Credit Acceptance Corporation Reports Third Quarter Earnings of $7,645,000 or $0.18 Per Diluted Share Representing a 25.3% Increase in Net Income
SOUTHFIELD, Mich.--Oct. 17, 2001--Credit Acceptance Corporation announced today that consolidated net income for the quarter ended September 30, 2001 was $7,645,000 or $0.18 per diluted share compared to $6,104,000 or $0.14 per diluted share for the same period in 2000 representing 25.3% and 28.6% increases in net income and earnings per share, respectively. For the nine-month period ended September 30, 2001, consolidated net income was $21,963,000 or $0.51 per diluted share compared to $17,983,000 or $0.40 per diluted share for the same period in 2000.Analysis of Economic Profit or Loss
Economic profit or loss is a measurement of how efficiently the Company utilizes its capital and has been used by the Company since January 1, 2000 to evaluate its performance. The Company's goal is to increase its overall return on capital in order to maximize the amount of economic profit per share generated.
The Company's economic loss improved to ($1,306,000) or ($0.03) per diluted share for the quarter ended September 30, 2001 compared to ($2,339,000) or ($0.05) per diluted share for the same period in 2000. The improvement was due primarily to an improvement in the return on capital and a reduction in the weighted average cost of capital for the three months ended September 30, 2001 compared to the same period in 2000.
The Company's return on capital increased to 8.51% and 8.55% for the three and nine months ended September 30, 2001 from 8.17% and 8.10% for the same periods in 2000. The improvements in the return on capital are primarily due to consistent collection performance and a reduction in the amount advanced to dealers as a percent of the gross contract amount partially offset by larger losses incurred in the Company's leasing business. The reduction in the weighted average cost of capital for the three and nine months ended September 30, 2001 compared to the same periods in 2000 was primarily due to lower average interest rates on the Company's borrowings as a result of an overall reduction in market rates during the periods.
The table below illustrates the calculation of the Company's economic profit or loss for the periods indicated.
(Dollars in thousands, Three Months Ended Nine Months Ended
except per share data) September 30, September 30,
---------------------- ----------------------
2001 2000 2001 2000
---------- ---------- ---------- ----------
(Unaudited) (Unaudited)
Reported net
income(1) $ 7,645 $ 6,104 $ 21,963 $ 17,983
Adjustments for
non-recurring items(2) -- -- (457) --
---------- ---------- ---------- ----------
Adjusted net income 7,645 6,104 21,506 17,983
Interest expense
after tax 2,556 2,695 7,696 8,153
---------- ---------- ---------- ----------
Net operating profit
after tax ("NOPAT") 10,201 8,799 29,202 26,136
Average capital(3) $ 479,463 $ 430,852 $ 455,312 $ 430,461
Return on capital
("ROC")(4) 8.51% 8.17% 8.55% 8.10%
Weighted average cost
of capital ("WACC")(5) 9.60% 10.34% 9.89% 10.57%
---------- ---------- ---------- ----------
Spread (1.09%) (2.17%) (1.34%) (2.47%)
Total economic
loss(6) $ (1,306) $ (2,339) $ (4,586) $ (8,004)
Diluted weighted
average shares
outstanding 43,594,725 43,424,885 43,027,573 44,653,068
Economic loss
per share $ (0.03) $ (0.05) $ (0.10) $ (0.18)
Economic profit (loss)
by CAC business
segment(7)
North America $ (704) $ (1,248) $ (1,414) $ (4,967)
United Kingdom 217 (405) (349) (2,065)
Automotive Leasing (819) (686) (2,823) (972)
---------- ---------- ---------- ----------
Total economic loss $ (1,306) $ (2,339) $ (4,586) $ (8,004)
========== ========== ========== ==========
(1) Consolidated net income from the income statement of this news
release.
(2) Includes an after tax gain of $703,000 on an exercised clean up
call relating to the July 1998 securitization and a $246,000 after
tax charge relating to an executive severance agreement.
