Credit Acceptance Announces 2nd Quarter Earnings
SOUTHFIELD, Mich.--July 17, 2002--Credit Acceptance Corporation Credit Acceptance Corporation (the "Company") announced consolidated net income for the three months ended June 30, 2002 of $8,550,000 or $0.20 per diluted share compared to $7,729,000 or $0.18 per diluted share for the same period in 2001.For the six months ended June 30, 2002, consolidated net income was $14,864,000 or $0.34 per diluted share compared to $14,318,000 or $0.34 per diluted share for the same period in 2001. After adjustments related to stock options and excluding the impact of non-recurring adjustments, consolidated net income for the three months ended June 30, 2002 was $8,841,000 or $0.19 per adjusted share compared to $7,448,000 or $0.16 per adjusted share for the same period in 2001. For the six months ended June 30, 2002, consolidated net income, after adjustments related to stock options and excluding the impact of non-recurring adjustments, was $17,956,000 or $0.38 per adjusted share compared to $14,037,000 or $0.30 per adjusted share for the same period in 2001. For an explanation of stock option and non-recurring adjustments to net income, refer to footnotes (1), (2), (3) and (4) of the Company's economic loss calculation which follows.
The following presents selected financial and operating data for the periods indicated:
Consolidated
------------
Consolidated
Selected Financial and Operating Data
(Unaudited)
-------------------------------------
Three Months Ended June 30,
(Dollars in thousands, -------------------------------------
except per share data) 2002 2001 % Change
-------------------------------------
Originations $ 146,872 $ 207,749 (29.3)%
Number of loans originated 12,643 18,978 (33.4)
Collections $ 121,291 $ 109,710 10.6
Dealer-partners:
Number of active dealer-partners 649 1,045 (37.9)
Loans per active dealer-partner 19.5 18.2 7.3
Average loan size $ 11.6 $ 10.9 6.1
Reported net income $ 8,550 $ 7,729 10.6
Non-recurring adjustments(1) - (281)
Repatriation adjustment(2) - -
Recorded stock option expense(3) 291 -
----------- ------------
Adjusted net income 8,841 7,448 18.7
Interest expense after-tax 1,601 2,639 (39.3)
----------- ------------
Net operating profit after tax
("NOPAT") 10,442 10,087 3.5
Average capital(4) $ 499,998 $ 482,577 3.6
Return on Capital ("ROC")(5) 8.35% 8.36%
Weighted average cost of capital
("WACC")(6) 9.68% 9.96%
----------- ------------
Spread (1.33%) (1.60%)
Economic loss(7) $ (1,657) $ (1,931)
Adjusted weighted average
shares outstanding(8) 47,207,810 46,865,471
----------- ------------
Economic loss per share(9) $ (0.04) $ (0.04)
----------- ------------
----------- ------------
Adjusted net income
per share(10) $ 0.19 $ 0.16 18.8 %
----------- ------------
----------- ------------
-------------------------------------
Six Months Ended June 30,
(Dollars in thousands, -------------------------------------
except per share data) 2002 2001 % Change
-------------------------------------
Originations $ 340,006 $ 430,704 (21.1)%
Number of loans originated 33,478 38,781 (13.7)
Collections $ 247,344 $ 221,345 11.7
Dealer-partners:
Number of active dealer-partners 922 1,493 (38.2)
Loans per active dealer-partner 36.3 26.0 39.8
Average loan size $ 10.2 $ 11.1 (8.6)
Reported net income $ 14,864 $ 14,318 3.8
Non-recurring adjustments(1) (963) (281)
Repatriation adjustment(2) 3,564 -
Recorded stock option expense(3) 491 -
----------- ------------
Adjusted net income 17,956 14,037 27.9
Interest expense after-tax 3,103 5,140 (39.6)
----------- ------------
Net operating profit after tax
("NOPAT") 21,059 19,177 9.8
Average capital(4) $ 504,440 $ 464,809 8.5
Return on Capital ("ROC")(5) 8.35% 8.25%
Weighted average cost of capital
("WACC")(6) 9.42% 10.11%
----------- ------------
Spread (1.07%) (1.86%)
Economic loss(7) $ (2,697) $ (4,328)
Adjusted weighted average
shares outstanding(8) 47,159,165 47,075,250
----------- ------------
Economic loss per share(9) $ (0.06) $ (0.09)
----------- ------------
----------- ------------
Adjusted net income
per share(10) $ 0.38 $ 0.30 26.7 %
----------- ------------
----------- ------------
----------------------------------------------------------------------
(1) The following non-recurring adjustments have been reversed in
order to present a more useful analysis of economic profit. For
the three and six months ended June 30, 2001: (i) an after tax
charge of $422,000 for executive severance and (ii) an after tax
gain of ($703,000) related to an exercised clean-up call on the
July 1998 securitization. For the six months ended June 30, 2002 a
reduction in state income tax expense of ($963,000) as a result of
the re-characterization of income as a result of an Internal
Revenue Service examination.
