Credit Acceptance Corporation Reports Third Quarter Earnings of $6,104,000 or $.14 Per Diluted Share
18 October 2000
Credit Acceptance Corporation Reports Third Quarter Earnings of $6,104,000 or $.14 Per Diluted Share
SOUTHFIELD, Mich.--Oct. 18, 2000--Credit Acceptance Corporation announced today that consolidated net income for the quarter ended September 30, 2000, was $6,104,000 or $.14 per diluted share compared to ($33,641,000) or ($.73) per diluted share for the same period in 1999. For the nine months ended September 30, 2000, the consolidated net income was $17,983,000 or $.40 per diluted share compared to ($14,491,000) or ($.31) per diluted share for the same period in 1999. The prior year results reflect an after tax non-cash charge of $39.2 million in the third quarter of 1999 relating to dealer advance losses and the write down of a portion of the retained interest in the July 1998 securitization. The 1999 loss is partially offset by a $9.0 million after tax gain in the second quarter of 1999 relating to the sale of a subsidiary.Cash collections on installment contracts receivable, as a percent of average gross installment contracts receivable, were 44.1% for the nine months ended September 30, 2000 compared with 43.5% for the same period in 1999. The Company's average annualized yield on its installment contract portfolio improved to 14.1% for the nine months ended September 30, 2000 from 12.7% for the same period in 1999. The improvement in the average yield resulted from a decrease in the percentage of installment contracts which were in non-accrual status to 20.8% as of September 30, 2000 from 23.6% for the same period in 1999.
The Company's consolidated originations totaled $137,166,000 and $459,820,000 for the three and nine months ended September 30, 2000 compared with $140,609,000 and $405,012,000 for the same periods in 1999, representing a decrease of 2.5% and an increase of 13.5% for the three and nine month periods, respectively.
The Company's North American operations originated $85,248,000 and $317,514,000 in new installment contracts for the three and nine months ended September 30, 2000 compared with $97,472,000 and $317,588,000 for the same periods in 1999, representing a decrease of 12.5% and no quantifiable percentage change for the three and nine month periods, respectively.
The Company's United Kingdom operations originated $43,065,000 and $110,746,000 in new installment contracts for the three and nine month periods ended September 30, 2000 compared to $40,893,000 and $83,750,000 for the same periods in 1999, representing an increase of 5.3% and 32.2% for the three and nine month periods respectively.
Originations for the Company's automobile leasing operations were $8,853,000 and $31,560,000 for the three and nine months ended September 30, 2000 compared with $2,244,000 and $3,674,000 for the same periods in 1999. The Company reported a net loss on its automobile leasing operations of ($499,000) for the quarter ended September 30, 2000 compared with a net loss of ($95,000) for the same period in 1999. The Company began originating operating leases of used vehicles during the first quarter of 1999.
The increase in the automobile leasing operations net loss for the quarter was primarily due to a $1.0 million increase in the provision for credit losses for the quarter ended September 30, 2000 compared to the same period in 1999. While the increase in the size of the Company's lease portfolio accounts for the largest portion of the increase in the provision for credit losses, an additional amount was provided during the quarter based on additional portfolio performance data, which caused the company to increase its forecasted repossession rate for the portfolio of leases. In addition, the provision for credit losses increased due to management's decision to increase the reserve against leased vehicle residual values based upon additional analysis of the residual values in the Company's lease portfolio.
Credit Acceptance Corporation is a specialized financial services company which provides funding, receivables management, collection, sales training and related products and services to automobile dealers selling vehicles to consumers with limited access to traditional sources of consumer credit.
CREDIT ACCEPTANCE CORPORATION
Summary Financial Data
(Dollars in thousands, except per share data)
Three Months Ended Nine Months Ended
Income Statements September 30 September 30
----------------- ---------------------- ----------------------
2000 1999 2000 1999
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REVENUE
Finance charges $20,206 $18,753 $60,505 $57,901
Premiums earned 1,951 3,034 6,986 7,810
Lease revenue 3,870 377 8,917 456
Other income 5,147 5,759 15,441 21,625
---------- ---------- ---------- ----------
Total revenue 31,174 27,923 91,849 87,792
COSTS AND EXPENSES
Operating expenses 12,471 12,445 38,196 41,411
Provision for
credit losses 3,074 49,590 8,097 53,820
Provision for claims 604 884 2,096 2,609
Depreciation of
leased assets 1,679 142 3,525 176
Valuation adjustment
on retained interest
in securitization -- 13,000 -- 13,517
Interest 4,119 3,673 12,479 12,472
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Total costs
and expenses 21,947 79,734 64,393 124,005
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OPERATING INCOME (LOSS) 9,227 (51,811) 27,456 (36,213)
Gain on sale of subsidiary -- -- -- 14,720
Foreign exchange
gain (loss) (5) 62 (85) 8
Provision (credit)
for income taxes 3,118 (18,108) 9,388 (6,994)
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NET INCOME (LOSS) $ 6,104 $ (33,641) $ 17,983 $ (14,491)
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Net income (loss) per common share:
Basic $ 0.14 ($0.73) $ 0.41 ($0.31)
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Diluted $ 0.14 ($0.73) $ 0.40 ($0.31)
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Weighted average shares outstanding:
Basic 43,013,682 46,214,489 44,319,948 46,272,303
