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									                                                                       SELL RECOMMENDATION
                                            Firm: AmeriCredit Corporation                              NYSE Ticker: ACF
                                            Sector: Financial Services                                 Moody’s Debt Rating: B1↓
Anne Rife Cox Endowment Fund                Current Exposure: 2,150 shares @ $1.73 = $3,719.50         Cost Basis: $79,150
Spring 2003                                                               Analyst: Cameron W. George
                                                                     Contact via e-mail at camgeorge@aol.com


       Past 1-Year Performance
                                             A Bad Credit Risk Bonanza Gone
                                                                 Summary Findings and Other Lowlights
                                             I. Current negative qualitative issues weighing heavily on investors
                                                     A. Operations catch-22: AmeriCredit’s bond insurance company suggests it will
                                                          no longer guarantee payment on its securitization transactions because of
                                                          liquidity concerns. Scary, since asset-backed securitization is the business.
                                                     B. Irate investors: AmeriCredit shareholders have filed at least 16 pending
                                                          lawsuits alleging securities fraud against AmeriCredit and its executives.
                                                     C. Debt doldrums: S&P, Moody’s, and Fitch have all reduced AmeriCredit’s
    Relevant Performance Data                             rating on its senior notes and maintain negative outlooks for ACF.
            (On March 5, 2003)                       D. L-l-loss restatements: AmeriCredit restated its December 2002 quarterly loss,
 Market Price:               $1.73                        from $27.6 million to $44.7 million, based on securitization glitches.
 Shares Outstanding:         154.7 MM                E. “Un-Fortune-ate” working conditions: One month after Fortune magazine
 Market Capitalization:      $267.7 MM                    honored AmeriCredit as one of the “100 Best Companies to Work For,” CEO
 52-Week Low:                $1.59                        Michael Barrington terminated 20% of the employees and closed 60% of the
 52-Week High:               $46.93                       branch offices.
 Price/Earnings:             0.77                    F. Seasoned magic bean offering: Desperate for financing, AmeriCredit issued
 Industry Price/Earnings:    13.53                        67 million shares of common stock (at $7.50 per share) in a late-2002 follow-on
 Price/Book:                 0.16                         equity offering.
 Industry Price/Book:        3.58
 Price/Sales:                0.19            II. Suspect accounting practices, noted in the shareholder lawsuits, possibly misrepresent
 Industry Price/Sales:       2.71            earnings and revenue and preclude reasonable comparable company valuation analysis.
 EPS Estimate:               $0.43           III. Common shareholders will be left holding the bag since the book value of debt
 Beta:                        2.22           comprises most of the firm’s value, and AmeriCredit does not pay dividends. Bondholders,
 Industry Beta:              0.61            of course, take priority over stockholders and thus require payment before any shareholders
                                             are paid.
          Corporate Profile                  IV. Discounted cash flow (DCF) analysis most accurately values AmeriCredit according to
 “AmeriCredit Corp. purchases auto           the circumstances and scenarios already priced into the market. On March 5, 2003, DCF
 finance contracts without recourse          valued AmeriCredit generously at $1.77 per share.
 from franchised and select independent
 automobile dealerships, and, to a lesser                         Key Competitors and Approximate Market Caps
 extent, makes loans directly to
 consumers buying used and new                                  Closest competitor: WFS Financial ($748 MM)
 vehicles. The Company targets                       Others: TFC Enterprises ($15 MM), Credit Acceptance Corp. ($246 MM)
 consumers who are typically unable to
 obtain financing from traditional                  ACF Performance Relative to WFS Financial, Dow, NASDAQ, and S&P 500
 sources. Funding for AmeriCredit'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. The Company's
 automobile lending programs are
 designed to serve customers who have
 limited access to traditional automobile
 financing. Its typical borrowers have
 experienced prior credit difficulties or
 have modest income.”
       Graph Source: Yahoo! Finance
      Performance Data Source: Multex
       Profile Source: Yahoo! Finance
                                             Origin of AmeriCredit
        AmeriCredit began in 1986 as UrCarCo—used car lots offering both sales and financing to
customers with poor credit. It was the inspiration of Cash America Pawnshop executives Jack
Daugherty and Clifton Morris, who financed UrCarCo with four other investors and created the nation’s
first chain of used car lots. The company’s 1989 initial public offering met with great success, but
the excitement was short-lived; after quadrupling in size to 20 lots, UrCarCo became mired in
huge losses from poor underwriting and bad loans on top of declining car sales. In 1991 the
company began reinventing itself, completely restructuring after receiving $10 million from Rainwater
Management. In 1992 UrCarCo changed its name to AmeriCredit, liquidated its used car business, and
expanded its indirect lending services to include asset-backed securitization as the primary source of
revenue. Today, Clifton Morris remains Chairman of AmeriCredit.

