þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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MICHIGAN
(State or other jurisdiction of incorporation or organization)
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38-1999511
(I.R.S. Employer Identification No.)
|
|
25505 WEST TWELVE MILE ROAD
SOUTHFIELD, MICHIGAN
(Address of principal executive offices)
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48034-8339
(Zip Code)
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Large accelerated filer o
|
Accelerated filer þ
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Non-accelerated filer o
(Do not check if a smaller reporting company)
|
Smaller reporting company o
|
PART I. — FINANCIAL INFORMATION
|
||||
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
|
||||
Consolidated Statements of Income – Three months ended March 31, 2011 and 2010
|
1
|
|||
Consolidated Balance Sheets – As of March 31, 2011 and December 31, 2010
|
2
|
|||
Consolidated Statements of Cash Flows – Three months ended March 31, 2011 and 2010
|
3
|
|||
Notes to Consolidated Financial Statements
|
4
|
|||
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
23
|
|||
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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33
|
|||
ITEM 4. CONTROLS AND PROCEDURES
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33
|
|||
PART II. — OTHER INFORMATION
|
||||
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
34
|
|||
ITEM 6. EXHIBITS
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34
|
|||
SIGNATURE
|
35
|
|||
INDEX OF EXHIBITS
|
36
|
|||
EX-31.A
|
||||
EX-31.B
|
||||
EX-32.A
|
||||
EX-32.B
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(In thousands, except per share data)
|
For the Three Months Ended March 31,
|
|||||||
2011
|
2010
|
|||||||
Revenue:
|
||||||||
Finance charges
|
$
|
106,503
|
$
|
89,663
|
||||
Premiums earned
|
8,543
|
7,704
|
||||||
Other income
|
8,466
|
5,895
|
||||||
Total revenue
|
123,512
|
103,262
|
||||||
Costs and expenses:
|
||||||||
Salaries and wages
|
16,071
|
16,110
|
||||||
General and administrative
|
5,633
|
6,542
|
||||||
Sales and marketing
|
6,409
|
4,810
|
||||||
Provision for credit losses
|
8,916
|
6,426
|
||||||
Interest
|
12,623
|
11,705
|
||||||
Provision for claims
|
6,599
|
5,212
|
||||||
Total costs and expenses
|
56,251
|
50,805
|
||||||
Income from continuing operations before provision for income taxes
|
67,261
|
52,457
|
||||||
Provision for income taxes
|
24,070
|
20,442
|
||||||
Income from continuing operations
|
43,191
|
32,015
|
||||||
Discontinued operations
|
||||||||
Loss from discontinued United Kingdom operations
|
-
|
(5
|
)
|
|||||
Provision for income taxes
|
-
|
-
|
||||||
Loss from discontinued operations
|
-
|
(5
|
)
|
|||||
Net income
|
$
|
43,191
|
$
|
32,010
|
||||
Net income per share:
|
||||||||
Basic
|
$
|
1.59
|
$
|
1.03
|
||||
Diluted
|
$
|
1.57
|
$
|
1.01
|
||||
Income from continuing operations per share:
|
||||||||
Basic
|
$
|
1.59
|
$
|
1.03
|
||||
Diluted
|
$
|
1.57
|
$
|
1.01
|
||||
Loss from discontinued operations per share:
|
||||||||
Basic
|
$
|
-
|
$
|
-
|
||||
Diluted
|
$
|
-
|
$
|
-
|
||||
Weighted average shares outstanding:
|
||||||||
Basic
|
27,196
|
31,042
|
||||||
Diluted
|
27,489
|
31,584
|
(In thousands, except per share data)
|
As of
|
|||||||
March 31, 2011
|
December 31, 2010
|
|||||||
(Unaudited)
|
||||||||
ASSETS:
|
||||||||
Cash and cash equivalents
|
$
|
4,585
|
$
|
3,792
|
||||
Restricted cash and cash equivalents
|
81,370
|
66,536
|
||||||
Restricted securities available for sale
|
806
|
805
|
||||||
Loans receivable (including $7,506 and $9,031 from affiliates as of March 31, 2011 and December 31, 2010, respectively)
|
1,488,356
|
1,344,881
|
||||||
Allowance for credit losses
|
(135,868
|
)
|
(126,868
|
)
|
||||
Loans receivable, net
|
1,352,488
|
1,218,013
|
||||||
Property and equipment, net
|
16,864
|
16,311
|
||||||
Income taxes receivable
|
708
|
12,002
|
||||||
Other assets
|
35,269
|
26,056
|
||||||
Total Assets
|
$
|
1,492,090
|
$
|
1,343,515
|
||||
LIABILITIES AND SHAREHOLDERS' EQUITY:
|
||||||||
Liabilities:
|
||||||||
Accounts payable and accrued liabilities
|
$
|
97,194
|
$
|
75,297
|
||||
Revolving secured line of credit
|
132,800
|
136,700
|
||||||
Secured financing
|
398,600
|
300,100
|
||||||
Mortgage note
|
4,465
|
4,523
|
||||||
Senior notes
|
350,455
|
244,344
|
||||||
Deferred income taxes, net
|
102,724
|
108,077
|
||||||
Income taxes payable
|
10,542
|
-
|
||||||
Total Liabilities
|
1,096,780
|
869,041
|
||||||
Commitments and Contingencies - See Note 12
|
||||||||
Shareholders' Equity:
|
||||||||
Preferred stock, $.01 par value, 1,000 shares authorized, none issued
|
-
|
-
|
||||||
Common stock, $.01 par value, 80,000 shares authorized, 25,584 and 27,304 shares issued and outstanding as of March 31, 2011 and December 31, 2010, respectively
|
256
|
273
|
||||||
Paid-in capital
|
34,878
|
30,985
|
||||||
Retained earnings
|
360,245
|
443,326
|
||||||
Accumulated other comprehensive loss, net of tax of $40 and $64 as of March 31, 2011 and December 31, 2010, respectively
|
(69
|
)
|
(110
|
)
|
||||
Total Shareholders' Equity
|
395,310
|
474,474
|
||||||
Total Liabilities and Shareholders' Equity
|
$
|
1,492,090
|
$
|
1,343,515
|
(In thousands)
|
For the Three Months Ended March 31,
|
|||||||
2011
|
2010
|
|||||||
Cash Flows From Operating Activities:
|
||||||||
Net income
|
$
|
43,191
|
$
|
32,010
|
||||
Adjustments to reconcile cash provided by operating activities:
|
||||||||
Provision for credit losses
|
8,916
|
6,426
|
||||||
Depreciation and amortization
|
2,488
|
3,248
|
||||||
Loss on retirement of property and equipment
|
4
|
-
|
||||||
Provision for deferred income taxes
|
(5,377
|
)
|
(5,679
|
)
|
||||
Stock-based compensation
|
591
|
1,183
|
||||||
Change in operating assets and liabilities:
|
||||||||
Increase in accounts payable and accrued liabilities
|
21,959
|
25,776
|
||||||
Decrease in income taxes receivable / increase in income taxes payable
|
21,836
|
11,021
|
||||||
Increase in other assets
|
(7,537
|
)
|
(6,223
