The Auto Channel
The Largest Independent Automotive Research Resource
The Largest Independent Automotive Research Resource
Official Website of the New Car Buyer

Credit Acceptance Announces: - 2nd Quarter Earnings

SOUTHFIELD, Mich.--Aug. 5, 2003--Credit Acceptance Corporation Credit Acceptance Corporation (the "Company") announced consolidated net income for the three months ended June 30, 2003 of $1,008,000 or $0.02 per diluted share compared to $8,466,000 or $0.19 per diluted share for the same period in 2002. For the six months ended June 30, 2003, consolidated net income was $9,601,000 or $0.23 per diluted share compared to $14,663,000 or $0.34 per diluted share for the same period in 2002.

Excluding the impact of one-time expenses, including expenses incurred relating to the Company's previously reported decision to stop loan originations in the United Kingdom, consolidated net income for the three and six months ended June 30, 2003 was $8,246,000 or $0.19 per diluted share and $16,439,000 or $0.39 per diluted share, respectively, compared to $8,466,000 or $0.19 per diluted share and $17,264,000 or $0.40 per diluted share for the same periods in 2002.

As a result of the decision in the most recent quarter to stop loan originations in the United Kingdom and Canada and the decision to stop lease originations in early 2002, the Company's sole active business unit consists of providing "guaranteed credit approval" through a network of automobile dealer-partners located in the United States.

Segment information follows:

(Dollars in thousands, except          Three Months Ended June 30,
                                    ---------------------------------
per share data)                        2003        2002     % Change
                                    ----------- ----------- ---------

Net Income
-----------------------------------
United States (2), (3)                  $8,703      $7,320     18.9 %
United Kingdom (1)                      (7,594)      1,296   (686.0)
Automobile Leasing                        (153)       (305)    49.8
Other                                       52         155    (66.5)
                                    ----------- -----------
Consolidated                            $1,008      $8,466    (88.1)%
                                    =========== ===========

Net Income Per Share
-----------------------------------
United States (2), (3)                   $0.20       $0.17     21.5 %
United Kingdom (1)                       (0.18)       0.03   (699.0)
Automobile Leasing                       (0.00)      (0.01)    48.7
Other                                     0.00        0.00    (65.7)
                                    ----------- -----------
Consolidated                             $0.02       $0.19    (87.8)%
                                    =========== ===========


(Dollars in thousands, except           Six Months Ended June 30,
                                    ----------------------------------
per share data)                        2003        2002     % Change
                                    ----------- ----------- ----------

Net Income
-----------------------------------
United States (2), (3)                 $16,181     $12,482      29.6 %
United Kingdom (1)                      (6,288)      2,483    (353.2)
Automobile Leasing                        (468)       (856)     45.3
Other                                      176         554     (68.2)
                                    ----------- -----------
Consolidated                            $9,601     $14,663     (34.5)%
                                    =========== ===========

Net Income Per Share
-----------------------------------
United States (2), (3)                   $0.38       $0.29      32.8 %
United Kingdom (1)                       (0.15)       0.06    (359.5)
Automobile Leasing                       (0.01)      (0.02)     44.0
Other                                     0.00        0.01     (67.4)
                                    ----------- -----------
Consolidated                             $0.23       $0.34     (32.9)%
                                    =========== ===========

(1) For the three and six months ended June 30, 2003, includes
    impairment and other expenses associated with the decision to
    liquidate the United Kingdom operation, which decreased net income
    by $7,238,000 after-tax, or $0.17 per diluted share.

(2) For the six months ended June 30, 2003, includes interest income
    from the Internal Revenue Service, which increased net income by
    $400,000 after-tax, or $0.01 per diluted share.

(3) For the six months ended June 30, 2002, includes a reduction in
    state tax related expense, which increased net income by $963,000
    after-tax, or $0.02 per diluted share, and an increase in federal
    tax related expense, which decreased net income by $3,564,000
    after-tax, or $0.08 per diluted share.

The Company intends to utilize proceeds from businesses being liquidated to: (i) fund dealer-partner advances on loans originated in the United States and (ii) fund share repurchases.

Detail of expected net liquidation proceeds follows:

(Dollars in thousands)     As of June 30, 2003
                           --------------------

United Kingdom                         $50,900
Canada                                   6,300
Automobile Leasing                       7,800
                            -------------------
                                       $65,000
                            ===================

It is expected that approximately 70% of the liquidation proceeds will be recovered within one year, 90% within two years, and the remainder within three years.

The Company also reported the following:

-- Consolidated loan originations for the three and six months ended June 30, 2003 were $206.9 million and $438.9 million, representing increases of 40.8% and 29.5% compared to the same periods in 2002. Detail of amounts by business unit follows:

(Dollars in                       Originations
 thousands)
           -----------------------------------------------------------
           Three Months Ended June 30,    Six Months Ended June 30,
           ----------------------------- -----------------------------
                                  %                             %
             2003      2002     Change     2003      2002     Change
           --------- --------- --------- --------- --------- ---------

United
 States    $190,870  $134,829     41.6 % $411,152  $306,883     34.0 %
United
 Kingdom(a)  13,358     9,365     42.6     22,784    26,903    (15.3)
Other(b)      2,631     2,675     (1.6)     4,969     5,164     (3.8)
           --------- ---------           --------- ---------
           $206,859  $146,869     40.8   $438,905  $338,950     29.5
           ========= =========           ========= =========

(a) Effective June 30, 2003, the Company stopped originating loans in
    the United Kingdom.

(b) Includes Canada.

The increase in Loan originations in the United States in 2003 is due to: (i) an increase in the number of active dealer-partners due to increased dealer-partner enrollments and reduced levels of dealer-partner attrition and (ii) a continued increase in the number of loans per active dealer-partner.

The Company made no material changes in credit policy or pricing in the second quarter, other than routine changes designed to maintain current profitability levels.

The Company's historical results indicate the risk of an unintended adverse change in the profitability of loan originations is increased during periods of high growth. The growth rate experienced in the second quarter of 2003 is higher than the Company's expected long-term growth rate. However, the Company believes that the investments in infrastructure in 2002, combined with decreases in loan origination volumes in 2002, have adequately prepared the Company for this growth.

-- Forecasted collection rates in the United States business segment stabilized during the quarter. Prior to this quarter, forecasted collection rates had declined during the three previous quarters. Most of this decline occurred in the second half of 2002 when a difficult system conversion negatively impacted collection results, and during the first quarter of 2003 when post repossession collections declined from the prior trend line. As a result, the current quarter's results include a reduction in the amount recorded for advance losses in the United States business segment compared to the prior three quarters.

Results for the three and six months ended June 30, 2003 include an expense for asset impairment and accrued expenses related to the Company's decision to stop loan originations in the United Kingdom as reported in the Company's June 2, 2003 news release. The expense of $7.2 million after-tax, or $0.17 per diluted share, consists of: (i) $6.8 million after-tax increase in expense due to the impairment of dealer-partner advance balances and other assets, (ii) $300,000 after-tax increase in salaries and wages resulting from employee severance expenses, and (iii) $100,000 after-tax reduction in other income due to a refund of income earned from an ancillary product profit sharing agreement.

The following table reconciles the reported net income and adjusted net income (reported net income excluding certain adjustments) for the three and six months ended June 30, 2003 and 2002:

                         Three Months Ended       Six Months Ended
                              June 30,                June 30,
                       ----------------------- -----------------------
(Dollars in thousands,
 except per share data)   2003        2002        2003        2002
                       ----------- ----------- ----------- -----------

Reported net income        $1,008      $8,466      $9,601     $14,663
State tax expense
 resulting from
re-characterization of
 income                         -           -           -        (963)
United Kingdom
 repatriation tax
 expense                        -           -           -       3,564
United Kingdom
 impairment expenses        7,238           -       7,238           -
Interest income from
 Internal Revenue
 Service                        -           -        (400)          -
                       ----------- ----------- ----------- -----------
Adjusted net income         8,246       8,466      16,439      17,264
Diluted weighted
 average shares
 outstanding           42,868,265  43,821,716  42,629,844  43,684,127
Adjusted net income per
 share                      $0.19       $0.19       $0.39       $0.40
                       =========== =========== =========== ===========

Results for the three and six months ended June 30, 2003 also include $915,000 and $1.2 million, respectively, compared to $366,000 and $678,000 for the same periods in 2002 in after-tax expense due to the Company's adoption of Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS No. 123"), which requires the Company to expense the fair market value of stock options granted to employees over the expected life of the options. The fair market value of stock options is dependent upon a number of variables including the number of options outstanding, the historical volatility of the stock price, and the expected life of the options, among other factors. While the number of stock options outstanding declined in 2003 compared to 2002, stock-based compensation expense increased as a result of a change in assumptions that reduced the period over which certain performance based stock options are expected to vest. The Company has restated all prior periods to reflect the stock-based compensation expense that would have been recognized had the recognition provisions of SFAS No. 123 been applied to all awards granted to employees or directors after January 1, 1995. Prior period results restated for the effect of SFAS No. 123 are detailed in the Company's Form 10-Q, which is being filed concurrently with this news release.

Refer to the Company's Form 10-Q, which has been filed with the Securities and Exchange Commission, and appears on the Company's website at www.creditacceptance.com for a complete discussion of the results of operations and financial data for the three and six months ended June 30, 2003.

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 forecast and estimate future collections and historical 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 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. 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)


(Dollars in thousands,
 except per share data)  Three Months Ended       Six Months Ended
                              June 30,                June 30,
                       ----------------------- -----------------------
                          2003        2002        2003        2002
                       ----------- ----------- ----------- -----------
                             (Unaudited)             (Unaudited)
Revenue:
 Finance charges          $26,431     $25,522     $50,687     $50,407
 Lease revenue              1,784       4,428       4,120       9,587
 Ancillary product
  income                    4,233       3,794       9,966       7,391
 Premiums earned              757       1,054       1,512       2,494
 Other income               2,767       3,791       6,616       7,568
                       ----------- ----------- ----------- -----------
   Total revenue           35,972      38,589      72,901      77,447
                       ----------- ----------- ----------- -----------
Costs and expenses:
 General and
  administrative            5,198       6,383      10,961      12,100
 Salaries and wages         8,687       7,448      17,204      14,952
 Sales and marketing        2,483       1,809       4,660       3,590
 Stock-based
  compensation expense      1,428         565       1,803       1,047
 Provision for
  insurance and warranty
  claims                      209         570         308       1,133
 Provision for credit
  losses                    2,863       3,562       6,772       7,077
 Depreciation of leased
  assets                    1,167       2,566       2,715       5,507
 United Kingdom asset
  impairment expense       10,493           -      10,493           -
 Interest                   1,401       2,457       2,997       4,762
                       ----------- ----------- ----------- -----------
   Total costs and
    expenses               33,929      25,360      57,913      50,168
                       ----------- ----------- ----------- -----------
Operating income            2,043      13,229      14,988      27,279
 Foreign exchange gain         14          11          29          27
                       ----------- ----------- ----------- -----------
Income before provision
 for income taxes           2,057      13,240      15,017      27,306
 Provision for income
  taxes                     1,049       4,774       5,416      12,643
                       ----------- ----------- ----------- -----------
Net income                 $1,008      $8,466      $9,601     $14,663
                       =========== =========== =========== ===========
Net income per common
 share:
   Basic                    $0.02       $0.20       $0.23       $0.35
                       =========== =========== =========== ===========
   Diluted                  $0.02       $0.19       $0.23       $0.34
                       =========== =========== =========== ===========
Weighted average shares
 outstanding:
   Basic               42,321,170  42,535,312  42,317,443  42,486,667
   Diluted             42,868,265  43,821,716  42,629,844  43,684,127



                     CREDIT ACCEPTANCE CORPORATION

                      Consolidated Balance Sheets
                        (Dollars in thousands)

(Dollars in thousands)                            As of
                                    ----------------------------------
                                     June 30, 2003  December 31, 2002
                                    --------------- ------------------
              ASSETS:                 (Unaudited)

Cash and cash equivalents                  $22,068            $13,466
Investments -- held to maturity                456                173

Loans receivable                           857,502            778,674
Allowance for credit losses                 (5,100)            (5,497)
                                    ---------------  -----------------
   Loans receivable, net                   852,402            773,177
                                    ---------------  -----------------

Floor plan receivables                       2,964              4,450
Lines of credit                              2,817              3,655
Notes receivable (including $1,548
 and $1,513 from affiliates as of
 June 30, 2003
 and December 31,2002, respectively)         2,074              3,899
Investment in operating leases               9,328             17,879
Property and equipment, net                 18,355             19,951
Other assets                                 7,077              5,166
                                    ---------------  -----------------
   Total Assets                           $917,541           $841,816
                                    ===============  =================

   LIABILITIES AND SHAREHOLDERS'
               EQUITY:
Liabilities:
 Lines of credit                            $8,305            $43,555
 Secured financing                         100,000             58,153
 Mortgage note                               5,813              6,195
 Capital lease obligations                   1,538              1,938
 Accounts payable and accrued
  liabilities                               33,034             28,341
 Dealer holdbacks, net                     417,043            362,534
 Deferred income taxes, net                  4,010             10,058
 Income taxes payable                       11,700              6,094
                                    ---------------  -----------------
   Total Liabilities                       581,443            516,868
                                    ---------------  -----------------

Shareholders' Equity:
 Common stock                                  422                423
 Paid-in capital                           124,446            124,263
 Retained earnings                         208,459            198,858
 Accumulated other comprehensive
  income - cumulative translation
  adjustment                                 2,771              1,404
                                    ---------------  -----------------
   Total Shareholders' Equity              336,098            324,948
                                    ---------------  -----------------
   Total Liabilities and Shareholders'
    Equity                                $917,541           $841,816
                                    ===============  =================