AmeriCredit Reports Fourth Quarter and Fiscal Year 2003 Operating Results; Company Also Restates Results for Fiscal Year 2002
FORT WORTH, Texas--Aug. 2, 20035, 2003--AmeriCredit Corp. today announced operating results for its fourth quarter and fiscal year 2003 and a restatement of operating results for fiscal year 2002 and the nine months ended March 31, 2003. This announcement updates the August 6, 2003, press release that provided summary operating results for the quarter and fiscal year ended June 30, 2003.Fourth quarter and fiscal year 2003 results
For its fourth fiscal quarter ended June 30, 2003, AmeriCredit reported a net loss of $17.1 million, or $0.11 per share, which includes a $93.7 million pre-tax ($57.7 million after-tax), non-cash impairment charge to the Company's credit enhancement assets. Restated earnings for the fourth fiscal quarter ended June 30, 2002, were $90.8 million, or $1.00 per share. For the fiscal year ended June 30, 2003, AmeriCredit reported net income of $21.2 million, or $0.15 per share, compared with restated earnings of $314.6 million, or $3.50 per share, for the fiscal year ended June 30, 2002.
The carrying value of the Company's credit enhancement assets after the impairment charge is based on the assumption that credit defaults and recovery rates in the off-balance sheet trusts will be consistent with recent experience for the foreseeable future. These assumptions lead to cumulative credit loss expectations for the 2000, 2001 and 2002 trusts in the 13.0 to 14.5 percent range, compared to previous expectations in the 12.5 to 14.0 percent range.
"While we're disappointed with the impairment charge related to our off-book portfolio, we're encouraged with the progress we've made under our revised operating plan," said AmeriCredit CEO Clifton Morris. "Over the last six months, we made tough decisions, executed changes swiftly, and finished the fiscal year with improved liquidity and a stronger balance sheet."
Automobile loan purchases were $686.9 million for the fourth quarter of fiscal 2003, compared with the Company's stated origination goal of approximately $750 million per quarter. Loan purchases for the same quarter last year were $2.4 billion. Managed auto receivables totaled $14.9 billion at June 30, 2003.
Annualized net charge-offs were 7.4% of average managed auto receivables for the fourth quarter of fiscal 2003, compared with annualized net charge-offs of 7.6% for the March 2003 quarter and 5.2% for the June 2002 quarter. Managed auto receivables more than 60 days delinquent were 3.3% of total managed auto receivables at June 30, 2003, compared with 2.7% at March 31, 2003, and 3.3% at June 30, 2002.
AmeriCredit's unrestricted cash balance totaled $316.9 million at June 30, 2003, compared with $238.1 million at March 31, 2003. Additionally, in July the Company received a $70 million refund of estimated tax payments made in fiscal year 2003.
FAS 133 restatement
The Company and its independent accountants have reviewed the accounting treatment under Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities," (FAS 133) for certain interest rate swaps that were entered into prior to 2001 and used to hedge interest rate risk on a portion of its cash flows from credit enhancement assets. The result of this review is that certain unrealized losses originally classified in other comprehensive income should be reclassified to net income for fiscal year 2002 and the first nine months of fiscal year 2003.
This restatement totals approximately $56.5 million pre-tax and
affects the following periods:
(Dollars in thousands, Nine Months Ended Year Ended
except per share amounts) March 31, 2003 June 30, 2002
----------------- --------------
Pre-Tax Earnings
Previous $65,159 $565,012
As restated 62,218 511,496
Net Income
Previous $40,073 $347,483
As restated 38,264 314,570
Earnings Per Share
Previous $0.30 $3.87
As restated 0.29 3.50
Shareholders' Equity
Previous $1,912,557 $1,432,316
As restated 1,912,557 1,427,449
In September, the Company will file an amended annual report on Form 10-K for the fiscal year ended June 30, 2002, and amended quarterly reports on Form 10-Q for the first three quarters of fiscal year 2003 to reflect these changes.
Regulation FD
Pursuant to Regulation FD, the Company provides its expectations regarding future business trends to the public via a press release or 8-K filing. The Company anticipates some risks and uncertainties with its guidance as it continues to execute its revised operating plan implemented in February 2003.
This guidance incorporates, but is not limited to, the restatement of prior period earnings related to FAS 133, the impairment of credit enhancement assets in the June 2003 quarter and the following assumptions:
-- Approximately $750 million in quarterly loan originations,
-- Stable credit quality,
-- An increase in operating expenses as a percent of the managed portfolio as the portfolio balance declines, and
-- AmeriCredit anticipates that it will terminate its whole loan purchase facility in the September 2003 quarter. In connection, the Company will be required to expense the 3% (approximately $30 million) residual interest granted to the purchaser and all deferred costs related to the facility during the quarter. AmeriCredit intends to repurchase and subsequently securitize these receivables.
