Asset Acceptance Reports Slip in Earnings but Higher Cash Collections

Debt purchaser Asset Acceptance Capital Corp. announced first quarter 2007 results, highlighted by a 7.2 percent improvement in cash collections and an overall account representative productivity increase of 28.6 percent, but lower overall earnings.

Asset Acceptance reported cash collections of $95.9 million in the first quarter ended March 31, 2007 — the highest single-quarter cash collections in the history of the Company, versus cash collections of $89.4 million in the same period of 2006.

Total revenues were essentially flat at $67.3 million for the first quarter 2007, compared to total revenues of $67.4 million in the first quarter of 2006. Net income for the quarter was $9.9 million, or $0.28 per fully diluted share, compared to net income of $12.6 million, or $0.34 per fully diluted share, for the first quarter of 2006. Earnings Before Interest, Taxes, Depreciation and Amortization, including purchased receivable amortization ("Adjusted EBITDA"), increased 7.7 percent in the first quarter 2007 to $46.2 million when compared to the year-ago period. Please refer to the table on page 4, which reconciles net income according to Generally Accepted Accounting Principles ("GAAP") to Adjusted EBITDA.

"Entering 2007, we have mapped a clear vision for the future, driven by a sustained focus on growing cash collections, leveraging our associate talent, improving operating efficiency through long-term cost savings initiatives and finally, by identifying new revenue opportunities of strategic interest for Asset Acceptance," said Brad Bradley, Chairman, President and CEO of Asset Acceptance Capital Corp. "We are encouraged by our performance in the first quarter of 2007, highlighted by the strongest quarter of cash collections ever achieved in our 45 year history. Importantly, first quarter cash collections grew at a faster rate than in each of the three previous quarters. We look forward to building on this momentum as we move forward through the remainder of the year."

Although cash collections increased in the quarter compared to the year- ago period, purchased receivable revenues declined by $0.5 million or 0.7 percent due to higher amortization rates on 2006 purchases and a $4.5 million net impairment charge on purchased receivables. Performance has been better than initially expected on portfolios purchased during 2006. The amortization rate on 2006 purchases was 38.2% in the first quarter compared to amortization on 2005 purchases of 27.3% in the year ago quarter.