twinsbill, here is the news.
UAC ANNOUNCES INTENTION TO INCREASE RESERVES
INDIANAPOLIS--(BUSINESS WIRE)--May 30, 1997--UAC (Union Acceptance
Corporation--Nasdaq:UACA) announced today that after an evaluation of current recovery and credit loss trends the Company intends to increase the allowance for credit losses included in the excess servicing asset. The Company has elected to take an after-tax charge to earnings of approximately $16.1 million or $1.22 per share in the fourth quarter of fiscal 1997, which should lead to a credit loss reserve level of approximately 4.05% compared to 3.00% at March 31, 1997.
After the charge to earnings, the Company expects to report a net loss for the fourth quarter of approximately $9.0-$11.0 million or $0.68-$0.83 per share. In the fourth quarter of fiscal 1996, the Com- pany reported net earnings of $5.5 million or $0.41 per share. Net credit losses for the fourth quarter ended June 30, 1997 are expected to improve to approximately 2.70% from the 3.23% reported for the third quarter ended March 31, 1997, however, there has been no material improvement in recoveries and credit loss trends are higher this year than in previous years.
For the fiscal year ended June 30, 1997, after taking into account the charge to earnings, the Company expects to report net earnings of approximately $7.0-$9.0 million versus $21.1 million for fiscal year ended June 30, 1996, and $9.4 million for fiscal year ended June 30, 1995. Given the trends in the general economy and the consumer's propensity to file bankruptcy, this action is an appropriate adjustment at this time, remarked UAC President, John Stainbrook.
Certain statements set forth above are forward looking, particularly regarding recovery rates, loss levels, and earnings projections, and are subject to important factors that could cause actual results to differ materially from those projected by the Company. Certain of such factors are discussed under Discussion of Forward-looking Information in the Management's Discussion and Analysis section of UAC's 1996 Annual Report and Form 10-K.
A conference call for investors will take place Friday, May 30, 1997 at 1:00 pm EST.
UAC is a consumer finance company focused on acquiring and servicing through the use of state-of-the-art technology and disciplined credit standards prime automobile retail installment sales contracts originated by dealerships affiliated with major domestic and foreign manufacturers. The company commenced business in 1986 and currently acquires loans from over 3,000 manufacturer-franchised dealerships in 27 states. UAC is based in Indianapolis, Indiana. The UAC fiscal year ends in June.
Contact:
Richard R. Waterfield
Director of Investor Relations
317/231-2728
or
Michele Katz/Geoffrey Buscher/Kelly Lofts
Press: Stan Froelich/Nancy Gallinghouse
Morgen-Walke Associates
212/850-5600
TWINSBILL: let's try and make this a thread where we share information. I dislike threads where people ask questions they know the answer to, in a attempt to make themselves seem smarter than the other contributors. Please, in the future share your knowledge of announcements directly. That method of operation will keep everyone active on this thread. |
