Credit Acceptance Announces 1st Quarter Earnings.Business Editors SOUTHFIELD Southfield, city (1990 pop. 75,728), Oakland co., SE Mich., a suburb of Detroit, on the Rouge River; laid out 1817, inc. as a city 1958. There are electronics research, meat-processing, and printing facilities, and manufactures include plastic, metal, rubber, and , Mich.--(BUSINESS WIRE)--April 17, 2002 Credit Acceptance Corporation (Nasdaq:CACC CACC Center for Animal Care and Control CACC Canadian Association for Community Care CACC Central Alabama Community College CACC Chilterns Association of Camera Clubs (United Kingdom) ) Credit Acceptance Corporation (the "Company") announced consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: net income for the quarter ended March 31, 2002 was $6,314,000 or $0.15 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share compared to $6,589,000 or $0.15 per diluted share for the same period in 2001. After adjustments related to stock options (see "Stock Options") and excluding the impact of non-recurring adjustments, consolidated net income was $9,115,000 or $0.19 per adjusted share compared to $6,401,000 or $0.14 per adjusted share for the same period in 2001. The results for the quarter ended March 31, 2002 include two non-recurring adjustments. The first relates to an amount booked to record additional taxes that will be owed upon repatriation Repatriation The process of converting a foreign currency into the currency of one's own country. Notes: If you are American, converting British Pounds back to U.S. dollars is an example of repatriation. of currently undistributed Adj. 1. undistributed - (of investments) not distributed among a variety of securities undiversified - not diversified earnings in the Company's United Kingdom business unit. An adjustment of $3,713,000 was recorded to the provision for income taxes during the quarter of which $149,000 relates to the current period. The remaining $3,564,000 relates to earnings generated from inception INCEPTION. The commencement; the beginning. In making a will, for example, the writing is its inception. 3 Co. 31 b; Plowd. 343. Vide Consummation; Progression. of the United Kingdom business unit through December December: see month. 31, 2001. Prior to this quarter, these undistributed earnings were classified as "permanently reinvested" and as a result no accrual accrual, n continually recurring short-term liabilities. Examples are accrued wages, taxes, and interest. of future United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. tax liability was required. Based upon reduced capital requirements Capital requirements Financing required for the operation of a business, composed of long-term and working capital plus fixed assets. in the United Kingdom business unit, it is likely that some amount of capital will be repatriated within fiscal 2002. While it is likely the Company will continue to have a sizable siz·a·ble also size·a·ble adj. Of considerable size; fairly large. siz  a·ble·ness n. investment in the
United Kingdom in the future, given current circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact.2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or , the Company does not expect future earnings to remain in the United Kingdom indefinitely in·def·i·nite adj. Not definite, especially: a. Unclear; vague. b. Lacking precise limits: an indefinite leave of absence. c. . The second adjustment, of $963,000 relates to a change in estimate for state income tax owed as a result of the re-characterization of income as a result of an Internal Revenue Service examination. The adjustment reverses a portion of the amount originally recorded in the fourth quarter of 2001 and favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. impacted the reported provision for income taxes by $634,000 and operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. by $329,000 in the current quarter. The quarter also included a $200,000 after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. expense associated with performance-based stock options granted in 1999. See "Stock Options" for a more comprehensive discussion of this topic. Economic Profit (Loss) Economic profit (loss) represents operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. after tax less the cost of capital. The Company's economic loss improved to ($954,000) or ($0.02) per adjusted share for the quarter ended March 31, 2002 compared to ($2,531,000) or ($0.05) per adjusted share for the same period in 2001. In addition to adjusting for non-recurring items, the economic loss includes three adjustments relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc stock options. See the section on "Stock Options" for a complete discussion of this topic. The following presents the calculation of the Company's economic loss for the periods indicated (Dollars in thousands, except per share data):
Three Months Ended March 31,
-------------------------------
2002 2001
------------- -------------
(Unaudited)
Reported net income(1) $ 6,314 $ 6,589
Non-recurring adjustments(2) 2,601 (188)
Recorded stock option expense(3) 200 --
------------- -------------
Adjusted net income 9,115 6,401
Interest expense after-tax 1,502 2,458
------------- -------------
Net operating profit after
tax ("NOPAT") 10,617 8,859
Average capital(4) $ 505,913 $ 448,960
Return on Capital ("ROC")(5) 8.39% 7.89%
Weighted average cost of
capital ("WACC")(6) 9.15% 10.15%
------------- -------------
Spread (0.76%) (2.26%)
Economic loss(7) $ (954) $ (2,531)
Adjusted weighted average
shares outstanding(8) 47,336,090 47,123,792
------------- -------------
Economic loss per share(9) and(10) $ (0.02) $ (0.05)
------------- -------------
------------- -------------
Adjusted net income per share(11) $ 0.19 $ 0.14
------------- -------------
------------- -------------
(1) Consolidated net income from the income statement of this
news release.
