1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1996 OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to -------- -------- Commission File Number 000-20202 --------- CREDIT ACCEPTANCE CORPORATION ----------------------------- (Exact name of registrant as specified in its charter) <TABLE> <S><C> Michigan 38-1999511 - ----------------------------------------------------------------------------------------------------------------------------- (State or other jurisdiction of incorporation or organization) (IRS Employer Identification) 25505 West Twelve Mile Road, Suite 3000, Southfield, Michigan 48034-8339 - ----------------------------------------------------------------------------------------------------------------------------- (Address of principal executive offices) (zip code) Registrant's telephone number, including area code (810) 353-2700 -------------------------------------------------------------------------- </TABLE> Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X . No . ----- ----- Indicate the number of shares outstanding of each of the issuer's class of common stock, as of the latest practicable date. Outstanding at Class November 8, 1996 ----- ---------------- Common Stock - $.005 par value 45,639,848
2 TABLE OF CONTENTS PART I. FINANCIAL INFORMATION PAGE NO. Item 1. Financial Statements Consolidated Balance Sheets - As of December 31, 1995 and September 30, 1996 ................. 1 Consolidated Income Statements - Three and nine month periods ended September 30, 1995 and September 30, 1996 ............................................. 2 Consolidated Statements of Cash Flows - Nine months ended September 30, 1995 and September 30, 1996 .... 3 Consolidated Statement of Shareholders' Equity - Nine months ended September 30, 1996 ........................... 4 Notes to Consolidated Financial Statements ..................... 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations ............... 6 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K ............................... 12 Signatures .............................................................. 13 Index of Exhibits ....................................................... 14 Exhibits ................................................................ 15
3 CREDIT ACCEPTANCE CORPORATION CONSOLIDATED BALANCE SHEETS <TABLE> <CAPTION> As of 12/31/95 As of 9/30/96 -------------- ------------- (Dollars in thousands) (Unaudited) <S> <C> <C> <C> ASSETS Cash and cash equivalents $ 1 $ 26 Investments 2,525 6,051 Installment contracts receivable 660,209 930,949 Allowance for credit losses (7,757) (10,658) -------------- ------------- Installment contracts receivable, net 652,452 920,291 Floor plan receivables 13,249 15,325 Notes receivable 3,232 2,892 Property and equipment, net 10,342 13,183 Other assets, net 4,639 2,218 -------------- ------------- TOTAL ASSETS $ 686,440 $ 959,986 ============== ============= LIABILITIES Senior notes 60,000 130,000 Lines of credit 31,559 95,122 Mortgage loan payable to bank 4,221 4,069 Accounts payable and accrued liabilities 18,279 27,559 Income taxes payable 214 - Deferred dealer enrollment fees, net 1,649 2,535 Dealer holdbacks, net 363,519 461,560 Deferred income taxes 8,024 8,328 -------------- ------------- TOTAL LIABILITIES 487,465 729,173 -------------- ------------- SHAREHOLDERS' EQUITY Common stock 228 228 Paid-in capital 124,105 125,354 Retained earnings 74,977 104,945 Cumulative translation adjustment (335) 286 -------------- ------------- TOTAL SHAREHOLDERS' EQUITY 198,975 230,813 -------------- ------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 686,440 $ 959,986 ============== ============= </TABLE> 1
4 CREDIT ACCEPTANCE CORPORATION CONSOLIDATED INCOME STATEMENTS (Unaudited) <TABLE> <CAPTION> (Dollars in thousands, except per share data) 3 Months Ended 3 Months Ended 9 Months Ended 9 Months Ended 9/30/95 9/30/96 9/30/95 9/30/96 -------------- -------------- -------------- -------------- <S> <C> <C> <C> <C> REVENUE Finance charges $ 17,442 $ 23,720 $ 48,202 $ 66,252 Interest and other income 2,812 4,539 6,281 10,998 Dealer enrollment fees 729 1,378 1,978 3,603 Premiums earned 1,706 2,855 4,551 7,456 -------------- -------------- -------------- -------------- Total revenue 22,689 32,492 61,012 88,309 COSTS AND EXPENSES Salaries and wages 2,460 2,900 6,906 8,605 General and administrative 2,567 3,881 7,183 10,634 Provision for credit losses 1,854 3,422 4,944 8,869 Sales and marketing 667 1,268 1,538 3,115 Provision for claims 505 936 1,371 2,470 Interest 2,892 3,801 7,057 8,625 -------------- -------------- -------------- -------------- Total costs and expenses 10,945 16,208 28,999 42,318 -------------- -------------- -------------- -------------- OPERATING INCOME 11,744 16,284 32,013 45,991 Foreign exchange gain(loss) -------------- -------------- -------------- -------------- (8) 2 (55) 3 -------------- -------------- -------------- -------------- INCOME BEFORE INCOME TAXES 11,736 16,286 31,958 45,994 Provision for income taxes 4,112 5,643 11,136 16,026 -------------- -------------- -------------- -------------- NET INCOME $ 7,624 $ 10,643 $ 20,822 $ 29,968 ============== ============== ============== ============== Net income per common share $ 0.18 $ 0.23 $ 0.49 $ 0.64 ============== ============== ============== ============== Weighted average shares outstanding 42,614,278 46,630,208 42,526,109 46,515,428 ============== ============== ============== ============== </TABLE> 2
