Page | |||
PART I. FINANCIAL INFORMATION
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Item 1.
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1
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2
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3
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4
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5
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6
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Item 2.
|
26
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Item 3.
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42
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Item 4.
|
42
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PART II. OTHER INFORMATION
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Item 1.
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43
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Item 1A.
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43
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Item 2.
|
52
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Item 3.
|
52 | ||
Item 4.
|
52
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Item 5.
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52
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Item 6.
|
53
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54
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March 31,
|
December 31,
|
|||||||
2013
|
2012
|
|||||||
(unaudited)
|
||||||||
Assets
|
||||||||
Unrestricted cash and cash equivalents
|
$ | 71,308 | $ | 67,915 | ||||
Restricted cash and cash equivalents
|
13,969 | 12,921 | ||||||
Loans and fees receivable:
|
||||||||
Loans and fees receivable, net (of $8,785 and $8,274 in deferred revenue and $10,092 and $11,151 in allowances for uncollectible loans and fees receivable at March 31, 2013 and December 31, 2012, respectively)
|
70,745 | 69,625 | ||||||
Loans and fees receivable, at fair value
|
17,606 | 20,378 | ||||||
Loans and fees receivable pledged as collateral under structured financings, at fair value
|
122,976 | 133,595 | ||||||
Property at cost, net of depreciation
|
7,054 | 7,192 | ||||||
Investments in equity-method investees
|
36,584 | 37,756 | ||||||
Deposits
|
16,410 | 16,397 | ||||||
Prepaid expenses and other assets
|
12,457 | 14,647 | ||||||
Total assets
|
$ | 369,109 | $ | 380,426 | ||||
Liabilities
|
||||||||
Accounts payable and accrued expenses
|
$ | 31,718 | $ | 38,596 | ||||
Notes payable, at face value
|
37,168 | 26,747 | ||||||
Notes payable associated with structured financings, at fair value
|
129,550 | 140,127 | ||||||
Convertible senior notes
|
95,480 | 95,335 | ||||||
Income tax liability
|
60,607 | 60,434 | ||||||
Total liabilities
|
354,523 | 361,239 | ||||||
Commitments and contingencies (Note 10)
|
||||||||
Equity
|
||||||||
Common stock, no par value, 150,000,000 shares authorized: 15,496,135 shares issued and outstanding (including 1,672,656 loaned shares to be returned) at March 31, 2013; and 15,509,179 shares issued and outstanding (including 1,672,656 loaned shares to be returned) at December 31, 2012
|
- | - | ||||||
Additional paid-in capital
|
210,768 | 211,122 | ||||||
Accumulated other comprehensive loss
|
(2,440 | ) | (1,154 | ) | ||||
Retained deficit
|
(193,681 | ) | (190,673 | ) | ||||
Total shareholders’ equity
|
14,647 | 19,295 | ||||||
Noncontrolling interests
|
(61 | ) | (108 | ) | ||||
Total equity
|
14,586 | 19,187 | ||||||
Total liabilities and equity
|
$ | 369,109 | $ | 380,426 |
For the Three Months Ended March 31,
|
||||||||
2013
|
2012
|
|||||||
Interest income:
|
||||||||
Consumer loans, including past due fees
|
$ | 19,824 | $ | 25,130 | ||||
Other
|
111 | 202 | ||||||
Total interest income
|
19,935 | 25,332 | ||||||
Interest expense
|
(5,772 | ) | (10,851 | ) | ||||
Net interest income before fees and related income on earning assets and provision for losses on loans and fees receivable
|
14,163 | 14,481 | ||||||
Fees and related income on earning assets
|
6,806 | 49,867 | ||||||
Losses upon charge off of loans and fees receivable recorded at fair value, net of recoveries
|
(5,798 | ) | (55,628 | ) | ||||
Provision for losses on loans and fees receivable recorded at net realizable value
|
(3,282 | ) | (2,503 | ) | ||||
Net interest income, fees and related income on earning assets
|
11,889 | 6,217 | ||||||
Other operating income:
|
||||||||
Servicing income
|
2,601 | 1,264 | ||||||
Other Income
|
2,136 | 812 | ||||||
Equity in income of equity-method investees
|
4,307 | 6,017 | ||||||
Total other operating income
|
9,044 | 8,093 | ||||||
Other operating expense:
|
||||||||
Salaries and benefits
|
4,409 | 5,667 | ||||||
Card and loan servicing
|
10,679 | 10,464 | ||||||
Marketing and solicitation
|
1,935 | 816 | ||||||
Depreciation
|
373 | 428 | ||||||
Other
|
6,078 | 6,975 | ||||||
Total other operating expense
|
23,474 | 24,350 | ||||||
Loss on continuing operations before income taxes
|
(2,541 | ) | (10,040 | ) | ||||
Income tax (expense) benefit
|
(446 | ) | 1,716 | |||||
Loss on continuing operations
|
(2,987 | ) | (8,324 | ) | ||||
Discontinued operations:
|
||||||||
Income from discontinued operations before income taxes
|
- | 5,874 | ||||||
Income tax expense
|
- | (2,056 | ) | |||||
Income from discontinued operations
|
- | 3,818 | ||||||
Net loss
|
(2,987 | ) | (4,506 | ) | ||||
Net (income) loss attributable to noncontrolling interests in continuing operations
|
(21 | ) | 74 | |||||
