|
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 November 3, 2016
|
Common Stock, $0.01 par value
|
|
25,532,227 shares
|
|
Page
|
|
|
|
|
|
|
Condensed Consolidated Statements of
Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2016 |
|
December 31,
2015 |
||||
Assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
157,672
|
|
|
$
|
123,993
|
|
Investment in receivable portfolios, net
|
2,397,831
|
|
|
2,440,669
|
|
||
Property and equipment, net
|
66,703
|
|
|
72,546
|
|
||
Deferred court costs, net
|
57,089
|
|
|
75,239
|
|
||
Other assets
|
206,403
|
|
|
148,762
|
|
||
Goodwill
|
819,785
|
|
|
924,847
|
|
||
Assets associated with discontinued operations
|
—
|
|
|
388,763
|
|
||
Total assets
|
$
|
3,705,483
|
|
|
$
|
4,174,819
|
|
Liabilities and equity
|
|
|
|
||||
Liabilities:
|
|
|
|
||||
Accounts payable and accrued liabilities
|
$
|
217,242
|
|
|
$
|
290,608
|
|
Debt
|
2,848,443
|
|
|
2,944,063
|
|
||
Other liabilities
|
27,718
|
|
|
59,226
|
|
||
Liabilities associated with discontinued operations
|
—
|
|
|
232,434
|
|
||
Total liabilities
|
3,093,403
|
|
|
3,526,331
|
|
||
Commitments and contingencies
|
|
|
|
|
|
||
Redeemable noncontrolling interest
|
33,755
|
|
|
38,624
|
|
||
Redeemable equity component of convertible senior notes
|
3,798
|
|
|
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, 25,532 shares and 25,288 shares issued and outstanding as of September 30, 2016 and December 31, 2015, respectively
|
255
|
|
|
253
|
|
||
Additional paid-in capital
|
83,521
|
|
|
110,533
|
|
||
Accumulated earnings
|
597,247
|
|
|
543,489
|
|
||
Accumulated other comprehensive loss
|
(103,320
|
)
|
|
(57,822
|
)
|
||
Total Encore Capital Group, Inc. stockholders’ equity
|
577,703
|
|
|
596,453
|
|
||
Noncontrolling interest
|
(3,176
|
)
|
|
7,285
|
|
||
Total equity
|
574,527
|
|
|
603,738
|
|
||
Total liabilities, redeemable equity and equity
|
$
|
3,705,483
|
|
|
$
|
4,174,819
|
|
|
September 30,
2016 |
|
December 31,
2015 |
||||
Assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
55,158
|
|
|
$
|
50,483
|
|
Investment in receivable portfolios, net
|
1,038,119
|
|
|
1,197,513
|
|
||
Property and equipment, net
|
16,859
|
|
|
19,767
|
|
||
Deferred court costs, net
|
20,836
|
|
|
33,296
|
|
||
Other assets
|
58,146
|
|
|
31,679
|
|
||
Goodwill
|
616,859
|
|
|
706,812
|
|
||
Assets associated with discontinued operations
|
—
|
|
|
92,985
|
|
||
Liabilities
|
|
|
|
||||
Accounts payable and accrued liabilities
|
$
|
89,056
|
|
|
$
|
142,375
|
|
Debt
|
1,591,403
|
|
|
1,665,009
|
|
||
Other liabilities
|
770
|
|
|
839
|
|
||
Liabilities associated with discontinued operations
|
—
|
|
|
58,923
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Revenues
|
|
|
|
|
|
|
|
||||||||
Revenue from receivable portfolios, net
|
$
|
159,534
|
|
|
$
|
265,523
|
|
|
$
|
697,080
|
|
|
$
|
799,934
|
|
Other revenues
|
19,881
|
|
|
13,391
|
|
|
60,794
|
|
|
39,424
|
|
||||
Total revenues
|
179,415
|
|
|
278,914
|
|
|
757,874
|
|
|
839,358
|
|
||||
Operating expenses
|
|
|
|
|
|
|
|
||||||||
Salaries and employee benefits
|
67,783
|
|
|
62,995
|
|
|
212,924
|
|
|
194,116
|
|
||||
Cost of legal collections
|
56,932
|
|
|
58,760
|
|
|
158,047
|
|
|
170,834
|
|
||||
Other operating expenses
|
24,131
|
|
|
22,217
|
|
|
75,420
|
|
|
68,278
|
|
||||
Collection agency commissions
|
8,848
|
|
|
9,381
|
|
|
28,242
|
|
|
28,532
|
|
||||
General and administrative expenses
|
34,871
|
|
|
86,789
|
|
|
103,044
|
|
|
155,624
|
|
||||
Depreciation and amortization
|
8,032
|
|
|
8,043
|
|
|
26,128
|
|
|
24,058
|
|
||||
Total operating expenses
|
200,597
|
|
|
248,185
|
|
|
603,805
|
|
|
641,442
|
|
||||
(Loss) income from operations
|
(21,182
|
)
|
|
30,729
|
|
|
154,069
|
|
|
197,916
|
|
||||
Other (expense) income
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
(48,632
|
)
|
|
(47,816
|
)
|
|
(149,920
|
)
|
|
(136,369
|
)
|
||||
Other income (expense)
|
4,100
|
|
|
(924
|
)
|
|
14,358
|
|
|
1,588
|
|
||||
Total other expense
|
(44,532
|
)
|
|
(48,740
|
)
|
|
(135,562
|
)
|
|
(134,781
|
)
|
||||
(Loss) income before income taxes
|
(65,714
|
)
|
|
(18,011
|
)
|
|
18,507
|
|
|
63,135
|
|
||||
Benefit (provision) for income taxes
|
13,768
|
|
|
6,361
|
|
|
(9,831
|
)
|
|
(23,174
|
)
|
||||
(Loss) income from continuing operations
|
(51,946
|
)
|
|
(11,650
|
)
|
|
8,676
|
|
|
39,961
|
|
||||
Income (loss) from discontinued operations, net of tax
|
—
|
|
|
2,286
|
|
|
(3,182
|
)
|
|
5,827
|
|
||||
Net (loss) income
|
(51,946
|
)
|
|
(9,364
|
)
|
|
5,494
|
|
|
45,788
|
|
||||
Net loss (income) attributable to noncontrolling interest
|
50,422
|
|
|
(1,595
|
)
|
|
48,264
|
|
|
335
|
|
||||
Net (loss) income attributable to Encore Capital Group, Inc. stockholders
|
$
|
(1,524
|
)
|
|
$
|
(10,959
|
)
|
|
$
|
53,758
|
|
|
$
|
46,123
|
|
Amounts attributable to Encore Capital Group, Inc.:
|
|
|
|
|
|
|
|
||||||||
(Loss) income from continuing operations
|
$
|
(1,524
|
)
|
|
$
|
(13,245
|
)
|
|
$
|
56,940
|
|
|
$
|
40,296
|
|
Income (loss) from discontinued operations, net of tax
|
—
|
|
|
2,286
|
|
|
(3,182
|
)
|
|
5,827
|
|
||||
Net (loss) income
|
$
|
(1,524
|
)
|
|
$
|
(10,959
|
)
|
|
$
|
53,758
|
|
|
$
|
46,123
|
|
|
|
|
|
|
|
|
|
||||||||
(Loss) earnings per share attributable to Encore Capital Group, Inc.:
|
|
|
|
|
|
|
|
||||||||
Basic (loss) earnings per share from:
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
(0.06
|
)
|
|
$
|
(0.52
|
)
|
|
$
|
2.22
|
|
|
$
|
1.56
|
|
Discontinued operations
|
$
|
—
|
|
|
$
|
0.09
|
|
|
$
|
(0.13
|
)
|
|
$
|
0.23
|
|
Net basic (loss) earnings per share
|
$
|
(0.06
|
)
|
|
$
|
(0.43
|
)
|
|
$
|
2.09
|
|
|
$
|
1.79
|
|
Diluted (loss) earnings per share from:
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
(0.06
|
)
|
|
$
|
(0.52
|
)
|
|
$
|
2.20
|
|
|
$
|
1.50
|
|
Discontinued operations
|
$
|
—
|
|
|
$
|
0.09
|
|
|
$
|
(0.12
|
)
|
|
$
|
0.21
|
|
Net diluted (loss) earnings per share
|
$
|
(0.06
|
)
|
|
$
|
(0.43
|
)
|
|
$
|
2.08
|
|
|
$
|
1.71
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
||||||||
Basic
|
25,777
|
|
|
25,450
|
|
|
25,690
|
|
|
25,800
|
|
||||
Diluted
|
25,777
|
|
|
25,450
|
|
|
25,885
|
|
|
26,912
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Net (loss) income
|
$
|
(51,946
|
)
|
|
$
|
(9,364
|
)
|
|
$
|
5,494
|
|
|
$
|
45,788
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
||||||||
Change in unrealized gains/losses on derivative instruments:
|
|
|
|
|
|
|
|
||||||||
Unrealized gain (loss) on derivative instruments
|
983
|
|
|
(615
|
)
|
|
487
|
|
|
(26
|
)
|
||||
Income tax effect
|
(384
|
)
|
|
242
|
|
|
(190
|
)
|
|
2
|
|
||||
Unrealized gain (loss) on derivative instruments, net of tax
|
599
|
|
|
(373
|
)
|
|
297
|
|
|
(24
|
)
|
||||
Change in foreign currency translation:
|
|
|
|
|
|
|
|
||||||||
Unrealized loss on foreign currency translation
|
(11,456
|
)
|
|
(13,995
|
)
|
|
(47,221
|
)
|
|
(26,854
|
)
|
||||
Income tax effect
|
73
|
|
|
(115
|
)
|
|
1,426
|
|
|
(1,479
|
)
|
||||
Unrealized loss on foreign currency translation, net of tax
|
(11,383
|
)
|
|
(14,110
|
)
|
|
(45,795
|
)
|
|
(28,333
|
)
|
||||
Other comprehensive loss, net of tax
|
(10,784
|
)
|
|
(14,483
|
)
|
|
(45,498
|
)
|
|
(28,357
|
)
|
||||
Comprehensive (loss) income
|
(62,730
|
)
|
|
(23,847
|
)
|
|
(40,004
|
)
|
|
17,431
|
|
||||
Comprehensive loss (income) attributable to noncontrolling interest:
|
|
|
|
|
|
|
|
||||||||
Net loss (income)
|
50,422
|
|
|
(1,595
|
)
|
|
48,264
|
|
|
335
|
|
||||
Unrealized loss (gain) on foreign currency translation
|
115
|
|
|
2,308
|
|
|
(807
|
)
|
|
2,960
|
|
||||
Comprehensive loss attributable to noncontrolling interest
|
50,537
|
|
|
713
|
|
|
47,457
|
|
|
3,295
|
|
||||
Comprehensive (loss) income attributable to Encore Capital Group, Inc. stockholders
|
$
|
(12,193
|
)
|
|
$
|
(23,134
|
)
|
|
$
|
7,453
|
|
|
$
|
20,726
|
|
|
Nine Months Ended
September 30, |
||||||
|
2016
|
|
2015
|
||||
Operating activities:
|
|
|
|
||||
Net income
|
$
|
5,494
|
|
|
$
|
45,788
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Loss (income) from discontinued operations, net of income taxes
|
1,352
|
|
|
(5,827
|
)
|
||
Depreciation and amortization
|
26,128
|
|
|
24,058
|
|
||
Non-cash interest expense, net
|
28,557
|
|
|
25,529
|
|
||
Stock-based compensation expense
|
9,502
|
|
|
17,259
|
|
||
Gain on derivative instruments, net
|
(10,885
|
)
|
|
—
|
|
||
Deferred income taxes
|
(46,524
|
)
|
|
(257
|
)
|
||
Excess tax benefit from stock-based payment arrangements
|
—
|
|
|
(1,705
|
)
|
||
Loss on sale of discontinued operations, net of tax
|
1,830
|
|
|
—
|
|
||
Provision for (reversal of) allowances on receivable portfolios, net
|
86,777
|
|
|
(3,958
|
)
|
||
Changes in operating assets and liabilities
|
|
|
|
||||
Deferred court costs and other assets
|
7,572
|
|
|
(31,347
|
)
|
||
Prepaid income tax and income taxes payable
|
(2,485
|
)
|
|
(49,431
|
)
|
||
Accounts payable, accrued liabilities and other liabilities
|
(24,146
|
)
|
|
38,364
|
|
||
Net cash provided by operating activities from continuing operations
|
83,172
|
|
|
58,473
|
|
||
Net cash provided by operating activities from discontinued operations
|
2,096
|
|
|
4,908
|
|
||
Net cash provided by operating activities
|
85,268
|
|
|
63,381
|
|
||
Investing activities:
|
|
|
|
||||
Cash paid for acquisitions, net of cash acquired
|
(675
|
)
|
|
(236,214
|
)
|
||
Proceeds from divestiture of business, net of cash divested
|
106,041
|
|
|
