##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2006
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number: 000-50552
 Asset Acceptance Capital Corp.
 Exact name of registrant as specified in its charter
 Delaware
    
    80-0076779(State or other jurisdiction of
incorporation or organization)
    
    (I.R.S.Employer Identification No.)
 28405 Van Dyke Avenue
Warren, Michigan 48093  Address of principal executive offices
 Registrants telephone number, including area code:
(586) 939-9600
  þ o
  o þ o
  o þ




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##### 



ASSET ACCEPTANCE CAPITAL CORP.
 Quarterly Report on Form 10-Q
 TABLE OF CONTENTS
 PagePART I  Financial InformationItem 1. Consolidated Financial Statements (unaudited)
    
    
    3Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    12Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    23Item 4. Controls and Procedures
    
    
    24PART II  Other InformationItem 1. Legal Proceedings
    
    
    24Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    24Item 6. Exhibits
    
    
    25Signatures
    
    
    26Exhibits:
10.1 Third amendment to Lease Agreement for property located at 28405
Van Dyke Avenue, Warren, Michigan31.1 Rule 13a-14(a) Certification of Chief Executive Officer31.2
Rule 13a-14(a) Certification of Chief Financial Officer32.1
Section 1350 Certification of Chief Executive Officer and Chief
Financial OfficerThird Amendment to Lease AgreementRule 13a-14(a) Certification of Chief Executive OfficerRule 13a-14(a) Certification of Chief Financial OfficerSection 1350 Certification of CEO and CFO
  Quarterly Report on Form 10-Q
 www.assetacceptance.com
 2




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1 . Consolidated Financial Statements
 ASSET ACCEPTANCE CAPITAL CORP.
 Consolidated Statements of Financial Position
(Unaudited)
 March 31, 2006
    
    
    December 31, 2005ASSETSCash
    
    $
    69,539,990
    
    
    $
    50,518,934Purchased receivables
    
    
    252,898,222
    
    
    
    248,990,772Finance contract receivables, net
    
    
    2,877,954
    
    
    
    3,925,581Property and equipment, net
    
    
    12,007,809
    
    
    
    10,747,627Goodwill
    
    
    6,339,574
    
    
    
    6,339,574Other assets
    
    
    3,753,401
    
    
    
    3,419,367Total assets
    
    $
    347,416,950
    
    
    $
    323,941,855LIABILITIES AND STOCKHOLDERS EQUITYLiabilities:Deferred tax liability, net
    
    $
    59,626,398
    
    
    $
    58,583,604Accounts payable and other liabilities
    
    
    19,493,870
    
    
    
    14,639,774Income taxes payable
    
    
    6,171,179
    
    
    
    1,071,179Capital lease obligations
    
    
    172,705
    
    
    
    186,944Total liabilities
    
    
    85,464,152
    
    
    
    74,481,501Stockholders equity:Preferred stock, $0.01 par value, 10,000,000 shares authorized, no
shares issued and outstanding
    
    
    
    
    
    
    Common stock, $0.01 par value, 100,000,000 shares authorized;
issued shares  37,225,275 at March 31, 2006 and December 31,
2005
    
    
    372,253
    
    
    
    372,253Additional paid in capital
    
    
    160,566,354
    
    
    
    160,361,599Retained earnings
    
    
    101,316,597
    
    
    
    88,726,502Common stock in treasury; at cost, 20,160 shares at March 31, 2006
    
    
    (302,406
    )
    
    
    Total stockholders equity
    
    
    261,952,798
    
    
    
    249,460,354Total liabilities and stockholders equity
    
    $
    347,416,950
    
    
    $
    323,941,855
  3




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##### Table of Contents



ASSET ACCEPTANCE CAPITAL CORP.
 Consolidated Statements of Income
(Unaudited)
 Three months ended March 31,2006
    
    
    2005RevenuesPurchased receivable revenues
    
    $
    67,264,780
    
    
    $
    65,866,194Finance contract revenues
    
    
    116,205
    
    
    
    168,307Total revenues
    
    
    67,380,985
    
    
    
    66,034,501ExpensesSalaries and benefits
    
    
    23,325,502
    
    
    
    18,543,040Collections expense
    
    
    18,814,848
    
    
    
    18,442,899Occupancy
    
    
    2,174,856
    
    
    
    2,111,974Administrative
    
    
    2,350,499
    
    
    
    1,870,555Depreciation and amortization
    
    
    889,617
    
    
    
    843,148Loss on disposal of equipment
    
    
    145
    
    
    
    Total operating expenses
    
    
    47,555,467
    
    
    
    41,811,616Income from operations
    
    
    19,825,518
    
    
    
    24,222,885Other income (expense)Interest income
    
    
    580,957
    
    
    
    34,908Interest expense
    
    
    (177,544
    )
    
    
    (140,818
    )Other
    
    
    (9,539
    )
    
    
    (25
    )Income before income taxes
    
    
    20,219,392
    
    
    
    24,116,950Income taxes
    
    
    7,629,297
    
    
    
    8,971,506Net income
    
    $
    12,590,095
    
    
    $
    15,145,444Weighted average number of shares:Basic
    
    
    37,213,179
    
    
    
    37,225,275Diluted
    
    
    37,243,261
    
    
    
    37,244,694Earnings per common share outstanding:Basic
    
    $
    0.34
    
    
    $
    0.41Diluted
    
    $
    0.34
    
    
    $
    0.41
  4




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##### Table of Contents



ASSET ACCEPTANCE CAPITAL CORP.
 Consolidated Statements of Cash Flows
(Unaudited)
 Three months ended March 31,2006
    
    
    2005Cash flows from operating activitiesNet income
    
    $
    12,590,095
    
    
    $
    15,145,444Adjustments to reconcile net income to net cash provided
by operating activities:Depreciation and amortization
    
    
    889,617
    
    
    
    843,148Deferred income taxes
    
    
    1,042,794
    
    
    