Net loss attributable to controlling interests
|
$ | (3,008 | ) | $ | (4,432 | ) | ||
Loss on continuing operations attributable to controlling interests per common share—basic
|
$ | (0.22 | ) | $ | (0.37 | ) | ||
Loss on continuing operations attributable to controlling interests per common share—diluted
|
$ | (0.22 | ) | $ | (0.37 | ) | ||
Income from discontinued operations attributable to controlling interests per common share—basic
|
$ | - | $ | 0.17 | ||||
Income from discontinued operations attributable to controlling interests per common share—diluted
|
$ | - | $ | 0.17 | ||||
Net loss attributable to controlling interests per common share—basic
|
$ | (0.22 | ) | $ | (0.20 | ) | ||
Net loss attributable to controlling interests per common share—diluted
|
$ | (0.22 | ) | $ | (0.20 | ) |
For the Three Months Ended March 31,
|
||||||||
2013
|
2012
|
|||||||
Net loss
|
$ | (2,987 | ) | $ | (4,506 | ) | ||
Other comprehensive (loss) income:
|
||||||||
Foreign currency translation adjustment
|
(1,394 | ) | 1,010 | |||||
Income tax benefit (expense) related to other comprehensive income
|
108 | (68 | ) | |||||
Comprehensive loss
|
(4,273 | ) | (3,564 | ) | ||||
Comprehensive (income) loss attributable to noncontrolling interests
|
(21 | ) | 74 | |||||
Comprehensive loss attributable to controlling interests
|
$ | (4,294 | ) | $ | (3,490 | ) |
Common Stock
|
||||||||||||||||||||||||||||||||
Shares Issued
|
Amount
|
Additional Paid-In Capital
|
Treasury Stock
|
Accumulated Other Comprehensive Loss
|
Retained Deficit
|
Noncontrolling Interests
|
Total Equity
|
|||||||||||||||||||||||||
Balance at December 31, 2012
|
15,509,179 | $ | - | $ | 211,122 | $ | - | $ | (1,154 | ) | $ | (190,673 | ) | $ | (108 | ) | $ | 19,187 | ||||||||||||||
Compensatory stock issuances
|
107,056 | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Contributions by owners of noncontrolling interests
|
- | - | - | - | - | - | 26 | 26 | ||||||||||||||||||||||||
Amortization of deferred stock-based compensation costs
|
- | - | 90 | - | - | - | - | 90 | ||||||||||||||||||||||||
Redemption and retirement of shares
|
(120,100 | ) | - | (444 | ) | - | - | - | - | (444 | ) | |||||||||||||||||||||
Net loss
|
- | - | - | - | - | (3,008 | ) | 21 | (2,987 | ) | ||||||||||||||||||||||
Foreign currency translation adjustment, net of tax
|
- | - | - | - | (1,286 | ) | - | - | (1,286 | ) | ||||||||||||||||||||||
Balance at March 31, 2013
|
15,496,135 | $ | - | $ | 210,768 | $ | - | $ | (2,440 | ) | $ | (193,681 | ) | $ | (61 | ) | $ | 14,586 |
For the Three Months Ended March 31,
|
||||||||
2013
|
2012
|
|||||||
Operating activities
|
||||||||
Net loss
|
$ | (2,987 | ) | $ | (4,506 | ) | ||
Adjustments to reconcile net loss to net cash provided by operating activities:
|
||||||||
Depreciation, amortization and accretion, net
|
305 | 404 | ||||||
Losses upon charge off of loans and fees receivable recorded at fair value
|
8,479 | 55,628 | ||||||
Provision for losses on loans and fees receivable
|
3,282 | 2,881 | ||||||
Interest expense from accretion of discount on convertible senior notes
|
145 | 1,253 | ||||||
Income from accretion of discount associated with receivables purchases
|
(6,812 | ) | (8,889 | ) | ||||
Unrealized gain on loans and fees receivable and underlying notes payable held at fair value
|
(2,118 | ) | (46,612 | ) | ||||
Income from equity-method investments
|
(4,307 | ) | (6,017 | ) | ||||
Other non cash adjustments to income
|
- | 291 | ||||||
Changes in assets and liabilities, exclusive of business acquisitions:
|
||||||||
Decrease in uncollected fees on earning assets
|
282 | 16,997 | ||||||
Increase in income tax liability
|
281 | 251 | ||||||
(Increase) decrease in prepaid expenses
|
(118 | ) | 109 | |||||
Decrease in accounts payable and accrued expenses
|
(6,643 | ) | (1,478 | ) | ||||
Other
|
3,554 | 451 | ||||||
Net cash (used in) provided by operating activities
|
(6,657 | ) | 10,763 | |||||
Investing activities
|
||||||||
(Increase) decrease in restricted cash
|
(1,048 | ) | 2,003 | |||||
Investment in equity-method investees
|
- | (1,354 | ) | |||||
Proceeds from equity-method investees
|
4,545 | 11,124 | ||||||
Investments in earning assets
|
(43,157 | ) | (49,367 | ) | ||||
Proceeds from earning assets
|
63,867 | 89,638 | ||||||
Investments in subsidiaries
|
- | (3,514 | ) | |||||
Purchases and development of property, net of disposals
|
(266 | ) | (714 | ) | ||||
Net cash provided by investing activities
|
23,941 | 47,816 | ||||||
Financing activities
|
||||||||
Noncontrolling interests contributions, net
|
26 | - | ||||||
Purchase and retirement of outstanding stock
|
(444 | ) | (196 | ) | ||||
Proceeds from borrowings
|
12,282 | 365 | ||||||
Repayment of borrowings
|
(25,002 | ) | (58,583 | ) | ||||
Net cash used in financing activities
|
(13,138 | ) | (58,414 | ) | ||||
Effect of exchange rate changes on cash
|
(753 | ) | 227 | |||||
Net increase in unrestricted cash
|
3,393 | 392 | ||||||
Unrestricted cash and cash equivalents at beginning of period
|
67,915 | 144,913 | ||||||
Unrestricted cash and cash equivalents at end of period
|
$ | 71,308 | $ | 145,305 | ||||
Supplemental cash flow information
|
||||||||
Cash paid for interest
|
$ | 7,653 | $ | 10,392 | ||||
Net cash income tax payments
|
$ | 165 | $ | 89 | ||||
Supplemental non-cash information
|
||||||||
Issuance of stock options and restricted stock
|
$ | 305 | $ | 227 | ||||
Notes payable associated with capital leases
|
$ | 144 | $ | 305 |
1.
|
Description of Our Business
|
2.
|
Significant Accounting Policies and Consolidated Financial Statement Components
|
Balance at December 31, 2012
|
Additions
|
Subtractions
|
Balance at March 31, 2013
|
|||||||||||||
Loans and fees receivable, gross
|
$ | 89.1 | $ | 52.0 | $ | (51.5 | ) | $ | 89.6 | |||||||
Deferred revenue
|
(8.3 | ) | (7.3 | ) | 6.8 | (8.8 | ) | |||||||||
Allowance for uncollectible loans and fees receivable
|
(11.2 | ) | (3.3 | ) | 4.4 | (10.1 | ) | |||||||||
Loans and fees receivable, net
|
$ | 69.6 | $ | 41.4 | $ | (40.3 | ) | $ | 70.7 | |||||||
Balance at December 31, 2011
|
Additions
|
Subtractions
|
Balance at March 31, 2012
|
|||||||||||||
Loans and fees receivable, gross
|
$ | 119.3 | $ | 46.6 | $ | (54.7 | ) | $ | 111.2 | |||||||
Deferred revenue
|
(8.0 | ) | (6.5 | ) | 6.4 | (8.1 | ) | |||||||||
Allowance for uncollectible loans and fees receivable
|
(14.7 | ) | (2.9 | ) | 5.1 | (12.5 | ) | |||||||||
Loans and fees receivable, net
|
$ | 96.6 | $ | 37.2 | $ | (43.2 | ) | $ | 90.6 |
For the Three Months Ended March 31, 2013
|
Credit Cards
|
Auto Finance
|
Other Unsecured Lending Products
|
Total
|
||||||||||||
Allowance for uncollectible loans and fees receivable:
|
||||||||||||||||
Balance at beginning of period
|
$ | (4.6 | ) | $ | (3.1 | ) | $ | (3.5 | ) | $ | (11.2 | ) | ||||
Provision for loan losses
|
(2.2 | ) | 0.2 | (1.3 | ) | (3.3 | ) | |||||||||
Charge offs
|
2.8 | 1.1 | 1.3 | 5.2 | ||||||||||||
Recoveries
|
- | (0.8 | ) | - | (0.8 | ) | ||||||||||
Balance at end of period
|
$ | (4.0 | ) | $ | (2.6 | ) | $ | (3.5 | ) | $ | (10.1 | ) | ||||
Balance at end of period individually evaluated for impairment
|
$ | - | $ | - | $ | - | $ | - | ||||||||
Balance at end of period collectively evaluated for impairment
|
$ | (4.0 | ) | $ | (2.6 | ) | $ | (3.5 | ) | $ | (10.1 | ) | ||||
Loans and fees receivable:
|
||||||||||||||||
Loans and fees receivable, gross
|
$ | 8.9 | $ | 60.4 | $ | 20.3 | $ | 89.6 | ||||||||
Loans and fees receivable individually evaluated for impairment
|
$ | - | $ | - | $ | - | $ | - | ||||||||
Loans and fees receivable collectively evaluated for impairment
|
$ | 8.9 | $ | 60.4 | $ | 20.3 | $ | 89.6 |
For the Three Months Ended March 31, 2012
|
Credit Cards
|
Auto Finance
|
Other Unsecured Lending Products
|
Total
|
||||||||||||
Allowance for uncollectible loans and fees receivable:
|
||||||||||||||||
Balance at beginning of period
|
$ | (4.0 | ) | $ | (8.4 | ) | $ | (2.3 | ) | $ | (14.7 | ) | ||||
Provision for loan losses (includes $0.4 million of provision netted within income from discontinued operations)
|
(1.8 | ) | 0.6 | (1.7 | ) | (2.9 | ) | |||||||||
Charge offs
|
1.6 | 2.9 | 2.1 | 6.6 | ||||||||||||
Recoveries
|
(0.3 | ) | (1.2 | ) | - | (1.5 | ) | |||||||||
Balance at end of period
|
$ | (4.5 | ) | $ | (6.1 | ) | $ | (1.9 | ) | $ | (12.5 | ) | ||||
Balance at end of period individually evaluated for impairment
|
$ | - | $ | (0.1 | ) | $ | - | $ | (0.1 | ) | ||||||
Balance at end of period collectively evaluated for impairment
|
$ | (4.5 | ) | $ | (6.0 | ) | $ | (1.9 | ) | $ | (12.4 | ) | ||||
Loans and fees receivable:
|
||||||||||||||||
Loans and fees receivable, gross
|
$ | 24.0 | $ | 78.6 | $ | 8.6 | $ | 111.2 | ||||||||
Loans and fees receivable individually evaluated for impairment
|
$ | - | $ | 0.2 | $ | - | $ | 0.2 | ||||||||
Loans and fees receivable collectively evaluated for impairment
|
$ | 24.0 | $ | 78.4 | $ | 8.6 | $ | 111.0 |
As of
|
||||||||
March 31, 2013
|
December 31, 2012
|
|||||||
Current loans receivable
|
$ | 77.1 | $ | 71.4 | ||||
Current fees receivable
|
2.1 | 0.8 | ||||||
Delinquent loans and fees receivable
|
10.4 | 16.9 | ||||||
Loans and fees receivable, gross
|
$ | 89.6 | $ | 89.1 |
As of March 31, 2013
|
Credit Cards
|
Auto Finance
|
Other Unsecured Lending Products
|
Total
|
||||||||||||
30-59 days past due
|
$ | 0.4 | $ | 3.8 | $ | 0.6 | $ | 4.8 | ||||||||
60-89 days past due
|
0.4 | 1.2 | 0.5 | 2.1 | ||||||||||||
90 or more days past due
