Page | |||
PART I. FINANCIAL INFORMATION | |||
Item 1. | |||
Item 2. | |||
Item 3. | |||
Item 4. | |||
PART II. OTHER INFORMATION | |||
Item 1. | |||
Item 1A. | |||
Item 2. | |||
Item 3. | |||
Item 4. | |||
Item 5. | |||
Item 6. | |||
ITEM 1. | FINANCIAL STATEMENTS |
June 30, 2013 | December 31, 2012 | ||||||
(unaudited) | |||||||
Assets | |||||||
Unrestricted cash and cash equivalents | $ | 60,957 | $ | 67,915 | |||
Restricted cash and cash equivalents | 15,017 | 12,921 | |||||
Loans and fees receivable: | |||||||
Loans and fees receivable, net (of $9,496 and $8,274 in deferred revenue and $13,606 and $11,151 in allowances for uncollectible loans and fees receivable at June 30, 2013 and December 31, 2012, respectively) | 76,418 | 69,625 | |||||
Loans and fees receivable, at fair value | 15,662 | 20,378 | |||||
Loans and fees receivable pledged as collateral under structured financings, at fair value | 107,258 | 133,595 | |||||
Property at cost, net of depreciation | 7,725 | 7,192 | |||||
Investments in equity-method investees | 38,636 | 37,756 | |||||
Deposits | 16,197 | 16,397 | |||||
Prepaid expenses and other assets | 13,560 | 14,647 | |||||
Total assets | $ | 351,430 | $ | 380,426 | |||
Liabilities | |||||||
Accounts payable and accrued expenses | $ | 34,726 | $ | 38,596 | |||
Notes payable, at face value | 42,017 | 26,747 | |||||
Notes payable associated with structured financings, at fair value | 113,613 | 140,127 | |||||
Convertible senior notes | 95,628 | 95,335 | |||||
Income tax liability | 61,036 | 60,434 | |||||
Total liabilities | 347,020 | 361,239 | |||||
Commitments and contingencies (Note 10) | |||||||
Equity | |||||||
Common stock, no par value, 150,000,000 shares authorized: 15,444,580 shares issued and outstanding (including 1,672,656 loaned shares to be returned) at June 30, 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 | 210,468 | 211,122 | |||||
Accumulated other comprehensive loss | (2,526 | ) | (1,154 | ) | |||
Retained deficit | (203,530 | ) | (190,673 | ) | |||
Total shareholders’ equity | 4,412 | 19,295 | |||||
Noncontrolling interests | (2 | ) | (108 | ) | |||
Total equity | 4,410 | 19,187 | |||||
Total liabilities and equity | $ | 351,430 | $ | 380,426 |
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Interest income: | |||||||||||||||
Consumer loans, including past due fees | $ | 16,681 | $ | 22,853 | $ | 36,505 | $ | 47,983 | |||||||
Other | 84 | 206 | 195 | 408 | |||||||||||
Total interest income | 16,765 | 23,059 | 36,700 | 48,391 | |||||||||||
Interest expense | (5,866 | ) | (7,325 | ) | (11,638 | ) | (18,176 | ) | |||||||
Net interest income before fees and related income on earning assets and provision for losses on loans and fees receivable | 10,899 | 15,734 | 25,062 | 30,215 | |||||||||||
Fees and related income on earning assets | 10,219 | 14,431 | 17,025 | 64,298 | |||||||||||
Losses upon charge off of loans and fees receivable recorded at fair value, net of recoveries | (4,351 | ) | (17,275 | ) | (10,149 | ) | (72,903 | ) | |||||||
Provision for losses on loans and fees receivable recorded at net realizable value | (6,670 | ) | (5,952 | ) | (9,952 | ) | (8,455 | ) | |||||||
Net interest income, fees and related income on earning assets | 10,097 | 6,938 | 21,986 | 13,155 | |||||||||||
Other operating income: | |||||||||||||||
Servicing income | 2,604 | 968 | 5,205 | 2,232 | |||||||||||
