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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended June 30, 2000
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________.
Commission file number 1-10667
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AmeriCredit Corp.
(Exact name of registrant as specified in its charter)
Texas 75-2291093
(State or other jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or organization)
801 Cherry Street, Suite 3900, Fort Worth, Texas 76102
(Address of principal executive offices, including Zip Code)
(817) 302-7000
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
Common Stock, $0.01 par value registered
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
9 1/4 % Senior Notes due 2004/Guarantee of 9 1/4% Senior Notes due 2004
9.875% Senior Notes due 2006/Guarantee of 9.875% Senior Notes due 2006
(Title of each class)
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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. [X]
The aggregate market value of 66,189,922 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 15, 2000, was
approximately $1,778,854,153. For purposes of this computation, all executive
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 executive officers, directors and beneficial owners are, in fact,
affiliates of the Registrant.
There were 77,772,434 shares of Common Stock, $0.01 par value, outstanding
as of September 15, 2000.
DOCUMENTS INCORPORATED BY REFERENCE
The Registrant's Annual Report to Shareholders for the year ended June 30,
2000 ("the Annual Report"), furnished to the Commission pursuant to Rule 14a-
3(b) and the definitive Proxy Statement pertaining to the 2000 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
<TABLE>
<CAPTION>
Item Page
No. No.
---- ----
PART I
<S> <C> <C>
1. Business............................................................................... 3
2. Properties............................................................................. 18
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
7A. Quantitative and Qualitative Disclosures About Market Risk............................. 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 31
</TABLE>
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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
operations 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 801 Cherry Street, Suite 3900, Fort
Worth, Texas, 76102 and its telephone number is (817) 302-7000.
The Company and its subsidiaries, including AmeriCredit Financial Services,
Inc. ("AFSI"), a Delaware corporation, have been operating in the automobile
finance business since September 1992. Through its AFSI branch network, the
Company purchases loans made by franchised and select independent dealers to
consumers buying late model used and, to a lesser extent, new automobiles. The
Company targets consumers who are typically unable to obtain financing from
traditional sources. Funding for the Company's auto lending activities is
obtained primarily through the sale of loans in securitization transactions.
The Company services its automobile lending portfolio at regional centers
using automated loan servicing and collection systems.
In November 1996, the Company acquired Americredit Corporation of
California, a California corporation ("AMS"), which originated mortgage loans.
Such mortgage loans were generally packaged and sold for cash on a servicing
released whole-loan basis. Deterioration in the wholesale loan markets caused
the premiums received by AMS for the sale of mortgage loans to decrease since
the Company's acquisition of AMS. As a result, during October 1999, Company
management assessed various options with respect to the operations of AMS and
decided to cease the operations of AMS. The AMS wholesale mortgage loan
production and processing offices were closed, and the assets of AMS are being
liquidated.
Automobile Finance Operations
Target Market. The Company's automobile lending programs are designed to
serve customers who have limited access to traditional automobile financing.
The Company's typical borrowers have experienced prior credit difficulties or
have limited credit histories. Because the Company serves customers who are
unable to meet the credit standards imposed by most traditional automobile
financing sources, the Company generally charges interest at rates higher than
those charged by traditional automobile financing sources. The Company also
expects to sustain a higher level of credit losses than traditional automobile
financing sources since the Company provides financing in a relatively high
risk market.
Marketing. Since the Company is primarily an indirect lender, the Company
focuses its marketing activities on automobile dealerships. The Company is
selective in choosing the dealers with whom it conducts business and primarily
pursues manufacturer franchised dealerships with used car operations and
select independent dealerships. The Company selects these dealers because they
sell the type of cars the Company prefers to finance, specifically later
model, low mileage used cars and moderately priced new cars. Of the contracts
purchased by the Company during the fiscal year ended June 30, 2000,
approximately 96% were originated by manufacturer franchised dealers and 4% by
select independent dealers. The Company purchased contracts from 14,076
dealers during the fiscal year ended June 30, 2000. No dealer accounted for
more than 1% of the total volume of contracts purchased by the Company for
that same period.
Prior to entering into a relationship with a dealer, the Company considers
the dealer's operating history and reputation in the marketplace. The Company
then maintains a non-exclusive relationship with the dealer. This relationship
is actively monitored with the objective of maximizing the volume of
applications received from the dealer that meet the Company's underwriting
standards and profitability objectives. Due to the non-exclusive nature of the
Company's relationships with dealerships, the dealerships retain discretion to
determine whether to
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obtain financing from the Company or from another source for a customer
seeking to finance a vehicle purchase. Branch managers and other branch office
personnel regularly telephone and visit dealers to solicit new business and to
answer any questions dealers may have regarding the Company's financing
programs and capabilities. These personnel explain the Company's underwriting
philosophy, including the preference for non-prime quality contracts secured
by later model, lower mileage vehicles and the Company's practice of
underwriting in the local branch office. To increase the effectiveness of
these contacts, the branch managers and other branch office personnel have
access to the Company's management information systems which detail current
information regarding the number of applications submitted by a dealership,
the Company's response and the reasons why a particular application was
rejected.
The Company has entered into strategic marketing alliances with certain
banks which purchase prime quality auto finance contracts. The largest such
relationship is with Chase Automotive Finance. Under the alliances, the
Company's branch personnel and representatives from the banks jointly market
to automobile dealers with the Company providing non-prime auto financing and
the banks providing prime auto financing. The alliances allow the Company and
the banks to better service automobile dealers by offering auto financing
across a broad credit spectrum. The Company also benefits from being able to
market its auto financing programs to automobile dealers who have
relationships with the banks.
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. Depending upon several
factors, the Company may charge dealers an acquisition fee when purchasing
finance contracts. Such acquisition fees are assessed 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.
To supplement its indirect lending activities, the Company has introduced
certain other automobile finance programs. In its Valued Customer Program, the
Company pre-approves qualifying existing customers for their next auto loan
when they trade-in their vehicle or otherwise payoff their active AmeriCredit
account. The Company is also testing a direct mail marketing program whereby
specified consumers are pre-approved for financing at select automobile
dealerships serviced by the Company. Additionally, through strategic alliances
with certain online auto dealers and lending sources, the Company has begun
processing online credit applications in order to provide auto financing via
the Internet.
Branch Office Network. The Company uses a branch office network to market
its indirect financing programs to selected dealers, develop relationships
with these dealers and underwrite contracts submitted by dealerships. Branch
office personnel are responsible for the solicitation, enrollment and
education of dealers regarding the Company's financing programs. The Company
believes a local presence enables the Company to more fully service dealers
and be more responsive to dealer concerns and local market conditions. The
Company selects markets for branch office locations based upon numerous
factors, including demographic trends and data, competitive conditions, the
regulatory environment and the availability of qualified personnel. Branch
offices are typically situated in suburban office buildings which are
accessible to local dealers.
Each branch office solicits dealers for contracts and maintains the
Company's relationship with the dealers in the geographic vicinity of that
branch office. Branch office locations are typically staffed by a branch
manager, an assistant manager and one or more dealer and customer service
representatives. Larger branch offices may also have additional assistant
managers and/or dealer marketing representatives. The Company believes that
the personal relationships its branch managers and other branch personnel
establish with the dealership staff are
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an important factor in creating and maintaining productive relationships with
the Company's dealer customer base. Branch managers are compensated with base
salaries and annual incentives based on overall branch performance including
factors such as branch loan credit quality, loan pricing adequacy and loan
volume objectives. The incentives are typically paid in cash and stock-based
awards. The branch managers report to regional vice presidents.
The Company's regional vice presidents monitor branch office compliance
with the Company's underwriting guidelines. The Company's management
information systems provide the regional vice presidents access to credit
application information enabling them to consult with the branch managers on
credit decisions and review exceptions to the Company's underwriting
guidelines. The regional vice presidents also make periodic visits to the
branch offices to conduct operating reviews.
The following table sets forth information with respect to the number of
branches, dollar volume of contracts purchased and number of producing
dealerships for the periods set forth below.
<TABLE>
<CAPTION>
Years Ended June 30,
--------------------------------
2000 1999 1998
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(dollars in thousands)
<S> <C> <C> <C>
Number of branch offices...................... 196 176 129
Dollar volume of contracts purchased.......... $4,427,945 $2,879,796 $1,737,813
Number of producing dealerships (1)........... 14,076 12,590 9,204
</TABLE>
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(1) A producing dealership refers to a dealership from which the Company had
purchased contracts in the respective period.
Underwriting and Purchasing of Contracts
Proprietary Credit Scoring System and Risk-based Pricing. The Company
utilizes a proprietary credit scoring system to support the credit approval
process. The credit scoring system was developed through statistical analysis
of the Company's consumer demographic and portfolio databases. Credit scoring
is used to differentiate credit applicants and to rank order credit risk in
terms of expected default rates, which enables the Company to tailor loan
pricing and structure according to this statistical assessment of credit risk.
For example, a consumer with a lower score would indicate a higher probability
of default and, therefore, the Company could compensate for this higher
default risk through the structuring and pricing of the transaction. While the
Company employs a credit scoring system in the credit approval process, credit
scoring does not eliminate credit risk. Adverse determinations in evaluating
contracts for purchase could negatively affect the credit quality of the
Company's receivables portfolio.
The credit scoring system considers data contained in the customer's credit
application and credit bureau report as well as the structure of the proposed
loan and produces a statistical assessment of these attributes. This
assessment is used to segregate applicant risk profiles and determine whether
risk is acceptable and the price the Company should charge for that risk. The
Company's credit scorecards are validated on a monthly basis through the
comparison of actual versus projected performance by score. The Company
endeavors to refine its proprietary scorecards based on new information and
identified correlations relating to receivables performance.
Through the use of the proprietary credit scoring system, Company personnel
with credit authority are able to more efficiently review and prioritize loan
applications. Applications which receive a high score can be processed rapidly
and credit decisions can be quickly communicated to the dealer. Applications
receiving low scores can be quickly rejected without further processing and
review by the Company. This ability to prioritize applications allows for a
more effective allocation of resources to those applications requiring more
review.
Loan Approval Process. The Company purchases individual contracts through
its branch offices using a credit approval process tailored to local market
conditions. Each branch manager has a specific credit authority
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based upon their experience and historical loan portfolio results as well as
established credit scoring parameters. Contracts may also be purchased through
the Company's regional purchasing office for specific dealers requiring
centralized service, in certain markets where a branch office is not present
or, in some cases, outside of normal branch office working hours. Although the
credit approval process is decentralized, the Company's application processing
system includes controls designed to ensure that credit decisions comply with
the Company's credit scoring strategies and underwriting policies and
procedures.
Loan application packages completed by prospective obligors are received
via facsimile, electronically, and/or by telephone. Application data are
entered into the Company's automated application processing system. A credit
bureau report is automatically accessed and a credit score is computed.
Company personnel with credit authority review the application package and
determine whether to approve the application, approve the application subject
to conditions that must be met or deny the application. These personnel
consider many factors in arriving at a credit decision, relying primarily on
the applicant's credit score, but also taking into account the applicant's
capacity to pay, stability, credit history, the contract terms and collateral
value. The Company estimates that approximately 60% of applicants are denied
credit by the Company typically because of their credit histories or other
factors. Dealers are contacted regarding credit decisions electronically, by
facsimile and/or by telephone. Declined and conditioned applicants are also
provided with appropriate notification of the decision.