|
)
|
||||
Net cash provided by operating activities
|
86,071
|
67,762
|
||||||
Cash Flows From Investing Activities:
|
||||||||
Increase in restricted cash and cash equivalents
|
(14,834
|
)
|
(4,692
|
)
|
||||
Purchases of restricted securities available for sale
|
(303
|
)
|
(407
|
)
|
||||
Maturities of restricted securities available for sale
|
305
|
449
|
||||||
Principal collected on Loans receivable
|
253,592
|
206,137
|
||||||
Advances to Dealer-Partners
|
(336,408
|
)
|
(205,118
|
)
|
||||
Purchases of Consumer Loans
|
(32,726
|
)
|
(26,443
|
)
|
||||
Accelerated payments of Dealer Holdback
|
(12,045
|
)
|
(7,199
|
)
|
||||
Payments of Dealer Holdback
|
(15,574
|
)
|
(12,170
|
)
|
||||
Net (increase) decrease in other loans
|
(230
|
)
|
38
|
|||||
Purchases of property and equipment
|
(1,582
|
)
|
(781
|
)
|
||||
Net cash used in investing activities
|
(159,805
|
)
|
(50,186
|
)
|
||||
Cash Flows From Financing Activities:
|
||||||||
Borrowings under revolving secured line of credit
|
489,000
|
99,900
|
||||||
Repayments under revolving secured line of credit
|
(492,900
|
)
|
(168,800
|
)
|
||||
Proceeds from secured financing
|
150,000
|
-
|
||||||
Repayments of secured financing
|
(51,500
|
)
|
(183,430
|
)
|
||||
Principal payments under mortgage note and capital lease obligations
|
(58
|
)
|
(207
|
)
|
||||
Proceeds from sale of senior notes
|
106,000
|
243,738
|
||||||
Payments of debt issuance costs
|
(3,028
|
)
|
(8,422
|
)
|
||||
Repurchase of common stock
|
(126,675
|
)
|
(1,896
|
)
|
||||
Proceeds from stock options exercised
|
1,915
|
19
|
||||||
Tax benefits from stock-based compensation plans
|
1,773
|
954
|
||||||
Net cash provided by (used in) financing activities
|
74,527
|
(18,144
|
)
|
|||||
Net increase (decrease) in cash and cash equivalents
|
793
|
(568
|
)
|
|||||
Cash and cash equivalents, beginning of period
|
3,792
|
2,170
|
||||||
Cash and cash equivalents, end of period
|
$
|
4,585
|
$
|
1,602
|
||||
Supplemental Disclosure of Cash Flow Information:
|
||||||||
Cash paid during the period for interest
|
$
|
10,867
|
$
|
11,494
|
||||
Cash paid during the period for income taxes
|
$
|
6,306
|
$
|
5,126
|
Quarter Ended
|
Portfolio Program
|
Purchase Program
|
||||||
March 31, 2010
|
90.9
|
%
|
9.1
|
%
|
||||
June 30, 2010
|
90.5
|
%
|
9.5
|
%
|
||||
September 30, 2010
|
90.5
|
%
|
9.5
|
%
|
||||
December 31, 2010
|
91.8
|
%
|
8.2
|
%
|
||||
March 31, 2011
|
92.9
|
%
|
7.1
|
%
|
|
·
|
a down payment from the consumer;
|
|
·
|
a non-recourse cash payment (“advance”) from us; and
|
|
·
|
after the advance has been recovered by us, the cash from payments made on the Consumer Loan, net of certain collection costs and our servicing fee (“Dealer Holdback”).
|
|
·
|
First, to reimburse us for certain collection costs;
|
|
·
|
Second, to pay us our servicing fee, which generally equals 20% of collections;
|
|
·
|
Third, to reduce the aggregate advance balance and to pay any other amounts due from the Dealer-Partner to us; and
|
|
·
|
Fourth, to the Dealer-Partner as payment of Dealer Holdback.
|
|
·
|
the consumer and Dealer-Partner have signed a Consumer Loan contract;
|
|
·
|
we have received the original Consumer Loan contract and supporting documentation;
|
|
·
|
we have approved all of the related stipulations for funding; and
|
|
·
|
we have provided funding to the Dealer-Partner in the form of either an advance under the Portfolio Program or one-time purchase payment under the Purchase Program.
|
|
·
|
the aggregate amount of all cash advances paid;
|
|
·
|
finance charges;
|
|
·
|
Dealer Holdback payments;
|
|
·
|
accelerated Dealer Holdback payments; and
|
|
·
|
recoveries.
|
|
·
|
collections (net of certain collection costs); and
|
|
·
|
write-offs.
|
|
·
|
the aggregate amount of all amounts paid during the month of purchase to purchase Consumer Loans from Dealer-Partners;
|
|
·
|
finance charges; and
|
|
·
|
recoveries.
|
|
·
|
collections (net of certain collection costs); and
|
|
·
|
write-offs.
|
(In thousands)
|
For the Three Months Ended March 31,
|
|||||||
2011
|
2010
|
|||||||
Net assumed written premiums
|
$
|
14,386
|
$
|
10,270
|
||||
Net premiums earned
|
8,543
|
7,705
|
||||||
Provision for claims
|
6,599
|
5,215
|
||||||
Amortization of capitalized acquisition costs
|
213
|
218
|
(In thousands)
|
As of
|
||||||||
Balance Sheet location
|
March 31, 2011
|
December 31, 2010
|
|||||||
Trust assets
|
Restricted cash and cash equivalents
|
$
|
35,228
|
$
|
31,246
|
||||
Unearned premium
|
Accounts payable and accrued liabilities
|
30,600
|
24,757
|
||||||
Claims reserve (1)
|
Accounts payable and accrued liabilities
|
1,117
|
1,029
|
|
(1)
|
The claims reserve is estimated based on historical claims experience.
|
|
·
|
First, we determined that the trusts qualified as variable interest entities. The trusts have insufficient equity at risk as no parties to the trusts were required to contribute assets that provide them with any ownership interest.
|
|
·
|
Next, we determined that we have variable interests in the trusts. We have a residual interest in the assets of the trusts, which is variable in nature, given that it increases or decreases based upon the actual loss experience of the related service contracts. In addition, VSC Re is required to absorb any losses in excess of the trusts’ assets.
|
|
·
|
Next, we evaluated the purpose and design of the trusts. The primary purpose of the trusts is to provide third party administrators (“TPAs”) with funds to pay claims on vehicle service contracts and to accumulate and provide us with proceeds from investment income and residual funds.
|
|
·
|
Finally, we determined that we are the primary beneficiary of the trusts. We control the amount of premium written and placed in the trusts through Consumer Loan assignments under our Programs, which is the activity that most significantly impacts the economic performance of the trusts. We have the right to receive benefits from the trusts that could potentially be significant. In addition, VSC Re has the obligation to absorb losses of the trusts that could potentially be significant.
