,657 3,262 1,861
(1) A producing dealership refers to a dealership from which the Company had
purchased contracts in the relevant period.
The Company plans to expand its indirect automobile finance business by
adding additional branch offices and increasing dealer penetration at its
existing branch offices. The success of this strategy is dependent upon,
among other factors, the Company's ability to hire and retain qualified
branch managers and other personnel and to develop relationships with more
dealers. The Company confronts intense competition in attracting key
personnel and establishing relationships with dealers. Dealers often already
have favorable sub-prime financing sources, which may restrict the Company's
ability to develop dealer relationships and delay the Company's growth. In
addition, the competitive conditions in the Company's markets may result in a
reduction in the profitability of the contracts that the Company purchases or
a decrease in contract acquisition volume, which would adversely affect the
Company's results of operations.
PROPRIETARY CREDIT SCORING SYSTEM AND RISK-BASED PRICING. The Company has
implemented a credit scoring system throughout its branch office network to
support the branch level credit approval process. The credit scoring system
was developed with the assistance of Fair, Isaac and Co., Inc. from the
Company's loan and portfolio databases. Credit scoring is used to
differentiate credit applicants and to rank order credit risk in terms of
expected default rates, which enables the Company to tailor loan pricing and
structure according to this statistical assessment of credit risk. For
example, a consumer with a lower score would indicate a higher probability of
default and, therefore, the Company could compensate for this higher default
7
risk through the structuring and pricing of the transaction. While the
Company employs a credit scoring system in the credit approval process,
credit scoring does not eliminate credit risk. Adverse determinations in
evaluating contracts for purchase could adversely affect the credit quality
of the Company's receivables portfolio.
The credit scoring system contrasts the quality of credit applicant profiles
resulting in a statistical assessment of the most predictive characteristics.
Factors considered in any loan application include data presented on the
application, the credit bureau report and the type of loan the applicant
wishes to secure. Specifically, the credit scoring system considers customer
residential and employment stability, the customer's financial history,
current financial capacity, integrity of meeting historical financial
obligations, loan structure and credit bureau information. The scorecard
takes these factors into account and produces a statistical assessment of
these attributes. This assessment is used to segregate applicant risk
profiles and determine whether risk is acceptable and the price the Company
should charge for that risk. The credit scorecard is validated on a monthly
basis through the comparison of actual versus projected performance by score.
The Company will continue to refine its proprietary scorecards based on
increased information and identified correlations relating to receivables
performance.
Through the use of the Company's proprietary credit scoring system, branch
office personnel with credit authority are able to more efficiently review
and prioritize loan applications. Applications which receive a high score
are processed rapidly and credit decisions can be quickly faxed back to the
dealer. Applications receiving low scores can be quickly rejected without
further processing and review by the Company. This ability to prioritize
applications allows for a more effective allocation of resources to those
applications requiring more review.
DECENTRALIZED LOAN APPROVAL PROCESS. The Company purchases individual
contracts through its branch offices based on a decentralized credit approval
process tailored to local market conditions. Each branch manager has a
specific credit authority based upon his experience and historical loan
portfolio results as well as established credit scoring parameters. In
certain markets where a branch office is not present, contracts are purchased
through the Company's central purchasing office located in the Dallas-Fort
Worth area, which underwrites applications solicited by marketing
representatives in those markets. Although the credit approval process is
decentralized, all credit decisions are guided by the Company's credit
scoring strategies, overall credit and underwriting policies and procedures
and daily monitoring process.
Loan application packages completed by prospective obligors are received via
facsimile at the branch offices from dealers. Application data are entered
8
into the Company's automated application processing system. A credit bureau
report is automatically generated and a credit score is computed. Branch
office personnel with credit authority review the application package and
determine whether to approve the application, approve the application subject
to conditions that must be met or deny the application. These personnel
consider many factors in arriving at a credit decision, relying primarily on
the applicant's credit score, but also taking into account the applicant's
capacity to pay, stability, character and intent to pay, the contract terms
and collateral value. The Company estimates that approximately 60% to 65% of
applicants are denied credit by the Company typically because of their credit
histories or because their income levels are not sufficient to support the
proposed level of monthly payments. As part of the credit decision process,
a customer service representative investigates the residence, employment and
credit history of the applicant. Dealers are contacted regarding credit
decisions by telefax and/or telephone. Declined and conditioned applicants
are also provided with appropriate notification of the decision.
The Company's underwriting and collateral guidelines as well as credit
scoring parameters form the basis for the branch level credit decision;
however, the qualitative judgment of the branch office personnel with credit
authority with respect to the credit quality of an applicant is a significant
factor in the final credit decision. Exceptions to credit policies and
authorities must be approved by a regional vice president or other designated
credit officer.
Completed loan packages are sent by the dealers to the branch office. Loan
terms and insurance coverages are generally reverified with the consumer by
branch office personnel and the loan packages are forwarded to the Company's
centralized loan services department, where the packages are scanned to
create electronic copies. Key original documents are stored in a fire-proof
vault and the loan packages are further processed in an electronic
environment. The loans are reviewed for proper documentation and regulatory
compliance and are entered into the Company's loan accounting system. Daily
loan reports are generated for final review by senior operations management.
Once cleared for funding, the loan services department issues a check or
electronically transfers funds to the dealer. Upon funding of the contract,
the Company acquires a perfected security interest in the automobile that was
financed. All of the Company's contracts are fully amortizing with
substantially equal monthly installments.
SERVICING AND COLLECTIONS PROCEDURES. The Company services its receivables
portfolio at facilities located in Fort Worth, Texas, Tempe, Arizona and
Charlotte, North Carolina utilizing centralized data processing, billing and
collection functions. The Company's servicing activities consist of
collecting and processing customer payments, responding to customer
inquiries, initiating contact with customers who are delinquent in payment of
a receivable installment, maintaining the security interest in the financed
vehicle and repossessing and liquidating collateral when necessary. The
9
Company utilizes various automated systems to support its servicing and
collections activities. The Company uses monthly billing statements to serve
as a reminder to customers as well as an early warning mechanism in the event
a customer has failed to notify the Company of an address change.
Approximately 15 days before a customer's first payment due date and each
month thereafter, the Company mails the customer a billing statement
directing the customer to mail payments to a lockbox bank for deposit in a
lockbox account. Payment receipt data is electronically transferred from the
Company's lockbox bank to the Company for posting to the loan accounting
system. Payments may also be received directly by the Company from customers.
All payment processing and customer account maintenance is performed
centrally in Fort Worth, Texas by the loan services department. The Company
receives servicing fees for servicing securitized receivables equal to 2.25%
to 2.50% per annum of the outstanding principal balance of such receivables.
The Company maintains computerized records with respect to each finance
contract to record receipts and disbursements and to prepare related reports.
The Company utilizes a predictive dialing system to make phone calls to
customers whose payments are past due by less than 30 days. The predictive
dialer is a computer-controlled telephone dialing system which dials phone
numbers of customers from a file of records extracted from the Company's
database. Once a live voice responds to the automated dialer's call, the
system automatically transfers the call to a collector and the relevant
account information to the collector's computer screen. The system also
tracks and notifies collections management of phone numbers that the system
has been unable to reach within a specified number of days, thereby promptly
identifying for management all customers who cannot be reached by telephone.
By eliminating time wasted on attempting to reach customers, the system gives
a single collector the ability to speak with a larger number of accounts
daily.
Once an account becomes more than 30 days delinquent, the account moves to
the Company's mid-range collection unit. The objective of these collectors
is to prevent the account from becoming further delinquent. After a
scheduled payment on an account becomes approximately 60 days past due, the
Company typically initiates repossession of the financed vehicle. However,
if an account is deemed uncollectible, if the financed vehicle is deemed by
collection personnel to be in danger of being damaged, destroyed or hidden,
if the customer deals in bad faith or if the customer voluntarily surrenders
the financed vehicle, the Company may repossess it without regard to the
length of payment delinquency.
Payment deferrals are at times offered to customers who have encountered
temporary financial difficulty, hindering their ability to pay as contracted,
and when other methods of assisting the customer in meeting the contract
terms and conditions have been exhausted. A deferral allows the customer to
move a delinquent payment to the end of the loan by paying a fee
(approximately the
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interest portion of the payment deferred). The collector must review the
past payment history and assess the customer's desire and capacity to make
future payments and, before agreeing to a deferral, must comply with the
Company's policies and guidelines for deferrals. Exceptions to the Company's
policies and guidelines for deferrals must be approved by a collections
officer. Deferment transactions are processed by the loan services
department. As of June 30, 1997, approximately 10% of the Company's managed
receivables had received a deferral.
REPOSSESSIONS. The Company follows prescribed legal procedures for
repossessions, which include peaceful repossession, one or more consumer
notifications, a prescribed waiting period prior to disposition of the
repossessed automobile and return of personal items to the consumer. In some
jurisdictions, the Company must provide the consumer with reinstatement or
redemption rights. Legal requirements, particularly in the event of
bankruptcy, may restrict the Company's ability to dispose of the repossessed
vehicle. Repossessions are handled by independent repossession firms engaged
by the Company. Repossessions must be approved by a collections officer.
