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Debt | 9 Months Ended
--- | ---
Sep. 30, 2015
Debt Disclosure [Abstract] |
Debt | DEBT We currently utilize the following primary forms of debt financing: (1) a revolving secured line of credit; (2) revolving secured warehouse (“Warehouse”) facilities; (3) asset-backed secured financings (“Term ABS”) and (4) senior notes. General information for each of our financing transactions in place as of September 30, 2015 is as follows:
(Dollars in millions) |  |  |  |  |  |  |  |  |  |
Financings |  | Wholly-owned Subsidiary |  | Maturity Date |  | Financing Amount |  | Interest Rate as of September 30, 2015
Revolving Secured Line of Credit |  | n/a |  | 06/22/2018 |  |  |  | $ | 310.0 |  |  | At our option, either LIBOR plus 187.5 basis points or the prime rate plus 87.5 basis points
Warehouse Facility II (1) |  | CAC Warehouse Funding Corp. II |  | 07/18/2017 |  | (3) |  | $ | 400.0 |  |  | Commercial paper rate or LIBOR plus 200 basis points (2)
Warehouse Facility IV (1) |  | CAC Warehouse Funding LLC IV |  | 04/30/2018 |  | (3) |  | $ | 75.0 |  |  | LIBOR plus 200 basis points (2)
Warehouse Facility V (1) |  | CAC Warehouse Funding LLC V |  | 09/10/2017 |  | (4) |  | $ | 100.0 |  |  | LIBOR plus 160 basis points (2)
Warehouse Facility VI (1) |  | CAC Warehouse Funding LLC VI |  | 09/30/2018 |  | (3) |  | $ | 75.0 |  |  | LIBOR plus 200 basis points
Term ABS 2013-1 (1) |  | Credit Acceptance Funding LLC 2013-1 |  | 04/15/2015 |  | (3) |  | $ | 140.3 |  |  | Fixed rate
Term ABS 2013-2 (1) |  | Credit Acceptance Funding LLC 2013-2 |  | 10/15/2015 |  | (3) |  | $ | 197.8 |  |  | Fixed rate
Term ABS 2014-1 (1) |  | Credit Acceptance Funding LLC 2014-1 |  | 04/15/2016 |  | (3) |  | $ | 299.0 |  |  | Fixed rate
Term ABS 2014-2 (1) |  | Credit Acceptance Funding LLC 2014-2 |  | 09/15/2016 |  | (3) |  | $ | 349.0 |  |  | Fixed rate
Term ABS 2015-1 (1) |  | Credit Acceptance Funding LLC 2015-1 |  | 01/16/2017 |  | (3) |  | $ | 300.6 |  |  | Fixed rate
Term ABS 2015-2 (1) |  | Credit Acceptance Funding LLC 2015-2 |  | 08/15/2017 |  | (3) |  | $ | 300.2 |  |  | Fixed rate
2021 Senior Notes |  | n/a |  | 02/15/2021 |  |  |  | $ | 300.0 |  |  | Fixed rate
2023 Senior Notes |  | n/a |  | 03/15/2023 |  |  |  | $ | 250.0 |  |  | Fixed rate
(1) | Financing made available only to a specified subsidiary of the Company.
(2) | Interest rate cap agreements are in place to limit the exposure to increasing interest rates.
(3) | Represents the revolving maturity date. The outstanding balance will amortize after the maturity date based on the cash flows of the pledged assets.
(4) | Represents the revolving maturity date. The outstanding balance will amortize after the revolving maturity date and any amounts remaining on September 10, 2019 will be due.