|
(In thousands)
|
As of
|
|||||||
March 31, 2011
|
December 31, 2010
|
|||||||
Cash collections related to secured financings
|
$
|
46,020
|
$
|
35,160
|
||||
Cash held in trusts for future vehicle service contract claims (1)
|
35,350
|
31,376
|
||||||
Total restricted cash and cash equivalents
|
$
|
81,370
|
$
|
66,536
|
|
(1)
|
The unearned premium and claims reserve associated with the trusts are included in accounts payable and accrued liabilities in the consolidated balance sheets. As of March 31, 2011, the outstanding balance includes $35,228 related to VSC Re and $122 related to a discontinued profit sharing arrangement. As of December 31, 2010, the outstanding balance includes $31,246 related to VSC Re and $130 related to a discontinued profit sharing arrangement.
|
(In thousands)
|
As of March 31, 2011
|
|||||||||||||||
Cost
|
Gross Unrealized Gains
|
Gross Unrealized Losses
|
Estimated Fair Value
|
|||||||||||||
US Government and agency securities
|
$
|
149
|
$
|
1
|
$
|
-
|
$
|
150
|
||||||||
Corporate bonds
|
652
|
5
|
(1
|
)
|
656
|
|||||||||||
Total restricted securities available for sale
|
$
|
801
|
$
|
6
|
$
|
(1
|
)
|
$
|
806
|
|||||||
(In thousands)
|
As of December 31, 2010
|
|||||||||||||||
Cost
|
Gross Unrealized Gains
|
Gross Unrealized Losses
|
Estimated Fair Value
|
|||||||||||||
US Government and agency securities
|
$
|
298
|
$
|
3
|
$
|
-
|
$
|
301
|
||||||||
Corporate bonds
|
504
|
5
|
(5
|
)
|
504
|
|||||||||||
Total restricted securities available for sale
|
$
|
802
|
$
|
8
|
$
|
(5
|
)
|
$
|
805
|
(In thousands)
|
As of
|
|||||||||||||||
March 31, 2011
|
December 31, 2010
|
|||||||||||||||
Cost
|
Estimated Fair Value
|
Cost
|
Estimated Fair Value
|
|||||||||||||
Contractual Maturity
|
||||||||||||||||
Within one year
|
$
|
245
|
$
|
245
|
$
|
499
|
$
|
496
|
||||||||
Over one year to five years
|
556
|
561
|
303
|
309
|
||||||||||||
Total restricted securities available for sale
|
$
|
801
|
$
|
806
|
$
|
802
|
$
|
805
|
(In thousands)
|
As of March 31, 2011
|
|||||||||||
Dealer Loans
|
Purchased Loans
|
Total
|
||||||||||
Loans receivable
|
$
|
1,233,387
|
$
|
254,969
|
$
|
1,488,356
|
||||||
Allowance for credit losses
|
(122,801
|
)
|
(13,067
|
)
|
(135,868
|
)
|
||||||
Loans receivable, net
|
$
|
1,110,586
|
$
|
241,902
|
$
|
1,352,488
|
||||||
(In thousands)
|
As of December 31, 2010
|
|||||||||||
Dealer Loans
|
Purchased Loans
|
Total
|
||||||||||
Loans receivable
|
$
|
1,082,039
|
$
|
262,842
|
$
|
1,344,881
|
||||||
Allowance for credit losses
|
(113,227
|
)
|
(13,641
|
)
|
(126,868
|
)
|
||||||
Loans receivable, net
|
$
|
968,812
|
$
|
249,201
|
$
|
1,218,013
|
(In thousands)
|
For the Three Months Ended March 31, 2011
|
|||||||||||
Dealer Loans
|
Purchased Loans
|
Total
|
||||||||||
Balance, beginning of period
|
$
|
1,082,039
|
$
|
262,842
|
$
|
1,344,881
|
||||||
New Consumer Loan assignments (1)
|
336,408
|
32,726
|
369,134
|
|||||||||
Principal collected on Loans receivable
|
(208,459
|
)
|
(45,133
|
)
|
(253,592
|
)
|
||||||
Accelerated Dealer Holdback payments
|
12,045
|
-
|
12,045
|
|||||||||
Dealer Holdback payments
|
15,574
|
-
|
15,574
|
|||||||||
Transfers (2)
|
(4,596
|
)
|
4,596
|
-
|
||||||||
Write-offs
|
(351
|
)
|
(78
|
)
|
(429
|
)
|
||||||
Recoveries
|
497
|
16
|
513
|
|||||||||
Net change in other loans
|
230
|
-
|
230
|
|||||||||
Balance, end of period
|
$
|
1,233,387
|
$
|
254,969
|
$
|
1,488,356
|
||||||
(In thousands)
|
For the Three Months Ended March 31, 2010
|
|||||||||||
Dealer Loans
|
Purchased Loans
|
Total
|
||||||||||
Balance, beginning of period
|
$
|
869,603
|
$
|
297,955
|
$
|
1,167,558
|
||||||
New Consumer Loan assignments (1)
|
205,118
|
26,443
|
231,561
|
|||||||||
Principal collected on Loans receivable
|
(161,991
|
)
|
(44,146
|
)
|
(206,137
|
)
|
||||||
Accelerated Dealer Holdback payments
|
7,199
|
-
|
7,199
|
|||||||||
Dealer Holdback payments
|
12,170
|
-
|
12,170
|
|||||||||
Transfers (2)
|
(6,143
|
)
|
6,143
|
-
|
||||||||
Write-offs
|
(1,388
|
)
|
(25
|
)
|
(1,413
|
)
|
||||||
Recoveries
|
564
|
22
|
586
|
|||||||||
Net change in other loans
|
(38
|
)
|
-
|
(38
|
)
|
|||||||
Balance, end of period
|
$
|
925,094
|
$
|
286,392
|
$
|
1,211,486
|
|
(1)
|
The Dealer Loans amount represents advances paid to Dealer-Partners on Consumer Loans assigned under our Portfolio Program. The Purchased Loans amount represents one-time payments made to Dealer-Partners to purchase Consumer Loans assigned under our Purchase Program.
|
|
(2)
|
Under our Portfolio Program, certain events may result in Dealer-Partners forfeiting their rights to Dealer Holdback. We transfer the Dealer-Partner’s outstanding Dealer Loan balance to Purchased Loans in the period this forfeiture occurs.