Net income forecast
-------------------
($ millions) 12 mos. ending 12 mos. ending
12/31/03 6/30/04
------------------- --------------------
Net income $55-70 $125-155
"Our forecast is based on a stable economic environment and continued implementation of our current operating plan," said AmeriCredit President Dan Berce. "However, if credit conditions improve and we receive excess cash flow from FSA-insured trusts sooner than originally expected, we could consider increasing our loan origination levels before the end of fiscal 2004."
AmeriCredit will host a conference call for analysts and investors today at 5:30 p.m. Eastern Daylight Time. For a live Internet broadcast of this conference call, please go to the Company's Web site to register, download and install any necessary audio software. For those who cannot listen to the live broadcast, a replay will be available shortly after the call.
About AmeriCredit
AmeriCredit Corp. is a leading independent middle-market auto finance company. Using its branch network and strategic alliances with auto groups and banks, the Company purchases retail installment contracts entered into by auto dealers with consumers who are typically unable to obtain financing from traditional sources. AmeriCredit has more than one million customers and over $14 billion in managed auto receivables. The Company was founded in 1992 and is headquartered in Fort Worth, Texas. For more information, visit www.americredit.com.
Except for the historical information contained herein, the matters discussed in this news release include forward-looking statements that involve risks and uncertainties detailed from time to time in the Company's filings and reports with the Securities and Exchange Commission including the Company's annual report on Form 10-K for the period ended June 30, 2002. Such risks include -- but are not limited to -- deteriorating economic environment, adverse portfolio performance, declining wholesale values, reliance on capital markets, fluctuating interest rates, increased competition, regulatory changes and tightening labor markets. These forward-looking statements are based on the beliefs of the Company's management as well as assumptions made by and information currently available to Company management. Actual events or results may differ materially.
AmeriCredit Corp.
Consolidated Income Statements
(Unaudited, Dollars in Thousands, Except Per Share Amounts)
Three Months Ended Year Ended
June 30, June 30,
------------------------ ------------------------
2003 2002 2003 2002
Restated Restated
------------ ----------- ------------ -----------
Revenue:
Finance charge
income $202,796 $80,418 $613,225 $339,430
Gain on sale of
receivables -- 122,812 132,084 448,544
Servicing (loss)
income (14,236) 102,920 211,330 335,855
Other income 8,779 3,570 24,642 12,887
------------ ----------- ------------ -----------
197,339 309,720 981,281 1,136,716
------------ ----------- ------------ -----------
Costs and expenses:
Operating expenses 73,223 108,480 373,739 424,131
Provision for loan
losses 77,785 16,913 307,570 65,161
Interest expense 70,772 36,658 202,225 135,928
Restructuring
charges 3,291 -- 63,261 --
------------ ----------- ------------ -----------
225,071 162,051 946,795 625,220
------------ ----------- ------------ -----------
(Loss) income before
income taxes (27,732) 147,669 34,486 511,496
Income tax (benefit)
provision (10,677) 56,852 13,277 196,926
------------ ----------- ------------ -----------
Net (loss) income $(17,055) $90,817 $21,209 $314,570
============ =========== ============ ===========
(Loss) earnings per
share:
Basic $(0.11) $1.06 $0.15 $3.71
============ =========== ============ ===========
Diluted $(0.11) $1.00 $0.15 $3.50
============ =========== ============ ===========
Weighted average
shares 156,320,422 85,583,576 137,501,378 84,748,033
============ =========== ============ ===========
Weighted average
shares and
assumed incremental
shares 156,320,422 91,200,763 137,807,775 89,800,621
============ =========== ============ ===========
Consolidated Balance Sheets
(Unaudited, Dollars in Thousands)
June 30, March 31, June 30,
2003 2003 2002
Restated Restated
----------- ----------- -----------
Cash and cash equivalents $316,921 $238,133 $92,349
Finance receivables, net 4,996,616 4,742,859 2,198,391
Interest-only receivables from
Trusts 213,084 375,590 506,583
Investments in Trust receivables 760,528 769,492 691,065
Restricted cash - gain on sale
Trusts 387,006 334,124 343,570
Restricted cash - securitization
notes payable 229,917 125,301 --
Restricted cash - warehouse credit
facilities 764,832 538,561 56,479
Property and equipment, net 123,713 130,147 120,505
Other assets 315,412 294,233 208,075
