Asset Acceptance Capital Corp. Announces Strong Quarterly And
Annual Results Highlighted By Record Revenues And Cash Collections
WARREN, Mich., Feb. 22 /PRNewswire-FirstCall/ -- Asset Acceptance
Capital Corp. (NASDAQ:AACC), a leading purchaser and collector of
charged-off consumer debt, today announced its results for the
fourth quarter and year ended December 31, 2004, highlighted by a
29.8 percent increase in total revenues and a 26.6 percent increase
in cash collections for the quarter. Revenues for the fourth
quarter of 2004 climbed to $57.5 million, compared to $44.3 million
reported for the fourth quarter of 2003. Asset Acceptance reported
net income of $12.6 million, or $0.34 per fully diluted share, for
the fourth quarter of 2004 compared to net income of $11.1 million,
or $0.39 per fully diluted share, for the fourth quarter of 2003.
Net income for the quarter was up 37.4 percent to $12.6 million
compared to pro forma net income of $9.1 million for the fourth
quarter of 2003. Net income for the fourth quarter of 2004 is
calculated on a consistent basis with pro forma income for the same
period of 2003. Pro forma income in 2003 includes income tax
expense assuming all the Company's subsidiaries had been 100
percent owned and the Company was a C corporation during the
period. Fully diluted earnings per share were $0.34 for the fourth
quarter of 2004 compared to pro forma fully diluted earnings per
share of $0.32 for the same quarter of 2003. Cash collections for
the quarter increased 26.6 percent to $68.3 million, compared to
the $54.0 million reported for the same period of last year. The
Company said its results before February 4, 2004 include its
operations prior to its reorganization into Asset Acceptance
Capital Corp. "The fourth quarter of 2004 was another strong
quarter for the Company," said Brad Bradley, President and CEO of
Asset Acceptance Capital Corp. "Cash collections increased by 26.6
percent, and we continued to show solid growth in earnings.
Additionally, we moved into our new corporate headquarters during
the fourth quarter. Our accomplishments would not have been
possible without the hard work and dedication of our employees."
During the fourth quarter of 2004, Asset Acceptance invested $28.0
million in consumer debt portfolios, with a face value of $1.3
billion, for a blended rate of 2.11 percent of face value. This
compares to the fourth quarter of 2003, when the Company invested
$24.1 million in consumer debt portfolios, with a face value of
$1.4 billion, for a blended rate of 1.68 percent of face value. The
Company said all purchase data is adjusted for buybacks. "I am
pleased that we were able to invest more in portfolio purchases
compared to the same period of 2003, even though the pricing
environment continues to be competitive. It is a testament to our
resourcefulness, discipline, and knowledge of the industry," said
Bradley. "We were able to find the right deals, at the right prices
-- with the expectation to achieve our benchmark of three times
cost as measured over a five year period which we strive for on
portfolio purchases." Fourth Quarter 2004 Highlights * Revenues in
the quarter were $57.5 million compared to $44.3 million in the
fourth quarter of 2003, an increase of 29.8 percent. * Cash
collections rose to $68.3 million, an increase of 26.6 percent from
$54.0 million for the same period last year. * Net income rose to
$12.6 million for the fourth quarter of 2004, or $0.34 per fully
diluted share, compared to net income of $11.1 million, or $0.39
per fully diluted share, for the same period of 2003. Pro forma net
income for the fourth quarter of 2003 was $9.1 million yielding pro
forma fully diluted earnings per share of $0.32. * Total operating
expenses for the fourth quarter of 2004 were $37.4 million, or 54.7
percent of cash collections. This compares with operating expenses
of 52.0 percent of cash collections during the same period last
year. * Traditional call center collections for the fourth quarter
were $37.1 million, or 54.4 percent of total cash collections, up
18.7 percent from the same period last year. * Legal collections
for the fourth quarter were $22.8 million, or 33.4 percent of total
cash collections, up 37.1 percent from the same period last year. *
Other collections, including forwarding, bankruptcy and probate
collections, accounted for the remaining 12.2 percent of cash
collections. * Quarterly collector productivity on a full-time
equivalent basis for the fourth quarter increased 8.5 percent to
$39,368 compared to the same period last year. Collector
productivity includes all collectors regardless of their length of
employment. 2004 Summary Total revenues for fiscal 2004 increased
to $214.8 million, a 34.1 percent increase over the $160.2 million
for 2003. Cash collections for 2004 rose 35.4 percent to $267.9
million compared to the $197.8 million reported for 2003. The
Company reported net income for 2004 of $0.7 million due to
previously announced one-time charges during the first quarter for
the vesting of share appreciation rights and related payroll taxes
totaling $45.7 million and a deferred income tax charge of $19.3
million that was incurred upon the initial public offering of the
Company and the corporate reorganization in anticipation of that
event, respectively. Adjusted net income, as described below, for
2004 was up 58.6 percent to $47.8 million compared to pro forma net
income of $30.1 million for 2003. Adjusted net income for 2004 is
calculated on a consistent basis with pro forma income for 2003.
