Reports Cash Collections of $87.3 Million, Operating Expenses of
51.6% of Cash Collections WARREN, Mich., July 30
/PRNewswire-FirstCall/ -- Asset Acceptance Capital Corp.
(NASDAQ:AACC), a leading purchaser and collector of charged-off
consumer debt, today announced results for the second quarter of
2009. The Company's second-quarter results included cash
collections of $87.3 million and operating expenses of 51.6% of
cash collections. The Company reported earnings of $0.03 per fully
diluted share for the period. Asset Acceptance reported cash
collections of $87.3 million in the second quarter ended June 30,
2009, versus cash collections of $95.2 million in the year-ago
period. For the six-month period ended June 30, 2009, the Company
reported cash collections of $181.4 million compared to cash
collections of $195.5 million in the first six months of 2008.
Total revenues were $49.1 million in the second quarter of 2009,
compared to total revenues of $56.5 million in the second quarter
of 2008. Total revenues in the first half of 2009 were $106.1
million versus $120.8 million in the first six months of 2008.
Amortization of purchased receivables in the second quarter of 2009
was 44.1% of total cash collections versus 41.0% of total cash
collections in the second quarter of 2008. For the first six months
of 2009, amortization of purchased receivables was 41.8% of total
cash collections versus 38.6% of total cash collections in the same
period of last year. The Company reported a second quarter of 2009
net impairment charge of $6.8 million, versus a net impairment
charge of $5.0 million in the prior year quarter. Net impairments
for the first six months of 2009 totaled $10.3 million, versus $5.4
million for the first six months of 2008. Net income for the
quarter was $0.8 million, or $0.03 per fully diluted share,
compared to net income of $2.1 million, or $0.07 per fully diluted
share, in the second quarter of 2008. Net income for the first two
quarters of 2009 was $5.4 million, or $0.18 per fully diluted
share, compared to net income of $8.9 million, or $0.29 per fully
diluted share, in the same period of 2008. Earnings Before
Interest, Taxes, Depreciation and Amortization, including purchased
receivable amortization ("Adjusted EBITDA"), decreased to $43.5
million in the second quarter of 2009, down 7.0% compared to the
year-ago period. For the six-month period ended June 30, 2009,
Adjusted EBITDA declined to $91.7 million, a decrease of 7.2% when
compared to the same six-month period in 2008. Please refer to the
table on page 3, which reconciles net income according to Generally
Accepted Accounting Principles ("GAAP") to Adjusted EBITDA. During
the second quarter of 2009, the Company invested $20.0 million to
purchase charged-off consumer debt portfolios with a face value of
$727.9 million, for a blended rate of 2.74% of face value. This
compares to the prior-year second quarter, when the Company
invested $64.8 million to purchase consumer debt portfolios with a
face value of $1.9 billion, representing a blended rate of 3.38% of
face value. The Company invested $42.0 million to purchase
charged-off consumer debt portfolios with a face value of $1.5
billion, for a blended rate of 2.85% during the first six months of
2009, compared to $86.7 million with a face value of $2.5 billion,
for a blended rate of 3.53% in the same period of 2008. All
purchase data is adjusted for buybacks. Rion Needs, President and
CEO, commented: "The collections environment continues to be
challenging in the current economic climate. As unemployment
continues to increase we are seeing a negative impact on our
liquidation rates, especially in the older vintages where there is
decreased collection leverage due to the age of the accounts.
However, we believe we will have strong returns on our investments
in paper purchased in recent quarters because of our stated
strategy of carefully controlling our levels of purchasing in order
to save dry powder for the second half of 2009 and full year 2010,
which has allowed us to be selective in the portfolios we have
acquired." Needs continued, "We continue to build increased levels
of operational sophistication and data analysis into our daily
activities that will serve to maximize collections on our
portfolios over the long run. We are particularly focused on our
call centers, where we are aggressively increasing our capacity by
expanding our collection account representative headcount to
achieve better penetration of our inventory. We expect a net
increase in collection account representative headcount of 20% by
year end and are ahead of plan. We continue to enhance the
segmentation of our accounts in order to focus our efforts on those
most likely to liquidate, as well as complete our system conversion
that will give our workforce the tools they need to maximize every
collection opportunity. We believe these efforts will increase our
liquidation rates going forward." In addition to lower cash
collections in the quarter, the Company reported lower operating
expenses compared to the prior year. Total operating expenses in
the quarter were reduced 9.3% to $45.1 million, from $49.7 million
in the second quarter of 2008. For the 2009 second quarter, Asset
Acceptance reported operating expenses of 51.6% of cash
collections, down from 52.2% of cash collections in the prior year
quarter. Mark Redman, Senior Vice President and CFO of Asset
Acceptance Capital Corp., commented: "We have continued to
aggressively manage our cost structure in this difficult
collections environment as evidenced by our 51.6% cost to collect
ratio during the second quarter. Additionally, as a result of
reducing our purchasing activity during the second quarter we paid
down the revolving line of credit balance to zero and built our
cash position, which stood at $12.9 million at the end of June. We
are prepared to increase our level of purchasing in the second half
of the year to capitalize on the growing supply of charge-offs
resulting from the downturn in the economy." Reconciliation of GAAP
Net Income to Adjusted EBITDA (Unaudited) The Company provided the
following table which reconciles GAAP net income, as reported, to
Adjusted EBITDA. The Company indicated that the measure "Adjusted
EBITDA" is the basis for its management bonus program and a similar
computation is used in its credit agreement's financial covenants.
The Company believes that Adjusted EBITDA, which is generally cash
collections less operating expenses (other than non-cash operating
expenses, such as depreciation and amortization), represents the
Company's cash generation which can be used to purchase
receivables, pay down debt, pay income taxes, return to
shareholders and for other uses. Adjusted EBITDA, which is a
non-GAAP financial measure, should not be considered an alternative
to, or more meaningful than, net income prepared on a GAAP basis.
Additionally, Adjusted EBITDA as computed by the Company may not be
comparable to similar metrics used by others in the industry. Three
months ended June 30, Six months ended June 30,
--------------------------- ------------------------- 2009 2008
2009 2008 ---- ---- ---- ---- Net income $842,287 $2,124,158
$5,444,431 $8,901,982 Add: interest income and expense (net),
income taxes, depreciation and amortization 4,070,520 5,600,322
10,415,500 14,120,691 Add (subtract): (gain) loss on disposal of
assets 5,137 (2,035) 6,541 (155,557) Add: impairment of intangible
assets - - - 445,651 Add (subtract): other (income) expense 67,963
1,650 (3,814) (16,333) ------ ----- ------- -------- Subtotal
4,985,907 7,724,095 15,862,658 23,296,434 Change to balance of
purchased receivables 38,486,861 39,152,564 75,896,934 75,841,926
Non-cash revenue (12,627) (168,500) (45,442) (316,269) --------
--------- -------- --------- Adjusted EBITDA $43,460,141
$46,708,159 $91,714,150 $98,822,091 =========== ===========
=========== =========== Cash collections $87,293,577 $95,192,743
$181,410,514 $195,457,024 Other revenues, net 262,610 264,885
514,129 737,822 Operating expenses (45,060,679) (49,675,339)
(92,062,348) (99,777,663) Depreciation and amortization 959,496
921,970 1,845,314 1,949,774 Impairment of intangible assets - - -
445,651 Loss on disposal of equipment 5,137 3,900 6,541 9,483 -----
----- ----- ----- Adjusted EBITDA $43,460,141 $46,708,159
$91,714,150 $98,822,091 =========== =========== ===========
=========== Second Quarter 2009 Earnings Conference Call Asset
Acceptance Capital Corp. will host a conference call at 11 a.m.
Eastern today to discuss these results and current business trends.
To listen to a live webcast of the call, please go to the investor
section of the Company's web site at
http://www.assetacceptance.com/. A replay of the webcast will be
available until July 30, 2010. About Asset Acceptance Capital Corp.
For more than 45 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 Private
Securities Litigation Reform Act of 1995. Forward-looking
statements include reference to the Company's presentations and
webcasts. These forward-looking statements reflect the Company's
views, expectations and beliefs at the time such statements were
made with respect to such matters, as well as 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 and involve certain risks,
uncertainties and assumptions ("Risk Factors") that make the
timing, extent, likelihood and degree of occurrence of these
matters difficult to predict. Words such as "anticipates,"
"believes," "estimates," "expects," "intends," "should," "could,"
"will," variations of such words and similar expressions are
intended to identify forward-looking statements. 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 and acquiring charged-off receivables in
industries that the Company has little or no experience. These Risk
Factors also include, among others, the Risk Factors discussed
under "Item 1A Risk Factors" in the Company's most recently filed
Annual Report on Form 10-K and in other SEC filings, in each case
under a section titled "Risk Factors" or similar headings and those
discussions regarding risk factors as well as the discussion of
forward-looking statements in such sections are incorporated herein
by reference. 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.
Supplemental Financial Data (Unaudited, Dollars in Q2 '09 Q1 '09 Q4
'08 Q3 '08 Q2 '08 Millions, except collections per account
representative) Total revenues $49.1 $57.0 $55.0 $58.4 $56.5 Cash
collections $87.3 $94.1 $83.3 $90.8 $95.2 Operating expenses to
cash collections 51.6% 50.0% 55.2% 55.2% 52.2% Traditional call
center collections $36.1 $41.0 $35.1 $38.4 $42.2 Legal collections
$38.5 $38.7 $34.9 $38.1 $39.9 Other collections $12.7 $14.4 $13.3
$14.3 $13.1 Amortization rate 44.1% 39.7% 34.2% 36.0% 41.0%
Collections on fully amortized portfolios $15.8 $18.3 $17.7 $18.4
$20.3 Core amortization rate (Note 1) 53.9% 49.3% 43.4% 45.1% 52.1%
Investment in purchased receivables (Note 2) $20.0 $22.1 $32.0
$35.6 $64.8 Face value of purchased receivables (Note 2) $727.9
$746.9 $632.0 $719.2 $1,918.6 Average cost of purchased receivables
(Note 2) 2.74% 2.95% 5.06% 4.96% 3.38% Number of purchased
receivable portfolios 22 31 23 42 52 Collections per account
representative FTE $38,858 $42,940 $34,994 $39,866 $45,538 Average
account representative FTE's 929 955 1,003 966 939 Note 1: Core
amortization rate is amortization divided by collections on
non-fully amortized portfolios. Note 2: All purchase data is
adjusted for buybacks. The Company provided the following details
regarding purchased receivable revenues: Three months ended June
30, 2009 -------------------------------- Year of Amortization
Monthly Net Zero Basis Purchase Collections Revenue Rate(1)
Yield(2) Impairments Collections -------- ----------- -------
------- -------- ----------- ----------- 2003 and prior $14,882,021
$13,402,082 N/M% N/M% $489,000 $12,484,108 2004 5,633,013 2,475,410
56.1 4.96 1,941,000 901,949 2005 6,103,487 864,320 85.8 1.23
2,488,000 34,537 2006 14,512,193 9,086,793 37.4 5.11 1,701,000
1,610,591 2007 18,191,261 9,907,523 45.5 3.67 - 706,439 2008
22,974,091 9,838,611 57.2 2.85 227,000 88,705 2009 4,997,511
3,244,604 35.1 3.90 - 6,250 --------- --------- - ----- Totals
$87,293,577 $48,819,343 44.1 4.83 $6,846,000 $15,832,579
=========== =========== ========== =========== Three months ended
June 30, 2008 -------------------------------- Year of Amortization
Monthly Net Zero Basis Purchase Collections Revenue Rate(1)
Yield(2) Impairments Collections -------- ----------- -------
------- -------- ----------- ----------- 2002 and prior $12,784,399
$12,101,312 N/M% N/M% $- $11,609,421 2003 10,546,373 9,274,480 12.1
34.90 (537,150) 5,902,566 2004 8,920,506 6,239,920 30.0 7.47
637,317 819,045 2005 10,082,486 2,547,583 74.7 2.02 2,513,000 7,892
2006 21,342,389 11,672,311 45.3 4.72 2,356,000 1,898,018 2007
24,315,224 11,120,941 54.3 2.80 - 35,260 2008 7,201,366 3,252,132
54.8 2.64 - 27,779 --------- --------- - ------ Totals $95,192,743
$56,208,679 41.0 5.58 $4,969,167 $20,299,981 ===========
=========== ========== =========== Six months ended June 30, 2009
------------------------------ Year of Amortization Monthly Net
Zero Basis Purchase Collections Revenue Rate(1) Yield(2)
Impairments Collections -------- ----------- ------- -------
-------- ----------- ----------- 2003 and prior $32,115,952
$29,595,638 N/M% N/M% $412,700 $26,617,497 2004 12,509,541
5,799,086 53.6 5.23 3,958,600 1,934,285 2005 13,541,643 4,641,864
65.7 2.97 2,745,000 77,042 2006 30,784,791 20,327,073 34.0 5.44
2,497,000 3,608,141 2007 39,310,080 21,131,396 46.2 3.70 -
1,664,748 2008 47,118,967 20,260,841 57.0 2.76 682,000 178,177 2009
6,029,540 3,803,124 36.9 3.82 - 6,250 --------- --------- - -----
Totals $181,410,514 $105,559,022 41.8 5.08 $10,295,300 $34,086,140
============ ============ =========== =========== Six months ended
June 30, 2008 ------------------------------ Year of Amortization
Monthly Net Zero Basis Purchase Collections Revenue Rate(1)
Yield(2) Impairments Collections -------- ----------- -------
------- -------- ----------- ----------- 2002 and prior $27,359,596
$26,288,995 N/M% N/M% $(550,000) $24,688,531 2003 22,443,394
19,419,777 13.5 33.26 (1,018,200) 12,099,253 2004 18,514,737
12,819,248 30.8 7.28 1,687,664 1,794,244 2005 20,694,464 8,307,417
59.9 3.04 2,605,986 44,299 2006 46,230,295 27,206,224 41.2 5.17
2,448,000 3,856,965 2007 51,663,171 22,322,914 56.8 2.64 180,000
35,260 2008 8,551,367 3,566,792 58.3 2.58 - 27,779 ---------
--------- - ------ Totals $195,457,024 $119,931,367 38.6 5.92
$5,353,450 $42,546,331 ============ ============ ==========
=========== (1) "N/M" indicates that the calculated percentage for
aggregated vintage years is not meaningful. (2) The monthly yield
is the weighted-average yield determined by dividing purchased
receivable revenues recognized in the period by the average of the
beginning monthly carrying values of the purchased receivables for
the period presented. Asset Acceptance Capital Corp. Consolidated
Statements of Operations (Unaudited) Three months ended June 30,
Six months ended June 30, ---------------------------
------------------------- 2009 2008 2009 2008 ---- ---- ---- ----
Revenues Purchased receivable revenues, net $48,819,343 $56,208,679
$105,559,022 $119,931,367 Gain on sale of purchased receivables -
5,935 - 165,040 Other revenues, net 262,610 264,885 514,129 737,822
------- ------- ------- ------- Total revenues 49,081,953
56,479,499 106,073,151 120,834,229 ---------- ----------
----------- ----------- Expenses Salaries and benefits 18,367,377
20,831,373 38,213,894 42,903,346 Collections expense 21,640,610
23,038,448 43,767,293 44,994,121 Occupancy 1,859,381 1,928,829
3,670,242 3,856,317 Administrative 2,228,678 2,950,819 4,559,064
5,618,971 Depreciation and amortization 959,496 921,970 1,845,314
1,949,774 Impairment of assets - - - 445,651 Loss on disposal of
equipment and other assets 5,137 3,900 6,541 9,483 ----- -----
----- ----- Total operating expenses 45,060,679 49,675,339
92,062,348 99,777,663 ---------- ---------- ---------- ----------
Income from operations 4,021,274 6,804,160 14,010,803 21,056,566
Other income (expense) Interest income 3,731 6,778 4,692 30,029
Interest expense (2,471,838) (3,250,063) (5,113,964) (6,594,660)
Other (67,963) (1,650) 3,814 16,333 -------- ------- ----- ------
Income before income taxes 1,485,204 3,559,225 8,905,345 14,508,268
Income taxes 642,917 1,435,067 3,460,914 5,606,286 -------
--------- --------- --------- Net income $842,287 $2,124,158
$5,444,431 $8,901,982 ======== ========== ========== ==========
Weighted-average number of shares: Basic 30,623,320 30,561,421
30,617,189 30,557,220 Diluted 30,711,491 30,606,807 30,668,037
30,586,249 Earnings per common share outstanding: Basic $0.03 $0.07
$0.18 $0.29 Diluted $0.03 $0.07 $0.18 $0.29 Asset Acceptance
Capital Corp. Consolidated Statements of Financial Position
(Unaudited) June 30, December 31, 2009 2008 -------------
------------ ASSETS Cash $12,927,039 $6,042,859 Purchased
receivables, net 327,095,264 361,808,502 Income taxes receivable
593,927 3,934,029 Property and equipment, net 12,664,308 12,526,817
Goodwill 14,323,071 14,323,071 Intangible assets, net 2,348,833
2,453,117 Other assets 5,561,400 7,082,721 --------- ---------
Total assets $375,513,842 $408,171,116 ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Accounts payable
$3,028,701 $3,388,320 Accrued liabilities 17,356,040 21,476,207