----------- ----------- -----------
Total assets $8,108,029 $7,548,440 $4,217,017
=========== =========== ===========
Warehouse credit facilities $1,272,438 $2,263,547 $1,751,974
Whole loan purchase facility 902,873 902,121 --
Securitization notes payable 3,281,370 1,675,106 --
Senior notes 378,432 379,050 418,074
Other notes payable 34,599 65,914 66,811
Funding payable 25,562 23,082 126,893
Accrued taxes and expenses 162,433 193,534 194,260
Derivative financial instruments 66,531 82,962 85,922
Deferred income taxes 103,162 50,567 145,634
----------- ----------- -----------
Total liabilities 6,227,400 5,635,883 2,789,568
Shareholders' equity 1,880,629 1,912,557 1,427,449
----------- ----------- -----------
Total liabilities and
shareholders' equity $8,108,029 $7,548,440 $4,217,017
=========== =========== ===========
Consolidated Statements of Cash Flows
(Unaudited, Dollars in Thousands)
Three Months Ended Year Ended
June 30, June 30,
-------------------- ---------------------
2003 2002 2003 2002
Restated Restated
---------- --------- ----------- ---------
Cash flows from operating
activities:
Net (loss) income $(17,055) $90,817 $21,209 $314,570
Adjustments to reconcile
net (loss) income to net
cash provided (used) by
operating activities:
Depreciation and
amortization 19,572 10,497 55,925 38,372
Provision for loan losses 77,785 16,913 307,570 65,161
Deferred income taxes 69,581 31,353 7,441 40,770
Accretion of present
value discount (13,981) (31,963) (99,351) (112,261)
Impairment of credit
enhancement assets 93,742 11,983 189,520 53,897
Non-cash gain on sale of
receivables -- (117,019) (124,831) (424,771)
Non-cash restructuring
charges 2,705 -- 41,251 --
Other (678) 2,018 3,182 2,018
Distributions from Trusts -
net of swap payments (3,766) 60,770 140,836 243,596
Initial deposits to credit
enhancement assets -- (64,995) (58,101) (368,495)
Change in assets and
liabilities:
Other assets (31,397) (3,170) (28,011) (41,979)
Accrued taxes and
expenses (40,401) (21,398) (48,015) 88,017
Purchases, principal
collections and sales of
receivables held for sale -- 125,816 1,922,076 (273,476)
---------- --------- ----------- ---------
Net cash provided (used) by
operating Activities 156,107 111,622 2,330,701 (374,581)
---------- --------- ----------- ---------
Cash flows from investing
activities:
Purchases and principal
collections
of receivables (311,936) -- (5,099,127) --
Purchases of property and
equipment (1,772) 3,357 (40,670) (11,559)
Net change in restricted
cash and other (299,642) 16,554 (967,915) (10,104)
---------- --------- ----------- ---------
Net cash (used) provided by
investing Activities (613,350) 19,911 (6,107,712) (21,663)
---------- --------- ----------- ---------
Cash flows from financing
activities:
Net change in warehouse
credit facilities (991,109) (140,255) (479,223) 248,073
Net change in whole loan
purchase facility -- -- 875,000 --
Net change in
securitization notes 1,595,359 -- 3,261,230 --
Net change in senior notes
and other (70,927) 20,202 (138,131) 173,976
Proceeds from issuance of
common stock 2,597 5,461 482,345 20,818
---------- --------- ----------- ---------
Net cash provided (used) by
financing activities 535,920 (114,592) 4,001,221 442,867
---------- --------- ----------- ---------
Net increase in cash and
cash Equivalents 78,677 16,941 224,210 46,623
Effect of Canadian exchange
rate changes on cash and
cash equivalents 111 520 362 710
Cash and cash equivalents
at beginning of period 238,133 74,888 92,349 45,016
---------- --------- ----------- ---------
Cash and cash equivalents
at end of period $316,921 $92,349 $316,921 $92,349
========== ========= =========== =========
Other Financial Data
(Unaudited, Dollars in Thousands)
Three Months Ended Year Ended
June 30, June 30,
------------------------- -------------------------
2003 2002 2003 2002
------------ ------------ ------------ ------------
Loan originations $686,851 $2,426,079 $6,310,584 $8,929,352
Loans securitized 1,947,680 2,558,912 6,487,873 8,608,909
Average on-book
receivables $5,186,506 $1,696,581 $3,723,023 $1,753,182
Average gain on
sale receivables 10,200,346 12,556,982 12,013,489 10,711,164
------------ ------------ ------------ ------------
Average managed
receivables $15,386,852 $14,253,563 $15,736,512 $12,464,346
============ ============ ============ ============
June 30, June 30,
2003 2002
------------ ------------
Ending on-book
receivables $5,326,314 $2,261,718
Ending gain on
sale receivables 9,562,464 12,500,743
------------ ------------
Ending managed
receivables $14,888,778 $14,762,461
============ ============
June 30, March 31, June 30,
On-book receivables: 2003 2003 2002
----------- ----------- -----------
Principal $5,326,314 $5,028,731 $2,261,718
Allowance for loan losses and
nonaccretable acquisition fees (329,698) (285,872) (63,327)
----------- ----------- -----------
$4,996,616 $4,742,859 $2,198,391
=========== =========== ===========
6.2% 5.7% 2.8%
=========== =========== ===========
June 30, March 31, June 30,
(% of ending portfolio balance) 2003 2003 2002
--------- --------- ---------
Loan delinquency:
31 - 60 days 8.2% 7.3% 7.0%
greater than 60 days 3.3 2.7 3.3
--------- --------- ---------
11.5 10.0 10.3
Repossessions 1.2 1.4 1.1
--------- --------- ---------
12.7% 11.4% 11.4%
========= ========= =========
Three Months Ended Year Ended
June 30, June 30,
------------------- ---------------------
2003 2002 2003 2002
--------- --------- ----------- ---------
Net charge-offs:
On-book $46,369 $16,033 $111,366 $54,420
Gain on sale 236,241 168,725 915,291 519,398
--------- --------- ----------- ---------
$282,610 $184,758 $1,026,657 $573,818
========= ========= =========== =========
Net charge-offs as a
percent of average
managed receivables 7.4% 5.2% 6.5% 4.6%
========= ========= =========== =========
The Company evaluates the profitability of its lending activities based partly upon the net margin related to its managed auto loan portfolio, including on-book and gain on sale receivables. The Company uses this information to analyze trends in the components of the profitability of its managed auto portfolio. Net margin on a managed basis facilitates comparisons of results between the Company and other finance companies (i) that do not securitize their receivables or (ii) due to the structure of their securitization transactions, are not required to account for the securitization of their receivables as a sale. The Company routinely securitizes its receivables and prior to October 1, 2002, recorded a gain on the sale of such receivables. The net margin on a managed basis presented below assumes that all securitized receivables have not been sold and are still on the Company's consolidated balance sheet. Accordingly, no gain on sale or servicing income would have been recognized. Instead, finance charges would be recognized over the life of the securitized receivables as earned, and interest and other costs related to the asset-backed securities would be recognized as incurred.
Three Months Ended Year Ended
June 30, June 30,
------------------- -----------------------
2003 2002 2003 2002
--------- --------- ----------- -----------
Finance charge and other
income $652,417 $643,257 $2,732,043 $2,298,439
Funding costs (193,792) (198,889) (779,862) (759,324)
--------- --------- ----------- -----------
Net margin $458,625 $444,368 $1,952,181 $1,539,115
========= ========= =========== ===========
Three Months Year Ended
Ended
June 30, June 30,
---------------- -------------
2003 2002 2003 2002
--------- ------ ------ ------
Finance charge and other income 17.0% 18.1% 17.4% 18.4%
Funding costs (5.0) (5.6) (5.0) (6.1)
--------- ------ ------ ------
Net margin as a percent of average
managed receivables 12.0% 12.5% 12.4% 12.3%
========= ====== ====== ======
Three Months Ended Year Ended
June 30, June 30,
------------------ -------------------
2003 2002 2003 2002
-------- --------- --------- ---------
Operating expenses $73,223 $108,480 $373,739 $424,131
Operating expenses as a percent
of average managed receivables 1.9% 3.1% 2.4% 3.4%
Tax rate 38.5% 38.5% 38.5% 38.5%
The following is a reconciliation of finance charge and other income as reflected on the Company's consolidated income statements to the Company's managed basis finance charge and other income:
Three Months Ended Year Ended
June 30, June 30,
------------------- -----------------------
2003 2002 2003 2002
--------- --------- ----------- -----------
Finance charge and other
income per consolidated
income statements $211,575 $83,988 $637,867 $352,317
Adjustment to reflect
income earned on
receivables in gain
on sale Trusts 440,842 559,269 2,094,176 1,946,122
--------- --------- ----------- -----------
Managed basis finance
charge and other income $652,417 $643,257 $2,732,043 $2,298,439
========= ========= =========== ===========
The following is a reconciliation of funding costs as reflected on the Company's consolidated income statements to the Company's managed basis funding costs:
Three Months Ended Year Ended
June 30, June 30,
------------------- -------------------
2003 2002 2003 2002
--------- --------- --------- ---------
Interest expense per
consolidated income
Statements $70,772 $36,658 $202,225 $135,928
Adjustment to reflect expenses
incurred by gain on sale
Trusts 123,020 162,231 577,637 623,396
--------- --------- --------- ---------
Managed basis funding costs $193,792 $198,889 $779,862 $759,324
========= ========= ========= =========