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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
<TABLE>
<C> <S>
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended June 30, 1996
[ ] 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
</TABLE>
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AMERICREDIT CORP.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
TEXAS 75-2291093
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
200 BAILEY AVENUE, FORT WORTH, TEXAS 76107
(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code: (817) 332-7000
--------------------------
Securities registered pursuant to Section 12(b) of the Act:
<TABLE>
<CAPTION>
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
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<S> <C>
Common Stock, $.01 par value New York Stock Exchange
</TABLE>
Securities registered pursuant to Section 12(g) of the Act:
None
(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 _____.
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. [ ]
The aggregate market value of 24,452,995 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 18, 1996 was
approximately $431,106,302. 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 28,340,491 shares of Common Stock, $.01 par value outstanding as
of September 18, 1996.
DOCUMENTS INCORPORATED BY REFERENCE
The Registrant's Annual Report to Shareholders for the year ended June 30,
1996 ("the Annual Report") furnished to the Commission pursuant to Rule 14a-3(b)
and the definitive Proxy Statement pertaining to the 1996 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.
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AMERICREDIT CORP.
INDEX TO FORM 10-K
ITEM PAGE
NO. No.
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PART I
1. Business 4
2. Properties 17
3. Legal Proceedings 18
4. Submission of Matters to a Vote of Security Holders 18
PART II
5. Market for Registrant's Common Equity and Related Stockholder
Matters 19
6. Selected Financial Data 19
7. Management's Discussion and Analysis of Financial Condition
and Results of Operations 19
8. Financial Statements and Supplementary Data 19
9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure 19
PART III
10. Directors and Executive Officers of the Registrant 20
11. Executive Compensation 20
12. Security Ownership of Certain Beneficial Owners and
Management 20
13. Certain Relationships and Related Transactions 20
PART IV
14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K 21
SIGNATURES 22
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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.
On July 22, 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 AFSI's
branch offices and marketing representatives, the Company serves as a
source for franchised and independent dealers to finance their
customers' purchases of primarily used automobiles. The Company targets
consumers who are typically unable to obtain financing from traditional
sources. Sales finance contracts originated by dealers which conform to
the Company's credit policies are purchased by the Company, generally
for a non-refundable acquisition fee and without recourse to the dealer.
These consumer finance loans typically range in amount from $9,000 to
$15,000, with repayment terms usually ranging from 42 to 60 months.
Funding for the Company's operations is obtained through the use of bank
lines of credit and the issuance of automobile receivables-backed
securities. The Company services its loan portfolio at facilities
located in Fort Worth, Texas and Tempe, Arizona using automated loan
servicing and collection systems.
From April 1993 through January 1995, the Company, through another
subsidiary, financed insurance premiums for consumers purchasing
automobile insurance through independent insurance agents. The Company
curtailed its activities in this business in order to concentrate its
resources on the core indirect automobile finance business.
The Company previously operated a chain of "we finance" used car retail
lots in Texas, selling used cars and typically financing sales to
customers. However, in connection with a restructuring during the year
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ended June 30, 1993, the Company 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 borrower may have had previous
financial difficulties, but is now attempting to re-establish credit, or
may not yet have an established credit history. 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 which are higher than those charged by
traditional automobile financing sources. The Company also expects to
sustain a higher level of credit losses than that experienced by
traditional automobile financing sources since the Company provides
financing in a relatively high risk market.
DEALER RELATIONSHIPS. When buying a car, consumers are customarily
directed to a dealer's finance and insurance department to finalize
their purchase agreement and review potential financing sources. If the
consumer elects to pursue financing at a dealer, an application is taken
for submission to the dealer's financing sources. The dealers are
generally familiar with the lending policies of their financing sources
and develop both traditional and secondary financing sources. In the
event that a consumer may not qualify for traditional automobile
financing, a dealer typically submits such buyer's application to one or
more secondary financing sources, such as the Company, for approval and
purchase.
Since the Company is an indirect lender, the Company's financing
programs are marketed directly to dealers rather than to consumers. The
marketing process involves personal contacts with the owners, general
managers and finance managers of the dealers and distribution of the
Company's promotional materials. The Company also establishes
relationships with dealers through referrals from other participating
dealers.
The Company has established relationships with a variety of automobile
dealers located in the markets in which the Company has branch offices
or marketing representatives. While the Company occasionally finances
purchases of new cars, a large majority of the Company's finance
receivables are originated in connection with consumers' purchases of
used cars. Of the finance contracts purchased by the Company during the
year ended June 30, 1996, approximately 77% were originated by
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manufacturer-franchised dealers with used car operations and 23% by
independent dealers specializing in used car sales. The Company
purchased contracts from 3,262 dealers during the year ended June 30,
1996. No dealer accounted for more than 10% of the total volume of
contracts purchased by the Company for the year ended June 30, 1996.
Prior to entering into a relationship with a dealer, the Company
evaluates the dealer's operating history. The quality of the credit
applications submitted by the dealer for review and the performance of
contracts purchased from a dealer are continually monitored to determine
the viability of the Company's relationship with the dealer. Dealer
relationships are maintained through frequent contacts by the Company's
representatives and by providing a high level of service, including
prompt and consistent credit application processing, timely contract
funding and competitive financing terms and fees.
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
charges the 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 OFFICES. The Company's branch offices are responsible for
solicitation and development of dealer relationships and execution of
credit decisions. Branch locations are typically staffed by a branch
manager, an assistant manager, and one or more dealer and customer
service representatives. Larger branches may also have an additional
assistant manager and/or a dealer marketing representative. Branch
managers are compensated with base salaries, annual incentives based on
overall branch performance and stock option grants. The branch managers
report to a regional vice president.
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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 presidents access to credit application information
enabling them to consult with the branch managers on day to day credit
decisions and review and approve 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 report to senior vice presidents who in turn
report to the Executive Vice President and Director of Consumer Finance
Operations.
As of June 30, 1996, the Company operated 51 branch offices in 26
states. The Company has branch offices in the following locations:
STATE CITY
----- ----
Arizona Phoenix
California San Jose
San Francisco
Concord
Fresno
Los Angeles
San Diego
Stockton
Colorado Colorado Springs
Denver
Florida Tampa
Ft. Lauderdale
Jacksonville
Orlando
Georgia Atlanta (2)
Illinois Chicago (3)
Indiana Indianapolis
Kentucky Louisville
Maryland Baltimore
Massachusetts Boston
Michigan Detroit
Missouri Kansas City
St. Louis
Nevada Las Vegas
New Jersey Marlton
New Mexico Albuquerque
North Carolina Charlotte
Raleigh-Durham
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STATE CITY
----- ----
Ohio Columbus
Cleveland
Cincinnati
Akron
Oklahoma Oklahoma City
Oregon Portland
Pennsylvania Pittsburgh
South Carolina Greenville
Charleston
Tennessee Nashville
Memphis
Texas Dallas-Fort Worth
Houston
San Antonio
Utah Salt Lake City
Virginia Vienna
Newport News
Norfolk
Richmond
Washington Seattle
The Company selects markets for branch office locations based upon the
availability of qualified branch managers and evaluation of regulatory,
competitive and demographic factors. Branch offices are typically
situated in office buildings which are accessible to local automobile
dealers.
MARKETING REPRESENTATIVES. The Company's marketing representatives are
responsible for solicitation and development of dealer relationships in
existing branch territories and in markets where the Company does not
have a branch presence. Unlike the Company's branch managers, the
marketing representatives do not have credit authority. Credit
applications solicited by marketing representatives located in
teritories where the Company does not have a branch presence are
underwritten at a central purchasing office in Dallas-Fort Worth, Texas.
FINANCE CONTRACT ACQUISITION. The Company purchases individual finance
contracts through its branch offices based on a decentralized credit
approval process tailored to local market conditions. The Company's
central purchasing office operates in a manner similar to the branch
office network.
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All credit extensions are executed at the branch level. Each branch
manager has a specific credit authority based upon their experience and
historical loan portfolio results and credit scoring parameters.
Extensions of credit outside these limits are reviewed and approved by a
regional vice president. Although the credit approval process is
decentralized, all credit decisions are guided by the Company's credit
scoring strategies and overall credit and underwriting policies and
procedures.
The Company has implemented a credit scoring system across its branch
network to support the branch level credit approval process. The credit
scoring system was developed with the assistance of Fair Isaac & Co.,
Inc. from the Company's loan origination and portfolio databases.
Credit scoring is used to prioritize applications for processing and to
tailor loan pricing and structure to an empirical assessment of credit
risk. While the Company employs a credit scoring system in the credit
approval process, credit scoring does not eliminate credit risk.
Adverse determinations at the branch level in evaluating finance
contracts for purchase could adversely affect the credit quality of the
Company's loan portfolio.
Loan application packages completed by prospective obligors are
received via facsimile at the branch offices from dealers. Application
data is entered into the Company's automated application processing
system. A credit bureau report is automatically generated and a credit
score is computed. Depending on the credit quality of the applicant, a
customer service representative may then investigate the residence,
employment and credit history of the applicant or forward the
application package directly to the branch manager. In either case, the
Company's credit policy requires investigation of all applications prior
to loan funding. The branch manager reviews the application package and
determines whether to approve the application, approve the application
subject to conditions that must be met, or deny the application. The
branch manager considers many factors in arriving at a credit decision,
including the applicant's credit score, capacity to pay, stability,
character and intent to pay, the contract terms, and collateral value.
In certain cases, a regional vice president may review and approve the
branch manager's credit decision. The Company estimates that
approximately 55% 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 car
payments. Dealers are contacted regarding credit decisions by telefax
and/or telephone. Declined and conditioned applicants are also provided
with appropriate notification of the decision.
9
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Once a credit approval has been received from the Company and any other
financing sources to which the application package was submitted, the
dealer selects a financing source. The ability of the financing source
to provide a rapid credit decision and the amount of the contract fees
and customer advance are of primary importance to the dealer in choosing
a financing source.
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 personnel and the loan packages are forwarded to the
Company's centralized loan services department where the package is
scanned to create an electronic copy. 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. A daily loan report is generated for a final review
by consumer finance operations management. Once cleared for funding by
consumer finance operations management, the loan services department
issues a check 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 finance contracts are fully amortizing
with substantially equal monthly installments. Consumers receive
monthly billing statements from the Company directing them to remit
payments to the Company's lockbox bank for deposit into the Company's
lockbox account. Payment receipt data is electronically transferred to
the Company by its lockbox bank for posting to the loan accounting
system. All payment processing and customer account maintenance is
performed centrally by the loan services department.
COLLECTIONS AND REPOSSESSIONS. Collection activity on finance contracts
is performed centrally at the Company's Fort Worth, Texas and Tempe,
Arizona collection facilities. The Company believes that centralization
of collections activities creates a more efficient process through the
use of technology and employment of economies of scale. The Company's
collection personnel ("collectors") follow standardized collection
policies and procedures. Collectors monitor the finance receivables
portfolio through a computer assisted collection system and typically
take action on delinquencies within a few days after delinquency occurs.
A collector's action is usually telephone contact with the consumer
utilizing the Company's automated predictive dialing system. This
system dials multiple telephone numbers simultaneously based upon
parameters set by management. When a telephone connection is made, the
call is routed to a collector and the delinquent consumer's account
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information is displayed on the collector's computer terminal. The
collector then attempts to work out the delinquency with the consumer.
If a consumer is delinquent in their payment obligations, the Company's
policy is to work out suitable payment arrangements with the consumer.
However, if the consumer becomes seriously delinquent or deals in bad
faith with the Company, the Company may ultimately have to repossess the
consumer's automobile and generally will take prompt action to do so.
Repossessions are handled by independent repossession firms engaged by
the Company. Repossessions must be approved by a collection officer.
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.
