Press Releases
Credit Acceptance Announces Fourth Quarter and 2008 Earnings
SOUTHFIELD, Mich., Feb 3, 2009 (GlobeNewswire via COMTEX News Network) -- Credit Acceptance Corporation (Nasdaq:CACC) (referred to as the "Company", "we", "our", or "us") announced consolidated net income of $18.6 million, or $0.60 per diluted share, for the three months ended December 31, 2008 compared to consolidated net income of $12.5 million, or $0.40 per diluted share, for the same period in 2007. For the year ended December 31, 2008, consolidated net income was $67.2 million, or $2.16 per diluted share, compared to consolidated net income of $54.9 million, or $1.76 per diluted share, for the same period in 2007.
Adjusted net income, a non-GAAP financial measure, for the three months ended December 31, 2008 was $23.6 million, or $0.76 per diluted share, compared to $14.9 million, or $0.48 per diluted share, for the same period in 2007. For the year ended December 31, 2008 adjusted net income was $82.8 million, or $2.66 per diluted share, compared to adjusted net income of $61.7 million, or $1.98 per diluted share, for the same period in 2007.
Operating Results -----------------
Results for the three months and year ended December 31, 2008, compared to the same periods in 2007, include the following:
% Change
--------------------------------------
Three Months Ended Year Ended
December 31, 2008 December 31, 2008
------------------ ------------------
Consumer loan unit volume -13.4% 13.7%
Consumer loan dollar volume -21.0% 18.9%
Number of active dealer-partners 4.0% 15.5%
Average loans receivable
balance, net 32.0% 33.8%
Loan Performance
----------------
The following table compares our forecast of consumer loan collection rates as of December 31, 2008, with the forecasts as of September 30, 2008 and December 31, 2007, and at the time of assignment, segmented by year of assignment:
Forecasted Collection Percentage as of
---------------------------------------
Loan Dec. 31, Sept. 30, Dec. 31, Initial
Assignment Year 2008 2008 2007(1) Forecast
--------------- -------- -------- -------- --------
1999 72.1% 72.1% 72.0% 73.6%
2000 72.5% 72.5% 72.4% 72.8%
2001 67.4% 67.4% 67.3% 70.4%
2002 70.4% 70.4% 70.6% 67.9%
2003 73.8% 73.9% 74.1% 72.0%
2004 73.4% 73.5% 73.5% 73.0%
2005 74.1% 74.1% 73.8% 74.0%
2006 70.3% 70.3% 70.9% 71.4%
2007 67.9% 68.2% 71.1% 70.7%
2008(2) 67.9% 68.2% -- 69.7%
Variance in Forecasted
Collection Percentage from
-----------------------------
Loan Sept. 30, Dec. 31, Initial
Assignment Year 2008 2007 Forecast
--------------- -------- -------- --------
1999 0.0% 0.1% -1.5%
2000 0.0% 0.1% -0.3%
2001 0.0% 0.1% -3.0%
2002 0.0% -0.2% 2.5%
2003 -0.1% -0.3% 1.8%
2004 -0.1% -0.1% 0.4%
2005 0.0% 0.3% 0.1%
2006 0.0% -0.6% -1.1%
2007 -0.3% -3.2% -2.8%
2008(2) -0.3% -- -1.8%
(1) These forecasted collection percentages differ from those
previously reported in our Annual Report on Form 10-K for the
year ended December 31, 2007 and our 2007 earnings release as
they have been revised for a new methodology for forecasting
future collections on loans that we implemented during the first
quarter of 2008.
(2) The forecasted collection rate for 2008 loans as of December 31,
2008 includes both loans that were in our portfolio as of
September 30, 2008 and loans received during the most recent
quarter. The following table provides forecasted collection rates
for each of these segments:
Forecasted Collection
Percentage as of
----------------------------
December 31, September 30,
2008 Loan Assignment Period 2008 2008 Variance
----------------------------- ------------- ------------- --------
January 1, 2008 through
September 30, 2008 67.6% 68.2% -0.6%
October 1, 2008 through
December 31, 2008 69.3% -- --
Both GAAP net income and adjusted net income, for the three months and year ended December 31, 2008, were negatively impacted by a reduction in forecasted collection rates during the second and fourth quarters of 2008. In addition, during the fourth quarter of 2008, we revised the estimated timing of future collections to reflect recent trends in prepayment frequency. In recent periods we have experienced a reduction in prepayments, which typically result from payoffs that occur when customers reestablish a positive credit history, trade-in their vehicle, and finance another vehicle purchase with a more traditional auto loan. As the availability of traditional financing has been curtailed as a result of current economic conditions, prepayment rates have declined. The reduction in assumed future prepayment rates also adversely impacted fourth quarter results as assuming lower prepayment rates reduces the net present value of the cash flows expected from our loan portfolio.
We forecast future loan cash flows by comparing loans in our current portfolio to historical loans with the same attributes. The attributes include both variables captured at loan origination like credit bureau data, application data, loan data and vehicle data, as well as variables captured subsequent to loan origination such as collection and delinquency data. Prior to the second quarter of 2008, our forecasted cash flows were based on an assumption that loans within our current portfolio would produce similar collection rates as produced by historical loans with the same attributes. During the second quarter of 2008, we modified our forecast to assume that loans originated in 2006, 2007, and 2008 would perform 100 to 300 basis points worse than historical loans with the same attributes.
During the fourth quarter of 2008, we again realized lower than expected collection rates and as a result implemented an additional modification to our forecasting methodology. This modification reduced estimated future net cash flows by $9.5 million or 0.7% of the total undiscounted cash flow stream expected from our loan portfolio. The adjustment impacted only loans originated subsequent to September 30, 2007 with more recent loans impacted more severely and more seasoned loans within this time period impacted less severely. Forecasted collection rates on loans originated on or before September 30, 2007 were not modified as collection results during the fourth quarter of 2008 were consistent with our expectations for these loans.