(3) Average capital is equal to the average amount of debt during the
period plus the average amount of equity during the period.
(4) Return on capital is equal to NOPAT divided by average capital.
(5) 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.
(6) Total economic loss equals the spread (ROC minus WACC) multiplied
by average capital.
(7) See Summary of Operations for discussion on business reporting
segments
Summary of Operations
The Company's consolidated originations totaled $211,483,000 and $654,218,000 for the three and nine months ended September 30, 2001 compared with $138,470,000 and $464,674,000 for the same periods in 2000, representing an increase of 52.7% and 40.8% for the three and nine month periods, respectively. The increases were primarily due to: (i) continued acceptance of the Company's internet origination system; (ii) strong production from the Company's field sales force, which was expanded in 2000; and (iii) favorable market conditions.
The Company's average annualized yield, defined as finance charges as a percent of average net installment contracts receivable, declined from 14.0% for the nine months ended September 30, 2000 to 13.3% for the same period in 2001. The lower average yield is primarily due to the increasing length of the average initial contract term, which lengthened from 32.7 months as of September 30, 2000 to 34.9 months as of September 30, 2001.
Further discussions of the Company's three business segments are discussed below.
CAC North America Business Segment
North American Business Segment
Selected Financial and Operating Data
-------------------------------------
Three Months Ended
September 30,
---------------------------------
(Dollars in Thousands) 2001 2000 % Change
---------------------------------
Originations $ 178,632 $ 85,248 109.5%
Number of contracts originated 15,329 10,107 51.7%
Collections $ 88,954 $ 78,784 12.9%
Dealer partners
Number of active dealers 848 791 7.2%
Contracts per active dealer 18.1 12.8 41.4%
Average contract size $ 11.7 $ 8.4 39.3%
Revenue $ 24,856 $ 21,452 15.9%
Costs and expenses $ 15,807 $ 13,558 16.6%
as a % of revenue 63.6% 63.2%
Earnings before taxes ("EBT") $ 9,049 $ 7,894 14.6%
as a % of revenue 36.4% 36.8%
NOPAT $ 7,463 $ 6,964 7.2%
Average capital $ 347,475 $ 317,260 9.5%
Economic loss $ (704) $ (1,248) 43.6%
Nine Months Ended
September 30,
---------------------------------
(Dollars in Thousands) 2001 2000 % Change
---------------------------------
Originations $ 531,403 $ 317,514 67.4%
Number of contracts originated 50,329 37,382 34.6%
Collections $ 259,284 $ 245,571 5.6%
Dealer partners
Number of active dealers 1,121 1,088 3.0%
Contracts per active dealer 44.8 34.4 30.2%
Average contract size $ 10.6 $ 8.5 24.7%
Revenue $ 73,701 $ 67,223 9.6%
Costs and expenses $ 45,383 $ 44,141 2.8%
as a % of revenue 61.6% 65.7%
Earnings before taxes ("EBT") $ 28,318 $ 23,082 22.7%
as a % of revenue 38.4% 34.3%
NOPAT $ 22,278 $ 21,069 5.7%
Average capital $ 323,840 $ 328,455 (1.4%)
Economic loss $ (1,414) $ (4,967) 71.5%
The Company's North American operations originated $178,632,000 and $531,403,000 in new installment contracts for the three and nine months ended September 30, 2001 compared with $85,248,000 and $317,514,000 for the same periods in 2000, representing increases of 109.5% and 67.4% for the three and nine month periods, respectively. The increases reflect: (i) an increase in the average contract size to $11,653 and $10,559 for the three and nine months ended September 30, 2001 compared with $8,435 and $8,494 for the same periods in 2000, as installment contracts originated through the Company's new internet origination system consist of newer vehicles financed over longer initial contract terms; (ii) an increase in the number of active dealers to 848 for the three months ended September 30, 2001 compared with 791 for the same period in 2000 and (iii) an increase in the average number of contracts originated per active dealer to 18.1 and 44.8 for the three and nine months ended September 30, 2001 compared with 12.8 and 34.4 for the same periods in 2000.
