UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________________________________

FORM 10-K

_______________________________________

(Mark One)

ý ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 For the year ended December 31, ~~2012~~2013



¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from to

Commission File ~~Numbers~~Number: 333-~~169730-01~~188977

_______________________________________

DriveTime Automotive Group, Inc.

(Exact name of registrant as specified in its charter)

_______________________________________



DELAWARE		86-0721358
(State or other jurisdiction of Incorporation or organization)		(I.R.S. Employer Identification No.)

_______________________________________

DT Acceptance Corporation

(Exact name of registrant as specified in its charter)

_______________________________________

ARIZONA		82-0587346
(State or other jurisdiction ofIncorporation or organization)		(I.R.S. EmployerIdentification No.)

4020 East Indian School Road

Phoenix, Arizona 85018

(Address, ~~including~~of ~~zip~~Principal ~~code~~Executive Offices, ofZip ~~principal executive offices~~Code)

(602) 852-6600

(Registrants’ telephone number, including area code)

_______________________________________

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No ý

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No ý

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):



Large accelerated filer	¨	Accelerated filer	¨

Non-accelerated filer	x (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No ý

On ~~December~~June 3130, ~~2012~~2013, none of the voting stock of the registrant was held by non-affiliates.

The total number of shares of common stock outstanding as of December 31, ~~2012~~2013, was 101.7696

Table of Contents

TABLE OF CONTENTS

	Page
Part I
Item 1. Business	32
Item 1A. Risk Factors	1110
Item 1B. Unresolved Staff Comments	2218
Item 2. Properties	2319
Item 3. Legal Proceedings	2420
Item 4. Mine Safety Disclosures	2420
Part II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchase of Equity Securities	2520
Item 6. Selected Financial Data	2621
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations	2922
Item 7A. Quantitative and Qualitative Disclosures about Market Risk	5342
Item 8. Financial Statements and Supplementary Data	5443
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	~~102~~86
Item 9A. Controls and Procedures	~~102~~86
Item 9B. Other Information	~~103~~86
Part III
Item 10. Directors, Executive Officers and Corporate Governance	~~104~~87
Item 11. Executive Compensation	~~105~~88
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	~~112~~96
Item 13. Certain Relationships and Related Transactions, and Director Independence	~~113~~96
Item 14. Principal Accounting Fees and Services	~~115~~98
Part IV
Item 15. Exhibits, Financial Statement Schedules	~~117~~100
Signatures

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Special Note Regarding Forward-looking Statements

This report contains “forward-looking statements,” which include information relating to future events, future financial performance, strategies, expectations, competitive environment, regulation, and availability of resources. These forward-looking statements include, without limitation, statements concerning projections, predictions, expectations, estimates, or forecasts as to our business, financial and operational results, and future economic performance; and statements of management’s goals and objectives and other similar expressions concerning matters that are not historical facts. Words such as “may,” “should,” “could,” “would,” “predicts,” “potential,” “continue,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” and similar expressions, as well as statements in future tense, identify forward-looking statements. Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved.

Forward-looking statements are based on information available at the time those statements are made or management’s good faith belief as of that time with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include, but are not limited to:

• weaccess ~~require~~to ~~substantial~~the capital needed to finance our business;

• weour ~~may~~significant ~~not~~indebtedness beand ~~able~~the torelated ~~generate~~restrictive ~~sufficient~~covenants ~~cash~~imposed ~~flow~~on ~~to meet our debt service obligations~~us;

• ~~interest~~our ~~rates~~ability ~~affect~~to ~~our~~generate ~~profitability~~sufficient ~~and~~ cash ~~flows~~flow ~~and~~to anmeet ~~increase in interest rates will increase~~ our ~~interest~~debt ~~expense~~service ~~and lower our profitability and liquidity~~obligations;

• ~~changes~~the toeffect ~~our~~of ~~business~~interest ~~plan~~rates ~~that~~on ~~are~~our ~~currently being implemented~~profitability, ~~and~~cash ~~those~~flows ~~that may be implemented in the future, may not be successful~~ and ~~may cause unintended consequences~~liquidity;


•	our focus on customers with subprime credit;

• ~~general~~our failure to effectively manage our growth including through acquisitions, joint ventures, and ~~economic~~new ~~conditions~~products and ~~their~~services, ~~effect~~which onmay ~~automobile~~not ~~sales~~be successful;

• ~~extensive~~general ~~governmental~~economic ~~regulations~~conditions ~~applicable~~and totheir ~~us,~~effect ~~the~~on ~~violation~~automobile ~~of which could cause our business to suffer~~sales;

• ~~changes~~the inhighly ~~laws,~~competitive ~~regulations,~~industry orin ~~policies~~which we operate;

• ~~the~~our ~~need~~ability to ~~reduce~~source ~~the~~inventory ~~scope~~in ofa ~~our~~cost-effective ~~operations~~manner;

• the effects of seasonal and ~~other~~product demand fluctuations inon our ~~results~~operating ~~of operations~~results;

• our ~~failure~~reputation toin ~~effectively manage our growth, access~~ the ~~additional required financing to fund our growth, and increased exposure to legal and regulatory risks as a result of our plans to expand~~marketplace;

• weour ~~operate~~failure into acomply ~~highly~~with ~~competitive~~the ~~environment,~~extensive ~~and~~governmental ifregulations weapplicable ~~are unable~~ to ~~compete with our competitors~~us, ~~our~~the ~~results~~violation of ~~operations~~which ~~and financial condition~~ could because ~~materially~~our ~~adversely~~business ~~affected;~~to ~~and~~suffer;


•	the results of the ongoing investigation of us by the Consumer Financial Protection Bureau relating to our compliance with various consumer finance laws, and possible fines, repayments, or other sanctions resulting therefrom;


•	changes in laws, regulations, or policies; and


•	other factors discussed in “Item 1—Business,” “Item 1A—Risk Factors,” and “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Forward-looking statements speak only as of the date the statements are made. You should not put undue reliance on any forward-looking statements. We assume no obligation to update forward-looking statements to reflect actual results, changes in assumptions, or changes in other factors affecting forward-looking information, except to the extent required by applicable securities laws. If we do update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.

Industry Data

We use industry and market data throughout this annual report, which we have obtained from market research, independent industry publications or other publicly available information. Our statement that we are the leading used vehicle retailer in the United States ("U.S.") with a primary focus on the sale and financing of quality vehicles in the subprime market is based on our review of the other top companies’ financial statements, industry publications and research data with respect to such other companies. Although we believe that each such source is reliable as of its respective date, the information contained in such sources has not been independently verified. While we are not aware of any misstatements regarding any industry and market data presented herein, such data is subject to change based on various factors, including those discussed in “Item 1A—Risk Factors.”

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Industry Data

We use industry and market data throughout this annual report, which we have obtained from market research, independent industry publications or other publicly available information. Our statement that we are the leading used vehicle retailer in the United States with a primary focus on the sale and financing of quality vehicles in the subprime market is based on our review of the other top companies’ financial statements, industry publications and research data with respect to such other companies. Although we believe that each such source is reliable as of its respective date, the information contained in such sources has not been independently verified. While we are not aware of any misstatements regarding any industry and market data presented herein, such data is subject to change based on various factors, including those discussed in “Item 1A—Risk Factors.”

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Part I

Item 1. Business

Unless otherwise indicated, the terms “DriveTime,” the “Company,” “we,” “our” and “us” refer to DriveTime Automotive Group, Inc. and its ~~consolidated~~subsidiaries (including DT Acceptance Corporation and its subsidiaries) on a consolidated basis.

Company

DriveTime Automotive Group, Inc. ("DTAG") and DT Acceptance Corporation ("DTAC") (together referred to herein as “we,” “our,” “the Company,” and “us”), are sister companies operating collectively under common control, generally with DTAG directing our retail vehicle sales and operations and DTAC directing our financing and loan servicing operations. DTAG and DTAC are consolidated for financial reporting purposes.

Business Overview

WeDriveTime ~~are~~is the ~~leading~~nation’s largest integrated used ~~vehicle~~car retailer inand ~~the~~subprime ~~United~~finance ~~States~~company. Our ~~with~~business amodel ~~primary~~successfully ~~focus~~integrates on the ~~sale~~acquisition, reconditioning and ~~financing~~sale of quality used vehicles towith financing ~~the~~for ~~subprime~~customers ~~market.~~who ~~Through~~are ~~our~~unable ~~company~~to ~~owned~~obtain ~~dealerships,~~financing wefrom ~~provide~~traditional ~~our~~sources. This ~~customers~~integrated ~~with~~model awas ~~comprehensive~~developed ~~end-to-end~~over ~~solution~~our ~~for~~21 ~~their~~years ~~automotive~~of ~~needs,~~experience ~~including~~in ~~the~~sourcing ~~sale,~~quality ~~financing~~vehicles, ~~and~~evaluating ~~maintenance~~customer ofcredit, ~~their~~loan ~~vehicles~~servicing, byand offering ~~our~~a ~~DriveCare®~~full ~~limited~~range ~~warranty. Over~~of ~~our~~other ~~company~~related ~~history,~~products ~~we have sold~~ and ~~financed~~services ~~over~~to ~~900,000~~meet ~~vehicles. As~~the needs of ~~December 31,~~our ~~2012,~~customer webase. We ~~owned~~control ~~and~~all ~~operated~~aspects 97of ~~dealerships~~the ~~and~~integrated 17model, ~~reconditioning~~inclusive ~~facilities~~of ~~located~~site inselection 44for ~~geographic~~dealerships, ~~regions~~the ~~throughout~~types 19and ~~states. On~~quantity ~~average~~of ~~we have over 7,500~~ vehicles ~~available for sale at our dealerships.~~we ~~For~~purchase, the ~~year~~reconditioning ~~ended December 31~~process, ~~2012,~~vehicles ~~we sold 59~~sales,~~930~~ ~~vehicles~~pricing, ~~generated~~financing ~~$1.2 billion of total revenue~~terms, and ~~generated~~the ~~$160.1~~servicing ~~million~~ of ~~Adjusted EBITDA. As of December 31, 2012,~~ our loan ~~portfolio~~and ~~had~~lease ~~a total outstanding principal balance of $1~~portfolios.~~6 billion.~~

Over the past 20three years, we have ~~developed~~opened an34 ~~integrated~~new ~~business~~dealerships, ~~model~~22 ~~that~~of ~~consists~~which were in new designated marketing areas (“DMA’s”). As of ~~vehicle~~December ~~acquisition~~31, ~~reconditioning~~2013, ~~sales~~we operated 110 dealerships, ~~underwriting~~20 reconditioning facilities and ~~finance,~~two loan servicing, ~~and~~centers ~~after~~in ~~sale~~50 ~~support.~~geographic Weregions ~~believe~~across ~~our~~20 ~~model~~states. ~~enables~~For usthe toyear ~~operate~~ended ~~successfully~~December 31, in2013, ~~the~~we ~~underserved~~sold ~~subprime~~and ~~market~~leased over 73,000 ~~and~~vehicles, ~~provides~~we agenerated ~~platform~~$1.4 ~~which~~billion ~~allows~~of ustotal torevenue, ~~systematically~~$174.0 ~~open~~million ~~new~~of ~~dealerships~~Recurring inAdjusted ~~existing~~EBITDA and ~~new~~originated ~~markets~~$1.1 ~~throughout~~billion of finance receivables to end the ~~United~~year ~~States~~with a portfolio ("loan portfolio") of $1.9 billion.

Through our long history of providing vehicles and vehicle financing to the subprime credit market, we have developed sophisticated vehicle sourcing, supply chain and vehicle pricing systems, which are supplemented with predictable credit scoring models specific to our customer segment. Our credit scoring models and point of sale retail systems provide our customers with vehicle and financing options based on their income, down payment, desirability, and overall affordability. We believe our business model enables us to operate successfully in the underserved and highly fragmented subprime market, and provides a platform which allows us to strategically open new dealerships in new and existing markets throughout the United States.

The DriveTime Brand

InThe ~~recent years, the~~ DriveTime brand ~~has~~represents ~~evolved~~transparency, ~~from a traditional buy-here~~value, ~~pay-here~~customer ~~dealership~~loyalty ~~model~~and tooffers a ~~comprehensive~~unique ~~retail~~and ~~experience. Our~~refreshing ~~dealerships~~alternative ~~are~~to ~~retail~~the ~~focused~~typical ~~and~~used ~~facilitate~~vehicle ~~the~~buying ~~sale~~experience. Our ofbrand ~~our~~has ~~vehicles~~evolved ~~through~~over ~~dealerships~~time ~~with~~into a customer centric ~~focus. We~~dealership ~~have~~model ~~opened~~featuring 21a ~~new~~comprehensive ~~dealerships~~retail ~~over the past two years under this model~~experience. We ~~have~~own, ~~also~~operate ~~remodeled~~and control all of our ~~existing~~ dealerships and ~~branded~~financing ~~them~~functions, ~~with~~which aenables ~~spacious~~us ~~contemporary~~to ~~design,~~provide a unique ~~signage~~buying ~~and~~experience ~~flooring,~~for our customer segment and ~~modern~~deliver ~~furniture~~quality used vehicles and ~~color~~financing ~~patterns~~solutions. We ~~believe~~realize our ~~branded~~customers ~~dealership~~face ~~facilities~~credit ~~are~~challenges, ~~essential~~therefore, toevery ~~our~~aspect ~~customer~~of the sales experience ~~and~~offers ~~help~~the ~~promote~~options ~~our~~necessary ~~image~~to ascater ato ~~courteous,~~the ~~transparent,~~customers’ ~~respectful~~individual vehicular and ~~trustworthy~~financing ~~business~~needs.

~~Our~~We ~~website~~utilize ~~focuses~~television ~~on the approval process, vehicle inventory selection,~~ and ~~the~~online ~~unique~~advertising ~~features~~programs ofdepicting ~~the~~a ~~DriveTime~~simplified ~~brand. It~~purchase ~~provides~~process ~~customers~~for ~~with~~all ~~comprehensive information about available inventory~~individuals, ~~including~~even ~~pictures~~those ofwho ~~dealerships,~~have ~~pictures~~experienced ofdifficulties ~~vehicle inventory,~~in ~~vehicle~~obtaining ~~pricing,~~financing ~~and specifications of each vehicle. The website also educates customers on how~~ to ~~complete~~ apurchase ~~credit application and schedule~~ a ~~visit~~vehicle atfrom aother ~~dealership~~dealers. Our ~~internet~~current ~~call~~TV ~~center~~advertising strategy is ~~available~~a ~~for~~light ~~customers~~hearted, tofamily ~~ask~~friendly ~~questions,~~campaign ~~discuss~~featuring ~~financing,~~the ~~inquire~~tag ~~about~~line ~~our~~“Save ~~warranty~~Yourself,” ~~and~~which ~~schedule~~focuses anon ~~appointment~~the ~~prior~~theme ~~to visiting one~~ of ~~our~~being ~~dealerships. These~~rescued ~~features~~from ~~are~~credit ~~focused~~issues, onsaving ~~helping~~time, ~~customers get comfortable with our straightforward sales approach~~ and removing ~~obtain information on our differentiation within~~ the ~~subprime~~stress ~~used vehicle market prior to and without having to physically visit a dealership. This approach is intended to provide customers peace~~ of ~~mind~~the ~~when~~car ~~dealing~~buying ~~with sensitive credit issues~~experience. ~~After~~Our ~~purchasing~~advertising apromotes ~~vehicle,~~multiple ~~our~~financing ~~customers~~options ~~also have access to www.mydrivetime.com, which allows them to manage their account, sign up~~ for ~~ACH~~our ~~payments,~~customers ~~make~~including ~~one~~a ~~time~~traditional ~~payments,~~vehicle ~~and~~sale ~~see~~as ~~their~~well ~~account~~as ~~balance. We~~a ~~believe~~Cancel ~~that~~Anytime ~~www.mydrivetime.com~~Lease™ ~~adds clarity and enhances our customer relationship throughout the life of the customer's loan~~program.

To promote a courteous, transparent and respectful brand, each of our dealership facilities has an aesthetically pleasing open floor plan, featuring bright colors, plenty of natural lighting, with many locations featuring vaulted ceilings. We believe our dealership design provides customers with a high degree of transparency throughout the buying experience, which is uncommon in the subprime market. Our dealerships are akin to new car franchise dealerships in presentation and appearance. Spacious floor plans are supplemented with an interactive workspace, no "back-office," customer lounge, and a child play area. Customers are guided through the retail process by our salaried sales personnel. All the company’s sales advisors are committed to enhancing the car buying experience by creating a no-pressure sales environment anchored by our no-haggle vehicle pricing.

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Each of our dealerships features a wide selection of makes and models to satisfy the preferences and budgets of our customers. Our dealerships generally maintain an inventory of approximately 90 vehicles and offer a broad spectrum of brands. Over 75% of our inventory is comprised of vehicles from Chevrolet, Ford, Dodge, Chrysler, Toyota, Nissan, Pontiac, Hyundai and Kia. To a lesser extent, our inventory also features brands such as Jeep, Honda, Audi, BMW, Mercedes, Volvo and Infiniti. Vehicles range in age from two to seven years and mileage from 40,000 to 120,000 miles.

The customer experience at the dealerships is lead by college educated; retail experienced sales personnel. We provide a targeted training curriculum to our sales personnel at each level of the business. This curriculum provides a specific training path to develop and become certified in the business and leadership skills necessary to advance within our company. We also provide an accelerated management training course, which targets external candidates with multiple years of retail business experience, to whom we provide an accelerated course in how to run our business. These programs have helped us develop the talent necessary to fuel our growth and maintain the DriveTime customer experience.

DriveTime Operations

Our integrated business model is designed to facilitate an efficient business program, control costs and provide quality products and financing solutions for our customers. The integrated model includes the following:

Ø Dealership Site Selection

Ø Vehicle Acquisition

Ø Vehicle Reconditioning and Distribution

Ø Vehicle Sales, Financing and Cancel Anytime Lease™

Ø Loan Servicing

Ø After Sales Product Support

Our participation throughout the value chain, including vehicle acquisition, reconditioning, sales, financing and loan servicing, provides a platform for controlled growth and achievement of economic efficiencies to balance retail pricing and credit risk.

Dealership Site Selection. We employ a group of internal real estate and demographic professionals, who are responsible for identifying dealership and reconditioning center site locations, which best suit our needs. We segment the country by Designated Marketing Area (DMA) and rank DMA’s by total number of potential DriveTime customers within each DMA through our proprietary demographic model. Over time we maximize the number of stores per DMA based on the potential number of DriveTime Customers and the maximum capacity for each regions reconditioning center. In determining which market we want to enter, we take into consideration indicators such as the strength of surrounding dealerships, traffic counts, retail vacancy trends and median income level.

Vehicle Acquisition. For the year ended December 31, 2013, we purchased over 96,000 vehicles nationwide. Our primary source of vehicle inventory is derived from the nation’s largest used vehicle auctions. We also acquire vehicles through other sources including on-line purchases, daily rental agencies, and commercial fleets. Vehicles are purchased by an internal group of purchasing professionals (“buyers”) who we employ. Using our proprietary acquisition models and real-time data, we deliver weekly buy targets to our buyers based on current inventory levels, projected sales volumes, inventory turn times, and targeted vehicle pricing. Our centralized vehicle selection strategy takes into account many factors including the retail value, age of each vehicle, costs of acquisition, reconditioning, and delivering the vehicle for resale, total cost of ownership and affordability to the buyer, and vehicle desirability at each of our dealerships. Our supply chain analytics and centralized purchasing strategy are integrated with our distribution model to maintain an optimal mix of vehicle inventory at each dealership to balance the specific demand in each market.

Vehicle Reconditioning and Distribution. Prior to vehicles being transported from auction, a post-auction inspection is performed on each vehicle, in order to avoid purchasing vehicles that fail to meet our quality standards. Vehicles that pass the post auction inspection are transported to one of our regional reconditioning facilities, where we perform a comprehensive multi-point inspection and recondition the vehicles for safety and operability. The inspection process allows us to evaluate the extent of repairs required for each vehicle which aids in assessing vehicle profitability. Vehicles that fail inspection, or for which we discover unexpected mechanical issues during the reconditioning process, are returned to auction and not sold at our dealerships. We utilize our proprietary inventory management system to identify and monitor labor, parts and other costs associated with reconditioning each vehicle. Reconditioned vehicles are distributed to our dealerships based on real-time projected inventory turn times at each dealership.

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AsVehicle ~~of December 31~~Sales, ~~2012,~~Financing ~~information~~and ~~regarding~~Cancel ~~the~~Anytime ~~regions in which we operate is as follows:~~Lease™

	Twelve Months Ended December 31, 2012			As of December 31, 2012
State	# of Units Sold	Percent ofUnit SalesVolume		Number ofDealerships	Number ofReconditioningFacilities	# of ActiveLoans	LoanPrincipal		% ofPortfolio
Texas	12,730	21.2	%	18	4	32,769	$	369,021	23.0	%
Florida	8,349	13.9	%	16	2	22,500	247,281		15.4	%
North Carolina	5,446	9.1	%	9	1	13,741	157,670		9.9	%
Georgia	4,903	8.2	%	7	1	10,719	122,027		7.6	%
Arizona	4,135	6.9	%	6	1	10,231	108,792		6.8	%
Virginia	3,528	5.9	%	6	1	9,977	106,749		6.7	%
Tennessee	3,518	5.9	%	5	1	5,552	72,967		4.6	%
California	2,511	4.2	%	4	1	6,547	71,005		4.4	%
South Carolina	2,446	4.1	%	4	—	4,493	58,163		3.6	%
Alabama	2,412	4.0	%	5	1	3,340	44,787		2.8	%
Nevada	2,176	3.6	%	2	1	5,846	63,346		4.0	%
New Mexico	1,622	2.7	%	3	1	4,767	48,421		3.0	%
Oklahoma	1,509	2.5	%	2	—	2,777	36,109		2.3	%
Ohio	1,203	2.0	%	3	—	1,199	17,417		1.1	%
Indiana	1,182	2.0	%	2	1	1,486	21,603		1.3	%
Colorado	1,031	1.7	%	2	1	3,343	35,268		2.2	%
Mississippi	882	1.5	%	1	—	1,116	15,847		1.0	%
Arkansas (1)	211	0.4	%	1	—	209	3,218		0.2	%
Missouri (1)	136	0.2	%	1	—	136	2,019		0.1	%
	59,930	100	%	97	17	140,748	$	1,601,710	100.0	%

Depending on a customers’ financing and credit history, we offer customers the ability to acquire a vehicle through an installment sales contract or a Cancel Anytime Lease™. Our sales process is designed to facilitate the delivery of a vehicle to a customer by providing information on sales programs, financing terms, financing options, payment options, and optional products such as VSC, GAP and GPS monitoring subscriptions, all which allow each customer to select the mix of products that most suits their individual needs. The sales process typically starts with customers visiting our website and setting an appointment with our sales associates at one of our 110 dealerships. Our inventory and inventory pricing are available on-line allowing customers to view and research vehicle inventory on all web enabled devices. Our internet call center is open 24/7 and staffed with knowledgeable personnel to answer customer questions, discuss financing, inquire about our ancillary product offerings and schedule their appointments. These features are available to increase customer awareness, provide customer education regarding our straightforward no-haggle sales approach and to differentiate us from our competitors within the used vehicle market. This approach is intended to provide peace of mind to our customers while dealing with sensitive credit issues.

During the fourth quarter of 2013 we launched our Driver's Seat Cancel Anytime Lease™ program (1“Cancel Anytime Lease™”) ~~New~~throughout ~~region~~our ~~for~~network of dealerships. The lease program provides customers who are at the ~~Company~~lower end of our credit spectrum, with an option to obtain a vehicle without the long term commitment associated with a traditional sale. With a low up-front cash requirement and affordable payment terms, customers that otherwise couldn’t qualify for ~~2012~~a loan with us may qualify to lease a vehicle under this program.

~~Integrated~~Loan ~~Business~~Servicing. ~~Model~~We perform all loan servicing operations for our portfolio. This includes everything from centralized payment collections to the resale of repossessed vehicles at auction. We place a strong emphasis on employee training, customer service and regulatory compliance through systematic processes. Customers can make cash payments through an electronic payment network of over 16,000 locations nationwide and through a variety of traditional payment channels. We promote the use of the most cost effective payment avenues such as ACH and bill-pay, since we are sensitive to our customers cash needs. Our experienced collection staff utilizes our proprietary collection software, which we developed specifically for subprime auto loans. We use automated dialer and messaging systems to enhance collection efficiency and to monitor call volumes. We utilize our vehicle acquisition and sales expertise in representing our vehicles at auction in order to maximize the recovery value of repossessed vehicles.

~~Our~~After ~~integrated~~Sale ~~business~~Product ~~model~~Support. We isprovide ~~focused~~all oncustomers ~~giving~~with a 30 day, 1,500 mile limited warranty (“DriveCare® Limited Warranty”) with the purchase of any vehicle as well as a 5 day, no questions asked, vehicle return policy. The 30 day warranty covers all labor and parts of the vehicle for major mechanical items and A/C and provides for reimbursement of specified costs for rental cars and towing/roadside assistance. Customers that lease a vehicle are provided with our ~~customers~~extended service contract as a standard feature embedded into the ~~ability~~lease tocontract. During ~~acquire~~2013, ~~quality~~we ~~used~~began ~~vehicles~~offering ~~through~~DriveTime customers the ~~following~~DriveCare® ~~key~~Extended ~~activities:~~Vehicle Service Contract (VSC) as a separately priced, optional product.

•DriveTime ~~Vehicle~~Ancillary ~~acquisition.~~Product We acquire inventory primarily from used vehicle auctions. Our centralized vehicle selection strategy takes into account many factors, including the retail value, age, and costs of buying, reconditioning, and delivering the vehicle for resale, along with buyer affordability and desirability. Our supply chain analytics and centralized purchasing strategy are integrated with our distribution of vehicles in order to maintain the optimum mix of vehicle inventory at each dealership based on specific dealership demand in each market. It also factors in pricing and deal structure for the finance component of our business, enabling us to quickly adjust vehicle acquisition and pricing in light of market conditions and to ensure affordability at all of our dealerships.Offerings

Using our proprietary models and real-time data, we deliver weekly buy targets to our buyers based on current inventory levels, projected sales volumes, inventory turn times, and targeted vehicle pricing. We acquire inventory from used vehicle auctions, daily rental agencies, and commercial fleets. Approximately 88% of our inventory is acquired through on-line or live auctions, with the remainder purchased through fleet purchases and other sources. On-line purchases account for approximately 20% of our auction purchases.Background

AtPrior ~~December~~to 312013, ~~2012~~the pricing of our vehicles included our 3 year/36,000 wemile ~~employed~~DriveCare® 39limited ~~buyers~~warranty ~~who~~as ~~averaged~~part ~~over~~of ~~five~~the ~~years~~bundled retail price of ~~experience~~each ~~with~~vehicle ussold. ~~For~~Over the ~~year~~course ~~ended~~of ~~December 31~~2013, ~~2012~~we transitioned to an “unbundled” pricing model to make it easier for our customers to compare the value of vehicles at our dealerships to others in the marketplace. As a result of this transition, we ~~purchased~~now ~~78,190~~provide ~~vehicles~~customers ~~from~~the ~~over~~option ~~120~~to ~~auctions~~purchase ~~nationwide~~certain ancillary products such as extended vehicle service contracts (VSC), ~~with~~guaranteed ~~over~~asset ~~70%~~protection (GAP) and GPS monitoring subscription (GPS) on an a la carte basis and no longer embed these ancillary products in the base price of ~~those~~the ~~purchased~~vehicle. By ~~from~~unbundling ~~two~~our ~~national~~service ~~wholesale~~offerings, ~~auction~~we ~~companies~~believe we will drive incremental web traffic to our dealerships and increase overall volume of sales.

• Vehicle reconditioning and distribution. Subsequent to acquisition, vehicles are transported to one of our regional reconditioning facilities, where we recondition the vehicles and perform a rigorous multi-point inspection for safety and operability. The inspection process assists us in evaluating the extent of repairs requiredProducts

DriveCare® Extended Vehicle Service Contract (VSC). VSC is as a separately priced, optional product for customers choosing to purchase a vehicle through us. The VSC includes either a 36 month/36,000 mile or 60 month/50,000 mile service contract which covers labor and parts of the vehicle for major mechanical items and A/C and provides for reimbursement of specified costs for rental cars and towing.

Guaranteed Asset Protection (GAP). GAP is also a separately priced, optional product for customers choosing to purchase a vehicle through us. GAP covers the difference between the actual cash value of a vehicle paid by the customer’s insurance and the balance owed on the financing of the vehicle.

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~~for~~GPS ~~each~~Monitoring ~~vehicle~~Subscription ~~and~~(GPS). ~~helps~~We inoffer ~~evaluating~~a ~~profitability~~combination ofGPS ~~vehicle~~monitoring ~~sales. We~~subscription ~~centrally~~to ~~determine~~our customers. In the ~~distribution~~event ofa ~~vehicles~~customers’ tovehicle ~~our~~is ~~dealerships~~stolen, ~~based~~the onGPS ~~current~~enables ~~inventory~~the ~~mix~~provider and ~~levels,~~the ~~along~~police ~~with~~to ~~sales~~locate ~~patterns~~the atvehicle ~~each~~in ~~dealership~~a timely manner. The WeGPS ~~utilize~~monitoring ~~our~~subscription ~~proprietary~~is ~~inventory~~a ~~management~~robust ~~system~~product that provides the customer with the ability to ~~determine~~track ~~and~~the ~~monitor~~vehicle’s ~~labor~~location, ~~parts,~~mileage and ~~other~~speed, ~~costs~~create ~~associated~~geo ~~with~~fences, ~~reconditioning~~as ~~each~~well ~~vehicle.~~as ~~Reconditioned~~other ~~vehicles~~monitoring ~~are~~features. The ~~distributed~~customer is able to ~~our~~access ~~dealerships~~their ~~based~~subscription onand ~~real-~~obtain their vehicle tracking data at any time ~~projected~~through ~~inventory~~their ~~turn~~mobile ~~times~~device and/or ~~levels~~a atweb ~~each~~based ~~dealership~~portal.

•Loan ~~Vehicle~~Servicing ~~sales.~~& ~~Our~~Credit ~~sales~~Scoring process is designed to facilitate the delivery of a vehicle to a customer, educate our customer on financing terms and payment options, educate the customer on our warranty, and choose the right vehicle for the customer's needs. The sales process often starts with customers visiting our website and setting an appointment at a dealership. Our inventory and inventory pricing is available on-line and we have recently released a mobile website that allows customers to search vehicle inventory on their smartphones. Our no-haggle vehicle pricing is displayed on each vehicle's sticker and on our website. Prices are determined centrally for all dealerships and all regions.Models

We ~~employ~~provide ~~proprietary~~financing ~~inventory~~for ~~management~~substantially ~~and~~all ~~pricing~~vehicles ~~systems~~we ~~which~~sell ~~are~~at ~~integrated~~our ~~with~~dealerships ~~and~~through ~~into~~retail ~~our~~installment ~~credit~~sales ~~scoring~~contracts ~~system~~(“loans”).The tofoundation ~~facilitate~~for ~~the~~underwriting ~~optimum~~these ~~vehicle~~loans ~~for~~is our ~~customers'~~proprietary ~~needs. Sales and~~ credit ~~grade~~scoring ~~are~~models ~~generally~~and ~~down~~our ~~payment~~loan ~~sensitive~~servicing platform. ~~Down~~Our ~~payments~~loan ~~can~~servicing ~~take~~objectives ~~the~~are ~~form~~structured ofto ~~cash~~ensure orregulatory ~~vehicle~~compliance, ~~trade-in~~while also delivering excellent customer service.

•Subsequent ~~Marketing.~~to Wecompleting ~~utilize~~a ~~targeted television~~sale, ~~radio,~~each ~~and~~loan ~~online~~is ~~advertising~~systematically ~~programs~~boarded to ~~promote~~ our ~~brand~~loan servicing and ~~encourage~~accounting ~~customers~~system. toOur ~~complete~~proprietary ancollection ~~online~~system ~~credit~~was ~~application~~developed specifically for subprime auto loans, providing the transparency and ~~visit~~information ~~one~~necessary to produce a positive customer experience. We use a centralized collections approach using a combination of ~~our~~two ~~dealerships~~larger domestic locations and two smaller offshore partners.

WeOur ~~have~~loan ~~refined~~servicing ~~our~~platform ~~advertising~~is ~~campaign~~segmented tointo ~~emphasize~~various ~~more~~stages ~~information~~of ~~about~~delinquency, ~~our~~which ~~sales~~enables ~~process,~~us ~~including~~to ~~the~~provide ~~following:~~specialized ~~lower~~training ~~down~~for ~~payments~~each ~~than~~of our ~~competition,~~collection ~~the~~groups. We ~~option~~believe toour beservicing ~~approved~~policies onand ~~our~~procedures ~~website,~~provide inexcellent ~~person~~customer service, orcompliance ~~through~~with aregulatory ~~mobile device~~guidelines, and ~~extra~~maximum ~~benefits~~recovery ~~included~~of aspast ~~part~~due ofamounts. Early ~~the~~stage ~~purchase~~delinquent ~~price,~~accounts ~~such~~generally asreceive ~~our~~reminder ~~DriveCare®~~phone ~~limited~~calls ~~warranty. Our~~from ~~current~~our TVautomated ~~advertising~~dialer ~~strategy~~using ~~features~~a ~~the~~prescribed ~~tag~~timing ~~line~~element ~~“We~~based ~~Bring~~on ~~People~~where ~~and~~each ~~Cars~~customer ~~Together~~is located.” ~~Our~~We ~~new~~follow TVa ~~advertisements~~pre-defined ~~focus~~set onof ~~the~~procedures ~~availability~~within ofeach ~~our~~delinquency ~~inventory~~stage in order to ~~fit~~optimize our ~~variety~~collection ~~of customer needs~~efforts, ~~whether~~monitor ~~their~~our ~~needs~~collector’s ~~call for a family vehicle~~activities, ~~economy~~and ~~car,~~ensure ~~SUV~~compliance orwith ~~pick-up~~regulatory ~~truck~~standards.

ACollectors ~~vital~~focus ~~component~~their ofefforts ~~our~~on ~~lead~~obtaining ~~and~~customer ~~sales~~payments, ~~generation~~educating iscustomers ~~web-based~~on ~~marketing~~payment options and ~~online~~explaining ~~assets.~~their ~~Approximately~~service ~~57%~~contract (for vehicles in need of ~~our~~repair). ~~sales~~All collector calls are ~~generated~~recorded byand ~~customers~~are ~~who~~randomly ~~complete~~selected anfor ~~online~~quality ~~application~~review ~~prior~~with tomany ~~visiting~~calls ~~one~~monitored ofin ~~our~~a ~~dealerships~~live environment. ~~Credit~~Calls ~~applications~~ are ~~submitted~~evaluated ~~via~~based ~~www.drivetime.com. In~~on ~~addition~~(i) toRespect ~~our~~- ~~websites,~~listening weto ~~generate~~the ~~leads~~customers and ~~sales~~showing ~~through~~that ~~search~~we ~~engine~~understand ~~optimization,~~their ~~pay-per-click~~situation; ~~marketing,~~(ii) ~~targeted~~Transparency e-~~mail,~~ ~~third~~empowering customers with information to help them be successful; and (iii) Options -~~party,~~ being solution focused and ~~affiliate~~helping ~~marketing~~to educate customers about different tools and programs available to them. Our quality control group provides visibility and transparency of our loan servicing personnel and provides us a platform to enhance collection strategies and the overall customer experience.

•Consumer ~~Underwriting~~complaints ~~and~~are ~~finance.~~monitored ~~Using~~and ~~information~~serviced ~~provided~~by asan ~~part~~independent ofinternal ~~the~~group ~~credit~~reporting ~~application~~directly ~~process,~~to ~~our~~the ~~centralized~~executive ~~proprietary~~team. Complaints ~~credit~~are ~~scoring~~originated ~~system~~via ~~determines~~consumer adirect, ~~customer’s~~federal ~~credit grade~~ and ~~the~~state ~~corresponding~~regulatory ~~minimum~~bodies, ~~down~~consumer ~~payment~~rights organizations and ~~maximum~~consumer ~~installment~~web ~~payment~~sites. WeAll ~~monitor~~complaints, ~~the~~regardless ~~performance~~ of ~~our~~source, ~~portfolio~~are logged and ~~close~~tracked ~~rates~~systemically. onThe ateam ~~real-time~~servicing ~~basis,~~complaints/concerns ~~allowing~~received usare toresponsible ~~centrally~~for ~~adjust~~timely ~~pricing~~follow up and ~~financing~~are ~~terms~~empowered to ~~balance~~provide ~~sales~~satisfactory ~~volumes~~resolution ~~and~~for ~~loan~~all ~~performance~~parties. ~~For~~On ~~more~~a ~~information~~monthly onbasis ~~underwriting,~~complaints ~~see~~are ~~"Underwriting~~discussed ~~and~~with ~~Credit~~senior ~~Scoring~~leadership ~~Models"~~in ~~below~~an effort to improve business practices.

•We ~~Loan~~have ~~servicing.~~dedicated, Weand ~~perform~~will ~~all~~continue ~~servicing~~to ~~functions~~dedicate ~~for~~substantial ~~our~~resources ~~loan~~to ~~portfolio~~developing, ~~from~~maintaining, ~~collections~~and ~~through~~updating ~~the~~our ~~resale~~proprietary ofcredit ~~repossessed~~scoring ~~vehicles.~~models ~~Customers~~that ~~can~~are ~~make~~focused ~~cash~~on ~~payments~~predicting ~~through~~the ancredit ~~electronic~~risk ~~payment~~of ~~network~~our atcustomers. We have over ~~3,900~~twelve ~~Wal-Mart~~years ~~stores~~of ~~and~~experience in developing credit scoring models that are more ~~than~~finely ~~17,000~~tuned ~~other~~to ~~locations~~the ~~nationwide.~~nuances ~~Customers~~within ~~also~~the ~~can~~subprime ~~make~~auto ~~payments~~segment. ~~through~~Many ~~traditional~~companies ~~payment~~use ~~methods~~FICO ~~such~~scores as ~~check,~~a ~~money~~standard ~~order,~~metric ~~bill-pay,~~to ~~and~~assess ~~ACH.~~the ~~Our~~credit ~~experienced~~risk ~~collection~~of ~~staff~~customers. ~~utilizes~~We believe our ~~proprietary~~scoring ~~collection~~models ~~software,~~provides ~~which~~a wesubstantial ~~developed~~improvement over traditional FICO scores in rank-ordering the likelihood of credit risk default specifically ~~for~~within the subprime auto ~~loans~~segment. Our Wescoring ~~use~~models ~~behavioral~~utilize ~~models~~alternative ~~designed~~data sources along with traditional credit bureau data to ~~predict~~enhance ~~payment~~the ~~habits,~~ability asof ~~well~~further assegmenting ~~automated~~the ~~dialer~~credit ~~and~~risk ~~messaging~~levels ~~systems~~of tothe ~~enhance~~subprime ~~collection~~auto ~~efficiency~~segment into different, but distinct categories. We ~~utilize~~believe our ~~vehicle~~ability ~~acquisition~~to ~~and~~quantify ~~sales~~a ~~expertise~~customer's inrisk ~~representing~~profile ~~our~~based ~~vehicles~~upon athistorical ~~auction~~data, inbreadth ~~order~~of data, and sophisticated modeling techniques, allows us to ~~maximize~~better predict loan performance, manage the ~~recovery~~blended ~~value~~quality of ~~repossessed~~our ~~vehicles~~portfolio of loans, and obtain more appropriate risk adjusted returns than relying on more generic predictors such as FICO scores.

~~Beginning~~Our incentralized ~~2012,~~risk ~~each~~management group manages the credit mix of our ~~vehicles~~loan isportfolio ~~equipped~~on ~~with~~a ~~an anti~~company-~~theft~~wide ~~GPS~~basis. ~~device~~This ~~that~~group ~~not~~is ~~only~~also ~~assists~~responsible infor ~~tracking~~monitoring the origination and ~~recovering~~underwriting ~~vehicles~~processes, ifproviding ~~stolen~~underwriting training to the dealerships, ~~but~~monitoring inloan ~~many~~servicing, ~~cases~~and ~~helps~~static-pool totracking ~~lower~~of ~~auto~~portfolio ~~insurance~~loss ~~rates~~performance and profitability. ~~This~~ ~~device~~The static-pool tracking of portfolio loss performance is also ~~used~~monitored by our ~~collections~~internal ~~team~~credit ingrade. We actively monitor our portfolio performance and regularly analyze the ~~event~~grade wemix ~~need~~of tooriginations ~~recover~~and the ~~vehicle~~related ~~post-charge-off~~financing terms provided to our customers, which are established centrally. ~~The~~We ~~device~~are ~~does~~able ~~not~~to ~~contain~~closely monitor credit trends and make appropriate adjustments to both the grade mix and pricing of our originations, as our loans have a ~~starter~~relatively ~~interrupt~~short ~~feature~~average outstanding life due to frequency of charge-off.

•Other ~~After~~Business sale support. After-sale support consists of our DriveCare® limited warranty. In the majority of the states in which we operate, the warranty is included with each vehicle we sell as part of the sales price. In certain states, the warranty is sold as a separate service contract. During the fourth quarter of 2012 we began a pilot, whereby we're offering the DriveCare® warranty as a separately priced product, apart from the price of the vehicle. We both self-administer our warranty program through our in-house team of customer service representatives, as well as use a third party warranty administrator. Our DriveCare® limited warranty includes a 36 month/36,000 mile warranty which covers major mechanical and other electronic components of the engine block, the transmission, climate control, and drive axles.Ventures

Included within the DriveTime family of companies, are other business ventures which are either in the early stages of development, or are immaterial in nature to DriveTime as a whole.