Upon repossession and after any prescribed waiting period, the repossessed
automobile is sold at auction. The Company does not sell any vehicles on a
retail basis. The proceeds from the sale of the automobile at auction, and
any other recoveries, are credited against the balance of the contract.
Auction proceeds from sale of the repossessed vehicle and other recoveries
are usually not sufficient to cover the outstanding balance of the contract,
and the resulting deficiency is charged-off. The Company may pursue
collection of deficiencies when it deems such action to be appropriate.
CHARGE-OFF POLICY. The Company's policy is to charge-off an account in the
month in which the account becomes 180 days contractually delinquent even if
the Company has not repossessed the related vehicle. On accounts less than
180 days delinquent, the Company charges-off the account when the vehicle
securing the delinquent contract is repossessed and disposed of. The
charge-off represents the difference between the actual net sales proceeds
and the amount of the delinquent contract, including accrued interest.
Accrual of finance charge income is suspended on accounts which are more than
60 days contractually delinquent.
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RISK MANAGEMENT. The Company has developed procedures to evaluate and
supervise the operations of each branch office on a centralized basis. The
Company's centralized risk management department is responsible for
monitoring the contract purchase process and supporting the supervisory role
of senior operations management. This department tracks via databases key
variables, such as loan applicant data, credit bureau and credit score
information, loan structures and terms and payment histories. The risk
management department also regularly reviews the performance of the Company's
credit scoring system and is involved with third-party vendors in the
development and enhancement of credit scorecards for the Company.
The risk management department also prepares regular credit indicator
packages reviewing portfolio performance at various levels of detail
including total Company, branch office and dealer. Various daily reports and
analytical data are also generated by the Company's management information
systems. This information is used to monitor credit quality as well as to
constantly refine the structure and mix of new contract purchases. Portfolio
returns are reviewed on a consolidated basis, as well as at the branch
office, dealer and contract levels.
A behavioral scoring model is used to project the relative probability that
an individual account will default and to validate the credit scoring system
after the receivable has aged for a sufficient period time (generally six to
nine months). Default probabilities are calculated for each account
independent of the credit score. The Company believes that, when grouped by
credit score at origination, projected default rates from the behavioral
scoring model coincide with the credit scoring system.
The value of the collateral underlying the Company's receivables portfolio is
updated monthly with a loan-by-loan link to national wholesale auction
values. This data, along with the Company's own experience relative to
mileage and vehicle condition, are used for evaluating collateral disposition
activities as well as for reserve analysis models.
The Company's risk management department conducts regular compliance audits
of branch office operations and the loan services and collections
departments. The primary objective of the audits is to measure compliance
with the Company's written policies and procedures as well as regulatory
matters. Audits of branch office operations are conducted no less than every
six months and include a review of compliance with underwriting policies,
completeness of loan documentation, assessment of collateral value and extent
of applicant data investigation. Written audit reports are distributed to
local branch office personnel and the regional vice presidents for response
and follow-up. Senior operations management reviews copies of these reports.
SECURITIZATION OF LOANS. Since December 1994, the Company has pursued a
strategy of securitizing its receivables to diversify its funding, improve
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liquidity and obtain a cost-effective source of funds for the purchase of
additional automobile finance contracts. The Company applies the net
proceeds from securitizations to pay down borrowings under its bank line of
credit, thereby increasing availability thereunder for further contract
purchases. Through June 30, 1997, the Company had securitized approximately
$1.3 billion of automobile receivables.
In its securitizations, the Company, through a wholly-owned subsidiary,
transfers automobile receivables to newly-formed securitization trusts, which
issue one or more classes of asset-backed securities. The asset-backed
securities are simultaneously sold to investors, except for certain
subordinated interests which may be retained by wholly-owned subsidiaries of
the Company and which are included in excess servicing receivable in the
Company's consolidated financial statements.
When receivables are transferred to securitization trusts in securitization
transactions, the Company recognizes a gain on sale of receivables and
continues to service such receivables. The gain on sale of receivables
represents the difference between the sales proceeds, net of transaction
costs, and the Company's net carrying value of the receivables sold, plus the
present value of estimated excess cash flows. The excess cash flows are the
difference between the cash collected from obligors on securitized
receivables and the sum of (i) principal and interest paid to investors in
the asset-backed securities; (ii) contractual servicing fees; (iii) defaults,
net of recoveries; and (iv) other expenses such as trustee fees and financial
guarantee insurance premiums. Concurrently with recognizing such gain on
sale of receivables, the Company records a corresponding asset, excess
servicing receivable, which includes the present value of estimated excess
cash flows as described above plus any subordinated interests in the
securitization trusts retained by the Company.
The calculation of excess servicing receivable includes estimates of future
losses and prepayment rates for the remaining term of the receivables sold
since these factors impact the amount and timing of future cash collected on
the receivables sold. The carrying value of excess servicing receivable is
reviewed quarterly by the Company on a disaggregated basis by trust. If
future losses and prepayment rates exceed the Company's original estimates,
excess servicing receivable will be adjusted through a charge to operations.
Through June 30, 1997, no such charge has been made. Favorable credit loss
and prepayment experience compared to the Company's original estimates would
result in additional income when realized.
In connection with the Company's securitization program, the Company arranges
for credit enhancement to achieve a desired credit rating on the asset-backed
securities issued. The credit enhancement for the Company's securitizations
has taken the form of financial guaranty insurance policies issued by
Financial Security Assurance Inc. ("FSA"), a monoline insurer, which insures
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the timely payment of principal and interest due on the asset-backed
securities. As of June 30, 1997, FSA had insured all the Company's asset
backed securities. The Company has limited reimbursement obligations to FSA;
however, credit enhancement requirements, including FSA's encumbrance of
certain restricted cash accounts and subordinated interests in trusts,
provide a source of funds to cover shortfalls in collections (as described
below) and to reimburse FSA for any claims which may be made under the
policies issued with respect to the Company's securitizations.
The credit enhancement requirements for any securitization include restricted
cash accounts which are generally established with an initial deposit and
subsequently funded through excess cash flows from securitized receivables.
Funds are withdrawn from the restricted cash accounts to cover any shortfalls
in amounts payable on the asset-backed securities. Funds are also available
to be withdrawn in an event of default to reimburse FSA for draws on its
financial guaranty insurance policy. In addition, the restricted cash
account for each securitization trust is cross-collateralized to the
restricted cash accounts established in connection with the Company's other
securitization trusts, such that excess cash flow from a performing
securitization trust insured by FSA may be used to support cash flow
shortfalls from a non-performing securitization trust insured by FSA, thereby
further restricting excess cash flow available to the Company. The Company
is entitled to receive amounts from the restricted cash accounts to the
extent the amounts deposited exceed predetermined required minimum levels.
FSA has taken a pledge of the stock of AFS Funding Corp., the wholly-owned
subsidiary of the Company that owns the restricted cash accounts and excess
servicing receivable, such that, if the pledge is exercised in the event of a
payment under one of its insurance policies or certain material adverse
changes in the business of the Company, FSA would control all of the
restricted cash accounts and excess servicing receivable. The terms of each
securitization also provide that, under certain tests relating to
delinquencies, defaults and losses, cash may be retained in the restricted
cash account and not released to the Company until increased minimum levels
of credit enhancement requirements have been reached.
TRADE NAMES. The Company has obtained federal trademark protection for the
"AmeriCredit" name and the logo that incorporates the "AmeriCredit" name.
COMPETITION. Competition in the field of sub-prime automobile finance is
intense. The automobile finance market is highly fragmented and is served by
a variety of financial entities including the captive finance affiliates of
major automotive manufacturers, banks, thrifts, credit unions and independent
finance companies. Many of these competitors have greater financial
resources and lower costs of funds than the Company. Many of these
competitors also have long standing relationships with automobile dealerships
and may offer dealerships or their customers other forms of financing,
including dealer
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floor plan financing and leasing, which are not provided by the Company.
Additionally, several independent companies have completed initial public
offerings during the last few years in order to fund growth. Providers of
automobile financing have traditionally competed on the basis of interest
rates charged, the quality of credit accepted, the flexibility of loan terms
offered and the quality of service provided to dealers and customers. In
seeking to establish itself as one of the principal financing sources at the
dealers it serves, the Company competes predominately on the basis of its
high level of dealer service and strong dealer relationships and by offering
flexible loan terms. The Company also seeks to offer rates that are
competitive and that are consistent with its goal of balancing risk and
returns.
REGULATION. The Company's operations are subject to regulation, supervision
and licensing under various federal, state and local statues, ordinances and
regulations.
In most states in which the Company operates, a consumer credit regulatory
agency regulates and enforces laws relating to consumer lenders and sales
finance agencies such as the Company. Such rules and regulations generally
provide for licensing of sales finance agencies, limitations on the amount,
duration and charges, including interest rates, for various categories of
loans, requirements as to the form and content of finance contracts and other
documentation and restrictions on collection practices and creditors' rights.
In certain states, the Company's branch offices are subject to periodic
examination by state regulatory authorities. Some states in which the
Company operates do not require special licensing or provide extensive
regulation of the Company's business.