—
|
|
||
Purchases of receivable portfolios, net of put-backs
|
(712,706
|
)
|
|
(549,957
|
)
|
||
Collections applied to investment in receivable portfolios, net
|
507,552
|
|
|
488,174
|
|
||
Purchases of property and equipment
|
(16,548
|
)
|
|
(15,754
|
)
|
||
Proceeds from derivative instruments, net
|
10,038
|
|
|
—
|
|
||
Net cash used in investing activities from continuing operations
|
(106,298
|
)
|
|
(313,751
|
)
|
||
Net cash provided by (used in) used in investing activities from discontinued operations
|
14,685
|
|
|
(41,154
|
)
|
||
Net cash used in investing activities
|
(91,613
|
)
|
|
(354,905
|
)
|
||
Financing activities:
|
|
|
|
||||
Payment of loan costs
|
(3,750
|
)
|
|
(7,316
|
)
|
||
Proceeds from credit facilities
|
455,786
|
|
|
911,588
|
|
||
Repayment of credit facilities
|
(443,968
|
)
|
|
(471,610
|
)
|
||
Repayment of senior secured notes
|
(14,343
|
)
|
|
(11,250
|
)
|
||
Repayment of securitized notes
|
(935
|
)
|
|
(32,324
|
)
|
||
Repurchase of common stock
|
—
|
|
|
(33,185
|
)
|
||
Taxes paid related to net share settlement of equity awards
|
(4,113
|
)
|
|
(6,050
|
)
|
||
Excess tax benefit from stock-based payment arrangements
|
—
|
|
|
1,705
|
|
||
Proceeds from other debt
|
35,080
|
|
|
—
|
|
||
Other, net
|
(10,070
|
)
|
|
(5,703
|
)
|
||
Net cash provided by financing activities
|
13,687
|
|
|
345,855
|
|
||
Net increase in cash and cash equivalents
|
7,342
|
|
|
54,331
|
|
||
Effect of exchange rate changes on cash and cash equivalents
|
(3,263
|
)
|
|
(3,274
|
)
|
||
Cash and cash equivalents, beginning of period
|
153,593
|
|
|
124,163
|
|
||
Cash and cash equivalents, end of period
|
157,672
|
|
|
175,220
|
|
||
Cash and cash equivalents of discontinued operations, end of period
|
—
|
|
|
31,825
|
|
||
Cash and cash equivalents of continuing operations, end of period
|
$
|
157,672
|
|
|
$
|
143,395
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Revenue
|
$
|
—
|
|
|
$
|
8,882
|
|
|
$
|
4,950
|
|
|
$
|
24,457
|
|
Salaries and employee benefits
|
—
|
|
|
(1,981
|
)
|
|
(2,860
|
)
|
|
(6,153
|
)
|
||||
Other operating expenses
|
—
|
|
|
(1,736
|
)
|
|
(1,473
|
)
|
|
(3,924
|
)
|
||||
General and administrative expenses
|
—
|
|
|
(1,213
|
)
|
|
(1,551
|
)
|
|
(4,156
|
)
|
||||
Depreciation and amortization
|
—
|
|
|
(192
|
)
|
|
(127
|
)
|
|
(611
|
)
|
||||
Income (loss) from discontinued operations, before income taxes
|
—
|
|
|
3,760
|
|
|
(1,061
|
)
|
|
9,613
|
|
||||
Loss on sale of discontinued operations, before income taxes
|
—
|
|
|
—
|
|
|
(3,000
|
)
|
|
—
|
|
||||
Total income (loss) on discontinued operations, before income taxes
|
—
|
|
|
3,760
|
|
|
(4,061
|
)
|
|
9,613
|
|
||||
Income tax (provision) benefit
|
—
|
|
|
(1,474
|
)
|
|
879
|
|
|
(3,786
|
)
|
||||
Total income (loss) from discontinued operations, net of tax
|
$
|
—
|
|
|
$
|
2,286
|
|
|
$
|
(3,182
|
)
|
|
$
|
5,827
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||
Weighted average common shares outstanding—basic
|
25,777
|
|
|
25,450
|
|
|
25,690
|
|
|
25,800
|
|
Dilutive effect of stock-based awards
|
—
|
|
|
—
|
|
|
195
|
|
|
265
|
|
Dilutive effect of convertible senior notes
|
—
|
|
|
—
|
|
|
—
|
|
|
847
|
|
Weighted average common shares outstanding—diluted
|
25,777
|
|
|
25,450
|
|
|
25,885
|
|
|
26,912
|
|
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
September 30, 2016 |
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Foreign currency exchange contracts
|
$
|
—
|
|
|
$
|
1,466
|
|
|
$
|
—
|
|
|
$
|
1,466
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Foreign currency exchange contracts
|
—
|
|
|
(72
|
)
|
|
—
|
|
|
(72
|
)
|
||||
Interest rate swap agreements
|
—
|
|
|
(199
|
)
|
|
—
|
|
|
(199
|
)
|
||||
Temporary Equity
|
|
|
|
|
|
|
|
||||||||
Redeemable noncontrolling interests
|
—
|
|
|
—
|
|
|
(33,755
|
)
|
|
(33,755
|
)
|
|
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
|
|
Addition to redeemable noncontrolling interest
|
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
|
|
|
Addition to redeemable noncontrolling interest
|
498
|
|
|
Net loss attributable to redeemable noncontrolling interests
|
(37,029
|
)
|
|
Adjustment of the redeemable noncontrolling interests to fair value
|
32,470
|
|
|
Effect of foreign currency translation attributable to redeemable noncontrolling interests
|
(808
|
)
|
|
Balance at September 30, 2016
|
$
|
33,755
|
|
|
September 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
|
|
$
|
676
|
|
|
Other assets
|
|
$
|
718
|
|
Foreign currency exchange contracts
|
Other liabilities
|
|
(72
|
)
|
|
Other liabilities
|
|
(601
|
)
|
||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
||||
Foreign currency exchange contracts
|
Other assets
|
|
790
|
|
|
Other assets
|
|
—
|
|
||
Interest rate swap agreements
|
Other liabilities
|
|
(199
|
)
|
|
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
September 30, |
|
|
|
Three Months Ended
September 30, |
|
|
|
Three Months Ended
September 30, |
|||||||||||||||||||
|
2016
|
|
2015
|
|
|
|
2016
|
|
2015
|
|
|
|
2016
|
|
2015
|
|||||||||||||
Foreign currency exchange contracts
|
|
$
|
989
|
|
|
$
|
(670
|
)
|
|
Salaries and
employee benefits |
|
$
|
151
|
|
|
$
|
(153
|
)
|
|
Other (expense)
income |
|
$
|
—
|
|
|
$
|
—
|
|
Foreign currency exchange contracts
|
|
171
|
|
|
(126
|
)
|
|
General and
administrative expenses |
|
26
|
|
|
(28
|
)
|
|
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 |
||||||||||||||||||
|
Nine Months Ended
September 30, |
|
|
|
Nine Months Ended
September 30, |
|
|
|
Nine Months Ended
September 30, |
|||||||||||||||||||
|
2016
|
|
2015
|
|
|
|
2016
|
|
2015
|
|
|
|
2016
|
|
2015
|
|||||||||||||
Foreign currency exchange contracts
|
|
$
|
1,284
|
|
|
$
|
(593
|
)
|
|
Salaries and
employee benefits |
|
$
|
683
|
|
|
$
|
(468
|
)
|
|
Other (expense)
income |
|
$
|
—
|
|
|
$
|
—
|
|
Foreign currency exchange contracts
|
|
(19
|
)
|
|
24
|
|
|
General and
administrative expenses |
|
95
|
|
|
(75
|
)
|
|
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
September 30, |
|
Nine Months Ended
September 30, |
|||||||||||||
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|||||||||
Foreign currency exchange contracts
(1)
|
|
Other income (expense)
|
|
$
|
3,330
|
|
|
$
|
—
|
|
|
$
|
10,706
|
|
|
$
|
—
|
|
Interest rate swap agreements
|
|
Interest expense
|
|
39
|
|
|
—
|
|
|
83
|
|
|
—
|
|
(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 gain of
$0.5 million
and
$2.1 million
during the three and nine months ended September 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
|
|
|||
Revenue recognized, net
|
(119,543
|
)
|
|
(39,991
|
)
|
|
(159,534
|
)
|
|||
Net additions on existing portfolios
|
299,212
|
|
|
22,862
|
|
|
322,074
|
|
|||
Additions for current purchases, net
|
180,079
|
|
|
—
|
|
|
180,079
|
|
|||
Effect of foreign currency translation
|
(75,402
|
)
|
|
135
|
|
|
(75,267
|
)
|
|||
Balance at September 30, 2016
|
$
|
3,090,040
|
|
|
$
|
244,673
|
|
|
$
|
3,334,713
|
|
|
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
|
|
|||
Revenue recognized, net
|
(233,680
|
)
|
|
(31,843
|
)
|
|
(265,523
|
)
|
|||
Net additions on existing portfolios
|
117,399
|
|
|
119,127
|
|
|
236,526
|
|
|||
Additions for current purchases, net
|
149,278
|
|
|
—
|
|
|
149,278
|
|
|||
Effect of foreign currency translation
|
(120,970
|
)
|
|
(1,209
|
)
|
|
(122,179
|
)
|
|||
Balance at September 30, 2015
|
$
|
3,106,131
|
|
|
$
|
224,213
|
|
|
$
|
3,330,344
|
|
|
Three Months Ended September 30, 2016
|
||||||||||||||
|
Accrual Basis
Portfolios
|
|
Cost Recovery
Portfolios
|
|
Zero Basis
Portfolios
|
|
Total
|
||||||||
Balance, beginning of period
|
$
|
2,465,967
|
|
|
$
|
3,626
|
|
|
$
|
—
|
|
|
$
|
2,469,593
|
|
Purchases of receivable portfolios
|
206,359
|
|
|
—
|
|
|
—
|
|
|
206,359
|
|
||||
Gross collections
(1)
|
(366,321
|
)
|
|
(706
|
)
|
|
(39,934
|
)
|
|
(406,961
|
)
|
||||
Put-backs and Recalls
(2)
|
(3,103
|
)
|
|
—
|
|
|
(57
|
)
|
|
(3,160
|
)
|
||||
Foreign currency adjustments
|
(27,361
|
)
|
|
(173
|
)
|
|
—
|
|
|
(27,534
|
)
|
||||
Revenue recognized
|
212,664
|
|
|
—
|
|
|
38,317
|
|
|
250,981
|
|
||||
Portfolio (allowance) reversals, net
|
(93,121
|
)
|
|
—
|
|
|
1,674
|
|
|
(91,447
|
)
|
||||
Balance, end of period
|
$
|
2,395,084
|
|
|
$
|
2,747
|
|
|
$
|
—
|
|
|
$
|
2,397,831
|
|
Revenue as a percentage of collections
(3)
|
58.1
|
%
|
|
0.0
|
%
|
|
96.0
|
%
|
|
61.7
|
%
|
||||
|
|
|
|
|
|
|
|
||||||||
|
Three Months Ended September 30, 2015
|
||||||||||||||
|
Accrual Basis
Portfolios
|
|
Cost Recovery
Portfolios
|
|
Zero Basis
Portfolios
|
|
Total
|
||||||||
Balance, beginning of period
|
$
|
2,343,864
|
|
|
$
|
7,903
|
|
|
$
|
—
|
|
|
$
|
2,351,767
|
|
Purchases of receivable portfolios
|
187,180
|
|
|
—
|
|
|
—
|
|
|
187,180
|
|
||||
Gross collections
(1)
|
(388,822
|
)
|
|
(1,126
|
)
|
|
(31,805
|
)
|
|
(421,753
|
)
|
||||
Put-backs and Recalls
(2)
|
(5,677
|
)
|
|
(1
|
)
|
|
(37
|
)
|
|
(5,715
|
)
|
||||
Foreign currency adjustments
|
(52,505
|
)
|
|
(1,273
|
)
|
|
—
|
|
|
(53,778
|
)
|
||||
Revenue recognized
|
240,039
|
|
|
—
|
|
|
28,745
|
|
|
268,784
|
|
||||
Portfolio (allowance) reversals, net
|
(6,358
|
)
|
|
—
|
|
|
3,097
|
|
|
(3,261
|
)
|
||||
Balance, end of period
|
$
|
2,317,721
|
|
|
$
|
5,503
|
|
|
$
|
—
|
|
|
$
|
2,323,224
|
|
Revenue as a percentage of collections
(3)
|
61.7
|
%
|
|
0.0
|
%
|
|
90.4
|
%
|
|
63.7
|
%
|
(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.