During the quarter ended September 30, 2001, the Company's North American operation created its Capital Services Group, comprised of Floor Plan Financing ("FPF") and Auto Funding America ("AFA"). FPF provides floor plan financing secured by dealer inventories and AFA, which started in March 2000, provides loans to dealers secured by the dealers' own portfolio of installment contracts. These AFA loans provide dealers working capital as they service their portfolio of installment contracts. In July 2000, AFA originated secured loans to two dealers with a carrying value of $2.3 million as of September 30, 2001. During the quarter ended September 30, 2001, the Company determined that these two loans were significantly impaired and recorded a pre-tax provision of $900,000 to increase its allowance for credit losses pertaining to these loans to $1.2 million as of September 30, 2001. Also during the quarter, Doug Busk, CAC's former Chief Financial Officer, was named President of Capital Services to lead the Company's efforts in AFA and FPF. Capital Services, which had $6.3 million of capital allocated as of September 30, 2001, is currently liquidating its remaining portfolio of AFA loans and the Company does not intend to allocate additional capital to AFA. The Company will, however, continue to look for opportunities to grow FPF and will allocate capital based on economic profit generated.
CAC North America's economic loss improved to ($704,000) from ($1,248,000) primarily due to a lower weighted average cost of capital, which was a result of lower market rates during the period. Excluding the pre-tax charge of $900,000 for AFA's allowance for credit losses, CAC North American's economic loss would have improved to ($119,000).
CAC United Kingdom Business Segment
United Kingdom Business Segment
Selected Financial and Operating Data
-------------------------------------
Three Months Ended
September 30,
---------------------------------
(Dollars in Thousands) 2001 2000 % Change
---------------------------------
Originations $ 27,746 $ 43,065 (35.6%)
Number of contracts originated 1,938 3,173 (38.9%)
Collections $ 21,899 $ 18,464 18.6%
Dealer partners
Number of active dealers 127 140 (9.3%)
Contracts per active dealer 15.3 22.7 (32.6%)
Average contract size $ 14.3 $ 13.6 5.1%
Revenue $ 5,880 $ 5,669 3.7%
Costs and expenses $ 2,636 $ 3,527 (25.3%)
as a % of revenue 44.8% 62.2%
Earnings before taxes ("EBT") $ 3,244 $ 2,142 51.4%
as a % of revenue 55.2% 37.8%
NOPAT $ 2,682 $ 1,750 53.3%
Average capital $ 96,053 $ 83,412 15.2%
Economic profit (loss) $ 217 $ (405) 153.6%
Nine Months Ended
September 30,
---------------------------------
(Dollars in Thousands) 2001 2000 % Change
---------------------------------
Originations $ 98,551 $ 110,746 (11.0%)
Number of contracts originated 7,201 8,096 (11.1%)
Collections $ 63,669 $ 56,635 12.4%
Dealer partners
Number of active dealers 205 179 14.5%
Contracts per active dealer 35.1 45.2 (22.3%)
Average contract size $ 13.7 $ 13.7 --
Revenue $ 17,841 $ 15,469 15.3%
Costs and expenses $ 9,989 $ 10,108 (1.2%)
as a % of revenue 56.0% 65.3%
Earnings before taxes ("EBT") $ 7,852 $ 5,361 46.5%
as a % of revenue 44.0% 34.7%
NOPAT $ 6,944 $ 4,346 59.8%
Average capital $ 94,916 $ 80,789 17.5%
Economic profit (loss) $ (349) $ (2,065) 83.1%
The Company's United Kingdom operations originated $27,746,000 and $98,551,000 in new installment contracts for the three and nine months ended September 30, 2001 compared with $43,065,000 and $110,746,000 for the same periods in 2000, representing a decrease of 35.6% and a decrease of 11.0% for the three and nine month periods, respectively. The decrease in contract originations is a result of the Company discontinuing its relationship with certain dealers as new CAC management in the UK has re-focused the operation on originating contracts that generate higher economic profit than in comparable prior periods.