|
(In thousands)
|
For the Three Months Ended March 31, 2011
|
|||||||||||
Dealer Loans
|
Purchased Loans
|
Total
|
||||||||||
Balance, beginning of period
|
$
|
113,227
|
$
|
13,641
|
$
|
126,868
|
||||||
Provision for credit losses
|
9,428
|
(512
|
)
|
8,916
|
||||||||
Write-offs
|
(351
|
)
|
(78
|
)
|
(429
|
)
|
||||||
Recoveries
|
497
|
16
|
513
|
|||||||||
Balance, end of period
|
$
|
122,801
|
$
|
13,067
|
$
|
135,868
|
||||||
(In thousands)
|
For the Three Months Ended March 31, 2010
|
|||||||||||
Dealer Loans
|
Purchased Loans
|
Total
|
||||||||||
Balance, beginning of period
|
$
|
108,792
|
$
|
8,753
|
$
|
117,545
|
||||||
Provision for credit losses
|
3,404
|
3,022
|
6,426
|
|||||||||
Write-offs
|
(1,388
|
)
|
(25
|
)
|
(1,413
|
)
|
||||||
Recoveries
|
564
|
22
|
586
|
|||||||||
Balance, end of period
|
$
|
111,372
|
$
|
11,772
|
$
|
123,144
|
(Dollars in thousands)
|
|||||||||||||||
Financings
|
Wholly-owned Subsidiary
|
Issue Number
|
Close Date
|
Maturity Date
|
Financing Amount
|
Interest Rate as of
March 31, 2011
|
|||||||||
Revolving Secured Line of Credit
|
n/a
|
n/a
|
June 9, 2010
|
June 22, 2012
|
$
|
170,000
|
At our option, either the Eurodollar rate plus 225 basis points or the prime rate plus 125 basis points
|
||||||||
Revolving Secured
Warehouse Facility (1)
|
CAC Warehouse Funding Corp. II
|
2003-2
|
June 16, 2010
|
June 15, 2013 (2)
|
$
|
325,000
|
Commercial paper rate plus 350 basis points or LIBOR plus 450 basis points (4) (5)
|
||||||||
Revolving Secured
Warehouse Facility (1)
|
CAC Warehouse Funding III, LLC
|
2008-2
|
September 10, 2010
|
September 10, 2013 (6)
|
$
|
75,000
|
Commercial paper rate plus 300 basis points or LIBOR plus 300 basis points (3) (4) (5)
|
||||||||
Term ABS 2009-1 (1)
|
Credit Acceptance Funding LLC 2009-1
|
2009-1
|
December 3, 2009
|
May 15, 2011 (2)
|
$
|
110,500
|
Fixed rate
|
||||||||
Term ABS 2010-1 (1)
|
Credit Acceptance Funding LLC 2010-1
|
2010-1
|
November 4, 2010
|
October 15, 2012 (2)
|
$
|
100,500
|
Fixed rate
|
||||||||
Senior Notes
|
n/a
|
n/a
|
(7)
|
February 1, 2017
|
$
|
350,000
|
Fixed rate
|
|
(1)
|
Financing made available only to a specified subsidiary of the Company.
|
|
(2)
|
Represents the revolving maturity date. The outstanding balance will amortize after the maturity date based on the cash flows of the contributed assets.
|
|
(3)
|
A portion of the outstanding balance is a floating rate obligation that has been converted to a fixed rate obligation via an interest rate swap.
|
|
(4)
|
The LIBOR rate is used if funding is not available from the commercial paper market.
|
|
(5)
|
Interest rate cap agreements are in place to limit the exposure to increasing interest rates.
|
|
(6)
|
Represents the revolving maturity date. The outstanding balance will amortize after the revolving maturity date and any amounts remaining on September 10, 2014 will be due.
|
|
(7)
|
The close dates associated with the issuance of $250.0 million and $100.0 million of the Senior Notes occurred on February 1, 2010 and March 3, 2011, respectively.
|
(In thousands)
|
For the Three Months Ended March 31,
|
|||||||
2011
|
2010
|
|||||||
Revolving Secured Line of Credit
|
||||||||
Maximum outstanding balance
|
$
|
149,700
|
$
|
107,900
|
||||
Average outstanding balance
|
86,538
|
44,533
|
||||||
Revolving Secured Warehouse Facility (2003-2)
|
||||||||
Maximum outstanding balance
|
$
|
180,600
|
$
|
152,600
|
||||
Average outstanding balance
|
124,633
|
53,591
|
||||||
Revolving Secured Warehouse Facility (2008-2)
|
||||||||
Maximum outstanding balance
|
$
|
40,000
|
$
|
75,000
|
||||
Average outstanding balance
|
35,489
|
75,000
|
(Dollars in thousands)
|
As of
|
|||||||
March 31, 2011
|
December 31, 2010
|
|||||||
Revolving Secured Line of Credit
|
||||||||
Balance outstanding
|
$
|
132,800
|
$
|
136,700
|
||||
Letter of credit
|
500
|
500
|
||||||
Amount available for borrowing (1)
|
36,700
|
32,800
|
||||||
Interest rate
|
3.00
|
%
|
3.03
|
%
|
||||
Revolving Secured Warehouse Facility (2003-2)
|
||||||||
Balance outstanding
|
$
|
162,600
|
$
|
49,100
|
||||
Amount available for borrowing (1)
|
162,400
|
275,900
|
||||||
Contributed eligible Loans
|
229,678
|
83,652
|
||||||
Interest rate
|
3.79
|
%
|
3.82
|
%
|
||||
Revolving Secured Warehouse Facility (2008-2)
|
||||||||
Balance outstanding
|
$
|
25,000
|
$
|
40,000
|
||||
Amount available for borrowing (1)
|
50,000
|
35,000
|
||||||
Contributed eligible Loans
|
57,646
|
70,950
|
||||||
Interest rate
|
4.36
|
%
|
3.94
|
%
|
||||
Term ABS 2009-1
|
||||||||
Balance outstanding
|
$
|
110,500
|
$
|
110,500
|
||||
Contributed eligible Loans
|
142,507
|
142,490
|
||||||
Interest rate
|
4.40
|
%
|
4.40
|
%
|
||||
Term ABS 2010-1
|
||||||||
Balance outstanding
|
$
|
100,500
|
$
|
100,500
|
||||
Contributed eligible Loans
|
127,112
|
127,054
|
||||||
Interest rate
|
2.36
|
%
|
2.36
|
%
|
||||
Senior Notes
|
||||||||
Balance outstanding (2)
|
$
|
350,455
|
$
|
244,344
|
||||
Interest rate
|
9.13
|
%
|
9.13
|
%
|
(Dollars in thousands)
|
||||||||||||||
Term ABS Financings
|
Issue Number
|
Close Date
|
Net Book Value of Dealer Loans Conveyed at Closing
|
Revolving Period
|
Expected Annualized Rates (1)
|
|||||||||
Term ABS 2009-1
|
2009-1
|
December 3, 2009
|
$
|
142,301
|
18 months
(Through May 15, 2011)
|
5.2
|
%
|
|||||||
Term ABS 2010-1
|
2010-1
|
November 4, 2010
|
$
|
126,751
|
24 months
(Through October 15, 2012)
|
3.1
|
%
|
|
(1)
|
Includes underwriter’s fees and other costs.
