Asset Acceptance Reports Slip in Income for 2006, Increase for Q4

Asset Acceptance Capital Corp., a leading purchaser and collector of charged-off consumer debt, today announced financial results for its fourth quarter and fiscal year-ended December 31, 2006.
 
The Company’s investments in purchased receivables were $62.2 million in the fourth quarter alone. As a result, investments in purchased receivables increased 33.9 percent for the full year 2006 from 2005 levels. Net income for the year decreased 11% to $45.5 million; however, Earnings Before Interest, Taxes, Depreciation and Amortization, including purchased receivable amortization ("Adjusted EBITDA") for the year increased by $8.7 million to $162.1 million. (Please refer to the table on page 4 which reconciles net income according to Generally Accepted Accounting Principles ("GAAP") to Adjusted EBITDA).

Revenues increased 14.3 percent to $61.5 million for the fourth quarter ended December 31, 2006, compared to revenues of $53.8 million in the fourth quarter of 2005. Asset Acceptance reported that cash collections grew 5.8 percent to $81.0 million in the fourth quarter of 2006, versus cash collections of $76.5 million in the prior year period. Net income for the quarter was $9.8 million, or $0.28 per fully diluted share, compared to net income of $6.1 million, or $0.16 per fully diluted share, for the fourth quarter of 2005.

During the fourth quarter of 2006, the Company invested a record $62.2 million to purchase charged-off consumer debt portfolios with a face value of $2.5 billion, representing a blended rate of 2.46 percent of face value. This compares to the prior-year fourth quarter, when the Company invested $25.1 million to purchase consumer debt portfolios with a face value of $867.9 million, representing a blended rate of 2.90 percent of face value. For the full-year 2006, Asset Acceptance invested $135.0 million to purchase consumer debt portfolios, up 33.9 percent from the full-year 2005 period, with a cumulative face value of $4.6 billion. All purchase data is adjusted for buybacks.

"Our associates put forth an admirable effort during 2006, highlighted by year-on-year growth in cash collections, investments in purchased receivables and overall account representative productivity," said Brad Bradley, Chairman, President and CEO of Asset Acceptance Capital Corp. "Although we faced challenges during the past year, we believe our team enters 2007 equipped with a series of well-defined operational initiatives designed to position our business for growth."

"The senior management team at Asset Acceptance is taking a proactive approach to improving efficiencies throughout the organization," continued Bradley. "This approach is focused on rationalizing and improving our cost structure, further evolving our collections and purchasing expertise and finally, capitalizing on new opportunities as they arise, particularly in instances that allow us to leverage our in-house collections expertise. We look forward to building a better, stronger Asset Acceptance in 2007."

During 2006, the Company repurchased 2,520,160 shares of common stock for $40.5 million, of which 2,500,000 shares were repurchased for $40.2 million, with an average purchase price of $16.08 per share, under our stock repurchase program. As of December 31, 2006, Asset Acceptance had completed the repurchase of all shares available under the stock repurchase program.

For the fiscal year-ended December 31, 2006, Asset Acceptance reported total revenue of $254.9 million, a slight increase from fiscal 2005. Cash collections for the full-year fiscal 2006 were $340.9 million, an increase of 6.6 percent from 2005. Net income declined 11.2 percent in fiscal 2006, including the impact of $17.9 million in net impairment charges taken throughout the year which directly reduced purchased receivables revenue and the carrying value of the purchased receivables.

"During the past decade, we have purchased consumer debt portfolios with a combined face-value exceeding $27 billion," continued Bradley. "Since 2000, we have purchased from among more than 20 different asset types at various stages of delinquency and from more than 150 debt sellers, a testament to the versatility of our business model. During the nearly five decades we have been in business, we have managed to grow profitably over the long term in a variety of industry pricing cycles by remaining disciplined buyers of well- priced, charged-off consumer receivables. As we enter 2007, we remain committed to identifying new and existing opportunities for profitable long- term growth."

Mark A. Redman, Vice President-Finance and CFO of Asset Acceptance Capital Corp., concluded: "During the fourth quarter of 2006, we invested a record $62.2 million in new portfolios at an average cost of 2.46 percent, positioning us for continued growth as we enter 2007. Between our investment in purchased receivables during the fourth quarter, our purchase of PARC and our recent repurchases of common stock, we put considerable cash to good use in 2006. Our cash generation was strong exiting the year, highlighted by the $162.1 million in Adjusted EBITDA generated during fiscal 2006. With cost savings initiatives being implemented, we are focused on driving improved profitability as we move forward into a new year."