The Company's underwriting and collateral guidelines as well as credit
scoring parameters form the basis for the credit decision; however, the
qualitative judgment of the personnel with credit authority with respect to
the credit quality of an applicant is a significant factor in the final credit
decision. Exceptions to credit policies and authorities must be approved by a
regional vice president or other designated credit officer.
Completed loan packages are sent by the automobile dealers to the branch
office. As part of the credit decision process, a Company customer service
representative investigates the residence, employment and credit history of
the applicant. Loan terms and insurance coverages are generally reverified
with the customer. Key loan documentation is scanned to create electronic
images and electronically forwarded to the Company's centralized loan
processing department. The original documents are subsequently sent to the
loan processing department and are stored in a fire resistant vault.
Upon electronic receipt of loan documentation from the branches, the loan
processing department reviews the loan packages for proper documentation and
regulatory compliance and completes the entry of information into the
Company's loan accounting system. Once cleared for funding, the loan
processing department electronically transfers funds to the dealer or issues a
check. Upon funding of the contract, the Company acquires a perfected security
interest in the automobile that was financed. Daily loan reports are generated
for review by senior operations management. All of the Company's contracts are
fully amortizing with substantially equal monthly installments.
Servicing and Collections Procedures
General. The Company's servicing activities consist of collecting and
processing customer payments, responding to customer inquiries, initiating
contact with customers who are delinquent in payment of an installment,
maintaining the security interest in the financed vehicle, monitoring physical
damage insurance coverage of the financed vehicle and repossessing and
liquidating collateral when necessary. The Company utilizes various automated
systems to support its servicing and collections activities. The Company uses
monthly billing statements to serve as a reminder to customers as well as an
early warning mechanism in the event a customer has failed to notify the
Company of an address change. Approximately 15 days before a customer's first
payment due date and each month thereafter, the Company mails the customer a
billing statement directing the customer to mail payments to a lockbox bank
for deposit in a lockbox account. Payment receipt data is electronically
transferred from the Company's lockbox bank to the Company for posting to the
loan accounting system. Payments may also be received directly by the Company
from customers. All payment processing and customer account maintenance is
performed centrally in Fort Worth, Texas.
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The Company's collections activities are performed at regional centers
located in Fort Worth, Texas, Tempe, Arizona, and Charlotte, North Carolina. A
predictive dialing system is utilized to make phone calls to customers whose
payments are past due. The predictive dialer is a computer-controlled
telephone dialing system which dials phone numbers of customers from a file of
records extracted from the Company's database. Once a live voice responds to
the automated dialer's call, the system automatically transfers the call to a
collector and the relevant account information to the collector's computer
screen. The system also tracks and notifies collections management of phone
numbers that the system has been unable to reach within a specified number of
days, thereby promptly identifying for management all customers who cannot be
reached by telephone. By eliminating the time spent on attempting to reach
customers, the system gives a single collector the ability to speak with a
larger number of accounts daily.
Once an account reaches a certain level of delinquency, the account moves
to the Company's mid-range collection units. The objective of these collectors
is to prevent the account from becoming further delinquent. After a scheduled
payment on an account becomes approximately 90 days past due, the Company
typically initiates repossession of the financed vehicle. However, the Company
may repossess a financed vehicle without regard to the length of payment
delinquency if an account is deemed uncollectible, the financed vehicle is
deemed by collection personnel to be in danger of being damaged, destroyed or
hidden, the customer deals in bad faith or the customer voluntarily surrenders
the financed vehicle.
Payment deferrals are at times offered to customers who have encountered
temporary financial difficulty, hindering their ability to pay as contracted.
A deferral allows the customer to move a delinquent payment to the end of the
loan, usually by paying a fee (calculated in a manner specified by applicable
law). The collector reviews the customer's past payment history and
statistically based behavioral score and assesses the customer's desire and
capacity to make future payments. Before agreeing to a deferral, the collector
must also ensure that the deferment transaction complies with the Company's
policies and guidelines. Exceptions to the Company's policies and guidelines
for deferrals must be approved by a collections officer. While payment
deferrals are initiated and approved in the collections department, a separate
department in the Company processes authorized deferment transactions. As of
June 30, 2000, approximately 14% of the Company's managed receivables had
received a deferral.
Repossessions. Repossessions are subject to prescribed legal procedures,
which include peaceful repossession, one or more customer notifications, a
prescribed waiting period prior to disposition of the repossessed automobile
and return of personal items to the customer. Some jurisdictions provide the
customer with reinstatement or redemption rights. Legal requirements,
particularly in the event of bankruptcy, may restrict the Company's ability to
dispose of the repossessed vehicle. Repossessions are handled by independent
repossession firms engaged by the Company and must be approved by a
collections officer. Upon repossession and after any prescribed waiting
period, the repossessed automobile is sold at auction. The Company does not
sell any vehicles on a retail basis. The proceeds from the sale of the
automobile at auction, and any other recoveries, are credited against the
balance of the contract. Auction proceeds from sale of the repossessed vehicle
and other recoveries are usually not sufficient to cover the outstanding
balance of the contract, and the resulting deficiency is charged-off. The
Company may pursue collection of deficiencies when it deems such action to be
appropriate.
Charge-Off Policy. The Company's policy is to charge-off an account in the
month in which the account becomes 120 days contractually delinquent if the
Company has not repossessed the related vehicle. Otherwise, the Company
charges-off the account when the vehicle securing the delinquent contract is
repossessed and liquidated. The charge-off represents the difference between
the actual net sales proceeds and the amount of the delinquent contract,
including accrued interest. Accrual of finance charge income is suspended on
accounts which are more than 60 days contractually delinquent.
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Risk Management
Overview. The Company's risk management department is responsible for
monitoring the loan approval process and supporting the supervisory role of
senior operations management. This department tracks via databases key
variables, such as loan applicant data, credit bureau and credit score
information, loan structures and terms and payment histories. The risk
management department also regularly reviews the performance of the Company's
credit scoring system and is responsible for the development and enhancement
of credit scorecards for the Company.
The risk management department prepares regular credit indicator packages
reviewing portfolio performance at various levels of detail including total
Company, branch office and dealer. Various daily reports and analytical data
are also generated by the Company's management information systems. This
information is used to monitor credit quality as well as to refine the
structure and mix of new contract purchases. Portfolio returns can be reviewed
on a consolidated basis, as well as at the branch office, dealer and contract
levels.
Behavioral Scoring. Statistically-based behavioral assessment models are
used to project the relative probability that an individual account will
default and to validate the credit scoring system after the receivable has
aged for a sufficient period of time, generally six to nine months. Default
probabilities are calculated for each account independent of the credit score.
Projected default rates from the behavioral assessment models and credit
scoring systems are compared and analyzed to monitor the effectiveness of the
Company's credit strategies.
Collateral Value Management. The value of the collateral underlying the
Company's receivables portfolio is updated monthly with a loan-by-loan link to
national wholesale auction values. This data, along with the Company's own
experience relative to mileage and vehicle condition, are used for evaluating
collateral disposition activities as well as for reserve analysis models.
Compliance Audits. The Company's Internal Audit and Quality Control
departments conduct regular reviews of branch office operations, loan
operations, loan processing and servicing, collections and other functional
areas. The primary objective of the reviews is to measure compliance with the
Company's written policies and procedures as well as regulatory matters.
Branch office quality control reviews include a review of compliance with
underwriting policies, completeness of loan documentation, collateral value
assessment and extent of applicant data investigation. Written quality control
reports are distributed to local branch office personnel and the regional vice
presidents for response and follow-up. Senior operations management reviews
copies of these reports. Internal Audit results and responses are also
reviewed by senior executive management.
Securitization of Loans
Since December 1994, the Company has pursued a strategy of securitizing its
receivables to diversify its funding, improve liquidity and obtain a cost-
effective source of funds for the purchase of additional automobile finance
contracts. The Company applies the net proceeds from securitizations to pay
down borrowings under its warehouse credit facilities, thereby increasing
availability thereunder for further contract purchases. Through June 30, 2000,
the Company had securitized approximately $10.3 billion of automobile
receivables since 1994.
In its securitizations, the Company, through a wholly-owned subsidiary,
transfers automobile receivables to newly-formed securitization trusts, which
issue one or more classes of asset-backed securities. The asset-backed
securities are in turn sold to investors.
When receivables are transferred to securitization trusts, the Company
recognizes a gain on sale of receivables and continues to service such
receivables. The gain on sale of receivables primarily represents the present
value of estimated excess cash flows the Company expects to receive from the
pool of receivables sold. The estimated excess cash flows are the difference
between the finance charge income received from obligors on securitized
receivables and the interest paid to investors in the asset-backed securities,
net of credit losses,
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servicing fees and other expenses. Concurrently with recognizing such gain on
sale of receivables, the Company records a corresponding asset, interest-only
receivables from trusts, which includes the present value of estimated excess
cash flows as described above.
The calculation of interest-only receivables from trusts includes estimates
of future losses and prepayment rates for the remaining term of the
receivables sold since these factors impact the amount and timing of future
cash collected on the receivables sold. The carrying value of interest-only
receivables is reviewed quarterly by the Company for each separate
securitization transaction. If future losses or prepayment rates exceed the
Company's original estimates, the asset will be adjusted through a charge to
operations. Favorable credit loss and prepayment experience compared to the
Company's original estimates would result in additional income when realized.
In connection with the Company's securitization program, the Company
arranges for a financial guaranty insurance policy to achieve a high grade
credit rating on the asset-backed securities issued. The policies for each of
the Company's securitizations have been provided by Financial Security
Assurance Inc. ("FSA"), a monoline insurer, which insures the payment of
principal and interest due on the asset-backed securities. The Company has
limited reimbursement obligations to FSA; however, credit enhancement
requirements, including FSA's encumbrance of certain restricted cash accounts
and subordinated interests in trusts, provide a source of funds to cover
shortfalls in collections and to reimburse FSA for any claims which may be
made under the policies issued with respect to the Company's securitizations.
The credit enhancement requirements for any securitization include
restricted cash accounts which are generally established with an initial
deposit and subsequently funded through excess cash flows from securitized
receivables. Funds would be withdrawn from the restricted cash accounts to
cover any shortfalls in amounts payable on the asset-backed securities. Funds
are also available to be withdrawn in an event of default to reimburse FSA for
draws on its financial guaranty insurance policy. In addition, the restricted
cash account for each securitization trust is cross-collateralized to the
restricted cash accounts established in connection with the Company's other
securitization trusts, such that excess cash flow from a performing
securitization trust insured by FSA may be used to support cash flow
shortfalls from a non-performing securitization trust insured by FSA, thereby
further restricting excess cash flow available to the Company. The Company is
entitled to receive amounts from the restricted cash accounts to the extent
the amounts deposited exceed predetermined required minimum levels.
FSA has taken a pledge of the stock of AFS Funding Corp., the wholly-owned
subsidiary of the Company that owns the restricted cash accounts, interest-
only receivables and any subordinated interests in the trusts, such that, if
the pledge is foreclosed upon in the event of a payment by FSA under one of
its insurance policies or certain material adverse changes in the business of
the Company, FSA would control all of the restricted cash accounts, interest-
only receivables and subordinated interests in the trusts. The terms of each
securitization also provide that, under certain tests relating to
delinquencies, defaults and losses, cash may be retained in the restricted
cash account and not released to the Company until increased minimum levels of
credit enhancement requirements have been reached and maintained.
