Asset Acceptance Capital Corp. (NASDAQ: AACC), a leading purchaser and collector of charged-off consumer debt, today announced that it will be closing its Cleveland, Ohio collections office. Once substantially completed, the closing of the office is expected to reduce the Company’s operating expenses by approximately $3.0 million per year.
In connection with closing the Cleveland collections office, the Company will incur approximately $1.5 million, or $0.03 per fully diluted share after the effect of taxes, in restructuring charges during the fourth quarter 2010, which includes employee termination benefits, contract termination costs for the remaining lease payments on the Cleveland, Ohio office, accelerated depreciation and other exit costs. The employee termination benefits, contract termination costs and other exit costs will require an outlay of cash of approximately $1.4 million, while non-cash charges are estimated at $0.1 million.
The Company also announced that it will incur a charge of approximately $5.3 million, or $0.10 per fully diluted share after the effect of taxes, during the fourth quarter 2010 resulting from the termination for performance of a relationship with a third party service provider. The charge relates to a cash settlement payment to reimburse the third party for court costs incurred on the Company’s behalf that the third party would otherwise have recovered through commissions in future periods. The Company expects the action to provide operating expense savings of approximately $7.5 million in total over the next three years.
Rion Needs, President and CEO, Asset Acceptance Capital Corp. noted, “These actions reflect our continued efforts to further streamline our operations and aggressively align our cost structure to improve our competitive positioning and enhance shareholder value. Collection efforts previously housed in the Cleveland office will be transferred to other offices throughout our collections network. We anticipate that these actions will favorably impact overall profitability and productivity without sacrificing top-line collections.”About Asset Acceptance Capital Corp. For more than 45 years, Asset Acceptance has provided credit originators, such as credit card issuers, consumer finance companies, retail merchants, utilities and others an efficient alternative in recovering defaulted consumer debt. For more information, please visit www.AssetAcceptance.com. Asset Acceptance Capital Corp. Safe Harbor Statement This press release contains certain statements, including the Company's plans and expectations regarding its operating strategies, charged-off receivables, collections and costs, which are forward-looking statements and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include reference to the Company’s presentations and webcasts. These forward-looking statements reflect the Company's views, expectations and beliefs at the time such statements were made with respect to such matters, as well as the Company's future plans, objectives, events, portfolio purchases and pricing, collections and financial results such as revenues, expenses, income, earnings per share, capital expenditures, operating margins, financial position, expected results of operations and other financial items. Forward-looking statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions (“Risk Factors”) that make the timing, extent, likelihood and degree of occurrence of these matters difficult to predict. Words such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “should,” “could,” “will,” variations of such words and similar expressions are intended to identify forward-looking statements.