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AmeriCredit Beats, to Restate

The second quarter blows past estimates, but an 8-K filing notes a few accounting issues.
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beat second-quarter estimates and boosted 2006 guidance. The company also said it would restate its cash flows going back three years.

The Fort Worth, Texas, subprime lender made $87 million, or 59 cents a share, for the quarter ended Dec. 31, up from the year-ago $65 million, or 39 cents a share. Revenue rose to $448 million from $345 million a year earlier.

The latest quarter included an after-tax gain of $6 million, or 5 cents a share, on the partial sale of AmeriCredit's investment in DealerTrack Holdings. That was offset by an after-tax charge of the same amount related to Hurricane Katrina. Analysts surveyed by Thomson First Call were forecasting a 46-cent profit on revenue of $393 million.

Automobile loan purchases rose to $1.34 billion from $1.12 billion in the same period a year earlier. Annualized net charge offs were 5.9% of average managed auto receivables for the December 2005 quarter, compared to 7% for the December 2004 quarter. Annualized net charge offs for the six months ended Dec. 31, 2005, were 5.8%, compared to 6.6% for the same period last year.

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"Historically, the December quarter is our most challenging quarter due to seasonal pressures in terms of credit performance and loan origination volume. We did see some seasonal impact, but overall our performance was very good," said CEO Dan Berce. "Our credit performance was solid, our loan volume was right about where we thought it would be and net income increased 34% over the same quarter last year. Our balance sheet remains strong, and we believe we are well positioned for the second half of fiscal year 2006."

AmeriCredit boosted its earnings-per-share forecast for the year ending in June to a range of $1.78-$1.96 from the previous $1.67-$1.85. Analysts were looking for $1.90.

The company also made a regulatory filing indicating it would restate past financials.

"As the result of a recent speech by a staff member of the Securities and Exchange Commission at a national accounting conference, the Company reviewed its classification within the consolidated statements of cash flows of cash received from the retained interests on gain on sale securitizations," Americredit said. "Based upon this review, management determined that the classification of the line item 'Distributions from gain on sale Trusts, net of swap payments' within the operating cash flows section of the consolidated statements of cash flows is not in compliance with generally accepted accounting principles in the United States."

AmeriCredit continued, "As these retained interests are accounted for as available for sale securities, cash received from the assets should be classified as investing cash flows within the consolidated statements of cash flows. Accordingly, the Company will restate its consolidated statements of cash flows for each of the years ended June 30, 2005, 2004 and 2003, as well as its interim consolidated statement of cash flows for the three months ended September 30, 2005, to reflect this reclassification, and until that restatement occurs the prior period financial statements cannot be relied upon. Investors should look to the revised financial statements when they become available."

Additionally, "As a result of the restatement, operating cash flow decreased and investing cash flow increased by $508.1 million, $307.6 million and $128.1 million for the years ended June 30, 2005, 2004 and 2003, respectively. For the three months ended September 30, 2005, operating cash flow decreased and investing cash flow increased by $143.0 million."

AmeriCredit shares rose 12 cents to $27.42 Monday before being halted in after-hours action.