(2) 2002 adjustments reflect: (i) additional taxes recorded in
connection with future repatriation of earnings from the
United Kingdom business unit, and (ii) a reduction in state
income tax related liability. The 2001 amount reflects the
first quarter 2001 impact of the United Kingdom business unit
tax adjustment.
(3) Generally accepted accounting principles ("GAAP") require
the Company to record an expense relating to
performance-based options. See Stock Options.
(4) Average capital is equal to the average amount of debt and
equity during the period, which includes $23,623,000 and
$22,864,000 added to reported shareholder's equity to reflect
the cost of stock options in 2002 and 2001, respectively.
(5) Return on capital is equal to NOPAT divided by average
capital.
(6) Weighted average cost of capital is equal to the sum of: (i)
the after-tax cost of debt multiplied by the ratio of average
debt to average capital, plus (ii) the cost of equity
multiplied by the ratio of average equity to average capital.
The cost of equity is assumed to be equal to the 30-year
Treasury bond rate plus 6% plus two times the Company's
interest bearing debt to equity, which includes $23,623,000
and $22,864,000 added to reported shareholders' equity to
reflect the cost of stock options in 2002 and 2001,
respectively.
(7) Total economic loss equals the Spread (ROC minus WACC)
multiplied by average capital.
(8) Includes actual shares outstanding plus total stock options
outstanding. Differs from shares used for GAAP earnings per
share which include only a portion of options outstanding.
(9) Economic loss per share equals the economic loss divided by
the adjusted weighted average shares outstanding.
(10) The Company's method of measuring options in the
calculation of economic profit (loss) is conservative in
two respects. First, the tax benefits of options have not
been included in our calculation of economic profit (loss).
Because option expense is deducted for tax purposes upon
exercise, more capital will be returned to the Company upon
exercise than is invested in repurchased shares. Second,
options may be cancelled due to turnover or the failure to
meet performance targets. Cancellations will be factored in
as they occur. One additional risk is assumed. Should options
be issued and shares repurchased above intrinsic value, and
the options subsequently expire unexercised, a loss equal to
the amount paid above intrinsic value would be incurred.
(11) Adjusted net income per share equals the adjusted net income
divided by the adjusted weighted average shares outstanding.
Summary of Operations
---------------------
Results for the Company's three business segments are discussed
below.