Upon repossession and after any prescribed waiting period, the
repossessed automobile is typically sold at auction. The proceeds from
the sale of the automobile at auction and any other recoveries are
credited against the balance of the finance contract. Auction proceeds
from the sale of repossessed vehicles and other recoveries are usually
not sufficient to cover the outstanding balance of the finance contract,
and the resulting deficiencies are charged-off against the Company's
allowance for losses. The Company may pursue collection of deficiencies
when it deems such action to be appropriate.
INSURANCE AND OTHER PRODUCTS. The Company requires all consumers to
obtain or provide evidence that they carry current comprehensive and
collision insurance. Through a third party administrator, the Company
tracks the insurance status of each finance contract and sends notices
to consumers when collateral becomes uninsured. If no action is taken
by the consumer to insure the collateral, continuing efforts are made to
persuade the consumer to comply with the insurance requirements of the
finance contract. Although it has the right, the Company rarely
repossesses a vehicle due to it being uninsured. The Company also does
not typically force place insurance coverage and add the premium to the
consumer's obligation, although it has the right to do so under the
terms of the finance contracts.
In the event that the consumer fails to maintain insurance as required
by the finance contract, the Company may be adversely affected in its
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ability to realize auction proceeds from the sale of repossessed
vehicles if the vehicle collateralizing the finance contract has been
damaged or stolen. Further, uninsured damage or theft of the vehicles
serving as collateral under the finance contracts can be expected to
result in higher rates of default by consumers.
The Company will also finance other insurance products including credit
life, credit accident and health and extended service contracts at the
option of the consumer. The consumer may obtain such products from
sources provided by the Company, dealers or from other third parties.
The Company may receive commissions and fees related to these products,
but the Company does not assume any primary insurance risk.
RISK MANAGEMENT. With its decentralized credit approval process, the
Company has developed procedures to evaluate and supervise the
operations of each branch office. The Company's centralized risk
management department is responsible for monitoring the origination
process and supporting the supervisory role of consumer finance
operations management. This group tracks key variables via databases
that contain loan applicant data, credit bureau and credit score
information, loan structures and terms and payment histories. The risk
management department also reviews the performance of the Company's
credit scoring system and is involved with third party vendors in the
development of new credit scorecards for the Company. The residual
value of the collateral underlying the Company's loan portfolio is
updated monthly with a loan-by-loan link to national wholesale auction
values. This data is used for evaluating collateral disposition
activities as well as for reserve analysis models.
The risk management department prepares a periodic credit indicator
package reviewing portfolio performance at various levels of detail
including total company, branch and dealer. A sample of loans
underwritten by each branch are reviewed periodically to audit
compliance with policies and procedures. 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 loan
production. Projected portfolio returns are reviewed on a consolidated
basis, as well as at the branch, dealer and transaction levels. While
the Company's risk management department is designed to minimize the
risks inherent in the decentralized credit approval process, the risk of
adverse finance contract purchases by the branch network cannot be
eliminated.
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TRADE NAMES
The Company has obtained federal trademark protection for the
"AmeriCredit" name and the logo that incorporates the "AmeriCredit"
name.
COMPETITION
The Company encounters strong competition in its segment of the market
from other local, regional and national consumer finance companies, some
of which have access to greater financial resources than the Company.
As an indirect lender, the Company's financing programs are marketed
directly to automobile dealers rather than consumers. The Company
believes that there are numerous competitors providing, or capable of
providing, financing through dealers for purchases of automobiles. Many
of these competitors have long standing relationships with dealers. The
principal competitive factors affecting a dealer's decision to offer
finance contracts for sale to a particular financing source are the
level of service including promptness and consistency of credit
application processing, the timeliness of contract funding, the
competitiveness of financing terms and fees and the financial stability
of the funding source.
The Company plans to expand its indirect automobile finance business by
adding additional branch offices and expanding loan production capacity
at existing branches. The success of this strategy is dependent upon
the Company's ability to hire and retain qualified branch managers and
other personnel and develop relationships with more dealers. The
Company confronts intense competition in attracting key personnel and
establishing relationships with dealers. Dealers often already have
favorable secondary 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 contract fees that the Company charges
dealers or a decrease in contract acquisition volume, which would
adversely affect the Company's profitability.
Because the Company's target market consists of consumers who generally
have limited access to traditional automobile financing sources, the
Company usually does not compete directly with banks, savings and loans,
credit unions, the manufacturers' captive finance companies and other
traditional sources of consumer credit. However, there can be no
assurance that traditional financial institutions will not, in the
future, become more active in providing financing to the Company's
targeted customer base.
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REGULATION
The Company's operations are subject to regulation, supervision, and
licensing under various federal, state and local statutes, 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 model 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.
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
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rescission and other remedies that could have an adverse effect on the
Company.
Management believes that it maintains all 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.
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.
EMPLOYEES
At June 30, 1996, the Company employed 447 persons.
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. 61 Chairman of the Board, Chief
Executive Officer and
President
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Michael R. Barrington 37 Executive Vice President and
Chief Operating Officer of
the Company; President and
Chief Operating Officer of
AFSI
Daniel E. Berce 42 Executive Vice President,
Chief Financial Officer and
Treasurer
Chris A. Choate 33 Vice President, General
Counsel and Secretary
Edward H. Esstman 55 Senior Vice President and
Chief Credit Officer of the
Company; Executive Vice
President, Director of
Consumer Finance Operations
of AFSI
Cheryl L. Miller 32 Senior Vice President,
Director of Collections and
Customer Service of AFSI
Michael T. Miller 35 Senior Vice President,
Director of Risk
Management, Credit Policy
and Planning and Chief of
Staff of AFSI
Preston A. Miller 32 Vice President and Controller
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
the present. 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 President and Chief Operating Officer of
AFSI since AFSI's formation in July 1992. Mr. Barrington has also been
Executive Vice President and Chief Operating Officer of the Company
since November 1994 and Vice President of the Company from May 1991
until November 1994.
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DANIEL E. BERCE is a certified public accountant and has been Executive
Vice President, Chief Financial Officer and Treasurer of the Company
since November 1994 and Vice President, Chief Financial Officer and
Treasurer of the Company from May 1991 until November 1994.
CHRIS A. CHOATE has been Vice President, General Counsel and Secretary
of the Company since November 1994 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.
EDWARD H. ESSTMAN has been Executive Vice President, Director of
Consumer Finance Operations of AFSI since November 1994 and Senior Vice
President, Director of Consumer Finance of AFSI from AFSI's formation in
July 1992 until November 1994. Mr. Esstman has also been Senior Vice
President and Chief Credit Officer for the Company since November 1994.
From April 1984 until June 1992, Mr. Esstman acted in various management
capacities at Mercury Finance Company, most recently as Vice President
of Administration.
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, 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. From May
1991 until July 1992, Mr. Miller was Manager of Credit Analysis of the
Company.
PRESTON A. MILLER has been Vice President and Controller of the Company
since November 1994 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 loan
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servicing, branch support and administrative activities. The building
has not been pledged as collateral for any outstanding debt.
All of the Company's branch office facilities are 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.
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 July 1996. This facility is used for loan servicing activities.
ITEM 3. LEGAL PROCEEDINGS
In the normal course of its business, the Company is named as 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. One proceeding in which the Company is a defendant
has been brought as a putative class action and is pending in federal
district court in Connecticut. A class has yet to be certified in this
case and the Company's motion to dismiss is presently pending. In the
opinion of management, resolution of these matters 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, 1996.
18
<PAGE>
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 bank line of credit contains certain restrictions on the
payment of dividends. While the Company has an accumulated deficit at
June 30, 1996, 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.
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.
19
<PAGE>
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.
20
<PAGE>
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, 1996 and 1995.
Consolidated Income Statements for the years ended June 30, 1996,
1995 and 1994.
Consolidated Statements of Shareholders' Equity for the years
ended June 30, 1996, 1995 and 1994.
Consolidated Statements of Cash Flows for the years ended June
30, 1996, 1995 and 1994.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
REPORT OF INDEPENDENT ACCOUNTANTS
(2) 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.
(3) The exhibits filed in response to Item 601 of Regulation S-K are
listed in the Index to Exhibits on pages 24 through 27.
(4) The Company did not file any reports on Form 8-K during the
quarterly period ended June 30, 1996.
21
<PAGE>
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 23, 1996.
AmeriCredit Corp.
BY: /s/ Clifton H. Morris, Jr.
----------------------------------
Clifton H. Morris, Jr.
Chairman of the Board, Chief
Executive Officer and President
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, September 23, 1996
- ---------------------------- Chief Executive Officer
Clifton H. Morris, Jr. and President
/s/ Daniel E. Berce Executive Vice President, September 23, 1996
- ---------------------------- Chief Financial Officer
Daniel E. Berce and Treasurer and Director
/s/ Michael R. Barrington Executive Vice President, September 23, 1996
- ---------------------------- Chief Operating Officer
Michael R. Barrington and Director
/s/ Edward H. Esstman Senior Vice President, September 23, 1996
- ---------------------------- Chief Credit Officer and
Edward H. Esstman Director
/s/ James H. Greer Director September 23, 1996
- ----------------------------
James H. Greer
/s/ Gerald W. Haddock Director September 23, 1996
- ----------------------------
Gerald W. Haddock
/s/ Douglas K. Higgins Director September 23, 1996
- ----------------------------
Douglas K. Higgins
22
<PAGE>
/s/ Kenneth H. Jones, Jr. Director September 23, 1996
- ----------------------------
Kenneth H. Jones, Jr.
23
<PAGE>
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 below. Exhibits not required for this report have been
omitted.
Exhibit
Number Description
- --------- -----------
*3.1 -- 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 -- Amendment to Articles of Incorporation, filed October
18, 1989 (Exhibit 3.2)
##3.3 -- Articles of Amendment to Articles of Incorporation of
the Company, filed November 12, 1992 (Exhibit 3.3)
*3.4 -- Bylaws of the Company (Exhibit 3.4)
#4.1 -- Specimen stock certificate evidencing the Common
Stock (Exhibit 4.1)
*10.1 -- 1989 Stock Option Plan for Non-Employee Directors of
the Company (Exhibit 10.4)
*10.2 -- 1989 Stock Option Plan (with Stock Appreciation
Rights) for the Company (Exhibit 10.5)
**10.3 -- Amendment No. 1 to the 1989 Stock Option Plan (with
Stock Appreciation Rights) for the Company (Exhibit
4.6)
*10.4 -- 1987 Incentive Stock Option Plan for the Company
(Exhibit 10.6)
***10.5 -- 1990 Stock Option Plan for Non-Employee Directors of
the Company (Exhibit 10.14)
#10.6 -- 1991 Key Employee Stock Option Plan of the Company
(Exhibit 10.10)
#10.7 -- 1991 Non-employee Director Stock Option Plan of the
Company (Exhibit 10.11)
#10.8 -- Executive Employment Agreement, dated January 30,
1991, between the Company and Clifton H. Morris, Jr.
(Exhibit 10.18)
#10.9 -- Executive Employment Agreement, dated January 30,
1991, between the Company and Michael R. Barrington
(Exhibit 10.19)
#10.10 -- Executive Employment Agreement, dated January 30,
1991 between the Company and Daniel E. Berce (Exhibit
10.20)
24
<PAGE>
##10.11 -- Executive Employment Agreement, dated May 20, 1993,
between the Company and Edward H. Esstman (Exhibit
10.18)
###10.12 -- Indenture, dated December 1, 1994, between
AmeriCredit Receivables Finance Corp. and LaSalle
National Bank (Exhibit 10.1)
###10.13 -- Sale and Servicing Agreement, dated December 1, 1994,
between AmeriCredit Receivables Finance Corp.,
AmeriCredit Financial Services, Inc., AmeriCredit
Receivables Corp. and LaSalle National Bank (Exhibit
10.2)
^10.14 -- Indenture, dated June 1, 1995, between AmeriCredit
Receivables Finance Corp. 1995-A and LaSalle National
Bank (Exhibit 10.15)
^10.15 -- 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)
^10.16 -- Restated Revolving Credit Agreement, dated June 2,
1995, between AmeriCredit Corp. and subsidiaries and
First Interstate Bank of Texas, N.A., Bank One,
Texas, N.A., LaSalle National Bank, The Daiwa Bank,
Ltd., Harris Trust and Savings Bank, and Comerica
Bank - Texas (Exhibit 10.17)
^^10.17 -- 1995 Omnibus Stock and Incentive Plan for AmeriCredit
Corp.
