What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2023-03-15 compared with 2022-03-16 · 155 added, 80 removed, 562 unchanged (29% of the section changed)

77 unchanged sentences

and also under the caption “Forward-Looking Statements.” One reason for our expectation is that we have had positive net income

in each of the ten fiscal years ended December 31, 2021, although not in every quarter within that period.

in each of the eleven fiscal years ended December 31, 2022, although not in every quarter within that period.

Our Results of Operations Will Depend on Our Ability

to Secure and Maintain Adequate Credit and Warehouse Financing on Favorable Terms.

Our business strategy requires that warehouse credit facilities

be available in order to purchase significant volumes of receivables.

Historically, our primary

sources of day-to-day liquidity have been our warehouse credit facilities, in which we sell and contribute automobile contracts, as often

as twice a week, to special-purpose subsidiaries, where they are "warehoused" until they are financed on a long-term basis through

the issuance and sale of asset-backed notes.

Upon sale of the notes, funds advanced under one or more warehouse credit facilities are

repaid from the proceeds.

Our current short-term funding capacity is $200 million, comprising two credit facilities, each with a maximum

credit limit of $100 million.

Both warehouse credit facilities have a revolving period during which we may receive advances secured by

contributed automobile contracts, followed by an amortization period during which no further advances may be made, but prior to which

outstanding advances are due and payable.

See “Management’s Discussion and Analysis of Financial Condition and Results of

Operations – Liquidity and Capital Resources – Liquidity”.

If we are unable to maintain

warehouse financing on acceptable terms, we might curtail or cease our purchases of new automobile contracts, which could lead to a material

adverse effect on our results of operations, financial condition and cash flows.

We depend on various financing

sources, including credit facilities, our securitization program and other secured and unsecured debt issuances, to finance our business

Historically, our primary sources of day-to-day liquidity have been our warehouse credit facilities, in which we sell and

contribute automobile contracts, as often as twice a week, to special-purpose subsidiaries, where they are "warehoused" until

they are financed on a long-term basis through the issuance and sale of asset-backed notes.

Upon sale of the notes, funds advanced under

one or more warehouse credit facilities are repaid from the proceeds.

Our current short-term funding capacity is $400 million, comprising

two credit facilities, each with a maximum credit limit of $200 million.

Both warehouse credit facilities have a revolving period during

which we may receive advances secured by contributed automobile contracts, followed by an amortization period during which no further

advances may be made, but prior to which outstanding advances are due and payable.

See “Management’s Discussion and Analysis

of Financial Condition and Results of Operations – Liquidity and Capital Resources – Liquidity”.

Our access to financing sources

depends upon our financial position, general market conditions, availability of bank liquidity, the bank regulatory environment, our compliance

with covenants imposed under our financing agreements, the credit quality of the collateral we can pledge to support secured financings,

and other factors beyond our control.

If we are unable to maintain warehouse or securitization financing on acceptable terms, we might

curtail or cease our purchases of new automobile contracts, which could lead to a material adverse effect on our results of operations,

financial condition and liquidity.

Our Substantial Indebtedness Could Adversely Affect Our Financial

Health and Prevent Us From Fulfilling Our Obligations Under Our Existing Indebtedness

We currently have and will

continue to have a substantial amount of outstanding indebtedness.

At December 31, 2022, we had approximately $2,469.0 million of debt

Such debt consisted primarily of $2,108.7 million of securitization trust debt, and also included $285.3 million of warehouse

lines of credit, $49.6 million of residual interest financing debt and $25.3 million in subordinated renewable notes.

Our ability to make

payments of principal or interest on, or to refinance, our indebtedness will depend on our future operating performance, and our ability

to enter into additional credit facilities and securitization transactions as well as other debt financings, which, to a certain extent,

are subject to economic, financial, competitive, regulatory, capital markets and other factors beyond our control.

If we are unable to generate

sufficient cash flows in the future to service our debt, we may be required to refinance all or a portion of our existing debt or to obtain

additional financing.