North America Business Segment
------------------------------
North America Business Segment
Selected Financial and Operating Data
-------------------------------------------
(Unaudited)
Three Months Ended March 31,
-------------------------------------------
(Dollars in thousands,
except per share data) 2002 2001 % Change
------------- ------------- ------------
Originations $ 174,543 $ 175,669 (0.6)%
Number of loans
originated 16,102 19,183 (16.1)
Collections $ 100,011 $ 86,447 15.7
Dealer-partners:
Number of active
dealer-partners 681 886 (23.1)
Loans per active
dealer-partner 23.6 21.7 9.2
Average loan size $ 10.8 $ 9.2 18.4
Reported net income $ 9,327 $ 5,447 71.2
Non-recurring
adjustment (963) --
Recorded stock option
expense 200 --
------------- -------------
Adjusted net income 8,564 5,447 57.2
Interest expense
after-tax 889 1,518 (41.4)
------------- -------------
NOPAT 9,453 6,965 35.7
Average capital $ 383,007 $ 321,377 19.2
ROC 9.87% 8.67%
WACC 8.95% 10.14%
------------- -------------
Spread 0.92% (1.47%)
Economic profit (loss) $ 903 $ (1,205)
Adjusted weighted average
shares outstanding 47,336,090 47,123,792
------------- -------------
Economic profit (loss)
per share $ 0.02 $ (0.03)
------------- -------------
------------- -------------
Adjusted net income
per share $ 0.18 $ 0.12 50.0 %
------------- -------------
------------- -------------
The North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. Business Segment's ("North America Operation") economic profit (loss) improved to $903,000 or $0.02 per adjusted share for the quarter ended March 31, 2002 compared with ($1,205,000) or ($0.03) per adjusted share for the same period in 2001 due to: (i) an increase in the return on capital to 9.87% from 8.67% for the same period in 2001 due primarily to a reduction in operating expenses as a percent of average capital; and (ii) a lower weighted average cost of capital Weighted average cost of capital (WACC) Expected return on a portfolio of all a firm's securities. Used as a hurdle rate for capital investment. Often the weighted average of the cost of equity and the cost of debt The weights are determined by the relative proportions of equity , which was a result of lower interest rates during the period. The North America Operation's automobile automobile, self-propelled vehicle used for travel on land. The term is commonly applied to a four-wheeled vehicle designed to carry two to six passengers and a limited amount of cargo, as contrasted with a truck, which is designed primarily for the transportation of loan originations The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. were $174,543,000 for the quarter ended March 31, 2002 compared with $175,669,000 for the same period in 2001, representing a decrease of 0.6%. The reduction in loan origination volume is a result of an increased focus on improving the return on capital. The Company's financial goal is to maximize In a graphical environment, to enlarge a window to the full size of the screen. See Win Maximize windows. the amount of economic profit generated per share. The Company believes that in the short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. , this objective can best be achieved by first improving the return per dollar of capital invested. Once return on capital goals have been met, the Company will then focus on increasing the amount of capital invested through increasing the number of dealer-partners and the number of loans originated per dealer-partner. The Company's efforts to improve the return on capital have focused on increasing the spread between the amount advanced to dealer-partners and the forecasted collection rate.
United Kingdom Business Segment
-------------------------------
United Kingdom Business Segment
Selected Financial and Operating Data
------------------------------------------
(Unaudited)
Three Months Ended March 31,
------------------------------------------
(Dollars in thousands,
except per share data) 2002 2001 % Change
------------- ------------- -----------
Originations $ 17,538 $ 35,357 (50.4)%
Number of loans
originated 1,304 2,704 (51.8)
Collections $ 21,399 $ 20,673 3.5
Dealer-partners:
Number of active
dealer-partners 106 148 (28.4)
Loans per active
dealer-partner 12.3 18.3 (32.7)
Average loan size $ 13.4 $ 13.1 2.9
Reported net income(loss) $ (2,462) $ 1,741
Non-recurring
adjustments 3,564 (188)
------------- -------------
Adjusted net income 1,102 1,553 (29.0)
Interest expense
after-tax 213 353 (39.7)
------------- -------------
NOPAT 1,315 1,906 (31.0)
Average capital $ 87,671 $ 90,887 (3.5)
ROC 6.00% 8.39%
WACC 9.98% 10.04%
------------- -------------
Spread (3.98%) (1.65%)
Economic loss $ (872) $ (375)
Adjusted weighted average
shares outstanding 47,336,090 47,123,792
------------- -------------
Economic loss
per share $ (0.02) $ (0.01)
------------- -------------
------------- -------------
Adjusted net income
per share $ 0.02 $ 0.03 (33.3)%
------------- -------------
------------- -------------
The United Kingdom Business Segment's ("United Kingdom Operation") economic loss increased to ($872,000) or ($0.02) per adjusted share for the quarter ended March 31, 2002 compared with ($375,000) or ($0.01) per adjusted share for the same period in 2001 primarily due to a decrease in the return on capital to 6.00% from 8.39% for the same period in 2001. The decrease in the return on capital is primarily due to a reduction in finance charge revenue as a percent of average capital as a result of an increase in the average loan term. To a lesser extent, the reduction was due to an increase in operating expenses as a percent of average capital. The decrease in the return on capital is partially offset by a lower average cost of capital, which was a result of lower interest rates during the period. The United Kingdom Operation originated $17,538,000 in automobile loans for the quarter ended March 31, 2002 compared with $35,357,000 for the same period in 2001, representing a decrease of 50.4%. The reduction in loan origination volume in the United Kingdom is a result of the same strategy as described under the North America Business Segment.