|
1.3 | 0.9 | 1.3 | 3.5 | ||||||||||||
Delinquent loans and fees receivable, gross
|
2.1 | 5.9 | 2.4 | 10.4 | ||||||||||||
Current loans and fees receivable, gross
|
6.8 | 54.5 | 17.9 | 79.2 | ||||||||||||
Total loans and fees receivable, gross
|
$ | 8.9 | $ | 60.4 | $ | 20.3 | $ | 89.6 | ||||||||
Balance of loans greater than 90-days delinquent still accruing interest and fees
|
$ | - | $ | 0.5 | $ | - | $ | 0.5 | ||||||||
As of December 31, 2012
|
Credit Cards
|
Auto Finance
|
Other Unsecured Lending Products
|
Total
|
||||||||||||
30-59 days past due
|
$ | 0.7 | $ | 5.4 | $ | 0.6 | $ | 6.7 | ||||||||
60-89 days past due
|
1.0 | 2.0 | 0.5 | 3.5 | ||||||||||||
90 or more days past due
|
4.2 | 1.6 | 0.9 | 6.7 | ||||||||||||
Delinquent loans and fees receivable, gross
|
5.9 | 9.0 | 2.0 | 16.9 | ||||||||||||
Current loans and fees receivable, gross
|
1.3 | 55.2 | 15.7 | 72.2 | ||||||||||||
Total loans and fees receivable, gross
|
$ | 7.2 | $ | 64.2 | $ | 17.7 | $ | 89.1 | ||||||||
Balance of loans greater than 90-days delinquent still accruing interest and fees
|
$ | - | $ | 0.5 | $ | - | $ | 0.5 |
For the Three Months Ended March 31,
|
||||||||
2013
|
2012
|
|||||||
Fees on credit products
|
$ | 3,916 | $ | 2,963 | ||||
Changes in fair value of loans and fees receivable recorded at fair value
|
16,723 | 55,929 | ||||||
Changes in fair value of notes payable associated with structured financings recorded at fair value
|
(14,605 | ) | (9,317 | ) | ||||
Other
|
772 | 292 | ||||||
Total fees and related income on earning assets
|
$ | 6,806 | $ | 49,867 |
3.
|
Discontinued Operations
|
Net interest income, fees and related income on earning assets
|
$ | 15,019 | ||
Other operating income
|
1,132 | |||
Other operating expense
|
10,277 | |||
Income before income taxes
|
5,874 | |||
Income tax expense
|
(2,056 | ) | ||
Net income
|
$ | 3,818 | ||
Net income attributable to noncontrolling interests
|
$ | - |
4.
|
Segment Reporting
|
Credit Cards
|
||||||||||||
and Other
|
Auto
|
|||||||||||
Three Months Ended March 31, 2013
|
Investments
|
Finance
|
Total
|
|||||||||
Interest income:
|
||||||||||||
Consumer loans, including past due fees
|
$ | 14,044 | $ | 5,780 | $ | 19,824 | ||||||
Other
|
41 | 70 | 111 | |||||||||
Total interest income
|
14,085 | 5,850 | 19,935 | |||||||||
Interest expense
|
(5,339 | ) | (433 | ) | (5,772 | ) | ||||||
Net interest income before fees and related income on earning assets and provision for losses on loans and fees receivable
|
8,746 | 5,417 | 14,163 | |||||||||
Fees and related income on earning assets
|
6,740 | 66 | 6,806 | |||||||||
Servicing income
|
2,400 | 201 | 2,601 | |||||||||
Equity in income of equity-method investees
|
4,307 | - | 4,307 | |||||||||
Income tax (expense) benefit
|
(78 | ) | (368 | ) | (446 | ) | ||||||
(Loss on) income from continuing operations before income taxes
|
$ | (3,971 | ) | $ | 1,430 | $ | (2,541 | ) | ||||
Total assets
|
$ | 307,056 | $ | 62,053 | $ | 369,109 |
Credit Cards
|
||||||||||||
and Other
|
Auto
|
|||||||||||
Three Months Ended March 31, 2012
|
Investments
|
Finance
|
Total
|
|||||||||
Interest income:
|
||||||||||||
Consumer loans, including past due fees
|
$ | 18,694 | $ | 6,436 | $ | 25,130 | ||||||
Other
|
136 | 66 | 202 | |||||||||
Total interest income
|
18,830 | 6,502 | 25,332 | |||||||||
Interest expense
|
(7,675 | ) | (3,176 | ) | (10,851 | ) | ||||||
Net interest income before fees and related income on earning assets and provision for losses on loans and fees receivable
|
11,155 | 3,326 | 14,481 | |||||||||
Fees and related income on earning assets
|
49,540 | 327 | 49,867 | |||||||||
Servicing income
|
1,123 | 141 | 1,264 | |||||||||
Equity in income of equity-method investees
|
6,017 | - | 6,017 | |||||||||
Income tax benefit (expense)
|
2,212 | (496 | ) | 1,716 | ||||||||
Loss on continuing operations before income taxes
|
$ | (8,438 | ) | $ | (1,602 | ) | $ | (10,040 | ) | |||
Total assets
|
$ | 301,278 | $ | 79,148 | $ | 380,426 |
5.