(2) In the first quarter of 2002, an adjustment of $3,713,000 was
recorded to reflect additional taxes that would be due upon
repatriation of currently undistributed earnings in the Company's
United Kingdom business unit. $3,564,000 of this adjustment
related to earnings generated from inception of the business unit
through December 31, 2001.
(3) Generally accepted accounting principles ("GAAP") require the
Company to record an expense relating to performance-based stock
options. The after-tax GAAP expense associated with
performance-based stock options granted in 1999 was $291,000 and
$491,000 for the three and six months ended June 30, 2002. The
Company believes adding back the recorded GAAP expense combined
with the adjustments discussed in footnotes (4) and (6) accurately
reflects the true cost of stock options. Refer to the first
quarter 2002 Form 10-Q or the Company's website at
www.creditacceptance.com for further discussion of the Company's
practices regarding stock options.
(4) Average capital is equal to the average amount of debt and equity
during the period. For purposes of computing economic profit, the
Company has added to shareholders' equity as reported under GAAP
$26,875,000 and $25,481,000 in the three and six months ended
June 30, 2002, respectively, and $22,838,000 and $21,771,000 in
the three and six months ended June 30, 2001, respectively.
Amounts added to shareholders' equity represent the average amount
of capital employed to repurchase shares consistent with the
Company's practices regarding stock options.
(5) Return on capital is equal to annualized NOPAT divided by average
capital.
(6) Weighted average cost of capital is equal to the sum of: (i) the
after-tax cost of debt multiplied by the ratio of average debt to
average capital, plus (ii) the cost of equity multiplied by the
ratio of average equity to average capital. The cost of equity is
assumed to be equal to the 30-year Treasury bond rate plus 6% plus
two times the Company's interest bearing debt to equity, which
includes the additions to shareholders' equity as reported under
GAAP discussed in footnote (4).
(7) Total economic loss equals the Spread (ROC minus WACC) multiplied
by average capital.
(8) Includes actual shares outstanding plus total stock options
outstanding. Differs from shares used for GAAP earnings per share
which include only a portion of options outstanding.
(9) Economic loss per share equals the economic loss divided by the
adjusted weighted average shares outstanding.
(10) Adjusted net income per share equals the adjusted net income
divided by the adjusted weighted average shares outstanding.
The Company's economic loss improved to ($1,657,000) and
($2,697,000) or ($0.04) and ($0.06) per adjusted share for the three
and six months ended June 30, 2002 compared to ($1,931,000) and
($4,328,000) or ($0.04) and ($0.09) per adjusted share for the same
periods in 2001, respectively. This improvement for the three months
ended June 30, 2002 is due to a lower weighted average cost of
capital, which was a result of lower interest rates during the period.
The improvement in economic loss for the six months ended June 30,
2002 is primarily due to a lower weighted average cost of capital,
which was a result of lower interest rates during the period. The
improvement in economic loss for the six months ended June 30, 2002 is
also due to an increase in the return on capital to 8.35% for the six
months ended June 30, 2002 compared to 8.25% for the same period in
2001. The improvement in return on capital was primarily due to an
increase in capital invested in North America, which generates the
highest return on capital and an increase in the return on capital in
North America, partially offset by a decrease in the return on capital
in the United Kingdom.
Automobile loan and lease originations were $146,872,000 and
$340,006,000 for the three and six months ended June 30, 2002 compared
with $207,749,000 and $430,704,000 for the same periods in 2001,
representing decreases of 29.3% and 21.1%, respectively. The reduction
in loan origination volume is a result of an increased focus on
improving the return on capital. The Company's financial goal is to
maximize the amount of economic profit generated per share. The
Company believes that in the short-term, this objective can best be
achieved by first improving the return per dollar of capital invested.
Once return on capital goals have been met, the Company will then
focus on increasing the amount of capital invested by increasing the
number of dealer-partners and the number of loans originated per
dealer-partner. The Company's efforts to improve the return on capital
have focused on increasing the spread between the amount advanced to
dealer-partners and the forecasted collection rate.