Automobile Leasing Business Segment
-----------------------------------
Automobile Leasing Business Segment
Selected Financial and Operating Data
--------------------------------------------------
(Unaudited)
Three Months Ended March 31,
--------------------------------------------------
(Dollars in thousands,
except per
share data) 2002 2001 % Change
------------- ------------- -------------
Collections $ 4,644 $ 4,516 2.8 %
Reported net loss $ (551) $ (599) 8.0
Interest expense
after-tax 400 587 (31.9)
------------- -------------
NOPAT (151) (12) (1,158.3)
Average capital $ 35,235 $ 36,696 (4.0)
ROC (1.71%) (0.14%)
WACC 9.48% 10.23%
------------- -------------
Spread (11.19%) (10.37%)
Economic loss $ (985) $ (951)
Adjusted weighted
average shares
outstanding 47,336,090 47,123,792
------------- -------------
Economic loss
per share $ (0.02) $ (0.02)
------------- -------------
------------- -------------
Adjusted net loss
per share $ (0.01) $ (0.01) 0.0 %
------------- -------------
------------- -------------
In the first quarter of 2002, the Company stopped originating automobile leases. The assets of the Automobile Leasing Segment are reviewed for impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. on a quarterly basis. Based upon this review, no additional write-down Write-Down Reducing the book value of an asset because it is overvalued compared to the market value. Notes: This is usually reflected in the company's income statement as an expense, thereby reducing net income. was necessary in the first quarter of 2002. Stock Options In 1999, the Company began granting performance-based stock options to employees. Performance-based options are options that vest solely based on the achievement of performance targets, in our case targets based on either earnings per share or economic profit. GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). requires companies to expense performance-based options when it is likely that performance targets will be met and a measurement date can be established. The amount of the reported expense is the price of our stock at the end of each reporting period less the exercise price of the options. The Company's non-performance options are not required to be expensed under GAAP. Regardless of the accounting, options represent a significant cost to shareholders. The true cost is the business value transferred to the employee in stock, less the exercise proceeds, a number that is difficult to calculate since it depends on when options are exercised and the future performance of the business. GAAP provides several alternatives for accounting for this cost. In the Company's opinion, none of these alternatives provide a method that accurately captures the true cost of options in all circumstances. Because the Company believes that accurately understanding and managing the cost of options is essential, over the last 3 years, the Years, The the seven decades of Eleanor Pargiter’s life. [Br. Lit.: Benét, 1109] See : Time Company has developed the following practices regarding stock options: -- When options are issued, the Company's general practice is to repurchase the same number of shares. Future options will not be granted unless shares have first been repurchased in the open market, and will have a strike price no less than the average price of the repurchased shares. For shareholders, the only impact of options therefore is the capital used to repurchase shares is no longer available to invest in income producing assets. This cost, the opportunity cost of the capital used to repurchase shares until the capital is returned upon option exercise, already reduces our reported earnings. -- Option grants are predominantly performance-based, with appropriately aggressive vesting targets. The Company believes that these options properly align the interests of management and shareholders by rewarding management only for exceptional business performance. -- Starting this quarter, the calculation of economic profit (loss) includes three adjustments to GAAP to reflect the cost of options. First, to avoid double counting, the GAAP expense recorded for performance options is added back. Second, to be conservative, all options outstanding are included in our fully diluted share base. Finally, economic profit (loss) includes a charge for the capital used to repurchase shares covering options grants. Since 1999, net of cancelled can·cel v. can·celed also can·celled, can·cel·ing also can·cel·ling, can·cels also can·cels v.tr. 1. To cross out with lines or other markings. See Synonyms at erase. 