CAC United Kingdom generated economic profit of $217,000 for the quarter ended September 30, 2001, which was primarily a result of improved operating results and a lower weighted average cost of capital. CAC United Kingdom improved its operating results principally through headcount reductions, lowering operating costs and by reducing its provision for credit losses as a result of discontinued relationships with certain dealers.
CAC Automotive Leasing Business Segment
CAC Automotive Leasing Business Segment
Selected Financial and Operating Data
---------------------------------------
Three Months Ended
September 30,
---------------------------------
(Dollars in Thousands) 2001 2000 % Change
---------------------------------
Originations $ 5,105 $ 10,157 (49.7%)
Number of contracts originated 561 926 (39.4%)
Collections $ 4,926 $ 3,029 62.6%
Dealer partners:
Number of active dealers 72 84 (14.3%)
Contracts per active dealer 7.8 11.0 (29.1%)
Average contract size $ 9.1 $ 11.0 (17.3%)
Revenue $ 6,090 $ 4,053 50.3%
Costs and expenses $ 6,801 $ 4,867 39.7%
as a % of revenue 111.7% 120.1%
Earnings before taxes ("EBT") $ (711) $ (814) 12.7%
as a % of revenue (11.7%) (20.1%)
NOPAT $ 55 $ 85 (35.3%)
Average capital $ 35,935 $ 30,180 19.1%
Economic loss $ (819) $ (686) (19.4%)
Nine Months Ended
September 30,
---------------------------------
(Dollars in Thousands) 2001 2000 % Change
---------------------------------
Originations $ 24,264 $ 36,414 (33.4%)
Number of contracts originated 2,523 3,374 (25.2%)
Collections $ 14,171 $ 6,667 112.6%
Dealer partners:
Number of active dealers 120 90 33.3%
Contracts per active dealer 21.0 37.5 (44.0%)
Average contract size $ 9.6 $ 10.8 (11.1%)
Revenue $ 17,333 $ 9,157 89.3%
Costs and expenses $ 20,199 $ 10,229 97.5%
as a % of revenue 116.5% 111.7%
Earnings before taxes ("EBT") $ (2,866) $ (1,072) (167.4%)
as a % of revenue (16.5%) (11.7%)
NOPAT $ (20) $ 722 (102.8%)
Average capital $ 36,556 $ 21,218 72.3%
Economic loss $ (2,823) $ (972) (190.4%)
Originations for the Company's automobile leasing operations were $5,105,000 and $24,264,000 for the three and nine months ended September 30, 2001 compared with $10,157,000 and $36,414,000 for the same periods in 2000, representing a decrease of 49.7% and 33.4% for the three and nine month periods, respectively.
The decreases in lease originations are based on the Company's strategy to limit the amount of capital invested in this operation until additional portfolio data is obtained. 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 residual values 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, in 2002.