Additional information related to the amounts outstanding on each facility is as follows:
(In millions) | For the Three Months Ended September 30, |  | For the Nine Months Ended September 30,
| 2015 |  | 2014 |  | 2015 |  | 2014
Revolving Secured Line of Credit |  |  |  |  |  |  |
Maximum outstanding balance | $ | 142.6 |  |  | $ | 163.5 |  |  | $ | 206.3 |  |  | $ | 204.7 |
Average outstanding balance | 30.0 |  |  | 101.2 |  |  | 48.0 |  |  | 102.2 |
Warehouse Facility II |  |  |  |  |  |  |
Maximum outstanding balance | $ | 200.8 |  |  | $ | 290.2 |  |  | $ | 200.8 |  |  | $ | 290.2 |
Average outstanding balance | 4.4 |  |  | 152.9 |  |  | 10.6 |  |  | 89.6 |
Warehouse Facility IV |  |  |  |  |  |  |
Maximum outstanding balance | $ | 12.0 |  |  | $ | 26.7 |  |  | $ | 35.0 |  |  | $ | 26.7 |
Average outstanding balance | 12.0 |  |  | 24.5 |  |  | 8.2 |  |  | 21.7 |
Warehouse Facility V (1) |  |  |  |  |  |  |
Maximum outstanding balance | $ | 99.2 |  |  | $ | 58.8 |  |  | $ | 99.2 |  |  | $ | 75.0 |
Average outstanding balance | 9.6 |  |  | 2.5 |  |  | 16.4 |  |  | 7.4 |
Warehouse Facility VI |  |  |  |  |  |  |
Maximum outstanding balance | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Average outstanding balance | — |  |  | — |  |  | — |  |  | — |
(1) | In connection with the renewal of this warehouse facility in the third quarter of 2014, we formed a new wholly owned subsidiary, CAC Warehouse Funding LLC V, which replaced CAC Warehouse Funding III, LLC.
(Dollars in millions) | As of
| September 30, 2015 |  | December 31, 2014
Revolving Secured Line of Credit |  |  |
Balance outstanding | $ | — |  |  | $ | 119.5 |
Amount available for borrowing (1) | 310.0 |  |  | 115.5 |
Interest rate | 2.06 | % |  | 2.16 | %
Warehouse Facility II |  |  |
Balance outstanding | $ | — |  |  | $ | 81.3 |
Amount available for borrowing (1) | 400.0 |  |  | 243.7 |
Loans pledged as collateral | — |  |  | 104.1 |
Restricted cash and cash equivalents pledged as collateral | 1.7 |  |  | 2.0 |
Interest rate | 2.20 | % |  | 2.16 | %
Warehouse Facility IV |  |  |
Balance outstanding | $ | 12.0 |  |  | $ | 19.9 |
Amount available for borrowing (1) | 63.0 |  |  | 55.1 |
Loans pledged as collateral | 22.8 |  |  | 44.9 |
Restricted cash and cash equivalents pledged as collateral | 0.9 |  |  | 1.4 |
Interest rate | 2.19 | % |  | 2.17 | %
Warehouse Facility V |  |  |
Balance outstanding | $ | — |  |  | $ | 17.9 |
Amount available for borrowing (1) | 100.0 |  |  | 57.1 |
Loans pledged as collateral | — |  |  | 34.9 |
Restricted cash and cash equivalents pledged as collateral | 1.1 |  |  | 1.2 |
Interest rate | 1.80 | % |  | 1.77 | %
Warehouse Facility VI |  |  |
Balance outstanding | $ | — |  |  | $ | — |
Amount available for borrowing (1) | 75.0 |  |  | — |
Loans pledged as collateral | — |  |  | — |
Restricted cash and cash equivalents pledged as collateral | 0.1 |  |  | — |
Interest rate | 2.20 | % |  | — | %
Term ABS 2012-1 |  |  |
Balance outstanding | $ | — |  |  | $ | 43.8 |
Loans pledged as collateral | — |  |  | 145.1 |
Restricted cash and cash equivalents pledged as collateral | — |  |  | 19.3 |
Interest rate | — | % |  | 3.04 | %
Term ABS 2012-2 |  |  |
Balance outstanding | $ | — |  |  | $ | 184.0 |
Loans pledged as collateral | — |  |  | 278.6 |
Restricted cash and cash equivalents pledged as collateral | — |  |  | 27.8 |
Interest rate | — | % |  | 1.67 | %
Term ABS 2013-1 |  |  |
Balance outstanding | $ | 74.3 |  |  | $ | 140.3 |
Loans pledged as collateral | 159.1 |  |  | 186.7 |
Restricted cash and cash equivalents pledged as collateral | 16.5 |  |  | 16.7 |
Interest rate | 1.40 | % |  | 1.31 | %
Term ABS 2013-2 |  |  |
Balance outstanding | $ | 197.8 |  |  | $ | 197.8 |
Loans pledged as collateral | 246.2 |  |  | 248.9 |
Restricted cash and cash equivalents pledged as collateral | 23.4 |  |  | 21.2 |
Interest rate | 1.67 | % |  | 1.67 | %
Term ABS 2014-1 |  |  |
Balance outstanding | $ | 299.0 |  |  | $ | 299.0 |