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~~Dealership~~Carvana. In ~~Operations~~January 2013, we launched Carvana. Carvana is a sales channel that enables a customer to buy a car, from click to delivery, 100% online over the internet. Carvana's target customer demographic is not specific to credit, and is geared to attract a broader credit spectrum and income classification than that of DriveTime. Carvana (www.Carvana.com) is a 360- degree, integrated used car buying experience that enables consumers to purchase used vehicles online through a highly efficient and transparent process. Initially launched in Georgia, Carvana has expanded regionally with plans to expand nationally. Carvana’s business and operations fully integrate all steps of the vehicle sales process, including: (a) vehicle search (b) vehicle tour and detail (c) credit scoring (d) customer financing (e) eContracting (f) verification of customer data (g) electronic down payment, and (h) vehicle delivery. In 2013 Carvana opened up the Carvana Vending Machine, a facility in midtown Atlanta, which allows our customers to pick up their vehicle using a confirmation code generated during the sales process. To a certain extent, Carvana will continue to utilize DriveTime's existing infrastructure, with customized aspects of each component of the DriveTime business process. The customization has, and will continue to add value to the DriveTime infrastructure, as Carvana continues to develop.

~~Each~~Inilex. In ofJune ~~our~~2013 ~~dealerships~~we ~~features~~acquired a ~~wide~~51% ~~selection~~controlling ofinterest ~~makes~~in ~~and models to satisfy the preferences and budgets of our potential customers~~Inilex. ~~Our~~Inilex ~~dealerships~~is ~~generally~~a ~~maintain~~provider ~~an inventory~~ of ~~approximately~~GPS 75technology ~~vehicles~~ and wetelemetry ~~offer~~solutions aand ~~broad~~is ~~spectrum of brands. Over 75% of~~ our ~~inventory~~provider ~~is comprised~~ of ~~vehicles~~GPS ~~from~~devices ~~Chevrolet,~~installed ~~Ford,~~on ~~Dodge,~~vehicle ~~Chrysler, Nissan, Toyota, Pontiac, Hyundai, Kia and Mitsubishi. To a lesser extent, our current~~ inventory ~~also features brands such as Honda, Audi, BMW, Mercedes, Volvo~~ and ~~Infiniti. Our newly renovated and branded dealership facilities feature a contemporary, open floor plan that provides customers with a degree of transparency throughout the buying experience that~~ is ~~uncommon in~~ the ~~subprime~~provider ~~market.~~of ~~Spacious~~our ~~floor~~GPS ~~plans~~monitoring ~~are~~subscription ~~supplemented~~offered ~~with~~to ~~interactive~~our ~~workspace, no "back-office," and a customer friendly atmosphere~~customers.

~~Customers~~Go ~~are~~Auto ~~guided~~Exchange. In ~~through~~ the ~~retail~~fourth ~~process~~quarter byof ~~our~~2013, ~~personnel.~~we ~~Our~~entered ~~retail~~into ~~process~~a isjoint ~~designed~~venture topartnership be(as ~~transparent~~a ~~and~~minority partner) with Manheim to ~~let~~form ~~the~~Go ~~customer~~Auto ~~“drive”~~Exchange, ~~the~~LLC, ~~process.~~a ~~Customers~~new ~~are~~separate ~~provided~~and ~~with~~independent ~~information~~wholesale auction company focusing on independent dealers and the ~~purchase~~low-end ~~process~~vehicle ~~and~~segment. The ~~transactions~~first ~~move~~locations atfor ~~the~~Go ~~customer’s~~Auto ~~pace.~~Exchange ~~Our~~reside ~~dealerships~~in ~~are~~Atlanta ~~generally~~and ~~located~~Phoenix, with more locations expected in ~~high~~2014. We ~~traffic~~believe ~~commercial~~this ~~districts~~partnership ~~and~~will ~~showcase~~create economic efficiencies in our ~~DriveTime~~repo ~~logos~~remarketing ~~and~~division ~~color~~of ~~schemes~~the Company.

Each dealership is operated by a general manager, who has responsibility for the operations of the dealership facility and is compensated in part based on overall dealership profitability and other operating metrics. Our dealerships also typically employ between one to three sales managers, seven to ten sales advisors, and administrative support personnel. Sales advisors' primary compensation is comprised of a base salary and incentive bonus programs focused on dealership profitability, as well as the achievement of monthly sales targets. Segments

~~Underwriting~~On December 5, 2013, DTAC and ~~Credit~~GFC ~~Scoring~~Lending ~~Models~~("GO Financial") entered into an agreement to sell GO Financial to the shareholders of DTAC. In consideration for the sale of GO Financial, DTAC received aggregate cash proceeds of $85.1 million and notes from the shareholders in the principal amount of $28.5 million. Through the sale of GO Financial we eliminated our direct lending operating segment. We have determined the sale of GO Financial qualifies for and is presented as a discontinued operation based on the guidance provided in ASC 205-20-55-3, and that we currently operate with only one reportable segment for operations. See Note 19 — Discontinued Operations to our consolidated financial statements for further information.

We provide financing for substantially all of the used vehicles we sell at our dealerships through retail installment sales contracts. The foundation for underwriting these loans is our proprietary credit scoring models.Industry

We ~~have~~operate dedicated, and will continue to dedicate substantial resources to developing, maintaining, and updating our proprietary credit scoring models that are focused on predicting the credit risk of our customers. Many companies use FICO scores as a standard metric to assess the credit risk of customers. Our scoring models provide a substantial improvement over traditional FICO scores in ~~rank-ordering~~both the ~~likelihood~~highly offragmented ~~credit~~used ~~risk~~vehicle ~~default~~sales within the subprime auto segment. Our scoring models utilize alternative data sources along with traditional credit bureau data to enhance the ability to separate the credit risk levels of the subprime auto segment into different categories. Our alternative data sources span hundreds of different metrics and ~~are~~financing ~~utilized to enhance the predictability of loan performance through additional behavioral statistics and external reference data~~markets. ~~Our~~During ~~centralized~~2013, ~~proprietary credit scoring models are currently~~ used tovehicle ~~classify~~sales ~~customers~~were ~~into~~generated various risk grades that are linked to financing parameters. We have over ten years of experience in developing credit scoring models that are more finely tuned to the nuances within the subprime auto segment. Our internal scoring model is comprised of eight credit grades ranging from A+approximately ~~to D-~~53,000 ~~with~~franchise ~~A+ being the highest~~ and D-independent ~~being~~dealers ~~the lowest credit grade. Approximately 93% of our portfolio is graded C and above~~nationwide, ~~with~~according ~~just 7% scored C- and below. We believe our ability~~ to ~~quantify~~industry ~~a customer's risk profile based upon historical~~ data, breadth of data, and sophisticated modeling techniques, allows us to better predict loan performance, manage the blended quality of our portfolio of loans, and obtain more appropriate risk adjusted returns than relying on more generic predictors such as FICO scores.

~~Our~~Used ~~scoring~~vehicle ~~models~~sales. ~~are~~The ~~periodically~~market ~~updated~~for toused ~~account~~vehicles ~~for~~is ~~changes~~among the largest and most highly fragmented retail markets in ~~loan~~the ~~performance~~United States, ~~data~~with ~~sources,~~no ~~economic~~single ~~cycles,~~used ~~and~~vehicle ~~business~~retailer ~~processes~~holding more than 1% of market share. WeAlthough ~~deployed~~the ~~our~~number ~~first~~of ~~credit~~industry- ~~scoring~~wide ~~model~~dealerships has contracted in ~~July~~recent ~~2001.~~years ~~Since~~due ~~then,~~to wethe ~~have~~recessionary ~~implemented~~environment ~~seven~~and ~~subsequent~~franchise ~~generations~~terminations, unit sales of ~~credit~~used ~~scoring~~vehicles ~~models~~continue to increase. WeAccording ~~generally~~to ~~update~~industry ~~and~~data, ~~enhance~~in ~~our~~2013 ~~models~~there onwere an42 ~~18-24~~million ~~month~~used ~~rotation~~vehicle sale transactions, representing 73% of the overall vehicle market by unit sales. ~~The~~ ~~credit~~Sales ~~scoring~~typically ~~models~~occur ~~have~~through ~~evolved~~one ~~over~~of ~~time~~three tochannels: ~~better~~(i) ~~leverage~~the ~~data~~used ~~collected~~vehicle ~~from~~retail ~~additional~~operations ~~data~~of ~~sources~~the ~~than~~approximately in15,800 ~~prior~~manufacturer-franchised ~~models~~new car dealerships, ~~resulting~~which inrepresented ~~improvements~~37% inof ~~identifying~~industry ~~differences~~sales in ~~the~~2013, ~~credit~~(ii) ~~risk~~approximately 37,000 independent used vehicle dealerships, which represented 34% of ~~our~~industry ~~customers~~sales in 2013, and (iii) individuals who sell used vehicles in ~~our~~private ~~ability~~transactions, towhich ~~more~~represented ~~accurately~~29% ~~predict~~of ~~loan~~industry ~~performance~~sales in 2013.

~~Prior~~We tobelieve ~~each~~that ~~sale, we require~~ our ~~customers~~integrated tobusiness ~~complete~~model ahas ~~credit~~several ~~application.~~advantages ~~Upon~~over ~~entering the customer information into~~ our ~~origination~~competition ~~system, our proprietary credit scoring system determines the customer's credit grade. The credit grade~~ and ~~down~~enables ~~payment~~us ~~generates~~to ~~the~~provide ~~selection~~our ofcustomers ~~vehicles~~with that meet the customer's needs and are within the parameters of the available financing terms. The customer's credit grade and type of vehicle determine the term, maximum installment payment, and minimum payment amounts. The annual percentage rate (APR) charged is a ~~function~~unique ofbuying ~~the~~experience ~~customer's~~featuring: credit grade, down payment, and model year of the vehicle along with state mandated limits. Our centralized risk management and pricing departments set these terms and they cannot be altered by dealership personnel.

~~Our~~Ø Professional ~~centralized risk management group manages the credit mix of our loan portfolio on a company-wide basis. This group is also responsible for monitoring the origination~~ and ~~underwriting~~courteous ~~processes,~~buying ~~providing~~experience ~~underwriting~~with ~~training~~“no tohaggle” ~~the~~pricing dealerships, monitoring loan servicing, and static-pool tracking of portfolio loss performance and profitability. The static-pool tracking of portfolio loss performance is also monitored by our internal credit grade. Over the past several years, the unit loss

Ø A variety of financing options including a traditional sale and our Cancel Anytime Lease™

Ø A five day “no questions asked” vehicle return policy and optional extended warranty programs

Ø Affordable low down payments relative to our industry peers

Ø Branded dealership facilities, each of which maintains a large inventory of quality, reconditioned used vehicles;

Ø Attractive suite of ancillary products including service contracts, GAP, and GPS, to meet the needs of our customer base

Ø Full service credit underwriting and loan servicing capabilities

Ø Ability for customers to make cash payments at over 16,000 locations nationwide

Ø College educated, retail experienced sales staff

Ø Ability to source quality and quantity of vehicles to meet our needs based on the significant amount of volume we represent at national wholesale auction houses.

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~~rate~~Our ~~results~~aptitude byand ~~credit~~experience ~~grade~~in ~~have~~delivering ~~been~~customer ~~relatively~~satisfaction ~~consistent~~in an end-to-end solution, including the sale and financing of a vehicle and related products is supplemented through ~~economic~~our ~~cycles~~vehicle variety, breadth and ~~across~~the ~~different~~interactive ~~generations~~nature of ~~scoring~~our ~~models~~website.

WeVehicle ~~actively~~financing. ~~monitor~~The ~~our~~used ~~portfolio~~vehicle ~~performance~~financing ~~and~~segment ~~the~~is ~~credit~~highly ~~grade~~fragmented ~~mix~~and ofis ~~originations.~~served Weby ~~regularly~~a ~~analyze~~variety ~~the grade mix~~ of ~~originations~~financing ~~through~~sources ~~the~~that ~~financing~~include ~~terms~~independent ~~provided~~finance tocompanies, ~~our customers~~“buy-here, ~~which~~pay-here ~~are~~dealers,” ~~established~~select ~~centrally.~~traditional Welending ~~have~~sources ~~higher~~such ~~minimum~~as ~~down~~banks, ~~payments~~savings and ~~lower~~loans, ~~maximum installment payments for our lower~~ credit ~~grade customers~~unions, ~~resulting~~and incaptive ~~lower~~finance ~~close~~subsidiaries ~~rates~~of ~~for~~vehicle ~~our~~manufacturers. ~~lower~~Many ~~credit~~traditional ~~grade~~lending ~~customers.~~sources ~~Our loans~~ have anhistorically ~~average~~avoided ~~original~~the ~~term~~subprime ofmarket ~~approximately~~due 57to ~~months~~its ~~and~~relatively anhigh ~~average~~credit ~~life~~risk ofalong 31with ~~months,~~the ~~due~~associated tocollection ~~charge-offs~~efforts and ~~pay-offs~~costs. ~~Due~~However, todue ~~the~~in ~~fact~~part ~~that~~to ~~our~~the ~~loans have a~~ relatively ~~short~~strong ~~average~~performance ~~life,~~of wethe ~~are~~subprime ~~able~~auto tofinance ~~closely~~segment ~~monitor~~since ~~credit~~the ~~trends~~recession, ~~and~~in ~~make~~recent ~~appropriate~~years ~~adjustments~~traditional tolending ~~both~~sources ~~the~~have ~~grade~~increased ~~mix~~their ~~and~~subprime ~~pricing of our originations~~lending.

~~Monitoring~~The ~~and~~industry ~~Collections~~is generally segmented by credit characteristics of the borrower (prime versus subprime) with subprime borrowers generally classified as those with credit scores below 620. According to industry data, the percentage of U.S. population with a FICO score under 620 is approximately 24.5%. Originations for customers within the subprime used vehicle market averaged $32.6 billion per annum over the last six years, with 2013 reaching over $50.0 billion, up from just over $40.0 billion in 2012.

~~After~~Within ~~completing~~the asubprime ~~sale~~market, ~~each~~we ~~loan~~cater isto ~~automatically~~customers ~~added~~who have the income necessary to ~~our~~purchase ~~comprehensive~~a ~~loan~~used ~~servicing~~vehicle, ~~and~~but ~~collection~~because ~~system.~~of ~~Our~~their ~~proprietary~~impaired ~~collection~~or ~~system~~limited ~~was~~credit ~~developed~~histories, ~~specifically~~cannot qualify for ~~subprime~~financing ~~auto~~from ~~loans~~traditional ~~and~~third-party ~~provides~~sources as they generally do not have the ~~transparency~~required ~~and~~down ~~tools~~payment. ~~necessary~~Our average customer is 26 to ~~effectively~~42 ~~and~~years ~~efficiently~~of ~~service~~age, ~~our~~has ~~loan~~an ~~portfolio. We~~annual ~~use~~income of $37,000 to $50,000, and has a ~~centralized~~FICO ~~collections~~score ~~approach~~between 461 and do554. ~~not~~Over the last five years, we have ~~collectors~~originated ~~residing~~over 285,000 loans representing approximately $4.2 billion in ~~dealership~~receivable ~~locations~~value and, as of December 31, 2013, our portfolio size was just under $2.0 billion.

~~Our~~DriveTime’s ~~early~~advantages ~~delinquencies~~in ~~are~~this ~~managed~~industry ~~through~~include the ~~use~~integration of anthe ~~automated~~retail ~~dialer~~vehicle sale and ~~messaging~~finance ~~system~~aspect toof ~~provide~~a ~~optimum~~used ~~collection~~auto ~~efficiency~~transaction. We ~~for~~believe ~~early~~our ~~delinquencies.~~integrated sales and financing process, our human capital, transparent pricing, vehicle reconditioning and delivery processes and ~~The~~over ~~early~~20 ~~delinquencies~~years ~~(one~~of toevaluating 16customer ~~days~~credit ~~past~~all ~~due)~~provide ~~are~~us ~~managed~~the byunique ~~our~~ability ~~offshore~~to ~~collections~~be ~~partner~~competitive, agile and ~~are~~flexible ~~actively~~in ~~overseen~~an byever ~~domestic~~changing ~~collections~~industry ~~management~~and offer critical customer service to those who have been underserved elsewhere in the market.

Our delinquencies 17 to 43 days past due are managed by our Dallas, Texas collection facility personnel utilizing a manual and dialer effort. Delinquencies 44 to 60 days past due are managed by our Mesa, Arizona collection facility personnel. These collections are primarily manual (non-dialer) and are managed through daily queues of delinquent accounts for each collector to manage based on the customer's delinquency status.

Our back-end collections (generally 61+ days past due) are all handled through our Mesa collections facility primarily through our strategic manual process. The Mesa facility also manages our specialty groups such as new loans, bankruptcy, repossession, insurance, and military programs.

Collectors focus their efforts on obtaining customer payments, educating our customers on payment options and explaining our warranty (for vehicles in need of repair). All collector calls are recorded and recorded calls are randomly selected for quality review. Calls are evaluated based on (i) respect - listening to the customers and showing that we understand their situation; (ii) transparency - empowering customers with information to help them be successful; and (iii) options - being solution focused and helping to educate customers about different tools and programs available to them.

During 2011, we began installing anti-theft/GPS units on our vehicles. For collection purposes, these units are used to locate vehicles and assist us in repossessing vehicles more effectively when collection efforts have been exhausted. These units can also assist the customer in locating a stolen vehicle. These units do not include starter-interrupt functionality.

We also employ a recovery team that utilizes an extensive network of qualified third-party repossession agents throughout the country. These agents are assigned repossession rights to recover the vehicles at our direction and transport recovered vehicles to vehicle auctions. All repossessed vehicles are then sold at auction to establish a fair market recovery value. We utilize our vehicle acquisition and sales expertise in representing our vehicles at auction in order to maximize the recovery value of repossessed vehicles.

Indirect Lending - GO Financial

In December 2011, we launched a new indirect lending line of business, GFC Lending, LLC dba GO Financial (“GO Financial” or "GO"). GO provides subprime auto financing to third-party automobile dealerships. The third-party automobile dealerships originate retail installment sales contracts to finance purchases of vehicles by customers with demographics similar to DriveTime. GO enters into a dealer servicing agreement with each of the third-party automobile dealerships whereby, subsequent to verification of a qualifying customer loan, GO advances funds to the dealership through a non-recourse loan (“dealer advance”). Once originated, GO performs the loan servicing of both the dealer advance to the dealership and the underlying customer loan to the end customer. Another subsidiary of DT Acceptance Corporation ("DTAC") (“DTCC”) serves as the servicer of the underlying customer loans, on behalf of GO. GO generally does not have recourse to the dealerships with respect to customer loan performance. GO has a secured interest in each customer loan and the underlying collateral (the vehicle) and receives priority repayment of customer loans from cash flows collected by GO from customers.

The amount of each dealer advance from GO to a dealership is dependent upon the vehicle, our credit rating of the dealership and the credit quality of the customer, and is a percentage of the amount financed. GO provides the third-party dealership with a credit scoring model and underwriting guidelines. The dealer advance amount generally ranges from sixty

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percent (60%) to eighty percent (80%) of the customer loan. The exact amount of each dealer advance from GO to the dealership varies from loan to loan, based on a predetermined set of risk characteristics. Each individual dealership builds discrete pools of loans and dealer advances are repaid by the dealerships based on cash flows collected by GO from the pool of underlying customer loans. Based on certain qualifications, GO offers a pool-closing advance, which provides dealers incentive to originate the minimum number of loans required to close a pool.

In general terms, each dealer agreement is a form of cash flow sharing arrangement. The dealer agreement assigns the responsibilities for administering, servicing, and collecting the amounts due on customer loans from the dealership to GO. The dealer agreement states that as cash payments are received from the underlying pool of customer loans, twenty percent (20%) of the cash is allocated to GO as a return, covering both GO’s interest income on the dealer advance and a servicing fee related to the customer loan. Cash collections are then allocated to repayment of incremental and direct servicing expenses incurred by GO and then allocated to the pay down of the dealer advance. Once all dealer advances within a pool have been paid in full, the future payments received from customers continue to be allocated twenty percent (20%) to GO and the remaining cash, net of any incremental and direct servicing expenses, is allocated and remitted to the dealership.

We believe this indirect lending program provides an opportunity for independent dealerships to sell additional vehicles to customers with subprime credit, and provides us with incremental profitability to supplement our existing operations. At December 31, 2012 and 2011, we had $41.0 million and $24.0 thousand, respectively, in dealer finance receivables outstanding.

GO's capital to date has been generated by contributions from its parent, DTAC. For the year-ended December 31, 2012, DTAC contributed approximately $41.7 million to GO for its funding needs and for general corporate purposes. GO does not currently have a third party lending arrangement and is seeking to obtain its own warehouse lending facility apart from that of DriveTime.

With the introduction of the indirect lending line of business through GO, we have determined that we have two reportable business segments, one for our core DriveTime operations and one for GO. See Note 20 to our consolidated financial statements under “Item 8—Financial Statements and Supplementary Data” for financial information regarding our operating segments.

On-Line Auto Sales - Carvana

In January 2013, we launched Carvana. Carvana, LLC is a new sales channel that enables a customer to buy a car, from click to delivery, 100% online over the internet. Carvana's target customer demographic is not specific to credit, and is geared to attract a broader credit spectrum and income classification than that of DriveTime and GO Financial. Carvana (www.Carvana.com) is a 360-degree, integrated used car buying experience that enables consumers to purchase used vehicles online through a highly efficient and transparent process. Initially launching in Georgia, with plans to expand regionally, then nationally, Carvana’s business and operations will fully integrate all steps of the vehicle sales process, including: (a) vehicle search (b) vehicle tour and detail (c) credit scoring (d) customer financing (e) eContracting (f) verification of customer data (g) electronic down payment, and (h) vehicle delivery. Carvana is not expected to have a significant net impact to our consolidated results for 2013. To a certain extent, Carvana will utilize DriveTime's existing infrastructure, with customized aspects of each component of the DriveTime business process.

Intellectual Property

We have an ongoing program under which we evaluate our intellectual property and consider appropriate federal and state intellectual property related filings. We believe that there is significant value in our trademarks, but that our business as a whole is not materially dependent on our trademarks. We believe we have taken appropriate measures to protect our proprietary rights.

Employees

At December 31, 2012 we employed 2,530 people, consisting of 1,820 people in our retail operations, 440 people in our portfolio operations, 230 people in our corporate operations and 40 in our indirect lending operations. None of our employees are covered by a collective bargaining agreement and we generally believe that relations with our employees are good.

Competition

WeOur ~~operate~~vertically inintegrated abusiness ~~highly~~model ~~fragmented~~exposes us to competition from both the used automotive retail industry and ~~competitive~~subprime financing industry. ~~Our~~Both ~~primary~~industries ~~competitors~~are ~~include~~highly afragmented ~~number~~and ofcompetitive. ~~used~~According ~~vehicle~~to ~~departments~~industry sources, as of ~~franchise~~December ~~dealers~~31, ~~“buy-here~~2013, ~~pay-here”~~there ~~dealerships,~~were ~~and~~approximately ~~independent~~35 million used ~~vehicle~~car ~~dealers~~sales ~~that~~from ~~operate~~both ~~within~~dealership ~~the~~and ~~subprime~~private ~~segment~~sales ofwith the ~~used~~top ~~vehicle~~100 ~~sales~~groups ~~industry.~~representing We6% ~~also~~total ~~compete~~market ~~with~~share acombined. ~~broad~~Our ~~range~~direct ofretail ~~financial~~competition ~~institutions~~includes franchised and independent ~~finance~~used ~~companies~~vehicle ~~offering~~dealers ~~financing~~that operate in the subprime ~~segment~~space and ~~the~~“buy-here, pay-here” dealerships. Financing entities such as national and regional banks, credit unions, and ~~finance~~other ~~companies~~financial ~~that~~institutions ~~purchase~~have ~~their~~also ~~loans.~~become Wesignificant ~~continually~~lenders ~~strive~~in the subprime space to ~~successfully~~take ~~distinguish~~advantage ~~ourselves~~of ~~from~~incrementally ~~our~~higher ~~competitors~~interest rates and ~~compete~~margins inavailable under this segment.

8We believe we can effectively distinguish ourselves from the competition due to our over 20 year experience serving the subprime market, proprietary risk and pricing model and an established nationwide infrastructure for both retail sales and collections. We have also developed and maintained strategic relationships with both banking and industry auction houses that provide the financing and inventory needed to take advantage of business opportunities as they arise. We have maintained continuity in our executive leadership with extensive subprime lender/dealer experience with proven success through multiple economic cycles.

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industry in a cost-effective manner. In addition, periodically larger companies with significant financial and other resources have entered or announced plans to enter the used vehicle sales and/or finance industry, or relax their credit standards and compete with us, at least at the upper end of our customer segment. These dealerships also compete with us in areas such as the purchase of inventory, which can result in increased wholesale costs for used vehicles and lower margins. These dealerships and finance companies could also enter into direct competition with us at any time at the lower end of the subprime market.

While traditional financial institutions have not consistently serviced subprime borrowers, the high interest rates and margins of companies involved in subprime financing have, at times, encouraged certain of these traditional institutions to enter, or to contemplate entering, this market. During the past economic downturn, many finance companies reduced or eliminated subprime auto financing. More recently, however, companies have re-entered our market presenting new competition, which has resulted in increased subprime auto originations nationwide. Traditional lenders have also increased their subprime auto finance originations.

Integrated Information Systems

We manage the operations of our reconditioning facilities, dealerships, loan servicing centers, and our accounting and reporting functions with an integrated information system. When ~~we purchase~~ a ~~used~~ vehicle, ~~our~~is ~~purchasing~~purchased, ~~group~~the ~~records~~acquisition ~~the~~is ~~purchase~~recorded inand ~~our~~a ~~system,~~unique ~~and~~identifier ~~the~~is ~~system~~assigned ~~adds~~to the vehicle towhich ~~inventory~~is ~~and~~utilized ~~makes~~within the ~~appropriate~~system ~~accounting~~to ~~entries~~track ~~for~~and ~~vehicle~~report ~~cost.~~on ~~Reconditioning~~the ~~costs~~vehicle ~~are~~throughout ~~also~~the ~~tracked~~reconditioning ~~for~~and ~~each~~sales ~~vehicle~~processes. When a sale ~~occurs~~is consummated and a loan is generated, the system adds the loan to our loan servicing and collection systems. We use both local and wide-area data and voice communication networks that allow us to centrally account for all purchase and sale activity ~~centrally~~ and to service large volumes of contracts from our ~~centralized~~ collections facilities. We ~~also~~ have ~~internally~~ developed comprehensive databases and management tools, including credit scoring models, static pool analyses, behavioral scoring, and predictive modeling to set inventory acquisition and underwriting guidelines, structure contract terms, establish collection strategies, and monitor underwriting effectiveness.

Our systems and databases are maintained in secured data centers. Our data centers are configured with redundant power, cooling, and network access. Fire protection systems, including passive and active design elements, are installed. We utilize multiple backup systems in an effort to ensure uninterruptible power. Our network features multiple wide area network connections using a redundant routing architecture and multiple access points to public networks. Systems and databases are configured for high availability and disaster recovery. We have a comprehensive disaster recovery plan in place to cover intermittent or extended periods of interruption in one or more of our critical systems and we periodically test our disaster recovery procedures.7

Industry

We operate in the large and highly fragmented used vehicle sales and financing markets. According to CNW Research, for 2012, used vehicle sales were generated from 54,000 franchise and independent dealers nationwide.

Used vehicle sales. The market for used vehicles is among the largest and most highly fragmented retail markets in the United States, with no single used vehicle retailer holding more than 1% of market share. Although the number of industry-wide dealerships has contracted in recent years, due to the recessionary environment and franchise terminations, unit sales of used vehicles have recently increased. According to CNW, in 2012 there were 40.5 million used vehicle sale transactions, representing 73.7% of the overall vehicle market by unit sales. Sales typically occur through one of three channels: (i) the used vehicle retail operations of the approximately 16,000 manufacturer-franchised new car dealerships, which represented 37.0% of industry sales in 2012, (ii) approximately 38,000 independent used vehicle dealerships, which represented 34.6% of industry sales in 2012, and (iii) individuals who sell used vehicles in private transactions, which represented 28.4% of industry sales in 2012.

Vehicle financing. The industry is generally segmented by credit characteristics of the borrower (prime versus subprime). According to CNW, originations for customers within the subprime used vehicle market averaged $29.1 billion per annum over the last five years ending December 31, 2012, and increased to $43.1 billion in 2012, a $2.5 billion increase over 2011.

The used vehicle financing segment is highly fragmented and is served by a variety of financing sources that include independent finance companies, “buy-here, pay-here dealers,” and select traditional lending sources such as banks, savings and loans, credit unions, and captive finance subsidiaries of vehicle manufacturers. Many traditional lending sources have historically avoided the subprime market due to its relatively high credit risk and the associated collection efforts and costs, however, in recent years traditional lending sources have increased their subprime lending.

Our market. Within the subprime market, we cater to customers who have the income necessary to purchase a used vehicle, but because of their impaired credit histories, cannot qualify for financing from traditional third-party sources

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~~generally~~Our ~~because~~systems ~~they~~and dodatabases ~~not~~are ~~have~~maintained ~~the~~in ~~required~~secured ~~down~~data ~~payment~~centers which are configured with redundant power, cooling, and network access. ~~Our~~Firewalls, ~~average~~access ~~customer~~controls isand 30other advanced features are used to 45protect ~~years~~customer ofinformation ~~age~~from unauthorized access. Fire protection systems, ~~has~~including anpassive ~~annual~~and ~~income~~active ofdesign ~~$35~~elements,~~000~~ are installed. We utilize multiple electrical backup systems in an effort to ~~$50,000,~~ensure ~~and~~uninterruptible ~~has~~power. aOur ~~FICO~~network ~~score~~features ~~between~~multiple ~~475~~wide ~~and~~area ~~550~~network connections using redundant routing architecture with multiple access points to public networks. ASystems ~~customer~~and databases are configured for high availability with a ~~FICO~~comprehensive ~~score~~disaster ~~below~~recovery ~~620~~plan isin ~~typically~~place ~~considered~~ to ~~have~~cover ~~subprime~~intermittent ~~credit~~or extended periods of interruption in one or more of our critical systems. We periodically test our disaster recovery procedures.

Regulation

Our sales, finance, and collections operations are subject to ongoing regulation, supervision, and licensing under various federal, state, and local statutes, ordinances, and regulations. Among other things, these laws require that we obtain and maintain certain licenses and qualifications, limit or prescribe terms of the contracts that we originate, provide specified disclosures to customers, limit our right to repossess and sell collateral, and prohibit us from discriminating against certain customers.

Our financing activities with customers are subject to federal truth-in-lending, fair credit reporting, and equal credit opportunity laws and regulations, as well as state and local motor vehicle finance laws, installment finance laws, usury laws, and other installment sales laws. Our debt collection activities with customers are subject to federal fair debt collection practices and fair credit reporting laws and regulations. We are also subject to federal and state consumer protection, privacy, and related laws and regulations. We charge fixed interest rates in excess of traditional prime and non-prime finance companies on the contracts originated at our dealerships. Some states regulate finance fees and charges that may be paid as a result of vehicle sales.

The ~~Dodd-Frank~~U.S. ~~Wall~~lending ~~Street~~and ~~Reform~~used ~~and~~vehicle ~~Consumer~~sale ~~Protection~~industries ~~Act,~~are ~~which~~highly ~~was~~regulated ~~signed~~under ~~into~~various ~~law~~U.S. onFederal ~~July 21~~laws, ~~2010,~~including ~~established~~the aTruth-in-Lending, ~~new regulator~~Truth-in-Savings, ~~the~~Equal ~~Consumer~~Credit ~~Financial Protection Bureau~~Opportunity, toFair ~~oversee~~Credit ~~consumer~~Reporting, ~~financial~~Fair ~~products~~Debt ~~and~~Collection ~~services,~~Practices ~~including~~Service ~~mortgage,~~Members ~~credit~~Civil ~~card~~Relief, ~~payday~~and ~~lending~~Unfair and ~~auto~~Deceptive ~~finance.~~Practices ~~The Bureau’s authority includes rule making~~Acts, ~~enforcement~~as ~~and~~well anas ~~array~~various ofstate ~~enforcement~~laws. ~~tools~~We ~~ranging~~are ~~from~~subject ~~fines~~ to ~~legal~~inspections, ~~action.~~examinations, ~~The~~supervision, ~~Bureau~~and isregulation ~~also~~by ~~establishing~~each ~~cooperation~~state ~~agreements~~in ~~with~~which ~~various~~we ~~agencies~~are ~~including~~licensed and the Federal Trade Commission ~~and State Attorneys General~~. ~~The~~Additional ~~Federal~~legal ~~Trade Commission retains certain of its rule making~~ and ~~enforcement~~regulatory ~~authority,~~matters ~~including~~affecting ~~enforcement authority over~~ the ~~Federal~~Company’s ~~Debt~~activities ~~Collections~~are ~~Practices~~further ~~Act~~discussed ~~and~~in ~~for warranty issues, and under~~ the ~~new~~Item 1A-Risk ~~law~~Factors itsection isof ~~required~~this toannual ~~prescribe~~report ~~rules~~on ~~addressing~~Form ~~unfair and deceptive practices by auto dealers~~10-K.

At the federal level, Congress enacted comprehensive financial regulatory reform legislation on July 21, 2010. A significant focus of the new law (the Dodd-Frank Act) is heightened consumer protection. The Dodd-Frank Act established a new body, the Consumer Financial Protection Bureau (“CFPB), which has regulatory, supervisory, and enforcement powers over providers of consumer financial products and services, including us, including explicit supervisory authority to examine and require registration of non-depository lenders and promulgate rules that can affect the practices and activities of lenders. Future rule making could also ultimately lead to our being under the examination authority of the CFPB.

Although the Dodd-Frank Act expressly provides that the CFPB has no authority to establish usury limits, some consumer advocacy groups have suggested that various forms of alternative financial services or specific features of consumer loan products should be a regulatory priority, and it is possible that at some time in the future the CFPB could propose and adopt rules making such lending services materially less profitable or impractical, which may impact finance loans or other products that we offer.

In March 2013, the CFPB issued a bulletin recommending that indirect vehicle lenders take steps to monitor and impose controls over dealer markup policies whereby dealers charge consumers higher interest rates, with the markup shared between the dealer and the lender. While we are not an indirect lender, changes such as this could be a precursor to other changes, any or all of which could adversely affect the profitability of vehicle financing.

The CFPB is also conducting supervisory audits of large vehicle lenders and has indicated it intends to study and take action with respect to possible Equal Credit Opportunity Act (“ECOA”) “disparate impact” credit discrimination in indirect vehicle finance. The CFPB has entered into a consent decree with one lender and could enter into consent decrees with more lenders on disparate impact claims. These actions could negatively impact the business of the affected lenders, and potentially the business of dealers and other lenders in the vehicle finance market. This impact on dealers and lenders could increase our regulatory compliance requirements and associated costs.

In addition to the grant of certain regulatory powers to the CFPB, the Dodd-Frank Act gives the CFPB authority to pursue administrative proceedings or litigation for violations of federal consumer financial laws. In these proceedings, the CFPB can obtain cease and desist orders (which can include orders for restitution or rescission of contracts, as well as other kinds of affirmative relief) and monetary penalties. See "—Item 1A. Risk Factors" for additional information on the CFPB investigation.

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To ensure compliance with the various regulations affecting our business, we have implemented certain systematic processes to notify us of potential compliance violations. We produce certain exception reports to track compliance and to identify trends within our collection activities. We utilize this information to promptly identify and address issues or deficiencies and to provide targeted training to our collectors.

Environmental

We are subject to a complex variety of federal, state, and local laws, regulations, and permits relating to the environment and human health and safety. These requirements change frequently ~~and~~ tend to become more stringent over time, and are a significant consideration for us as our operations involve the use of storage tanks, ~~the~~ disposal of wastewater, and ~~the~~ emission of hazardous substances to the air,. asWe ~~well as the~~ use, ~~storage~~store, ~~recycling~~recycle, and ~~disposal~~dispose of hazardous materials, such as motor oil, ~~and~~oil filters, transmission fluids, antifreeze, refrigerants, paints, thinners, batteries, cleaning products, lubricants, degreasing agents, tires, and fuel. If we violate or fail to comply with these laws, regulations, or permits, we could be fined or otherwise sanctioned by regulators. Pursuant to such requirements, we have made and will continue to make capital and other expenditures.

10Intellectual Property

Employees

At December 31, 2013 we employed 3,165 people, consisting of 2,143 people in retail operations, 786 people in portfolio operations and 236 people in corporate operations. None of our employees are covered by a collective bargaining agreement and we generally believe relations with our employees are good.

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Item 1A. Risk Factors

You should carefully consider the following risks and the other information contained in this report, including our consolidated financial statements and related notes and “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The risks described below are those that we believe are the material risks we face. Any of the risks described below, and others that we may not anticipate, could significantly and adversely affect our business, prospects, financial condition, operating results ~~of operations,~~ and liquidity.

WeBusiness ~~require substantial capital to finance our business.~~Risks

WeOur ~~have~~business ~~borrowed,~~could ~~and~~be ~~will~~negatively ~~continue~~impacted toif ~~borrow,~~our ~~substantial~~access ~~amounts of capital~~ to ~~fund~~funding ~~our~~is ~~operations and we periodically refinance such debt~~reduced. ~~If we cannot obtain the financing we need, or cannot do so on a timely basis and on favorable terms, our liquidity could be materially adversely affected.~~

AtWe ~~December 31~~rely in part on asset-backed securitizations to fund our business operations. The asset-backed securities (“ABS”) market, ~~2012~~along with credit markets in general, weexperienced ~~had~~unprecedented ~~approximately~~disruptions $1during the recent economic downturn.4 ~~billion~~Although inmarket ~~aggregate~~conditions ~~principal~~have ~~amount~~improved since 2009, for a number of ~~indebtedness~~years ~~outstanding~~following the recent economic downturn, ~~which~~certain ~~includes~~issuers ~~$57~~experienced increased risk premiums while there was a relatively lower level of investor demand for certain ABS (particularly those securities backed by subprime collateral).2 ~~million~~In ~~under~~addition, ~~portfolio~~the ~~warehouse~~risk ~~facilities~~of ~~that~~volatility ~~are~~surrounding ~~due~~the global economic system and uncertainty surrounding regulatory reforms such as the Dodd-Frank Act continue to ~~expire~~create ~~between~~uncertainty ~~2013~~around ~~and~~access ~~2014~~to the capital markets. As a result, ~~depending~~there oncan be no assurance that we will continue to be successful in selling securities in the ~~facility~~ABS market. ~~The~~ ~~portfolio~~Adverse ~~warehouse~~changes ~~facilities~~in ~~contain~~our ~~term-out~~ABS ~~features~~program ~~resulting~~or in ~~final~~the ~~maturities~~ABS ~~between~~market 12generally ~~and~~could 24materially ~~months~~adversely ~~from~~affect ~~their~~our ~~expiration~~ability ~~dates,~~to ~~depending~~securitize loans on ~~the~~a ~~facility~~timely basis or on terms acceptable to us. This could increase our cost of funding, reduce our margins or cause us to hold assets until investor demand improves.

We ~~historically~~also ~~have~~depend ~~restored~~on ~~capacity~~bond ~~under~~financings, such as our Senior Secured Notes due 2017 ("Senior Secured Notes"), and various credit facilities, including our portfolio warehouse facilities, ~~from~~to ~~time~~fund our operations and liquidity needs. We cannot guarantee that these financing sources will continue to ~~time~~be byavailable ~~securitizing~~beyond ~~portfolios~~the ofcurrent ~~finance~~maturity ~~receivables~~dates, on reasonable terms, or at all. As we continue to expand our operations and/ our volume of loan originations increases, we may require the expansion of our borrowing capacity on our existing credit facilities or ~~obtaining~~the ~~bank~~addition ~~term~~of ~~financing~~new credit facilities. The ~~volatility~~availability of ~~the~~these ~~securitization~~financing ~~market~~sources ~~and~~depends, in part, on factors outside of our ~~ability~~control, toincluding ~~successfully~~regulatory ~~and~~capital ~~efficiently~~treatment ~~complete~~for ~~securitizations~~unfunded bank lines of credit, the financial strength and ~~bank~~strategic ~~term~~objectives ~~financings~~of ~~are~~the ~~affected~~banks bythat participate in our credit facilities, and the ~~condition~~availability of bank liquidity in general. In the ~~financial~~event ~~markets~~of ~~generally,~~a ~~conditions~~sudden or unexpected shortage of funds in the ~~asset-backed~~banking ~~securities~~system, ~~market~~we ~~specifically~~cannot be sure that we will be able to avail ourselves of new financing without incurring high funding costs, a reduction in the ~~performance~~term of ~~our~~funding ~~securitized~~instruments, ~~portfolio~~or ~~and~~ the ~~macro-economic~~liquidation ~~environment~~of ~~generally~~certain assets.