^^^10.18 -- 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)
%10.19 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)
%%10.20 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)
%%%10.21 -- 1996 Limited Stock Option Plan for AmeriCredit Corp.
@11.1 -- Statement Re Computation of Per Share Earnings
25
<PAGE>
INDEX TO EXHIBITS
(Continued)
@13.1 -- 1996 Annual Report to Shareholders of the Company
@21.1 -- Subsidiaries of the Company
@23.1 -- Consent of Coopers & Lybrand
@27.1 -- Financial Data Schedule
- -------------------------------------------------------------------------------
* 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.
** 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.
*** 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.
# 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.
## 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.
### 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, 1994
filed by the Company with the Securities and Exchange
Commission.
^ 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, 1995 filed by the Company
with the Securities and Exchange Commission.
^^ 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.
^^^ 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
26
<PAGE>
filed by the Company with the Securities and Exchange
Commission.
% 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.
%% Incorporated by reference to the exhibit shown in
parenthesis included in Form 8-K, dated May 16, 1996, filed
by the AmeriCredit Automobile Receivables Trust 1996-B with
the Securities and Exchange Commission.
%%% 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.
@ Filed herewith.
27
<PAGE>
EXHIBIT 11.1
AMERICREDIT CORP.
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
(dollars in thousands, except per share amounts)
YEARS ENDED
------------------------------------
JUNE 30, JUNE 30, JUNE 30,
1996 1995 1994
---------- ---------- ----------
PRIMARY:
Average common shares outstanding 28,524,571 28,730,151 29,067,323
Common share equivalents resulting
from assumed exercise of stock
options and warrants 1,678,727 1,650,598 2,750,760
---------- ---------- ----------
Average common shares and share
equivalents outstanding 30,203,298 30,380,749 31,818,083
---------- ---------- ----------
---------- ---------- ----------
FULLY DILUTED:
Average common shares outstanding 28,524,571 28,730,151 29,067,323
Common share equivalents resulting
from assumed excercise of stock
options and warrants 1,881,793 2,405,317 2,750,760
---------- ---------- ----------
Average common shares and share
equivalents outstanding 30,406,364 31,135,468 31,818,083
---------- ---------- ----------
---------- ---------- ----------
NET INCOME $ 21,591 $ 28,893 $ 5,065
---------- ---------- ----------
---------- ---------- ----------
Primary $ .71 $ .95 $ .16
---------- ---------- ----------
---------- ---------- ----------
Fully Diluted $ .71 $ .95 $ .16
---------- ---------- ----------
---------- ---------- ----------
Primary earnings per share has been computed by dividing net income by the
average common shares and share equivalents outstanding. Common share
equivalents were computed using the treasury stock method. The average
common stock market price for the period was used to determine the number of
common share equivalents.
Fully diluted earnings per share has been computed in the same manner as
primary earnings per share except that the higher of the average or end of
period common stock market price was used to determine the number of common
share equivalents.
<PAGE>
CORPORATE PROFILE
AmeriCredit Corp. is a national consumer finance company specializing in
purchasing and servicing automobile sales finance contracts. The Company is
headquartered in Fort Worth, Texas, and its common shares are traded on the New
York Stock Exchange.
Through its branch offices and marketing representatives, the Company serves as
a source for franchised and independent dealers to finance their customers'
purchases of primarily used automobiles. The Company targets consumers who are
typically unable to obtain financing from traditional sources. Sales finance
contracts originated by dealers which conform to the Company's credit policies
are purchased by the Company, generally for a non-refundable acquisition fee
and without recourse to the dealer. These consumer finance loans typically
range in amounts from $9,000 to $15,000, with repayment terms usually ranging
from 42 to 60 months. Funding for the Company's operations is obtained through
the use of bank lines of credit and the issuance of automobile receivables-
backed securities. The Company services its loan portfolio at facilities,
located in Fort Worth, Texas and Tempe, Arizona using automated loan servicing
and collection systems.
<PAGE>
LETTER TO SHAREHOLDERS
AmeriCredit Corp.'s strategic investments in quality people, leading edge
technology and skilled risk management paid off in the form of strong growth
for our fiscal year ended June 30, 1996. With a solid operating foundation in
place, AmeriCredit experienced growth of 117% in managed finance receivables
for fiscal 1996. Loan originations increased by 88% over last year. Revenue
was up 145% and operating income was 242% higher for fiscal 1996 compared to
fiscal 1995. The most important product of our investments, however, was that
we were able to achieve these growth rates while staying focused on credit
quality.
Encouraged by this success, we have decided to accelerate our expansion plans
for fiscal 1997. At the same time, AmeriCredit remains committed to making the
investments necessary to position the company for sustained profitable growth.
FISCAL 1996 RESULTS
AmeriCredit earned $21.6 million, or $.71 per share for the fiscal year ended
June 30, 1996. Pre-tax operating income for fiscal 1996 was a record $34.3
million, a 242% increase compared to pre-tax operating earnings of $10.0
million for fiscal 1995. Net income of $28.9 million, or $.95 per share, for
the fiscal year ended June 30, 1995 included a one-time income tax credit of
$19.0 million, or $.62 per share, arising from the Company's recognition of the
future benefits from using its net operating loss and other tax credit
carryforwards.
RECEIVABLES GROWTH
AmeriCredit attained growth of 117% in managed finance receivables for fiscal
1996, increasing the portfolio to $524.0 million at June 30, 1996 from $240.5
million at June 30, 1995. We purchased $432.4 million of new loans in fiscal
1996, up 88% compared to loan originations of $230.2 million for fiscal 1995.
This growth resulted from opening new branch offices in fiscal 1996 and
increasing market penetration in existing branch territories.
Our ability to deliver fast, consistent service through our automated systems,
combined with our strategy of focusing marketing efforts on dealers who have
historically provided us higher quality credit applications, contributed to our
increased lending volume. We purchased loans from 3,262 dealers in fiscal 1996
2
<PAGE>
compared to 1,861 dealers last year. A dealer marketing survey recently
conducted by an independent marketing research firm showed that dealers have a
positive image of AmeriCredit and their awareness of AmeriCredit continues to
grow.
BRANCH EXPANSION
AmeriCredit opened 20 branches in fiscal 1996, and at June 30, 1996 had a total
of 51 lending offices located throughout the country. We were doing business
in 39 states at fiscal year end.
We have decided to accelerate our expansion rate going forward, with plans now
to open 30 offices in fiscal 1997. Several factors convinced us to step up our
expansion. First, we have been able to attract, develop and retain quality
personnel. Approximately 40% of our branches are now managed by individuals
trained and promoted from within AmeriCredit. Turnover at key positions in
AmeriCredit has been minimal.
In addition, our infrastructure has continually been strengthened to
accommodate growth. Representative of our forward looking investments is the
opening in August 1996 of our second servicing facility in Tempe, Arizona.
This location will house 200 employees at its capacity, significantly expanding
our servicing capabilities.
Finally, our risk management strategies have performed favorably providing us
confidence in our ability to increase loan production without sacrificing our
commitment to credit quality.
RISK MANAGEMENT STRATEGIES
The cornerstone of our risk management strategies has been the use of new
account credit scoring to assess credit quality at origination. Our initial
scorecard was installed in the summer of 1994, and in late fiscal 1996, we
completed the development of a new custom scorecard with the assistance of
Fair Isaac & Co., Inc. We expect the new scorecard to be more predictive,
which should help us to maintain volume objectives while enhancing our ability
to evaluate credit quality.
After two years of scorecard experience, it is clear that credit scoring works
in the sub-prime auto finance niche. Our historical static pool portfolio
performance, segregated by credit score interval, indicates that credit scoring
3
<PAGE>
effectively differentiates credit risk across a broad spectrum of the sub-prime
market. Based on the evaluation of risk through credit scoring, we are able to
price each finance contract purchase according to risk. Our goal is to balance
risk with our targeted returns.
We believe that our risk management strategies have set AmeriCredit apart and
allowed us this past year to avoid the deteriorating credit experience recently
reported by some consumer credit lenders.
TECHNOLOGY AND EFFICIENCY
The deployment of leading edge technology combined with economies of scale
realized from our centralized branch support and loan servicing operations has
enabled AmeriCredit to be a low cost provider in our business. AmeriCredit's
ratio of operating expenses to average net managed finance receivables
outstanding decreased to 7.2% for fiscal 1996 from 10.0% for fiscal 1995. This
ratio should improve further as we benefit from continued portfolio growth and
information systems developments.
During fiscal 1996, we continued to make investments in our operating platform.
Among other enhancements, we upgraded the predictive dialing and automated
collection systems used in our loan servicing centers. Voice response
technology was installed to more efficiently and effectively manage customer
service. A new version of our automated application processing system was
implemented in the branch offices. We have also further developed our
behavioral scoring models which are used to focus our collection efforts and
contain loan servicing costs. AmeriCredit is committed to remaining at the
forefront of technology in the sub-prime auto finance sector.
FINANCE ACTIVITY
AmeriCredit's asset securitization program has evolved to become the primary
source of funding for our growth. We completed three automobile receivables-
backed securities transactions in fiscal 1996, raising a total of $270.3
million. Our fourth quarter securitization was a public issuance which reduced
our overall funding cost and attracted a more diversified investor base. We
plan to access the automobile receivables-backed securities market each
calendar quarter going forward. Our $150 million bank line of credit, which we
use to warehouse finance receivables between securitization transactions, will
also be expanded in fiscal 1997.
4
<PAGE>
The Company repurchased 829,000 shares of our stock in fiscal 1996 at an
aggregate price of $10.7 million or $12.92 per share. An additional 315,000
shares were repurchased in July and August of 1996. AmeriCredit's stock
buyback program, authorized by the Board of Directors, allows the repurchase of
another 1.4 million shares.
OUTLOOK
We are pleased that during the past year the financial community has taken note
of AmeriCredit's unique risk management approach, operating efficiencies and
growth prospects. The Company attracted broader shareholder interest and
analyst coverage in fiscal 1996. Our hometown newspaper, The Fort Worth Star
Telegram, recognized us as the top performing public company of 1995 in the
Fort Worth area.
AmeriCredit set out over four years ago to be a dominant player in sub-prime
auto finance - building market share on a solid foundation of quality people
and superior risk management - and to be a low cost provider aided by leading
edge technology. We remain absolutely committed to these strategies and the
creation of shareholder value.
We appreciate the continued interest, support and loyalty of all of our
employees, customers and shareholders.
Sincerely,
Clifton H. Morris, Jr.
Chairman of the Board, Chief
Executive Officer and President
September 13, 1996
5
<PAGE>
AMERICREDIT CORP.
SUMMARY FINANCIAL AND OPERATING INFORMATION
(dollars in thousands, except per share data)
<TABLE>
Year Ended
-------------------------------------------------------------
June 30, June 30, June 30, June 30, June 30,
1996 1995 (a) 1994 1993 (b) 1992
--------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Finance charge income $ 51,706 $ 30,249 $ 12,788 $ 13,904 $ 23,989
Gain on sale of
receivables 22,873
Sales 8,271 48,454
Income (loss) before
income taxes 34,256 10,018 5,065 (19,366) (23,257)
Net income (loss) 21,591 28,893 5,065 (19,366) (24,201)
Earnings (loss) per
share .71 .95 .16 (.66) (.77)
Weighted average shares
and share
equivalents 30,203,298 30,380,749 31,818,083 29,267,419 31,482,225
</TABLE>
<TABLE>
June 30, June 30, June 30, June 30, June 30,
1996 1995 1994 1993 1992
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents
and investment
securities $ 24,007 $ 33,586 $ 42,262 $ 68,425 $ 39,303
Finance receivables,
net 250,484 221,888 72,150 43,889 69,527
Excess servicing
receivable 33,093
Total assets 330,159 285,725 122,215 131,127 153,564
Total liabilities 166,934 138,499 2,714 8,343 6,224
Shareholders' equity 163,225 147,226 119,501 122,784 147,340
</TABLE>
(a) As further described in the Financial Review, the Company recognized an
income tax benefit in fiscal 1995 equal to the expected future tax
savings from using its net operating loss carryforward and other future
tax benefits.