    8,271,237Share-based compensation expense
    
    
    204,755
    
    
    
    70,255Net impairment of purchased receivables
    
    
    2,694,000
    
    
    
    700,000Non-cash revenue
    
    
    (503,347
    )
    
    
    (1,991,322
    )Loss on disposal of equipment
    
    
    145
    
    
    
    Charge-offs of finance contracts
    
    
    70,871
    
    
    
    25,967Changes in assets and liabilities:Decrease (increase) in other assets
    
    
    (381,035
    )
    
    
    1,036,996Increase in income taxes payable
    
    
    5,100,000
    
    
    
    450,250Increase in accounts payable and other liabilities
    
    
    4,854,096
    
    
    
    1,270,767Net cash provided by operating activities
    
    
    26,561,991
    
    
    
    25,822,742Cash flows from investing activitiesInvestment in purchased receivables, net of buy backs
    
    
    (25,432,528
    )
    
    
    (32,603,676
    )Principal collected on purchased receivables
    
    
    19,934,425
    
    
    
    15,822,768Investment in finance contracts
    
    
    (130,151
    )
    
    
    (246,732
    )Principal collected on finance contracts
    
    
    506,907
    
    
    
    177,189Purchase of property and equipment
    
    
    (2,078,772
    )
    
    
    (1,026,429
    )Net cash used in investing activities
    
    
    (7,200,119
    )
    
    
    (17,876,880
    )Cash flows from financing activitiesBorrowings under line of credit
    
    
    
    
    
    
    6,500,000Repayment of line of credit
    
    
    
    
    
    
    (6,500,000
    )Repayment of capital lease obligations
    
    
    (38,410
    )
    
    
    (39,613
    )Purchase of treasury shares
    
    
    (302,406
    )
    
    
    Net cash used in financing activities
    
    
    (340,816
    )
    
    
    (39,613
    )Net increase in cash
    
    
    19,021,056
    
    
    
    7,906,249Cash at beginning of period
    
    
    50,518,934
    
    
    
    14,204,579Cash at end of period
    
    $
    69,539,990
    
    
    $
    22,110,828Supplemental disclosure of cash flow informationCash paid for interest
    
    $
    132,239
    
    
    $
    17,752Cash paid (received) for income taxes
    
    
    1,506,093
    
    
    
    (963,981
    )Non-cash investing and financing activities:Capital lease obligations incurred
    
    
    24,171
    
    
    
    44,201
  5




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ASSET ACCEPTANCE CAPITAL CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 1. Summary of Significant Accounting Policies
 Nature of Operations
   Reporting Entity
   Cash
  Purchased Receivables Portfolios and Revenue Recognition
   6




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Three months ended March 31,2006
    
    
    2005Beginning balance
    
    $
    248,990,772
    
    
    $
    216,479,676Investment in purchased receivables, net of buybacks
    
    
    26,032,528
    
    
    
    32,603,675Cash collections
    
    
    (89,389,858
    )
    
    
    (80,397,640
    )Purchased receivable revenues
    
    
    67,264,780
    
    
    
    65,866,194Ending balance
    
    $
    252,898,222
    
    
    $
    234,551,905
 7




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##### Table of Contents



Three months ended March 31,2006
    
    
    2005Beginning balance
    
    $
    848,545,458
    
    
    $
    792,755,605Revenue recognized on purchased receivables
    
    
    (67,264,780
    )
    
    
    (65,866,194
    )Additions due to purchases during the period
    
    
    54,314,075
    
    
    
    77,787,360Reclassifications from nonaccretable yield
    
    
    52,077,516
    
    
    
    13,023,344Ending balance (1)
    
    $
    887,672,269
    
    
    $
    817,700,115
 
 (1)
    
    Accretable yields are a function of estimated remaining cash
flows and are based on historical cash collections. Please refer to
Forward-Looking Statements on page 12 and Critical Accounting
policies on page 23 for further information regarding these estimates.  Three months ended March 31,2006
    
    
    2005Revenues from fully amortized pools:Pools that amortized before 60 months
    
    $
    8,531,014
    
    
    $
    7,953,040Pools that are 60 months or older
    
    
    6,787,986
    
    
    
    3,319,174Pools under full cost recovery
    
    
    1,387,108
    
    
    
    856,762Total revenue from fully amortized pools
    
    $
    16,706,108
    
    
    $
    12,128,976
  Three months ended March 31,2006
    
    
    2005Beginning balance
    
    $
    22,285,355
    
    
    $
    Impairments
    
    
    3,295,000
    
    
    
    700,000Reversal of impairments (1)
    
    
    (601,000
    )
    
    
    Ending balance
    
    $
    24,979,355
    
    
    $
    700,000
 
 (1)
    
    The impairment reversals relate to impairment charges recognized during the fiscal year ended
December 31, 2005. Collections from Third Parties
  Earnings Per Share
  8




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##### Table of Contents



Reclassifications
  2. Related-Party Transactions
  3. Line of Credit
  
    
    funds borrowed can be used to purchase portfolios of charged-off receivables and for
general corporate purposes;
    
    leverage ratio (as defined in the line of credit agreement) cannot exceed 1.5 to 1.0;
    
    debt to total capitalization ratio (as defined in the line of credit agreement) cannot exceed 1.25 to 1.0; and
    
    tangible net worth must exceed $145.0 million plus 50% of net income after September
30, 2004, which required a balance of $183.2 million as of March 31, 2006.
  4. Property and Equipment
  March 31, 2006
    
    

    December 31, 2005Computers and software
    
    $
    10,462,292
    
    
    $
    8,984,055Furniture and fixtures
    
    
    9,175,861
    
    
    
    9,158,973Leasehold improvements
    
    
    2,023,937
    
    
    
    2,017,496Equipment under capital lease
    
    
    436,444
    
    
    
    485,299Automobiles
    
    
    47,404
    
    
    