                             Description of AmeriCredit’s Core Business Model
AmeriCredit engages in the indirect automobile finance business—buying consumer finance loans from
automobile dealers, then conveying such loans to special purpose trusts which issue bonds that are
secured by the loans in the trusts. Cash flow from the loans is retained in restricted accounts until the
cash reserves reach a certain amount.

                         Central Problems Affecting AmeriCredit’s Operations
(1)    As seen before in Chairman Clifton Morris’ past UrCarCo experience, the reincarnated
AmeriCredit is faced again with troubles arising from extending credit to excessively risky and
unworthy customers. Operations difficulties and liquidity crises result from increased default rates
caused by the continued weakness in the economy, lower-than-expected recovery proceeds caused by
depressed used car values, and the expectation that current economic conditions will continue for the
foreseeable future.
(2)    Based on discussions with AmeriCredit about earnings quality, profitability, liquidity, and long-
term forecasts, S&P, Moody’s, and Fitch have all downgraded AmeriCredit’s senior notes from lower-
medium to low speculative (junk) grade.
(3)    Financial Security Assurance, Inc., a company that guarantees payment on AmeriCredit’s asset-
backed securitization transactions, recently suggested it probably will not continue a business
partnership with AmeriCredit due to AmeriCredit’s falling creditworthiness.

                              AmeriCredit’s Proposed Short-Term Solution
On February 12, 2003, AmeriCredit announced a new, revised operating plan in an effort to preserve
and strengthen its capital and liquidity positions. The plan includes a decrease in loan origination
volume and a reduction of operating expenses through downsizing its workforce and consolidating its
branch office network by closing a majority of the branch locations. Assuming continued access to the
securitization markets, AmeriCredit believes that it has sufficient liquidity to operate under its new plan
through the 2003 calendar year.

                                 Conclusion: A Critical Problem of Order
The “operations catch-22” mentioned on previous page: Without increasing revenue and cash streams,
the debt rating agencies will not raise AmeriCredit’s credit grade, but without a better credit rating,
Financial Security Assurance, Inc., will not guarantee AmeriCredit’s asset-backed securities, and
without Financial Security Assurance, Inc.’s promising to insure AmeriCredit’s asset-backed securities,
there will be no overwhelming revenue and cash streams. Therefore, AmeriCredit’s core cash-
generating operations seem to be paralyzed for a while.       Sources: Hoovers, Yahoo! Finance, 2002 Annual Report
                                                            COMPARABLE COMPANY VALUATION ANALYSIS
                                                                                   (On March 5, 2003)
                    Financial Data for Valuation                                                             Financial Data of Closely Competing Firms
          Firm Name           Industry            AmeriCredit                       WFS Financial           TFC Enterprises       Credit Acceptance Corp.    Firm Name
                Ticker                                ACF                               WFSI                    TFCE                       CACC              Ticker
   Shares Outstanding                              154,682,081                       41,019,737               11,538,462                 42,379,310          Shares Outstanding
                 Price                                $1.73                            $18.24                    $1.30                     $5.80             Price
       Price/Earnings           13.53                 0.77                              9.15                     4.74                        8.5             Price/Earnings
           Price/Book           3.58                  0.16                              1.21                     0.31                       0.76             Price/Book
           Price/Sales          2.71                  0.19                              1.27                     0.36                       1.63             Price/Sales
          Net Income                              $347,480,000                       $82,100,000              $5,100,000                $29,700,000          Net Income
   Earnings Per Share                                 $2.25                             $2.00                    $0.44                     $0.70             Earnings Per Share
                 Sales                           $1,190,200,000                     $590,200,000             $51,400,000               $154,300,000          Sales
 Market Capitalization                            $267,600,000                      $748,200,000             $15,000,000               $245,800,000          Market Capitalization
 Book Value of Equity                            $1,432,300,000                     $634,500,000             $51,100,000               $323,800,000          Book Value of Equity
    Book Value/Share                                  $9.26                            $15.47                    $4.43                     $7.64             Book Value/Share
                  Beta          0.61                  2.22                              0.99                     0.79                       0.67             Beta
  52-Week High Price                                 $46.93                            $31.95                    $1.85                     $14.95            52-Week High Price
  52-Week Low Price                                   $1.70                            $16.23                    $0.70                     $5.25             52-Week Low Price

