EXHIBIT 99.1
SILVER TRIANGLE BUILDING
25505 WEST TWELVE MILE ROAD o SUITE 3000
SOUTHFIELD, MI 48034-8339
(248) 353-2700
WWW.CREDITACCEPTANCE.COM
NEWS RELEASE
FOR IMMEDIATE RELEASE DATE: MAY 2, 2005
INVESTOR RELATIONS: DOUGLAS W. BUSK
TREASURER
(248) 353-2700 EXT. 4432
IR@CREDITACCEPTANCE.COM
NASDAQ SYMBOL: CACCE
CREDIT ACCEPTANCE ANNOUNCES OPERATING RESULTS FOR THE FIRST QUARTER OF 2005
SOUTHFIELD, MICHIGAN - MAY 2, 2005 - CREDIT ACCEPTANCE CORPORATION (NASDAQ:
CACCE) Credit Acceptance Corporation (the "Company") announced certain operating
results for the first quarter of 2005. Results for the first quarter ended March
31, 2005 compared to the same period in 2004 include the following:
o Loan origination dollar volume grew 3.9%
o Loan origination unit volume grew 8.4%
o The number of active dealer-partners grew 31.9%
o Loan origination unit volume per dealer-partner decreased 18.0%
LOAN ORIGINATIONS (1)
<Table>
<Caption>
(Dollars in thousands) THREE MONTHS ENDED
MARCH 31,
-------------------------------
2005 2004
------------- -------------
Loan originations $ 310,938 $ 299,296
Number of loans originated 25,847 23,841
Number of active dealer-partners (2) 1,112 843
Loans per active dealer-partner 23.2 28.3
Average loan size $ 12.0 $ 12.6
</Table>
(1) Loan origination information relates to the United States, the
Company's only business segment that continues to originate new loans.
(2) Active dealer-partners are dealer-partners who submitted at least one
loan during the period.
The Company believes the decline in loans per dealer-partner is primarily the
result of a more difficult competitive environment.
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PROFITABILITY OF NEW LOAN ORIGINATIONS
The expected profitability of new loan originations was impacted by the
following:
o Effective February 1, 2005 the monthly fee charged to dealer-partners
for access to the Company's patented Credit Application Processing
System ("CAPS") was increased from $499 to $599
o Effective March 1, 2005 the Company increased advance rates by
approximately 1.5%
o Early in the first quarter the Company began offering a Guaranteed
Asset Protection waiver and insurance product ("GAP"). GAP provides
the consumer protection by covering the difference between the loan
balance and the amount traditional insurance covers in the event the
vehicle is totaled or stolen. The Company receives a commission for
every GAP product sold by its dealer-partners.
The Company believes that the net impact of these three changes will result in
loans originated in the first quarter producing approximately the same level of
profitability as loans originated in 2004.
DEALER-PARTNER ENROLLMENTS
The number of active dealer-partners is a function of new dealer-partner
enrollments and attrition. New dealer-partner enrollments are a function of the
number of sales personnel ("Market Area Managers" or "MAM's") and their
productivity. The following table summarizes the changes in active
dealer-partners and MAM productivity for the three months ended March 31, 2005
and 2004:
<Table>
<Caption>
THREE MONTHS ENDED
MARCH 31,
--------------------------------
2005 (1) 2004 (1)
------------- -------------
Balance, beginning of period 1,028 763
New dealer-partner enrollments (2) 137 120
Attrition (3) (53) (40)
------------- -------------
Balance, end of period 1,112 843
============= =============
Average number of MAM's 56 42
New dealer-partner enrollments per MAM 2.4 2.9
</Table>
(1) Active dealer-partners are dealer-partners who submitted at least one
loan during the period.
(2) Excludes new dealer-partners that have enrolled in the Company's
program, but have not submitted at least one loan during the period.
(3) Dealer-partner attrition is measured according to the following
formula: dealer-partners active during the prior period who become
inactive in the current period less dealer-partners who were inactive
during the prior period who become active in the current period.
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LOAN PORTFOLIO PERFORMANCE
The following information relates to the loan portfolio performance in the
United States.
The following table compares the Company's forecast of collection rates for
loans originated by year as of March 31, 2005 with the forecast as of December
31, 2004:
<Table>
<Caption>
LOAN
ORIGINATION MARCH 31, 2005 DECEMBER 31, 2004
YEAR FORECASTED COLLECTION % FORECASTED COLLECTION % VARIANCE
- --------------- --------------------------- --------------------------- -----------
1992 81.8% 81.8% 0.0%
1993 76.0% 76.0% 0.0%
1994 62.1% 62.1% 0.0%
1995 55.3% 55.3% 0.0%
1996 55.4% 55.5% -0.1%
1997 58.5% 58.6% -0.1%
1998 67.6% 67.6% 0.0%
1999 72.0% 72.0% 0.0%
2000 72.2% 72.2% 0.0%
2001 67.3% 67.3% 0.0%
2002 69.2% 69.1% 0.1%
2003 71.8% 71.8% 0.0%
2004 70.5% 70.5% 0.0%
</Table>
During the quarter ended March 31, 2005, collection rates were consistent with
the Company's expectations.