Adjusted fully diluted earnings per share were $1.31 for 2004
compared to pro forma fully diluted earnings per share of $1.06 for
2003. For 2004, Asset Acceptance invested $89.2 million in consumer
debt portfolios, with a face value of $4.5 billion, for a blended
rate of 1.99 percent of face value. This compares to 2003, when the
Company invested $87.5 million in consumer debt portfolios, with a
face value of $4.1 billion, for a blended rate of 2.12 percent of
face value. Bradley concluded: "2004 was a historic year for the
Company, and we are excited about our prospects for 2005. We have a
broad range of portfolios under management, and we will utilize our
patient and opportunistic approach to portfolio purchasing in
seeking out both traditional and non-traditional asset classes."
Mark A. Redman, Vice President of Finance and CFO of Asset
Acceptance Capital Corp., added: "In 2004 we reduced our operating
expenses excluding one-time charges to 51.2 percent of cash
collections, compared to 53.3 percent of cash collections in 2003.
As a result of the IPO proceeds and robust internal cash flow from
operations, we strengthened our balance sheet by paying off our
line of credit and our notes payable in 2004." 2004 Year-End
Highlights * Revenues for 2004 were $214.8 million compared with
$160.2 million for 2003, an increase of 34.1 percent. * Cash
collections rose to $267.9 million for 2004, an increase of 35.4
percent from $197.8 million for 2003. * Net income was $0.7 million
for 2004, or $0.02 per fully diluted share, compared to net income
of $37.7 million, or $1.33 per fully diluted share for 2003. On an
adjusted basis, as further discussed below, the Company had net
income of $47.8 million up 58.6 percent from $30.1 million for the
comparable period in 2003. Adjusted fully diluted earnings per
share were $1.31 versus $1.06 in 2003, as more fully discussed
below. * Total operating expenses in 2004 were $182.7 million, or
68.2 percent of cash collections, including the previously
disclosed one-time charges of $45.7 million due the vesting of
share appreciation rights and related payroll taxes in the first
quarter of 2004. Factoring out these one-time charges, operating
expenses were $137.1 million, or 51.2 percent of total cash
collections. This compares to operating expenses of 53.3 percent of
cash collections in 2003. * Traditional call center collections for
the year were $153.3 million, or 57.2 percent of total cash
collections, up 27.5 percent over 2003. * Legal collections for
2004 were $83.0 million, or 31.0 percent of total cash collections,
up 47.1 percent from last year. * Other collections, including
forwarding, bankruptcy and probate collections, accounted for the
remaining 11.8 percent of cash collections for 2004. * Annual
collector productivity on a full-time equivalent basis for 2004
increased 12.3 percent compared to 2003. Asset Acceptance said that
it is currently collecting on purchases made from credit card
issuers, retailers, finance companies, utilities, healthcare
providers and other credit originators. Reconciliation of GAAP to
Adjusted Basis The Company provided the following reconciliation of
reported GAAP net income to adjusted net income for the twelve
months December 31, 2004 and 2003. Operating expenses in the twelve
months ended December 31, 2004 were adjusted to exclude the
one-time compensation and related payroll tax charges.
