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Fair Value Measurements
3 Months Ended
Mar. 31, 2019
Fair Value Disclosures [Abstract]  
Fair Value Measurements

13.

Fair Value Measurements

Recurring Fair Value Measurements

In accordance with ASC 820, Fair Value Measurements and Disclosures, certain of the Company’s assets and liabilities, which are carried at fair value, are classified in one of the following three categories:

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data.

Level 3: Unobservable inputs that are not corroborated by market data.

During the three months ended March 31, 2019 and 2018, there were no transfers of assets or liabilities in or out of Level 1, Level 2 or Level 3 fair value measurements. It is the Company’s policy to value any transfers between levels of the fair value hierarchy based on end of period fair values.

The Company’s financial assets and liabilities that are measured at fair value on a recurring basis as of March 31, 2019 and 2018 and December 31, 2018 are as follows (dollars in thousands):

 

 

 

March 31,

 

 

Fair Value Measurements Using

 

 

 

2019

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Financial assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-qualified savings plan assets(1)

 

$

2,683

 

 

$

2,683

 

 

$

 

 

$

 

Total

 

$

2,683

 

 

$

2,683

 

 

$

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31,

 

 

Fair Value Measurements Using

 

 

 

2018

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Financial assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-qualified savings plan assets(1)

 

$

2,079

 

 

$

2,079

 

 

$

 

 

$

 

Total

 

$

2,079

 

 

$

2,079

 

 

$

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

 

Fair Value Measurements Using

 

 

 

2018

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Financial assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-qualified savings plan assets(1)

 

 

2,052

 

 

 

2,052

 

 

 

 

 

 

 

Total

 

$

2,052

 

 

$

2,052

 

 

$

 

 

$

 

 

(1)

The non-qualified savings plan assets are included in “Other receivables and prepaid expenses” in the Company’s consolidated balance sheets and have an offsetting liability of equal amount, which is included in “Accounts payable and accrued expenses” in the Company’s consolidated balance sheets.

Fair Value Measurements on a Non-Recurring Basis

The Company measures non-financial assets and liabilities such as property and equipment and intangible assets at fair value on a non-recurring basis or when events or circumstances indicate that the carrying amount of the assets may be impaired. At March 31, 2019 and 2018 and December 31, 2018, there were no assets or liabilities recorded at fair value on a non-recurring basis.

Financial Assets and Liabilities Not Measured at Fair Value

The Company’s financial assets and liabilities as of March 31, 2019 and 2018 and December 31, 2018 that are not measured at fair value in the consolidated balance sheets are as follows (dollars in thousands):

 

 

 

Balance at

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31,

 

 

Fair Value Measurements Using

 

 

 

2019

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Financial assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

92,829

 

 

$

92,829

 

 

$

 

 

$

 

Short-term loans and line of credit accounts, net (1)

 

 

211,347

 

 

 

 

 

 

 

 

 

211,347

 

Installment loans and RPAs, net (1)(3)

 

 

604,509

 

 

 

 

 

 

 

 

 

636,932

 

Restricted cash (4)

 

 

25,391

 

 

 

25,391

 

 

 

 

 

 

 

Investment in unconsolidated investee (2)

 

 

6,703

 

 

 

 

 

 

 

 

 

6,703

 

Total

 

$

940,779

 

 

$

118,220

 

 

$

 

 

$

854,982

 

Financial liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liability for estimated losses on consumer loans guaranteed by the Company

 

$

1,264

 

 

$

 

 

$

 

 

$

1,264

 

Securitization notes

 

 

181,000

 

 

 

 

 

 

181,365

 

 

 

 

8.50% senior notes due 2024

 

 

250,000

 

 

 

 

 

 

235,915

 

 

 

 

8.50% senior notes due 2025

 

 

375,000

 

 

 

 

 

 

350,593

 

 

 

 

Total

 

$

807,264

 

 

$

 

 

$

767,873

 

 

$

1,264

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31,

 

 

Fair Value Measurements Using

 

 

 

2018

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Financial assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

69,900

 

 

$

69,900

 

 

$

 

 

$

 

Short-term loans and line of credit accounts, net (1)

 

 

180,525

 

 

 

 

 

 

 

 

 

180,525

 

Installment loans and RPAs, net (1)(3)

 

 

522,551

 

 

 

 

 

 

 

 

 

551,001

 

Restricted cash (4)

 

 

34,765

 

 

 

34,765

 

 

 

 

 

 

 

Investment in unconsolidated investee (2)

 

 

6,703

 

 

 

 

 

 

 

 

 

6,703

 

Total

 

$

814,444

 

 

$

104,665

 

 

$

 

 

$

738,229

 

Financial liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liability for estimated losses on consumer loans guaranteed by the Company

 

$

1,410

 

 

$

 

 

$

 

 

$

1,410

 

Promissory note

 