|
(In thousands)
|
Fair Value as of
|
||||||||
Balance Sheet location
|
March 31, 2011
|
December 31, 2010
|
|||||||
Derivatives designated as hedging instruments
|
|||||||||
Liability Derivatives
|
|||||||||
Interest rate swap
|
Accounts payable and accrued liabilities
|
$
|
115
|
$
|
176
|
||||
Derivatives not designated as hedging instruments
|
|||||||||
Asset Derivatives
|
|||||||||
Interest rate caps
|
Other assets
|
$
|
35
|
$
|
56
|
||||
Total Derivatives
|
|||||||||
Total Asset Derivatives
|
$
|
35
|
$
|
56
|
|||||
Total Liability Derivatives
|
$
|
115
|
$
|
176
|
(In thousands)
|
|||||||||||||||||
Derivatives in Cash Flow Hedging Relationships
|
(Loss) / Gain Recognized in OCI on Derivative (Effective Portion)
|
(Loss) / Gain Reclassified from Accumulated OCI into
Income (Effective Portion)
|
|||||||||||||||
For the Three Months Ended March 31,
|
For the Three Months Ended March 31,
|
||||||||||||||||
2011
|
2010
|
Location
|
2011
|
2010
|
|||||||||||||
Interest rate swap
|
$
|
(8
|
)
|
$
|
49
|
Interest expense
|
$
|
(69
|
)
|
$
|
(440
|
)
|
(In thousands)
|
|||||||||
Derivatives Not Designated as Hedging Instruments
|
Amount of (Loss) / Gain Recognized in Income on Derivatives
|
||||||||
For the Three Months Ended March 31,
|
|||||||||
Location
|
2011
|
2010
|
|||||||
Interest rate caps
|
Interest expense
|
$
|
(20
|
)
|
$
|
(76
|
)
|
||
Interest rate swap
|
Interest expense
|
-
|
(590
|
)
|
|||||
Total
|
$
|
(20
|
)
|
$
|
(666
|
)
|
(In thousands)
|
As of
|
|||||||||||||||
March 31, 2011
|
December 31, 2010
|
|||||||||||||||
Carrying
Amount
|
Estimated
Fair Value
|
Carrying
Amount
|
Estimated
Fair Value
|
|||||||||||||
Assets
|
||||||||||||||||
Cash and cash equivalents
|
$
|
4,585
|
$
|
4,585
|
$
|
3,792
|
$
|
3,792
|
||||||||
Restricted cash and cash equivalents
|
81,370
|
81,370
|
66,536
|
66,536
|
||||||||||||
Restricted securities available for sale
|
806
|
806
|
805
|
805
|
||||||||||||
Net investment in Loans receivable
|
1,352,488
|
1,365,369
|
1,218,013
|
1,224,830
|
||||||||||||
Derivative instruments
|
35
|
35
|
56
|
56
|
||||||||||||
Liabilities
|
||||||||||||||||
Revolving secured line of credit
|
$
|
132,800
|
$
|
132,800
|
$
|
136,700
|
$
|
136,700
|
||||||||
Secured financing
|
398,600
|
400,088
|
300,100
|
302,377
|
||||||||||||
Mortgage note
|
4,465
|
4,465
|
4,523
|
4,523
|
||||||||||||
Senior notes
|
350,455
|
378,188
|
244,344
|
261,250
|
||||||||||||
Derivative instruments
|
115
|
115
|
176
|
176
|
Level 1
|
Valuation is based upon quoted prices for identical instruments traded in active markets.
|
Level 2
|
Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.
|
Level 3
|
Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates or assumptions that market participants would use in pricing the asset or liability.
|
(In thousands)
|
As of March 31, 2011
|
As of December 31, 2010
|
||||||||||||||||||||||
Level 1
|
Level 2
|
Total
Fair Value
|
Level 1
|
Level 2
|
Total
Fair Value
|
|||||||||||||||||||
Assets
|
||||||||||||||||||||||||
Restricted securities available for sale
|
$
|
806
|
$
|
-
|
$
|
806
|
$
|
805
|
$
|
-
|
$
|
805
|
||||||||||||
Derivative instruments
|
-
|
35
|
35
|
-
|
56
|
56
|
||||||||||||||||||
Liabilities
|
||||||||||||||||||||||||
Derivative instruments
|
$
|
-
|
$
|
115
|
$
|
115
|
$
|
-
|
$
|
176
|
$
|
176
|
(In thousands)
|
For the Three Months Ended March 31,
|
|||||||||||||||
2011
|
2010
|
|||||||||||||||
Affiliated
Dealer-Partner
activity
|
% of
consolidated
|
Affiliated
Dealer-Partner
activity
|
% of
consolidated
|
|||||||||||||
Dealer Loan revenue
|
$
|
545
|
0.6
|
%
|
$
|
847
|
1.2
|
%
|
||||||||
New Consumer Loan assignments (1)
|
347
|
0.1
|
%
|
1,498
|
0.6
|
%
|
||||||||||
Accelerated Dealer Holdback payments
|
24
|
0.2
|
%
|
101
|
1.4
|
%
|
||||||||||
Dealer Holdback payments
|
465
|
3.0
|
%
|
590
|
4.9
|
%
|
|
(1)
|
Represents advances paid to Dealer-Partners on Consumer Loans assigned under our Portfolio Program and one-time payments made to Dealer-Partners to purchase Consumer Loans assigned under our Purchase Program.
|
For the Three Months Ended March 31,
|
||||||||
2011
|
2010
|
|||||||
U.S. federal statutory rate
|
35.0
|
%
|
35.0
|
%
|
||||
State income taxes
|
1.7
|
%
|
2.1
|
%
|
||||
Changes in reserve for uncertain tax positions as a result of settlements and lapsed statutes and related interest
|
-1.0
|
%
|
1.6
|
%
|
||||
Other
|
0.1
|
%
|
0.3
|
%
|
||||
Effective tax rate
|
35.8
|
%
|
39.0
|
%
|
(In thousands)
|
For the Three Months Ended March 31,
|
|||||||
2011
|
2010
|
|||||||
Weighted average shares outstanding:
|
||||||||
Common shares
|
26,833
|
30,842
|
||||||
Vested restricted stock units
|
363
|
200
|
||||||
Basic number of weighted average shares outstanding
|
27,196
|
31,042
|
||||||
Dilutive effect of stock options
|
174
|
368
|
||||||
Dilutive effect of restricted stock and restricted stock units
|
119
|
174
|
||||||
Dilutive number of weighted average shares outstanding
|
27,489
|
31,584
|
(In thousands)
|
Number of Shares
|
|||||||
For the Three Months Ended March 31,
|
||||||||
Restricted Stock
|
2011
|
2010
|
||||||
Outstanding Beginning Balance
|
112
|
242
|
||||||
Granted
|
9
|
19
|
||||||
Vested
|
(63
|
)
|
(142
|
)
|
||||
Forfeited
|
(3
|
)
|
-
|
|||||
Outstanding Ending Balance
|
55
|
119
|
(In thousands, except per share data)
|
Nonvested
|
Vested
|
Total
|
||||||||||||||||
Restricted Stock Units
|
Number of Restricted Stock Units
|
Weighted Average Grant-Date Fair Value Per Share
|
Number of Restricted Stock Units
|
Weighted Average Grant-Date Fair Value Per Share
|
Number of Restricted Stock Units
|
||||||||||||||
Outstanding as of December 31, 2010
|
521
|
$
|
19.99
|
270
|
$
|
22.94
|
791
|
||||||||||||
Granted
|
5
|
62.20
|
-
|
-
|
5
|
(1
|
)
|
||||||||||||
Vested
|
(158
|
)
|
20.99
|
158
|
20.99
|
-
|
(2
|
)
|
|||||||||||
Outstanding as of March 31, 2011
|
368
|
$
|
20.13
|
428
|
$
|
22.22
|
796
|
||||||||||||
(In thousands, except per share data)
|
Nonvested
|
Vested
|
Total
|
||||||||||||||||
Restricted Stock Units
|
Number of Restricted Stock Units
|
Weighted Average Grant-Date Fair Value Per Share
|
Number of Restricted Stock Units
|
Weighted Average Grant-Date Fair Value Per Share
|
Number of Restricted Stock Units
|
||||||||||||||
Outstanding as of December 31, 2009
|
648
|
$
|
19.35
|
120
|
$
|
26.30
|
768
|
||||||||||||
Granted
|
33
|
39.89
|
-
|
-
|
33
|
(3
|
)
|
||||||||||||
Vested
|
(150
|
)
|
20.24
|
150
|
20.24
|
-
|
(4
|
)
|
|||||||||||
Outstanding as of March 31, 2010
|
531
|
$
|
20.36
|
270
|
$
|
22.94
|
801
|
|
(1)
|
The distribution date of vested restricted stock units is February 22, 2018.