Guidance for 2001 The Company also updated guidance for 2001: Estimated earnings per share $0.68 North American Retail installment contract origination growth 65% United Kingdom Retail installment contract origination growth (20%) Automotive Leasing origination contract growth (30%) Average net installment contract receivables growth 20% Finance charge yield % 13% Average debt balance $195-$210 million Average borrowing cost 8.25%
Cautionary Statement Regarding Forward Looking Information
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. These forward-looking statements represent our outlook only as of the date of this release. While we believe any forward-looking statements we have made are reasonable, actual results could differ materially since the statements are based on our current expectations and are subject to risks and uncertainties. These risks and uncertainties, include, among others, competition from traditional financing sources and from non-traditional lenders, unavailability 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 against the Company, the loss of key management personnel, the Company's ability to complete various financing alternatives and the various other factors discussed in the Company's reports filed with the Securities and Exchange Commission. Readers are cautioned to consider these factors when relying on such forward-looking information. 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 company specializing in products and services for a network of automobile dealer-partners in North America and Europe. Credit Acceptance provides its dealer-partners with financing sources for consumers with limited access to credit and delivers credit approvals instantly through the internet. Other dealer-partner services include marketing, sales training and a wholesale purchasing cooperative. Through its financing program, Credit Acceptance helps consumers change their lives by providing them an opportunity to strengthen and reestablish 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
Income Statements
-----------------
(Dollars in thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- -----------------------
2001 2000 2001 2000
----------- ----------- ----------- -----------
Revenue:
Finance charges $ 22,835 $ 20,206 $ 65,065 $ 60,505
Lease revenue 5,728 3,812 16,368 8,628
Other income 8,263 7,156 27,442 22,716
----------- ----------- ----------- -----------
Total revenue 36,826 31,174 108,875 91,849
----------- ----------- ----------- -----------
Costs and Expenses:
Selling, general
& administrative
expenses 15,547 12,613 46,203 39,303
Provision for
credit losses 2,632 3,074 8,352 8,097
Depreciation of
leased assets 3,172 2,141 9,270 4,514
Interest 3,887 4,119 11,708 12,479
----------- ----------- ----------- -----------
Total costs
and expenses 25,238 21,947 75,533 64,393
----------- ----------- ----------- -----------
Operating income 11,588 9,227 33,342 27,456
Foreign exchange
losses 6 5 38 85
----------- ----------- ----------- -----------
Income before
provision for
income taxes 11,582 9,222 33,304 27,371
Provision for
income taxes 3,937 3,118 11,341 9,388
----------- ----------- ----------- -----------
Net income $ 7,645 $ 6,104 $ 21,963 $ 17,983
=========== =========== =========== ===========
Net income per
common share:
Basic $ 0.18 $ 0.14 $ 0.52 $ 0.41
=========== =========== =========== ===========
Diluted $ 0.18 $ 0.14 $ 0.51 $ 0.40
=========== =========== =========== ===========
Weighted average
shares outstanding:
Basic 41,997,434 43,013,682 42,153,090 44,319,948
=========== =========== =========== ===========
Diluted 43,594,725 43,424,885 43,027,573 44,653,068
=========== =========== =========== ===========
CREDIT ACCEPTANCE CORPORATION
Balance Sheets
--------------
(Dollars in thousands)
As of September 30
--------------------
2001 2000
--------- ---------
Assets:
Cash and investments $ 42,393 $ 24,618
Investments - held to maturity 202 881
Installment contracts receivable 740,407 571,463
Allowance for credit losses (4,241) (4,374)
--------- ---------
Installment contracts receivable, net 736,166 567,089
Floor plan receivables 6,727 10,995
Notes receivable 11,462 5,333