Other income | 316 | 639 | 2,452 | 1,451 | |||||||||||
Equity in income of equity-method investees | 957 | 3,539 | 5,264 | 9,556 | |||||||||||
Total other operating income | 3,877 | 5,146 | 12,921 | 13,239 | |||||||||||
Other operating expense: | |||||||||||||||
Salaries and benefits | 4,371 | 4,800 | 8,780 | 10,467 | |||||||||||
Card and loan servicing | 10,849 | 10,726 | 21,528 | 21,190 | |||||||||||
Marketing and solicitation | 2,586 | 630 | 4,521 | 1,446 | |||||||||||
Depreciation | 418 | 348 | 791 | 776 | |||||||||||
Other | 5,078 | 6,223 | 11,156 | 13,198 | |||||||||||
Total other operating expense | 23,302 | 22,727 | 46,776 | 47,077 | |||||||||||
Loss on continuing operations before income taxes | (9,328 | ) | (10,643 | ) | (11,869 | ) | (20,683 | ) | |||||||
Income tax (expense) benefit | (462 | ) | 1,257 | (908 | ) | 2,973 | |||||||||
Loss on continuing operations | (9,790 | ) | (9,386 | ) | (12,777 | ) | (17,710 | ) | |||||||
Discontinued operations: | |||||||||||||||
Income from discontinued operations before income taxes | — | 5,276 | — | 11,150 | |||||||||||
Income tax expense | — | (1,846 | ) | — | (3,902 | ) | |||||||||
Income from discontinued operations | — | 3,430 | — | 7,248 | |||||||||||
Net loss | (9,790 | ) | (5,956 | ) | (12,777 | ) | (10,462 | ) | |||||||
Net (income) loss attributable to noncontrolling interests in continuing operations | (59 | ) | 211 | (80 | ) | 285 | |||||||||
Net loss attributable to controlling interests | $ | (9,849 | ) | $ | (5,745 | ) | $ | (12,857 | ) | $ | (10,177 | ) | |||
Loss on continuing operations attributable to controlling interests per common share—basic | $ | (0.71 | ) | $ | (0.42 | ) | $ | (0.93 | ) | $ | (0.79 | ) | |||
Loss on continuing operations attributable to controlling interests per common share—diluted | $ | (0.71 | ) | $ | (0.42 | ) | $ | (0.93 | ) | $ | (0.79 | ) | |||
Income from discontinued operations attributable to controlling interests per common share—basic | $ | — | $ | 0.16 | $ | — | $ | 0.33 | |||||||
Income from discontinued operations attributable to controlling interests per common share—diluted | $ | — | $ | 0.16 | $ | — | $ | 0.33 | |||||||
Net loss attributable to controlling interests per common share—basic | $ | (0.71 | ) | $ | (0.26 | ) | $ | (0.93 | ) | $ | (0.46 | ) | |||
Net loss attributable to controlling interests per common share—diluted | $ | (0.71 | ) | $ | (0.26 | ) | $ | (0.93 | ) | $ | (0.46 | ) |
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Net loss | $ | (9,790 | ) | $ | (5,956 | ) | $ | (12,777 | ) | $ | (10,462 | ) | |||
Other comprehensive (loss) income: | |||||||||||||||
Foreign currency translation adjustment | (117 | ) | (665 | ) | (1,511 | ) | 345 | ||||||||
Income tax benefit related to other comprehensive income | 31 | 85 | 139 | 17 | |||||||||||
Comprehensive loss | (9,876 | ) | (6,536 | ) | (14,149 | ) | (10,100 | ) | |||||||
Comprehensive (income) loss attributable to noncontrolling interests in continuing operations | (59 | ) | 211 | (80 | ) | 285 | |||||||||
Comprehensive loss attributable to controlling interests | $ | (9,935 | ) | $ | (6,325 | ) | $ | (14,229 | ) | $ | (9,815 | ) |
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 | 172,964 | — | — | — | — | — | — | — | ||||||||||||||||||||||
Contributions by owners of noncontrolling interests | — | — | — | — | — | — | 26 | 26 | ||||||||||||||||||||||