 

3,000

 

 

 

 

 

 

 

 

 

3,327

 

Revolving line of credit

 

 

8,000

 

 

 

 

 

 

 

 

 

8,000

 

Securitization notes

 

 

217,125

 

 

 

 

 

 

220,066

 

 

 

 

9.75% senior notes due 2021

 

 

293,044

 

 

 

 

 

 

306,260

 

 

 

 

8.50% senior notes due 2024

 

 

250,000

 

 

 

 

 

 

261,250

 

 

 

 

Total

 

$

772,579

 

 

$

 

 

$

787,576

 

 

$

12,737

 

 

 

 

Balance at

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

 

Fair Value Measurements Using

 

 

 

2018

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Financial assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

52,917

 

 

$

52,917

 

 

$

 

 

$

 

Short-term loans and line of credit accounts, net (1)

 

 

222,860

 

 

 

 

 

 

 

 

 

222,860

 

Installment loans and RPAs, net (1)(3)

 

 

637,086

 

 

 

 

 

 

 

 

 

670,888

 

Restricted cash (4)

 

 

24,342

 

 

 

24,342

 

 

 

 

 

 

 

Investment in unconsolidated investee (2)

 

 

6,703

 

 

 

 

 

 

 

 

 

6,703

 

Total

 

$

943,908

 

 

$

77,259

 

 

$

 

 

$

900,451

 

Financial liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liability for estimated losses on consumer loans guaranteed by the Company

 

$

2,166

 

 

$

 

 

$

 

 

$

2,166

 

Revolving line of credit

 

 

22,000

 

 

 

 

 

 

 

 

 

22,000

 

Securitization notes

 

 

227,288

 

 

 

 

 

 

225,474

 

 

 

 

8.50% senior notes due 2024

 

 

250,000

 

 

 

 

 

 

212,500

 

 

 

 

8.50% senior notes due 2025

 

 

375,000

 

 

 

 

 

 

306,563

 

 

 

 

Total

 

$

876,454

 

 

$

 

 

$

744,537

 

 

$

24,166

 

 

(1)

Short-term loans, line of credit accounts, installment loans and RPAs are included in “Loans and finance receivables, net” in the consolidated balance sheets.

(2)

Investment in unconsolidated investee is included in “Other assets” in the consolidated balance sheets.

(3)

Installment loan and RPAs, net include $280.7 million, $278.3 million and $319.0 million in net assets of consolidated VIEs as of March 31, 2019 and 2018 and December 31, 2018, respectively.

(4)

Restricted cash includes $23.2 million, $26.7 million and $22.2 million in assets of consolidated VIEs as of March 31, 2019 and 2018 and December 31, 2018, respectively.

Cash and cash equivalents and restricted cash bear interest at market rates and have maturities of less than 90 days. The carrying amount of restricted cash and cash equivalents approximates fair value.

Short-term loans, line of credit accounts, installment loans and RPAs are carried in the consolidated balance sheet net of the allowance for estimated losses, which is calculated by applying historical loss rates combined with recent default trends to the gross receivable balance. Short-term loans and line of credit accounts have relatively short maturity periods that are generally 12 months or less. The unobservable inputs used to calculate the fair value of these receivables include historical loss rates, recent default trends and estimated remaining loan term; therefore, the carrying value approximates the fair value. The fair value of installment loans and RPAs is estimated using discounted cash flow analyses, which consider interest rates on loans and discounts offered for receivables with similar terms to customers with similar credit quality, the timing of expected payments, estimated customer default rates and/or valuations of comparable portfolios. Unsecured installment loans typically have terms between two and 60 months. RPAs typically have estimated delivery terms between six and 18 months.

The Company measures the fair value of its investment in unconsolidated investee using Level 3 inputs. Because the unconsolidated investee is a private company and financial information is limited, the Company estimates the fair value based on the best available information at the measurement date.

In connection with its CSO programs, the Company guarantees consumer loan payment obligations to unrelated third-party lenders for short-term and installment loans the Company arranges for consumers on the third-party lenders’ behalf and is required to purchase any defaulted loans it has guaranteed. The Company measures the fair value of its liability for third-party lender-owned consumer loans under Level 3 inputs. The fair value of these liabilities is calculated by applying historical loss rates combined with recent default trends to the gross consumer loan balance. The unobservable inputs used to calculate the fair value of these loans include historical loss rates, recent default trends and estimated remaining loan terms; therefore, the carrying value of these liabilities approximates the fair value.

The Company measures the fair value of its revolving line of credit using Level 3 inputs. The Company considered the fair value of its other long-term debt and the timing of expected payment(s).

The fair values of the Company’s Securitization Notes and senior notes are estimated based on quoted prices in markets that are not active, which are deemed Level 2 inputs.

The fair value of the Promissory Note was estimated using a discounted cash flow analysis, which is deemed Level 3.