Investment in operating leases, net 45,197 38,760
Property and equipment, net 19,795 18,053
Other assets 4,875 4,736
Retained interest in securitization -- 4,839
--------- ---------
Total Assets $ 866,817 $ 675,304
========= =========
Liabilities:
Senior Notes $ 7,995 $ 23,080
Lines of credit 113,242 61,803
Secured financing 102,669 74,202
Mortgage note 7,090 7,751
Accounts payable and accrued liabilities 36,628 28,369
Dealer holdbacks, net 301,542 211,579
Deferred income taxes, net 9,278 9,821
Income taxes payable 7,365 511
--------- ---------
Total Liabilities $ 585,809 $ 417,116
--------- ---------
Shareholders' Equity
Common stock 419 428
Paid-in capital 108,102 112,581
Retained Earnings 177,916 150,286
Accumulated other comprehensive
loss-cumulative
translation adjustment (5,429) (5,107)
--------- ---------
Total Shareholders' Equity 281,008 258,188
--------- ---------
Total Liabilities and Shareholders' Equity $ 866,817 $ 675,304
========= =========
CREDIT ACCEPTANCE CORPORATION
Statements of Cash Flows
------------------------
(Dollars in thousands)
Nine Months Ended
September 30,
--------------------
2001 2000
--------- ---------
Cash Flows From Operating Activities:
Net Income $ 21,963 $ 17,983
Adjustments to reconcile cash
provided by operating activities -
Provision for credit losses 8,352 8,097
Depreciation 3,276 2,738
Depreciation of operating
lease vehicles 7,478 3,524
Amortization of deferred
leasing costs 1,792 990
Credit for deferred income taxes (1,456) 21
Gain on clean up call
of securitization (1,082) --
Change in operating assets
and liabilities -
Accounts payable and
accrued liabilities 9,695 4,695
Income taxes payable 7,365 511
Income taxes receivable 351 12,686
Lease payment receivable (486) (1,967)
Unearned insurance premiums,
insurance reserves and fees (467) (1,096)
Other assets (1,360) 941
--------- ---------
Net cash provided
by operating
activities 55,421 49,123
--------- ---------
Cash Flows From Investing Activities:
Principal collected on
installment contracts receivable 228,811 236,581
Advances to dealers and payments
of dealer holdbacks (310,651) (234,101)
Operating lease acquisitions (21,399) (31,560)
Deferred costs from lease acquisitions (2,866) (4,854)
Operating lease liquidations 8,743 2,465
Decrease in floor plan receivables 1,691 4,742
Increase in notes receivable (4,477) (1,723)
Purchases of property and equipment (4,748) (2,701)
--------- ---------
Net cash used in
investing activities (104,896) (31,151)
--------- ---------
Cash Flows From Financing Activities:
Net borrowings under lines of credit 25,146 24,809
Proceeds from secured financing 165,412 64,500
Repayment of secured financing (107,782) (73,495)
Repayments of senior notes and
mortgage note (8,453) (7,963)
Repurchase of common stock (3,229) (16,440)
Proceeds from stock options exercised 1,099 71
--------- ---------
Net cash provided
by (used in) financing
activities 72,193 (8,518)
--------- ---------
Effect of exchange
rate changes on cash (1,051) (6,401)
--------- ---------
Net Increase In Cash 21,667 3,053
Cash and cash equivalents
- beginning of period 20,726 21,565
--------- ---------
Cash and cash equivalents
- end of period $ 42,393 $ 24,618
========= =========
CREDIT ACCEPTANCE CORPORATION
Summary Financial Data
----------------------
(Dollars in thousands)
Installment Contracts Receivable
--------------------------------
The following table summarizes the composition of installment
contracts receivable:
As of September 30
------------------------------
2001 2000
------------- -------------
Gross installment contracts
receivable $ 882,820 $ 680,972
Unearned finance charges (135,593) (101,257)
Unearned insurance premiums,
insurance reserves and fees (6,820) (8,252)
------------- -------------
Installment contracts receivable $ 740,407 $ 571,463
============= =============
Non-accrual installment
contracts as a percent
of total gross installment
contracts 18.4% 20.8%
============= =============
A summary of changes in gross installment contracts receivable is
as follows:
Three Months Ended Nine Months Ended
September 30 September 30
---------------------- ---------------------
2001 2000 2001 2000