The Company is also subject to extensive federal regulation, including the
Truth in Lending Act, the Equal Credit Opportunity Act and the Fair Credit
Reporting Act. These laws require the Company to provide certain disclosures
to prospective borrowers and protect against discriminatory lending practices
and unfair credit practices. The principal disclosures required under the
Truth in Lending Act include the terms of repayment, the total finance charge
and the annual percentage rate charged on each loan. The Equal Credit
Opportunity Act prohibits creditors from discriminating against loan
applicants on the basis of race, color, sex, age or marital status. Pursuant
to Regulation B promulgated under the Equal Credit Opportunity Act, creditors
are required to make certain disclosures regarding consumer rights and advise
consumers whose credit applications are not approved of the reasons for the
rejection. In addition, the credit scoring system used by the Company must
comply with the requirements for such a system as set forth in the Equal
Credit Opportunity Act and Regulation B. The Fair Credit Reporting Act
requires the Company to provide certain information to consumers whose credit
applications are not approved on the basis of a report obtained from a
consumer reporting agency.
15
The dealers who originate automobile loans purchased by the Company also must
comply with both state and federal credit and trade practice statutes and
regulations. Failure of the dealers to comply with such statutes and
regulations could result in consumers having rights of rescission and other
remedies that could have an adverse effect on the Company.
Management believes that the Company maintains all material licenses and
permits required for its current operations and is in substantial compliance
with all applicable local, state and federal regulations. There can be no
assurance, however, that the Company will be able to maintain all requisite
licenses and permits and the failure to satisfy those and other regulatory
requirements could have a material adverse effect on the operations of the
Company. Further, the adoption of additional, or the revision of existing,
rules and regulations could have a material adverse effect on the Company's
business.
As a consumer finance company, the Company is subject to various consumer
claims and litigation seeking damages and statutory penalties based upon,
among other theories of liability, usury, 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.
Management believes that the Company has taken prudent steps to address the
litigation risks associated with its business activities. However, there can
be no assurance that the Company will be able to successfully defend against
all such consumer 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 indirect automobile finance business.
HOME EQUITY LOAN OPERATIONS
In November 1996, the Company acquired all of the issued and outstanding
stock of AMS in consideration for 400,000 shares of the Company's common
stock. AMS originates and acquires sub-prime home equity loans through a
network of mortgage brokers. AMS sells its home equity loans and the related
servicing rights in the wholesale markets.
While not currently representing a material portion of the Company's assets
or revenues, management intends over time to devote substantial resources to
pursue growth of AMS's business of originating home equity loans to sub-prime
borrowers. There can be no assurance, however, that the Company will be able
to successfully expand such business or that the failure to effectively
expand such business will not have a material adverse effect on the Company's
financial position, liquidity or results of operations.
16
RISK FACTORS
DEPENDENCE ON CREDIT FACILITIES. The Company depends on credit facilities
with financial institutions to finance its purchase of contracts pending
securitization. At June 30, 1997, the Company has a credit facility (the
"Credit Agreement") with various banks providing for revolving credit
borrowings of up to $240 million, subject to a defined borrowing base. The
Credit Agreement matures in October 1997. The Company's ability to execute
its business strategy may require increases in the level of warehouse
financing resources. There can be no assurance that such financing resources
will continue to be available to the Company on reasonable terms or at all.
To the extent that the Company is unable to extend or replace the Credit
Agreement, and arrange new credit or warehouse facilities, the Company would
have to curtail its contract purchasing activities, which would have a
material adverse effect on the Company's financial position, liquidity and
results of operations.
The Credit Agreement contains certain restrictions and covenants and requires
the Company to maintain specified financial ratios and satisfy certain
financial tests. A breach of any of these convenants could result in an
event of default under the Credit Agreement. Upon the occurrence of an event
of default under the Credit Agreement, the lenders thereunder could elect to
declare all amounts outstanding under the Credit Agreement, including accrued
interest or other obligations, to be immediately due and payable and/or
restrict the Company's ability to obtain additional borrowings under the
Credit Agreement. The Company's ability to meet those financial ratios and
tests can be affected by events beyond its control, and there can be no
assurance that the Company will meet those financial ratios and tests.
DEPENDENCE ON SECURITIZATION PROGRAM. Since December 1994, the Company has
relied upon its ability to aggregate and sell receivables in the asset-backed
securities market to generate cash proceeds for repayment of credit
facilities and to purchase additional contracts from automobile dealers.
Further, gains on sales generated by the Company's securitizations represent
a significant portion of the Company's revenues. The Company endeavors to
effect securitizations of its receivables on at least a quarterly basis.
Accordingly, adverse changes in the Company's asset-backed securities program
or in the asset-backed securities market for automobile receivables generally
could materially adversely affect the Company's ability to purchase and
resell loans on a timely basis and upon terms reasonably favorable to the
Company. Any delay in the sale of receivables beyond a quarter-end would
eliminate the gain on sale in the given quarter and adversely affect the
Company's reported earnings for such quarter. Any such adverse changes or
delays would have a material adverse effect on the Company's financial
position, liquidity and results of operations.
17
DEPENDENCE ON CREDIT ENHANCEMENT. To date, all of the Company's
securitizations have utilized credit enhancement in the form of financial
guaranty insurance policies issued by FSA in order to achieve "AAA/Aaa"
ratings on the asset-backed securities issued by the securitization trusts.
FSA is not required to insure Company-sponsored securitizations and there can
be no assurance that it will continue to do so or that future
Company-sponsored securitizations will be similarly rated. Likewise, the
Company is not required to utilize financial guaranty insurance policies
issued by FSA or any other form of credit enhancement in connection with its
securitizations. A downgrading of FSA's credit rating or FSA's withdrawal of
credit enhancement could result in higher interest costs for future
Company-sponsored securitizations. Such events could have a material adverse
effect on the Company's financial position, liquidity and results of
operations.
LIQUIDITY AND CAPITAL NEEDS. The Company requires substantial amounts of
cash to fund its contract purchase and securitization activities. Although
the Company recognizes a gain on the sale of receivables upon the closing of
a securitization, it typically receives the cash representing such gain over
the actual life of the receivables securitized. The Company also incurs
significant transaction costs in connection with a securitization and incurs
both current and deferred tax liabilities as a result of the gains on sale.
Accordingly, the Company's strategy of securitizing substantially all of its
newly purchased receivables and increasing the number of contracts purchased
will require substantial amounts of cash.
The Company expects to continue to require substantial amounts of cash as the
volume of the Company's contract purchases increases and its securitization
program grows. The Company's primary cash requirements include the funding
of: (i) contract purchases pending their securitization and sale; (ii) credit
enhancement requirements in connection with the securitization and sale of
the receivables; (iii) interest and principal payments under the Credit
Agreement and other indebtedness; (iv) fees and expenses incurred in
connection with the securitization of receivables and the servicing of such
receivables; (v) ongoing operating expenses; and (vi) income tax payments due
on receipt of excess cash flows from securitization trusts.
The Company's primary sources of liquidity in the future are expected to be
existing cash, borrowings under its Credit Agreement, the implementation of
other warehouse financing facilities, sales of automobile receivables through
securitizations, excess cash flow received from securitization trusts and,
subject to capital market conditions, issuances of other debt or equity
securities.
The Company's primary sources of liquidity as described in the paragraph
above are expected to be sufficient to fund the Company's liquidity
requirements for the year ended June 30, 1998 if the Company's future
operations are consistent with management's current growth expectations.
However, because the Company
18
expects to continue to require substantial amounts of cash for the
foreseeable future, it anticipates that it will need to effect debt or equity
financings regularly, in addition to quarterly securitizations. The type,
timing and terms of financing selected by the Company will be dependent upon
the Company's cash needs, the availability of other financing sources and the
prevailing conditions in the financial markets. There can be no assurance
that any such sources will be available to the Company at any given time or
as to the favorableness of the terms on which such sources may be available.
LEVERAGE. The Company currently has substantial outstanding indebtedness and
is significantly leveraged. The Company's ability to make payments of
principal or interest on, or to refinance its indebtedness will depend on its
future operating performance, and its ability to effect additional
securitizations and debt and/or equity financings, which to a certain extent
is subject to economic, financial, competitive and other factors beyond its
control. If the Company is unable to generate sufficient cash flow in the
future to service its debt, it may be required to refinance all or a portion
of its existing debt, or to obtain additional financing. There can be no
assurance that any such refinancing would be possible or that any additional
financing could be obtained. The inability to obtain additional financing
could have a material adverse effect on the Company.
The degree to which the Company is leveraged creates substantial risks
including: (i) the Company may be more vulnerable to adverse general economic
and industry conditions; (ii) the Company may find it more difficult to
obtain additional financing for future working capital, capital expenditures,
acquisitions, general corporate purposes or other purposes; and (iii) the
Company will have to dedicate a substantial portion of the Company's cash
resources to the payment of principal and interest on indebtedness
outstanding thereby reducing the funds available for operations and future
business opportunities. In addition, the Credit Agreement and Indenture
pursuant to which the Company's 9 1/4% Senior Notes were issued contain
certain convenants which could limit the Company's operating and financial
flexibility.