Amortization of deferred stock-based compensation costs | — | — | 212 | — | — | — | — | 212 | ||||||||||||||||||||||
Redemption and retirement of shares | (237,563 | ) | — | (866 | ) | — | — | — | — | (866 | ) | |||||||||||||||||||
Net loss | — | — | — | — | — | (12,857 | ) | 80 | (12,777 | ) | ||||||||||||||||||||
Foreign currency translation adjustment, net of tax | — | — | — | — | (1,372 | ) | — | — | (1,372 | ) | ||||||||||||||||||||
Balance at June 30, 2013 | 15,444,580 | $ | — | $ | 210,468 | $ | — | $ | (2,526 | ) | $ | (203,530 | ) | $ | (2 | ) | $ | 4,410 |
For the Six Months Ended June 30, | |||||||
2013 | 2012 | ||||||
Operating activities | |||||||
Net loss | $ | (12,777 | ) | $ | (10,462 | ) | |
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||
Depreciation, amortization and accretion, net | 656 | 730 | |||||
Losses upon charge off of loans and fees receivable recorded at fair value | 15,991 | 72,903 | |||||
Provision for losses on loans and fees receivable | 9,952 | 10,064 | |||||
Interest expense from accretion of discount on convertible senior notes | 293 | 2,149 | |||||
Income from accretion of discount associated with receivables purchases | (13,919 | ) | (16,750 | ) | |||
Unrealized gain on loans and fees receivable and underlying notes payable held at fair value | (9,490 | ) | (57,481 | ) | |||
Income from equity-method investments | (5,264 | ) | (9,556 | ) | |||
Other non-cash adjustments to income | 159 | 287 | |||||
Changes in assets and liabilities, exclusive of business acquisitions: | |||||||
(Increase) decrease in uncollected fees on earning assets | (295 | ) | 19,199 | ||||
Increase in income tax liability | 740 | 886 | |||||
Decrease in prepaid expenses | 117 | 4 | |||||
Decrease in accounts payable and accrued expenses | (3,558 | ) | (846 | ) | |||
Other | 3,183 | 2,957 | |||||
Net cash (used in) provided by operating activities | (14,212 | ) | 14,084 | ||||
Investing activities | |||||||
(Increase) decrease in restricted cash | (2,127 | ) | 5,805 | ||||
Investment in equity-method investees | (3,750 | ) | (1,354 | ) | |||
Proceeds from equity-method investees | 7,211 | 16,042 | |||||
Investments in earning assets | (87,090 | ) | (121,340 | ) | |||
Proceeds from earning assets | 121,761 | 167,227 | |||||
Investments in subsidiaries | — | (3,514 | ) | ||||
Purchases and development of property, net of disposals | (1,362 | ) | (1,139 | ) | |||
Net cash provided by investing activities | 34,643 | 61,727 | |||||
Financing activities | |||||||
Noncontrolling interests contributions, net | 26 | — | |||||
Purchase and retirement of outstanding stock | (866 | ) | (196 | ) | |||
Proceeds from borrowings | 21,198 | 15,365 | |||||
Repayment of borrowings | (46,880 | ) | (184,605 | ) | |||
Net cash used in financing activities | (26,522 | ) | (169,436 | ) | |||
Effect of exchange rate changes on cash | (867 | ) | (6 | ) | |||
Net decrease in unrestricted cash | (6,958 | ) | (93,631 | ) | |||
Unrestricted cash and cash equivalents at beginning of period | 67,915 | 144,913 | |||||
Unrestricted cash and cash equivalents at end of period | $ | 60,957 | $ | 51,282 | |||
Supplemental cash flow information | |||||||
Cash paid for interest | $ | 11,287 | $ | 16,265 | |||
Net cash income tax payments | $ | 168 | $ | 43 | |||
Supplemental non-cash information | |||||||
Issuance of stock options and restricted stock | $ | 522 | $ | 227 | |||