As a result of the forecast modifications implemented in the second and fourth quarters of 2008, we now expect loans originated in 2006, 2007, and 2008 to perform worse than similar loans originated in 2003 through 2005. The impact of our forecasting changes is summarized in the table below by year of assignment:
Loan Assignment Reduction in
Year Forecasted Performance
---------------------- ----------------------
2006 100 basis points
2007 200 basis points
2008 400 basis points
A reduction in forecasted cash flows impacts GAAP financial results and adjusted financial results differently. The accounting treatment utilized does not change the amount of the impact, only the period in which the cash impact is recorded. The impact of the fourth quarter 2008 forecast revision on both GAAP and adjusted results is summarized below (pre-tax):
Three Months Ended
December 31, 2008
------------------------
GAAP Adjusted
results results
----------- -----------
(In thousands)
Amount of cash impact reflected as a fourth
quarter 2008 expense through the provision
for credit losses $ (10,556) $ --
Amount of cash impact reflected as a fourth
quarter 2008 reduction in loan revenue (799) (1,943)
Amount of cash impact to be reflected in
future periods as a change in loan revenue 1,897 (7,515)
----------- -----------
Cash impact of reduction in forecast $ (9,458) $ (9,458)
=========== ===========
Under both methods of accounting, forecasted net cash flows were reduced by $9.5 million. Under GAAP accounting, a portion of the cash impact was recorded as a current period expense through a provision for credit losses and a portion was recorded as a reduction in our loan yield, which impacts the amount of revenue recorded in both current and future periods. GAAP results for the fourth quarter include a $10.6 million provision for credit losses and a reduction in loan revenue of $0.8 million as a result of the forecast revision, which reduced net income by $7.2 million. Since the combined impact recorded in the fourth quarter exceeds the cash impact, the excess will be recorded as an increase in loan revenue in future periods. The current period impact of the forecast revision exceeds the cash impact under GAAP since GAAP results also reflect the change in the estimated timing of future collections as a result of reduced prepayment expectations.
For adjusted financial results, the entire forecast revision was recorded as a reduction in our loan yield, which reduced loan revenue recorded in the fourth quarter by $1.9 million. The remaining $7.5 million will be recorded as a reduction in loan revenue in future periods.
As a result of current economic conditions and uncertainty about future conditions, we are cautious about our forecasts of future collection rates. However, we believe our current estimates are reasonable for the following reasons:
* Our forecasts start with the assumption that loans in our current portfolio will perform like historical loans with similar attributes. * We reduced our forecasts during the second quarter on loans originated in 2006 through 2008 by 100 to 300 basis points as these loans began to perform worse than expected. * Actual loan performance during the third and fourth quarters of 2008 was consistent with our forecast as of June 30, 2008 for loans originated prior to October 1, 2007. * As described above, we further reduced our forecasts during the fourth quarter of 2008 on loans originated subsequent to September 30, 2007. Although the performance of these loans was consistent with expectations during the third quarter of 2008, during the fourth quarter of 2008 the performance of these loans was worse than expected. * We have adjusted our estimated timing of future net cash flows to reflect recent trends relating to loan prepayments. * We have reduced the forecasted collection rate used at loan inception to price new loan originations. From September 1, 2008 through January 31, 2009, the forecasted collection rate used at loan inception was approximately 300 basis points lower than identical loans originated a year ago. Beginning February 1, 2009, we decreased the forecasted collection rate used at loan inception by an additional 100 basis points. * Our current forecasting methodology, when applied against historical data, produces a consistent forecasted collection rate as the loans age. * During January of 2009, realized net loan cash flows were consistent with our current forecast.
If the economic environment continues to deteriorate, our loan collection rates may continue to decline. Knowing this, we set prices at loan inception to increase the likelihood of achieving an acceptable return on capital, even if collection results are worse than we currently forecast.
The following table presents forecasted consumer loan collection rates, advance rates (includes amounts paid to acquire purchased loans), the spread (the forecasted collection rate less the advance rate), and the percentage of the forecasted collections that had been realized as of December 31, 2008. Payments of dealer holdback and accelerated payments of dealer holdback are not included in the advance percentage paid to the dealer-partner. All amounts are presented as a percentage of the initial balance of the consumer loan (principal + interest). The table includes both dealer loans and purchased loans.
As of December 31, 2008
-----------------------------------------------------
Loan Assignment Forecasted % of Forecast
Year Collection % Advance % Spread % Realized
--------------- ------------ ----------- ----------- -------------
1999 72.1% 48.7% 23.4% 99.7%
2000 72.5% 47.9% 24.6% 99.3%
2001 67.4% 46.0% 21.4% 98.8%
2002 70.4% 42.2% 28.2% 98.5%
2003 73.8% 43.4% 30.4% 98.0%
2004 73.4% 44.0% 29.4% 97.1%
2005 74.1% 46.9% 27.2% 95.2%
2006 70.3% 46.6% 23.7% 82.4%
2007 67.9% 46.5% 21.4% 55.1%
2008 67.9% 44.6% 23.3% 21.2%
The following table presents forecasted consumer loan collection rates, advance rates (includes amounts paid to acquire purchased loans), and the spread (the forecasted collection rate less the advance rate) as of December 31, 2008 for purchased loans and dealer loans separately:
Loan Assignment Forecasted
Year Collection % Advance % Spread %
--------------- ------------ ------------ ----------
Purchased loans 2007 67.6% 48.9% 18.7%
2008 66.9% 47.0% 19.9%
Dealer loans 2007 68.0% 45.9% 22.1%
2008 68.4% 43.4% 25.0%
Although the advance rate on purchased loans is higher as compared to the advance rate on dealer loans, purchased loans do not require the Company to pay dealer holdback.
Access to Capital -----------------
During the year ended December 31, 2008, we have:
* Expanded our bank line of credit from $75.0 million to $153.5 million and renewed it until June 2010 * Renewed our $325.0 million warehouse facility to August 2009 * Completed a $150.0 million asset-backed secured financing with an institutional investor * Completed a $50.0 million two-year revolving warehouse facility with another institutional investor * Renewed our $50.0 million residual credit facility until August 2009
Our target growth rate in 2009 will depend on our success in securing additional financing and renewing our existing debt facilities. If no additional capital is obtained, we expect to continue to target unit volumes during the first six months of 2009 that are approximately 10% lower than the prior year comparable period.
In August of 2009, our $325.0 million warehouse facility and our $50.0 million residual credit facility (collectively referred to as the "maturing facilities") mature. If we are unsuccessful in renewing the maturing facilities, and alternative financing cannot be obtained, additional reductions in loan origination volumes will be required. Given current conditions in the credit markets, there can be no assurance that the maturing facilities will be renewed or that alternative financing will be obtained. In the event that the maturing facilities are not renewed, no further advances would be made under the maturing facilities. Assuming the Company continues to be in compliance with all debt covenants, the amount outstanding would be repaid over time as the collections on the loans securing the maturing facilities are received.
The following table summarizes maximum loan origination volumes under two scenarios: (1) the maturing facilities are renewed (or replaced) but no other additional capital is obtained during 2009; and (2) no additional capital is obtained during 2009 and the maturing facilities are not renewed.