(b) The Company withdrew from the retail used car sales business effective
December 31, 1992.
6
<PAGE>
FINANCIAL REVIEW
GENERAL
Since September 1992, the Company has been in the business of purchasing and
servicing automobile sales finance contracts originated by franchised and
independent dealers. Finance receivables originated in this business are
referred to as indirect receivables. Finance receivables originated in
businesses previously operated by the Company are referred to as other
receivables.
Indirect-owned finance receivables represent finance contracts held in the
Company's loan portfolio. The Company earns finance charge income on these
finance receivables. When indirect finance receivables are sold to special
purpose financing trusts (the "Trusts") in automobile receivables-backed
securities transactions, the Company recognizes a gain on sale of receivables
and continues to service such finance receivables. Indirect-serviced finance
receivables represent finance contracts sold with servicing retained by the
Company. The Company earns servicing fee income for acting as servicer of
these finance receivables.
RESULTS OF OPERATIONS
YEAR ENDED JUNE 30, 1996 AS COMPARED TO
YEAR ENDED JUNE 30, 1995
REVENUE:
The Company's average net owned and serviced finance receivables outstanding
consisted of the following (in thousands):
Years Ended
June 30,
----------------------------
1996 1995
---- ----
Indirect-owned $261,776 $141,526
Indirect-serviced 96,190
-------- --------
357,966 141,526
Other 443 6,918
-------- --------
$358,409 $148,444
-------- --------
-------- --------
7
<PAGE>
The Company's finance charge income consisted of the following (in thousands):
Years Ended
June 30,
----------------------------------
1996 1995
---- ----
Indirect $51,679 100% $ 29,039 96%
Other 27 0% 1,210 4%
------- ---- -------- ----
$51,706 100% $ 30,249 100%
------- ---- -------- ----
------- ---- -------- ----
The increase in indirect finance charge income is due to growth of 85% in
average net indirect-owned finance receivables outstanding. The Company
purchased $432.4 million of indirect loans during fiscal 1996, compared to
$230.2 million during fiscal 1995. This growth resulted from loan production
at branches open during both periods as well as expansion of the Company's loan
production capacity. The Company operated 51 branch offices as of June 30,
1996, compared to 31 as of June 30, 1995. The decrease in other finance charge
income is due to the ongoing liquidation of the related receivables portfolios.
The Company's effective yield on its finance receivables decreased to 19.7%
from 20.4%.
Gain on sale of receivables of $22.9 million in fiscal 1996 resulted from the
sale of finance receivables to the Trusts and the issuance to investors of
$270.3 million of automobile receivables-backed securities by the Trusts. The
gain represents the difference between the sales proceeds, net of transaction
costs, and the Company's net carrying value of the receivables sold, plus
excess servicing spread. Excess servicing spread is the present value of
estimated future collections and recoveries on the finance receivables sold to
the Trusts, less the present value of required principal and interest payments
to the investors, base servicing fees payable to the Company and certain other
fees. The gain on sale of receivables amounted to 8.5% of the sales proceeds
for fiscal 1996.
The Company's issuances of automobile receivables-backed securities in fiscal
1995 were structured as debt issuances by subsidiaries of the Company and thus
were accounted for as borrowings on the Company's consolidated balance sheets,
rather than as sales of receivables. Since the Company intends to structure
future issuances of automobile receivables-backed securities in a manner which
will result in the recognition of a gain on sale of receivables, the amount and
8
<PAGE>
timing of such future transactions will significantly impact the Company's
earnings from period to period.
Servicing fee income of $3.7 million in fiscal 1996 represents the Company's
base servicing fees and other fees earned for acting as servicer of the finance
receivables sold to the Trusts and net excess servicing fees.
COSTS AND EXPENSES:
Operating expenses as a percentage of average net owned and serviced finance
receivables outstanding decreased to 7.2% for fiscal 1996 as compared to 10.0%
for fiscal 1995. The ratio improved as a result of economies of scale realized
from a growing finance receivables portfolio and automation of loan
origination, processing and servicing functions. The dollar amount of
operating expenses increased by $10.9 million, or 74%, primarily due to the
addition of branch offices and branch management and loan processing and
servicing staff.
The provision for losses increased to $7.9 million as compared to $4.3 million.
Further discussion concerning the provision for losses is included under the
caption, "Finance Receivables".
Interest expense increased to $13.1 million for fiscal 1996 as compared to $4.0
million for fiscal 1995 due to the higher debt levels necessary to fund the
Company's increased loan origination volume. Average debt outstanding was
$163.8 million and $44.3 million for the years ended June 30, 1996 and 1995,
respectively. The Company's effective rate of interest paid on its debt
decreased to 8.0% from 9.1%.
The provision for income taxes for fiscal 1996 resulted primarily from
amortization of the Company's deferred tax asset at the federal statutory
income tax rate. In the fourth quarter of fiscal 1995, the Company recognized
an income tax benefit and a corresponding deferred tax asset equal to the
expected future tax savings from using its net operating loss carryforward and
other future tax benefits. The deferred tax asset is being amortized through a
non-cash income tax provision against the Company's earnings as the net
operating loss carryforward and other future tax benefits are utilized. The
Company will not pay regular federal income taxes until the net operating loss
carryforward and other future tax benefits have been fully recovered. Prior to
the fourth quarter of fiscal 1995, the Company had offset the deferred tax
9
<PAGE>
asset with a valuation allowance. Accordingly, there was no provision for
federal income taxes in fiscal 1995.
YEAR ENDED JUNE 30, 1995 AS COMPARED TO
YEAR ENDED JUNE 30, 1994
REVENUE:
The Company's average net finance receivables outstanding consisted of the
following (in thousands):
Years Ended
----------------------------
June 30, June 30,
1995 1994
---- ----
Indirect $141,526 $37,507
Other 6,918 25,260
-------- -------
$148,444 $62,767
-------- -------
-------- -------
The Company's finance charge income consisted of the following (in thousands):
Years Ended
----------------------------
June 30, June 30,
1995 1994
---- ----
Indirect $29,039 96% $ 7,820 61%
Other 1,210 4% 4,968 39%
------- ---- ------- ----
$30,249 100% $12,788 100%
------- ---- ------- ----
------- ---- ------- ----
The increase in indirect finance charge income is due to growth of 277% in
average net indirect finance receivables outstanding. The Company purchased
$230.2 million of indirect loans during fiscal 1995, compared to $65.9 million
during fiscal 1994. This growth resulted from loan production at branches open
during both periods as well as expansion of the Company's loan production
capacity. The Company operated 31 branch offices as of June 30, 1995, compared
to 18 as of June 30, 1994. The decrease in other finance charge income is due
to the ongoing liquidation of the related receivables portfolios. The Company's
overall effective yield on its finance receivables was 20.4% for both fiscal
years.
10
<PAGE>
COSTS AND EXPENSES:
Operating expenses as a percentage of average net finance receivables
outstanding decreased to 10.0% for fiscal 1995 as compared to 15.0% for fiscal
1994. The ratio improved as a result of economies of scale realized from a
growing finance receivables portfolio and automation of loan origination,
processing and servicing functions. The dollar amount of operating expenses
increased by $5.4 million, or 57%, primarily due to the addition of branch
offices and branch management and loan processing and servicing staff.
The provision for losses increased to $4.3 million as compared to $1.2 million.
Further discussion concerning the provision for losses is included under the
caption, "Finance Receivables".
Interest expense of $4.0 million for fiscal 1995 resulted from borrowings on
the Company's bank line of credit and the issuance of $51 million and $99.2
million of automobile receivables-backed notes in December 1994 and June 1995,
respectively. The Company did not have any bank borrowings during fiscal 1994.
The income tax benefit in fiscal 1995 resulted from the Company's recognition
of a deferred tax asset equal to the expected future tax savings from using its
net operating loss carryforward and other future tax benefits. Based on the
Company's trend of positive operating results since entering the indirect
automobile finance business in September 1992 and future expectations, the
Company determined in the fourth quarter of fiscal 1995 that it is more likely
than not that its net operating loss carryforward and other future tax benefits
will be fully utilized prior to expiration of the carryforward periods. Prior
to the fourth quarter of fiscal 1995, the Company had offset the deferred tax
asset with a valuation allowance. Accordingly, there was no provision for
federal income taxes in fiscal 1995 and 1994.
FINANCE RECEIVABLES
The Company provides financing in relatively high-risk markets, and therefore,
charge-offs are anticipated. The Company records a periodic provision for
losses as a charge to operations and a related allowance for losses in the
consolidated balance sheets as a reserve against estimated future losses in the
indirect-owned finance receivables portfolio. The Company typically purchases
individual finance contracts with a non-refundable acquisition fee on a non-
recourse basis. Such acquisition fees are also recorded in the consolidated
balance sheets as an allowance for losses. The calculation of excess servicing
11
<PAGE>
receivable includes an allowance for estimated future losses over the remaining
term of the finance receivables sold to the Trusts and serviced by the Company.
The Company reviews historical origination and charge-off relationships,
charge-off experience factors, collections information, delinquency reports,
estimates of the value of the underlying collateral, economic conditions and
trends and other information in order to make the necessary judgments as to the
appropriateness of the periodic provision for losses and the allowance for
losses. Although the Company uses many resources to assess the adequacy of the
allowance for losses, there is no precise method for accurately estimating the
ultimate losses in the finance receivables portfolio.
Net finance receivables represented 75.9% and 77.7% of the Company's total
assets at June 30, 1996 and 1995, respectively. The following table presents
certain data related to the finance receivables portfolio (dollars in
thousands):
June 30,
1996
-------------------------------------
Indirect Indirect Total
Owned Serviced Portfolio
-------------------------------------
Gross finance receivables $315,552 $314,796 $630,348
Unearned finance charges
and fees (51,466) (54,901) (106,367)
--------- --------- ---------
Finance receivables 264,086 $259,895 $523,981
--------- ---------
--------- ---------
Allowance for losses (13,602) $ 25,616 (1) $ 39,218
--------- --------- ---------
--------- --------- ---------
Finance receivables, net $250,484
---------
---------
Number of outstanding contracts 30,366 29,547
--------- --------
--------- --------
Average amount of outstanding
contract (principal amount) $ 8,697 $ 8,796
(in dollars) --------- --------
--------- --------
Allowance for losses as a
percentage of finance receivables 5.2% 9.9% 7.5%
--------- --------- ---------
--------- --------- ---------
(1) The allowance for losses related to indirect-serviced finance receivables
is netted against excess servicing receivable in the Company's consolidated
balance sheets.
