AmeriCredit Corp. Announces Record 2Q Operating Results
14 January 1999
AmeriCredit Corp. Announces Record Second Quarter Operating Results and Restatement of Prior Period Results
FORT WORTH, Texas--Jan. 13, 1999--AmeriCredit Corp. today announced record net income of $17,376,000, or $0.26 per share, for its second fiscal quarter ended December 31, 1998, versus restated earnings of $11,912,000, or $0.18 per share, for the quarter ended December 31, 1997. On a comparative basis, net income increased 46% and earnings per share rose 44%.For the six months ended December 31, 1998, AmeriCredit reported record net income of $32,858,000, or $0.49 per share, versus restated earnings of $22,142,000, or $0.34 per share, for the six months ended December 31, 1997, representing an increase of 48% in net income and an increase of 44% in earnings per share.
Automobile loan purchases were $599,149,000 for the second quarter of fiscal 1999, an increase of 76% over loan purchases of $341,194,000 for the second quarter of fiscal 1998. For the six months ended December 31, 1998, automobile loan purchases were $1,224,116,000, 76% higher than loan purchases of $696,252,000 for the six months ended December 31, 1997.
AmeriCredit's managed auto receivables totaled $3,082,420,000 at December 31, 1998, an increase of 93% since December 31, 1997. The Company opened 16 branch locations in its second fiscal quarter bringing the total number of branch locations to 165 in 41 states at December 31, 1998.
Managed auto receivables more than sixty days delinquent were 2.8% of total managed auto receivables at December 31, 1998, down from 3.6% at December 31, 1997.
Annualized net charge-offs decreased to 4.8% of average managed auto receivables for the second quarter ended December 31, 1998, from 5.5% for the second quarter of fiscal 1998.
AmeriCredit also announced a restatement of its financial statements for the fiscal years ended June 30, 1998, 1997 and 1996, as well as for the first quarter of fiscal 1999. As required by the Financial Accounting Standards Board's ("FASB") Special Report, "A Guide to Implementation of Statement 125 on Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, Second Edition," dated December 1998, and related guidance set forth in statements made by the staff of the Securities and Exchange Commission ("SEC") on December 8, 1998, the Company has retroactively changed its practice of measuring and accounting for credit enhancement assets to the cash-out method from the cash-in method.
Initial deposits to restricted cash accounts and subsequent cash flows received by securitization trusts sponsored by the Company accumulate as credit enhancement assets until certain targeted levels are achieved, after which cash is distributed to the Company on an unrestricted basis. Under the cash-in method previously used by the Company, (i) the assumed discount period for measuring the present value of credit enhancement assets ended when cash flows were received by the securitization trusts and (ii) initial deposits to restricted cash accounts were recorded at face value. Under the cash-out method required by the FASB and SEC, the assumed discount period for measuring the present value of credit enhancement assets ends when cash, including return of the initial deposits, is distributed to the Company on an unrestricted basis.
The change to the cash-out method results only in a difference in the timing of revenue recognition from a securitization and has no effect on the total cash flows of such transactions. While the total amount of revenue recognized over the term of a securitization transaction is the same under either method, the cash-out method results in (i) lower initial gains on the sale of receivables due to the longer discount period and (ii) higher subsequent servicing fee income from accretion of the additional cash-out discount. Accordingly, the reductions in previously reported earnings resulting from retroactive application of the change will generally be recognized in subsequent period earnings as servicing fee income.
The restatement resulted in the following changes to prior period financial statements:
(Unaudited, Dollars in Thousands, Except Per Share Amounts)
Quarter Ended Years Ended
September 30, June 30,
------------ ----------------------------
1998 1998 1997 1996
---- ---- ---- ----
Revenue
Previous $ 76,119 $227,940 $137,747 $ 80,978
As restated 69,766 209,336 123,356 79,635
Net Income
Previous $ 19,389 $ 60,741 $ 38,699 $ 21,591
As restated 15,482 49,301 29,849 20,765
Earnings per share
Previous $ 0.29 $ 0.93 $ 0.63 $ 0.36
As restated 0.23 0.76 0.48 0.34
Credit Enhancement Assets
(end of period)
Previous $368,816 $324,051 $182,271 $48,397
As restated 324,424 289,161 164,311 47,054
Shareholders' equity
(end of period)
Previous $335,156 $306,161 $216,536 $163,225
As restated 307,857 284,706 205,491 162,399
The Company will amend its Annual Report on Form 10-K for the year ended June 30, 1998, and Quarterly Report on Form 10-Q for the quarter ended September 30, 1998, in connection with the restatement.
AmeriCredit is a national consumer finance company specializing in purchasing, securitizing and servicing automobile loans and originating and selling mortgage loans. AmeriCredit maintains a web site at http://www.americredit.com that contains further information on the Company.