DEFAULT AND PREPAYMENT RISKS. The Company's results of operations, financial
condition and liquidity depend, to a material extent, on the performance of
contracts purchased and held by the Company prior to their sale in a
securitization transaction as well as the subsequent performance of
receivables sold to securitization trusts. A portion of the loans purchased
by the Company may default or prepay during the period prior to their sale in
a securitization transaction or if they remain owned by the Company. The
Company bears the full risk of losses resulting from payment defaults during
such period. In the event of a payment default, the collateral value of the
financed vehicle may not cover the outstanding loan balance and costs of
recovery. The Company maintains an allowance for losses on loans held by the
Company, which reflects management's estimates of anticipated losses for such
loans. If the allowance is inadequate, then the Company would recognize as
an
19
expense the losses in excess of such allowance and results of operations
could be adversely affected. In addition, under the terms of the Credit
Agreement, the Company is not able to borrow against defaulted loans and
loans greater than 30 days delinquent held by the Company.
The Company also retains a substantial portion of the default and prepayment
risk associated with the receivables that it sells pursuant to
Company-sponsored securitizations. A large component of the gain recognized
on such sales and the corresponding asset recorded on the Company's balance
sheet is excess servicing receivable which is based on the present value of
estimated future excess cash flows from the securitized receivables which
will be received by the Company. Accordingly, excess servicing receivable is
calculated on the basis of management's assumptions concerning, among other
things, defaults and prepayments. Actual defaults and prepayments may vary
from management's assumptions, possibly to a material degree. In addition,
the Company is required to deposit substantial amounts of the cash flows
generated by its interests in Company sponsored securitizations ("restricted
cash") into spread accounts which are pledged to FSA as security for any
amounts which may be paid out by FSA on financial guarantee insurance
policies.
The Company regularly measures its default, prepayment and other assumptions
against the actual performance of securitized receivables. If the Company
were to determine, as a result of such regular review or otherwise, that it
underestimated defaults and/or prepayments, or that any other material
assumptions were inaccurate, the Company would be required to adjust the
carrying value of its excess servicing receivable by making a charge to
income and writing down the carrying value of excess servicing receivable on
its balance sheet. Future cash flows from securitization trusts may also be
less than expected and the Company's results of operations and liquidity
would be adversely affected, possibly to a material degree. In addition, an
increase in prepayments and defaults would reduce the size of the Company's
servicing portfolio which would reduce the Company's servicing fee income,
further adversely affecting results of operations and cash flow. A
write-down of excess servicing receivable and the corresponding decreases in
earnings and cash flow could limit the Company's ability to service debt and
to affect future securitizations and other financings. To date, no such
write downs have been required. Although the Company believes that it has
made reasonable assumptions as to the future cash flows of the various pools
of receivables that have been sold in securitization transactions, actual
rates of default or prepayment may differ from those assumed and other
assumptions may be required to be revised upon future events.
PORTFOLIO PERFORMANCE; NEGATIVE IMPACT ON CASH FLOWS; RIGHT TO TERMINATE
NORMAL SERVICING. Generally, the form of credit enhancement agreement
entered into in connection with securitization transactions contains
specified limits on the delinquency, default and loss rates on the
receivables included in each
20
trust. If, at any measurement date, the delinquency, default or loss rate
with respect to any trust were to exceed the specified limits, provisions of
the credit enhancement agreement would automatically increase the level of
credit enhancement requirements for that trust. During the period in which
the specified delinquency, default or loss rate was exceeded, excess cash
flow, if any, from the trust would be used to fund the increased credit
enhancement levels instead of being distributed to the Company, which would
have an adverse effect on the Company's cash flow. Further, the credit
enhancement requirements for each securitization trust are
cross-collateralized to the credit enhancement requirements established in
connection with each of the Company's other securitization trusts, such that
excess cash flow from a performing securitization trust insured by FSA may be
used to support increased credit enhancement requirements for a
non-performing securitization trust insured by FSA, thereby further
restricting excess cash flow available to the Company. The Company has
periodically exceeded these specified limits; however, FSA waived these
occurrences. There can be no assurance that FSA would waive any such future
occurrences.
The credit enhancement agreements entered into in connection with
securitization transactions contain additional specified limits on the
delinquency, default and loss rates on the receivables included in each trust
which are higher than the limits referred to in the preceding paragraph. If,
at any measurement date, the delinquency, default or loss rate with respect
to any trust were to exceed these additional specified limits applicable to
such trust, provisions of the credit enhancement agreements permit FSA to
terminate the Company's servicing rights with respect to the receivables sold
to that trust. In addition, the servicing agreements are cross-defaulted so
that a default under one servicing agreement would allow FSA to terminate the
Company's servicing rights under all of its servicing agreements. Although
the Company has never exceeded such delinquency, default or loss rates, there
can be no assurance that the Company's servicing rights with respect to the
automobile receivables in such trusts, or any other trust which exceeds the
specified limits in future periods, will not be terminated. FSA has other
rights to terminate the Company as servicer if (i) the Company were to breach
its obligations under the servicing agreements, (ii) FSA was required to make
payments under its policy or (iii) certain bankruptcy or insolvency events
were to occur. As of June 30, 1997, no such termination events have occurred
with respect to any of the trusts formed by the Company.
21
IMPLEMENTATION OF BUSINESS STRATEGY. The Company's financial position and
results of operations depend on its ability to execute its business strategy.
Execution of such business strategy is dependent on the Company's ability to
obtain substantial additional financing, expand its automobile finance branch
network, attract and retain skilled employees and on the ability of its
officers and key employees to manage growth successfully. The failure or
inability of the Company to execute its business strategy could materially
adversely affect its financial position, liquidity and results of operations.
The Company's business strategy also includes leveraging its expertise to
broaden its indirect lending to sub-prime borrowers through the purchase of
AMS. While not currently representing a material portion of the Company's
assets or revenues, management intends over time to devote substantial
resources to pursue growth of AMS's business of originating home equity loans
to sub-prime borrowers. The conduct of a mortgage finance business requires
a substantial amount of cash. The Company has no prior experience in the
home equity mortgage business. Further, AMS's business will require
substantial additional resources to fund growth. There can be no assurance
that the Company will be able to successfully implement its sub-prime home
equity loan business strategy. The failure to effectively implement such
strategy or to obtain adequate resources to fund AMS's growth will have
material adverse effects on the Company's financial position, liquidity and
results of operations.
CREDIT-IMPAIRED BORROWERS. The Company specializes in purchasing,
securitizing and servicing sub-prime receivables. Sub-prime borrowers are
associated with higher-than-average delinquency and default rates. While the
Company believes that it effectively manages such risks with its proprietary
credit scoring system, risk-based loan pricing and other underwriting
policies and collection methods, no assurance can be given that such criteria
or methods will be effective in the future. In the event that the Company
underestimates the default risk or under-prices contracts that it purchases,
the Company's financial position, liquidity and results of operations would
be adversely affected, possibly to a material degree.
ECONOMIC CONDITIONS. Delinquencies, defaults, repossessions and losses
generally increase during periods of economic recession. Such periods also
may be accompanied by decreased consumer demand for automobiles and declining
values of automobiles securing outstanding loans, thereby weakening
collateral coverage and increasing the possibility of a loss in the event of
default. Significant increases in the inventory of used automobiles during
periods of economic recession may also depress the prices at which
repossessed automobiles may be sold or delay the timing of such sales.
Because the Company focuses on sub-prime borrowers, the actual rates of
delinquencies, defaults, repossessions and losses on such loans could be
higher than those experienced in the general automobile finance industry and
could be more dramatically affected by a general economic downturn. In
addition, during an
22
economic slowdown or recession, the Company' servicing costs may increase
without a corresponding increase in its servicing fee income. While the
Company believes that the underwriting criteria and collection methods it
employs enable it to manage the higher risk inherent in loans made to
sub-prime borrowers, no assurance can be given that such criteria or methods
will afford adequate protection against such risks. Any sustained period of
increased delinquencies, defaults, repossessions or losses or increased
servicing costs could also adversely affect the Company's ability to complete
future securitizations and correspondingly, its financial position, liquidity
and results of operations.
INTEREST RATES. The Company's profitability may be directly affected by the
level of and fluctuations in interest rates, which affect the Company's
ability to earn a gross interest rate spread between the rate charged
consumers and the rate paid on its indebtedness. As interest rates rise, the
Company would have to increase the rates charged on new contract purchases in
order to preserve the gross interest rate spread. However, the rates on many
of the contracts purchased by the Company are already are at or near the
statutory maximums, affording the Company limited opportunity to pass on any
increased interest costs. Furthermore, the Company's future gains recognized
upon the securitization of automobile receivables will also be affected by
interest rates. The Company recognizes a gain in connection with its
securitizations based upon the estimated present value of projected future
excess cash flows from the securitization trusts, which is largely dependent
upon the gross interest rate spread. The Company believes that its
profitability and liquidity would be adversely affected during any period of
higher interest rates, possibly to a material degree. The Company monitors
the interest rate environment and employs pre-funding or other hedging
strategies designed to mitigate the impact of changes in interest rates.
COMPETITION. Reference should be made to Item 1. "Business - Indirect
Automobile Finance Operations - Competition" for a discussion of competitive
risk factors.