North America
North America
Selected Financial and Operating Data
(Unaudited)
--------------------------------------------------------------------
Three Months Ended June 30,
---------------------------------------
(Dollars in thousands,
except per share data) 2002 2001 % Change
--------- --------- ----------
Originations $ 137,485 $ 166,570 (17.5)%
Number of loans originated 11,990 15,656 (23.4)
Collections $ 96,181 $ 83,883 14.7
Dealer-partners:
Number of active dealer-partners 602 905 (33.5)
Loans per active
dealer-partner 19.9 17.3 15.1
Average loan size $ 11.5 $ 10.6 7.8
Reported net income $ 7,484 $ 6,894 8.6
Non-recurring adjustments (1) - (703)
Repatriation adjustment (2) - -
Recorded stock option expense (3) 291 -
--------- ---------
Adjusted net income 7,775 6,191 25.6
Interest expense after-tax 1,065 1,593 (33.1)
--------- ---------
NOPAT 8,840 7,784 13.6
Average capital (4) $ 388,167 $ 351,098 10.6
ROC 9.11% 8.87%
WACC 9.52% 9.76%
--------- ---------
Spread (0.41%) (0.89%)
Economic profit (loss) $ (224) $ (856)
Adjusted weighted
average shares
outstanding 47,207,810 46,865,471
---------- ----------
Economic profit (loss)
per share $ (0.00) $ (0.02)
========== ==========
Adjusted net
income per share $ 0.16 $ 0.13 23.1 %
========== ==========
Six Months Ended June 30,
---------------------------------------
(Dollars in thousands,
except per share data) 2002 2001 % Change
--------- --------- ----------
Originations $ 312,028 $ 342,239 (8.8)%
Number of loans originated 28,092 34,839 (19.4)
Collections $ 196,192 $ 170,330 15.2
Dealer-partners:
Number of active dealer-partners 726 1,046 (30.6)
Loans per active
dealer-partner 38.7 33.3 16.2
Average loan size $ 11.1 $ 9.8 13.1
Reported net income $ 13,098 $ 12,481 4.9
Non-recurring adjustments (1) (963) (703)
Repatriation adjustment (2) 3,564 -
Recorded stock option expense (3) 491 -
---------- ----------
Adjusted net income 16,190 11,778 37.5
Interest expense after-tax 1,954 3,034 (35.6)
---------- ----------
NOPAT 18,144 14,812 22.5
Average capital (4) $ 385,477 $ 333,954 15.4
ROC 9.41% 8.87%
WACC 9.25% 9.94%
---------- ----------
Spread 0.16% (1.07%)
Economic profit (loss) $ 489 $ (1,921)
Adjusted weighted
average shares
outstanding 47,159,165 47,075,250
---------- ----------
Economic profit (loss)
per share $ 0.01 $ (0.04)
========== ==========
Adjusted net
income per share $ 0.34 $ 0.25 36.0 %
========== ==========
(1) The following non-recurring adjustments have been reversed in
order to present a more useful analysis of economic profit. For
the three and six months ended June 30, 2001, an after tax gain of
($703,000) related to an exercised clean-up call on the July 1998
securitization.
For the six months ended June 30, 2002 a reduction in state income
tax expense of ($963,000) as a result of the re-characterization
of income as a result of an Internal Revenue Service examination.
(2) In the first quarter of 2002, an adjustment of $3,713,000 was
recorded to reflect additional taxes that would be due upon
repatriation of currently undistributed earnings in the Company's
United Kingdom business unit. $3,564,000 of this adjustment
related to earnings generated from inception of the business unit
through December 31, 2001.
(3) GAAP requires the Company to record an expense relating to
performance-based stock options. The after-tax GAAP expense
associated with performance-based stock options granted in 1999
was $291,000 and $491,000 for the three and six months ended
June 30, 2002.
(4) Average capital is equal to the average amount of debt and equity
during the period. For purposes of computing economic profit, the
Company has added to shareholders' equity as reported under GAAP
$25,994,000 and $24,674,000 in the three and six months ended June
30, 2002, respectively, and $22,838,000 and $21,771,000 in the
three and six months ended June 30, 2001, respectively. Amounts
added to shareholders' equity represent the average amount of
capital employed to repurchase shares consistent with the
Company's practices regarding stock options.
Economic profit (loss) for North America improved to ($224,000) and
$489,000 or $0.00 and $0.01 per adjusted share for the three and six
months ended June 30, 2002 compared to ($856,000) and ($1,921,000) or
($0.02) and ($0.04) per adjusted share for the same periods in 2001,
respectively. This improvement is due to: (i) an increase in the
return on capital to 9.11% and 9.41% for the three and six months
ended June 30, 2002 compared to 8.87% for the same periods in 2001 due
primarily to an increase in finance charge revenue as a percent of
average capital as a result of a reduction in the amount advanced to
dealer-partners as a percent of the gross loan amount and (ii) a lower
weighted average cost of capital, which was a result of lower interest
rates during the period.
Automobile loan originations were $137,485,000 and $312,028,000 for
the three and six months ended June 30, 2002 compared with
$166,570,000 and $342,239,000 for the same periods in 2001,
representing decreases of 17.5% and 8.8%, respectively. The reduction
in loan origination volume in North America is a result of the
Company's increased focus on improving the return on capital.
United Kingdom
--------------
United Kingdom
Selected Financial and Operating Data
(Unaudited)
-------------------------------------
Three Months Ended June 30,
-------------------------------------
(Dollars in thousands,
except per share data) 2002 2001 % Change
----------- ----------- ---------
Originations $ 9,365 $ 33,949 (72.4)%
Number of loans originated 651 2,559 (74.6)
Collections $ 21,112 $ 21,097 0.1
Dealer-partners:
Number of active dealer-partners 45 148 (69.6)
Loans per active dealer-partner 14.5 17.3 (16.3)
Average loan size $ 14.4 $ 13.3 8.4
Reported net income $ 1,371 $ 1,485 (7.7)
Non-recurring adjustments(1) - 422
----------- -----------
Adjusted net income 1,371 1,907 (28.1)
Interest expense after-tax 156 393 (60.3)
----------- -----------
NOPAT 1,527 2,300 (33.6)
Average capital(2) $ 83,553 $ 94,558 (11.6)
ROC 7.31% 9.73%
WACC 11.16% 10.21%
----------- -----------
Spread (3.85%) (0.48%)
Economic loss $ (804) $ (114)
Adjusted weighted
average shares outstanding 47,207,810 46,865,471
----------- -----------
Economic loss per share $ (0.02) $ (0.00)
----------- -----------
----------- -----------
Adjusted net income per share $ 0.03 $ 0.04 (25.0)%
----------- -----------
----------- -----------
-------------------------------------
Six Months Ended June 30,
-------------------------------------
(Dollars in thousands,
except per share data) 2002 2001 % Change
----------- ----------- ---------
Originations $ 26,903 $ 69,306 (61.2)%
Number of loans originated 1,955 5,263 (62.9)
Collections $ 42,511 $ 41,770 1.8
Dealer-partners:
Number of active dealer-partners 151 296 (49.0)
Loans per active dealer-partner 12.9 17.8 (27.2)
Average loan size $ 13.8 $ 13.2 4.5
Reported net income $ 2,622 $ 3,227 (18.7)
Non-recurring adjustments(1) - 422
----------- -----------
Adjusted net income 2,622 3,649 (28.1)
Interest expense after-tax 369 789 (53.2)
----------- -----------
NOPAT 2,991 4,438 (32.6)
Average capital(2) $ 87,241 $ 94,172 (7.4)
ROC 6.86% 9.42%
WACC 10.46% 10.28%
----------- -----------
Spread (3.60%) (0.86%)
Economic loss $ (1,569) $ (405)
Adjusted weighted
average shares outstanding 47,159,165 47,075,250
----------- -----------
Economic loss per share $ (0.03) $ (0.01)
----------- -----------
----------- -----------
Adjusted net income per share $ 0.06 $ 0.08 (25.0)%
----------- -----------
----------- -----------
----------------------------------------------------------------------
(1) For the three and six months ended June 30, 2001, the
non-recurring adjustment of $422,000 for an after tax charge for
executive severance has been reversed in order to present a more
useful analysis of economic profit.
(2) Average capital is equal to the average amount of debt and equity
during the period. For purposes of computing economic profit, the
Company has added to shareholders' equity as reported under GAAP
$881,000 and $807,000 in the three and six months ended June 30,
2002, respectively. Amounts added to shareholders' equity
represent the average amount of capital employed to repurchase
shares consistent with the Company's practices regarding stock
options.
Economic loss for the United Kingdom declined to ($804,000) and
($1,569,000) or ($0.02) and ($0.03) per adjusted share for the three
and six months ended June 30, 2002 compared to ($114,000) and
($405,000) or ($0.00) and ($0.01) per adjusted share for the same
periods in 2001, respectively, primarily due to a decrease in the
return on capital to 7.31% and 6.86% for the three and six months
ended June 30, 2002 from 9.73% and 9.42% for the same periods in 2001,
respectively. The decrease in the return on capital is primarily due
to: (i) a reduction in finance charge revenue, as a percent of average
capital, due to an increase in the percent of non-accrual loans; and
(ii) an increase in the provision for credit losses, as a percent of
average capital, due primarily to an increase in the provision for
losses on advances to dealer-partners. The increase in advance
provisions is due to the deterioration in credit quality of loans
originated in 2001. As a result, the Company stopped originating
automobile loans in Ireland and decreased the amount advanced to
dealer-partners in the United Kingdom. The decrease in the return on
capital is partially offset by a lower weighted average cost of
capital, which was a result of lower interest rates during the period.
Automobile loan originations were $9,365,000 and $26,903,000 for the
three and six months ended June 30, 2002 compared with $33,949,000 and
$69,306,000 for the same period in 2001, representing decreases of
72.4% and 61.2%, respectively. The reduction in loan origination
volume in the United Kingdom is a result of the Company's increased
focus on improving the return on capital. To improve the United
Kingdom's return on capital the Company has increased the spread
between the advance rate and the forecasted collection rate. In order
for these changes to result in improved returns on capital, increased
unit volume will be required in order to absorb fixed operating
expenses.
Automobile Leasing
------------------
Automobile Leasing
Selected Financial and Operating Data
(Unaudited)
-------------------------------------
Three Months Ended June 30,
-------------------------------------
(Dollars in thousands,
except per share data) 2002 2001 % Change
----------- ----------- ----------
Collections $ 3,998 $ 4,730 (15.5)%
Reported net loss $ (305) $ (650) 53.1
Interest expense after-tax 380 653 (41.8)
----------- -----------
NOPAT 75 3 2,400.0
Average capital $ 28,278 $ 36,921 (23.4)
ROC 1.06% 0.03%
WACC 9.95% 10.44%
----------- -----------
Spread (8.89%) (10.41%)
Economic loss $ (629) $ (961)
Adjusted weighted average
shares outstanding 47,207,810 46,865,471
----------- -----------
Economic loss per share $ (0.01) $ (0.02)
----------- -----------
----------- -----------
Adjusted net loss per share $ (0.01) $ (0.01) 0.0 %
----------- -----------
----------- -----------
-------------------------------------
Six Months Ended June 30,
-------------------------------------
(Dollars in thousands,
except per share data) 2002 2001 % Change
----------- ----------- ----------
Collections $ 8,641 $ 9,245 (6.5)%
Reported net loss $ (856) $ (1,390) 38.4
Interest expense after-tax 780 1,317 (40.8)
----------- -----------
NOPAT (76) (73) (4.1)
Average capital $ 31,722 $ 36,683 (13.5)
ROC (0.48%) (0.40%)
WACC 9.72% 10.52%
----------- -----------
Spread (10.20%) (10.92%)
Economic loss $ (1,617) $ (2,002)
Adjusted weighted average
shares outstanding 47,159,165 47,075,250
----------- -----------
Economic loss per share $ (0.03) $ (0.04)
----------- -----------
----------- -----------
Adjusted net loss per share $ (0.02) $ (0.03) 33.3 %
----------- -----------
----------- -----------
In the first quarter of 2002, the Company stopped originating
automobile leases. The assets of Automobile Leasing are reviewed for
impairment on a quarterly basis. Based upon this review, no additional
write-down was necessary in the three and six months ending June 30,
2002.
Cautionary Statement Regarding Forward Looking Information
Certain statements in this release that are not historical facts,
including those regarding the Company's future plans and objectives,
are "forward-looking statements" within the meaning of the federal
securities laws. These forward-looking statements represent our
outlook only as of the date of this release. While the Company
believes that its forward-looking statements are reasonable, actual
results could differ materially since the statements are based on our
current expectations, which are subject to risks and uncertainties.
Factors that might cause such a difference include the following:
increased competition from traditional financing sources and from
non-traditional lenders, unavailability of funding at competitive
rates of interest or the Company's potential inability to continue to
obtain third party financing on favorable terms, the Company's
potential inability to generate sufficient cash flow to service its
debt and fund its future operations, 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 potential inability to maintain
or increase the volume of automobile loans, the Company's potential
inability to accurately estimate future collections and collection
rates and the associated default risk, the Company's potential
inability to accurately estimate the residual values of leased
vehicles, an increase in the amount or severity of litigation against
the Company, the loss of key management personnel, the effects of
terrorist attacks and potential attacks and the various other factors
discussed in the Company's reports filed with the Securities and
Exchange Commission. Other factors not currently anticipated by
management may also materially and adversely affect the Company's
results of operations. The Company does not undertake, and expressly
disclaims any obligation, to update or alter its forward-looking
statements whether as a result of new information, future events or
otherwise, except as required by applicable law.
Description of Credit Acceptance Corporation
Credit Acceptance is a financial services company specializing in
products and services for a network of automobile dealer-partners in
North America and Europe. Credit Acceptance provides participating
dealer-partners with financing sources for consumers with limited
access to credit by offering "guaranteed credit approval". The Company
delivers credit approvals through the internet. Other services include
marketing, sales training and a wholesale purchasing cooperative.
Through its financing program, Credit Acceptance helps consumers
change their lives by providing 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
Consolidated Income Statements
(Dollars in thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
------------------------- -----------------------
2002 2001 2002 2001
----------- ----------- ---------- ----------
(Unaudited) (Unaudited)
Revenue:
Finance charges $ 25,522 $ 22,432 $ 50,407 $ 42,960
Lease revenue 4,428 5,573 9,587 10,640
Other income 8,639 9,318 17,453 18,482
---------- ---------- ----------- -----------
Total revenue 38,589 37,323 77,447 72,082
---------- ---------- ----------- -----------
Costs and expenses:
Operating
expenses 17,037 15,652 33,045 30,689
Provision for
credit losses 3,170 2,705 6,551 5,720
Depreciation of
leased assets 2,566 3,169 5,507 6,098
Interest 2,457 4,016 4,762 7,821
---------- ---------- ----------- -----------
Total costs
and expenses 25,230 25,542 49,865 50,328
---------- ---------- ----------- -----------
Operating income 13,359 11,781 27,582 21,754
Foreign exchange
gain (loss) (2) (39) 15 (32)
---------- ---------- ----------- -----------
Income before
provision for
income taxes 13,357 11,742 27,597 21,722
Provision
for income
taxes 4,807 4,013 12,733 7,404
---------- ---------- ----------- -----------
Net income $ 8,550 $ 7,729 $ 14,864 $ 14,318
---------- ---------- ----------- -----------
---------- ---------- ----------- -----------
Net income per
common share:
Basic $ 0.20 $ 0.18 $ 0.35 $ 0.34
---------- ---------- ----------- -----------
---------- ---------- ----------- -----------
Diluted $ 0.20 $ 0.18 $ 0.34 $ 0.34
---------- ---------- ----------- -----------
---------- ---------- ----------- -----------
Weighted average
shares
outstanding:
Basic 42,535,312 42,020,176 42,486,667 42,229,955
Diluted 43,821,716 42,752,287 43,684,127 42,713,296
CREDIT ACCEPTANCE CORPORATION
Consolidated Balance Sheets
(Dollars in thousands)
As of June 30,
-----------------------------
2002 2001
------------- -------------
(Unaudited)
ASSETS:
Cash and cash equivalents $ 20,694 $ 20,236
Investments-- held to maturity 175 177
Automobile loans receivable 795,656 676,920
Allowance for credit losses (5,026) (3,784)
--------- ---------
Automobile loans receivable, net 790,630 673,136
--------- ---------
Floor plan receivables 6,414 6,188
Notes receivable 9,869 11,057
Investment in operating leases, net 29,246 47,540
Property and equipment, net 19,802 19,574
Other assets 5,280 4,948