Income taxes payable 1,438,288 658,329 Notes payable 144,572,514
181,550,000 Deferred tax liability, net 65,113,382 64,470,002
---------- ---------- Total liabilities $231,508,925 $271,542,858
------------ ------------ 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 shares - 33,170,177 and 33,169,552 at June 30,
2009 and December 31, 2008, respectively 331,702 331,696 Additional
paid in capital 147,677,015 146,915,791 Retained earnings
40,632,745 35,188,314 Accumulated other comprehensive loss, net of
tax (3,492,941) (4,664,862) Common stock in treasury; at cost,
2,596,653 and 2,596,521 shares at June 30, 2009 and December 31,
2008, respectively (41,143,604) (41,142,681) ------------
------------ Total stockholders' equity 144,004,917 136,628,258
----------- ----------- Total liabilities and stockholders' equity
$375,513,842 $408,171,116 ============ ============ ASSET
ACCEPTANCE CAPITAL CORP. Consolidated Statements of Cash Flows
(Unaudited) Six months ended June 30, -------------------------
2009 2008 ---- ---- Cash flows from operating activities Net income
$5,444,431 $8,901,982 Adjustments to reconcile net income to net
cash provided by operating activities: Depreciation and
amortization 1,845,314 1,949,774 Amortization of deferred financing
costs 263,303 272,606 Deferred income taxes 176,278 428,777
Share-based and other non-cash compensation 761,230 737,898 Net
impairment of purchased receivables 10,295,300 5,353,450 Non-cash
revenue (45,442) (316,269) Loss on disposal of equipment and other
assets 6,541 9,483 Gain on sale of purchased receivables -
(165,040) Impairment of intangible assets - 445,651 Changes in
assets and liabilities: (Decrease) increase in accounts payable and
other accrued liabilities (2,840,763) 2,171,191 Decrease in other
assets 1,258,018 180,474 Increase in net income taxes 4,120,061
200,253 --------- ------- Net cash provided by operating activities
21,284,271 20,170,230 ---------- ---------- Cash flows from
investing activities Investment in purchased receivables, net of
buy backs (41,138,254) (84,976,768) Principal collected on
purchased receivables 65,601,634 70,488,476 Proceeds from the sale
of purchased receivables - 167,405 Purchases of property and
equipment (1,885,272) (4,742,783) Proceeds from sale of property
and equipment 210 2,515 --- ----- Net cash provided by (used in)
investing activities 22,578,318 (19,061,155) ----------
------------ Cash flows from financing activities Borrowings under
notes payable 17,800,000 57,000,000 Repayments of notes payable
(54,777,486) (58,750,000) Purchase of treasury shares (923) -
Payment of deferred financing costs - (660,575) Repayments of
capital lease obligations - (13,767) - -------- Net cash used in
financing activities (36,978,409) (2,424,342) ------------
----------- Net increase (decrease) in cash 6,884,180 (1,315,267)
Cash at beginning of period 6,042,859 10,474,479 ---------
---------- Cash at end of period $12,927,039 $9,159,212 ===========
========== Supplemental disclosure of cash flow information Cash
paid for interest, net of capitalized interest $5,208,677
$6,502,385 Net cash (received) paid for income taxes (705,644)
4,993,390 Non-cash investing and financing activities: Change in
fair value of swap liability (1,639,023) 87,419 Change in
unrealized loss on cash flow hedge 1,171,921 (57,317) DATASOURCE:
Asset Acceptance Capital Corp. CONTACT: Jeff Lambert or Jeff Tryka,
both of Lambert, Edwards & Associates, +1-616-233-0500 or , for
Asset Acceptance Capital Corp. Web Site:
http://www.assetacceptance.com/
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