12
<PAGE>
June 30,
1995
-------------------------------------
Indirect Total
Owned Other Portfolio
-------------------------------------
Gross finance receivables $287,360 $ 1,373 $288,733
Unearned finance charges
and fees (46,869) (25) (46,894)
--------- --------- ---------
Finance receivables 240,491 1,348 241,839
Allowance for losses (19,376) (575) (19,951)
--------- --------- ---------
Finance receivables, net $221,115 $ 773 $221,888
--------- --------- ---------
--------- --------- ---------
Number of outstanding
contracts 30,941
---------
---------
Average amount of
outstanding contract
(principal amount)
(in dollars) $ 7,773
---------
---------
Allowance for losses as a
percentage of finance
receivables 8.1%
---------
---------
The following is a summary of net indirect owned and serviced finance
receivables which are more than 60 days delinquent (dollars in thousands):
June 30,
---------------
1996 1995
---- ----
Delinquent contracts $16,207 $ 4,907
Delinquent contracts as a
percentage of total net indirect
owned and serviced finance receivables
outstanding 3.1% 2.0%
13
<PAGE>
The following table presents charge-off data with respect to the Company's
net indirect owned and serviced finance receivables portfolio (dollars in
thousands):
Years Ended
June 30,
----------------------------
1996 1995 1994
---- ---- ----
Net charge-offs:
Indirect-owned $18,322 $6,409 $1,432
Indirect-serviced 1,652
------- ------ ------
$19,974 $6,409 $1,432
------- ------ ------
------- ------ ------
Net charge-offs as a percentage
of average net indirect owned
and serviced finance
receivables outstanding 5.6% 4.5% 3.8%
------- ------ ------
------- ------ ------
The Company recorded periodic provisions for losses as charges to operations of
$7,912,000, $4,156,000 and $1,062,000 related to its indirect owned finance
receivables portfolio for the years ended June 30, 1996, 1995 and 1994,
respectively. (Provisions for losses of $122,000 and $187,000 for the years
ended June 30, 1995 and 1994, respectively, were recorded with respect to other
finance receivables). The increased loss provisions are a result of higher
average net indirect-owned finance receivables outstanding.
The Company began its indirect automobile finance business in September 1992
and has grown its total net owned and serviced finance receivables portfolio to
$524.0 million as of June 30, 1996. The Company expects that its delinquency
and charge-offs will increase over time as the portfolio matures and its
finance receivables growth rate moderates. Accordingly, the delinquency and
charge-off data above is not necessarily indicative of delinquency and charge-
off experience that could be expected for a more seasoned portfolio.
14
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash flows are summarized as follows (in thousands):
Years Ended
June 30,
-------------------------------
1996 1995 1994
---- ---- ----
Operating activities $34,897 $ 14,637 $ 3,900
Investing activities (63,116) (144,512) (12,174)
Financing activities 12,050 132,433 (9,238)
--------- ---------- ---------
Net increase (decrease) in
cash and cash equivalents $(16,169) $ 2,558 (17,512)
--------- ---------- ---------
--------- ---------- ---------
In addition to the net change in cash and cash equivalents shown above, the
Company also had net decreases in investment securities of $3.7 million, $16.2
million and $8.7 million for the years ended June 30, 1996, 1995 and 1994,
respectively. Such amounts are included as investing activities in the above
table.
The Company's primary sources of cash have been collections and recoveries on
its finance receivables portfolio, borrowings under its bank line of credit and
the issuance of automobile receivables-backed securities.
The Company has a line of credit with a group of banks under which it may
borrow up to $150 million, subject to a defined borrowing base. The Company
utilizes the line of credit to fund its daily lending activities and
operations. A total of $86.0 million was outstanding under the line of credit
as of June 30, 1996.
During fiscal 1996 and 1995, the Company completed five automobile receivables-
backed securities transactions. The proceeds from the transactions were used in
each case to repay a portion of the borrowings then outstanding under the
Company's bank line of credit. A summary of these transactions is as follows:
15
<PAGE>
<TABLE>
Amount Investor Accounting
Issuer Name Date (in Millions) Rate Treatment
- ----------- ---- ----------- ------ ---------
<S> <C> <C> <C> <C>
AmeriCredit Receivables Finance Corp.
1994-A Dec. 1994 $ 51.0 8.19% Borrowing
AmeriCredit Receivables Finance Corp.
1995-A Jun. 1995 99.2 6.55% Borrowing
AmeriCredit Automobile Receivables
Trust 1995-B Dec. 1995 65.0 6.10% Sale of Receivables
AmeriCredit Automobile Receivables
Trust 1996-A Mar. 1996 89.4 5.70% Sale of Receivables
AmeriCredit Automobile Receivables
Trust 1996-B May 1996 115.9 6.50% Sale of Receivables
</TABLE>
The securities listed above were rated "Aaa" by Moody's Investors Service, Inc.
and "AAA" by Standard and Poor's Ratings Services. Financial Security
Assurance, Inc. issued financial guaranty insurance policies for the benefit of
the investors in each series.
The Company's primary use of cash has been purchases and originations of
finance receivables. The Company purchased $432.4 million of finance contracts
during fiscal 1996 requiring cash of $417.2 million, net of acquisition fees
and other factors. The Company operated 51 branch offices and had a number of
marketing representatives as of June 30, 1996. The Company plans to open thirty
additional branches in fiscal 1997. The Company may also expand loan
production capacity at existing offices where appropriate. While the Company
has been able to establish and grow its indirect automobile finance business
thus far, there can be no assurance that future expansion will be successful
due to competitive, regulatory, market, economic or other factors.
The Company's Board of Directors has authorized the repurchase of up to
6,000,000 shares of the Company's common stock. A total of 4,279,500
shares at an aggregate purchase price of $22.9 million had been purchased
pursuant to this program through June 30, 1996.
As of June 30, 1996, the Company had $8.7 million in cash and cash equivalents
and investment securities. The Company also had available borrowing capacity of
$64.0 million under its bank line of credit. The Company estimates that it
will require additional external capital for fiscal 1997 in addition to these
existing capital resources and collections and recoveries on its finance
receivables portfolio in order to fund expansion of its indirect automobile
finance business, capital expenditures, additional common stock repurchases and
other costs and expenses.
16
<PAGE>
The Company anticipates that such funding will be in the form of additional
automobile receivables-backed securities transactions, expansion of its bank
line of credit and the implementation of other warehouse financing facilities.
There can be no assurance that funding will be available to the Company through
these sources, or if available, that it will be on terms acceptable to the
Company.
Since the Company's funding strategy is dependent upon the issuance of
interest-bearing securities and the incurrence of other debt, fluctuations in
interest rates impact the Company's profitability. The Company uses several
strategies to minimize the risk of interest rate fluctuations including the use
of hedging instruments and the regular sale of finance receivables to the
Trusts. There can be no assurance that these strategies will be effective in
minimizing interest rate risk or that increases in interest rates will not have
an adverse effect on the Company's profitability.
17
<PAGE>
AMERICREDIT CORP.
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
ASSETS
June 30, June 30,
1996 1995
---- ----
Cash and cash equivalents $ 2,145 $ 18,314
Investment securities 6,558 10,265
Finance receivables, net 250,484 221,888
Excess servicing receivable 33,093
Restricted cash 15,304 5,007
Property and equipment, net 7,670 6,036
Deferred income taxes 9,995 19,788
Other assets 4,910 4,427
-------- ---------
Total assets $330,159 $ 285,725
-------- ---------
-------- ---------
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Bank line of credit $ 86,000 $
Automobile receivables-backed notes 67,847 134,520
Notes payable 418 716
Accrued taxes and expenses 12,669 3,263
-------- ---------
Total liabilities 166,934 138,499
-------- ---------
Commitments and contingencies
Shareholders' equity:
Preferred stock, $.01 par value per share,
20,000,000 shares authorized; none issued
Common stock, $.01 par value per share,
120,000,000 shares authorized;
32,640,963 and 32,117,201 shares issued 326 321
Additional paid-in capital 190,005 185,573
Accumulated deficit (5,233) (26,824)
-------- ---------
185,098 159,070
Treasury stock, at cost (4,120,483 and
3,400,039 shares) (21,873) (11,844)
-------- ---------
Total shareholders' equity 163,225 147,226
-------- ---------
Total liabilities and shareholders'
equity $330,159 $285,725
-------- ---------
-------- ---------
The accompanying notes are an integral part
of these consolidated financial statement
18
<PAGE>
AMERICREDIT CORP.
CONSOLIDATED INCOME STATEMENTS
(dollars in thousands, except per share data)
Years Ended
----------------------------------------
June 30, June 30, June 30,
1996 1995 1994
-------- -------- --------
Revenue:
Finance charge income $ 51,706 $ 30,249 $ 12,788
Gain on sale of receivables 22,873
Servicing fee income 3,712
Investment income 1,075 1,284 2,550
Other income 1,612 1,551 544
--------- --------- ---------
80,978 33,084 15,882
--------- --------- ---------
Costs and expenses:
Operating expenses 25,681 14,773 9,400
Provision for losses 7,912 4,278 1,249
Interest expense 13,129 4,015 168
--------- --------- ---------
46,722 23,066 10,817
--------- --------- ---------
Income before income taxes 34,256 10,018 5,065
Income tax provision (benefit) 12,665 (18,875)
--------- --------- ---------
Net income $ 21,591 $ 28,893 $ 5,065
--------- --------- ---------
--------- --------- ---------
Earnings per share $ .71 $ .95 $ .16
--------- --------- ---------
--------- --------- ---------
Weighted average shares and
share equivalents 30,203,298 30,380,749 31,818,083
---------- ---------- ----------
---------- ---------- ----------
The accompanying notes are an integral part
of these consolidated financial statements
19
<PAGE>
AMERICREDIT CORP.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(dollars in thousands)
<TABLE>
Common Stock Additional Treasury Stock
----------------- Paid-in Accumulated --------------
Shares Amount Capital Deficit Shares Amount
------ ------ ------- --------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
Balance at July 1, 1993 31,723,733 $ 317 $189,695 $(60,782) 2,614,200 $ (6,446)
Common stock issued on
exercise of options 33,600 1 130
Purchase of treasury stock 403,100 (2,297)
Purchase and cancellation
of stock option (6,237)
Common stock issued for
employee benefit plan (8,940) 55
Net income 5,065
---------- ---- -------- -------- --------- ---------
Balance at June 30, 1994 31,757,333 318 183,588 (55,717) 3,008,360 (8,688)
Common stock issued on
exercise of options 359,868 3 1,302
Income tax benefit from
exercise of options 683
Purchase of treasury stock 433,200 (3,412)
Common stock issued for
employee benefit plans (41,521) 256
Net income 28,893
---------- ---- -------- -------- --------- ---------
Balance at June 30, 1995 32,117,201 321 185,573 (26,824) 3,400,039 (11,844)
Common stock issued on
exercise of options 523,762 5 3,045
Income tax benefit from
exercise of options
1,387
Purchase of treasury
stock 829,000 (10,710)
Common stock issued for
employee benefit plans (108,556) 681
Net income 21,591
---------- ---- -------- -------- --------- ---------
Balance at June 30, 1996 32,640,963 $326 $190,005 $(5,233) 4,120,483 $(21,873)
---------- ---- -------- -------- --------- ---------
---------- ---- -------- -------- --------- ---------
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements
20
<PAGE>
AMERICREDIT CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
<TABLE>
Years Ended
---------------------------------------
June 30, June 30, June 30,
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 21,591 $ 28,893 $ 5,065
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 1,528 1,317 1,274
Provision for losses 7,912 4,278 1,249
Deferred income taxes 11,681 (18,954)
Gain on sale of receivables (22,873)
Amortization of excess servicing
receivable 6,636
Changes in assets and liabilities:
Other assets (984) (1,834) 1,051
Accrued taxes and expenses 9,406 937 (4,739)
-------- -------- --------
Net cash provided by operating
activities 34,897 14,637 3,900
-------- -------- --------
Cash flows from investing activities:
Purchases and originations of finance
receivables (417,235) (225,350) (76,208)
Principal collections and recoveries
on finance receivables 94,948 71,334 46,698
Net proceeds from sale of receivables 268,923
Purchases of property and equipment (3,166) (1,791) (3,255)
Proceeds from disposition of property
and equipment 4 61 640
Purchases of investment securities (19,183)
Proceeds from sales and maturities of
investment securities 3,707 16,241 27,834
Increase in restricted cash (10,297) (5,007)
Proceeds from sale of investment in
affiliate 11,300
-------- -------- --------
Net cash used by investing
activities (63,116) (144,512) (12,174)
-------- -------- --------
Cash flows from financing activities:
Borrowings on bank line of credit 342,600 83,900
Payments on bank line of credit (256,600) (83,900)
Proceeds from issuance of automobile
receivables-backed notes 150,170
Payments on automobile receivables-
backed notes (66,673) (15,650)
Payments on notes payable (298) (236) (890)
Proceeds from issuance of common stock 3,731 1,561 186
Purchase of treasury stock (10,710) (3,412) (2,297)
Purchase and cancellation of stock
option (6,237)
-------- -------- --------
Net cash provided (used)
by financing activities 12,050 132,433 (9,238)
-------- -------- --------
Net increase (decrease) in cash and
cash equivalents (16,169) 2,558 (17,512)
Cash and cash equivalents at beginning
of year 18,314 15,756 33,268
-------- -------- --------
Cash and cash equivalents at end of year $ 2,145 $ 18,314 $ 15,756
-------- -------- --------
-------- -------- --------
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements
21
<PAGE>
AMERICREDIT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
HISTORY AND OPERATIONS
AmeriCredit Corp. ("the Company") was formed on August 1, 1986 and began
operations in March 1987. Since September 1992, the Company has been in the
business of purchasing automobile sales finance contracts originated by
franchised and independent dealers, generally referred to as indirect lending.