|
|
Nine Months Ended September 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
|
696,228
|
|
|
—
|
|
|
—
|
|
|
696,228
|
|
||||
Transfer of portfolios
|
(96
|
)
|
|
96
|
|
|
—
|
|
|
—
|
|
||||
Gross collections
(1)
|
(1,181,546
|
)
|
|
(2,063
|
)
|
|
(105,257
|
)
|
|
(1,288,866
|
)
|
||||
Put-backs and Recalls
(2)
|
(19,680
|
)
|
|
(11
|
)
|
|
(19
|
)
|
|
(19,710
|
)
|
||||
Foreign currency adjustments
|
(127,680
|
)
|
|
110
|
|
|
—
|
|
|
(127,570
|
)
|
||||
Revenue recognized
|
683,752
|
|
|
—
|
|
|
100,105
|
|
|
783,857
|
|
||||
Portfolio (allowance) reversals, net
|
(91,948
|
)
|
|
—
|
|
|
5,171
|
|
|
(86,777
|
)
|
||||
Balance, end of period
|
$
|
2,395,084
|
|
|
$
|
2,747
|
|
|
$
|
—
|
|
|
$
|
2,397,831
|
|
Revenue as a percentage of collections
(3)
|
57.9
|
%
|
|
0.0
|
%
|
|
95.1
|
%
|
|
60.8
|
%
|
||||
|
|
|
|
|
|
|
|
||||||||
|
Nine Months Ended September 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
|
731,114
|
|
|
—
|
|
|
—
|
|
|
731,114
|
|
||||
Gross collections
(1)
|
(1,205,717
|
)
|
|
(4,351
|
)
|
|
(74,080
|
)
|
|
(1,284,148
|
)
|
||||
Put-backs and Recalls
(2)
|
(9,652
|
)
|
|
(20
|
)
|
|
(229
|
)
|
|
(9,901
|
)
|
||||
Foreign currency adjustments
|
(54,753
|
)
|
|
(2,602
|
)
|
|
20
|
|
|
(57,335
|
)
|
||||
Revenue recognized
|
731,196
|
|
|
—
|
|
|
64,780
|
|
|
795,976
|
|
||||
Portfolio (allowance) reversals, net
|
(5,551
|
)
|
|
—
|
|
|
9,509
|
|
|
3,958
|
|
||||
Balance, end of period
|
$
|
2,317,721
|
|
|
$
|
5,503
|
|
|
$
|
—
|
|
|
$
|
2,323,224
|
|
Revenue as a percentage of collections
(3)
|
60.6
|
%
|
|
0.0
|
%
|
|
87.4
|
%
|
|
62.0
|
%
|
(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 September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Balance at beginning of period
|
$
|
55,918
|
|
|
$
|
68,454
|
|
|
$
|
60,588
|
|
|
$
|
75,673
|
|
Provision for portfolio allowances
|
94,011
|
|
|
8,322
|
|
|
94,011
|
|
|
8,322
|
|
||||
Reversal of prior allowances
|
(2,564
|
)
|
|
(5,061
|
)
|
|
(7,234
|
)
|
|
(12,280
|
)
|
||||
Balance at end of period
|
$
|
147,365
|
|
|
$
|
71,715
|
|
|
$
|
147,365
|
|
|
$
|
71,715
|
|
|
September 30,
2016 |
|
December 31,
2015 |
||||
Court costs advanced
|
$
|
646,399
|
|
|
$
|
636,922
|
|
Court costs recovered
|
(257,575
|
)
|
|
(242,899
|
)
|
||
Court costs reserve
|
(331,735
|
)
|
|
(318,784
|
)
|
||
Deferred court costs
|
$
|
57,089
|
|
|
$
|
75,239
|
|
|
Court Cost Reserve
|
||||||||||||||
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Balance at beginning of period
|
$
|
(319,651
|
)
|
|
$
|
(298,955
|
)
|
|
$
|
(318,784
|
)
|
|
$
|
(279,572
|
)
|
Provision for court costs
|
(25,599
|
)
|
|
(22,434
|
)
|
|
(55,976
|
)
|
|
(59,897
|
)
|
||||
Net down of reserve after deferral period
|
12,955
|
|
|
11,924
|
|
|
40,028
|
|
|
30,284
|
|
||||
Effect of foreign currency translation
|
560
|
|
|
545
|
|
|
2,997
|
|
|
265
|
|
||||
Balance at end of period
|
$
|
(331,735
|
)
|
|
$
|
(308,920
|
)
|
|
$
|
(331,735
|
)
|
|
$
|
(308,920
|
)
|
|
September 30,
2016 |
|
December 31,
2015 |
||||
Deferred tax assets
|
$
|
44,087
|
|
|
$
|
12,695
|
|
Identifiable intangible assets, net
|
31,113
|
|
|
15,712
|
|
||
Prepaid income taxes
|
28,729
|
|
|
25,839
|
|
||
Other financial receivables
|
22,047
|
|
|
11,275
|
|
||
Prepaid expenses
|
15,766
|
|
|
21,872
|
|
||
Service fee receivables
|
11,045
|
|
|
13,708
|
|
||
Receivable from seller
|
5,388
|
|
|
8,605
|
|
||
Security deposits
|
2,967
|
|
|
2,368
|
|
||
Derivative instruments
|
1,466
|
|
|
718
|
|
||
Other
|
43,795
|
|
|
35,970
|
|
||
Total
|
$
|
206,403
|
|
|
$
|
148,762
|
|
|
September 30,
2016 |
|
December 31,
2015 |
||||
Encore revolving credit facility
|
$
|
567,000
|
|
|
$
|
627,000
|
|
Encore term loan facility
|
134,031
|
|
|
143,078
|
|
||
Encore senior secured notes
|
14,407
|
|
|
28,750
|
|
||
Encore convertible notes
|
448,500
|
|
|
448,500
|
|
||
Less: Debt discount
|
(34,502
|
)
|
|
(41,867
|
)
|
||
Cabot senior secured notes
|
1,242,359
|
|
|
1,360,000
|
|
||
Add: Debt premium
|
39,516
|
|
|
53,440
|
|
||
Less: Debt discount
|
(2,440
|
)
|
|
(3,184
|
)
|
||
Cabot senior revolving credit facility
|
114,321
|
|
|
54,089
|
|
||
Preferred equity certificates
|
211,620
|
|
|
221,516
|
|
||
Capital lease obligations
|
5,949
|
|
|
11,054
|
|
||
Other
|
140,630
|
|
|
83,342
|
|
||
|
2,881,391
|
|
|
2,985,718
|
|
||
Less: debt issuance costs, net of amortization
|
(32,948
|
)
|
|
(41,655
|
)
|
||
Total
|
$
|
2,848,443
|
|
|
$
|
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
|
%
|
|
September 30,
2016 |
|
December 31,
2015 |
||||
Liability component—principal amount
|
$
|
448,500
|
|
|
$
|
448,500
|
|
Unamortized debt discount
|
(34,502
|
)
|
|
(41,867
|
)
|
||
Liability component—net carrying amount
|
$
|
413,998
|
|
|
$
|
406,633
|
|
Equity component
|
$
|
60,511
|
|
|
$
|
58,184
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Interest expense—stated coupon rate
|
$
|
3,317
|
|
|
$
|
3,315
|
|
|
$
|
9,925
|
|
|
$
|
9,915
|
|
Interest expense—amortization of debt discount
|
2,501
|
|
|
2,359
|
|
|
7,366
|
|
|
6,947
|
|
||||
Total interest expense—convertible notes
|
$
|
5,818
|
|
|
$
|
5,674
|
|
|
$
|
17,291
|
|
|
$
|
16,862
|
|
|
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
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Interest expense—stated coupon rate
|
$
|
25,870
|
|
|
$
|
24,394
|
|
|
$
|
81,359
|
|
|
$
|
72,395
|
|
Interest income—accretion of debt premium
|
(2,542
|
)
|
|
(2,771
|
)
|
|
(7,854
|
)
|
|
(7,978
|
)
|
||||
Interest expense—amortization of debt discount
|
119
|
|
|
—
|
|
|
503
|
|
|
—
|
|
||||
Total interest expense—Cabot senior secured notes
|
$
|
23,447
|
|
|
$
|
21,623
|
|
|
$
|
74,008
|
|
|
$
|
64,417
|
|
•
|
Interest at LIBOR (or EURIBOR for any loan drawn in euro) plus
3.5%
until October 5, 2016 and LIBOR (or EURIBOR for any loan drawn in euro) plus
3.25%
thereafter;
|
•
|
A restrictive covenant that limits the loan to value ratio to
0.75
in the event that the Cabot Credit Facility is more than
20%
utilized;
|
•
|
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
in the event that the Cabot Credit Facility is more than
20%
utilized;
|
•
|
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
September 30, |
|
Nine Months Ended
September 30, |
||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||
Federal (benefit) provision
|
(35.0
|
)%
|
|
(35.0
|
)%
|
|
35.0
|
%
|
|
35.0
|
%
|
State (benefit) provision
|
(2.2
|
)%
|
|
(2.4
|
)%
|
|
2.2
|
%
|
|
2.4
|
%
|
International provision (benefit)
(1)
|
16.0
|
%
|
|
(20.5
|
)%
|
|
19.3
|
%
|
|
(8.3
|
)%
|
Permanent items
(2)
|
0.3
|
%
|
|
1.4
|
%
|
|
3.3
|
%
|
|
1.2
|
%
|
Tax effect of CFPB / regulatory charges
|
0.0
|
%
|
|
21.9
|
%
|
|
0.0
|
%
|
|
6.2
|
%
|
Other
(3)
|
(0.1
|
)%
|
|
(0.7
|
)%
|
|
(6.7
|
)%
|
|
0.2
|
%
|
Effective rate
|
(21.0
|
)%
|
|
(35.3
|
)%
|
|
53.1
|
%
|
|
36.7
|
%
|
(1)
|
Relates primarily to lower tax rates on income or loss 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
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Revenues
(1)
:
|
|
|
|
|
|
|
|
||||||||
United States
|
$
|
165,933
|
|
|
$
|
170,177
|
|
|
$
|
502,776
|
|
|
$
|
535,919
|
|
International
|
|
|
|
|
|
|
|
||||||||
Europe
(2), (3)
|
(9,540
|
)
|
|
98,783
|
|
|
188,223
|
|
|
275,521
|
|
||||
Other foreign countries
|
23,022
|
|
|
9,954
|
|
|
66,875
|
|
|
27,918
|
|
||||
|
13,482
|
|
|
108,737
|
|
|
255,098
|
|
|
303,439
|
|
||||
Total
|
$
|
179,415
|
|
|
$
|
278,914
|
|
|
$
|
757,874
|
|
|
$
|
839,358
|
|
(1)
|
Revenues are attributed to countries based on location of customer.
|
(2)
|
Based on the financial information that is used to produce the general-purpose financial statements, providing further geographic information is impracticable.
|
(3)
|
Revenues from Europe during the three and nine months ended September 30, 2016 are net of the allowance charge of
$94.0 million
as discussed in Note 7, “Investment in Receivable Portfolios, Net”.
