CompuCredit Announces Preliminary Fourth Quarter Results.Business Editors ATLANTA--(BUSINESS WIRE)--Jan. 29, 2002 CompuCredit Corporation (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : CCRT CCRT Core Conflictual Relationship Theme CCRT Conseil Canadien de la Réadaptation et du Travail (Canadian Council on Rehabilitation and Work) CCRT Cape Cod Rail Trail (Massachusetts, USA) ) today reported preliminary fourth quarter 2001 net income of $5.6 million, or $0.12 per share before the possible adjustments described below. These results compare to fourth quarter 2000 net income of $11.3 million or $0.24 per share. For the year ending December December: see month. 31, 2001, the company reported preliminary net income of $41.6 million or $0.89 per share compared to prior year net income of $82.4 million or $1.79 per share. These numbers are unaudited and do not reflect resolution of the matters described below. As previously announced, in the fourth quarter CompuCredit sold two subordinate interests in its securitizations for net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $26 million. The aggregate "face" amount of these two interests was approximately $36 million. Initially, CompuCredit expected to amortize amortize To write off gradually and systematically a given amount of money within a specific number of time periods. For example, an accountant amortizes the cost of a long-term asset by deducting a portion of that cost against income in each period. the discount as interest expense over the remaining life of the securitizations. CompuCredit's independent auditors Independent Auditor An external auditor with a certified public accounting designation that qualifies him or her to provide an auditor's report. Notes: These auditors aren't affiliated with the company being audited. have indicated that the company should record the discount as a loss upon sale of the interests, and the company is currently reassessing whether that treatment is appropriate. The net effect of this non-cash adjustment would be to decrease net income for the fourth quarter by $5.8 million, or $0.13 per share. In addition, the auditors AUDITORS, practice. Persons lawfully appointed to examine and digest accounts referred to them, take down the evidence in writing, which may be lawfully offered in relation to such accounts, and prepare materials on which a decree or judgment may be made; and to report the whole, together are reassessing whether the sales require any revaluation Revaluation A calculated adjustment to a country's official exchange rate relative to a chosen baseline. The baseline can be anything from wage rates to the price of gold to a foreign currency. In a fixed exchange rate regime, only a decision by a country's government (i.e. of CompuCredit's retained interests Retained interest (also colloquially known as a payout penalty) is future, currently unpaid, interest that some lenders add to the remaining principal of a loan to determine a payout figure in the event that the loan is terminated before the completion of the original term. . "We are in discussions with our auditors on this issue. The total amount of this non-cash adjustment cannot be precisely estimated at this time but is not expected to exceed $35 million, which would include the $5.8 million loss on sale," said David Hanna Han·na , Marcus Alonzo Known as "Mark." 1837-1904. American financier and politician who managed the 1896 and 1900 presidential campaigns of William McKinley and served as a U.S. senator from Ohio (1897-1904). , Chief Executive Officer. "Our industry is under significant scrutiny Scrutiny (Fr. scrutin, Late Lat. scrutinium, from scrutari, to search or examine thoroughly) is a careful examination or inquiry (as though there was a mistake). right now," noted Mr. Hanna. "The accounting for these transactions has no cash impact on our business, but the amounts involved are significant enough that it is important for us to be in full agreement with our independent auditors on the proper accounting treatment before we announce our final fourth quarter results in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with Generally Accepted Accounting Principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). )." "We're we're Contraction of we are. we're we are disappointed with our fourth quarter results," said Mr. Hanna. "Reduced loan growth and increased expenses in anticipation The performance of an act or obligation before it is legally due. In patent law, the publication of the existence of an invention that has already been patented or has a patent pending, of greater growth kept us from meeting our profit goals. Consumer spending Consumer demand or consumption is also known as personal consumption expenditure. It is the largest part of aggregate demand or effective demand at the macroeconomic level. in October October: see month. bounced back from the September September: see month. levels, but holiday purchases in November November: see month. and December were significantly lower than expected. Unfortunately, we did not adjust our expense levels quickly enough. We addressed this problem earlier this month by implementing a layoff Layoff 1. When a company eliminates jobs regardless of how good the employees' performance. 2. A risk reduction, made by investment bankers, that minimizes the potential downside associated with a commitment to purchase and sell a stock issue unsubscribed by stockholders holding of approximately 70 people." "As the recession continues, we believe that 2002 will be a challenging year for CompuCredit. We continue to cautiously cau·tious adj. 1. Showing or practicing caution; careful. 