XML 20 R10.htm IDEA: XBRL DOCUMENT
v3.22.2

Fair Value Measurements | 6 Months Ended
--- | ---
Jun. 30, 2022
Fair Value Disclosures [Abstract] |
Fair Value Measurements | Fair Value Measurements Fair value is defined as the price that would be received upon sale of an asset or the price paid to transfer a liability, in an orderly transaction between market participants at the measurement date (i.e., the “exit price”). The Company uses a fair value hierarchy that prioritizes the inputs used in valuation techniques to measure fair value into three broad levels. The following is a brief description of each level: •Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities. •Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. •Level 3: Unobservable inputs, including inputs that reflect the reporting entity’s own assumptions. Financial Instruments Required To Be Carried At Fair Value Financial assets and liabilities measured at fair value on a recurring basis are summarized below (in thousands):
| Fair Value Measurements as of June 30, 2022
| Level 1 |  | Level 2 |  | Level 3 |  | Total
Assets |  |  |  |  |  |  |
Interest rate cap contracts | $ | — |  |  | $ | 18,658 |  |  | $ | — |  |  | $ | 18,658 |
Liabilities |  |  |  |  |  |  |
Cross-currency swap agreements | — |  |  | (42,018) |  |  | — |  |  | (42,018) |
Contingent consideration | — |  |  | — |  |  | (2,568) |  |  | (2,568) |
| Fair Value Measurements as of December 31, 2021
| Level 1 |  | Level 2 |  | Level 3 |  | Total
Assets |  |  |  |  |  |  |
Interest rate cap contracts | $ | — |  |  | $ | 3,541 |  |  | $ | — |  |  | $ | 3,541 |
Liabilities |  |  |  |  |  |  |
Cross-currency swap agreements | — |  |  | (16,902) |  |  | — |  |  | (16,902) |
Contingent consideration | — |  |  | — |  |  | (5,218) |  |  | (5,218) |
Derivative Contracts: The Company uses derivative instruments to manage its exposure to fluctuations in interest rates and foreign currency exchange rates. Fair values of these derivative instruments are estimated using industry standard valuation models. These models project future cash flows and discount the future amounts to a present value using market-based observable inputs, including interest rate curves, foreign currency exchange rates, and forward and spot prices for currencies. Contingent Consideration: The following table provides a roll-forward of the fair value of contingent consideration for the six months ended June 30, 2022 and year ended December 31, 2021 (in thousands):
| Amount
Balance as of December 31, 2020 | $ | 2,957 |
Issuance of contingent consideration in connection with purchase of noncontrolling interest | 2,913 |
Change in fair value of contingent consideration | (388) |
Payment of contingent consideration | (180) |
Effect of foreign currency translation | (84) |
Balance as of December 31, 2021 | 5,218 |
Change in fair value of contingent consideration | 794 |
Payment of contingent consideration | (2,813) |
Effect of foreign currency translation | (631) |
Balance as of June 30, 2022 | $ | 2,568 |
Non-Recurring Fair Value Measurement: Certain assets are measured at fair value on a nonrecurring basis. These assets include real estate-owned assets classified as held for sale at the lower of their carrying value or fair value less cost to sell. The fair value of the assets held for sale and estimated selling expenses were determined at the time of initial recognition and in each reporting period using Level 3 measurements based on appraised values using market comparables. The fair value estimate of the assets held for sale was approximately $69.0 million and $44.6 million as of June 30, 2022 and December 31, 2021, respectively. Financial Instruments Not Required To Be Carried At Fair Value The table below summarizes fair value estimates for the Company's financial instruments that are not required to be carried at fair value. The total of the fair value calculations presented does not represent, and should not be construed to represent, the underlying value of the Company. The carrying amounts in the following table are included in the consolidated statements of financial condition as of June 30, 2022 and December 31, 2021 (in thousands):
| June 30, 2022 |  | December 31, 2021
| Carrying Amount |  | Estimated Fair Value |  | Carrying Amount |  | Estimated Fair Value
Financial Assets |  |  |  |  |  |  |
Investment in receivable portfolios, net | $ | 3,035,123 |  |  | $ | 3,339,365 |  |  | $ | 3,065,553 |  |  | $ | 3,416,926 |
Financial Liabilities |  |  |  |  |  |  |
Convertible senior notes due March 2022(1) | — |  |  | — |  |  | 150,000 |  |  | 195,009 |
Exchangeable senior notes due September 2023 | 172,500 |  |  | 239,049 |  |  | 172,500 |  |  | 257,782 |
Convertible senior notes due October 2025 | 100,000 |  |  | 152,268 |  |  | 100,000 |  |  | 165,887 |
Senior secured notes(2) | 1,465,192 |  |  | 1,354,150 |  |  | 1,606,327 |  |  | 1,652,246 |
Encore private placement notes | 87,930 |  |  | 84,389 |  |  | 107,470 |  |  | 108,652 |
_______________________ (1)The 2022 Convertible Senior Notes matured on March 15, 2022 and the Company repaid the notes in cash. (2)Carrying amount represents historical cost, adjusted for any related debt discount or debt premium. Investment in Receivable Portfolios: The fair value of investment in receivable portfolios is measured using Level 3 inputs by discounting the estimated future cash flows generated by the Company’s proprietary forecasting models. The key inputs include the estimated future gross cash flow, average cost to collect, and discount rate. The determination of such inputs requires significant judgment, including assessing the assumed market participant’s cost structure, its determination of whether to include fixed costs in its valuation, its collection strategies, and determining the appropriate weighted average cost of capital. The Company evaluates the use of these key inputs on an ongoing basis and refines the data as it continues to obtain better information from market participants in the debt recovery and purchasing business. Borrowings: The Company’s convertible notes, exchangeable notes, senior secured notes and private placement notes are carried at historical cost, adjusted for the applicable debt discount. The fair value estimate for the convertible and exchangeable notes incorporates quoted market prices using Level 2 inputs. The fair value of the senior secured notes and private placement notes is estimated using widely accepted valuation techniques, including discounted cash flow analyses using available market information on discount and borrowing rates with similar terms, maturities, and credit ratings. Accordingly, the Company used Level 2 inputs for these debt instrument fair value estimates. The carrying value of the Company’s senior secured revolving credit facility and securitisation senior facility approximates fair value due to the use of current market rates that are repriced frequently.

X
- References No definition available. + Details
Name: | us-gaap_FairValueDisclosuresAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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 https://asc.fasb.org/extlink&oid=126976982&loc=d3e19207-110258 + Details
Name: | us-gaap_FairValueDisclosuresTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration