XML 73 R14.htm IDEA: XBRL DOCUMENT v2.4.0.8
Fair Values of Assets and Liabilities
 6 Months Ended
Jun. 30, 2013
Fair Value Disclosures [Abstract]  
Fair Values of Assets and Liabilities
Fair Values of Assets and Liabilities
 
Valuations and Techniques for Assets
 
Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. The table below summarizes (in thousands) by fair value hierarchy the June 30, 2013 and December 31, 2012 fair values and carrying amounts (1) of our assets that are required to be carried at fair value in our consolidated financial statements and (2) of our assets not carried at fair value, but for which fair value disclosures are required:

Assets – As of June 30, 2013 (1)
Quoted Prices in Active
Markets for Identical Assets (Level 1)
 
Significant Other
Observable Inputs (Level 2)
 
Significant
Unobservable Inputs (Level 3)
 
Carrying Amount of Assets
Loans and fees receivable, net for which it is practicable to estimate fair value
$
—

 
$
—

 
$
87,744

 
$
68,597

Loans and fees receivable, net for which it is not practicable to estimate fair value (2)
$
—

 
$
—

 
$
—

 
$
7,821

Loans and fees receivable, at fair value
$
—

 
$
—

 
$
15,662

 
$
15,662

Loans and fees receivable pledged as collateral under structured financings, at fair value
$
—

 
$
—

 
$
107,258

 
$
107,258


Assets – As of December 31, 2012 (1)
Quoted Prices in Active Markets for Identical Assets (Level 1)
 
Significant Other Observable Inputs (Level 2)
 
Significant Unobservable Inputs (Level 3)
 
Carrying Amount of Assets
Loans and fees receivable, net for which it is practicable to estimate fair value
$
—

 
$
—

 
$
76,384

 
$
65,198

Loans and fees receivable, net for which it is not practicable to estimate fair value (2)
$
—

 
$
—

 
$
—

 
$
4,427

Loans and fees receivable, at fair value
$
—

 
$
—

 
$
20,378

 
$
20,378

Loans and fees receivable pledged as collateral under structured financings, at fair value
$
—

 
$
—

 
$
133,595

 
$
133,595

  

(1)
For cash, deposits and other short-term investments, the carrying amount is a reasonable estimate of fair value.
(2)
We do not disclose fair value for this portion of our loans and fees receivable, net because it is not practicable to do so.   These loans and fees receivable consist of a variety of receivables that are largely start-up in nature and for which we have neither sufficient history nor a comparable peer group from which we can calculate fair value.

For those asset classes above that are required to be carried at fair value in our consolidated financial statements, gains and losses associated with fair value changes are detailed on our fees and related income on earning assets table within Note 2, “Significant Accounting Policies and Consolidated Financial Statement Components.”

For Level 3 assets carried at fair value measured on a recurring basis using significant unobservable inputs, the following table presents (in thousands) a reconciliation of the beginning and ending balances for the six months ended June 30, 2013 and June 30, 2012:
 
Loans and Fees
Receivable, at
Fair Value
 
Loans and Fees
Receivable Pledged as
Collateral under
Structured
Financings, at Fair
Value
 
Total
Balance at January 1, 2013
$
20,378

 
$
133,595

 
$
153,973

Total gains—realized/unrealized:


 


 


Net revaluations of loans and fees receivable pledged as collateral under structured financings, at fair value
—

 
19,789

 
19,789

Net revaluations of loans and fees receivable, at fair value
5,276

 
—

 
5,276

Settlements, net
(9,992
)
 
(43,553
)
 
(53,545
)
Impact of foreign currency translation
—

 
(2,573
)
 
(2,573
)
Net transfers in and/or out of Level 3
—

 
—

 
—

Balance at June 30, 2013
$
15,662

 
$
107,258

 
$
122,920

Balance at January 1, 2012
$
28,226

 
$
238,763

 
$
266,989

Total gains—realized/unrealized:
 

 
 

 
 

Net revaluations of loans and fees receivable pledged as collateral under structured financings, at fair value
—

 
75,471

 
75,471

Net revaluations of loans and fees receivable, at fair value
7,400

 
—

 
7,400

Settlements, net
(14,780
)
 
(129,172
)
 
(143,952
)
Impact of foreign currency translation
—

 
1,144

 
1,144

Net transfers in and/or out of Level 3
—

 
—

 
—

Balance at June 30, 2012
$
20,846

 
$
186,206

 
$
207,052



  
The unrealized gains and losses for assets within the Level 3 category presented in the tables above include changes in fair value that are attributable to both observable and unobservable inputs.
 