Maximum for the Year Ended
December 31, 2009
------------------------------------
Assuming Maturing Assuming Maturing
Facilities are Facilities are
(Dollars in Year Ended Renewed Not Renewed
millions) December 31, 2008 (or Replaced) (or Replaced)
----------------- ----------------- -----------------
Loan dollar
volume $ 805 $ 660 $ 580
Average Loans
receivable
balance, net $ 967 $ 1,080 $ 1,050
Loan Volume
-----------
During 2008 we reduced advance rates in response to a more favorable competitive environment and projected capital availability. Reducing advance rates increases our return on capital, but reduces consumer loan unit volume. The following table summarizes consumer loan unit volume and active dealer-partners during the most recent quarter as compared to the same period in the previous year:
Three Months Ended December 31,
-------------------------------
2008 2007 % change
--------- --------- ---------
Consumer loan unit volume 21,792 25,156 -13.4%
Active dealer-partners(1) 2,134 2,052 4.0%
--------- --------- ---------
Average volume per active
dealer-partner 10.2 12.3 -17.1%
Consumer loan unit volume from
dealer-partners active both periods 14,345 18,721 -23.4%
Dealer-partners active both periods 1,158 1,158 0.0%
--------- --------- ---------
Average volume per dealer-partners
active both periods 12.4 16.2 -23.4%
Consumer loan unit volume from new
dealer-partners 1,404 1,624 -13.5%
New active dealer-partners(2) 264 310 -14.8%
--------- --------- ---------
Average volume per new active
dealer-partners 5.3 5.2 1.9%
Attrition(3) 25.6% 19.4%
(1) Active dealer-partners are dealer-partners who have received
funding for at least one dealer loan or purchased loan during the
period.
(2) New active dealer-partners are dealer-partners who enrolled in
our program and have received funding for their first dealer loan
or purchased loan from us during the periods presented.
(3) Attrition is measured according to the following formula:
decrease in consumer loan unit volume from dealer-partners who
have received funding for at least one dealer loan or purchased
loan during the comparable period of the prior year but did not
receive funding for any dealer loans or purchased loans during
the current period divided by prior year comparable period
consumer loan unit volume.
The following table summarizes changes in consumer loan dollar and unit volume in each of the last 12 quarters compared with the same period in the previous year:
Consumer Loans
Year over Year Percent Change
---------------------------------
Three Months Ended Dollar Volume Unit Volume
------------------ --------------- ---------------
March 31, 2006 11.1% 12.6%
June 30, 2006 6.1% 6.8%
September 30, 2006 26.4% 12.4%
December 31, 2006 36.1% 18.2%
March 31, 2007 41.1% 25.0%
June 30, 2007 43.9% 26.8%
September 30, 2007 2.2% 0.2%
December 31, 2007 23.3% 13.8%
March 31, 2008 28.5% 16.0%
June 30, 2008 40.6% 26.1%
September 30, 2008 27.5% 26.9%
December 31, 2008 -21.0% -13.4%
Unit volume declined during the fourth quarter of 2008 due to a decrease in volume per active dealer-partner, partially offset by an increase in the number of active dealer-partners. Dollar volume declined more than unit volume due to reductions in the average loan size caused by the pricing changes implemented in the third quarter of 2008.
The following table summarizes key information regarding purchased loans:
Three Months Ended Year Ended
December 31, December 31,
------------------ ------------------
2008 2007 2008 2007
-------- -------- -------- --------
New purchased loan unit volume
as a percentage of total
unit volume 21.8% 29.4% 29.8% 17.6%
As of December 31, 2008 and 2007, the net purchased loan receivable balance was 30.3% and 17.2%, respectively, of the total net receivable balance.
VSC Re ------
During the fourth quarter of 2008, we formed VSC Re, a wholly-owned subsidiary that is engaged in the business of reinsuring coverage under vehicle service contracts sold to consumers by dealer-partners on vehicles financed by us. VSC Re currently reinsures vehicle service contracts that are underwritten by two of our three third party insurers. Vehicle service contract premiums, which represent the selling price of the vehicle service contract to the consumer less commissions and certain administrative costs, are contributed to trust accounts controlled by VSC Re. These premiums are used to fund claims covered under the vehicle service contracts. The Company has entered into arrangements with third-party insurance companies that limit our exposure to fund claims to the amount of premium dollars contributed, less amounts earned and withdrawn, plus $0.5 million of equity contributed. With the reinsurance structure, we will be able to access projected excess trust assets monthly and will record revenue and expense on an accrual basis. Previously, we received profit sharing payments directly from the third party insurers on an annual basis and recorded these payments as income upon receipt. Our financial results for the three months and year ended December 31, 2008 reflect two months of VSC Re activity, including $3.9 million in premiums earned and $2.7 million in provision for claims. We formed VSC Re in order to enhance our control and the security of the trust assets that will be used to pay future vehicle service contract claims. The income we expect to earn from vehicle service contracts over time will likely not be impacted as, both before and after the formation of VSC Re, the income we receive is based on the amount by which vehicle service contract premiums exceed claims. The only change in our risk associated with adverse claims experience relates to the $0.5 million equity contribution that was required as part of this new structure, which is now at risk in the event claims exceed premiums. Under the prior structure, our risk was limited to the amount of premiums received.
Adjusted Financial Results --------------------------
Adjusted financial results are provided to help shareholders understand our financial performance. The financial data below is non-GAAP, unless labeled otherwise. We use adjusted financial information internally to measure financial performance and to determine incentive compensation. The table below shows our results following adjustments to reflect non-GAAP accounting methods. These adjustments are explained in the table footnotes and the subsequent "Floating Yield Adjustment" and "Program Fee Yield Adjustment" sections. Measures such as adjusted average capital, adjusted net income, adjusted net income per diluted share, adjusted net income plus interest expense after-tax, adjusted return on capital, adjusted revenue, adjusted operating expenses, and economic profit are all non-GAAP financial measures. These non-GAAP financial measures should be viewed in addition to, and not as an alternative for, our reported results prepared in accordance with GAAP.