Notes payable associated with capital leases | $ | 148 | $ | 268 |
1. | Description of Our Business |
2. | Significant Accounting Policies and Consolidated Financial Statement Components |
Balance at December 31, 2012 | Additions | Subtractions | Balance at June 30, 2013 | ||||||||||||
Loans and fees receivable, gross | $ | 89.1 | $ | 109.2 | $ | (98.8 | ) | $ | 99.5 | ||||||
Deferred revenue | (8.3 | ) | (15.1 | ) | 13.9 | (9.5 | ) | ||||||||
Allowance for uncollectible loans and fees receivable | (11.2 | ) | (10.0 | ) | 7.6 | (13.6 | ) | ||||||||
Loans and fees receivable, net | $ | 69.6 | $ | 84.1 | $ | (77.3 | ) | $ | 76.4 | ||||||
Balance at December 31, 2011 | Additions | Subtractions | Balance at June 30, 2012 | ||||||||||||
Loans and fees receivable, gross | $ | 119.3 | $ | 95.7 | $ | (102.5 | ) | $ | 112.5 | ||||||
Deferred revenue | (8.0 | ) | (13.3 | ) | 12.8 | (8.5 | ) | ||||||||
Allowance for uncollectible loans and fees receivable | (14.7 | ) | (10.3 | ) | 8.0 | (17.0 | ) | ||||||||
Loans and fees receivable, net | $ | 96.6 | $ | 72.1 | $ | (81.7 | ) | $ | 87.0 |
For the Three Months Ended June 30, 2013 | Credit Cards | Auto Finance | Other Unsecured Lending Products | Total | |||||||||||
Allowance for uncollectible loans and fees receivable: | |||||||||||||||
Balance at beginning of period | $ | (4.0 | ) | $ | (2.6 | ) | $ | (3.5 | ) | $ | (10.1 | ) | |||
Provision for loan losses | (3.7 | ) | 0.5 | (3.5 | ) | (6.7 | ) | ||||||||
Charge offs | 1.5 | 1.2 | 1.0 | 3.7 | |||||||||||
Recoveries | (0.1 | ) | (0.3 | ) | (0.1 | ) | (0.5 | ) | |||||||
Balance at end of period | $ | (6.3 | ) | $ | (1.2 | ) | $ | (6.1 | ) | $ | (13.6 | ) | |||
Balance at end of period individually evaluated for impairment | $ | — | $ | — | $ | — | $ | — | |||||||
Balance at end of period collectively evaluated for impairment | $ | (6.3 | ) | $ | (1.2 | ) | $ | (6.1 | ) | $ | (13.6 | ) |
For the Six Months Ended June 30, 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 | (5.9 | ) | 0.7 | (4.8 | ) | (10.0 | ) | ||||||||
Charge offs | 4.3 | 2.3 | 2.3 | 8.9 | |||||||||||
Recoveries | (0.1 | ) | (1.1 | ) | (0.1 | ) | (1.3 | ) | |||||||
Balance at end of period | $ | (6.3 | ) | $ | (1.2 | ) | $ | (6.1 | ) | $ | (13.6 | ) | |||
Balance at end of period individually evaluated for impairment | $ | — | $ | — | $ | — | $ | — | |||||||
Balance at end of period collectively evaluated for impairment | $ | (6.3 | ) | $ | (1.2 | ) | $ | (6.1 | ) | $ | (13.6 | ) | |||
Loans and fees receivable: | |||||||||||||||
Loans and fees receivable, gross | $ | 13.2 | $ | 60.7 | $ | 25.6 | $ | 99.5 | |||||||
Loans and fees receivable individually evaluated for impairment | $ | — | $ | — | $ | — | $ | — | |||||||
Loans and fees receivable collectively evaluated for impairment | $ | 13.2 | $ | 60.7 | $ | 25.6 | $ | 99.5 |
For the Three Months Ended June 30, 2012 | Credit Cards | Auto Finance | Other Unsecured Lending Products | Total | |||||||||||
Allowance for uncollectible loans and fees receivable: | |||||||||||||||
Balance at beginning of period | $ | (4.5 | ) | $ | (6.1 | ) | $ | (1.9 | ) | $ | (12.5 | ) | |||
Provision for loan losses (includes $1.4 million of provision netted within income from discontinued operations) | (7.1 | ) | 0.7 | (1.0 | ) | (7.4 | ) | ||||||||
Charge offs | 1.4 | 1.8 | 0.9 | 4.1 | |||||||||||
Recoveries | (0.3 | ) | (0.9 | ) | — | (1.2 | ) | ||||||||