REGULATION. Reference should be made to Item 1. "Business - Indirect
Automobile Finance Operations - Regulation" for a discussion of regulatory
risk factors.
EMPLOYEES
At June 30, 1997, the Company employed approximately 900 persons.
23
EXECUTIVE OFFICERS
The following sets forth certain data concerning the executive officers of
the Company, all of whom are elected on an annual basis.
NAME AGE POSITION
---- --- --------
Clifton H. Morris, Jr. 62 Chairman of the Board and Chief Executive Officer
Michael R. Barrington 38 Vice Chairman, President and Chief Operating
Officer
Daniel E. Berce 43 Vice Chairman and Chief Financial Officer
Edward H. Esstman 56 Executive Vice President - Auto Finance Division;
President of AFSI
Chris A. Choate 34 Senior Vice President, General Counsel and
Secretary
Cheryl L. Miller 33 Senior Vice President, Director of Collections
and Customer Service of AFSI
Michael T. Miller 36 Senior Vice President and Chief Credit Officer
Preston A. Miller 33 Senior Vice President and Treasurer
CLIFTON H. MORRIS, JR. has been Chairman of the Board and Chief Executive
Officer of the Company since May 1988, and was also President of the Company
from such date until April 1991 and from April 1992 to November 1996. Mr.
Morris is also a director of Service Corporation International, a publicly
held company which owns and operates funeral homes and related businesses.
MICHAEL R. BARRINGTON has been Vice Chairman, President and Chief Operating
Officer of the Company since November 1996 and was Executive Vice President
and Chief Operating Officer of the Company from November 1994 until November
1996. Mr. Barrington was a Vice President of the Company from May 1991 until
November 1994. From its formation in July 1992 until November 1996, Mr.
Barrington was also the President and Chief Operating Officer of AFSI.
24
DANIEL E. BERCE has been Vice Chairman and Chief Financial Officer of the
Company since November 1996 and was Executive Vice President, Chief Financial
Officer and Treasurer of the Company from November 1994 until November 1996.
Mr. Berce was Vice President, Chief Financial Officer and Treasurer of the
Company from May 1991 until November 1994.
EDWARD H. ESSTMAN has been President and Chief Operating Officer of AFSI
since November 1996. Mr. Esstman was Executive Vice President, Director of
Consumer Finance Operations of AFSI from November 1994 until November 1996
and was Senior Vice President, Director of Consumer Finance of AFSI from
AFSI's formation in July 1992 until November 1994. Mr. Esstman has also been
Executive Vice President - Auto Finance Division of the Company since
November 1996 and Senior Vice President and Chief Credit Officer of the
Company from November 1994 until November 1996.
CHRIS A. CHOATE has been Senior Vice President, General Counsel and Secretary
of the Company since November 1996 and was Vice President, General Counsel
and Secretary of the Company from November 1994 until November 1996 and
General Counsel and Secretary of the Company from January 1993 until November
1994. From July 1991 until January 1993, Mr. Choate was Assistant General
Counsel.
CHERYL L. MILLER has been Senior Vice President, Collections and Customer
Service of AFSI since March 1996 and Vice President, Collections and Customer
Service of AFSI from October 1994 until March 1996. From May 1994 until
October 1994, Ms. Miller acted in other management capacities for AFSI.
Prior to that, Ms. Miller was with Ford Motor Credit Company, most recently as
customer service supervisor of the Dallas branch.
MICHAEL T. MILLER has been Senior Vice President and Chief Credit Officer of
the Company since November 1996. Mr. Miller has also been Senior Vice
President, Risk Management, Credit Policy and Planning and Chief of Staff of
AFSI since November 1994 and Vice President, Risk Management, Credit Policy
and Planning of AFSI from AFSI's formation in July 1992 until November 1994.
PRESTON A. MILLER has been Senior Vice President and Treasurer of the Company
since November 1996. Mr. Miller was Vice President and Controller of the
Company from November 1994 until November 1996 and was Controller of the
Company from September 1989 until November 1994.
ITEM 2. PROPERTIES
The Company's executive offices are located at 200 Bailey Avenue, Fort Worth,
Texas, in a 43,000 square foot building purchased by the Company in February
1994. This building is utilized by the Company for branch office support and
administrative activities. The Company also leases 25,000 square feet of
office space in Tempe, Arizona under a ten year agreement with renewal
options that commenced in 1996, 35,000 square feet of office space in
Charlotte, North
25
Carolina under a ten year agreement with renewal options that commenced in
1997 and 37,250 square feet of office space in Fort Worth, Texas under four
year agreements that commenced in 1997. These facilities are used for loan
servicing and collections activities.
The Company's branch office facilities are generally leased under agreements
with original terms of three to five years. Such facilities are typically
located in a suburban office building and consist of between 1,000 and 2,000
square feet of space.
ITEM 3. LEGAL PROCEEDINGS
In the normal course of its business, the Company is named as a defendant in
legal proceedings. These cases include claims for alleged truth-in-lending
violations, nondisclosures, misrepresentations and deceptive trade practices,
among other things. The relief requested by the plaintiffs varies but
includes requests for compensatory, statutory and punitive damages. Two
unrelated proceedings in which the company is a defendant have been brought
as putative class actions and are pending in federal district courts in
Connecticut and Illinois, respectively. Classes have not been certified in
either case and the Company has filed motions to dismiss in both cases which
are presently pending. In the opinion of management, the resolution of these
proceedings will not have a material adverse effect on the consolidated
financial position, results of operations or liquidity of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of the Company's security holders
during the fourth quarter ended June 30, 1997.
26
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company has never paid cash dividends on its common stock. The Company's
Credit Agreement and Indenture pursuant to which its 9 1/4% Senior Notes were
issued contain certain restrictions on the payment of dividends. The Company
presently intends to retain future earnings, if any, for purposes of funding
operations.
Information contained under the caption "Common Stock Data" in the Annual
Report is incorporated herein by reference in further response to this Item 5.
ITEM 6. SELECTED FINANCIAL DATA
Information contained under the caption "Summary Financial and Operating
Information" in the Annual Report is incorporated herein by reference in
response to this Item 6.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Information contained under the caption "Financial Review" in the Annual
Report is incorporated herein by reference in response to this Item 7.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Financial Statements of the Company included in the Annual
Report and information contained under the caption "Quarterly Data" in the
Annual Report are incorporated herein by reference in response to this Item 8.
The payment of principal, premium, if any, and interest on the Company's 9 1/4%
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 9 1/4% Senior
Notes. The Company believes that the condensed consolidating financial
information for the Company, the combined Subsidiary Guarantors and the combined
Non-Guarantor Subsidiaries provide information that is more meaningful in
understanding the financial position of the Subsidiary Guarantors than separate
financial statements of the Subsidiary Guarantors. Therefore, the separate
financial statements of the Subsidiary Guarantors are not deemed material.
27
The following supplementary schedules present consolidating financial
information for (i) the Company (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 as of June 30, 1997 and 1996 and for
the three years in the period ended June 30, 1997.
Investments in subsidiaries are accounted for by the parent company on the
equity method for purposes of the presentation set forth below. 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.
28
AmeriCredit Corp.
Supplementary Information
Consolidating Balance Sheet
June 30, 1997
(Dollars in Thousands)
AmeriCredit
Corp. Guarantors Non-Guarantors Eliminations Consolidated
----------- ---------- -------------- ------------ ------------
ASSETS
Cash and cash equivalents $ 3,988 $ 2,039 $ 6,027
Investment securities $ 6,500 6,500
Finance receivables, net 240,912 25,745 266,657
Excess servicing receivable (777) 12,096 103,057 114,376
Restricted cash 67,895 67,895
Property and equipment, net 136 13,748 13,884
Goodwill 7,260 7,260
Other assets 4,447 5,304 1,103 10,854
Due (to) from affiliates 277,369 (197,656) (79,713)
Investment in affiliates 56,764 $(56,764)
-------- --------- -------- -------- --------
Total assets $344,439 $ 85,652 $120,126 $(56,764) $493,453
-------- --------- -------- -------- --------
-------- --------- -------- -------- --------
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Bank line of credit $71,700 $ 71,700
Mortgage warehouse facility 345 345
Automobile receivables-backed notes $ 23,689 23,689
9 1/4% Senior Notes $125,000 125,000
Notes payable 3,484 33 3,517
Deferred income taxes (8,669) (5,547) 27,520 13,304
Accrued taxes and expenses 8,088 27,987 3,287 39,362
-------- --------- -------- -------- --------
Total liabilities 127,903 94,518 54,496 276,917
-------- --------- -------- -------- --------
Shareholders' equity:
Common stock 333 203 3 $ (206) 333
Additional paid-in capital 203,544 98,336 (98,336) 203,544
Unrealized gain on excess
servicing receivable 2,954 2,954 (2,954) 2,954
Retained earnings (deficit) 33,466 (107,405) 62,673 44,732 33,466
-------- --------- -------- -------- --------
240,297 (8,866) 65,630 (56,764) 240,297
Treasury stock (23,761) (23,761)
-------- --------- -------- -------- --------
Total shareholders' equity 216,536 (8,866) 65,630 (56,764) 216,536
-------- --------- -------- -------- --------
Total liabilities and
shareholders' equity $344,439 $ 85,652 $120,126 $(56,764) $493,453
-------- --------- -------- -------- --------
-------- --------- -------- -------- --------
29
AmeriCredit Corp.