Theoretical Value based on Comparable Industry Ratios
                            Key Valuation Ratios                               Firm Values (Equity)           Stock Prices
              ACF Value based on industry Price/Earnings ratio                    $4,701,404,400                $30.39
                ACF Value based on industry Price/Sales ratio                     $3,225,442,000                $20.85
                ACF Value based on industry Price/Book ratio                      $5,127,634,000                $33.14
                                                                      Averages    $3,963,423,200                $28.12

Note:
Net income, sales, market capitalization, and shares outstanding figures approximated for consistency among firms.
Metrics from trailing twelve month periods, except Price/Book. Price/Book from most recent quarter.
Source of information: Multex Investor Services
Key Explanations:

Very obviously the Earnings Per Share (EPS) from fiscal year 2002 seems unusually high, considering the current $1.73 market price. We must discount the credibility of
 this figure since the purchase of one $1.73 share would yield $2.25 in earnings. If this were the case, then theoretically AmeriCredit could shut down, divide the earnings,
 and all the shareholders would make money immediately. The .77 P/E metric above, from Multex Investor, represents AmeriCredit's stated net income in the chart.
 However, consensus earnings for 2003 indicate a 4.1 P/E for AmeriCredit. AmeriCredit has long been accused of unsavory and questionable accounting practices
 involving its treatment of loan losses and loan loss reserves. These loan losses seem not to flow through the income statement as per standard practice--instead, they
 show up in the cash flow statement as a "non-cash item" from operations. If 4.1 is a more appropriate P/E, then net income should be closer to $65,268,293 with EPS of $0.42.
After we deem AmeriCredit's earnings assertions to be suspicious and misleading, we must then ask what else could have been misrepresented. Revenues from
 securitization transactions may also have been creatively increased based on improper booking of loan loss reserves. If so, then Price/Sales could be wrong, too.

Price/Book is among the only remaining valuation multiples. However, this figure does not specifically take into consideration AmeriCredit's particular qualitative
  issues that are dragging down the stock price. Comparable multiples assume the companies are actually comparable, an underlying requirement not applicable here.

Quickly we realize that we cannot rely on comparable company analysis for valuing AmeriCredit. The method of comparables uses "big picture" multiples to value
 companies. To determine the intrinsic value of AmeriCredit, we must delve into the individual line items in AmeriCredit's cash flow statement to separate fact from fiction.

Therefore, the discounted cash flow (DCF) analysis, which follows the determination of free cash flows, is our best option.
                                               DETERMINATION OF FREE CASH FLOWS AVAILABLE TO THE FIRM
                                                 (Note: All numbers in thousands of U.S. dollars, unless otherwise indicated.)