|
|
Total
|
||
Balance, December 31, 2015
|
$
|
924,847
|
|
Goodwill acquired
|
623
|
|
|
Goodwill adjustments
(1)
|
(21,408
|
)
|
|
Effect of foreign currency translation
|
(84,277
|
)
|
|
Balance, September 30, 2016
|
$
|
819,785
|
|
(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 September 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
|
$
|
23,523
|
|
|
$
|
(3,014
|
)
|
|
$
|
20,509
|
|
|
$
|
5,356
|
|
|
$
|
(903
|
)
|
|
$
|
4,453
|
|
Developed technologies
|
8,167
|
|
|
(3,855
|
)
|
|
4,312
|
|
|
8,141
|
|
|
(3,793
|
)
|
|
4,348
|
|
||||||
Trade name and other
|
10,669
|
|
|
(4,377
|
)
|
|
6,292
|
|
|
10,324
|
|
|
(3,413
|
)
|
|
6,911
|
|
||||||
Total intangible assets
|
$
|
42,359
|
|
|
$
|
(11,246
|
)
|
|
$
|
31,113
|
|
|
$
|
23,821
|
|
|
$
|
(8,109
|
)
|
|
$
|
15,712
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
United States:
|
|
|
|
|
|
|
|
||||||||
Credit card
|
$
|
131,671
|
|
|
$
|
120,883
|
|
|
$
|
379,300
|
|
|
$
|
347,524
|
|
Consumer bankruptcy receivables
|
9,914
|
|
|
10,978
|
|
|
33,776
|
|
|
10,978
|
|
||||
Subtotal
|
141,585
|
|
|
131,861
|
|
|
$
|
413,076
|
|
|
$
|
358,502
|
|
||
Europe:
|
|
|
|
|
|
|
|
||||||||
Credit card
|
30,727
|
|
|
37,342
|
|
|
207,682
|
|
|
338,218
|
|
||||
IVA
|
107
|
|
|
4,681
|
|
|
2,546
|
|
|
7,418
|
|
||||
Other
|
12,133
|
|
|
—
|
|
|
12,133
|
|
|
8,460
|
|
||||
Subtotal
|
42,967
|
|
|
42,023
|
|
|
222,361
|
|
|
354,096
|
|
||||
Other geographies:
|
|
|
|
|
|
|
|
||||||||
Credit card and other
|
21,807
|
|
|
13,296
|
|
|
60,791
|
|
|
18,516
|
|
||||
Total purchases
|
$
|
206,359
|
|
|
$
|
187,180
|
|
|
$
|
696,228
|
|
|
$
|
731,114
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
United States:
|
|
|
|
|
|
|
|
||||||||
Collection sites
|
$
|
111,753
|
|
|
$
|
113,663
|
|
|
$
|
362,010
|
|
|
$
|
374,745
|
|
Legal collections
|
130,985
|
|
|
154,190
|
|
|
427,972
|
|
|
480,896
|
|
||||
Collection agencies
(1)
|
12,875
|
|
|
16,649
|
|
|
41,630
|
|
|
52,702
|
|
||||
Subtotal
|
255,613
|
|
|
284,502
|
|
|
831,612
|
|
|
908,343
|
|
||||
Europe:
|
|
|
|
|
|
|
|
||||||||
Collection sites
|
61,306
|
|
|
65,512
|
|
|
180,742
|
|
|
176,169
|
|
||||
Legal collections
|
31,502
|
|
|
24,680
|
|
|
94,596
|
|
|
63,616
|
|
||||
Collection agencies
|
28,730
|
|
|
38,564
|
|
|
100,684
|
|
|
112,136
|
|
||||
Subtotal
|
121,538
|
|
|
128,756
|
|
|
376,022
|
|
|
351,921
|
|
||||
Other geographies:
|
|
|
|
|
|
|
|
||||||||
Collection sites
|
22,518
|
|
|
7,681
|
|
|
60,726
|
|
|
22,706
|
|
||||
Legal collections
|
2,634
|
|
|
—
|
|
|
7,775
|
|
|
—
|
|
||||
Collection agencies
|
4,658
|
|
|
814
|
|
|
12,731
|
|
|
1,178
|
|
||||
Subtotal
|
29,810
|
|
|
8,495
|
|
|
81,232
|
|
|
23,884
|
|
||||
Total collections
|
$
|
406,961
|
|
|
$
|
421,753
|
|
|
$
|
1,288,866
|
|
|
$
|
1,284,148
|
|
(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 September 30,
|
||||||||||||
|
2016
|
|
2015
|
||||||||||
Revenues
|
|
|
|
|
|
|
|
||||||
Revenue from receivable portfolios, net
|
$
|
159,534
|
|
|
88.9
|
%
|
|
$
|
265,523
|
|
|
95.2
|
%
|
Other revenues
|
19,881
|
|
|
11.1
|
%
|
|
13,391
|
|
|
4.8
|
%
|
||
Total revenues
|
179,415
|
|
|
100.0
|
%
|
|
278,914
|
|
|
100.0
|
%
|
||
Operating expenses
|
|
|
|
|
|
|
|
||||||
Salaries and employee benefits
|
67,783
|
|
|
37.8
|
%
|
|
62,995
|
|
|
22.6
|
%
|
||
Cost of legal collections
|
56,932
|
|
|
31.7
|
%
|
|
58,760
|
|
|
21.1
|
%
|
||
Other operating expenses
|
24,131
|
|
|
13.5
|
%
|
|
22,217
|
|
|
8.0
|
%
|
||
Collection agency commissions
|
8,848
|
|
|
4.9
|
%
|
|
9,381
|
|
|
3.3
|
%
|
||
General and administrative expenses
|
34,871
|
|
|
19.4
|
%
|
|
86,789
|
|
|
31.1
|
%
|
||
Depreciation and amortization
|
8,032
|
|
|
4.5
|
%
|
|
8,043
|
|
|
2.9
|
%
|
||
Total operating expenses
|
200,597
|
|
|
111.8
|
%
|
|
248,185
|
|
|
89.0
|
%
|
||
(Loss) income from operations
|
(21,182
|
)
|
|
(11.8
|
)%
|
|
30,729
|
|
|
11.0
|
%
|
||
Other (expense) income
|
|
|
|
|
|
|
|
||||||
Interest expense
|
(48,632
|
)
|
|
(27.1
|
)%
|
|
(47,816
|
)
|
|
(17.1
|
)%
|
||
Other income (expense)
|
4,100
|
|
|
2.3
|
%
|
|
(924
|
)
|
|
(0.4
|
)%
|
||
Total other expense
|
(44,532
|
)
|
|
(24.8
|
)%
|
|
(48,740
|
)
|
|
(17.5
|
)%
|
||
Loss before income taxes
|
(65,714
|
)
|
|
(36.6
|
)%
|
|
(18,011
|
)
|
|
(6.5
|
)%
|
||
Benefit for income taxes
|
13,768
|
|
|
7.6
|
%
|
|
6,361
|
|
|
2.3
|
%
|
||
Loss from continuing operations
|
(51,946
|
)
|
|
(29.0
|
)%
|
|
(11,650
|
)
|
|
(4.2
|
)%
|
||
Income from discontinued operations, net of tax
|
—
|
|
|
0.0
|
%
|
|
2,286
|
|
|
0.8
|
%
|
||
Net loss
|
(51,946
|
)
|
|
(29.0
|
)%
|
|
(9,364
|
)
|
|
(3.4
|
)%
|
||
Net loss (income) attributable to noncontrolling interest
|
50,422
|
|
|
28.2
|
%
|
|
(1,595
|
)
|
|
(0.5
|
)%
|
||
Net loss attributable to Encore Capital Group, Inc. stockholders
|
$
|
(1,524
|
)
|
|
(0.8
|
)%
|
|
$
|
(10,959
|
)
|
|
(3.9
|
)%
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2016
|
|
2015
|
||||||||||
Revenues
|
|
|
|
|
|
|
|
||||||
Revenue from receivable portfolios, net
|
$
|
697,080
|
|
|
92.0
|
%
|
|
$
|
799,934
|
|
|
95.3
|
%
|
Other revenues
|
60,794
|
|
|
8.0
|
%
|
|
39,424
|
|
|
4.7
|
%
|
||
Total revenues
|
757,874
|
|
|
100.0
|
%
|
|
839,358
|
|
|
100.0
|
%
|
||
Operating expenses
|
|
|
|
|
|
|
|
||||||
Salaries and employee benefits
|
212,924
|
|
|
28.1
|
%
|
|
194,116
|
|
|
23.1
|
%
|
||
Cost of legal collections
|
158,047
|
|
|
20.9
|
%
|
|
170,834
|
|
|
20.4
|
%
|
||
Other operating expenses
|
75,420
|
|
|
10.0
|
%
|
|
68,278
|
|
|
8.1
|
%
|
||
Collection agency commissions
|
28,242
|
|
|
3.7
|
%
|
|
28,532
|
|
|
3.4
|
%
|
||
General and administrative expenses
|
103,044
|
|
|
13.6
|
%
|
|
155,624
|
|
|
18.5
|
%
|
||
Depreciation and amortization
|
26,128
|
|
|
3.4
|
%
|
|
24,058
|
|
|
2.9
|
%
|
||
Total operating expenses
|
603,805
|
|
|
79.7
|
%
|
|
641,442
|
|
|
76.4
|
%
|
||
Income from operations
|
154,069
|
|
|
20.3
|
%
|
|
197,916
|
|
|
23.6
|
%
|
||
Other (expense) income
|
|
|
|
|
|
|
|
||||||
Interest expense
|
(149,920
|
)
|
|
(19.8
|
)%
|
|
(136,369
|
)
|
|
(16.2
|
)%
|
||
Other income
|
14,358
|
|
|
1.9
|
%
|
|
1,588
|
|
|
0.1
|
%
|
||
Total other expense
|
(135,562
|
)
|
|
(17.9
|
)%
|
|
(134,781
|
)
|
|
(16.1
|
)%
|
||
Income before income taxes
|
18,507
|
|
|
2.4
|
%
|
|
63,135
|
|
|
7.5
|
%
|
||
Provision for income taxes
|
(9,831
|
)
|
|
(1.3
|
)%
|
|
(23,174
|
)
|
|
(2.7
|
)%
|
||
Income from continuing operations
|
8,676
|
|
|
1.1
|
%
|
|
39,961
|
|
|
4.8
|
%
|
||
(Loss) income from discontinued operations, net of tax
|
(3,182
|
)
|
|
(0.4
|
)%
|
|
5,827
|
|
|
0.7
|
%
|
||
Net income
|
5,494
|
|
|
0.7
|
%
|
|
45,788
|
|
|
5.5
|
%
|
||
Net loss attributable to noncontrolling interest
|
48,264
|
|
|
6.4
|
%
|
|
335
|
|
|
0.0
|
%
|
||
Net income attributable to Encore Capital Group, Inc. stockholders
|
$
|
53,758
|
|
|
7.1
|
%
|
|
$
|
46,123
|
|
|
5.5
|
%
|
|
Three Months Ended September 30, 2016
|
|
Three Months Ended September 30, 2015
|
||||||||||||||||||||
|
Janus Holdings
|
|
Encore Europe
(1)
|
|
Consolidated
|
|
Janus Holdings
|
|
Encore Europe
(1)
|
|
Consolidated
|
||||||||||||
Total revenues
(2)
|
$
|
(12,842
|
)
|
|
$
|
—
|
|
|
$
|
(12,842
|
)
|
|
$
|
92,641
|
|
|
$
|
—
|
|
|
$
|
92,641
|
|
Total operating expenses
|
(58,074
|
)
|
|
—
|
|
|
(58,074
|
)
|
|
(47,203
|
)
|
|
—
|
|
|
(47,203
|
)
|
||||||
(Loss) income from operations
|
(70,916
|
)
|
|
—
|
|
|
(70,916
|
)
|
|
45,438
|
|
|
—
|
|
|
45,438
|
|
||||||
Interest expense-non-PEC
|
(26,472
|
)
|
|
—
|
|
|
(26,472
|
)
|
|
(27,564
|
)
|
|
—
|
|
|
(27,564
|
)
|
||||||
PEC interest (expense) income
|
(11,575
|
)
|
|
5,672
|
|
|
(5,903
|
)
|
|
(12,264
|
)
|
|
6,010
|
|
|
(6,254
|
)
|
||||||
Other income (expense)
|
4,845
|
|
|
—
|
|
|
4,845
|
|
|
(570
|
)
|
|
—
|
|
|
(570
|
)
|
||||||
(Loss) income before income taxes
|
(104,118
|
)
|
|
5,672
|
|
|
(98,446
|
)
|
|
5,040
|
|
|
6,010
|
|
|
11,050
|
|
||||||
Benefit (provision) for income taxes
|
17,382
|
|
|
—
|
|
|
17,382
|
|
|
(2,037
|
)
|
|
—
|
|
|
(2,037
|
)
|
||||||
Net (loss) income
|
(86,736
|
)
|
|
5,672
|
|
|
(81,064
|
)
|
|
3,003
|
|
|
6,010
|
|
|
9,013
|
|
||||||
Net loss (income) attributable to noncontrolling interest
|
12,087
|
|
|
37,250
|
|
|
49,337
|
|
|
(421
|
)
|
|
(1,289
|
)
|
|
(1,710
|
)
|
||||||
Net (loss) income attributable to Encore Capital Group, Inc. stockholders
|
$
|
(74,649
|
)
|
|
$
|
42,922
|
|
|
$
|
(31,727
|
)
|
|
$
|
2,582
|
|
|
$
|
4,721
|
|
|
$
|
7,303
|
|
|
Nine Months Ended September 30, 2016
|
|
Nine Months Ended September 30, 2015
|
||||||||||||||||||||
|
Janus Holdings
|
|
Encore Europe
(1)
|
|
Consolidated
|
|
Janus Holdings
|
|
Encore Europe
(1)
|
|
Consolidated
|
||||||||||||
Total revenues
(2)
|
$
|
168,819
|
|
|
$
|
—
|
|
|
$
|
168,819
|
|
|
$
|
257,031
|
|
|
$
|
—
|
|
|
$
|
257,031
|
|
Total operating expenses
|
(159,054
|
)
|
|
—
|
|
|
(159,054
|
)
|
|
(136,405
|
)
|
|
—
|
|
|
(136,405
|
)
|
||||||
Income from operations
|
9,765
|
|
|
—
|
|
|
9,765
|
|
|
120,626
|
|
|
—
|
|
|
120,626
|
|
||||||
Interest expense-non-PEC
|
(83,323
|
)
|
|
—
|
|
|
(83,323
|
)
|
|
(77,297
|
)
|
|
—
|
|
|
(77,297
|
)
|
||||||
PEC interest (expense) income
|
(36,638
|
)
|
|
17,954
|
|
|
(18,684
|
)
|
|
(36,004
|
)
|
|
17,644
|
|
|
(18,360
|
)
|
||||||
Other income
|
16,243
|
|
|
—
|
|
|
16,243
|
|
|
485
|
|
|
—
|
|
|
485
|
|
||||||
(Loss) income before income taxes
|
(93,953
|
)
|
|
17,954
|
|
|
(75,999
|
)
|
|
7,810
|
|
|
17,644
|
|
|
25,454
|
|
||||||
Benefit (provision) for income taxes
|
13,565
|
|
|
—
|
|
|
13,565
|
|
|
(5,561
|
)
|
|
—
|
|
|
(5,561
|
)
|
||||||
Net (loss) income
|
(80,388
|
)
|
|
17,954
|
|
|
(62,434
|
)
|
|
2,249
|
|
|
17,644
|
|
|
19,893
|
|
||||||
Net loss (income) attributable to noncontrolling interest
|
11,246
|
|
|
34,502
|
|
|
45,748
|
|
|
(315
|
)
|
|
(965
|
)
|
|
(1,280
|
)
|
||||||
Net (loss) income attributable to Encore Capital Group, Inc. stockholders
|
$
|
(69,142
|
)
|
|
$
|
52,456
|
|
|
$
|
(16,686
|
)
|
|
$
|
1,934
|
|
|
$
|
16,679
|
|
|
$
|
18,613
|
|
(1)
|
Includes only the results of operations related to Janus Holdings and therefore does not represent the complete financial performance of Encore Europe.