Trade Names
The Company has obtained federal trademark protection for the "AmeriCredit"
name and the logo that incorporates the "AmeriCredit" name.
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
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generally provide for licensing of sales finance agencies, limitations on the
amount, duration and charges, including interest rates, for various categories
of loans, requirements as to the form and content of finance contracts and
other documentation, and restrictions on collection practices and creditors'
rights. In certain states, the Company's branch offices are subject to
periodic examination by state regulatory authorities. Some states in which the
Company operates do not require special licensing or provide extensive
regulation of the Company's business.
The Company is also subject to extensive federal regulation, including the
Truth in Lending Act, the Equal Credit Opportunity Act and the Fair Credit
Reporting Act. These laws require the Company to provide certain disclosures
to prospective borrowers and protect against discriminatory lending practices
and unfair credit practices. The principal disclosures required under the
Truth in Lending Act include the terms of repayment, the total finance charge
and the annual percentage rate charged on each loan. The Equal Credit
Opportunity Act prohibits creditors from discriminating against loan
applicants on the basis of race, color, sex, age or marital status. Pursuant
to Regulation B promulgated under the Equal Credit Opportunity Act, creditors
are required to make certain disclosures regarding consumer rights and advise
consumers whose credit applications are not approved of the reasons for the
rejection. In addition, the credit scoring system used by the Company must
comply with the requirements for such a system as set forth in the Equal
Credit Opportunity Act and Regulation B. The Fair Credit Reporting Act
requires the Company to provide certain information to consumers whose credit
applications are not approved on the basis of a report obtained from a
consumer reporting agency.
The dealers who originate automobile loans purchased by the Company also
must comply with both state and federal credit and trade practice statutes and
regulations. Failure of the dealers to comply with such statutes and
regulations could result in consumers having rights of rescission and other
remedies that could have an adverse effect on the Company.
The Company believes that it maintains all material licenses and permits
required for its current operations and is in substantial compliance with all
applicable local, state and federal regulations. There can be no assurance,
however, that the Company will be able to maintain all requisite licenses and
permits, and the failure to satisfy those and other regulatory requirements
could have a material adverse effect on its operations. Further, the adoption
of additional, or the revision of existing, rules and regulations could have a
material adverse effect on the Company's business.
Competition
Competition in the field of non-prime automobile finance is intense. The
automobile finance market is highly fragmented and is served by a variety of
financial entities including the captive finance affiliates of major
automotive manufacturers, banks, thrifts, credit unions and independent
finance companies. Many of these competitors have substantially greater
financial resources and lower costs of funds than the Company. Many of these
competitors also have long standing relationships with automobile dealerships
and may offer dealerships or their customers other forms of financing,
including dealer floor plan financing and leasing, which are not provided by
the Company. Providers of automobile financing have traditionally competed on
the basis of interest rates charged, the quality of credit accepted, the
flexibility of loan terms offered and the quality of service provided to
dealers and customers. In seeking to establish itself as one of the principal
financing sources at the dealers it serves, the Company competes predominately
on the basis of its high level of dealer service and strong dealer
relationships and by offering flexible loan terms. There can be no assurance
that the Company will be able to compete successfully in this market or
against these competitors.
Risk Factors
Dependence on Warehouse Credit Facilities. The Company depends on warehouse
credit facilities with financial institutions to finance its purchase of
contracts pending securitization. At June 30, 2000, the Company has five
domestic warehouse credit facilities with various financial institutions
providing for revolving credit borrowings of up to a total of approximately
$2.2 billion, subject to defined borrowing bases. The Company
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<PAGE>
has $725 million and $275 million warehouse facilities which mature in
September 2000, a $375 million warehouse facility which matures in March 2001,
and $500 million and $300 million warehouse facilities which mature in June
2001. The Company also has a $30 million Cdn. bank facility to fund Canadian
auto receivables, which matures in March 2001. The Company cannot guarantee
that any of these financing resources will continue to be available at
reasonable terms or at all. The availability of these financing sources
depends in part on factors outside of the Company's control, including
regulatory capital treatment for unfunded bank lines of credit and the
availability of bank liquidity in general. If the Company is unable to extend
or replace any of these facilities and arrange new warehouse credit
facilities, it will have to curtail contract purchasing activities, which
would have a material adverse effect on the Company's financial position,
liquidity and results of operations.
The Company's warehouse credit facilities contain extensive restrictions
and covenants and require the Company to maintain specified financial ratios
and satisfy specified financial tests, including maintenance of asset quality
and portfolio performance tests. Failure to meet any of these convenants,
financial ratios or financial tests could result in an event of default under
these agreements. If an event of default occurs under these agreements, the
lenders could elect to declare all amounts outstanding under these agreements
to be immediately due and payable, enforce their interests against collateral
pledged under such agreements, and restrict the Company's ability to obtain
additional borrowings under these agreements. The Company's ability to meet
those financial ratios and tests can be affected by events beyond its control,
and the Company cannot guarantee that it will meet those financial ratios and
tests.
Dependence on Securitization Program. Since December 1994, the Company has
relied upon its ability to aggregate and sell receivables in the asset-backed
securities market to generate cash proceeds for repayment of warehouse credit
facilities and to purchase additional contracts from automobile dealers.
Further, gains on sales generated by the Company's securitizations currently
represent the single largest component of the Company's revenues. The Company
endeavors to effect securitizations of its receivables on at least a quarterly
basis. Accordingly, adverse changes in the Company's asset-backed securities
program or in the asset-backed securities market for automobile receivables
generally could materially adversely affect the Company's ability to purchase
and securitize loans on a timely basis and upon terms reasonably favorable to
the Company. Any delay in the sale of receivables beyond a quarter-end would
eliminate the gain on sale that quarter and adversely affect the Company's
reported earnings for that quarter. Any of these adverse changes or delays
would have a material adverse effect on the Company's financial position,
liquidity and results of operations.
Dependence on Credit Enhancement. To date, all of the Company's
securitizations have utilized credit enhancement in the form of financial
guaranty insurance policies issued by Financial Security Assurance, Inc.
("FSA") in order to achieve AAA/Aaa ratings which reduces the costs of
securitizations relative to alternative forms of financing available to the
Company. FSA is not required to insure Company-sponsored securitizations, and
there can be no assurance that it will continue to do so or that future
Company-sponsored securitizations will be similarly rated. Likewise, the
Company is not required to utilize financial guaranty insurance policies
issued by FSA or any other form of credit enhancement in connection with its
securitizations. The Company utilizes reinsurance and other credit enhancement
alternatives to reduce the initial cash deposit related to its
securitizations. A downgrading of FSA's credit rating or FSA's withdrawal of
credit enhancement or the lack of availability of reinsurance or other
alternative credit enhancements for the Company's securitization program could
result in higher interest costs for future Company-sponsored securitizations
and larger initial cash deposit requirements. These events could have a
material adverse effect on the Company's financial position, liquidity and
results of operations.
Liquidity and Capital Needs. The Company's ability to make payments on and
to refinance its indebtedness and to fund planned capital expenditures depends
on its ability to generate cash in the future. This, to a certain extent, is
subject to general economic, financial, competitive, legislative, regulatory
and other factors that are beyond the Company's control.
The Company requires substantial amounts of cash to fund its contract
purchase and securitization activities. Although the Company recognizes a gain
on the sale of receivables upon the closing of a securitization, it
11
<PAGE>
typically receives the cash representing that gain over the actual life of the
receivables securitized. The Company also incurs significant transaction costs
in connection with a securitization. Accordingly, the Company's strategy of
securitizing substantially all of its newly purchased receivables and
increasing the number of contracts purchased will require substantial amounts
of cash.
The Company expects to continue to require substantial amounts of cash as
the volume of the Company's contract purchases increases and its
securitization program grows. The Company's primary cash requirements include
the funding of: (i) contract purchases pending their securitization and sale;
(ii) credit enhancement requirements in connection with the securitization and
sale of the receivables; (iii) interest and principal payments under warehouse
credit facilities, the Company's senior notes and other indebtedness; (iv)
fees and expenses incurred in connection with the securitization and servicing
of receivables; (v) capital expenditures for technology; (vi) ongoing
operating expenses; and (vii) income tax payments.
The Company's primary sources of liquidity in the future are expected to be
existing cash, financings under its warehouse credit facilities, sales of
automobile receivables through securitizations, excess cash flow received from
securitization trusts and further issuances of debt or equity securities,
depending on capital market conditions.
Because the Company's principal credit facilities are initially 364 days in
length, the Company must renew these facilities annually. In addition, because
the Company expects to continue to require substantial amounts of cash for the
foreseeable future, it anticipates that it will need to access the asset-
backed securities market on a quarterly basis and may enter into additional
debt or equity financings. The type, timing and terms of financing selected by
the Company will be dependent upon the Company's cash needs, the availability
of various financing sources and the prevailing conditions in the financial
markets. There can be no assurance that any such sources will be available to
the Company at any given time or as to whether the terms on which such sources
may be available will be acceptable.
Leverage. The Company currently has substantial outstanding indebtedness.
The Company's ability to make payments of principal or interest on, or to
refinance, its indebtedness will depend on its future operating performance
and its ability to enter into additional securitizations and debt and/or
equity financings, which to a certain extent is subject to economic,
financial, competitive and other factors beyond its control.
If the Company is unable to generate sufficient cash flow in the future to
service its debt, it may be required to refinance all or a portion of its
existing debt or to obtain additional financing. There can be no assurance
that any such refinancing would be possible or that any additional financing
could be obtained on acceptable terms. The inability to obtain additional
financing could have a material adverse effect on the Company.
The degree to which the Company is leveraged creates risks including: (i)
the Company may be unable to satisfy its obligations under its outstanding
senior notes; (ii) the Company may be more vulnerable to adverse general
economic and industry conditions; (iii) the Company may find it more difficult
to fund future working capital, capital expenditures, acquisitions, general
corporate purposes or other purposes; and (iv) the Company will have to
dedicate a substantial portion of its cash resources to the payment of
principal and interest on indebtedness outstanding thereby reducing the funds
available for operations and future business opportunities. The Company's
warehouse credit facilities and its indentures restrict its ability to, among
other things: (i) sell or transfer assets; (ii) incur additional debt; (iii)
repay other debt; (iv) pay dividends; (v) make certain investments or
acquisitions; (vi) repurchase or redeem capital stock; (vii) engage in mergers
or consolidations; and (viii) engage in certain transactions with subsidiaries
and affiliates.
The warehouse credit facilities and the indentures also require the Company
to comply with certain financial ratios, covenants and asset quality
maintenance requirements. These restrictions may interfere with the Company's
ability to obtain financing or to engage in other necessary or desirable
business activities.
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<PAGE>
If the Company cannot comply with the requirements in its warehouse credit
facilities, then the lenders may require it to immediately repay all of the
outstanding debt under its facilities. If its debt payments were accelerated,
the Company's assets might not be sufficient to fully repay the debt. These
lenders may also require the Company to use all of its available cash to repay
its debt, they may foreclose upon their collateral or they may prevent the
Company from making payments to other creditors on certain portions of the
Company's outstanding debt.