                                                      2001         2002      2003     2004              2005      2006            2007
Finish here:                                         Actual       Actual   Forecast Forecast           Forecast  Forecast        Forecast
Net Income                                              222,900    347,500   407,334  468,434            538,699  619,504           712,430 From income statement below.
Depreciation/Depletion                                   19,700     38,400    38,400   38,400             38,400    38,400           38,400
Deferred Taxes                                           82,900     61,400    61,400   61,400             61,400    61,400           61,400
Non-Cash Items (Purchase of Receivables)               -271,400   -594,400  -594,400 -594,400           -594,400 -594,400          -594,400
Changes in Working Capital                           -1,044,500   -227,400  -227,400 -227,400           -227,400 -227,400          -227,400
OPERATING CASH FLOWS                                   -990,400   -374,500  -314,666 -253,566           -183,301 -102,496            -9,570
Interest Expense/Income, Net of Tax                      71,920     84,258    98,582  115,341            134,949  157,890           184,731
Capital Expenditures                                    -34,300    -11,600   -11,600  -11,600            -11,600   -11,600          -11,600
Other Investing Cash Flows                              -64,600    -15,100   -15,100  -15,100            -15,100   -15,100          -15,100
INVESTING CASH FLOWS                                    -98,900    -26,700   -26,700  -26,700            -26,700   -26,700          -26,700
FREE CASH FLOWS                                      -1,017,380   -316,942  -242,784 -164,925            -75,052    28,694          148,461 FCFs into chart on next page.


                                                      2001          2002      2003      2004             2005         2006         2007
Start here:                                          Actual        Actual   Forecast Forecast          Forecast     Forecast     Forecast
Sales                                                  818,200    1,190,200 1,368,730 1,574,040         1,810,145   2,081,667     2,393,917
COGS                                                    10,000       12,900    13,687    15,740            18,101      20,817        23,939
Gross profit                                           808,200    1,177,300 1,355,043 1,558,299         1,792,044   2,060,851     2,369,978
Operating Expenses                                     445,800      612,300   698,052   802,760           923,174   1,061,650     1,220,898
Income before taxes                                    362,400      565,000   656,990   755,539           868,870     999,200     1,149,080
Income tax expense                                     139,500      217,500   249,656   287,105           330,171     379,696       436,651
Net Income                                             222,900      347,500   407,334   468,434           538,699     619,504       712,430 Feed into FCF chart above.


Assumptions:

Sales will grow by 15% every year through 2007.
COGS derived based on known Sales and Gross Profit.
Tax rate is 38%.
COGS will be 1% of Sales.
Operating Expenses will be 51% of Sales.
Depreciation/Depletion kept constant at 2002 level until 2007.
"Non-cash items" refer to the purchase of receivables for bundling and sale as asset-backed securities.
"Non-cash items" has increased by a geometric mean return of 115% each year since 1998. Above, "Non-cash items" kept at 2002 level until 2007 for conservatism.
Deferred taxes kept constant at 2002 level until 2007.
Change in 2001 working capital considered extraordinary, unusual, and non-recurring. Changes in working capital kept constant at 2002 level until 2007.
Capital expenditures have been relatively constant. Capital expenditures kept at 2002 level until 2007.
"Other investing cash flows" kept at 2002 level until 2007 for conservatism.
                                                    DISCOUNTED CASH FLOW (DCF) ANALYSIS

Key Assumptions:
              $1.73     Market stock price on March 5, 2003
        154,723,618     Common shares outstanding
      -$316,942,000     Unlevered free cash flows at Time 0
            15.00%      Forecasted 5 year sales growth rate
             3.00%      Terminal growth rate
       $449,400,000     Interest-bearing liabilities (book)
       $274,134,000     Interest-bearing liabilities (market)
                2.22    Beta
                 B1     Moody's Bond Rating
             6.50%      Market Risk Premium
                0.51    =Wd
                0.49    =Ws
               38%      Tax rate
              1.5%      Risk-free rate

Equity financing=
         $267,671,859 Current market capitalization.
Debt financing=
         $274,134,000 Market value of senior notes + other notes payable from most recent balance sheet. See explanation.

                   0.51 =Wd                   Weight of debt financing in corporate capital structure.
                   0.49 =Ws                   Weight of equity financing in corporate capital structure.

                 15.93% =Kd                   Same as cost of equity for valuation. See below for explanation of use.
                 15.93% =Ks                   Derived from Capital Asset Pricing Model.

                 12.87% =WACC                 Weighted average cost of capital.