Balance at end of period | $ | (10.5 | ) | $ | (4.5 | ) | $ | (2.0 | ) | $ | (17.0 | ) | |||
Balance at end of period individually evaluated for impairment | $ | — | $ | — | $ | — | $ | — | |||||||
Balance at end of period collectively evaluated for impairment | $ | (10.5 | ) | $ | (4.5 | ) | $ | (2.0 | ) | $ | (17.0 | ) |
For the Six Months Ended June 30, 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 $1.8 million of provision netted within income from discontinued operations) | (8.9 | ) | 1.3 | (2.7 | ) | (10.3 | ) | ||||||||
Charge offs | 3.0 | 4.7 | 3.0 | 10.7 | |||||||||||
Recoveries | (0.6 | ) | (2.1 | ) | — | (2.7 | ) | ||||||||
Balance at end of period | $ | (10.5 | ) | $ | (4.5 | ) | $ | (2.0 | ) | $ | (17.0 | ) | |||
Balance at end of period individually evaluated for impairment | $ | — | $ | — | $ | — | $ | — | |||||||
Balance at end of period collectively evaluated for impairment | $ | (10.5 | ) | $ | (4.5 | ) | $ | (2.0 | ) | $ | (17.0 | ) | |||
Loans and fees receivable: | |||||||||||||||
Loans and fees receivable, gross | $ | 27.9 | $ | 73.4 | $ | 11.2 | $ | 112.5 | |||||||
Loans and fees receivable individually evaluated for impairment | $ | — | $ | 0.1 | $ | — | $ | 0.1 | |||||||
Loans and fees receivable collectively evaluated for impairment | $ | 27.9 | $ | 73.3 | $ | 11.2 | $ | 112.4 |
June 30, 2013 | December 31, 2012 | ||||||
Current loans receivable | $ | 82.4 | $ | 71.4 | |||
Current fees receivable | 3.0 | 0.8 | |||||
Delinquent loans and fees receivable | 14.1 | 16.9 | |||||
Loans and fees receivable, gross | $ | 99.5 | $ | 89.1 |
Balance at June 30, 2013 | Credit Cards | Auto Finance | Other Unsecured Lending Products | Total | |||||||||||
30-59 days past due | $ | 1.2 | $ | 5.2 | $ | 1.2 | $ | 7.6 | |||||||
60-89 days past due | 0.9 | 1.5 | 0.8 | 3.2 | |||||||||||
90 or more days past due | 1.5 | 0.6 | 1.2 | 3.3 | |||||||||||
Delinquent loans and fees receivable, gross | 3.6 | 7.3 | 3.2 | 14.1 | |||||||||||
Current loans and fees receivable, gross | 9.6 | 53.4 | 22.4 | 85.4 | |||||||||||
Total loans and fees receivable, gross | $ | 13.2 | $ | 60.7 | $ | 25.6 | $ | 99.5 | |||||||
Balance of loans 90 or more days past due and still accruing interest and fees | $ | — | $ | 0.1 | $ | — | $ | 0.1 | |||||||
Balance at 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 90 or more days past due and still accruing interest and fees | $ | — | $ | 0.5 | $ | — | $ | 0.5 |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Fees on credit products | $ | 5,385 | $ | 4,031 | $ | 9,301 | $ | 6,994 | |||||||
Changes in fair value of loans and fees receivable recorded at fair value | 8,342 | 26,942 | 25,065 | 82,871 | |||||||||||
Changes in fair value of notes payable associated with structured financings recorded at fair value | (970 | ) | (16,073 | ) | (15,575 | ) | (25,390 | ) | |||||||
Other | (2,538 | ) | (469 | ) | (1,766 | ) | (177 | ) | |||||||
Total fees and related income on earning assets | $ | 10,219 | $ | 14,431 | $ | 17,025 | $ | 64,298 |
3. | Discontinued Operations |
Three months ended June 30, 2012 | Six months ended June 30, 2012 | ||||||
Net interest income, fees and related income on earning assets | $ | 14,186 | $ | 29,205 | |||
Other operating income | 1,028 | 2,160 | |||||
Other operating expense | 9,938 | 20,215 | |||||
Income before income taxes | 5,276 | 11,150 | |||||