|
|
(2)
|
The distribution date of vested restricted stock units is February 22, 2014 for 60 restricted stock units, February 22, 2016 for 90 restricted stock units and February 22, 2017 for 8 restricted stock units.
|
|
(3)
|
The distribution date of vested restricted stock units is February 22, 2017.
|
|
(4)
|
The distribution date of vested restricted stock units is February 22, 2014 for 60 restricted stock units and February 22, 2016 for 90 restricted stock units.
|
(In thousands)
|
For the Three Months Ended March 31,
|
|||||||
2011
|
2010
|
|||||||
Restricted stock
|
$
|
216
|
$
|
334
|
||||
Restricted stock units
|
375
|
849
|
||||||
Total
|
$
|
591
|
$
|
1,183
|
(In thousands)
|
For the Three Months Ended March 31,
|
|||||||
2011
|
2010
|
|||||||
Net income
|
$
|
43,191
|
$
|
32,010
|
||||
Unrealized gain (loss) on securities available for sale, net of tax
|
2
|
(5
|
)
|
|||||
Unrealized gain on interest rate swap, net of tax
|
39
|
309
|
||||||
Comprehensive income
|
$
|
43,232
|
$
|
32,314
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
Forecasted Collection Percentage as of
|
Variance in Forecasted Collection Percentage from
|
|||||||||||||||||||
Consumer Loan Assignment Year
|
March 31,
2011
|
December 31, 2010
|
Initial
Forecast
|
December 31,
2010
|
Initial
Forecast
|
|||||||||||||||
2002
|
70.5
|
%
|
70.5
|
%
|
67.9
|
%
|
0.0
|
%
|
2.6
|
%
|
||||||||||
2003
|
73.7
|
%
|
73.7
|
%
|
72.0
|
%
|
0.0
|
%
|
1.7
|
%
|
||||||||||
2004
|
73.0
|
%
|
73.0
|
%
|
73.0
|
%
|
0.0
|
%
|
0.0
|
%
|
||||||||||
2005
|
73.7
|
%
|
73.7
|
%
|
74.0
|
%
|
0.0
|
%
|
-0.3
|
%
|
||||||||||
2006
|
70.2
|
%
|
70.2
|
%
|
71.4
|
%
|
0.0
|
%
|
-1.2
|
%
|
||||||||||
2007
|
68.0
|
%
|
67.9
|
%
|
70.7
|
%
|
0.1
|
%
|
-2.7
|
%
|
||||||||||
2008
|
70.0
|
%
|
69.9
|
%
|
69.7
|
%
|
0.1
|
%
|
0.3
|
%
|
||||||||||
2009
|
78.6
|
%
|
78.5
|
%
|
71.9
|
%
|
0.1
|
%
|
6.7
|
%
|
||||||||||
2010
|
75.4
|
%
|
75.8
|
%
|
73.6
|
%
|
-0.4
|
%
|
1.8
|
%
|
As of March 31, 2011
|
||||||||||||||||
Consumer Loan Assignment Year
|
Forecasted Collection %
|
Advance % (1)
|
Spread %
|
% of Forecast Realized (2)
|
||||||||||||
2002
|
70.5
|
%
|
42.2
|
%
|
28.3
|
%
|
99.4
|
%
|
||||||||
2003
|
73.7
|
%
|
43.4
|
%
|
30.3
|
%
|
99.3
|
%
|
||||||||
2004
|
73.0
|
%
|
44.0
|
%
|
29.0
|
%
|
99.0
|
%
|
||||||||
2005
|
73.7
|
%
|
46.9
|
%
|
26.8
|
%
|
98.7
|
%
|
||||||||
2006
|
70.2
|
%
|
46.6
|
%
|
23.6
|
%
|
97.6
|
%
|
||||||||
2007
|
68.0
|
%
|
46.5
|
%
|
21.5
|
%
|
93.5
|
%
|
||||||||
2008
|
70.0
|
%
|
44.6
|
%
|
25.4
|
%
|
82.6
|
%
|
||||||||
2009
|
78.6
|
%
|
43.9
|
%
|
34.7
|
%
|
65.4
|
%
|
||||||||
2010
|
75.4
|
%
|
44.7
|
%
|
30.7
|
%
|
28.8
|
%
|
||||||||
2011
|
73.0
|
%
|
44.9
|
%
|
28.1
|
%
|
3.3
|
%
|
|
(1)
|
Represents advances paid to Dealer-Partners on Consumer Loans assigned under our Portfolio Program and one-time payments made to Dealer-Partners to purchase Consumer Loans assigned under our Purchase Program as a percentage of the contractual amounts of the Consumer Loans. Payments of Dealer Holdback and accelerated Dealer Holdback are not included.
|
|
(2)
|
Presented as a percentage of total forecasted collections.
|
Consumer Loan Assignment Year
|
Forecasted Collection %
|
Advance % (1)
|
Spread %
|
||||||||||
Dealer loans
|
2007
|
68.0
|
%
|
45.8
|
%
|
22.2
|
%
|
||||||
2008
|
70.6
|
%
|
43.3
|
%
|
27.3
|
%
|
|||||||
2009
|
78.6
|
%
|
43.5
|
%
|
35.1
|
%
|
|||||||
2010
|
75.4
|
%
|
44.4
|
%
|
31.0
|
%
|
|||||||
2011
|
73.0
|
%
|
44.7
|
%
|
28.3
|
%
|
|||||||
Purchased loans
|
2007
|
68.1
|
%
|
49.1
|
%
|
19.0
|
%
|
||||||
2008
|
69.1
|
%
|
46.7
|
%
|
22.4
|
%
|
|||||||
2009
|
78.5
|
%
|
45.4
|
%
|
33.1
|
%
|
|||||||
2010
|
75.6
|
%
|
47.0
|
%
|
28.6
|
%
|
|||||||
2011
|
72.9
|
%
|
47.9
|
%
|
25.0
|
%
|
|
(1)
|
Represents advances paid to Dealer-Partners on Consumer Loans assigned under our Portfolio Program and one-time payments made to Dealer-Partners to purchase Consumer Loans assigned under our Purchase Program as a percentage of the contractual amounts of the Consumer Loans. Payments of Dealer Holdback and accelerated Dealer Holdback are not included.