--------- ---------
Total Assets $ 882,110 $ 782,856
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Liabilities:
Senior notes $ -- $ 10,658
Lines of credit 91,272 111,989
Secured financing 65,101 66,497
Mortgage note 7,118 7,259
Accounts payable and
accrued liabilities 37,402 34,449
Dealer holdbacks, net 350,689 269,585
Deferred income taxes, net 18,331 10,624
Income taxes payable 5,781 2,150
--------- ---------
Total Liabilities 575,694 513,211
--------- ---------
Shareholders' Equity:
Common stock 417 419
Paid-in capital 108,460 107,518
Retained earnings 200,020 170,271
Accumulated other comprehensive
loss-cumulative translation
adjustment (2,481) (8,563)
--------- ---------
Total Shareholders' Equity 306,416 269,645
--------- ---------
Total Liabilities and
Shareholders' Equity $ 882,110 $ 782,856
========= =========
CREDIT ACCEPTANCE CORPORATION
Consolidated Statements of Cash Flows
(Dollars in thousands)
Six Months Ended June 30,
---------------------------------
2002 2001
--------------- ---------------
(Unaudited)
Cash Flows From Operating Activities:
Net income $ 14,864 $ 14,318
Adjustments to reconcile
net cash provided by
operating activities:
Provision for credit losses 6,551 5,720
Depreciation 2,735 2,106
Depreciation and amortization
of leased assets 5,507 6,098
Gain on securitization clean-up -- (1,082)
Loss on retirement of
property and equipment 276 --
Provision (credit) for deferred
income taxes 7,663 (110)
Tax benefit from exercise
of stock options 1,555 --
Change in operating
assets and liabilities:
Accounts payable
and accrued liabilities (1,948) 6,734
Income taxes payable 683 2,150
Income taxes receivable -- 351
Lease payment receivable 535 (223)
Unearned insurance premiums,
insurance reserves and fees (492) 218
Deferred dealer enrollment fees, net 43 782
Other assets 2,889 (1,433)
--------- ---------
Net cash provided by
operating activities 40,861 35,629
--------- ---------
Cash Flows From Investing Activities:
Principal collected on automobile
loans receivable 170,648 152,730
Advances to dealers (155,711) (189,320)
Payments of dealer holdback (16,274) (13,881)
Operating lease acquisitions (874) (16,848)
Deferred costs from lease
acquisitions (201) (2,311)
Operating lease liquidations 5,792 5,855
Payment for clean-up call on
securitization -- (237)
Decreases in floor plan receivables 30 1,902
Decrease (increase) in notes
receivable 1,298 (4,072)
Purchases of property and equipment (3,168) (3,358)
--------- ---------
Net cash provided by (used in)
investing activities 1,540 (69,540)
--------- ---------
Cash Flows From Financing Activities:
Proceeds under lines of credit, net 18,057 23,893
Proceeds from secured financings 28,552 97,068
Repayments of secured financings (85,847) (75,610)
Net proceeds under capital lease
obligation 556 --
Repayment of senior notes and
mortgage note (356) (5,621)
Repurchase of common stock (6,325) (3,226)
Proceeds from stock options exercised 4,225 512
--------- ---------
Net cash provided by (used in)
financing activities (41,138) 37,016
--------- ---------
Effect of exchange rate
changes on cash 3,658 (4,185)
--------- ---------
Net increase (decrease) in cash
and cash equivalents 4,921 (1,080)
Cash and cash equivalents,
beginning of period 15,773 21,316
--------- ---------
Cash and cash equivalents,
end of period $ 20,694 $ 20,236
========= =========
CREDIT ACCEPTANCE CORPORATION
Summary Financial Data
(Dollars in thousands)
Automobile Loans Receivable
---------------------------
The following table summarizes the composition of automobile loans
receivable:
As of June 30,
2002 2001
-------------- --------------
(Unaudited)
Gross automobile loans
receivable $ 944,170 $ 807,281
Unearned finance charges (142,762) (122,855)
Unearned insurance premiums,
insurance reserves and fees (5,752) (7,506)
--------- ---------
Automobile loans receivable $ 795,656 $ 676,920
========= =========
Delinquent automobile loans $ 193,381 $ 143,676
========= =========
Non-accrual automobile loans
as a percent of total
gross automobile loans 20.5% 17.8%
========= =========
A summary of changes in gross automobile loans receivable is as
follows:
Three Months Ended June 30, Six Months Ended June 30,
----------------------------- -------------------------
2002 2001 2002 2001
--------- ---------- ----------- ---------
(Unaudited) (Unaudited)
Balance, beginning
of period $ 937,632 $ 741,530 $ 906,808 $ 674,402
Gross amount of
automobile loans