Income tax expense | (1,846 | ) | (3,902 | ) | |||
Net income | $ | 3,430 | $ | 7,248 | |||
Net income attributable to noncontrolling interests | $ | — | $ | — |
4. | Segment Reporting |
Three months ended June 30, 2013 | Credit Cards and Other Investments | Auto Finance | Total | ||||||||
Interest income: | |||||||||||
Consumer loans, including past due fees | $ | 10,866 | $ | 5,815 | $ | 16,681 | |||||
Other | 37 | 47 | 84 | ||||||||
Total interest income | 10,903 | 5,862 | 16,765 | ||||||||
Interest expense | (5,603 | ) | (263 | ) | (5,866 | ) | |||||
Net interest income before fees and related income on earning assets and provision for losses on loans and fees receivable | $ | 5,300 | $ | 5,599 | $ | 10,899 | |||||
Fees and related income on earning assets | $ | 12,581 | $ | (2,362 | ) | $ | 10,219 | ||||
Servicing income | $ | 2,404 | $ | 200 | $ | 2,604 | |||||
Equity in income of equity-method investees | $ | 957 | $ | — | $ | 957 | |||||
(Loss on) income from continuing operations before income taxes | $ | (8,794 | ) | $ | (534 | ) | $ | (9,328 | ) | ||
Income tax (expense) benefit | $ | (101 | ) | $ | (361 | ) | $ | (462 | ) | ||
Total assets | $ | 292,342 | $ | 59,088 | $ | 351,430 |
Six months ended June 30, 2013 | Credit Cards and Other Investments | Auto Finance | Total | ||||||||
Interest income: | |||||||||||
Consumer loans, including past due fees | $ | 24,910 | $ | 11,595 | $ | 36,505 | |||||
Other | 78 | 117 | 195 | ||||||||
Total interest income | 24,988 | 11,712 | 36,700 | ||||||||
Interest expense | (10,942 | ) | (696 | ) | (11,638 | ) | |||||
Net interest income before fees and related income on earning assets and provision for losses on loans and fees receivable | $ | 14,046 | $ | 11,016 | $ | 25,062 | |||||
Fees and related income on earning assets | $ | 19,321 | $ | (2,296 | ) | $ | 17,025 | ||||
Servicing income | $ | 4,804 | $ | 401 | $ | 5,205 | |||||
Equity in income of equity-method investees | $ | 5,264 | $ | — | $ | 5,264 | |||||
(Loss on) income from continuing operations before income taxes | $ | (12,765 | ) | $ | 896 | $ | (11,869 | ) | |||
Income tax (expense) benefit | $ | (179 | ) | $ | (729 | ) | $ | (908 | ) | ||
Total assets | $ | 292,342 | $ | 59,088 | $ | 351,430 |
Three months ended June 30, 2012 | Credit Cards and Other Investments | Auto Finance | Total | ||||||||
Interest income: | |||||||||||
Consumer loans, including past due fees | $ | 16,476 | $ | 6,377 | $ | 22,853 | |||||
Other | 139 | 67 | 206 | ||||||||
Total interest income | 16,615 | 6,444 | 23,059 | ||||||||
Interest expense | (6,862 | ) | (463 | ) | (7,325 | ) | |||||
Net interest income before fees and related income on earning assets and provision for losses on loans and fees receivable | $ | 9,753 | $ | 5,981 | $ | 15,734 | |||||
Fees and related income on earning assets | $ | 14,155 | $ | 276 | $ | 14,431 | |||||
Servicing income | $ | 803 | $ | 165 | $ | 968 | |||||
Equity in income of equity-method investees | $ | 3,539 | $ | — | $ | 3,539 | |||||
(Loss on) income from continuing operations before income taxes | $ | (13,194 | ) | $ | 2,551 | $ | (10,643 | ) | |||
Income tax benefit (expense) | $ | 1,761 | $ | (504 | ) | $ | 1,257 | ||||
Total assets | $ | 351,585 | $ | 74,348 | $ | 425,933 |
Six months ended June 30, 2012 | Credit Cards and Other Investments | Auto Finance | Total | ||||||||
Interest income: | |||||||||||