|
Year over Year Percent Change
|
||||||||
Three Months Ended
|
Unit Volume
|
Dollar Volume (1)
|
||||||
March 31, 2010
|
11.2
|
%
|
21.6
|
%
|
||||
June 30, 2010
|
22.7
|
%
|
42.2
|
%
|
||||
September 30, 2010
|
26.9
|
%
|
51.5
|
%
|
||||
December 31, 2010
|
37.7
|
%
|
66.9
|
%
|
||||
March 31, 2011
|
36.7
|
%
|
59.3
|
%
|
|
(1)
|
Represents advances paid to Dealer-Partners on Consumer Loans assigned under our Portfolio Program and one-time payments made to Dealer-Partners to purchase Consumer Loans assigned under our Purchase Program. Payments of Dealer Holdback and accelerated Dealer Holdback are not included.
|
For the Three Months Ended March 31,
|
||||||||||||
2011
|
2010
|
% Change
|
||||||||||
Consumer Loan unit volume
|
53,183
|
38,903
|
36.7
|
%
|
||||||||
Active Dealer-Partners (1)
|
2,775
|
2,346
|
18.3
|
%
|
||||||||
Average volume per active Dealer-Partner
|
19.2
|
16.6
|
15.7
|
%
|
||||||||
Consumer Loan unit volume from Dealer-Partners active both periods
|
41,556
|
34,659
|
19.9
|
%
|
||||||||
Dealer-Partners active both periods
|
1,801
|
1,801
|
-
|
|||||||||
Average volume per Dealer-Partners active both periods
|
23.1
|
19.2
|
19.9
|
%
|
||||||||
Consumer Loan unit volume from new Dealer-Partners
|
2,177
|
1,741
|
25.0
|
%
|
||||||||
New active Dealer-Partners (2)
|
321
|
216
|
48.6
|
%
|
||||||||
Average volume per new active Dealer-Partners
|
6.8
|
8.1
|
-16.0
|
%
|
||||||||
Attrition (3)
|
-10.9
|
%
|
-20.8
|
%
|
|
(1)
|
Active Dealer-Partners are Dealer-Partners who have received funding for at least one Loan during the period.
|
|
(2)
|
New active Dealer-Partners are Dealer-Partners who enrolled in our program and have received funding for their first Loan from us during the period.
|
|
(3)
|
Attrition is measured according to the following formula: decrease in Consumer Loan unit volume from Dealer-Partners who have received funding for at least one Loan during the comparable period of the prior year but did not receive funding for any Loans during the current period divided by prior year comparable period Consumer Loan unit volume.
|
For the Three Months Ended March 31,
|
||||||||
2011
|
2010
|
|||||||
New Dealer Loan unit volume as a percentage of total unit volume
|
92.9
|
%
|
90.9
|
%
|
||||
New Dealer Loan dollar volume as a percentage of total dollar volume (1)
|
91.1
|
%
|
88.6
|
%
|
|
(1)
|
Represents advances paid to Dealer-Partners on Consumer Loans assigned under our Portfolio Program and one-time payments made to Dealer-Partners to purchase Consumer Loans assigned under our Purchase Program. Payments of Dealer Holdback and accelerated Dealer Holdback are not included.
|
(Dollars in thousands, except per share data)
|
For the Three Months Ended March 31,
|
|||||||||||
2011
|
2010
|
% Change
|
||||||||||
Revenue:
|
||||||||||||
Finance charges
|
$
|
106,503
|
$
|
89,663
|
18.8
|
%
|
||||||
Premiums earned
|
8,543
|
7,704
|
10.9
|
%
|
||||||||
Other income
|
8,466
|
5,895
|
43.6
|
%
|
||||||||
Total revenue
|
123,512
|
103,262
|
19.6
|
%
|
||||||||
Costs and expenses:
|
||||||||||||
Salaries and wages
|
16,071
|
16,110
|
-0.2
|
%
|
||||||||
General and administrative
|
5,633
|
6,542
|
-13.9
|
%
|
||||||||
Sales and marketing
|
6,409
|
4,810
|
33.2
|
%
|
||||||||
Provision for credit losses
|
8,916
|
6,426
|
38.7
|
%
|
||||||||
Interest
|
12,623
|
11,705
|
7.8
|
%
|
||||||||
Provision for claims
|
6,599
|
5,212
|
26.6
|
%
|
||||||||
Total costs and expenses
|
56,251
|
50,805
|
10.7
|
%
|
||||||||
Income from continuing operations before provision for income taxes
|
67,261
|
52,457
|
28.2
|
%
|
||||||||
Provision for income taxes
|
24,070
|
20,442
|
17.7
|
%
|
||||||||
Income from continuing operations
|
43,191
|
32,015
|
34.9
|
%
|
||||||||
Discontinued operations
|
||||||||||||
Loss from discontinued United Kingdom operations
|
-
|
(5
|
)
|
-100.0
|
%
|
|||||||
Provision for income taxes
|
-
|
-
|
0.0
|
%
|
||||||||
Loss from discontinued operations
|
-
|
(5
|
)
|
-100.0
|
%
|
|||||||
Net income
|
$
|
43,191
|
$
|
32,010
|
34.9
|
%
|
||||||
Net income per share:
|
||||||||||||
Basic
|
$
|
1.59
|
$
|
1.03
|
||||||||
Diluted
|
$
|
1.57
|
$
|
1.01
|
||||||||
Income from continuing operations per share:
|
||||||||||||
Basic
|
$
|
1.59
|
$
|
1.03
|
||||||||
Diluted
|
$
|
1.57
|
$
|
1.01
|
||||||||
Loss from discontinued operations per share:
|
||||||||||||
Basic
|
$
|
-
|
$
|
-
|
||||||||
Diluted
|
$
|
-
|
$
|
-
|
||||||||
Weighted average shares outstanding:
|
||||||||||||
Basic
|
27,196
|
31,042
|
||||||||||
Diluted
|
27,489
|
31,584
|
(In thousands)
|
Change
|
|||
Income from continuing operations for the three months ended March 31, 2010
|
$
|
32,015
|
||
Increase in finance charges
|
16,840
|
|||
Increase in premiums earned
|
839
|
|||
Increase in other income
|
2,571
|
|||
Increase in operating expenses (1)
|
(651
|
)
|
||
Increase in provision for credit losses
|
(2,490
|
)
|
||
Increase in interest
|
(918
|
)
|
||
Increase in provision for claims
|
(1,387
|
)
|
||
Increase in provision for income taxes
|
(3,628
|
)
|
||
Income from continuing operations for the three months ended March 31, 2011
|
$
|
43,191
|
|
(1)
|
Operating expenses consist of salaries and wages, general and administrative, and sales and marketing expenses.
|
(Dollars in thousands)
|
For the Three Months Ended March 31,
|
|||||||||||
2011
|
2010
|
Change
|
||||||||||
Average net Loans receivable balance
|
$
|
1,258,789
|
$
|
1,050,731
|
$
|
208,058
|
||||||
Average yield on our Loan portfolio
|
33.8
|
%
|
34.1
|
%
|
-0.3
|
%
|
(In thousands)
|
Year over Year Change
|
|||
Impact on finance charges:
|
For the Three Months Ended March 31, 2011
|
|||
Due to an increase in the average net Loans receivable balance
|
$
|
17,754
|
||
Due to a decrease in the average yield
|
(914
|
)
|
||
Total increase in finance charges
|
$
|
16,840
|
|
·
|
An increase in sales and marketing expense of $1.6 million, or 33.2%, primarily due to increased sales commissions resulting from our growth in Consumer Loan assignment volume and the expansion of our sales force.