~~Since~~The ~~the~~degree ~~disruption~~to inwhich ~~the~~we ~~securitization~~are ~~markets~~leveraged, atand ~~the~~to ~~onset~~which ofwe may become leveraged, could negatively impact our ability to obtain additional financing in the ~~financial~~future, ~~crisis~~increase aour ~~few~~vulnerability ~~years~~to ~~ago~~general economic downturns and adverse industry conditions, welimit ~~have~~our ~~obtained~~ability ~~alternative~~to ~~financing~~respond ~~through~~to changes in our industry, and place us at a ~~variety~~competitive disadvantage vis-à-vis our competitors. If continued access to the sources of ~~debt~~funding ~~instruments,~~described ~~including~~above ~~bank~~is ~~term~~not ~~financing~~available ~~through~~to ~~which~~us weon ~~entered~~a ~~into~~regular ~~private~~basis ~~securitization~~for ~~transactions~~any reason, ~~securing~~we ~~over~~may ~~$800.0~~have ~~million~~to incurtail ~~portfolio~~or ~~financing~~suspend certain business operations, ~~$60~~including loan origination activities.1 ~~million~~Downsizing inthe ~~third~~scale ~~party~~of ~~junior~~our ~~secured~~business ~~notes,~~would ~~$200.0~~have ~~million~~a inmaterial ~~senior~~adverse ~~secured~~effect ~~notes,~~on ~~and~~our ~~$75.0~~financial ~~million~~position, inliquidity, ~~shareholder~~and ~~financings~~operating results.

~~There~~A isreduction ~~a risk that~~ in the ~~future,~~credit werating ~~may~~of ~~not~~our beSenior ~~able~~Secured ~~to secure similar additional financing~~Notes, ~~execute securitizations,~~ or ~~renew~~any ~~loans~~of ~~and~~our credit facilities, ~~if lenders and counterparties are also facing liquidity and capital challenges. Such an inability to obtain or renew financing~~ could ~~adversely~~restrict ~~affect~~ our ~~liquidity,~~access ~~financial~~to ~~condition,~~the ~~and~~capital ~~results of operations.~~ markets

~~Our~~Credit ~~substantial~~rating ~~debt~~agencies ~~could~~evaluate ~~have~~us, ~~adverse~~and ~~effects~~their ratings of our Senior Secured Notes and creditworthiness are based on a number of factors. These factors include our ~~business~~financial strength and other factors not entirely within our control, including conditions affecting the financial services industry generally. There can be no assurance that we ~~may~~will ~~incur~~maintain ~~additional~~our ~~indebtedness~~current inratings. Failure to maintain those ratings could, among other things, adversely limit our access to the ~~future~~capital markets and affect the cost and other terms upon which we are able to obtain financing, which may adversely affect our liquidity, financial condition and operating results.

~~For~~Our ~~the~~indebtedness ~~year~~and ~~ended~~related ~~December 31, 2012, we paid $73.0 million in cash for interest charges associated with our debt~~ obligations~~. We~~ ~~may incur additional debt in the future, causing our cash payments for interest to increase. The degree to which we~~ are ~~leveraged,~~significant and tothe ~~which~~agreements wegoverning ~~may~~them ~~become~~impose ~~leveraged,~~restrictions ~~could have adverse effects~~ on our business~~, including as follows:~~.

•At ~~Our~~December ~~ability~~31, to2013, ~~obtain~~we ~~additional~~had ~~financing~~approximately $1.7 billion in aggregate principal amount of indebtedness outstanding, which includes $283.4 million under portfolio warehouse facilities that are due to expire between 2014 and 2015, depending on the ~~future~~facility. ~~may~~This beindebtedness ~~impaired~~reduces operational flexibility and creates default risks.

• A significant portion of our cash flow from operations must be dedicated to the payment of interest and principal on our debt, and related expenses, which reduces the funds available to us for our operations.10

• Some of our debt is and will continue to be at variable rates of interest, which may result in higher interest expense in the event of increases in market interest rates.

• The agreements that govern our indebtedness contain, and any agreements to refinance our indebtedness likely will contain, financial and restrictive covenants, and our failure to comply with such covenants may result in an event of default, decrease in advance rate, or increase in interest rate, which, if not cured or waived, could result in the acceleration of that indebtedness and trigger an event of default under other indebtedness.

• Our level of indebtedness will increase our vulnerability to general economic downturns and adverse industry conditions.

• Our debt service obligations could limit our flexibility in planning for, or reacting to, changes in our industry.

• Our leverage could place us at a competitive disadvantage vis-à-vis our competitors who have less leverage relative to their overall capital structures.

Interest rates affect our profitability and cash flows and an increase in interest rates will increase our interest expense and lower our profitability, cash flows, and liquidity.

Much of our financing income results from the difference between the rate of interest that we pay on the funds we borrow and the rate of interest that we earn on the finance receivables in our portfolio. While we earn interest on our finance receivables at a fixed rate, we pay interest on certain of our borrowings at variable rates. When interest rates increase, our

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~~interest~~The ~~expense~~agreements ~~increases.~~that ~~Increases~~govern in our ~~interest~~indebtedness ~~expense~~(including ~~that~~the weindenture ~~cannot~~governing ~~offset~~the bySenior ~~increases~~Secured inNotes) ~~interest~~contain, ~~income~~and ~~could~~any ~~have~~agreements athat ~~material~~govern ~~adverse~~future ~~impact~~indebtedness onmay ~~our~~contain, ~~profitability~~covenants ~~and~~that ~~liquidity.~~impose ~~Correspondingly, a~~ significant ~~reduction~~operating inand ~~our~~financial ~~average~~restrictions ~~APR could have a material adverse impact~~ on ~~our~~us, ~~profitability~~including, ifamong ~~not~~other ~~offset~~things, ~~by a corresponding reduction in~~ our ~~loan~~ability ~~losses, borrowing costs, or increases~~ to ~~gross margin on vehicles sold.~~:

~~Reduction~~• inincur ~~the~~additional ~~credit rating of our senior secured notes due 2017 ("Senior Notes") could restrict our access to the capital markets and adversely affect our liquidity, financial condition and results of operations.~~indebtedness;

Credit rating agencies evaluate us, and their ratings of our Senior Notes and creditworthiness are based on a number of factors. These factors include our financial strength and other factors not entirely within our control, including conditions affecting the financial services industry generally. There can be no assurance that we will maintain our current ratings. Failure to maintain those ratings could, among other things, adversely limit our access to the capital markets and affect the cost and other terms upon which we are able to obtain financing, which may adversely affect our liquidity, financial condition and results of operations.

We may not be able to generate sufficient cash flow to meet our debt service obligations.

Our ability to generate sufficient cash flow from operations to make scheduled payments on our debt obligations will depend on our future financial performance and cash flows, which will be affected by a range of economic, competitive, and business factors, many of which are outside of our control. If we do not generate sufficient cash flow from operations, we may have to undertake alternative financing plans, such as refinancing or restructuring our debt, selling assets, reducing or delaying capital investments, or seeking to raise additional capital. The terms of the agreements that govern our indebtedness contain limitations on our ability to incur additional indebtedness. We cannot assure you that any refinancing would be possible, that any assets could be sold, or, if sold, of the timing of the sales and the amount of proceeds realized from those sales, or that additional financing could be obtained on acceptable terms, if at all, or would be permitted under the terms of the agreements governing our indebtedness then outstanding. Our inability to generate sufficient cash flow to satisfy our debt obligations, or to refinance our obligations on commercially reasonable terms or at all, would have a material adverse effect on our business, financial condition, and results of operations, as well as on our ability to satisfy our debt obligations.

Our failure to comply with the agreements relating to our outstanding indebtedness, including as a result of events beyond our control, could result in an event of default or limits on our ability to borrow funds to finance our business.

The agreements that govern our indebtedness (including the indenture governing the notes) contain, and any agreements that govern future indebtedness may contain, covenants that impose significant operating and financial restrictions on, among other things, our ability to:

• incur additional debt;


•	incur liens;


•	sell or otherwise dispose of assets;


•	make investments, loans, or advances;


•	engage in merger and acquisition activity;


•	pay dividends, redeem capital stock, or make certain other restricted payments or investments;


•	engage in certain sale and leaseback transactions;


•	enter into new lines of business; and


•	enter into transactions with our affiliates.

~~The agreements that govern our indebtedness also contain certain covenants relating to the performance of our portfolio~~Additionally, ~~which ultimately impacts~~ the ~~manner in which we operate our business. The~~ advance rates on our portfolio warehouse facilities may be reduced if our portfolio does not perform as expected, we exceed certain extension limits, term limits, delinquency limits, or fail to meet the required collateral levels. The ~~agreements~~portfolio ~~governing~~warehouse ~~any~~facilities ~~future~~also ~~indebtedness~~contain ~~could~~term-out ~~contain~~features ~~financial~~resulting ~~and~~in ~~other~~final ~~covenants~~maturities ~~more~~between ~~restrictive~~12 ~~than~~and ~~those~~24 ~~that~~months ~~are~~from ~~currently~~their ~~applicable~~expiration todates, usdepending on the facility.

Failure to comply with the agreements governing our indebtedness could result in an event of default under one or more such agreements, cause cross-defaults on other agreements governing our indebtedness, including the Senior Notes, and prevent us from securing alternate sources of funds necessary to operate our business. Any of these events could have a material adverse effect on our results of operations and financial condition. From time to time in the past, we have breached certain of these technical or other ~~covenants under the agreements governing our indebtedness~~restrictions, and have obtained waivers from the applicable lenders in such instances. In a future event of default or breach of covenants, there can be no assurance we will be able to receive such waivers, and our inability to obtain these waivers may result in events of default and cross default under, and the acceleration of, applicable indebtedness, each of which would have a material adverse impact on our ability to maintain the levels of funding needed to continue to expand and operate our business.

Our ability to obtain certain financings in the future is also restricted by the fixed charge coverage ratio of the debt incurrence test under the indenture relating to the Senior Secured Notes. We do not currently meet ~~these~~the ~~requirements~~fixed ~~nor~~charge docoverage weratio ~~anticipate~~test ~~meeting~~under the indenture, which does not constitute a breach of covenant but will limit our ability to obtain certain financings, including the incurrence of unsecured debt.

Our business will be negatively impacted if we are not able to generate sufficient cash flow to meet our debt service obligations.

Our ability to make payments of principal and interest on indebtedness will depend in part on our cash flows from operations, which are subject to economic, financial, competitive and other factors beyond our control. For the year ended December 31, 2013, we paid $75.0 million in cash for interest charges associated with our debt obligations. We cannot be certain that we will maintain a level of cash flows from operations sufficient to permit us to meet our debt service obligations in the future. If we are unable to generate sufficient cash flows from operations to service our debt, we may be required to undertake alternative financing plans, such as selling assets, refinancing all or a portion of our existing debt, reducing or delaying capital investments, or obtaining additional financing. There can be no assurance that any of these alternatives will be available on terms acceptable to us, or at all.

Changes in interest rates may adversely impact our profitability and risk profile

Our profitability is dependent, at least in part, on the difference between the interest rates we earn on our finance receivables (which are fixed) and the interest rates we pay on our borrowings (which may be variable). Thus, when interest rates increase, the overall rates we pay on our borrowings may increase, while the rates we earn on our finance receivables remain the same, potentially reducing our profitability. In addition, rates charged on new customer loan originations may be limited by market and competitive conditions, restricting our ability to pass on increased interest costs to the consumer. Further, increases in interest rates may reduce the volume of vehicles we sell and loans we originate, which would negatively affect our operating results in the absence of mitigating factors.

If we were to lose the right to service our portfolio of receivables, we could experience a decrease in collections, which could have a material adverse impact on our business

We retain the right to service all receivables that we finance, including those pledged as collateral to our portfolio warehouse facilities and those sold to securitization trusts. We are entitled to a fee for our servicing activities, which generates cash flow for operations. Subject to certain conditions, if we experience an event of default under the agreements governing our financing arrangements, we may lose the right to service our receivables. Loss of this right could have a material adverse effect on our cash flows. In addition, if we lose our servicing rights, these servicing activities could be transitioned to a third-party who might lack the requisite experience in servicing subprime receivables. As a result, we may experience decreased collections, which could have a material adverse effect on our operating results and financial condition and on the value of the collateral securing the Senior Secured Notes and certain of our credit facilities.

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There is a high degree of risk associated with borrowers with subprime credit. The allowance for credit losses that we have established to cover losses in our loan portfolio may not be sufficient or may need to be increased, which could have a material adverse effect on our operating results and the value of the collateral securing the Senior Secured Notes and certain of our credit facilities.

Substantially all of the loans that we originate and service are with borrowers with subprime credit. Loans to borrowers with subprime credit have lower collection rates and are subject to higher loss rates than loans to borrowers with prime or near prime credit. Although we have extensive experience in subprime auto lending, there can be no assurance that our collection rates will not decrease and that our loss rates will not increase over time.

We maintain an allowance for credit losses to cover losses on an aggregate basis at a level we consider sufficient to cover estimated losses inherent in our portfolio of receivables, though our allowance is not meant to cover life of loan losses. On a quarterly basis we review and may make upward or downward adjustments to the allowance. However, our allowance may not be sufficient to the actual cover losses in our portfolio, and we may need to increase our allowance for reasons related to, among other things, continued economic uncertainty or significant increases in delinquencies or charge-offs. A significant variation in the timing of or increase in credit losses in our portfolio or a substantial increase in our allowance or provision for credit losses would have a material adverse effect on our operating results.

In addition, because certain elements of our financings are collateralized by the loans we originate, including the Senior Secured Notes (which are secured, in part, by receivables), other financings secured by receivables, and the financings of special purpose entities that have issued securities secured by receivables, the value of such collateral will be sensitive to the performance of the underlying receivables.

Our proprietary credit scoring system may fail to properly quantify the credit risks associated with our customers, which could have a material adverse effect on our financial condition and operating results.

We have developed, and revise from time to time, complex proprietary credit scoring models that use traditional and non-traditional variables to classify our customers into various risk grades that are linked to loan parameters. We cannot guarantee that these credit scoring models will perform as intended in current or future market conditions. In addition, given that our typical customer has limited or no credit history, our models rely on customer-related data provided by third parties (including credit agencies) or obtained from publicly available sources, in addition to any information provided to us by our customers. If data obtained from these sources are inaccurate or volatile, or if any such data or categories of data became unavailable to us, the ability of our credit scoring models to properly assess customer risk could be compromised, or our models could fail altogether, which could have a material adverse effect on our operating results and financial condition.

Our failure to effectively manage our growth, including the risks associated with new products, services or business ventures, could harm our business.

We continue to pursue growth opportunities, acquisitions, joint ventures and the introduction of new products and services, including the following:


•	Our recent acquisition of a majority interest in Inilex, our GPS supplier.


•	Our recent investment in GO Auto Exchange, LLC, a joint venture with Manheim to create a wholesale auction company focused on independent dealers and the low-end vehicle segments.


•	The launch in 2013 of Carvana, our new on-line used vehicle sales channel.


•	The introduction of our Cancel Anytime Lease™, which we began offering as a way to expand our service offerings to meet the expanding needs of our customers.


•	The unbundling of our VSC, GAP and GPS subscription from the sale of our vehicles, which involves deferral of revenue related to these products that was previously included in the purchase price of our used vehicles.

These and other business expansion initiatives could have unintended consequences, including negative impacts to our brand, the diversion of excessive time and attention of personnel away from our core business, and additional strain on our capital resources, information and reporting systems, financial management controls and personnel, and regulatory compliance systems and personnel.

There can be no assurance that these or any other new business ventures, products or services will be successful. When entering into any new business or venture we run the risk of losing our initial investment and incurring operational losses if the venture does not perform according to expectations, which could result in material adverse effects to our business, operating results or financial condition. In addition, we may not be able to effectively manage or integrate our expanding operations, (including new dealerships and reconditioning centers) or achieve planned growth on a timely or profitable basis. If we are unable to achieve our planned growth or effectively manage our growth, we may experience operating inefficiencies that could have a material adverse effect on our operating results.

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~~these~~ ~~requirements~~If ~~for~~our ~~the~~vehicle ~~foreseeable~~leasing ~~future~~program underperforms our expectations, ~~which~~or ~~will~~the ~~limit~~value of our ~~ability~~leasing tovehicle ~~obtain~~fleet ~~certain~~declines ~~financings,~~more ~~especially~~than ~~the~~we ~~incurrence~~expect, ofwe ~~senior~~could ~~unsecured~~be ~~debt~~materially adversely affected.

~~There~~We ishave a ~~high~~vehicle ~~degree~~leasing offleet. ~~risk~~When ~~associated~~we ~~with~~acquire ~~borrowers~~these ~~with~~vehicles, ~~subprime~~we ~~credit.~~make ~~The~~certain ~~allowance~~assumptions ~~for~~regarding ~~credit~~our ~~losses~~ability ~~that~~to lease the vehicles to our customers and certain estimates regarding vehicle reliability, remaining useful life and residual value. If we ~~have~~are ~~established~~unable to ~~cover~~lease ~~losses~~fleet ~~inherent~~vehicles into our ~~loan~~customers, ~~portfolio~~or ~~may~~our ~~not~~customers cancel their leases sooner than we anticipate, our cash flows could be ~~sufficient~~materially orimpacted. If we fail to accurately predict vehicle reliability, vehicle service costs and useful life, we may need to bereplace ~~increased~~fleet vehicles sooner than anticipated, which could ~~have~~result ain ~~material~~unexpected ~~adverse~~costs ~~effect~~and ondiminished cash flows. If we fail to properly estimate residual values, or deviation from expected residual values occurs due to excessive wear and tear or other factors, our ~~results~~vehicle ofleasing operations could incur significant losses and ~~the~~have ~~value~~a ofmaterially ~~your~~adverse ~~collateral~~impact on our operating results and financial condition.

~~Substantially~~Reliance ~~all~~on ofthird ~~the~~parties ~~sales financing we extend and the loans that we service are with borrowers with subprime credit. Loans~~ to ~~borrowers~~administer ~~with~~our ~~subprime~~ancillary ~~credit~~product ~~have~~offerings ~~lower collection rates~~ and ~~are~~perform ~~subject~~certain tocompany ~~higher~~functions ~~loss~~could ~~rates~~adversely ~~than~~affect ~~loans to borrowers with prime credit. Although we have extensive experience in subprime auto lending, there can be no assurance that~~ our ~~collections~~business and ~~loss~~financial ~~rates will not increase over time~~results.

We ~~maintain~~have anrelationships ~~allowance~~with ~~for~~third ~~credit~~party ~~losses~~providers to ~~cover~~administer ~~losses~~the onVSC anand ~~aggregate~~GAP ~~basis~~products atwe aoffer ~~level~~to weour ~~consider~~customers ~~sufficient~~and towe ~~cover~~outsource ~~estimated~~certain ~~losses~~collection ~~inherent~~operations inand ~~our~~other ~~portfolio~~activities ofto ~~receivables.~~foreign Oncompanies alocated ~~quarterly~~outside ~~basis~~the wecontiguous ~~review~~United ~~and~~States. Our ~~may~~dependence ~~make~~on ~~upward~~third orparty ~~downward~~service ~~adjustments~~providers tomay ~~the~~increase ~~allowance.~~our ~~However~~operational complexity, decrease our ~~allowance~~control ~~may~~over ~~not~~certain befunctions, ~~sufficient~~and subject us to ~~cover~~additional ~~losses~~risks, ~~inherent~~such inas ~~our~~inadequate ~~portfolio~~service, ~~and~~work westrikes, ~~may~~or ~~need~~other towork ~~increase~~stoppages ~~our~~in ~~allowance~~foreign ~~for~~countries ~~reasons~~where ~~related~~certain ~~to,~~outsourced ~~among~~services ~~other~~are ~~things~~located. Further, ~~the~~if ~~continued~~our ~~weak~~relationships ~~economic~~with ~~environment~~such ~~and~~third ~~uncertainty~~party inproviders ~~the~~were ~~housing~~modified, ~~market~~disrupted, or ~~significant~~terminated, ~~increases~~we inwould ~~delinquencies~~need orto ~~charge-offs.~~obtain Athese ~~significant~~services ~~variation~~from inalternative ~~the~~sources. ~~timing~~We ofmay orbe ~~increase~~unable into ~~credit~~replace ~~losses~~these inthird ~~our~~party ~~portfolio~~providers orwith a ~~substantial~~suitable ~~increase~~alternative in ~~our~~a ~~allowance~~timely and efficient manner on terms acceptable to us, or ~~provision~~at ~~for~~all, ~~credit~~and ~~losses~~we ~~would~~may ~~have~~not abe ~~material~~able ~~adverse~~to ~~effect~~provide onthese services effectively using our internal resources. In any such scenario, our market reputation could suffer, and our operating results ofand ~~operations~~financial position could be adversely affected.

InAdverse ~~addition,~~macro-economic ~~because~~conditions ~~a portion of the collateral securing the notes consists of receivables, the remaining residual property rights in receivables securing other financings (~~and ~~the~~their ~~value~~effect ofon ~~which~~automobile ~~are~~sales ~~therefore~~may ~~determined~~adversely byaffect ~~the~~our value of receivables sold or otherwise pledged) or the remaining residual value of special purpose entities that have themselves put in place financings secured by receivables (and the value of which are therefore determined by the value of receivables owned), the value of the collateral securing the notes will be sensitive to the performance of the underlying receivablesbusiness.

~~Our~~Changes ~~focus~~in onmacro ~~customers~~or ~~with~~regional ~~subprime~~U.S. ~~credit~~economic conditions may ~~raise~~adversely ~~concerns~~impact on the ~~part~~used ofvehicle ~~future~~industry, and our business. ~~partners~~Relevant economic factors include, ~~lenders~~among other things, ~~counterparties~~consumer credit availability, consumer credit delinquency and ~~regulators~~loss rates, ~~which~~interest ~~may~~rates, ~~adversely~~gasoline ~~affect~~prices, inflation, unemployment levels, the state of the housing market and changes in stock market values. During periods of economic slowdown, these and other factors could increase loss frequency and decrease consumer demand for automobiles as well as weaken collateral values on certain types of automobiles. Because our ~~business~~historical focus has been on subprime consumers, the actual rates of delinquencies, defaults, repossessions, and losses on loans to our customers could be dramatically impacted by a general economic downturn.

WeThe ~~focus~~most ~~solely~~recent oneconomic ~~the~~downturn ~~subprime~~adversely ~~segment~~impacted of the used vehicle ~~sales~~industry, ~~and~~including ~~financing~~us. Although market ~~and~~conditions ~~provide~~have ~~loans~~improved toand ~~borrowers~~we ~~with~~have ~~subprime~~since ~~credit~~expanded ~~who,~~our ~~as a class~~operations, ~~have~~economic ~~lower~~uncertainty ~~collection rates~~ and ~~are~~unemployment ~~subject~~in tothe ~~higher~~U.S. ~~loss~~remain ~~rates~~at ~~than~~elevated ~~prime~~levels, and ~~near~~should ~~prime~~declining ~~borrowers.~~economic Inconditions ~~addition~~recur, ~~the~~we ~~subprime~~would ~~industry~~expect ~~has~~a ~~been~~similar ~~the~~recurrence ~~subject~~ of ~~extensive~~adverse ~~media~~impacts ~~attention,~~to ~~enhanced~~our ~~regulatory scrutiny~~industry, ~~and~~operating ~~Congressional~~results ~~hearings~~and asfinancial ~~a result of what has been characterized as inappropriate consumer practices by subprime lenders in the mortgage industry~~condition.

~~These~~Our ~~issues~~operations ~~may~~are ~~raise~~geographically ~~concerns on the part of future business partners~~concentrated, ~~lenders, counterparties,~~ and ~~regulators. As~~ a ~~result,~~downturn ~~we are unable to assess whether, and to what extent, they may have an adverse effect on our business~~ in the ~~future,~~economies ~~including on our reputation, revenues and profitability. In particular, we cannot predict whether these issues may negatively affect our ability to obtain new financing to support our operations~~ or ~~any~~markets ~~necessary regulatory approvals or business licenses~~ in ~~connection~~which ~~with~~we ~~our~~operate ~~plans to expand our business, either of which~~ could ~~have~~adversely aaffect ~~material~~vehicle ~~adverse~~sales ~~effect~~and ~~on our business~~collections.

~~Our~~As ~~proprietary~~of ~~credit~~December ~~scoring~~31, ~~system~~2013, ~~may~~we ~~not~~operated ~~perform~~our asdealerships ~~expected~~in ~~and~~20 ~~fail~~states, tothough ~~properly~~approximately ~~quantify~~43% ~~the~~of ~~credit~~our ~~risks~~sales ~~associated~~volume ~~with~~and 50% of our ~~customers~~servicing portfolio is concentrated in three states: Texas, ~~which~~Florida ~~could~~and ~~have~~North aCarolina. ~~material~~Accordingly, ~~adverse~~our ~~effect~~operating results depend substantially on general economic conditions and consumer spending habits in these markets. Adverse economic conditions, natural disasters, or other factors affecting any state or region where high concentrations of our ~~financial~~customers ~~condition~~reside could adversely affect vehicle sales and collections and materially impact our overall operating results ofand ~~operations~~financial condition.

WeOur ~~have~~industry ~~developed,~~is ~~and~~highly ~~revise~~competitive ~~from~~and ~~time to time~~fragmented, ~~complex proprietary credit scoring models that use traditional~~ and ~~non-traditional~~if ~~variables~~we ~~to classify our customers into various risk grades that~~ are ~~linked~~unable to ~~loan~~compete, ~~parameters.~~we ~~There~~may isexperience no guarantee that our credit scoring models will perform as intended or that they will perform in future market conditions. Failure of our credit scoring models to properly quantify the credit risks associated with our customers could have a material adverse ~~effect~~effects on our operating results ~~of operations~~ and financial condition.

WeUsed ~~depend~~vehicle onretailing and financing is a highly competitive industry. In addition to “buy-here, pay-here” dealerships, our competition includes publicly and privately owned used car dealers and the ~~accuracy~~banks, finance companies and ~~completeness~~indirect lenders that purchase their loans. Many of ~~information~~our ~~furnished~~retail tocompetitors usbuy byand sell the same or onsimilar ~~behalf~~makes of ~~our~~vehicles ~~customers~~that we offer in the same or similar markets and at competitive prices, which can result in margin pressure due to increased inventory costs and lower retail prices. IfThe wefinancing side of the market is served by banks, captive finance affiliates of automobile manufacturers, credit unions and ~~our~~independent ~~systems~~finance companies that may be much larger and have greater financial resources than are ~~unable~~available to ~~detect~~us, ~~any~~which ~~misrepresentations~~may inallow ~~this~~them ~~information~~to compete favorably with us. Along with lower operating margins on retail sales, increased competition may cause downward pressure on the interest rates that we charge on finance receivables originated by our dealerships, all of which together could ~~experience~~have a material adverse effect on our operating results ~~of operations~~ and financial condition.

Our typical customers have limited or no credit histories. In deciding whether to extend credit to customers, we rely heavily on information furnished to us by or on behalf of our customers, including employment and personal financial information. If a significant percentage of our customers intentionally or negligently misrepresented any of this information, and we and our systems did not detect such misrepresentations, this could have a material adverse effect on our ability to effectively manage our credit risk, which could have a material adverse effect on our results of operations, cash flows, and financial condition.

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~~Our~~If ~~proprietary~~we ~~vehicle~~are ~~pricing~~unable ~~system~~to ~~may~~obtain ~~not~~sufficient ~~perform~~inventory asin ~~expected~~a ~~and~~cost-effective ~~fail~~manner, toour ~~properly~~operating ~~set~~results ~~the retail price~~ and ~~effective~~financial ~~margin~~condition ~~associated~~will ~~with~~be ~~our~~adversely ~~used vehicle inventory for sale~~impacted.

We ~~have~~require ~~developed~~a large number of quality used vehicles for our dealerships, and ~~revise~~our ~~from~~ability ~~time~~ to ~~time,~~manage ainventory ~~complex~~costs ~~pricing~~while ~~engine~~maintaining ~~that~~affordability ~~utilizes~~for ~~several~~our ~~variables~~customers inis ~~determining~~critical to the ~~retail~~success ~~price~~ of our ~~vehicles,~~business. ~~including~~We ~~cost~~acquire most of our used vehicle, ~~cost~~inventory ofthrough ~~reconditioning~~auctions, ~~relative~~primarily ~~market~~through ~~prices,~~two auction companies. We also source inventory from wholesalers and ~~other~~fleet ~~external~~owners, ~~data~~such toas ~~price~~leasing ~~our~~and ~~vehicles~~rental ~~competitively~~companies. The ~~failure~~number of sources that can supply acceptable quantities of vehicles meeting our ~~pricing~~quality ~~engine~~standards is limited, and we face substantial competition to ~~properly~~acquire ~~calculate~~the avehicles ~~retail~~we ~~price~~purchase. ~~for~~Additionally, ~~each~~rising ~~vehicle~~auction prices may lead us to acquire older or higher mileage vehicles, which could ~~have~~cause aan ~~material~~increase ~~adverse~~in ~~effect~~reconditioning onand ~~our~~warranty ~~results~~costs, both of ~~operations~~which would also negatively affect our sales margins and ~~financial~~overall ~~condition~~profitability.

~~General~~We ~~economic~~also ~~conditions~~rely on logistics in transporting vehicles from auctions to reconditioning facilities and ~~their~~to ~~effect~~our ondealerships. ~~automobile~~Our ~~sales~~failure to manage this process both internally and through our network of transportation partners, or disruptions in the vehicle transport industry beyond our control, could cause a disruption in inventory supply chain and distribution, which may adversely affect our ~~business~~operating results and financial condition.

~~Vehicles~~We ~~sales~~may ~~historically~~experience ~~have~~seasonal been impacted by economic factors. Many factors affect the industry, including general economic conditions, consumer confidence, the level of personal discretionary income, interest rates, the price of fuel, and ~~credit~~other ~~availability. Deteriorating~~fluctuations ~~economic and market conditions throughout the United States or within a region~~ in ~~which we do business could result in a decline in vehicle sales, a decrease in collectability of~~ our ~~finance~~operating ~~receivables, or an increase in vehicle pricing~~results. ~~We cannot assure you that the industry will not experience sustained periods of decline in vehicle sales in the future. Any future decline could have a material adverse effect on our business.~~

WeSales ~~are~~of motor vehicles historically have been subject to ~~significant~~substantial ~~governmental~~cyclical ~~regulation,~~variation characterized by periods of oversupply and ifweak demand. Historically, we ~~are~~have ~~found~~experienced tohigher berevenues in ~~violation~~the first quarter of ~~any~~the calendar year than in the last three quarters of the ~~federal,~~calendar ~~state,~~year. orWe ~~local~~believe ~~laws~~these orresults ~~regulations~~are ~~applicable~~due to usseasonal buying patterns driven in part by the timing of income tax refunds, which are a primary source of our ~~business~~customers’ ~~could~~down ~~suffer~~payments on used vehicle purchases. WeOur ~~are~~loan performance also ~~subject~~has tofollowed ~~legal~~a seasonal pattern, with delinquencies and ~~administrative~~charge-offs ~~proceedings~~being ~~which,~~the ifhighest in the ~~outcomes~~second ~~are~~half ~~unfavorable~~of tothe ~~us,~~year. ~~could~~A ~~adversely~~significant ~~affect~~portion of our ~~business~~general and administrative expenses, however, do not vary proportionately with fluctuations in revenues. Accordingly, our results in any quarter may not indicate the results we may achieve in any subsequent quarter or for the full year. We expect quarterly fluctuations in our operating results, ~~and~~to ~~prospects~~continue as a result of seasonal patterns.

~~The~~We ~~automotive retail and finance industries~~ are subject to afluctuations ~~wide~~in ~~range~~demand offor ~~federal,~~our ~~state,~~products and ~~local~~our ~~laws~~failure ~~and~~to ~~regulations,~~adequately meet such ~~as local licensing requirements~~demand, ~~and~~including ~~retail~~through ~~financing,~~inventory ~~debt collection, consumer protection, environmental, health and safety, creditor, wage~~re-~~hour,~~mixing ~~anti-discrimination,~~ and ~~other~~product ~~employment practices laws and regulations. The violation of these or future requirements or laws and regulations can result in administrative~~pricing, ~~civil,~~could oradversely ~~criminal~~affect ~~sanctions against us, which may include a cease and desist order against the subject operations or even revocation or suspension of~~ our ~~license to operate the subject~~ business~~. As a result~~, ~~we have incurred and will continue to incur capital and~~ operating ~~expenditures and other costs to comply with these requirements~~results, ~~laws,~~ and ~~regulations.~~financial Further, over the past several years, private plaintiffs and federal, state, and local regulatory and law enforcement authorities have increased their scrutiny of advertising, sales, financing, and insurance activities in the sale and leasing of motor vehiclescondition. In addition, many state attorneys general have been increasingly active in the area of consumer protection. We are also subject, and may be subject in the future, to inquiries and audits from state and federal regulators. There can be no assurance that such activities will not continue in the future or have a material adverse effect on our business.

~~From~~The ~~time~~demand tofor ~~time,~~the products we offer may be ~~involved~~reduced indue ~~various~~to ~~legal~~a ~~and~~variety ~~administrative~~of ~~proceedings.~~factors, Wesuch ~~are~~as ~~also~~demographic ~~currently~~patterns, ~~the~~changes ~~subject~~in ofcustomer ~~investigative~~preferences ~~inquiries~~or ~~from~~financial ~~the~~conditions, ~~Consumer~~regulatory ~~Protection~~restrictions ~~Division~~that ofdecrease customer access to particular products, or the ~~Office~~availability of ~~Texas~~alternative ~~Attorney~~or ~~General~~competing products. ~~See~~For ~~“Item~~example, ~~3—Legal~~if ~~Proceedings.”~~customer Itpreferences ischange ~~not~~and ~~feasible~~we fail to ~~predict~~re-align ~~the~~our ~~outcome~~inventory ofmix ~~these~~and ~~proceedings~~ancillary orproducts ~~any~~and ~~claims~~services ~~made~~to ~~against~~such uspreferences, our revenues could decrease significantly and ~~the~~our ~~outcome~~operations ofcould ~~any~~be ~~such~~harmed. If ~~proceedings~~used orvehicle ~~claims~~retail prices rise significantly due to supply constraints, consumer demand for used vehicles could ~~adversely~~decline ~~affect~~as customers delay purchases or pursue alternative options. If our ~~reputation,~~pricing ~~results~~models offail ~~operations~~to properly calculate retail vehicle prices aligned with market demand our sales and sales margin could decrease, which orcould have a material adverse effect on our operating results and financial condition.

WeOur ~~are~~reputation ~~also~~is ~~subject to the Dodd-Frank Act of 2010, which represents~~ a ~~comprehensive~~key ~~overhaul~~aspect of ~~the~~our ~~rules and regulations governing the financial services industry. Although the regulatory decisions regarding its implementation continue many parts of the Dodd-Frank Act are now in effect~~business, ~~including the establishment~~ and ~~operation~~our of the Consumer Financial Protection Bureau (the “CFPB”), as an independent entity within the Federal Reserve. The CFPB has the authority to promulgate consumer protection regulations applicable to all entities offering consumer financial services or products, including non-bank commercial companies in the business ~~of extending credit and servicing consumer loans. Although the CFPB has begun operations and now has a director, the exact scope and substance of the regulations that~~ may be ~~adopted~~affected by ~~the~~how ~~CFPB,~~we ~~particularly as they relate to our operations,~~ are ~~still~~viewed unknown at this time. However, on April 12, 2012, the CFPB delivered a Civil Investigative Demand to DriveTime Automotive Group ("DTAG") requesting that DTAG produce certain documents and information and answer questions relating to certain components of the business of DTAG and its affiliates. The CFPB has not alleged a violation by DTAG of any law and DTAG is cooperating with the CFPB's requests for information. We are currently in the ~~process of providing the documents and information requested by the CFPB~~marketplace. It is not feasible to predict the outcome of this investigation, and although no assertions or claims have been made against us, an adverse action by the CFPB could adversely affect our reputation, results of operations, or financial condition.

The ~~Dodd-Frank~~DriveTime ~~Act~~brand ~~contains~~represents ~~numerous~~transparency, ~~other~~value ~~provisions~~and ~~affecting~~a ~~financial~~customer-centric ~~industry~~used ~~participants~~vehicle buying experience. The reputation of ~~all~~our ~~types,~~brand ~~including~~is ~~third~~critical ~~parties~~to ~~that~~our success. If we ~~deal~~fail ~~with~~to inmaintain the ~~course~~high ofstandards ~~our~~on ~~business,~~which ~~such~~this asreputation ~~rating~~is ~~agencies~~built, ~~insurance~~or ~~companies,~~if ~~and~~an ~~investors. Its~~event ~~implementing~~occurs ~~regulations~~that ~~have~~damages ~~had~~this reputation, ~~and~~it ~~likely~~could ~~will~~adversely ~~continue~~affect toour ~~have,~~brand ~~the~~and ~~effect~~consumer ofdemand ~~increasing~~for ~~the~~our ~~compliance~~products ~~costs~~and ofhave ~~operating~~a material adverse effect on our business, sales and operating results. Additionally, ~~its~~if ~~continued~~we ~~implementation~~fail ~~may~~to ~~further~~correct ~~impact~~or mitigate misinformation or negative information about the vehicles we offer, our ~~operating~~customer ~~environment~~experience, inor ~~other~~any ~~substantial~~aspect ~~and~~of ~~unpredictable~~our ~~ways~~brand, ~~that~~we could ~~have~~experience a material adverse effect on our ~~financial~~business, ~~condition~~sales and ~~results~~operating ~~of operations~~results.

~~Changes~~Adverse inoutcomes ~~laws,~~to ~~regulations,~~current orand ~~policies~~future litigation against us may adversely ~~affect~~impact our ~~business~~financial position, liquidity and operating results.

We may be involved in various litigation matters from time to time, which may include product liability claims and other litigation with customers, labor and employment-related lawsuits, environmental claims, class actions, purported class actions, and other actions brought by competitors or governmental authorities, any of which could have a material adverse effect on our business and operating results. These actions could expose us to substantial monetary damages and legal defense costs, injunctive relief and criminal and civil fines and penalties, reduced demand for our products, and adverse publicity, among other consequences. We cannot assure you that we will have sufficient resources, including insurance to the extent it is available, to cover such legal actions and claims, and adverse outcomes of such legal actions could have a material adverse effect on our operating results and financial condition. See “Item 3-Legal Proceedings,” for more information.

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~~The~~A ~~laws~~failure ~~and~~of ~~regulations governing~~ our ~~lending,~~information ~~servicing,~~systems ~~debt collection, and insurance activities~~ or ~~the~~any ~~regulatory~~security orbreach ~~enforcement environment at the federal level~~ or inunauthorized ~~any~~disclosure of ~~the~~confidential ~~states~~information incould ~~which we operate may change at any time and may~~ have ana material adverse effect on our business. For example, the CFPB is currently conducting studies on and reviewing consumer lending related regulations that affect our industry. The CFPB has also commenced the examination of banks and non-banking institutions, with a focus on consumer lending compliance. These activities may lead to changes in laws and regulations governing these activities that apply to our business.

Our business is highly dependent on communications and information systems. In ~~addition~~particular, ~~the~~we ~~Patient~~rely ~~Protection~~on our information systems to effectively manage our pricing strategy and ~~Affordable~~tools, ~~Care~~sales, ~~Act~~inventory, and service efforts, the preparation of ~~2010~~our consolidated financial and operating data, asconsumer itfinancing, isand ~~phased~~loan servicing and collections. Our information systems also collect, process and retain sensitive and confidential information regarding our customers, employees and others. Despite the security measures and business controls we have in ~~over~~place ~~time~~(which include, ~~will~~among ~~significantly~~other ~~affect~~things, backup systems, disaster recovery measures, and the ~~administration~~adoption of ~~health~~procedures ~~care~~in ~~services~~compliance with the Red Flags Rule promulgated under the Fair Credit Reporting Act) our facilities and systems, and those of third-party service providers, could ~~significantly~~be ~~impact~~vulnerable ~~our~~to ~~cost~~external or internal security breaches, acts of ~~providing~~vandalism, ~~employees~~computer viruses, employee theft or misuse, misplaced or lost data, programming or human errors, malfunction, or other similar events. Some threats are out of our control, including natural disasters and network and telecommunications failures. Others may inadvertently occur when we integrate systems or migrate data to our servers following an acquisition or in connection with ~~health~~periodic hardware or software upgrades. Regardless, any security breach or event resulting in the misappropriation, loss, or other unauthorized disclosure of confidential information, whether by us directly or by our third-~~care~~party ~~insurance~~service providers, could damage our reputation, expose us to the risks of litigation and liability, disrupt our business, or otherwise affect our operating results.

WeIf ~~are~~all ~~unable to predict how these~~ or ~~any~~some ~~other~~portion ~~future~~of ~~legislative~~our oremployees ~~regulatory~~elect ~~proposals~~to orcollectively ~~programs~~bargain ~~will be administered~~ or ~~implemented~~join ora ~~in what form~~union, orthese ~~whether~~actions ~~any additional or similar changes to statutes or regulations, including the interpretation or implementation thereof, will occur in the future. Any such action~~ could adversely affect ~~us in substantial and unpredictable ways and could have an adverse effect on~~ our ~~results of~~ operations ~~and financial condition~~.

~~Our~~As ~~inability~~of toDecember ~~remain~~31, in2013, ~~compliance~~none ~~with~~of ~~regulatory~~our ~~requirements~~employees inwere arepresented ~~particular~~by ~~jurisdiction~~a ~~could~~labor ~~have~~union. aThe ~~material~~automotive ~~adverse~~industry ~~effect~~is onhistorically ~~our~~an ~~operations~~industry in ~~that~~which ~~market~~there ~~and~~is ona ~~our~~high ~~reputation~~degree ~~generally~~of labor union participation. NoIf ~~assurance~~all ~~can~~or besome ~~given~~portion ~~that~~of ~~applicable~~our ~~laws~~employees orelects ~~regulations~~to ~~will~~join ~~not~~a belabor ~~amended~~union, orwe ~~construed~~could ~~differently~~experience orincreased ~~that~~operational ~~new~~costs, ~~laws~~work stoppages or strikes, and/or ~~regulations~~barriers ~~will~~to ~~not~~communication bebetween ~~adopted,~~management ~~either~~and ofemployees. ~~which~~These factors could ~~materially~~lead ~~adversely~~to ~~affect~~inefficiencies ~~our~~in ~~business,~~the ~~financial~~operation ~~condition,~~of the affected facilities or ~~results~~groups ofand ~~operations~~could cause us to experience a material adverse effect.