Consumer loans, including past due fees | $ | 35,170 | $ | 12,813 | $ | 47,983 | |||||
Other | 275 | 133 | 408 | ||||||||
Total interest income | 35,445 | 12,946 | 48,391 | ||||||||
Interest expense | (14,537 | ) | (3,639 | ) | (18,176 | ) | |||||
Net interest income before fees and related income on earning assets and provision for losses on loans and fees receivable | $ | 20,908 | $ | 9,307 | $ | 30,215 | |||||
Fees and related income on earning assets | $ | 63,695 | $ | 603 | $ | 64,298 | |||||
Servicing income | $ | 1,926 | $ | 306 | $ | 2,232 | |||||
Equity in income of equity-method investees | $ | 9,556 | $ | — | $ | 9,556 | |||||
(Loss on) income from continuing operations before income taxes | $ | (21,632 | ) | $ | 949 | $ | (20,683 | ) | |||
Income tax benefit (expense) | $ | 3,973 | $ | (1,000 | ) | $ | 2,973 | ||||
Total assets | $ | 351,585 | $ | 74,348 | $ | 425,933 |
5. | Shareholders' Equity |
6. | Investments in Equity-Method Investees |
As of | |||||||
June 30, 2013 | December 31, 2012 | ||||||
Loans and fees receivable pledged as collateral under structured financings, at fair value | $ | 41,761 | $ | 53,375 | |||
Investments in non-marketable debt securities, at fair value | $ | 39,163 | $ | 46,564 | |||
Total assets | $ | 104,239 | $ | 114,375 | |||
Notes payable associated with structured financings, at fair value | $ | 17,585 | $ | 29,279 | |||
Total liabilities | $ | 17,824 | $ | 29,558 | |||
Members’ capital | $ | 86,415 | $ | 84,817 |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Net interest income, fees and related income on earning assets | $ | 1,937 | $ | 7,084 | $ | 10,574 | $ | 21,371 | |||||||
Total other operating income | $ | 176 | $ | 846 | $ | 514 | $ | 929 | |||||||
Net income | $ | 1,631 | $ | 7,214 | $ | 10,045 | $ | 20,704 | |||||||
Net income attributable to our equity investment in investee | $ | 957 | $ | 3,539 | $ | 5,264 | $ | 9,556 |
As of | |||||||
June 30, 2013 | December 31, 2012 | ||||||
Investments in non-marketable debt securities, at fair value | $ | 39,163 | $ | 46,564 | |||
Total assets | $ | 40,696 | $ | 47,125 | |||
Total liabilities | $ | — | $ | — | |||
Members’ capital | $ | 40,696 | $ | 47,125 |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Net interest income, fees and related (loss) income on earning assets | $ | (964 | ) | $ | 4,010 | $ | 6,266 | $ | 4,557 | ||||||
Net (loss) income | $ | (976 | ) | $ | 3,998 | $ | 6,243 | $ | 4,524 | ||||||
Net (loss) income attributable to our equity investment in investee | $ | (487 | ) | $ | 284 | $ | 3,122 | $ | 804 |
7. | Fair Values of Assets and Liabilities |
Assets – As of June 30, 2013 (1) | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Carrying Amount of Assets | |||||||||||
Loans and fees receivable, net for which it is practicable to estimate fair value | $ | — | $ | — | $ | 87,744 | $ | 68,597 | |||||||
Loans and fees receivable, net for which it is not practicable to estimate fair value (2) | $ | — | $ | — | $ | — | $ | 7,821 | |||||||
Loans and fees receivable, at fair value | $ | — | $ | — | $ | 15,662 | $ | 15,662 | |||||||
Loans and fees receivable pledged as collateral under structured financings, at fair value | $ | — | $ | — | $ | 107,258 | $ | 107,258 |
Assets – As of December 31, 2012 (1) | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Carrying Amount 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, at Fair Value | Loans and Fees Receivable Pledged as Collateral under Structured Financings, at Fair Value | Total | |||||||||