Net Revaluation of Loans and Fees Receivable. We record the net revaluation of loans and fees receivable (including those pledged as collateral) in the fees and related income on earning assets category in our consolidated statements of operations, specifically as changes in fair value of loans and fees receivable recorded at fair value.

For Level 3 assets carried at fair value measured on a recurring basis using significant unobservable inputs, the following table presents (in thousands) quantitative information about the valuation techniques and the inputs used in the fair value measurement as of June 30, 2013:

Quantitative Information about Level 3 Fair Value Measurements
 
Fair Value at
 
 
 
 
 
 
 
June 30, 2013
 
 
 
 
 
 
Fair Value Measurements
(in Thousands)
 
Valuation Technique
 
Unobservable Input
 
Range (Weighted Average)(1)
Loans and fees receivable, at fair value
$
15,662

 
Discounted cash flows
 
Gross yield
 
23.5
%
 
 

 
 
 
Principal payment rate
 
3.7
%
 
 

 
 
 
Expected credit loss rate
 
17.0
%
 
 

 
 
 
Servicing rate
 
11.2
%
 
 

 
 
 
Discount rate
 
15.9
%
Loans and fees receivable pledged as collateral under structured financings, at fair value
$
107,258

 
Discounted cash flows
 
Gross yield
 
8.4% to 25.3% (18.8%)

 
 

 
 
 
Principal payment rate
 
1.5% to 3.2% (2.5%)

 
 

 
 
 
Expected credit loss rate
 
11.7% to 23.0% (18.7%)

 
 

 
 
 
Servicing rate
 
6.8% to 8.5% (7.8%)

 
 

 
 
 
Discount rate
 
15.9% to 16.2% (16.0%)

 
(1) Our loans and fees receivable, at fair value consist of a single portfolio with one set of assumptions.  As such, no range is given.

Valuations and Techniques for Liabilities
 
Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the liability. The table below summarizes (in thousands) by fair value hierarchy the June 30, 2013 and December 31, 2012 fair values and carrying amounts of (1) our liabilities that are required to be carried at fair value in our consolidated financial statements and (2) our liabilities not carried at fair value, but for which fair value disclosures are required:

Liabilities – As of June 30, 2013
Quoted Prices in
Active Markets for
Identical Assets (Level 1)
 
Significant Other
Observable Inputs (Level 2)
 
Significant
Unobservable Inputs (Level 3)
 
Carrying Amount of Liabilities
Liabilities not carried at fair value
 
 
 
 
 
 
 
CAR revolving credit facility
$
—

 
$
—

 
$
20,000

 
$
20,000

ACC amortizing debt facility
$
—

 
$
—

 
$
1,887

 
$
1,887

Amortizing debt facility
$
—

 
$
—

 
$
6,721

 
$
6,721

Revolving credit facility
$
—

 
$
—

 
$
4,000

 
$
4,000

Amortizing structured financing
$
—

 
$
—

 
$
1,477

 
$
1,477

U.K. credit card accounts revolving credit facility
$
—

 
$
—

 
$
7,783

 
$
7,783

5.875% Convertible Senior Notes
$
—

 
$
64,155

 
$
—

 
$
95,178

Liabilities carried at fair value
 

 
 

 
 

 
 

Interest rate swap underlying CAR facility
$
—

 
$
124

 
$
—

 
$
124

Economic sharing arrangement liability
$
—

 
$
—

 
$
550

 
$
550

Notes payable associated with structured financings, at fair value
$
—

 
$
—

 
$
113,613

 
$
113,613



Liabilities - As of December 31, 2012
Quoted Prices in Active Markets for Identical Assets (Level 1)
 
 Significant Other Observable Inputs (Level 2)
 
Significant Unobservable Inputs (Level 3)
 
Carrying Amount of Liabilities
Liabilities not carried at fair value
 

 
 

 
 

 
 

CAR revolving credit facility
$
—

 
$
—

 
$
20,000

 
$
20,000

ACC amortizing debt facility
$
—

 
$
—

 
$
3,896

 
$
3,896

Revolving credit facility
$
—

 
$
—

 
$
1,456

 
$
1,456

U.K. credit card accounts revolving credit facility
$
—

 
$
—

 
$
1,213

 
$
1,213

5.875% Convertible Senior Notes
$
—

 
$
55,787

 
$
—

 
$
94,886

Liabilities carried at fair value
 

 
 

 
 

 
 

Interest rate swap underlying CAR facility
$
—

 
$
175

 
$
—

 
$
175

Economic sharing arrangement liability
$
—

 
$
—

 
$
815

 
$
815

Notes payable associated with structured financings, at fair value
$
—

 
$
—

 
$
140,127

 
$
140,127



 
Gains and losses associated with fair value changes for our notes payable associated with structured financing liabilities that are carried at fair value are detailed on our fees and related income on earning assets table within Note 2, “Significant Accounting Policies and Consolidated Financial Statement Components.”  See Note 8, “Notes Payable,” for further discussion on our notes payable.