|
Shareholders’ Equity
|
6.
|
Investments in Equity-Method Investees
|
As of
|
||||||||
March 31, 2013
|
December 31, 2012
|
|||||||
Loans and fees receivable pledged as collateral under structured financings, at fair value
|
$ | 47,662 | $ | 53,375 | ||||
Investments in non-marketable debt securities, at fair value
|
$ | 43,493 | $ | 46,564 | ||||
Total assets
|
$ | 106,354 | $ | 114,375 | ||||
Notes payable associated with structured financings, at fair value
|
$ | 23,720 | $ | 29,279 | ||||
Total liabilities
|
$ | 23,979 | $ | 29,558 | ||||
Members’ capital
|
$ | 82,375 | $ | 84,817 |
For the Three Months Ended March 31,
|
||||||||
2013
|
2012
|
|||||||
Net interest income, fees and related income on earning assets
|
$ | 8,637 | $ | 14,287 | ||||
Total other operating income
|
$ | 338 | $ | 83 | ||||
Net income
|
$ | 8,414 | $ | 13,490 | ||||
Net income attributable to investee
|
$ | 4,307 | $ | 6,017 |
As of
|
||||||||
March 31, 2013
|
December 31, 2012
|
|||||||
Investments in non-marketable debt securities, at fair value
|
$ | 43,493 | $ | 46,564 | ||||
Total assets
|
$ | 45,042 | $ | 47,125 | ||||
Total liabilities
|
$ | - | $ | - | ||||
Members’ capital
|
$ | 45,042 | $ | 47,125 | ||||
For the Three Months Ended March 31,
|
||||||||
2013
|
2012
|
|||||||
Net interest income, fees and related income on earning assets
|
$ | 7,230 | $ | 547 | ||||
Net income
|
$ | 7,219 | $ | 526 | ||||
Net income attributable to investee
|
$ | 3,609 | $ | 520 |
7.
|
Fair Values of Assets and Liabilities
|
Quoted Prices in Active
|
Significant Other
|
Significant
|
||||||||||||||
Markets for Identical
|
Observable Inputs
|
Unobservable
|
Carrying Amount
|
|||||||||||||
Assets – As of March 31, 2013 (1)
|
Assets (Level 1)
|
(Level 2)
|
Inputs (Level 3)
|
of Assets
|
||||||||||||
Loans and fees receivable, net for which it is practicable to estimate fair value
|
$ | - | $ | - | $ | 76,773 | $ | 51,466 | ||||||||
Loans and fees receivable, net for which it is not practicable to estimate fair value (2)
|
$ | - | $ | - | $ | - | $ | 19,279 | ||||||||
Loans and fees receivable, at fair value
|
$ | - | $ | - | $ | 17,606 | $ | 17,606 | ||||||||
Loans and fees receivable pledged as collateral under structured financings, at fair value
|
$ | - | $ | - | $ | 122,976 | $ | 122,976 | ||||||||
Quoted Prices in Active
|
Significant Other
|
Significant
|
||||||||||||||
Markets for Identical
|
Observable Inputs
|
Unobservable
|
Carrying Amount
|
|||||||||||||
Assets – As of December 31, 2012 (1)
|
Assets (Level 1)
|
(Level 2)
|
Inputs (Level 3)
|
of Assets
|
||||||||||||
Loans and fees receivable, net for which it is practicable to estimate fair value
|
$ | - | $ | - | $ | 76,384 | $ | 65,198 | ||||||||
Loans and fees receivable, net for which it is not practicable to estimate fair value (2)
|
$ | - | $ | - | $ | - | $ | 4,427 | ||||||||
Loans and fees receivable, at fair value
|
$ | - | $ | - | $ | 20,378 | $ | 20,378 | ||||||||
Loans and fees receivable pledged as collateral under structured financings, at fair value
|
$ | - | $ | - | $ | 133,595 | $ | 133,595 |
(1)
|
For cash, deposits and other short-term investments, the carrying amount is a reasonable estimate of fair value.
|
(2)
|
We do not disclose fair value for this portion of our loans and fees receivable, net because it is not practicable to do so. These loans and fees receivable consist of a variety of receivables that are largely start-up in nature and for which we have neither sufficient history nor a comparable peer group from which we can calculate fair value.