Adjusted financial results for the three months and year ended December 31, 2008, compared to the same periods in 2007, include the following:
Three Months Ended
December 31,
-------------------------------
(Dollars in thousands, except per 2008 2007 % Change
share data) -------------------------------
Adjusted average capital $1,014,071 $ 777,642 30.4%
Adjusted net income $ 23,572 $ 14,872 58.5%
Adjusted interest expense after-tax $ 6,994 $ 5,928 18.0%
Adjusted net income plus interest
expense after-tax $ 30,566 $ 20,800 47.0%
Adjusted return on capital 12.1% 10.7% 13.1%
Cost of capital 6.3% 6.8% -7.4%
Economic profit $ 14,559 $ 7,479 94.7%
GAAP diluted weighted average shares
outstanding 31,038,088 30,897,546 0.5%
Adjusted net income per diluted share $ 0.76 $ 0.48 58.3%
Year Ended
December 31,
-------------------------------
(Dollars in thousands, except per 2008 2007 % Change
share data) -------------------------------
Adjusted average capital $ 974,976 $ 710,114 37.3%
Adjusted net income $ 82,792 $ 61,658 34.3%
Adjusted interest expense after-tax $ 26,990 $ 22,798 18.4%
Adjusted net income plus interest
expense after-tax $ 109,782 $ 84,456 30.0%
Adjusted return on capital 11.3% 11.9% -5.0%
Cost of capital 6.4% 7.0% -8.6%
Economic profit $ 47,025 $ 34,450 36.5%
GAAP diluted weighted average shares
outstanding 31,105,043 31,153,688 -0.2%
Adjusted net income per diluted share $ 2.66 $ 1.98 34.3%
Economic profit increased 94.7% and 36.5% for the three months and year ended December 31, 2008, respectively, as compared to the same periods in 2007. Economic profit is a function of the return on capital in excess of the cost of capital and the amount of capital invested in the business.
For the three months ended December 31, 2008, adjusted average capital grew by 30.4% and the adjusted return on capital increased from 10.7% to 12.1%, as compared to the same period in 2007. The return on capital was positively impacted by a reduction in operating expenses, as a percentage of capital, and the change in vehicle service contract revenue recognition. Revenue, as a percentage of capital, declined year over year as more attractive pricing on 2008 originations was more than offset by worsening loan performance.
For the year ended December 31, 2008, adjusted average capital grew by 37.3%, while the adjusted return on capital declined from 11.9% to 11.3%, as compared to the same period in 2007. The return on capital was negatively impacted by a reduction in loan yields due to worsening loan performance partially offset by lower operating expenses, as a percentage of capital, and more attractive pricing on 2008 originations.
The following table shows adjusted revenue and adjusted operating expenses as a percentage of adjusted average capital and the percentage change in adjusted average capital for each of the last eight quarters, compared to the same periods in the prior year:
Three Months Ended
----------------------------------------------
Dec. 31, Sept. 30, Jun. 30, Mar. 31,
2008 2008 2008 2008
---------- ---------- ---------- ----------
Adjusted revenue as a
percentage of adjusted
average capital 31.2% 28.9% 28.5% 30.7%
========== ========== ========== ==========
Adjusted operating
expenses as a
percentage of adjusted
average capital 11.0% 10.8% 11.3% 13.6%
========== ========== ========== ==========
Adjusted return on
capital 12.1% 11.4% 10.8% 10.7%
========== ========== ========== ==========
Percentage change in
adjusted average
capital compared to
the same period in the
prior year 30.4% 42.3% 39.6% 37.5%
========== ========== ========== ==========
Three Months Ended
----------------------------------------------
Dec. 31, Sept. 30, Jun. 30, Mar. 31,
2007 2007 2007 2007
---------- ---------- ---------- ----------
Adjusted revenue as a
percentage of adjusted
average capital 31.7% 32.5% 32.3% 35.7%
========== ========== ========== ==========
Adjusted operating
expenses as a
percentage of adjusted
average capital 14.7% 13.6% 13.6% 14.1%
========== ========== ========== ==========
Adjusted return on
capital 10.7% 11.8% 11.8% 13.5%
========== ========== ========== ==========
Percentage change in
adjusted average
capital compared to
the same period in the
prior year 35.5% 34.2% 29.4% 20.8%
========== ========== ========== ==========
The following tables show how non-GAAP measures reconcile to GAAP measures. All after-tax adjustments are calculated using a 37% tax rate as we estimate that to be our long term average effective tax rate. Amounts do not recalculate due to rounding.
Three Months Ended
December 31,
----------------------
(Dollars in thousands, except per 2008 2007 % Change
share data) ---------- ---------- --------
Adjusted net income
-------------------
GAAP net income $ 18,556 $ 12,484 48.6%
Floating yield adjustment (after-tax) 4,125 1,591
Program fee yield adjustment
(after-tax) 372 1,353
Gain from discontinued United Kingdom
segment (after-tax) 221 (219)
Litigation -- --
Interest expense related to interest
rate swap agreement 242 302
Adjustment to record taxes at 37%(1) 56 (639)
---------- ----------
Adjusted net income(1) $ 23,572 $ 14,872 58.5%
========== ==========
Adjusted net income per diluted share $ 0.76 $ 0.48 58.3%
-------------------------------------
Diluted weighted average shares
outstanding 31,038,088 30,897,546 0.5%
Adjusted average capital
------------------------
GAAP average debt $ 665,635 $ 515,031 29.2%
GAAP average shareholders' equity 331,402 256,838 29.0%
Floating yield adjustment 18,643 9,784
Program fee yield adjustment (1,609) (4,011)
---------- ----------
Adjusted average capital $1,014,071 $ 777,642 30.4%
========== ==========
Adjusted return on capital
--------------------------
Adjusted net income $ 23,572 $ 14,872
Adjusted interest expense after-tax 6,994 5,928
---------- ----------
Adjusted net income plus interest
expense after-tax $ 30,566 $ 20,800 47.0%
========== ==========
Adjusted return on capital(2) 12.1% 10.7% 13.1%
========== ==========
Economic profit
---------------
Adjusted return on capital 12.1% 10.7%
Cost of capital(3) 6.3% 6.8%
---------- ----------
Adjusted return on capital in excess
of cost of capital 5.8% 3.9%
Adjusted average capital $1,014,071 $ 777,642
---------- ----------
Economic profit $ 14,559 $ 7,479 94.7%
========== ==========
Year Ended
December 31,
----------------------
(Dollars in thousands, except per 2008 2007 % Change
share data) ---------- ---------- --------
Adjusted net income
-------------------
GAAP net income $ 67,177 $ 54,916 22.3%
Floating yield adjustment (after-tax) 13,079 3,555
Program fee yield adjustment
(after-tax) 2,075 4,985
Gain from discontinued United Kingdom
segment (after-tax) (109) (1,302)
Litigation -- 406
Interest expense related to interest
rate swap agreement 220 302
Adjustment to record taxes at 37%(1) 350 (1,204)
---------- ----------
Adjusted net income(1) $ 82,792 $ 61,658 34.3%
========== ==========
Adjusted net income per diluted share $ 2.66 $ 1.98 34.3%
-------------------------------------
Diluted weighted average shares
outstanding 31,105,043 31,153,688 -0.2%
Adjusted average capital
------------------------
GAAP average debt $ 660,804 $ 469,704 40.7%
GAAP average shareholders' equity 302,765 238,051 27.2%
Floating yield adjustment 13,762 8,198
Program fee yield adjustment (2,355) (5,839)
---------- ----------
Adjusted average capital $ 974,976 $ 710,114 37.3%
========== ==========
Adjusted return on capital
--------------------------
Adjusted net income $ 82,792 $ 61,658
Adjusted interest expense after-tax 26,990 22,798
---------- ----------
Adjusted net income plus interest
expense after-tax $ 109,782 $ 84,456 30.0%
========== ==========
Adjusted return on capital(2) 11.3% 11.9% -5.0%
========== ==========
Economic profit
---------------
Adjusted return on capital 11.3% 11.9%
Cost of capital (3) 6.4% 7.0%
---------- ----------
Adjusted return on capital in excess
of cost of capital 4.9% 4.9%
Adjusted average capital $ 974,976 $ 710,114
---------- ----------
Economic profit $ 47,025 $ 34,450 36.5%
========== ==========
(1) In prior year reports, we adjusted income taxes by equalizing the
tax rate between the two periods presented. Beginning in the
first quarter of 2008, we changed our methodology to normalize
the tax rate to 37%, as we estimate that to be our long term
average effective tax rate. As a result of this change, the
adjustment to income taxes and adjusted net income for the three
months and year ended December 31, 2007 differ from what was
reported in the prior year.