2. Tentative or restrained; guarded: felt a cautious optimism that the offer would be accepted. view growth opportunities for 2002, but will not grow at the expense of credit quality or liquidity," said Mr. Hanna. The net charge-off Eliminate or write off. The term charge-off is used to describe the process of removing from the records of a company something that was once regarded as an asset but has subsequently become worthless. rate was 15.3 percent in the fourth quarter of 2001 as compared to 14.6 percent for the third quarter of 2001. At December 31, 2001, the 60+ day managed delinquency delinquency Criminal behaviour carried out by a juvenile. Young males make up the bulk of the delinquent population (about 80% in the U.S.) in all countries in which the behaviour is reported. rate was 11.1 percent as compared to 10.9 percent as of September 30, 2001. "Despite our earnings underperformance, we are pleased to see the prudent use of our credit products by our cardholders, which is reflected in our stable delinquency rates," said Rich House, President. For the fourth quarter of 2001, the managed net interest margin was 19.0 percent as compared to 21.8 percent in the fourth quarter of 2000 and 21.5 percent in the third quarter of 2001. The company added 125,000 new accounts in the fourth quarter, compared to 183,000 in the third quarter of 2001. The return on average managed loans was 1.2 percent for the fourth quarter of 2001, compared to 3.4 percent for the third quarter of 2001. The operating ratio Operating Ratio A ratio that shows the efficiency of management by comparing operating expense to net sales: was 9.8 percent for the fourth quarter of 2001, compared to 8.8 percent for the third quarter of 2001. During the year 2001, CompuCredit's book value per share increased to $9.53 from $8.69 at the end of 2000. Further details regarding CompuCredit's fourth quarter financial performance and 2002 outlook will be discussed during management's conference call on Wednesday Wednesday: see week. , January January: see month. 30, 2002 at 8:30 a.m. Eastern Standard Time. The media and public are invited to listen to the live webcast of the call, accessible on the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the at http://www.CompuCredit.com. The conference call will be archived at the above web site for those interested parties that are unable to attend at this time. CompuCredit Corporation (Nasdaq: CCRT) is a credit card company that uses analytical techniques An analytical technique is a method that is used to determine the concentration of a chemical compound or chemical element. There are a wide variety of techniques used for analysis, from simple weighing (gravimetric) to titrations (titrimetric)to very advanced techniques using , including sophisticated computer models, to market general-purpose gen·er·al-pur·pose adj. Designed for or suitable to more than one use; broadly useful: a general-purpose loan. general-purpose Adjective credit cards and related fee-based products and services. Through its Aspire brand and others, the company currently serves more than 2.2 million customers nationwide. Credit cards marketed by CompuCredit are issued by Columbus Columbus. 1 City (1990 pop. 178,681), seat of Muscogee co., W Ga., at the head of navigation on the Chattahoochee River; settled and inc. 1828 on the site of a Creek village. Bank and Trust Company under an agreement with CompuCredit. For more information about CompuCredit, visit www.compucredit.com. All statements in this press release concerning our financial performance and earnings expectations for fiscal year 2002 and the resolution of outstanding accounting issues are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. . These forward-looking statements are not guarantees of future performance and are subject to various assumptions, risks, uncertainties and other factors that could cause our actual results to differ materially from those that are suggested by these forward-looking statements. These factors include, among others, the following risks and others set forth under the caption "Risk Factors" in CompuCredit's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December 31, 2000: we have a limited experience with our receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed ; we may be unable to meet our future capital and liquidity needs or may be forced to rely on more expensive funding sources than securitizations to sustain our growth; we may encounter other unanticipated difficulties as we seek to sustain and manage our growth; we may be unable to successfully evaluate the creditworthiness Creditworthiness The condition in which the risk of default on a debt obligation by that entity is deemed low. Creditworthiness Eligibility of an individual or firm to borrow money. of our clients and price our credit products so as to remain as profitable as expected; we may experience increased delinquencies and defaults resulting from lack of seasoning of our credit card portfolio; increases in interest rates may increase our cost of funds Cost of Funds The interest rate paid on an outstanding loan. Notes: Money isn't free! Cost of funds is the cost of borrowing money. See also: Interest Rate Cost of funds Interest rate associated with borrowing money. and reduce the payment performance of our clients; unpredictable economic and other factors could adversely affect our business; changes in consumer protection or other laws may adversely affect our ability to collect credit card account balances or otherwise adversely affect our business or expose To make available. When software "exposes" certain functions, it makes those routines available to the programmer through a programming interface (API). If a company "exposes" its Web services, it is making certain services available to users or to other companies over the Web. us to litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. ; adverse publicity could impair im·pair tr.v. im·paired, im·pair·ing, im·pairs To cause to diminish, as in strength, value, or quality: an injury that impaired my hearing; a severe storm impairing communications. acceptance of our products; intense competition for credit card customers could hinder hin·der 1 v. hin·dered, hin·der·ing, hin·ders v.tr. 1. To be or get in the way of. 2. To obstruct or delay the progress of. v.intr. our efforts to attract new customers and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. cause us to lose accounts or account balances; we may not be able to successfully target internet clients or evaluate their creditworthiness; our reputation and business may be damaged by internet security ''This article or section is being rewritten at Internet security is the process of protecting data and privacy of devices connected to internet from information robbery, hacking, malware infection and unwanted software. breaches or other internet related problems; we may encounter unanticipated difficulties integrating and managing acquired companies or businesses; and we may not realize the benefits or net income we expect from acquisitions. Moreover, as a consequence of those or other factors, CompuCredit's plans or expectations may change. CompuCredit expressly disclaims any obligation to update or revise, publicly or otherwise, any forward-looking statements, whether as a result of new information, future events or otherwise.