|
|
·
|
A decrease in general and administrative expense of $0.9 million, or 13.9%, primarily due to decreased legal costs and a refund received in the current period from the successful appeal of a property tax assessment.
|
(Dollars in thousands)
|
For the Three Months Ended March 31,
|
|||||||
2011
|
2010
|
|||||||
Interest expense
|
$
|
12,623
|
$
|
11,705
|
||||
Average outstanding debt balance
|
723,781
|
492,069
|
||||||
Pre-tax average cost of debt
|
7.0
|
%
|
9.5
|
%
|
(In thousands)
|
||||
Year
|
Scheduled Principal Debt Maturities (1)
|
|||
Remainder of 2011
|
$
|
54,515
|
||
2012
|
203,574
|
|||
2013
|
161,994
|
|||
2014
|
115,782
|
|||
2015
|
-
|
|||
Thereafter
|
350,000
|
|||
Total
|
$
|
885,865
|
|
(1)
|
The principal maturities of certain financings are estimated based on forecasted collections.
|
|
·
|
Our inability to accurately forecast and estimate the amount and timing of future collections could have a material adverse effect on results of operations.
|
|
·
|
We may be unable to execute our business strategy due to current economic conditions.
|
|
·
|
We may be unable to continue to access or renew funding sources and obtain capital needed to maintain and grow our business.
|
|
·
|
The terms of our debt limit how we conduct our business.
|
|
·
|
A violation of the terms of our Term ABS facilities or revolving secured warehouse facilities could have a materially adverse impact on our operations.
|
|
·
|
The conditions of the U.S. and international capital markets may adversely affect lenders with which we have relationships, causing us to incur additional costs and reducing our sources of liquidity, which may adversely affect our financial position, liquidity and results of operations.
|
|
·
|
Our substantial debt could negatively impact our business, prevent us from satisfying our debt obligations and adversely affect our financial condition.
|
|
·
|
Due to competition from traditional financing sources and non-traditional lenders, we may not be able to compete successfully.
|
|
·
|
We may not be able to generate sufficient cash flows to service our outstanding debt and fund operations and may be forced to take other actions to satisfy our obligations under such debt.
|
|
·
|
Interest rate fluctuations may adversely affect our borrowing costs, profitability and liquidity.
|
|
·
|
Reduction in our credit rating could increase the cost of our funding from, and restrict our access to, the capital markets and adversely affect our liquidity, financial condition and results of operations.
|
|
·
|
We may incur substantially more debt and other liabilities. This could exacerbate further the risks associated with our current debt levels.
|
|
·
|
The regulation to which we are or may become subject could result in a material adverse effect on our business.
|
|
·
|
Adverse changes in economic conditions, the automobile or finance industries, or the non-prime consumer market could adversely affect our financial position, liquidity and results of operations, the ability of key vendors that we depend on to supply us with services, and our ability to enter into future financing transactions.
|
|
·
|
Litigation we are involved in from time to time may adversely affect our financial condition, results of operations and cash flows.
|
|
·
|
Changes in tax laws and the resolution of uncertain income tax matters could have a material adverse effect on our results of operations and cash flows from operations.
|
|
·
|
Our operations are dependent on technology.
|
|
·
|
Reliance on third parties to administer our ancillary product offerings could adversely affect our business and financial results.
|
|
·
|
We are dependent on our senior management and the loss of any of these individuals or an inability to hire additional team members could adversely affect our ability to operate profitably.
|
|
·
|
Our reputation is a key asset to our business, and our business may be affected by how we are perceived in the marketplace.
|
|
·
|
The concentration of our Dealer-Partners in several states could adversely affect us.
|
|
·
|
Failure to properly safeguard confidential consumer information could subject us to liability, decrease our profitability and damage our reputation.
|
|
·
|
Our founder controls a majority of our common stock, has the ability to control matters requiring shareholder approval and has interests which may conflict with the interests of our other security holders.
|
|
·
|
Reliance on our outsourced business functions could adversely affect our business.
|
|
·
|
Natural disasters, acts of war, terrorist attacks and threats or the escalation of military activity in response to these attacks or otherwise may negatively affect our business, financial condition and results of operations.
|
Period
|
Total Number of Shares Purchased
|
Average Price Paid per Share
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
Maximum Dollar Value that May Yet Be Used to Purchase Shares Under the Plans or Programs
|
||||||||||||
January 1 to January 31, 2011
|
-
|
$
|
-
|
-
|
$
|
29,113,295
|
||||||||||
February 1 to February 28, 2011
|
19,550
|
*
|
70.380
|
-
|
29,113,295
|
|||||||||||
March 1 to March 31, 2011
|
1,904,761
|
**
|
65.625
|
1,904,761
|
29,113,295
|
|||||||||||
1,924,311
|
$
|
65.673
|
1,904,761
|
CREDIT ACCEPTANCE CORPORATION
|
|||
(Registrant)
|
|||
By:
|
/s/ Kenneth S. Booth
|
||
Kenneth S. Booth
|
|||
Chief Financial Officer
|
|||
(Principal Financial Officer and Principal Accounting Officer)
|
|||
Date: May 2, 2011
|
Exhibit No.
|
Description
|
|
4(f)(144)
|
1
|
First Supplemental Indenture, dated as of March 3, 2011, among the Company, the Guarantors named therein and U.S. Bank National Association, as trustee.
|
4(f)(145)
|
1
|
Registration Rights Agreement, dated March 3, 2011, among Credit Acceptance Corporation, Buyers Vehicle Protection Plan, Inc., Vehicle Remarketing Services, Inc. and the representative of the initial purchasers of the Company’s 9.125% First Priority Senior Secured Notes due 2017 issued on March 3, 2011.
|
31(a)
|
2
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
31(b)
|
2
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
32(a)
|
2
|
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
32(b)
|
2
|
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
1
|
Previously filed as an exhibit to the Company’s Current Report on Form 8-K, dated March 3, 2011, and incorporated herein by reference.
|
|
2
|
Filed herewith.
|
Date: May 2, 2011
|
By:
|
/s/ Brett A. Roberts
|
|
Brett A. Roberts
|
|||
Chief Executive Officer
|
|||
(Principal Executive Officer)
|
Date: May 2, 2011
|
By:
|
/s/ Kenneth S. Booth
|
|
Kenneth S. Booth
|
|||
Chief Financial Officer
|
|||
(Principal Financial Officer)
|
|
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: May 2, 2011
|
By:
|
/s/ Brett A. Roberts
|
|
Brett A. Roberts
|
|||
Chief Executive Officer
|
|||
(Principal Executive Officer)
|
|
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: May 2, 2011
|
By:
|
/s/ Kenneth S. Booth
|
|
Kenneth S. Booth
|
|||
Chief Financial Officer
|
|||
(Principal Financial Officer)
|