(2) Adjusted return on capital is defined as annualized adjusted net
income plus adjusted interest expense after-tax divided by
adjusted average capital.
(3) The cost of capital includes both a cost of equity and a cost of
debt. The cost of equity capital is determined based on a
formula that considers the risk of the business and the risk
associated with our use of debt. The formula utilized for
determining the cost of equity capital is as follows: (the
average 30 year treasury rate + 5%) + ((1 - tax rate) x (the
average 30 year treasury rate + 5% - pre-tax average cost of debt
rate) x average debt/(average equity + average debt x tax rate)).
For the three months ended December 31, 2008 and 2007, the
average 30 year treasury rate was 3.8% and 4.6%, respectively.
The adjusted pre-tax average cost of debt was 6.7% and 7.3%,
respectively. For the year ended December 31, 2008 and 2007, the
average 30 year treasury rate was 4.3% and 4.8%, respectively.
The adjusted pre-tax average cost of debt was 6.5% and 7.8%,
respectively.
Quarter Ended
----------------------------------------------
Dec. 31, Sept. 30, Jun. 30, Mar. 31,
(Dollars in thousands) 2008 2008 2008 2008
---------- ---------- ---------- ----------
Adjusted net income
-------------------
GAAP net income $ 18,556 $ 20,657 $ 10,344 $ 17,620
Floating yield
adjustment (after-tax) 4,125 1,183 9,536 (1,765)
Program fee yield
adjustment (after-tax) 372 506 653 544
Loss (gain) from
discontinued United 221 (326) 35 (39)
Kingdom segment
(after-tax)
Litigation -- -- -- --
Interest expense
related to interest
rate swap agreement 242 (179) (375) 532
Adjustment to record
taxes at 37% 56 419 (2) (123)
---------- ---------- ---------- ----------
Adjusted net income $ 23,572 $ 22,260 $ 20,191 $ 16,769
========== ========== ========== ==========
Adjusted revenue
----------------
GAAP total revenue $ 86,296 $ 80,107 $ 75,005 $ 70,778
Floating yield
adjustment 6,546 1,880 15,137 (2,800)
Program fee yield
adjustment 590 804 1,036 863
Provision for credit
losses (14,252) (8,278) (20,782) (2,479)
---------- ---------- ---------- ----------
Adjusted revenue $ 79,180 $ 74,513 $ 70,396 $ 66,362
========== ========== ========== ==========
Adjusted average
capital
----------------
GAAP average debt $ 665,635 $ 706,637 $ 686,148 $ 584,794
GAAP average
shareholders' equity 331,402 308,990 295,771 274,897
Floating yield
adjustment 18,643 18,002 9,326 9,076
Program fee yield
adjustment (1,609) (2,048) (2,626) (3,136)
---------- ---------- ---------- ----------
Adjusted average
capital $1,014,071 $1,031,581 $ 988,619 $ 865,631
========== ========== ========== ==========
Adjusted revenue as a
percentage of adjusted
average capital 31.2% 28.9% 28.5% 30.7%
========== ========== ========== ==========
Adjusted return on
capital
------------------
Adjusted net income $ 23,572 $ 22,260 $ 20,191 $ 16,769
Adjusted interest
expense after-tax 6,994 7,081 6,602 6,313
---------- ---------- ---------- ----------
Adjusted net income
plus interest
expense after-tax $ 30,566 $ 29,341 $ 26,793 $ 23,082
========== ========== ========== ==========
Adjusted return on
capital 12.1% 11.4% 10.8% 10.7%
========== ========== ========== ==========
Adjusted operating
expenses
------------------
GAAP salaries and
wages $ 17,788 $ 16,766 $ 16,699 $ 17,740
GAAP general and
administrative 6,785 6,975 6,627 7,124
GAAP sales and
marketing 3,431 4,088 4,542 4,642
Litigation -- -- -- --
---------- ---------- ---------- ----------
Adjusted operating
expenses $ 28,004 $ 27,829 $ 27,868 $ 29,506
========== ========== ========== ==========
Adjusted operating
expenses as a
percentage of adjusted
average capital 11.0% 10.8% 11.3% 13.6%
========== ========== ========== ==========
Percentage change in
adjusted average
capital compared to
the same period in the
prior year 30.4% 42.3% 39.6% 37.5%
========== ========== ========== ==========
Quarter Ended
----------------------------------------------
Dec. 31, Sept. 30, Jun. 30, Mar. 31,
(Dollars in thousands) 2007 2007 2007 2007
---------- ---------- ---------- ----------
Adjusted net income
-------------------
GAAP net income $ 12,484 $ 14,742 $ 12,330 $ 15,360
Floating yield
adjustment (after-tax) 1,591 1,265 617 82
Program fee yield
adjustment (after-tax) 1,353 925 1,143 1,564
Loss (gain) from
discontinued United (219) (1,273) 163 27
Kingdom segment
(after-tax)
Litigation -- 91 315 --
Interest expense
related to interest
rate swap agreement 302 -- -- --
Adjustment to record
taxes at 37% (639) 4 379 (948)
---------- ---------- ---------- ----------
Adjusted net income $ 14,872 $ 15,754 $ 14,947 $ 16,085
========== ========== ========== ==========
Adjusted revenue
----------------
GAAP total revenue $ 63,232 $ 61,058 $ 58,286 $ 57,351
Floating yield
adjustment 2,525 2,008 979 130
Program fee yield
adjustment 2,150 1,470 1,814 2,483
Provision for credit
losses (6,345) (5,629) (3,968) (3,723)
---------- ---------- ---------- ----------