    136,525Total property and equipment, cost
    
    
    22,145,938
    
    
    
    20,782,348Less accumulated depreciation
    
    
    (10,138,129
    )
    
    
    (10,034,721
    )Net property and equipment
    
    $
    12,007,809
    
    
    $
    10,747,627
 5. Share-Based Compensation
  9




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Options issue year:
    
    2006
    
    2005Expected volatility
    
    
    46.00
    %
    
    
    46.00
    %Expected dividends
    
    
    0.00
    %
    
    
    0.00
    %Expected term
    
    5 Years
    
    
    5 YearsRisk-free rate
    
    
    4.55
    %
    
    
    3.82%-4.39
    %
 Stock Options
  Weighted-Average
    
    
    AggregateOptions
    
    
    Weighted-Average
    
    
    Remaining
    
    
    IntrinsicOutstanding
    
    
    Exercise Price
    
    
    Contractual Term
    
    
    ValueJanuary 1, 2006
    
    
    251,009
    
    
    $
    19.38Granted
    
    
    4,300
    
    
    
    17.45Exercised
    
    
    
    
    
    
    Forfeited or expired
    
    
    
    
    
    
    Outstanding at March 31, 2006
    
    
    255,309
    
    
    
    19.34
    
    
    
    8.68
    
    
    $
    328,812Exercisable at March 31, 2006
    
    
    161,093
    
    
    $
    17.87
    
    
    
    8.47
    
    
    $
    295,437
  10




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##### Table of Contents



6. Litigation Contingencies
  7. Income Taxes
  8. Subsequent Event  Acquisition of PARC
   11




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##### Table of Contents








Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations


Company Overview
      Forward-Looking Statements
   
    
    our ability to purchase charged-off receivable portfolios on acceptable terms and in sufficient amounts;
    
    our ability to recover sufficient amounts on our charged-off receivable portfolios;
    
    our ability to hire and retain qualified personnel;
    
    a decrease in collections if bankruptcy filings increase or if bankruptcy laws or other
debt collection laws change;
    
    our ability to make reasonable estimates of the timing and amount of future cash
receipts for purposes of recording purchased receivable revenues in accordance with
Accounting Standards Executive Committee Statement of Position 03-3 as well as the
Accounting Standards Executive Committee Practice Bulletin 6;
    
    changes in, or failure to comply with, governmental regulations, including our ability
to maintain compliance with Section 404 of the Sarbanes-Oxley Act and the costs related to
compliance;
    
    our ability to acquire and to collect on charged-off receivable portfolios in industries
in which we have little or no experience;
    
    our ability to maintain existing, and secure additional financing on acceptable terms;
    
    the loss of any of our executive officers or other key personnel;
 
 12




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##### Table of Contents




    
    the costs, uncertainties and other effects of legal and administrative proceedings;
    
    our ability to successfully expand our businesses and train and integrate new account representatives;
    
    the temporary or permanent loss of our computer or telecommunications systems, as well
as our ability to respond to changes in technology and increased competition;
    
    changes in our overall performance based upon significant macroeconomic conditions; and
    
    other unanticipated events and conditions that may hinder our ability to compete.
 Results of Operations
  Percent of Total Revenues
    

Percent of Cash CollectionsThree Months Ended March 31,
    
    Three Months Ended March 31,2006
    
    2005
    
    2006
    
    2005RevenuesPurchased receivable revenues
    
    
    99.8
    %
    
    
    99.7
    %
    
    
    75.3
    %
    
    
    81.9
    %Finance contract revenues
    
    
    0.2
    
    
    
    0.3
    
    
    
    0.1
    
    
    
    0.2Total revenues
    
    
    100.0
    
    
    
    100.0
    
    
    
    75.4
    
    
    
    82.1ExpensesSalaries and benefits
    
    
    34.6
    
    
    
    28.1
    
    
    
    26.1
    
    
    
    23.1Collections expense
    
    
    27.9
    
    
    
    27.9
    
    
    
    21.1
    
    
    
    22.9Occupancy
    
    
    3.3
    
    
    
    3.2
    
    
    
    2.4
    
    
    
    2.6Administrative
    
    
    3.5
    
    
    
    2.8
    
    
    
    2.6
    
    
    
    2.3Depreciation and amortization
    
    
    1.3
    
    
    
    1.3
    
    
    
    1.0
    
    
    
    1.1Loss on disposal of equipment
    
    
    0.0
    
    
    
    0.0
    
    
    
    0.0
    
    
    
    0.0Total operating expenses
    
    
    70.6
    
    
    
    63.3
    
    
    
    53.2
    
    
    
    52.0Income from operations
    
    
    29.4
    
    
    
    36.7
    
    
    
    22.2
    
    
    
    30.1Other income (expense)Interest income
    
    
    0.9
    
    
    
    0.0
    
    
    
    0.6
    
    
    
    0.1Interest expense
    
    
    (0.3
    )
    
    
    (0.2
    )
    
    
    (0.2
    )
    
    
    (0.2
    )Other
    
    
    (0.0
    )
    
    
    0.0
    
    
    
    (0.0
    )
    
    
    0.0Income before income taxes
    
    
    30.0
    
    
    
    36.5
    
    
    
    22.6
    
    
    
    30.0Income taxes
    
    
    11.3
    
    
    
    13.6
    
    
    
    8.5
    
    
    
    11.2Net income
    
    
    18.7
    %
    
    
    22.9
    %
    
    
    14.1
    %
    
    
    18.8
    %
 Three Months Ended March 31, 2006 Compared To Three Months Ended March 31, 2005
 Revenue
  13




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Operating Expenses
  Salaries and Benefits.
 Collections Expense.
 Occupancy.
 Administrative.
 14




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Depreciation and Amortization.
 Interest Income.
 Interest Expense.
 Income Taxes.
 15




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##### Table of Contents



Supplemental Performance Data
 Portfolio Performance
  Total EstimatedCash Collections