There can be no assurance that any refinancing will be possible or that any additional financing could be obtained

on acceptable terms.

The inability to service or refinance our existing debt or to obtain additional financing would have a material adverse

effect on our financial position, liquidity and results of operations.

The degree to which we are leveraged creates risks,

· we may be unable to satisfy our obligations under our outstanding indebtedness;

· we may find it more difficult to fund future credit enhancement requirements, operating costs, tax payments, capital expenditures

or general corporate expenditures;

· we may have to dedicate a substantial portion of our cash resources to payments on our outstanding indebtedness, thereby reducing

the funds available for operations and future business opportunities;

· increasing our vulnerability to adverse general economic, industry and capital markets conditions.

· limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;

· placing us at a competitive disadvantage compared to our competitors that have less debt;

· limiting our ability to borrow additional funds.

Although we believe we are

able to service and repay such debt, there is no assurance that we will be able to do so.

If we do not generate sufficient operating profits,

our ability to make required payments on our debt would be impaired.

Failure to pay our indebtedness when due would give rise to various

remedies in favor of any unpaid creditors, and creditors’ exercise of such remedies could have a material adverse effect on our

Our Results of Operations Will Depend on Our Ability to Securitize

63 unchanged sentences

if it should occur, could have material adverse effects on our future results of operations, financial condition and cash flows.

Our Results of Operations May be Affected by Changing Economic

We are subject to changes

in general economic conditions that are beyond our control.

During periods of economic slowdown or recession, delinquencies, defaults,

repossessions and losses generally increase.

These periods also may be accompanied by increased unemployment rates, inflation, decreased

demand for automobiles and declining values of automobiles securing outstanding receivables, which weakens collateral values and increases

the amount of a loss in the event of default.

Additionally, higher gasoline prices, declining stock market values, unstable real estate

values, increasing unemployment levels, general availability of consumer credit, changes in vehicle ownership trends and other factors

that impact consumer confidence or disposable income could increase loss frequency and decrease demand for automobiles as well as weaken

collateral values on certain types of automobiles.

In addition, during an economic slowdown or recession, our servicing costs may increase

without a corresponding increase in our revenue.

No assurance can be given that the underwriting criteria and collection methods we employ

will afford adequate protection against these risks.

Any sustained period of increased delinquencies, defaults, repossessions or losses

or increased servicing costs could adversely affect our financial position, liquidity, results of operation and our ability to enter into

future financing transactions.

We sell repossessed automobiles

at wholesale auction markets located throughout the United States.

Depressed wholesale prices for used automobiles may result in, or increase,

a loss upon our disposition of repossessed vehicles and we may be unable to collect the resulting deficiency balances.

Depressed wholesale

prices for used automobiles may result from manufacturer incentives or discounts on new vehicles, financial difficulties of new vehicle

manufacturers, discontinuance of vehicle brands and models, increased used vehicle inventory resulting from significant liquidations of

rental or fleet inventories and increased trade-ins due to promotional programs offered by new vehicle manufacturers.

Additionally, higher

gasoline prices may decrease the wholesale auction values of certain types of vehicles.

Decreased auction proceeds resulting from the

depressed prices at which used automobiles may be sold during periods of economic slowdown or low retail demand could result in higher

losses for us.

Further, we are dependent on the efficient operation of the wholesale auction markets.

If the operations of the wholesale

auction markets are disrupted, as they were during the recent COVID 19 pandemic, we may be unable to sell our used vehicles at sufficient

volume and/or pricing.

The number of delinquencies,

defaults, losses and repossessions on sub-prime automobile receivables has historically been significantly influenced by the employment

status of obligors on automobile loan contracts.

Any general weakness in the economy may affect sub-prime obligors more strongly than

the population as a whole.

Furthermore, the global financial

markets have at times experienced increased volatility due to uncertainty surrounding the level and sustainability of the sovereign debt

of various countries.