~~Due~~We toare ~~the~~dependent ~~most~~on ~~recent~~the ~~economic~~services ~~recession~~of ~~and~~certain ~~continued~~key ~~uncertainty~~personnel inand ~~capital~~the ~~markets,~~loss weof ~~have~~their ~~in the past~~services, ~~and~~or ~~could~~an beinability ~~required in the future~~ to ~~reduce~~attract ~~the~~such ~~scope of our operations~~personnel, ~~which~~ could ~~have~~harm ~~a material adverse effect on~~ our ~~results of operations, cash flows, and financial condition~~business.

~~During~~Our ~~2008~~continued ~~and~~success ~~early~~depends ~~2009,~~in wepart ~~contracted~~on the continued employment of our ~~operations~~senior inmanagement ~~response~~team, toincluding ~~the~~our ~~economic~~Chief ~~crisis.~~Executive ~~While~~Officer weand ~~expanded~~President, Raymond C. Fidel, our ~~operations~~Executive Vice President and ~~opened~~Chief ~~new~~Financial ~~dealerships~~Officer, ~~during~~Mark ~~2010,~~G. ~~2011~~Sauder, our Executive Vice President and ~~2012~~General Counsel, ifJon weD. ~~again~~Ehlinger ~~experience~~and ~~economic~~our ~~uncertainty~~Senior orVice ~~economic~~President ~~deterioration~~and Chief Risk Officer, wePaul ~~could~~I. beKaplan. ~~required~~We todo ~~reduce~~not ~~the~~currently ~~scope~~maintain key person life insurance on any member of our ~~operations. If~~senior wemanagement ~~choose~~team, toand ~~close~~the ~~dealerships~~unexpected ~~and/~~loss of the services of any of these key personnel, or ~~reduce~~our ~~portfolio~~inability ~~originations~~to inattract ~~the~~new ~~future~~key personnel, wecould ~~will~~have ~~face~~a ~~certain~~material ~~additional~~adverse ~~risks~~effect on our operations. See “Item 10—Directors, ~~including~~Executive ~~risks~~Officers, ~~related~~and ~~to:~~Corporate Governance” for more information.

•Our anExecutive ~~inability~~Chairman and principal shareholder can direct our management and policies through his right to ~~obtain~~elect ~~anticipated~~our ~~cost~~Board ~~reductions;~~of Directors (the "Board") and to control substantially all matters requiring a stockholder vote.

•Ernest ~~legal~~C. Garcia II, our Executive Chairman and ~~regulatory~~principal ~~risks~~shareholder, ~~related~~beneficially owns the majority of our outstanding common stock. Certain agreements to ~~closed~~which ~~stores~~we are a party, including the indenture governing the Senior Secured Notes, the agreements governing our other indebtedness, and ~~lay-offs~~our origination agreement with DTAC pursuant to which DTAC purchases all of the auto loan receivables we originate, limit the control Mr. Garcia otherwise could exercise over our business and operations. Mr. Garcia has the power to elect our entire board of directors and determine the terms and outcome of any corporate transaction or other matters required to be submitted to shareholders for approval, including the ~~risk~~amendment of ~~lawsuits;~~our certificate of incorporation, mergers, consolidations and the sale of all or substantially all of our assets. Because his interests as an equity holder may conflict with the interests of holders of our Senior Secured Notes, he may cause us to take actions that, in his judgment, could enhance his equity but may be prejudicial to the holders of the Senior Secured Notes.

•Conflicts ~~vandalism,~~of ~~theft~~interest may arise as a result of affiliations that our principal shareholder has with Verde Investments, Inc. or other ~~damages~~companies towith ~~vacant~~which ~~stores;~~we have material relationships.

•Our ~~diversion~~principal shareholder is also the owner of ~~management'~~Verde Investments, Inc. (“Verde”), a company with which we have and have had material leasing and financing relationships. See “Item 13—Certain Relationships and Related Transactions, and Director Independence.” Future transactions between us and Verde, or other affiliated companies with which we have a material relationship, could give rise to a conflict of interest on the part of our principal shareholder or any of our directors or executive officers. While transactions that we enter into in which a director or officer has a conflict of interest are generally permissible so long as the material facts relating to the director’s ~~attention~~or ~~from~~officer’s ~~normal~~relationship ~~business~~or ~~operations;~~interest as to the transaction are disclosed to our Board and a majority of our disinterested directors, or a committee consisting solely of disinterested directors, approves the transaction, any such conflict of interest could have a material adverse effect on our business, operating results or financial condition.

• failure to generate sufficient cash flows to help fund our operations.

If we were to lose the right to service our portfolio of receivables, we could experience a decrease in collections, which could have a material adverse effect on our results of operations and financial condition.

We retain the right to service all receivables that we finance, including those pledged as collateral to our portfolio warehouse facilities and those sold to securitization trusts. We are entitled to a fee for our servicing activities, which generates cash flow for operations. Subject to certain conditions, if we experience an event of default under the agreements governing our financing arrangements, we may lose the right to service our receivables. Loss of this right could have a material adverse effect on our cash flows. In addition, if we lose our servicing rights, transitioning servicing activities to a third party could result in interruptions in collections, which could decrease the likelihood that the receivables will be repaid. Moreover, a replacement servicer might lack the requisite experience in servicing such subprime receivables. As a result, we may experience decreased collections, which could have a material adverse effect on our results of operations and financial condition and on the value of the collateral securing the notes.

Our operations and the finance receivables we generate are concentrated geographically, and a downturn in the economies or markets in which we operate could adversely affect vehicle sales and collections.

As of December 31, 2012, we operated our dealerships in 19 states. Approximately 50% of our portfolio is concentrated in three states, Texas, Florida and North Carolina. These states also account for approximately 45% of our sales volume. Adverse economic conditions, natural disasters, or other factors affecting any state or region where high concentrations of our customers reside could adversely affect vehicle sales and collections. If adverse economic conditions, natural disasters, or other factors occur that affect the regions in which we do business, or if borrowers in these regions experience financial difficulties, a significant number of borrowers may not be able to make timely loan payments, if at all, or may be more prone to filing for bankruptcy protection, which could have a material adverse effect on our results of operations and financial condition.

We may experience seasonal and other fluctuations in our results of operations.

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~~Sales~~Changes of motor vehicles historically have been subject to substantial cyclical variation characterized by periods of oversupply and weak demand. We believe that many factors affect the industry, including consumer confidence in ~~the~~accounting ~~economy,~~policies ~~the level of personal discretionary spending, interest rates, fuel prices, credit availability, and unemployment rates. A recession or an industry or general economic slowdown~~ could ~~materially~~ adversely ~~impact~~affect our ~~business~~reported operating results.

~~Historically,~~We we have ~~experienced~~identified ~~higher~~several ~~revenues~~accounting inpolicies ~~the~~as ~~first~~being ~~quarter~~“critical” ofto the ~~calendar~~fair ~~year~~presentation ~~than in the last three quarters~~ of ~~the~~our ~~calendar~~financial ~~year.~~condition Weand ~~believe~~operating ~~these~~ results ~~are~~because ~~due~~they toinvolve ~~seasonal~~major ~~buying~~aspects ~~patterns resulting in part because many~~ of our ~~customers~~business ~~receive~~and ~~income~~require ~~tax~~management ~~refunds,~~to ~~which~~make ~~are~~judgments aabout ~~primary~~matters ~~source~~that ofare ~~down~~inherently ~~payments on used vehicle purchases, during the first quarter of the year~~uncertain. ~~Our~~Materially ~~loan~~different ~~performance~~amounts ~~also~~could ~~has~~be ~~historically~~recorded ~~followed~~under adifferent ~~seasonal~~conditions ~~pattern~~or ~~with~~using ~~delinquencies~~different ~~and charge-offs being the highest in the second half of the year~~assumptions. ~~Accordingly,~~These ~~our~~policies ~~results~~are indescribed ~~any quarter may not indicate the results we may achieve~~ in ~~any~~“Item ~~subsequent~~7—Management’s ~~quarter~~Discussion orand ~~for~~Analysis ~~the~~of ~~full~~Financial ~~year.~~Condition Aand ~~significant~~Results ~~portion~~ of ~~our~~Operations” ~~general~~ and ~~administrative~~the ~~expenses~~notes doto ~~not~~the ~~vary~~consolidated ~~proportionately~~financial ~~with~~statements ~~fluctuations~~included in ~~revenues.~~Item ~~We expect quarterly fluctuations in operating results to continue as a result of seasonal patterns~~8. ~~Such patterns may change, however, due to factors affecting the automotive industry or otherwise.~~

~~Our~~Additionally, ~~failure~~the toU.S. ~~effectively~~based ~~manage~~Financial ~~our~~Accounting ~~growth~~Standards ~~could~~Board ~~harm~~is ~~our~~currently ~~business,~~working wetogether ~~may~~with ~~not~~the beInternational ~~able~~Accounting Standards Board on several projects to ~~access~~converge ~~the~~certain ~~additional~~accounting ~~financing~~principles and facilitate more comparable financial reporting between companies that are required to ~~fund~~follow ~~our~~U.S. ~~growth,~~generally accepted accounting principles (“GAAP”) and ~~our~~those ~~plans~~that are required to ~~expand~~follow ~~our~~International ~~operations~~Financial ~~will~~Reporting ~~expose~~Standards us(“IFRS”) outside of the U.S. These efforts may result in different accounting principles under GAAP, which may have a material impact on the way in which we report financial results in areas including, but not limited to, ~~increased~~potential ~~legal~~changes in accounting for leases, revenue recognition, and ~~regulatory~~impairment ~~risks~~of ~~that~~financial assets. The U.S. Securities and Exchange Commission (the “SEC”) may make a determination in the future regarding the incorporation of IFRS into the financial reporting system for companies based in the U.S. A change in accounting principles from GAAP to IFRS, or the implementation of these or other converged or new accounting requirements, could adversely affect our ~~business~~reported operating results and financial condition, and cause us to restate prior period reported results under the proposed guidance.

WeRegulatory continually evaluate expanding our operations by opening new dealerships and reconditioning centers, some of which will potentially be located in existing DriveTime markets and some of which are expected to be located in markets in which we do not currently operate. This growth may result in the incurrence of additional debt and operating expenses, which could adversely affect our profitability and liquidity. Moreover, growth and expansion of our operations may place a significant strain on our resources and increase demands on our executive management team, management information and reporting systems, financial management controls and personnel, and regulatory compliance systems and personnel. We may not be able to expand our operations or effectively manage or integrate our expanding operations, or achieve planned growth on a timely or profitable basis. If we are unable to achieve our planned growth or manage our growth effectively, we may experience operating inefficiencies and our results of operations may be materially adversely affected.Risks

InWe ~~addition,~~are ~~expansion~~subject ~~into new states will increase our legal and regulatory risk. Our failure or alleged failure~~ to ~~comply~~significant ~~with~~governmental ~~applicable laws and regulations in any new jurisdiction~~regulation, and ~~ensuing~~if ~~inquiries~~we orare ~~investigations~~found byto ~~regulatory~~be ~~and enforcement authorities, may result~~ in ~~regulatory~~violation ~~action, including suspension or revocation~~ of ~~one~~any ~~or more~~ of ~~our~~the ~~licenses~~federal, ~~civil or criminal penalties~~state, or ~~other~~local ~~disciplinary~~laws ~~actions, and restrictions on~~ or ~~suspension~~regulations ofapplicable ~~some or all of our business operations. As a result, our business could suffer, our reputation could be harmed, and we could be subject~~ to ~~additional legal risk. This could, in turn, increase the size and number of claims and damages asserted against~~ us, subject us to regulatory investigations, enforcement actions, or other proceedings, or lead to increased regulatory or supervisory concerns. We may also be required to spend additional time and resources on any necessary remedial measures, which could have an adverse effect on our business. ~~We cannot predict the timing or form of any current or future regulatory or law enforcement initiatives, and any such initiatives~~ could ~~have~~suffer ~~a material~~ adverse ~~effect on our results of operations and financial condition~~consequences.

WeThe ~~operate~~automotive inretail and finance industries are subject to a ~~highly~~wide ~~competitive~~range ~~environment~~of federal, state, and iflocal laws and regulations, such as dealership and other licensing and registration requirements, and retail financing, debt collection, consumer protection, environmental, health and safety, creditor, wage-hour, anti-discrimination, and other related laws and regulations. During the past several years, governmental authorities have increased their scrutiny of advertising, sales, financing, and insurance activities involved in the sale and leasing of motor vehicles, and many state attorneys general have been increasingly active in the area of consumer protection. Our violation of these or future requirements, laws or regulations could result in administrative, civil, or criminal sanctions against us, which may include, among other things, withheld or delayed approval of business licenses, cease and desist orders against our operations, and suspension or revocation of our existing operating licenses. As a result, we ~~are~~have ~~unable~~incurred and will continue to ~~compete~~incur capital and operating expenditures to comply with ~~our~~these ~~competitors~~requirements, ~~our~~laws, ~~results~~and ofregulations. ~~operations~~Despite the significant efforts we make to comply with these laws and ~~financial~~regulations, ~~condition~~we ~~could~~are subject, and may be ~~materially~~subject ~~adversely~~in ~~affected~~the future, to inquiries and audits from state and federal regulators. There can be no assurance that such activities will not result in material adverse effects on our business.

~~Our~~The ~~primary competitors are the “buy~~Dodd-~~here,~~Frank ~~pay-here”~~Act ~~dealerships, independent used vehicle dealers,~~ and ~~used vehicle departments of franchise dealers that operate in~~ the ~~subprime~~creation ~~segment~~ of the ~~used~~CFPB ~~vehicle~~has ~~sales industry,~~ and ~~the~~likely ~~banks,~~will ~~finance~~continue companies and indirect lenders that purchase their loans. There is no assurance that we can successfully distinguish ourselves from our competitors or compete in this industry in a cost-effective manner or at all. Moreover, if our competitors grow and strengthen through consolidation in the industry while we are unable to ~~identify~~increase attractive consolidation opportunities, we could end up at a competitive disadvantage and experience declining market share and revenue. In addition, larger companies with significant financial and other resources have periodically entered or announced plans to enter the used vehicle sales and/or finance industry, or relax their credit standards and compete with us, at least at the upper end of our ~~customer~~regulatory ~~segment.~~compliance ~~These~~efforts ~~dealerships also compete with us in areas such as the purchase of inventory, which can result in increased wholesale costs for used vehicles~~ and ~~lower~~associated ~~margins, and the dealerships and finance companies could also enter into direct competition with us at any time at the lower end of the subprime market~~costs.

~~Increased~~We ~~competition~~are ~~may~~subject ~~cause~~to ~~downward~~the ~~pressure~~Dodd-Frank onAct of 2010 (the ~~interest~~“Dodd-Frank ~~rates~~Act”), ~~that~~which werepresents ~~charge~~a oncomprehensive ~~finance~~overhaul ~~receivables~~of ~~originated~~the byrules ~~our~~and ~~dealerships,~~regulations orgoverning ~~lower~~the ~~margins~~financial services industry, orincluding ~~may~~the ~~cause~~establishment and operation of the Consumer Financial Protection Bureau (the “CFPB”) as an ~~increase~~independent inentity ~~our~~within ~~operating~~the ~~costs,~~Federal ~~all~~Reserve. ofThe ~~which~~CFPB ~~could~~has ~~have~~broad aregulatory ~~material~~authority ~~adverse~~over ~~effect~~consumer onprotection ~~our~~matters ~~results~~applicable to entities offering consumer financial services or products, including non-bank commercial companies in the business of ~~operations~~extending credit and ~~financial~~servicing ~~condition~~consumer loans.

IfThe weCFPB ~~are~~has ~~unable~~issued rules allowing it to ~~obtain~~supervise ~~sufficient~~non-bank ~~numbers~~“larger participants” in certain markets for consumer financial services and products and may in the future issue rules to supervise non-bank larger participants in the direct and/or indirect auto lending industries, which may include us. For example, in March 2013, the CFPB issued Bulletin 2013-02 highlighting its concern that the practice of ~~used~~automotive ~~vehicles~~dealers being compensated for ~~our~~arranging ~~inventory~~customer financing through discretionary markup of wholesale rates offered by financial institutions (“dealer markup”) results in a ~~cost~~significant risk of pricing disparity in violation of The Equal Credit Opportunity Act (“ECOA”). The CFPB recommended that financial institutions under its jurisdiction take steps to ensure compliance with the ECOA, which may include imposing controls on dealer markup, monitoring and addressing the effects of dealer markup policies, and eliminating dealer discretion to markup buy rates and fairly compensating dealers using a different mechanism. In December 2013, the CFPB and the U.S. Department of Justice (the “DOJ”), based on a proxy methodology that combines geography-~~effective~~based ~~manner~~and name-based probabilities, ~~our~~alleged ~~operations~~that certain presumed-minority borrowers who had obtained automobile financing from a national lender were charged higher dealer markups as a result of such lender’s policy and ~~financial~~practice ~~results~~of ~~will~~allowing bedealer ~~adversely~~markup. ~~impacted~~In connection with the investigation, the lender consented to the issuance of a consent order and agreed to pay damages, to implement a compliance plan, and to pay a monetary penalty.

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WeThe ~~require~~CFPB’s acommencement ~~large number~~ of ~~quality~~regulatory ~~used~~and ~~vehicles~~enforcement ~~for~~activities ~~our~~related ~~dealerships.~~to Weconsumer ~~acquire~~lending ~~most~~activities ofhas ~~our~~and ~~used-vehicle~~may ~~inventory~~continue ~~through~~to ~~auctions,~~affect ~~and~~us. ~~primarily~~On ~~through~~April ~~two~~12, ~~auction~~2012, ~~companies.~~the ToCFPB delivered a ~~lesser~~Civil ~~extent,~~Investigative weDemand ~~also~~to ~~acquire~~DTAG ~~used~~requesting ~~vehicles~~that ~~from~~DTAG ~~wholesalers,~~produce ~~franchised~~certain documents and ~~independent~~information ~~dealers,~~ and ~~fleet~~answer ~~owners,~~questions ~~such~~relating asto ~~leasing~~certain ~~companies~~components ~~and~~of ~~rental~~the ~~companies.~~business ~~The~~of ~~sources~~DTAG ~~from~~and its affiliates, which we ~~can~~provided. ~~purchase~~The ~~vehicles~~CFPB ofmade asupplemental ~~quality~~requests ~~and~~for ininformation aon ~~quantity~~February ~~acceptable~~21, to2013 usand ~~are~~May ~~limited~~1, ~~and~~2013, ~~there is substantial competition~~ to ~~acquire~~which ~~the~~we ~~vehicles~~also wefully ~~purchase~~responded. ~~Consequently,~~In weJanuary ~~may~~2014, ~~not~~the beCFPB ~~able~~notified tous ~~obtain~~that, ~~sufficient inventory~~ in aaccordance ~~cost-effective~~with ~~manner~~the orCFPB’s atdiscretionary ~~all.~~NORA ~~Any~~process, ~~decline~~the inCFPB ~~the~~is ~~number~~considering ofwhether orto ~~increased~~pursue ~~competition~~an ~~for~~enforcement ~~quality~~action ~~vehicles~~against ~~could~~us ~~diminish~~based ~~our~~on ~~ability~~allegations relating to ~~obtain~~our ~~sufficient~~collection ~~inventory~~practices. atIf asuch ~~price~~action ~~that~~is webrought, ~~can~~the ~~reflect~~CFPB inmay ~~retail~~seek ~~market~~injunctive ~~prices~~ and ~~would~~monetary ~~adversely affect our business~~relief.

IfWe ~~our~~understand ~~inventory~~that ora ~~other~~NORA ~~costs~~notice from the CFPB is intended to ensure that potential subjects of ~~operations~~enforcement ~~increase~~actions ~~and~~have wethe ~~are~~opportunity ~~unable~~to present their positions to ~~pass~~the ~~along~~CFPB ~~these~~before ~~costs~~an enforcement action is recommended or commenced. In response to ~~our~~the ~~customers~~NORA notice, we ~~may~~made bea ~~unable~~NORA submission on February 20, 2014, which is a written statement setting forth any reasons of law or policy why we believe the CFPB should not pursue an enforcement action against us. We continue to ~~maintain~~believe that our practices relating to loan collections are lawful. We cannot provide any assurance, however, that the CFPB will not ultimately take legal action against us or ~~grow~~that ~~margins~~the outcome of any such action, if brought, will not have a material adverse effect on our reputation, operating results, or financial condition.

~~Our~~The ~~inventory~~Dodd-Frank ~~and~~Act contains numerous other ~~costs~~provisions ~~are~~affecting ~~variable~~financial ~~and~~industry ~~dependent~~participants ~~upon~~of ~~various~~all ~~factors~~types, ~~many~~including ofthird ~~which~~parties ~~are~~that ~~outside~~we ofdeal ~~our~~with ~~control. A rise~~ in ~~vehicle~~the ~~acquisition~~course ~~cost~~of ~~could erode~~ our ~~sales~~business, ~~margins~~such ~~and~~as ~~negatively~~rating ~~affect~~agencies, ~~our~~insurance ~~results~~companies, ofand ~~operations~~investors. ~~Rising~~ ~~auction~~It ~~prices have~~ also ~~led~~provided to the ~~acquisition~~Federal ofTrade aCommission ~~higher~~(“FTC”) ~~mileage~~with new and ~~older~~expanded ~~age~~authority ~~vehicle,~~regarding ~~which~~automotive ~~could~~dealers, ~~cause an increase in reconditioning~~ and ~~warranty~~the ~~costs,~~FTC ~~both~~recently ofannounced ~~which~~an ~~would~~enforcement ~~also~~initiative ~~negatively~~relating ~~affect~~to ~~our~~the ~~sales~~advertising ~~margins~~practices ~~and~~of ~~overall~~automotive ~~profitability~~dealers. If weWe ~~incur~~believe ~~cost~~that ~~increases,~~the weimplementing ~~may~~regulations ~~seek~~of tothe ~~pass~~Dodd-Frank ~~those~~Act ~~increases~~likely ~~along~~will continue to ~~our~~have ~~customers. However,~~ the ~~income~~effect of ~~our~~increasing ~~average customer limits~~ the ~~maximum~~compliance ~~monthly~~costs ~~payment~~of operating our ~~customers~~business ~~can afford,~~ and wefurther ~~may~~impact beour ~~unable~~operating toenvironment ~~pass~~in ~~these~~other ~~costs~~substantial ~~along~~and tounpredictable ~~our~~ways ~~customers~~that incould ~~the~~have ~~form~~a ofmaterial ~~higher~~adverse ~~sales~~effect ~~prices,~~on ~~which would adversely affect~~ our ~~ability~~financial tocondition ~~maintain~~and oroperating ~~increase margins~~results. ~~Recently, used vehicle values have continued to increase.~~

WeChanges ~~rely heavily on logistics~~ in ~~transporting~~laws, vehicles for delivery from auctions to reconditioning facilities and to our dealerships. Our ability to manage this process both internally and through our network of transportation partners could cause a rise in inventory costs and disruption in inventory supply chain and distribution. Furtherregulations, ~~any disruption in the vehicle transport industry~~ or ~~the~~policies ~~cost~~may ~~of transport could~~ adversely affect our ~~results of operations~~business.

AThe ~~failure~~laws ofand regulations governing our retail, lending, servicing, debt collection, and insurance activities or ~~interruption~~the regulatory or enforcement environment at the federal level or in ~~our~~any ~~communications~~of ~~and~~the ~~information~~states ~~systems~~in ~~could~~which ~~adversely~~we ~~affect~~operate ~~our~~may ~~revenues~~change at any time and ~~profitability~~may have an adverse effect on our business. Examples of such changes or potential changes include the following:

~~Our~~• ~~business~~Additional isregulatory ~~highly~~actions ~~dependent on communications~~ and ~~information~~investigations ~~systems~~by ~~and is exposed to many types of operational risks, including~~ the ~~risk~~CFPB ~~of fraud by employees or other parties, record-keeping error, errors resulting from faulty computer or telecommunication systems, computer failures or interruption,~~ and ~~damage to computer and telecommunication systems caused by internal or external events. We periodically update or change~~ the ~~integrated~~DOJ ~~computer~~against ~~systems~~automotive ~~and~~lenders ~~other~~are ~~components~~likely ofto ~~our~~occur ~~operating systems. Any significant failure of such systems, whether as a result of third-party actions or~~ in ~~connection~~the ~~with~~future ~~planned upgrades~~ and ~~conversions~~, ~~could~~while ~~disrupt~~it ~~our~~is ~~operations~~difficult ~~and adversely affect our ability~~ to ~~collect~~predict onhow ~~contracts~~any ~~and~~such ~~comply~~changes ~~with~~might ~~legal~~impact ~~and regulatory requirements. Additionally~~us, ~~our~~any ~~systems~~adverse ~~are~~changes vulnerable to interruption or malfunction due to events beyond our control, including natural disasters and network and telecommunications failures. Our systems may also be vulnerable to unauthorized access, computer hackers, computer viruses, and other security problems. A user who circumvents security measures could misappropriate proprietary information or cause interruptions to or malfunctions in ~~operations.~~applicable Aslaws ~~a result, we may be required to expend significant resources to protect against the threat of these security breaches~~ or toregulations ~~alleviate~~resulting ~~problems~~from ~~caused~~such byactions ~~these incidents. We have backup systems~~ and weinvestigations ~~periodically test disaster recovery scenarios; however, this may not prevent a systems failure or allow us to timely resolve any systems failures. Any interruption to our systems~~ could have a material adverse ~~effect~~impact on our ~~results~~business ~~of operations~~ and ~~financial~~operating ~~condition~~results.

~~Reliance~~• We operate in some states that impose limits on the interest rates we can charge on the installment sales contracts we provide to our ~~outsourced~~customers, ~~business~~and ~~functions~~new or lower limits may harm our ability to offset increased interest expenses and could adversely affect our ~~business~~profitability and liquidity.

We• ~~outsource~~Certain astates ~~portion~~allow ofus ~~our~~to ~~collections~~apply ~~and~~for ~~internet~~ sales ~~functions~~taxes credits to ~~companies~~the ~~located~~extent ~~outside~~that the ~~contiguous~~related ~~United~~receivable ~~States.~~becomes ~~While we believe there are benefits to these arrangements, outsourcing increases our operational complexity and decreases our control~~uncollectible. WeIf ~~rely~~state onlaws ~~these~~or ~~service~~the ~~providers~~position ~~to provide a high level~~ of ~~service~~state ~~and~~taxing ~~support,~~authorities ~~which~~change ~~subjects~~with usrespect to ~~risks~~these ~~associated with inadequate or untimely service. For example~~refunds, ~~the~~we ~~outsourcing of collection functions~~ could ~~result~~experience ina ~~lower~~material ~~collection~~adverse ~~rates than we would have achieved had we performed the same functions internally~~effect. In ~~addition~~this regard, ifon ~~these~~February ~~outsourcing~~24, ~~arrangements~~2011, ~~were not renewed or were terminated or~~ the ~~services~~Nevada ~~provided~~Supreme toCourt usruled ~~were~~against ~~otherwise disrupted, we would have to obtain these services from an alternative provider or provide them using~~ our ~~internal~~sales ~~resources.~~tax Werefund ~~may~~requests befor ~~unable~~prior totax ~~replace,~~years ~~or be delayed~~ in ~~replacing, these sources and there is a risk~~ that ~~we would be unable to enter into a similar agreement with an alternate provider on terms that we consider favorable or in a timely manner~~state. InWhile ~~the~~only ~~future,~~applicable ~~we may outsource other business functions. If any of these or other risks related~~ to ~~outsourcing~~2002 ~~were~~and ~~realized~~2003, ~~our~~this ~~financial~~ruling ~~position, liquidity and results of operations~~ could beaffect ~~adversely~~our ~~affected. We~~ability ~~are also subject~~ to ~~work~~receive ~~strikes~~or ~~and~~retain ~~work~~refunds ~~stoppages~~ in ~~the~~subsequent ~~countries/regions~~tax inyears ~~which~~as ~~we operate, which could adversely affect our collections~~well.

~~Anti-outsourcing~~• Federal and state legislation has been proposed, ifand ~~adopted~~enacted in some states, that could ~~adversely~~broaden ~~affect~~restrictions ~~our~~on ~~business~~U.S. companies outsourcing their services to companies outside the U.S. Such restrictions may include tax disincentives, ~~financial~~fees ~~condition~~or penalties, intellectual property transfer restrictions, mandatory government audit requirements, and ~~results~~new ofwork ~~operations.~~visa restrictions that could impact collections and other activities that we outsource to companies located outside the U.S.

We are unable to predict how these or any other future legislative or regulatory proposals or programs will be administered or implemented or in what form, or whether any additional or similar changes to statutes or regulations, including the interpretation or implementation thereof, will occur in the future. Any such action could affect us in substantial and unpredictable ways and could have an adverse effect on our operating results and financial condition.

We are subject to environmental laws, regulations, and permits that could impose significant liabilities, costs, and obligations.

We are subject to a complex variety of federal, state, and local laws, regulations, and permits relating to the environment and human health and safety. If we violate or fail to comply with, or otherwise incur liability under these laws, regulations, or permits, incur significant costs, including fines and sanctions by regulators, clean up costs, and damages for third-party claims. These environmental requirements, and the enforcement thereof, change frequently, have become more stringent over time, and compliance may necessitate substantial capital expenditures or operating costs. A number of our facilities have a history as commercial operations involving the use of underground storage tanks. Under certain environmental laws, we could be responsible for the costs relating to any contamination at these or any of our, or our

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~~Outsourcing services and corporate functions to organizations operating in countries outside the U.S. is a topic of political discussion in many countries~~predecessors’, ~~including~~current ~~the~~or ~~United~~former ~~States. Federal~~owned ~~and~~or ~~state~~operated ~~legislation~~properties ~~has~~or ~~been~~third-party ~~proposed,~~waste ~~and~~disposal ~~enacted in some states~~sites, ~~that~~whether ~~could~~or ~~restrict~~not orwe ~~discourage~~were Uat fault.S. ~~companies~~Such ~~from~~matters ~~outsourcing~~also ~~their~~may ~~services~~lead to ~~companies~~claims ~~outside~~from ~~the~~governmental ~~United~~authorities ~~States~~and inother ~~order~~third toparties ~~address~~for ~~concerns~~fines ~~over~~or ~~the~~penalties, ~~perceived~~natural ~~association~~resource ~~between~~damages, ~~offshore~~or ~~outsourcing~~personal ~~and~~injury ~~the~~or ~~loss~~property ~~of jobs domestically~~damage. ~~The~~We ~~enactment~~cannot ofassure ~~additional~~you ~~such~~that ~~legislation~~our ~~could~~costs ~~broaden existing restrictions on outsourcing~~ and ~~impact~~liabilities ~~private~~relating ~~industry~~to ~~with~~environmental ~~measures~~matters ~~that~~will ~~include,~~not ~~but~~adversely ~~are~~affect ~~not~~our ~~limited~~operating toresults, ~~tax disincentives~~business, ~~fees~~financial ~~or penalties~~condition, ~~intellectual property transfer restrictions~~reputation, ~~mandatory government audit requirements, and new standards that have the effect of restricting the use of certain business and/~~or ~~work visas~~liquidity.

~~The~~We ~~personal~~could ~~information~~suffer ~~that~~material weeffects ~~collect~~of ~~may~~regulatory bechallenges ~~vulnerable~~ to ~~breach,~~certain ~~theft,~~transactions oreffected ~~loss,~~within ~~the occurrence of any of which could adversely affect~~ our ~~reputation~~related ~~and~~finance ~~operations~~company structure.

~~Possession~~Our ~~and~~treatment ~~use~~ of ~~personal~~certain ~~information~~intercompany intransactions within our ~~operations~~related ~~subjects~~party usfinance tocompany ~~risks and costs that could harm our business. We collect~~structure, ~~use,~~including ~~and~~the ~~retain~~tax ~~large~~treatment ~~amounts~~ of ~~personal~~intercompany ~~information~~sales ~~regarding~~of ~~our~~receivables ~~customers,~~from ~~employees,~~DTAG ~~and~~to ~~their~~DTAC ~~families,~~could ~~including~~be ~~social~~subjected ~~security~~to ~~numbers,~~review ~~tax~~by ~~return~~federal ~~information, personal~~ and ~~family~~state ~~financial~~tax ~~data, and credit card numbers~~authorities. ~~Our~~We ~~computer~~believe ~~networks~~that ~~and~~our ~~the~~intercompany ~~networks~~transactions ofare ~~certain~~standard ofwithin our ~~vendors~~industry ~~that hold~~ and ~~manage confidential information on~~ our ~~behalf~~interpretation ~~may~~of bethe ~~vulnerable~~applicable totax ~~unauthorized~~rules ~~access,~~is ~~employee~~not ~~theft~~meaningfully ordifferent ~~misuse,~~from ~~computer hackers, computer viruses, and~~ other ~~security~~companies ~~threats~~therein. ~~Confidential~~However, ~~information~~tax authorities may ~~also~~challenge ~~inadvertently~~our ~~become~~position ~~available~~causing toan ~~third~~accelerated ~~parties~~tax ~~when~~obligation, wewhich ~~integrate~~could ~~systems~~have ora ~~migrate~~material ~~data~~adverse toeffect on our ~~servers~~operating ~~following~~results anand ~~acquisition~~financial ~~or in connection with periodic hardware or software upgrades~~condition.

Due to the sensitive nature of the personal information stored on our servers, our networks may be targeted by hackers seeking to access this data. A user who circumvents security measures could misappropriate sensitive information or cause interruptions or malfunctions in our operations. Although we use security and business controls to limit access and use of personal information, a third party may be able to circumvent those security and business controls, which could result in a breach of privacy. In addition, errors in the storage, use, or transmission of personal information could result in a breach of privacy. Possession and use of personal information in our operations also subjects us to legislative and regulatory burdens that could require us to implement certain policies and procedures, such as the procedures we adopted to comply with the Red Flags Rule that was promulgated by the Federal Trade Commission under the federal Fair Credit Reporting Act and that requires the establishment of guidelines and policies regarding identity theft, and could require us to make certain notifications of data breaches and restrict our use of personal information. A violation of any laws or regulations relating to the collection or use of personal information could result in the imposition of fines against us. As a result, we may be required to expend significant resources to protect against the threat of these security breaches or to alleviate problems caused by these breaches. A major breach, theft, or loss of personal information that is held by us or our vendors, or a violation of laws or regulations relating to the same, could have a material adverse effect on our reputation and result in further regulation and oversight by federal and state authorities and increased costs of compliance.

New business ventures could expose us to business risks not previously encountered.

In the fourth quarter of 2011, we introduced an indirect lending line of the business through our wholly-owned subsidiary GO Financial. This line of business is a complement to our other operations, and does not replace DriveTime vehicle sales or financings. Although we have leveraged much of the knowledge and resources of our existing infrastructure, the third party nature of GO transactions exposes GO's portfolio to risk that has not been traditionally present in the DriveTime portfolio. We will continue to monitor and make changes to our business plan to minimize risks to the GO portfolio; however, the following risks are inherent in GO:

• GO relies on third party dealers, not owned or operated by DriveTime, for its originations; the quality and accuracy of the loans originated, including customer fraud, vehicle quality, and the presence or absence of warranties or extended services contracts covering vehicle repair, will impact the quality of receivables in our GO portfolio.

• GO deals have customer payment terms different from our traditional arrangements, but which are customary in the indirect lending business.

• The infrastructure we built to facilitate GO transactions could fail, resulting in substantial write-offs to capitalized software projects.

• GO may experience operating difficulty in certain states in which we are operating due to regulatory restrictions specific to subprime lending.

• Loan portfolio performance may prove to be unprofitable if loss rates of the GO portfolio exceed our expectations.

• The GO brand could negatively impact the DriveTime brand.

• As GO grows, it may end up with a concentration of third-party dealers in a state or states increasing credit quality and dealer risks.

• Third parties administer ancillary product offerings, such as vehicle service contracts, and if they fail to perform our loans may perform worse than anticipated and we will have the cost and risk of finding competent, cost effective alternatives in a timely manner.

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• Our third-party dealers must also comply with credit and trade practice statutes and regulations. Their failure to comply with these statutes and regulations could result in consumers having rights of rescission and other remedies.

• The sale of vehicle service contracts and other products by our third party dealers in connection with loans assigned to us is also subject to state laws and regulations. As we are the holder of loans that may, in part, finance these products, some of these state laws and regulations may apply to our servicing and collection of the loans. Although these laws and regulations do not significantly affect our business, there can be no assurance that insurance or other regulatory authorities in the jurisdictions in which these products are offered will not seek to regulate or restrict the operation of our business in these jurisdictions.

• A number of risks related to DriveTime also apply to GO, including capital to finance the business, our substantial debt, cash flow, compliance with our agreements with our lenders, the risk of being in the subprime segment of the market, interest rates, efficacy of our credit scoring model, servicing of our loans, key personnel, confidentiality of customer information, and regulatory changes and concerns.

There can be no assurance that GO will be successful, and it could have unintended consequences which would have an adverse effect on our results of operations or financial condition. GO also involves numerous other risks, including the diversion of management's attention from other business concerns.

In the first quarter of 2013, we introduced a new on-line used vehicle sales channel through Carvana, LLC, which is a wholly-owned subsidiary of DTAG. The Carvana business model is designed to facilitate the sale of a used vehicle through a sale process that is 100% on-line. Carvana is a complement to our other operations, however, and does not replace our core DriveTime businesses of vehicle sales and financings. Although we have leveraged much of the knowledge and resources of our existing infrastructure, the prospect of this new business venture presents risks to our core operations. We will continue to monitor and make changes to our business plan to minimize risks to DriveTime. However, the following risks, among others, are inherent in Carvana:

• The infrastructure we built to facilitate Carvana transactions could fail, resulting in substantial write-offs to capitalized software projects.

• Carvana may experience operating difficulty in certain states in which we are operating due to regulatory restrictions.

• The Carvana brand could negatively impact the DriveTime brand.

• Operating the Carvana business could divert excessive time and attention of DriveTime management and personnel away from core DriveTime businesses.

• Carvana is initially concentrated in Atlanta, Georgia. Any economic disruption, geographic natural disaster, or other negative impact in the local area could cause a negative financial impact to DriveTime.

• Third parties may administer ancillary product offerings, such as vehicle service contracts, and if they fail to perform our loans may perform worse than anticipated and we will have the cost and risk of finding competent, cost effective alternatives in a timely manner.

• A number of risks related to DriveTime also apply to Carvana, including capital to finance the business, our substantial debt, risks to operating cash flow, compliance with lender agreements, interest rates, efficacy of our credit scoring model, our reliance on key personnel, confidentiality of customer information, and regulatory changes and concerns.

• Carvana's business focus as an on-line retailer could be significantly affected by internet fraud, identity theft, credit card, debit card and ACH fraud.

• Carvana will rely heavily on logistics in transporting vehicles for delivery. Our ability to manage this process both internally and through a potential network of transportation partners could cause a disruption in business. Further, any disruption in the vehicle transport industry or the cost of transport could adversely affect both Carvana and DriveTime.

There can be no assurance that Carvana will be successful, and it could have unintended consequences which would have an adverse effect on our results of operations or financial condition.

We are dependent on the services of certain key personnel and the loss of their services could harm our business.

We believe that our success depends on the continued employment of our senior executive management team, including our Chief Executive Officer and President, Raymond C. Fidel, our Chief Financial Officer, Mark G. Sauder, and our Executive Vice President and General Counsel, Jon D. Ehlinger. The unexpected loss of the services of any of our key executive management personnel or our inability to attract new management when necessary could have a material adverse effect on our operations. We do not currently maintain key person life insurance on any member of our executive management team.

Additionally, our success depends on the key management personnel at our corporate offices and the dealerships in our local markets. The market for qualified employees in the automotive and finance industries and in the markets in which we operate, particularly for qualified general managers, loan managers, and collections personnel, is highly competitive and may

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subject us to increased labor costs during periods of low unemployment. We also believe that our competitors pursue many of our managerial and collections and sales and service personnel from time to time. The loss of a group of key employees in any of our markets could have a material adverse effect on our business and results of operations in that market or across many or all markets in which we operate.

If all or some portion of our employees elect to collectively bargain or join a union, these actions could adversely affect our operations.

As of December 31, 2012, none of our employees were represented by a labor union. The automotive industry is historically an industry in which there is a high degree of labor union participation. If all or some portion of our employees elects to join a labor union, we could experience increased operational costs, work stoppages or strikes, and/or barriers to communication between management and employees. These factors could lead to inefficiencies in the operation of the affected facilities or groups and could cause us to experience a material adverse effect.

We are subject to environmental laws, regulations, and permits that could impose significant liabilities, costs, and obligations.

We are subject to a complex variety of federal, state, and local laws, regulations, and permits relating to the environment and human health and safety. If we violate or fail to comply with these laws, regulations, or permits, we could be fined or otherwise sanctioned by regulators. These environmental requirements, and the enforcement thereof, change frequently, have tended to become more stringent over time, and may necessitate substantial capital expenditures or operating costs. Under certain environmental laws, we could be responsible for the costs relating to any contamination at our or our predecessors' current or former owned or operated properties or third-party waste disposal sites. We cannot assure you that our costs and liabilities relating to environmental matters will not adversely affect our results of operations, business, financial condition, reputation, or liquidity.