|
Loans and Fees
|
||||||||||||
Receivable Pledged as
|
||||||||||||
Collateral under
|
||||||||||||
Loans and Fees
|
Structured
|
|||||||||||
Receivable, at
|
Financings, at Fair
|
|||||||||||
Fair Value
|
Value
|
Total
|
||||||||||
Balance at January 1, 2013
|
$ | 20,378 | $ | 133,595 | $ | 153,973 | ||||||
Total gains—realized/unrealized:
|
- | 13,924 | 13,924 | |||||||||
Net revaluations of loans and fees receivable pledged as collateral under structured financings, at fair value
|
2,799 | - | 2,799 | |||||||||
Net revaluations of loans and fees receivable, at fair value
|
(5,571 | ) | (21,894 | ) | (27,465 | ) | ||||||
Settlements, net
|
- | (2,649 | ) | (2,649 | ) | |||||||
Impact of foreign currency translation
|
- | - | - | |||||||||
Net transfers in and/or out of Level 3
|
- | - | - | |||||||||
Balance at March 31, 2013
|
$ | 17,606 | $ | 122,976 | $ | 140,582 | ||||||
Balance at January 1, 2012
|
$ | 28,226 | $ | 238,763 | $ | 266,989 | ||||||
Total gains—realized/unrealized:
|
||||||||||||
Net revaluations of loans and fees receivable pledged as collateral under structured financings, at fair value
|
- | 52,192 | 52,192 | |||||||||
Net revaluations of loans and fees receivable, at fair value
|
3,737 | - | 3,737 | |||||||||
Settlements, net
|
(8,453 | ) | (91,742 | ) | (100,195 | ) | ||||||
Impact of foreign currency translation
|
- | 2,712 | 2,712 | |||||||||
Net transfers in and/or out of Level 3
|
- | - | - | |||||||||
Balance at March 31, 2012
|
$ | 23,510 | $ | 201,925 | $ | 225,435 |
Quantitative Information about Level 3 Fair Value Measurements
|
||||||||||
Fair Value at
|
||||||||||
March 31, 2013
|
Range
|
|||||||||
Fair value measurements
|
(in thousands)
|
Valuation Technique
|
Unobservable Input
|
(Weighted Average)(1)
|
||||||
Loans and fees receivable, at fair value
|
$ | 17,606 |
Discounted cash flows
|
Gross yield
|
22.0 | % | ||||
Principal payment rate
|
3.6 | % | ||||||||
Expected credit loss rate
|
17.0 | % | ||||||||
Servicing rate
|
11.5 | % | ||||||||
Discount rate
|
16.0 | % | ||||||||
Loans and fees receivable pledged as collateral under structured financings, at fair value
|
$ | 122,976 |
Discounted cash flows
|
Gross yield
|
10.5% to 24.8 (19.4
|
%) | ||||
Principal payment rate
|
1.5% to 3.2% (2.5
|
%) | ||||||||
Expected credit loss rate
|
10.1% to 22.4% (17.8
|
%) | ||||||||
Servicing rate
|
6.9% to 8.4% (7.8
|
%) | ||||||||
Discount rate
|
16.0% to 16.2% (16.0
|
%) |
Quoted Prices in
|
||||||||||||||||
Active Markets for
|
Significant Other
|
Significant
|
||||||||||||||
Identical Assets
|
Observable Inputs
|
Unobservable Inputs
|
Carrying Amount
|
|||||||||||||
Liabilitiess – As of March 31, 2013
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
of Liabilities
|
||||||||||||
Liabilities not carried at fair value
|
||||||||||||||||
CAR revolving credit facility
|
$ | - | $ | - | $ | 20,000 | $ | 20,000 | ||||||||
ACC amortizing debt facility
|
$ | - | $ | - | $ | 2,785 | $ | 2,785 | ||||||||
Amortizing debt facility
|
$ | - | $ | - | $ | 9,000 | $ | 9,000 | ||||||||
Revolving credit facility
|
$ | - | $ | - | $ | 1,895 | $ | 1,895 | ||||||||
U.K. Credit card accounts revolving credit facility
|
$ | - | $ | - | $ | 3,445 | $ | 3,445 | ||||||||
5.875% Convertible Senior Notes
|
$ | - | $ | 48,813 | $ | - | $ | 94,886 | ||||||||
Liabilities carried at fair value
|
||||||||||||||||
Interest rate swap underlying CAR facility
|
$ | - | $ | 150 | $ | - | $ | 150 | ||||||||
Economic sharing arrangement liability
|
$ | - | $ | - | $ | 707 | $ | 707 | ||||||||
Notes payable associated with structured financings, at fair value
|
$ | - | $ | - | $ | 129,550 | $ | 129,550 | ||||||||
Quoted Prices in
|
||||||||||||||||
Active Markets for
|
Significant Other
|
Significant
|
||||||||||||||
Identical Assets
|
Observable Inputs
|
Unobservable Inputs
|
Carrying Amount
|
|||||||||||||
Liabilities - As of December 31, 2012
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
of Liabilities
|
||||||||||||
Liabilities not carried at fair value
|
||||||||||||||||
CAR revolving credit facility
|
$ | - | $ | - | $ | 20,000 | $ | 20,000 | ||||||||
ACC amortizing debt facility
|
$ | - | $ | - | $ | 3,896 | $ | 3,896 | ||||||||
Revolving credit facility
|
$ | - | $ | - | $ | 1,456 | $ | 1,456 | ||||||||
U.K. Credit card accounts revolving credit facility
|
$ | - | $ | - | $ | 1,213 | $ | 1,213 | ||||||||
5.875% Convertible Senior Notes
|
$ | - | $ | 55,787 | $ | - | $ | 94,886 | ||||||||
Liabilities carried at fair value
|
||||||||||||||||
Interest rate swap underlying CAR facility
|
$ | - | $ | 175 | $ | - | $ | 175 | ||||||||
Economic sharing arrangement liability
|
$ | - | $ | - | $ | 815 | $ | 815 | ||||||||
Notes payable associated with structured financings, at fair value
|
$ | - | $ | - | $ | 140,127 | $ | 140,127 |
Notes Payable Associated with
|
||||||||
Structured Financings, at Fair Value
|
||||||||
2013
|
2012
|
|||||||
Beginning balance, January 1
|
$ | 140,127 | $ | 241,755 | ||||
Transfers in due to consolidation of equity-method investees
|
- | - | ||||||
Total (gains) losses—realized/unrealized:
|
||||||||
Net revaluations of notes payable associated with structured financings, at fair value
|
14,605 | 9,317 | ||||||
Repayments on outstanding notes payable, net
|
(22,410 | ) | (51,136 | ) | ||||
Impact of foreign currency translation
|
(2,772 | ) | 2,534 | |||||
Net transfers in and/or out of Level 3
|
- | - | ||||||
Ending balance, March 31
|
$ | 129,550 | $ | 202,470 |
Quantitative information about Level 3 Fair Value Measurements
|
|||||||
Fair Value at
|
|||||||
March 31, 2013
