Asset Acceptance Capital Corp., a Warren, Mich.-based debt buyer, posted a large fourth-quarter loss, mainly the result of non-cash impairment charges absorbed in the last three months of the year.
For fiscal year 2009, ended Dec. 31, the company posted revenue of $172.5 million versus $234.2 million in 2008.
The company, in the fourth quarter, paid $43 million for charged-off consumer debt totaling $1.4 billion, or 3.08% of face value. In the year-ago period, the company invested $31.9 million to purchase portfolios with a face value of $630 million, or 5.06% of face value. For more about the overall state of the debt-buying industry, click here.
Quarterly cash collections fell 10% to $74.8 million. The non-cash net impairment charge on purchased debt was $32.4 million. Net loss for the quarter was $20.2 million compared with an income of $3.8 million, a year earlier. Total revenue for the quarter declined 66% to $18.7 million.
For the fiscal year, cash collections reached $334 million compared with $369.6 million in 2008.
"We continued to ramp up our purchasing during the back half of the year, and expect this initiative to pay dividends as we move through 2010 and collect on the newer vintage," says Rion Needs, chief executive of Asset Acceptance.
"The operating environment in 2009 has been one of the most challenging periods in our company's history, with the fourth quarter proving to be one of the most difficult quarters of the year. We observed a significant difference between actual and projected cash collections in some ... older portfolios, which caused us to perform a more in-depth review of our expectation of future cash collections. This resulted in a large non-cash impairment charge. As a result, we reported a net loss for fourth quarter and the year. We are hopeful that this action will aid in minimizing non-cash impairments going forward."
Needs says debt prices remained attractive as the supply of chargeoffs from issuers expanded and the overall demand remained soft. "We continued to ramp up our purchasing during the back half of the year, and expect this initiative to pay dividends as we move through 2010," he says.