We could also be responsible for costs relating to any contamination at our current or formerly owned or operated properties or third party waste disposal sites. This liability may be imposed even if we were not at fault. In addition to potentially significant expenses to investigate and remediate contamination, such matters can give rise to claims from governmental authorities and other third parties for fines or penalties, natural resource damages, or personal injury or property damage.

States impose limits on the interest rates we can charge on the installment sales contracts we provide to our customers, and new or lower limits may harm our ability to offset increased interest expenses and can adversely affect our profitability and liquidity.

We operate in states that impose limits on the contract interest rate that a lender may charge, and laws or regulations that limit the interest rates that we can charge can adversely affect our profitability and liquidity. When a state limits the amount of interest that we can charge on our installment sales contracts, we may not be able to offset an increase in interest expense caused by rising interest rates or greater levels of borrowings under our credit facilities. In addition, no assurance can be given that we will not be prohibited by new state laws from charging the interest rates we are currently able to charge on our installment sales contracts or from raising interest rates above certain desired levels. Therefore, these interest rate limitations can adversely affect our profitability and liquidity.

A change in state laws, or the application thereof, relating to the extent to which we can obtain a refund of sales tax for customer defaults could have a material adverse effect on our business.

In general, we are required to collect and remit state and local sales tax on each vehicle we sell. Subject to certain requirements, certain states allow us to collect a refund of prior sales taxes paid to the extent that the receivable becomes uncollectible. If state laws change with respect to the extent to which we can claim a refund for sales tax in such situations, or state taxing authorities change their position with respect thereto, we could experience a material adverse effect. In this regard, on February 24, 2011, we received an unfavorable ruling from the Nevada Supreme Court with respect to the efficacy of certain sales tax refunds we requested for prior tax years. While only applicable to 2002 and 2003, this ruling could affect subsequent tax years as well.

Reliability and safety of vehicle manufactured products could have a material adverse effect on our results of operations.

Manufacturer recalls, product reliability, safety issues and overall vehicle quality could adversely affect the demand for used vehicles at our dealerships and adversely affect loan performance. Such issues could also expose us to litigation and negative publicity related to the sale of the vehicles in question, which could have an adverse material effect on our sales, reputation, and results of operations.

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We may be adversely affected by product liability exposure claims.

DriveTime, and the automotive industry generally, is exposed to product liability claims in the event that the failure of our products to perform to specifications results, or is alleged to result, in property damage, bodily injury, and/or death. In connection with such product liability claims, we may incur significant costs to defend such claims and we may experience material product liability losses in the future. We cannot assure you that we will have sufficient resources, including insurance to the extent it is available, to cover such product liability claims, and the outcome of various legal actions and claims could have a material adverse effect on our results of operations and financial condition.

We have programs for our customers to provide insurance covering our collateral in the event of theft or an accident. If our customers do not maintain insurance, it could negatively impact our operations and/or profitability.

Certain of our customers have difficulty obtaining and maintaining affordable insurance for their vehicles. We offer a separate collateral protection insurance program. Under this program, we offer customers dual interest collateral protection insurance administered through a third party with whom we have a contractual relationship. We do not offer a liability insurance product. There is a risk customers will not maintain collateral protection insurance, which could adversely affect our recoveries.

Failure to register our dealership sales business subsidiary in the relevant jurisdictions would cause a severe disruption in our operations.

In connection with our applications for renewal of the relevant license or registration, a state licensing authority could decide to withhold or delay approval of the relevant license or registration and prohibit DriveTime Car Sales, a subsidiary of DTAG, from operating one or more of our dealerships until certain requirements are met. We cannot anticipate what these requirements might entail or whether we will be able to comply with any such requirements in a timely manner. If the relevant license or registration is not granted for DriveTime Car Sales to operate in any state, it would cause a severe disruption in our operations in that state, which could have a material adverse effect on our business, financial condition and results of operations. We have recently expanded our operations into new states and intend to continue our expansion. A failure to attain the proper licensing and registration requirements for our expansion could disrupt our ability to further expand our business.

We could suffer a material adverse effect if the IRS challenged our position on intercompany sales of receivables.

We generally recognize losses for U.S. federal income tax purposes on the intercompany sales of receivables from DTAG to DTAC. This practice is standard within our industry and our interpretation is not meaningfully different from other companies in our industry. However, the IRS may challenge our position and seek to defer our recognition of such losses. If the IRS were able to successfully challenge our position, there could be a material adverse effect on our results of operations and financial condition.

Our Chairman and principal shareholder can direct our management and policies through his right to elect our board of directors and to control substantially all matters requiring a stockholder vote.

Ernest C. Garcia II, our Chairman and principal shareholder, beneficially owns the majority of our outstanding common stock. Certain agreements to which we are a party, including the indenture governing the notes, the agreements governing our other indebtedness, and our origination agreement with DTAC pursuant to which DTAC purchases all of the auto loan receivables we originate, limit the control Mr. Garcia otherwise could exercise over our business and operations. Mr. Garcia has the power to elect our entire board of directors and determine the terms and outcome of any corporate transaction or other matters required to be submitted to shareholders for approval, including the amendment of our certificate of incorporation, mergers, consolidations and the sale of all or substantially all of our assets. Because his interests as an equity holder may conflict with the interests of holders of the notes, he may cause us to take actions that, in his judgment, could enhance his equity but may be prejudicial to the holders of the notes.

Conflicts of interest may arise as a result of affiliations that our directors or executive officers have with Verde Investments, Inc. or other companies with which we have material relationships.

Ernest C. Garcia II, our Chairman and controlling stockholder, is also the owner of Verde Investments, Inc. ("Verde"), a company with which we have historically had material leasing and financing relationships. See “Item 13—Certain Relationships and Related Transactions, and Director Independence.” In addition, there may occur future transactions between us and Verde which could give rise to a conflict of interest on the part of Mr. Garcia. While transactions that we enter into in which a director or officer has a conflict of interest are generally permissible so long as the material facts relating to the director's or officer's relationship or interest as to the transaction are disclosed to our Board of Directors and a majority of our

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disinterested directors, or a committee consisting solely of disinterested directors, approves the transaction, any such conflict of interest could have a material adverse effect on our business, results of operations or financial condition.

Changes in accounting policies could adversely affect our reported results of operations.

We have identified several accounting policies as being “critical” to the fair presentation of our financial condition and results of operations because they involve major aspects of our business and require management to make judgments about matters that are inherently uncertain. Materially different amounts could be recorded under different conditions or using different assumptions.

Additionally, the U.S. based Financial Accounting Standards Board is currently working together with the International Accounting Standards Board on several projects to converge certain accounting principles and facilitate more comparable financial reporting between companies that are required to follow U.S. GAAP and those that are required to follow International Financial Reporting Standards (“IFRS”) outside of the U.S. These efforts may result in different accounting principles under GAAP, which may have a material impact on the way in which we report financial results in areas including, but not limited to, potential changes in accounting for leases, revenue recognition, and impairment of financial assets. The U.S. Securities and Exchange Commission (the “SEC”) may make a determination in the future regarding the incorporation of IFRS into the financial reporting system for U.S. based companies. A change in accounting principles from U.S. GAAP to IFRS, or the implementation of these or other converged or new accounting requirements, could adversely affect our reported results of operations and financial condition, and cause us to restate prior period reported results under the proposed guidance.

Item 1B. Unresolved Staff Comments

None.

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Item 2. Properties

Dealerships and Facilities

As of December 31, ~~2012~~2013, we operated 97110 dealerships and 1720 reconditioning facilities in 4450 geographic regions in 1920 states. Select information regarding these dealerships and other facilities, organized by region, is as follows:

Region	Total SQFootage ofFacilities	Date first Facilityopened	Number ofDealerships	Number ofReconditioningFacilities	DriveTimeOwnedFacilities
Atlanta	128,010	September 1997	5	1	2
Houston	168,846	June 2011	3	1	1
Dallas	103,128	September 1997	8	2	—
Atlanta	136,860	September 1997	6	1	3
Dallas	126,341	September 1997	8	2	—
Charlotte	102,534	August 2006	5	1	1
Indianapolis	95,971	April 2011	2	1	1
Houston	92,676	June 2011	2	1	1
Memphis	88,098	November 2010	2	1	1
Tampa	81,391	January 1997	5	1	2
Orlando	76,236	September 1999	6	1	—
Phoenix	71,826	December 1994	5	1	1
Denver	71,764	May 2007	2	1	—
San Antonio	68,086	March 1997	4	1	1
Columbus	47,552	September 2012	1	—	—
Las Vegas	64,944	October 1996	2	1	1
Denver	41,660	May 2007	2	1	—
Los Angeles	56,530	September 1997	4	1	—
Los Angeles	41,530	September 1997	4	1	—
Columbus	54,877	September 2012	2	1	—
Las Vegas	40,697	October 1996	2	1	1
Memphis	38,992	November 2010	1	1	1
Cincinnati	37,571	September 2011	2	—	—
Richmond	32,276	December 1999	3	1	1
Austin	31,800	November 2004	3	—	—
Nashville	26,678	December 2009	2	—	—
St. Louis	27,854	September 2012	2	—	—
St. Louis	24,000	September 2012	1	—	—
Mobile	27,517	December 2010	1	1	—
Nashville	26,678	December 2009	2	1	1
Little Rock	23,738	July 2012	1	—	—
Columbia	23,733	June 2010	1	—	—
Albuquerque	21,470	October 1997	3	1	—
Greensboro	21,137	February 2007	3	—	—
Greenville	18,950	May 2010	1	—	—
Mobile	18,017	December 2010	1	1	—
Miami	18,140	March 2013	2	—	—
Albuquerque	16,810	October 1997	3	1	—
Fayetteville	15,000	July 2010	1	—	—
Myrtle Beach	14,200	December 2012	1	—	—
McAllen	13,400	November 2012	1	—	—
Jacksonville	12,582	April 2006	3	—	—
Birmingham	12,300	October 2010	2	—	—
Norfolk	11,779	May 2005	3	—	—
Charleston	10,790	March 2011	1	—	—
Chattanooga	10,010	October 2010	1	—	—
Knoxville	9,931	December 2010	1	—	—
Oklahoma City	8,768	January 2010	2	—	—
Tulsa	8,651	July 2010	1	—	—
Huntsville	8,623	November 2012	1	—	—
Tallahassee	8,570	November 2012	1	—	—
Jackson	8,000	May 2011	1	—	—
Augusta	7,618	September 2011	1	—	—
Pensacola	7,215	March 2012	1	—	—
Savannah	6,600	November 2011	1	—	—
Oklahoma City	4,348	January 2010	1	—	—
Columbus, GA	5,316	April 2013	1	—	—
Corpus Christi	5,000	December 2013	1	—	—
Fort Myers	4,900	March 2013	1	—	—
West Palm Beach	4,272	September 2013	1	1	—
Louisville	4,217	August 2013	1	—	—
Montgomery	4,000	September 2012	1	—	—
Tucson	3,821	May 1994	1	—	—
			97	17	12
			110	20	14

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Item 3. Legal Proceedings

We are involved in various claims and actions arising in the ordinary course of business. In the opinion of management, based on consultation with legal counsel, the ultimate disposition of these matters will not have a material adverse effect on us. We believe appropriate accruals have been made for the disposition of these matters. In accordance with ASC 450, Contingencies, we establish an accrual for a liability when it is both probable that the liability has been incurred and the amount of the loss can be reasonably estimated. These accruals are reviewed monthly and adjusted to reflect the impact of negotiations, settlements and payments, rulings, advice of legal counsel, and other information and events pertaining to a particular case. Legal expenses related to defense, negotiations, settlements, rulings, and advice of outside legal counsel are expensed as incurred. At December 31, 2013, we do not have any material accruals for legal contingencies.

In August 2008, we received a Civil Investigative Demand from the Texas Office of Attorney General, Consumer Protection Division, asking for the production of certain materials. The demand indicates it is the subject of an investigation of possible violations of the Deceptive Trade Practices Act, Sections 17.46(a) and (b) in the marketing, advertising, financing, and selling of used vehicles. We provided the Texas Office of Attorney General with all requested information in August 2008. At that time, we met with the state’s Attorney General’s Office to provide them with an overview of the Company and discuss the requested materials. In addition, the Attorney General’s Office indicated that itthey would review the materials we provided to itthem and if there were any concerns, they would contact us to meet, discuss and resolve the concerns. The Texas Attorney General has requested additional information and documentation from time to time, most recently in February 2010, when it requested clarifying information limited to vehicle inspections, after sale repairs, warranty, loan servicing, and consumer concerns. We believe the request is routine in nature and we have responded accordingly. We believe we are in compliance with all applicable state laws and regulations and we intend to continue to cooperate with state officials, and we will continue to fully cooperate with the ~~Texas~~state’s Attorney General’s Office in responding to the demand and any follow up discussions with them. We believe we do not have loss contingencies related to this matter.

On April 12, 2012, the Consumer Financial Protection Bureau (the “CFPB”) delivered a Civil Investigative Demand to DTAG requesting ~~that~~ DTAG produce certain documents and information and answer questions relating to certain components of the business of DTAG and its affiliates. ~~The~~We ~~CFPB~~have ~~has~~continued ~~not~~to ~~alleged~~work aclosely ~~violation~~with bythe ~~DTAG~~CFPB ofto ~~any~~provide ~~law~~details and ~~DTAG~~clarity isrelated ~~cooperating~~to ~~with~~their ~~the~~original ~~CFPB's~~request. ~~requests~~Our ~~for~~counsel ~~information.~~had Wea ~~have~~Jan ~~provided~~29, ~~the~~2014 ~~documents~~Notice ~~and~~of ~~information~~Response ~~initially~~and ~~requested~~Advice bycall with the CFPB~~. On~~, to which we responded on February 2120, ~~2013,~~2014. We wehave ~~also~~not ~~received~~had aany ~~limited~~contact ~~request~~with tothem ~~clarify~~since ~~and~~that ~~supplement~~time. ~~certain~~See ~~information~~"—Item ~~provided~~1A. toRisk ~~the~~Factors" ~~CFPB. Such~~for additional information ~~has~~on ~~since~~the ~~been~~CFPB ~~provided~~investigation.

On March 4, 2013, Credit Acceptance Corporation filed a patent infringement complaint against DTAG, DTAC and GO in the U.S. District Court for the Central District of California, Western Division. In its complaint, the plaintiff alleges infringement of its U.S. Patent No. 6,950,897, entitled “System and Method for Providing Financing.” The complaint seeks injunctive relief as well as awards of damages and attorneys' fees. We have not yet answered the complaint but we believe we do not have loss contingencies related to this matter.

Additionally, in the ordinary course of business, we are a defendant in various other types of legal proceedings. Although we cannot determine at this time the amount of the ultimate exposure from these lawsuits, if any, based on the advice of counsel management does not expect the final outcome to have a material adverse effect on us.

Item 4. Mine Safety Disclosures

None.

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Part II

Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

There is no established public trading market for our common equity. Approximately 98.3% of our common equity is beneficially owned by our Executive Chairman and principal shareholder, Ernest C. Garcia, II. The remaining 1.7% is held by our Chief Executive Officer, Raymond C. Fidel~~, subject to vesting as described more fully under “Item 11—Executive Compensation— Compensation Discussion and Analysis—Chief Executive Officer Restricted Stock Grant~~.” See ~~also~~ Note 1213 — Shareholders’ Equity, Dividends & ~~Dividends~~Stock Compensation to our consolidated financial statements for information regarding cash dividends.

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Item 6. Selected Financial Data

The following table sets forth our selected historical consolidated financial and operating data as of the dates and for the periods indicated. The consolidated statements of operations for the years ended December 31, ~~2012~~2013, ~~2011,~~2012 and ~~2010~~2011, and data from the consolidated balance sheet as of December 31, ~~2012~~2013 and ~~2011~~2012, have been derived from our audited financial statements, which are included elsewhere in this report. The consolidated statements of operations for the years ended December 31, ~~2009~~2010 and ~~2008~~2009, and the consolidated balance sheet data as of December 31, ~~2010~~2011, ~~2009~~2010 and ~~2008~~2009, have been derived from our audited financial statements, which are not included in this report. Our historical results are not necessarily indicative of our results for any future period.

The selected historical consolidated financial and operating data are adjusted to account for the sale of GO Financial to our shareholders in December 2013. We have determined that the sale of GO Financial qualifies for and is presented as a discontinued operation based on the guidance provided in ASC 205-20-55-3. See “Note 19—Discontinued Operations” to our consolidated financial statements for more information.

The following selected financial and other data should be read in conjunction with “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes included elsewhere in this report.



	As of December 31,
	2013			2012			2011			2010			2009
Consolidated Statements of Operations Data	(Unaudited) (In thousands, except per vehicle sold data)
Total revenue	$	1,400,896		$	1,221,064		$	1,121,967		$	1,025,741		$	946,282
Income Before Income Taxes	$	33,325		$	62,416		$	90,148		$	71,086		$	52,727
Net income from continuing operations	$	31,716		$	61,222		$	88,927		$	70,682		$	51,997
Other Financial Data:
Pretax economic earnings ⁽¹⁾	$	73,449		$	64,527		$	90,148		$	71,086		$	52,727
Recurring adjusted EBITDA ⁽²⁾	$	173,965		$	162,929		$	180,532		$	197,899		$	159,478
Dealerships:
Dealerships in operation at end of period	110			97			89			85			78
Average number of dealerships	104			91			87			81			79
Retail Sales:
Number of vehicles sold	68,177			59,930			56,109			52,498			49,500
Number of vehicles leased	5,132			—			—			—			—
Total vehicles sold and leased	73,309			59,930			56,109			52,498			49,500
Loan Portfolio:
Principal balances originated	$	1,106,422		$	917,093		$	829,164		$	747,329		$	686,214
Average amount financed	$	16,229		$	15,303		$	14,781		$	14,244		$	13,867
Number of loans outstanding – end of period	150,830			140,748			137,293			134,264			127,737
Average principal outstanding	$	1,763,403		$	1,588,471		$	1,469,528		$	1,378,486		$	1,364,782
Average effective yield on portfolio ⁽³⁾	19.0		%	19.4		%	19.5		%	19.9		%	19.3		%
Allowance for credit losses as a percentage of portfolio principal	16.0		%	15.7		%	15.1		%	15.0		%	16.6		%
Portfolio delinquencies 31-90 days	13.9		%	15.1		%	10.9		%	9.1		%	7.4		%
Net charge-offs as a percentage of average principal outstanding	14.8		%	13.9		%	13.1		%	13.5		%	18.2		%
Lease Information:
Number of leases outstanding - end of period	4,293			—			—			—			—
Vehicle Lease Fleet - end of period	$	31,161		$	—		$	—		$	—		$	—
Financing and Liquidity:
Unrestricted cash and availability ⁽⁴⁾	$	134,283		$	138,400		$	230,267		$	145,837		$	40,407
	3.0x			2.8x			2.4x			2.4x			3.4x
Average total debt	$	1,551,750		$	1,263,432		$	1,100,128		$	1,141,428		$	1,047,522
Weighted average effective borrowing rate on total debt ⁽⁶⁾	5.0		%	5.7		%	6.6		%	9.2		%	10.6		%

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	As of and for the Years Ended December 31,
	As of December 31,
	2012			2011			2010			2009			2008
	2013			2012			2011			2010			2009
	(Unaudited)($ in thousands, except per vehicle sold data)
Consolidated Balance Sheet Data:	(In thousands)
Consolidated Statement of Operations Data
Cash and cash equivalents	$	30,754		$	26,478		$	25,930		$	23,677		$	21,526
Total Revenue	$	1,222,866		$	1,121,307		$	1,025,741		$	946,282		$	1,058,625
Finance receivables (7)	1,938,931			1,661,662			1,521,955			1,425,918			1,349,312
Total Costs and Expenses	$	1,162,319		$	1,031,948		$	954,655		$	893,555		$	1,057,815
Allowance for credit losses	(299,516		)	(252,590		)	(221,533		)	(208,000		)	(218,259		)
Income Before Income Taxes	$	60,547		$	89,359		$	71,086		$	52,727		$	810
Vehicle inventory	319,567			270,733			212,330			145,961			115,257
Net Income/(Loss)	$	59,353		$	88,138		$	70,682		$	51,997		$	(280	)
Total assets	2,326,054			1,989,117			1,766,829			1,568,154			1,432,080
Other Financial Data:
Deferred revenue	42,133			2,501			—			—			—
EBITDA(1)	$	153,789		$	178,484		$	182,939		$	176,454		$	111,980
Total debt	1,686,501			1,422,279			1,221,380			1,070,207			1,087,215
Adjusted EBITDA(1)	$	160,083		$	179,642		$	197,899		$	159,478		$	104,515
Long term debt	1,080,604			928,916			832,901			861,500			618,679
Dealerships:*
Shareholders’ equity	488,024			467,553			457,849			418,767			293,145
Dealerships in operation at end of period	97			89			85			78			86
Average number of vehicles sold per dealership per month	55			54			54			52			49
Retail Sales:*
Number of used vehicles sold	59,930			56,109			52,498			49,500			55,415
Average age of vehicles sold (in years)	6.0			5.4			4.3			4.1			4.1
Average mileage of vehicles sold	86,972			79,741			71,300			68,076			67,428
Per vehicle sold data:
Average net revenue per vehicle sold	$	15,360		$	14,940		$	14,491		$	14,029		$	14,378
Average cost of used vehicle sold	$	10,144		$	9,704		$	9,166		$	7,967		$	8,612
Average gross margin	$	5,216		$	5,236		$	5,325		$	6,062		$	5,766
Gross margin percentage	34.0		%	35.0		%	36.7		%	43.2		%	40.1		%
Loan Portfolio:*
Principal balances originated	$	917,093		$	829,164		$	747,329		$	686,214		$	789,360
Average amount financed per origination	$	15,418		$	14,781		$	14,244		$	13,867		$	14,250
Number of loans outstanding – end of period	140,748			137,293			134,264			127,737			125,070
Principal outstanding – end of period	$	1,601,710		$	1,466,680		$	1,381,092		$	1,312,216		$	1,342,855
Average principal outstanding	$	1,588,471		$	1,469,528		$	1,378,486		$	1,364,782		$	1,410,292
Average effective yield on portfolio (2)	18.9		%	19.5		%	19.9		%	19.3		%	19.3		%
Allowance for credit losses as a percentage of portfolio principal	15.7		%	15.1		%	15.0		%	16.6		%	18.1		%
Portfolio performance data:*
Portfolio delinquencies 31-90 days (3)	15.1		%	10.9		%	9.1		%	7.4		%	9.4		%
Principal charged-off as a percentage of average principal outstanding	23.4		%	23.0		%	22.0		%	26.6		%	30.3		%
Recoveries as a percentage of principal charged-off	40.3		%	42.8		%	38.5		%	31.7		%	29.4		%
Net charge-offs as a percentage of average principal outstanding	13.9		%	13.1		%	13.5		%	18.2		%	21.4		%
Financing and Liquidity:*
Unrestricted cash and availability (4)	$	138,402		$	230,267		$	145,837		$	40,407		$	50,232
Ratio of net debt to shareholder's equity (5)	2.8x			2.4x			2.4x			3.4x			3.9x
Total average debt	$	1,263,432		$	1,100,128		$	1,141,428		$	1,047,522		$	1,153,122
Weighted average effective borrowing rate on total debt (6)	5.7		%	6.6		%	9.2		%	10.6		%	8.4		%

27(1) Pretax Economic Earnings is pretax income from continuing operations plus the change in deferred revenue net of expected costs associated with ancillary products.

~~Table~~(2) See definition of ~~Contents~~Recurring Adjusted EBITDA in Item 7—Management's Discussion and Analysis—Non GAAP discussion.

	As of December 31,
	2012			2011			2010			2009			2008
	($ in thousands)
Consolidated Balance Sheet Data:
Cash and cash equivalents	$	26,480		$	25,930		$	23,677		$	21,526		$	25,533
DriveTime and GO Finance receivables (7)	1,675,578			1,495,364			1,408,741			1,340,591			1,375,019
Allowance for credit losses	(252,590		)	(221,533		)	(208,000		)	(218,259		)	(242,600		)
Inventory	270,733			212,330			145,961			115,257			100,211
Total assets	1,989,117			1,766,829			1,568,154			1,432,080			1,430,738
Total debt (8)	1,422,279			1,221,380			1,070,207			1,087,215			1,107,067
Shareholders’ equity	467,553			457,849			418,767			293,145			266,008


⁽³⁾	^{Average effective yield represents the interest income earned at the contractual rate (stated APR) less the write-off of accrued interest on charged-off loans , plus interest earned on investments held in trust and late fees earned.}

*Denotes Selected Financial Data which is only representative of DriveTime and excludes GO.

(1) See definition of EBITDA and Adjusted EBITDA in Management's Discussion and Analysis - Non GAAP discussion.

(2) Average effective yield represents the interest income earned at the contractual rate (stated APR) less the write-off of accrued interest on charged-off loans and amortization of loan origination costs (which includes the write-off of unamortized loan origination costs on charged-off loans), plus interest earned on investments held in trust and late fees earned.

(3) Delinquencies are presented on a Sunday-to-Sunday basis, which reflects delinquencies as of the nearest Sunday to period end. Sunday is used to eliminate any impact of the day of the week on delinquencies since delinquencies tend to be higher mid-week. We modified our charge-off policy in December 2011. See Item 7.—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Factors Affecting Comparability—Modification to

Charge-off Policy, for more information.


⁽⁴⁾	^{Unrestricted cash and availability consists of cash and cash equivalents plus available borrowings under the portfolio warehouse, residual, and inventory facilities, based on assets pledged or available to be pledged to the facilities.}

(5) Net debt is calculated as total debt less restricted cash and investments held in trust securing various debt facilities. ~~Ratio~~Adjusted ~~of net debt to~~ shareholders’ equity is calculated as ~~net debt divided by~~ total shareholders’ equity plus deferred income.

(6) Weighted average effective borrowing rate includes the effect of ~~unused line fees and~~ amortization of discounts, ~~and~~ debt issuance costs and unused line fees.

(7) Includes ~~DriveTime~~ principal balances, recovery receivables, accrued interest, and capitalized loan origination costs~~, and GO carrying value of dealer finance receivables~~.

(8) Total debt excludes accounts payable, accrued expenses, and other liabilities.

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations and our liquidity and capital resources should be read in conjunction with our consolidated financial statements and related notes that appear elsewhere in this report. In addition to historical financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this report, particularly in “Item 1A—Risk Factors” and “Special Note Regarding Forward-Looking Statements.”

Overview

We are the leading used vehicle retailer in the United States with a primary focus on the sale and financing of quality vehicles to the subprime market. Through our branded dealerships, we provide our customers with a comprehensive end-to-end solution for their automotive needs, including the ~~sale,~~ financing, and maintenance of their vehicles. As of December 31, ~~2012~~2013, we ~~owned and~~ operated 97110 dealerships and 1720 reconditioning facilities located in 4450 geographic regions throughout 1920 states. For the year ended December 31, ~~2012~~2013, we sold 59and leased 73,~~930~~309 vehicles, generated $1.24 billion of total revenue, and $~~160~~174.10 million of Recurring Adjusted EBITDA. As of December 31, ~~2012~~2013, our loan portfolio had a total outstanding principal balance of $1.69 billion. We maintain our loan portfolio and related financings on our balance sheet.

Fiscal ~~2012~~2013 Highlights

• ~~Total~~Completed ~~revenue~~the ~~increased~~unbundling 9%of toour ~~$1.2~~ancillary ~~billion~~products infrom ~~2012,~~the ~~from~~price ~~$1.1~~of ~~billion~~the vehicle in ~~2011~~the fourth quarter 2013.

• ~~Unit~~Designed ~~sales~~and ~~increased~~implemented 7%the toCancel ~~59,930~~Anytime Lease™ in ~~2012,~~all ~~from~~dealerships ~~56,109~~during ~~in 2011~~2013.

• ~~Originations~~Total revenue increased 11by 15% to $~~917.~~1.4 ~~million~~billion in 2013, compared to $~~829~~1.2 ~~million~~billion in ~~2011~~2012.

• GONumber ~~Financial~~of ~~increased~~vehicles ~~its~~sold ~~active~~or ~~dealer~~leased ~~base~~increased by 22% to ~~191~~73,309 ~~dealers~~in ~~and~~2013, ~~funded~~compared ~~$45.4~~to ~~million~~59,930 financed in ~~advances~~2012.

• WeOriginations ~~opened~~increased 10by ~~stores~~21% into ~~nine~~$1.1 ~~new geographic regions including: Pensacola~~billion, ~~Florida;~~compared ~~Little~~to ~~Rock, Arkansas; Columbus, Ohio; Montgomery, Alabama; St~~$917.1 ~~Louis,~~million ~~Missouri;~~originated ~~McAllen,~~in ~~Texas; Tallahassee, Florida; Huntsville, Alabama, and Myrtle Beach, South Carolina~~2012.

• We ~~completed~~opened ~~two~~13 ~~securitizations~~stores byin ~~issuing~~six annew ~~aggregate~~geographic ofregions ~~$482.2~~including: ~~million~~Fort ofMyers, ~~asset~~Miami ~~backed~~and ~~securities~~West Palm Beach, Florida; Columbus, Georgia; Louisville, Kentucky and Corpus Christi, Texas.

• InWe ~~December~~completed ~~2012~~two wesecuritizations ~~executed~~by aissuing ~~$350.0~~an ~~million~~aggregate ~~bank~~of ~~term financing secured by~~ $~~458~~468.09 million of ~~finance~~asset-backed ~~receivables~~securities.

• ~~Entered~~We ~~and~~issued ~~terminated~~an ~~definitive~~additional ~~agreements~~$50.0 tomillion ~~sell~~of ~~DTAG~~Senior ~~and~~Secured ~~DTAC~~Notes inat ~~two~~a ~~separate~~price ~~transactions~~of -111.0%, ~~See~~resulting in an effective "~~Termination~~yield ofto ~~Material~~first ~~Definitive~~call ~~Agreements~~date" ~~immediately~~of ~~following~~7.67%.

~~Termination~~• In December 2013 we sold all membership interests of ~~Material~~GO ~~Definitive~~Financial ~~Agreements~~to our shareholders.

~~On September 11, 2012, DTAG and DTAC entered into definitive agreements to sell DriveTime in separate~~22

~~transactions.~~Table ~~Pursuant to the definitive agreements, DTAC agreed to sell its finance receivable portfolio, which consists~~ of vehicle related installment sales contracts, certificates representing its residual interests in securitizations of finance receivables, and certain other assets to Santander Consumer USA Inc. Immediately thereafter, a group of third-party investors was to purchase all of the outstanding stock of DTAG and DTAC, effectively acquiring DTAG's used vehicle dealership operations, including its owned and leased dealerships and reconditioning and other facilities located throughout the United States. In connection with the pending sale of DriveTime, on September 24, 2012, we commenced an offer to purchase and consent solicitation with respect to our outstanding Senior Notes. Contents

OnDiscontinued November 14, 2012, we terminated the definitive agreements entered into on September 11, 2012 to sell DriveTime due to certain unsatisfied conditions to the closings of the transactions contemplated therein. We also terminated and withdrew the offer to purchase and consent solicitation commenced on September 24, 2012.Operation

On December 5, 2013, DTAC and GFC Lending ("GO Financial") entered into an agreement to sell GO Financial to the shareholders of DTAC. In consideration for the sale of GO Financial, DTAC received aggregate cash proceeds of $85.1 million and notes from the shareholders in the principal amount of $28.5 million. Through the sale of GO Financial we eliminated our direct lending operating segment. We have determined the sale of GO Financial qualifies for and is presented as a discontinued operation based on the guidance provided in ASC 205-20-55-3, and that we currently operate with only one reportable segment for operations. See Note 19 — Discontinued Operations to our consolidated financial statements for further information.

Statement of Operations—Line Item Descriptions

Revenue

Sales ~~of used vehicles~~revenue

We derive a significant portion of our revenue from the sale of used vehicles and related ancillary products. Ancillary products include items such as extended vehicle service contracts ("VSC"), Guaranteed Asset Protection ("GAP") and GPS Monitoring Subscription ("GPS"). Revenue from sales of used vehicles is derived by the number of vehicles sold multiplied by the sales price per vehicle. ~~Sales~~and ~~revenue~~ is reported net of a reserve for expected returns. Factors affecting revenue from sales of used vehicles and ancillary products include the number of used vehicles sold, cost of used vehicles sold, penetration rate of ancillary products and the price at which we sell our vehicles and products.

29The number of used vehicles we sell depends on the volume of customer applications received and the conversion rate from customer application to sale. Application volume is a function of advertised vehicle prices, number of regions, number of dealerships, advertising, customer referrals, repeat customer volume, other marketing efforts, competition from other used car dealerships, availability of credit from other subprime finance companies and general economic conditions. The conversion rate from customer application to sale is a function of competitive pricing, underwriting standards, customer sales experience, customer affordability, selection of vehicle inventory and ancillary products available. The price at which we sell our vehicles is dependent on base inventory cost, reconditioning costs and our pricing strategy. The price at which we sell our ancillary products is dependent on penetration rates, competitive pricing, product features and regional and statutory restrictions.

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returns, and net of deferred service contract revenue, where applicable. Factors affecting revenue from sales of used vehicles include the number of used vehicles we sell and the price at which we sell our vehicles.

The number of used vehicles we sell depends on the volume of customer applications received and the conversion rate from customer application to sale. Application volume is a function of the number of dealerships, advertising, customer referrals, repeat customer volume, other marketing efforts, competition from other used car dealerships, availability of credit from other subprime finance companies, and general economic conditions. The conversion rate from customer application to sale is a function of our underwriting standards, customer sales experience, customer affordability, vehicle inventory, and warranty provided. The price at which we sell our vehicles is dependent on base inventory cost, reconditioning costs, and our pricing strategy.

Interest income

Interest income consists of interest earned on finance receivables, net of amortization of loan origination costs, plus late payment fees and interest earned on investments held in trust. We write-off accrued interest on charged-off loans as a reduction to interest income. Interest income is affected by (i) the principal balance of our loan portfolio, (ii) the average APR of our loan portfolio, and (iii) the payment performance by our borrowers on their loans.

~~Dealer Finance and~~ Other Income

~~Dealer~~Other ~~finance and other~~ income consists primarily of third party GPS revenue ~~recognized~~and lease revenue. GPS revenue is provided from GOthe ~~Financial's~~sale ~~dealer~~of ~~finance~~GPS ~~receivables~~units ~~under~~by Inilex our consolidated majority owned telemetry subsidiary. Factors affecting GPS revenue are the ~~effective~~number ~~interest~~of ~~method~~affiliated dealers, number of vehicles sold per dealer and ~~income~~price ~~from~~at ~~other~~which ~~ancillary~~the ~~products~~units ~~offered~~are sold. Lease revenue is driven by GOthe ~~Financial~~number of vehicles leased, ~~respectively~~the type of vehicle leased, term of lease, origination fees, lease payment performance and our pricing strategies.

Costs and Expenses

Cost of ~~used vehicles sold~~sales

Cost of ~~used~~sales ~~vehicles sold~~ includes the cost to acquire vehicles, ~~reconditioning~~the ~~and~~cost ~~transportation~~to ~~costs~~recondition ~~associated~~and ~~with~~transport ~~preparing~~each ~~the~~vehicle ~~vehicles~~in preparation for resale, ~~vehicle~~and ~~warranty,~~the ~~and~~cost ~~other~~of ~~related~~ancillary ~~costs~~products. The cost to acquire vehicles includes the vehicle purchase price, auction fees, salaries and wages, ~~and~~reconditioning ~~other~~center overhead and buyer related costs. AFor units sold where a service contract was bundled with the price of the vehicle (mostly pre-2013 sales), a liability for the estimated cost of vehicle repairs ~~under~~was ~~our~~established ~~DriveCare®~~at ~~limited~~the ~~vehicle~~time ~~warranty~~of ~~program~~sale isby ~~established~~charging atcost ~~the~~of ~~time~~sales. aRepair ~~used~~expenses ~~vehicle~~related isto ~~sold~~separately bypriced ~~charging~~service ~~cost~~contracts ofis ~~used~~recorded ~~vehicles~~to ~~sold~~cost sales when incurred.

The cost of ~~used~~sales ~~vehicles sold~~ is affected by a variety of factors, including the following: (i) the cost of vehicles purchased at auction, (ii) the supply and demand of vehicles purchased at auction which affects the auction market, (iii) the quality, make, model, and age of vehicles acquired, (iv) transportation costs, (v) reconditioning parts and labor costs along with costs to operate our reconditioning facilities, and (vi) ~~warranty~~vehicle ~~costs~~service contract claims and expenses.

Provision for credit losses

Provision for credit losses is the charge recorded to operations to maintain an allowance for credit losses adequate to cover losses inherent in ~~the~~our loan portfolio. We charge- off the entire principal balance of receivables that are contractually 91 or more days past due at the end of athe month unless the customer has made a qualifying minimum payment ~~within the previous 30 days from month-end~~, in which case, the customer loan would not charge- off until ~~121~~120 days contractually past due. ~~At time of charge-off, we record a receivable for estimated recoveries on charged-off receivables, which is included in other assets.~~ The allowance for credit losses varies based on size of the loan portfolio and the expected performance of the loans. Loan performance is a function of the underlying credit quality of the portfolio, the effectiveness of collection activities, auction values for repossessed vehicles, other ancillary collections, and overall economic conditions.

We anticipate the allowance for credit losses to grow as we increase origination volume and grow our portfolio. However, the allowance as a percentage of portfolio principal may increase or decrease based on the underlying performance of loans originated, value of collateral, and the change in credit grade mix of loans originated.23

Interest expense

Non-portfolio debt interest expense consists of interest expense and related amortization of discounts and debt issuance costs on our senior unsecured notes payable, inventory facility, real estate mortgage financing, and an equipment note payable. Non-portfolio debt interest expense is dependent on the amount of indebtedness and the interest expense associated therewith, both of which are dependent on the financial markets and economy as a whole.

Senior secured debt interest expense consists of interest expense and related amortization of discount and fees on our 12.625% Senior Secured Notes due 2017.

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of the loan portfolio and the expected performance of the loan portfolio. Loan performance is a function of the underlying credit quality of the portfolio, the effectiveness of collection activities, auction values for repossessed vehicles, other ancillary collections, ancillary product refunds and overall economic conditions.

We generally anticipate the dollar amount of allowance for credit losses to grow as we increase origination volume and grow our portfolio. However, the allowance as a percentage of portfolio principal may increase or decrease based on the underlying performance of loans originated, value of collateral, refunds for ancillary products and the change in credit grade mix of loans originated.

Interest expense

Portfolio debt interest expense consists of interest and related amortization of debt issuance costs on our portfolio warehouse facilities, securitizations, bank term financing, and term residual financing. Portfolio interest expense fluctuates based on the average size of our loan portfolio, average borrowings against loan collateral, and market rates available in the securitization market.

Non-portfolio debt interest expense consists of interest expense and related amortization of discounts and debt issuance costs on our inventory facility, mortgage note payable, real estate facility and equipment note payable. Non-portfolio debt interest expense is determined by the amount of indebtedness and interest expense associated therewith, both of which are dependent on the financial markets and economy as a whole.

Senior secured debt interest expense consists of interest expense and the related amortization of premium, discount and other fees on our Senior Secured Notes.

Selling and marketing

Selling and marketing expenses ~~are~~include ~~generally~~the ~~affected by sales volume,~~ cost of advertising media, and ~~our~~other marketing ~~strategy~~activities. Selling and marketing expenses ~~include~~are ~~advertising~~influenced by the number of regions and ~~marketing~~dealerships, ~~related~~sales ~~costs.~~volume and changes in marketing strategy.

General and administrative

General and administrative expenses include compensation and benefits, corporate overhead, software, property and property-related expenses, collection expenses on our portfolio, ~~store closing costs,~~ and other ancillary expenses, such as professional fees and services.

General and administrative expenses increase and decrease primarily as a result of costs associated with expansion and contraction of our dealership base. As we grow our portfolio, certain collection related costs may increase as we manage a larger servicing platform.

~~Loss on extinguishment of debt~~Depreciation

~~Loss~~Depreciation onexpense ~~extinguishment~~includes ofdepreciation ~~debt~~for ~~represents~~all ~~the difference between the carrying value~~ of ~~the~~our ~~debt~~buildings, weimprovements, ~~repurchased~~furniture, equipment and ~~the~~lease ~~purchase~~fleet. Depreciation ~~price~~will atincrease ~~which~~as we ~~repurchased~~expand ~~the~~our ~~debt,~~dealership ~~net~~operations ofand ~~the~~as ~~write-off~~we ofcontinue ~~unamortized~~to ~~debt~~grow ~~issuance~~our ~~costs~~lease ~~and discounts~~fleet.

Critical Accounting Policies

The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with United States generally accepted accounting principles (GAAP). The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, revenue and expenses, and related disclosures of contingent assets and liabilities at the date of our financial statements. Actual results may differ from these estimates under different assumptions or conditions, impacting our reported results of operations and financial condition.

Certain accounting policies involve significant judgments and assumptions by management, which have a material impact on the carrying value of assets and liabilities and the recognition of income and expenses. Management considers these accounting policies to be critical accounting policies. The estimates and assumptions used by management are based on historical experience and other factors, which are believed to be reasonable under the circumstances. The significant accounting policies which we believe are the most critical to aid in fully understanding and evaluating our reported financial results are described below.

