WARREN, Mich. — The leadership of Asset Acceptance Capital Corp., a purchaser and collector of charged-off consumer debt, recently detailed how it was encouraged by the progress made in becoming more efficient and increasing purchasing, also noting that the company made strides in certain areas of its first-quarter performance.

Company executives recently reported Asset Acceptance's net income for the quarter was $356,500, or $0.01 per fully diluted share. The company referenced that net income total to what it posted in the first quarter of last year, which came to $4.6 million, or $0.15 per fully diluted share.

Rion Needs, president and chief executive officer of Asset Acceptance, reviewed the company's overall financial positioning and other elements of its performance.

"While our business and industry faced a difficult economic period in 2009, we are pleased with the early success of many of our efforts to improve efficiencies and increase purchasing," Needs said.

Furthermore, the company indicated cash collections of $89.2 million during the quarter that ended March 31. In the year-ago period, they stated the cash collections total was $94.1 million, referencing that it continued to be negatively impacted by the reduced purchasing in 2009.

Asset Acceptance's total revenue also dipped in the first quarter when comparing year-over-year. In the most recent quarter, this figure came in at $51.6 million, while in the first quarter of 2009 it was $57.0 million.

Elsewhere, executives said their amortization of purchased receivables in the first quarter of this year was 42.7 percent of total cash collections. In the same quarter a year ago, they stated the figure was 39.7 percent.

The company went on to note that earnings before adjusted EBITDA decreased to $42.5 million in the first quarter of 2010. Executives determined the total was down 12.5 percent compared to the year-ago period.

Mark Redman, senior vice president and chief financial officer, shared some analysis of how Asset Acceptance performed during the first quarter.

"In the first quarter our total cash collections, operating expenses and adjusted EBITDA exceeded our expectations," Redman indicated.

"The amortization rate during the quarter was high despite recognizing nominal impairments. Purchased receivables revenue is largely a factor of the yields assigned and the carrying value of the receivables," he continued. "With the significant impairment recognized in the fourth quarter of 2009, revenue was down because of the lower carrying value of the purchased receivables despite a relatively steady yield when compared to 2009.

"Better than expected collections result in increased amortization in the short term but generally better overall revenues in the long term," Redman added.

Asset Acceptance offered some details about other financial activity the company conducted during the first quarter.

The company said it invested $29.8 million to purchase charged-off consumer debt portfolios with a face value of $823.3 million for a blended rate of 3.62 percent of face value. The amount was higher than the investment in the first quarter of 2009. That's when Asset Acceptance decided to invest $21.8 million to purchase consumer debt portfolios with a face value of $737.6 million, representing a blended rate of 2.95 percent of face value.

According to executives, all purchase data is adjusted for buybacks.

In addition to lower cash collections in the quarter, the company mentioned higher operating expenses compared to the prior year time period. Asset Acceptance revealed that total operating expenses in the quarter increased 2.9 percent to $48.4 million; that's up from $47.0 million in the first quarter of 2009.

For the 2010 first quarter, Asset Acceptance also revealed operating expenses of 54.2 percent of cash collections, a percentage that's up from 50.0 percent of cash collections in the prior year quarter.

Executives also disclosed that beginning in February 2006, the Federal Trade Commission commenced an investigation into the company's debt collection practices under the Fair Credit Reporting Act, the Fair Debt Collection Practices Act and the Federal Trade Commission Act.

Then on April 6, they pointed out that the FTC delivered a letter to the company which stated its view on three issues. Executives stated the letter indicated Asset Acceptance may have engaged in certain violations of those laws, offered the company an opportunity to resolve the matter through consent negotiations and forwarded a proposed consent decree.

Asset Acceptance said the proposed consent decree includes certain monitoring and reporting obligations and customer disclosures, as well as a civil monetary penalty.

"Asset Acceptance is currently reviewing the proposal with counsel and has begun to discuss the matter with the FTC," executives stated. "The company indicated that it believes that the resolution of this matter will not have a material adverse effect on its business."

Needs wrapped up the first-quarter report by elaborating on more points of the Asset Acceptance's performance.

"Our initiatives to improve our work flow automation processes contributed to solid collections performance in the first quarter. In addition, the continued advantageous purchasing environment allowed us to acquire $29.8 million in charged-off consumer debt portfolios, net of buybacks, an increase of 37 percent from the first quarter of last year," he went on to highlight.

"As the pricing environment has begun to stabilize, we seek to continue to maximize returns as we bid appropriately on the portfolios purchased. In 2010, we remain committed to returning our purchasing levels to meet or exceed historical levels," he continued.

Furthermore, Needs offered a glimpse into how the company will continue to operate during the quarters going forward.

"We also maintained our focus on progressing the four tenets of our long-term growth strategy," he emphasized.

"We continued to identify ways to improve operational efficiencies across the business, which led to both collections and expense management that exceeded our internal plans," Needs explained. "While we realize there is more work to be done, efforts to further improve our operations, enhance our financial discipline and achieve an optimal capital structure will drive revenue growth and profitability, and in turn, create long-term shareholder value."