Time                                0                    1                         2                  3                   4                        5
FCFs                          -$316,942,000               -$242,784,000         -$164,925,000       -$75,052,000         $28,694,000                    $148,461,000
Terminal Value                                                                                                                                         $1,549,728,630
CFs                     Disregard                         -$242,784,000         -$164,925,000       -$75,052,000         $28,694,000                   $1,698,189,630
PVs                     Disregard                         -$215,105,894         -$129,464,586       -$52,198,619         $17,681,540                    $927,144,487



         $548,056,928 =Value of firm
        -$274,134,000 =Value of interest-bearing debt (market value)
         $273,922,928 =Value of equity

Find the value of equity on a per-share basis:
                                                                          Comparing this price to the current price, we can assume that we have accurately
                  $1.77 =Intrinsic value of ACF stock                      represented the market's concern about qualitative issues discussed herein.
                                                                           However, this price may still be too high given the conservatism of my estimates.
Key Explanations:

Senior notes currently trading at 61% of par. Given $1000 par value, this implies current price of $611.25.
Since the bonds are trading at such a steep discount, consider 61% of the value of interest-bearing debt: $274,134,000.

According to www.bondsonline.com, the yield-to-maturity on AmeriCredit's most recent senior note issue is 20.71%.
Given the risk-free rate and market risk premium assumptions we made, AmeriCredit's cost of equity capital is 15.93%.
I argue that the costs of equity and debt capital should be similar, since (1) the market value of debt almost exactly equals
  the market value of equity, and (2) the debt is trading at a very large discount. The comparable relationship between debt
  and equity would not be such a problem in more stable, "AAA-rated" companies, but in this case the discount creates a
  unique situation in which the book value of debt comprises almost the full value of the firm. Notice that AmeriCredit does not
  pay dividends--bondholders will not allow stockholders to receive a dime until they get paid. Thus, debt "acts like" equity.
  Another reason: the chance of default is high and bondholders will likely not receive the full YTM on the senior notes.
                                                                                     AmeriCredit Corporation
                                                                                      BALANCE SHEET
                                                                         (Note: All numbers in thousands of U.S. dollars.)

                                                         1997                 1998                 1999                2000               2001            2002          2003
                                                       Year End             Year End             Year End            Year End           Year End        Year End        YTD
Assets:
 Cash and cash equivalents                                    $6,027               $33,087                $21,189            $42,916         $77,053        $119,445     $215,826
 Finance receivables, net                                    266,657               342,853                456,009            871,511       1,921,465       2,198,391    3,779,648
 Interest-only receivables from Trusts                        53,465               131,694                191,865            229,059         387,895         514,497      356,805
 Investments in Trust receivables                             50,788                98,857                195,598            341,707         493,022         691,065      791,343
 Restricted cash - gain on sale Trusts                        57,142                55,758                107,399            253,852         270,358         343,570      356,138
 Restricted cash - securitization notes payable                                                                                                                            57,883
 Restricted cash - warehouse credit facilities *                                                                                                                          267,377
 Property and equipment, net                                  13,884               23,385               41,145             44,535            67,828         120,505       121,320
 Other assets                                                 27,530               28,037               50,282             78,689           167,286         237,458       343,681
   Total assets                                              $475,493             $713,671           $1,063,487         $1,862,269        $3,384,907      $4,224,931    $6,290,021

Liabilities and Shareholders' Equity
Liabilities:
  Warehouse credit facilities                                $72,045             $165,608             $114,659           $487,700         $1,502,879      $1,751,974    $1,750,000
  Securitization notes payable                                                                                                                                           1,792,399
  Credit enhancement facility                                                                                                 66,606         36,319
  Senior notes                                               125,000               175,000                375,000            375,000        375,000          418,074       379,668
  Other notes payable                                         27,206                 6,410                 17,874             19,691         23,077           66,811        69,683
  Funding payable                                             20,819                40,444                 39,301             61,664         60,460          126,893       122,278
  Accrued taxes and expenses                                  14,039                 6,688                 42,928             70,627        114,041          188,740       159,490
  Derivatives financial instruments                                                                                                          82,796           85,922        88,020
  Servicing liability                                                                                                                                          5,520         3,720
  Deferred income taxes                                        8,123                31,673                 73,995           92,402           130,139         148,681        34,123
    Total liabilities                                        267,232               425,823                663,757        1,173,690         2,324,711       2,792,615     4,399,381