Revenue Recognition ~~- DriveTime~~

Revenue is recognized differently for each of the products we sell. Revenue from the sale of used vehicles is recognized upon delivery, when the sales contract is signed, and the agreed-upon down payment or purchase price has been received. ~~Sales~~Revenue ~~of used vehicles include revenue~~ from the sale of used vehicles atis ~~the~~recorded ~~contractual sales price,~~ net of athe reserve for returns and ~~excludes~~ sales tax. The reserve for returns is estimated using historical experience and trends and could be affected if future vehicle returns differ from historical averages. A 10% increase in our rate of returns would result in a $0.2 million ~~and $0.1 million~~ increase in our sales return allowance (and a corresponding decrease in revenue) for each of the years ended December 31, ~~2012~~2013 and ~~2011, respectively~~2012. Revenue is recognized at time of sale since persuasive evidence of an arrangement in the form of an installment sales contract exists, we have delivered the vehicle to the customer, transferred title, the sale has a fixed and determinable price, and collectability is reasonably assured.

Interest income consists of interest earned on finance receivables, net of amortization of loan origination costs, plus late payment fees and interest earned on investments held in trust. Interest income is recognized on the accrual basis, when earned, based on a simple interest method. Finance receivables continue to accrue interest until repayment or charge-off. Customer loans may be prepaid without penalty. Direct loan origination costs related to loans originated at our dealerships are deferred and charged against interest income over the life of the related loans using the effective interest method.24

Revenue Recognition - GO Financial

We recognize revenue for dealer finance receivables (Dealer Finance Income) under the effective interest method, by applying a loss adjusted forecast of cash flows for each dealer pool, such that revenue is recognized on a level-yield basis. Open pools establish an effective yield at either their first fiscal quarter, or upon maturation of the pool. The effective yield established is held constant for an open pool until pool closure, unless circumstances warrant a yield adjustment or impairment assessment prior to pool closure. For each accounting period subsequent to pool closure, expected cash flows are re-estimated. Deterioration in expected cash flows, both in the open and closed pool stage, is reflected as a provision for loan loss and corresponding allowance for credit losses, at the pool level. Any subsequent improvement in expected cash flows of the impaired pool(s) will first reverse any previous allowance for credit loss and be prospectively reflected as an increase in the pool yield. For closed pools, if the re-estimation of expected cash flows results in a higher effective yield, an increase in the pool yield is reflected prospectively.

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Revenue from the sale of VSC, GAP and GPS is deferred at the time of sale and recognized over time. The requirement to defer revenue related to the sale of our ancillary products as separately price products will have a significant impact on future GAAP earnings, however, the economic margin and underlying cash flow of selling these products has not changed. We believe the net economic benefit of selling these products will be positive to the Company, as we anticipate that the volume of applications and sales will increase as our vehicle price becomes more comparable to others in the marketplace. For the years ended December 31, 2013 and 2012, the deferred net impact to GAAP revenues of our decision to separately sell these products was $39.6 million and $2.5 million, respectively.

We lease vehicles to customers under a Cancel Anytime Lease™ agreement, therefore, leased vehicles are classified as operating leases with lease revenue recognized as payments are received. Origination fees received at lease inception are deferred and recognized on a straight line basis over the term of the lease. Lease revenue is recorded within other income on the consolidated statements of operations. The GAAP earnings impact will become greater in future years if we expand our leasing program. We anticipate the economic benefit of our leasing program will be positive as we believe the increase in financing options will allow us to attract a broader range of customers.

Allowance for Credit Losses

DriveTime maintains an allowance for estimated credit losses onas anof ~~aggregate~~each ~~basis~~reporting atdate ~~a level we consider sufficient~~ to ~~cover~~provide ~~probable~~for credit losses inherent in our loan portfolio. The ofallowance ~~receivables~~estimate asconsiders ~~of each reporting date utilizing~~ a loss ~~emergence~~emergent period, ~~to cover estimated losses. The allowance takes into account~~ historical credit loss experience, including the timing, frequency and severity of losses. ~~This~~Our ~~estimate~~analysis ~~of existing probable credit losses inherent in the portfolio~~ is primarily based onupon monthly origination static pool ~~analyses~~data ~~by month of origination based~~ on origination principal, credit grade mix and deal structure, including down payment and term. The evaluation of the adequacy of the allowance also considers factors and assumptions regarding the overall portfolio quality, delinquency ~~status~~trends, ~~the~~ value of the underlying collateral, current economic conditions that may affect the borrowers’ ability to pay, and the overall effectiveness of collection efforts.

The static pool loss curves by grade are adjusted for actual performance to date, and historical seasonality patterns. The forecasted periodic loss rates, which drive the forecast for estimated gross losses (before recoveries) are calculated by factoring amortization speed and origination terms. Charge-offs have a natural seasonality pattern such that they are typically lower during the first and second quarters of each calendar year because customers tend to have additional money from tax refunds to apply to their loans, compared to the third and fourth quarters when charge-offs tend to increase. Recoveries are estimated using historical unit and dollar static pool recovery activity to forecast recoveries for estimated charge-offs at the balance sheet date. The forecasted recovery rates (on a per unit basis) are based on the historical unit recovery trend by recovery type ~~and~~as adjusted for ~~the~~ estimated ~~impact~~impacts of economic and market conditions. Recovery estimates include proceeds from selling repossessed vehicles at auction, sales tax credits, insurance, refunds to be applied from canceled or terminated VSC and GAP, bankruptcy collections, and deficiency collections.

The allowance model is sensitive to changes in assumptions, such that an increase or decrease in our forecasted net charge-offs would increase or decrease the allowance as a percentage of principal outstanding required to be maintained. The amount of our allowance is sensitive to losses within credit grades, recovery values, deal structure, ~~the~~ loss emergence period and overall credit grade mix of the portfolio. In the event loss assumptions used in the calculation of ~~the~~our allowance ~~for credit losses~~ were to increase, ~~there would be~~ a corresponding increase in the amount of the allowance ~~for~~would ~~credit losses~~result, which would decrease the net carrying value of finance receivables and increase the amount of provision for credit losses recorded, thereby decreasing net income. A 5.0% increase in our frequency loss assumption would increase the allowance for credit losses and our provision for credit losses by $1112.02 million and $1011.40 million as of December 31, ~~2012~~2013 and ~~2011~~2012, respectively. Also, a 5.0% decrease in our assumed recoveries per loan charged-off, would result in an increase to the allowance for credit losses and provision for credit losses of $6.16 million and $6.01 million as of December 31, ~~2012~~2013 and ~~2011~~2012, respectively. Our ability to forecast net charge-offs and track static pool net losses by month of origination are a critical aspect of this analysis.

Although it is reasonably possible that events or circumstances could occur in the future that are not presently foreseen, which could cause actual credit losses to be materially different from the recorded allowance for credit losses, we believe that we have given appropriate consideration to the relevant factors and have made reasonable assumptions in determining the level of the allowance. Our credit and underwriting policies, adherence to such policies, and the execution of collections processes have a significant impact on collection results, as does the economy as a whole. Changes to the economy, unemployment, auction prices for repossessed vehicles, and collections and recovery processes could materially affect our reported results.

See “Revenue Recognition - GO Financial” for a description of allowance for credit losses on GO finance receivables.

Recovery Receivables

Recovery receivables are a component of finance receivables and consist of estimated recoveries to be received on charged-off ~~receivables~~vehicle loans, including proceeds from selling repossessed vehicles at auction, ~~along~~net ~~with~~of sales tax, insurance proceeds, bankruptcy and deficiency collections. The recovery amount from selling repossessed vehicles at auction is a forecast of vehicles to be recovered from loans previously charged-off and vehicles currently in our possession. Based on our extensive experience and historical database of auction recoveries, we estimate the number of units we will recover and the value ~~that~~ we will receive for these vehicles at auction. Our forecast utilizes historical data with respect to recovery rates, values, and time from charge-off to repossession, as well as seasonal patterns in prices at wholesale auctions. In order to estimate auction recoveries we utilize historical static pool unit recovery ~~rates~~dollars, as adjusted for recent market trends, to arrive at the forecasted recovery dollars by static pool month of charge-off. A 1.0% decrease in the estimated value of vehicles at auction at December 31, 2013 would result in a decrease in net income of approximately $1.2 million. Insurance, bankruptcy and deficiency collections are estimated using historical trends adjusted for changes to recovery practices. Changes in recovery receivables are treated as increases or decreases to net charge-offs and ultimately the allowance for credit losses.

~~Valuation of Inventory~~25

Inventory consists of used vehicles held-for-sale or currently undergoing reconditioning and is stated at the lower of cost or market value. Vehicle inventory cost is determined by specific identification. Direct and indirect vehicle reconditioning costs including parts and labor, costs to transport the vehicles to our dealership locations, buyer costs, and other incremental costs are capitalized as a component of inventory cost. Determination of the market value of inventory involves assumptions regarding wholesale loss rates derived from historical trends and could be affected by changes in supply and demand at our retail locations and at the auctions. A 1.0% decrease in the valuation of our inventory at December 31, 2012 would result in a decrease in net income of approximately $2.7 million.

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Valuation of Inventory

Inventory consists of used vehicles held-for-sale or currently undergoing reconditioning and is stated at the lower of cost or market value. Vehicle inventory cost is determined by specific identification. Direct and indirect vehicle reconditioning costs including parts and labor, overhead, costs to transport the vehicles to our reconditioning and dealership locations, buyer costs, and other incremental costs are capitalized as a component of our inventory. Determination of the market value of inventory involves assumptions regarding wholesale loss rates derived from historical trends and could be affected by changes in supply and demand at our retail locations and at auction. A 1.0% decrease in the valuation of our inventory at December 31, 2013 would result in a decrease in net income of approximately $3.2 million.

Secured Financings

We sell loans originated at our dealerships to ~~our~~ bankruptcy-remote securitization subsidiaries, which, in turn, transfer the loans to separate trusts that issue notes and certificates collateralized by these loans. The notes (asset-backed securities) are sold to investors, and we retain the certificates. We continue to service all securitized loans. We have determined ~~that~~ the trusts ~~are~~to be variable interest entities ~~and~~with ~~that~~ DTAC isbeing the primary beneficiary ~~of those trusts~~. Therefore, loans included inwithin the securitization transactions are recorded as finance receivables, ~~and~~with the asset-backed securities ~~that are~~ issued by the trusts ~~are~~ recorded as a component of portfolio term financings in the accompanying consolidated balance sheets.

~~Limited~~Note: ~~Warranty~~See Note 2 to the Consolidated Financial Statements - Significant Accounting Policies, appearing elsewhere in this document for more detailed information regarding our accounting policies.

A liability for the estimated cost of vehicle repairs under our DriveCare® limited warranty is established at the time a used vehicle is sold by charging costs of used vehicles sold. The liability is evaluated for adequacy through an analysis based on the program’s historical performance of cost incurred per unit sold, management’s estimate of frequency of vehicles to be repaired and severity of claims based on vehicles currently under warranty, the make, mileage, and age of vehicles under warranty, which are based on the program’s historical performance and our expectation of future usage. These assumptions are further affected by mix, mileage, and age of vehicles sold and our ability to recondition vehicles prior to sale. A 5.0% increase in our warranty frequency assumptions related to warranty usage and a 5.0% increase in our warranty severity assumptions would result in a $0.9 million increase in our warranty accrual at December 31, 2012, and a corresponding reduction in net income.

Factors Affecting Comparability

We have set forth below selected factors that we believe have had, or can be expected to have, a significant effect on the comparability of recent or future results of operations:

Revenue Recognition

Beginning in the fourth quarter of 2012 we began offering our DriveCare® ~~limited~~extended ~~warranty~~vehicle service contract as a separately priced ~~service~~optional ~~contract~~product in ~~our~~certain regions in which we operate, with all dealerships ~~located~~offering inthe ~~Tennessee~~service contract as a separately priced product by the end of 2013. In addition, ~~Virginia~~during 2013 we began offering GAP and ~~Ohio~~GPS as separately priced optional products. As a result, ~~the~~ revenue ~~and~~associated ~~costs~~with ofseparately ~~the~~sold ~~sale~~VSC, ofGAP ~~these~~and ~~service~~GPS contracts is deferred and recognized over the life of the ~~warranty contract~~agreement, in relation to the usage and expected duration of the contracts. AtFor ~~December~~the years ending December 31, 2013 and 2012, the ~~amount~~gross ofnegative ~~deferred~~impact ~~revenue~~to ~~(and~~GAAP revenue ~~recognized)~~due onto the ~~consolidated~~deferment ~~balance~~of ~~sheet~~revenue ~~and~~associated ~~consolidated~~with ~~statement~~the unbundling of ~~operations,~~ancillary products was ~~immaterial~~$39. An6 ~~increase~~million inand ~~the~~$2.5 ~~number~~million, ofrespectively. ~~locations~~The ~~where~~deferral weof ~~offer~~revenue ~~the~~related ~~warranty~~to asthe asale ~~separately~~of ~~priced~~these ~~product~~products will continue to have a direct material impact on our gross revenue, ~~and~~ gross margin and net profitability of vehicle sales in future periods compared to historical results. However, we believe the economic impact of the unbundling will be accretive to the business due to the expected positive impact to volume.

GOBeginning ~~Financial~~in 2013 we began offering Cancel Anytime Lease™ to our customers as an alternative financing option to purchasing a vehicle through an installment sales contract. Recognition of lease revenue is deferred over the term of the lease and is included in other income on the consolidated statements of operations.

In December 2011, we launched GO Financial. GO provides indirect subprime auto financing to non-DriveTime dealers. This business line was launched during our fourth quarter of 2011 and was not material to our financial results for the fiscal year ended December 31, 2011. However, at December 31, 2012, GO Financial had $41.0 million in dealer finance receivables and $42.4 million in total assets, combined with $41.7 million of equity on a stand-alone basis. GO has generated $3.0 million in total revenue during fiscal 2012, with a pre-tax loss of $1.9 million for the year. We expect that GO’s originations of dealer financings will continue to grow during 2013, thereby increasing our total revenue, portfolio size, and operating expenses as GO hires personnel, organizes and registers in various states with various regulatory authorities, and incurs other costs of doing business.Recoveries

~~New~~During ~~Business~~2013, ~~Line~~we evaluated our recovery estimates related to sales tax credits in certain states in which we operate. As a result, we now include an estimate of credits to be received on certain state sales tax returns related to accrued but charged-off ~~Carvana~~interest and post charge-off interest assessed to customer's accounts. Recoveries as a percent of charge-offs were approximately 2.0% higher as a result of this change.

In January 2013, we launched Carvana. Carvana, LLC is a new sales channel that enables the customer to buy a car, from click to delivery, 100% online over the internet. Carvana's target customer demographic is not specific to credit, and is geared to attract a broader credit spectrum and income classification than that of DriveTime and GO Financial. Carvana (www.Carvana.com) is a 360-degree, integrated used car buying experience that enables consumers to purchase used vehicles online through a highly efficient and transparent process. Initially launching in Georgia, with plans to expand regionally, then nationally, Carvana’s business and operations will fully integrate all steps of the vehicle sales process, including: (a) vehicle search, (b) vehicle tour and detail, (c) credit scoring, (d) customer financing, (e) eContracting (f) verification of customer data (g) electronic down payment, and (h) vehicle delivery. Carvana is not expected to have a significant net impact to our consolidated results for 2013, though it will incur operating expenses as it hires personnel, obtains state licensing and registers with regulatory agencies and incurs other costs of doing business, thereby increasing our general and administrative expenses. To a certain extent, Carvana will utilize DriveTime's existing infrastructure, with customized aspects of each component of the DriveTime business process. Inilex

33In June 2013 we acquired a controlling interest in Inilex, a provider of GPS technology and telemetry solutions. In accordance with ASC 810 we consolidate Inilex's results into our financial statements and eliminate all intercompany transactions. The impact of this consolidation leads to $8.1 million of additional revenue included in other income as compared to the prior years. As a result of the application of this guidance, the consolidated statements of operations show a net loss attributable to the noncontrolling interest in Inilex in the amount of $0.50 million. The benefit of the ownership in Inilex to us is represented in a lower per unit cost resulting in a higher net income margin.

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~~Transaction~~Results ~~Costs~~of Operations

WeComparison ~~incurred certain legal, accounting, tax consulting, and other professional service fees in connection with a planned sale~~ of ~~DTAG~~years and DTAC in 2012 (see Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Termination of Material Definitive Agreement for more information). The aggregate expense paid to third parties associated therewith of approximately $3.9 million was recorded in General and administration expenses for the year ended December 31, ~~2012. We~~2013 ~~have~~and ~~incurred all costs associated with this transaction in the~~ 2012 ~~fiscal year and do not expect these costs in the future, nor did we incur such costs in 2011.~~

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Results of Operations - DriveTime

Comparison of years ended December 31, 2012 and 2011

The following table sets forth our results of operations for the periods indicated:

	Year EndedDecember 31,
	Year Ended December 31,				% Change
	2012		2011		% Change
	2013		2012
	($ in thousands)
Revenue:	($ in thousands)
Revenue:
Sales revenue	$	1,055,504	$	920,507	14.7	%
Sales of used vehicles	$	920,507	$	838,242	9.8	%
Interest income	327,798		299,382		9.5	%
Interest income	299,382		283,065		5.8	%
Other income	17,594		1,175		1,397.4	%
Dealer Finance and Other Income	2,977		—		100.0	%
Total revenue	1,400,896		1,221,064		14.7	%
Total revenue	1,222,866		1,121,307		9.1	%
Costs and expenses:
Cost of used vehicles sold	607,932		544,504		11.6	%
Cost of sales	731,190		607,932		20.3	%
Provision for credit losses	~~253~~308,~~603~~332		~~207~~253,~~198~~603		2221.46	%
Portfolio debt interest expense	4142,~~978~~196		4341,~~475~~978		(30.45	)%
Non-portfolio debt interest expense	42,~~644~~552		34,~~034~~644		53(45.10	)%
Senior secured debt interest expense	2630,~~470~~325		26,~~541~~470		(014.36	)%
Selling and marketing	2832,~~139~~138		2228,~~790~~015		2314.57	%
General and administrative	~~179~~195,~~403~~806		~~168~~176,~~331~~266		611.61	%
Depreciation expense	2025,~~150~~032		1619,~~075~~740		2526.38	%
Total costs and expenses	1,~~162~~367,~~319~~571		1,~~031~~158,~~948~~648		1218.60	%
Income before income taxes	6033,~~547~~325		8962,~~359~~416		(3246.26	)%
Income tax expense	1,~~194~~609		1,~~221~~194		(234.28	)%
Net income	$	59,353	$	88,138	(32.7	)%
Net income from continuing operations	$	31,716	$	61,222	(48.2	)%

Sales ~~of used vehicles~~Revenue

~~Revenue~~Sales ~~from~~revenue ~~sales~~increased ofby ~~used~~14.7% ~~vehicles increased~~ for the year ended December 31, ~~2012~~2013 ~~compared to 2011 primarily~~ due to ana 13.8% increase in ~~sales~~the unit volume of ~~6.8%,~~used ~~coupled~~vehicles ~~with~~sold and a 20.8% increase in ~~the~~our average combined sales price ~~per~~of the vehicle ~~net~~and ancillary products compared to 2012. The increase was partially offset by a 5.3% decrease in revenue due to the impact of ~~sales~~unbundling ~~returns~~our ~~and~~ancillary ~~allowances~~products. The increase in sales volume is primarily attributable to an increase in the average number of stores in ~~operation~~operations asrelated to a ~~result~~full year of ~~opening~~operations 10for ~~new~~the ~~stores~~net ~~and~~increase ~~closing~~of ~~two~~eight stores in 2012. ~~The~~combined ~~increase~~with inthe ~~average~~partial ~~sales~~year ~~price~~of ~~per~~operations ~~vehicle~~for ~~sold~~the is13 ~~attributable~~stores toopened anin ~~overall~~2013. Sales volume was also positively impacted from an increase in the ~~average~~number ~~cost~~ of ~~used~~applications ~~vehicles~~received ~~sold~~per store, ~~both~~ as a result of anunbundling ~~increase~~our inancillary ~~wholesale~~products ~~used~~from the sales price of the vehicle, ~~prices~~which ~~causing~~made the pricing of our ~~acquisition~~vehicles ~~cost~~more tocomparable ~~increase,~~in ~~and~~the anmarketplace. ~~increase~~See inalso ~~reconditioning~~"Critical ~~costs,~~Accounting asPolicies a- ~~result~~Revenue ofRecognition" ~~acquiring~~above ~~vehicle~~for ~~inventory~~additional ~~with~~discussion ~~higher~~surrounding ~~mileage~~the ~~and~~impact ~~age,~~of ~~year~~selling ~~over~~our ~~year. See~~vehicle ~~also~~service ~~“—Cost~~contract ofas ~~used~~a ~~vehicles~~separately ~~sold”~~price ~~below~~product.

Interest income

Interest income increased for the year ended December 31, ~~2012~~2013 compared to ~~2011~~2012 primarily due to ana $174.9 million increase in our average portfolio principal outstanding, ~~year~~compared ~~over~~to ~~year~~2012, partially offset by a decrease in average portfolio yield. ~~Average~~The increase in average portfolio ~~principal~~size ~~outstanding~~was ~~increased~~driven asby athe ~~result~~increase ofin origination volume and an increase in ~~originations~~the ~~over~~average ~~portfolio~~amount ~~run-off~~financed per loan origination. The ~~Average~~decrease ~~portfolio~~in the average effective yield ~~decreased~~was ~~slightly,~~attributed asto a result of a decrease in average APR of ~~loans~~contracts originated ~~during the period~~. See “Originations” below for further discussion.

~~Cost~~Other ~~of used vehicles sold~~income

~~Total~~Other ~~cost~~income ofincludes ~~used~~Inilex ~~vehicles~~revenue ~~sold~~from ~~increased for~~ the ~~year~~sale ~~ended~~of ~~December 31,~~its ~~2012~~GPS ~~compared~~product to ~~2011~~third parties, as awell ~~result~~as ~~of an increase in~~ the ~~number~~revenue ofrecognized ~~vehicles~~on ~~sold~~our ~~and~~lease anfinancing ~~increase in the per unit average cost of vehicles sold~~product. ~~Our~~Other ~~cost~~income ~~of vehicles sold per unit~~ increased ~~primarily~~for asthe ayear ~~result~~ended ofDecember 31, ~~higher~~2013 ~~acquisition~~compared ~~costs~~to at auction and an increase in vehicle reconditioning costs. Acquisition costs have increased as a result of an appreciation in wholesale used vehicle prices. Wholesale used vehicle prices increased throughout most of 2012, ~~with~~primarily ~~prices~~due ~~starting~~ to ~~soften at~~ the ~~end~~acquisition of ~~the~~Inilex ~~fourth~~and ~~quarter. Price~~the ~~appreciation~~inception ~~was caused by increased demand for used vehicles, coupled with a decrease in supply~~ of ~~used vehicles nationwide. In an effort to maintain overall affordability for~~ our ~~customers,~~leasing ~~we purchased vehicles with a higher average age and mileage to limit our base cost of vehicles acquired at auction~~program. As ~~a result, reconditioning costs have also increased.~~

35Cost of sales

Cost of sales increased for the year ended December 31, 2013 compared to 2012 as a result of an increase in the number of vehicles sold combined with an increase in the per unit average cost of vehicles sold. The increase in per unit cost of vehicles sold is attributable to an overall increase in the average cost of vehicles acquired at auction, which is the result of selling a lower mileage and newer model year vehicle in 2013 compared to 2012.

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Gross margin

Gross margin as a percentage of sales revenue decreased for the year ended December 31, 2012 compared to 2011. The decrease in gross margin is primarily attributable to an increase in our “Cost of used vehicles sold” as described above, while only a portion of these costs were passed on to our customers through an increase in sales price due to competitive pressure, and to maintain affordability for our customers. As we experience wholesale pricing pressure, our ability to pass on cost to our customers is limited, because our customers are generally down payment and monthly payment sensitive.



	As of December 31,
	2013		2012
GAAP gross margin percentage	32.0	%	33.9	%
Economic gross margin percentage	35.8	%	34.2	%

The decrease in gross margin as a percentage of sales revenue for the year ended December 31, 2013 compared to 2012, is primarily attributable to the accounting effects related to offering our vehicle service contract as a separately priced product. Excluding the effects of selling our ancillary products as separately priced items, gross economic margin percentage would have increased 1.6% for the year ended December 31, 2013 as compared to 2012. Gross margin was also affected by higher vehicle acquisition costs. As we experience wholesale pricing pressure, our ability to pass on costs to our customers is limited, because our customers are generally sensitive to down payment, monthly payment amounts and financing terms.

Provision for credit losses

Provision for credit losses increased for the year ended December 31, ~~2012~~2013 compared to ~~2011~~2012 primarily as a result of an increase in the principal balance of loans outstanding ~~in conjunction with an increase in allowance for credit losses~~ as a ~~percentage~~result of ~~loan principal. Portfolio principal~~ increased asorigination avolume, ~~result~~coupled ofwith an increase in ~~originations,~~the ~~mostly~~allowance ~~driven~~as ~~from~~a anpercentage ~~increase~~of ~~in dealership growth~~principal.

Net charge-offs as a percent of average outstanding principal increased to 1314.98% from 13.19% for the year ended December 31, ~~2012~~2013 compared to ~~2011,~~2012. asThe aincrease in net charge-offs percentage is the result of an increase in gross charge-offs, coupled with a decrease in our recovery rate. Gross principal charged-off increased slightly to 23.8% compared to 23.4% for the year ended December 31, ~~2012,~~2013 compared to 232012.0% ~~in 2011.~~ Influencing gross loss rates ~~are~~were ~~general~~higher ~~economic~~average ~~conditions~~principal ~~including~~charge-offs ~~unemployment~~due ~~and~~in ~~underemployment~~part ~~rates~~to ~~and~~higher ~~wholesale~~ vehicle ~~prices~~acquisition cost, which ~~have~~ resulted in ~~the~~a ~~sale of older,~~ higher ~~mileage~~amount ~~vehicles~~financed and longer financing terms to maintain customer payment affordability, plus general economic conditions including unemployment and underemployment rates, and the latent impact of the disruption of our collection operations resulting from the terminated transaction for the sale of the Company in 2012. Recoveries as a percentage of principal charged-off decreased to 4037.36% from 4240.83% for the year ended December 31, ~~2012,~~2013 compared to ~~2011~~2012. ~~However~~ Beginning in the second quarter of 2012 and continuing throughout 2013, ~~auction~~the ~~values~~wholesale ~~continue~~market tosoftened bepartially ~~near~~as ~~historical~~a ~~highs~~result of rising new vehicle sales, increasing the inventory of used vehicles from trade-ins, and an increase in supply of fleet vehicles as rental companies are retiring more vehicles. Recoveries for 2013 were positively impacted by a change in our estimated sales tax credits.

Our allowance as a percent of principal outstanding increased from 15.17% at ~~the~~December ~~end~~31, of2012 ~~2011~~ to 1516.70% at December 31, ~~2012~~2013. The increase in the allowance rate is ~~driven~~due ~~by our expectation that recovery values will continue~~ to ~~decline during 2013, combined with~~ an increase in gross charge-off expectations as a result of an increase in average term. and an expectation that recovery values will continue to decline in 2014.

Portfolio debt interest expense

Total portfolio debt interest expense ~~decreased~~increased for the year ended December 31, ~~2012~~2013 compared to ~~2011~~2012. This ~~decrease~~increase is athe result of aan ~~decrease~~increase in the ~~overall~~average ~~cost~~portfolio ofdebt ~~funds~~outstanding ofto ~~portfolio~~$1.2 ~~debt~~billion tofrom 4$961.5%1 million for the ~~year~~years ~~ended~~ending December 31, 2013 and 2012, ~~compared to 5.1% for 2011~~respectively, partially offset by ana ~~increase~~decrease in the ~~average~~overall ~~balance~~cost of ~~portfolio~~funds ~~debt~~as ~~outstanding.~~a ~~The~~result ~~decrease in our costs~~ of ~~funds is attributable to~~ lower borrowing costs ofon our recent securitizations, bank term financing, and ~~a decrease in borrowing costs of our~~ warehouse facilities. ~~We utilize our warehouse facilities for our origination growth. Therefore, our average debt outstanding increased as a result of an increase in finance receivable originations during the year.~~

Non-portfolio debt interest expense

Total non-portfolio debt interest expense ~~increased~~decreased for the year ended December 31, ~~2012~~2013 compared to ~~2011~~2012. The ~~increase~~decrease was ~~primarily~~ due to ~~increased borrowings on our inventory line as a result of increasing~~ the ~~capacity~~sale of ~~that~~GO ~~facility~~Financial ~~from~~and ~~$50.0~~subsequent ~~million~~reclassification toof ~~$130.0 million (excluding~~ a ~~$10.0~~portion ~~million seasonal increase) as~~ of ~~October~~interest ~~2011. In~~expense ~~addition, we added a real estate facility~~ in ~~2012~~2013 ~~with average borrowings of approximately $8.0 million. As a result, the average balance outstanding of non-portfolio debt increased $38.6 million from 2011~~ to ~~2012,~~discontinued ~~which was partially offset by a decline in the average cost of funds for non-portfolio debt~~operations.

Senior secured debt interest expense

~~The weighted average effective rate on the~~ Senior ~~Notes~~Secured ~~was~~debt ~~13.2%~~interest ~~and~~expense ~~13.3%~~increased for the ~~years~~year ended December 31, ~~2012~~2013 ~~and~~compared ~~2011,~~to ~~respectively, which includes amortization of discount and deferred financing costs~~2012. InThis ~~June~~increase ~~2010~~is wedue ~~issued~~to an additional $~~200~~50.0 million of ~~12.625%~~ Senior ~~Notes~~Secured ~~due~~notes ~~2017. The Senior Notes were~~ issued ~~with an original issuance price of 98.854%. Interest on the Senior Notes is payable semi-annually~~ in ~~arrears~~May ~~on June 15th and December 15th of each year~~2013.

Selling and marketing expense

Selling and marketing expenses increased for the year ended December 31, ~~2012~~2013 compared to ~~2011~~2012. ~~This~~These ~~increase~~increases ~~was~~are primarily adue ~~result of an increase in our advertising expenses, primarily related~~ to our ~~television and internet marketing strategy, an increase in television commercial production, and an increase in advertising associated with operating in new~~ geographic ~~locations as a result of~~ expansion ~~of our dealership base~~ into ~~several~~ new ~~geographic regions~~markets.

General and administrative expense

General and administrative expenses increased for the year ended December 31, ~~2012~~2013 compared to ~~2011~~2012. This increase was primarily ~~the~~due ~~result~~to ofan ~~the~~increase in operating lease expense related to an increased number of dealerships ~~and reconditioning centers~~ in operation year over year, ~~and~~combined with a corresponding increase in salaries and wages related to an increase in average number of employees related to our operational expansion. Additionally general and administrative expense increased through the acquisition of Inilex and through the growth of our online auto sales initiative, Carvana.

3628

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corresponding increase in salaries and wages as we increased the number of employees in conjunction with our overall expansion. Lease expense increased due to the increased number of facilities in operation combined with an increase in the per facility location costs as our new locations have a larger footprint than legacy locations. In addition, we incurred approximately $3.9 million in transaction-related costs associated with the potential sale of the Company that was terminated in the fourth quarter of 2012 and approximately $3.1 million in initial costs associated with the CFPB requests for information.

Depreciation expense

Depreciation expense increased for the year ended December 31, ~~2012~~2013 compared to ~~2011~~2012. This increase was primarily the result of an increase in capital expenditures associated with the expansion of our dealership base, ~~the addition of a reconditioning facility~~ and ~~improvements to our~~ information technology infrastructure.

Net income

~~Net~~The ~~income~~following ~~for~~table ~~the~~sets ~~year~~forth ~~ended December 31, 2012 decreased compared to 2011. The decrease in~~ net income isadjusted primarily attributable to increases in general and administrative expenses associated with our retail expansion, one time sale transaction costs and initial CFPB costs, an increase in marketing and advertising expenses, and an increase in provision for ~~loan~~factors ~~losses,~~affecting ~~partially offset by increases in interest income and gross margin dollars from increased sales volume.~~comparability:



	Year Ended December 31,
	2013	2012
	(In thousands)
Net Income from continuing operations	31,716	61,222
Change in Deferred Income ⁽¹⁾	40,124	2,111
Adjusted Net Income	71,840	63,333


⁽¹⁾	^{Deferred income is the net economic benefit of estimated deferred revenue and expense related to VSC, GAP and GPS. Although expense is recognized for GAAP purposes when incurred, for purposes of this presentation, costs are assumed to be recognized up front.}

Net income for the year ended December 31, 2013 decreased compared to 2012. The decrease in net income is primarily due to (i) the accounting effects of deferring income from the sale of our VSC, GAP and GPS products; (ii) an increase in general and administrative expenses associated with our retail expansion; and (iii) an increase in provision for loan losses for our growing portfolio balance.

Excluding the effects of deferred income, adjusted net income for the year ended December 31, 2013 and 2012 would have been $71.8 million and $63.3 million, respectively.

Originations

The following table sets forth information regarding our originations for the periods indicated:

	Year Ended December 31,						Change
	2012			2011
	2013			2012
	($ in thousands, except per loan data)
Amount originated	$	~~917~~1,~~093~~106,422		$	~~829~~917,~~164~~093		$	87189,~~929~~329
Number of loans originated	5968,~~483~~177			5659,~~096~~483			38,~~387~~694
Average amount financed	$	1516,~~418~~229		$	1415,~~781~~418		$	~~637~~811
Average APR originated	2019.30		%	20.73		%	(01.43		)%
Average term (in months)	5764.45			5657.94			07.51
Average down payment	$	~~998~~962		$	~~1,103~~998		$	(~~105~~36	)
Down payment as a percent of amount financed	6.5.9		%	76.5		%	(1.0.6		)%
Percentage of sales revenue financed (1)	99.6		%	98.9		%	0.7		%

~~(1)~~Origination ~~Represents~~volume and number of loans originated increased due to an increase in the ~~dollar~~number of used vehicles sold and an increase in the average amount financed per loan originated. ~~divided~~The bynumber of used vehicles sold increased as a result of an increase in the ~~dollar~~average number of dealerships in operation in 2013 compared to 2012. The average amount financed per loan originated increased as a result of ~~revenue~~an ~~from~~increase in the average sales price per vehicle sold and financing ancillary products, coupled with a decrease in the average down payment per loan originated. Average APR decreased and average term increased for the year ended December 31, 2013 compared to 2012. These changes are a result of ~~used~~our ~~vehicles~~overall interest rate and financing/underwriting strategy, which is designed to optimize affordability to our customers, while considering the effects of retail cost and vehicle pricing.

We originate loans in conjunction with each vehicle we sell, unless the sale is a cash transaction. The balance on these loans, together with accrued interest and unamortized loan origination costs, comprises our portfolio of finance receivables. Our receivables are then financed through securitizations, bank term facilities, and warehouse facilities in order to generate liquidity for our business. See “—Liquidity and Capital Resources” below.29

~~The~~Table ~~increase in origination volume and number~~ of loans originated were due to an increase in the number of used vehicles sold and an increase in the average amount financed per loan originated as a direct result of an increase in the average sales price per vehicle sold and a decrease in the average down payment per loan originated. Average APR decreased and average term increased for the year ended December 31, 2012 compared to 2011. These changes are a result of our overall interest rate and financing/underwriting strategy, which is designed to optimize affordability to our customers, while considering the effects of retail costs and vehicle pricing. The increase in the percentage of sales revenue financed is primarily a result of a lower average down payment combined with a higher average sales price. Contents

Receivables portfolio

The following table shows the characteristics of our finance receivables portfolio for the periods indicated:



	As of and for the Year Ended December 31,						Change
	2013			2012			Change
Average Remaining Principal Per Loan, End Of Period	$	12,397		$	11,380		$	1,017
Weighted Average APR of Contracts Outstanding	20.0		%	20.4		%	(0.4		)%
Average Age Per Loan (in months)	13.7			14.4			(0.7)
Delinquencies:
Delinquencies 1 - 30 Days	30.0		%	33.0		%	(3.0		)%
Delinquencies 31 - 60 Days	9.0		%	10.0		%	(1.0		)%
Delinquencies 61 - 90 Days	4.9		%	5.1		%	(0.2		)%
Delinquencies 91 - 120 Days	2.4		%	2.8		%	(0.4		)%
Total Past Due	46.3		%	50.9		%	(4.6		)%

~~Table~~The average remaining principal balance increased as of ~~Contents~~December 31, 2013, compared to 2012, due to an increase in the average amount financed per loan coupled with an increase in term.

	As of and for theYear Ended December 31,						Change
	2012			2011
Average Remaining Principal Per Loan, End Of Period	$	11,380		$	10,683		$	697
Weighted Average APR of Contracts Outstanding	20.4		%	20.8		%	(0.4		)%
Average Age Per Loan (in months)	14.4			15.0			(0.6)
Delinquencies:
Delinquencies 31 - 60 Days	10.0		%	7.1		%	2.9		%
Delinquencies 61 - 90 Days	5.1		%	3.8		%	1.3		%
Delinquencies 91 - 120 Days	2.8		%	0.3		%	2.5		%
Total Delinquencies Over 30 Days	17.9		%	11.2		%	6.7		%

Finance receivables principal balance, average principal balance and the number of loans outstanding period over period increased as of and for the year ended December 31, 2012, compared to 2011, due to origination volume exceeding portfolio run-off (regular principal payments, payoffs, and charge-offs).

Delinquencies

As a percentage of total outstanding loan principal balances, delinquencies ~~over~~greater than 30 days ~~increased~~decreased year over year. ~~The~~In ~~increase~~May in2012 ~~delinquencies is~~ the ~~result~~Company ofentered ~~our~~into ~~change~~an inagreement ~~collection strategy for early delinquencies aimed~~ to ~~improve~~sell ~~customer~~its ~~experience while reducing cost of servicing~~portfolio, ~~centralization of collection efforts for early delinquencies,~~ which ~~includes~~was ~~the~~later ~~use~~terminated ofin ~~off-shore~~November ~~services~~2012. As a result, ofwe ~~the~~experienced ~~proposed~~greater ~~sale of the portfolio in the latter half of 2012,~~ turnover of collections personnel ~~increased~~, wewhile ~~enacted~~enacting a collections hiring freeze, ~~and~~which ~~experienced~~resulted in a general disruption of our collections operations, all ~~which~~leading ~~adversely~~to ~~impacted~~an adverse impact on delinquencies in 2012. We During the same time, we also closed our regional collection centers in Orlando, Florida and Richmond, Virginia, which ~~temporarily~~had ~~impacted~~an ~~delinquencies~~additional impact. ~~Since~~ ~~the~~In ~~termination~~2013 ~~of the transaction and closure of our regional facilities,~~ we ~~have~~took ~~taken necessary~~ steps to increase collections personnel and supplement our closed regional centers, returning to our normal staffing levels.

Results of Operations~~- DriveTime~~

Comparison of years ended December 31, ~~2011~~2012 and ~~2010~~2011

The following table sets forth our results of operations for the periods indicated:



	Year Ended December 31,				% Change
	2012		2011		% Change
Revenue:	(In thousands)
Sales revenue	$	920,507	$	838,242	9.8	%
Interest income	299,382		283,065		5.8	%
Other income	1,175		660		78.0	%
Total revenue	1,221,064		1,121,967		8.8	%
Costs and expenses:
Cost of sales	607,932		544,504		11.6	%
Provision for credit losses	253,603		207,198		22.4	%
Portfolio debt interest expense	41,978		43,475		(3.4	)%
Non-portfolio debt interest expense	4,644		3,034		53.1	%
Senior secured debt interest expense	26,470		26,541		(0.3	)%
Selling and marketing	28,015		22,790		22.9	%
General and administrative	176,266		168,202		4.8	%
Depreciation expense	19,740		16,075		22.8	%
Total costs and expenses	1,158,648		1,031,819		12.3	%
Income before income taxes	62,416		90,148		(30.8	)%
Income tax expense	1,194		1,221		(2.2	)%
Net income from continuing operations	$	61,222	$	88,927	(31.2	)%

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	Year EndedDecember 31,
	2011		2010		% Change
	($ in thousands)
Revenue:
Sales of used vehicles	$	838,242	$	760,767	10.2	%
Interest income	283,065		264,974		6.8	%
Total revenue	1,121,307		1,025,741		9.3	%
Costs and expenses:
Cost of used vehicles sold	544,504		481,210		13.2	%
Provision for credit losses	207,198		175,900		17.8	%
Portfolio debt interest expense	43,475		68,314		(36.4	)%
Non-portfolio debt interest expense	3,034		14,757		(79.4	)%
Senior secured debt interest expense	26,541		15,031		76.6	%
Selling and marketing	22,790		16,783		35.8	%
General and administrative	168,331		165,491		1.7	%
Depreciation expense	16,075		13,751		16.9	%
Loss on extinguishment of debt	—		3,418		(100.0	)%
Total costs and expenses	1,031,948		954,655		8.1	%
Income before income taxes	89,359		71,086		25.7	%
Income tax expense	1,221		404		202.2	%
Net income	$	88,138	$	70,682	24.7	%

Sales revenue

Sales revenue increased for the year ended December 31, 2012 compared to 2011 primarily due to an increase in sales volume of 6.8%, coupled with a 2.8% increase in the average sales price per vehicle net of sales returns and allowances. The increase in sales volume is primarily attributable to an increase in the average number of stores in operation as a result of opening ten new stores and closing two in 2012. The increase in average sales price per vehicle sold is attributable to an overall increase in the average cost of used vehicles sold, both as a result of an increase in wholesale used vehicle prices causing our acquisition cost to increase, and an increase in reconditioning costs, as a result of acquiring vehicle inventory with higher mileage and age, year over year. See also “—Cost of sales” below.

Revenue from sales of used vehicles increased for the year ended December 31, 2011 compared to the same period during 2010. This increase in revenue was primarily due to an increase in sales volume of 6.9%, coupled with an increase in the average sales price per vehicle of 3.1%. The increase in sales volume is primarily attributable to an increase in the average number of stores in operation as a result of opening a net of four new stores in 2011. The increase in average sales price per vehicle sold is attributable to an overall increase in the average cost of used vehicles sold, primarily as a result of an increase in wholesale used vehicle prices causing our acquisition cost to increase. See also “—Cost of used vehicles sold” below.

