XML 19 R9.htm IDEA: XBRL DOCUMENT

3. Securitization Trust Debt

9 Months Ended

Sep. 30, 2017

We have completed many securitization transactions that are structured as secured borrowings for financial accounting purposes. The debt issued in these transactions is shown on our Unaudited Condensed Consolidated Balance Sheets as “Securitization trust debt,” and the components of such debt are summarized in the following table:

Series		Final Scheduled Payment Date (1)	Receivables Pledged at September 30, 2017 (2)		Initial Principal		Outstanding Principal at September 30, 2017		Outstanding Principal at December 31, 2016		Weighted Average Contractual Interest Rate at September 30, 2017
		(Dollars in thousands)
	CPS 2012-C	December 2019	$	–	$	147,000	$	–	$	14,421		–
	CPS 2012-D	March 2020		–		160,000		–		17,865		–
	CPS 2013-A	June 2020		18,270		185,000		16,015		28,661		1.70%
	CPS 2013-B	September 2020		25,007		205,000		22,374		37,570		2.13%
	CPS 2013-C	December 2020		30,755		205,000		29,939		46,830		5.58%
	CPS 2013-D	March 2021		31,306		183,000		29,557		46,345		4.77%
	CPS 2014-A	June 2021		37,687		180,000		35,414		54,988		4.06%
	CPS 2014-B	September 2021		52,509		202,500		51,099		75,140		3.49%
	CPS 2014-C	December 2021		82,954		273,000		81,051		116,280		3.72%
	CPS 2014-D	March 2022		90,853		267,500		89,368		127,307		4.02%
	CPS 2015-A	June 2022		98,727		245,000		97,395		134,466		3.50%
	CPS 2015-B	September 2022		115,193		250,000		114,161		153,893		3.43%
	CPS 2015-C	December 2022		156,908		300,000		155,261		207,636		3.94%
	CPS 2016-A	March 2023		200,682		329,460		198,375		262,260		4.25%
	CPS 2016-B	June 2023		226,642		332,690		220,324		284,752		4.29%
	CPS 2016-C	September 2023		228,946		318,500		222,544		285,618		3.85%
	CPS 2016-D	December 2023		166,557		206,325		162,871		200,221		3.01%
	CPS 2017-A	April 2024		179,926		206,320		174,942		–		3.18%
	CPS 2017-B	September 2024		212,943		225,170		201,190		–		2.81%
	CPS 2017-C	September 2024		220,464		224,825		214,519		–		2.74%
			$	2,176,329	$	4,646,290	$	2,116,399	$	2,094,253

_________________

(1)

The Final Scheduled Payment Date represents final legal maturity of the securitization trust debt. Securitization trust debt is expected to become due and to be paid prior to those dates, based on amortization of the finance receivables pledged to the trusts. Expected payments, which will depend on the performance of such receivables, as to which there can be no assurance, are $229.7 million in 2017, $829.4 million in 2018, $549.1 million in 2019, $318.9 million in 2020, $156.9 million in 2021, $32.4 million in 2022.

(2)

Includes repossessed assets that are included in Other assets on our Unaudited Condensed Consolidated Balance Sheet.

Debt issuance costs of $12.8 million and $13.4 million as of September 30, 2017 and December 31, 2016, respectively, have been excluded from the table above. These debt issuance costs are presented as a direct deduction to the carrying amount of the securitization trust debt on our Unaudited Condensed Consolidated Balance Sheets.

All of the securitization trust debt was sold in private placement transactions to qualified institutional buyers. The debt was issued through our wholly-owned bankruptcy remote subsidiaries and is secured by the assets of such subsidiaries, but not by our other assets.

The terms of the securitization agreements related to the issuance of the securitization trust debt and the warehouse credit facilities require that we meet certain delinquency and credit loss criteria with respect to the pool of receivables, and certain of the agreements require that we maintain minimum levels of liquidity and not exceed maximum leverage levels. As of September 30, 2017, we were in compliance with all such covenants.

We are responsible for the administration and collection of the automobile contracts. The securitization agreements also require certain funds be held in restricted cash accounts to provide additional collateral for the borrowings, to be applied to make payments on the securitization trust debt or as pre-funding proceeds from a term securitization prior to the purchase of additional collateral. As of September 30, 2017, restricted cash under the various agreements totaled approximately $115.0 million. Interest expense on the securitization trust debt consists of the stated rate of interest plus amortization of additional costs of borrowing. Additional costs of borrowing include facility fees, amortization of deferred financing costs and discounts on notes sold. Deferred financing costs and discounts on notes sold related to the securitization trust debt are amortized using a level yield method. Accordingly, the effective cost of the securitization trust debt is greater than the contractual rate of interest disclosed above.

Our wholly-owned bankruptcy remote subsidiaries were formed to facilitate the above asset-backed financing transactions. Similar bankruptcy remote subsidiaries issue the debt outstanding under our credit facilities. Bankruptcy remote refers to a legal structure in which it is expected that the applicable entity would not be included in any bankruptcy filing by its parent or affiliates. All of the assets of these subsidiaries have been pledged as collateral for the related debt. All such transactions, treated as secured financings for accounting and tax purposes, are treated as sales for all other purposes, including legal and bankruptcy purposes. None of the assets of these subsidiaries are available to pay other creditors.