CompuCredit Corporation (CCRT)
Financial and Statistical Summary
(Unaudited)
At or For the Three Months Ended
Dec. 31, Sept. 30, Dec. 31,
2001 (3) 2001 2000
-------------------------------------
(In thousands, except percentages and per share data)
Common Share Statistics
EPS - Basic $ 0.12 $ 0.32 $ 0.24
EPS - Diluted $ 0.12 $ 0.32 $ 0.24
Book Value Per Common Share
Outstanding (period end)(1) $ 9.53 $ 9.46 $ 8.69
Stock Price Per Share
(period end) $ 11.76 $ 7.29 $ 18.13
Total Market Capitalization
(period end) $ 547,536 $ 339,416 $ 843,078
Shares Outstanding (period end) 46,559 46,559 46,515
Weighted Average Shares
O/S - Basic 46,559 46,559 46,515
Weighted Average Shares
O/S - Diluted 46,566 46,662 46,647
Average Managed Loans Statistics (2)
Average Managed Loans $1,838,873 $1,745,136 $1,398,041
Average Equity $ 453,478 $ 433,000 $ 395,385
Net Interest Margin 19.0% 21.5% 21.8%
Return on Average Managed Loans 1.2% 3.4% 3.2%
Return on Average Equity (ROE) 5.0% 13.8% 11.5%
Net Charge-Off Rate 15.3% 14.6% 13.3%
Net Charge-Offs $ 70,207 $ 63,759 $ 46,552
Risk Adjusted Margin 12.5% 16.1% 18.6%
Operating Ratio 9.8% 8.8% 7.9%
Period-End Managed Loans
Statistics (2)
Total Managed Loans $1,891,842 $1,804,631 $1,528,372
Delinquency Rate (60+ days) 11.1% 10.9% 9.5%
Number of Accounts 2,185 2,163 2,178
Shareholders' Equity $ 485,255 $ 440,273 $ 404,181
Equity to Managed Loans Ratio 25.6% 24.4% 26.4%
(1) Assumes preferred shares are converted into common shares at
December 31, 2001.
(2) Excludes receivables at or near charge-off at the time of
purchase.
(3) These numbers are unaudited and do not reflect the resolution of
the sale of subordinate interests in CompuCredit's
securitizations. The aggregate "face" amount of these two
interests was approximately $36 million. Initially, CompuCredit
expected to amortize the discount as interest expense over the
remaining life of the securitizations. CompuCredit's independent
auditors have indicated that the company should record the
discount as a loss upon sale of the interests, and the company is
currently reassessing whether that treatment is appropriate. The
net effect of this non-cash adjustment would be to decrease net
income for the fourth quarter by $5.8 million, or $0.13 per share.
In addition, the auditors are reassessing whether the sales
require any revaluation of CompuCredit's retained interests. The
company is in discussions with their auditors on this issue. The
total amount of this non-cash adjustment cannot be precisely
estimated at this time but is not expected to exceed $35 million,
which would include the $5.8 million loss on sale.
CompuCredit Corporation and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
December 31, December 31,
2001 (1) 2000
--------------------------------
(Dollars in thousands)
Assets
Cash and cash equivalents $55,746 $68,980
Retained interests in credit card
receivables securitized 402,145 325,583
Accrued interest and fees 32,928 24,569
-------------------------------
Net credit card receivables 435,073 350,152
Amounts due from securitization 28,496 11,735
Deferred costs, net 17,862 8,332
Software, furniture, fixtures
and equipment, net 34,522 14,268
Prepaid expenses 10,439 5,540
Other assets 13,974 11,498
-------------------------------
Total assets $596,112 $470,505
===============================
Liabilities
Accrued expenses $28,321 $21,531
Notes payable 16,517 -
Deferred revenue 13,819 9,217
Income tax liability 52,200 35,576
-------------------------------
Total liabilities 110,857 66,324
Shareholders' equity
Preferred stock, no par value,
10,000,000 shares authorized:
Series A preferred stock, 30,000
and 0 shares issued and outstanding
at December 31, 2001 and
December 31, 2000, respectively 29,512 -
Series B preferred stock, 10,000
and 0 shares issued and outstanding
at December 31, 2001 and
December 31, 2000, respectively 10,000 -
Common stock, no par value,
150,000,000 shares authorized;
46,559,165 and 46,514,639 issued
and outstanding at December 31, 2001
and December 31, 2000, respectively - -
Additional paid-in capital 240,352 239,789
Note issued to purchase stock (500) -
Retained earnings 205,891 164,392
-------------------------------
Total shareholders' equity 485,255 404,181
-------------------------------
Total liabilities and
shareholders' equity $596,112 $470,505
===============================
(1) These numbers are unaudited and do not reflect the resolution of
the sale of subordinate interests in CompuCredit's
securitizations. The aggregate "face" amount of these two
interests was approximately $36 million. Initially, CompuCredit
expected to amortize the discount as interest expense over the
remaining life of the securitizations. CompuCredit's independent
auditors have indicated that the company should record the
discount as a loss upon sale of the interests, and the company is
currently reassessing whether that treatment is appropriate. The
net effect of this non-cash adjustment would be to decrease net
income for the fourth quarter by $5.8 million, or $0.13 per share.