Supplementary Information
Consolidating Balance Sheet
June 30, 1996
(Dollars in Thousands)
AmeriCredit
Corp. Guarantors Non-guarantors Eliminations Consolidated
----------- ---------- -------------- ------------ ------------
ASSETS
Cash and cash equivalents $ (4,913) $ (87) $ 7,145 $ 2,145
Investment securities 6,558 6,558
Finance receivables, net 183,023 67,461 250,484
Excess servicing receivable 16,856 16,237 33,093
Restricted cash 15,304 15,304
Property and equipment, net 83 7,587 7,670
Deferred income taxes 6,360 3,635 9,995
Other assets 1,761 2,221 928 4,910
Due (to) from affiliates 124,527 (106,986) (17,541)
Investment in affiliates 32,320 $(32,320)
-------- -------- -------- --------- --------
Total assets $166,696 $106,249 $ 89,534 $(32,320) $330,159
-------- -------- -------- --------- --------
-------- -------- -------- --------- --------
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Bank line of credit $86,000 $ 86,000
Automobile receivables-backed
notes $67,847 67,847
Notes payable $ 418 418
Accrued taxes and expenses 3,053 9,709 (93) 12,669
-------- -------- -------- --------- --------
Total liabilities 3,471 95,709 67,754 166,934
-------- -------- -------- --------- --------
Shareholders' equity:
Common stock 326 175 3 $ (178) 326
Additional paid-in capital 190,005 112,112 (112,112) 190,005
Retained earnings (deficit) (5,233) (101,747) 21,777 79,970 (5,233)
-------- -------- -------- --------- --------
185,098 10,540 21,780 (32,320) 185,098
Treasury stock (21,873) (21,873)
-------- -------- -------- --------- --------
Total shareholders' equity 163,225 10,540 21,780 (32,320) 163,225
-------- -------- -------- --------- --------
Total liabilities and
shareholders' equity $166,696 $106,249 $ 89,534 $(32,320) $330,159
-------- -------- -------- --------- --------
-------- -------- -------- --------- --------
30
AmeriCredit Corp.
Supplementary Information
Consolidating Statement of Income
Year Ended June 30, 1997
(Dollars in Thousands)
AmeriCredit
Corp. Guarantors Non-Guarantors Eliminations Consolidated
----------- ---------- -------------- ------------ ------------
Revenue:
Finance charge income $ 36,633 $ 8,277 $ 44,910
Gain on sale of receivables $ (855) 2,939 65,172 67,256
Servicing fee income 55,994 4,111 $(39,081) 21,024
Investment income 18,262 147 2,411 (17,911) 2,909
Other income 86 1,344 218 1,648
Equity in income of affiliates 33,374 (33,374)
------- -------- -------- -------- --------
50,867 97,057 80,189 (90,366) 137,747
------- -------- -------- -------- --------
Costs and expenses:
Operating expenses 5,282 83,997 1,717 (39,081) 51,915
Provision for losses 6,595 6,595
Interest expense 5,116 17,202 11,905 (17,911) 16,312
------- -------- -------- -------- --------
10,398 107,794 13,622 (56,992) 74,822
------- -------- -------- -------- --------
Income before income taxes 40,469 (10,737) 66,567 (33,374) 62,925
Provision for income taxes 1,770 (3,217) 25,673 24,226
------- -------- -------- -------- --------
Net income $38,699 $ (7,520) $40,894 $(33,374) $ 38,699
------- -------- -------- -------- --------
------- -------- -------- -------- --------
31
AmeriCredit Corp.
Supplementary Information
Consolidating Statement of Income
Year Ended June 30, 1996
(Dollars in Thousands)
AmeriCredit
Corp. Guarantors Non-Guarantors Eliminations Consolidated
----------- ---------- -------------- ------------ ------------
Revenue:
Finance charge income $32,050 $19,656 $51,706
Gain on sale of receivables 12,449 10,424 22,873
Servicing fee income 26,329 50 $(22,667) 3,712
Investment income $11,395 337 643 (11,300) 1,075
Other income 104 1,489 19 1,612
Equity in income of affiliates 25,914 (25,914)
------- ------- ------- -------- -------
37,413 72,654 30,792 (59,881) 80,978
------- ------- ------- -------- -------
Costs and expenses:
Operating expenses 3,700 41,359 3,289 (22,667) 25,681
Provision for losses 7,912 7,912
Interest expense 371 15,212 8,846 (11,300) 13,129
------- ------- ------- -------- -------
4,071 64,483 12,135 (33,967) 46,722
------- ------- ------- -------- -------
Income before income taxes 33,342 8,171 18,657 (25,914) 34,256
Provision for income taxes 11,751 914 12,665
------- ------- ------- -------- -------
Net income $21,591 $ 7,257 $18,657 $(25,914) $21,591
------- ------- ------- -------- -------
------- ------- ------- -------- -------
32
AmeriCredit Corp.
Supplementary Information
Consolidating Statement of Income
Year Ended June 30, 1995
(Dollars in Thousands)
AMERICREDIT
CORP. GUARANTORS NON-GUARANTORS ELIMINATIONS CONSOLIDATED
----------- ---------- -------------- ------------ ------------
Revenue:
Finance charge income $25,048 $5,201 $30,249
Investment income $12,264 96 224 $(11,300) 1,284
Servicing fee income 844 (844)
Other income 1,019 (1,232) 1,764 1,551
Equity in income of affiliates 1,596 (1,596)
------- ------- ------ -------- -------
14,879 24,756 7,189 (13,740) 33,084
------- ------- ------ -------- -------
Costs and expenses:
Operating expenses 2,627 12,143 847 (844) 14,773
Provision for losses 4,278 4,278
Interest expense 1,532 10,561 3,222 (11,300) 4,015
------- ------- ------ -------- -------
4,159 26,982 4,069 (12,144) 23,066
------- ------- ------ -------- -------
Income before income taxes 10,720 (2,226) 3,120 (1,596) 10,018
Provision for income taxes (18,173) (702) (18,875)
------- ------- ------ -------- -------
Net income $28,893 $(1,524) $3,120 $ (1,596) $28,893
------- ------- ------ -------- -------
------- ------- ------ -------- -------
33
AmeriCredit Corp.
Supplementary Information
Consolidating Statement of Cash Flows
Year Ended June 30, 1997
(Dollars in Thousands)
AMERICREDIT NON-
CORP GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED
----------- ---------- ---------- ------------ ------------
Cash flows from operating activities
Net income $ 38,699 $ (7,520) $ 40,894 $ (33,374) $ 38,699
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 28 2,175 2,203
Provision for losses 6,595 6,595
Deferred income taxes (1,180) (1,912) 27,520 24,428
Gain on sale of auto receivables (64,338) (64,338)
Amortization of excess servicing receivable 4,760 29,633 34,393
Equity in income of affiliates (33,374) 33,374
Changes in assets and liabilities
Other assets 917 (3,083) (175) (2,341)
Accrued taxes and expenses 4,835 18,278 3,380 26,493
--------- --------- --------- --------- ---------
Net cash provided by operating activities 9,925 19,293 36,914 66,132
--------- --------- --------- --------- ---------
Cash flows from investing activities
Purchases of auto receivables (896,711) (814,107) 814,107 (896,711)
Originations of mortgage receivables (53,770) (53,770)
Principal collections and recoveries on
receivables 22,672 41,717 64,389
Net proceeds from sale of auto receivables 814,107 767,571 (814,107) 767,571
Net proceeds from sale of mortgage receivables 52,489 52,489
Purchase of property and equipment (81) (4,430) (4,511)
Proceeds from sales and maturities of investment
securities 58 58
Increase in restricted cash (52,591) (52,591)
Net change in investment in affiliates 25,605 (22,981) (2,624)
--------- --------- --------- --------- ---------
Net cash used by investment activities 25,582 (88,624) (60,034) (123,076)
--------- --------- --------- --------- ---------
Cash flows from financing activities
Borrowings on bank line of credit 745,500 745,500
Payments on bank line of credit (759,800) (759,800)
Net increase in mortgage warehouse facility (2,964) (2,964)
Proceeds from issuance of 9 1/4% Senior Notes 120,894 120,894
Payments on automobile receivables-backed notes (44,158) (44,158)
Payments on notes payable (552) (552)
Purchase of treasury stock (4,387) (4,387)
Proceeds from issuance of common stock 6,293 6,293
Net change in due (to) from affiliates (152,842) 90,670 62,172
--------- --------- --------- --------- ---------
Net cash provided by financing activities (30,594) 73,406 18,014 60,826
--------- --------- --------- --------- ---------
Net increase (decrease) in cash and
cash equivalents 4,913 4,075 (5,106) 3,882
Cash and equivalents at beginning of year (4,913) (87) 7,145 2,145
--------- --------- --------- --------- ---------
Cash and cash equivalents at end of year $ $ 3,988 $ 2,039 $ $ 6,027
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
34
AmeriCredit Corp.