The Company operated 51 indirect lending branch offices in 26 states as of June
30, 1996 and also had a group of marketing representatives doing business in
both branch territories and other areas.
BASIS OF PRESENTATION
The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries. All significant intercompany transactions and
accounts have been eliminated in consolidation.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
which affect the reported amounts of assets and liabilities and the disclosures
of contingent assets and liabilities as of the date of the financial statements
and the amount of revenue and costs and expenses during the reporting periods.
Actual results could differ from those estimates. These estimates include,
among other things, anticipated prepayments and credit losses on finance
receivables sold in automobile receivables-backed securities transactions and
the determination of the allowance for losses on finance receivables.
CASH EQUIVALENTS
Investments in highly liquid securities with original maturities of 90 days or
less are included in cash and cash equivalents.
INVESTMENT SECURITIES
Investment securities are considered held-to-maturity and are carried at
amortized cost.
22
<PAGE>
AMERICREDIT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FINANCE RECEIVABLES
Finance charge income related to finance receivables is recognized using the
interest method. Accrual of finance charge income is suspended on finance
contracts which are more than 60 days delinquent. Fees and commissions
received and direct costs of originating loans are deferred and amortized over
the term of the related finance contracts also using the interest method.
Provisions for losses are charged to operations in amounts sufficient to
maintain the allowance for losses at a level considered adequate to cover
estimated losses in the finance receivables portfolio. Automobile finance
sales contracts are typically purchased by the Company for a non-refundable
acquisition fee on a non-recourse basis, and such acquisition fees are also
added to the allowance for losses. The Company reviews historical origination
and charge-off relationships, charge-off experience factors, collections
information, delinquency reports, estimates of the value of the underlying
collateral, economic conditions and trends and other information in order to
make the necessary judgments as to the appropriateness of the periodic
provision for losses and the allowance for losses. Finance contracts are
charged-off to the allowance for losses when the Company repossesses and
disposes of the collateral or the account is otherwise deemed uncollectible.
EXCESS SERVICING RECEIVABLE
The Company periodically sells finance receivables to certain special purpose
financing trusts (the "Trusts"), and the Trusts issue automobile receivables-
backed securities to investors in order to provide the sales proceeds. A gain
on sale of receivables is recognized by the Company on the settlement date of
such transactions.
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
finance receivables sold, plus excess servicing spread. Excess servicing
spread is the present value of estimated future collections and recoveries on
the finance receivables sold to the Trusts, less the present value of required
principal and interest payments to the investors, base servicing fees payable
to the Company and certain other fees.
23
<PAGE>
AMERICREDIT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
EXCESS SERVICING RECEIVABLE (CONT.)
Concurrently with recognizing such gain on sale of receivables, the Company
records a corresponding asset, excess servicing receivable, equal to the excess
servicing spread described above plus any subordinated interests in the Trusts
retained by the Company. Excess servicing receivable is amortized, as a charge
to servicing fee income, over the estimated term of the finance receivables
sold. Collections of excess servicing receivable are recognized as servicing
fee income when received.
The calculation of excess servicing receivable includes estimates of future
credit losses and prepayment rates for the remaining term of the finance
receivables sold since these factors impact the amount and timing of future
collections and recoveries on the finance receivables. The carrying value of
excess servicing receivable is reviewed quarterly by the Company on a
disaggregated basis by Trust. If future credit losses and prepayment rates
exceed the Company's original estimates, excess servicing receivable will be
adjusted through a charge to servicing fee income. Favorable credit loss and
prepayment experience compared to the Company's original estimates would result
in additional servicing fee income.
RESTRICTED CASH
A financial guaranty insurance company (the "Insurer") has provided a financial
guaranty insurance policy for the benefit of the investors in each series of
automobile receivables-backed securities issued by the Trusts or special
purpose financing subsidiaries of the Company. In connection with the issuance
of the policies, the Company was required to establish a separate cash account
with a trustee for the benefit of the Insurer for each series of securities and
related finance receivables pool. Monthly collections and recoveries from each
pool of finance receivables in excess of required principal and interest
payments on the securities and servicing and other fees are added to the
restricted cash accounts until the balance reaches a specified percentage of
the pool of finance receivables, and thereafter are distributed to the Company.
In the event that monthly collections and recoveries from any pool of finance
receivables are insufficient to make required principal and interest payments
to the investors and pay servicing and other fees, any shortfall would be drawn
from the restricted cash accounts.
24
<PAGE>
AMERICREDIT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
RESTRICTED CASH (CONT.)
Certain agreements with the Insurer provide that if delinquency, default and
net loss ratios in the pools of finance receivables supporting the automobile
receivables-backed securities exceed certain amounts, the specified levels of
the restricted cash accounts would be increased and, in certain cases, the
Company would be removed as servicer of the finance receivables.
PROPERTY AND EQUIPMENT
Property and equipment are carried at cost. Depreciation is generally provided
on a straight-line basis over the estimated useful lives of the assets.
The cost of assets sold or retired and the related accumulated depreciation are
removed from the accounts at the time of disposition, and any resulting gain or
loss is included in operations. Maintenance, repairs, and minor replacements
are charged to operations as incurred; major replacements and betterments are
capitalized.
OFF BALANCE SHEET FINANCIAL INSTRUMENTS
The Company periodically enters into hedging transactions to manage the gross
interest rate spread on its automobile receivables-backed securities
transactions. The Company's hedging strategies include the use of Forward U.S.
Treasury Rate Lock Agreements. The face amount and terms of these agreements
generally correspond to the principal amount and average maturities of the
finance receivables to be sold to the Trusts and the related securities to be
issued by the Trusts. Gains or losses on these agreements are deferred and
recognized as a component of the gain on sale of receivables at the time that
finance receivables are sold to the Trusts.
INCOME TAXES
Deferred income taxes are provided, when appropriate, in accordance with the
asset and liability method of accounting for income taxes as prescribed by
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes", to recognize the tax effects of temporary differences between financial
statement and income tax accounting.
25
<PAGE>
AMERICREDIT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
EARNINGS PER SHARE
Earnings per share is based upon the weighted average number of shares
outstanding during each year, adjusted for any dilutive effect of warrants
and options using the treasury stock method.
2. INVESTMENT SECURITIES
The amortized cost and estimated fair value of investment securities as of
June 30, 1996, by issuer type, are as follows (in thousands):
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------- ---------- ---------- ---------
U.S. Government
obligations $ 5,000 $ $ 304 $4,696
Mortgage-backed
securities 1,558 1,558
------- ------- ------- ------
$ 6,558 $ $ 304 $6,254
------- ------- ------- ------
------- ------- ------- ------
The amortized cost and estimated fair value of investment securities as of
June 30, 1995, by issuer type, are as follows (in thousands):
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------- ---------- ---------- ---------
U.S. Government
obligations $ 5,000 $ $ 220 $4,780
Corporate debt
securities 1,000 1,000
Mortgage-backed
securities 4,265 4 122 4,147
------- ------- ------- ------
$10,265 $ 4 $ 342 $9,927
------- ------- ------- ------
------- ------- ------- ------
The amortized cost and estimated fair value of investment securities as of
June 30, 1996, by contractual maturity, are shown below (in thousands).
Expected maturities will differ from contractual maturities because borrowers
may have
26
<PAGE>
AMERICREDIT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. INVESTMENT SECURITIES (cont.)
the right to call or prepay obligations with or without call or prepayment
penalties.
Estimated
Amortized Fair
Cost Value
--------- ---------
Due after one year through two years $5,000 $4,696
Mortgage-backed securities 1,558 1,558
------ ------
$6,558 $6,254
------ ------
------ ------
Proceeds from the sale of investment securities during the year ended June
30, 1994 were $1,857,000. No material gain or loss was realized on the sale.
3. FINANCE RECEIVABLES
Finance receivables consist of the following (in thousands):
June 30, June 30,
1996 1995
-------- --------
Gross finance receivables:
Indirect $315,552 $287,360
Other 1,373
-------- --------
315,552 288,733
Less unearned finance charges and fees (51,466) (46,894)
-------- --------
Principal amount of finance receivables 264,086 241,839
Less allowance for losses (13,602) (19,951)
-------- --------
Finance receivables, net $250,484 $221,888
-------- --------
-------- --------
Indirect automobile sales finance contracts are collateralized by vehicle
titles and the Company has the right to repossess the vehicle in the event
that the consumer defaults on the payment terms of the contract.
27
<PAGE>
AMERICREDIT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. FINANCE RECEIVABLES (cont.)
The accrual of finance charge income has been suspended on $17,339,000 and
$7,863,000 of delinquent finance contracts as of June 30, 1996 and 1995,
respectively.
Contractual maturities of finance receivables for years ending June 30 are as
follows (in thousands):
1997 $ 73,477
1998 65,656
1999 58,687
2000 43,272
2001 22,994
--------
$264,086
--------
--------
The Company's experience has been that a portion of the scheduled payments
will be received prior to contractual maturity dates.
A summary of the allowance for losses is as follows (in thousands):
Years Ended
----------------------------------------
June 30, June 30, June 30,
1996 1995 1994
--------- ---------- ----------
Balance at beginning of year $19,951 $ 9,330 $12,581
Provision for losses 7,912 4,278 1,249
Acquisition fees 18,097 13,908 4,716
Allowance related to receivables
sold (13,461)
Net charge-offs-indirect (18,322) (6,409) (1,432)
Net charge-offs-other (575) (1,156) (7,784)
------- ------- -------
Balance at end of year $13,602 $19,951 $ 9,330
------- ------- -------
------- ------- -------
28
<PAGE>
AMERICREDIT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. EXCESS SERVICING RECEIVABLE
As of June 30, 1996, the Company was servicing $259,895,000 of automobile
sales finance contracts which have been sold to the Trusts.