The Company may not be able to obtain a waiver of these provisions or
refinance its debt, if needed. In such a case, the Company's business, results
of operations and financial condition would suffer.
Default and Prepayment Risks. The Company's results of operations,
financial condition and liquidity depend, to a material extent, on the
performance of contracts purchased and held by the Company prior to their sale
in a securitization transaction as well as the subsequent performance of
receivables sold to securitization trusts. Obligors under loans acquired by
the Company may default or prepay during the period prior to their sale in a
securitization transaction or if they remain owned by the Company. The Company
bears the full risk of losses resulting from payment defaults during such
period. In the event of a payment default, the collateral value of the
financed vehicle usually does not cover the outstanding loan balance and costs
of recovery. The Company maintains an allowance for loan losses on loans held
for sale by the Company, which reflects management's estimates of anticipated
losses for such loans. If the allowance is inadequate, then the Company would
recognize as an expense the losses in excess of that allowance, and results of
operations could be adversely affected. In addition, under the terms of the
warehouse credit facilities, the Company is not able to borrow against
defaulted loans and loans greater than 30 days delinquent held by the Company.
The Company also retains a substantial portion of the default and
prepayment risk associated with the receivables that it sells pursuant to
Company-sponsored securitizations. A large component of the gain recognized on
these sales and the corresponding assets recorded on the Company's balance
sheet are credit enhancement assets which are based on the present value of
estimated future excess cash flows from the securitized receivables which will
be received by the Company. Accordingly, credit enhancement assets are
calculated on the basis of management's assumptions concerning, among other
things, defaults and prepayments. Actual defaults and prepayments may vary
from management's assumptions, possibly to a material degree. As of June 30,
2000, credit enhancement assets totaled $824.6 million. Depending on the
Company's growth, credit enhancement assets may become a larger share of the
Company's overall assets.
The Company is required to deposit substantial amounts of the cash flows
generated by its interests in Company-sponsored securitizations ("restricted
cash") into spread accounts which are pledged to FSA as security for the
Company's obligation to reimburse FSA for any amounts which may be paid out on
financial guarantee insurance policies.
The Company regularly measures its default, prepayment and other
assumptions against the actual performance of securitized receivables. If the
Company were to determine, as a result of such regular review or otherwise,
that it underestimated defaults and/or prepayments, or that any other material
assumptions were inaccurate, the Company would be required to adjust the
carrying value of its credit enhancement assets, which consist of restricted
cash, investments in trust receivables and interest-only receivables, by
recording a charge to income and writing down the carrying value of these
assets on its balance sheet. Future cash flows from securitization trusts may
also be less than expected, and the Company's results of operations and
liquidity would be adversely affected, possibly to a material degree. In
addition, an increase in defaults or prepayments would reduce the size of the
Company's servicing portfolio, which would reduce the Company's servicing fee
income, further adversely affecting results of operations and cash flow. A
material write-down of credit enhancement assets and the corresponding
decreases in earnings and cash flow could limit the Company's ability to
service debt and to enter into future securitizations and other financings.
Although the Company believes that it has made reasonable assumptions as to
the future cash flows of the various pools of receivables that have been sold
in securitization transactions, actual rates of default or prepayment may
differ from those assumed, and other assumptions may be required to be revised
upon future events.
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<PAGE>
Portfolio Performance; Negative Impact on Cash Flows; Right to Terminate
Normal Servicing. Generally, the form of credit enhancement agreement the
Company enters into in connection with securitization transactions contains
specified limits on the delinquency, default and loss rates on the receivables
included in each securitization trust. If, at any measurement date, the
delinquency, default or loss rate with respect to any trust were to exceed the
specified limits, provisions of the credit enhancement agreement would
automatically increase the level of credit enhancement requirements for that
trust. During the period in which the specified delinquency, default and loss
rates were exceeded, excess cash flow, if any, from the trust would be used to
fund the increased credit enhancement levels instead of being distributed to
the Company, which would have an adverse effect on the Company's cash flow.
Further, the credit enhancement requirements for each securitization trust are
cross-collateralized to the credit enhancement requirements established in
connection with each of the Company's other securitization trusts so that
excess cash flow from a performing securitization trust insured by FSA may be
used to support increased credit enhancement requirements for a non-performing
securitization trust insured by FSA, which would further restrict excess cash
flow available to the Company. The Company has on occasion exceeded these
specified limits, however, FSA has either waived each of these occurrences or
amended the agreements. The Company can give no assurance that FSA would waive
any such future occurrence or amend the agreements. Any refusal of FSA to
waive any such future occurrence or amend the agreements could have a material
adverse effect on the Company's financial position, liquidity and results of
operations.
The credit enhancement agreements entered into in connection with
securitization transactions contain additional specified limits on the
delinquency, default and loss rates on the receivables included in each trust
which are higher than the limits referred to in the preceding paragraph. If,
at any measurement date, the delinquency, default or loss rate with respect to
any trust were to exceed these additional specified limits applicable to that
trust, provisions of the credit enhancement agreements permit FSA to terminate
the Company's servicing rights to the receivables sold to that trust. In
addition, the servicing agreements are cross-defaulted so that a default under
one servicing agreement would allow FSA to terminate the Company's servicing
rights under all of its servicing agreements. Although the Company has never
exceeded such delinquency, default or loss rates, there can be no assurance
that the Company's servicing rights with respect to the automobile receivables
in such trusts or any other trust which exceeds the specified limits in future
periods will not be terminated. FSA has other rights to terminate the Company
as servicer if (i) the Company were to breach its obligations under the
servicing agreements, (ii) FSA was required to make payments under its
policies or (iii) certain bankruptcy or insolvency events were to occur. As of
June 30, 2000, no such termination events have occurred with respect to any of
the trusts formed by the Company.
Reliance on Revenue Generated from the Sale of Loans to Trusts. The Company
periodically sells auto receivables to certain special purpose financing
trusts and these trusts in turn issue asset-backed securities to investors.
The Company retains an interest in the receivables sold in the form of a
residual or interest-only strip and may also retain other subordinated
interests in the receivables sold to the trusts. The residual or interest-only
strips represent the present value of future excess cash flows resulting from
the difference between the finance charge income received from the obligors on
the receivables and the interest paid to the investors in the asset-backed
securities, net of credit losses, servicing fees and other expenses.
Upon the transfer of receivables to the trusts, the Company removes the net
book value of the receivables sold from its consolidated balance sheets and
allocates the carrying value between the assets transferred and the interests
retained, based upon their relative fair values at the settlement date. The
difference between the sales proceeds, net of transaction costs, and the
allocated basis of the assets transferred is recognized as a gain on sale of
receivables.
For the year ended June 30, 2000, the Company recognized a gain on sale of
auto receivables of $207.6 million or approximately 41% of revenue during that
period. If the Company is unable to continue expansion of its loan purchase
volume and sell such loans to the trusts, the Company could experience a
significant change in the timing of revenue recognition and reported income.
Further, there can be no assurance that the Company will recognize gains on
future sales of receivables to the trusts consistent with the gains on
previous sales.
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Implementation of Business Strategy. The Company's financial position and
results of operations depend on Company management's ability to execute its
business strategy. Key factors involved in execution of such business strategy
include continued expansion of automobile contract purchase volume, continued
and successful use of proprietary scoring models for risk assessment and risk-
based pricing, the use of sophisticated risk management techniques, continued
investment in technology to support operating efficiency and growth, and
funding and liquidity through securitizations. The failure or inability of the
Company to execute any element of its business strategy could materially
adversely affect its financial position, liquidity and results of operations.
The Company plans to expand its indirect automobile finance business by
adding additional branch offices and by increasing the dealer penetration of
the Company's existing branch offices. The success of this strategy is
dependent upon, among other factors, the Company's ability to hire and retain
qualified branch managers and other personnel, to develop relationships with
more dealers and to expand the Company's current relationships with existing
dealer customers. The Company is faced with intense competition in attracting
key personnel and establishing relationships with new dealers. Dealers often
already have favorable non-prime financing sources, which may restrict the
Company's ability to develop dealer relationships and delay the Company's
growth. In addition, the competitive conditions in the Company's market may
result in a reduction in the profitability of the contracts that the Company
purchases or a decrease in contract acquisition volume, which would adversely
affect the Company's results of operations.
The growth of the Company's servicing portfolio has resulted in increased
need for additional personnel and expansion of systems capacity. The Company's
ability to support, manage and control growth is dependent upon, among other
things, the Company's ability to hire, train, supervise and manage its growing
workforce. There can be no assurance that the Company will have trained
personnel and systems adequate to support the Company's growth strategy.
Credit-Impaired Borrowers. The Company specializes in purchasing and
servicing non-prime automobile receivables. Non-prime borrowers are associated
with higher-than-average delinquency and default rates. While the Company
believes that it effectively manages these risks with its proprietary credit
scoring system, risk-based loan pricing and other underwriting policies and
collection methods, no assurance can be given that these criteria or methods
will be effective in the future. In the event that the Company underestimates
the default risk or under-prices contracts that it purchases, the Company's
financial position, liquidity and results of operations would be adversely
affected, possibly to a material degree.
Economic Conditions. Delinquencies, defaults, repossessions and losses
generally increase during periods of economic recession. These periods also
may be accompanied by decreased consumer demand for automobiles and declining
values of automobiles securing outstanding loans, which weakens collateral
coverage and increases the amount of a loss in the event of default.
Significant increases in the inventory of used automobiles during periods of
economic recession may also depress the prices at which repossessed
automobiles may be sold or delay the timing of these sales. Because the
Company focuses on non-prime borrowers, the actual rates of delinquencies,
defaults, repossessions and losses on these loans could be higher than those
experienced in the general automobile finance industry and could be more
dramatically affected by a general economic downturn. In addition, during an
economic slow down or recession, the Company's servicing costs may increase
without a corresponding increase in its servicing fee income. While the
Company believes that the underwriting criteria and collection methods it
employs enable it to manage the higher risk inherent in loans made to non-
prime borrowers, no assurance can be given that such criteria or methods will
afford adequate protection against such risks. Any sustained period of
increased delinquencies, defaults, repossessions or losses or increased
servicing costs could also adversely affect the Company's ability to enter
into future securitizations and, correspondingly, its financial position,
liquidity and results of operations.
Interest Rates. The Company's profitability may be directly affected by the
level of and fluctuations in interest rates, which affect the Company's
ability to earn a gross interest rate spread. As the level of interest rates
increase, the Company's gross interest rate spread may decline since the rates
charged on the contracts purchased from dealers are limited by statutory
maximums, restricting the Company's opportunity to pass on
15
<PAGE>
increased interest costs. Furthermore, the Company's future gains recognized
upon the securitization of automobile receivables will also be affected by
interest rates. The Company recognizes a gain in connection with its
securitizations based upon the estimated present value of projected future
excess cash flows from the securitization trusts, which is largely dependent
upon the gross interest rate spread. The Company believes that its
profitability and liquidity would be adversely affected during any period of
higher interest rates, possibly to a material degree.
Labor Market Conditions. Low unemployment rates driven by economic growth
and the continued expansion of consumer credit markets could contribute to an
increase in the Company's employee turnover rate. High turnover or an
inability to attract and retain qualified replacement personnel could have an
adverse effect on the Company's delinquency, default and net loss rates and,
ultimately, the Company's financial condition, results of operations and
liquidity.