|
(2)
|
Total revenues are net of the portfolio allowance charges recorded on certain pool groups at Cabot during the three months ended September 30, 2016.
|
|
Three Months Ended September 30, 2016
|
|
As of
September 30, 2016 |
|||||||||||||||||||||
|
Collections
(1)
|
|
Gross
Revenue
(2)
|
|
Revenue
Recognition
Rate
(3)
|
|
Net
Reversal (Portfolio Allowance) |
|
Revenue
% of Total
Revenue
|
|
Unamortized
Balances
|
|
Monthly
IRR
|
|||||||||||
United States:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
ZBA
(4)
|
$
|
38,164
|
|
|
$
|
36,528
|
|
|
95.7
|
%
|
|
$
|
1,674
|
|
|
14.6
|
%
|
|
$
|
—
|
|
|
—
|
|
2007
|
580
|
|
|
173
|
|
|
29.8
|
%
|
|
166
|
|
|
0.1
|
%
|
|
942
|
|
|
4.6
|
%
|
||||
2008
|
1,648
|
|
|
704
|
|
|
42.7
|
%
|
|
724
|
|
|
0.3
|
%
|
|
3,631
|
|
|
5.2
|
%
|
||||
2009
(5)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
2010
|
2,397
|
|
|
1,760
|
|
|
73.4
|
%
|
|
—
|
|
|
0.7
|
%
|
|
1,902
|
|
|
25.0
|
%
|
||||
2011
|
9,503
|
|
|
6,041
|
|
|
63.6
|
%
|
|
—
|
|
|
2.4
|
%
|
|
9,237
|
|
|
16.1
|
%
|
||||
2012
|
25,960
|
|
|
16,973
|
|
|
65.4
|
%
|
|
—
|
|
|
6.8
|
%
|
|
46,288
|
|
|
11.0
|
%
|
||||
2013
|
43,940
|
|
|
29,954
|
|
|
68.2
|
%
|
|
—
|
|
|
11.9
|
%
|
|
102,270
|
|
|
8.9
|
%
|
||||
2014
|
48,860
|
|
|
26,392
|
|
|
54.0
|
%
|
|
—
|
|
|
10.5
|
%
|
|
205,503
|
|
|
4.0
|
%
|
||||
2015
|
51,548
|
|
|
24,811
|
|
|
48.1
|
%
|
|
—
|
|
|
9.8
|
%
|
|
341,126
|
|
|
2.3
|
%
|
||||
2016
|
33,013
|
|
|
19,996
|
|
|
60.6
|
%
|
|
—
|
|
|
8.0
|
%
|
|
384,603
|
|
|
2.2
|
%
|
||||
Subtotal
|
255,613
|
|
|
163,332
|
|
|
63.9
|
%
|
|
2,564
|
|
|
65.1
|
%
|
|
1,095,502
|
|
|
3.7
|
%
|
||||
Europe:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
2013
|
39,624
|
|
|
26,925
|
|
|
68.0
|
%
|
|
(76,018
|
)
|
|
10.7
|
%
|
|
286,472
|
|
|
3.0
|
%
|
||||
2014
|
37,038
|
|
|
21,869
|
|
|
59.0
|
%
|
|
(13,150
|
)
|
|
8.7
|
%
|
|
341,855
|
|
|
2.1
|
%
|
||||
2015
|
31,236
|
|
|
14,886
|
|
|
47.7
|
%
|
|
(4,843
|
)
|
|
5.9
|
%
|
|
289,982
|
|
|
1.6
|
%
|
||||
2016
|
13,640
|
|
|
7,933
|
|
|
58.2
|
%
|
|
—
|
|
|
3.2
|
%
|
|
206,978
|
|
|
1.5
|
%
|
||||
Subtotal
|
121,538
|
|
|
71,613
|
|
|
58.9
|
%
|
|
(94,011
|
)
|
|
28.5
|
%
|
|
1,125,287
|
|
|
2.1
|
%
|
||||
Other geographies:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
ZBA
(4)
|
1,770
|
|
|
1,789
|
|
|
101.1
|
%
|
|
—
|
|
|
0.7
|
%
|
|
—
|
|
|
—
|
|
||||
2013
|
410
|
|
|
—
|
|
|
0.0
|
%
|
|
—
|
|
|
0.0
|
%
|
|
1,408
|
|
|
0.0
|
%
|
||||
2014
|
4,034
|
|
|
4,349
|
|
|
107.8
|
%
|
|
—
|
|
|
1.7
|
%
|
|
61,055
|
|
|
2.2
|
%
|
||||
2015
|
14,203
|
|
|
6,683
|
|
|
47.1
|
%
|
|
—
|
|
|
2.7
|
%
|
|
61,125
|
|
|
3.3
|
%
|
||||
2016
|
9,393
|
|
|
3,215
|
|
|
34.2
|
%
|
|
—
|
|
|
1.3
|
%
|
|
53,454
|
|
|
2.1
|
%
|
||||
Subtotal
|
29,810
|
|
|
16,036
|
|
|
53.8
|
%
|
|
—
|
|
|
6.4
|
%
|
|
177,042
|
|
|
2.7
|
%
|
||||
Total
|
$
|
406,961
|
|
|
$
|
250,981
|
|
|
61.7
|
%
|
|
$
|
(91,447
|
)
|
|
100.0
|
%
|
|
$
|
2,397,831
|
|
|
2.9
|
%
|
(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 September 30, 2015
|
|
As of
September 30, 2015 |
|||||||||||||||||||||
|
Collections
(1)
|
|
Gross
Revenue
(2)
|
|
Revenue
Recognition
Rate
(3)
|
|
Net
Reversal (Portfolio Allowance) |
|
Revenue
% of Total
Revenue
|
|
Unamortized
Balances
|
|
Monthly
IRR
|
|||||||||||
United States:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
ZBA
(4)
|
$
|
31,159
|
|
|
$
|
28,099
|
|
|
90.2
|
%
|
|
$
|
3,097
|
|
|
10.5
|
%
|
|
$
|
—
|
|
|
—
|
|
2007
|
727
|
|
|
267
|
|
|
36.7
|
%
|
|
520
|
|
|
0.1
|
%
|
|
1,797
|
|
|
4.6
|
%
|
||||
2008
|
3,259
|
|
|
2,016
|
|
|
61.9
|
%
|
|
1,444
|
|
|
0.8
|
%
|
|
6,447
|
|
|
9.6
|
%
|
||||
2009
|
3,179
|
|
|
1,171
|
|
|
36.8
|
%
|
|
—
|
|
|
0.4
|
%
|
|
218
|
|
|
25.0
|
%
|
||||
2010
|
5,015
|
|
|
3,072
|
|
|
61.3
|
%
|
|
—
|
|
|
1.1
|
%
|
|
4,373
|
|
|
18.8
|
%
|
||||
2011
|
26,197
|
|
|
19,754
|
|
|
75.4
|
%
|
|
—
|
|
|
7.3
|
%
|
|
32,871
|
|
|
17.3
|
%
|
||||
2012
|
40,813
|
|
|
25,190
|
|
|
61.7
|
%
|
|
—
|
|
|
9.4
|
%
|
|
92,866
|
|
|
8.0
|
%
|
||||
2013
|
67,986
|
|
|
42,781
|
|
|
62.9
|
%
|
|
—
|
|
|
16.0
|
%
|
|
183,453
|
|
|
7.1
|
%
|
||||
2014
|
73,250
|
|
|
36,418
|
|
|
49.7
|
%
|
|
—
|
|
|
13.5
|
%
|
|
325,382
|
|
|
3.5
|
%
|
||||
2015
|
32,917
|
|
|
15,833
|
|
|
48.1
|
%
|
|
—
|
|
|
5.9
|
%
|
|
325,617
|
|
|
2.0
|
%
|
||||
Impact of CFPB settlement
|
—
|
|
|
—
|
|
|
|
|
(8,322
|
)
|
|
|
|
—
|
|
|
—
|
|
||||||
Subtotal
|
284,502
|
|
|
174,601
|
|
|
61.4
|
%
|
|
(3,261
|
)
|
|
65.0
|
%
|
|
973,024
|
|
|
5.5
|
%
|
||||
Europe:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
2013
|
51,210
|
|
|
43,010
|
|
|
84.0
|
%
|
|
—
|
|
|
16.0
|
%
|
|
457,343
|
|
|
3.0
|
%
|
||||
2014
|
51,522
|
|
|
30,362
|
|
|
58.9
|
%
|
|
—
|
|
|
11.3
|
%
|
|
473,135
|
|
|
2.1
|
%
|
||||
2015
|
26,024
|
|
|
14,788
|
|
|
56.8
|
%
|
|
—
|
|
|
5.5
|
%
|
|
334,266
|
|
|
1.7
|
%
|
||||
Subtotal
|
128,756
|
|
|
88,160
|
|
|
68.5
|
%
|
|
—
|
|
|
32.8
|
%
|
|
1,264,744
|
|
|
2.3
|
%
|
||||
Other geographies:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
ZBA
(4)
|
646
|
|
|
646
|
|
|
100.0
|
%
|
|
—
|
|
|
0.2
|
%
|
|
—
|
|
|
—
|
|
||||
2013
|
2,181
|
|
|
—
|
|
|
0.0
|
%
|
|
—
|
|
|
0.0
|
%
|
|
3,075
|
|
|
0.0
|
%
|
||||
2014
|
4,227
|
|
|
5,066
|
|
|
119.8
|
%
|
|
—
|
|
|
1.9
|
%
|
|
69,714
|
|
|
2.3
|
%
|
||||
2015
|
1,441
|
|
|
311
|
|
|
21.6
|
%
|
|
—
|
|
|
0.1
|
%
|
|
12,667
|
|
|
2.1
|
%
|
||||
Subtotal
|
8,495
|
|
|
6,023
|
|
|
70.9
|
%
|
|
—
|
|
|
2.2
|
%
|
|
85,456
|
|
|
2.2
|
%
|
||||
Total
|
$
|
421,753
|
|
|
$
|
268,784
|
|
|
63.7
|
%
|
|
$
|
(3,261
|
)
|
|
100.0
|
%
|
|
$
|
2,323,224
|
|
|
3.3
|
%
|
(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.