    Estimated

    
    Total
    
    
    Collections as aNumber of
    
    
    Purchase
    

    Including Cash



    Remaining

    
    Estimated
    
    
    Percentage ofPurchase Period
    
    Portfolios
    
    
    Price (1)
    

    Sales (2)



    Collections (3)

    
    Collections
    
    
    Purchase Price (2)(dollars in thousands)1995
    
    53
    
    
    
    $
    1,519
    
    
    $
    7,916
    

    
    $
    
    
    
    $
    7,916
    
    
    521
    %1996
    
    46
    
    
    
    
    3,844
    
    
    
    17,325
    

    
    
    180
    
    
    
    17,505
    
    
    4551997
    
    45
    
    
    
    
    4,345
    
    
    
    28,493
    

    
    
    973
    
    
    
    29,466
    
    
    6781998
    
    61
    
    
    
    
    16,411
    
    
    
    78,816
    

    
    
    5,810
    
    
    
    84,626
    
    
    5161999
    
    51
    
    
    
    
    12,925
    
    
    
    57,015
    

    
    
    7,663
    
    
    
    64,678
    
    
    5002000
    
    49
    
    
    
    
    20,595
    
    
    
    110,048
    

    
    
    23,598
    
    
    
    133,646
    
    
    6492001
    
    62
    
    
    
    
    43,131
    
    
    
    214,344
    

    
    
    67,882
    
    
    
    282,226
    
    
    6542002
    
    94
    
    
    
    
    72,286
    
    
    
    249,405
    

    
    
    141,630
    
    
    
    391,035
    
    
    5412003
    
    76
    
    
    
    
    87,316
    
    
    
    248,838
    

    
    
    257,259
    
    
    
    506,097
    
    
    5802004
    
    106
    
    
    
    
    86,995
    
    
    
    109,965
    

    
    
    254,888
    
    
    
    364,853
    
    
    4192005
    
    104
    
    
    
    
    101,764
    
    
    
    39,889
    

    
    
    299,889
    
    
    
    339,778
    
    
    3342006 (4)
    
    17
    
    
    
    
    26,897
    
    
    
    413
    

    
    
    80,798
    
    
    
    81,211
    
    
    302Total
    
    764
    
    
    
    $
    478,028
    
    
    $
    1,162,467
    

    
    $
    1,140,570
    
    
    $
    2,303,037
    
    
    482
    %
 
 (1)
    
    Purchase price refers to the cash paid to a seller to acquire a portfolio less the purchase
price refunded by a seller due to the return of non-compliant accounts (also defined as
buybacks) less the purchase price for accounts that were sold at the time of purchase to
another debt purchaser.(2)
    
    For purposes of this table, cash collections include selected cash sales which were entered
into subsequent to purchase. Cash sales, however, exclude the sales of portfolios which
occurred at the time of purchase.(3)
    
    Estimated remaining collections are based on historical cash
collections. Please refer to Forward-Looking Statements on page 12
and Critical Accounting policies on page 23 for further
information regarding these estimates.(4)
    
    Includes only three months of activity through March 31, 2006.   UnamortizedUnamortized

    
    
    
    
    
    Balance as a

    
    UnamortizedBalance as of

    
    Purchase
    
    
    Percentage of
    
    
    Balance as aPurchase Period
    

    March 31, 2006


    
    Price (1)
    
    
    Purchase Price (2)
    
    
    Percentage of Total(dollars in thousands)2000
    

    $
    46
    
    
    $
    20,595
    
    
    0.2
    %
    
    
    0.0
    %2001
    

    
    3,483
    
    
    
    43,131
    
    
    8.1
    
    
    
    1.42002
    

    
    23,930
    
    
    
    72,286
    
    
    33.1
    
    
    
    9.42003
    

    
    45,975
    
    
    
    87,316
    
    
    52.7
    
    
    
    18.22004
    

    
    61,504
    
    
    
    86,995
    
    
    70.7
    
    
    
    24.32005
    

    
    90,972
    
    
    
    101,764
    
    
    89.4
    
    
    
    36.02006 (3)
    

    
    26,988
    
    
    
    26,897
    
    
    100.3
    
    
    
    10.7Total
    

    $
    252,898
    
    
    $
    438,984
    
    
    57.6
    %
    
    
    100.0
    %
 
 (1)
    
    Purchase price refers to the cash paid to a seller to acquire a portfolio less the purchase
price refunded by a seller due to the return of non-compliant accounts (also defined as
buybacks) less the purchase price for accounts that were sold at the time of purchase to
another debt purchaser.(2)
    
    For purposes of this table, cash collections include selected cash sales which were entered
into subsequent to purchase. Cash sales, however, exclude the sales of portfolios which
occurred at the time of purchase.(3)
    
    Includes only three months of activity through March 31, 2006. 
 16




---



##### Table of Contents



Account Representative Productivity and Turnover
  Account Representatives by Experience
 Three months ended
    
    Year endedMarch 31,
    
    December 31,Number of account representatives:
    
    2006
    
    2005
    
    2005
    
    2004One year or more (1)
    
    
    560
    
    
    
    507
    
    
    
    510
    
    
    
    471Less than one year (2)
    
    
    524
    
    
    
    493
    
    
    
    540
    
    
    
    437Total account representatives
    
    
    1,084
    
    
    
    1,000
    
    
    
    1,050
    
    
    
    908(1)   Based on number of average traditional call center Full Time Equivalent (FTE) account
representatives with one or more years of service.(2)   Based on number of average traditional call center FTE account representatives with less
than one year of service, including new employees in training.Collection Averages by ExperienceThree months ended
    
    Year endedMarch 31,
    
    December 31,Collection averages:
    
    2006
    
    2005
    
    2005
    
    2004One year or more (1)
    
    $
    52,302
    
    
    $
    55,710
    
    
    $
    199,734
    
    
    $
    195,426Less than one year (2)
    