2. options, 1,401,000 options have been issued compared with 4,439,000 shares repurchased in the amount of $23,623,000. Because of options granted prior to 1999, there are currently more options outstanding than repurchased shares. These uncovered options Uncovered options See: Naked options will be covered through future repurchases and the cost included in subsequent periods. Credit Acceptance understands that options represent a cost to shareholders. The Company believes this cost is now accurately measured and charged to economic profit per share, the number on which the Company's management incentive compensation system is based. These practices regarding options were adopted to increase the chance that future option grants will create value for shareholders. Cautionary Statement Regarding Forward Looking Information Certain statements in this release that are not historical facts, including those regarding the Company's future plans and objectives, 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. " within the meaning of the federal securities laws. These forward-looking statements represent our outlook only as of the date of this release. While the Company believes that its forward-looking statements are reasonable, actual results could differ materially since the statements are based on our current expectations, which are subject to risks and uncertainties. Factors that might cause such a difference include the following: competition from traditional financing sources and from non-traditional lenders, unavailability un·a·vail·a·ble adj. Not available, accessible, or at hand. un  a·vail of funding at competitive rates of interest,
adverse changes in applicable laws and regulations, adverse changes in
economic conditions, adverse changes in the automobile or finance
industries or in the non-prime consumer finance market, the
Company's ability to maintain or increase the volume of automobile
loans, the Company's potential inability to accurately forecast and
estimate future collections and historical collection rates, the
Company's potential inability to accurately estimate the residual
values Residual valueUsually refers to the value of a lessor's property at the time the lease expires. residual value The price at which a fixed asset is expected to be sold at the end of its useful life. of the lease vehicles, an increase in the amount or severity of 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. against the Company, the loss of key management personnel, the Company's ability to continue to obtain third party financing on favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. terms and the various other factors discussed in the Company's reports filed with the Securities and Exchange Commission. Other factors not currently anticipated by management may also materially and adversely affect the Company's results of operations. The Company does not undertake, and expressly disclaims any obligation, to update or alter its forward-looking statements whether as a result of new information, future events or otherwise, except as required by applicable law. Description of Credit Acceptance Corporation Credit Acceptance is a financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. company specializing in products and services for a network of automobile dealer-partners in North America and Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). . Credit Acceptance provides participating
dealer-partners with financing sources for consumers with limited access
to credit by offering "guaranteed credit approval". The
Company delivers credit approvals through the internet. Other services
include marketing, sales training and a wholesale purchasing
cooperative purchasing cooperative,n a group of dental professionals pooling their financial resources to purchase large quantities of supplies and equipment for the purpose of obtaining a discount. . Through its financing program, Credit Acceptance helps consumers change their lives by providing an opportunity to strengthen and reestablish Re`es`tab´lish v. t. 1. To establish anew; to fix or confirm again; to restore; as, to reëstablish a covenant; to reëstablish health. s> Verb 1. their credit standing by making timely monthly payments. Credit Acceptance is publicly traded on NASDAQ under the symbol CACC. For more information, visit www.creditacceptance.com.
CREDIT ACCEPTANCE CORPORATION
Consolidated Income Statements
------------------------------
(Dollars in thousands, except per share data)
Three Months Ended
March 31,
---------------------------
2002 2001
------------- -------------
(Unaudited)
Revenue:
Finance charges $ 24,479 $ 20,189
Lease revenue 5,159 5,067
Other income 9,134 9,483
------------- -------------
Total revenue 38,772 34,739
------------- -------------
Costs and expenses:
Operating expenses 15,922 15,017
Provision for credit losses 3,381 3,015