|
|
Nine Months Ended September 30, 2016
|
|
As of
September 30, 2016 |
|||||||||||||||||||||
|
Collections
(1)
|
|
Gross
Revenue (2) |
|
Revenue
Recognition
Rate
(3)
|
|
Net
Reversal (Portfolio Allowance) |
|
Revenue
% of Total
Revenue
|
|
Unamortized
Balances
|
|
Monthly
IRR
|
|||||||||||
United States:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
ZBA
(4)
|
$
|
99,821
|
|
|
$
|
94,795
|
|
|
95.0
|
%
|
|
$
|
5,171
|
|
|
12.1
|
%
|
|
$
|
—
|
|
|
—
|
|
2007
|
1,712
|
|
|
587
|
|
|
34.3
|
%
|
|
467
|
|
|
0.1
|
%
|
|
942
|
|
|
4.6
|
%
|
||||
2008
|
7,426
|
|
|
3,663
|
|
|
49.3
|
%
|
|
1,596
|
|
|
0.5
|
%
|
|
3,631
|
|
|
5.2
|
%
|
||||
2009
(5)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
2010
|
8,085
|
|
|
6,270
|
|
|
77.6
|
%
|
|
—
|
|
|
0.8
|
%
|
|
1,902
|
|
|
25.0
|
%
|
||||
2011
|
48,941
|
|
|
30,959
|
|
|
63.3
|
%
|
|
—
|
|
|
4.0
|
%
|
|
9,237
|
|
|
16.1
|
%
|
||||
2012
|
90,568
|
|
|
57,582
|
|
|
63.6
|
%
|
|
—
|
|
|
7.3
|
%
|
|
46,288
|
|
|
11.0
|
%
|
||||
2013
|
158,446
|
|
|
99,614
|
|
|
62.9
|
%
|
|
—
|
|
|
12.7
|
%
|
|
102,270
|
|
|
8.9
|
%
|
||||
2014
|
173,348
|
|
|
87,854
|
|
|
50.7
|
%
|
|
—
|
|
|
11.2
|
%
|
|
205,503
|
|
|
4.0
|
%
|
||||
2015
|
180,200
|
|
|
79,315
|
|
|
44.0
|
%
|
|
—
|
|
|
10.1
|
%
|
|
341,126
|
|
|
2.3
|
%
|
||||
2016
|
63,065
|
|
|
34,720
|
|
|
55.1
|
%
|
|
—
|
|
|
4.4
|
%
|
|
384,603
|
|
|
2.2
|
%
|
||||
Subtotal
|
831,612
|
|
|
495,359
|
|
|
59.6
|
%
|
|
7,234
|
|
|
63.2
|
%
|
|
1,095,502
|
|
|
3.7
|
%
|
||||
Europe:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
2013
|
130,082
|
|
|
103,342
|
|
|
79.4
|
%
|
|
(76,018
|
)
|
|
13.2
|
%
|
|
286,472
|
|
|
3.0
|
%
|
||||
2014
|
121,938
|
|
|
73,747
|
|
|
60.5
|
%
|
|
(13,150
|
)
|
|
9.4
|
%
|
|
341,855
|
|
|
2.1
|
%
|
||||
2015
|
96,926
|
|
|
49,540
|
|
|
51.1
|
%
|
|
(4,843
|
)
|
|
6.3
|
%
|
|
289,982
|
|
|
1.6
|
%
|
||||
2016
|
27,076
|
|
|
15,420
|
|
|
57.0
|
%
|
|
—
|
|
|
2.0
|
%
|
|
206,978
|
|
|
1.5
|
%
|
||||
Subtotal
|
376,022
|
|
|
242,049
|
|
|
64.4
|
%
|
|
(94,011
|
)
|
|
30.9
|
%
|
|
1,125,287
|
|
|
2.1
|
%
|
||||
Other geographies:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
ZBA
(4)
|
5,436
|
|
|
5,309
|
|
|
97.7
|
%
|
|
—
|
|
|
0.7
|
%
|
|
—
|
|
|
—
|
|
||||
2013
|
1,204
|
|
|
—
|
|
|
0.0
|
%
|
|
—
|
|
|
0.0
|
%
|
|
1,408
|
|
|
0.0
|
%
|
||||
2014
|
13,398
|
|
|
13,551
|
|
|
101.1
|
%
|
|
—
|
|
|
1.7
|
%
|
|
61,055
|
|
|
2.2
|
%
|
||||
2015
|
44,290
|
|
|
21,512
|
|
|
48.6
|
%
|
|
—
|
|
|
2.7
|
%
|
|
61,125
|
|
|
3.3
|
%
|
||||
2016
|
16,904
|
|
|
6,077
|
|
|
36.0
|
%
|
|
—
|
|
|
0.8
|
%
|
|
53,454
|
|
|
2.1
|
%
|
||||
Subtotal
|
81,232
|
|
|
46,449
|
|
|
57.2
|
%
|
|
—
|
|
|
5.9
|
%
|
|
177,042
|
|
|
2.7
|
%
|
||||
Total
|
$
|
1,288,866
|
|
|
$
|
783,857
|
|
|
60.8
|
%
|
|
$
|
(86,777
|
)
|
|
100.0
|
%
|
|
$
|
2,397,831
|
|
|
2.9
|
%
|
(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.
|
|
Nine Months Ended September 30, 2015
|
|
As of
September 30, 2015 |
|||||||||||||||||||||
|
Collections
(1)
|
|
Gross
Revenue
(2)
|
|
Revenue
Recognition
Rate
(3)
|
|
Net
Reversal (Portfolio Allowance) |
|
Revenue
% of Total
Revenue
|
|
Unamortized
Balances
|
|
Monthly
IRR
|
|||||||||||
United States:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
ZBA
(4)
|
$
|
72,342
|
|
|
$
|
63,042
|
|
|
87.1
|
%
|
|
$
|
9,509
|
|
|
7.9
|
%
|
|
$
|
—
|
|
|
—
|
|
2007
|
2,486
|
|
|
872
|
|
|
35.1
|
%
|
|
816
|
|
|
0.1
|
%
|
|
1,797
|
|
|
4.6
|
%
|
||||
2008
|
10,471
|
|
|
6,693
|
|
|
63.9
|
%
|
|
1,955
|
|
|
0.8
|
%
|
|
6,447
|
|
|
9.6
|
%
|
||||
2009
|
17,812
|
|
|
10,293
|
|
|
57.8
|
%
|
|
—
|
|
|
1.3
|
%
|
|
218
|
|
|
25.0
|
%
|
||||
2010
|
39,358
|
|
|
22,777
|
|
|
57.9
|
%
|
|
—
|
|
|
2.9
|
%
|
|
4,373
|
|
|
18.8
|
%
|
||||
2011
|
89,638
|
|
|
67,889
|
|
|
75.7
|
%
|
|
—
|
|
|
8.5
|
%
|
|
32,871
|
|
|
17.3
|
%
|
||||
2012
|
141,648
|
|
|
86,577
|
|
|
61.1
|
%
|
|
—
|
|
|
11.0
|
%
|
|
92,866
|
|
|
8.0
|
%
|
||||
2013
|
235,970
|
|
|
137,742
|
|
|
58.4
|
%
|
|
—
|
|
|
17.3
|
%
|
|
183,453
|
|
|
7.1
|
%
|
||||
2014
|
239,737
|
|
|
112,315
|
|
|
46.8
|
%
|
|
—
|
|
|
14.1
|
%
|
|
325,382
|
|
|
3.5
|
%
|
||||
2015
|
58,881
|
|
|
24,935
|
|
|
42.3
|
%
|
|
—
|
|
|
3.1
|
%
|
|
325,617
|
|
|
2.0
|
%
|
||||
Impact of CFPB settlement
|
—
|
|
|
—
|
|
|
|
|
|
(8,322
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Subtotal
|
908,343
|
|
|
533,135
|
|
|
58.7
|
%
|
|
3,958
|
|
|
67.0
|
%
|
|
973,024
|
|
|
4.7
|
%
|
||||
Europe:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
2013
|
163,097
|
|
|
130,345
|
|
|
79.9
|
%
|
|
—
|
|
|
16.4
|
%
|
|
457,343
|
|
|
3.0
|
%
|
||||
2014
|
153,043
|
|
|
93,835
|
|
|
61.3
|
%
|
|
—
|
|
|
11.8
|
%
|
|
473,135
|
|
|
2.1
|
%
|
||||
2015
|
35,781
|
|
|
20,716
|
|
|
57.9
|
%
|
|
—
|
|
|
2.6
|
%
|
|
334,266
|
|
|
1.7
|
%
|
||||
Subtotal
|
351,921
|
|
|
244,896
|
|
|
69.6
|
%
|
|
—
|
|
|
30.8
|
%
|
|
1,264,744
|
|
|
2.3
|
%
|
||||
Other geographies:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
ZBA
(4)
|
1,738
|
|
|
1,738
|
|
|
100.0
|
%
|
|
—
|
|
|
0.2
|
%
|
|
—
|
|
|
—
|
|
||||
2012
|
471
|
|
|
—
|
|
|
0.0
|
%
|
|
—
|
|
|
0.0
|
%
|
|
—
|
|
|
0.0
|
%
|
||||
2013
|
7,122
|
|
|
312
|
|
|
4.4
|
%
|
|
—
|
|
|
0.0
|
%
|
|
3,075
|
|
|
0.0
|
%
|
||||
2014
|
11,580
|
|
|
15,180
|
|
|
131.1
|
%
|
|
—
|
|
|
1.9
|
%
|
|
69,714
|
|
|
2.3
|
%
|
||||
2015
|
2,973
|
|
|
715
|
|
|
24.0
|
%
|
|
—
|
|
|
0.1
|
%
|
|
12,667
|
|
|
2.1
|
%
|
||||
Subtotal
|
23,884
|
|
|
17,945
|
|
|
75.1
|
%
|
|
—
|
|
|
2.2
|
%
|
|
85,456
|
|
|
2.2
|
%
|
||||
Total
|
$
|
1,284,148
|
|
|
$
|
795,976
|
|
|
62.0
|
%
|
|
$
|
3,958
|
|
|
100.0
|
%
|
|
$
|
2,323,224
|
|
|
3.3
|
%
|
(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
September 30, |
|
Nine Months Ended
September 30, |
||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||
United States
|
41.0
|
%
|
|
43.0
|
%
|
|
39.7
|
%
|
|
41.4
|
%
|
Europe
|
40.3
|
%
|
|
31.4
|
%
|
|
35.0
|
%
|
|
31.6
|
%
|
Other geographies
|
44.1
|
%
|
|
30.2
|
%
|
|
42.5
|
%
|
|
29.2
|
%
|
Overall cost per dollar collected
|
41.1
|
%
|
|
39.2
|
%
|
|
38.5
|
%
|
|
38.5
|
%
|
|
Three Months Ended September 30,
|
||||||||||
|
2016
|
|
2015
|
|
$ Change
|
||||||
Stated interest on debt obligations
|
$
|
39,494
|
|
|
$
|
39,466
|
|
|
$
|
28
|
|
Interest expense on preferred equity certificates
|
5,903
|
|
|
6,254
|
|
|
(351
|
)
|
|||
Amortization of loan fees and other loan costs
|
3,157
|
|
|
2,508
|
|
|
649
|
|
|||
Amortization of debt discount
|
2,620
|
|
|
2,359
|
|
|
261
|
|
|||
Accretion of debt premium
|
(2,542
|
)
|
|
(2,771
|
)
|
|
229
|
|
|||
Total interest expense
|
$
|
48,632
|
|
|
$
|
47,816
|
|
|
$
|
816
|
|
|
Nine Months Ended September 30,
|
||||||||||
|
2016
|
|
2015
|
|
$ Change
|
||||||
Stated interest on debt obligations
|
$
|
122,004
|
|
|
$
|
110,802
|
|
|
$
|
11,202
|
|
Interest expense on preferred equity certificates
|
18,684
|
|
|
18,360
|
|
|
324
|
|
|||
Amortization of loan fees and other loan costs
|
9,217
|
|
|
8,238
|
|
|
979
|
|
|||
Amortization of debt discount
|
7,869
|
|
|
6,947
|
|
|
922
|
|
|||
Accretion of debt premium
|
(7,854
|
)
|
|
(7,978
|
)
|
|
124
|
|
|||
Total interest expense
|
$
|
149,920
|
|
|
$
|
136,369
|
|
|
$
|
13,551
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||
Federal (benefit) provision
|
(35.0
|
)%
|
|
(35.0
|
)%
|
|
35.0
|
%
|
|
35.0
|
%
|
State (benefit) provision
|
(2.2
|
)%
|
|
(2.4
|
)%
|
|
2.2
|
%
|
|
2.4
|
%
|
International provision (benefit)
(1)
|
16.0
|
%
|
|
(20.5
|
)%
|
|
19.3
|
%
|
|
(8.3
|
)%
|
Permanent items
(2)
|
0.3
|
%
|
|
1.4
|
%
|
|
3.3
|
%
|
|
1.2
|
%
|
Tax effect of CFPB / regulatory charges
|
0.0
|
%
|
|
21.9
|
%
|
|
0.0
|
%
|
|
6.2
|
%
|
Other
(3)
|
(0.1
|
)%
|
|
(0.7
|
)%
|
|
(6.7
|
)%
|
|
0.2
|
%
|
Effective rate
|
(21.0
|
)%
|
|
(35.3
|
)%
|
|
53.1
|
%
|
|
36.7
|
%
|
(1)
|
Relates primarily to lower tax rates on income or loss 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 September 30,
|
||||||||||||||||||||||
|
2016
|
|
2015
|
||||||||||||||||||||
|
$
|
|
Per Diluted
Share— Accounting |
|
Per Diluted
Share— Economic |
|
$
|
|
Per Diluted
Share— Accounting |
|
Per Diluted
Share— Economic |
||||||||||||
GAAP net loss from continuing operations attributable to Encore, as reported
|
$
|
(1,524
|
)
|
|
$
|
(0.06
|
)
|
|
$
|
(0.06
|
)
|
|
$
|
(13,245
|
)
|
|
$
|
(0.52
|
)
|
|
$
|
(0.52
|
)
|
Effect of diluted potential shares excluded from loss per share calculation
(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.01
|
|
|
0.01
|
|
||||||
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Convertible notes non-cash interest and issuance cost amortization
|
2,983
|
|
|
0.12
|
|
|
0.12
|
|
|
2,859
|
|
|
0.11
|
|
|
0.11
|
|
||||||
Acquisition, integration and restructuring related expenses
|
3,843
|
|
|
0.15
|
|
|
0.15
|
|
|
2,235
|
|
|
0.09
|
|
|
0.09
|
|
||||||
Settlement fees and related administrative expenses
(2)
|
2,613
|
|
|
0.10
|
|
|
0.10
|
|
|
63,019
|
|
|
2.38
|
|
|
2.45
|
|
||||||
Amortization of certain acquired intangible assets
(3)
|
529
|
|
|
0.02
|
|
|
0.02
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Income tax effect of the adjustments
(4)
|
(3,263
|
)
|
|
(0.13
|
)
|
|
(0.13
|
)
|
|
(22,268
|
)
|
|
(0.84
|
)
|
|
(0.87
|
)
|
||||||
Adjustments attributable to noncontrolling interest
(5)
|
(1,568
|
)
|
|
(0.06
|
)
|
|
(0.06
|
)
|
|
(418
|
)
|
|
(0.02
|
)
|
|
(0.02
|
)
|
||||||
Adjusted income from continuing operations attributable to Encore
|
$
|
3,613
|
|
|
$
|
0.14
|
|
|
$
|
0.14
|
|
|
$
|
32,182
|
|
|
$
|
1.21
|
|
|
$
|
1.25
|
|
(1)
|
The shares used to calculate GAAP net loss per diluted share - accounting and GAAP net loss per diluted share - economic during the three months ended September 30, 2016 and 2015 exclude dilutive potential common shares because of their anti-dilutive effect.