Balance at January 1, 2013 | $ | 20,378 | $ | 133,595 | $ | 153,973 | |||||
Total gains—realized/unrealized: | |||||||||||
Net revaluations of loans and fees receivable pledged as collateral under structured financings, at fair value | — | 19,789 | 19,789 | ||||||||
Net revaluations of loans and fees receivable, at fair value | 5,276 | — | 5,276 | ||||||||
Settlements, net | (9,992 | ) | (43,553 | ) | (53,545 | ) | |||||
Impact of foreign currency translation | — | (2,573 | ) | (2,573 | ) | ||||||
Net transfers in and/or out of Level 3 | — | — | — | ||||||||
Balance at June 30, 2013 | $ | 15,662 | $ | 107,258 | $ | 122,920 | |||||
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 | — | 75,471 | 75,471 | ||||||||
Net revaluations of loans and fees receivable, at fair value | 7,400 | — | 7,400 | ||||||||
Settlements, net | (14,780 | ) | (129,172 | ) | (143,952 | ) | |||||
Impact of foreign currency translation | — | 1,144 | 1,144 | ||||||||
Net transfers in and/or out of Level 3 | — | — | — | ||||||||
Balance at June 30, 2012 | $ | 20,846 | $ | 186,206 | $ | 207,052 |
Quantitative Information about Level 3 Fair Value Measurements | ||||||||||
Fair Value at | ||||||||||
June 30, 2013 | ||||||||||
Fair Value Measurements | (in Thousands) | Valuation Technique | Unobservable Input | Range (Weighted Average)(1) | ||||||
Loans and fees receivable, at fair value | $ | 15,662 | Discounted cash flows | Gross yield | 23.5 | % | ||||
Principal payment rate | 3.7 | % | ||||||||
Expected credit loss rate | 17.0 | % | ||||||||
Servicing rate | 11.2 | % | ||||||||
Discount rate | 15.9 | % | ||||||||
Loans and fees receivable pledged as collateral under structured financings, at fair value | $ | 107,258 | Discounted cash flows | Gross yield | 8.4% to 25.3% (18.8%) | |||||
Principal payment rate | 1.5% to 3.2% (2.5%) | |||||||||
Expected credit loss rate | 11.7% to 23.0% (18.7%) | |||||||||
Servicing rate | 6.8% to 8.5% (7.8%) | |||||||||
Discount rate | 15.9% to 16.2% (16.0%) |
Liabilities – As of June 30, 2013 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Carrying Amount of Liabilities | |||||||||||
Liabilities not carried at fair value | |||||||||||||||
CAR revolving credit facility | $ | — | $ | — | $ | 20,000 | $ | 20,000 | |||||||
ACC amortizing debt facility | $ | — | $ | — | $ | 1,887 | $ | 1,887 | |||||||
Amortizing debt facility | $ | — | $ | — | $ | 6,721 | $ | 6,721 | |||||||
Revolving credit facility | $ | — | $ | — | $ | 4,000 | $ | 4,000 | |||||||
Amortizing structured financing | $ | — | $ | — | $ | 1,477 | $ | 1,477 | |||||||
U.K. credit card accounts revolving credit facility | $ | — | $ | — | $ | 7,783 | $ | 7,783 | |||||||
5.875% Convertible Senior Notes | $ | — | $ | 64,155 | $ | — | $ | 95,178 | |||||||
Liabilities carried at fair value | |||||||||||||||
Interest rate swap underlying CAR facility | $ | — | $ | 124 | $ | — | $ | 124 | |||||||
Economic sharing arrangement liability | $ | — | $ | — | $ | 550 | $ | 550 | |||||||
Notes payable associated with structured financings, at fair value | $ | — | $ | — | $ | 113,613 | $ | 113,613 |
Liabilities - As of December 31, 2012 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Carrying Amount 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 |