Loans pledged as collateral | 364.5 |  |  | 426.2 |
Restricted cash and cash equivalents pledged as collateral | 33.6 |  |  | 31.6 |
Interest rate | 1.72 | % |  | 1.72 | %
Term ABS 2014-2 |  |  |
Balance outstanding | $ | 349.0 |  |  | $ | 349.0 |
Loans pledged as collateral | 433.2 |  |  | 440.7 |
Restricted cash and cash equivalents pledged as collateral | 38.9 |  |  | 36.2 |
Interest rate | 2.05 | % |  | 2.05 | %
Term ABS 2015-1 |  |  |
Balance outstanding | $ | 300.6 |  |  | $ | — |
Loans pledged as collateral | 372.7 |  |  | — |
Restricted cash and cash equivalents pledged as collateral | 30.3 |  |  | — |
Interest rate | 2.26 | % |  | — | %
Term ABS 2015-2 |  |  |
Balance outstanding | $ | 300.2 |  |  | $ | — |
Loans pledged as collateral | 401.4 |  |  | — |
Restricted cash and cash equivalents pledged as collateral | 28.9 |  |  | — |
Interest rate | 2.63 | % |  | — | %
2021 Senior Notes |  |  |
Balance outstanding | $ | 300.0 |  |  | $ | 300.0 |
Interest rate | 6.125 | % |  | 6.125 | %
2023 Senior Notes |  |  |
Balance outstanding (2) | $ | 248.3 |  |  | $ | — |
Interest rate | 7.375 | % |  | — | %
(1) | Availability may be limited by the amount of assets pledged as collateral.
(2) | As of September 30, 2015 the outstanding balance presented for the 2023 Senior Notes includes an unamortized debt discount of $1.7 million.
Revolving Secured Line of Credit Facility We have a $310.0 million revolving secured line of credit facility with a commercial bank syndicate. On June 11, 2015, we increased the facility limit from $235.0 million to $310.0 million. We also extended the maturity of the facility from June 23, 2017 to June 22, 2018. There were no other material changes to the terms of the facility. Borrowings under the revolving secured line of credit facility, including any letters of credit issued under the facility, are subject to a borrowing-base limitation. This limitation equals 80% of the net book value of Loans, less a hedging reserve (not exceeding $1.0 million), and the amount of other debt secured by the collateral which secures the revolving secured line of credit facility. Borrowings under the revolving secured line of credit facility agreement are secured by a lien on most of our assets. Warehouse Facilities We have four Warehouse facilities with total borrowing capacity of $650.0 million. Each of the facilities are with different institutional investors. On May 13, 2015, we extended the date on which our $75.0 million Warehouse Facility IV will cease to revolve from April 5, 2016 to April 30, 2018. On May 19, 2015, we increased the facility limit of Warehouse Facility II from $325.0 million to $400.0 million. On June 11, 2015, we increased the facility limit of Warehouse Facility V from $75.0 million to $100.0 million. There were no other material changes to the terms of the facilities. On September 30, 2015, we entered into Warehouse Facility VI, a $75.0 million revolving secured warehouse facility. The facility will cease to revolve on September 30, 2018. Borrowings under the facility will bear interest at a rate equal to LIBOR plus 200 basis points. Under each Warehouse facility, we can contribute Loans to our wholly-owned subsidiaries in return for cash and equity in each subsidiary. In turn, each subsidiary pledges the Loans as collateral to institutional investors to secure financing that will fund the cash portion of the purchase price of the Loans. The financing provided to each subsidiary under the applicable facility is limited to the lesser of 80% of the net book value of the contributed Loans plus the restricted cash and cash equivalents pledged as collateral on such Loans or the facility limit. The financings create indebtedness for which the subsidiaries are liable and which is secured by all the assets of each subsidiary. Such indebtedness is non-recourse to us, even though we are consolidated for financial reporting purposes with the subsidiaries. Because the subsidiaries are organized as legal entities separate from