    
    30,980
    
    
    
    33,040
    
    
    
    117,859
    
    
    
    139,891Overall average
    
    
    41,995
    
    
    
    44,535
    
    
    
    157,661
    
    
    
    168,708(1)   Based on number of average traditional call center FTE account representatives with one or
more years of service.(2)   Based on number of average traditional call center FTE account representatives with less
than one year of service, including new employees in training.We believe that account representative productivity is adversely impacted by increases in
account representative turnover. Collection averages tend to increase for account representatives
as they gain experience. The following table provides annualized account representative turnover
data for traditional collections for the three months ended March 31, 2006 and 2005 as well as for
the years ended December 31, 2005 and 2004:Turnover by ExperienceThree months ended
    
    Year endedMarch 31,
    
    December 31,2006
    
    2005
    
    2005
    
    2004Account representatives turnover:One year or more (1)
    
    
    28.6
    %
    
    
    46.0
    %
    
    
    39.3
    %
    
    
    38.4
    %Less than one year (2)
    
    
    98.3
    
    
    
    122.9
    
    
    
    117.8
    
    
    
    103.3Total turnover
    
    
    61.5
    
    
    
    84.2
    
    
    
    78.8
    
    
    
    69.0
 
 (1)
    
    Based on number of traditional call center FTE account representatives with one or more years
of service.(2)
    
    Based on number of traditional call center FTE account representatives with less than one
year of service, including new employees in training. 
 17




---



##### Table of Contents



Cash Collections
  Historical Collections (1)
 ThreeMonthsEndedPurchase
    
    Purchase
    
    
    Year Ended December 31,
    
    
    March 31,Period
    
    Price (2)
    
    
    1995
    
    
    1996
    
    
    1997
    
    
    1998
    
    
    1999
    
    
    2000
    
    
    2001
    
    
    2002
    
    
    2003
    
    
    2004
    
    
    2005
    
    
    2006(dollars in thousands)Pre-1995
    
    
    
    
    
    $
    4,303
    
    
    $
    3,218
    
    
    $
    2,290
    
    
    $
    1,481
    
    
    $
    1,106
    
    
    $
    912
    
    
    $
    695
    
    
    $
    478
    
    
    $
    511
    
    
    $
    369
    
    
    $
    375
    
    
    $
    591995
    
    $
    1,519
    
    
    
    388
    
    
    
    1,566
    
    
    
    1,659
    
    
    
    1,118
    
    
    
    786
    
    
    
    708
    
    
    
    472
    
    
    
    343
    
    
    
    278
    
    
    
    227
    
    
    
    212
    
    
    
    421996
    
    
    3,844
    
    
    
    
    
    
    
    827
    
    
    
    3,764
    
    
    
    3,085
    
    
    
    2,601
    
    
    
    2,098
    
    
    
    1,440
    
    
    
    1,041
    
    
    
    816
    
    
    
    687
    
    
    
    683
    
    
    
    1291997
    
    
    4,345
    
    
    
    
    
    
    
    
    
    
    
    1,682
    
    
    
    4,919
    
    
    
    5,573
    
    
    
    5,017
    
    
    
    3,563
    
    
    
    2,681
    
    
    
    1,785
    
    
    
    1,526
    
    
    
    1,342
    
    
    
    2951998
    
    
    16,411
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,835
    
    
    
    15,220
    
    
    
    15,045
    
    
    
    12,962
    
    
    
    11,021
    
    
    
    7,987
    
    
    
    5,582
    
    
    
    4,653
    
    
    
    9321999
    
    
    12,925
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,761
    
    
    
    11,331
    
    
    
    10,862
    
    
    
    9,750
    
    
    
    8,278
    
    
    
    6,675
    
    
    
    5,022
    
    
    
    1,0882000
    
    
    20,595
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,895
    
    
    
    23,444
    
    
    
    22,559
    
    
    
    20,318
    
    
    
    17,196
    
    
    
    14,062
    
    
    
    3,0972001
    
    
    43,131
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,630
    
    
    
    50,327
    
    
    
    50,967
    
    
    
    45,713
    
    
    
    39,865
    
    
    
    8,7692002
    
    
    72,286
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22,340
    
    
    
    70,813
    
    
    
    72,024
    
    
    
    67,649
    
    
    
    16,0822003
    
    
    87,316
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    36,067
    
    
    
    94,564
    
    
    
    94,234
    
    
    
    23,8072004
    
    
    86,995
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23,365
    
    
    
    68,354
    
    
    
    18,2462005
    
    
    101,764
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23,459
    
    
    
    16,4302006
    
    
    26,897
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    413Total
    
    
    
    
    
    $
    4,691
    
    
    $
    5,611
    
    
    $
    9,395
    
    
    $
    15,438
    
    
    $
    29,047
    
    
    $
    44,006
    
    
    $
    71,068
    
    
    $
    120,540
    
    
    $
    197,820
    
    
    $
    267,928
    
    
    $
    319,910
    
    
    $
    89,389Cumulative Collections (1)TotalThroughPurchase
    
    Purchase
    
    
    Total Through December 31,
    
    
    March 31,Period
    
    Price (2)
    
    
    1995
    
    
    1996
    
    
    1997
    
    
    1998
    
    
    1999
    
    
    2000
    
    
    2001
    
    
    2002
    
    
    2003
    
    
    2004
    
    
    2005
    
    
    2006(dollars in thousands)1995
    
    $
    1,519
    
    
    $
    388
    
    
    $
    1,954
    
    
    $
    3,613
    
    
    $
    4,731
    
    
    $
    5,517
    
    
    $
    6,225
    
    
    $
    6,697
    
    
    $
    7,040
    
    
    $
    7,318
    
    
    $
    7,545
    
    
    $
    7,757
    
    
    $
    7,7991996
    
    
    3,844
    
    
    
    
    
    
    
    827
    
    
    
