EXHIBIT 99.1
CAUTIONARY STATEMENT REGARDING FORWARD LOOKING INFORMATION
Certain statements in this document that are not historical facts, such as those
using terms like "believes," "expects," "anticipates," "assumptions,"
"forecasts," "estimates" and those regarding the Company's future plans and
objectives, are "forward-looking statements" within the meaning of the federal
securities laws. These forward-looking statements represent the Company's
outlook only as of the date of this document. While the Company believes that
its forward-looking statements are reasonable, actual results could differ
materially since the statements are based on current expectations, which are
subject to risks and uncertainties. Factors that might cause such a difference
include the following:
- the Company's potential inability to accurately forecast and estimate
the amount and timing of future collections,
- increased competition from traditional financing sources and from
non-traditional lenders,
- the unavailability of funding at competitive rates of interest,
- the Company's potential inability to continue to obtain third party
financing on favorable terms,
- the Company's potential inability to generate sufficient cash flow to
service its debt and fund its future operations,
- adverse changes in applicable laws and regulations,
- adverse changes in economic conditions,
- adverse changes in the automobile or finance industries or in the non-prime
consumer finance market,
- the Company's potential inability to maintain or increase the volume of
automobile loans,
- an increase in the amount or severity of litigation against the Company,
- the loss of key management personnel,
- the effect of terrorist attacks and potential attacks, and
- various other factors discussed in the Company's reports filed with the
Securities and Exchange Commission.
Other factors not currently anticipated by management may also materially and
adversely affect the Company's results of operations. The Company does not
undertake, and expressly disclaims any obligation, to update or alter its
statements whether as a result of new information, future events or otherwise,
except as required by applicable law.
QUESTIONS AND ANSWERS
Q1. Why did you use a 30% discount rate to calculate the present value of the
future expected cash flows from the current asset base? Why not 10%?
A1. 30% was selected to be consistent with the discount rate used to establish
our allowance for credit losses under GAAP. Conceptually, it represents the
average expected yield at the inception of the loan. Using 10% would result in
an estimated present value of future cash flows of approximately $571 million.
Keep in mind the estimated cash flows are before tax and before expenses
required to service the loans.
Q2. Why are some of the historical numbers listed in the 2 tables for forecasted
collections (12/31/03) and advance rates different from the 1st quarter 10Q?
A2. We changed the table to report U.S. results, as this is our only active
segment going forward. Last quarter's table was consolidated, which means it
included the United Kingdom and Canada.
Q3. What level of growth in dealer-partners (# of) do you anticipate/project a
year from now?
A3. Although we have internal goals related to dealer-partner enrollments and
attrition, we don't believe it is helpful to make these targets public. However,
given the importance of this metric, we believe it is appropriate to expand our
disclosures in this area.
The dealer-partner number we disclose is a count of active dealer partners. The
number of active dealer-partners is a function of new dealer-partner enrollments
and attrition. The following table rolls forward the count of active
dealer-partners from Q2 of 2003 to Q2 of 2004:
Active dealer-partners - Q2 2003 677
New dealer-partners 385
Attrition (163)
-----------------------
Active dealer-partners - Q2 2004 899
We added 385 dealer-partners and lost 163 or 24% of the active dealer-partners
as of Q2 of 2003.
New dealer-partner enrollments are a function of the number of sales personnel,
called MAM's for Market Area Managers, and their productivity. The following
table details new dealer-partners and productivity per MAM over the past 12
months:
New
dealer-partners MAM's Productivity
Jul-03 36 35 1.03
Aug-03 23 33 0.70
Sep-03 29 33 0.88
Oct-03 28 34 0.82
Nov-03 26 40 0.65
Dec-03 27 40 0.68
Jan-04 40 40 1.00
Feb-04 36 42 0.86
Mar-04 44 43 1.02
Apr-04 24 47 0.51
May-04 41 48 0.85
Jun-04 31 49 0.63
-------------------------
0.80
We expect to add 1 MAM per month over the next 18 months.
We will begin to include the above tables in our quarterly reports.
Q4. Did loan originations grow at the +17% rate in each of the months of the
quarter? Meaning, did the quarter end at roughly the same run rate as you
averaged for the quarter?
A4. April 16.2%
May 8.3%
June 27.5%
May 2004 had one less business day than the prior year. June 2004 had one more
business day than the prior year.
Q5. Why didn't you buy back additional stock during the quarter?
A5. We stopped repurchasing shares on April 1 intending to begin again after our
earnings release. Our first quarter earnings were not released until May 14, at
which time we no longer believed we could repurchase shares without an unfair
advantage. Now that our second quarter release and 10-Q have been filed we are
free again to repurchase shares.