us, their assets (including the contributed Loans) are not available to our creditors. The subsidiaries pay us a monthly servicing fee equal to 6% of the collections received with respect to the contributed Loans. The fee is paid out of the collections. Except for the servicing fee and holdback payments due to Dealers, if a facility is amortizing, we do not have any rights in any portion of such collections until all outstanding principal, accrued and unpaid interest, fees and other related costs have been paid in full. If a facility is not amortizing, the applicable subsidiary may be entitled to retain a portion of such collections provided that the borrowing base requirements of the facility are satisfied. Term ABS Financings Our wholly-owned subsidiaries (the “Funding LLCs”), have completed secured financing transactions with qualified institutional investors. In connection with these transactions, we contributed Loans on an arms-length basis to each Funding LLC for cash and the sole membership interest in that Funding LLC. In turn, each Funding LLC contributed the Loans to a respective trust that issued notes to qualified institutional investors. The Term ABS 2013-1, 2013-2, 2014-1, 2014-2, 2015-1 and 2015-2 transactions each consist of three classes of notes. The Class C Notes for each Term ABS financing, other than Term ABS 2015-1 and 2015-2, do not bear interest and have been retained by us. Each financing at the time of issuance has a specified revolving period during which we may be required, and are likely, to contribute additional Loans to each Funding LLC. Each Funding LLC will then contribute the Loans to their respective trust. At the end of the revolving period, the debt outstanding under each financing will begin to amortize. The financings create indebtedness for which the trusts are liable and which is secured by all the assets of each trust. Such indebtedness is non-recourse to us, even though we are consolidated for financial reporting purposes with the trusts and the Funding LLCs. Because the Funding LLCs are organized as legal entities separate from us, their assets (including the contributed Loans) are not available to our creditors. We receive a monthly servicing fee on each financing equal to 6% of the collections received with respect to the contributed Loans. The fee is paid out of the collections. Except for the servicing fee and Dealer Holdback payments due to Dealers, if a facility is amortizing, we do not have any rights in any portion of such collections until all outstanding principal, accrued and unpaid interest, fees and other related costs have been paid in full. If a facility is not amortizing, the applicable subsidiary may be entitled to retain a portion of such collections provided that the borrowing base requirements of the facility are satisfied. However, in our capacity as servicer of the Loans, we do have a limited right to exercise a “clean-up call” option to purchase Loans from the Funding LLCs and/or the trusts under certain specified circumstances. Alternatively, when a trust’s underlying indebtedness is paid in full, either through collections or through a prepayment of the indebtedness, the trust is to pay any remaining collections over to its Funding LLC as the sole beneficiary of the trust. The collections will then be available to be distributed to us as the sole member of the respective Funding LLC. The table below sets forth certain additional details regarding the outstanding Term ABS Financings:
(Dollars in millions) |  |  |  |  |  |
Term ABS Financings |  | Close Date |  | Net Book Value of Loans Contributed at Closing |  | 24-month Revolving Period
Term ABS 2013-1 |  | April 25, 2013 |  | $ | 187.8 |  |  | Through April 15, 2015
Term ABS 2013-2 |  | October 31, 2013 |  | $ | 250.1 |  |  | Through October 15, 2015
Term ABS 2014-1 |  | April 16, 2014 |  | $ | 374.7 |  |  | Through April 15, 2016
Term ABS 2014-2 |  | September 25, 2014 |  | $ | 437.6 |  |  | Through September 15, 2016