    4,591
    
    
    
    7,676
    
    
    
    10,277
    
    
    
    12,375
    
    
    
    13,815
    
    
    
    14,856
    
    
    
    15,672
    
    
    
    16,359
    
    
    
    17,042
    
    
    
    17,1711997
    
    
    4,345
    
    
    
    
    
    
    
    
    
    
    
    1,682
    
    
    
    6,601
    
    
    
    12,174
    
    
    
    17,191
    
    
    
    20,754
    
    
    
    23,435
    
    
    
    25,220
    
    
    
    26,746
    
    
    
    28,088
    
    
    
    28,3831998
    
    
    16,411
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,835
    
    
    
    20,055
    
    
    
    35,100
    
    
    
    48,062
    
    
    
    59,083
    
    
    
    67,070
    
    
    
    72,652
    
    
    
    77,305
    
    
    
    78,2371999
    
    
    12,925
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,761
    
    
    
    15,092
    
    
    
    25,954
    
    
    
    35,704
    
    
    
    43,982
    
    
    
    50,657
    
    
    
    55,679
    
    
    
    56,7672000
    
    
    20,595
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,895
    
    
    
    32,339
    
    
    
    54,898
    
    
    
    75,216
    
    
    
    92,412
    
    
    
    106,474
    
    
    
    109,5712001
    
    
    43,131
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,630
    
    
    
    67,957
    
    
    
    118,924
    
    
    
    164,637
    
    
    
    204,502
    
    
    
    213,2712002
    
    
    72,286
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22,340
    
    
    
    93,153
    
    
    
    165,177
    
    
    
    232,826
    
    
    
    248,9082003
    
    
    87,316
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    36,067
    
    
    
    130,631
    
    
    
    224,865
    
    
    
    248,6722004
    
    
    86,995
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23,365
    
    
    
    91,719
    
    
    
    109,9652005
    
    
    101,764
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23,459
    
    
    
    39,8892006
    
    
    26,897
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    413Cumulative Collections as Percentage of Purchase Price (1)TotalThroughPurchase
    
    Purchase
        
    Total Through December 31,

        
    March 31,Period
    
    Price (2)
        
    1995
    
    
    
    1996
    
    
    1997
    
    
    1998
    
    
    1999
    
    
    2000
    
    
    2001
    
    
    2002
    
    
    2003
    
    
    2004
    
    
    2005

        
    20061995
    
    $
    1,519
        
    
    26
    %
    
    
    129
    %
    
    
    238
    %
    
    
    311
    %
    
    
    363
    %
    
    
    410
    %
    
    
    441
    %
    
    
    463
    %
    
    
    482
    %
    
    
    497
    %
    
    
    511
    %

    
    513
    %1996
    
    
    3,844
        
    
    
    
    
    
    22
    
    
    
    119
    
    
    
    200
    
    
    
    267
    
    
    
    322
    
    
    
    359
    
    
    
    386
    
    
    
    408
    
    
    
    426
    
    
    
    443
    
    
    

    4471997
    
    
    4,345
        
    
    
    
    
    
    
    
    
    
    39
    
    
    
    152
    
    
    
    280
    
    
    
    396
    
    
    
    478
    
    
    
    539
    
    
    
    580
    
    
    
    616
    
    
    
    646
    
    
    
    6531998
    
    
    16,411
    
        
    
    
    
    
    
    
    
    
    
    
    
    
    29
    
    
    
    122
    
    
    
    214
    
    
    
    293
    
    
    
    360
    
    
    
    409
    
    
    
    443
    
    
    
    471
    
    
    
    4771999
    
    
    12,925
    
        
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29
    
    
    
    117
    
    
    
    201
    
    
    
    276
    
    
    
    340
    
    
    
    392
    
    
    
    431
    
    
    
    4392000
    
    
    20,595
    
        
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    43
    
    
    
    157
    
    
    
    267
    
    
    
    365
    
    
    
    449
    
    
    
    517
    
    
    
    5322001
    
    
    43,131
    
        
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    41
    
    
    
    158
    
    
    
    276
    
    
    
    382
    
    
    
    474
    
    
    
    4942002
    
    
    72,286
        
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    31
    
    
    
    129
    
    
    
    229
    
    
    
    322
    
    
    
    3442003
    
    
    87,316
    
        
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    41
    
    
    
    150
    
    
    
    258
    
    
    
    2852004
    
    
    86,995
    
        
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27
    
    
    
    105
    
    
    
    1262005
    
    
    101,764
        
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23
    
    
    
    392006
    
    
    26,897
    
        
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2
 
 (1)
    
    Does not include proceeds from sales of any receivables.(2)
    
    Purchase amount refers to the cash paid to a seller to acquire a portfolio less the purchase
price refunded by a seller due to the return of non-compliant accounts (also defined as
buybacks) less the purchase price for accounts that were sold at the time of purchase to
another debt purchaser. 18




---



##### Table of Contents



Seasonality
   
 Cash Collections
 Quarter
    
    2002
    
    
    2003
    
    
    2004
    
    
    2005
    
    
    2006First
    
    $
    27,297,721
    
    
    $
    44,017,730
    
    
    $
    65,196,055
    
    
    $
    80,397,640
    
    
    $
    89,389,858Second
    
    
    30,475,078
    
    
    
    51,190,533
    
    
    
    67,566,031
    
    
    
    84,862,856
    
    
    
    Third
    
    
    29,337,914
    
    
    
    48,622,829
    
    
    
    66,825,822
    
    
    
    78,159,364
    
    
    
    Fourth
    
    
    33,429,419
    
    
    
    53,988,333
    
    
    
    68,339,797
    
    
    
    76,490,350
    
    
    