5 CREDIT ACCEPTANCE CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) <TABLE> <CAPTION> (Dollars in thousands) 9 Months Ended 9 Months Ended 9/30/95 9/30/96 -------------- -------------- <S> <C> <C> CASH FLOWS FROM OPERATING ACTIVITIES Net Income $ 20,822 $ 29,968 Adjustments to reconcile net income to net cash provided by oper ating activities - Provision for deferred income taxes 2,254 304 Depreciation and amortization 640 1,003 Provision for credit losses 4,944 8,869 Change in operating assets and liabilities - Accounts payable and accrued liabilities 6,039 9,280 Income taxes payable (13) (214) Unearned insurance premiums, insurance reserves, and fees 1,938 2,418 Deferred dealer enrollment fees, net 559 886 Other assets (2,830) 2,421 -------------- -------------- Net cash provided by operating activities 34,353 54,935 -------------- -------------- CASH FLOWS FROM INVESTING ACTIVITIES Principal collected on installment contracts receivable 140,885 207,530 Purchase of marketable securities (751) (3,526) Increase in floor plan receivables (5,750) (2,076) Decrease(increase) in notes receivable (843) 340 Purchase of property and equipment (1,202) (3,844) -------------- -------------- Net cash provided by investing activities 132,339 198,424 -------------- -------------- CASH FLOWS FROM FINANCING ACTIVITIES Repayment of mortgage loan payable to bank (143) (152) Advances to dealers and payments of dealer holdback (245,802) (388,615) Net borrowings under line of credit agreement 76,230 63,563 Proceeds from senior note issuance - 70,000 Proceeds from stock options exercised 1,627 1,283 Proceeds from public stock offering, net 91,203 - Payment of stock issuance costs - (34) -------------- -------------- Net cash used in financing activities (76,885) (253,955) -------------- -------------- Effect of exchange rate changes on cash 1 621 -------------- -------------- NET INCREASE IN CASH 89,808 25 Cash and cash equivalents - beginning of period 105 1 -------------- -------------- Cash and cash equivalents - end of period $ 89,913 $ 26 -------------- -------------- </TABLE> 3
6 CREDIT ACCEPTANCE CORPORATION CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 (Unaudited) <TABLE> <CAPTION> Cumulative Paid-In Translation Retained (Dollars in thousands) Common Stock Capital Adjustment Earnings ------------ ------------ ------------ ------------ <S> <C> <C> <C> <C> Balance as of December 31, 1995 $ 228 $ 124,105 $ (335) $ 74,977 Net income - - - 29,968 Foreign currency translation adjustment - - 621 - Stock options exercised - 1,283 - - Stock issuance costs - (34) - - ------------ ------------ ------------ ------------ Balance as of September 30, 1996 $ 228 $ 125,354 $ 286 $ 104,945 ============ ============ ============ ============ </TABLE> 4
7 CREDIT ACCEPTANCE CORPORATION Notes to Consolidated Financial Statements (Unaudited) 1. GENERAL The unaudited consolidated operating results have been prepared on the same basis as the audited financial statements and, in the opinion of management, include all adjustments, consisting of normal recurring items, necessary for a fair presentation of the periods. The results of operations for interim periods are not necessarily indicative of actual results achieved for full fiscal years. As contemplated by the Securities and Exchange Commission under rule 10-01 of Regulation S-X, the accompanying consolidated financial statements and related notes have been condensed and do not contain certain information included in the Company's annual consolidated financial statements and notes thereto. 2. NET INCOME PER SHARE The net income per share amounts are based on the average number of common shares and common stock equivalents outstanding. All per share amounts have been adjusted to reflect all stock splits declared by the Company. 3. STATEMENT OF FINANCIAL ACCOUNTING STANDARD NO. 121 Effective January 1, 1996, the Company adopted Statement of Financial Accounting Standard No. 121, "Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Of." This new accounting standard requires impairment losses on long-lived assets to be recognized when an asset's book value exceeds its expected future cash flows (undiscounted). Measurement of the impairment loss is based on the fair value of the asset. The adoption of this accounting standard did not impact the Company's financial position or results of operations. 5
