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AmeriCredit Corp. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: May 7, 2010 03:19PM

AmeriCredit Corp. (ACF) filed Quarterly Report for the period ended 2010-03-31. Americredit Corp. has a market cap of $2.97 billion; its shares were traded at around $22.19 with a P/E ratio of 18.3 and P/S ratio of 1.6.

ACF is in the portfolios of Ian Cumming of Leucadia National, Fairholme Fund, Bruce Berkowitz of Fairholme Capital Management, Donald Yacktman of Yacktman Asset Management Co., Jim Simons of Renaissance Technologies LLC, Jeremy Grantham of GMO LLC, Steven Cohen of SAC Capital Advisors.

Highlight of Business Operations:

Gain on retirement of debt for the three months ended March 31, 2010 was $0.3 million. We repurchased on the open market $21.0 million of senior notes due in 2015 at an average price of 97.3% of the principal amount of the notes repurchased. Gain on retirement of debt for the three months ended March 31, 2009 was $11.0 million. We repurchased on the open market $25.0 million of convertible senior notes due in 2011 at an average price of 41.0% of the principal amount of the notes repurchased.

originated in prior periods. The provision for loan losses decreased to $74.6 million for the three months ended March 31, 2010, from $234.8 million for the three months ended March 31, 2009, as a result of favorable credit performance of loans originated since early calendar year 2008, stabilization of economic conditions and improved recovery values on repossessed collateral. As an annualized percentage of average finance receivables, the provision for loan losses was 3.3% and 7.6% for the three months ended March 31, 2010 and 2009, respectively.

Interest expense decreased to $106.6 million for the three months ended March 31, 2010, from $148.2 million for the three months ended March 31, 2009. Interest expense reflects the adoption of ASC 470 20 65-1, which was applied retrospectively. We have separately accounted for the liability and equity components of our convertible senior notes retrospectively, which results in recognizing interest expense based on a borrowing rate at the time of issuance for similar unsecured senior debt without an equity conversion feature. Average debt outstanding was $7.6 billion and $11.2 billion for the three months ended March 31, 2010 and 2009, respectively. Our effective rate of interest on our debt increased to 5.7% for the three months ended March 31, 2010, compared to 5.4% for the three months ended March 31, 2009.

Canadian currency translation adjustment gains of $2.8 million and losses of $2,000 for the three months ended March 31, 2010 and 2009, respectively, were included in other comprehensive income. The translation adjustment is due to the change in the value of our Canadian dollar denominated assets related to the change in the U.S. dollar to Canadian dollar conversion rates during the three months ended March 31, 2010 and 2009.

During the nine months ended March 31, 2010, we repurchased on the open market $21.0 million of senior notes due in 2015 at an average price of 97.3% of the principal amount of the notes repurchased which generated a gain on retirement of debt of $0.3 million. During the nine months ended March 31, 2009, we repurchased on the open market, $38.9 million of convertible senior notes due in 2013 at an average price of 37.75% of the principal amount of the notes repurchased, $114.7 million of convertible senior notes due in 2023 at an average price of 98.9% of the principal amount of the notes repurchased and $25.0 million of convertible senior notes due in 2011 at an average price of 41.0% of the principal amount of the notes repurchased. We also issued 15,122,670 shares of our common stock to Fairholme Funds Inc. (“Fairholme”) in a non-cash transaction in exchange for $108.4 million of our Senior Notes due 2015 held by Fairholme, at a price of $840 per $1,000 principal amount of the Notes. We recorded a gain of $42.5 million in connection with these transactions.

Interest expense decreased to $358.5 million for the nine months ended March 31, 2010, from $573.7 million for the nine months ended March 31, 2009. Interest expense reflects the adoption of ASC 470 20 65-1, which was applied retrospectively. We have separately accounted for the liability and equity components of our convertible senior notes retrospectively, which results in recognizing interest expense based on a borrowing rate at the time of issuance for similar unsecured senior debt without an equity conversion feature. Average debt outstanding was $8.3 billion and $12.4 billion for the nine months ended March 31, 2010 and 2009, respectively. Our effective rate of interest paid on our debt decreased to 5.7% for the nine months ended March 31, 2010, compared to 6.2% for the nine months ended March 31, 2009, due to the acceleration of unamortized warrant costs of $14.3 million and unamortized commitment fees of $5.8 million related to the early termination of a forward purchase agreement in the nine months ended March 31, 2009.

Read the The complete Report



Stocks Discussed: ACF,
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