For our material Level 3 liabilities carried at fair value measured on a recurring basis using significant unobservable inputs, the following table presents (in thousands) a reconciliation of the beginning and ending balances for the six months ended June 30, 2013 and 2012.
 
Notes Payable Associated with
Structured Financings, at Fair Value
 
2013
 
2012
Beginning balance, January 1
$
140,127

 
$
241,755

Transfers in due to consolidation of equity-method investees
—

 
—

Total (gains) losses—realized/unrealized:
 

 
 

Net revaluations of notes payable associated with structured financings, at fair value
15,575

 
25,390

Repayments on outstanding notes payable, net
(39,388
)
 
(85,480
)
Impact of foreign currency translation
(2,701
)
 
1,085

Net transfers in and/or out of Level 3
—

 
—

Ending balance, June 30
$
113,613

 
$
182,750



 
The unrealized gains and losses for liabilities within the Level 3 category presented in the tables above include changes in fair value that are attributable to both observable and unobservable inputs. We provide below a brief description of the valuation techniques used for Level 3 liabilities.
 
Net Revaluation of Notes Payable Associated with Structured Financings, at Fair Value. We record the net revaluations of notes payable associated with structured financings, at fair value, in the changes in fair value of notes payable associated with structured financings line item within the fees and related income on earning assets category of our consolidated statements of operations.
 
For material Level 3 liabilities carried at fair value measured on a recurring basis using significant unobservable inputs, the following table presents (in thousands) quantitative information about the valuation techniques and the inputs used in the fair value measurement for the period ended June 30, 2013:

Quantitative Information about Level 3 Fair Value Measurements
 
Fair Value at
 
 
 
 
 
 
 
June 30, 2013
 
 
 
 
 
 
Fair Value Measurements
(in thousands)
 
Valuation Technique
 
Unobservable Input
 
Range (Weighted Average)
Notes payable associated with structured financings, at fair value
$
113,613

 
Discounted cash flows
 
Gross yield
 
8.4% to 25.3% (18.8%)
 
 

 
 
 
Principal payment rate
 
1.5% to 3.2% (2.5%)
 
 

 
 
 
Expected credit loss rate
 
11.7% to 23.0% (18.7%)
 
 

 
 
 
Discount rate
 
15.9% to 20.3% (17.6%)

Other Relevant Data
 
Other relevant data (in thousands) as of June 30, 2013 and December 31, 2012 concerning certain assets and liabilities we carry at fair value are as follows:
As of June 30, 2013
Loans and Fees
Receivable at
Fair Value
 
Loans and Fees Receivable Pledged as Collateral under Structured Financings at Fair Value
Aggregate unpaid principal balance within loans and fees receivable that are reported at fair value
$
21,213

 
$
144,322

Aggregate fair value of loans and fees receivable that are reported at fair value
$
15,662

 
$
107,258

Aggregate fair value of receivables carried at fair value that are 90 days or more past due (which also coincides with finance charge and fee non-accrual policies)
$
29

 
$
415

Aggregate excess of balance of unpaid principal receivables within loans and fees receivable that are reported at fair value and are 90 days or more past due (which also coincides with finance charge and fee non-accrual policies) over the fair value of such loans and fees receivable
$
799

 
$
6,116



 
As of December 31, 2012
Loans and Fees
Receivable at
Fair Value
 
Loans and Fees
Receivable Pledged as Collateral under Structured Financings at Fair Value
Aggregate unpaid principal balance within loans and fees receivable that are reported at fair value
$
26,154

 
$
192,433

Aggregate fair value of loans and fees receivable that are reported at fair value
$
20,378

 
$
133,595

Aggregate fair value of receivables carried at fair value that are 90 days or more past due (which also coincides with finance charge and fee non-accrual policies)
$
36

 
$
957

Aggregate excess of balance of unpaid principal receivables within loans and fees receivable that are reported at fair value and are 90 days or more past due (which also coincides with finance charge and fee non-accrual policies) over the fair value of such loans and fees receivable
$
1,643

 
$
7,591


Notes Payable
Notes Payable Associated with Structured Financings, at Fair Value as of June 30, 2013
 
Notes Payable Associated with Structured Financings, at Fair Value as of December 31, 2012
Aggregate unpaid principal balance of notes payable
$
241,675

 
$
287,711

Aggregate fair value of notes payable
$
113,613

 
$
140,127