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Finance Receivables and Obligations Collateralized by Finance Receivables
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6 Months Ended |
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| Notes, Loans and Financing Receivable, Net, Current [Abstract] |
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| Finance Receivables and Obligations Collateralized by Finance Receivables |
Finance Receivables and Obligations Collateralized by Finance Receivables AFC sells the majority of its U.S. dollar denominated finance receivables on a revolving basis and without recourse to a wholly-owned, bankruptcy remote, consolidated, special purpose subsidiary ("AFC Funding Corporation"), established for the purpose of purchasing AFC's finance receivables. A securitization agreement allows for the revolving sale by AFC Funding Corporation to a group of bank purchasers of undivided interests in certain finance receivables subject to committed liquidity. AFC Funding Corporation had committed liquidity of $1.25 billion for U.S. finance receivables at June 30, 2016. In March 2016, AFC and AFC Funding Corporation entered into Amendment No. 1 (the "Amendment") to the Sixth Amended and Restated Receivables Purchase Agreement (the “Receivables Purchase Agreement”). The Amendment increased AFC Funding's U.S. committed liquidity from $1.15 billion to $1.25 billion. The maturity date of the Receivables Purchase Agreement remains June 29, 2018. We capitalized approximately $0.8 million of costs in connection with the Amendment. We also have an agreement for the securitization of Automotive Finance Canada Inc.'s ("AFCI") receivables which expires on June 29, 2018. AFCI's committed facility is provided through a third party conduit (separate from the U.S. facility) and was C$125 million at June 30, 2016. The receivables sold pursuant to both the U.S. and Canadian securitization agreements are accounted for as secured borrowings. The following tables present quantitative information about delinquencies, credit losses less recoveries ("net credit losses") and components of securitized financial assets and other related assets managed. For purposes of this illustration, delinquent receivables are defined as receivables 31 days or more past due. | | | | | | | | | | | | | | | | | | | | Net Credit Losses Three Months Ended | | Net Credit Losses Six Months Ended | | Principal Amount of: | | | (in millions) | Receivables | | Receivables Delinquent | | | Floorplan receivables | $ | 1,730.1 |
| | $ | 8.8 |
| | $ | 5.3 |
| | $ | 10.6 |
| Other loans | 8.5 |
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| Total receivables managed | $ | 1,738.6 |
| | $ | 8.8 |
| | $ | 5.3 |
| | $ | 10.6 |
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| | | | | | | | | | | | | | | | | | | | Net Credit Losses Three Months Ended | | Net Credit Losses Six Months Ended | | Principal Amount of: | | | (in millions) | Receivables | | Receivables Delinquent | | | Floorplan receivables | $ | 1,635.5 |
| | $ | 7.0 |
| | $ | 4.1 |
| | $ | 7.3 |
| Other loans | 5.5 |
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| Total receivables managed | $ | 1,641.0 |
| | $ | 7.0 |
| | $ | 4.1 |
| | $ | 7.3 |
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As of June 30, 2016 and December 31, 2015, $1,719.7 million and $1,626.6 million, respectively, of finance receivables and a cash reserve of 1 percent of the obligations collateralized by finance receivables served as security for the obligations collateralized by finance receivables. Obligations collateralized by finance receivables consisted of the following: | | | | | | | | | | | | | Obligations collateralized by finance receivables, gross | $ | 1,241.7 |
| | $ | 1,201.2 |
| Unamortized securitization issuance costs | (10.5 | ) | | (12.2 | ) | Obligations collateralized by finance receivables | $ | 1,231.2 |
| | $ | 1,189.0 |
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Proceeds from the revolving sale of receivables to the bank facilities are used to fund new loans to customers. AFC, AFC Funding Corporation and AFCI must maintain certain financial covenants including, among others, limits on the amount of debt AFC and AFCI can incur, minimum levels of tangible net worth, and other covenants tied to the performance of the finance receivables portfolio. The securitization agreements also incorporate the financial covenants of our Credit Facility. At June 30, 2016, we were in compliance with the covenants in the securitization agreements. |
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- DefinitionThe entire disclosure for a transferor's continuing involvement in financial assets that it has transferred in a securitization or asset-backed financing arrangement, the nature of any restrictions on assets reported by an entity in its statement of financial position that relate to a transferred financial asset (including the carrying amounts of such assets), how servicing assets and servicing liabilities are reported, and (for securitization or asset-backed financing arrangements accounted for as sales) when a transferor has continuing involvement with the transferred financial assets and transfers of financial assets accounted for as secured borrowings, how the transfer of financial assets affects an entity's financial position, financial performance, and cash flows.
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