Diluted 43,424,885 46,214,489 44,653,068 46,272,303
CREDIT ACCEPTANCE CORPORATION
Summary Financial Data
----------------------
(Dollars in thousands)
Balance Sheet As of September 30
------------- 2000 1999
--------- ---------
ASSETS
Cash and investments $ 25,499 $ 19,231
Installment contracts receivable 571,463 573,884
Allowance for credit losses (4,374) (4,765)
--------- ---------
Installment contracts receivable, net 567,089 569,119
Investment in operating leases, net 38,995 3,892
Other assets, net 43,309 66,747
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TOTAL ASSETS $ 674,892 $ 658,989
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--------- ---------
LIABILITIES
Total debt $ 166,836 $ 158,361
Dealer holdbacks, net 210,932 205,932
Other liabilities 38,936 34,506
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TOTAL LIABILITIES $ 416,704 $ 398,799
--------- ---------
TOTAL SHAREHOLDERS' EQUITY 258,188 260,190
--------- ---------
TOTAL LIABILITIES
AND SHAREHOLDERS' EQUITY $ 674,892 $ 658,989
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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
--------------------
2000 1999
--------- ---------
Gross installment
contracts receivable $ 680,972 $ 683,024
Unearned finance charges (101,257) (99,171)
Unearned insurance
premiums, insurance
reserves and fees (8,252) (9,969)
--------- ---------
Installment contracts
receivable $ 571,463 $ 573,884
--------- ---------
--------- ---------
Non-accrual installment
contracts as a percent
of total gross installment
contracts 20.8% 23.6%
--------- ---------
--------- ---------
A summary of changes in gross installment contracts receivable is
as follows:
Three Months Ended Nine Months Ended
September 30 September 30
-------------------- -------------------
2000 1999 2000 1999
--------- --------- --------- ---------
Balance, beginning of period $ 686,551 $ 694,071 $ 679,247 $ 794,831
Gross amount of installment
contracts accepted 128,313 138,365 428,260 401,338
Cash collections on
installment contracts
receivable (97,248) (99,063) (302,206) (315,047)
Charge offs (32,570) (55,874) (109,072) (195,155)
Currency translation (4,074) 5,525 (15,257) (2,943)
--------- --------- --------- ---------
Balance, end of period $ 680,972 $ 683,024 $ 680,972 $ 683,024
--------- --------- --------- ---------
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Investment in Operating Leases
------------------------------
The following table summarizes the composition of investment in
operating leases, net:
As of September 30
2000 1999
--------- ---------
Gross leased vehicles $ 36,952 $ 3,674
Accumulated depreciation (3,613) (176)
Gross deferred costs 5,489 377
Accumulated amortization
of deferred costs (1,002) (33)
Lease payments receivable 2,446 85
--------- ---------
Investment in
operating leases 40,272 3,927
Less: Allowance for
lease vehicle losses (1,277) (35)
--------- ---------
Investment in operating
leases, net $ 38,995 $ 3,892
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CREDIT ACCEPTANCE CORPORATION
Summary Financial Data
-----------------------
(Dollars in thousands)
Investment in Operating Leases - (continued)
-------------------------------------------
A summary of changes in gross leased vehicles is as follows:
Three Months Ended Nine Months Ended
September 30 September 30
-------------------- -------------------
2000 1999 2000 1999
--------- --------- --------- ---------
Balance, beginning of period $ 30,178 $ 1,430 $ 8,443 $ -
Gross operating
leases originated 8,853 2,244 31,560 3,674
Operating lease liquidations (2,079) - (3,051) -
--------- --------- --------- ---------
Balance, end of period $ 36,952 $ 3,674 $ 36,952 $ 3,674
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Reserves
--------
A summary of changes in the allowance for credit losses, the
reserve on advances, and the allowance for lease vehicle losses is as
follows:
Three Months Ended Nine Months Ended
September 30 September 30
-------------------- -------------------
2000 1999 2000 1999
--------- --------- --------- ---------
Allowance for Credit Losses
Balance, beginning of period $ 4,184 $ 5,114 $ 4,742 $ 7,075
Provision for credit losses 581 398 996 780
Charge offs (373) (786) (1,293) (3,062)
Currency translation (18) 39 (71) (28)
--------- --------- --------- ---------
Balance, end of period $ 4,374 $ 4,765 $ 4,374 $ 4,765
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Three Months Ended Nine Months Ended
September 30 September 30
-------------------- -------------------
2000 1999 2000 1999
--------- --------- --------- ---------
Reserve on Advances
Balance, beginning of period $ 7,695 $ 16,090 $ 4,329 $ 19,954
Provision for advance losses 1,452 49,167 5,370 53,005
Advance reserve fees - - - 8
Charge offs (2,463) (61,481) (3,041) (68,989)
Currency translation (79) 56 (53) (146)
--------- --------- --------- ---------
Balance, end of period $ 6,605 $ 3,832 $ 6,605 $ 3,832
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CREDIT ACCEPTANCE CORPORATION
Summary Financial Data
----------------------
(Dollars in thousands)
Reserves - (continued)
---------------------
Three Months Ended Nine Months Ended
September 30 September 30
-------------------- -------------------
2000 1999 2000 1999
--------- --------- --------- ---------
Allowance For Lease
Vehicle Losses
-------------------
Balance, beginning of period $ 619 $ 10 $ 91 $ -
Provision for lease
vehicle losses 1,041 25 1,731 35
Charge offs (383) - (545) -
--------- --------- --------- ---------
Balance, end of period $ 1,277 $ 35 $ 1,277 $ 35
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Dealer Holdbacks
----------------
The following table summarizes the composition of dealer
holdbacks:
As of September 30
2000 1999
--------- ---------
Dealer holdbacks $ 541,663 $ 544,355
Less: Advances
(net of reserve of $6,605
and $3,832 at
September 30, 2000
and 1999 respectively) (330,731) (338,423)
--------- ---------
Dealer holdbacks, net $ 210,932 $ 205,932
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