Additionally, income taxes were adjusted to assume the Company had
always been a C corporation and its subsidiaries were all 100
percent owned. Adjusted income taxes in this reconciliation are
computed based upon an estimated effective income tax rate of
approximately 37.2 percent of the adjusted net income before
adjusted income taxes. (In thousands except earnings per share
amounts) Twelve months ended December 31, 2004 2003 GAAP net income
$ 746 $37,743 Add income tax expense 29,634 10,283 Income before
income taxes 30,380 48,026 Add one-time compensation and related
payroll tax charge 45,673 -- Adjusted income before adjusted income
taxes 76,053 48,026 Less adjusted income taxes 28,292 17,914
Adjusted net income $47,761 $30,112 Weighted average number of
shares outstanding: Basic 36,386 28,448 Diluted 36,394 28,448
Earnings per common share outstanding: Basic $ 0.02 $ 1.33 Diluted
$ 0.02 $ 1.33 Adjusted weighted average number of shares
outstanding: Basic 36,386 28,448 Diluted 36,394 28,448 Adjusted
earnings per common share outstanding: Basic $ 1.31 $ 1.06 Diluted
$ 1.31 $ 1.06 Fourth Quarter 2004 Conference Call Asset Acceptance
Capital Corp. will host a conference call at 10 a.m. Eastern today
to discuss these results and current business trends. To listen to
a live web cast of the call, please go to the investor section of
the Company's web site at http://www.assetacceptance.com/. A replay
of the call will be available on the Company's website until
February 22, 2006. About Asset Acceptance Capital Corp. For more
than 40 years, Asset Acceptance has provided credit originators,
such as credit card issuers, consumer finance companies, retail
merchants, utilities and others an efficient alternative in
recovering defaulted consumer debt. For more information, please
visit http://www.assetacceptance.com/. Asset Acceptance Capital
Corp. Safe Harbor Statement This press release contains certain
statements, including the Company's plans and expectations
regarding its operating strategies, charged-off receivables and
costs, which are forward-looking statements and are made pursuant
to the safe harbor provisions of the Securities Litigation Reform
Act of 1995. These forward-looking statements reflect the Company's
views, at the time such statements were made, with respect to the
Company's future plans, objectives, events, portfolio purchases and
pricing, collections and financial results such as revenues,
expenses, income, earnings per share, capital expenditures,
operating margins, financial position, expected results of
operations and other financial items. Forward-looking statements
are not guarantees of future performance; they are subject to risks
and uncertainties. In addition, words such as "estimates,"
"expects," "intends," "should," "could," "will," variations of such
words and similar expressions are intended to identify
forward-looking statements. These statements are not guarantees of
future performance and involve certain risks, uncertainties and
assumptions ("Risk Factors") that are difficult to predict with
regard to timing, extent, likelihood and degree of occurrence.
There are a number of factors, many of which are beyond the
Company's control, which could cause actual results and outcomes to
differ materially from those described in the forward-looking
statements. Risk Factors include, among others: ability to purchase
charged- off consumer receivables at appropriate prices, ability to
continue to acquire charged-off receivables in sufficient amounts
to operate efficiently and profitably, employee turnover, ability
to compete in the marketplace, acquiring charged-off receivables in
industries that the Company has little or no experience,
integration and operations of newly acquired businesses, and
additional factors discussed in the Company's periodic reports
filed with the Securities and Exchange Commission on Form 10-K and
10-Q and exhibits thereto. Other Risk Factors exist, and new Risk
Factors emerge from time to time that may cause actual results to
differ materially from those contained in any forward- looking
statements. Given these risks and uncertainties, investors should
not place undue reliance on forward-looking statements as a
prediction of actual results. Furthermore, the Company expressly
disclaims any obligation to update, amend or clarify
forward-looking statements. In addition to the foregoing, several
Risk Factors are discussed in the Company's most recently filed