8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations RESULTS OF OPERATIONS Three and Nine Months Ended September 30, 1996 Compared to Three and Nine Months Ended September 30, 1995 Total Revenue. Total revenue increased from $22.7 million and $61.0 million for the three and nine months ended September 30, 1995 to $32.5 million and $88.3 million for the same periods in 1996, representing increases of 43.2% and 44.7%, respectively. These increases are primarily due to an increase in finance charge revenue resulting from an increase in installment contracts receivable. The increase in installment contracts receivable is primarily the result of an increase in the number of dealers participating in the Company's program and an increase in the average contract size. The Company enrolled 2,001 new dealers into the Company's program during the nine months ended September 30, 1996, bringing the total number of dealers as of September 30, 1996 to 4,981 compared to 2,880 as of September 30, 1995. The average yield on the Company's installment contract portfolio was approximately 12.9% and 11.1% for the nine months ended September 30, 1995 and 1996, respectively. The decrease in the average yield resulted from an increase in the percent of installment contracts which were greater than 120 days contractually past due (which were 29.2% and 33.0% of gross installment contracts as of September 30, 1995 and 1996, respectively). The increase in the level of contractual past due contracts, while significant, is mitigated by the fact that when an installment contract is 120 days contractually past due, the Company (i) transfers the contract to a non-accrual status; and (ii) makes a provision to credit losses equal to the earned but unpaid revenue previously recognized on such installment contract. In addition, the decline in the average yield was also the result of an increase in the average outstanding term of the Company's installment contract portfolio. Also contributing to the increase in total revenue was premiums earned on the Company's credit life and service contract programs. Premiums earned increased from $1.7 million and $4.6 million for the three and nine months ended September 30, 1995 to $2.9 million and $7.5 million for the same periods in 1996, representing increases of 67.4% and 63.8%, respectively. Interest and other income increased from $2.8 million and $6.3 million during the three and nine months ended September 30, 1995 to $4.5 million and $11.0 million during the same periods in 1996, representing increases of 61.4% and 75.1%, respectively. The increase is primarily due to commissions earned on credit life and service contract products offered by dealers, and an increase in interest earned on floor plan financing which resulted from increased floor plan balances in 1996. Earned dealer enrollment fees increased from $729,000 and $2.0 million for the three and nine months ended September 30, 1995 to $1.4 million and $3.6 million for the same periods in 1996, representing increases of 89.0% and 82.2%, respectively. The increase is due to the continued increase in the number of dealers enrolled in the Company's financing program. Salaries and Wages. Salaries and wages, as a percent of total revenue, decreased from 10.8% and 11.3% for the three and nine months ended September 30, 1995 to 8.9% and 9.7% for the same periods in 1996. The Company continues to benefit from increased efficiencies which have allowed it to increase revenue with a less than proportionate increase in personnel costs. General and Administrative. General and administrative expenses, as a percent of total revenue, increased from 11.3% and 11.8% for the three and nine months ended September 30, 1995 to 11.9% and 12.0% for the same periods in 1996. This increase is primarily due to investments in technology which have enabled the Company to more effectively service its growing installment contract portfolio while having a positive impact on personnel costs. 6