Competition. Reference should be made to Item 1. "Business--Automobile
Finance Operations-- Competition" for a discussion of competitive risk
factors.
Regulation. Reference should be made to Item 1. "Business--Automobile
Finance Operations-- Regulation" for a discussion of regulatory risk factors.
Employees
At June 30, 2000, the Company employed 3,048 persons in 41 states and three
Canadian provinces. None of the Company's employees are a part of a collective
bargaining agreement, and the Company's relationships with employees are
satisfactory.
Executive Officers
The following sets forth certain data concerning the executive officers of
the Company as of June 30, 2000.
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<C> <C> <S>
Clifton H. Morris, Jr... 65 Executive Chairman of the Board
Michael R. Barrington... 41 Vice Chairman of the Board, Chief Executive
Officer and President
Daniel E. Berce......... 46 Vice Chairman of the Board and Chief Financial
Officer
Edward H. Esstman....... 59 Executive Vice President--Dealer Services and
Director
Steven P. Bowman........ 33 Executive Vice President--Chief Credit Officer
Chris A. Choate......... 37 Executive Vice President--General Counsel and
Secretary
Denny P. Hanysak........ 56 Executive Vice President--Consumer Services
Joseph E. McClure....... 53 Executive Vice President--Chief Information
Officer
Michael T. Miller....... 39 Executive Vice President--e-Services
Preston A. Miller....... 36 Executive Vice President--Treasurer
Cinde C. Perales........ 39 Executive Vice President--Chief of Staff
Karl J. Reeb............ 42 Executive Vice President--Chief Administration
Officer
</TABLE>
Clifton H. Morris, Jr. has been Executive Chairman of the Board since July
2000 and served as Chairman of the Board and Chief Executive Officer of the
Company from May 1988 to July 2000. He also served as President of the Company
from May 1988 until April 1991 and from April 1992 to November 1996.
Michael R. Barrington has been Vice Chairman of the Board and Chief
Executive Officer of the Company since July 2000. He served as Vice Chairman,
President and Chief Operating Officer of the Company from November 1996 to
July 2000, and was Executive Vice President and Chief Operating Officer of the
Company from November 1994 until November 1996. Mr. Barrington was a Vice
President of the Company from May 1991 until November 1994.
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<PAGE>
Daniel E. Berce has been Vice Chairman and Chief Financial Officer of the
Company since November 1996, and was Executive Vice President, Chief Financial
Officer and Treasurer for the Company from November 1994 until November 1996.
Mr. Berce was Vice President, Chief Financial Officer and Treasurer of the
Company from May 1991 until November 1994.
Edward H. Esstman has been Executive Vice President--Dealer Services since
October 1999. He served as Executive Vice President--Auto Finance Division for
the Company from November 1996 to October 1999 and Senior Vice President and
Chief Credit Officer for the Company from November 1994 until November 1996.
Mr. Esstman was Senior Vice President and Director of Consumer Finance of AFSI
from AFSI's formation in July 1992 until November 1994.
Steven P. Bowman has been Executive Vice President--Chief Credit Officer
since March 2000. He served as Senior Vice President, Risk Management from May
1998 until March 2000 and was Vice President, Risk Management from June 1997
until May 1998. From July 1996 until June 1997, Mr. Bowman was Assistant Vice
President, Risk Management.
Chris A. Choate has been Executive Vice President--General Counsel and
Secretary of the Company since November 1999 and was Senior Vice President,
General Counsel and Secretary of the Company from November 1996 to November
1999. He served as Vice President, General Counsel and Secretary of the
Company from November 1994 until November 1996, and was 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.
Denny P. Hanysak has been Executive Vice President--Consumer Services since
October 1999. He served as Executive Vice President, Mortgage Services for
Americredit Corp. of California from July 1998 until October 1999.
Joseph E. McClure has been Executive Vice President--Chief Information
Officer of the Company since April 1999, and was Senior Vice President and
Chief Information Officer from October 1998 until April 1999. Prior to that,
Mr. McClure was Executive Vice President and Division Information Officer of
Associates First Capital Corp., and was in that position for more than five
years.
Michael T. Miller has been Executive Vice President--e-Services since March
2000. He served as Executive Vice President and Chief Credit Officer from July
1998 until March 2000, and was Senior Vice President and Chief Credit Officer
of the Company from November 1996 until July 1998. Mr. Miller was Senior Vice
President, Risk Management, Credit Policy and Planning and Chief of Staff of
AFSI from November 1994 until November 1996, and Vice President, Risk
Management, Credit Policy and Planning of AFSI from AFSI's formation in July
1992 until November 1994.
Preston A. Miller has been Executive Vice President--Treasurer of the
Company since July 1998, and was Senior Vice President and Treasurer of the
Company from November 1996 until July 1998. Mr. Miller was Vice President and
Controller of the Company from November 1994 until November 1996, and was
Controller of the Company from September 1989 until November 1994.
Cinde C. Perales has been Executive Vice President--Chief of Staff of the
Company since November 1999. Ms. Perales served as Executive Vice President
and Director of Loan Services of AFSI from July 1998 to November 1999, was
Senior Vice President and Director of Loan Services of AFSI from March 1996
until July 1998, and was Vice President and Director of Loan Services of AFSI
from October 1992 until March 1996.
Karl J. Reeb has been Executive Vice President--Chief Administration
Officer of the Company since November 1999. Prior to that, Mr. Reeb held
various human resource executive positions with Verizon (formerly "Airtouch
Communications") in Los Angeles, San Francisco, and Dallas for approximately
10 years.
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<PAGE>
ITEM 2. PROPERTIES
The Company's executive offices are located at 801 Cherry Street, Suite
3900, Fort Worth, Texas, in a 127,255 square foot leased office space under a
12 year lease that commenced in July 1999. The Company also leases 67,000
square feet of office space in Tempe, Arizona, under a ten year agreement with
renewal options, 76,000 square feet of office space in Charlotte, North
Carolina, under a ten year agreement with renewal options and 250,000 square
feet of office space in Arlington, Texas, under a five year agreement.
The Company's branch office facilities are generally leased under
agreements with original terms of three to five years. Such facilities are
typically located in a suburban office building and consist of between 1,000
and 2,000 square feet of space.
ITEM 3. LEGAL PROCEEDINGS
As a consumer finance company, the Company is subject to various consumer
claims and litigation seeking damages and statutory penalties, based upon,
among other things, usury, disclosure inaccuracies, wrongful repossession,
fraud and discriminatory treatment of credit applicants, which could take the
form of a plaintiffs' class action complaint. The Company, as the assignee of
finance contracts originated by dealers, may also be named as a co-defendant
in lawsuits filed by consumers principally against dealers. The damages and
penalties claimed by consumers in these types of matters can be substantial.
The relief requested by the plaintiffs varies but includes requests for
compensatory, statutory and punitive damages.
Two proceedings in which the Company is a defendant have been brought in
the form of class action complaints. One proceeding, pending in the State of
Georgia, claims that the Company miscalculated rebates on certain precomputed
retail installment contracts in Georgia. The other proceeding, pending in
United States District Court in the State of California, claims that certain
loan pricing structures used by the Company and other banks and finance
companies violate various California laws. In the opinion of management, both
of these lawsuits are without merit and the Company intends to defend
vigorously.
Management believes that the Company has taken prudent steps to address the
litigation risks associated with the Company's business activities. However,
there can be no assurance that the Company will be able to successfully defend
against all such claims or that the determination of any such claim in a
manner adverse to the Company would not have a material adverse effect on the
Company's automobile finance business.
On April 8, 1999, a putative class action complaint was filed against the
Company and certain of the Company's officers and directors alleging
violations of Section 10(b) of the Securities Exchange Act of 1934 arising
from the Company's use of the cash-in method of measuring and accounting for
credit enhancement assets in the Company's financial statements through the
first quarter of fiscal 1999. The United States District Court granted the
Company's motion to dismiss the litigation with prejudice on April 21, 2000.
The plaintiffs have appealed the dismissal to the United States Court of
Appeals for the Fifth Circuit, where the matter is presently pending. In the
opinion of management this litigation is without merit, as evidenced by the
District Court's dismissal, and the Company intends to vigorously contest the
plaintiff's appeal of such dismissal.
In the opinion of management, the resolution of the proceedings described
in this section will not have a material adverse effect on the Company's
consolidated financial position, liquidity or results of operations.
ITEM 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, 2000.
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
Indentures pursuant to which the senior notes were issued contain certain
restrictions on the payment of dividends. The Company presently intends to
retain future earnings, if any, for use in the operation and expansion of the
business and does not anticipate paying any cash dividends in the foreseeable
future.
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 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Information contained under the caption "Financial Review--Interest Rate
Risk" in the Annual Report is incorporated herein by reference in response to
this Item 7A.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION
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
Information contained under the caption "Related Party Transactions" in the
Proxy Statement is incorporated herein by reference 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, 2000 and 1999.
Consolidated Statements of Income and Comprehensive Income for the
years ended June 30, 2000, 1999 and 1998.
Consolidated Statements of Shareholders' Equity for the years ended
June 30, 2000, 1999 and 1998.
Consolidated Statements of Cash Flows for the years ended June 30,
2000, 1999 and 1998.
Notes to Consolidated Financial Statements
Report of Independent Accountants
(2) Consolidating financial information for AmeriCredit Corp. (on a parent
only basis), the combined Subsidiary Guarantors and the combined Non-
Guarantor Subsidiaries is included herein in the form of the financial
statement schedules on the following eight pages.
Financial Statement Schedules
The payment of principal, premium, if any, and interest on the Company's
senior notes is guaranteed by certain of the Company's subsidiaries (the
"Subsidiary Guarantors"). The separate financial statements of the
Subsidiary Guarantors are not included herein because the Subsidiary
Guarantors are wholly-owned consolidated subsidiaries of the Company and
are jointly, severally and unconditionally liable for the obligations
represented by the senior notes. The Company believes that the condensed
consolidating financial information for the Company, the combined
Subsidiary Guarantors and the combined Non-Guarantor Subsidiaries provide
information that is more meaningful in understanding the financial
position of the Subsidiary Guarantors than separate financial statements
of the Subsidiary Guarantors.
The following consolidating financial statement schedules present
consolidating financial data for (i) the Company (on a parent only basis),
(ii) the combined Subsidiary Guarantors, (iii) the combined Non-Guarantor
Subsidiaries, (iv) an elimination column for adjustments to arrive at the
information for the Company and its subsidiaries on a consolidated basis
and (v) the Company and its subsidiaries on a consolidated basis as of
June 30, 2000 and 1999 and for each of the three years in the period ended
June 30, 2000.
Investments in subsidiaries are accounted for by the parent company using
the equity method for purposes of the presentation set forth. Earnings of
subsidiaries are therefore reflected in the parent company's investment
accounts and earnings. The principal elimination entries eliminate
investments in subsidiaries and intercompany balances and transactions.
(3) All other schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are
either not required under the related instructions, are inapplicable, or
the required information is included elsewhere in the Consolidated
Financial Statements and incorporated herein by reference.
(4) The exhibits filed in response to Item 601 of Regulation S-K are listed
in the Index to Exhibits.
(5) The Company did not file any reports on Form 8-K during the quarterly
period ended June 30, 2000. Certain subsidiaries and affiliates of the
Company filed reports on Form 8-K during the period ended June 30, 2000
reporting monthly information related to securitization trusts.