|
(2)
|
Amount represents litigation and government settlement fees and related administrative expenses. For the three and nine months ended September 30, 2016 amounts consist of settlement and administrative fees related to certain TCPA settlements. For the three and nine months ended September 30, 2015, amounts relate to the consent order with the CFPB that we entered into in September 2015. We believe these fees and expenses are not indicative of ongoing operations and adjusting for these fees and expenses makes it easier to compare to prior periods, anticipated future periods, and our competitors’ results.
|
(3)
|
As we continue to acquire debt solution service providers around the world, the acquired intangible assets, such as trade names and customer relationships, have grown substantially, particularly in recent quarters. These intangible assets are valued at the time of the acquisition and amortized over their estimated lives. We believe that amortization of acquisition-related intangible assets, especially the amortization of an acquired company’s trade names and customer relationships, is the result of pre-acquisition activities. In addition, the amortization of these acquired intangibles is a non-cash static expense that is not affected by operations during any reporting period. As a result, the amortization of certain acquired intangible assets is excluded from our adjusted income from continuing operations attributable to Encore and adjusted income from continuing operations per share.
|
(4)
|
Amount represents the total income tax effect of the adjustments, which is calculated based on the applicable marginal tax rate of the jurisdiction in which the portion of the adjustment occurred.
|
(5)
|
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.
|
|
Nine Months Ended September 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
|
$
|
56,940
|
|
|
$
|
2.20
|
|
|
$
|
2.20
|
|
|
$
|
40,296
|
|
|
$
|
1.50
|
|
|
$
|
1.55
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Convertible notes non-cash interest and issuance cost amortization
|
8,813
|
|
|
0.34
|
|
|
0.34
|
|
|
8,445
|
|
|
0.31
|
|
|
0.32
|
|
||||||
Acquisition, integration and restructuring related expenses
|
10,173
|
|
|
0.39
|
|
|
0.39
|
|
|
14,298
|
|
|
0.54
|
|
|
0.55
|
|
||||||
Settlement fees and related administrative expenses
(2)
|
6,299
|
|
|
0.24
|
|
|
0.24
|
|
|
63,019
|
|
|
2.34
|
|
|
2.42
|
|
||||||
Amortization of certain acquired intangible assets
(3)
|
2,178
|
|
|
0.08
|
|
|
0.08
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Income tax effect of the adjustments
(4)
|
(8,884
|
)
|
|
(0.34
|
)
|
|
(0.34
|
)
|
|
(26,827
|
)
|
|
(1.00
|
)
|
|
(1.03
|
)
|
||||||
Adjustments attributable to noncontrolling interest
(5)
|
(4,059
|
)
|
|
(0.15
|
)
|
|
(0.15
|
)
|
|
(4,981
|
)
|
|
(0.19
|
)
|
|
(0.19
|
)
|
||||||
Adjusted income from continuing operations attributable to Encore
|
$
|
71,460
|
|
|
$
|
2.76
|
|
|
$
|
2.76
|
|
|
$
|
94,250
|
|
|
$
|
3.50
|
|
|
$
|
3.62
|
|
(1)
|
The shares used to calculate GAAP net loss per diluted share - accounting and GAAP net loss per diluted share - economic during the three months ended September 30, 2016 and 2015 exclude dilutive potential common shares because of their anti-dilutive effect.
|
(2)
|
Amount represents litigation and government settlement fees and related administrative expenses. For the three and nine months ended September 30, 2016 amounts consist of settlement and administrative fees related to certain TCPA settlements. For the three and nine months ended September 30, 2015, amounts relate to the consent order with the CFPB that we entered into in September 2015. We believe these fees and expenses are not indicative of ongoing operations and adjusting for these fees and expenses makes it easier to compare to prior periods, anticipated future periods, and our competitors’ results.
|
(3)
|
As we continue to acquire debt solution service providers around the world, the acquired intangible assets, such as trade names and customer relationships, have grown substantially, particularly in recent quarters. These intangible assets are valued at the time of the acquisition and amortized over their estimated lives. We believe that amortization of acquisition-related intangible assets, especially the amortization of an acquired company’s trade names and customer relationships, is the result of pre-acquisition activities. In addition, the amortization of these acquired intangibles is a non-cash static expense that is not affected by operations during any reporting period. As a result, the amortization of certain acquired intangible assets is excluded from our adjusted income from continuing operations attributable to Encore and adjusted income from continuing operations per share.
|
(4)
|
Amount represents the total income tax effect of the adjustments, which is calculated based on the applicable marginal tax rate of the jurisdiction in which the portion of the adjustment occurred.
|
(5)
|
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
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
2016
|
|
2015
|
|
2016
|
|
2015
|
|||||||||
GAAP net (loss) income, as reported
|
$
|
(51,946
|
)
|
|
$
|
(9,364
|
)
|
|
$
|
5,494
|
|
|
$
|
45,788
|
|
Adjustments:
|
|
|
|
|
|
|
|
||||||||
(Income) loss from discontinued operations, net of tax
|
—
|
|
|
(2,286
|
)
|
|
3,182
|
|
|
(5,827
|
)
|
||||
Interest expense
|
48,632
|
|
|
47,816
|
|
|
149,920
|
|
|
136,369
|
|
||||
(Benefit) provision for income taxes
|
(13,768
|
)
|
|
(6,361
|
)
|
|
9,831
|
|
|
23,174
|
|
||||
Depreciation and amortization
|
8,032
|
|
|
8,043
|
|
|
26,128
|
|
|
24,058
|
|
||||
Amount applied to principal on receivable portfolios
(1)
|
247,427
|
|
|
156,229
|
|
|
591,786
|
|
|
484,214
|
|
||||
Stock-based compensation expense
|
633
|
|
|
5,156
|
|
|
9,502
|
|
|
17,259
|
|
||||
Acquisition, integration and restructuring related expenses
|
3,843
|
|
|
2,235
|
|
|
9,255
|
|
|
12,893
|
|
||||
Settlement fees and related administrative expenses
(2)
|
2,613
|
|
|
63,019
|
|
|
6,299
|
|
|
63,019
|
|
||||
Adjusted EBITDA
|
$
|
245,466
|
|
|
$
|
264,487
|
|
|
$
|
811,397
|
|
|
$
|
800,947
|
|
(1)
|
Amount represents collections from receivable portfolios that are not included in consolidated revenues as a result of accounting principles that require the application of such collections to amortize the principal of such receivable portfolios. We adjust for this amount because (a) the method is materially consistent with the calculation method contained in covenants used in our revolving credit and term loan facility and (b) it represents actual cash collections and we believe this measure is a useful indicator of our ability to generate cash collections in excess of operating expenses through the liquidation of our receivable portfolios.
|
(2)
|
Amount represents litigation and government settlement fees and related administrative expenses. For the three and nine months ended September 30, 2016 amount consists of settlement and administrative fees related to certain TCPA settlements. For the three and nine months ended September 30, 2015, amount relates to the consent order with the CFPB that we entered into in September 2015. We believe these fees and expenses are not indicative of ongoing operations and adjusting for these fees and expenses makes it easier to compare to prior periods, anticipated future periods, and our competitors’ results. Adjusting for these settlement and administrative fees is materially consistent with the calculation method contained in covenants used in our revolving credit and term loan facility.
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
2016
|
|
2015
|
|
2016
|
|
2015
|
|||||||||
GAAP total operating expenses, as reported
|
$
|
200,597
|
|
|
$
|
248,185
|
|
|
$
|
603,805
|
|
|
$
|
641,442
|
|
Adjustments:
|
|
|
|
|
|
|
|
||||||||
Stock-based compensation expense
|
(633
|
)
|
|
(5,156
|
)
|
|
(9,502
|
)
|
|
(17,259
|
)
|
||||
Operating expenses related to non-portfolio purchasing and recovery business
(1)
|
(26,446
|
)
|
|
(20,835
|
)
|
|
(81,584
|
)
|
|
(62,404
|
)
|
||||
Acquisition, integration and restructuring related expenses
|
(3,843
|
)
|
|
(2,235
|
)
|
|
(10,173
|
)
|
|
(12,893
|
)
|
||||
Settlement fees and related administrative expenses
(2)
|
(2,613
|
)
|
|
(54,697
|
)
|
|
(6,299
|
)
|
|
(54,697
|
)
|
||||
Adjusted operating expenses related to portfolio purchasing and recovery business
|
$
|
167,062
|
|
|
$
|
165,262
|
|
|
$
|
496,247
|
|
|
$
|
494,189
|
|
(1)
|
Operating expenses related to non-portfolio purchasing and recovery business include operating expenses from other operating segments that primarily engage in fee-based business, as well as corporate overhead not related to our portfolio purchasing and recovery business.
|
(2)
|
Amount represents litigation and government settlement fees and related administrative expenses. For the three and nine months ended September 30, 2016 amount consists of settlement and administrative fees related to certain TCPA settlements. For the three and nine months ended September 30, 2015, amount relates to the consent order with the CFPB that we entered into in September 2015. We believe these fees and expenses are not indicative of ongoing operations and adjusting for these fees and expenses makes it easier to compare to prior periods, anticipated future periods, and our competitors’ results. Adjusting for these settlement and administrative fees is materially consistent with the calculation method contained in covenants used in our revolving credit and term loan facility.
|
(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
September 30, 2016
, excluding collections on behalf of others.