    Total cash collections
    
    $
    120,540,132
    
    
    $
    197,819,425
    
    
    $
    267,927,705
    
    
    $
    319,910,210
    
    
    $
    89,389,858
  For the year ended
    
    For the three months endedDecember 31,
    
    March 31,2004
    
    2005
    
    2005
    
    2006Traditional collections
    
    
    57.2
    %
    
    
    51.8
    %
    
    
    55.4
    %
    
    
    50.9
    %Legal collections
    
    
    31.0
    
    
    
    35.8
    
    
    
    32.3
    
    
    
    36.8Other collections
    
    
    11.8
    
    
    
    12.4
    
    
    
    12.3
    
    
    
    12.3Total cash collections
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
 19




---



##### Table of Contents



Face Value ofCharged-off
    
    
    
    
    
    
    No. ofAsset Type
    
    Receivables (3)
    
    
    %
    
    
    Accounts
    
    
    %Visa®/MasterCard®/Discover®
    
    $
    10,442,026,946
    
    
    
    44.5
    %
    
    
    4,444,056
    
    
    
    19.8
    %Private Label Credit Cards
    
    
    3,245,776,213
    
    
    
    13.8
    
    
    
    4,742,436
    
    
    
    21.2Telecommunications/Utility/Gas (1)
    
    
    2,043,596,549
    
    
    
    8.7
    
    
    
    4,766,548
    
    
    
    21.3Auto Deficiency
    
    
    1,387,698,055
    
    
    
    5.9
    
    
    
    248,375
    
    
    
    1.1Health Club
    
    
    1,390,914,154
    
    
    
    5.9
    
    
    
    1,422,361
    
    
    
    6.3Installment Loans
    
    
    619,086,184
    
    
    
    2.7
    
    
    
    200,459
    
    
    
    1.0Wireless Telecommunications
    
    
    717,757,549
    
    
    
    3.1
    
    
    
    1,690,860
    
    
    
    7.5Other (2)
    
    
    3,615,107,542
    
    
    
    15.4
    
    
    
    4,884,667
    
    
    
    21.8Total
    
    $
    23,461,963,192
    
    
    
    100.0
    %
    
    
    22,399,762
    
    
    
    100.0
    %
 
 (1)
    
    This excludes the wireless telecommunication purchased receivable portfolios.(2)
    
    Other includes charged-off receivables of several debt types, including student loan,
mobile home deficiency and retail mail order. This includes the purchase of a single portfolio
in June 2002 with a face value of $1.2 billion at a cost of $1.2 million (or 0.1% of face
value) and consisting of approximately 3.8 million accounts.(3)
    
    Face value of charged-off receivables represents the cumulative amount of purchases net of
buybacks. The amount is not adjusted for payments received, settlements or additional accrued
interest on any accounts in such portfolios after the date we purchased the applicable
portfolio.  
    
    Fresh accounts are typically 120 to 270 days past due, have been charged-off by the
credit originator and are either being sold prior to any post charged-off collection
activity or are placed with a third party collector for the first time. These accounts
typically sell for the highest purchase price.
    
    Primary accounts are typically 270 to 360 days past due, have been previously placed
with one third party collector and typically receive a lower purchase price.
    
    Secondary and tertiary accounts are typically more than 360 days past due, have been
placed with two or three third party collectors and receive even lower purchase prices.
   Face Value ofCharged-off
    
    
    
    
    
    
    No. ofAccount Type
    
    Receivables (2)
    
    
    %
    
    
    Accounts
    
    
    %Fresh
    
    $
    1,086,401,545
    
    
    
    4.6
    %
    
    
    462,813
    
    
    
    2.1
    %Primary
    
    
    3,925,627,956
    
    
    
    16.8
    
    
    
    2,663,057
    
    
    
    11.9Secondary
    
    
    4,204,227,580
    
    
    
    17.9
    
    
    
    4,246,860
    
    
    
    18.9Tertiary (1)
    
    
    13,020,819,926
    
    
    
    55.5
    
    
    
    14,394,569
    
    
    
    64.3Other
    
    
    1,224,886,185
    
    
    
    5.2
    
    
    
    632,463
    
    
    
    2.8Total
    
    $
    23,461,963,192
    
    
    
    100.0
    %
    
    
    22,399,762
    
    
    
    100.0
    %
 20




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##### Table of Contents



(1)
    
    This includes the purchase of a single portfolio in June 2002 with a face value of $1.2
billion at a cost of $1.2 million (or 0.1% of face value), and consisting of approximately 3.8
million accounts.(2)
    
    Face value of charged-off receivables represents the cumulative amount of purchases net of
buybacks. The amount is not adjusted for payments received, settlements or additional accrued
interest on any accounts in such portfolios after the date we purchased the applicable
portfolio.  Face Value ofCharged-off
    
    
    
    
    
    
    No. ofGeographic Location
    
    Receivables (3)
    
    
    %
    
    
    Accounts
    
    
    %Texas (1)
    
    $
    3,275,520,677
    
    
    
    14.0
    %
    
    
    2,764,964
    
    
    
    12.4
    %California
    
    
    2,662,479,392
    
    
    
    11.4
    
    
    
    2,787,138
    
    
    
    12.4Florida (1)
    
    
    2,255,584,925
    
    
    
    9.6
    
    
    
    1,587,115
    
    
    
    7.1Michigan (1)
    
    
    1,750,558,156
    
    
    
    7.5
    
    
    
    2,268,135
    
    
    
    10.1New York
    
    
    1,430,081,404
    
    
    
    6.1
    
    
    
    1,172,618
    
    
    
    5.2Ohio (1)
    
    
    1,271,285,269
    
    
    
    5.4
    
    
    
    1,465,463
    
    
    
    6.5Illinois (1)
    
    
    1,065,832,246
    
    
    
    4.5
    
    
    
    1,348,072
    
    
    
    6.0Pennsylvania
    
    
    712,488,332
    
    
    
    3.0
    
    
    
    592,952
    
    
    
    2.7North Carolina
    
    
    682,759,274
    
    
    
    2.9
    
    
    
    527,789
    
    
    