21
<PAGE>
AMERICREDIT CORP.
FINANCIAL STATEMENT SCHEDULE
CONSOLIDATING BALANCE SHEET
June 30, 2000
<TABLE>
<CAPTION>
AmeriCredit Non-
Corp. Guarantors Guarantors Eliminations Consolidated
----------- ---------- ---------- ------------ ------------
(dollars in thousands)
<S> <C> <C> <C> <C> <C>
ASSETS
Cash and cash
equivalents............ $ 30,705 $ 12,211 $ 42,916
Receivables held for
sale, net.............. 284,851 586,660 871,511
Interest-only
receivables from
Trusts................. $ 1,019 228,040 229,059
Investments in Trust
receivables............ 341,707 341,707
Restricted cash......... 253,852 253,852
Property and equipment,
net.................... 349 44,186 44,535
Other assets............ 11,529 40,781 26,379 78,689
Due (to) from
affiliates............. 675,339 (701,473) 26,134
Investment in
affiliates............. 318,749 266,920 2,536 $(588,205)
---------- --------- ---------- --------- ----------
Total assets........ $1,006,985 $ (34,030) $1,477,519 $(588,205) $1,862,269
========== ========= ========== ========= ==========
LIABILITIES AND
SHAREHOLDERS' EQUITY
Liabilities:
Warehouse credit
facilities........... $ 4,661 $ 483,039 $ 487,700
Credit enhancement
facility............. 66,606 66,606
Senior notes.......... $ 375,000 375,000
Other notes payable... 19,691 19,691
Funding payable....... 61,519 145 61,664
Accrued taxes and
expenses............. 14,058 49,837 6,732 70,627
Deferred income
taxes................ (90,343) (60,323) 243,068 92,402
---------- --------- ---------- --------- ----------
Total liabilities... 318,406 55,694 799,590 1,173,690
---------- --------- ---------- --------- ----------
Shareholders' equity:
Common stock.......... 837 32 1 $ (33) 837
Additional paid-in
capital.............. 401,979 40,093 267,512 (307,605) 401,979
Accumulated other
comprehensive
income............... 44,803 44,803 (44,803) 44,803
Retained earnings..... 262,111 (129,849) 365,613 (235,764) 262,111
---------- --------- ---------- --------- ----------
709,730 (89,724) 677,929 (588,205) 709,730
Treasury stock........ (21,151) (21,151)
---------- --------- ---------- --------- ----------
Total shareholders'
equity............... 688,579 (89,724) 677,929 (588,205) 688,579
---------- --------- ---------- --------- ----------
Total liabilities
and shareholders'
equity............. $1,006,985 $ (34,030) $1,477,519 $(588,205) $1,862,269
========== ========= ========== ========= ==========
</TABLE>
22
<PAGE>
AMERICREDIT CORP.
FINANCIAL STATEMENT SCHEDULE
CONSOLIDATING BALANCE SHEET
June 30, 1999
<TABLE>
<CAPTION>
AmeriCredit Non-
Corp. Guarantors Guarantors Eliminations Consolidated
----------- ---------- ---------- ------------ ------------
(dollars in thousands)
<S> <C> <C> <C> <C> <C>
ASSETS
Cash and cash
equivalents............ $ 20,246 $ 943 $ 21,189
Receivables held for
sale, net.............. 256,771 199,238 456,009
Interest-only
receivables from
Trusts................. $ 1,337 190,528 191,865
Investments in Trust
receivables............ 195,598 195,598
Restricted cash......... 107,399 107,399
Property and equipment,
net.................... 349 40,796 41,145
Other assets............ 11,510 30,170 8,602 50,282
Due (to) from
affiliates............. 567,368 (478,520) (88,848)
Investment in
affiliates............. 198,339 118,024 1,050 $(317,413)
-------- --------- -------- --------- ----------
Total assets........ $778,903 $ (12,513) $614,510 $(317,413) $1,063,487
======== ========= ======== ========= ==========
LIABILITIES AND
SHAREHOLDERS' EQUITY
Liabilities:
Warehouse credit
facilities........... $ 20,290 $ 94,369 $ 114,659
Senior notes.......... $375,000 375,000
Other notes payable... 17,874 17,874
Funding payable....... 39,301 39,301
Accrued taxes and
expenses............. 16,062 26,601 265 42,928
Deferred income
taxes................ (29,763) (42,016) 145,774 73,995
-------- --------- -------- --------- ----------
Total liabilities... 379,173 44,176 240,408 663,757
-------- --------- -------- --------- ----------
Shareholders' equity:
Common stock.......... 715 203 3 $ (206) 715
Additional paid-in
capital.............. 252,194 108,475 118,840 (227,315) 252,194
Accumulated other
comprehensive
income............... 21,410 21,410 (21,410) 21,410
Retained earnings..... 147,610 (165,367) 233,849 (68,482) 147,610
-------- --------- -------- --------- ----------
421,929 (56,689) 374,102 (317,413) 421,929
Treasury stock........ (22,199) (22,199)
-------- --------- -------- --------- ----------
Total shareholders'
equity............... 399,730 (56,689) 374,102 (317,413) 399,730
-------- --------- -------- --------- ----------
Total liabilities
and shareholders'
equity............. $778,903 $ (12,513) $614,510 $(317,413) $1,063,487
======== ========= ======== ========= ==========
</TABLE>
23
<PAGE>
AMERICREDIT CORP.
FINANCIAL STATEMENT SCHEDULE
CONSOLIDATING STATEMENT OF INCOME
Year Ended June 30, 2000
<TABLE>
<CAPTION>
AmeriCredit Non-
Corp. Guarantors Guarantors Eliminations Consolidated
----------- ---------- ---------- ------------ ------------
(dollars in thousands)
<S> <C> <C> <C> <C> <C>
Revenue
Finance charge
income............... $ 74,467 $ 49,683 $124,150
Gain on sale of
receivables.......... $ (284) 15,344 194,010 209,070
Servicing fee income.. 193,890 41,662 $ (65,301) 170,251
Other income.......... 45,064 5,186 1,011 (45,052) 6,209
Equity in income of
affiliates........... 117,148 (117,148)
-------- -------- -------- --------- --------
161,928 288,887 286,366 (227,501) 509,680
-------- -------- -------- --------- --------
Costs and expenses
Operating expenses.... 364 288,054 102 (65,301) 223,219
Provision for loan
losses............... 8,072 8,287 16,359
Interest expense...... 48,720 1,915 63,727 (45,052) 69,310
Charge for closing
mortgage operations.. 10,500 10,500
-------- -------- -------- --------- --------
49,084 308,541 72,116 (110,353) 319,388
-------- -------- -------- --------- --------
Income before income
taxes.................. 112,844 (19,654) 214,250 (117,148) 190,292
Income tax provision.... (1,657) (5,038) 82,486 75,791
-------- -------- -------- --------- --------
Net income.............. $114,501 $(14,616) $131,764 $(117,148) $114,501
======== ======== ======== ========= ========
</TABLE>
24
<PAGE>
AMERICREDIT CORP.
FINANCIAL STATEMENT SCHEDULE
CONSOLIDATING STATEMENT OF INCOME
Year Ended June 30, 1999
<TABLE>
<CAPTION>
AmeriCredit Non-
Corp. Guarantors Guarantors Eliminations Consolidated
----------- ---------- ---------- ------------ ------------
(dollars in thousands)
<S> <C> <C> <C> <C> <C>
Revenue
Finance charge
income............... $ 42,302 $ 32,986 $ 75,288
Gain on sale of
receivables.......... $ (6,394) 2,400 173,886 169,892
Servicing fee income.. 120,044 8,539 $ (42,617) 85,966
Other income.......... 39,585 3,428 744 (39,447) 4,310
Equity in income of
affiliates........... 73,633 (73,633)
-------- -------- -------- --------- --------
106,824 168,174 216,155 (155,697) 335,456
-------- -------- -------- --------- --------
Costs and expenses
Operating expenses.... 6,900 201,004 58 (42,617) 165,345
Provision for loan
losses............... 3,979 5,650 9,629
Interest expense...... 22,983 20,097 35,159 (39,447) 38,792
-------- -------- -------- --------- --------
29,883 225,080 40,867 (82,064) 213,766
-------- -------- -------- --------- --------
Income before income
taxes.................. 76,941 (56,906) 175,288 (73,633) 121,690
Income tax provision.... 2,101 (24,967) 69,716 46,850
-------- -------- -------- --------- --------
Net income.............. $ 74,840 $(31,939) $105,572 $ (73,633) $ 74,840
======== ======== ======== ========= ========
</TABLE>
25
<PAGE>
AMERICREDIT CORP.
FINANCIAL STATEMENT SCHEDULE
CONSOLIDATING STATEMENT OF INCOME
Year Ended June 30, 1998
<TABLE>
<CAPTION>
AmeriCredit Non-
Corp. Guarantors Guarantors Eliminations Consolidated
----------- ---------- ---------- ------------ ------------
(dollars in thousands)
<S> <C> <C> <C> <C> <C>
Revenue
Finance charge
income............... $ 39,114 $16,723 $ 55,837
Gain on sale of
receivables.......... $(6,729) 1,350 108,573 103,194
Servicing fee income.. 91,682 9,822 $ (53,594) 47,910
Other income.......... 31,029 1,268 741 (30,643) 2,395
Equity in income of
affiliates........... 50,179 (50,179)
------- -------- ------- --------- --------
74,479 133,414 135,859 (134,416) 209,336
------- -------- ------- --------- --------
Costs and expenses
Operating expenses.... 10,800 137,273 5 (53,594) 94,484
Provision for loan
losses............... 7,555 7,555
Interest expense...... 14,776 24,192 18,810 (30,643) 27,135
------- -------- ------- --------- --------
25,576 169,020 18,815 (84,237) 129,174
------- -------- ------- --------- --------
Income before income
taxes.................. 48,903 (35,606) 117,044 (50,179) 80,162
Income tax provision.... (398) (11,148) 42,407 30,861
------- -------- ------- --------- --------
Net income.............. $49,301 $(24,458) $74,637 $ (50,179) $ 49,301
======= ======== ======= ========= ========
</TABLE>
26
<PAGE>
AMERICREDIT CORP.