REVIEW OF LOAN ACCOUNTING POLICIES
On April 11, 2005, the Company issued a press release announcing a possible
change in accounting methodology for its loan portfolio and the receipt of a
Nasdaq Staff Determination Letter regarding the potential delisting of the
Company's common stock due to the Company's inability to timely file its annual
report on Form 10-K for the year ended December 31, 2004.
On April 26, 2005, the Company submitted a letter to the staff of the Office of
the Chief Accountant of the U.S. Securities and Exchange Commission requesting
guidance related to the accounting methodology the Company uses for its loan
portfolio. The Company is seeking input from the SEC staff to determine if it
can continue with the GAAP treatment it has followed since going public in 1992
or should adopt an alternative methodology as proposed by the Company's
independent registered public accounting firm, Deloitte & Touche LLP.
The Company has been granted a hearing before a Nasdaq Listing Qualifications
Panel to review the Staff Determination. The hearing has been set for May 5,
2005. The Qualifications Panel typically makes a decision within several weeks
of the hearing.
The Company has three debt facilities that require the Company to timely file
its annual report on Form 10-K for the year ended December 31, 2004. The Company
has received waivers of this requirement on all three debt facilities through
May 31, 2005. In the event the Company's Form 10-K has not been filed by this
date, the Company intends to request additional extensions from its lenders. The
Company intends to continue to provide its lenders with financial statements
based on the Company's historical loan accounting policies and is confident that
waivers providing the Company with sufficient time to complete its public
filings will be received.
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CAUTIONARY STATEMENT REGARDING FORWARD LOOKING INFORMATION
Certain statements in this release that are not historical facts, such as those
using terms like "believes," "expects," "anticipates," "assumptions,"
"forecasts," "estimates" and those regarding the Company's future results, plans
and objectives, are "forward-looking statements" within the meaning of the
federal securities laws. These forward-looking statements represent the
Company's outlook only as of the date of this release. While the Company
believes that its forward-looking statements are reasonable, actual results
could differ materially since the statements are based on current expectations,
which are subject to risks and uncertainties. Factors that might cause such a
difference include the following:
o the Company's potential inability to accurately forecast and estimate
the amount and timing of future collections,
o the potential delisting of the Company's common stock,
o the Company's potential restating of prior years financial statements,
o increased competition from traditional financing sources and from
non-traditional lenders,
o the unavailability of funding at competitive rates of interest,
o the Company's potential inability to continue to obtain third party
financing on favorable terms,
o the Company's potential inability to generate sufficient cash flow to
service its debt and fund its future operations,
o adverse changes in applicable laws and regulations,
o adverse changes in economic conditions,
o adverse changes in the automobile or finance industries or in the
non-prime consumer finance market,
o the Company's potential inability to maintain or increase the volume
of automobile loans,
o an increase in the amount or severity of litigation against the
Company,
o the loss of key management personnel or the inability to hire
qualified personnel,
o the effect of terrorist attacks and potential attacks, and
o various other factors discussed in the Company's reports filed with
the Securities and Exchange Commission.
Other factors not currently anticipated by management may also materially and
adversely affect the Company's results of operations. The Company does not
undertake, and expressly disclaims any obligation, to update or alter its
statements whether as a result of new information, future events or otherwise,
except as required by applicable law.
DESCRIPTION OF CREDIT ACCEPTANCE CORPORATION
Since 1972, Credit Acceptance has provided auto loans to consumers, regardless
of their credit history. Our product is offered through a nationwide network of
automobile dealers who benefit by selling vehicles to consumers who otherwise
could not obtain financing, by repeat and referral sales generated by these same
customers, and from sales to customers responding to advertisements for our
product, but who actually end up qualifying for traditional financing.
Without our product, consumers are often unable to purchase a vehicle or they
purchase an unreliable one and are not provided the opportunity to improve their
credit standing. As we report to the three national credit reporting agencies, a
significant number of our customers improve their lives by improving their
credit score and move on to more traditional sources of financing. Credit
Acceptance is publicly traded on the NASDAQ National Market under the symbol
CACCE. For more information, visit www.creditacceptance.com.
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