accepted 146,850 200,519 338,931 411,545
Legal and
repossession
fees 6,014 5,720 12,344 12,031
Gross automobile
loans reacquired
from securitization -- 2,918 -- 2,918
Cash collections on
automobile loans
accepted (117,293) (104,980) (238,703) (212,100)
Charge-offs (39,719) (36,674) (81,554) (69,483)
Currency
translation 10,686 (1,752) 6,344 (12,032)
--------- --------- --------- ---------
Balance,
end of period $ 944,170 $ 807,281 $ 944,170 $ 807,281
========= ========= ========= =========
Investment in Operating Leases
------------------------------
The following table summarizes the composition of investment in
operating leases, net:
As of June 30,
------------------------------
2002 2001
-------------- ------------
(Unaudited)
Gross leased assets $ 38,774 $ 50,270
Accumulated depreciation (12,461) (8,557)
Gross deferred costs 5,239 7,126
Accumulated amortization of deferred costs (2,817) (2,160)
Lease payments receivable 2,791 3,193
-------- --------
Investment in operating leases 31,526 49,872
Less: Allowance for lease vehicle losses (2,280) (2,332)
-------- --------
Balance, end of period $ 29,246 $ 47,540
======== ========
CREDIT ACCEPTANCE CORPORATION
Summary Financial Data
(Dollars in thousands)
Investment in Operating Leases - (concluded)
--------------------------------------------
A summary of changes in the investment in operating leases is as
follows:
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
2002 2001 2002 2001
----------- ----------- ------------ ----------
(Unaudited) (Unaudited)
Balance, beginning
of period $ 38,023 $ 49,720 $ 45,750 $ 44,944
Gross operating
leases originated 22 7,230 1,075 19,159
Depreciation and
amortization of
operating leases (2,566) (3,169) (5,507) (6,098)
Lease payments due 4,415 5,359 9,397 10,461
Collections on
operating leases (3,998) (4,730) (8,641) (9,245)
Charge-offs (559) (452) (1,291) (993)
Operating lease
liquidations (4,087) (4,187) (9,517) (8,386)
Currency translation 276 101 260 30
-------- -------- -------- --------
Balance, end
of period $ 31,526 $ 49,872 $ 31,526 $ 49,872
======== ======== ======== ========
Reserves
--------
A summary of changes in the allowance for credit losses, the
reserve for advance losses, and the reserve on investment in operating
leases are as follows:
Three Months Ended June 30, Six Months Ended June 30,
---------------------------- -------------------------
2002 2001 2002 2001
----------- ---------- ---------- ----------
Allowance for Credit Losses (Unaudited) (Unaudited)
--------------------------
Balance, beginning
of period $ 4,909 $ 3,797 $ 4,745 $ 4,640
Provision for
loan losses 491 -- 951 --
Charge-offs (461) -- (733) (799)
Currency translation 87 (13) 63 (57)
------- ------- ------- -------
Balance, end
of period $ 5,026 $ 3,784 $ 5,026 $ 3,784
======= ======= ======= =======
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
2002 2001 2002 2001
------------ ---------- ------------ --------
Reserve for Advance Losses (Unaudited) (Unaudited)
--------------------------
Balance, beginning
of period $ 10,009 $ 7,252 $ 9,161 $ 6,788
Provision for
advance losses 1,368 1,130 2,830 2,910
Charge-offs (1,409) (314) (1,974) (1,514)
Currency translation 229 (18) 180 (134)
-------- -------- -------- --------
Balance, end
of period $ 10,197 $ 8,050 $ 10,197 $ 8,050
======== ======== ======== ========
CREDIT ACCEPTANCE CORPORATION
Summary Financial Data
(Dollars in thousands)
Reserves - (concluded)
---------------------
Three Months Ended June 30, Six Months Ended June 30,
---------------------------- --------------------------
2002 2001 2002 2001
---------- ----------- ----------- -------------
Reserve on Investment
in Operating Leases (Unaudited) (Unaudited)
---------------------
Balance, beginning
of period $ 2,411 $ 2,115 $ 2,976 $ 2,023
Provision for lease
vehicle losses 1,311 1,575 2,770 2,810
Charge-offs (1,442) (1,358) (3,466) (2,501)
------- ------- ------- -------
Balance, end
of period $ 2,280 $ 2,332 $ 2,280 $ 2,332
======= ======= ======= =======
Dealer Holdbacks
-----------------
The following table summarizes the composition of dealer
holdbacks:
As of June 30,
------------------------------------
2002 2001
------------------------------------
(Unaudited)
Dealer holdbacks $ 751,861 $ 641,078
Less: advances (net of reserve of
$10,197 and $8,050 at
June 30, 2002 and 2001, respectively) (401,172) (371,493)
--------- ---------
Dealer holdbacks, net $ 350,689 $ 269,585
========= =========