In addition, the auditors are reassessing whether the sales
require any revaluation of CompuCredit's retained interests. The
company is in discussions with their auditors on this issue. The
total amount of this non-cash adjustment cannot be precisely
estimated at this time but is not expected to exceed $35 million,
which would include the $5.8 million loss on sale.
CompuCredit Corporation and Subsidiaries
Consolidated Statements of Income (Unaudited)
For the For the
Three Months Ended Twelve Months Ended
Dec. 31, Sept. 30, Dec. 31, Dec. 31, Dec. 31,
2001 (2) 2001 2000 2001 (2) 2000
----------------------------- -------------------
(Dollars in thousands, except per share data)
Net Interest income $114 $271 $1,461 $2,030 $7,091
Other operating income:
Securitization income,
net 484 571 1,981 1,560 11,778
Income from retained
interests in credit
card receivables
securitized 5,141 19,159 20,593 61,023 113,944
Servicing income 1,372 1,411 1,648 6,018 7,705
Other credit card fees 26,097 23,948 16,999 89,553 53,165
Interchange fees 5,666 6,212 6,154 22,780 19,880
Ancillary products 6,920 8,731 8,455 30,592 28,497
---------------------------- -------------------
Total other
operating income 45,680 60,032 55,830 211,526 234,969
Other operating expense:
Salaries and benefits 3,789 3,330 1,894 12,161 5,833
Credit card servicing 17,543 15,650 9,768 62,374 28,320
Marketing and
solicitation 2,403 7,670 20,715 29,931 59,509
Professional fees 1,012 837 775 3,659 2,255
Data processing 3,691 2,375 1,254 10,558 4,519
Net occupancy 1,356 1,112 355 3,875 1,160
Ancillary product
expense 1,983 2,058 2,308 10,121 8,501
Other 5,384 4,282 2,781 16,810 7,808
---------------------------- -------------------
Total other
operating expense 37,161 37,314 39,850 149,489 117,905
Income before income
taxes 8,633 22,989 17,441 64,067 124,155
Income tax expense (3,019) (8,049) (6,104) (22,424) (41,781)
---------------------------- -------------------
Net income $5,614 $14,940 $11,337 $41,643 $82,374
============================ ===================
Net income attributable
to common shareholders $5,470 $14,940 $11,337 $41,499 $82,374
============================ ===================
Average shares
outstanding - basic 46,559 46,559 46,515 46,542 45,886
============================ ===================
Average shares
outstanding - diluted 46,566 46,662 46,647 46,621 46,070
============================ ===================
Earnings per
share - basic (1) $ 0.12 $ 0.32 $ 0.24 $ 0.89 $ 1.80
============================ ===================
Earnings per
share - diluted (1) $ 0.12 $ 0.32 $ 0.24 $ 0.89 $ 1.79
============================ ===================
(1) The effect of the preferred stock, which is convertible into
common shares, was excluded from the EPS computations because its
inclusion would have been anti-dilutive.
(2) These numbers are unaudited and do not reflect the resolution of
the sale of subordinate interests in CompuCredit's
securitizations. The aggregate "face" amount of these two
interests was approximately $36 million. Initially, CompuCredit
expected to amortize the discount as interest expense over the
remaining life of the securitizations. CompuCredit's independent
auditors have indicated that the company should record the
discount as a loss upon sale of the interests, and the company is
currently reassessing whether that treatment is appropriate. The
net effect of this non-cash adjustment would be to decrease net
income for the fourth quarter by $5.8 million, or $0.13 per share.
In addition, the auditors are reassessing whether the sales
require any revaluation of CompuCredit's retained interests. The
company is in discussions with their auditors on this issue. The
total amount of this non-cash adjustment cannot be precisely
estimated at this time but is not expected to exceed $35 million,
which would include the $5.8 million loss on sale.
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