9 Provision for Credit Losses. The amount provided for credit losses, as a percent of total revenue, increased from 8.2% and 8.1% for the three and nine months ended September 30, 1995 to 10.5% and 10.0% for the same periods in 1996. This increase is the result of an increase in the Company's reserve on advances made to dealers. Sales and Marketing. Sales and marketing expenses, as a percent of total revenue, increased from 2.9% and 2.5% during the three and nine months ended September 30, 1995 to 3.9% and 3.5% during the same periods in 1996. This increase is primarily the result of increased sales commissions as a result of the increased enrollment of new dealers into the Company's program, as well as an increase in other costs directly associated with the enrollment of new dealers. Provision for Claims. The amount provided for insurance and service contract claims, as a percent of total revenue, increased from 2.2% during the three and nine months ended September 30, 1995 to 2.9% and 2.8% during the same periods in 1996. The increase is principally attributable to an increase in the level of reserves necessary to cover unpaid claims, including incurred but unreported claims. The increase is proportionate with the growth in the Company's credit life and service contract programs. Interest Expense. Interest expense, as a percent of total revenue, decreased from 12.7% and 11.6% for the three and nine months ended September 30, 1995 to 11.7% and 9.8% for the same periods in 1996. The decrease, as a percent of revenue, is primarily a result of a decrease in the level of borrowings under the Company's revolving credit facility, as proceeds from the Company's equity offering in September of 1995 were used to pay down this debt. To a lesser extent, the decrease is also a result of lower average borrowing rates on the revolving credit facility in 1996. Operating Income. As a result of the aforementioned factors, operating income increased from $11.7 million and $32.0 million for the three and nine months ended September 30, 1995 to $16.3 million and $46.0 million for the same periods in 1996, representing increases of 38.7% and 43.7%, respectively. Foreign Exchange Loss. The Company incurred a foreign exchange loss of $8,000 and $55,000 for the three and nine months ended September 30, 1995 and a foreign exchange gain of $2,000 and $3,000 for the same periods in 1996. The gain and loss result from the effect of exchange rate fluctuations between the U.S. dollar and British pound sterling on unhedged intercompany balances between the Company and its subsidiary that operates in the United Kingdom. Provision for Income Taxes. The provision for income taxes increased from $4.1 million and $11.1 million during the three and nine months ended September 30, 1995 to $5.6 million and $16.0 million during the same periods in 1996. The increase is due to a higher level of pretax income in 1996. For the nine months ended September 30, the effective tax rate was 34.8% in 1996 and 1995. 7
10 INSTALLMENT CONTRACTS RECEIVABLE The following table summarizes the composition of installment contracts receivable at the dates indicated: AS OF AS OF (Dollars in thousands) 12/31/95 09/30/96 --------- ---------- (Unaudited) Gross installment contracts receivable $ 790,607 $1,118,330 Unearned finance charges (125,536) (180,101) Unearned insurance premiums, insurance reserves, and fees (4,862) (7,280) --------- ---------- Installment contracts receivable $ 660,209 $ 930,949 ========= ========== Non-accrual installment contracts as a percent of total gross installment contracts 31.8% 33.0% ==== ==== A summary of changes in gross installment contracts receivable is as follows: <TABLE> <CAPTION> THREE MONTHS ENDED NINE MONTHS ENDED (Dollars in thousands) SEPTEMBER 30, SEPTEMBER 30, -------------------------- -------------------------- 1995 1996 1995 1996 --------- ---------- --------- ----------- (Unaudited) (Unaudited) <S> <C> <C> <C> <C> Balance, beginning of period $ 642,328 $ 981,145 $ 486,897 $ 790,607 Gross amount of installment contracts accepted 153,665 272,836 462,017 697,050 Cash collections on installment contracts receivable (68,353) (98,794) (190,790) (278,586) Charge offs (19,080) (36,857) (49,564) (90,741) --------- ---------- ---------- ---------- Balance, end of period $ 708,560 $1,118,330 $ 708,560 $1,118,330 ========= ========== ========== ========== </TABLE> DEALER HOLDBACKS The following table summarizes the composition of dealer holdbacks at the dates indicated: AS OF AS OF (Dollars in thousands) 12/31/95 09/30/96 -------- -------- (Unaudited) Dealer holdbacks $ 628,386 $ 891,982 Less: Advances (net of reserves of $3,214 and $6,928 at December 31, 1995 and September 30, 1996, respectively) (264,867) (430,422) --------- --------- Dealer holdbacks, net $ 363,519 $ 461,560 ========= ========= 8