---------- --------- --------- ---------
Balance, beginning
of period $ 807,281 $ 686,551 $ 674,402 $ 679,247
Gross amount of
installment contracts
accepted 206,378 128,313 629,954 428,260
Gross installment
contracts acquired
pursuant to clean
up call -- -- 2,918 --
Cash collections
on installment
contracts
receivable (110,853) (97,248) (322,953) (302,206)
Charge offs (28,392) (32,570) (97,875) (109,072)
Currency translation 8,406 (4,074) (3,626) (15,257)
---------- --------- --------- ---------
Balance, end
of period $ 882,820 $ 680,972 $ 882,820 $ 680,972
========== ========= ========= =========
Investment in Operating Leases
------------------------------
The following table summarizes the composition of investment in
operating leases, net:
As of September 30
-------------------
2001 2000
-------- --------
Gross leased vehicles $ 50,181 $ 36,952
Accumulated depreciation (10,158) (3,613)
Gross deferred costs 6,992 5,489
Accumulated amortization of
deferred costs (2,502) (1,002)
Lease payments receivable 3,448 2,211
-------- --------
Investment in operating leases 47,961 40,037
Less: Reserve on investment
in operating leases (2,764) (1,277)
-------- --------
Investment in operating
leases, net $ 45,197 $ 38,760
======== ========
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 Nine Months Ended
September 30 September 30
--------------------- -------------------
2001 2000 2001 2000
-------- --------- -------- --------
Balance, beginning
of period $ 49,872 $ 33,464 $ 44,944 $ 9,188
Gross operating
leases originated 5,105 10,156 24,265 36,414
Depreciation and
amortization of
operating leases (3,172) (2,141) (9,270) (4,514)
Lease payments due 5,664 3,871 16,125 8,936
Collections on
operating leases (4,925) (3,029) (14,171) (6,667)
Charge offs (476) (235) (1,468) (302)
Operating lease
liquidations (3,943) (2,039) (12,329) (3,009)
Currency translation (164) (9) (135) (8)
-------- --------- -------- --------
Balance, end
of period $ 47,961 $ 40,038 $ 47,961 $ 40,038
======== ======== ======== ========
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 Nine Months Ended
September 30 September 30
------------------ -----------------
2001 2000 2001 2000
------- ------- ------- -------
Allowance for Credit Losses
---------------------------
Balance, beginning
of period $ 3,784 $ 4,184 $ 4,640 $ 4,742
Provision for
loan losses 543 581 543 996
Charge offs (127) (373) (926) (1,293)
Currency translation 41 (18) (16) (71)
------- ------- ------- -------
Balance, end
of period $ 4,241 $ 4,374 $ 4,241 $ 4,374
======= ======= ======= =======
Three Months Ended Nine Months Ended
September 30 September 30
------------------ ------------------
2001 2000 2001 2000
-------- -------- ------- -------
Reserve on Advances
-------------------
Balance, beginning
of period $ 8,050 $ 7,695 $ 6,788 $ 4,329
Provision for
advance losses 438 1,452 3,348 5,370
Charge offs (43) (2,463) (1,557) (3,041)
Currency translation 52 (79) (82) (53)
-------- -------- ------- -------
Balance, end
of period $ 8,497 $ 6,605 $ 8,497 $ 6,605
======== ======== ======= =======
CREDIT ACCEPTANCE CORPORATION
Summary Financial Data
----------------------
(Dollars in thousands)
Reserves - (continued)
----------------------
Three Months Ended Nine Months Ended
September 30 September 30
-------------------- ------------------
2001 2000 2001 2000
-------- -------- -------- --------
Reserve on Investment
--------------------
in Operating Leases
-------------------
Balance, beginning of
period $ 2,332 $ 619 $ 2,023 $ 91
Provision for lease
vehicle losses 1,651 1,041 4,461 1,731
Charge offs (1,219) (383) (3,720) (545)
-------- -------- -------- --------
Balance, end of period $ 2,764 $ 1,277 $ 2,764 $ 1,277
======== ======== ======== ========
Dealer Holdbacks
----------------
The following table summarizes the composition of dealer holdbacks:
As of September 30
---------------------------
2001 2000
------------ ------------
Dealer holdbacks $ 701,434 $ 541,663
Less: Advances (net of
reserve of $8,497 and
$6,605 at September 30,
2001 and 2000, respectively) (399,892) (330,084)
------------- -------------
Dealer holdbacks, net $ 301,542 $ 211,579
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