FINANCIAL STATEMENT SCHEDULE
CONSOLIDATING STATEMENT OF CASH FLOWS
Year Ended June 30, 2000
<TABLE>
<CAPTION>
AmeriCredit Non-
Corp. Guarantors Guarantors Eliminations Consolidated
----------- ----------- ----------- ------------ ------------
(dollars in thousands)
<S> <C> <C> <C> <C> <C>
Cash flows from
operating activities:
Net income............ $ 114,501 $ (14,616) $ 131,764 $ (117,148) $ 114,501
Adjustments to
reconcile net income
to net cash provided
by operating
activities:
Non-cash charge for
closing mortgage
operations......... 6,566 6,566
Depreciation and
amortization....... 19,357 19,357
Provision for loan
losses............. 8,072 8,287 16,359
Deferred income
taxes.............. (48,997) (18,307) 82,692 15,388
Non-cash servicing
fee income......... (44,083) (44,083)
Non-cash gain on
sale of auto
receivables........ (186,176) (186,176)
Distributions from
Trusts............. 125,104 125,104
Equity in income of
affiliates......... (117,148) 117,148
Changes in assets
and liabilities:
Other assets....... (19) (15,756) (8,066) (23,841)
Accrued taxes and
expenses.......... (2,004) 23,236 6,467 27,699
--------- ----------- ----------- ----------- -----------
Net cash provided
by operating
activities....... (53,667) 8,552 115,989 70,874
--------- ----------- ----------- ----------- -----------
Cash flows from
investing activities:
Purchases of auto
receivables.......... (4,425,836) (4,405,708) 4,405,708 (4,425,836)
Originations of
mortgage
receivables.......... (109,688) (109,688)
Principal collections
and recoveries on
receivables.......... (10,984) 54,740 43,756
Net proceeds from
sale of auto
receivables.......... 4,405,708 3,955,404 (4,405,708) 3,955,404
Net proceeds from
sale of mortgage
receivables.......... 126,866 126,866
Initial deposits to
restricted cash...... (186,606) (186,606)
Net change in credit
enhancement
facility............. 66,606 66,606
Purchases of property
and equipment........ (9,751) (9,751)
Change in other
assets............... (1,521) (9,711) (11,232)
Net change in
investment in
affiliates........... 20,131 (170,007) (1,486) 151,362
--------- ----------- ----------- ----------- -----------
Net cash used by
investing
activities....... 20,131 (195,213) (526,761) 151,362 (550,481)
--------- ----------- ----------- ----------- -----------
Cash flows from
financing activities:
Net change in
warehouse credit
facilities........... (15,629) 388,670 373,041
Payments on other
notes payable........ (11,079) (11,079)
Proceeds from
issuance of common
stock................ 139,372 2,692 148,670 (151,362) 139,372
Net change in due
(to) from
affiliates........... (94,757) 210,057 (115,300)
--------- ----------- ----------- ----------- -----------
Net cash provided
by financing
activities....... 33,536 197,120 422,040 (151,362) 501,334
--------- ----------- ----------- ----------- -----------
Net increase in cash
and cash equivalents.. 10,459 11,268 21,727
Cash and cash
equivalents at
beginning of year..... 20,246 943 21,189
--------- ----------- ----------- ----------- -----------
Cash and cash
equivalents at end of
year.................. $ $ 30,705 $ 12,211 $ $ 42,916
========= =========== =========== =========== ===========
</TABLE>
27
<PAGE>
AMERICREDIT CORP.
FINANCIAL STATEMENT SCHEDULE
CONSOLIDATING STATEMENT OF CASH FLOWS
Year Ended June 30, 1999
<TABLE>
<CAPTION>
AmeriCredit Non-
Corp. Guarantors Guarantors Eliminations Consolidated
----------- ----------- ----------- ------------ ------------
(dollars in thousands)
<S> <C> <C> <C> <C> <C>
Cash flows from
operating activities:
Net income............ $ 74,840 $ (31,939) $ 105,572 $ (73,633) $ 74,840
Adjustments to
reconcile net income
to net cash provided
by operating
activities:
Depreciation and
amortization....... 41 12,604 12,645
Provision for loan
losses............. 3,979 5,650 9,629
Deferred income
taxes.............. (1,375) (25,379) 70,118 43,364
Non-cash servicing
fee income......... (12,525) (12,525)
Non-cash gain on
sale of auto
receivables........ (157,757) (157,757)
Distributions from
Trusts............. 44,531 44,531
Equity in income of
affiliates......... (73,633) 73,633
Changes in assets
and liabilities:
Other assets....... 3,304 (11,950) 2,469 (6,177)
Accrued taxes and
expenses.......... 18,342 13,095 4,803 36,240
--------- ----------- ----------- ----------- -----------
Net cash provided
by operating
activities....... 21,519 (39,590) 62,861 44,790
--------- ----------- ----------- ----------- -----------
Cash flows from
investing activities:
Purchases of auto
receivables.......... (2,869,776) (2,783,160) 2,783,160 (2,869,776)
Originations of
mortgage
receivables.......... (297,535) (297,535)
Principal collections
and recoveries on
receivables.......... 6,381 15,143 21,524
Net proceeds from
sale of auto
receivables.......... 2,783,160 2,727,763 (2,783,160) 2,727,763
Net proceeds from
sale of mortgage
receivables.......... 294,096 294,096
Initial deposits to
restricted cash...... (82,750) (82,750)
Return of deposits
from restricted
cash................. 23,000 23,000
Purchases of property
and equipment........ (215) (14,513) (14,728)
Change in other
assets............... (5,514) (4,948) (10,462)
Net change in
investment in
affiliates........... 93 (104,103) (1,048) 105,058
--------- ----------- ----------- ----------- -----------
Net cash used by
investing
activities....... (122) (207,804) (106,000) 105,058 (208,868)
--------- ----------- ----------- ----------- -----------
Cash flows from
financing activities:
Net change in
warehouse credit
facilities........... (4,610) (46,339) (50,949)
Net proceeds from
issuance of senior
notes................ 194,097 194,097
Payments on other
notes payable........ (3,890) (26) (3,916)
Proceeds from
issuance of common
stock................ 12,948 139 104,919 (105,058) 12,948
Net change in due
(to) from
affiliates........... (224,552) 241,980 (17,428)
--------- ----------- ----------- ----------- -----------
Net cash provided
by financing
activities....... (21,397) 237,483 41,152 (105,058) 152,180
--------- ----------- ----------- ----------- -----------
Net decrease in cash
and cash equivalents.. (9,911) (1,987) (11,898)
Cash and cash
equivalents at
beginning of year..... 30,157 2,930 33,087
--------- ----------- ----------- ----------- -----------
Cash and cash
equivalents at end of
year.................. $ $ 20,246 $ 943 $ $ 21,189
========= =========== =========== =========== ===========
</TABLE>
28
<PAGE>
AMERICREDIT CORP.
FINANCIAL STATEMENT SCHEDULE
CONSOLIDATING STATEMENT OF CASH FLOWS
Year Ended June 30, 1998
<TABLE>
<CAPTION>
AmeriCredit Non-
Corp. Guarantors Guarantors Eliminations Consolidated
----------- ----------- ----------- ------------ ------------
(dollars in thousands)
<S> <C> <C> <C> <C> <C>
Cash flows from
operating activities:
Net income............ $ 49,301 $ (24,458) $ 74,637 $ (50,179) $ 49,301
Adjustments to
reconcile net income
to net cash provided
by operating
activities:
Depreciation and
amortization....... 50 4,448 4,498
Provision for loan
losses............. 7,555 7,555
Deferred income
taxes.............. 390 (11,826) 42,410 30,974
Non-cash servicing
fee income......... (10,867) (10,867)
Non-cash gain on
sale of auto
receivables........ (96,405) (96,405)
Distributions from
Trusts............. 43,807 43,807
Equity in income of
affiliates......... (50,179) 50,179
Changes in assets
and liabilities:
Other assets....... (420) (739) (2,165) (3,324)
Accrued taxes and
expenses.......... (10,368) 6,338 (3,321) (7,351)
-------- ----------- ----------- ----------- -----------
Net cash provided
by operating
activities....... (11,226) (18,682) 48,096 18,188
-------- ----------- ----------- ----------- -----------
Cash flows from
investing activities:
Purchases of auto
receivables.......... (1,693,957) (1,777,748) 1,777,748 (1,693,957)
Originations of
mortgage
receivables.......... (137,169) (137,169)
Principal collections
and recoveries on
receivables.......... 8,560 28,787 37,347
Net proceeds from
sale of auto
receivables.......... 1,777,748 1,609,970 (1,777,748) 1,609,970
Net proceeds from
sale of mortgage
receivables.......... 119,683 119,683
Initial deposits to
restricted cash...... (56,725) (56,725)
Purchases of property
and equipment........ 11 (9,467) (9,456)
Change in other
assets............... 5,000 64 5,064
Net change in
investment in
affiliates........... (9,998) (3,921) (2) 13,921
-------- ----------- ----------- ----------- -----------
Net cash used by
investing
activities....... (4,987) 61,477 (195,654) 13,921 (125,243)
-------- ----------- ----------- ----------- -----------
Cash flows from
financing activities:
Net change in
warehouse credit
facilities........... (47,145) 140,708 93,563
Net proceeds from
issuance of senior
notes................ 47,762 47,762
Payments on other
notes payable........ (1,346) (7) (23,689) (25,042)
Proceeds from
issuance of common
stock................ 17,832 13,921 (13,921) 17,832
Net change in due
(to) from
affiliates........... (48,035) 30,526 17,509
-------- ----------- ----------- ----------- -----------
Net cash provided
by financing
activities....... 16,213 (16,626) 148,449 (13,921) 134,115
-------- ----------- ----------- ----------- -----------
Net increase in cash
and cash equivalents.. 26,169 891 27,060
Cash and cash
equivalents at
beginning of year..... 3,988 2,039 6,027
-------- ----------- ----------- ----------- -----------
Cash and cash
equivalents at end of
year.................. $ $ 30,157 $ 2,930 $ $ 33,087
======== =========== =========== =========== ===========
</TABLE>
29
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULES
Board of Directors and Shareholders
AmeriCredit Corp.
Our audits of the consolidated financial statements referred to in our
report dated August 3, 2000, appearing in the 2000 Annual Report to
Shareholders of AmeriCredit Corp. (which report and consolidated financial
statements are incorporated by reference in this Annual Report on Form 10-K)
also included an audit of the financial statement schedules included in Item
14(2) of this Form 10-K. In our opinion, these financial statement schedules
present fairly, in all material respects, the information set forth therein
when read in conjunction with the related consolidated financial statements.
PricewaterhouseCoopers LLP
Fort Worth, Texas
August 3, 2000
30
<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 27,
2000.
AmeriCredit Corp.
/s/ Clifton H. Morris, Jr.
By: _________________________________
Clifton H. Morris, Jr.
Executive Chairman of the Board
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.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Clifton H. Morris, Jr. Executive Chairman of the September 27, 2000
______________________________________ Board
Clifton H. Morris, Jr.
/s/ Michael R. Barrington Vice Chairman, Chief September 27, 2000
______________________________________ Executive Officer and
Michael R. Barrington President
/s/ Daniel E. Berce Vice Chairman and Chief September 27, 2000
______________________________________ Financial Officer
Daniel E. Berce
/s/ Edward H. Esstman Executive Vice President September 27, 2000
______________________________________ Dealer Services and
Edward H. Esstman Director
A. R. Dike Director September 27, 2000
______________________________________
A. R. Dike
James H. Greer Director September 27, 2000
______________________________________
James H. Greer
Douglas K. Higgins Director September 27, 2000
______________________________________
Douglas K. Higgins
/s/ Kenneth H. Jones, Jr. Director September 27, 2000
______________________________________
Kenneth H. Jones, Jr.
</TABLE>
31
<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 by the
numbers in parenthesis under the Exhibit Number column. Documents filed with
this report are identified by the symbol "@" under the Exhibit Number column.
