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Credit Acceptance Corp. Reports 3rd Quarter Earnings; 25.3% Increase in Net Income

October 17, 2001

Credit Acceptance Corp. announced Oct. 17 that consolidated net income for the quarter ended Sept. 30, 2001 was $7,645,000 or $0.18 per diluted share compared to $6,104,000 or $0.14 per diluted share for the same period in 2000, representing 25.3 percent and 28.6 percent increases in net income and earnings per share, respectively.

For the nine-month period ended Sept. 30, 2001, consolidated net income was $21,963,000 or $0.51 per diluted share compared to $17,983,000 or $0.40 per diluted share for the same period in 2000.

Analysis of Economic Profit or Loss

Economic profit or loss is a measurement of how efficiently the company utilizes its capital and has been used by CAC since Jan. 1, 2000 to evaluate its performance. The company's goal is to increase its overall return on capital in order to maximize the amount of economic profit per share generated.

CAC's economic loss improved to ($1,306,000) or ($0.03) per diluted share for the quarter ended Sept. 30, 2001 compared to ($2,339,000) or ($0.05) per diluted share for the same period in 2000.

Accoding to CAC, the improvement was due primarily to an improvement in the return on capital and a reduction in the weighted average cost of capital for the three months ended Sept. 30, 2001 compared to the same period in 2000.

The company's return on capital increased to 8.51 percent and 8.55 percent for the three and nine months ended Sept. 30, 2001 from 8.17 percent and 8.10 percent for the same periods in 2000.

According to Credit Acceptance Corp., the improvements in the return on capital are primarily due to consistent collection performance and a reduction in the amount advanced to dealers as a percent of the gross contract amount partially offset by larger losses incurred in the company's leasing business.

The reduction in the weighted average cost of capital for the three and nine months ended Sept. 30, 2001 compared to the same periods in 2000 was primarily due to lower average interest rates on the company's borrowings as a result of an overall reduction in market rates during the periods, according to a company statement.

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