|
Range
|
||||||
Fair value measurements
|
(in thousands)
|
Valuation Technique
|
Unobservable Input
|
(Weighted Average)
|
|||
Notes payable associated with structured financings, at fair value
|
$ | 129,550 |
Discounted cash flows
|
Gross yield
|
10.5% to 24.8% (19.4%)
|
||
Principal payment rate
|
1.5% to 3.2% (2.5%)
|
||||||
Expected credit loss rate
|
10.1% to 22.4% (17.8%)
|
||||||
Discount rate
|
16.0% to 19.8% (17.4%)
|
As of March 31, 2013
|
Loans and Fees
Receivable at |
Loans and Fees Receivable Pledged as Collateral under Structured Financings at Fair Value
|
||||||
Aggregate unpaid principal balance within loans and fees receivable that are reported at fair value
|
$ | 24,173 | $ | 165,197 | ||||
Aggregate fair value of loans and fees receivable that are reported at fair value
|
$ | 17,606 | $ | 122,976 | ||||
Aggregate fair value of receivables carried at fair value that are 90 days or more past due (which also coincides with finance charge and fee non-accrual policies)
|
$ | 42 | $ | 610 | ||||
Aggregate excess of balance of unpaid principal receivables within loans and fees receivable that are reported at fair value and are 90 days or more past due (which also coincides with finance charge and fee non-accrual policies) over the fair value of such loans and fees receivable
|
$ | 1,154 | $ | 7,652 |
As of December 31, 2012
|
Loans and Fees
Receivable at |
Loans and Fees
Receivable Pledged as Collateral under Structured Financings at Fair Value |
||||||
Aggregate unpaid principal balance within loans and fees receivable that are reported at fair value
|
$ | 26,154 | $ | 192,433 | ||||
Aggregate fair value of loans and fees receivable that are reported at fair value
|
$ | 20,378 | $ | 133,595 | ||||
Aggregate fair value of receivables carried at fair value that are 90 days or more past due (which also coincides with finance charge and fee non-accrual policies)
|
$ | 36 | $ | 957 | ||||
Aggregate excess of balance of unpaid principal receivables within loans and fees receivable that are reported at fair value and are 90 days or more past due (which also coincides with finance charge and fee non-accrual policies) over the fair value of such loans and fees receivable
|
$ | 1,643 | $ | 7,591 |
Notes Payable
|
Notes Payable
Associated withStructured Financings, at Fair Value as of
March 31, 2013
|
Notes Payable Associated with Structured Financings, at Fair Value as of
December 31, 2012
|
||||||
Aggregate unpaid principal balance of notes payable
|
$ | 259,457 | $ | 287,711 | ||||
Aggregate fair value of notes payable
|
$ | 129,550 | $ | 140,127 |
8.
|
Notes Payable
|
Carrying Amounts at Fair Value as of
|
||||||||
March 31, 2013
|
December 31, 2012
|
|||||||
Amortizing securitization facility issued out of our upper-tier originated portfolio master trust (stated maturity of June 2013), outstanding face amount of $184.8 million bearing interest at a weighted average 3.7% interest rate, which is secured by credit card receivables and restricted cash aggregating $86.1 million in carrying amount
|
$ | 86.1 | $ | 93.6 | ||||
Amortizing term securitization facility (denominated and referenced in U.K. sterling and a stated maturity of April 2014) issued out of our U.K. Portfolio securitization trust, outstanding face amount of $74.5 million bearing interest at a weighted average 5.3% interest rate, which is secured by credit card receivables and restricted cash aggregating $43.9 million in carrying amount
|
43.5 | 46.5 | ||||||
Total structured financing notes reported at fair value that are secured by credit card receivables and to which we are subordinated
|
$ | 129.6 | $ | 140.1 |
As of
|
||||||||
March 31, 2013
|
December 31, 2012
|
|||||||
Revolving credit facility (expiring October 4, 2014) at a an annual rate equal to 4.75% that is secured by the financial and operating assets of CAR with an aggregate carrying amount of $51.3 million (1)
|
$ | 20.0 | $ | 20.0 | ||||
Amortizing debt facility (expiring December 15, 2014) at a fixed rate of 9.5% at March 31, 2013 that is secured by certain receivables and restricted cash with an aggregate carrying amount of $9.5 million (2)
|
9.0 | - | ||||||
Amortizing debt facility (expiring November 6, 2016) that is secured by our ACC Auto Finance segment receivables and restricted cash with an aggregate carrying amount of $6.7 million (3)
|
2.8 | 3.9 | ||||||
Revolving credit facility that can be drawn to the extent of outstanding eligible principal receivables up to $2.0 million, expiring October 10, 2013 with an annual rate equal to the lender’s cost of funds plus 6.0% (6.8% as of March 31, 2013) (4)
|
1.9 | 1.4 | ||||||
Revolving credit facility associated with our credit card accounts in the U.K. that can be drawn to the extent of outstanding eligible principal receivables up to £5.0 million, expiring December 1, 2016 with an annual rate equal to the lender’s cost of funds plus 7.0% (9.8% as of March 31, 2012)
|
3.4 | 1.2 | ||||||
Vendor-financed software and equipment purchases (expiring September 2014) at an implied rate of 15%, that are secured by certain equipment
|
0.1 | 0.2 | ||||||
Total notes payable outstanding
|
$ | 37.2 | $ | 26.7 |
(1)
|
Loan is subject to certain affirmative covenants, including a coverage ratio, a leverage ratio and a collateral performance test, the failure of which could result in required early repayment of all or a portion of the outstanding balance by our CAR Auto Finance operations. The assets of Atlanticus Holdings Corporation are not subject to creditor claims arising due to asset performance-related covenants under this loan.