Excess servicing receivable consists of the following (in thousands):
June 30,
1996
--------
Estimated future net cash flows before
allowance for credit losses $ 63,457
Allowance for credit losses (25,616)
--------
Estimated future net cash flows 37,841
Unamortized discount at 12% (4,748)
--------
$ 33,093
--------
--------
A summary of excess servicing receivable is as follows (in thousands):
Year Ended
June 30,
----------
1996
----
Balance at beginning of period $ 0
Additions related to
receivables sold 39,729
Amortization (6,636)
-------
Balance at end of period $33,093
-------
-------
29
<PAGE>
AMERICREDIT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. PROPERTY AND EQUIPMENT
Property and equipment consists of the following (in thousands):
June 30, June 30,
1996 1995
-------- --------
Land $ 600 $ 600
Buildings and improvements 1,973 1,903
Equipment 6,994 6,230
Furniture and fixtures 828 1,003
------- -------
10,395 9,736
Less accumulated depreciation
and amortization (2,725) (3,700)
------- -------
$7,670 $6,036
------- -------
------- -------
6. DEBT
The Company has a revolving credit agreement with a group of banks under
which the Company may borrow up to $150 million, subject to a defined
borrowing base. Aggregate borrowings of $86,000,000 were outstanding as of
June 30, 1996. Borrowings under the credit agreement are collateralized by
certain indirect finance receivables and bear interest, based upon the
Company's option, at either the prime rate (8.25% as of June 30, 1996) or
various market London Interbank Offered Rates plus 1.65%. The Company is
also required to pay an annual commitment fee equal to 3/8% of the unused
portion of the credit agreement. The credit agreement, which expires in
October 1996, contains various restrictive covenants requiring certain
minimum financial ratios and results and placing certain limitations on the
incurrence of additional debt, capital expenditures, cash dividends and
repurchase of common stock.
30
<PAGE>
AMERICREDIT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. DEBT (cont.)
Automobile receivables-backed notes consist of the following (in thousands):
June 30, June 30,
1996 1995
---- ----
Series 1994-A notes, interest at 8.19%,
collateralized by certain finance
receivables in the principal amount
of $13,995, final maturity in
December 1999 $13,671 $ 35,350
Series 1995-A notes, interest at 6.55%,
collateralized by certain finance
receivables in the principal amount
of $55,688, final maturity
in September 2000 54,176 99,170
------- --------
$67,847 $134,520
------- --------
------- --------
The Series 1994-A notes were issued in December 1994 and initially aggregated
$51,000,000. The Series 1995-A notes were issued in June 1995 and initially
aggregated $99,170,000. Each series of notes was issued by a wholly-owned
special purpose financing subsidiary of the Company which holds the related
finance receivables. Principal and interest on the notes are payable monthly
from collections and recoveries on the specific pools of finance receivables
which are collateral for the notes.
Maturities of the automobile receivables-backed notes, based on the contractual
maturities of the underlying finance receivables, for years ending June 30 are
as follows (in thousands):
1997 $30,434
1998 22,066
1999 12,065
2000 3,282
-------
$67,847
-------
-------
The Company's experience has been that a portion of the scheduled payments on
the underlying finance receivables will be received prior to the contractual
31
<PAGE>
AMERICREDIT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. DEBT (cont.)
maturity dates. Accordingly, scheduled payments shown above for the automobile
receivables-backed notes would also be paid prior to the dates indicated.
7. COMMITMENTS AND CONTINGENCIES
Branch lending offices are generally leased for terms of up to five years with
certain rights to extend for additional periods. The Company also leases
office space for its Tempe, Arizona loan servicing facility under a 10 year
lease with renewal options. Lease expense was $875,000, $422,000 and $419,000
for the years ended June 30, 1996, 1995 and 1994, respectively. Lease
commitments for years ending June 30 are as follows (in thousands):
1997 $1,197
1998 990
1999 720
2000 480
2001 386
Thereafter 1,331
------
$5,104
------
------
As of June 30, 1996, the Company had entered into a Forward U.S. Treasury Rate
Lock Agreement to sell $100 million of U.S. Treasury Notes for settlement on
August 30, 1996. The gain or loss on this hedging position will be recognized
as a component of the gain on sale of receivables in the Company's first
automobile receivables-backed securities transaction subsequent to June 30,
1996.
The Company services automobile sales finance contracts for its own account and
for the Trusts. These finance contracts are with consumers residing throughout
the United States, with borrowers located in Texas accounting for 18% and 24%
of the total serviced portfolio as of June 30, 1996 and 1995, respectively. No
other state accounted for more than 10% of the total serviced portfolio.
In the normal course of its business, the Company is named as 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
32
<PAGE>
AMERICREDIT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. COMMITMENTS AND CONTINGENCIES (cont.)
requests for compensatory, statutory and punitive damages. One proceeding in
which the Company is a defendant has been brought as a putative class action
and is pending in federal district court in Connecticut. A class has yet to be
certified in this case and the Company's motion to dismiss is 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.
8. STOCK OPTIONS
The Company has certain stock option plans for key employees, marketing
representatives and non-employee directors. The employee and marketing
representative plans generally provide for options to be granted, become
exercisable, and terminate upon terms established by a committee of the Board
of Directors. The 1995 Omnibus Stock and Incentive Plan also provides for
the issuance of other stock-based awards to key employees. Except for the 1989
Stock Option Plan for Non-Employee Directors which has been terminated as to
future grants, the terms under which non-employee director options are to be
granted, become exercisable and terminate are established by the plans.
The Company also has a stock option plan for automobile dealers that become
part of the Company's dealership network and refer business to the Company.
Dealer options are granted based upon the volume of finance contracts purchased
by the Company from such dealer and terminate three years from the date of
grant.
33
<PAGE>
AMERICREDIT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. STOCK OPTIONS (cont.)
A summary of stock option activity under these plans is as follows:
Options Outstanding
Options ------------------------------
Available Shares Price Per Share
----------- --------- ---------------
Balance at July 1, 1993
(1,893,400 shares exercisable) 2,285,637 3,057,531 $2.50 - $14.50
Granted (814,880) 814,880 5.63 - 7.50
Canceled 78,900 (78,900) 2.88 - 14.50
Exercised (33,600) 2.50 - 5.75
----------- --------- ---------------
Balance at June 30, 1994
(2,259,465 shares exercisable) 1,549,657 3,759,911 2.50 - 14.50
Granted (1,346,490) 1,346,490 5.50 - 14.50
Canceled 162,100 (162,100) 3.00 - 14.50
Exercised (359,868) 2.80 - 8.13
Adoption of plans 4,000,000
----------- --------- ---------------
Balance at June 30, 1995
(3,247,084 shares exercisable) 4,365,267 4,584,433 2.50 - 14.50
Granted (1,801,723) 1,801,723 11.00 - 16.00
Canceled 44,500 (44,500) 4.00 - 11.00
Exercised (523,762) 2.80 - 12.88
Adoption of plan 850,000
----------- --------- ----------------
Balance at June 30, 1996
(4,070,245 shares exercisable) 3,458,044 5,817,894 $2.50 - $16.00
----------- --------- ---------------
----------- --------- ---------------
9. EMPLOYEE BENEFIT PLANS
The Company has a defined contribution retirement plan covering substantially
all employees. The Company's contributions to the plan, which were made in
Company common stock, were $133,000, $99,000 and $55,000 for the years ended
June 30, 1996, 1995 and 1994, respectively.
The Company also has an employee stock purchase plan that allows participating
employees to purchase, through payroll deductions, shares of the Company's
common stock at 85% of the fair market value at specified dates. A total of
500,000 shares have been reserved for issuance under the plan. Shares
34
<PAGE>
AMERICREDIT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
9. EMPLOYEE BENEFIT PLANS (cont.)
purchased under the plan were 97,117 and 31,361 for the years ended June 30,
1996 and 1995, respectively.
10. INCOME TAXES
The income tax provision (benefit) consists of the following (in thousands):
Year Ended
June 30,
----------------
1996 1995
---- ----
Current $ 984 $ 79
Deferred 11,681 (18,954)
------- --------
$12,665 ($18,875)
------- --------
------- --------
The Company's effective income tax rate on income before income taxes differs
from the U.S. statutory tax rate as follows:
Years Ended
-----------------------------------
June 30, June 30, June 30,
1996 1995 1994
---- ---- ----
U.S. statutory tax rate 35% 35% 35%
Change in valuation allowance (226) (35)
Other 2 3
---- ---- ----
37% (188%) 0%
---- ---- ----
---- ---- ----
The deferred income tax provision (benefit) consists of the following (in
thousands):
Years Ended
-----------------------------------
June 30, June 30, June 30,
1996 1995 1994
---- ---- ----
Change in valuation allowance $ (320) ($22,615) $(1,606)
Net operating loss carryforward 8,387 2,266 (2,447)
Allowance for losses 1,556 32 2,278
Other 2,058 1,363 1,775
------- -------- -------
$11,681 ($18,954) $ 0
------- -------- -------
------- -------- -------
35
<PAGE>
AMERICREDIT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
10. INCOME TAXES (cont.)
The tax effects of temporary differences that give rise to deferred tax assets
and liabilities are as follows (in thousands):
June 30, June 30,
1996 1995
---- ----
Deferred tax assets:
Net operating loss carryforward $ 8,969 $17,356
Allowance for losses 1,151
Alternative minimum tax credits 1,548 1,047
Other 590 554
Valuation allowance (320)
------- -------
11,107 19,788
------- -------
Deferred tax liabilities:
Allowance for losses 405
Other 707
------- -------
1,112
------- -------
Net deferred tax asset $ 9,995 $19,788
------- -------
------- -------
The Company reduced the valuation allowance on the deferred tax asset in the
fourth quarter of the year ended June 30, 1995 after re-evaluating the
realizability of the deferred tax asset. Based on the Company's trend of
positive operating results since entering the indirect automobile finance
business in September 1992 and future expectations, the Company determined that
it is more likely than not that its net operating loss carryforward and other
future tax benefits will be fully utilized prior to expiration of the
carryforward periods.
As of June 30, 1996, the Company has a net operating loss carryforward of
approximately $19,500,000 million for income tax reporting purposes which
expires between 2007 and 2009 and an alternative minimum tax carryforward of
$1,500,000 million with no expiration date.
36
<PAGE>
AMERICREDIT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
11. SUPPLEMENTAL INFORMATION
Cash payments for interest costs and income taxes consist of the following (in
thousands):
Years Ended
-------------------------------
June 30, June 30, June 30,
1996 1995 1994
-------- --------- ----------
Interest costs (none capitalized) $12,179 $ 5,167 $ 168
Income taxes 1,447 151
During the year ended June 30, 1995, the Company sold certain property for cash
and a note receivable of $184,000.
During the year ended June 30, 1995, a capital lease obligation of $564,000 was
incurred when the Company entered into a lease for equipment.
During the year ended June 30, 1994, the Company sold certain property and
equipment for cash and a note receivable of $740,000.
12. FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, "Disclosures about Fair
Value of Financial Instruments" ("SFAS 107"), requires disclosure of fair value
information about financial instruments, whether or not recognized in the
Company's consolidated balance sheets. Fair values are based on estimates
using present value or other valuation techniques in cases where quoted market
prices are not available. Those techniques are significantly affected by the
assumptions used, including the discount rate and the estimated timing and
amount of future cash flows. Therefore, the estimates of fair value may differ
substantially from amounts which ultimately may be realized or paid at
settlement or maturity of the financial instruments. SFAS 107 excludes certain
financial instruments and all nonfinancial instruments from its disclosure
requirements. Accordingly, the aggregate fair value amounts presented do not
represent the underlying value of the Company.
37
<PAGE>
AMERICREDIT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
12. FAIR VALUE OF FINANCIAL INSTRUMENTS (cont.)
Estimated fair values, carrying values and various methods and assumptions used
in valuing the Company's financial instruments as of June 30, 1996 are set
forth below (in thousands):
Carrying Estimated
Value Fair Value
-------- ----------
Financial assets:
Cash and cash equivalents and
restricted cash (a) $ 17,449 $ 17,449
Investment securities (b) 6,558 6,254
Finance receivables (c) 250,484 283,760
Excess servicing receivable (d) 33,093 35,009
Financial liabilities:
Bank line of credit (e) 86,000 86,000
Automobile receivables-
backed notes (f) 67,847 68,055
Unrecognized financial instruments:
Forward U.S. Treasury Note
sale (g) 0 (700)
(a) The carrying value of cash and cash equivalents and restricted cash is
considered to be a reasonable estimate of fair value.
(b) The fair value of investment securities is estimated based on market
prices for similar securities.
(c) Since the Company periodically sells its finance receivables, fair value
is estimated by discounting future net cash flows expected to be realized
from the finance receivables using interest rate, prepayment and credit
loss assumptions similar to the Company's historical experience.