Concerns regarding sovereign debt may spread to other countries at any time.

There can be no assurance that this

uncertainty relating to the sovereign debt of various countries will not lead to further disruption of the financial and credit markets

in the United States, which could adversely affect our financial position, liquidity, results of operation and our ability to enter into

future financing transactions.

A deterioration in economic

conditions and certain economic factors, such as reduced business activity, high unemployment, interest rates, housing prices, energy

prices (including the price of gasoline), increased consumer indebtedness (including of obligors on the receivables), lack of available

credit, the rate of inflation (such as the recent increase in inflation) and consumer perceptions of the economy, as well as other factors,

such as terrorist events, civil unrest, cyber-attacks, public health emergencies, extreme weather conditions or significant changes in

the geopolitical environment (such as the ongoing military conflict between Ukraine and Russia) and/or public policy, including increased

state, local or federal taxation, could adversely affect the ability and willingness of obligors to meet their payment obligations under

the receivables we originate.

Our operating results could be adversely affected if obligors are unable to make timely payments on their

receivables or if we elect to, or are required to, implement forbearance programs in connection with obligors suffering a hardship (including

hardships related to the COVID-19 pandemic and general economic conditions).

The above described negative

economic factors, as well as others, have also historically resulted in decreased consumer demand for motor vehicles, which may result

in an increase in the inventory of used motor vehicles and depress the price at which repossessed motor vehicles may be sold or delay

the timing of those sales.

If the default rate on our receivables increases and the price at which the vehicles may be sold at auction

declines, our financial position, liquidity, results of operation and our ability to enter into future financing transactions may be adversely

If Interest Rates Rise, Our Results of Operations May Be Impaired.

5 unchanged sentences

the interest rates payable on our securitization trust debt and the rates payable on risk-free investments has varied.

As of the date

of this report, it is the consensus of market observers that interest rates on risk-free debt will rise within the next year.

rates on risk-free debt do increase, or if our spread above risk-free rates should increase, or both, we would expect increased interest

expense, If interest rates in general should rise, our expenses would likewise rise, to have a material adverse effect on our future results

of operations, financial condition and cash flow.

The Federal Reserve

increased interest rates multiple times in 2022, once in early 2023, and is expected to continue to raise rates further in 2023.

rates on risk-free debt continue to increase, or if our spread above risk-free rates should increase, or both, we would expect increased

interest expense, If interest rates in general should rise, our expenses would likewise rise, to have a material adverse effect on our

financial position, liquidity, results of operation and our ability to enter into future financing transactions.

If We Are Unable to Compete Successfully with our Competitors,

77 unchanged sentences

averages over 20 years of service with us.

Bradley, Jr., our President and CEO, has been our President since our

formation in 1991.

Our future operating results depend in significant part upon the continued service of our key senior management personnel,

none of whom is bound by an employment agreement.

Our future operating results also depend in part upon our ability to attract and retain

qualified management, technical, sales and support personnel for our operations.

Competition for such personnel is intense.

assure you that we will be successful in attracting or retaining such personnel.

Conversely, adverse general economic conditions may have

had a countervailing effect.

The loss of any key employee, the failure of any key employee to perform in his or her current position or

our inability to attract and retain skilled employees, as needed, could materially and adversely affect our results of operations, financial

condition and cash flow.

Our future operating results depend in significant part upon the continued service of

our key senior management personnel, none of whom is bound by an employment agreement.

Our future operating results also depend in part

upon our ability to attract and retain qualified management, technical, sales and support personnel for our operations.

Competition for

such personnel is intense.

We cannot assure you that we will be successful in attracting or retaining such personnel.

Conversely, adverse

general economic conditions may have had a countervailing effect.

The loss of any key employee, the failure of any key employee to perform

in his or her current position or our inability to attract and retain skilled employees, as needed, could materially and adversely affect

our results of operations, financial condition and cash flow.

