Credit Acceptance Corporation Reports First Quarter Earnings of $6,589,000 or $0.15 Per Diluted Share.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 18, 2001 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) ) announced today that 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, 2001, was $6,589,000 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 $5,726,000 or $0.13 per diluted share for the same period in 2000. These results represent a 15.1% and 22.5% increase in net income and diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of , respectively. The Company's consolidated originations totaled $229,266,000 for the quarter ended March 31, 2001 compared with $179,324,000 for the same period in 2000, representing an increase of 27.9 %. The growth in originations was higher than expected. In the Company's January January: see month. 24, 2001 news release, origination Origination The process through which a mortgage lender creates a mortgage secured by some amount of the mortgagor's real property. Notes: Also known as loan origination, everyone must go through the origination process when securing a mortgage for a piece of real growth for the first quarter of 2001was forecasted at 5%. The favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. variance The discrepancy between what a party to a lawsuit alleges will be proved in pleadings and what the party actually proves at trial. In Zoning law, an official permit to use property in a manner that departs from the way in which other property in the same locality was primarily the result of: (i) better than anticipated results from efforts made in 2000 to expand the Company's field sales force, (ii) faster than expected acceptance of the Company's new internet See Web 2.0 and Internet2. origination system, and (iii) a favorable market environment. The Company's North American operations North American operation Surgical oncology Radical surgery of a 'frozen pelvis', consisting of radical en bloc resection of the uterus and urinary bladder. See 'Frozen pelvis.'. Cf 'All-American' and 'South American' operations. originated $181,248,000 in new installment contracts installment contract n. an agreement in which payments of money, delivery of goods or performance of services are to be made in a series of payments, deliveries or performances, usually on specific dates or upon certain happenings. for the quarter ended March 31, 2001 compared with $135,313,000 for the same period in 2000, representing an increase of 34.0% for the quarter. The increase reflects: (i) an increase in the average number of contracts originated per active dealer to 21.7 for the quarter ended March 31, 2001 from 19.2 for the same period in 2000, (ii) an increase in the number of active dealers to 886 at March 31, 2001 from 836 at March 31, 2000 and (iii) an increase in the average contract size to $9,108 for the quarter ended March 31, 2001 from $8,063 for the same period in 2000. The Company's United Kingdom operations originated $36,089,000 in new installment contracts for the quarter ended March 31, 2001 compared to $ 30,155,000 for the same period in 2000, representing an increase of 19.7% for the quarter. The increase reflects: (i) an increase in the number of active dealers to 148 at March 31, 2001 from 112 at March 31, 2000, (ii) a decrease in the average number of contracts originated per active dealer to 18.3 for the quarter ended March 31, 2001 from 19.8 for the same period in 2000 and (iii) a decrease in the average contract size to $13,073 for the quarter ended March 31, 2001 from $13,210 for the same period in 2000. Cash collections on installment contracts receivable, as a percent of average gross installment contracts receivable, were 15.1% for the quarter ended March 31, 2001 compared with 15.4% for the same period in 2000. The decline in the cash collection percentage represents the first decline in this number since the fourth quarter of 1997. The decline in the collection percentage is due to a decrease in the collection percentage in the United Kingdom to 10.8% for the quarter ended March 31, 2001 compared with 12.4% for the same period in 2000 and was partially offset by an increase in the collection percentage in 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. to 16.7% for the quarter ended March 31, 2001 compared with 16.4% for the same period in 2000. The decline in the cash collection percentage in the United Kingdom was due to: (i) an increase in the average contract term to 41 months for the quarter ended March 31, 2001 compared with 39 months for the same period in 2000 and (ii) a decline in credit quality. Compensating for the decline in credit quality was a reduction in the amount advanced to dealers as a percentage of the gross contract amount to 55.3% for the quarter ended March 31, 2001 compared with 57.8% for the same period in 2000. The Company's average annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. yield on its installment contract portfolio declined to 13.6% for the quarter ended March 31, 2001 from 13.9% for the same period in 2000. The decrease in the average yield primarily resulted from an increase in the average initial contract term as of March 31, 2001 compared to the same period in 2000 and was partially offset by a decrease in the percentage of installment contracts that were in non-accrual status to 19.1% as of March 31, 2001 from 20.8% for the same period in 2000. The Company recorded a net loss on its 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 leasing operations of ($747,000) for the quarter ended March 31, 2001 compared with a net loss of ($221,000) for the same period in 2000. The larger net loss for the quarter was primarily due to a $1,064,000 increase in the provision for credit losses for the quarter ended March 31, 2001 compared to the same period in 2000. Originations for the Company's automobile leasing operations were $11,929,000 for the quarter ended March 31, 2001 compared with $13,856,000 for the same period in 2000, representing a decrease of 13.9% for the quarter. The decrease is consistent with the Company's strategy to limit the amount of capital invested in this operation until additional portfolio data is obtained.