|
(3)
|
Cumulative Collections Multiple (“CCM”) through
September 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:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
<2007
|
$
|
719,081
|
|
|
$
|
2,206,341
|
|
|
$
|
12,831
|
|
|
$
|
2,219,172
|
|
|
3.1
|
|
2007
|
204,063
|
|
|
523,056
|
|
|
12,524
|
|
|
535,580
|
|
|
2.6
|
|
||||
2008
|
227,753
|
|
|
618,557
|
|
|
28,072
|
|
|
646,629
|
|
|
2.8
|
|
||||
2009
|
252,988
|
|
|
784,958
|
|
|
45,130
|
|
|
830,088
|
|
|
3.3
|
|
||||
2010
|
345,401
|
|
|
1,005,458
|
|
|
81,825
|
|
|
1,087,283
|
|
|
3.1
|
|
||||
2011
|
383,637
|
|
|
976,352
|
|
|
105,125
|
|
|
1,081,477
|
|
|
2.8
|
|
||||
2012
|
466,559
|
|
|
973,926
|
|
|
173,121
|
|
|
1,147,047
|
|
|
2.5
|
|
||||
2013
(4)
|
512,897
|
|
|
1,017,052
|
|
|
387,739
|
|
|
1,404,791
|
|
|
2.7
|
|
||||
2014
(4)
|
519,221
|
|
|
625,341
|
|
|
464,800
|
|
|
1,090,141
|
|
|
2.1
|
|
||||
2015
|
477,528
|
|
|
283,533
|
|
|
557,493
|
|
|
841,026
|
|
|
1.8
|
|
||||
2016
|
378,369
|
|
|
62,695
|
|
|
636,842
|
|
|
699,537
|
|
|
1.8
|
|
||||
Subtotal
|
4,487,497
|
|
|
9,077,269
|
|
|
2,505,502
|
|
|
11,582,771
|
|
|
2.6
|
|
||||
Europe:
|
|
|
|
|
|
|
|
|
|
|||||||||
2013
(4)
|
619,079
|
|
|
725,776
|
|
|
902,164
|
|
|
1,627,940
|
|
|
2.6
|
|
||||
2014
(4)
|
630,343
|
|
|
455,613
|
|
|
835,493
|
|
|
1,291,106
|
|
|
2.0
|
|
||||
2015
(4)
|
423,359
|
|
|
162,797
|
|
|
627,982
|
|
|
790,779
|
|
|
1.9
|
|
||||
2016
|
222,361
|
|
|
27,077
|
|
|
417,317
|
|
|
444,394
|
|
|
2.0
|
|
||||
Subtotal
|
1,895,142
|
|
|
1,371,263
|
|
|
2,782,956
|
|
|
4,154,219
|
|
|
2.2
|
|
||||
Other geographies:
|
|
|
|
|
|
|
|
|
||||||||||
2012
|
6,706
|
|
|
8,011
|
|
|
2,194
|
|
|
10,205
|
|
|
1.5
|
|
||||
2013
|
29,568
|
|
|
38,106
|
|
|
6,502
|
|
|
44,608
|
|
|
1.5
|
|
||||
2014
|
88,227
|
|
|
39,480
|
|
|
117,044
|
|
|
156,524
|
|
|
1.8
|
|
||||
2015
|
91,290
|
|
|
59,350
|
|
|
134,054
|
|
|
193,404
|
|
|
2.1
|
|
||||
2016
|
60,627
|
|
|
19,243
|
|
|
100,161
|
|
|
119,404
|
|
|
2.0
|
|
||||
Subtotal
|
276,418
|
|
|
164,190
|
|
|
359,955
|
|
|
524,145
|
|
|
1.9
|
|
||||
Purchased U.S. bankruptcy receivables:
|
|
|
|
|
|
|
||||||||||||
2010
|
11,971
|
|
|
26,292
|
|
|
6
|
|
|
26,298
|
|
|
2.2
|
|
||||
2011
|
1,642
|
|
|
4,564
|
|
|
15
|
|
|
4,579
|
|
|
2.8
|
|
||||
2012
|
82,674
|
|
|
90,662
|
|
|
7,806
|
|
|
98,468
|
|
|
1.2
|
|
||||
2013
|
39,833
|
|
|
70,879
|
|
|
11,042
|
|
|
81,921
|
|
|
2.1
|
|
||||
2014
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
2015
|
24,372
|
|
|
2,277
|
|
|
25,731
|
|
|
28,008
|
|
|
1.1
|
|
||||
2016
|
33,777
|
|
|
370
|
|
|
39,531
|
|
|
39,901
|
|
|
1.2
|
|
||||
Subtotal
|
194,269
|
|
|
195,044
|
|
|
84,131
|
|
|
279,175
|
|
|
1.4
|
|
||||
Total
|
$
|
6,853,326
|
|
|
$
|
10,807,766
|
|
|
$
|
5,732,544
|
|
|
$
|
16,540,310
|
|
|
2.4
|
|
(1)
|
Adjusted for Put-Backs and Recalls.
|
(2)
|
Cumulative collections from inception through
September 30, 2016
, excluding collections on behalf of others.
|
(3)
|
ERC for purchased consumer receivables includes
$77.9 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. As of September 30, 2016, ERC for Zero Basis Portfolios include approximately $172.0 million for purchased consumer receivables in the United States. ERC for Zero Basis Portfolios for purchased consumer receivables in Europe and other geographies and purchased U.S. bankruptcy receivables were immaterial.
|
(2)
|
ERC for purchased consumer receivables includes
$77.9 million
related to accounts that converted to bankruptcy after purchase. The collection forecast of each pool is generally estimated up to 120 months in the United States and up to 180 months 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 three months data from October 1, 2016 to December 31, 2016.
|
(4)
|
Includes portfolios acquired in connection with certain business combinations.
|
|
Unamortized
Balance as of September 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
|
$
|
942
|
|
|
$
|
204,063
|
|
|
0.5
|
%
|
|
0.1
|
%
|
2008
|
3,631
|
|
|
227,753
|
|
|
1.6
|
%
|
|
0.4
|
%
|
||
2009
|
—
|
|
|
252,988
|
|
|
0.0
|
%
|
|
0.0
|
%
|
||
2010
|
1,902
|
|
|
345,401
|
|
|
0.6
|
%
|
|
0.2
|
%
|
||
2011
|
9,237
|
|
|
383,637
|
|
|
2.4
|
%
|
|
0.9
|
%
|
||
2012
|
39,101
|
|
|
466,559
|
|
|
8.4
|
%
|
|
3.8
|
%
|
||
2013
(2)
|
102,270
|
|
|
512,897
|
|
|
19.9
|
%
|
|
9.9
|
%
|
||
2014
(2)
|
205,503
|
|
|
519,221
|
|
|
39.6
|
%
|
|
19.9
|
%
|
||
2015
|
318,022
|
|
|
477,528
|
|
|
66.6
|
%
|
|
30.8
|
%
|
||
2016
|
350,650
|
|
|
378,369
|
|
|
92.7
|
%
|
|
34.0
|
%
|
||
Subtotal
|
1,031,258
|
|
|
3,768,416
|
|
|
27.4
|
%
|
|
100.0
|
%
|
||
Europe:
|
|
|
|
|
|
|
|
||||||
2013
(2)
|
286,472
|
|
|
619,079
|
|
|
46.3
|
%
|
|
25.4
|
%
|
||
2014
(2)
|
341,855
|
|
|
630,343
|
|
|
54.2
|
%
|
|
30.4
|
%
|
||
2015
(2)
|
289,982
|
|
|
423,359
|
|
|
68.5
|
%
|
|
25.8
|
%
|
||
2016
|
206,978
|
|
|
222,361
|
|
|
93.1
|
%
|
|
18.4
|
%
|
||
Subtotal
|
1,125,287
|
|
|
1,895,142
|
|
|
59.4
|
%
|
|
100.0
|
%
|
||
Other geographies:
|
|
|
|
|
|
|
|
||||||
2013
|
1,408
|
|
|
29,568
|
|
|
4.8
|
%
|
|
0.8
|
%
|
||
2014
|
61,055
|
|
|
88,227
|
|
|
69.2
|
%
|
|
34.5
|
%
|
||
2015
|
61,125
|
|
|
91,290
|
|
|
67.0
|
%
|
|
34.5
|
%
|
||
2016
|
53,454
|
|
|
60,627
|
|
|
88.2
|
%
|
|
30.2
|
%
|
||
Subtotal
|
177,042
|
|
|
269,712
|
|
|
65.6
|
%
|
|
100.0
|
%
|
||
Purchased U.S. bankruptcy receivables:
|
|
|
|
|
|
|
|
||||||
2012
|
7,187
|
|
|
82,674
|
|
|
8.7
|
%
|
|
11.1
|
%
|
||
2013
|
—
|
|
|
39,833
|
|
|
0.0
|
%
|
|
0.0
|
%
|
||
2014
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
2015
|
23,104
|
|
|
24,372
|
|
|
94.8
|
%
|
|
36.0
|
%
|
||
2016
|
33,953
|
|
|
33,777
|
|
|
100.5
|
%
|
|
52.9
|
%
|
||
Subtotal
|
64,244
|
|
|
180,656
|
|
|
35.6
|
%
|
|
100.0
|
%
|
||
Total
|
$
|
2,397,831
|
|
|
$
|
6,113,926
|
|
|
39.2
|
%
|
|
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)
|
$
|
50,679
|
|
|
$
|
22,923
|
|
|
$
|
3,004
|
|
|
$
|
1,770
|
|
|
$
|
78,376
|
|
2017
|
280,995
|
|
|
98,003
|
|
|
11,125
|
|
|
11,121
|
|
|
401,244
|
|
|||||
2018
|
262,744
|
|
|
143,417
|
|
|
51,893
|
|
|
15,787
|
|
|
473,841
|
|
|||||
2019
|
160,234
|
|
|
121,454
|
|
|
50,332
|
|
|
15,690
|
|
|
347,710
|
|
|||||
2020
|
104,287
|
|
|
99,685
|
|
|
28,081
|
|
|
12,962
|
|
|
245,015
|
|
|||||
2021
|
65,103
|
|
|
84,234
|
|
|
12,811
|
|
|
5,398
|
|
|
167,546
|
|
|||||
2022
|
43,609
|
|
|
75,068
|
|
|
10,178
|
|
|
720
|
|
|
129,575
|
|
|||||
2023
|
31,143
|
|
|
71,521
|
|
|
3,928
|
|
|
403
|
|
|
106,995
|
|
|||||
2024
|
20,153
|
|
|
81,898
|
|
|
2,601
|
|
|
393
|
|
|
105,045
|
|
|||||
2025
|
9,897
|
|
|
65,487
|
|
|
2,013
|
|
|
—
|
|
|
77,397
|
|
|||||
2026
|
2,414
|
|
|
67,618
|
|
|
1,076
|
|
|
—
|
|
|
71,108
|
|
|||||
2027
|
—
|
|
|
70,151
|
|
|
—
|
|
|
—
|
|
|
70,151
|
|
|||||
2028
|
—
|
|
|
70,232
|
|
|
—
|
|
|
—
|
|
|
70,232
|
|
|||||
2029
|
—
|
|
|
33,025
|
|
|
—
|
|
|
—
|
|
|
33,025
|
|
|||||
2030
|
—
|
|
|
16,855
|
|
|
—
|
|
|
—
|
|
|
16,855
|
|
|||||
2031
|
—
|
|
|
3,716
|
|
|
—
|
|
|
—
|
|
|
3,716
|
|
|||||
Total
|
$
|
1,031,258
|
|
|
$
|
1,125,287
|
|
|
$
|
177,042
|
|
|
$
|
64,244
|
|
|
$
|
2,397,831
|
|
(1)
|
2016 amount consists of three months data from October 1, 2016 to December 31, 2016.
|
|
Headcount as of September 30,
|
||||||||||
|
2016
|
|
2015
|
||||||||
|
Domestic
|
|
International
|
|
Domestic
(1)
|
|
International
|
||||
General & Administrative
|
915
|
|
|
2,152
|
|
|
924
|
|
|
1,795
|
|
Account Manager
|
266
|
|
|
3,229
|
|
|
274
|
|
|
2,644
|
|
Total
|
1,181
|
|
|
5,381
|
|
|
1,198
|
|
|
4,439
|
|
(1)
|
Headcount as of September 30, 2015 includes 80 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
|
|
||
Q3 2016
|
874
|
|
|
1,475,381
|
|
|
206,359
|
|
(1)
|
Includes portfolios acquired in connection with certain business combinations.
|
|
Nine Months Ended
September 30, |
||||||
|
2016
|
|
2015
|
||||
|
|
|
|
||||
|
(Unaudited)
|
||||||
Net cash provided by operating activities
|
$
|
85,268
|
|
|
$
|
63,381
|
|
Net cash used in investing activities
|
(91,613
|
)
|
|
(354,905
|
)
|
||
Net cash provided by financing activities
|
13,687
|
|
|
345,855
|
|
|
|
|
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+
|
|
First Amendment to Non-Employee Director Deferred Stock Compensation Plan (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.
|
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;
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b.
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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;
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c.
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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
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d.
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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
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5.
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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):
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a.
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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
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b.
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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.
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By:
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/
S
/ JONATHAN C. CLARK
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Jonathan C. Clark
Executive Vice President, Chief Financial Officer and Treasurer
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(1)
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The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
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(2)
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The information contained in the Report fairly presents, in all material respects, the consolidated financial condition and results of operations of the Company.
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/s/ Kenneth A. Vecchione
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Kenneth A. Vecchione
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President and Chief Executive Officer
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/s/ Jonathan C. Clark
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Jonathan C. Clark
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Executive Vice President,
Chief Financial Officer and Treasurer
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