-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EwVQ9ml+hz+oNdK6njvaYEWA7BwyNEFJVBzcY87oMBkj/gRlW6XdsbpYx6FVanMl CjU4rHBQAVlxFnFKPjHjkg== 0000950124-03-001953.txt : 20030604 0000950124-03-001953.hdr.sgml : 20030604 20030604090336 ACCESSION NUMBER: 0000950124-03-001953 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20030602 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20030604 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CREDIT ACCEPTANCE CORPORATION CENTRAL INDEX KEY: 0000885550 STANDARD INDUSTRIAL CLASSIFICATION: PERSONAL CREDIT INSTITUTIONS [6141] IRS NUMBER: 381999511 STATE OF INCORPORATION: MI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-20202 FILM NUMBER: 03731267 BUSINESS ADDRESS: STREET 1: 25505 W TWELVE MILE RD STREET 2: STE 3000 CITY: SOUTHFIELD STATE: MI ZIP: 48034-8334 BUSINESS PHONE: 8103532700 MAIL ADDRESS: STREET 1: 25505 WEST TWELVE MILE ROAD STREET 2: SUITE 3000 CITY: SOUTHFIELD STATE: MI ZIP: 48034-8334 8-K 1 k77568e8vk.txt CURRENT REPORT DATED 06/02/03 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): JUNE 2, 2003 CREDIT ACCEPTANCE CORPORATION (Exact Name of Registrant as Specified in its Charter) Commission File Number 000-20202 MICHIGAN 38-1999511 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 25505 W. TWELVE MILE ROAD, SUITE 3000 48034-8339 SOUTHFIELD, MICHIGAN (Zip Code) (Address of Principal Executive Offices)
Registrant's telephone number, including area code: (248) 353-2700 ITEM 5. OTHER EVENTS AND REGULATION FD DISCLOSURE. On June 2, 2003, Credit Acceptance Corporation (the "Company"), issued a press release announcing the decision to cease loan originations in Canada and the United Kingdom effective June 30, 2003. The press release, dated June 2, 2003, is attached as Exhibit 99.1 to this Form 8-K. On June 3, 2003, the Company issued a press release announcing that it was preparing to engage in a $100 million asset-backed bond transaction in June 2003, to be offered and sold solely to qualified institutional buyers in reliance on rule 144A. The press release, dated June 3, 2003 and issued pursuant to Rule 135c under the Securities Act of 1933, is attached as Exhibit 99.2 to this Form 8-K. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (c) Exhibits. 99.1 Press Release dated June 2, 2003 99.2 Press Release dated June 3, 2002 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. CREDIT ACCEPTANCE CORPORATION (Registrant) By: /s/ Douglas W. Busk ----------------------- Douglas W. Busk Chief Financial Officer and Treasurer June 4, 2003 INDEX OF EXHIBITS EXHIBIT NO. DESCRIPTION ----------- ----------------------------------------- 99.1 Press Release dated June 2, 2003. 99.2 Press Release dated June 3, 2003. EX-99.1 3 k77568exv99w1.txt PRESS RELEASE DATED JUNE 2, 2003 99.1 [CREDIT ACCEPTANCE LOGO] SILVER TRIANGLE BUILDING 25505 WEST TWELVE MILE ROAD - SUITE 3000 SOUTHFIELD, MI 48034-8339 (248) 353-2700 www.creditacceptance.com NEWS RELEASE FOR IMMEDIATE RELEASE DATE: JUNE 2, 2003 INVESTOR RELATIONS: DOUGLAS W. BUSK CHIEF FINANCIAL OFFICER (248) 353-2700 EXT. 432 IR@creditacceptance.com NASDAQ SYMBOL: CACC CREDIT ACCEPTANCE ANNOUNCES OPERATIONAL CHANGES SOUTHFIELD, MICHIGAN JUNE 2, 2003 -- CREDIT ACCEPTANCE CORPORATION (NASDAQ:CACC) Credit Acceptance announced today that effective June 30, 2003 loan originations would cease in Canada and the United Kingdom. The Company believes this decision will benefit shareholders as capital currently invested in both countries can be redeployed at higher returns in the U.S. and management will be able to focus all of its resources on the U.S. operation. The Company will continue to service both loan portfolios and cash flows from the portfolios will continue to be apportioned between the Company and its dealer-partners in accordance with servicing agreements in place. The Company's results for the second quarter will include a non-recurring charge of approximately $11.1 million pre-tax ($7.2 million after-tax or $0.17 per diluted share) for asset impairment and accrued expenses related to the change in status of the operations. This write-off is primarily the result of two factors. First, under current accounting rules, the assets of a business being liquidated are required to be evaluated for impairment using different criteria than used for continuing operations. The Company's largest asset in both Canada and the United Kingdom consists of advances to dealer-partners that are secured by portfolios of automobile loans. Under Generally Accepted Accounting Principles, in the case of a business being liquidated, the investment in advances is considered impaired if the expected net cash flows (cash flows net of servicing expenses and payments due dealers under servicing agreements) are less than the carrying amount of the advances. In contrast, for continuing operations, servicing expenses do not enter the impairment calculation. Second, in analyzing expected cash flows, the Company is currently using lower collection rate assumptions than were used before the decision to liquidate. These lower collection rates reflect uncertainties (such as potentially higher United Kingdom turnover or reduced morale) in the servicing environment that may arise as a result of the decision to liquidate. Because of the lower collection rates and the different accounting rules that apply to businesses being liquidated, the United Kingdom advances were determined to be impaired. Since Canadian loans are serviced in the United States, no change in assumptions was made in evaluating the cash flows related to Canada and the advances in Canada are not considered impaired. 