11 CREDIT POLICY AND EXPERIENCE The Company maintains an allowance for credit losses which, in the opinion of management, adequately reserves against expected future losses. The risk of loss to the Company related to the installment contracts receivable balance relates primarily to the earned but unpaid servicing fee or finance charge recognized on contractually delinquent accounts. To the extent that the Company does not collect the gross amount of the contract, the remaining gross installment receivable contract balance is charged off against dealer holdbacks, unearned finance charges, and the allowances for credit losses. The Company also maintains a reserve against advances to dealers that are not expected to be recovered through collections on the related installment contract receivable portfolio. Advance balances are reviewed by management on a monthly basis, and those which are deemed to be unrecoverable are charged against the reserve. Credit loss experience, changes in the character and size of the receivables portfolio and the advance balance, and management's judgment are primary factors used in assessing the overall adequacy of the allowance and advance reserve and the resulting provisions for credit losses. Ultimate losses may vary from current estimates and the amount of the provision, which is a current expense, may be either greater or less than actual charge offs. Servicing fees, which are booked as finance charges, are recognized under the interest method of accounting until the underlying obligation is 120 days contractually past due. At such time, the Company suspends the accrual of revenue and makes a provision for credit losses equal to the earned but unpaid revenue. In all cases, installment contracts on which no material payment has been received for one year are charged off against the related dealer holdback and the allowance for credit losses. As future payments on any remaining aggregate contracts from a given dealer are available to recover all advances from such dealer, the risk of loss to the Company is mitigated. The following table sets forth information relating to charge offs, the allowance for credit losses, the reserve on advances, and dealer holdbacks. <TABLE> <CAPTION> THREE MONTHS ENDED NINE MONTHS ENDED (Dollars in thousands) SEPTEMBER 30, SEPTEMBER 30, ----------------------------- ----------------------------- 1995 1996 1995 1996 ---------- ----------- ---------- ----------- (Unaudited) (Unaudited) <S> <C> <C> <C> <C> Provision for credit losses-installment contracts $ 1,417 $ 2,090 $ 3,685 $ 4,904 Provision for credit losses-advances 437 1,332 1,259 3,965 Charged against dealer holdbacks 15,382 29,495 39,883 72,587 Charged against unearned finance charges 3,220 6,573 8,424 16,151 Charged against allowance for credit losses 478 789 1,257 2,003 ---------- ----------- ----------- ----------- Total contracts charged off $ 19,080 $ 36,857 $ 49,564 $ 90,741 ========== =========== =========== =========== Net charge offs against the reserve on advances $ 10 $ 184 $ 10 $ 251 </TABLE> 9
12 <TABLE> <CAPTION> AS OF AS OF (Dollars in thousands) SEPTEMBER 30, 1995 SEPTEMBER 30, 1996 ------------------ ------------------ (Unaudited) <S> <C> <C> Allowance for credit losses as a percent of gross installment contracts receivable 0.9% 1.0% Reserve on advances as a percent of advances 1.2% 1.6% Dealer holdbacks as a percent of gross installment contracts receivable 79.4% 79.8% </TABLE> The Company's relatively low level of amounts charged against the allowance for credit losses is due to, among other factors: (i) the requirement that each installment contract accepted must meet established, formula-based criteria prior to the Company making an advance on such contract; (ii) experienced personnel, using computer-assisted accounts receivable management and collection systems; (iii) the security interest the Company receives in the vehicle at the time it accepts an installment contract; and (iv) the high level of dealer holdbacks, relative to the amount of installment contracts. LIQUIDITY AND CAPITAL RESOURCES The Company's principal need for capital is to fund cash advances made to dealers in connection with the acceptance of installment contracts and for the payment of dealer holdbacks to dealers who have repaid their advance balances. These cash outflows to dealers increased from $245.8 million during the nine months ended September 30, 1995 to $388.6 million during the same period in 1996. These amounts have been funded from cash collections on installment contracts, income from operations, and advances under the Company's credit agreement. During the first nine months of 1996, the Company borrowed approximately $133.6 million to assist in funding the Company's operations. The borrowings were provided by the Company's line of credit agreements and through the sale of senior notes. The increased need for capital is primarily a result of the continued growth in new installment contracts accepted. To a lesser extent, the increased need for capital is also due to an increase in the amount advanced per contract, continued increases in dealers' utilization of service contract products offered by the Company, and amounts needed to fund the continued growth of the Company's operations in the United Kingdom. During the quarter ended September 30, 1996, the Company commenced operations in Canada and Ireland, offering essentially the same programs and services as are offered in the United States and United Kingdom. The Company expects, over the longer term, to fund these operations with