Adjusted revenue $ 61,562 $ 58,907 $ 57,111 $ 56,241
========== ========== ========== ==========
Adjusted average
capital
----------------
GAAP average debt $ 515,031 $ 477,930 $ 473,141 $ 412,715
GAAP average
shareholders' equity 256,838 243,922 233,465 217,977
Floating yield
adjustment 9,784 8,348 8,073 6,587
Program fee yield
adjustment (4,011) (5,316) (6,345) (7,684)
---------- ---------- ---------- ----------
Adjusted average
capital $ 777,642 $ 724,884 $ 708,334 $ 629,595
========== ========== ========== ==========
Adjusted revenue as a
percentage of adjusted
average capital 31.7% 32.5% 32.3% 35.7%
========== ========== ========== ==========
Adjusted return on
capital
------------------
Adjusted net income $ 14,872 $ 15,754 $ 14,947 $ 16,085
Adjusted interest
expense after-tax 5,928 5,689 5,960 5,221
---------- ---------- ---------- ----------
Adjusted net income
plus interest
expense after-tax $ 20,800 $ 21,443 $ 20,907 $ 21,306
========== ========== ========== ==========
Adjusted return on
capital 10.7% 11.8% 11.8% 13.5%
========== ========== ========== ==========
Adjusted operating
expenses
------------------
GAAP salaries and
wages $ 16,823 $ 13,620 $ 13,092 $ 11,861
GAAP general and
administrative 6,729 7,266 7,359 5,917
GAAP sales and
marketing 4,990 3,835 4,144 4,472
Litigation -- (145) (500) --
---------- ---------- ---------- ----------
Adjusted operating
expenses $ 28,542 $ 24,576 $ 24,095 $ 22,250
========== ========== ========== ==========
Adjusted operating
expenses as a
percentage of adjusted
average capital 14.7% 13.6% 13.6% 14.1%
========== ========== ========== ==========
Percentage change in
adjusted average
capital compared to
the same period in the
prior year 35.5% 34.2% 29.4% 20.8%
========== ========== ========== ==========
Floating Yield Adjustment
-------------------------
The purpose of this adjustment is to modify the calculation of our GAAP-based finance charge revenue so that favorable and unfavorable changes in expected cash flows from loans receivable are treated consistently. To make the adjustment understandable, we must first explain how GAAP requires us to account for finance charge revenue, our primary revenue source.
Finance charge revenue equals the cash inflows from our loan portfolio less cash outflows to acquire the loans. Our GAAP finance charge revenue is based on estimates of future cash flows and is recognized on a level-yield basis over the estimated life of the loan. With the level-yield approach, the amount of finance charge revenue recognized from a loan in a given period, divided by the loan asset, is a constant percentage. Under GAAP, favorable changes in expected cash flows are treated as increases to the yield and are recognized over time, while unfavorable changes are recorded as a current period expense. The non-GAAP methodology that we use (the "floating yield" method) is identical to the GAAP approach except that, under the "floating yield" method, all changes in expected cash flows (both positive and negative) are treated as yield adjustments and therefore impact earnings over time. The GAAP treatment always results in a lower carrying value of the loan receivable asset, but may result in either higher or lower earnings for any given period depending on the timing and amount of expected cash flow changes.
We believe floating yield earnings are a more accurate reflection of the performance of our business, since both favorable and unfavorable changes in estimated cash flows are treated consistently.
Program Fee Yield Adjustment ----------------------------
The purpose of this adjustment is to make revenue from program fees comparable across time periods. In 2001, we began charging dealer-partners a monthly program fee for access to our internet-based Credit Approval Processing System, also known as CAPS.
Effective January 1, 2007, we implemented a change in the way these fees are charged designed to positively impact dealer-partner attrition. We continue to charge a monthly program fee of $599, but instead of collecting the fee in the current period, we collect it from future dealer holdback payments.
As a result of this change, (as of January 1, 2007) we record program fees on a GAAP basis as a yield adjustment, recognizing these fees as finance charge revenue over the term of the dealer loan because collection is dependent on the future cash flows of the loan. Previously, we had recorded the fee as program fee revenue in the month the fee was charged. The current GAAP treatment is more consistent with the cash economics of the business.
To allow for proper comparisons between periods, we make an adjustment to our financial results as though program fees had always been recorded as a yield adjustment. The program fee adjustment will become less significant in future periods. The program fee adjustment is projected to be $0.8 million and $0.3 million in 2009 and 2010, respectively. The adjustment will be immaterial starting in 2011.