Annual Report on Form 10-K and other SEC filings, in each case
under the section titled "Forward Looking Statements" and those
discussions regarding risk factors as well as the discussion of
forward looking statements in such sections are incorporated herein
by reference. Supplemental Financial Data (Unaudited, Dollars in
Millions, except collections per collector) Q4 '04 Q3 '04 Q2 '04 Q1
'04 Q4 '03 Q3 '03 Q2 '03 Q1 '03 Total revenues $ 57.5 $ 56.0 $ 51.5
$ 49.7 $ 44.3 $ 43.1 $ 38.0 $ 34.8 Cash collections $ 68.3 $ 66.8 $
67.6 $ 65.2 $ 54.0 $48.6 $ 51.2 $ 44.0 Operating expenses to cash
collections (Excl. one-time charges in Q1 '04, see Note 1) 54.7%
53.0% 48.5% 48.3% 52.0% 59.1% 50.0% 52.2% Traditional call center
collections $ 37.1 $ 36.6 $ 38.5 $ 41.0 $ 31.3 $ 28.0 $ 31.8 $ 29.1
Legal collections $ 22.8 $ 21.6 $ 21.4 $ 17.2 $ 16.6 $ 15.4 $ 14.0
$ 10.4 Other collections $ 8.4 $ 8.6 $ 7.7 $ 7.0 $ 6.1 $ 5.2 $ 5.4
$ 4.5 Amortization rate 16.7% 16.4% 24.0% 23.9% 18.2% 11.5% 26.1%
21.4% Collections on fully amortized portfolios $ 10.0 $ 8.6 $ 7.4
$ 5.2 $ 3.2 $ 3.3 $ 3.2 $ 1.9 Investment in purchased receivables
(Note 2) $ 28.0 $ 16.0 $ 33.0 $ 12.1 $ 24.1 $ 25.8 $ 14.5 $ 23.1
Face value of purchased receivables (Note 2) $1,326.9 $639.9
$2,003.8 $501.4 $1,431.7 $1,253.2 $551.3 $897.6 Average cost of
purchased receivables (Note 2) 2.11% 2.50% 1.65% 2.42% 1.68% 2.06%
2.64% 2.57% Number of purchased receivable portfolios 24 29 36 17
20 21 17 18 Collections per collector FTE $39,368 $40,224 $42,013
$47,476 $36,268 $33,077 $39,541 $42,316 Average collector FTE's 944
910 917 864 863 847 803 688 Note 1. Including the one-time
compensation and related payroll tax charges of $45.7 million due
to the vesting for share appreciation rights which occurred upon
the initial public offering of the Company, operating expenses were
118.3% of cash collections during the first quarter of 2004. Note
2. All purchase data is adjusted for buybacks. Asset Acceptance
Capital Corp. Consolidated Statements of Income Three months ended
Year ended December 31, December 31, (in thousands, except
per-share data) 2004 2003 2004 2003 Revenues Purchased receivable
revenues $56,912 $44,176 $213,723 $159,628 Gain on sale of
purchased receivables 468 -- 468 -- Finance contract revenues 119
127 562 565 Total revenues 57,499 44,303 214,753 160,193 Expenses
Salaries and benefits 16,910 14,067 111,034 51,296 Collections
expense 16,198 10,952 56,949 43,656 Occupancy 1,781 1,537 6,109
4,633 Administrative 1,692 837 5,677 3,259 Depreciation 748 682
2,881 2,572 Loss on disposal of equipment 56 1 98 4 Total operating
expense 37,385 28,076 182,748 105,420 Income from operations 20,114
16,227 32,005 54,773 Net interest expense 155 1,730 1,709 7,195
Other income (58) (94) (84) (448) Income before income taxes 20,017
14,591 30,380 48,026 Income taxes 7,450 3,452 29,634 10,283 Net
income $12,567 $11,139 $746 $37,743 Pro forma income tax expense
$5,442 $11,301 $17,914 Pro forma net income $9,149 $19,079 $30,112
Weighted average number of shares: Basic 37,225 28,448 36,386
28,448 Diluted 37,237 28,448 36,394 28,448 Earnings per common
share outstanding: Basic $0.34 $0.39 $0.02 $1.33 Diluted $0.34
$0.39 $0.02 $1.33 Pro forma earnings per common share outstanding:
Basic $0.32 $0.52 $1.06 Diluted $0.32 $0.52 $1.06 Asset Acceptance
Capital Corp. Consolidated Statements of Financial Position
December 31, (in thousands) 2004 2003 Assets: Cash $14,205 $5,499
Purchased receivables 216,480 183,720 Finance contract receivables,
net 688 642 Property and equipment, net 11,165 7,970 Goodwill 6,340
6,340 Other assets 3,628 2,939 Total assets $252,506 $207,110
Liabilities: Line of credit $ -- $72,950 Notes payable - related
party -- 39,560 Deferred tax liability 41,247 11,906 Accounts
payable and other liabilities 13,825 8,093 Capital lease
obligations 254 218 Total liabilities 55,326 132,727 Stockholders'
equity: Preferred stock, $0.01 par value, 10,000,000 shares
authorized, no shares issued and outstanding -- -- Common stock,
$0.01 par value, 100,000,000 shares authorized; issued and
outstanding shares- 37,225,275 at December 31, 2004 and 28,448,449
at December 31, 2003 372 284 Additional paid in capital 159,348
36,385 Retained earnings 37,460 37,714 Total equity 197,180 74,383
Total liabilities and equity $252,506 $207,110 DATASOURCE: Asset
Acceptance Capital Corp. CONTACT: Jeff Lambert of Lambert, Edwards
& Associates, Inc., +1-616-233-0500, for Asset Acceptance
Capital
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