borrowings from the Company's available sources, subject to certain limitations in agreements setting forth the terms of such borrowings. The extent of these operation's need for capital will depend on the volume of contracts generated from dealers in Canada and Ireland. The operations in Canada will be serviced from the Company's Southfield, Michigan headquarters and the operations in Ireland will be serviced from the Company's office in the United Kingdom. The Company has a $152 million credit agreement with a commercial bank syndicate. The agreement consists of a $92 million line of credit facility with a commitment period through January 12, 1997 and a $60 million revolving credit facility with a commitment period through January 13, 1999. Both facilities are subject to annual extension for additional one year periods at the request of the Company with the consent of each of the banks in the facility. The borrowings are unsecured with interest payable at the Eurocurrency rate plus a minimum of 80 basis points and a maximum of 140 basis points (currently 105 basis points) dependent on the Company's debt ratings, or at the prime rate. The Eurocurrency borrowings may be fixed for periods up to one year. The credit agreement has certain restrictive covenants, including limits on the ratio of the Company's debt-to-equity, limits on the Company's investment in its subsidiary in the United Kingdom, and requirements that the Company maintain a specified minimum level of net worth. As of September 30, 1996, there was approximately $92.7 million outstanding under these facilities. 10
13 The Company also has a 2.0 million British pound sterling line of credit agreement with a commercial bank in the United Kingdom, which is used to fund the day to day cash flow requirements of the Company's subsidiary which operates in the United Kingdom. The borrowings are secured by a letter of credit issued by the Company's principal commercial bank with interest payable at the United Kingdom bank's base rate (currently 6.00%) plus 65 basis points or at the LIBOR rate plus 56.25 basis points. The rates may be fixed for periods up to six months. As of September 30, 1996, there was approximately 1.6 million British pounds ($2.4 million U.S. dollars) outstanding under this facility. On August 29, 1996, the Company completed the sale of its $70.0 million 7.99% Senior Notes due July 1, 2001 to various insurance companies. The notes are unsecured and require annual payments of principle and interest commencing on July 1, 1997. The most restrictive covenants place limits on the ratios of the Company's debt-to-equity, limits on the Company's investment in its subsidiary in the United Kingdom, and requires the Company to maintain a specified minimum level of net worth. Proceeds from the sale were used to repay indebtedness under the Company's $152 million credit agreement. The Company maintains a significant dealer holdback on installment contracts accepted which assists the Company in funding its long-term cash flow requirements. In future periods, the Company's short and long-term cash flow requirements will continue to be funded primarily through earnings from operations, cash flow from the collection of installment contracts, and the Company's credit facilities. The Company will continue to utilize various sources of financing available from time to time to fund the continuing growth of the Company. The Company believes that such amounts will be sufficient to meet its short-term and long-term cash flow requirements. 11
14 PART II. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits See Index of Exhibits following the signature page. (b) Reports on Form 8-K The Company was not required to file a current report on Form 8-K during the quarter ended September 30, 1996 and none were filed during that period. 12
15 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 thereunto duly authorized. CREDIT ACCEPTANCE CORPORATION (Registrant) Date: November 13, 1996 /S/Brett A. Roberts ----------------------------- Brett A. Roberts Chief Financial Officer Signing on behalf of the registrant and as principal financial officer. Date: November 13, 1996 /S/John P. Cavanaugh ----------------------------- John P. Cavanaugh Corporate Controller and Assistant Secretary Principal accounting officer. 13
16 INDEX OF EXHIBITS Exhibit Number Description - -------------- ----------- 10(p) (2) Second Amendment to Credit Acceptance Corporation $60,000,000 8.87% Senior Notes Due November 1, 2001 10(q) (4) Third Amendment to Credit Acceptance Corporation $152,000,000 Amended and Restated Credit Agreement dated as of January 8, 1996 10(r) Note Purchase Agreement dated August 1, 1996 between various insurance companies and the Company and related form of note 11(1) Statement of Computation of Net Income Per Common Share 27 Financial Data Schedule 14