Cautionary Statement Regarding Forward-Looking Information ----------------------------------------------------------
We claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 for all of our forward-looking statements. Statements in this release that are not historical facts, such as those using terms like "may," "will," "should," "believe," "expect," "anticipate," "assume," "forecast," "estimate," "intend," "plan", "target" and those regarding our future results, plans and objectives, are "forward-looking statements" within the meaning of the federal securities laws. These forward-looking statements represent our outlook only as of the date of this release. Actual results could differ materially from these forward-looking statements since the statements are based on our current expectations, which are subject to risks and uncertainties. Factors that might cause such a difference include, but are not limited to, the factors set forth in Item 1A of our Form 10-K for the year ended December 31, 2007, other risk factors discussed herein or listed from time to time in our reports filed with the Securities and Exchange Commission and the following:
* Our inability to accurately forecast and estimate the amount and timing of future collections could have a material adverse effect on results of operations. * We may be unable to continue to access or renew funding sources and obtain capital on favorable terms needed to maintain and grow the business. * Requirements under credit facilities to meet financial and portfolio performance covenants. * The conditions of the U.S. and international capital markets may adversely affect lenders the Company has relationships with, causing us to incur additional cost and reducing our sources of liquidity, which may adversely affect our financial position, liquidity and results of operations. * Due to competition from traditional financing sources and non-traditional lenders, we may not be able to compete successfully. * We may not be able to generate sufficient cash flow to service our outstanding debt and fund operations. * Interest rate fluctuations may adversely affect our borrowing costs, profitability and liquidity. * The regulation to which we are subject could result in a material adverse affect on our business. * Adverse changes in economic conditions, the automobile or finance industries, or the non-prime consumer market, could adversely affect our financial position, liquidity and results of operations, the ability of key vendors that we depend on to supply us with certain services, and our ability to enter into future financing transactions. * Litigation we are involved in from time to time may adversely affect our financial condition, results of operations and cash flows. * We are dependent on our senior management and the loss of any of these individuals or an inability to hire additional personnel could adversely affect our ability to operate profitably. * Our inability to properly safeguard confidential consumer information. * Our operations could suffer from telecommunications or technology downtime or increased costs. * Natural disasters, acts of war, terrorist attacks and threats or the escalation of military activity in response to such attacks or otherwise may negatively affect our business, financial condition and results of operations.
Other factors not currently anticipated by management may also materially and adversely affect our results of operations. We do not undertake, and expressly disclaim any obligation, to update or alter our statements whether as a result of new information, future events or otherwise, except as required by applicable law.
Description of Credit Acceptance Corporation --------------------------------------------
Since 1972, Credit Acceptance has provided auto loans to consumers, regardless of their credit history. Our product is offered through a nationwide network of automobile dealers who benefit from sales of vehicles to consumers who otherwise could not obtain financing; from repeat and referral sales generated by these same customers; and from sales to customers responding to advertisements for our product, but who actually end up qualifying for traditional financing.
Without our product, consumers are often unable to purchase a vehicle or they purchase an unreliable one and are not provided the opportunity to improve their credit standing. As we report to the three national credit reporting agencies, a significant number of our consumers improve their lives by improving their credit score and move on to more traditional sources of financing. Credit Acceptance is publicly traded on the NASDAQ under the symbol CACC. For more information, visit creditacceptance.com.
CREDIT ACCEPTANCE CORPORATION
CONSOLIDATED INCOME STATEMENTS
(Dollars in thousands, except per share data)
Three Months Ended Year Ended
December 31, December 31,
---------------------- ----------------------
2008 2007 2008 2007
---------- ---------- ---------- ----------
(Unaudited) (Unaudited) (Unaudited)
Revenue:
Finance charges $ 76,704 $ 58,233 $ 286,823 $ 220,473
Premiums earned 3,902 45 3,967 361
Other income 5,690 4,954 21,396 19,093
---------- ---------- ---------- ----------
Total revenue 86,296 63,232 312,186 239,927
---------- ---------- ---------- ----------
Costs and expenses:
Salaries and wages 17,788 16,823 68,993 55,396
General and
administrative 6,785 6,729 27,511 27,271
Sales and marketing 3,431 4,990 16,703 17,441
Provision for credit
losses 14,237 6,345 46,029 19,947
Provision for claims 2,650 4 2,651 39
Interest 11,487 9,888 43,189 36,669
Other expense 15 13 73 52
---------- ---------- ---------- ----------
Total costs and
expenses 56,393 44,792 205,149 156,815
---------- ---------- ---------- ----------
Operating income 29,903 18,440 107,037 83,112
Foreign currency
(loss) gain (10) 5 (25) 69
---------- ---------- ---------- ----------
Income from continuing
operations before
provision for income
taxes 29,893 18,445 107,012 83,181
Provision for income
taxes 11,116 6,180 39,944 29,567
---------- ---------- ---------- ----------
Income from continuing
operations 18,777 12,265 67,068 53,614
---------- ---------- ---------- ----------
Discontinued operations
(Loss) gain from
discontinued United
Kingdom operations (241) (282) 307 (562)
(Credit) provision for
income taxes (20) (501) 198 (1,864)
---------- ---------- ---------- ----------
(Loss) gain from
discontinued
operations (221) 219 109 1,302
---------- ---------- ---------- ----------
Net income $ 18,556 $ 12,484 $ 67,177 $ 54,916
========== ========== ========== ==========
Net income per common
share:
Basic $ 0.61 $ 0.42 $ 2.22 $ 1.83
========== ========== ========== ==========
Diluted $ 0.60 $ 0.40 $ 2.16 $ 1.76
========== ========== ========== ==========
Income from continuing
operations per common
share:
Basic $ 0.62 $ 0.41 $ 2.22 $ 1.78
========== ========== ========== ==========
Diluted $ 0.60 $ 0.40 $ 2.16 $ 1.72
========== ========== ========== ==========
(Loss) gain from
discontinued
operations per common
share:
Basic $ (0.01) $ 0.01 $ -- $ 0.04
========== ========== ========== ==========
Diluted $ (0.01) $ 0.01 $ -- $ 0.04
========== ========== ========== ==========
Weighted average shares
outstanding:
Basic 30,327,802 30,007,476 30,249,783 30,053,129
Diluted 31,038,088 30,897,546 31,105,043 31,153,688
CREDIT ACCEPTANCE CORPORATION
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data)
As of December 31,
----------------------
2008 2007
---------- ----------
ASSETS: (Unaudited)