Interest income

Interest income increased for the year ended December 31, ~~2011~~2012 compared to ~~2010.~~2011 ~~This increase is~~ primarily due to an increase in our average portfolio principal outstanding ~~for the~~ year ~~ended~~over ~~December 31~~year, ~~2011,~~ partially offset by a decrease in average portfolio yield. Average portfolio principal outstanding increased ~~$91.0~~as ~~million~~a ~~during the year ended December 31, 2011, compared to 2010. This increase was the~~ result of an increase in originations over portfolio run-off. Average portfolio yield decreased slightly, as a result of a decrease in average APR of loans originated during the period. See “Originations” below for further discussion.

Cost of ~~used vehicles sold~~sales

~~Total~~Cost ~~cost~~ of ~~used~~sales ~~vehicles sold~~ increased for the year ended December 31, ~~2011~~2012 compared to ~~2010.~~2011 ~~This~~as ~~increase~~a isresult ~~due~~of to an increase in the number of vehicles sold and an increase in the ~~average~~per ~~total~~unit average cost of vehicles sold ~~of 5~~.~~9%.~~ Our cost of vehicles sold per unit increased primarily as a result of higher acquisition costs at auction and an increase in vehicle reconditioning costs. Acquisition costs have increased as a result of an appreciation in wholesale used vehicle prices. Wholesale used vehicle prices increased ~~during~~throughout ~~the~~most ~~year~~of ~~ended December 31~~2012, ~~2011,~~with ~~compared~~prices starting to ~~2010,~~soften asat athe ~~result~~end of the fourth quarter. Price appreciation was caused by increased demand for used vehicles, coupled with a decrease in supply of used vehicles nationwide. In ~~Vehicle~~an ~~reconditioning~~effort ~~costs~~to ~~have~~maintain ~~increased~~overall asaffordability afor ~~result~~our ofcustomers, anwe ~~increase~~purchased invehicles ~~the~~with a higher average age and mileage to limit our base cost of vehicles ~~sold,~~acquired inat anauction. As ~~effort~~a toresult, ~~maintain~~reconditioning ~~overall~~costs ~~affordability~~have ~~for~~also ~~our customers~~increased.

Gross margin

Gross margin ~~total~~as ~~dollars~~a ~~increased~~percentage of sales revenue decreased for the year ended December 31, ~~2011~~2012 compared to ~~2010,~~2011. The ~~however~~decrease in gross margin asis aprimarily ~~percentage~~attributable to an increase in our “Cost of sales” ~~revenue~~as ~~decreased.~~described ~~The~~above, ~~increase~~while inonly ~~gross~~a ~~margin~~portion ~~dollars~~of isthese ~~attributable~~costs were passed on to our customers through an increase in ~~total~~sales ~~units~~price ~~sold~~due ~~year~~to competitive pressure, and to maintain affordability for our customers. As we experience wholesale pricing pressure, our ability to pass on cost to our customers is limited, because our customers are generally down payment and monthly payment sensitive.

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over year. The decrease in gross margin percentage is primarily attributable to an increase in our “Cost of used vehicles sold” as described above, while only a portion of these costs were passed on to our customers through an increase in sales price. In an effort to maintain affordability for our customers, our total cost per vehicle sold increased 5.9% during the year ended December 31, 2011, while our average price per vehicle sold only increased 3.1%, for the year ended December 31, 2011, compared to the same period in 2010.

Provision for credit losses

Provision for credit losses increased for the year ended December 31, ~~2011,~~2012 compared to ~~2010.~~2011 ~~The increase is~~ primarily ~~the~~as a result of an increase in the principal balance of loans outstanding asin aconjunction ~~result~~with of an increase in ~~originations~~allowance ~~over~~for ~~portfolio~~credit ~~run-off,~~losses inas ~~conjunction~~a ~~with~~percentage of loan principal. Portfolio principal increased as a ~~slight~~result of an increase in ~~allowance~~originations, ~~for~~mostly ~~credit~~driven ~~losses~~from asan aincrease ~~percentage~~in ofdealership ~~loan principal~~growth.

Net charge-offs as a percent of average outstanding principal ~~decreased~~increased to 13.19% from 13.51% for the year ended December 31, ~~2011~~2012 compared to ~~the~~2011, ~~same period in 2010~~ as a result of an increase in gross charge-offs, ~~which~~coupled ~~was~~with ~~more~~a ~~than~~decrease ~~offset by an improvement~~ in our recovery rate. Gross principal charged-off increased to 23.04% for the year ended December 31, ~~2011~~2012, compared to 2223.0% in ~~2010~~2011. Influencing gross loss rates are general economic conditions including unemployment and underemployment rates and wholesale vehicle prices, which have resulted in the sale of an older, higher mileage ~~vehicle~~vehicles and longer financing terms to maintain customer payment affordability. Recoveries as a percentage of principal charged-off ~~increased~~decreased to 4240.83% from 3842.58% for the year ended December 31, ~~2011~~2012, compared to ~~2010~~2011. However, ~~The improvement in recoveries is due primarily to higher~~ auction values ~~stemming~~continue ~~from~~to ~~appreciation~~be innear ~~the~~historical ~~wholesale used vehicle market~~highs.

Our allowance as a percent of principal outstanding increased from 15.1% at the end of 2011 to 15.7% at December 31, 2012. The increase in the allowance rate is driven by our expectation that recovery values will continue to decline during 2013, combined with an increase in gross charge-off expectations as a result of an increase in average term.

Portfolio debt interest expense

Total portfolio debt interest expense decreased for the year ended December 31, ~~2011~~2012 compared to ~~2010~~2011. This decrease ~~was~~is a result of a decrease in the overall cost of funds of portfolio debt to 54.15% for the year ended December 31, ~~2011~~2012, compared to 85.21% for ~~2010~~2011, partially offset by an increase in the average balance of portfolio debt outstanding. The decrease in our costs of funds is attributable to lower borrowing costs of our recent securitizations, inbank ~~2011~~term financing, and a decrease in borrowing costs of our warehouse facilities. We ~~The~~utilize ~~original~~our ~~duration~~warehouse ~~weighted~~facilities ~~average~~for ~~coupon of~~ our ~~three~~origination ~~most recent securitizations as of December 31, 2011 was 3~~growth.~~03%~~ ~~for 2011-1~~Therefore, ~~2.88%~~our ~~for~~average ~~2011-2,~~debt ~~and~~outstanding ~~3.97%~~increased ~~for~~as ~~2011-3.~~a Inresult ~~addition,~~of ~~our~~an ~~warehouse~~increase ~~facility renewals and additions~~ in ~~2011~~finance ~~were~~receivable atoriginations ~~lower~~during ~~interest~~the ~~rates than in 2010~~year.

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Non-portfolio debt interest expense

Total non-portfolio debt interest expense ~~decreased~~increased for the year ended December 31, ~~2011~~2012 compared to ~~2010~~2011. The ~~This~~increase ~~decrease~~ was primarily due to ~~the~~increased ~~exchange~~borrowings ofon ~~$60.1~~our ~~million~~inventory ~~junior~~line ~~secured~~as ~~notes~~a ~~and~~result ~~$40.0 million~~ of ~~subordinated~~increasing ~~debt~~the ~~(with~~capacity ~~effective rates~~ of ~~22.4%~~that ~~and~~facility 12from $50.~~2%,~~0 ~~respectively)~~million ~~for~~to ~~equity, and the exchange of~~ $2130.0 million ~~junior~~(excluding ~~secured~~a ~~notes and~~ $3510.0 million inseasonal ~~subordinated~~increase) ~~debt~~as ~~for~~of anOctober ~~equal~~2011. In ~~principal~~addition, ~~amount~~we ofadded ~~Senior~~a ~~Notes,~~real ~~both~~estate offacility ~~which occurred~~ in ~~conjunction~~2012 with ~~the~~average ~~offering~~borrowings of ~~our~~approximately ~~Senior Notes in June 2010~~$8.0 million. As a result, the average balance outstanding of non-portfolio debt ~~decreased~~increased $6438.86 million ~~for~~from ~~the~~2011 ~~year~~to ~~ended December 31~~2012, ~~2011~~which ~~compared~~was topartially ~~2010.~~offset ~~Further,~~by a decline in the average cost of funds offor non-portfolio debt ~~decreased to 4~~.~~7% for the year ended December 31, 2011, from 11.6% for the same period in 2010, as a result of these transactions.~~

Senior secured debt interest expense

The weighted average effective rate on the Senior ~~secured~~Secured ~~debt~~Notes ~~interest~~was ~~expense~~13.2% ~~increased~~and ~~during~~13.3% for the ~~year~~years ended December 31, ~~2011~~2012 ~~compared~~and to2011, ~~2010.~~respectively, ~~This~~which ~~increase~~includes ~~was~~amortization aof ~~result~~discount ofand ~~the~~deferred ~~issuance~~financing incosts. In June 2010 ofwe ~~our~~issued ~~Senior Notes~~$200.0 Asmillion aof ~~result,~~12.625% weSenior ~~incurred~~Secured aNotes ~~full~~due ~~year~~2017. ofThe ~~interest~~Senior ~~expense~~Secured inNotes ~~2011~~were ~~versus~~issued awith ~~partial~~an ~~year~~original inissuance ~~2010.~~price ~~The~~of ~~weighted~~98.854%. ~~average~~Interest ~~effective~~on ~~rate~~the onSenior ~~these~~Secured ~~notes~~Notes is ~~13.3%,~~payable ~~which~~semi-annually ~~includes~~in ~~amortization~~arrears ofon ~~discount~~June 15th and ~~deferred~~December ~~financing~~15th ~~costs~~of each year.

Selling and marketing expense

Selling and marketing expenses ~~decreased~~increased for the year ended December 31, ~~2011~~2012 compared to ~~2010~~2011. This ~~decrease~~increase was primarily a result of a decrease in sales commissions as we completed the transition from a 100% commission structure to a base salary plus team and individual bonus compensation structure for sales personnel. This transition began in 2010 and was fully complete in 2011. This decrease was partially offset by an increase in our advertising expenses, primarily related to our television and internet marketing strategy, an increase in television commercial production, and an increase in advertising associated with operating in new geographic locations as a result of expansion of our dealership base into ~~seven~~several new geographic regions.

General and administrative expense

General and administrative expenses increased for the year ended December 31, ~~2011~~2012 compared to ~~2010~~2011. This increase was primarily the result of the increased number of dealerships and reconditioning centers in operation year over year, and a corresponding increase in salaries and wages as we increased the number of employees in conjunction with our overall expansion. Lease expense increased due to the increased number of facilities in operation combined with an increase in the per facility location costs as our new locations have a larger footprint than legacy locations. In addition, we incurred approximately $3.9 million in transaction-related costs associated with the potential sale of the Company that was terminated in the fourth quarter of 2012 and approximately$3.1 million in initial costs associated with the CFPB requests for information.

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expansion. Salaries and wages expense also increased due to the new salaries and wages structure of sales personnel. See “—Selling and marketing expense” as described above. Lease expense also increased due to the increased number of facilities in operation.

Depreciation expense

Depreciation expense increased for the year ended December 31, ~~2011~~2012 compared to ~~2010~~2011. This increase was primarily the result of an increase in capital expenditures associated with the expansion of our dealership base, the addition of a reconditioning facility and improvements to our information technology infrastructure.

Net income

Net income for the year ended December 31, ~~2011~~2012 ~~increased~~decreased compared to ~~2010~~2011. The ~~increase~~decrease in net income ~~for 2011~~ is aprimarily ~~result~~attributable ofto anincreases ~~increase~~ in ~~total~~general ~~revenue~~and ofadministrative ~~9.3%,~~expenses ~~primarily~~associated aswith aour ~~result~~retail ofexpansion, one antime ~~increase~~sale intransaction ~~the~~costs ~~volume~~and ofinitial ~~vehicles~~CFPB ~~sold~~costs, ~~and~~an aincrease ~~larger~~in ~~average~~marketing ~~loan~~and ~~portfolio.~~advertising ~~Partially~~expenses, ~~offsetting~~and ~~the~~an increase in ~~total~~provision ~~revenue~~for ~~was~~loan anlosses, ~~increase~~partially inoffset ~~provision~~by ~~for~~increases ~~credit~~in ~~losses~~interest income and ~~general~~gross ~~and~~margin ~~administrative~~dollars ~~expenses,~~from asincreased ~~discussed~~sales ~~above~~volume.

Originations

The following table sets forth information regarding our originations for the periods indicated:

	Year Ended December 31,						Change
	2011			2010
	2012			2011
	($ in thousands, except per loan data)
Amount originated	$	~~829~~917,~~164~~093		$	~~747~~829,~~329~~164		$	8187,~~835~~929
Number of loans originated	5659,~~096~~483			5256,~~468~~096			3,~~628~~387
Average amount financed	$	1415,~~781~~418		$	14,~~244~~781		$	~~537~~637
Average APR originated	20.73		%	2120.87		%	(10.14		)%
Average term (in months)	5657.94			5356.9			3.0.5
Average down payment	$	~~1,103~~998		$	1,~~213~~103		$	(~~110~~105	)
Down payment as a percent of amount financed	76.5		%	87.5		%	(1.0		)%
Percentage of sales revenue financed (1)	98.9		%	98.2		%	0.7		%

~~(1) Represents the dollar amount originated divided by the dollar amount of revenue from sales of used vehicles.~~32

WeTable originate loans in conjunction with each vehicle we sell, unless the sale is a cash transaction. The balance on these loans, together with accrued interest and unamortized loan origination costs, comprises our portfolio of finance receivables. Our receivables are then financed through securitizations and warehouse facilities in order to generate liquidity for our business. See “—Liquidity and Capital Resources” below.Contents

~~During~~We ~~2011,~~originate ~~the number of~~ loans ~~and~~in ~~principal~~conjunction ~~balance~~with ofeach ~~loans~~vehicle we ~~originated~~sell, ~~increased~~unless asthe ~~compared~~sale tois ~~2010.~~a ~~These~~cash ~~increases~~transaction. ~~were~~The ~~due~~balance toon anthese ~~increase~~loans, intogether ~~the~~with ~~number~~accrued ofinterest ~~used vehicles sold~~ and anunamortized ~~increase in the average amount financed per~~ loan ~~originated~~origination ascosts, acomprises ~~direct~~our ~~result~~portfolio of anfinance ~~increase in the average sales price per vehicle sold and a decrease in the average down payment per loan originated~~receivables. ~~Average~~Our ~~APR~~receivables ~~decreased~~are ~~for~~then ~~the~~financed ~~year~~through ~~ended December 31~~securitizations, ~~2011~~bank ~~compared to the same period in the prior year. The average~~ term ~~increased for the year ended December 31~~facilities, ~~2011,~~and ~~compared~~warehouse tofacilities ~~the same period~~ in ~~2010.~~order ~~These changes are a result of our overall interest rate and financing/underwriting strategy, which is designed~~ to ~~optimize~~generate ~~affordability~~liquidity tofor our ~~customers,~~business. ~~while~~See ~~considering~~“—Liquidity ~~the effects of retail costs~~ and ~~vehicle~~Capital ~~pricing~~Resources” below.

The increase in origination volume and number of loans originated were due to an increase in the number of used vehicles sold and an increase in the average amount financed per loan originated as a direct result of an increase in the average sales price per vehicle sold and a decrease in the average down payment per loan originated. Average APR decreased and average term increased for the year ended December 31, 2012 compared to 2011. These changes are a result of our overall interest rate and financing/underwriting strategy, which is designed to optimize affordability to our customers, while considering the effects of retail costs and vehicle pricing. The increase in the percentage of sales revenue financed is primarily a result of a lower average down payment combined with a higher average sales price.

Receivables portfolio

The following table shows the characteristics of our finance receivables portfolio for the periods indicated:



	As of and for the Year Ended December 31,						Change
	2012			2011			Change
Average Remaining Principal Per Loan, End Of Period	$	11,380		$	10,683		$	697
Weighted Average APR of Contracts Outstanding	20.4		%	20.8		%	(0.4		)%
Average Age Per Loan (in months)	14.4			15.0			(0.6)
Delinquencies:
Delinquencies 1 - 30 Days	33.0		%	22.0		%	11.0		%
Delinquencies 31 - 60 Days	10.0		%	7.1		%	2.9		%
Delinquencies 61 - 90 Days	5.1		%	3.8		%	1.3		%
Delinquencies 91 - 120 Days	2.8		%	0.3		%	2.5		%
Total Past Due	50.9		%	33.2		%	17.7		%

~~Table~~Finance receivables principal balance, average principal balance and the number of ~~Contents~~loans outstanding period over period increased as of and for the year ended December 31, 2012, compared to 2011, due to origination volume exceeding portfolio run-off (regular principal payments, payoffs, and charge-offs).

	As of and for theYear Ended December 31,					Change
	2011		2010
Average Remaining Principal Per Loan, End Of Period	10,683		$	10,286		$	397
Weighted Average APR Of Contracts Outstanding	20.8	%	21.0		%	(0.2		)%
Average Age Per Loan (in months)	15.0		15.3			(0.3		)
Delinquencies:
Delinquencies 31 - 60 Days	7.1	%	6.3		%	0.8		%
Delinquencies 61- 90 Days	3.8	%	2.8		%	1.0		%
Delinquencies 91 - 120 Days	0.3	%	—		%	0.3		%
Total Delinquencies Over 30 Days	11.2	%	9.1		%	2.1		%

Finance receivables principal balance, average principal balance and the number of loans outstanding period over period increased as of and for the year ended December 31, 2011, compared to 2010, due to origination volume exceeding portfolio run-off (regular principal payments, payoffs, and charge-offs).

Delinquencies

As a percentage of total outstanding loan principal balances, delinquencies over 30 days ~~were~~increased ~~11.2%~~year ~~and~~over 9year.1% ~~at December 31, 2011 and 2010, respectively.~~ The increase in delinquencies is the result of our change in collection strategy for early delinquencies, ~~including~~aimed ~~utilizing~~to ~~dialer~~improve ~~technology,~~customer ~~coupled~~experience ~~with~~while ~~our~~reducing ~~modification~~cost inof ~~charge-off~~servicing, ~~policy~~centralization ~~(see~~of ~~“Factors~~collection ~~Affecting~~efforts ~~Comparability,~~for ~~Modification~~early todelinquencies, ~~Charge-off~~which ~~Policy”).~~includes ~~Further~~the ~~influencing~~use ~~delinquencies~~of isoff-shore ~~the~~services. As ~~effects~~a result of the ~~current~~proposed ~~economic~~sale ~~environment,~~of ~~including~~the ~~high~~portfolio ~~unemployment~~in ~~and~~the ~~underemployment.~~latter Inhalf ~~conjunction~~of ~~with~~2012, ~~our~~turnover ~~centralization~~ of collections ~~during~~personnel ~~2010~~increased, we ~~are~~enacted ~~utilizing~~a ~~messaging~~collections ~~and~~hiring ~~dialer~~freeze, ~~technologies~~and ~~for~~experienced ~~early~~a ~~delinquencies~~general indisruption ~~order~~of toour ~~achieve~~collections aoperations, ~~more~~all ~~cost~~which ~~effective~~adversely ~~collections~~impacted ~~process~~delinquencies. We Asalso aclosed ~~result,~~our weregional ~~anticipate~~collection ~~delinquencies~~centers toin beOrlando, ~~relatively~~Florida ~~higher~~and ~~than~~Richmond, ~~our~~Virginia, ~~historical~~which ~~rates.~~temporarily Weimpacted ~~will~~delinquencies. ~~continue~~Since tothe ~~monitor~~termination ~~portfolio~~of ~~performance~~the transaction and ~~delinquencies~~closure inof anour ~~effort~~regional facilities, we have taken necessary steps to ~~balance~~increase ~~cost~~collections ~~effectiveness~~personnel and ~~efficiencies~~supplement ~~based~~our onclosed ~~the~~regional ~~current~~centers, ~~economy~~to our normal staffing levels.

Seasonality

Historically, we have experienced higher revenues in the first quarter of the calendar year than in the last three quarters of the calendar year. We believe these results are due to seasonal buying patterns resulting, in part, because many of our customers receive income tax refunds during the first quarter of the year, which are a primary source of down payments on used vehicle purchases. Our portfolio of finance receivables also has historically followed a seasonal pattern, with delinquencies and charge-offs being the highest in the second half of the year.

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Seasonality of Earnings

To illustrate the seasonality in total revenue, costs and expenses, and income before taxes, a summary of the quarterly financial data follows:



	First Quarter		Second Quarter		Third Quarter		Fourth Quarter			Total
	(In thousands)
2013:
Total revenue	$	385,224	$	360,865	$	364,204	$	290,603		$	1,400,896
Costs and expenses	$	367,061	$	339,975	$	358,818	$	301,717		$	1,367,571
Income / (loss) before income taxes	$	18,163	$	20,890	$	5,386	$	(11,114	)	$	33,325
Net income / (loss) from continuing operations	$	17,821	$	20,620	$	5,455	$	(12,180	)	$	31,716
2012:
Total revenue	$	367,663	$	301,850	$	304,785	$	246,766		$	1,221,064
Costs and expenses	$	333,825	$	271,596	$	299,344	$	253,883		$	1,158,648
Income / (loss) before income taxes	$	33,838	$	30,254	$	5,441	$	(7,117	)	$	62,416
Net income / (loss) from continuing operations	$	33,446	$	29,987	$	5,070	$	(7,281	)	$	61,222
2011:
Total revenue	$	332,856	$	275,405	$	286,012	$	227,694		$	1,121,967
Costs and expenses ⁽¹⁾	$	291,841	$	242,975	$	273,567	$	223,436		$	1,031,819
Income / (loss) before income taxes	$	41,015	$	32,430	$	12,445	$	4,258		$	90,148
Net income / (loss) from continuing operations	$	40,503	$	32,093	$	12,383	$	3,948		$	88,927

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	FirstQuarter		SecondQuarter		ThirdQuarter		FourthQuarter			Total
	($ in thousands)
2012:
Total revenue	$	367,838	$	302,202	$	304,957	$	247,869		$	1,222,866
Costs and expenses	$	334,651	$	272,609	$	300,190	$	254,869		$	1,162,319
Income / (loss) before income taxes	$	33,187	$	29,593	$	4,767	$	(7,000	)	$	60,547
Net income / (loss)	$	32,795	$	29,326	$	4,396	$	(7,164	)	$	59,353
2011:
Total revenue	$	332,856	$	275,405	$	286,012	$	227,034		$	1,121,307
Costs and expenses	$	291,841	$	242,975	$	273,575	$	223,557		$	1,031,948
Income / (loss) before income taxes	$	41,015	$	32,430	$	12,437	$	3,477		$	89,359
Net income / (loss)	$	40,503	$	32,093	$	12,376	$	3,166		$	88,138
2010:
Total revenue	$	297,038	$	245,747	$	263,323	$	219,633		$	1,025,741
Costs and expenses (1)	$	263,405	$	225,975	$	244,838	$	220,437		$	954,655
Income / (loss) before income taxes	$	33,633	$	19,772	$	18,485	$	(804	)	$	71,086
Net income / (loss)	$	33,284	$	19,322	$	19,232	$	(1,156	)	$	70,682

(1)^{Includes net gains / losses on extinguishment of debt.}

Seasonality of Vehicle ~~Sales~~Sold and Leased

To illustrate the seasonality of retail sales and leased units, a summary of quarterly data has been provided:

Year	FirstQuarter			SecondQuarter			ThirdQuarter			FourthQuarter				FullYear
	FirstQuarter			SecondQuarter			ThirdQuarter			FourthQuarter				FullYear
	Units	%		Units	%		Units	%		Units	%			Units	%
Year	Units	%		Units	%		Units	%		Units	%			Units	%
2008	20,820	37.5	%	12,745	23.0	%	12,230	22.1	%	9,620	17.4	%		55,415	100	%
2013	19,607	26.7	%	17,357	23.7	%	19,563	26.7	%	16,782	22.9	%	(1)	73,309	100	%
2009	15,787	32.0	%	11,941	24.1	%	12,297	24.8	%	9,475	19.1	%		49,500	100	%
2010	16,303	31.0	%	12,284	23.4	%	13,382	25.5	%	10,529	20.1	%		52,498	100	%
2011	18,095	32.2	%	13,639	24.3	%	14,233	25.4	%	10,142	18.1	%		56,109	100	%
2012	19,145	31.9	%	14,667	24.5	%	14,839	24.8	%	11,279	18.8	%		59,930	100	%
2011	18,095	32.2	%	13,639	24.3	%	14,233	25.4	%	10,142	18.1	%		56,109	100	%
2010	16,303	31.0	%	12,284	23.4	%	13,382	25.5	%	10,529	20.1	%		52,498	100	%
2009	15,787	32.0	%	11,941	24.1	%	12,297	24.8	%	9,475	19.1	%		49,500	100	%


⁽¹⁾	^{Fourth quarter unit sales increased as a result of the implementation of our leasing program. We expect leases to demonstrate a seasonality pattern similar to vehicle sales.}

Seasonality of Loan Performance

~~This~~The following table represents the performance of our entire loan portfolio outstanding for each period shown, and does not represent static pools based on origination year. As is evident from the table below, the seasonality in our business results in net charge-offs typically being the highest in the third and fourth quarter of each year and the lowest in the first and second quarter of each year.

Net Charge-Offs as a Percent of Average Portfolio Principal Balance:

Year	FirstQuarter	SecondQuarter	ThirdQuarter	FourthQuarter	FullYear
2008	4.9%	4.4%	5.7%	6.5%	21.5%
2013	3.8%	3.2%	4.2%	3.6%	14.8%
2009	4.9%	3.9%	4.8%	4.6%	18.2%
2010	3.3%	2.5%	3.7%	4.0%	13.5%
2011	3.0%	2.4%	3.7%	4.0%	13.1%
2012	3.0%	2.7%	3.9%	4.3%	13.9%
2011	3.0%	2.4%	3.7%	4.0%	13.1%
2010	3.3%	2.5%	3.7%	4.0%	13.5%
2009	4.9%	3.9%	4.8%	4.6%	18.2%

~~Results of Operations - GO Financial~~34

GO Financial began operations in December of 2011. The year ended December 31, 2012 is GO's first full year of operations. The following table sets forth our results of operations for the periods indicated:

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	Year EndedDecember 31, 2012
	($ in thousands)
Revenue:
Dealer Finance Income	$	2,168
Other Income	809
Total Revenue	2,977
Costs and Expenses:
Selling and Marketing	123
General and Administrative	4,313
Depreciation Expense	410
Total Costs and Expenses	4,846
Loss before Income Taxes	(1,869		)
Income Tax Expense (Benefit)	—
Net Loss	$	(1,869	)

Dealer Finance Income

GO recognized $2.2 million of finance income for the year ended December 31, 2012. Finance income represents revenue for dealer finance receivables recognized under the effective interest method, by applying a loss adjusted forecast of cash flows for each dealer pool.

Other Income

GO recognized $0.8 million of other income for the year ended December 31, 2012. Other income consists of revenue generated from ancillary products sold by participating dealers such as service contracts and GPS units.

Operating Expenses

GO's total operating expenses for the year ended December 31, 2012 were $4.8 million. The primary component of operating expenses is salaries and wages. At December 31, 2012, GO employed 40 people, including personnel in the areas of sales, verifications, information technology, account representation, and senior management.

	As of and for the Year Ended December 31, 2012
	($'s in thousands, except per deal information)
Originations:
Total dealer advance funded		$	61,109
Number of contracts funded		5,509
Average amount financed per deal		$	8,250
Average advance rate		74.4		%
Dealers:
Number of Funding Dealers		191
Total Number of Dealers		369
Dealer Turnover Rate		10.3		%
Number of Active Pools		247
Number of Closed Pools		21

Liquidity and Capital Resources

General

44We require capital to provide financing to our customers, to purchase vehicle inventory, to purchase lease fleet vehicles, to open new dealerships and reconditioning facilities, investments in new business segments and joint venture partnerships and for general corporate purposes, including property and equipment acquisition and other operational expenses.

~~Table~~We ofhistorically ~~Contents~~have funded our capital requirements through operating cash flow, portfolio warehouse facilities, securitizations, bank term financings, residual cash flow, term facilities, inventory and other revolving debt facilities, real estate mortgage financing, and other notes payable (including senior secured notes, junior secured notes, senior unsecured notes, and subordinated notes).

We require capital to provide financing to our customers, for the purchase of vehicle inventory, for capital improvements to open new dealerships and reconditioning facilities, and for general corporate purposes, including the purchase of property and equipment and to fund operations.

We historically have funded our capital requirements through operating cash flow, portfolio warehouse facilities, securitizations, bank term financing, residual cash flow, term facilities, inventory and other revolving debt facilities, real estate mortgage financing, and other notes payable (including senior secured notes, junior secured notes, senior unsecured notes, and subordinated notes).

Financing sources

We currently fund our capital requirements through the following:

•1. Portfolio term financings including asset-backed securitizations~~, which offer fixed rate secured financing for our receivables portfolio~~.

•2. ~~Bank~~Portfolio ~~term~~warehouse ~~financings~~facilities including agreements with three different institutional lenders.

•3. ~~Portfolio~~Term ~~warehouse~~residual ~~facilities including agreements with three different institutional lenders~~facility.

•4. ~~Senior~~Revolving ~~Secured~~inventory ~~Notes due 2017~~facility.

•5. ASenior ~~term~~Secured ~~residual facility~~Notes.

•6. Operating leases for the majority of our dealerships, reconditioning centers, operations facilities and our corporate ~~offices~~office.

•7. Other secured notes payable including ~~an inventory facility~~, a mortgage loan for our operations call center in Mesa, Arizona, and other ~~notes and~~ capital leases ~~secured by property and equipment~~.

For additional details and terms regarding these debt instruments, see Note 8 — Debt Obligations to our ~~condensed~~ consolidated financial statements included in Part II, Item 8 of this report.

Our warehouse facilities include certain favorable terms and conditions, including (i) the inability of the lender to subjectively lower collateral values and effectively lower advance rates; (ii) limited recourse; and (iii) limited foreclosure rights upon a default.

We actively manage utilization of our various funding sources as we seek to minimize borrowing costs through drawing on our lower cost facilities and minimizing unused line fees, while at the same time balancing the effective advance rates and liquidity generated by each of the credit facilities in order to meet our funding needs. The effective advance rates on our portfolio warehouse and term financings are based on the outstanding principal balance of the loans we originate. However, our initial investment in the loans we originate is lower than the original principal balance of the loans.

Recent financing and cash flow transactions

• In ~~December~~November ~~2012~~2013, we ~~amended~~paid ~~our~~down $~~100~~50.0 million ~~portfolio~~of our term residual facility ~~and extended the maturity date to December 2019, decreased the interest rate and provided the ability for borrowing base credit (under certain conditions)~~.

• In November ~~2012~~2013, we ~~entered~~paid ~~into~~ a ~~$350.0~~dividend ~~million~~of ~~portfolio term facility with Wells Fargo, collateralized by~~ $~~457~~2.58 million ofto ~~finance~~pay ~~receivables.~~taxes ~~This~~related ~~agreement~~to isprior ~~substantially~~period ~~similar~~taxable ~~in structure to a securitization~~income.

• In ~~October~~January ~~2012,~~2014 we ~~paid~~completed our 2014-1 securitization, issuing $6267.48 million of asset-backed securities with a original duration weighted average coupon of 2.57%. The securities were rated in ~~dividends~~tranches with credit ratings from AAA to ~~shareholders~~BBB by Standard and Poor's Ratings Service, ~~relating~~DBRS, toInc. ~~third~~and ~~quarter~~Kroll ~~2012~~Bond ~~earnings~~Rating Agency.


•	In March 2014 we extended the expiration date of the RBS warehouse facility to June 2014.

Operating leases

Operating leases are a significant component of our financing sources. At December 31, ~~2012~~2013, we leased the majority of our dealership and reconditioning center locations. We also lease our corporate office in Phoenix, Arizona, and an operations collections facility in Dallas, Texas. As each lease matures, we evaluate the existing location to determine whether the dealership should be relocated to another site in the region closer in proximity to new car franchises and/or higher traffic retail areas. As of December 31, ~~2012~~2013, we had approximately $70105.39 million in aggregate operating lease obligations.

Shareholder distributions

Income from S-corporations flows through to the individual shareholders, who report income/losses on their individual income tax returns. We have made distributions to shareholders to fund the tax paid by the shareholders related to S-corporation income of DTAG and DTAC, in addition to general distributions to the shareholders. ~~The following table summarizes distributions to shareholders since January 1, 2003.~~

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	January 1, 2003 - December 31, 2009		2010		2011		2012		Totals
	($ in thousands)
Distributions to shareholders	$	273,307	$	46,310	$	51,845	$	51,195	$	422,657
Less: S-corporation shareholder tax liability based on highest tax rates	104,660		18,596		26,895		26,970		177,121
Distributions in excess of amounts to pay taxes	$	168,647	$	27,714	$	24,950	$	24,225	$	245,536

The following table summarizes distributions to shareholders since January 1, 2003.



	January 1, 2003 - December 31, 2010		2011		2012		2013		Totals
	(In thousands)
Distributions to shareholders	$	319,617	$	51,845	$	51,195	$	13,701	$	436,358
Less: S-corporation shareholder tax liability based on highest tax rates	123,256		25,180		26,878		9,740		185,054
Distributions in excess of amounts to pay taxes	$	196,361	$	26,665	$	24,317	$	3,961	$	251,304

Liquidity

The following is a summary of total available liquidity, consisting of unrestricted cash and ~~current~~ availability under our portfolio warehouse and inventory facilities for the periods indicated:

	December 31,
	2012		2011		2010
	2013		2012		2011
	($ in thousands)
	(In thousands)
Unrestricted cash	$	2630,~~480~~754	$	2526,~~930~~478	$	2325,~~677~~930
Portfolio warehouse facilities	5499,~~185~~850		~~148~~54,~~837~~185		~~112~~148,~~160~~837
Term Residual Facility	9,058		—		—
Term residual facility	—		9,058		—
Inventory facility	483,679		5548,~~500~~679		1055,~~000~~500
Total liquidity	$	~~138~~134,~~402~~283	$	~~230~~138,~~267~~400	$	~~145~~230,~~837~~267

The following table presents a summary of our access to liquidity under our portfolio warehouse facilities and our inventory facility based on collateral pledged as of December 31, ~~2012~~2013 and ~~2011~~2012:

As of December 31, 2012	FacilityAmount		AmountDrawn		UnusedFacilityAmount (1)		BorrowingBase (2)		AmountDrawn		TotalAvailability
As of December 31, 2013	FacilityAmount		AmountDrawn		UnusedFacilityAmount		BorrowingBase		AmountDrawn		TotalAvailability
	($ in thousands)
	(In thousands)
Deutsche Bank warehouse	$	150,000	$	1998,~~300~~400	$	~~130~~51,~~700~~600	$	25116,~~272~~878	$	1998,~~300~~400	$	518,~~972~~478	(1)
Wells Fargo warehouse	150,000		23107,000		~~127~~43,000		24114,~~640~~434		23107,000		17,~~640~~434		(2)
RBS warehouse	125,000		1478,~~900~~000		~~110~~47,~~100~~000		1582,~~816~~829		1478,~~900~~000		~~916~~4,829		(3)
DTAC receivables (3)	N/A		N/A		N/A		45,657		N/A		45,657
DTAC receivables	N/A		N/A		N/A		69,109		N/A		69,109		(4)
Total portfolio warehouse facilities	$	425,000	$	57283,~~200~~400	$	~~367~~141,~~800~~600	$	~~111~~383,~~385~~250	$	57283,~~200~~400	$	5499,~~185~~850
Santander Term Residual Line	100,000		25,000		75,000		34,058		25,000		9,058
Santander term residual line	50,000		50,000		—		50,000		50,000		—
Inventory facility	140,000		91136,321		483,679		140,000		91136,321		483,679
	$	~~665~~615,000	$	~~173~~469,~~521~~721	$	~~491~~145,~~479~~279	$	~~285~~573,~~443~~250	$	~~173~~469,~~521~~721	$	~~111~~103,~~922~~529
Unrestricted cash											2630,~~480~~754
Total cash and availability											$	~~138~~134,~~402~~283

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As of December 31, 2011	FacilityAmount		AmountDrawn		UnusedFacilityAmount (1)		BorrowingBase (2)		AmountDrawn		TotalAvailability
As of December 31, 2012	FacilityAmount		AmountDrawn		UnusedFacilityAmount		BorrowingBase		AmountDrawn		TotalAvailability
	($ in thousands)
	(In thousands)
Deutsche Bank warehouse	$	150,000	$	3919,~~000~~300	$	~~111~~130,~~000~~700	$	5925,~~346~~272	$	3919,~~000~~300	$	205,~~346~~972	(1)
UBS warehouse	125,000		31,792		93,208		61,592		31,792		29,800
RBS warehouse	150,000		23,000		127,000		24,640		23,000		1,640		(2)
RBS warehouse	125,000		30,600		94,400		53,082		30,600		22,482
Wells Fargo warehouse	125,000		14,900		110,100		15,816		14,900		916		(3)
Wells Fargo warehouse	150,000		40,000		110,000		45,848		40,000		5,848
DTAC receivables	N/A		N/A		N/A		45,657		N/A		45,657		(4)
DTAC receivables (3)	N/A		N/A		N/A		70,361		N/A		70,361
Total portfolio warehouse facilities	$	425,000	$	57,200	$	367,800	$	111,385	$	57,200	$	54,185
Total portfolio warehouse facilities	$	550,000	$	141,392	$	408,608	$	290,229	$	141,392	$	148,837
Santander term residual line	100,000		25,000		75,000		34,058		25,000		9,058
Santander Term Residual Line	100,000		100,000		—		100,000		100,000		—
Inventory facility	140,000		91,321		48,679		140,000		91,321		48,679
Inventory facility	140,000		84,500		55,500		140,000		84,500		55,500
	$	665,000	$	173,521	$	491,479	$	285,443	$	173,521	$	111,922
	$	790,000	$	325,892	$	464,108	$	530,229	$	325,892	$	204,337
Unrestricted cash											26,478
Unrestricted cash											25,930
Total cash and availability											$	138,400
Total cash and availability											$	230,267

(1) ~~Represents~~As ~~amounts~~of ~~that~~December ~~can~~31, be2013 ~~drawn~~and ~~upon~~December as31, ~~long~~2012, asamount ~~the~~excludes ~~amount~~$4.3 ~~drawn~~million ~~does~~and ~~not~~$1.6 ~~exceed~~million ~~the~~of ~~borrowing~~warehouse ~~base~~cash ~~for~~collections ~~the~~respectively ~~credit~~per ~~facility~~borrowing base definition.

(2) ~~Borrowing~~Assumes ~~base~~collection isand ~~determined~~reserve byamounts ~~the~~on ~~collateral~~deposit ~~currently~~of ~~pledged to the respective facilities~~$4.2 ~~The~~million ~~borrowing base calculation~~ for ~~the portfolio warehouse facilities uses a blended 58% advance rate for~~ December 31, ~~2012~~2013 and ~~57%~~$1.6 million for December 31, ~~2011.~~2012 ~~Borrowing base includes collection and reserve amounts on deposit which~~ are ~~assumed to be~~ used to ~~pay~~paydown ~~down~~ amount drawn ~~on the RBS warehouse~~. Warehouse borrowing base excludes the amounts in the collection accounts for the Deutsche Bank warehouse and the Wells Fargo warehouse per the borrowing base definition for these warehouses. Borrowing base for the inventory facility is capped at our facility amount of $140.0 million, however, if we had a larger facility, availability would increase by $35.3 million at December 31, 2012.

(3) ~~Includes~~As ~~$79.3 million and $123.7 million as~~ of December 31, ~~2012~~2013 and ~~2011~~December 31, ~~respectively~~2012, ofamount ~~unpledged~~excludes ~~qualifying~~$5.0 ~~receivables~~million ~~that can be pledged immediately~~ and ~~bring~~$1.3 ~~total~~million ~~borrowing~~of towarehouse ~~our~~cash ~~maximum~~collections ~~capacity.~~respectively ~~The~~per borrowing base ~~is the lesser of total eligible collateral multiplied by the applicable advance rate and the facility amount~~definition.


⁽⁴⁾	^{Includes $105.9 million for December 31, 2013 and $79.3 million for December 31, 2012 of unpledged qualifying receivables that can be pledged immediately and bring total borrowing to our maximum capacity. The borrowing base is the lesser of total eligible collateral multiplied by the applicable advance rate and the facility amount.}

Changes in liquidity

Changes in liquidity are affected by increases and decreases to our operating cash flow, changes in advance rates on our portfolio warehouse facilities, capacity of our portfolio warehouse and inventory facilities, portfolio term financings, and changes in other notes payable. The following is a summary of changes in liquidity for each period presented:

	December 31,
	2012			2011			2010
	2013			2012			2011
	($ in thousands)
	(In thousands)
Liquidity – beginning of period	$	~~230~~138,~~267~~400		$	~~145~~230,~~837~~267		$	40145,~~407~~837
Net increase in cash and cash equivalents	~~550~~4,276			~~2,253~~548			2,~~151~~253
(Decrease) Increase in portfolio warehouse availability	~~(94~~45,~~652~~665		)	36(94,~~677~~652		)	~~103~~36,~~279~~677
Increase in Santander Term Residual Line	9,058			—			—
(Decrease) Increase in Santander term residual line	(9,058		)	9,058			—
(Decrease) Increase in inventory facility availability	(645,~~821~~000		)	45(6,~~500~~821		)	—45,500
Liquidity – end of period	$	~~138~~134,~~402~~283		$	~~230~~138,~~267~~400		$	~~145~~230,~~837~~267

Change in liquidity during the year ended December 31, ~~2012~~2013. Our liquidity for the year ended December 31, ~~2012~~2013 decreased $914.91 million,. This decrease was primarily the result of a decrease in the facility size of our term residual line combined with an increase in the amount drawn from ~~$230.3~~our ~~million~~inventory atline ~~December 31,~~to ~~2011~~fund an increase in inventory levels to ~~$138.4~~support ~~million~~the atanticipated ~~December 31,~~demand ~~2012~~in the first quarter of 2014 and national roll-out of the Driver's Seat Cancel Anytime Lease™. ~~This~~These ~~decrease~~decreases ~~was~~were ~~primarily~~partially offset by an increase in the ~~result~~borrowing base of our portfolio warehouse facilities primarily related to an increase in the ~~origination~~average ofadvance ~~$45.0~~rate ~~million~~and increased availability related to the sale of GO Financial and its related dealer finance receivables, which were not eligible for borrowing base, ~~and higher inventory levels resulting~~ in ~~borrowing~~the ~~base~~prior ~~in excess of facility capacity~~year.