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 year ended June 30, 1998. Such 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
December 31,
--------------------------------
1998 1997
Restated
----------- -----------
Revenue:
Finance charge income $ 16,260 $ 13,129
Gain on sale of receivables 38,900 23,655
Servicing fee income 21,146 11,882
Other income 2,013 582
----------- -----------
78,319 49,248
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Costs and expenses:
Operating expenses 39,676 21,825
Provision for losses 2,115 1,849
Interest expense 8,274 6,206
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50,065 29,880
----------- -----------
Income before income taxes 28,254 19,368
Income tax provision 10,878 7,456
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Net income $ 17,376 $ 11,912
----------- -----------
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Earnings per share:
Basic $ 0.28 $ 0.20
----------- -----------
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Diluted $ 0.26 $ 0.18
----------- -----------
----------- -----------
Weighted average shares 62,857,131 59,780,710
----------- -----------
----------- -----------
Weighted average shares and
assumed incremental shares 66,750,045 64,813,118
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Six Months Ended
December 31,
----------------------
1998 1997
Restated
----------- -----------
Revenue:
Finance charge income $ 33,177 $ 26,190
Gain on sale of receivables 74,020 44,335
Servicing fee income 38,011 22,171
Other income 2,877 1,022
----------- -----------
148,085 93,718
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Costs and expenses:
Operating expenses 73,735 41,916
Provision for losses 4,303 3,755
Interest expense 16,619 12,045
----------- -----------
94,657 57,716
----------- -----------
Income before income taxes 53,428 36,002
Income tax provision 20,570 13,860
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Net income $ 32,858 $ 22,142
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----------- -----------
Earnings per share:
Basic $ 0.52 $ 0.37
Diluted $ 0.49 $ 0.34
----------- -----------
----------- -----------
Weighted average shares 62,657,929 59,369,920
----------- -----------
----------- -----------
Weighted average shares and
assumed incremental shares 66,918,992 64,398,534
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Condensed Consolidated Balance Sheets
(Unaudited, Dollars in Thousands)
December 31, September 30, June 30,
1998 1998 1998
Restated Restated
-------- --------- --------
Cash and short term investments $68,709 $ 28,218 $ 33,087
Finance receivables, net 345,654 386,476 342,853
Interest-only receivables from Trusts 170,162 139,290 131,694
Investments in Trust receivables 123,627 107,084 98,857
Restricted cash 96,821 78,050 58,610
Other assets 60,432 55,611 48,570
-------- ----------- -----------
Total assets $865,405 $ 794,729 $ 713,671
-------- ----------- -----------
-------- ----------- -----------
Borrowings under warehouse lines $236,922 $ 208,185 $ 165,608
Senior notes 175,000 175,000 175,000
Other notes payable 11,022 8,285 6,410
Other liabilities 105,152 95,402 81,947
-------- ----------- -----------
Total liabilities 528,096 486,872 428,965
Shareholders' equity 337,309 307,857 284,706
-------- ----------- -----------
Total liabilities and shareholders'
equity $865,405 $ 794,729 $ 713,671
-------- ----------- -----------
-------- ----------- -----------
Other Financial Data
(Unaudited, Dollars in Thousands)
Three Months Ended
December 31,
1998 1997
---------- ----------
Auto lending operations
Auto loan originations $ 599,149 $ 341,194
Auto loans sold 650,000 350,000
Gain on sale of auto loans
37,168 22,601/a
Gain on sale of auto loans 5.7% 6.5%/a
(% of loans sold)
Average owned receivables $ 279,693 $ 244,597
Average serviced receivables 2,625,065 1,248,876
--------- ----------
Average managed receivables $2,904,758 $1,493,473
--------- ----------
--------- ----------
/a Restated
Mortgage lending operations
Mortgage loan originations $ 85,545 $ 24,179
Mortgage loans sold 73,947 23,160
Gain on sale of mortgage loans
1,732 1,054
Gain on sale of mortgage loans 2.3% 4.6%
(% of loans sold)
Six Months Ended
December 31,
-------------------
1998 1997
---------- ----------
Auto lending operations
Auto loan originations $1,224,116 $ 696,252
Auto loans sold 1,220,001 682,499
Gain on sale of auto loans
70,938 42,091/a
Gain on sale of auto loans 5.8% 6.2%/a
(% of loans sold)
Average owned receivables $ 284,969 $ 245,296
Average serviced receivables 2,419,905 1,130,318
---------- ----------
Average managed receivables $2,704,874 $1,375,614
---------- ----------
---------- ----------
/a Restated
Mortgage lending operations
Mortgage loan originations $ 124,446 $ 51,572
Mortgage loans sold 121,489 48,129
Gain on sale of mortgage loans
3,082 2,244
Gain on sale of mortgage loans 2.5% 4.7%
(% of loans sold)
December 31, 1998
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Auto loan portfolio Owned Serviced Total Managed
----- -------- ----------
Principal $ 330,036 $ 2,752,384 $ 3,082,420
Allowance for losses (8,377) (256,599) (264,976)
--------- ------------ ------------
$ 321,659 $ 2,495,785 $ 2,817,444
--------- ------------ ------------
--------- ------------ ------------
Allowance for losses (%) 2.5% 9.3% 8.6%
--------- ------------ ------------
--------- ------------ ------------
December 31, December 31,
1998 1997
------------------ ----------------
Auto loan delinquency (%)
31 - 60 days 7.7% 7.6%
Greater than 60 days 2.8% 3.6%
------------------ ----------------
10.5% 11.2%
Repossessions 1.0% 1.4%
------------------ ----------------
11.5% 12.6%
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