(d) The fair value of excess servicing receivable is estimated by discounting
the associated future net cash flows using discount rate, prepayment and
credit loss assumptions similar to the Company's historical experience.
38
<PAGE>
AMERICREDIT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
12. FAIR VALUE OF FINANCIAL INSTRUMENTS (cont.)
(e) The bank line of credit has a variable rate of interest and a maturity of
less than one year. Therefore, carrying value is considered to be a
reasonable estimate of fair value.
(f) The fair value of automobile receivables-backed notes is estimated based
on rates currently available for debt with similar terms and remaining
maturities.
(g) The fair value of the forward U.S. Treasury Note sale is estimated based
upon market prices for similar financial instruments.
13. RECENT ACCOUNTING DEVELOPMENTS
In October 1995, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-
Based Compensation" ("SFAS 123"). SFAS 123 establishes financial accounting and
reporting standards for stock-based compensation plans such as stock purchase
plans and stock options. The new standard allows companies either to continue
to account for stock based employee compensation plans under existing
accounting standards or adopt a fair value-based method of accounting for
stock-based awards as compensation expense over the service period, which is
usually the vesting period. SFAS 123 requires that if a company continues to
account for stock options under existing accounting standards, pro forma net
income and earnings per share information must be provided as if the new fair
value approach had been adopted. Stock based awards to third parties must be
accounted for on a fair value basis. The Company intends to continue to
account for stock-based employee compensation under existing accounting
standards and will be required to provide the pro forma disclosures described
above effective in its consolidated financial statements for the year ended
June 30, 1997. Stock option awards under the Company's dealer stock option
plan issued after December 15, 1995 have been accounted for on a fair value
basis.
In June 1996, the FASB issued Statement of Financial Accounting Standards No.
125, "Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities" ("SFAS 125"). SFAS 125 establishes accounting
and reporting standards for transfers of financial assets effective for
39
<PAGE>
AMERICREDIT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
13. RECENT ACCOUNTING DEVELOPMENTS (cont.)
transactions occuring after December 31, 1996. While the new standard will
apply to the Company's periodic automobile receivables-backed securities
transactions, the Company does not believe that adoption of SFAS 125 will have
a material effect on the Company's consolidated financial position or results
of operations.
40
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
Board of Directors and Shareholders
AmeriCredit Corp.
We have audited the accompanying consolidated balance sheets of AmeriCredit
Corp. as of June 30, 1996 and 1995, and the related consolidated statements of
income, shareholders' equity, and cash flows for each of the three years in the
period ended June 30, 1996. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of AmeriCredit Corp.
as of June 30, 1996 and 1995, and the consolidated results of its operations
and its cash flows for each of the three years in the period ended June 30,
1996, in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Fort Worth, Texas
August 7, 1996
41
<PAGE>
AMERICREDIT CORP.
COMMON STOCK DATA
The Company's common stock trades on the New York Stock Exchange under the
symbol ACF. There were 28,520,480 shares of common stock outstanding as of
June 30, 1996.
The following table sets forth the range of the high, low and closing sale
prices for the Company's common stock as reported on the Composite Tape of New
York Stock Exchange Listed Issues.
Fiscal year ended June 30, 1995: High Low Close
---- --- -----
First Quarter $ 6.75 $ 5.25 $ 6.75
Second Quarter 7.25 5.50 6.00
Third Quarter 8.25 5.25 8.13
Fourth Quarter 11.13 8.13 11.13
Fiscal year ended June 30, 1996: High Low Close
---- --- -----
First Quarter $15.00 $ 9.63 $14.88
Second Quarter 16.25 10.75 13.63
Third Quarter 14.25 10.38 13.88
Fourth Quarter 16.50 13.25 15.63
As of June 30, 1996, there were 403 shareholders of record of the Company's
common stock.
42
<PAGE>
AMERICREDIT CORP.
QUARTERLY DATA
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
Fiscal year ended First Second Third Fourth
June 30, 1996: Quarter Quarter Quarter Quarter
- --------------- ------- ------- ------- -------
<S> <C> <C> <C> <C>
Finance charge income $ 13,377 $ 13,852 $ 12,650 $ 11,827
Gain on sale of receivables 5,621 7,725 9,527
Income before income taxes 3,938 8,830 10,119 11,369
Net income 2,520 5,586 6,312 7,173
Earnings per share .08 .18 .21 .24
Weighted average shares
share equivalents 31,223,551 31,120,461 30,082,193 30,273,327
Fiscal year ended First Second Third Fourth
June 30, 1995: Quarter Quarter Quarter Quarter
- --------------- ------- ------- ------- -------
Finance charge income $ 4,826 $ 6,312 $ 8,237 $ 10,874
Income before income taxes 1,837 2,135 2,650 3,396
Net income 1,801 2,092 2,650 22,350
Earnings per share .06 .07 .09 .73
Weighted average shares
share equivalents 30,122,210 30,191,179 30,259,850 30,809,604
</TABLE>
43
<PAGE>
SHAREHOLDER INFORMATION
CORPORATE HEADQUARTERS:
200 Bailey Avenue
Fort Worth, Texas 76107
(817) 332-7000
INVESTOR RELATIONS INFORMATION:
For financial/investment data and general information about AmeriCredit Corp.,
write the Investor Relations Department at the above address, or telephone
(817) 882-7009.
SHAREHOLDER SERVICES:
For shareholder account information and other shareholder services, write the
Corporate Secretary at the above address, or telephone (817) 882-7009.
ANNUAL MEETING:
The Annual Meeting of the Company will be held on November 13, 1996 at 10:00
a.m. at the Fort Worth Club, Trinity Room, 700 Taylor Street, Fort Worth,
Texas. All shareholders are cordially invited to attend.
TRANSFER AGENT AND REGISTRAR:
ChaseMellon Shareholder Services
Stock Transfer Department
85 Challenger Rd., Overpeck Centre
Ridgefield Park, NJ 07660
Direct Dial (800) 635-9270
INDEPENDENT ACCOUNTANTS:
Coopers & Lybrand L.L.P.
301 Commerce Street, Suite 1900
Fort Worth, Texas 76102-4119
FORM 10-K:
SHAREHOLDERS MAY OBTAIN WITHOUT CHARGE A COPY OF THE COMPANY'S ANNUAL REPORT ON
FORM 10-K, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, BY WRITING TO
THE INVESTOR RELATIONS DEPARTMENT AT THE CORPORATE HEADQUARTERS ADDRESS.
44
<PAGE>
DIRECTORS
Clifton H. Morris, Jr.
CHAIRMAN OF THE BOARD,
CHIEF EXECUTIVE OFFICER AND PRESIDENT
AmeriCredit Corp.
Michael R. Barrington
EXECUTIVE VICE PRESIDENT AND CHIEF OPERATING OFFICER
AmeriCredit Corp.
Daniel E. Berce
EXECUTIVE VICE PRESIDENT,
CHIEF FINANCIAL OFFICER AND TREASURER
AmeriCredit Corp.
James H. Greer
CHAIRMAN OF THE BOARD
Shelton W. Greer Co., Inc.
Gerald W. Haddock
PRESIDENT AND CHIEF OPERATING OFFICER
Crescent Real Estate Equities Limited, L.P.
Kenneth H. Jones, Jr.
VICE CHAIRMAN
KBK Capital Corporation
Edward H. Esstman
SENIOR VICE PRESIDENT AND CHIEF CREDIT
OFFICER
AmeriCredit Corp.
Douglas K. Higgins
OWNER
Higgins & Associates
45
<PAGE>
OFFICERS
AMERICREDIT CORP.:
Clifton H. Morris, Jr.
CHAIRMAN OF THE BOARD,
CHIEF EXECUTIVE OFFICER AND PRESIDENT
Michael R. Barrington
EXECUTIVE VICE PRESIDENT AND CHIEF OPERATING OFFICER
Daniel E. Berce
EXECUTIVE VICE PRESIDENT,
CHIEF FINANCIAL OFFICER AND TREASURER
Chris A. Choate
VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL
Edward H. Esstman
SENIOR VICE PRESIDENT AND CHIEF CREDIT OFFICER
AMERICREDIT FINANCIAL SERVICES, INC.:
Clifton H. Morris, Jr.
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
Michael R. Barrington
PRESIDENT AND CHIEF OPERATING OFFICER
Daniel E. Berce
EXECUTIVE VICE PRESIDENT,
CHIEF FINANCIAL OFFICER AND TREASURER
Edward H. Esstman
EXECUTIVE VICE PRESIDENT, DIRECTOR OF CONSUMER FINANCE OPERATIONS
Christopher M. Barry
SENIOR VICE PRESIDENT, BRANCH OPERATIONS
46
<PAGE>
Randy K. Benefield
SENIOR VICE PRESIDENT, DIRECTOR OF MANAGEMENT INFORMATION SERVICES
Malia C. Bingham
SENIOR VICE PRESIDENT, BRANCH OPERATIONS
Chris A. Choate
SENIOR VICE PRESIDENT,
SECRETARY AND GENERAL COUNSEL
Patricia A. Jones
SENIOR VICE PRESIDENT, DIRECTOR OF HUMAN RESOURCES
Cheryl L. Miller
SENIOR VICE PRESIDENT, DIRECTOR OF COLLECTIONS AND CUSTOMER SERVICE
Michael T. Miller
SENIOR VICE PRESIDENT, DIRECTOR OF RISK MANAGEMENT, CREDIT POLICY AND PLANNING
AND CHIEF OF STAFF
Preston A. Miller
SENIOR VICE PRESIDENT AND CONTROLLER
Cinde Perales
SENIOR VICE PRESIDENT, DIRECTOR OF LOAN SERVICES
Nils L. Wirstrom
SENIOR VICE PRESIDENT, BRANCH OPERATIONS
47
<PAGE>
EXHIBIT 21.1
AMERICREDIT CORP.
SUBSIDIARIES OF THE COMPANY
State of
Subsidiary Ownership % Incorporation
- ---------- ----------- -------------
AmeriCredit Operating Co., Inc. 100% Delaware
AmeriCredit Financial Services, Inc. 100% Delaware
ACF Investment Corp. 100% Delaware
AmeriCredit Premium Finance, Inc. 100% Delaware
AFS Funding Corp. 100% Nevada
AmeriCredit Receivables Finance Corp. 100% Delaware
AmeriCredit Receivables Finance Corp.
1995-A 100% Delaware
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statements
of AmeriCredit Corp. on Form S-8 (File Nos. 33-41203, 33-48162, 33-56501 and
33-01111)and Form S-3 (File Nos. 33-52679 and 33-57517) of our report dated
August 7, 1996, on our audits of the consolidated financial statements as of
June 30, 1996 and 1995, and for the years ended June 30, 1996, 1995 and 1994,
which report is incorporated by reference in this Annual Report on Form 10-K.
COOPERS & LYBRAND, L.L.P.
Fort Worth, Texas
September 23, 1996
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF AMERICREDIT CORP. INCORPORATED BY REFERENCE
INTO THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED JUNE 30, 1996
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> JUN-30-1996
<CASH> 17,449
<SECURITIES> 6,558
<RECEIVABLES> 264,086
<ALLOWANCES> (13,602)
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 10,395
<DEPRECIATION> (2,725)
<TOTAL-ASSETS> 330,159
<CURRENT-LIABILITIES> 0
<BONDS> 154,265
0
0
<COMMON> 326
<OTHER-SE> 162,899
<TOTAL-LIABILITY-AND-EQUITY> 330,159
<SALES> 0
<TOTAL-REVENUES> 80,978
<CGS> 0
<TOTAL-COSTS> 25,681
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 7,912
<INTEREST-EXPENSE> 13,129
<INCOME-PRETAX> 34,256
<INCOME-TAX> 12,665
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 21,591
<EPS-PRIMARY> .71
<EPS-DILUTED> .71
</TABLE>