Shareholder' equity:
 Common stock                                                    667                   693                    715                837             899             917         1,603
 Additional paid-in capital                                  203,531               230,269                252,194            401,979         520,077         573,956     1,063,852
 Accumulated other comprehensive income                        4,355                 7,234                 21,410             44,803          73,689          42,797       (15,996)
 Retained earnings                                            23,469                72,770                147,610            262,111         484,963         832,446       857,970
                                                             232,022               310,966                421,929            709,730       1,079,628       1,450,116     1,907,429
 Treasury stock                                              (23,761)              (23,118)               (22,199)           (21,151)        (19,432)        (17,800)      (16,789)
  Total shareholders' equity                                 208,261               287,848                399,730            688,579       1,060,196       1,432,316     1,890,640
   Total liabilities and shareholders' equity                $475,493             $713,671           $1,063,487         $1,862,269        $3,384,907      $4,224,931    $6,290,021

* Prior to September, 2002, Restricted cash - warehouse credit facilities was included in Other assets.
Source of information: AmeriCredit
                                                         AmeriCredit Corporation
                                                        INCOME STATEMENT
                                             (Note: All numbers in thousands of U.S. dollars.)

                                             1997         1998            1999            2000         2001        2002       2003
                                           Year End     Year End        Year End        Year End     Year End    Year End     YTD
Revenue:
  Finance charge income                      $44,910        $55,837         $75,288       $124,150    $225,210     $339,430   $224,572
  Gain on sale of receivables                 52,323        103,194         169,892        209,070     301,768      448,544    132,084
  Servicing fee income                        23,492         47,910          85,966        170,251     281,239      389,371    131,861
  Other income                                 2,631          2,395           4,310          6,209      10,007       12,887     10,633
Total Revenues                               123,356        209,336         335,456        509,680     818,224    1,190,232    499,150

Costs and expenses:
  Operating expenses                          51,915         94,484         165,345        223,219     308,453     424,131     225,068
  Provision for loan losses                    6,595          7,555           9,629         16,359      31,387      65,161     152,676
  Interest expense                            16,312         27,135          38,792         69,310     116,024     135,928      79,903
  Charge for closing mortgage operations                                                    10,500
Total Expenses                                74,822        129,174         213,766        319,388     455,864     625,220     457,647


Income (loss) before income taxes             48,534         80,162         121,690        190,292     362,360     565,012      41,503

Income tax provision (benefit)                18,685         30,861          46,850         75,791     139,508     217,529      15,979

  Net income (loss)                           29,849         49,301          74,840        114,501     222,852     347,483      25,524

Source of information: AmeriCredit
                                                              AmeriCredit Corporation
                                                          CASH FLOW STATEMENT
                                                  (Note: All numbers in thousands of U.S. dollars.)

                                                                    1998             1999               2000          2001          2002
                                                                  Year End         Year End           Year End      Year End      Year End
Net Income                                                             49,300           74,800            114,500       222,900       347,500
Depreciation/Depletion                                                  4,500           12,600             19,400        19,700        38,400
Deferred Taxes                                                         31,000           43,400             15,400        82,900        61,400
Non-Cash Items                                                        -55,900         -116,100           -274,200      -271,400      -594,400
Changes in Working Capital                                             -10,700           30,100          -405,700    -1,044,500      -227,400
OPERATING CASH FLOWS                                                    18,200           44,800          -530,600      -990,400      -374,500

Capital Expenditures                                                    -9,500          -14,700            -9,800       -34,300       -11,600
Other Investing Cash Flow Items, Total                                -115,700         -194,100           -11,200       -64,600       -15,100
INVESTING CASH FLOWS                                                  -125,200         -208,800           -21,000       -98,900       -26,700

Financing Cash Flow Items                                                    0                0           71,900         57,000      160,000
Dividends Paid                                                               0                0                0              0            0
Issuance/Retirement of Stock, Net                                       17,800           12,900          139,400         56,600       20,800
Issuance/Retirement of Debt, Net                                       116,300         139,200           362,000      1,009,800      262,100
FINANCING CASH FLOWS                                                   134,100         152,100           573,300      1,123,400      442,900

Foreign Exchange Effects                                                     0                0                0             0           700

Net Change in Cash                                                      27,100          -11,900           21,700         34,100       42,400

Source of information: Multex Investor Services

								
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