    2.4Georgia
    
    
    597,656,104
    
    
    
    2.5
    
    
    
    514,821
    
    
    
    2.3Other (2)
    
    
    7,757,717,413
    
    
    
    33.1
    
    
    
    7,370,695
    
    
    
    32.9Total
    
    $
    23,461,963,192
    
    
    
    100.0
    %
    
    
    22,399,762
    
    
    
    100.0
    %
 
 (1)
    
    Collection site located in this state.(2)
    
    Each state included in Other represents under 2.0% individually of the face value of total
charged-off consumer receivables.(3)
    
    Face value of charged-off receivables represents the cumulative amount of purchases net of
buybacks. The amount is not adjusted for payments received, settlements or additional accrued
interest on any accounts in such portfolios after the date we purchased the applicable
portfolio. Liquidity and Capital Resources
  Borrowings
  
    
    funds borrowed can be used to purchase portfolios of charged-off receivables and for
general corporate purposes;
    
    leverage ratio (as defined in the line of credit agreement) cannot exceed 1.5 to 1.0;
    
    debt to total capitalization ratio (as defined in the line of credit agreement) cannot exceed 1.25 to 1.0; and
 
 21




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##### Table of Contents




    
    tangible net worth must exceed $145.0 million plus 50% of net income after September
30, 2004, which required a balance of $183.2 million as of March 31, 2006.
  Cash Flows
        Future Contractual Cash Obligations
  Year Ending December 31,2006
    
    
    2007
    
    
    2008 (3)
    
    
    2009
    
    
    2010
    
    
    ThereafterCapital lease obligations
    
    $
    97,111
    
    
    $
    63,802
    
    
    $
    18,634
    
    
    $
    
    
    
    $
    
    
    
    $
    Operating lease obligations (1)
    
    
    4,666,933
    
    
    
    6,288,820
    
    
    
    5,353,700
    
    
    
    4,525,104
    
    
    
    3,757,952
    
    
    
    12,333,794Purchased receivables (2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Line of credit (3)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Employment agreements
    
    
    405,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    5,169,044
    
    
    $
    6,352,622
    
    
    $
    5,372,334
    
    
    $
    4,525,104
    
    
    $
    3,757,952
    
    
    $
    12,333,794
 22




---



##### Table of Contents



(1)
    
    In April 2006, we entered into an amendment with respect to the lease for the Warren,
Michigan facility. The amendment extends the expiration of our lease agreement from November
30, 2014 to May 31, 2016 with increases in the future minimum contractual obligations. The
future minimum contractual obligations will increase to approximately $2.0 million, $2.8
million, $2.8 million, $2.9 million, $3.0 million and $16.9 million in 2006, 2007, 2008, 2009,
2010 and thereafter, respectively, from $1.9 million, $2.5 million, $2.6 million, $2.6
million, $2.7 million and $11.1 million in 2006, 2007, 2008, 2009, 2010 and thereafter,
respectively.(2)
    
    During 2006, we renewed one forward flow contract that commits us to purchase receivables for
a fixed percentage of the face amount of the receivables. This contract expires in November
2006 and calls for monthly purchases of approximately $142,500, depending upon circumstances.(3)
    
    To the extent that a balance is outstanding on our line of credit, it would be due in May
2008. There was no outstanding balance on our line of credit as of March 31, 2006. Off-Balance Sheet Arrangements
  Critical Accounting Policies
     
 Item 3. Quantitative and Qualitative Disclosures about Market Risk
  23




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##### Table of Contents



Item 4. Controls and Procedures
  
 PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
   
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
 Stock Options
   Number of
    
    ExerciseDirector
    
    Option Grant Date
    
    Options
    
    PriceJennifer L. Adams
    
    February 17, 2006
    
    
    860
    
    
    $
    17.45Terrence D. Daniels
    
    February 17, 2006
    
    
    860
    
    
    $
    17.45Donald Haider
    
    February 17, 2006
    
    
    860
    
    
    $
    17.45Anthony Ignaczak
    
    February 17, 2006
    
    
    860
    
    
    $
    17.45H. Eugene Lockhart
    
    February 17, 2006
    
    
    860
    
    
    $
    17.45
 24




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##### Table of Contents



Treasury Shares
  Average
    
    
    Total Number of
    
    
    Maximum Number ofTotal Number
    
    
    Price
    
    
    Shares Purchased as Part
    
    
    Shares that May Yetof Shares
    
    
    Paid per
    
    
    of Publicly Announced
    
    
    Be Purchased UnderPeriod
    
    Purchased (1)
    
    
    Share
    
    
    Plans or Programs
    
    
    the Plans or ProgramsJanuary
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    February
    
    
    20,160
    
    
    
    15.00
    
    
    
    
    
    
    
    March
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    20,160
    
    
    $
    15.00
    
    
    
    
    
    
    
    
 
 (1)
    
    The Company exercised its right to repurchase its shares from former employees at $15.00 per
share. 
 Item 6. Exhibits
 ExhibitNumber
    
    Description10.1*
    
    Third Amendment to Lease Agreement for property located at 28405 Van DykeAvenue, Warren, Michigan31.1*
    
    Rule 13a-14(a) Certification of Chief Executive Officer31.2*
    
    Rule 13a-14(a) Certification of Chief Financial Officer32.1*
    
    Section 1350 Certification of Chief Executive Officer and Chief Financial Officer
 
 * Filed herewith
 25




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##### Table of Contents



SIGNATURES
  ASSET ACCEPTANCE CAPITAL CORP.Date: May 9, 2006
    By:
    /s/ Nathaniel F. Bradley IVNathaniel F. Bradley IVChairman of the Board, President andChief Executive
Officer

(Principal Executive Officer) Date: May 9, 2006
    By:
    /s/ Mark A. RedmanMark A. RedmanVice President  Finance and

Chief Financial Officer

(Principal Financial and Accounting Officer) 26