Depreciation of leased assets 2,941 2,929
Interest 2,305 3,805
------------- -------------
Total costs and expenses 24,549 24,766
------------- -------------
Operating income 14,223 9,973
Foreign exchange gain 17 7
------------- -------------
Income before provision
for income taxes 14,240 9,980
Provision for income taxes 7,926 3,391
------------- -------------
Net income $ 6,314 $ 6,589
------------- -------------
------------- -------------
Net income per common share:
Basic $ 0.15 $ 0.16
------------- -------------
------------- -------------
Diluted $ 0.15 $ 0.15
------------- -------------
------------- -------------
Weighted average shares outstanding:
Basic 42,437,481 42,442,064
Diluted 43,497,889 42,851,520
CREDIT ACCEPTANCE CORPORATION
Consolidated Balance Sheets
---------------------------
(Dollars in thousands)
As of March 31,
-------------------------
2002 2001
----------- -----------
(Unaudited)
ASSETS:
Cash and cash equivalents $ 19,580 $ 35,369
Investments-- held to maturity 176 673
Automobile loans receivable 787,432 622,270
Allowance for credit losses (4,908) (3,797)
----------- -----------
Automobile loans receivable, net 782,524 618,473
----------- -----------
Floor plan receivables 5,774 6,987
Notes receivable 10,987 9,536
Investment in operating leases, net 35,612 47,605
Property and equipment, net 19,649 18,300
Retained interest in securitization -- 5,202
Other assets 5,428 5,613
----------- -----------
Total Assets $ 879,730 $ 747,758
----------- -----------
----------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY:
Liabilities:
Senior notes $ -- $ 15,948
Lines of credit 67,403 44,122
Secured financing 108,364 120,569
Mortgage note 6,740 7,425
Accounts payable and accrued liabilities 37,412 33,102
Dealer holdbacks, net 341,800 248,985
Deferred income taxes, net 13,775 10,295
Income taxes payable 7,125 3,641
----------- -----------
Total Liabilities 582,619 484,087
----------- -----------
Shareholders' Equity:
Common stock 422 421
Paid-in capital 113,000 108,515
Retained earnings 191,470 162,542
Accumulated other comprehensive
loss-cumulative translation adjustment (7,781) (7,807)
----------- -----------
Total Shareholders' Equity 297,111 263,671
----------- -----------
Total Liabilities and Shareholders' Equity $ 879,730 $ 747,758
----------- -----------
----------- -----------
CREDIT ACCEPTANCE CORPORATION
Consolidated Statements of Cash Flows
(Dollars in thousands)
Three Months Ended March 31,
----------------------------
2002 2001
------------- ------------
(Unaudited)
Cash Flows From Operating Activities:
Net income $ 6,314 $ 6,589
Adjustments to reconcile net cash
provided by operating activities:
Provision for credit losses 3,381 3,015
Depreciation 830 1,038
Depreciation of leased assets 2,941 2,929
Provision (credit) for deferred
income taxes 3,107 (496)
Tax benefit from exercise of
stock options 977 --
Change in operating assets
and liabilities:
Accounts payable and accrued
liabilities (2,114) 5,716
Income taxes payable 2,027 3,641
Income taxes receivable -- 351
Lease payment receivable 394 (46)
Unearned insurance premiums,
insurance reserves and fees (330) 413
Deferred dealer enrollment fees, net 219 453
Other assets 2,741 (2,098)
------------- ------------
Net cash provided by operating
activities 20,487 21,505
------------- ------------
Cash Flows From Investing Activities:
Principal collected on automobile
loans receivable 94,532 87,652
Advances to dealers (87,179) (103,109)
Payments of dealer holdback (7,776) (6,576)
Operating lease acquisitions (853) (10,468)
Deferred costs from lease acquisitions (200) (1,461)
Operating lease liquidations 3,422 3,127
Decreases in floor plan receivables 668 607
Decrease (increase) in notes receivable 180 (2,551)
Purchases of property and equipment (833) (920)
------------- ------------
Net cash provided by (used in)
investing activities 1,961 (33,699)
------------- ------------
Cash Flows From Financing Activities:
Repayments under lines of credit, net (5,812) (43,974)
Proceeds from secured financings 28,552 97,068
Repayments of secured financings (42,584) (21,538)
Repayment of senior notes and mortgage note (178) (165)
Repurchase of common stock -- (1,777)
Proceeds from stock options exercised 3,023 62
------------- ------------
Net cash provided by (used in)
financing activities (16,999) 29,676
------------- ------------
Effect of exchange rate changes on cash (1,642) (3,429)
------------- ------------
Net increases in cash and cash equivalents 3,807 14,053
Cash and cash equivalents,
beginning of period 15,773 21,316
------------- ------------
Cash and cash equivalents, end of period $ 19,580 $ 35,369
------------- ------------
------------- ------------
CREDIT ACCEPTANCE CORPORATION
Summary Financial Data