If We Fail to Comply with Regulations, Our Results of Operations

40 unchanged sentences

an Adverse Effect on Our Business.

Existing law, regulations

and interpretations may change in ways that increase our costs of compliance.

Existing law, regulations and

interpretations may change in ways that increase our costs of compliance.

In addition to direct costs,

99 unchanged sentences

have a material adverse effect on us.

We Have Substantial Indebtedness.

We currently have and will

continue to have a substantial amount of indebtedness.

At December 31, 2021, we had approximately $1,945.7 million of debt outstanding.

Such debt consisted primarily of $1,760.0 million of securitization trust debt, and also included $105.6 million of warehouse lines of

credit, $53.7 million of residual interest financing debt and $26.4 million in subordinated renewable notes.

We are also currently offering

the subordinated renewable notes to the public on a continuous basis, and such notes have maturities that range from three months to five

Our substantial indebtedness could adversely affect

our financial condition by, among other things:

· increasing our vulnerability to general adverse economic and industry conditions;

· requiring us to dedicate a substantial portion of our cash flows from operations to payments on our indebtedness, thereby reducing

amounts available for working capital, capital expenditures and other general corporate purposes;

· limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;

· placing us at a competitive disadvantage compared to our competitors that have less debt;

· limiting our ability to borrow additional funds.

Although we believe we are

able to service and repay such debt, there is no assurance that we will be able to do so.

If we do not generate sufficient operating profits,

our ability to make required payments on our debt would be impaired.

Failure to pay our indebtedness when due would give rise to various

remedies in favor of any unpaid creditors, and creditors’ exercise of such remedies could have a material adverse effect on our

Because We Are Subject to Many Restrictions in Our Existing Credit

89 unchanged sentences

The Coronavirus Outbreak Could Have Adverse Effects

The COVID-19 virus has spread (“the pandemic”) throughout

The pandemic has had adverse effects on the economy of the United States (notably a significant decrease in employment) and

the global economy in general.

The long-term effects of the social, economic and financial disruptions caused by the pandemic are unknown.

The extent to which obligors on our automobile contracts may be adversely affected by the pandemic, by loss of employment, and by related

efforts of governments to slow the spread of the COVID-19 virus throughout the nation and world cannot be predicted.

These occurrences

could have a material adverse effect on the ability of obligors to make timely payments to us.

Stimulus payments and enhanced unemployment benefits made available

to much of the population may have ameliorated in part the adverse effects on us of the pandemic;

however, the benefit to us of such payments

cannot be expected to continue.

Obligors’ past use of the stimulus payments, and the termination of enhanced benefits, may have

an adverse effect on our receipt of payments from obligors in the future, which could have a material adverse effect on our financial

condition and results of operations.

Finally, and depending on the extent to which the pandemic adversely

affects the United States economy, it may also have the effect of heightening many of the other risks described in this “Risk Factors”

section, such as those related to our business or operations, the ability or willingness of our customers to make timely payments, and

risks of geographic concentrations.

The COVID-19 virus has spread (“the pandemic”)

throughout the world.

The pandemic has had adverse effects on the economy of the United States (notably a significant decrease in employment)

and the global economy in general.

The long-term effects of the social, economic and financial disruptions caused by the pandemic are

The extent to which obligors on our automobile contracts may be adversely affected by the pandemic (including a resurgence due

to variants of COVID-19), by loss of employment, and by related efforts of governments to slow the spread of the COVID-19 virus throughout

the nation and world cannot be predicted.

These occurrences could have a material adverse effect on the ability of obligors to make timely

payments to us.

Finally, and depending on the extent to which

the pandemic adversely affects the United States economy, it may also have the effect of heightening many of the other risks described

in this “Risk Factors” section, such as those related to our business or operations, the ability or willingness of our customers

to make timely payments, and risks of geographic concentrations.

Our Results of Operations May Be Impaired as a Result of Natural

96 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors