|
x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
48-1090909
|
(State or other jurisdiction of
incorporation or organization)
|
(IRS Employer
Identification No.)
|
|
|
3111 Camino Del Rio North, Suite 103
San Diego, California
|
92108
|
(Address of principal executive offices)
|
(Zip code)
|
Class
|
|
Outstanding at July 28, 2016
|
Common Stock, $0.01 par value
|
|
25,526,835 shares
|
|
Page
|
|
|
|
|
|
|
Condensed Consolidated Statements of
Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
2016 |
|
December 31,
2015 |
||||
Assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
139,009
|
|
|
$
|
123,993
|
|
Investment in receivable portfolios, net
|
2,469,593
|
|
|
2,440,669
|
|
||
Property and equipment, net
|
67,428
|
|
|
72,546
|
|
||
Deferred court costs, net
|
69,150
|
|
|
75,239
|
|
||
Other assets
|
184,721
|
|
|
148,762
|
|
||
Goodwill
|
840,544
|
|
|
924,847
|
|
||
Assets associated with discontinued operations
|
—
|
|
|
388,763
|
|
||
Total assets
|
$
|
3,770,445
|
|
|
$
|
4,174,819
|
|
Liabilities and equity
|
|
|
|
||||
Liabilities:
|
|
|
|
||||
Accounts payable and accrued liabilities
|
$
|
217,215
|
|
|
$
|
290,608
|
|
Debt
|
2,849,066
|
|
|
2,944,063
|
|
||
Other liabilities
|
30,451
|
|
|
59,226
|
|
||
Liabilities associated with discontinued operations
|
—
|
|
|
232,434
|
|
||
Total liabilities
|
3,096,732
|
|
|
3,526,331
|
|
||
Commitments and contingencies
|
|
|
|
|
|
||
Redeemable noncontrolling interest
|
40,736
|
|
|
38,624
|
|
||
Redeemable equity component of convertible senior notes
|
4,588
|
|
|
6,126
|
|
||
Equity:
|
|
|
|
||||
Convertible preferred stock, $.01 par value, 5,000 shares authorized, no shares issued and outstanding
|
—
|
|
|
—
|
|
||
Common stock, $.01 par value, 50,000 shares authorized, 25,527 shares and 25,288 shares issued and outstanding as of June 30, 2016 and December 31, 2015, respectively
|
255
|
|
|
253
|
|
||
Additional paid-in capital
|
112,959
|
|
|
110,533
|
|
||
Accumulated earnings
|
598,771
|
|
|
543,489
|
|
||
Accumulated other comprehensive loss
|
(92,536
|
)
|
|
(57,822
|
)
|
||
Total Encore Capital Group, Inc. stockholders’ equity
|
619,449
|
|
|
596,453
|
|
||
Noncontrolling interest
|
8,940
|
|
|
7,285
|
|
||
Total equity
|
628,389
|
|
|
603,738
|
|
||
Total liabilities, redeemable equity and equity
|
$
|
3,770,445
|
|
|
$
|
4,174,819
|
|
|
June 30,
2016 |
|
December 31,
2015 |
||||
Assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
37,464
|
|
|
$
|
50,483
|
|
Investment in receivable portfolios, net
|
1,176,446
|
|
|
1,197,513
|
|
||
Property and equipment, net
|
16,447
|
|
|
19,767
|
|
||
Deferred court costs, net
|
33,018
|
|
|
33,296
|
|
||
Other assets
|
45,711
|
|
|
31,679
|
|
||
Goodwill
|
637,156
|
|
|
706,812
|
|
||
Assets associated with discontinued operations
|
—
|
|
|
92,985
|
|
||
Liabilities
|
|
|
|
||||
Accounts payable and accrued liabilities
|
$
|
92,210
|
|
|
$
|
142,375
|
|
Debt
|
1,637,825
|
|
|
1,665,009
|
|
||
Other liabilities
|
719
|
|
|
839
|
|
||
Liabilities associated with discontinued operations
|
—
|
|
|
58,923
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Revenues
|
|
|
|
|
|
|
|
||||||||
Revenue from receivable portfolios, net
|
$
|
267,452
|
|
|
$
|
270,301
|
|
|
$
|
537,546
|
|
|
$
|
534,411
|
|
Other revenues
|
21,990
|
|
|
12,361
|
|
|
40,913
|
|
|
26,033
|
|
||||
Total revenues
|
289,442
|
|
|
282,662
|
|
|
578,459
|
|
|
560,444
|
|
||||
Operating expenses
|
|
|
|
|
|
|
|
||||||||
Salaries and employee benefits
|
75,499
|
|
|
65,569
|
|
|
145,141
|
|
|
131,121
|
|
||||
Cost of legal collections
|
46,807
|
|
|
57,076
|
|
|
101,115
|
|
|
112,074
|
|
||||
Other operating expenses
|
24,946
|
|
|
21,735
|
|
|
51,289
|
|
|
46,061
|
|
||||
Collection agency commissions
|
9,274
|
|
|
8,466
|
|
|
19,394
|
|
|
19,151
|
|
||||
General and administrative expenses
|
32,934
|
|
|
37,638
|
|
|
68,173
|
|
|
68,835
|
|
||||
Depreciation and amortization
|
8,235
|
|
|
7,878
|
|
|
18,096
|
|
|
16,015
|
|
||||
Total operating expenses
|
197,695
|
|
|
198,362
|
|
|
403,208
|
|
|
393,257
|
|
||||
Income from operations
|
91,747
|
|
|
84,300
|
|
|
175,251
|
|
|
167,187
|
|
||||
Other (expense) income
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
(50,597
|
)
|
|
(46,250
|
)
|
|
(101,288
|
)
|
|
(88,553
|
)
|
||||
Other income
|
3,134
|
|
|
395
|
|
|
10,258
|
|
|
2,512
|
|
||||
Total other expense
|
(47,463
|
)
|
|
(45,855
|
)
|
|
(91,030
|
)
|
|
(86,041
|
)
|
||||
Income before income taxes
|
44,284
|
|
|
38,445
|
|
|
84,221
|
|
|
81,146
|
|
||||
Provision for income taxes
|
(13,451
|
)
|
|
(14,921
|
)
|
|
(23,599
|
)
|
|
(29,535
|
)
|
||||
Income from continuing operations
|
30,833
|
|
|
23,524
|
|
|
60,622
|
|
|
51,611
|
|
||||
Income (loss) from discontinued operations, net of tax
|
—
|
|
|
1,661
|
|
|
(3,182
|
)
|
|
3,541
|
|
||||
Net income
|
30,833
|
|
|
25,185
|
|
|
57,440
|
|
|
55,152
|
|
||||
Net (income) loss attributable to noncontrolling interest
|
(1,245
|
)
|
|
2,472
|
|
|
(2,158
|
)
|
|
1,930
|
|
||||
Net income attributable to Encore Capital Group, Inc. stockholders
|
$
|
29,588
|
|
|
$
|
27,657
|
|
|
$
|
55,282
|
|
|
$
|
57,082
|
|
Amounts attributable to Encore Capital Group, Inc.:
|
|
|
|
|
|
|
|
||||||||
Income from continuing operations
|
$
|
29,588
|
|
|
$
|
25,996
|
|
|
$
|
58,464
|
|
|
$
|
53,541
|
|
Income (loss) from discontinued operations, net of tax
|
—
|
|
|
1,661
|
|
|
(3,182
|
)
|
|
3,541
|
|
||||
Net income
|
$
|
29,588
|
|
|
$
|
27,657
|
|
|
$
|
55,282
|
|
|
$
|
57,082
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings (loss) per share attributable to Encore Capital Group, Inc.:
|
|
|
|
|
|
|
|
||||||||
Basic earnings (loss) per share from:
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
1.15
|
|
|
$
|
1.00
|
|
|
$
|
2.28
|
|
|
$
|
2.06
|
|
Discontinued operations
|
$
|
—
|
|
|
$
|
0.07
|
|
|
$
|
(0.12
|
)
|
|
$
|
0.14
|
|
Net basic earnings per share
|
$
|
1.15
|
|
|
$
|
1.07
|
|
|
$
|
2.16
|
|
|
$
|
2.20
|
|
Diluted earnings (loss) per share from:
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
1.14
|
|
|
$
|
0.97
|
|
|
$
|
2.26
|
|
|
$
|
1.97
|
|
Discontinued operations
|
$
|
—
|
|
|
$
|
0.06
|
|
|
$
|
(0.12
|
)
|
|
$
|
0.14
|
|
Net diluted earnings per share
|
$
|
1.14
|
|
|
$
|
1.03
|
|
|
$
|
2.14
|
|
|
$
|
2.11
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
||||||||
Basic
|
25,742
|
|
|
25,885
|
|
|
25,646
|
|
|
25,978
|
|
||||
Diluted
|
25,874
|
|
|
26,919
|
|
|
25,871
|
|
|
27,117
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Net income
|
$
|
30,833
|
|
|
$
|
25,185
|
|
|
$
|
57,440
|
|
|
$
|
55,152
|
|
Other comprehensive (loss) income, net of tax:
|
|
|
|
|
|
|
|
||||||||
Change in unrealized gains/losses on derivative instruments:
|
|
|
|
|
|
|
|
||||||||
Unrealized (loss) gain on derivative instruments
|
(562
|
)
|
|
(271
|
)
|
|
(496
|
)
|
|
589
|
|
||||
Income tax effect
|
220
|
|
|
107
|
|
|
194
|
|
|
(240
|
)
|
||||
Unrealized (loss) gain on derivative instruments, net of tax
|
(342
|
)
|
|
(164
|
)
|
|
(302
|
)
|
|
349
|
|
||||
Change in foreign currency translation:
|
|
|
|
|
|
|
|
||||||||
Unrealized (loss) gain on foreign currency translation
|
(23,866
|
)
|
|
8,173
|
|
|
(35,765
|
)
|
|
(12,859
|
)
|
||||
Income tax effect
|
32
|
|
|
253
|
|
|
1,353
|
|
|
(1,364
|
)
|
||||
Unrealized (loss) gain on foreign currency translation, net of tax
|
(23,834
|
)
|
|
8,426
|
|
|
(34,412
|
)
|
|
(14,223
|
)
|
||||
Other comprehensive (loss) income, net of tax
|
(24,176
|
)
|
|
8,262
|
|
|
(34,714
|
)
|
|
(13,874
|
)
|
||||
Comprehensive income
|
6,657
|
|
|
33,447
|
|
|
22,726
|
|
|
41,278
|
|
||||
Comprehensive (income) loss attributable to noncontrolling interest:
|
|
|
|
|
|
|
|
||||||||
Net (income) loss
|
(1,245
|
)
|
|
2,472
|
|
|
(2,158
|
)
|
|
1,930
|
|
||||
Unrealized (gain) loss on foreign currency translation
|
(1,260
|
)
|
|
(930
|
)
|
|
(922
|
)
|
|
652
|
|
||||
Comprehensive (income) loss attributable to noncontrolling interest
|
(2,505
|
)
|
|
1,542
|
|
|
(3,080
|
)
|
|
2,582
|
|
||||
Comprehensive income attributable to Encore Capital Group, Inc. stockholders
|
$
|
4,152
|
|
|
$
|
34,989
|
|
|
$
|
19,646
|
|
|
$
|
43,860
|
|
|
Six Months Ended
June 30, |
||||||
|
2016
|
|
2015
|
||||
Operating activities:
|
|
|
|
||||
Net income
|
$
|
57,440
|
|
|
$
|
55,152
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Loss (income) from discontinued operations, net of income taxes
|
1,352
|
|
|
(3,541
|
)
|
||
Depreciation and amortization
|
18,096
|
|
|
16,015
|
|
||
Non-cash interest expense, net
|
19,242
|
|
|
17,182
|
|
||
Stock-based compensation expense
|
8,869
|
|
|
12,103
|
|
||
Gain on derivative instruments, net
|
(7,531
|
)
|
|
—
|
|
||
Deferred income taxes
|
(25,002
|
)
|
|
765
|
|
||
Excess tax benefit from stock-based payment arrangements
|
—
|
|
|
(1,479
|
)
|
||
Loss on sale of discontinued operations, net of tax
|
1,830
|
|
|
—
|
|
||
Reversal of allowances on receivable portfolios, net
|
(4,670
|
)
|
|
(7,219
|
)
|
||
Changes in operating assets and liabilities
|
|
|
|
||||
Deferred court costs and other assets
|
(666
|
)
|
|
(13,437
|
)
|
||
Prepaid income tax and income taxes payable
|
5,260
|
|
|
(25,830
|
)
|
||
Accounts payable, accrued liabilities and other liabilities
|
(27,236
|
)
|
|
(5,616
|
)
|
||
Net cash provided by operating activities from continuing operations
|
46,984
|
|
|
44,095
|
|
||
Net cash provided by operating activities from discontinued operations
|
2,096
|
|
|
3,317
|
|
||
Net cash provided by operating activities
|
49,080
|
|
|
47,412
|
|
||
Investing activities:
|
|
|
|
||||
Cash paid for acquisitions, net of cash acquired
|
(675
|
)
|
|
(237,873
|
)
|
||
Proceeds from divestiture of business, net of cash divested
|
106,041
|
|
|
—
|
|
||
Purchases of receivable portfolios, net of put-backs
|
(517,665
|
)
|
|
(356,302
|
)
|
||
Collections applied to investment in receivable portfolios, net
|
351,219
|
|
|
334,587
|
|
||
Purchases of property and equipment
|
(10,094
|
)
|
|
(10,642
|
)
|
||
Other, net
|
3,502
|
|
|
—
|
|
||
Net cash used in investing activities from continuing operations
|
(67,672
|
)
|
|
(270,230
|
)
|
||
Net cash provided by (used in) used in investing activities from discontinued operations
|
14,685
|
|
|
(61,652
|
)
|
||
Net cash used in investing activities
|
(52,987
|
)
|
|
(331,882
|
)
|
||
Financing activities:
|
|
|
|
||||
Payment of loan costs
|
(2,934
|
)
|
|
(6,574
|
)
|
||
Proceeds from credit facilities
|
288,750
|
|
|
741,665
|
|
||
Repayment of credit facilities
|
(307,946
|
)
|
|
(357,496
|
)
|
||
Repayment of senior secured notes
|
(11,256
|
)
|
|
(7,500
|
)
|
||
Repayment of securitized notes
|
(935
|
)
|
|
(22,694
|
)
|
||
Repurchase of common stock
|
—
|
|
|
(33,185
|
)
|
||
Taxes paid related to net share settlement of equity awards
|
(4,068
|
)
|
|
(5,260
|
)
|
||
Excess tax benefit from stock-based payment arrangements
|
—
|
|
|
1,479
|
|
||
Proceeds from other debt
|
34,946
|
|
|
—
|
|
||
Other, net
|
(7,779
|
)
|
|
(6,640
|
)
|
||
Net cash (used in) provided by financing activities
|
(11,222
|
)
|
|
303,795
|
|
||
Net (decrease) increase in cash and cash equivalents
|
(15,129
|
)
|
|
19,325
|
|
||
Effect of exchange rate changes on cash and cash equivalents
|
545
|
|
|
(5,330
|
)
|
||
Cash and cash equivalents, beginning of period
|
153,593
|
|
|
124,163
|
|
||
Cash and cash equivalents, end of period
|
139,009
|
|
|
138,158
|
|
||
Cash and cash equivalents of discontinued operations, end of period
|
—
|
|
|
34,917
|
|
||
Cash and cash equivalents of continuing operations, end of period
|
$
|
139,009
|
|
|
$
|
103,241
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Revenue
|
$
|
—
|
|
|
$
|
7,694
|
|
|
$
|
4,950
|
|
|
$
|
15,575
|
|
Salaries and employee benefits
|
—
|
|
|
(1,976
|
)
|
|
(2,860
|
)
|
|
(4,172
|
)
|
||||
Other operating expenses
|
—
|
|
|
(1,280
|
)
|
|
(1,473
|
)
|
|
(2,188
|
)
|
||||
General and administrative expenses
|
—
|
|
|
(1,528
|
)
|
|
(1,551
|
)
|
|
(2,943
|
)
|
||||
Depreciation and amortization
|
—
|
|
|
(206
|
)
|
|
(127
|
)
|
|
(419
|
)
|
||||
Income (loss) from discontinued operations, before income taxes
|
—
|
|
|
2,704
|
|
|
(1,061
|
)
|
|
5,853
|
|
||||
Loss on sale of discontinued operations, before income taxes
|
—
|
|
|
—
|
|
|
(3,000
|
)
|
|
—
|
|
||||
Total income (loss) on discontinued operations, before income taxes
|
—
|
|
|
2,704
|
|
|
(4,061
|
)
|
|
5,853
|
|
||||
Income tax (provision) benefit
|
—
|
|
|
(1,043
|
)
|
|
879
|
|
|
(2,312
|
)
|
||||
Total income (loss) from discontinued operations, net of tax
|
$
|
—
|
|
|
$
|
1,661
|
|
|
$
|
(3,182
|
)
|
|
$
|
3,541
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||
Weighted average common shares outstanding—basic
|
25,742
|
|
|
25,885
|
|
|
25,646
|
|
|
25,978
|
|
Dilutive effect of stock-based awards
|
132
|
|
|
196
|
|
|
225
|
|
|
283
|
|
Dilutive effect of convertible senior notes
|
—
|
|
|
838
|
|
|
—
|
|
|
856
|
|
Weighted average common shares outstanding—diluted
|
25,874
|
|
|
26,919
|
|
|
25,871
|
|
|
27,117
|
|
Purchase price:
|
|
||
Cash paid at acquisition
|
$
|
268,391
|
|
Deferred consideration
|
6,306
|
|
|
Total purchase price
|
$
|
274,697
|
|
|
|
||
Allocation of purchase price:
|
|
||
Cash
|
$
|
30,518
|
|
Investment in receivable portfolios
|
215,988
|
|
|
Deferred court costs
|
760
|
|
|
Property and equipment
|
1,327
|
|
|
Other assets
|
2,384
|
|
|
Liabilities assumed
|
(46,435
|
)
|
|
Identifiable intangible assets
|
3,669
|
|
|
Goodwill
|
66,486
|
|
|
Total net assets acquired
|
$
|
274,697
|
|
•
|
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.
|
|
Fair Value Measurements as of
June 30, 2016 |
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Foreign currency exchange contracts
|
$
|
—
|
|
|
$
|
6,828
|
|
|
$
|
—
|
|
|
$
|
6,828
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Foreign currency exchange contracts
|
—
|
|
|
(3,623
|
)
|
|
—
|
|
|
(3,623
|
)
|
||||
Interest rate swap agreements
|
—
|
|
|
(258
|
)
|
|
—
|
|
|
(258
|
)
|
||||
Temporary Equity
|
|
|
|
|
|
|
|
||||||||
Redeemable noncontrolling interests
|
—
|
|
|
—
|
|
|
(40,736
|
)
|
|
(40,736
|
)
|
|
Fair Value Measurements as of
December 31, 2015 |
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Foreign currency exchange contracts
|
$
|
—
|
|
|
$
|
718
|
|
|
$
|
—
|
|
|
$
|
718
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Foreign currency exchange contracts
|
—
|
|
|
(601
|
)
|
|
—
|
|
|
(601
|
)
|
||||
Interest rate swap agreements
|
—
|
|
|
(352
|
)
|
|
—
|
|
|
(352
|
)
|
||||
Temporary Equity
|
|
|
|
|
|
|
|
||||||||
Redeemable noncontrolling interests
|
—
|
|
|
—
|
|
|
(38,624
|
)
|
|
(38,624
|
)
|
|
Amount
|
||
Balance at December 31, 2014
|
$
|
28,885
|
|
Initial redeemable noncontrolling interest related to business combinations
|
9,409
|
|
|
Net income attributable to redeemable noncontrolling interests
|
1,371
|
|
|
Adjustment of the redeemable noncontrolling interests to fair value
|
2,349
|
|
|
Effect of foreign currency translation attributable to redeemable noncontrolling interests
|
(3,390
|
)
|
|
Balance at December 31, 2015
|
38,624
|
|
|
Net income attributable to redeemable noncontrolling interests
|
1,278
|
|
|
Adjustment of the redeemable noncontrolling interests to fair value
|
1,756
|
|
|
Effect of foreign currency translation attributable to redeemable noncontrolling interests
|
(922
|
)
|
|
Balance at June 30, 2016
|
$
|
40,736
|
|
|
June 30, 2016
|
|
December 31, 2015
|
||||||||
Balance Sheet
Location
|
|
Fair Value
|
|
Balance Sheet
Location
|
|
Fair Value
|
|||||
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
|
||||
Foreign currency exchange contracts
|
Other assets
|
|
$
|
160
|
|
|
Other assets
|
|
$
|
718
|
|
Foreign currency exchange contracts
|
Other liabilities
|
|
(539
|
)
|
|
Other liabilities
|
|
(601
|
)
|
||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
||||
Foreign currency exchange contracts
|
Other assets
|
|
6,668
|
|
|
Other assets
|
|
—
|
|
||
Foreign currency exchange contracts
|
Other liabilities
|
|
(3,084
|
)
|
|
Other liabilities
|
|
—
|
|
||
Interest rate swap agreements
|
Other liabilities
|
|
(258
|
)
|
|
Other liabilities
|
|
(352
|
)
|
Derivatives Designated as Hedging Instruments
|
|
Gain or (Loss)
Recognized in OCI- Effective Portion |
|
Location of Gain
or (Loss) Reclassified from OCI into Income - Effective Portion |
|
Gain or (Loss)
Reclassified from OCI into Income - Effective Portion |
|
Location of
Gain or (Loss) Recognized - Ineffective Portion and Amount Excluded from Effectiveness Testing |
|
Amount of
Gain or (Loss) Recognized - Ineffective Portion and Amount Excluded from Effectiveness Testing |
||||||||||||||||||
|
Three Months Ended
June 30, |
|
|
|
Three Months Ended
June 30, |
|
|
|
Three Months Ended
June 30, |
|||||||||||||||||||
|
2016
|
|
2015
|
|
|
|
2016
|
|
2015
|
|
|
|
2016
|
|
2015
|
|||||||||||||
Foreign currency exchange contracts
|
|
$
|
(207
|
)
|
|
$
|
(395
|
)
|
|
Salaries and
employee benefits |
|
$
|
274
|
|
|
$
|
(164
|
)
|
|
Other (expense)
income |
|
$
|
—
|
|
|
$
|
—
|
|
Foreign currency exchange contracts
|
|
(36
|
)
|
|
(70
|
)
|
|
General and
administrative expenses |
|
46
|
|
|
(31
|
)
|
|
Other (expense)
income |
|
—
|
|
|
—
|
|
Derivatives Designated as Hedging Instruments
|
|
Gain or (Loss)
Recognized in OCI- Effective Portion |
|
Location of Gain
or (Loss) Reclassified from OCI into Income - Effective Portion |
|
Gain or (Loss)
Reclassified from OCI into Income - Effective Portion |
|
Location of
Gain or (Loss) Recognized - Ineffective Portion and Amount Excluded from Effectiveness Testing |
|
Amount of
Gain or (Loss) Recognized - Ineffective Portion and Amount Excluded from Effectiveness Testing |
||||||||||||||||||
|
Six Months Ended
June 30, |
|
|
|
Six Months Ended
June 30, |
|
|
|
Six Months Ended
June 30, |
|||||||||||||||||||
|
2016
|
|
2015
|
|
|
|
2016
|
|
2015
|
|
|
|
2016
|
|
2015
|
|||||||||||||
Foreign currency exchange contracts
|
|
$
|
295
|
|
|
$
|
77
|
|
|
Salaries and
employee benefits |
|
$
|
532
|
|
|
$
|
(315
|
)
|
|
Other (expense)
income |
|
$
|
—
|
|
|
$
|
—
|
|
Foreign currency exchange contracts
|
|
(190
|
)
|
|
150
|
|
|
General and
administrative expenses |
|
69
|
|
|
(47
|
)
|
|
Other (expense)
income |
|
—
|
|
|
—
|
|
Derivatives Not Designated as Hedging Instruments
|
|
Location of Gain or (Loss) Recognized in income on Derivative
|
|
Amount of Gain or (Loss) Recognized in Income on Derivative
|
||||||||||||||
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
|||||||||||||
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|||||||||
Foreign currency exchange contracts
(1)
|
|
Other income (expense)
|
|
$
|
1,990
|
|
|
$
|
—
|
|
|
$
|
7,376
|
|
|
$
|
—
|
|
(1)
|
After the effect of income tax and noncontrolling interest, the net impact of the derivative contracts to consolidated net income from continuing operations attributable to Encore was a loss of
$0.2 million
and a gain of
$1.6 million
during the three and six months ended June 30, 2016, respectively.
|
|
Accretable
Yield
|
|
Estimate of
Zero Basis
Cash Flows
|
|
Total
|
||||||
December 31, 2015
|
$
|
3,047,640
|
|
|
$
|
223,031
|
|
|
$
|
3,270,671
|
|
Revenue recognized, net
|
(238,547
|
)
|
|
(31,547
|
)
|
|
(270,094
|
)
|
|||
Net additions on existing portfolios
|
39,538
|
|
|
8,071
|
|
|
47,609
|
|
|||
Additions for current purchases, net
|
193,654
|
|
|
—
|
|
|
193,654
|
|
|||
Effect of foreign currency translation
|
(64,330
|
)
|
|
470
|
|
|
(63,860
|
)
|
|||
Balance at March 31, 2016
|
2,977,955
|
|
|
200,025
|
|
|
3,177,980
|
|
|||
Revenue recognized, net
|
(233,714
|
)
|
|
(33,738
|
)
|
|
(267,452
|
)
|
|||
Net additions on existing portfolios
|
59,459
|
|
|
95,135
|
|
|
154,594
|
|
|||
Additions for current purchases, net
|
183,217
|
|
|
—
|
|
|
183,217
|
|
|||
Effect of foreign currency translation
|
(181,223
|
)
|
|
245
|
|
|
(180,978
|
)
|
|||
Balance at June 30, 2016
|
$
|
2,805,694
|
|
|
$
|
261,667
|
|
|
$
|
3,067,361
|
|
|
Accretable
Yield
|
|
Estimate of
Zero Basis
Cash Flows
|
|
Total
|
||||||
Balance at December 31, 2014
|
$
|
2,993,321
|
|
|
$
|
66,392
|
|
|
$
|
3,059,713
|
|
Revenue recognized, net
|
(248,539
|
)
|
|
(15,571
|
)
|
|
(264,110
|
)
|
|||
Net additions on existing portfolios
|
228,560
|
|
|
39,661
|
|
|
268,221
|
|
|||
Additions for current purchases, net
|
85,907
|
|
|
—
|
|
|
85,907
|
|
|||
Effect of foreign currency translation
|
(108,046
|
)
|
|
(54
|
)
|
|
(108,100
|
)
|
|||
Balance at March 31, 2015
|
2,951,203
|
|
|
90,428
|
|
|
3,041,631
|
|
|||
Revenue recognized, net
|
(243,425
|
)
|
|
(26,876
|
)
|
|
(270,301
|
)
|
|||
Net additions on existing portfolios
|
(40,337
|
)
|
|
74,587
|
|
|
34,250
|
|
|||
Additions for current purchases, net
|
395,009
|
|
|
—
|
|
|
395,009
|
|
|||
Effect of foreign currency translation
|
131,654
|
|
|
(1
|
)
|
|
131,653
|
|
|||
Balance at June 30, 2015
|
$
|
3,194,104
|
|
|
$
|
138,138
|
|
|
$
|
3,332,242
|
|
|
Three Months Ended June 30, 2016
|
||||||||||||||
|
Accrual Basis
Portfolios
|
|
Cost Recovery
Portfolios
|
|
Zero Basis
Portfolios
|
|
Total
|
||||||||
Balance, beginning of period
|
$
|
2,482,855
|
|
|
$
|
4,123
|
|
|
$
|
—
|
|
|
$
|
2,486,978
|
|
Purchases of receivable portfolios
|
233,116
|
|
|
—
|
|
|
—
|
|
|
233,116
|
|
||||
Transfer of portfolios
|
(96
|
)
|
|
96
|
|
|
—
|
|
|
—
|
|
||||
Gross collections
(1)
|
(399,498
|
)
|
|
(724
|
)
|
|
(33,878
|
)
|
|
(434,100
|
)
|
||||
Put-backs and Recalls
(2)
|
(3,692
|
)
|
|
(5
|
)
|
|
140
|
|
|
(3,557
|
)
|
||||
Foreign currency adjustments
|
(80,432
|
)
|
|
136
|
|
|
—
|
|
|
(80,296
|
)
|
||||
Revenue recognized
|
233,010
|
|
|
—
|
|
|
31,963
|
|
|
264,973
|
|
||||
Portfolio allowance reversals, net
|
704
|
|
|
—
|
|
|
1,775
|
|
|
2,479
|
|
||||
Balance, end of period
|
$
|
2,465,967
|
|
|
$
|
3,626
|
|
|
$
|
—
|
|
|
$
|
2,469,593
|
|
Revenue as a percentage of collections
(3)
|
58.3
|
%
|
|
0.0
|
%
|
|
94.3
|
%
|
|
61.0
|
%
|
||||
|
|
|
|
|
|
|
|
||||||||
|
Three Months Ended June 30, 2015
|
||||||||||||||
|
Accrual Basis
Portfolios
|
|
Cost Recovery
Portfolios
|
|
Zero Basis
Portfolios
|
|
Total
|
||||||||
Balance, beginning of period
|
$
|
2,029,335
|
|
|
$
|
9,072
|
|
|
$
|
—
|
|
|
$
|
2,038,407
|
|
Purchases of receivable portfolios
|
418,780
|
|
|
—
|
|
|
—
|
|
|
418,780
|
|
||||
Gross collections
(1)
|
(409,339
|
)
|
|
(1,253
|
)
|
|
(26,732
|
)
|
|
(437,324
|
)
|
||||
Put-backs and Recalls
(2)
|
(1,458
|
)
|
|
(1
|
)
|
|
(164
|
)
|
|
(1,623
|
)
|
||||
Foreign currency adjustments
|
63,121
|
|
|
85
|
|
|
20
|
|
|
63,226
|
|
||||
Revenue recognized
|
242,618
|
|
|
—
|
|
|
23,323
|
|
|
265,941
|
|
||||
Portfolio allowance reversals, net
|
807
|
|
|
—
|
|
|
3,553
|
|
|
4,360
|
|
||||
Balance, end of period
|
$
|
2,343,864
|
|
|
$
|
7,903
|
|
|
$
|
—
|
|
|
$
|
2,351,767
|
|
Revenue as a percentage of collections
(3)
|
59.3
|
%
|
|
0.0
|
%
|
|
87.2
|
%
|
|
60.8
|
%
|
(1)
|
Does not include amounts collected on behalf of others.
|
(2)
|
Put-backs represent accounts that are returned to the seller in accordance with the respective purchase agreement (“Put-Backs”). Recalls represent accounts that are recalled by the seller in accordance with the respective purchase agreement (“Recalls”).
|
(3)
|
Revenue as a percentage of collections excludes the effects of net portfolio allowances or net portfolio allowance reversals.
|
|
Six Months Ended June 30, 2016
|
||||||||||||||
|
Accrual Basis
Portfolios
|
|
Cost Recovery
Portfolios
|
|
Zero Basis
Portfolios
|
|
Total
|
||||||||
Balance, beginning of period
|
$
|
2,436,054
|
|
|
$
|
4,615
|
|
|
$
|
—
|
|
|
$
|
2,440,669
|
|
Purchases of receivable portfolios
|
489,869
|
|
|
—
|
|
|
—
|
|
|
489,869
|
|
||||
Transfer of portfolios
|
(96
|
)
|
|
96
|
|
|
—
|
|
|
—
|
|
||||
Gross collections
(1)
|
(815,225
|
)
|
|
(1,357
|
)
|
|
(65,323
|
)
|
|
(881,905
|
)
|
||||
Put-backs and Recalls
(2)
|
(16,577
|
)
|
|
(11
|
)
|
|
38
|
|
|
(16,550
|
)
|
||||
Foreign currency adjustments
|
(100,319
|
)
|
|
283
|
|
|
—
|
|
|
(100,036
|
)
|
||||
Revenue recognized
|
471,088
|
|
|
—
|
|
|
61,788
|
|
|
532,876
|
|
||||
Portfolio allowance reversals, net
|
1,173
|
|
|
—
|
|
|
3,497
|
|
|
4,670
|
|
||||
Balance, end of period
|
$
|
2,465,967
|
|
|
$
|
3,626
|
|
|
$
|
—
|
|
|
$
|
2,469,593
|
|
Revenue as a percentage of collections
(3)
|
57.8
|
%
|
|
0.0
|
%
|
|
94.6
|
%
|
|
60.4
|
%
|
||||
|
|
|
|
|
|
|
|
||||||||
|
Six Months Ended June 30, 2015
|
||||||||||||||
|
Accrual Basis
Portfolios
|
|
Cost Recovery
Portfolios
|
|
Zero Basis
Portfolios
|
|
Total
|
||||||||
Balance, beginning of period
|
$
|
2,131,084
|
|
|
$
|
12,476
|
|
|
$
|
—
|
|
|
$
|
2,143,560
|
|
Purchases of receivable portfolios
|
543,934
|
|
|
—
|
|
|
—
|
|
|
543,934
|
|
||||
Gross collections
(1)
|
(816,895
|
)
|
|
(3,225
|
)
|
|
(42,275
|
)
|
|
(862,395
|
)
|
||||
Put-backs and Recalls
(2)
|
(3,975
|
)
|
|
(19
|
)
|
|
(192
|
)
|
|
(4,186
|
)
|
||||
Foreign currency adjustments
|
(2,248
|
)
|
|
(1,329
|
)
|
|
20
|
|
|
(3,557
|
)
|
||||
Revenue recognized
|
491,157
|
|
|
—
|
|
|
36,035
|
|
|
527,192
|
|
||||
Portfolio allowance reversals, net
|
807
|
|
|
—
|
|
|
6,412
|
|
|
7,219
|
|
||||
Balance, end of period
|
$
|
2,343,864
|
|
|
$
|
7,903
|
|
|
$
|
—
|
|
|
$
|
2,351,767
|
|
Revenue as a percentage of collections
(3)
|
60.1
|
%
|
|
0.0
|
%
|
|
85.2
|
%
|
|
61.1
|
%
|
(1)
|
Does not include amounts collected on behalf of others.
|
(2)
|
Put-backs represent accounts that are returned to the seller in accordance with the respective purchase agreement. Recalls represent accounts that are recalled by the seller in accordance with the respective purchase agreement.
|
(3)
|
Revenue as a percentage of collections excludes the effects of net portfolio allowances or net portfolio allowance reversals.
|
|
Valuation Allowance
|
||||||||||||||
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Balance at beginning of period
|
$
|
58,397
|
|
|
$
|
72,814
|
|
|
$
|
60,588
|
|
|
$
|
75,673
|
|
Reversal of prior allowances
|
(2,479
|
)
|
|
(4,360
|
)
|
|
(4,670
|
)
|
|
(7,219
|
)
|
||||
Balance at end of period
|
$
|
55,918
|
|
|
$
|
68,454
|
|
|
$
|
55,918
|
|
|
$
|
68,454
|
|
|
June 30,
2016 |
|
December 31,
2015 |
||||
Court costs advanced
|
$
|
643,251
|
|
|
$
|
636,922
|
|
Court costs recovered
|
(254,450
|
)
|
|
(242,899
|
)
|
||
Court costs reserve
|
(319,651
|
)
|
|
(318,784
|
)
|
||
Deferred court costs
|
$
|
69,150
|
|
|
$
|
75,239
|
|
|
Court Cost Reserve
|
||||||||||||||
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Balance at beginning of period
|
$
|
(324,025
|
)
|
|
$
|
(290,383
|
)
|
|
$
|
(318,784
|
)
|
|
$
|
(279,572
|
)
|
Provision for court costs
|
(11,479
|
)
|
|
(18,318
|
)
|
|
(30,376
|
)
|
|
(37,497
|
)
|
||||
Net down of reserve after 60 months
|
14,096
|
|
|
10,469
|
|
|
27,073
|
|
|
18,394
|
|
||||
Effect of foreign currency translation
|
1,757
|
|
|
(723
|
)
|
|
2,436
|
|
|
(280
|
)
|
||||
Balance at end of period
|
$
|
(319,651
|
)
|
|
$
|
(298,955
|
)
|
|
$
|
(319,651
|
)
|
|
$
|
(298,955
|
)
|
|
June 30,
2016 |
|
December 31,
2015 |
||||
Identifiable intangible assets, net
|
$
|
33,125
|
|
|
$
|
15,712
|
|
Prepaid expenses
|
22,717
|
|
|
21,872
|
|
||
Prepaid income taxes
|
22,277
|
|
|
25,839
|
|
||
Deferred tax assets
|
21,956
|
|
|
12,695
|
|
||
Other financial receivables
|
19,444
|
|
|
11,275
|
|
||
Service fee receivables
|
12,903
|
|
|
13,708
|
|
||
Derivative instruments
|
6,828
|
|
|
718
|
|
||
Receivable from seller
|
5,388
|
|
|
8,605
|
|
||
Security deposits
|
2,837
|
|
|
2,368
|
|
||
Other
|
37,246
|
|
|
35,970
|
|
||
Total
|
$
|
184,721
|
|
|
$
|
148,762
|
|
|
June 30,
2016 |
|
December 31,
2015 |
||||
Encore revolving credit facility
|
$
|
529,000
|
|
|
$
|
627,000
|
|
Encore term loan facility
|
137,047
|
|
|
143,078
|
|
||
Encore senior secured notes
|
17,494
|
|
|
28,750
|
|
||
Encore convertible notes
|
448,500
|
|
|
448,500
|
|
||
Less: Debt discount
|
(37,002
|
)
|
|
(41,867
|
)
|
||
Cabot senior secured notes
|
1,270,764
|
|
|
1,360,000
|
|
||
Add: Debt premium
|
43,449
|
|
|
53,440
|
|
||
Less: Debt discount
|
(2,644
|
)
|
|
(3,184
|
)
|
||
Cabot senior revolving credit facility
|
129,251
|
|
|
54,089
|
|
||
Preferred equity certificates
|
212,716
|
|
|
221,516
|
|
||
Capital lease obligations
|
6,913
|
|
|
11,054
|
|
||
Other
|
129,336
|
|
|
83,342
|
|
||
|
2,884,824
|
|
|
2,985,718
|
|
||
Less: debt issuance costs, net of amortization
|
(35,758
|
)
|
|
(41,655
|
)
|
||
Total
|
$
|
2,849,066
|
|
|
$
|
2,944,063
|
|
•
|
The Revolving Credit Facility of
$742.6 million
that expires in February 2019, with interest at a floating rate equal to, at the Company’s option, either: (1) reserve adjusted London Interbank Offered Rate (“LIBOR”), plus a spread that ranges from
250
to
300 basis points
depending on the cash flow leverage ratio of Encore and its restricted subsidiaries; or (2) alternate base rate, plus a spread that ranges from
150
to
200 basis points
depending on the cash flow leverage ratio of Encore and its restricted subsidiaries. “Alternate base rate,” as defined in the Restated Credit Agreement, means the highest of (i) the per annum rate which the administrative agent publicly announces from time to time as its prime lending rate, (ii) the federal funds effective rate from time to time, plus
0.5%
per annum, (iii) reserved adjusted LIBOR determined on a daily basis for a one month interest period, plus
1.0%
per annum or (iv)
zero
;
|
•
|
A
$92.5 million
term loan maturing on February 25, 2019, with interest at a floating rate equal to, at the Company’s option, either: (1) reserve adjusted LIBOR, plus a spread that ranges from
250
to
300 basis points
, depending on the cash flow leverage ratio of Encore and its restricted subsidiaries; or (2) alternate base rate, plus a spread that ranges from
150
to
200 basis points
, depending on the cash flow leverage ratio of Encore and its restricted subsidiaries. Principal amortizes
$6.9 million
in 2016,
$9.3 million
in 2017, and
$9.3 million
in 2018 with the remaining principal due at the end of the term;
|
•
|
A
$60.0 million
term loan maturing on February 25, 2017, with interest at a floating rate equal to, at the Company’s option, either: (1) reserve adjusted LIBOR, plus a spread that ranges from
200
to
250 basis points
, depending on the cash flow leverage ratio of Encore and its restricted subsidiaries; or (2) alternate base rate, plus a spread that ranges
|
•
|
A
$6.3 million
term loan maturing on November 3, 2017, with interest at a floating rate equal to, at the Company’s option, either: (1) reserve adjusted LIBOR, plus a spread that ranges from
250
to
300 basis points
, depending on the cash flow leverage ratio of Encore and its restricted subsidiaries; or (2) alternate base rate, plus a spread that ranges from
150
to
200 basis points
, depending on the cash flow leverage ratio of Encore and its restricted subsidiaries. Principal amortizes
$0.6 million
in 2016 and
$0.5 million
in 2017 with the remaining principal due at the end of the term;
|
•
|
A borrowing base under the Revolving Credit Facility equal to (1) the lesser of (i)
30%
-
35%
(depending on the trailing 12-month cost per dollar collected of Encore and its restricted subsidiaries) of all eligible non-bankruptcy estimated remaining collections, currently
33%
, plus
55%
of eligible estimated remaining collections for consumer receivables subject to bankruptcy, and (ii) the product of the net book value of all receivable portfolios acquired on or after January 1, 2005 multiplied by
95%
, minus (2) the sum of the aggregate principal amount outstanding of Encore’s Senior Secured Notes (as defined below) plus the aggregate principal amount outstanding under the term loans;
|
•
|
a maximum cash flow leverage ratio permitted of
2.50
:1.00;
|
•
|
a maximum cash flow secured leverage ratio of
2.00
:1.00;
|
•
|
The allowance of additional unsecured or subordinated indebtedness not to exceed
$1.1 billion
;
|
•
|
Restrictions and covenants, which limit the payment of dividends and the incurrence of additional indebtedness and liens, among other limitations;
|
•
|
Repurchases of up to
$150.0 million
of Encore’s common stock after July 9, 2015, subject to compliance with certain covenants and available borrowing capacity;
|
•
|
A change of control definition that excludes acquisitions of stock by Red Mountain Capital Partners LLC, JCF FPK I, LP and their respective affiliates of up to
50%
of the outstanding shares of Encore’s voting stock;
|
•
|
Events of default which, upon occurrence, may permit the lenders to terminate the facility and declare all amounts outstanding to be immediately due and payable;
|
•
|
A pre-approved acquisition limit of
$225.0 million
per fiscal year;
|
•
|
A basket to allow for investments not to exceed the greater of (1)
200%
of the consolidated net worth of Encore and its restricted subsidiaries and (2) an unlimited amount such that after giving effect to the making of any investment, the cash flow leverage ratio is less than
1.25
:1:00;
|
•
|
Collateralization by all assets of the Company, other than the assets of certain foreign subsidiaries and all unrestricted subsidiaries as defined in the Restated Credit Agreement.
|
|
2017 Convertible Notes
|
|
2020 Convertible Notes
|
|
2021 Convertible Notes
|
||||||
Initial conversion price
|
$
|
31.56
|
|
|
$
|
45.72
|
|
|
$
|
59.39
|
|
Closing stock price at date of issuance
|
$
|
25.66
|
|
|
$
|
33.35
|
|
|
$
|
47.51
|
|
Closing stock price date
|
November 27, 2012
|
|
|
June 24, 2013
|
|
|
March 5, 2014
|
|
|||
Conversion rate (shares per $1,000 principal amount)
|
31.6832
|
|
|
21.8718
|
|
|
16.8386
|
|
|||
Conversion date
(1)
|
May 27, 2017
|
|
|
January 1, 2020
|
|
|
September 15, 2020
|
|
(1)
|
The 2017 Convertible Notes became convertible on January 2, 2014, as certain early conversion events were satisfied. Refer to “Conversion and Earnings Per Share Impact” section below for further details.
|
|
2017 Convertible Notes
|
|
2020 Convertible Notes
|
|
2021 Convertible Notes
|
||||||
Debt component
|
$
|
100,298
|
|
|
$
|
140,247
|
|
|
$
|
143,645
|
|
Equity component
|
$
|
14,702
|
|
|
$
|
32,253
|
|
|
$
|
17,355
|
|
Equity issuance cost
|
$
|
788
|
|
|
$
|
1,106
|
|
|
$
|
581
|
|
Stated interest rate
|
3.000
|
%
|
|
3.000
|
%
|
|
2.875
|
%
|
|||
Effective interest rate
|
6.000
|
%
|
|
6.350
|
%
|
|
4.700
|
%
|
|
June 30,
2016 |
|
December 31,
2015 |
||||
Liability component—principal amount
|
$
|
448,500
|
|
|
$
|
448,500
|
|
Unamortized debt discount
|
(37,002
|
)
|
|
(41,867
|
)
|
||
Liability component—net carrying amount
|
$
|
411,498
|
|
|
$
|
406,633
|
|
Equity component
|
$
|
59,722
|
|
|
$
|
58,184
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Interest expense—stated coupon rate
|
$
|
3,297
|
|
|
$
|
3,308
|
|
|
$
|
6,608
|
|
|
$
|
6,600
|
|
Interest expense—amortization of debt discount
|
2,438
|
|
|
2,310
|
|
|
4,865
|
|
|
4,588
|
|
||||
Total interest expense—convertible notes
|
$
|
5,735
|
|
|
$
|
5,618
|
|
|
$
|
11,473
|
|
|
$
|
11,188
|
|
|
2017 Convertible Notes
|
|
2020 Convertible Notes
|
|
2021 Convertible Notes
|
||||||
Cost of the hedge transaction(s)
|
$
|
50,595
|
|
|
$
|
18,113
|
|
|
$
|
19,545
|
|
Initial conversion price
|
$
|
31.56
|
|
|
$
|
45.72
|
|
|
$
|
59.39
|
|
Effective conversion price
|
$
|
60.00
|
|
|
$
|
61.55
|
|
|
$
|
83.14
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Interest expense—stated coupon rate
|
$
|
27,846
|
|
|
$
|
24,151
|
|
|
$
|
55,489
|
|
|
$
|
48,001
|
|
Interest income—accretion of debt premium
|
(2,694
|
)
|
|
(2,660
|
)
|
|
(5,312
|
)
|
|
(5,207
|
)
|
||||
Interest expense—amortization of debt discount
|
257
|
|
|
—
|
|
|
384
|
|
|
—
|
|
||||
Total interest expense—Cabot senior secured notes
|
$
|
25,409
|
|
|
$
|
21,491
|
|
|
$
|
50,561
|
|
|
$
|
42,794
|
|
•
|
Interest at LIBOR (or EURIBOR for any loan drawn in euro) plus
3.5%
;
|
•
|
A restrictive covenant that limits the loan to value ratio to
0.75
;
|
•
|
A restrictive covenant that limits the super senior loan (i.e. the Cabot Credit Facility and any super priority hedging liabilities) to value ratio to
0.25
;
|
•
|
Additional restrictions and covenants which limit, among other things, the payment of dividends and the incurrence of additional indebtedness and liens; and
|
•
|
Events of default which, upon occurrence, may permit the lenders to terminate the Cabot Credit Facility and declare all amounts outstanding to be immediately due and payable.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||
Federal provision
|
35.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
State provision
|
6.2
|
%
|
|
6.9
|
%
|
|
6.2
|
%
|
|
6.9
|
%
|
State benefit
|
(2.2
|
)%
|
|
(2.4
|
)%
|
|
(2.2
|
)%
|
|
(2.4
|
)%
|
International benefit
(1)
|
(9.1
|
)%
|
|
(4.5
|
)%
|
|
(10.1
|
)%
|
|
(5.5
|
)%
|
Permanent items
(2)
|
0.4
|
%
|
|
3.2
|
%
|
|
0.5
|
%
|
|
2.1
|
%
|
Other
(3)
|
0.1
|
%
|
|
0.6
|
%
|
|
(1.4
|
)%
|
|
0.3
|
%
|
Effective rate
|
30.4
|
%
|
|
38.8
|
%
|
|
28.0
|
%
|
|
36.4
|
%
|
(1)
|
Relates primarily to lower tax rates on income attributable to international operations.
|
(2)
|
Represents a provision for nondeductible items.
|
(3)
|
Includes the effect of discrete items and an IRS audit settlement.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Revenues
(1)
:
|
|
|
|
|
|
|
|
||||||||
United States
|
$
|
166,112
|
|
|
$
|
183,111
|
|
|
$
|
336,843
|
|
|
$
|
365,742
|
|
Europe
|
100,403
|
|
|
90,014
|
|
|
197,763
|
|
|
176,738
|
|
||||
Other geographies
|
22,927
|
|
|
9,537
|
|
|
43,853
|
|
|
17,964
|
|
||||
Total
|
$
|
289,442
|
|
|
$
|
282,662
|
|
|
$
|
578,459
|
|
|
$
|
560,444
|
|
(1)
|
Revenues are attributed to countries based on location of customer.
|
|
Total
|
||
Balance, December 31, 2015
|
$
|
924,847
|
|
Goodwill acquired
|
623
|
|
|
Goodwill adjustments
(1)
|
(20,613
|
)
|
|
Effect of foreign currency translation
|
(64,313
|
)
|
|
Balance, June 30, 2016
|
$
|
840,544
|
|
(1)
|
Represent adjustments made to preliminary purchase price allocations as a result of obtaining fair value of intangible assets acquired and finalizing certain established deferred income tax associated with prior year business combinations.
|
|
As of June 30, 2016
|
|
As of December 31, 2015
|
||||||||||||||||||||
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
||||||||||||
Customer relationships
|
$
|
24,157
|
|
|
$
|
(2,452
|
)
|
|
$
|
21,705
|
|
|
$
|
5,356
|
|
|
$
|
(903
|
)
|
|
$
|
4,453
|
|
Developed technologies
|
8,234
|
|
|
(3,457
|
)
|
|
4,777
|
|
|
8,141
|
|
|
(3,793
|
)
|
|
4,348
|
|
||||||
Trade name and other
|
10,658
|
|
|
(4,015
|
)
|
|
6,643
|
|
|
10,324
|
|
|
(3,413
|
)
|
|
6,911
|
|
||||||
Total intangible assets
|
$
|
43,049
|
|
|
$
|
(9,924
|
)
|
|
$
|
33,125
|
|
|
$
|
23,821
|
|
|
$
|
(8,109
|
)
|
|
$
|
15,712
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
United States:
|
|
|
|
|
|
|
|
||||||||
Credit card
|
$
|
116,234
|
|
|
$
|
127,654
|
|
|
$
|
247,629
|
|
|
$
|
226,641
|
|
Consumer bankruptcy receivables
|
12,787
|
|
|
—
|
|
|
23,862
|
|
|
—
|
|
||||
Subtotal
|
129,021
|
|
|
127,654
|
|
|
$
|
271,491
|
|
|
$
|
226,641
|
|
||
Europe:
|
|
|
|
|
|
|
|
||||||||
Credit card
|
83,555
|
|
|
280,881
|
|
|
176,955
|
|
|
300,876
|
|
||||
IVA
|
2,340
|
|
|
1,100
|
|
|
2,439
|
|
|
2,737
|
|
||||
Telecom
|
—
|
|
|
8,460
|
|
|
—
|
|
|
8,460
|
|
||||
Subtotal
|
85,895
|
|
|
290,441
|
|
|
179,394
|
|
|
312,073
|
|
||||
Other geographies:
|
|
|
|
|
|
|
|
||||||||
Credit card
|
18,200
|
|
|
685
|
|
|
38,984
|
|
|
5,220
|
|
||||
Total purchases
|
$
|
233,116
|
|
|
$
|
418,780
|
|
|
$
|
489,869
|
|
|
$
|
543,934
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
United States:
|
|
|
|
|
|
|
|
||||||||
Collection sites
|
$
|
121,867
|
|
|
$
|
125,153
|
|
|
$
|
250,257
|
|
|
$
|
261,082
|
|
Legal collections
|
142,937
|
|
|
167,747
|
|
|
296,987
|
|
|
326,706
|
|
||||
Collection agencies
(1)
|
14,082
|
|
|
17,952
|
|
|
28,755
|
|
|
36,053
|
|
||||
Subtotal
|
278,886
|
|
|
310,852
|
|
|
575,999
|
|
|
623,841
|
|
||||
Europe:
|
|
|
|
|
|
|
|
||||||||
Collection sites
|
60,605
|
|
|
64,259
|
|
|
119,436
|
|
|
110,657
|
|
||||
Legal collections
|
31,616
|
|
|
20,833
|
|
|
63,094
|
|
|
38,936
|
|
||||
Collection agencies
|
35,129
|
|
|
33,448
|
|
|
71,954
|
|
|
73,572
|
|
||||
Subtotal
|
127,350
|
|
|
118,540
|
|
|
254,484
|
|
|
223,165
|
|
||||
Other geographies:
|
|
|
|
|
|
|
|
||||||||
Collection sites
|
20,579
|
|
|
7,581
|
|
|
38,208
|
|
|
15,025
|
|
||||
Legal collections
|
2,723
|
|
|
—
|
|
|
5,141
|
|
|
—
|
|
||||
Collection agencies
|
4,562
|
|
|
351
|
|
|
8,073
|
|
|
364
|
|
||||
Subtotal
|
27,864
|
|
|
7,932
|
|
|
51,422
|
|
|
15,389
|
|
||||
Total collections
|
$
|
434,100
|
|
|
$
|
437,324
|
|
|
$
|
881,905
|
|
|
$
|
862,395
|
|
(1)
|
Collections through our collection agency channel in the United States include accounts subject to bankruptcy filings collected by others. Additionally, collection agency collections often include accounts purchased from a competitor where we maintain the collection agency servicing until the accounts can be recalled and placed in our collection channels.
|
|
Three Months Ended June 30,
|
||||||||||||
|
2016
|
|
2015
|
||||||||||
Revenues
|
|
|
|
|
|
|
|
||||||
Revenue from receivable portfolios, net
|
$
|
267,452
|
|
|
92.4
|
%
|
|
$
|
270,301
|
|
|
95.6
|
%
|
Other revenues
|
21,990
|
|
|
7.6
|
%
|
|
12,361
|
|
|
4.4
|
%
|
||
Total revenues
|
289,442
|
|
|
100.0
|
%
|
|
282,662
|
|
|
100.0
|
%
|
||
Operating expenses
|
|
|
|
|
|
|
|
||||||
Salaries and employee benefits
|
75,499
|
|
|
26.1
|
%
|
|
65,569
|
|
|
23.2
|
%
|
||
Cost of legal collections
|
46,807
|
|
|
16.2
|
%
|
|
57,076
|
|
|
20.2
|
%
|
||
Other operating expenses
|
24,946
|
|
|
8.6
|
%
|
|
21,735
|
|
|
7.7
|
%
|
||
Collection agency commissions
|
9,274
|
|
|
3.2
|
%
|
|
8,466
|
|
|
3.0
|
%
|
||
General and administrative expenses
|
32,934
|
|
|
11.4
|
%
|
|
37,638
|
|
|
13.3
|
%
|
||
Depreciation and amortization
|
8,235
|
|
|
2.8
|
%
|
|
7,878
|
|
|
2.8
|
%
|
||
Total operating expenses
|
197,695
|
|
|
68.3
|
%
|
|
198,362
|
|
|
70.2
|
%
|
||
Income from operations
|
91,747
|
|
|
31.7
|
%
|
|
84,300
|
|
|
29.8
|
%
|
||
Other (expense) income
|
|
|
|
|
|
|
|
||||||
Interest expense
|
(50,597
|
)
|
|
(17.5
|
)%
|
|
(46,250
|
)
|
|
(16.4
|
)%
|
||
Other income
|
3,134
|
|
|
1.1
|
%
|
|
395
|
|
|
0.2
|
%
|
||
Total other expense
|
(47,463
|
)
|
|
(16.4
|
)%
|
|
(45,855
|
)
|
|
(16.2
|
)%
|
||
Income before income taxes
|
44,284
|
|
|
15.3
|
%
|
|
38,445
|
|
|
13.6
|
%
|
||
Provision for income taxes
|
(13,451
|
)
|
|
(4.6
|
)%
|
|
(14,921
|
)
|
|
(5.3
|
)%
|
||
Income from continuing operations
|
30,833
|
|
|
10.7
|
%
|
|
23,524
|
|
|
8.3
|
%
|
||
Income from discontinued operations, net of tax
|
—
|
|
|
0.0
|
%
|
|
1,661
|
|
|
0.6
|
%
|
||
Net income
|
30,833
|
|
|
10.7
|
%
|
|
25,185
|
|
|
8.9
|
%
|
||
Net (income) loss attributable to noncontrolling interest
|
(1,245
|
)
|
|
(0.5
|
)%
|
|
2,472
|
|
|
0.9
|
%
|
||
Net income attributable to Encore Capital Group, Inc. stockholders
|
$
|
29,588
|
|
|
10.2
|
%
|
|
$
|
27,657
|
|
|
9.8
|
%
|
|
Six Months Ended June 30,
|
||||||||||||
|
2016
|
|
2015
|
||||||||||
Revenues
|
|
|
|
|
|
|
|
||||||
Revenue from receivable portfolios, net
|
$
|
537,546
|
|
|
92.9
|
%
|
|
$
|
534,411
|
|
|
95.4
|
%
|
Other revenues
|
40,913
|
|
|
7.1
|
%
|
|
26,033
|
|
|
4.6
|
%
|
||
Total revenues
|
578,459
|
|
|
100.0
|
%
|
|
560,444
|
|
|
100.0
|
%
|
||
Operating expenses
|
|
|
|
|
|
|
|
||||||
Salaries and employee benefits
|
145,141
|
|
|
25.1
|
%
|
|
131,121
|
|
|
23.4
|
%
|
||
Cost of legal collections
|
101,115
|
|
|
17.4
|
%
|
|
112,074
|
|
|
20.0
|
%
|
||
Other operating expenses
|
51,289
|
|
|
8.9
|
%
|
|
46,061
|
|
|
8.2
|
%
|
||
Collection agency commissions
|
19,394
|
|
|
3.4
|
%
|
|
19,151
|
|
|
3.4
|
%
|
||
General and administrative expenses
|
68,173
|
|
|
11.8
|
%
|
|
68,835
|
|
|
12.3
|
%
|
||
Depreciation and amortization
|
18,096
|
|
|
3.1
|
%
|
|
16,015
|
|
|
2.9
|
%
|
||
Total operating expenses
|
403,208
|
|
|
69.7
|
%
|
|
393,257
|
|
|
70.2
|
%
|
||
Income from operations
|
175,251
|
|
|
30.3
|
%
|
|
167,187
|
|
|
29.8
|
%
|
||
Other (expense) income
|
|
|
|
|
|
|
|
||||||
Interest expense
|
(101,288
|
)
|
|
(17.5
|
)%
|
|
(88,553
|
)
|
|
(15.8
|
)%
|
||
Other income
|
10,258
|
|
|
1.8
|
%
|
|
2,512
|
|
|
0.5
|
%
|
||
Total other expense
|
(91,030
|
)
|
|
(15.7
|
)%
|
|
(86,041
|
)
|
|
(15.3
|
)%
|
||
Income before income taxes
|
84,221
|
|
|
14.6
|
%
|
|
81,146
|
|
|
14.5
|
%
|
||
Provision for income taxes
|
(23,599
|
)
|
|
(4.1
|
)%
|
|
(29,535
|
)
|
|
(5.3
|
)%
|
||
Income from continuing operations
|
60,622
|
|
|
10.5
|
%
|
|
51,611
|
|
|
9.2
|
%
|
||
(Loss) income from discontinued operations, net of tax
|
(3,182
|
)
|
|
(0.6
|
)%
|
|
3,541
|
|
|
0.6
|
%
|
||
Net income
|
57,440
|
|
|
9.9
|
%
|
|
55,152
|
|
|
9.8
|
%
|
||
Net (income) loss attributable to noncontrolling interest
|
(2,158
|
)
|
|
(0.3
|
)%
|
|
1,930
|
|
|
0.4
|
%
|
||
Net income attributable to Encore Capital Group, Inc. stockholders
|
$
|
55,282
|
|
|
9.6
|
%
|
|
$
|
57,082
|
|
|
10.2
|
%
|
|
Three Months Ended June 30, 2016
|
|
Three Months Ended June 30, 2015
|
||||||||||||||||||||
|
Janus Holdings
|
|
Encore Europe
(1)
|
|
Consolidated
|
|
Janus Holdings
|
|
Encore Europe
(1)
|
|
Consolidated
|
||||||||||||
Total revenues
|
$
|
92,128
|
|
|
$
|
—
|
|
|
$
|
92,128
|
|
|
$
|
84,613
|
|
|
$
|
—
|
|
|
$
|
84,613
|
|
Total operating expenses
|
(50,150
|
)
|
|
—
|
|
|
(50,150
|
)
|
|
(48,420
|
)
|
|
—
|
|
|
(48,420
|
)
|
||||||
Income from operations
|
41,978
|
|
|
—
|
|
|
41,978
|
|
|
36,193
|
|
|
—
|
|
|
36,193
|
|
||||||
Interest expense-non-PEC
|
(28,579
|
)
|
|
—
|
|
|
(28,579
|
)
|
|
(26,436
|
)
|
|
—
|
|
|
(26,436
|
)
|
||||||
PEC interest (expense) income
|
(12,652
|
)
|
|
6,200
|
|
|
(6,452
|
)
|
|
(12,009
|
)
|
|
5,885
|
|
|
(6,124
|
)
|
||||||
Other income
|
5,432
|
|
|
—
|
|
|
5,432
|
|
|
297
|
|
|
—
|
|
|
297
|
|
||||||
Income before income taxes
|
6,179
|
|
|
6,200
|
|
|
12,379
|
|
|
(1,955
|
)
|
|
5,885
|
|
|
3,930
|
|
||||||
Provision for income taxes
|
(2,130
|
)
|
|
—
|
|
|
(2,130
|
)
|
|
(1,403
|
)
|
|
—
|
|
|
(1,403
|
)
|
||||||
Net income (loss)
|
4,049
|
|
|
6,200
|
|
|
10,249
|
|
|
(3,358
|
)
|
|
5,885
|
|
|
2,527
|
|
||||||
Net (income) loss attributable to noncontrolling interest
|
(519
|
)
|
|
(1,761
|
)
|
|
(2,280
|
)
|
|
471
|
|
|
1,441
|
|
|
1,912
|
|
||||||
Net income (loss) attributable to Encore Capital Group, Inc. stockholders
|
$
|
3,530
|
|
|
$
|
4,439
|
|
|
$
|
7,969
|
|
|
$
|
(2,887
|
)
|
|
$
|
7,326
|
|
|
$
|
4,439
|
|
|
Six Months Ended June 30, 2016
|
|
Six Months Ended June 30, 2015
|
||||||||||||||||||||
|
Janus Holdings
|
|
Encore Europe
(1)
|
|
Consolidated
|
|
Janus Holdings
|
|
Encore Europe
(1)
|
|
Consolidated
|
||||||||||||
Total revenues
|
$
|
181,661
|
|
|
$
|
—
|
|
|
$
|
181,661
|
|
|
$
|
164,390
|
|
|
$
|
—
|
|
|
$
|
164,390
|
|
Total operating expenses
|
(100,980
|
)
|
|
—
|
|
|
(100,980
|
)
|
|
(89,202
|
)
|
|
—
|
|
|
(89,202
|
)
|
||||||
Income from operations
|
80,681
|
|
|
—
|
|
|
80,681
|
|
|
75,188
|
|
|
—
|
|
|
75,188
|
|
||||||
Interest expense-non-PEC
|
(56,851
|
)
|
|
—
|
|
|
(56,851
|
)
|
|
(49,733
|
)
|
|
—
|
|
|
(49,733
|
)
|
||||||
PEC interest (expense) income
|
(25,063
|
)
|
|
12,282
|
|
|
(12,781
|
)
|
|
(23,740
|
)
|
|
11,634
|
|
|
(12,106
|
)
|
||||||
Other income
|
11,398
|
|
|
—
|
|
|
11,398
|
|
|
1,055
|
|
|
—
|
|
|
1,055
|
|
||||||
Income before income taxes
|
10,165
|
|
|
12,282
|
|
|
22,447
|
|
|
2,770
|
|
|
11,634
|
|
|
14,404
|
|
||||||
Provision for income taxes
|
(3,817
|
)
|
|
—
|
|
|
(3,817
|
)
|
|
(3,524
|
)
|
|
—
|
|
|
(3,524
|
)
|
||||||
Net income (loss)
|
6,348
|
|
|
12,282
|
|
|
18,630
|
|
|
(754
|
)
|
|
11,634
|
|
|
10,880
|
|
||||||
Net (income) loss attributable to noncontrolling interest
|
(841
|
)
|
|
(2,748
|
)
|
|
(3,589
|
)
|
|
106
|
|
|
324
|
|
|
430
|
|
||||||
Net income (loss) attributable to Encore Capital Group, Inc. stockholders
|
$
|
5,507
|
|
|
$
|
9,534
|
|
|
$
|
15,041
|
|
|
$
|
(648
|
)
|
|
$
|
11,958
|
|
|
$
|
11,310
|
|
(1)
|
Includes only the results of operations related to Janus Holdings and therefore does not represent the complete financial performance of Encore Europe.
|
|
Three Months Ended June 30, 2016
|
|
As of
June 30, 2016 |
|||||||||||||||||||||
|
Collections
(1)
|
|
Gross
Revenue
(2)
|
|
Revenue
Recognition
Rate
(3)
|
|
Net
Portfolio Allowance Reversal |
|
Revenue
% of Total
Revenue
|
|
Unamortized
Balances
|
|
Monthly
IRR
|
|||||||||||
United States:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
ZBA
(4)
|
$
|
31,883
|
|
|
$
|
30,119
|
|
|
94.5
|
%
|
|
$
|
1,775
|
|
|
11.4
|
%
|
|
$
|
—
|
|
|
—
|
|
2007
|
556
|
|
|
194
|
|
|
34.9
|
%
|
|
154
|
|
|
0.1
|
%
|
|
1,183
|
|
|
4.6
|
%
|
||||
2008
|
2,924
|
|
|
1,249
|
|
|
42.7
|
%
|
|
550
|
|
|
0.5
|
%
|
|
3,851
|
|
|
6.3
|
%
|
||||
2009
(5)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
2010
|
2,704
|
|
|
2,198
|
|
|
81.3
|
%
|
|
—
|
|
|
0.8
|
%
|
|
2,539
|
|
|
25.0
|
%
|
||||
2011
|
17,197
|
|
|
9,842
|
|
|
57.2
|
%
|
|
—
|
|
|
3.7
|
%
|
|
12,713
|
|
|
17.4
|
%
|
||||
2012
|
29,983
|
|
|
18,601
|
|
|
62.0
|
%
|
|
—
|
|
|
7.0
|
%
|
|
55,789
|
|
|
9.9
|
%
|
||||
2013
|
53,213
|
|
|
32,408
|
|
|
60.9
|
%
|
|
—
|
|
|
12.2
|
%
|
|
116,497
|
|
|
8.2
|
%
|
||||
2014
|
57,762
|
|
|
29,617
|
|
|
51.3
|
%
|
|
—
|
|
|
11.2
|
%
|
|
228,107
|
|
|
4.0
|
%
|
||||
2015
|
58,427
|
|
|
27,014
|
|
|
46.2
|
%
|
|
—
|
|
|
10.2
|
%
|
|
368,768
|
|
|
2.0
|
%
|
||||
2016
|
24,237
|
|
|
12,254
|
|
|
50.6
|
%
|
|
—
|
|
|
4.6
|
%
|
|
256,407
|
|
|
2.2
|
%
|
||||
Subtotal
|
278,886
|
|
|
163,496
|
|
|
58.6
|
%
|
|
2,479
|
|
|
61.7
|
%
|
|
1,045,854
|
|
|
4.0
|
%
|
||||
Europe:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
2013
|
44,915
|
|
|
37,909
|
|
|
84.4
|
%
|
|
—
|
|
|
14.3
|
%
|
|
384,927
|
|
|
3.1
|
%
|
||||
2014
|
41,755
|
|
|
25,492
|
|
|
61.1
|
%
|
|
—
|
|
|
9.6
|
%
|
|
379,330
|
|
|
2.1
|
%
|
||||
2015
|
32,144
|
|
|
17,328
|
|
|
53.9
|
%
|
|
—
|
|
|
6.6
|
%
|
|
319,354
|
|
|
1.7
|
%
|
||||
2016
|
8,536
|
|
|
4,991
|
|
|
58.5
|
%
|
|
—
|
|
|
1.9
|
%
|
|
172,067
|
|
|
1.5
|
%
|
||||
Subtotal
|
127,350
|
|
|
85,720
|
|
|
67.3
|
%
|
|
—
|
|
|
32.4
|
%
|
|
1,255,678
|
|
|
2.2
|
%
|
||||
Other geographies:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
ZBA
(4)
|
1,995
|
|
|
1,843
|
|
|
92.4
|
%
|
|
—
|
|
|
0.7
|
%
|
|
—
|
|
|
—
|
|
||||
2013
|
423
|
|
|
—
|
|
|
0.0
|
%
|
|
—
|
|
|
0.0
|
%
|
|
1,812
|
|
|
0.0
|
%
|
||||
2014
|
4,967
|
|
|
4,637
|
|
|
93.4
|
%
|
|
—
|
|
|
1.7
|
%
|
|
62,609
|
|
|
2.3
|
%
|
||||
2015
|
15,003
|
|
|
7,288
|
|
|
48.6
|
%
|
|
—
|
|
|
2.7
|
%
|
|
66,928
|
|
|
3.3
|
%
|
||||
2016
|
5,476
|
|
|
1,989
|
|
|
36.3
|
%
|
|
—
|
|
|
0.8
|
%
|
|
36,712
|
|
|
2.4
|
%
|
||||
Subtotal
|
27,864
|
|
|
15,757
|
|
|
56.5
|
%
|
|
—
|
|
|
5.9
|
%
|
|
168,061
|
|
|
2.7
|
%
|
||||
Total
|
$
|
434,100
|
|
|
$
|
264,973
|
|
|
61.0
|
%
|
|
$
|
2,479
|
|
|
100.0
|
%
|
|
$
|
2,469,593
|
|
|
3.0
|
%
|
(1)
|
Does not include amounts collected on behalf of others.
|
(2)
|
Gross revenue excludes the effects of net portfolio allowance or net portfolio allowance reversals.
|
(3)
|
Revenue recognition rate excludes the effects of net portfolio allowance or net portfolio allowance reversals.
|
(4)
|
ZBA revenue typically has a 100% revenue recognition rate. However, collections on ZBA pool groups where a valuation allowance remains must first be recorded as an allowance reversal until the allowance for that pool group is zero. Once the entire valuation allowance is reversed, the revenue recognition rate will become 100%. ZBA gross revenue includes an immaterial amount of accounts that are returned to the seller in accordance with the respective purchase agreement (“Put-Backs”).
|
(5)
|
Total collections realized exceed the net book value of the portfolio and have been converted to ZBA.
|
|
Three Months Ended June 30, 2015
|
|
As of
June 30, 2015 |
|||||||||||||||||||||
|
Collections
(1)
|
|
Gross
Revenue
(2)
|
|
Revenue
Recognition
Rate
(3)
|
|
Net
Portfolio Allowance Reversal |
|
Revenue
% of Total
Revenue
|
|
Unamortized
Balances
|
|
Monthly
IRR
|
|||||||||||
United States:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
ZBA
(4)
|
$
|
25,805
|
|
|
$
|
22,396
|
|
|
86.8
|
%
|
|
$
|
3,553
|
|
|
8.4
|
%
|
|
$
|
—
|
|
|
—
|
|
2007
|
774
|
|
|
272
|
|
|
35.1
|
%
|
|
297
|
|
|
0.1
|
%
|
|
1,747
|
|
|
4.6
|
%
|
||||
2008
|
3,694
|
|
|
2,217
|
|
|
60.0
|
%
|
|
510
|
|
|
0.8
|
%
|
|
6,371
|
|
|
10.3
|
%
|
||||
2009
|
7,098
|
|
|
3,496
|
|
|
49.3
|
%
|
|
—
|
|
|
1.3
|
%
|
|
2,259
|
|
|
25.0
|
%
|
||||
2010
|
12,908
|
|
|
6,649
|
|
|
51.5
|
%
|
|
—
|
|
|
2.5
|
%
|
|
6,407
|
|
|
18.7
|
%
|
||||
2011
|
30,681
|
|
|
23,162
|
|
|
75.5
|
%
|
|
—
|
|
|
8.7
|
%
|
|
40,591
|
|
|
17.1
|
%
|
||||
2012
|
47,664
|
|
|
28,575
|
|
|
60.0
|
%
|
|
—
|
|
|
10.8
|
%
|
|
111,139
|
|
|
7.8
|
%
|
||||
2013
|
80,543
|
|
|
47,331
|
|
|
58.8
|
%
|
|
—
|
|
|
17.8
|
%
|
|
211,691
|
|
|
6.8
|
%
|
||||
2014
|
80,442
|
|
|
36,726
|
|
|
45.7
|
%
|
|
—
|
|
|
13.8
|
%
|
|
364,604
|
|
|
3.1
|
%
|
||||
2015
|
21,243
|
|
|
7,908
|
|
|
37.2
|
%
|
|
—
|
|
|
3.0
|
%
|
|
209,601
|
|
|
2.0
|
%
|
||||
Subtotal
|
310,852
|
|
|
178,732
|
|
|
57.5
|
%
|
|
4,360
|
|
|
67.2
|
%
|
|
954,410
|
|
|
5.5
|
%
|
||||
Europe:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
2013
|
56,824
|
|
|
43,628
|
|
|
76.8
|
%
|
|
—
|
|
|
16.4
|
%
|
|
483,377
|
|
|
3.0
|
%
|
||||
2014
|
52,122
|
|
|
31,408
|
|
|
60.3
|
%
|
|
—
|
|
|
11.8
|
%
|
|
509,998
|
|
|
2.1
|
%
|
||||
2015
|
9,594
|
|
|
5,634
|
|
|
58.7
|
%
|
|
—
|
|
|
2.1
|
%
|
|
315,361
|
|
|
2.0
|
%
|
||||
Subtotal
|
118,540
|
|
|
80,670
|
|
|
68.1
|
%
|
|
—
|
|
|
30.3
|
%
|
|
1,308,736
|
|
|
2.4
|
%
|
||||
Other geographies:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
ZBA
(4)
|
927
|
|
|
927
|
|
|
100.0
|
%
|
|
—
|
|
|
0.4
|
%
|
|
—
|
|
|
—
|
|
||||
2012
|
84
|
|
|
—
|
|
|
0.0
|
%
|
|
—
|
|
|
0.0
|
%
|
|
—
|
|
|
0.0
|
%
|
||||
2013
|
2,227
|
|
|
98
|
|
|
4.4
|
%
|
|
—
|
|
|
0.0
|
%
|
|
4,688
|
|
|
0.1
|
%
|
||||
2014
|
3,678
|
|
|
5,220
|
|
|
141.9
|
%
|
|
—
|
|
|
2.0
|
%
|
|
79,785
|
|
|
2.2
|
%
|
||||
2015
|
1,016
|
|
|
294
|
|
|
28.9
|
%
|
|
—
|
|
|
0.1
|
%
|
|
4,148
|
|
|
2.0
|
%
|
||||
Subtotal
|
7,932
|
|
|
6,539
|
|
|
82.4
|
%
|
|
—
|
|
|
2.5
|
%
|
|
88,621
|
|
|
2.0
|
%
|
||||
Total
|
$
|
437,324
|
|
|
$
|
265,941
|
|
|
60.8
|
%
|
|
$
|
4,360
|
|
|
100.0
|
%
|
|
$
|
2,351,767
|
|
|
3.6
|
%
|
(1)
|
Does not include amounts collected on behalf of others.
|
(2)
|
Gross revenue excludes the effects of net portfolio allowance or net portfolio allowance reversals.
|
(3)
|
Revenue recognition rate excludes the effects of net portfolio allowance or net portfolio allowance reversals.
|
(4)
|
ZBA revenue typically has a 100% revenue recognition rate. However, collections on ZBA pool groups where a valuation allowance remains must first be recorded as an allowance reversal until the allowance for that pool group is zero. Once the entire valuation allowance is reversed, the revenue recognition rate will become 100%. ZBA gross revenue includes an immaterial amount of Put-Backs.
|
|
Six Months Ended June 30, 2016
|
|
As of June 30, 2016
|
|||||||||||||||||||||
|
Collections
(1)
|
|
Gross
Revenue (2) |
|
Revenue
Recognition
Rate
(3)
|
|
Net
Portfolio Allowance Reversal |
|
Revenue
% of Total
Revenue
|
|
Unamortized
Balances
|
|
Monthly
IRR
|
|||||||||||
United States:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
ZBA
(4)
|
$
|
61,657
|
|
|
$
|
58,267
|
|
|
94.5
|
%
|
|
$
|
3,497
|
|
|
10.9
|
%
|
|
$
|
—
|
|
|
—
|
|
2007
|
1,132
|
|
|
414
|
|
|
36.6
|
%
|
|
301
|
|
|
0.1
|
%
|
|
1,183
|
|
|
4.6
|
%
|
||||
2008
|
5,778
|
|
|
2,959
|
|
|
51.2
|
%
|
|
872
|
|
|
0.6
|
%
|
|
3,851
|
|
|
6.3
|
%
|
||||
2009
(5)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
2010
|
5,688
|
|
|
4,510
|
|
|
79.3
|
%
|
|
—
|
|
|
0.8
|
%
|
|
2,539
|
|
|
25.0
|
%
|
||||
2011
|
39,438
|
|
|
24,918
|
|
|
63.2
|
%
|
|
—
|
|
|
4.7
|
%
|
|
12,713
|
|
|
17.4
|
%
|
||||
2012
|
64,608
|
|
|
40,609
|
|
|
62.9
|
%
|
|
—
|
|
|
7.6
|
%
|
|
55,789
|
|
|
9.9
|
%
|
||||
2013
|
114,506
|
|
|
69,660
|
|
|
60.8
|
%
|
|
—
|
|
|
13.1
|
%
|
|
116,497
|
|
|
8.2
|
%
|
||||
2014
|
124,488
|
|
|
61,462
|
|
|
49.4
|
%
|
|
—
|
|
|
11.5
|
%
|
|
228,107
|
|
|
4.0
|
%
|
||||
2015
|
128,652
|
|
|
54,504
|
|
|
42.4
|
%
|
|
—
|
|
|
10.2
|
%
|
|
368,768
|
|
|
2.0
|
%
|
||||
2016
|
30,052
|
|
|
14,724
|
|
|
49.0
|
%
|
|
—
|
|
|
2.8
|
%
|
|
256,407
|
|
|
2.2
|
%
|
||||
Subtotal
|
575,999
|
|
|
332,027
|
|
|
57.6
|
%
|
|
4,670
|
|
|
62.3
|
%
|
|
1,045,854
|
|
|
4.0
|
%
|
||||
Europe:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
2013
|
90,458
|
|
|
76,417
|
|
|
84.5
|
%
|
|
—
|
|
|
14.4
|
%
|
|
384,927
|
|
|
3.1
|
%
|
||||
2014
|
84,900
|
|
|
51,878
|
|
|
61.1
|
%
|
|
—
|
|
|
9.7
|
%
|
|
379,330
|
|
|
2.1
|
%
|
||||
2015
|
65,690
|
|
|
34,654
|
|
|
52.8
|
%
|
|
—
|
|
|
6.5
|
%
|
|
319,354
|
|
|
1.7
|
%
|
||||
2016
|
13,436
|
|
|
7,487
|
|
|
55.7
|
%
|
|
—
|
|
|
1.4
|
%
|
|
172,067
|
|
|
1.5
|
%
|
||||
Subtotal
|
254,484
|
|
|
170,436
|
|
|
67.0
|
%
|
|
—
|
|
|
32.0
|
%
|
|
1,255,678
|
|
|
2.2
|
%
|
||||
Other geographies:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
ZBA
(4)
|
3,666
|
|
|
3,520
|
|
|
96.0
|
%
|
|
—
|
|
|
0.7
|
%
|
|
—
|
|
|
—
|
|
||||
2013
|
794
|
|
|
—
|
|
|
0.0
|
%
|
|
—
|
|
|
0.0
|
%
|
|
1,812
|
|
|
0.0
|
%
|
||||
2014
|
9,364
|
|
|
9,202
|
|
|
98.3
|
%
|
|
—
|
|
|
1.7
|
%
|
|
62,609
|
|
|
2.3
|
%
|
||||
2015
|
30,087
|
|
|
14,829
|
|
|
49.3
|
%
|
|
—
|
|
|
2.8
|
%
|
|
66,928
|
|
|
3.3
|
%
|
||||
2016
|
7,511
|
|
|
2,862
|
|
|
38.1
|
%
|
|
—
|
|
|
0.5
|
%
|
|
36,712
|
|
|
2.4
|
%
|
||||
Subtotal
|
51,422
|
|
|
30,413
|
|
|
59.1
|
%
|
|
—
|
|
|
5.7
|
%
|
|
168,061
|
|
|
2.7
|
%
|
||||
Total
|
$
|
881,905
|
|
|
$
|
532,876
|
|
|
60.4
|
%
|
|
$
|
4,670
|
|
|
100.0
|
%
|
|
$
|
2,469,593
|
|
|
3.0
|
%
|
(1)
|
Does not include amounts collected on behalf of others.
|
(2)
|
Gross revenue excludes the effects of net portfolio allowance or net portfolio allowance reversals.
|
(3)
|
Revenue recognition rate excludes the effects of net portfolio allowance or net portfolio allowance reversals.
|
(4)
|
ZBA revenue typically has a 100% revenue recognition rate. However, collections on ZBA pool groups where a valuation allowance remains must first be recorded as an allowance reversal until the allowance for that pool group is zero. Once the entire valuation allowance is reversed, the revenue recognition rate will become 100%. ZBA gross revenue includes an immaterial amount of Put-Backs.
|
(5)
|
Total collections realized exceed the net book value of the portfolio and have been converted to ZBA.
|
|
Six Months Ended June 30, 2015
|
|
As of June 30, 2015
|
|||||||||||||||||||||
|
Collections
(1)
|
|
Gross
Revenue
(2)
|
|
Revenue
Recognition
Rate
(3)
|
|
Net
Portfolio Allowance Reversal |
|
Revenue
% of Total
Revenue
|
|
Unamortized
Balances
|
|
Monthly
IRR
|
|||||||||||
United States:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
ZBA
(4)
|
$
|
41,183
|
|
|
$
|
34,943
|
|
|
84.8
|
%
|
|
$
|
6,412
|
|
|
6.6
|
%
|
|
$
|
—
|
|
|
—
|
|
2007
|
1,759
|
|
|
605
|
|
|
34.4
|
%
|
|
297
|
|
|
0.1
|
%
|
|
1,747
|
|
|
4.6
|
%
|
||||
2008
|
7,212
|
|
|
4,677
|
|
|
64.9
|
%
|
|
510
|
|
|
0.9
|
%
|
|
6,371
|
|
|
10.3
|
%
|
||||
2009
|
14,633
|
|
|
9,122
|
|
|
62.3
|
%
|
|
—
|
|
|
1.7
|
%
|
|
2,259
|
|
|
25.0
|
%
|
||||
2010
|
34,343
|
|
|
19,705
|
|
|
57.4
|
%
|
|
—
|
|
|
3.8
|
%
|
|
6,407
|
|
|
18.7
|
%
|
||||
2011
|
63,441
|
|
|
48,135
|
|
|
75.9
|
%
|
|
—
|
|
|
9.1
|
%
|
|
40,591
|
|
|
17.1
|
%
|
||||
2012
|
100,835
|
|
|
61,387
|
|
|
60.9
|
%
|
|
—
|
|
|
11.7
|
%
|
|
111,139
|
|
|
7.8
|
%
|
||||
2013
|
167,984
|
|
|
94,961
|
|
|
56.5
|
%
|
|
—
|
|
|
18.0
|
%
|
|
211,691
|
|
|
6.8
|
%
|
||||
2014
|
166,487
|
|
|
75,897
|
|
|
45.6
|
%
|
|
—
|
|
|
14.4
|
%
|
|
364,604
|
|
|
3.1
|
%
|
||||
2015
|
25,964
|
|
|
9,102
|
|
|
35.1
|
%
|
|
—
|
|
|
1.7
|
%
|
|
209,601
|
|
|
2.0
|
%
|
||||
Subtotal
|
623,841
|
|
|
358,534
|
|
|
57.5
|
%
|
|
7,219
|
|
|
68.0
|
%
|
|
954,410
|
|
|
5.5
|
%
|
||||
Europe:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
2013
|
111,887
|
|
|
87,335
|
|
|
78.1
|
%
|
|
—
|
|
|
16.6
|
%
|
|
483,377
|
|
|
3.0
|
%
|
||||
2014
|
101,521
|
|
|
63,473
|
|
|
62.5
|
%
|
|
—
|
|
|
12.0
|
%
|
|
509,998
|
|
|
2.1
|
%
|
||||
2015
|
9,757
|
|
|
5,928
|
|
|
60.8
|
%
|
|
—
|
|
|
1.1
|
%
|
|
315,361
|
|
|
2.0
|
%
|
||||
Subtotal
|
223,165
|
|
|
156,736
|
|
|
70.2
|
%
|
|
—
|
|
|
29.7
|
%
|
|
1,308,736
|
|
|
2.4
|
%
|
||||
Other geographies:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
ZBA
(4)
|
1,092
|
|
|
1,092
|
|
|
100.0
|
%
|
|
—
|
|
|
0.2
|
%
|
|
—
|
|
|
—
|
|
||||
2012
|
471
|
|
|
—
|
|
|
0.0
|
%
|
|
—
|
|
|
0.0
|
%
|
|
—
|
|
|
0.0
|
%
|
||||
2013
|
4,941
|
|
|
312
|
|
|
6.3
|
%
|
|
—
|
|
|
0.1
|
%
|
|
4,688
|
|
|
0.1
|
%
|
||||
2014
|
7,353
|
|
|
10,114
|
|
|
137.5
|
%
|
|
—
|
|
|
1.9
|
%
|
|
79,785
|
|
|
2.2
|
%
|
||||
2015
|
1,532
|
|
|
404
|
|
|
26.4
|
%
|
|
—
|
|
|
0.1
|
%
|
|
4,148
|
|
|
2.0
|
%
|
||||
Subtotal
|
15,389
|
|
|
11,922
|
|
|
77.5
|
%
|
|
—
|
|
|
2.3
|
%
|
|
88,621
|
|
|
2.0
|
%
|
||||
Total
|
$
|
862,395
|
|
|
$
|
527,192
|
|
|
61.1
|
%
|
|
$
|
7,219
|
|
|
100.0
|
%
|
|
$
|
2,351,767
|
|
|
3.6
|
%
|
(1)
|
Does not include amounts collected on behalf of others.
|
(2)
|
Gross revenue excludes the effects of net portfolio allowance or net portfolio allowance reversals.
|
(3)
|
Revenue recognition rate excludes the effects of net portfolio allowance or net portfolio allowance reversals.
|
(4)
|
ZBA revenue typically has a 100% revenue recognition rate. However, collections on ZBA pool groups where a valuation allowance remains must first be recorded as an allowance reversal until the allowance for that pool group is zero. Once the entire valuation allowance is reversed, the revenue recognition rate will become 100%. ZBA gross revenue includes an immaterial amount of Put-Backs.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||
United States
|
39.0
|
%
|
|
40.5
|
%
|
|
39.1
|
%
|
|
40.6
|
%
|
Europe
|
31.1
|
%
|
|
30.6
|
%
|
|
32.4
|
%
|
|
31.8
|
%
|
Other geographies
|
42.9
|
%
|
|
28.3
|
%
|
|
41.6
|
%
|
|
28.7
|
%
|
Overall cost per dollar collected
|
36.9
|
%
|
|
37.6
|
%
|
|
37.3
|
%
|
|
38.1
|
%
|
|
Three Months Ended June 30,
|
||||||||||
|
2016
|
|
2015
|
|
$ Change
|
||||||
Stated interest on debt obligations
|
$
|
41,124
|
|
|
$
|
36,817
|
|
|
$
|
4,307
|
|
Interest expense on preferred equity certificates
|
6,452
|
|
|
6,124
|
|
|
328
|
|
|||
Amortization of loan fees and other loan costs
|
3,020
|
|
|
3,659
|
|
|
(639
|
)
|
|||
Amortization of debt discount
|
2,695
|
|
|
2,310
|
|
|
385
|
|
|||
Accretion of debt premium
|
(2,694
|
)
|
|
(2,660
|
)
|
|
(34
|
)
|
|||
Total interest expense
|
$
|
50,597
|
|
|
$
|
46,250
|
|
|
$
|
4,347
|
|
|
Six Months Ended June 30,
|
||||||||||
|
2016
|
|
2015
|
|
$ Change
|
||||||
Stated interest on debt obligations
|
$
|
82,510
|
|
|
$
|
71,336
|
|
|
$
|
11,174
|
|
Interest expense on preferred equity certificates
|
12,781
|
|
|
12,106
|
|
|
675
|
|
|||
Amortization of loan fees and other loan costs
|
6,060
|
|
|
5,730
|
|
|
330
|
|
|||
Amortization of debt discount
|
5,249
|
|
|
4,588
|
|
|
661
|
|
|||
Accretion of debt premium
|
(5,312
|
)
|
|
(5,207
|
)
|
|
(105
|
)
|
|||
Total interest expense
|
$
|
101,288
|
|
|
$
|
88,553
|
|
|
$
|
12,735
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||
Federal provision
|
35.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
State provision
|
6.2
|
%
|
|
6.9
|
%
|
|
6.2
|
%
|
|
6.9
|
%
|
State benefit
|
(2.2
|
)%
|
|
(2.4
|
)%
|
|
(2.2
|
)%
|
|
(2.4
|
)%
|
International benefit
(1)
|
(9.1
|
)%
|
|
(4.5
|
)%
|
|
(10.1
|
)%
|
|
(5.5
|
)%
|
Permanent items
(2)
|
0.4
|
%
|
|
3.2
|
%
|
|
0.5
|
%
|
|
2.1
|
%
|
Other
(3)
|
0.1
|
%
|
|
0.6
|
%
|
|
(1.4
|
)%
|
|
0.3
|
%
|
Effective rate
|
30.4
|
%
|
|
38.8
|
%
|
|
28.0
|
%
|
|
36.4
|
%
|
(1)
|
Relates primarily to lower tax rates on income attributable to international operations.
|
(2)
|
Represents a provision for nondeductible items.
|
(3)
|
Includes the effect of discrete items and an IRS audit settlement.
|
|
Three Months Ended June 30,
|
||||||||||||||||||||||
|
2016
|
|
2015
|
||||||||||||||||||||
|
$
|
|
Per Diluted
Share— Accounting |
|
Per Diluted
Share— Economic |
|
$
|
|
Per Diluted
Share— Accounting |
|
Per Diluted
Share— Economic |
||||||||||||
GAAP net income from continuing operations attributable to Encore, as reported
|
$
|
29,588
|
|
|
$
|
1.14
|
|
|
$
|
1.14
|
|
|
$
|
25,996
|
|
|
$
|
0.97
|
|
|
$
|
1.00
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Convertible notes non-cash interest and issuance cost amortization
|
2,921
|
|
|
0.11
|
|
|
0.11
|
|
|
2,809
|
|
|
0.10
|
|
|
0.11
|
|
||||||
Acquisition, integration and restructuring related expenses
|
3,271
|
|
|
0.13
|
|
|
0.13
|
|
|
9,297
|
|
|
0.35
|
|
|
0.35
|
|
||||||
Settlement fees and related administrative expenses
|
698
|
|
|
0.03
|
|
|
0.03
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Amortization of certain acquired intangible assets
|
575
|
|
|
0.02
|
|
|
0.02
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Income tax effect of the adjustments
|
(2,338
|
)
|
|
(0.09
|
)
|
|
(0.09
|
)
|
|
(2,570
|
)
|
|
(0.10
|
)
|
|
(0.10
|
)
|
||||||
Adjustments attributable to noncontrolling interest
(1)
|
(1,273
|
)
|
|
(0.05
|
)
|
|
(0.05
|
)
|
|
(4,023
|
)
|
|
(0.15
|
)
|
|
(0.15
|
)
|
||||||
Adjusted income from continuing operations attributable to Encore
|
$
|
33,442
|
|
|
$
|
1.29
|
|
|
$
|
1.29
|
|
|
$
|
31,509
|
|
|
$
|
1.17
|
|
|
$
|
1.21
|
|
|
Six Months Ended June 30,
|
||||||||||||||||||||||
|
2016
|
|
2015
|
||||||||||||||||||||
|
$
|
|
Per Diluted
Share— Accounting |
|
Per Diluted
Share— Economic |
|
$
|
|
Per Diluted
Share— Accounting |
|
Per Diluted
Share— Economic |
||||||||||||
GAAP net income from continuing operations attributable to Encore, as reported
|
$
|
58,464
|
|
|
$
|
2.26
|
|
|
$
|
2.26
|
|
|
$
|
53,541
|
|
|
$
|
1.97
|
|
|
$
|
2.04
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Convertible notes non-cash interest and issuance cost amortization
|
5,830
|
|
|
0.23
|
|
|
0.23
|
|
|
5,586
|
|
|
0.21
|
|
|
0.21
|
|
||||||
Acquisition, integration and restructuring related expenses
|
6,330
|
|
|
0.24
|
|
|
0.24
|
|
|
12,063
|
|
|
0.44
|
|
|
0.45
|
|
||||||
Settlement fees and related administrative expenses
|
3,686
|
|
|
0.14
|
|
|
0.14
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Amortization of certain acquired intangible assets
|
1,649
|
|
|
0.06
|
|
|
0.06
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Income tax effect of the adjustments
|
(5,621
|
)
|
|
(0.22
|
)
|
|
(0.22
|
)
|
|
(4,559
|
)
|
|
(0.17
|
)
|
|
(0.17
|
)
|
||||||
Adjustments attributable to noncontrolling interest
(1)
|
(2,491
|
)
|
|
(0.09
|
)
|
|
(0.09
|
)
|
|
(4,563
|
)
|
|
(0.17
|
)
|
|
(0.17
|
)
|
||||||
Adjusted income from continuing operations attributable to Encore
|
$
|
67,847
|
|
|
$
|
2.62
|
|
|
$
|
2.62
|
|
|
$
|
62,068
|
|
|
$
|
2.28
|
|
|
$
|
2.36
|
|
(1)
|
Certain of the above pre-tax adjustments include expenses recognized by our partially-owned subsidiaries. This adjustment represents the portion of the non-GAAP adjustments that are attributable to noncontrolling interest.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
2016
|
|
2015
|
|
2016
|
|
2015
|
|||||||||
GAAP net income, as reported
|
$
|
30,833
|
|
|
$
|
25,185
|
|
|
$
|
57,440
|
|
|
$
|
55,152
|
|
Adjustments:
|
|
|
|
|
|
|
|
||||||||
(Income) loss from discontinued operations, net of tax
|
—
|
|
|
(1,661
|
)
|
|
3,182
|
|
|
(3,541
|
)
|
||||
Interest expense
|
50,597
|
|
|
46,250
|
|
|
101,288
|
|
|
88,553
|
|
||||
Provision for income taxes
|
13,451
|
|
|
14,921
|
|
|
23,599
|
|
|
29,535
|
|
||||
Depreciation and amortization
|
8,235
|
|
|
7,878
|
|
|
18,096
|
|
|
16,015
|
|
||||
Amount applied to principal on receivable portfolios
|
166,648
|
|
|
167,024
|
|
|
344,359
|
|
|
327,985
|
|
||||
Stock-based compensation expense
|
5,151
|
|
|
6,198
|
|
|
8,869
|
|
|
12,103
|
|
||||
Acquisition, integration and restructuring related expenses
|
3,271
|
|
|
7,892
|
|
|
5,412
|
|
|
10,658
|
|
||||
Settlement fees and related administrative expenses
|
698
|
|
|
—
|
|
|
3,686
|
|
|
—
|
|
||||
Adjusted EBITDA
|
$
|
278,884
|
|
|
$
|
273,687
|
|
|
$
|
565,931
|
|
|
$
|
536,460
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
2016
|
|
2015
|
|
2016
|
|
2015
|
|||||||||
GAAP total operating expenses, as reported
|
$
|
197,695
|
|
|
$
|
198,362
|
|
|
$
|
403,208
|
|
|
$
|
393,257
|
|
Adjustments:
|
|
|
|
|
|
|
|
||||||||
Stock-based compensation expense
|
(5,151
|
)
|
|
(6,198
|
)
|
|
(8,869
|
)
|
|
(12,103
|
)
|
||||
Operating expenses related to non-portfolio purchasing and recovery business
|
(28,253
|
)
|
|
(19,946
|
)
|
|
(55,138
|
)
|
|
(41,569
|
)
|
||||
Acquisition, integration and restructuring related expenses
|
(3,271
|
)
|
|
(7,892
|
)
|
|
(6,330
|
)
|
|
(10,658
|
)
|
||||
Settlement fees and related administrative expenses
|
(698
|
)
|
|
—
|
|
|
(3,686
|
)
|
|
—
|
|
||||
Adjusted operating expenses related to portfolio purchasing and recovery business
|
$
|
160,322
|
|
|
$
|
164,326
|
|
|
$
|
329,185
|
|
|
$
|
328,927
|
|
(1)
|
Adjusted for Put-Backs and Recalls. Recalls represent accounts that are recalled by the seller in accordance with the respective purchase agreement (“Recalls”).
|
(2)
|
Cumulative collections from inception through
June 30, 2016
, excluding collections on behalf of others.
|
(3)
|
Cumulative Collections Multiple (“CCM”) through
June 30, 2016
refers to collections as a multiple of purchase price.
|
|
Purchase Price
(1)
|
|
Historical
Collections
(2)
|
|
Estimated
Remaining
Collections
(3)
|
|
Total Estimated
Gross Collections
|
|
Total Estimated Gross
Collections to
Purchase Price
|
|||||||||
Purchased consumer receivables:
|
|
|
|
|
|
|
||||||||||||
United States:
|
|
|
|
|
|
|
|
|
|
|||||||||
<2006
|
$
|
578,055
|
|
|
$
|
1,870,801
|
|
|
$
|
9,512
|
|
|
$
|
1,880,313
|
|
|
3.3
|
|
2006
|
141,026
|
|
|
331,729
|
|
|
5,486
|
|
|
337,215
|
|
|
2.4
|
|
||||
2007
|
204,063
|
|
|
520,772
|
|
|
14,140
|
|
|
534,912
|
|
|
2.6
|
|
||||
2008
|
227,755
|
|
|
614,024
|
|
|
24,921
|
|
|
638,945
|
|
|
2.8
|
|
||||
2009
|
253,002
|
|
|
777,761
|
|
|
50,688
|
|
|
828,449
|
|
|
3.3
|
|
||||
2010
|
345,414
|
|
|
992,482
|
|
|
96,038
|
|
|
1,088,520
|
|
|
3.2
|
|
||||
2011
|
383,650
|
|
|
958,374
|
|
|
126,370
|
|
|
1,084,744
|
|
|
2.8
|
|
||||
2012
|
466,589
|
|
|
951,084
|
|
|
185,176
|
|
|
1,136,260
|
|
|
2.4
|
|
||||
2013
(4)
|
513,138
|
|
|
973,112
|
|
|
430,576
|
|
|
1,403,688
|
|
|
2.7
|
|
||||
2014
(4)
|
519,323
|
|
|
576,480
|
|
|
520,904
|
|
|
1,097,384
|
|
|
2.1
|
|
||||
2015
|
478,169
|
|
|
233,058
|
|
|
618,157
|
|
|
851,215
|
|
|
1.8
|
|
||||
2016
|
247,328
|
|
|
29,987
|
|
|
419,268
|
|
|
449,255
|
|
|
1.8
|
|
||||
Subtotal
|
4,357,512
|
|
|
8,829,664
|
|
|
2,501,236
|
|
|
11,330,900
|
|
|
2.6
|
|
||||
Europe:
|
|
|
|
|
|
|
|
|
|
|||||||||
2013
(4)
|
619,079
|
|
|
686,153
|
|
|
939,102
|
|
|
1,625,255
|
|
|
2.6
|
|
||||
2014
(4)
|
630,344
|
|
|
418,576
|
|
|
761,941
|
|
|
1,180,517
|
|
|
1.9
|
|
||||
2015
(4)
|
423,407
|
|
|
131,560
|
|
|
597,050
|
|
|
728,610
|
|
|
1.7
|
|
||||
2016
|
179,394
|
|
|
13,436
|
|
|
314,828
|
|
|
328,264
|
|
|
1.8
|
|
||||
Subtotal
|
1,852,224
|
|
|
1,249,725
|
|
|
2,612,921
|
|
|
3,862,646
|
|
|
2.1
|
|
||||
Other geographies:
|
|
|
|
|
|
|
|
|
||||||||||
2012
|
6,723
|
|
|
8,052
|
|
|
2,151
|
|
|
10,203
|
|
|
1.5
|
|
||||
2013
|
29,568
|
|
|
36,999
|
|
|
6,920
|
|
|
43,919
|
|
|
1.5
|
|
||||
2014
|
88,227
|
|
|
35,078
|
|
|
116,874
|
|
|
151,952
|
|
|
1.7
|
|
||||
2015
|
91,290
|
|
|
45,148
|
|
|
139,946
|
|
|
185,094
|
|
|
2.0
|
|
||||
2016
|
38,837
|
|
|
9,103
|
|
|
76,591
|
|
|
85,694
|
|
|
2.2
|
|
||||
Subtotal
|
254,645
|
|
|
134,380
|
|
|
342,482
|
|
|
476,862
|
|
|
1.9
|
|
||||
Purchased U.S. bankruptcy receivables:
|
|
|
|
|
|
|
||||||||||||
2010
|
11,971
|
|
|
26,238
|
|
|
66
|
|
|
26,304
|
|
|
2.2
|
|
||||
2011
|
1,642
|
|
|
4,539
|
|
|
31
|
|
|
4,570
|
|
|
2.8
|
|
||||
2012
|
83,159
|
|
|
87,545
|
|
|
11,536
|
|
|
99,081
|
|
|
1.2
|
|
||||
2013
|
39,833
|
|
|
67,445
|
|
|
13,924
|
|
|
81,369
|
|
|
2.0
|
|
||||
2014
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
2015
|
24,372
|
|
|
1,204
|
|
|
27,002
|
|
|
28,206
|
|
|
1.2
|
|
||||
2016
|
23,863
|
|
|
65
|
|
|
27,756
|
|
|
27,821
|
|
|
1.2
|
|
||||
Subtotal
|
184,840
|
|
|
187,036
|
|
|
80,315
|
|
|
267,351
|
|
|
1.4
|
|
||||
Total
|
$
|
6,649,221
|
|
|
$
|
10,400,805
|
|
|
$
|
5,536,954
|
|
|
$
|
15,937,759
|
|
|
2.4
|
|
(1)
|
Adjusted for Put-Backs and Recalls.
|
(2)
|
Cumulative collections from inception through
June 30, 2016
, excluding collections on behalf of others.
|
(3)
|
ERC for purchased consumer receivables includes
$81.9 million
related to accounts that converted to bankruptcy after purchase.
|
(4)
|
Includes portfolios acquired in connection with certain business combinations.
|
(1)
|
ERC for Zero Basis Portfolios can extend beyond our collection forecasts.
|
(2)
|
ERC for purchased consumer receivables includes
$81.9 million
related to accounts that converted to bankruptcy after purchase. The collection forecast of each pool is generally estimated up to 120 months based on the expected collection period of each pool in the United States and in Europe. Expected collections beyond the 120 month collection forecast in the United States are included in ERC but are not included in the calculation of IRRs.
|
(3)
|
2016 amount consists of six months data from July 1, 2016 to December 31, 2016.
|
(4)
|
Includes portfolios acquired in connection with certain business combinations.
|
|
Unamortized
Balance as of June 30, 2016 |
|
Purchase
Price
(1)
|
|
Unamortized
Balance as a
Percentage of
Purchase Price
|
|
Unamortized
Balance as a
Percentage
of Total
|
||||||
Purchased consumer receivables:
|
|
|
|
|
|
|
|
||||||
United States:
|
|
|
|
|
|
|
|
||||||
2007
|
$
|
1,183
|
|
|
$
|
204,063
|
|
|
0.6
|
%
|
|
0.1
|
%
|
2008
|
3,851
|
|
|
227,755
|
|
|
1.7
|
%
|
|
0.4
|
%
|
||
2009
|
—
|
|
|
253,002
|
|
|
0.0
|
%
|
|
0.0
|
%
|
||
2010
|
2,539
|
|
|
345,414
|
|
|
0.7
|
%
|
|
0.3
|
%
|
||
2011
|
12,713
|
|
|
383,650
|
|
|
3.3
|
%
|
|
1.3
|
%
|
||
2012
|
45,257
|
|
|
466,589
|
|
|
9.7
|
%
|
|
4.6
|
%
|
||
2013
(2)
|
116,497
|
|
|
513,138
|
|
|
22.7
|
%
|
|
11.8
|
%
|
||
2014
(2)
|
228,107
|
|
|
519,323
|
|
|
43.9
|
%
|
|
23.1
|
%
|
||
2015
|
344,857
|
|
|
478,169
|
|
|
72.1
|
%
|
|
34.9
|
%
|
||
2016
|
232,383
|
|
|
247,328
|
|
|
94.0
|
%
|
|
23.5
|
%
|
||
Subtotal
|
987,387
|
|
|
3,638,431
|
|
|
27.1
|
%
|
|
100.0
|
%
|
||
Europe:
|
|
|
|
|
|
|
|
||||||
2013
(2)
|
384,927
|
|
|
619,079
|
|
|
62.2
|
%
|
|
30.7
|
%
|
||
2014
(2)
|
379,330
|
|
|
630,344
|
|
|
60.2
|
%
|
|
30.2
|
%
|
||
2015
(2)
|
319,354
|
|
|
423,407
|
|
|
75.4
|
%
|
|
25.4
|
%
|
||
2016
|
172,067
|
|
|
179,394
|
|
|
95.9
|
%
|
|
13.7
|
%
|
||
Subtotal
|
1,255,678
|
|
|
1,852,224
|
|
|
67.8
|
%
|
|
100.0
|
%
|
||
Other geographies:
|
|
|
|
|
|
|
|
||||||
2013
|
1,812
|
|
|
29,568
|
|
|
6.1
|
%
|
|
1.1
|
%
|
||
2014
|
62,609
|
|
|
88,227
|
|
|
71.0
|
%
|
|
37.3
|
%
|
||
2015
|
66,928
|
|
|
91,290
|
|
|
73.3
|
%
|
|
39.8
|
%
|
||
2016
|
36,712
|
|
|
38,837
|
|
|
94.5
|
%
|
|
21.8
|
%
|
||
Subtotal
|
168,061
|
|
|
247,922
|
|
|
67.8
|
%
|
|
100.0
|
%
|
||
Purchased U.S. bankruptcy receivables:
|
|
|
|
|
|
|
|
||||||
2012
|
10,532
|
|
|
83,159
|
|
|
12.7
|
%
|
|
18.0
|
%
|
||
2013
|
—
|
|
|
39,833
|
|
|
0.0
|
%
|
|
0.0
|
%
|
||
2014
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
2015
|
23,911
|
|
|
24,372
|
|
|
98.1
|
%
|
|
40.9
|
%
|
||
2016
|
24,024
|
|
|
23,863
|
|
|
100.7
|
%
|
|
41.1
|
%
|
||
Subtotal
|
58,467
|
|
|
171,227
|
|
|
34.1
|
%
|
|
100.0
|
%
|
||
Total
|
$
|
2,469,593
|
|
|
$
|
5,909,804
|
|
|
41.8
|
%
|
|
100.0
|
%
|
(1)
|
Purchase price refers to the cash paid to a seller to acquire a portfolio less Put-Backs, Recalls, and other adjustments.
|
(2)
|
Includes portfolios acquired in connection with certain business combinations.
|
Years Ending December 31,
|
Purchased
Consumer
Receivables
United States
|
|
Purchased
Consumer
Receivables
Europe
|
|
Purchased
Consumer
Receivables
Other Geographies
|
|
Purchased U.S.
Bankruptcy
Receivables
|
|
Total
Amortization
|
||||||||||
2016
(1)
|
$
|
110,547
|
|
|
$
|
61,768
|
|
|
$
|
2,192
|
|
|
$
|
3,717
|
|
|
$
|
178,224
|
|
2017
|
278,733
|
|
|
148,732
|
|
|
13,747
|
|
|
12,303
|
|
|
453,515
|
|
|||||
2018
|
218,846
|
|
|
174,592
|
|
|
50,471
|
|
|
13,651
|
|
|
457,560
|
|
|||||
2019
|
138,201
|
|
|
161,654
|
|
|
48,618
|
|
|
12,847
|
|
|
361,320
|
|
|||||
2020
|
90,846
|
|
|
151,391
|
|
|
25,328
|
|
|
11,258
|
|
|
278,823
|
|
|||||
2021
|
56,672
|
|
|
149,019
|
|
|
8,535
|
|
|
3,533
|
|
|
217,759
|
|
|||||
2022
|
39,240
|
|
|
156,630
|
|
|
14,930
|
|
|
507
|
|
|
211,307
|
|
|||||
2023
|
28,205
|
|
|
155,861
|
|
|
1,674
|
|
|
353
|
|
|
186,093
|
|
|||||
2024
|
17,468
|
|
|
61,815
|
|
|
1,319
|
|
|
298
|
|
|
80,900
|
|
|||||
2025
|
7,583
|
|
|
30,241
|
|
|
963
|
|
|
—
|
|
|
38,787
|
|
|||||
2026
|
1,046
|
|
|
3,975
|
|
|
284
|
|
|
—
|
|
|
5,305
|
|
|||||
Total
|
$
|
987,387
|
|
|
$
|
1,255,678
|
|
|
$
|
168,061
|
|
|
$
|
58,467
|
|
|
$
|
2,469,593
|
|
(1)
|
2016 amount consists of six months data from July 1, 2016 to December 31, 2016.
|
|
Headcount as of June 30,
|
||||||||||
|
2016
|
|
2015
|
||||||||
|
Domestic
|
|
International
|
|
Domestic
(1)
|
|
International
|
||||
General & Administrative
|
923
|
|
|
2,200
|
|
|
945
|
|
|
1,705
|
|
Account Manager
|
265
|
|
|
3,326
|
|
|
283
|
|
|
2,668
|
|
|
1,188
|
|
|
5,526
|
|
|
1,228
|
|
|
4,373
|
|
(1)
|
Headcount as of June 30, 2015 includes 81 Propel employees.
|
Quarter
|
# of
Accounts
|
|
Face Value
|
|
Purchase
Price
|
|||||
Q1 2014
(1)
|
1,104
|
|
|
$
|
4,288,159
|
|
|
$
|
467,565
|
|
Q2 2014
|
1,210
|
|
|
3,075,343
|
|
|
225,762
|
|
||
Q3 2014
(1)
|
2,203
|
|
|
3,970,145
|
|
|
299,509
|
|
||
Q4 2014
|
859
|
|
|
2,422,128
|
|
|
258,524
|
|
||
Q1 2015
|
734
|
|
|
1,041,011
|
|
|
125,154
|
|
||
Q2 2015
(1)
|
2,970
|
|
|
5,544,885
|
|
|
418,780
|
|
||
Q3 2015
|
1,267
|
|
|
2,085,381
|
|
|
187,180
|
|
||
Q4 2015
(1)
|
2,363
|
|
|
4,068,252
|
|
|
292,608
|
|
||
Q1 2016
|
1,450
|
|
|
3,544,338
|
|
|
256,753
|
|
||
Q2 2016
|
946
|
|
|
2,841,527
|
|
|
233,116
|
|
(1)
|
Includes portfolios acquired in connection with certain business combinations.
|
|
Six Months Ended
June 30, |
||||||
|
2016
|
|
2015
|
||||
|
|
|
|
||||
|
(Unaudited)
|
||||||
Net cash provided by operating activities
|
$
|
49,080
|
|
|
$
|
47,412
|
|
Net cash used in investing activities
|
(52,987
|
)
|
|
(331,882
|
)
|
||
Net cash (used in) provided by financing activities
|
(11,222
|
)
|
|
303,795
|
|
|
|
|
3.1
|
|
Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to Amendment No. 2 to the Company’s Registration Statement on Form S-1/A filed on June 14, 1999, File No. 333-77483)
|
|
|
|
3.2
|
|
Certificate of Amendment to the Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on April 4, 2002)
|
|
|
|
3.3
|
|
Bylaws, as amended through February 8, 2011 (incorporated by reference to Exhibit 3.3 to the Company’s Annual Report on Form 10-K filed on February 14, 2011)
|
|
|
|
10.1+
|
|
Non-Employee Director Compensation Program Guidelines, effective June 1, 2016 (filed herewith)
|
|
|
|
10.2+
|
|
Non-Employee Director Deferred Stock Compensation Plan (filed herewith)
|
|
|
|
10.3
|
|
Amendment Letter, dated June 6, 2016, related to the Amended and Restated Senior Facilities Agreement, dated November 11, 2015, by and among Cabot Financial (UK) Limited, the several guarantors, banks and other financial institutions and lenders from time to time party thereto and J.P. Morgan Europe Limited as Agent and Security Agent (filed herewith)
|
|
|
|
31.1
|
|
Certification of the Principal Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
|
|
|
|
31.2
|
|
Certification of the Principal Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
|
|
|
|
32.1
|
|
Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith)
|
|
|
|
101.INS
|
|
XBRL Instance Document (filed herewith)
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document (filed herewith)
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document (filed herewith)
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document (filed herewith)
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document (filed herewith)
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document (filed herewith)
|
+
|
Management contract or compensation plan or arrangement.
|
|
ENCORE CAPITAL GROUP, INC.
|
||
|
|
|
|
|
By:
|
|
/s/ Jonathan C. Clark
|
|
|
|
Jonathan C. Clark
|
|
|
|
Executive Vice President,
|
|
|
|
Chief Financial Officer and Treasurer
|
1.0
|
DEFINITIONS
|
1.1
|
“2013 Plan”
shall mean the Company’s 2013 Incentive Compensation Plan, as such plan may be amended, modified, or supplemented from time to time, and any successor to such plan
|
1.2
|
“Annual Meeting Date”
shall mean the date of the Company’s annual meeting of shareholders for a given calendar year.
|
1.3
|
“Beneficiary”
shall mean a beneficiary or beneficiaries designated in writing by a Non-Employee Director to receive any compensation under these Guidelines in the event of a Non-Employee Director’s death. If no Beneficiary is designated by the Non-Employee Director, then the Non-Employee Director’s estate shall be deemed to be the Non-Employee’s Beneficiary.
|
1.4
|
“Board"
shall mean the Board of Directors of the Company.
|
1.5
|
“Business Day”
means any day that is not a Saturday, Sunday, or other day on which banking corporations in San Diego, California, are authorized or required by law to close
|
1.6
|
“Code”
shall mean the Internal Revenue Code of 1986, as amended from time to time, including applicable regulations promulgated thereunder.
|
1.7
|
“Committee”
shall mean the Board’s Compensation Committee.
|
1.8
|
“Company”
shall mean Encore Capital Group, Inc., a Delaware corporation.
|
1.9
|
“Deferred Compensation Plan”
means the Company’s Non-Employee Director Deferred Stock Compensation Plan, as such plan may be amended, modified, or supplemented from time to time, and any successor to such plan
|
1.10
|
“Director Service Year”
shall mean the period beginning on a given Annual Meeting Date and ending on the date immediately preceding the next Annual Meeting Date.
|
1.11
|
“Effective Date”
shall mean June 1, 2016.
|
1.12
|
“Equity Award”
shall mean either a Stock Award or an RSU Award.
|
1.13
|
“Equity Award Agreement"
shall mean a written agreement between the Company and a Non-Employee Director that establishes the terms, conditions, restrictions and/or limitations applicable to an Equity Award in addition to those established by these Guidelines and by the Committee's exercise of its administrative powers;
provided, however
, that if a Non-Employee Director defers receipt of any Equity Award pursuant to the Deferred Compensation Plan, then such Non-Employee Director’s deferral election, coupled with the terms and conditions set forth in the Deferred Compensation Plan, shall be deemed to constitute an “Equity Award Agreement.”
|
1.14
|
“ERISA”
shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time, including applicable regulations promulgated thereunder.
|
1.15
|
“Exchange Act”
shall mean the Securities Exchange Act of 1934, as amended from time to time, including applicable regulations thereunder.
|
1.16
|
“
Fair Market Value of a Share"
shall mean:
|
(a)
|
if Shares are readily tradable on a national securities exchange or other market system, the closing price of a Share on the principal trading market for the Shares on the date of calculation (or on the last preceding trading date if Shares were not traded on such date), or
|
(b)
|
if Shares are not readily tradable on a national securities exchange or other market system:
|
(i)
|
the book value of a Share as of the last day of the last completed fiscal quarter preceding the date of calculation; or
|
(ii)
|
any other value as otherwise determined in good faith by the Board.
|
1.17
|
“Guidelines”
shall mean the Encore Capital Group, Inc. Non-Employee Director Compensation Program Guidelines.
|
1.18
|
“Non-Employee Director”
shall mean a member of the Board who is not an employee of the Company.
|
1.19
|
“Quarterly Payment Date”
shall mean September 1
st
, December 1
st
, March 1
st
, and June 1st in a given Director Service Year. By way of example, if the Annual Meeting Date for 20XX is June 15, 20XX and the Annual Meeting Date for 20YY is June 16, 20YY, then the “Quarterly Payment Dates” for the Director Service Year beginning on June 15, 20XX and ending on June 16, 20YY will be September 1, 20XX, December 1, 20XX, March 1, 20YY, and June 1, 20YY.
|
1.20
|
“RSU Award”
shall mean an Equity Award granted in the form of restricted stock units, and which shall be paid in Shares to the Non-Employee Director (or to his or her Beneficiary) pursuant to the terms of the Equity Award Agreement evidencing such Equity Award.
|
1.21
|
“Share”
shall mean a share of the Company’s common stock, $.01 par value.
|
1.22
|
“Stock Award”
shall mean an Equity Award granted in the form of Shares, and which shall be delivered to the Non-Employee Director (or his or her Beneficiary) in accordance with
Section 6
below.
|
1.23
|
“Stock Ownership and Retention Guidelines”
means the Company’s Stock Ownership and Retention Guidelines as adopted by the Board, as such guidelines may be amended, supplemented, and modified from time to time.
|
1.24
|
“Treasury Regulation”
shall mean the regulations promulgated under the Code by the United States Department of the Treasury, as amended from time to time.
|
1.25
|
“Voting Members”
shall have the meaning set forth in
Section 6.4
.
|
2.0
|
PURPOSE OF GUIDELINES
|
2.1
|
Purpose
. The purpose of these Guidelines is to implement and administer the Company’s current compensation program for Non-Employee Directors, which was originally adopted by the Board on December 7, 2011, amended by the Committee on May 13, 2014, further amended by the Board on December 17, 2014 and effective on January 1, 2015, and further amended by the Board on April 21, 2016, and effective on the Effective Date.
|
2.2
|
ERISA.
The director compensation program is not intended to be an employee benefit plan under ERISA, and thus the program and these Guidelines are intended to not be subject to ERISA.
|
2.3
|
Code Section 409A.
The program and these Guidelines are intended to be fully compliant with Code Section 409A.
|
3.1
|
Term
. These Guidelines shall be effective as of the Effective Date and shall terminate only when terminated by the Committee in accordance with
Section 3.2
below.
|
3.2
|
Termination of Guidelines
. The Committee may suspend or terminate these Guidelines at any time with or without prior notice;
provided, however
, that no action authorized by this
Section 3.2
shall reduce the amount of any outstanding Equity Award or otherwise adversely change the terms and conditions thereof without the Non-Employee Director’s prior written consent.
|
3.3
|
Amendment of Guidelines
. The Committee may amend these Guidelines at any time with or without prior notice;
provided, however
, that no action authorized by this
Section 3.3
shall reduce the amount of any outstanding Equity Award or otherwise adversely change the terms and conditions thereof without the Non-Employee Director’s prior written consent.
|
3.4
|
Amendment or Cancellation of Equity Award Agreements
. Subject to the provisions of the 2013 Plan, the Committee may amend or modify any Equity Award Agreement at any time;
provided, however,
that if the amendment or modification adversely affects the Non-Employee Director, such amendment or modification shall be by mutual agreement between the Committee and the Non-Employee Director or such other persons as may then have an interest therein.
|
3.5
|
Restrictions to Amendment of Guidelines
. Notwithstanding anything contained in these Guidelines to the contrary, any amendment to these Guidelines or to any Equity Award Agreement that would result in compensation payable under these Guidelines to be subject to the penalty tax imposed by Code Section 409A shall be null and void and of no effect as if these Guidelines had never been amended.
|
4.0
|
ADMINISTRATION
|
4.1
|
Responsibility
. The Committee shall have the responsibility, in its sole discretion, to control, operate, manage and administer these Guidelines in accordance with its terms.
|
4.2
|
Award Agreement
. Each Equity Award granted under these Guidelines shall be evidenced by an Equity Award Agreement, which shall be signed by an authorized officer of the Company and the Non-Employee Director;
provided, however,
that in the event of any conflict between a provision of these Guidelines or the 2013 Plan and any provision of an Award Agreement, the provisions of these Guidelines or the 2013 Plan, as the case may be, shall control and prevail.
|
4.3
|
Authority of the Committee
. The Committee shall have all the discretionary authority that may be necessary or helpful to enable it to discharge its responsibilities with respect to these Guidelines, including but not limited to the following:
|
(a)
|
to determine eligibility for participation in these Guidelines;
|
(b)
|
to determine the number of Shares underlying an Equity Award granted under these Guidelines;
|
(c)
|
to grant Equity Awards to, and to enter into Award Agreements with, Non-Employee Directors;
|
(d)
|
to supply any omission, correct any defect, or reconcile any inconsistency in these Guidelines in such manner and to such extent as it shall deem appropriate in its sole discretion to carry the same into effect;
|
(e)
|
to issue administrative guidelines as an aid to administer these Guidelines and make changes in such administrative guidelines as it from time to time deems proper;
|
(f)
|
to make rules for carrying out and administering these Guidelines and make changes in such rules as it from time to time deems proper;
|
(g)
|
to the extent permitted under these Guidelines, grant waivers of Guidelines terms, conditions, restrictions, and limitations;
|
(h)
|
to maintain these Guidelines’ full compliance with the 2013 Plan and Code Section 409A; and
|
(i)
|
to take any and all other actions it deems necessary or advisable for the proper operation or administration of these Guidelines.
|
4.4
|
Action by the Committee
. The Committee may act only by a majority of its members. Any determination of the Committee may be made, without a meeting, by a writing or writings signed by all of the members of the Committee. In addition, the Committee may authorize any one or more of its members or an officer of the Company to execute and deliver documents on behalf of the Committee.
|
4.5
|
Delegation of Authority
. The Committee may delegate to one or more of its members, or to one or more agents, such administrative duties as it may deem advisable;
provided, however
, that any such delegation shall be in writing. In addition, the Committee, or any person to whom it has delegated duties under this
Section 4.5
, may employ one or more persons to render advice with respect to any responsibility the Committee or such person may have under these Guidelines. The Committee may employ such legal or other counsel, consultants and agents as it may deem desirable for the administration of these Guidelines and may rely upon any opinion or computation received from any such counsel, consultant or agent. Expenses incurred by the Committee in the engagement of such counsel, consultant or agent shall be paid by the Company.
|
4.6
|
Determinations and Interpretations by the Committee
. All determinations and interpretations made by the Committee shall be binding and conclusive on all Non-Employee Directors and their heirs, successors, and legal representatives.
|
4.7
|
Liability
. No member of the Committee and no employee of the Company shall be liable for any act or failure to act hereunder, except in circumstances involving his or her bad faith, gross negligence or willful misconduct, or for any act or failure to act hereunder by any other member or employee or by any agent to whom duties in connection with the administration of these Guidelines have been delegated.
|
4.8
|
Indemnification
. The Company shall indemnify members of the Committee and any agent of the Committee against any and all liabilities or expenses to which they may be subjected by reason of any act or failure to act with respect to their duties on behalf of these Guidelines, except in circumstances involving such person's bad faith, gross negligence or willful misconduct.
|
5.0
|
ELIGIBILITY AND PARTICIPATION
|
5.1
|
Eligibility
. All Non-Employee Directors shall be eligible to participate in the Company’s director compensation program and to receive compensation in accordance with these Guidelines.
|
5.2
|
Participation
. Each Non-Employee Director shall participate in the Company’s director compensation program and receive compensation in accordance with these Guidelines.
|
5.3
|
Waiver of Compensation under These Guidelines
. A Non-Employee Director may waive all or a portion of his or her compensation under these Guidelines at any time, provided that such waiver is in writing and provided that such waiver does not violate Code Section 409A.
|
6.0
|
COMPENSATION
|
6.1
|
Annual Cash Compensation
. For each Director Service Year, each Non-Employee Director shall receive the following cash compensation for their annual service on the Board:
|
(a)
|
An annual cash retainer of $50,000;
|
(b)
|
If the Non-Employee Director is Chairman of the Board, an additional annual cash retainer of $50,000;
|
(c)
|
If the Non-Employee Director is the chair of the Audit Committee or Consumer Experience and Compliance Committee of the Board, an annual cash retainer of $25,000 for each position as chair;
|
(d)
|
If the Non-Employee Director is the chair of the Compensation Committee, Nominating and Corporate Governance Committee, Risk and Information Security Committee, or any other committee established by the Board, an annual cash retainer of $20,000 for each position as chair;
|
(e)
|
If the Non-Employee Director is a member (but not chair) of the Audit Committee, Compensation Committee, Consumer Experience and Compliance Committee, Nominating and Corporate Governance Committee, Risk and Information Security Committee, or any other committee established by the Board, an annual cash retainer of $10,000 for each position as member;
|
(f)
|
A $1,000 per meeting committee service fee for each committee of the Board on which the Non-Employee Director serves, for any committee meeting starting with the seventh (7
th
) meeting of such committee in a Director Service Year; and
|
(g)
|
If the Non-Employee Director is also a member of the Board of Directors of Cabot Credit Management Limited, the Company’s subsidiary, an additional annual cash retainer of $50,000.
|
6.2
|
Equity Awards
. In addition to the annual cash compensation set forth in
Section 6.1
, Non-Employee Directors shall receive the following Equity Awards as compensation for their service on the Board:
|
(a)
|
Upon becoming a member of the Board, each Non-Employee Director shall receive an Equity Award with a grant date fair market value equal to $50,000, to be granted on the 5th Business Day following the date the Non-Employee Director becomes a member of the Board.
|
(b)
|
For each Director Service Year, each Non-Employee Director shall receive an annual Equity Award retainer with a grant date fair market value equal to $120,000, to be granted on the 5th Business Day following the Annual Meeting Date for such Director Service Year;
provided
that if a person becomes a Non-Employee Director on a date other than the Annual Meeting Date for such Director Service Year, then the annual Equity Award retainer amount will be prorated to reflect the number of days remaining in such Director Service Year and the prorated annual Equity Award shall be granted on the 5th Business Day following the date the Non-Employee Director becomes a member of the Board.
|
6.3
|
Terms and Conditions of Equity Awards
. The Committee, in its sole discretion, may grant either Stock Awards or RSU Awards, or a combination of both. Equity Awards shall have the following terms and conditions:
|
(a)
|
Each Equity Award shall be issued pursuant to and shall be subject to the 2013 Plan.
|
(b)
|
Each Equity Award (other than Stock Awards) shall be evidenced by an Equity Award Agreement signed by the Non-Employee Director to whom it is granted and an authorized official of the Company.
|
(c)
|
The number of shares underlying each Equity Award shall be determined by dividing the applicable dollar amount of the Equity Award by the Fair Market Value of a Share on the date of grant, rounded down to whole Shares (i.e., any fractional shares shall be disregarded);
|
(d)
|
Equity Awards shall be fully vested on the date of grant;
|
(e)
|
Subject to the following sentence, all Shares underlying all Equity Awards granted to any Non-Employee Director shall be subject to the Stock Ownership and Retention Guidelines. Notwithstanding the foregoing, however, if the Equity Award is a Stock Award that is not deferred by the Non-Employee Director pursuant to
Section 6.6
, then the Non-Employee Director may sell a portion of the Shares issued pursuant to such Stock Award equal to an amount that would satisfy statutory minimum federal (including FICA and Social Security), state and local tax withholding requirements;
|
(f)
|
If the award is a Stock Award that is not deferred pursuant to
Section 6.6
below, then Shares (including appropriate legends if in certificate form)shall be issued in the Non-Employee Director’s name as soon as practicable after the applicable grant date;
|
(g)
|
If the award is an RSU Award that is not further deferred pursuant to
Section 6.6
below, Shares underlying such RSU Award shall be issued to the Non-Employee Director within 10 Business Days following the date that the Non-Employee Director is no longer a member of the Board;
|
(h)
|
Stock Awards that have not been deferred pursuant to
Section 6.6
shall have full voting and dividend rights in the same manner and to the same extent as such rights are extended to the Company’s shareholders; and
|
(i)
|
RSU Awards shall have no voting rights but shall have dividend equivalent rights as set forth in the Equity Award Agreements for such RSU Awards.
|
6.4
|
Clawback
. Notwithstanding anything contained in these Guidelines to the contrary, if a Non-Employee Director is determined, in the sole discretion of the affirmative vote of not less than a majority of the entire membership of the Board (excluding the Non-Employee Director whose compensation is at issue) (the “Voting Members”), by a resolution duly adopted by the Voting Members, to have not earned all or a portion of any compensation received from the Company because the Non-Employee Director has acted in a manner that is not in the Company’s best interests or has failed to act in a manner that is in the Company’s best interests during such member’s tenure on the Board or as a result of his or her failure to complete a full term of Board service for any reason, then, at the sole discretion of the Voting Members, any cash or Equity Award, or any portion thereof as determined by the Voting Members, held by such Non-Employee Director, shall as of the date of the adoption of such resolution be subject to forfeiture and all rights of the Non-Employee Director to or with respect to such forfeited cash and/or Equity Award shall terminate. With respect to any cash compensation or Shares actually received by such Non-Employee Director, if so resolved by the Voting Members in accordance with these Guidelines, at the Voting Members’ sole discretion, the Non-Employee Director may be required to pay back to the Company all or any portion of such cash compensation or deliver back to the Company all or any portion of such Shares as determined by the Voting Members. In the event that the Voting Members’ determination is based upon such Non-Employee Director’s action or inaction, as described above, then the Voting Members may consider whether any such repayment shall be assessed based on compensation received either at or after the time of the action or inaction. The Voting Members may also consider, if relevant, whether a prorated amount should be calculated for service rendered as a Board member, if the Non-Employee Director resigns before completing his or her service period as contemplated by periodic compensation payments.
|
6.5
|
Expenses
. The Company shall promptly reimburse a Non-Employee Director for his or her reasonable expenses reasonably incurred in connection with his or her service to the Board and the Company, subject to the Company’s reimbursement policy and the submission of written receipts or other valid documentation.
|
6.6
|
Deferral
. A Non-Employee Director may defer any compensation paid or granted under these Guidelines pursuant to the Deferred Compensation Plan.
|
6.7
|
Stock Ownership and Retention Guidelines
. Each Non-Employee Director will be subject to the Company’s Stock Ownership and Retention Guidelines.
|
7.0
|
MISCELLANEOUS
|
7.1
|
Listing of Awards and Related Matters
. If at any time the Committee determines that the listing, registration or qualification of Equity Awards on any securities exchange or under any applicable law, or the consent or approval of any governmental regulatory authority, is necessary or desirable as a condition of, or in connection with, the granting of an Equity Award, such Equity Award may not be exercised, distributed or paid out, as the case may be, in whole or in part, unless such listing, registration, qualification, consent or approval has been effected or obtained free of any conditions not acceptable to the Committee.
|
7.2
|
No Right, Title, or Interest in Company Assets
. Non-Employee Directors shall have no right, title, or interest whatsoever in or to any investments that the Company may make to aid it in meeting its obligations under these Guidelines. Nothing contained in these Guidelines, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind, or a fiduciary relationship between the Company and any Non-Employee Director, beneficiary, legal representative or any other person. To the extent that any person acquires a right to receive payments from the Company under these Guidelines, such right shall be no greater than the right of an unsecured general creditor of the Company. All payments to be made hereunder shall be paid from the general funds of the Company and no special or separate fund shall be established and no segregation of assets shall be made to assure payment of such amounts except as expressly set forth in these Guidelines.
|
7.3
|
No Right to Continued Service
. A Non-Employee Director's rights, if any, to continue to serve the Company as a member of the Board or otherwise shall not be enlarged or otherwise affected by these Guidelines, and the Company reserves the right to terminate the Non-Employee Director’s service to the Company in accordance with Company’s by-laws.
|
7.4
|
Awards Subject to Foreign Laws
. The Committee may grant Equity Awards to individual Non-Employee Directors who are subject to the tax and/or other laws of nations other than the United States, and such Equity Awards may have terms and conditions as determined by the Committee as necessary to comply with applicable foreign laws. The Committee may take any action that it deems advisable to obtain approval of such Equity Awards by the appropriate foreign governmental entity;
provided, however
, that no such Equity Awards may be granted pursuant to this
Section 7.4
and no action may be taken which would result in a violation of the Exchange Act or any other applicable law.
|
7.5
|
Governing Law
. The Guidelines, all cash compensation and Equity Awards granted hereunder, and all actions taken in connection herewith shall be governed by and construed in accordance with the laws of the State of Delaware without reference to principles of conflict of laws, except as superseded by applicable federal law.
|
To:
|
J.P Morgan Europe Limited
Loans Agency, 6
th
Floor
25 Bank Street
Canary Wharf
London E14 5JP
|
|
|
Attention:
|
Loans Agency
|
1.1
|
We refer to the Facilities Agreement.
|
1.2
|
Unless the contrary intention appears in this letter, words and expressions defined in, or defined by reference to, the Facilities Agreement shall have the same meanings when used in this letter.
|
1.3
|
In this letter,
Effective Date
means the date on which the Agent countersigns this letter.
|
1.4
|
References in the Facilities Agreement to
this Agreement
shall, with effect from the Effective Date and unless the context otherwise requires, be deemed to be references to the Facilities Agreement as amended by this letter.
|
1.5
|
Clause 1.2
(Construction)
and clause 1.3
(Third party rights)
of the Facilities Agreement shall be deemed to be incorporated in this letter in full,
mutatis mutandis.
|
1.6
|
The Parties wish to amend the Facilities Agreement as set out in paragraph 2 below.
|
2.1
|
the definition of "Permitted Jurisdiction Non-UK Originated Account" shall be amended such that the existing paragraph (a) of that definition shall be deleted in its entirety and replaced with the following:
|
2.2
|
the definition of "Portfolio Account" shall be amended such that the table at the end of that definition shall be deleted in its entirety and replaced with the following new table:
|
Time period during which the relevant member of the Restricted Group contractually commits to the relevant acquisition
|
Relevant Percentage In respect of Permitted Jurisdiction Non-UK Originated Accounts
|
From the 2015 Second Effective Date to 31 December 2016
|
30 per cent.
|
From 1 January 2017 to 31 December 2017
|
40 per cent.
|
From 1 January 2018 onwards
|
50 per cent
|
4.1
|
The Parent and the Agent hereby designate this letter as a Finance Document.
|
4.2
|
Save as amended by this letter, the provisions of the Facilities Agreement shall continue in full force and effect.
|
4.3
|
The provisions of clauses 38
(Notices),
40
(Partial Invalidity),
41
(Remedies and Waivers),
45
(Counterparts)
and 47
(Enforcement)
of the Facilities Agreement shall apply to this letter as though they were set out in full in this letter
(mutatis mutandis)
but as if the references in those clauses to the Facilities Agreement or a Finance Document were references to this letter.
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Encore Capital Group, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
By:
|
|
/
S
/ K
ENNETH
A. V
ECCHIONE
|
|
|
Kenneth A. Vecchione
President and Chief Executive Officer
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Encore Capital Group, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
By:
|
|
/
S
/ JONATHAN C. CLARK
|
|
|
Jonathan C. Clark
Executive Vice President, Chief Financial Officer and Treasurer
|
(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the consolidated financial condition and results of operations of the Company.
|
|
|
/s/ Kenneth A. Vecchione
|
|
Kenneth A. Vecchione
|
|
President and Chief Executive Officer
|
|
|
|
/s/ Jonathan C. Clark
|
|
Jonathan C. Clark
|
|
Executive Vice President,
Chief Financial Officer and Treasurer
|
|