|
(2)
|
Loan is subject to certain affirmative covenants tied to default rates and other performance metrics the failure of which could result in required early repayment of the remaining unamortized balance.
|
(3)
|
The terms of this lending agreement provided for the application of all excess cash flows from the underlying auto finance receivables portfolio (above and beyond interest costs and contractual servicing compensation to our outsourced third-party servicer) to reduce the outstanding principal balance of the debt, and the outstanding principal balance was repaid in the fourth quarter of 2012. Now that we have repaid the principal portion of the note, the lending agreement requires that we remit 37.5% of future cash flows (net of contractual servicing compensation) generated on the auto finance receivables portfolio to the note holders as additional compensation for the use of their capital. Based on current estimates of this additional compensation, we currently are accruing interest expense on this liability at a 25.8% effective interest rate based on current expectations of future collections; and the amount disclosed in the above table represents our accrued interest expense liability under this lending agreement. The assets of Atlanticus Holdings Corporation are not subject to creditor claims arising under this loan.
|
(4)
|
Loan was refinanced in April 2013 to a $2.0 million amortizing structured financing secured by certain receivables. The facility has a variable rate of interest tied to the lender’s cost of funds and matures April 1, 2016. The facility has certain asset performance covenants that if triggered could accelerate the early repayment of the remaining unamortized balance.
|
9.
|
Convertible Senior Notes
|
As of
|
||||||||
March 31, 2013
|
December 31, 2012
|
|||||||
Face amount of 3.625% convertible senior notes due 2025
|
$ | 450 | $ | 450 | ||||
Face amount of 5.875% convertible senior notes due 2035
|
139,467 | 139,467 | ||||||
Discount
|
(44,437 | ) | (44,582 | ) | ||||
Net carrying value
|
$ | 95,480 | $ | 95,335 | ||||
Carrying amount of equity component included in additional paid-in capital
|
$ | 108,714 | $ | 108,714 | ||||
Excess of instruments’ if-converted values over face principal amounts
|
$ | - | $ | - |
10.
|
Commitments and Contingencies
|
11.
|
Net Income (Loss) Attributable to Controlling Interests Per Common Share
|
For the Three Months Ended March 31,
|
||||||||
2013
|
2012
|
|||||||
Numerator:
|
||||||||
Loss on continuing operations attributable to controlling interests
|
$ | (3,008 | ) | $ | (8,250 | ) | ||
Income from discontinued operations attributable to controlling interests
|
$ | - | $ | 3,818 | ||||
Net loss attributable to controlling interests
|
$ | (3,008 | ) | $ | (4,432 | ) | ||
Denominator:
|
||||||||
Basic (including unvested share-based payment awards) (1)
|
13,840 | 21,974 | ||||||
Effect of dilutive stock compensation arrangements (2)
|
- | 83 | ||||||
Diluted (including unvested share-based payment awards) (1)
|
13,840 | 22,057 | ||||||
Loss on continuing operations attributable to controlling interests per common share—basic
|
$ | (0.22 | ) | $ | (0.37 | ) | ||
Loss on continuing operations attributable to controlling interests per common share—diluted
|
$ | (0.22 | ) | $ | (0.37 | ) | ||
Income from discontinued operations attributable to controlling interests per common share—basic
|
$ | - | $ | 0.17 | ||||
Income from discontinued operations attributable to controlling interests per common share—diluted
|
$ | - | $ | 0.17 | ||||
Net loss attributable to controlling interests per common share—basic
|
$ | (0.22 | ) | $ | (0.20 | ) | ||
Net loss attributable to controlling interests per common share—diluted
|
$ | (0.22 | ) | $ | (0.20 | ) |
(1)
|
Shares related to unvested share-based payment awards we included in our basic and diluted share counts are 197,500 and 92,709 for the three months ended March 31, 2013 and 2012, respectively.
|
(2)
|
The effect of dilutive options is shown only for informational purposes where we are in a net loss position. In such situations, the effect of including outstanding options and restricted stock would be anti-dilutive, and they are thus excluded from all loss period calculations.
|
12.
|
Stock-Based Compensation
|
For the Three Months Ended March 31, 2013
|
||||||||||||||||
Number of
Shares |
Weighted-
Average |
Weighted-
Average of Remaining |
Aggregate
Intrinsic |
|||||||||||||
Outstanding at December 31, 2012
|
500,000 | $ | 40.99 | |||||||||||||
Issued/Cancelled/Forfeited
|
- | - | ||||||||||||||
Outstanding at March 31, 2013
|
500,000 | $ | 40.99 | 0.1 | $ | - | ||||||||||
Exercisable at March 31, 2013
|
500,000 | $ | 40.99 | 0.1 | $ | - | ||||||||||
For the Three Months Ended March 31, 2012
|
||||||||||||||||
Number of
Shares |
Weighted-
Average |
Weighted-
Average of Remaining |
Aggregate
|