The Company also updated guidance for 2001:
Estimated earnings per share $0.64
Retail installment contract origination growth 20%
Average net installment contract receivables growth 9%
Finance charge yield % 13.5%
Lease origination growth 12%
Average debt balance $180-$185 million
Average borrowing cost 9%
The Company intends to focus on retail installment contract growth in North America and expects to maintain modest lease origination volumes until additional data relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc residual values Residual value Usually 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. and forecasted collection rates are available, which will allow the Company to more precisely measure the profitability of the leasing product. The Company implemented several changes to its leasing product in the fourth quarter 2000. The Company expects to obtain the data required to evaluate these changes as well as its residual values by the first quarter of 2002. The foregoing information regarding the Company's estimates of results for 2001 represent our outlook only as of the date of this release, and we undertake no obligation to update or revise these estimates, whether as a result of new developments or otherwise. Actual results may vary materially from these estimates. Certain statements in this release that are not historical facts, including those regarding the Company's 2001 guidance, future plans, objectives and expected performance, are "forward looking statements" within the meaning of the federal securities laws. Forward looking statements are subject to various risks and uncertainties, including, among others, 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 installment contracts or leases accepted, 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 of the
lease vehicles, an adverse outcome in the ongoing Internal Revenue
Service examination of the Company, 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, and the Company's ability to complete various financing alternatives and the various other factors discussed in the Company's annual and quarterly reports filed with the Securities and Exchange Commission. Credit Acceptance Corporation is a specialized spe·cial·ize v. spe·cial·ized, spe·cial·iz·ing, spe·cial·iz·es v.intr. 1. To pursue a special activity, occupation, or field of study. 2. 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 that provides funding, 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 management, collection, sales training and related products and services to automobile dealers selling or leasing used vehicles to consumers with limited access to traditional sources of credit.
Credit Acceptance Corporation
Summary Financial Data
(Dollars in thousands, except per share data)
Three Months Ended
March 31
--------------------------
Income Statement 2001 2000
---------------- ----------- ------------
REVENUE
Finance charges $ 20,179 $20,017
Lease revenue 5,067 1,455
Other income 9,493 7,995
----------- -----------
Total revenue 34,739 29,467
COSTS AND EXPENSES
Operating expenses 14,234 12,513
Provision for credit losses 3,015 2,447
Provision for claims 783 776
Depreciation of leased assets 2,929 818
Interest 3,805 4,193
----------- -----------
Total costs and expenses 24,766 20,747
----------- -----------
OPERATING INCOME 9,973 8,720
Foreign exchange gain (loss) 7 (14)
Provision for income taxes 3,391 2,980
----------- -----------
NET INCOME $ 6,589 $ 5,726
=========== ===========
Net income per common share:
Basic $ 0.16 $ 0.13
========= ==========
Diluted $ 0.15 $ 0.13
========= ==========
Weighted average shares outstanding:
Basic 42,442,064 45,363,107
Diluted 42,851,520 45,630,601
Credit Acceptance Corporation
Summary Financial Data
(Dollars in thousands, except per share data)
As of March 31
---------------------------
2001 2000
----------- ------------
Balance Sheet
-------------
ASSETS
Cash and investments $ 36,042 $ 23,640
Installment contracts receivable 622,270 580,355
Allowance for credit losses (3,797) (4,435)
------------- -------------
Installment contracts receivable, net 618,473 575,920
Investment in operating leases, net 47,605 21,835
Other assets, net 45,638 46,275
------------- -------------
TOTAL ASSETS $ 747,758 $ 667,670
============= =============
LIABILITIES
Total debt $ 188,064 $ 161,510
Dealer holdbacks, net 248,985 209,067
Other liabilities 47,038 34,783
------------- -------------
TOTAL LIABILITIES $ 484,087 $ 405,360
------------- -------------
TOTAL SHAREHOLDERS' EQUITY 263,671 262,310