Change in liquidity during the year ended December 31, ~~2011.~~2012 Our liquidity for the year ended December 31, ~~2011~~2012 ~~increased~~decreased $8491.49 million, ~~from~~as ~~$145~~compared to 2011.8 ~~million~~This atdecrease ~~December 31,~~was ~~2010~~primarily tothe result of the origination of $~~230~~45.30 million atof ~~December 31,~~GO ~~2011.~~Financial ~~This~~dealer ~~increase~~finance ~~was~~receivables, ~~primarily~~which ~~the~~were ~~result~~not ofeligible ~~increased~~for ~~liquidity~~borrowing ~~from~~base, ~~our~~and ~~revolving~~higher inventory ~~facility~~levels ~~and~~resulting ~~increased~~in ~~portfolio~~borrowing ~~warehouse~~base ~~availability~~in excess of facility capacity.

47Change in liquidity during the year ended December 31, 2011. Our liquidity for the year ended December 31, 2011 increased $84.4 million as compared to 2010. This increase was primarily the result of increased liquidity from our revolving inventory facility and increased portfolio warehouse availability. Increased portfolio warehouse availability was primarily the result of higher advance rates on our warehouse facilities and securitizations.

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Increased portfolio warehouse availability was primarily the result of higher advance rates on our warehouse facilities and securitizations.

Change in liquidity during the year ended December 31, 2010. Our liquidity for the year ended December 31, 2010 increased by $105.4 million. This increase was primarily the result of the net proceeds from the sale of our Senior Notes in June 2010, which were used primarily to pay down amounts outstanding under our warehouse facilities, plus the addition of a residual term loan in May 2010.

Cash flows

Operating activities

For the year ended December 31, 2013, net cash used in operating activities increased compared to 2012. The increase in cash used in operating activities was primarily due to a decrease in net income and an increase in loan originations over collections and recoveries of principal balances received. These decreases were partially offset by an increase in deferred revenue related to the sale of separately priced ancillary products and a smaller increase in our vehicle inventory.

For the year ended December 31, 2012, net cash used in operating activities increased compared to 2011. The increase in cash used in operating activities was primarily due to a decrease in net income, and an increase in loan originations over collections and recoveries of principal balances received. The decrease in cash was partially offset by a smaller increase in inventory and other assets.

For the year ended December 31, 2011, net cash used in operating activities was $25.2 million as compared to net cash provided by operating activities of $5.9 million for 2010. The decrease in cash provided by operating activities was primarily due to an increase in loan originations, an increase in inventory levels, and a smaller increase in accrued expenses. The decrease in cash was partially offset by an increase in collections and recoveries on finance receivable principal, and an increase in net income (inclusive of an increase in provision for credit losses).

For the year ended December 31, 2010, net cash provided by operating activities decreased as compared to 2009. The decrease in cash provided by operating activities was primarily due to an increase in loan originations, an increase in inventory levels as compared to 2009, and increase in other assets in 2010 compared to a decrease in 2009. This decrease was partially offset by an increase in collections and recoveries on finance receivable principal, and an increase in accounts payable, accrued expenses and other liabilities in 2010 compared to a decrease in 2009.

Investing activities

For the year ended December 31, ~~2012~~2013, net cash used in investing activities ~~increased~~decreased as compared to ~~2011~~2012. The ~~increase~~decrease in cash used in investing activities was primarily due to the ~~origination~~proceeds ofreceived ~~dealer~~from ~~finance~~the ~~receivables~~sale ~~for~~of GoGO Financial. ~~This~~ ~~increase~~These ~~was~~proceeds were partially offset by aan ~~decrease~~increase in cash used to ~~purchase~~acquire ~~dealership~~property ~~facilities~~ and equipment ~~for~~which ~~new~~was ~~dealerships~~primarily ~~and~~related to ~~remodel existing dealerships. The decrease in cash used for facilities was driven by~~ the ~~rebranding~~inception of ~~several~~our ~~facilities~~leasing ~~in 2011 that did not occur in 2012~~program. We also opened ten dealerships and one inspection center, and relocated three dealerships, in 2012, as compared to eleven dealerships, three inspection centers, and one inspection center relocation in 2011. Of the new and relocated facilities, we purchased one dealership and no inspection centers in 2012, as compared to two dealerships and three inspection centers in 2011.

For the year ended December 31, 2012, net cash used in investing activities increased as compared to 2011. The increase in cash used in investing activities was primarily due to the origination of dealer finance receivables for GO Financial. This increase was offset by a decrease in cash used to purchase dealership facilities and equipment for new dealerships and to remodel existing dealerships. The decrease in cash used for facilities was driven by the rebranding of several facilities in 2011 that did not occur in 2012. We also opened ten dealerships and one inspection center, and relocated three dealerships, in 2012, as compared to eleven dealerships, three inspection centers, and one inspection center relocation in 2011. Of the new and relocated facilities, we purchased one dealership and no inspection centers in 2012, as compared to two dealerships and three inspection centers in 2011.

For the year ended December 31, 2011, net cash used in investing activities increased as compared to 2010. The increase in cash used in investing activities was primarily due to eleven new dealership openings in 2011 and one dealership relocation. We also opened three new inspection centers in 2011 and had one inspection center relocation. Of the new and relocated facilities, we purchased three inspection centers and two dealerships. We also completed remodeling our existing dealerships, and increased information technology infrastructure equipment to support our operations.

For the year ended December 31, 2010, net cash used in investing activities increased compared to 2009. The increase in cash used in investing activities was primarily due to ten new dealership openings in 2010, one of which was a purchased property, combined with two reconditioning facilities under development, remodeling our existing dealerships, and an increase in the addition of information technology infrastructure equipment to support our operations.

Financing activities

For the year ended December 31, 2013, net cash provided by financing activities increased as compared to 2012. This increase was partly related to additional borrowings on our warehouse facilities which were facilitated through increases in advance rates and an increase in 2013 originations, both of which increased our borrowing capacity of these facilities. Also affecting cash provided by financing activities was an increase in amounts borrowed on our inventory facility year over year, which were accomplished through a larger borrowing base of vehicle inventory. We also reduced the amount used to pay dividends year over year. Partially offsetting these increases was a decrease related to portfolio term financings. In 2012 we executed two securitizations plus a bank term financing for a total of $832.2 million in debt, whereas in 2013, we completed two securitizations aggregating $468.9 million.

For the year ended December 31, 2012, net cash provided by financing activities increased as compared to 2011. This increase was primarily due to a net increase in portfolio term financings as a result of executing two securitizations in 2012 along with the bank term financing aggregating $832.2 million compared to three securitizations in 2011 totaling $708.0 million. We also borrowed and repaid less on our portfolio warehouse facilities in 2012 as a result of the term financings. In addition, other secured notes payable, net, increased less in 2012 than 2011 as a result of borrowing and repaying more under our inventory facility as a result of expanding our inventory borrowing base and expansion of our inventory available for sale.

For the year ended December 31, 2011, net cash provided by financing activities increased as compared to 2010. This increase was partially due to three securitizations during the course of 2011, in which we issued $708 million in asset-backed securities as opposed to one securitization in 2010 for $228.0 million. This increase was partially offset by the pay-down of our warehouse facilities. We also increased the amount borrowed under our inventory line when we amended and restated the inventory facility and increased the facility capacity.

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warehouse facilities. We also increased the amount borrowed under our inventory line when we amended and restated the inventory facility and increased the facility capacity.

For the year ended December 31, 2010, net cash provided by financing activities increased as compared to 2009. This change was a result of an increase in net borrowings under our warehouse facilities, which was a result of executing three new warehouse facilities and terminating one of our bank term financing agreements with one of our lenders, resulting in the pay-down of such financing while increasing warehouse borrowings. In addition, we issued $200.0 million of Senior Notes in June 2010, which provided net proceeds to the Company of $155.9 million (as $37.0 million principal amount of the notes were exchanged for existing debt), which was used to pay down amounts outstanding under warehouse facilities and pay-off a portion of junior secured notes and subordinated notes payable to our principal shareholder.

Contractual Obligations

The following tables set forth the aggregate amounts of our significant contractual obligations and commitments with definitive payment terms:

	As of December 31, 2012
	As of December 31, 2013
	Payments by Period
	Total		Less than1 Year (3)		Years 2-3		Years4-5		More than5 Years
	($ in thousands)
	(In thousands)
Securitizations & bank term financing (1)	$	1937,~~024,478~~821	$	~~490~~466,~~919~~934	$	~~443~~398,~~779~~965	$	8971,~~780~~922	$	—
Portfolio warehouse facilities (2)	57283,~~200~~400		32154,~~350~~953		24128,~~850~~447		—		—
Portfolio term residual financing	2550,000		—		—		—		2550,000
Senior Notes	198,320		—		—		198,320		—
Senior Secured Notes	253,316		—		—		253,316		—
Inventory facility	91136,321		—136,321		~~91,321~~—		—		—
Real estate mortgage loan	12,~~454~~231		~~223~~236		~~487~~515		11,~~744~~480		—
Real estate facility	1113,~~733~~412		~~448~~2,406		14,~~732~~812		4,~~629~~812		41,~~924~~382
Equipment note, secured by an aircraft	1,774		1,774		—		—		—
Capital lease obligations	1,773		1,137		636		—		—
Capital lease obligations	2,275		1,205		1,070		—		—
Operating lease obligations	105,920		23,503		37,341		26,393		18,683
Operating lease obligations	70,261		18,858		30,441		16,062		4,900
Total contractual obligations (4)	$	1,794,194	$	785,490	$	570,716	$	367,923	$	70,065
Total contractual obligations (4)	$	1,494,816	$	545,777	$	593,680	$	320,535	$	34,824


⁽¹⁾	^{Securitization obligations and bank term agreements do not have a contractual termination date. Therefore, all collections on the contracts collateralizing the securities are used to repay the asset-backed security holders based on an expected duration of the securities.}


⁽²⁾	^{On the termination date of the facilities, amounts outstanding at termination are not due and payable immediately. All collections on the contracts collateralizing these facilities are used to pay down the facilities until they are paid in full because these facilities contain term-out features.}


⁽³⁾	^{Generally and historically, we have renewed or replaced facilities expiring in less than one year.}


⁽⁴⁾	^{Total contractual obligations exclude future interest payment obligations.}

Senior Secured Notes Collateral

Our Senior Secured Notes due June 15, 2017 contain a collateral coverage ratio covenant which requires the Company to maintain a collateral coverage ratio of 1.5x the outstanding Senior Secured Notes. The following is the calculation of the collateral coverage ratio as of December 31, ~~2012~~2013 and is not meant to portray a GAAP summary of collateral but rather a summary of collateral as it resides legally within the Guarantor Subsidiaries, Non-Guarantor Subsidiaries, and Co-Issuers.



	As of December 31, 2013
	Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Co-Issuers		Total
	(In thousands)
Collateral Amounts:
Net Receivables Value ⁽¹⁾	$	—	$	277,610	$	179,646	$	457,256
Net Inventory Value ⁽²⁾	125,527		—		—		125,527
Cash Equivalents ⁽³⁾	—		—		—		—
Total Collateral Amount	$	125,527	$	277,610	$	179,646	$	582,783
12.625% Senior Secured Notes							250,000
Collateral Coverage Ratio							2.3x

~~Table~~(1) Net Receivables Value equals 85% of ~~Contents~~the finance receivables (including accrued interest and capitalized loan costs) minus debt (exclusive of Senior Secured Notes) collateralized by finance receivables (including accrued interest) plus cash equivalents securing such debt. The Senior Secured Notes are excluded from this calculation.

	As of December 31, 2012
	GuarantorSubsidiaries		Non-GuarantorSubsidiaries		Co-Issuers		Total
	($ in thousands)
Collateral Amounts:
Net Receivables Value (1)	$	—	$	115,836	$	162,573	$	278,409
Net Inventory Value (2)	133,328		—		—		133,328
Cash Equivalents (3)	—		—		—		—
Total Collateral Amount	$	133,328	$	115,836	$	162,573	$	411,737
12.625% Senior Secured Notes							200,000
Collateral Coverage Ratio							2.1x


⁽²⁾	^{Net Inventory Value equals}^85%^{of the book value of inventory pledged as collateral minus debt obligations (including accrued interest) secured by inventory. The Senior Secured Notes are excluded from this calculation.}

(13) ~~Net~~Cash ~~Receivables~~equivalents ~~Value~~equal ~~equals~~cash ~~85% of the finance receivables (including accrued interest~~ and ~~capitalized~~equivalents ~~loan~~pledged ~~costs)~~directly ~~minus~~to ~~debt~~secure ~~(exclusive~~the of Senior ~~Notes)~~Secured ~~collateralized by finance receivables (including accrued interest) plus cash equivalents securing such debt. The Senior~~ Notes ~~are excluded from this calculation~~.

(2) Net Inventory Value equals 85% of the book value of inventory pledged as collateral minus debt obligations (including accrued interest) secured by inventory. The Senior Notes are excluded from this calculation.

(3) Cash equivalents equal cash and equivalents pledged directly to secure the 12.625% Senior Secured Notes.

Impact of New Accounting Pronouncements

For a discussion of recent accounting pronouncements applicable to us, see Note 1718 — Recent Accounting Pronouncements to the consolidated financial statements as of December 31, ~~2012~~2013, included in Part II, Item 8 of this report.

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Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources.

We lease the majority of our dealership and reconditioning facilities under operating leases. See “—Liquidity and Capital Resources—Operating Leases” for more information.

Impact of Inflation

Inflation generally results in higher interest rates on our borrowings, which could decrease the profitability of our existing portfolio to the extent we have variable rate debt and could decrease profitability of our future originations if we are not able to pass the increase on to our customers. We seek to limit the risk of increasing borrowing costs:

• through ~~our~~ fixed rate portfolio term financings, which allowed us to fix a portion of our borrowing costs and generally match the term of the underlying finance receivables, and


•	by increasing the interest rate charged for loans originated at our dealerships (if allowed under applicable law) while maintaining affordability of the customer's payment.

~~The~~In prior years, the used vehicle market ~~has~~ experienced strong appreciation in used vehicle wholesale prices ~~over the past couple of years~~. The appreciation resulted, in part, from a reduced supply of used vehicles in the market due to a decline in new car industry sales coupled with a decrease in used vehicle trade-in activity compared with pre-recession levels. Higher wholesale values increased our vehicle acquisition and related costs., Inwhich ~~addition,~~led weus ~~increased~~to increase the age and mileage of vehicles we ~~sell~~sold in order to maintain ~~affordability for the~~ customer affordability. ~~These~~The ~~increased~~increase in costs led to an increase in our average selling price for used vehicles~~; however~~, weof ~~chose~~which towe ~~pass~~ only passed a portion of these costs to our customers ~~in order~~ to maintain ~~affordability~~customer ~~for our customers~~affordability. Higher wholesale values also improved our recovery values as a percentage of principal charged-off.

Non-GAAP Discussion

EBITDA, Adjusted EBITDA and Recurring Adjusted EBITDA, which we refer to as the non-GAAP financial measures, are supplemental measures of our performance that are not required by, or presented in accordance with, generally accepted accounting principles in the United States (“GAAP”). The non-GAAP financial measures are not measures of our financial performance under GAAP and should not be considered as an alternative to GAAP net income (loss) or any other performance measures derived in accordance with GAAP. See the footnotes to the tables in “Item 6—~~Summary~~Selected Financial Data” for definitions of the other non-GAAP financial measures.

50We present non-GAAP financial measures because we consider them to be important supplemental measures of our operating performance. The adjustment in our calculation of Adjusted EBITDA was made because management believes it represents our core economic operating performance. The adjustments in our calculation of Recurring Adjusted EBITDA are adjustments for items management does not consider to be reflective of our core economic operating performance. Management considers our core economic operating performance to be that which can be affected by our managers in any particular period through their management of the resources that affect our underlying revenue and profit generating operations during that period.

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We present non-GAAP financial measures because we consider them to be important supplemental measures of our operating performance. All of the adjustments made in our calculation of the non-GAAP financial measures are adjustments to items that management does not consider to be reflective of our core operating performance. Management considers our core operating performance to be that which can be affected by our managers in any particular period through their management of the resources that affect our underlying revenue and profit generating operations during that period.

However, because these non-GAAP financial measures are not recognized measurements under GAAP, when analyzing our operating performance investors should use these non-GAAP financial measures in addition to, and not as an alternative for, net income, operating income, or any other performance measure presented in accordance with GAAP, or as an alternative to cash flow from operating activities or as a measure of our liquidity. Because not all companies use identical calculations, our presentation of these non-GAAP financial measures may not be comparable to similarly titled measures of other companies.

Because of these limitations, EBITDA, Adjusted EBITDA and Recurring Adjusted EBITDA and other non-GAAP financial measures should not be considered as discretionary cash available to us to reinvest in the growth of our business. You should compensate for these limitations by relying primarily on our GAAP results and using these non-GAAP financial measures on a supplemental basis.

EBITDA represents net income (loss) before income tax expense, total interest expense (secured and unsecured) and depreciation expense. Adjusted EBITDA represents EBITDA plus ~~store~~the ~~closing~~change ~~costs,~~in ~~non-cash~~deferred ~~compensation~~income. ~~expense,~~Recurring ~~Nevada~~Adjusted ~~sales~~EBITDA ~~tax~~represents ~~liability,~~Adjusted ~~restricted~~EBITDA ~~stock~~less ~~compensation~~sales ~~expense,~~tax ~~IPO~~refund ~~expense~~adjustments, ~~gain~~plus onstock ~~extinguishment~~compensation ~~of debt~~expense, CFPB Expense, and Transaction Costs.

In evaluating EBITDA and Adjusted EBITDA, you should be aware that in the future we may incur expenses similar to the adjustments described above. Our presentation of EBITDA and Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by expenses that are unusual, non-routine, or non-recurring. EBITDA and Adjusted EBITDA have limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are that it does reflect:40

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In evaluating EBITDA, Adjusted EBITDA and Recurring Adjusted EBITDA, you should be aware that in the future we may incur expenses similar to the adjustments described above. Our presentation of EBITDA, Adjusted EBITDA and Recurring Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by expenses that are unusual, non-routine, or non-recurring. EBITDA, Adjusted EBITDA and Recurring Adjusted EBITDA have limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are that it does reflect:


•	cash expenditures for capital expenditures or contractual commitments;


•	changes in, or cash requirements for, our working capital requirements;


•	interest expense, or the cash requirements necessary to service interest or principal payments on our indebtedness;


•	the cost or cash required to replace assets that are being depreciated or amortized; and

• the impact on our reported results of earnings or charges resulting from items accounted for in the GAAP measure from which EBITDA, Adjusted EBITDA and Recurring Adjusted EBITDA isare derived.

The following table presents data relating to EBITDA, Adjusted EBITDA and Recurring Adjusted EBITDA, which are non-GAAP measures, for the periods indicated:

	Years Ended December 31,
	2012			2011			2010
	2013			2012			2011
	(Unaudited)($ in thousands)
	(Unaudited)(In thousands)
Net income	$	59,353		$	88,138		$	70,682
Net income from continuing operations	$	31,716		$	61,222		$	88,927
Plus EBITDA adjustments:
Income tax expense	1,~~194~~609			1,~~221~~194			~~404~~1,221
Total interest expense	7375,~~092~~073			73,~~050~~092			9873,~~102~~050
Depreciation expense	2025,~~150~~032			1619,~~075~~740			1316,~~751~~075
EBITDA	$	~~153~~133,~~789~~430		$	~~178~~155,~~484~~248		$	~~182~~179,~~939~~273
Store closing costs (1)	724			(101		)	1,184
Deferred Income Adjustments (1)	40,124			2,111			—
Non-cash compensation expense (2)	—			—			1,125
Adjusted EBITDA	$	173,554		$	157,359		$	179,273
Restricted stock compensation expense (3)	1,546			2,789			3,874
Sales Tax Refund Adjustment (2)	(828		)	(3,008		)	(1,530		)
Sales Tax Refund Adjustment (4)	(3,008		)	(1,530		)	4,831
Restricted stock compensation expense (3)	1,239			1,546			2,789
IPO expense (5)	—			—			528
CFPB Expenses (4)	—			3,090			—
Loss on extinguishment of debt (6)	—			—			3,418
Transaction Costs (5)	—			3,942			—
CFPB Expenses (7)	$	3,090		$	—		$	—
Recurring Adjusted EBITDA	$	173,965		$	162,929		$	180,532
Terminated Sale Transaction Costs (8)	$	3,942		$	—		$	—
Adjusted EBITDA	$	160,083		$	179,642		$	197,899

51(1) Represents deferred revenue net of expected cost associated with ancillary products.


⁽²⁾	^{Represents non-cash adjustments to sales tax refunds related to loans charged-off in prior periods.}

⁽³⁾

^{In December 2010, our chief executive officer, entered into a Restricted Stock Agreement with DTAG and DTAC pursuant to which we awarded a specified number of shares of restricted stock to Mr. Fidel. Such shares vested over a three-year period based on the achievement by the Company of certain income before income tax targets. See “Item 11—Executive Compensation— Compensation Discussion and Analysis—Chief Executive Officer Restricted Stock Grant.”}


⁽⁴⁾	^{Represents initial direct costs incurred in responding to the CFPB's request for information.}


⁽⁵⁾	^{Represents directs costs incurred in conjunction with the terminated sale of the Company in 2012.}

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(1) Store closing costs represent costs to close stores in 2008 and 2009 related to downsizing (and do not include dealerships closed in the normal course of business). Typically, expense relates to rent paid on continued lease obligations and fees associated with required storage of original dealerships records. Additionally, 2012 included the loss on disposal of fixed assets for a closed dealership and a lease liability for a closed reconditioning facility. Credits in store closing costs are the result of negotiating lease terminations more favorable than amounts accrued.

(2) Non-cash compensation expense related to an agreement directly between Mr. Garcia and Mr. Fidel (not between the Company and Mr. Fidel), which expired in June 2010.

(3) In December 2010, our chief executive officer, entered into a Restricted Stock Agreement with DTAG and DTAC pursuant to which we awarded a specified number of shares of restricted stock to Mr. Fidel. Such shares will become vested over a three-year period based on the achievement by the Company of certain income before income tax targets. See “Item 11—Executive Compensation— Compensation Discussion and Analysis—Chief Executive Officer Restricted Stock Grant.”

(4) Represents non-cash adjustments to sales tax refunds related to loans charged-off in prior periods.

(5) IPO expense represents costs incurred related to our withdrawn initial public offering in 2010.

(6) Loss on extinguishment of debt is a result of repurchasing outstanding indebtedness.

(7) Represents initial direct costs incurred in responding to the CFPB's request for information.

(8) Represents directs costs incurred in conjunction with the terminated sale of the Company in 2012.

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Item 7A. Quantitative and Qualitative Disclosures about Market Risk

Our financial instruments are exposed to market risk from changes in interest rates. We do not use financial instruments for trading purposes. We use fixed rate securities to manage risk. Our earnings are substantially affected by our net interest income, which is the difference between the income earned on interest-bearing assets and the interest paid on interest-bearing notes payable. Increases in market interest rates could have an adverse effect on profitability.

Our financial instruments consist primarily of fixed rate finance receivables and fixed and variable rate notes payable. Our finance receivables are classified as subprime loans and generally bear interest ranging from 3.6% to 29.9% or the maximum interest rate allowed in states that impose interest rate limits. At December 31, ~~2012~~2013, the remaining scheduled maturities on our finance receivables ranged from one to 75 months, with a weighted average remaining maturity of 4550.47 months. The interest rates we charge our customers on finance receivables have not changed significantly as a result of fluctuations in market interest rates. We may increase the interest rates we charge in the future if market interest rates rise. The affordability of our customers’ payments is an important component of the structure of our transactions. Because of these affordability concerns for our customers and interest rate limits imposed by some states, we may not pass on the entire portion of future rate increases to our customers.

Approximately $~~900~~1.0 ~~million~~billion of our total debt of $1.47 billion at December 31, ~~2012~~2013, consists of fixed-rate collateralized asset-backed securities issued under our securitization program, aand ~~term residual financing,~~ Senior Secured Notes payable, and other notes with a fixed interest rate. Our securitization program has allowed us to mitigate our interest rate risk by periodically replacing variable rate borrowings under our portfolio warehouse facilities with fixed rate borrowings during the year.

The table below illustrates the impact that hypothetical changes in interest rates could have on our interest expense for the years ended December 31, ~~2012~~2013 and ~~2011~~2012. We compute the impact on interest expense for the period by first computing the baseline interest expense on our debt with interest rate risk, which includes the variable rate revolving credit lines and the variable rate notes payable. We then determine interest expense based on each of the interest rate changes listed below and compare the results to the baseline interest expense. The table does not give effect to our fixed rate receivables and borrowings.

	Increase (Decrease) in Interest Expense
	Year Ended December 31, 2012			Year Ended December 31, 2011
	Year to date December 31, 2013			Year to date December 31, 2012
	($ in thousands)
Change in Rates	(In thousands)
Change in Rates
+200 basis points	$	12,853		$	3,884
+200 basis points	$	3,884		$	4,949
+100 basis points	$	6,427		$	1,942
+100 basis points	$	1,942		$	2,475
-100 basis points	$	(6,427	)	$	(1,942	)
-100 basis points	$	(1,942	)	$	(2,475	)
-200 basis points	$	(12,853	)	$	(3,884	)
-200 basis points	$	(3,884	)	$	(4,949	)

In computing the effect of hypothetical changes in interest expense, we have assumed that:


•	interest rates used for the baseline and hypothetical net interest expense amounts are on a monthly basis and in effect for the entire month;


•	interest for the period is calculated on monthly average debt balances during the applicable periods; and


•	there is no change in average balance outstanding as a result of the interest rate changes.

Our sensitivity to interest rate changes could be significantly different if actual experience differs from the assumptions used to compute the estimates.

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Item 8. Financial Statements and Supplementary Data

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page
Report of Independent Registered Public Accounting Firm	5544
Consolidated Balance Sheets as of December 31, 2012 and 2011	56
Consolidated Balance Sheets as of December 31, 2013 and December 31, 2012	45
Consolidated Statements of Operations for the Years Ended December 31, 2012, 2011 and 2010	57
Consolidated Statements of Operations for the Years Ended December 31, 2013, 2012 and 2011	46
Consolidated Statements of Shareholders’ Equity for the Years Ended December 31, 2012, 2011 and 2010	58
Consolidated Statements of Shareholders’ Equity for the Years Ended December 31, 2013, 2012 and 2011	47
Consolidated Statements of Cash Flows for the Years Ended December 31, 2012, 2011 and 2010	59
Consolidated Statements of Cash Flows for the Years Ended December 31, 2013, 2012 and 2011	48
Notes to Consolidated Financial Statements	6150

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Report of Independent Registered Public Accounting Firm

Board of Directors and Shareholders

DriveTime Automotive Group, Inc.

We have audited the accompanying consolidated balance sheets of DriveTime Automotive Group, Inc. and subsidiaries (~~collectively~~ the “Company”) as of December 31, ~~2012~~2013 and ~~2011~~2012, and the related consolidated statements of operations, shareholders’ equity, and cash flows for each of the three years in the period ended December 31, ~~2012~~2013. These ~~consolidated~~ financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these ~~consolidated~~ financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the ~~consolidated~~ financial statements are free of material misstatement. ~~The~~We ~~Company~~were is not ~~required to have, nor were we~~ engaged to perform an audit of ~~its~~the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the ~~consolidated~~ financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of DriveTime Automotive Group, Inc. and subsidiaries as of December 31, ~~2012~~2013 and ~~2011~~2012, and the results of their operations and their cash flows for each of the three years in the period ended December 31, ~~2012,~~2013 in conformity with accounting principles generally accepted in the United States of America.

/s/ GRANT THORNTON LLP

Phoenix, Arizona

March 2824, ~~2013~~2014

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DRIVETIME AUTOMOTIVE GROUP, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

	December 31, 2012			December 31, 2011
	December 31, 2013			December 31, 2012
	($ in thousands)
ASSETS	(In thousands)
ASSETS
Cash and Cash Equivalents	$	30,754		$	26,478
Cash and Cash Equivalents	$	26,480		$	25,930
Restricted Cash and Investments Held in Trust	114,868			107,072
Restricted Cash and Investments Held in Trust	107,072			99,716
Finance Receivables	1,938,931			1,661,662
Finance Receivables	1,634,622			1,495,340
Allowance for Credit Losses	(299,516		)	(252,590		)
Allowance for Credit Losses	(252,590		)	(221,533		)
Finance Receivables, net	1,639,415			1,409,072
Finance Receivables, net	1,382,032			1,273,807
Vehicle Inventory, net	319,567			270,733
Dealer Finance Receivables	40,956			24
Property and Equipment, net	103,660			93,141
Inventory	270,733			212,330
Lease Fleet Vehicles, net	31,161			—
Property and Equipment, net	94,397			90,669
Other Assets	58,087			40,218
Other Assets	67,447			64,353
Shareholder Notes Receivable	28,542			—
Total Assets	$	1,989,117		$	1,766,829
Assets of Discontinued Operation	—			42,403
Total Assets	$	2,326,054		$	1,989,117
LIABILITIES & SHAREHOLDERS’ EQUITY
Liabilities:
Accounts Payable	$	17,346		$	9,759
Payables and Other Accrued Expenses	$	108,749		$	95,267
Accrued Expenses and Other Liabilities	81,121			77,043
Accrued Expenses-Related Party	647			818
Accrued Expenses-Related Party	818			798
Deferred Revenue	42,133			2,501
Portfolio Term Financings	1,049,478			782,634
Portfolio Warehouse Facilities	283,400			57,200
Portfolio Warehouse Facilities	57,200			141,392
Portfolio Term Financings	987,821			1,049,478
Senior Secured Notes Payable	~~193~~253,~~320~~316			~~198~~193,~~058~~320
Senior Secured Notes Payable-Related Party	~~5,000~~—			—5,000
Other Secured Notes Payable	~~117~~161,~~281~~964			99117,~~296~~281
Total Liabilities	1,521,564			1,308,980
Liabilities of Discontinued Operation	—			699
Total Liabilities	1,838,030			1,521,564
Shareholders’ Equity-DTAG:
Common Stock	—			—
Paid-in Capital	147,~~117~~729			~~146~~147,~~336~~117
Retained Earnings	8,931			2,528
Retained Earnings / (Loss)	(45,650		)	8,931
Total Shareholders’ Equity-DTAG	~~156~~102,~~048~~079			~~148~~156,~~864~~048
Non-Controlling Interest-DTAC (1)	311,505			308,985
Non-Controlling Interest-Inilex (1)	(263		)	—
Total Equity	467,553			457,849
Non-Controlling Interest-DTAC (2)	386,208			311,505
Total Liabilities & Shareholders’ Equity	$	1,989,117		$	1,766,829
Total Equity	488,024			467,553
Total Liabilities & Shareholders’ Equity	$	2,326,054		$	1,989,117

(1) Refer to Note 1820 for Consolidating Financial Information and discussion regarding non-controlling interest-Inilex.

⁽²⁾ ^{Refer to}^{Note 20}^{for Consolidating Financial Information and discussion regarding non-controlling interest-DTAC.}

See accompanying notes to Consolidated Financial Statements.

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DRIVETIME AUTOMOTIVE GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Operations

	Years Ended December 31,
	2012			2011			2010
	2013			2012			2011
	($ in thousands)
Revenue:	(In thousands)
Revenue:
Sales Revenue	$	1,055,504		$	920,507		$	838,242
Sales of Used Vehicles	$	920,507		$	838,242		$	760,767
Interest Income	327,798			299,382			283,065
Interest Income	299,382			283,065			264,974
Other Income	17,594			1,175			660
Dealer Finance and Other Income	2,977			—			—
Total Revenue	1,400,896			1,221,064			1,121,967
Total Revenue	1,222,866			1,121,307			1,025,741
Costs and Expenses:
Cost of Used Vehicles Sold	607,932			544,504			481,210
Cost of Sales	731,190			607,932			544,504
Provision for Credit Losses	~~253~~308,~~603~~332			~~207~~253,~~198~~603			~~175~~207,~~900~~198
Portfolio Debt Interest Expense	4142,~~978~~196			4341,~~475~~978			6843,~~314~~475
Non-Portfolio Debt Interest Expense	42,~~644~~552			34,~~034~~644			43,~~581~~034
Non-Portfolio Debt Interest Expense—Related party	—			—			10,176
Senior Secured Debt Interest Expense	29,919			26,209			23,861
Senior Secured Debt Interest Expense	26,209			23,861			11,878
Senior Secured Debt Interest Expense—Related party	406			261			2,680
Senior Secured Debt Interest Expense—Related party	261			2,680			3,153
Selling and Marketing	32,138			28,015			22,790
Selling and Marketing	28,139			22,790			16,783
General and Administrative	184,971			165,393			157,201
General and Administrative	168,530			157,330			150,373
General and Administrative—Related party	10,835			10,873			11,001
General and Administrative—Related party	10,873			11,001			15,118
Depreciation Expense	25,032			19,740			16,075
Depreciation Expense	20,150			16,075			13,751
Total Costs and Expenses	1,367,571			1,158,648			1,031,819
Loss on Extinguishment of Debt	—			—			3,418
Income Before Income Taxes	33,325			62,416			90,148
Total Costs and Expenses	1,162,319			1,031,948			954,655
Income Tax Expense	1,609			1,194			1,221
Income Before Income Taxes	60,547			89,359			71,086
Net Income from Continuing Operations	31,716			61,222			88,927
Income Tax Expense	1,194			1,221			404
Loss from Discontinued Operations (net of taxes)	(1,956		)	(1,869		)	(789		)
Net Income	$29,760	~~59,353~~		$59,353	~~88,138~~		$88,138	~~70,682~~
Net Loss Attributable to Non-Controlling Interest-DTAC (1)	(178,318		)	(128,765		)	(150,310		)
Net Loss Attributable to noncontrolling interest - Inilex	(548		)	—			—
Net Income Attributable to DTAG	237,671			216,903			220,992
Net Income Attributable to DriveTime Consolidated	$	30,308		$	59,353		$	88,138
Net Income	$	59,353		$	88,138		$	70,682
Net Loss Attributable to Non-Controlling Interest-DTAC (1)	(216,753		)	(178,318		)	(128,765		)
Net Income Attributable to DTAG	247,061			237,671			216,903
Net Income	$	30,308		$	59,353		$	88,138

(1) Refer to Note 1820 for Consolidating Financial Information and discussion regarding non-controlling interest.

See accompanying notes to Consolidated Financial Statements.

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Consolidated Statements of Shareholders’ Equity

	DriveTime Automotive Group, Inc.										~~TotalConsolidatedShareholders’Equity~~			TotalConsolidatedShareholders’Equity
	Common Stock		Paid-inCapital		RetainedEarnings / (Loss)			~~Non~~NoncontrollingInterest-~~ControllingInterest-~~DTAC (1)			Noncontrolling Interest-Inilex (1)
	($ in thousands)
	(In thousands)
Balances, December 31, 2009	$	—	$	124,098	$	(19,969	)	$	189,016		$	293,145
Balances, December 31, 2010	$	—	$	144,942	$	(2,383	)	$	276,208		$	—		$	418,767
Net Income (Loss) for the Year	—		—		~~220~~216,~~992~~903			(~~150~~128,~~310~~765		)	~~70,682~~—			88,138
Exchange of Other Secured Notes Payable-Related Party to Equity	—		—		—			60,088			60,088
Non-Cash Compensation Expense-Related Party	—		1,394		—			1,395			—			2,789
Exchange of Subordinated Notes Payable-Related Party to Equity	—		20,000		—			20,000			40,000
Dividends-Related Party	—		—		—			(51,845		)	—			(51,845		)
Non-Cash Compensation Expense-Related Party	—		562		—			563			1,125
Intercompany Transfers of Loans	—		—		(211,992		)	211,992			—			—
Intercompany Transfers of Loans	$	—	$	—	$	(191,806	)	$	191,806		$	—
Balances, December 31, 2011	$	—	$	146,336	$	2,528		$	308,985		$	—		$	457,849
Dividends-Related Party	—		—		(11,600		)	(34,710		)	(46,310		)
Net Income (Loss) for the Year	—		—		237,671			(178,318		)	—			59,353
Other Equity Transactions	—		282		—			(245		)	37
Non-Cash Compensation Expense-Related Party	—		781		—			765			—			1,546
Balances, December 31, 2010	—		144,942		(2,383		)	276,208			418,767
Dividends-Related Party	—		—					(51,195		)	—			(51,195		)
Net Income (Loss) for the Year	—		—		216,903			(128,765		)	88,138
Intercompany Transfers of Loans	—		—		(231,268		)	231,268			—			—
Non-Cash Stock Compensation Expense-Related Party	—		1,394		—			1,395			2,789
Balances, December 31, 2012	$	—	$	147,117	$	8,931		$	311,505		$	—		$	467,553
Dividends-Related Party	—		—		—			(51,845		)	(51,845		)
Net Income (Loss) for the year	—		—		247,061			(216,753		)	(548		)	29,760
Intercompany Transfers of Loans	—		—		(211,992		)	211,992			—
Non-cash Compensation Expense - Related Party	—		612		—			627			—			1,239
Balances, December 31, 2011	$	—	$	146,336	$	2,528		$	308,985		$	457,849
Dividends-Related Party	—		—		—			(13,701		)	—			(13,701		)
Net Income (Loss) for the Year	—		—		237,671			(178,318		)	59,353
Intercompany Transfer of Loans	—		—		(304,944		)	304,944			—			—
Non-Cash Stock Compensation Expense-Related Party	—		781		—			765			1,546
Other Equity Transactions	—		—		3,302			(414		)	285			3,173
Dividends-Related Party	—		—					(51,195		)	(51,195		)
Balances, December 31, 2013	$	—	$	147,729	$	(45,650	)	$	386,208		$	(263	)	$	488,024
Intercompany Transfers of Loans	—		—		(231,268		)	231,268			—
Balances, December 31, 2012	$	—	$	147,117	$	8,931		$	311,505		$	467,553

(1) Refer to Note 1820 for Consolidating Financial Information and discussion regarding non-controlling interest.

See accompanying notes to Consolidated Financial Statements.

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Consolidated Statements of Cash Flows



	Years Ended December 31,
	2013			2012			2011
	(In thousands)
Cash Flows from Operating Activities:
Net Income	$	29,760		$	59,353		$	88,138
Net loss attributable to noncontrolling interest - Inilex	548			—			—
Net Income Attributable to DriveTime Consolidated	30,308			59,353			88,138
Net Loss from Discontinued Operation	1,956			1,869			789
Adjustments to Reconcile Net Income to Net Cash (Used in) Provided by Operating Activities:
Provision for Credit Losses	308,332			253,603			207,198
Depreciation Expense	25,032			19,740			16,075
Amortization of Debt Issuance Costs and Debt Premium and Discount	6,284			8,163			11,880
Non-Cash Compensation Expense	1,239			1,546			2,789
Loss (Gain) from Disposal of Property and Equipment	(145		)	(153		)	81
Originations of Finance Receivables	(1,106,422		)	(917,093		)	(829,141		)
Collections and Recoveries on Finance Receivable Principal Balances	572,757			559,092			540,450
Increase in Accrued Interest Receivable and Loan Origination Costs	(5,011		)	(4,252		)	(1,011		)
Increase in Inventory	(48,834		)	(58,403		)	(66,286		)
Increase in Other Assets	(12,432		)	(3,319		)	(2,814		)
Increase / (Decrease) in Deferred Revenue	39,632			2,393			(28		)
Increase / (Decrease) in Accounts Payable and Accrued Expenses	14,460			8,488			9,083
Increase (Decrease) in Accrued Expenses-Related Party	(171		)	20			(1,561		)
Net Cash Used By Operating Activities from Continuing Operations	(173,015		)	(68,953		)	(24,358		)
Net Cash Provided By Operating Activities from Discontinued Operations	761			(925		)	(838		)
Net Cash Used By Operating Activities	(172,254		)	(69,878		)	(25,196		)
Cash Flows from Investing Activities:
Proceeds from Disposal of Property and Equipment	1,748			1,895			519
Purchase of Property and Equipment	(36,271		)	(24,481		)	(44,174		)
Purchase of Lease Fleet	(33,022		)	—			—
Proceeds from Sale of Discontinued Operations	85,074			—			—
Increase in Other Investments	(3,200		)	—			—
Net Cash Provided by / (Used in) Investing Activities from Continuing Operations	14,329			(22,586		)	(43,655		)
Net Cash Used in Investing Activities from Discontinued Operation	(74,629		)	(41,971		)

Filing Compare · DRIVETIME AUTOMOTIVE GROUP INC