Term ABS 2015-1 |  | January 29, 2015 |  | $ | 375.9 |  |  | Through January 16, 2017
Term ABS 2015-2 |  | August 20, 2015 |  | $ | 375.5 |  |  | Through August 15, 2017
Senior Notes On March 30, 2015, we issued $250.0 million aggregate principal amount of 7.375% Senior Notes due 2023 (the “2023 senior notes”). The notes were issued pursuant to an indenture, dated as of March 30, 2015, among the Company, the Company’s subsidiaries Buyers Vehicle Protection Plan, Inc. and Vehicle Remarketing Services, Inc. (collectively, the “Guarantors”), and U.S. Bank National Association, as trustee. The 2023 senior notes mature on March 15, 2023 and bear interest at a rate of 7.375% per annum, computed on the basis of a 360-day year composed of twelve 30-day months and payable semi-annually on March 15 and September 15 of each year, beginning on September 15, 2015. The 2023 senior notes were issued at a price of 99.266% of their aggregate principal amount, resulting in gross proceeds of $248.2 million, and a yield to maturity of 7.5% per annum. We used the net proceeds from the offering of the notes for general corporate purposes, including repayment of outstanding borrowings under our revolving secured line of credit facility. On January 22, 2014, we issued $300.0 million aggregate principal amount of 6.125% senior notes due 2021 (the “2021 senior notes”). The 2021 senior notes were issued pursuant to an indenture, dated as of January 22, 2014, among the Company, the Guarantors, and U.S. Bank National Association, as trustee. The 2021 senior notes mature on February 15, 2021 and bear interest at a rate of 6.125% per annum, computed on the basis of a 360-day year composed of twelve 30-day months and payable semi-annually on February 15 and August 15 of each year, beginning on August 15, 2014. We used the net proceeds from the 2021 senior notes, together with borrowings under our revolving credit facilities, to redeem in full the $350.0 million aggregate principal amount of our 9.125% first priority senior secured notes due 2017 (the “2017 senior notes”) on February 21, 2014. During the first quarter of 2014, we recognized a pre-tax loss on extinguishment of debt of $21.8 million related to the redemption of the 2017 senior notes. Both the 2021 and the 2023 senior notes (the "senior notes") are guaranteed on a senior basis by the Guarantors, which are also guarantors of obligations under our revolving secured line of credit facility. Other existing and future subsidiaries of ours may become guarantors of the senior notes in the future. The indentures for the senior notes provide for a guarantor of the senior notes to be released from its obligations under its guarantee of the senior notes under specified circumstances. Debt Covenants As of September 30, 2015, we were in compliance with all our debt covenants relating to the revolving secured line of credit facility, including those that require the maintenance of certain financial ratios and other financial conditions. These covenants require a minimum ratio of our earnings before interest, taxes and non-cash expenses to fixed charges. These covenants also limit the maximum ratio of our funded debt less unrestricted cash and cash equivalents to tangible net worth. Additionally, we must maintain consolidated net income of not less than $1 for the two most recently ended fiscal quarters. Some of these debt covenants may indirectly limit the repurchase of common stock or payment of dividends on common stock. Our Warehouse facilities and Term ABS financings also contain covenants that measure the performance of the contributed assets. As of September 30, 2015, we were in compliance with all such covenants. As of the end of the quarter, we were also in compliance with our covenants under the senior notes indentures.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.19,20,22) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 + Details
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