------------- -------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 747,758 $ 667,670
============= =============
Credit Acceptance Corporation
Summary Financial Data
(Dollars in thousands)
Installment Contracts Receivable
--------------------------------
The following table summarizes the composition of installment
contracts receivable:
As of March 31
------------------------
2001 2000
----------- ------------
Gross installment contracts
receivable $ 741,530 $ 693,703
Unearned finance charges (111,559) (103,966)
Unearned insurance premiums,
insurance reserves and fees (7,701) (9,382)
----------- ------------
Installment contracts receivable $ 622,270 $ 580,355
=========== ============
Non-accrual installment contracts as a percent of total gross
installment contracts 19.1% 20.8%
=========== ============
A summary of changes in gross installment contracts is as follows:
Three Months Ended
March 31
----------------------------
2001 2000
----------- ------------
Balance, beginning of period $ 674,402 $ 679,201
Gross amount of installment
contracts accepted 217,337 165,468
Collections on installment
contracts receivable (107,120) (106,046)
Charge offs (32,809) (42,026)
Currency translation (10,280) (2,894)
----------- ------------
Balance, end of period $ 741,530 $ 693,703
=========== ============
Investment in Operating Leases
------------------------------
The following table summarizes the composition of investment in
operating leases, net:
As of December 31
-------------------------
2001 2000
----------- ------------
Gross leased vehicles $ 48,387 $ 20,060
Accumulated depreciation (6,865) (1,054)
Gross deferred costs 6,982 2,879
Accumulated amortization of
deferred costs (1,797) (281)
Lease payments receivable 3,013 434
----------- ------------
Investment in operating leases 49,720 22,038
Less: Reserve on investment
in operating leases (2,115) (203)
----------- ------------
Investment in operating
leases, net $ 47,605 $ 21,835
=========== ============
Credit Acceptance Corporation
Summary Financial Data
(Dollars in thousands)
Investment in Operating Leases -- (continued)
---------------------------------------------
A summary of changes in investment in operating leases is as
follows:
Three Months Ended
March 31
--------------------------
2001 2000
----------- ------------
Balance, beginning of period $ 44,944 $ 9,188
Gross operating leases
originated 11,929 13,856
Depreciation and amortization
of operating leases (2,934) (820)
Lease payments due 5,103 1,608
Collections on operating leases (4,516) (1,388)
Charge offs (541) (31)
Operating lease liquidations (4,195) (375)
Currency translation (70) --
----------- ------------
Balance, end of period $ 49,720 $ 22,038
=========== ============
Reserves
--------
A summary of changes in the allowance for credit losses, the
reserve on advances and the reserve on investment in operating leases
is as follows:
Three Months Ended
March 31
-----------------------
2001 2000
----------- ------------
Allowance for Credit Losses
---------------------------
Balance, beginning of period $ 4,640 $ 4,742
Provision for loan losses -- 285
Charge offs (799) (578)
Currency translation (44) (14)
----------- ------------
Balance, end of period $ 3,797 $ 4,435
=========== ============
Three Months Ended
March 31
---------------------------
2001 2000
----------- ------------
Reserve on Advances
-------------------
Balance, beginning of period $ 6,788 $ 4,329
Provision for advance losses 1,780 1,991
Charge offs (1,200) --
Currency translation (116) (28)
----------- ------------
Balance, end of period $ 7,252 $ 6,292
=========== ============
Credit Acceptance Corporation
Summary Financial Data
----------------------
(Dollars in thousands)
Reserves -- (continued)
Three Months Ended
March 31
2001 2000
----------- ------------
Reserve on investment in operating leases
-----------------------------------------
Balance, beginning of period $ 2,023 $ 91
Provision for lease vehicle losses 1,235 171
Charge offs (1,143) (59)
----------- ------------
Balance, end of period $ 2,115 $ 203
=========== ============
Dealer Holdbacks
----------------
The following table summarizes the composition of dealer
holdbacks:
As of March 31
------------------------
2001 2000
----------- ------------
Dealer holdbacks $ 589,247 $ 552,329
Less: Advances (net of reserve of
$7,252 and $ 6,292 at March 31, 2001
and 2000, respectively) (340,262) (343,262)
----------- ------------
Dealer holdbacks, net $ 248,985 $ 209,067
=========== ============
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