Supplementary Information
Consolidating Statement of Cash Flows
Year Ended June 30, 1996
(Dollars in Thousands)
AmeriCredit Non-
Corp Guarantors Guarantors Eliminations Consolidated
----------- ---------- ---------- ------------ ------------
Cash flows from operating activities
Net income $ 21,591 $ 7,257 $ 18,657 $ (25,914) $ 21,591
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 49 1,479 1,528
Provision for losses 7,912 7,912
Deferred income taxes 14,113 (2,432) 11,681
Gain on sale of auto receivables (12,449) (10,424) (22,873)
Amortization of excess servicing
receivable 6,636 6,636
Equity in income of affiliates (25,914) 25,914
Changes in assets and liabilities
Other assets 362 (1,857) 511 (984)
Accrued taxes and expenses 1,273 8,606 (473) 9,406
-------- --------- --------- --------- ---------
Net cash provided by operating activities 11,474 15,152 8,271 34,897
-------- --------- --------- --------- ---------
Cash flows from investing activities
Purchases of auto receivables (417,235) (115,646) 115,646 (417,235)
Principal collections and recoveries on
receivables 37,894 57,054 94,948
Net proceeds from sale of auto receivables 268,923 115,646 (115,646) 268,923
Purchase of property and equipment 2,536 (5,698) (3,162)
Proceeds from sales and maturities of
investment securities 3,707 3,707
Increase in restricted cash (10,297) (10,297)
Net change in investment in affiliates (2,746) 2,743 3
-------- --------- --------- --------- ---------
Net cash used by investment activities 3,497 (113,373) 46,760 (63,116)
-------- --------- --------- --------- ---------
Cash flows from financing activities
Borrowings on bank line of credit 342,600 342,600
Payments on bank line of credit (256,600) (256,600)
Payments on automobile receivables-
backed notes (66,673) (66,673)
Payments on notes payable (298) (298)
Net change in due (to) from affiliates (29,794) 18,528 11,266
Proceeds from issuance of common stock 3,731 3,731
Purchase of treasury stock (10,710) (10,710)
-------- --------- --------- --------- ---------
Net cash provided by financing activities (37,071) 104,528 (55,407) 12,050
-------- --------- --------- --------- ---------
Net increase (decrease) in cash and cash
equivalents (22,100) 6,307 (376) (16,169)
Cash and equivalents at beginning of year 17,187 (6,394) 7,521 18,314
-------- --------- --------- --------- ---------
Cash and cash equivalents at end of year $ (4,913) $ (87) $ 7,145 $ $ 2,145
-------- --------- --------- --------- ---------
-------- --------- --------- --------- ---------
35
AmeriCredit Corp.
Supplementary Information
Consolidating Statement of Cash Flows
Year Ended June 30, 1995
(Dollars in Thousands)
AmeriCredit
Corp Guarantors Non-Guarantors Eliminations Consolidated
----------- ---------- -------------- ------------ ------------
Cash flows from operating activities
Net income $ 28,893 $ (1,524) $ 3,120 $ (1,596) $ 28,893
Adjustments to reconcile net income to net
cash provided by operating activities:
cash provided by operating activities:
Depreciation and amortization 161 1,156 1,317
Provision for losses 4,278 4,278
Deferred income taxes (18,252) (702) (18,954)
Equity in income of affiliates (1,596) 1,596
Changes in assets and liabilities
Other assets (795) 400 (1,439) (1,834)
Accrued taxes and expenses 170 387 380 937
-------- --------- --------- --------- ---------
Net cash provided by operating activities 8,581 3,995 2,061 14,637
-------- --------- --------- --------- ---------
Cash flows from investing activities
Purchases and originations of receivables (225,350) (148,452) 148,452 (225,350)
Principal collections and recoveries on
receivables 53,210 18,124 71,334
Net proceeds from sale of auto receivables 148,452 (148,452)
Purchase of property and equipment 947 (2,677) (1,730)
Proceeds from sales and maturities of
investment securities 16,241 16,241
Increase in restricted cash (5,007) (5,007)
Net change in investment in affiliates (7,126) 7,126
-------- --------- --------- --------- ---------
Net cash used by investment activities 10,062 (19,239) (135,335) (144,512)
-------- --------- --------- --------- ---------
Cash flows from financing activities
Borrowings on bank line of credit 83,900 83,900
Payments on bank line of credit (83,900) (83,900)
Proceeds from issuance of automobile
receivables-backed notes 150,170 150,170
Payments on automobile receivables-backed notes (15,650) (15,650)
Payments on notes payable (236) (236)
Net change in due (to) from affiliates (18,037) 11,762 6,275
Proceeds from issuance of common stock 1,561 1,561
Purchase of treasury stock (3,412) (3,412)
-------- --------- --------- --------- ---------
Net cash provided by financing activities (20,124) 11,762 140,795 132,433
-------- --------- --------- --------- ---------
Net increase (decrease) in cash and cash equivalents (1,481) (3,482) 7,521 2,558
Cash and equivalents at beginning of year 18,668 (2,912) 15,756
-------- --------- --------- --------- ---------
Cash and cash equivalents at end of year $ 17,187 $ (6,394) $ 7,521 $ $ 18,314
-------- --------- --------- --------- ---------
-------- --------- --------- --------- ---------
36
REPORT ON INDEPENDENT ACCOUNTANTS ON SUPPLEMENTARY INFORMATION
Board of Directors and Shareholders
AmeriCredit Corp.
Our report on the audits of the consolidated financial statements of
AmeriCredit Corp. as of June 30, 1997 and 1996 and for the three years ended
June 30, 1997, 1996 and 1995 have been included by reference in this Form
10-K from page 30 of the 1997 Annual Report to Shareholders of AmeriCredit
Corp. These audits were conducted for the purpose of forming an opinion on
the basic financial statements taken as a whole. The related financial
statement schedules are presented for purposes of additional analysis and
are not a required part of the basic financial statements. Such information
has been subjected to the auditing procedures applied in the audits of the
basic financial statements and, in our opinion, is fairly stated, in all
material respects, in relation to the financial statements taken as a whole.
37
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
The Company had no disagreements on accounting or financial disclosure
matters with its independent accountants to report under this Item 9.
38
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information contained under the caption "Election of Directors" in the Proxy
Statement is incorporated herein by reference in response to this Item 10.
See Item 1. "Business - Executive Officers" for information concerning
executive officers.
ITEM 11. EXECUTIVE COMPENSATION
Information contained under the captions "Executive Compensation" and
"Election of Directors" in the Proxy Statement is incorporated herein by
reference in response to this Item 11.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information contained under the caption "Principal Shareholders and Stock
Ownership of Management" in the Proxy Statement is incorporated herein by
reference in response to this Item 12.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There is no information requiring disclosure pursuant to Item 404 of
Regulation S-K. Accordingly, no information is furnished in response to this
Item 13.
39
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(1) The following Consolidated Financial Statements of the Company and
Report of Independent Accountants are contained in the Annual Report
and are incorporated herein by reference.
CONSOLIDATED FINANCIAL STATEMENTS:
Consolidated Balance Sheets as of June 30, 1997 and 1996.
Consolidated Statements of Income for the years ended June 30, 1997,
1996 and 1995.
Consolidated Statements of Shareholders' Equity for the years ended June
30, 1997, 1996 and 1995.
Consolidated Statements of Cash Flows for the years ended June 30, 1997,
1996 and 1995.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
REPORT OF INDEPENDENT ACCOUNTANTS
(2) Consolidating financial information for AmeriCredit Corp. (on a parent
only basis), the combined Subsidiary Guarantors and the combined
Non-Guarantor Subsidiaries is included herein under Item 8.
(3) All schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are either not
required under the related instructions, are inapplicable, or the required
information is included elsewhere in the Consolidated Financial Statements
and incorporated herein by reference.
(4) The exhibits filed in response to Item 601 of Regulation S-K are listed
in the Index to Exhibits on pages 42 through 45.
(5) The Company did not file any reports on Form 8-K during the quarterly
period ended June 30, 1997. Certain subsidiaries and affiliates of the
Company filed reports on Form 8-K during the quarterly period ended June
30, 1997 reporting monthly information related to securitization trusts.
40
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, on September 25,
1997.
AMERICREDIT CORP.
BY: /s/ Clifton H. Morris, Jr.
-------------------------------
Clifton H. Morris, Jr.
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Registrant
and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Clifton H. Morris, Jr. Chairman of the Board and September 25, 1997
- --------------------------- Chief Executive Officer
CLIFTON H. MORRIS, JR.
/s/ Daniel E. Berce Vice Chairman and September 25, 1997
- --------------------------- Chief Financial Officer
DANIEL E. BERCE
/s/ Michael R. Barrington Vice Chairman, President September 25, 1997
- --------------------------- and Chief Operating Officer
MICHAEL R. BARRINGTON
/s/ Edward H. Esstman Executive Vice President, September 25, 1997
- --------------------------- Auto Finance Division and
EDWARD H. ESSTMAN Director
/s/ James H. Greer Director September 25, 1997
- ---------------------------
JAMES H. GREER
/s/ Gerald W. Haddock Director September 25, 1997
- ---------------------------
GERALD W. HADDOCK
/s/ Douglas K. Higgins Director September 25, 1997
- ---------------------------
DOUGLAS K. HIGGINS
/s/ Kenneth H. Jones, Jr. Director September 25, 1997
- ---------------------------
KENNETH H. JONES, JR.