----------------------
(Dollars in thousands)
Automobile Loans Receivable
---------------------------
The following table summarizes the composition of automobile loans
receivable:
As of March 31,
------------------------
2002 2001
---------- ----------
(Unaudited)
Gross automobile loans receivable $ 937,632 $ 741,530
Unearned finance charges (144,286) (111,559)
Unearned insurance premiums,
insurance reserves and fees (5,914) (7,701)
---------- ----------
Automobile loans receivable $ 787,432 $ 622,270
---------- ----------
---------- ----------
Delinquent automobile loans $ 187,650 $ 141,762
---------- ----------
---------- ----------
Non-accrual automobile loans as a
percent of total gross
automobile loans 20.0% 19.1%
---------- ----------
---------- ----------
A summary of changes in gross automobile loans receivable is as
follows:
Three Months Ended March 31,
----------------------------
2002 2001
---------- ----------
(Unaudited)
Balance, beginning of period $ 906,808 $ 674,402
Gross amount of automobile
loans accepted 192,081 211,026
Legal and repossession fees 6,330 6,311
Cash collections on automobile
loans accepted (121,410) (107,120)
Charge-offs (41,835) (32,809)
Currency translation (4,342) (10,280)
---------- ----------
Balance, end of period $ 937,632 $ 741,530
---------- ----------
---------- ----------
Investment in Operating Leases
------------------------------
The following table summarizes the composition of investment in
operating leases, net:
As of March 31,
-----------------------
2002 2001
----------- ----------
(Unaudited)
Gross leased assets $ 44,011 $ 48,387
Accumulated depreciation (12,095) (6,865)
Gross deferred costs 5,996 6,982
Accumulated amortization of deferred costs (2,803) (1,798)
Lease payments receivable 2,914 3,014
----------- ----------
Investment in operating leases 38,023 49,720
Less: Allowance for lease vehicle losses (2,411) (2,115)
----------- ----------
Balance, end of period $ 35,612 $ 47,605
----------- ----------
----------- ----------
CREDIT ACCEPTANCE CORPORATION
Summary Financial Data
----------------------
(Dollars in thousands)
Investment in Operating Leases - (continued)
--------------------------------------------
A summary of changes in the investment in operating leases is as
follows:
Three Months Ended March 31,
----------------------------
2002 2001
----------- -----------
(Unaudited)
Balance, beginning of period $ 45,750 $ 44,944
Gross operating leases originated 1,053 11,929
Depreciation and amortization of
operating leases (2,941) (2,929)
Lease payments due 4,982 5,103
Collections on operating leases (4,644) (4,516)
Charge-offs (732) (541)
Operating lease liquidations (5,430) (4,200)
Currency translation (15) (70)
----------- -----------
Balance, end of period $ 38,023 $ 49,720
----------- -----------
----------- -----------
Reserves
A summary of changes in the allowance for credit losses, the
reserve for advance losses, and the reserve on investment in operating
leases are as follows:
Three Months Ended March 31,
----------------------------
2002 2001
---------- ----------
Allowance for Credit Losses (Unaudited)
---------------------------
Balance, beginning of period $ 4,745 $ 4,640
Provision for loan losses 460 0
Charge-offs (272) (799)
Currency translation 25 (44)
---------- ----------
Balance, end of period $ 4,958 $ 3,797
---------- ----------
---------- ----------
Three Months Ended March 31,
----------------------------
2002 2001
------------ ------------
Reserve for Advance Losses (Unaudited)
--------------------------
Balance, beginning of period $ 9,161 $ 6,788
Provision for advance losses 1,462 1,780
Charge-offs (565) (1,200)
Currency translation (49) (116)
------------ ------------
Balance, end of period $ 10,009 $ 7,252
------------ ------------
------------ ------------
CREDIT ACCEPTANCE CORPORATION
Summary Financial Data
----------------------
(Dollars in thousands)
Three Months Ended March 31,
----------------------------
2002 2001
---------- ----------
Reserve on Investment in (Unaudited)
Operating Leases
--------------------------
Balance, beginning of period $ 2,976 $ 2,023
Provision for lease vehicle losses 1,459 1,235
Charge-offs (2,024) (1,143)
---------- ----------
Balance, end of period $ 2,411 $ 2,115
---------- ----------
---------- ----------
Dealer Holdbacks
----------------
The following table summarizes the composition of dealer
holdbacks:
As of March 31,
--------------------------
2002 2001
---------- ----------
(Unaudited)
Dealer holdbacks $ 746,697 $ 589,247
Less: advances (net of
reserve of $10,009 and $7,252
at March 31, 2002 and 2001,
respectively) (404,897) (340,262)
---------- ----------
Dealer holdbacks, net $ 341,800 $ 248,985
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