99.1 As a result of the decision to liquidate the United Kingdom portfolio (and the resulting classification of the United Kingdom advances as impaired), the Company is required to write down the carrying value of the advances to the present value (the Company has utilized a discount rate of 13%) of future cash flows less estimated future servicing expenses and payments due dealer-partners under servicing agreements. The write down includes approximately $7.0 million, which is the present value of the estimated future servicing expenses, which historically were required to be expensed as incurred. In addition, the change in estimated collection rates reflecting the more uncertain servicing environment reduced the Company's estimated discounted future cash flows by approximately $3.2 million. The $11.1 million pre-tax charge for the quarter is therefore comprised of the $7.0 million in accrued servicing expenses, $3.2 million related to the reduction in forecasted collection rates, and also approximately $900,000 related to the write-off of certain fixed assets and employee severance costs. The amount of capital invested in these operations as of April 30 was approximately $63 million reflecting the value of the advance balances plus other assets less other liabilities. The $7.2 million after-tax charge will reduce the amount of this investment to approximately $56 million. If current estimates of future cash flows prove to be accurate, approximately $59 million will be reinvested in the U.S. operation. It is expected that approximately 60% of this amount will be recovered within one year, 90% within two years, and the remainder within three years. Description of Credit Acceptance Corporation Credit Acceptance is a financial services company specializing in products and services for a network of automobile dealer-partners in North America and Europe. Credit Acceptance provides participating dealer-partners with financing sources for consumers with limited access to credit by offering "guaranteed credit approval". The Company delivers credit approvals through the internet. Other services include marketing, sales training and a wholesale purchasing cooperative. Through its financing program, Credit Acceptance helps consumers change their lives by providing an opportunity to strengthen and reestablish their credit standing by making timely monthly payments. Credit Acceptance is publicly traded on NASDAQ under the symbol CACC. For more information, visit www.creditacceptance.com. EX-99.2 4 k77568exv99w2.txt PRESS RELEASE Exhibit 99.2 [CREDIT ACCEPTANCE LOGO] SILVER TRIANGLE BUILDING 25505 WEST TWELVE MILE ROAD - SUITE 3000 SOUTHFIELD, MI 48034-8339 (248) 353-2700 WWW.CREDITACCEPTANCE.COM NEWS RELEASE FOR IMMEDIATE RELEASE DATE: JUNE 3, 2003 INVESTOR RELATIONS: DOUGLAS W. BUSK CHIEF FINANCIAL OFFICER (248) 353-2700 EXT. 432 IR@CREDITACCEPTANCE.COM NASDAQ SYMBOL: CACC CREDIT ACCEPTANCE ANNOUNCES $100 MILLION ASSET-BACKED BOND TRANSACTION SOUTHFIELD, MICHIGAN - JUNE 3, 2003 - CREDIT ACCEPTANCE CORPORATION (NASDAQ:CACC) Credit Acceptance announced today that it is preparing to engage in a $100 million asset-backed bond transaction in June 2003. The bonds would be offered and sold solely to qualified institutional buyers in reliance on rule 144A of the Securities Act of 1933. The Company's prior eight asset-backed transactions were financed through multi-asset conduits owned by commercial banks. The collateral for the financing will consist of assets originated in the United States. If the transaction is completed, the proceeds will be used to reduce amounts outstanding under the Company's line of credit. The bonds will not be registered under the Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from registration. This news release does not and will not constitute an offer to sell or the solicitation of an offer to buy the bonds. This news release is being issued pursuant to and in accordance with Rule 135c under the Securities Act of 1933. Description of Credit Acceptance Corporation Credit Acceptance is a financial services company specializing in products and services for a network of automobile dealer-partners. Credit Acceptance is publicly traded on NASDAQ under the symbol CACC. For more information, visit www.creditacceptance.com. -----END PRIVACY-ENHANCED MESSAGE-----