41
INDEX TO EXHIBITS
The following documents are filed as a part of this report. Those exhibits
previously filed and incorporated herein by reference are identified by the
letters in parenthesis under the Exhibit Number column. Documents filed with
this report are identified by the symbol "@" under the Exhibit Number column.
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
3.1(a) -- Articles of Incorporation of the Company, filed May 18, 1988,
and Articles of Amendment to Articles of Incorporation, filed
August 24, 1988 (Exhibit 3.1)
3.2(a) -- Amendment to Articles of Incorporation, filed October 18,
1989 (Exhibit 3.2)
3.3(e) -- Articles of Amendment to Articles of Incorporation of the
Company, filed November 12, 1992 (Exhibit 3.3)
3.4@ -- Bylaws of the Company, as amended
4.1(d) -- Specimen stock certificate evidencing the Common Stock
(Exhibit 4.1)
4.2(n) -- Rights Agreement, dated August 28, 1997, between the Company
and ChaseMellon Shareholder Services, L.L.C. (Exhibit 1)
10.1(a) -- 1989 Stock Option Plan for Non-Employee Directors of the
Company (Exhibit 10.4)
10.2(a) -- 1989 Stock Option Plan (with Stock Appreciation Rights) for the
Company (Exhibit 10.5)
10.3(b) -- Amendment No. 1 to the 1989 Stock Option Plan (with Stock
Appreciation Rights) for the Company (Exhibit 4.6)
10.4(c) -- 1990 Stock Option Plan for Non-Employee Directors of the Company
(Exhibit 10.14)
10.5(d) -- 1991 Key Employee Stock Option Plan of the Company
(Exhibit 10.10)
10.6(d) -- 1991 Non-employee Director Stock Option Plan of the Company
(Exhibit 10.11)
10.7(d) -- Executive Employment Agreement, dated January 30, 1991, between
the Company and Clifton H. Morris, Jr. (Exhibit 10.18)
10.7.1@ -- Amendment No. 1 to Executive Employment Agreement, dated May 1,
1997, between the Company and Clifton H. Morris, Jr.
10.8(d) -- Executive Employment Agreement, dated January 30, 1991, between
the Company and Michael R. Barrington (Exhibit 10.19)
10.8.1@ -- Amendment No. 1 to Executive Employment Agreement, dated May 1,
1997, between the Company and Michael R. Barrington
42
INDEX TO EXHIBITS
(Continued)
10.9(d) -- Executive Employment Agreement, dated January 30, 1991 between
the Company and Daniel E. Berce (Exhibit 10.20)
10.9.1@ -- Amendment No. 1 to Executive Employment Agreement, dated May 1,
1997, between the Company and Daniel E. Berce
10.10@ -- Amended and Restated Employment Agreement, dated October 15,
1996, between the Company and Edward H. Esstman
10.10.1@ -- Amendment No. 1 to Amended and Restated Employment Agreement,
dated May 1, 1997, between the Company and Edward H. Esstman
10.11@ -- Amended and Restated Employment Agreement, dated July 1, 1997,
between the Company and Michael T. Miller
10.12(f) -- Indenture, dated June 1, 1995, between AmeriCredit Receivables
Finance Corp. 1995-A and LaSalle National Bank (Exhibit 10.15)
10.13(f) -- Sale and Servicing Agreement, dated June 1, 1995, between
AmeriCredit Receivables Finance Corp. 1995-A, AmeriCredit
Financial Services, Inc., AmeriCredit Receivables Corp. and
LaSalle National Bank (Exhibit 10.16)
10.14(l) -- Second Restated Revolving Credit Agreement, dated October 7,
1996, between AmeriCredit Corp. and subsidiaries and Wells
Fargo Bank (Texas), National Association, Bank One, Texas, N.A.,
LaSalle National Bank, The Sumitomo Bank Limited, Harris Trust
and Savings Bank, Comerica Bank - Texas, Texas Commerce Bank
National Association, BankAmerica Business Credit, Inc. and
The Bank of Nova Scotia, as amended by that certain First
Amendment to Second Restated Revolving Credit Agreement, dated
January 22, 1997, between the same parties (Exhibit 10.1)
10.15(l) -- Indenture, dated February 4, 1997, between AmeriCredit Corp.
and subsidiaries and Bank One, Columbus, NA, with form of 9 1/4%
Senior Notes due 2004 attached as exhibit (Exhibit 10.2)
10.16(l) -- Purchase Agreement, dated January 30, 1997, between AmeriCredit
Corp. and subsidiaries and Smith Barney Inc., Montgomery
Securities, Piper Jaffray Inc. and Wheat First Butcher Singer
(Exhibit 10.3)
10.17(l) -- A/B Exchange Registration Rights Agreement, dated February 4,
1997, between AmeriCredit Corp. and subsidiaries and Smith
Barney Inc., Montgomery Securities, Piper Jaffray Inc. and
Wheat First Butcher Singer (Exhibit 10.4)
10.18(g) -- 1995 Omnibus Stock and Incentive Plan for AmeriCredit Corp.
10.19(m) -- Amendment No. 1 to 1995 Omnibus Stock and Incentive Plan for
AmeriCredit Corp
43
INDEX TO EXHIBITS
(Continued)
10.20(h) -- 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 (Exhibit 10.1)
10.21(i) -- Pooling and Servicing Agreement relating to AmeriCredit
Automobile Receivables Trust 1996-A, dated February 12, 1996,
among AmeriCredit Financial Services, Inc., AmeriCredit
Receivables Corp. and LaSalle National Bank (Exhibit 10.1)
10.22(j) -- Pooling and Servicing Agreement relating to AmeriCredit
Automobile Receivables Trust 1996-B, dated April 30, 1996,
among AmeriCredit Financial Services, Inc., AFS Funding Corp.
and LaSalle National Bank (Exhibit 4.1)
10.23(k) -- 1996 Limited Stock Option Plan for AmeriCredit Corp.
11.1@ -- Statement Re Computation of Per Share Earnings
12.1@ -- Statement of Re Computation of Ratios
13.1@ -- 1997 Annual Report to Shareholders of the Company
21.1@ -- Subsidiaries of the Registrant
23.1@ -- Consent of Coopers & Lybrand
27.1@ -- Financial Data Schedule
- ------------------------------------------------------------------------------
(a) Incorporated by reference to the exhibit shown in parenthesis
included in Registration Statement No. 33-31220 on Form S-1 filed by
the Company with the Securities and Exchange Commission.
(b) Incorporated by reference to the exhibit shown in parenthesis
included in Registration Statement No. 33-41203 on Form S-8 filed by
the Company with the Securities and Exchange Commission.
(c) Incorporated by reference to the exhibit shown in parenthesis
included in the Company's Annual Report on Form 10-K for the year
ended June 30, 1990 filed by the Company with the Securities and
Exchange Commission.
(d) Incorporated by reference to the exhibit shown in parenthesis
included in the Company's Annual Report on Form 10-K for the year
ended June 30, 1991 filed by the Company with the Securities and
Exchange Commission.
(e) Incorporated by reference to the exhibit shown in parenthesis
included in the Company's Annual Report on Form 10-K for the year
ended June 30, 1993 filed by the Company with the Securities and
Exchange Commission.
(f) Incorporated by reference to the exhibit shown in parenthesis
included in the Company's Annual Report on Form 10-K for the year
44
ended June 30, 1995 filed by the Company with the Securities and
Exchange Commission.
(g) Incorporated by reference from the Company's Proxy Statement for
the year ended June 30, 1995 filed by the Company with the Securities
and Exchange Commission.
(h) Incorporated by reference to the exhibit shown in parenthesis
included in the Company's Quarterly Report on Form 10-Q for the
quarterly period ended December 31, 1995 filed by the Company with
the Securities and Exchange Commission.
(i) Incorporated by reference to the exhibit shown in parenthesis
included in the Company's Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 1996 filed by Company with the
Securities and Exchange Commission.
(j) Incorporated by reference to the exhibit shown in parenthesis
included in a Report on Form 8-K, dated May 16, 1996, filed by the
AmeriCredit Automobile Receivables Trust 1996-B with the Securities
and Exchange Commission.
(k) Incorporated by reference from the Company's Proxy Statement for the
year ended June 30, 1996 filed by the Company with the Securities and
Exchange Commission.
(l) Incorporated by reference to the exhibit shown in parenthesis
included in the Company's Quarterly Report on Form 10-Q for the
quarterly period ended December 31, 1996 filed by the Company with
the Securities and Exchange Commission.
(m) Incorporated by reference from the Company's Proxy Statement for the
year ended June 30, 1997 filed by the Company with the Securities and
Exchange Commission.
(n) Incorporated by reference to the exhibit shown in parenthesis included
in the Company's Report on Form 8-K, dated August 28, 1997, filed by
the Company with the Securities and Exchange Commission.
@ Filed herewith.
45