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<C> <S>
3.1(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(1) Amendment to Articles of Incorporation, filed October 18, 1989
(Exhibit 3.2)
3.3(5) Articles of Amendment to Articles of Incorporation of the Company,
filed November 12, 1992 (Exhibit 3.3)
3.4(17) Bylaws of the Company, as amended (Exhibit 3.4)
4.1(4) Specimen stock certificate evidencing the Common Stock (Exhibit
4.1)
4.2(10) Rights Agreement, dated August 28, 1997, between the Company and
ChaseMellon Shareholder Services, L.L.C. (Exhibit 1)
4.2.1(16) Amendment No. 1 to Rights Agreement, dated September 9, 1999,
between the Company and ChaseMellon Shareholder Services, L.L.C.
(Exhibit 4.1)
4.3(15) Indenture, dated as of April 20, 1999, between AmeriCredit Corp.
and subsidiaries and Bank One, Columbus, NA, with form of 9.875%
Senior Notes due 2006 (Exhibit 4.3)
10.1(1) 1989 Stock Option Plan (with Stock Appreciation Rights) for the
Company (Exhibit 10.5)
10.2(2) Amendment No. 1 to the 1989 Stock Option Plan (with Stock
Appreciation Rights) for the Company (Exhibit 4.6)
10.3(3) 1990 Stock Option Plan for Non-Employee Directors of the Company
(Exhibit 10.14)
10.4(4) 1991 Key Employee Stock Option Plan of the Company (Exhibit 10.10)
10.5(4) 1991 Non-employee Director Stock Option Plan of the Company
(Exhibit 10.11)
10.6(4) Executive Employment Agreement, dated January 30, 1991, between
the Company and Clifton H. Morris, Jr. (Exhibit 10.18)
10.6.1(8) Amendment No. 1 to Executive Employment Agreement, dated May 1,
1997, between the Company and Clifton H. Morris, Jr. (Exhibit
10.7.1)
10.6.2(@) Amendment No. 2 to Executive Employment Agreement, dated June 15,
2000, between the Company and Clifton H. Morris, Jr.
10.7(4) Executive Employment Agreement, dated January 30, 1991, between
the Company and Michael R. Barrington (Exhibit 10.19)
10.7.1(8) Amendment No. 1 to Executive Employment Agreement, dated May 1,
1997, between the Company and Michael R. Barrington (Exhibit
10.8.1)
10.8(4) Executive Employment Agreement, dated January 30, 1991 between the
Company and Daniel E.Berce (Exhibit 10.20)
10.8.1(8) Amendment No. 1 to Executive Employment Agreement, dated May 1,
1997, between the Company and Daniel E. Berce (Exhibit 10.9.1)
10.9(8) Amended and Restated Employment Agreement, dated October 15, 1996,
between the Company and Edward H. Esstman (Exhibit 10.10)
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<C> <S>
10.9.1(8) Amendment No. 1 to Amended and Restated Employment Agreement,
dated May 1, 1997, between the Company and Edward H. Esstman
(Exhibit 10.10.1)
10.10(8) Amended and Restated Employment Agreement, dated July 1, 1997,
between the Company and Michael T. Miller (Exhibit 10.11)
10.10.1(13) Amendment No. 1 to Amended and Restated Employment Agreement,
dated as of August 1, 1998, between the Company and Michael T.
Miller
10.10.2(@) Amendment No. 2 to Amended and Restated Employment Agreement,
dated as of October 1, 1999, between the Company and Michael T.
Miller
10.11(18) Security Agreement, dated as of September 30, 1999, among Kitty
Hawk Funding Corporation, AmeriCredit BOA Trust, AmeriCredit
Financial Services, Inc., AmeriCredit Funding Corp. II and Bank
of America, N.A. (Exhibit 10.1)
10.11.1(18) Note Purchase Agreement, dated as of September 30, 1999, among
AmeriCredit BOA Trust, Kitty Hawk Funding Corporation and Bank of
America, N.A. (Exhibit 10.2)
10.12(18) Amended and Restated Sale and Servicing Agreement, dated September
21, 1999, among CP Funding Corp., Americredit Financial Services,
Inc. and The Chase Manhattan Bank (Exhibit 10.3)
10.12.1(18) Amended and Restated Security Agreement, dated September 21, 1999,
among CP Funding Corp., The Chase Manhattan Bank and the several
secured parties and funding agents party thereto from time to
time (Exhibit 10.4)
10.13(18) Credit Agreement, dated as of October 14, 1999, among AFS Funding
Corp., AmeriCredit Corp., AmeriCredit Financial Services, Inc.,
AmeriCredit Management Company, the Financial Institutions from
time to time party thereto as lenders, Bankers Trust Company and
Credit Suisse First Boston, New York Branch (Exhibit 10.5)
10.13.1(18) Security and Collateral Agent Agreement, dated as of October 14,
1999, among Credit Suisse First Boston, New York Branch, Bankers
Trust Company, AmeriCredit Financial Services, Inc. and AFS
Funding Corp.
10.13.2(18) Replacement Cash Collateral Account Agreement, dated as of October
14, 1999, among AFS Funding Corp., Financial Security Assurance,
Inc., Credit Suisse First Boston, New York Branch, and Bank One,
N.A.
10.13.3(18) Subordination and Intercreditor Agreement, dated as of October 14,
1999, among AFS Funding Corp., AFS Funding Trust, the AmeriCredit
securitization trusts party thereto as Issuers, AmeriCredit
Financial Services, Inc., AmeriCredit Management Company,
AmeriCredit Corp., Bankers Trust Company, Bankers Trust
(Delaware), Credit Suisse First Boston, the Junior Lien Holders
party thereto, Financial Security Assurance, Inc., Harris Trust
and Savings Bank, LaSalle Bank National Association and Bank One,
N.A. (Exhibit 10.8)
10.14(11) Indenture, dated February 4, 1997, between AmeriCredit Corp. and
subsidiaries and Bank One, Columbus, NA, with respect to Series A
and Series B 9 1/4 % Senior Notes due 2004 (Exhibit 10.2)
10.15(6) 1995 Omnibus Stock and Incentive Plan for AmeriCredit Corp.
10.15.1(9) Amendment No. 1 to 1995 Omnibus Stock and Incentive Plan for
AmeriCredit Corp.
10.16(7) 1996 Limited Stock Option Plan for AmeriCredit Corp.
10.17(12) Indenture dated January 29, 1998, between AmeriCredit Corp. and
subsidiaries and Bank One, N.A., with respect to Series C and
Series D 9 1/4% Senior Notes due 2004 (Exhibit 10.24)
</TABLE>
33
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<C> <S>
10.18(14) 1998 Limited Stock Option Plan for AmeriCredit Corp.
10.19(15) Receivables Financing Agreement, dated as of March 31, 1999, among
AmeriCredit Warehouse Trust, AmeriCredit Financial Services,
Inc., AmeriCredit Funding Corp., Americredit Corporation of
California, Credit Suisse First Boston, New York Branch, and Bank
One, N.A. (Exhibit 10.24)
10.19.1(15) Master Receivables Purchase Agreement, dated as of March 31, 1999,
among AmeriCredit Financial Services, Inc., AmeriCredit Funding
Corp., Americredit Corporation of California and Bank One, N.A.
(Exhibit 10.25)
10.19.2(15) Security and Collateral Agent Agreement, dated as of March 31,
1999, among Credit Suisse First Boston, New York Branch, Bank
One, N.A., AmeriCredit Financial Services, Inc. and AmeriCredit
Warehouse Trust (Exhibit 10.26)
10.19.3(@) Commitment Extension Agreement, dated as of March 29, 2000, among
AmeriCredit Warehouse Trust, AmeriCredit Financial Services, Inc.
and Credit Suisse First Boston, New York Branch
10.20(15) Purchase Agreement, dated as of April 15, 1999, between
AmeriCredit Corp. and subsidiaries and Salomon Smith Barney Inc.,
Bear, Stearns & Co. Inc. and ING Baring Furman Selz LLC (Exhibit
10.27)
10.21(15) A/B Exchange Registration Rights Agreement, dated as of April 20,
1999, between AmeriCredit Corp. and subsidiaries and Salomon
Smith Barney Inc., Bear, Stearns & Co. Inc., and ING Baring
Furman Selz LLC (Exhibit 10.28)
10.22(@) Amended and Restated Servicing and Custodian Agreement, dated as
of August 31, 2000, between AmeriCredit Financial Services, Inc.,
AmeriCredit Barclays Trust, Bank One, N.A., and Barclays Bank,
PLC
10.22.1(@) Amended and Restated Security Agreement, dated as of August 31,
2000, between AmeriCredit Financial Services, Inc., AmeriCredit
Funding Corp. III, AmeriCredit Barclays Trust, Sheffield
Receivables Corporation, Barclays Bank, PLC, and Bank One, N.A.
10.22.2(@) Note Purchase Agreement, dated as of June 30, 2000, between the
AmeriCredit Barclays Trust, AmeriCredit Financial Services, Inc.,
Sheffield Receivables Corporation, and Barclays Bank, PLC
10.23(@) Receivables Financing Agreement, dated as of June 30, 2000, among
AmeriCredit DB Trust, AmeriCredit Financial Services, Inc.,
AmeriCredit Funding Corp. IV, the lenders party thereto from time
to time, Deutsche Bank AG, New York Branch, and Bank One, N.A.
10.23.1(@) Security and Collateral Agent Agreement among Deutsche Bank AG,
New York Branch, Bank One, N.A., AmeriCredit Financial Services,
Inc., and AmeriCredit DB Trust
11.1(@) Statement Re Computation of Per Share Earnings
12.1(@) Statement Re Computation of Ratios
13.1(@) 2000 Annual Report to Shareholders of the Company
21.1(@) Subsidiaries of the Company
23.1(@) Consent of PricewaterhouseCoopers LLP
27.1(@) Financial Data Schedule
</TABLE>
--------
(1) Incorporated by referenced 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.
(2) 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.
34
<PAGE>
(3) 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.
(4) 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.
(5) 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.
(6) 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.
(7) 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.
(8) Incorporated by reference to exhibit shown in parenthesis included in
the Company's Annual Report on Form 10-K for the year ended June 30,
1997, filed by the Company with the Securities and Exchange Commission.
(9) Incorporated by reference from the Company's Proxy Statement for the
year ended June 30, 1997, filed by the Company with the Securities and
Exchange Commission.
(10) Incorporated by reference to the exhibit shown in parenthesis included
in the Company's Report on Form 8-K, dated August 28, 1997, filed by the
Company with the Securities and Exchange Commission.
(11) 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, 1997, filed by the Company with the Securities and
Exchange Commission.
(12) Incorporated by reference to the exhibit shown in parenthesis included
in the Company's Registration Statement on Form S-4, dated March 26,
1998, filed by the Company with the Securities and Exchange Commission.
(13) 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,
1998, filed by the Company with the Securities and Exchange Commission.
(14) Incorporated by reference from the Company's Proxy Statement for the
year ended June 30, 1998, filed by the Company with the Securities and
Exchange Commission.
(15) Incorporated by reference to the exhibit shown in parenthesis included
in the Company's Registration Statement on Form S-4, dated June 15,
1999, filed by the Company with the Securities and Exchange Commission.
(16) Incorporated by reference to the exhibit shown in parenthesis included
in the Company's Report on Form 8-K, dated September 7, 1999, filed by
the Company with the Securities and Exchange Commission.
(17) 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,
1999, filed by the Company with the Securities and Exchange Commission.
(18) 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, 1999, filed by the Company with the Securities and
Exchange Commission.
(@) Filed herewith
35
