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Investments In Enova
6 Months Ended
Jun. 30, 2015
Investment in Enova [Abstract]  
Investments in Enova
5. Investment in Enova

Upon completion of the Enova Spin-off, the Company retained approximately 20 percent, or 6,596,927 shares of Enova common stock, and the Company has agreed, pursuant to a private letter ruling it obtained in connection with the Enova Spin-off, to dispose of its retained shares of Enova common stock (other than the shares retained for delivery under the Company’s long-term incentive plans (the “LTIPs”) as described below) no later than two years after the date of the Enova Spin-off. Of the 6,521,463 shares owned at June 30, 2015, the Company has allocated 556,990 of its retained shares for delivery under the LTIPs that existed prior to the Enova Spin-off, making the Company’s residual ownership in Enova approximately 18 percent of the outstanding Enova common stock as of June 30, 2015. See table below for additional information.

All of the retained shares of Enova common stock (including shares retained for delivery under the Company’s LTIPs as described below) are classified as “available-for-sale securities” in accordance with ASC 320, Investments-Debt and Equity Securities (“ASC 320”). The Company does not account for its investment in Enova common stock under the equity method for the following reasons. The Company does not have the ability to significantly influence the strategy or the operating or financial policies of Enova. The Company does not share employees or management with Enova and does not participate in any policy-making process of Enova. The Company does not have the right to vote on matters put before Enova stockholders as it has granted Enova a proxy to vote its shares in the same proportion as the other stockholders of Enova on all such matters. In addition, the Company has agreed to divest its ownership in Enova within two years following the Enova Spin-off. While the Company’s Chief Executive Officer serves as one of seven members of Enova’s Board of Directors, he does not serve on any committees of Enova’s Board of Directors, and the Company is not able to influence his future election to Enova’s Board of Directors because it does not have voting power with respect to the shares of Enova that it owns. The Company also does not have any material business relationships with Enova.

The retained shares of Enova common stock include a portion of shares of Enova common stock that may be delivered by the Company to holders of certain outstanding unvested restricted stock units (“RSUs”), vested deferred RSUs, and unvested deferred RSUs that were granted by the Company under the LTIPs to certain of its officers, directors and employees, as well as shares that are deliverable to certain directors who have elected to defer a portion of their director fees to be paid in the form of common stock of the Company (“Director Deferred Shares”), if such equity awards and Director Deferred Shares were outstanding under the LTIPs on the date of the Enova Spin-off.

Such RSU awards and Director Deferred Shares will be payable by the Company in both shares of Company common stock and Enova common stock, subject to the terms of the LTIPs and/or the applicable award agreement. The delivery of the Enova shares of common stock will occur periodically based on the vesting or deferral terms that are applicable to the RSU awards or Director Deferred Shares. In the event the award does not vest, the Enova shares will be retained by the Company and sold.

As of June 30, 2015, the Company’s cost basis in its investment in Enova common stock was approximately $20.0 million, and an unrealized gain of approximately $89.1 million was included in “Accumulated other comprehensive income.” For the three and six months ended June 30, 2015, the Company recognized a gain of approximately $1.1 million and $1.2 million, respectively, for the disposition of Enova common stock as a result of the issuance of shares under LTIP agreements. The Company’s investment in Enova common stock is included in “Investment in equity securities” in the consolidated balance sheets. Activity during the six months ended June 30, 2015 for the Enova shares retained by the Company is shown below (shares in ones):

 
Enova Shares Attributed to the Company (a)
 
Potential Enova Shares to be Delivered Under the LTIPs
 
Total Enova Shares Held by the Company
Enova shares at December 31, 2014
5,911,840

 
685,087

 
6,596,927

Forfeitures (b)
47,014

 
(47,014
)
 

Shares delivered under the LTIPs

 
(56,925
)
 
(56,925
)
Shares withheld for taxes (b)
5,619

 
(24,158
)
 
(18,539
)
Shares held as of June 30, 2015
5,964,473

 
556,990

 
6,521,463

% ownership of Enova as of June 30, 2015
18.07
%
 
1.69
%
 
19.76
%
 
 
 
 
 
 
(a) Does not include shares retained for delivery under the LTIPs.
(b) Shares initially allocated to satisfy future RSU award issuances under the LTIPs that were forfeited prior to vesting or were withheld for taxes are attributed to the Company and are to be disposed of by the Company. For shares withheld for taxes during the six months ended June 30, 2015, 18,539 shares were sold on the open market, and 5,619 shares remain to be sold.