Cash and cash equivalents $ 3,154 $ 712
Restricted cash and cash equivalents 80,333 74,102
Restricted securities available for sale 3,345 3,290
Loans receivable (including $15,383 and
$16,125 from affiliates as of December 31,
2008 and December 31, 2007, respectively) 1,148,752 944,698
Allowance for credit losses (130,835) (134,145)
---------- ----------
Loans receivable, net 1,017,917 810,553
---------- ----------
Property and equipment, net 21,049 20,124
Income taxes receivable -- 20,712
Other assets 13,556 12,689
---------- ----------
Total Assets $1,139,354 $ 942,182
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Liabilities:
Accounts payable and accrued liabilities $ 83,948 $ 79,834
Income taxes payable 881 --
Line of credit 61,300 36,300
Secured financing 574,175 488,065
Mortgage note and capital lease obligations 6,239 7,765
Deferred income taxes, net 75,060 64,768
---------- ----------
Total Liabilities 801,603 676,732
---------- ----------
Shareholders' Equity:
Preferred stock, $.01 par value, 1,000,000
shares authorized, none issued -- --
Common stock, $.01 par value, 80,000,000
shares authorized, 30,666,691 and 30,240,859
shares issued and outstanding as of
December 31, 2008 and December 31, 2007,
respectively 306 302
Paid-in capital 11,829 4,134
Retained earnings 328,178 261,001
Accumulated other comprehensive (loss) income,
net of tax of $1,478 and $(7) at December 31,
2008 and December 31, 2007, respectively (2,562) 13
---------- ----------
Total Shareholders' Equity 337,751 265,450
---------- ----------
Total Liabilities and Shareholders' Equity $1,139,354 $ 942,182
========== ==========
CREDIT ACCEPTANCE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands) Years Ended
December 31,
----------------------
2008 2007
---------- ----------
(Unaudited)
Cash Flows From Operating Activities:
Net income $ 67,177 $ 54,916
Adjustments to reconcile cash provided by
operating activities:
Provision for credit losses 46,029 19,947
Depreciation 5,342 4,105
Loss on retirement of property and equipment 74 196
Provision for deferred income taxes 11,777 20,346
Stock-based compensation 4,309 4,659
Change in operating assets and liabilities:
Increase in accounts payable and accrued
liabilities 46 1,453
Decrease (increase) in income taxes
receivable 21,593 (8,978)
(Increase) decrease in other assets (867) 1,248
---------- ----------
Net cash provided by operating activities 155,480 97,892
---------- ----------
Cash Flows From Investing Activities:
Increase in restricted cash and cash
equivalents (6,231) (28,493)
Purchases of restricted securities available
for sale (1,514) (550)
Proceeds from sale of restricted securities
available for sale 373 --
Maturities of restricted securities available
for sale 1,094 898
Principal collected on Loans receivable 609,487 576,543
Advances to dealers and accelerated payments
of dealer holdback (524,496) (571,197)
Purchases of Consumer Loans (280,326) (139,340)
Payments of dealer holdback (58,503) (70,950)
Net decrease in other receivables 167 349
Purchases of property and equipment (6,341) (7,659)
---------- ----------
Net cash used in investing activities (266,290) (240,399)
---------- ----------
Cash Flows From Financing Activities:
Borrowings under line of credit 809,700 633,500
Repayments under line of credit (784,700) (635,600)
Proceeds from secured financing 605,700 619,500
Repayments of secured financing (519,590) (476,579)
Principal payments under mortgage note and
capital lease obligations (1,526) (1,429)
Repurchase of common stock (66) (9,530)
Proceeds from stock options exercised 2,369 2,584
Tax benefits from stock based compensation
plans 1,087 2,512
---------- ----------
Net cash provided by financing activities 112,974 134,958
---------- ----------
Effect of exchange rate changes on cash 278 (267)
---------- ----------
Net increase (decrease) in cash and cash
equivalents 2,442 (7,816)
Cash and cash equivalents, beginning of period 712 8,528
---------- ----------
Cash and cash equivalents, end of period $ 3,154 $ 712
========== ==========
Supplemental Disclosure of Cash Flow
Information:
Cash paid during the period for interest $ 43,255 $ 36,131
Cash paid during the period for income taxes $ 3,681 $ 14,506
Supplemental Disclosure of Non-Cash
Transactions:
Property and equipment acquired through
capital lease obligations $ -- $ 563
CREDIT ACCEPTANCE CORPORATION
SUMMARY FINANCIAL DATA
Loans Receivable
----------------
A summary of changes in Loans receivable is as follows (in thousands):
For the Year Ended
December 31, 2008
----------------------------------
Dealer Purchased
Loans Loans Total
---------- ---------- ----------
Balance, beginning of period $ 804,245 $ 140,453 $ 944,698
New loans(1) 524,496 280,326 804,822
Transfers(2) (7,953) 7,953 --
Dealer holdback payments 58,503 -- 58,503
Net cash collections on loans (506,600) (103,429) (610,029)
Write-offs (48,723) (146) (48,869)
Recoveries -- 28 28
Net change in other loans (123) -- (123)
Currency translation (278) -- (278)
---------- ---------- ----------
Balance, end of period $ 823,567 $ 325,185 $1,148,752
========== ========== ==========
For the Year Ended
December 31, 2007
----------------------------------
Dealer Purchased
Loans Loans Total
---------- ---------- ----------
Balance, beginning of period $ 724,645 $ 29,926 $ 754,571
New loans(1) 571,197 139,340 710,537
Transfers(2) (4,748) 4,748 --
Dealer holdback payments 70,950 -- 70,950
Net cash collections on loans (543,846) (33,398) (577,244)
Write-offs (14,376) (192) (14,568)
Recoveries -- 29 29
Net change in other loans 154 -- 154
Currency translation 269 -- 269
---------- ---------- ----------
Balance, end of period $ 804,245 $ 140,453 $ 944,698
========== ========== ==========
(1) New Dealer Loans includes advances to dealer-partners and
Portfolio Profit Express.
(2) Transfers relate to Dealer Loans that are now considered to be
Purchased Loans when we exercise our right to the dealer holdback
of certain dealer-partners' Consumer Loans once they are inactive
and have originated less than 100 Consumer Loans.
A summary of changes in the Allowance for credit losses is as follows
(in thousands):
For the Year Ended
December 31, 2008
----------------------------------
Dealer Purchased
Loans Loans Total
---------- ---------- ----------
Balance, beginning of period $ 133,201 $ 944 $ 134,145
Provision for credit losses(1) 29,608 16,178 45,786
Write-offs (48,723) (146) (48,869)
Recoveries -- 28 28
Currency translation (255) -- (255)
---------- ---------- ----------
Balance, end of period $ 113,831 $ 17,004 $ 130,835
========== ========== ==========
For the Year Ended
December 31, 2007
----------------------------------
Dealer Purchased
Loans Loans Total
---------- ---------- ----------
Balance, beginning of period $ 127,881 $ 910 $ 128,791
Provision for credit losses(2) 19,468 197 19,665
Write-offs (14,376) (192) (14,568)
Recoveries -- 29 29
Currency translation 228 -- 228
---------- ---------- ----------
Balance, end of period $ 133,201 $ 944 $ 134,145
========== ========== ==========
(1) Does not include a provision for credit losses of $243 related to
other items.
(2) Does not include a provision for credit losses of $282 related to
other items.
This news release was distributed by GlobeNewswire, www.globenewswire.com
SOURCE: Credit Acceptance Corporation
Credit Acceptance Corporation
Investor Relations:
Douglas W. Busk, Treasurer
(248) 353-2700 Ext. 4432
IR@creditacceptance.com
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