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Fair Value Measurements | 9 Months Ended
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Jun. 30, 2020
Fair Value Disclosures [Abstract] |
FAIR VALUE MEASUREMENTS | NOTE 7: FAIR VALUE MEASUREMENTS The fair value of a financial instrument is the amount that could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy prioritizes the quality and reliability of the information used to determine fair values. Categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is defined into the following three categories:
• | Level 1 — Quoted market prices in active markets for identical assets or liabilities.
• | Level 2 — Other observable market-based inputs or unobservable inputs that are corroborated by market data.
• | Level 3 — Unobservable inputs that are not corroborated by market data.
We have elected not to measure at fair value any eligible items for which fair value measurement is optional. There were no transfers in or out of Level 1, Level 2 or Level 3 for financial assets or liabilities measured at fair value on a recurring basis during the periods presented. The tables below present our financial assets and liabilities that are not measured at fair value on a recurring basis:
|  | Carrying Value |  | Estimated Fair Value
|  | June 30, 2020 |  | June 30, 2020 |  | Fair Value Measurement Using
|  | Level 1 |  | Level 2 |  | Level 3
|  | (in thousands)
Financial assets: |  |  |  |  |  |  |  |  |  |
Notes receivable from Grupo Finmart, net |  | $ | 3,866 |  |  | $ | 3,945 |  |  | $ | — |  |  | $ | — |  |  | $ | 3,945 |
2.89% promissory note receivable due April 2024 |  | 1,140 |  |  | 1,140 |  |  | — |  |  | — |  |  | 1,140 |
Investments in unconsolidated affiliates |  | 29,483 |  |  | 33,602 |  |  | 25,779 |  |  | — |  |  | 7,823 |
Financial liabilities: |  |  |  |  |  |  |  |  |  |
2024 Convertible Notes |  | $ | 115,681 |  |  | $ | 130,669 |  |  | $ | — |  |  | $ | 130,669 |  |  | $ | — |
2025 Convertible Notes |  | 131,378 |  |  | 125,235 |  |  | — |  |  | 125,235 |  |  | — |
8.5% unsecured debt due 2024 |  | 998 |  |  | 998 |  |  | — |  |  | — |  |  | 998 |
CASHMAX secured borrowing facility |  | (171 | ) |  | 295 |  |  | — |  |  | — |  |  | 295 |
|  | Carrying Value |  | Estimated Fair Value
|  | June 30, 2019 |  | June 30, 2019 |  | Fair Value Measurement Using
|  | Level 1 |  | Level 2 |  | Level 3
|  | (in thousands)
Financial assets: |  |  |  |  |  |  |  |  |  |
Notes receivable from Grupo Finmart, net |  | $ | 18,744 |  |  | $ | 19,517 |  |  | $ | — |  |  | $ | — |  |  | $ | 19,517 |
Zero-coupon convertible promissory note due January 2021 |  | 7,226 |  |  | 7,226 |  |  | — |  |  | — |  |  | 7,226 |
2.89% promissory note receivable due April 2024 |  | 1,108 |  |  | 1,108 |  |  | — |  |  | — |  |  | 1,108 |
Investments in unconsolidated affiliates |  | 30,922 |  |  | 27,158 |  |  | 24,464 |  |  | — |  |  | 2,694 |
Financial liabilities: |  |  |  |  |  |  |  |  |  |
2024 Convertible Notes |  | 109,909 |  |  | 161,719 |  |  | — |  |  | 161,719 |  |  | — |
2025 Convertible Notes |  | 124,542 |  |  | 159,873 |  |  | — |  |  | 159,873 |  |  | — |
8.5% unsecured debt due 2024 |  | 1,148 |  |  | 1,148 |  |  | — |  |  | — |  |  | 1,148 |
CASHMAX secured borrowing facility |  | 65 |  |  | 804 |  |  | — |  |  | — |  |  | 804 |
|  | Carrying Value |  | Estimated Fair Value
|  | September 30, 2019 |  | September 30, 2019 |  | Fair Value Measurement Using
|  | Level 1 |  | Level 2 |  | Level 3
|  | (in thousands)
Financial assets: |  |  |  |  |  |  |  |  |  |
Notes receivable from Grupo Finmart, net |  | $ | 7,182 |  |  | $ | 7,582 |  |  | $ | — |  |  | $ | — |  |  | $ | 7,582 |
2.89% promissory note receivable due April 2024 |  | 1,117 |  |  | 1,117 |  |  | — |  |  | — |  |  | 1,117 |
Investments in unconsolidated affiliates |  | 34,516 |  |  | 28,308 |  |  | 20,252 |  |  | — |  |  | 8,056 |
Financial liabilities: |  |  |  |  |  |  |  |  |  |
2024 Convertible Notes |  | $ | 111,311 |  |  | $ | 139,969 |  |  | $ | — |  |  | $ | 139,969 |  |  | $ | — |
2025 Convertible Notes |  | 126,210 |  |  | 138,345 |  |  | — |  |  | 138,345 |  |  | — |
8.5% unsecured debt due 2024 |  | 1,092 |  |  | 1,092 |  |  | — |  |  | — |  |  | 1,092 |
CASHMAX secured borrowing facility |  | (19 | ) |  | 634 |  |  | — |  |  | — |  |  | 634 |
As a result of the impact of COVID-19, certain of the above fair values as of June 30, 2020 may be highly volatile. We estimate the carrying value of our cash and cash equivalents, pawn loans, pawn service charges receivable, current consumer loans, fees and interest receivable and other debt approximate fair value. We consider our cash and cash equivalents to be measured using Level 1 inputs and our pawn loans, pawn service charges receivable, consumer loans, fees and interest receivable and other debt to be measured using Level 3 inputs. Significant increases or decreases in the underlying assumptions used to value pawn loans, pawn service charges receivable, consumer loans, fees and interest receivable and other debt could significantly increase or decrease these fair value estimates. We measured the fair value of the remaining deferred compensation fee due in September 2020 from the sale of Prestaciones Finmart, S.A.P.I. de C.V., SOFOM, E.N.R. ("Grupo Finmart") to Alpha Holding, S.A. de C.V. (“AlphaCredit”) in September 2016 as of June 30, 2020 under a discounted cash flow approach considering the estimated credit ratings for Grupo Finmart and AlphaCredit, with discount rates of primarily 5%. Certain of the significant inputs used for the valuation were not observable in the market. Significant increases or decreases in the underlying assumptions used to value the notes receivable could significantly increase or decrease these fair value estimates. We remain obligated to indemnify AlphaCredit for any tax obligations arising from the Grupo Finmart business that are attributable to periods prior to the completion of the sale in September 2016, referred to as “pre-closing taxes.” Those obligations continue until the expiration of the statute of limitations applicable to the pre-closing periods. In August 2019, AlphaCredit notified us of an indemnity claim for certain pre-closing taxes, but the nature, extent and validity of such claim has yet to be determined. In March 2020, AlphaCredit paid $4.0 million of the remaining deferred compensation into an escrow account pending resolution of the claim; we recorded that amount under “Restricted cash” in our condensed consolidated balance sheet as of June 30, 2020. We reviewed the financial statements of Grupo Finmart and AlphaCredit including the calculation of synthetic credit spreads as described above in making our determination that the Parent Loan Notes are collectible on an ongoing basis. The Company uses the equity method of accounting for its 13% ownership in a previously consolidated variable interest entity ("RDC") over which we no longer have the power to direct the activities that most significantly affect its economic performance. We believe its fair value approximates carrying value although such fair value is highly variable and includes significant unobservable inputs. The Company measured the fair value of the 2024 and 2025 Convertible Notes using quoted price inputs. The notes are not actively traded, and thus the price inputs represent a Level 2 measurement. As the quoted price inputs are highly variable from day to day, the fair value estimates disclosed above could significantly increase or decrease.

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=117815213&loc=d3e19207-110258 + Details
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