general economic and other factors beyond our control.

We have ~~substantially eliminated~~curtailed our U.S. credit card marketing efforts and have aggressively reduced credit lines and closed credit card accounts. In addition, the general economic downturn experienced in 2008 and 2009 significantly impacted not just the level of usage of our credit products by our customers but also levels of payments and delinquencies and other performance metrics. As a result, our credit card ~~business~~operation currently is ~~contracting, and until market conditions more substantially reverse, we do not expect overall net growth~~contracting.

Reliance upon relationships with a few large retailers in our ~~Credit Card~~point-of-sale finance operations may adversely affect our revenues and ~~Other Investments~~operating results from these operations. Our three largest retail partners accounted for over 82.0% of our point-of-sale finance and rental revenues in 2013. Although we are adding new retail partners on a regular basis, it is likely that we will continue to derive a significant portion of this operations’ revenue from a relatively small number of partners in the future. If a significant partner reduces or terminates its relationship with us, these operations’ revenue could decline significantly and our ~~Auto Finance segments.~~ operating results and financial condition could be harmed.

We Operate in a Heavily Regulated Industry

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Changes in bankruptcy, privacy or other consumer protection laws, or to the prevailing interpretation thereof, may expose us to litigation, adversely affect our ability to collect our loans and fees receivable, or otherwise adversely affect our operations. Similarly, regulatory changes could adversely affect our ability or willingness to market credit cards and other products and services to our customers. The accounting rules that govern our business are exceedingly complex, difficult to apply and in a state of flux. As a result, how we value our receivables and otherwise account for our business is subject to change depending upon the changes in, and, interpretation of, those rules. Some of these issues are discussed more fully below.

Reviews and enforcement actions by regulatory authorities under banking and consumer protection laws and regulations may result in changes to our business practices, may make collection of account balances more difficult or may expose us to the risk of fines, restitution and litigation.Our operations and the operations of the issuing banks through which we originate some of our credit products are subject to the jurisdiction of federal, state and local government authorities, including the CFPB, the SEC, the FDIC, the Office of the Comptroller of the Currency, the FTC, U.K. banking authorities, state regulators having jurisdiction over financial institutions and debt origination and collection and state attorneys general. Our business practices, including the terms of our products and our marketing, servicing and collection practices, are subject to both periodic and special reviews by these regulatory and enforcement authorities. These reviews can range from investigations of specific consumer complaints or concerns to broader inquiries into our practices generally. If as part of these reviews the regulatory authorities conclude that we are not complying with applicable law, they could request or impose a wide range of remedies including requiring changes in advertising and collection practices, changes in the terms of our products (such as decreases in interest rates or fees), the imposition of fines or penalties, or the paying of restitution or the taking of other remedial action with respect to affected customers. They also could require us to stop offering some of our products, either nationally or in selected states. To the extent that these remedies are imposed on the issuing banks through which we originate credit products, under certain circumstances we are responsible for the remedies as a result of our indemnification obligations with those banks. We also may elect to change practices or products that we believe are compliant with law in order to respond to regulatory concerns. Furthermore, negative publicity relating to any specific inquiry or investigation could hurt our ability to conduct business with various industry participants or to attract new accounts and could negatively affect our stock price, which would adversely affect our ability to raise additional capital and would raise our costs of doing business.

If any deficiencies or violations of law or regulations are identified by us or asserted by any regulator, or if the CFPB, the FDIC, the FTC or any other regulator requires us to change any of our practices, the correction of such deficiencies or violations, or the making of such changes, could have a materially adverse effect on our financial condition, results of operations or business. In addition, whether or not we modify our practices when a regulatory or enforcement authority requests or requires that we do so, there is a risk that we or other industry participants may be named as defendants in litigation involving alleged violations of federal and state laws and regulations, including consumer protection laws. Any failure to comply with legal requirements by us or the issuing banks through which we originate credit products in connection with the issuance of those products, or by us or our agents as the servicer of our accounts, could significantly impair our ability to collect the full amount of the account balances. The institution of any litigation of this nature, or any judgment against us or any other industry participant in any litigation of this nature, could adversely affect our business and financial condition in a variety of ways.

Our rent-to-own operations are regulated by and subject to the requirements of various federal and state laws and regulations. These laws and regulations which may be amended or supplemented or interpreted by the courts from time to time, could expose us to significant compliance costs or burdens or force us to change our business practices in a manner that may be materially adverse to our operations, prospects or financial condition. Currently, 47 states and the District of Columbia specifically regulate rent-to-own transactions such as those conducted in our rent-to-own programs. At the present time, no federal law specifically regulates the rent-to-own industry, although federal legislation to regulate the industry has been proposed from time to time. Any adverse changes in existing laws, or the passage of new adverse legislation by states or the federal government could materially increase both our costs of complying with laws and the risk that we could be sued or be subject to government sanctions if we are not in compliance. In addition, new burdensome legislation might force us to change our business model and might reduce the economic potential of our rent-to-own product offerings.

Most of the states that regulate rent-to-own transactions have enacted disclosure laws that require rent-to-own companies to disclose to their customers the total number of payments, total amount and timing of all payments to acquire ownership of any item, any other charges that may be imposed by them and miscellaneous other items. The more restrictive state lease purchase laws limit the total amount that a customer may be charged for an item, or regulate the amount of deemed “interest” that rent-to-own companies may charge on rent-to-own transactions, generally defining “interest” as lease fees paid in excess of the “retail” price of the goods.

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There has been increased attention in the United States, at both the state and federal levels, on consumer debt transactions in general, which may result in an increase in legislative and regulatory efforts directed at the rent-to-own industry. We cannot guarantee that the federal government or states will not enact additional or different legislation or regulation that would be disadvantageous or otherwise materially adverse to us.

In addition to the risk of lawsuits related to the laws that regulate rent-to-own and consumer lease transactions, we or our rent-to-own partners could be subject to lawsuits alleging violations of federal and state laws and regulations and consumer tort law, including fraud, consumer protection, information security and privacy laws, because of the consumer-oriented nature of the rent-to-own industry. A large judgment against us could adversely affect our financial condition and results of operations. Moreover, an adverse outcome from a lawsuit, even one against one of our competitors, could result in changes in the way we and others in the industry do business, possibly leading to significant costs or decreased revenues or profitability.

We are dependent upon banks to issue credit cards and provide certain other credit products. Our credit card and some of our other credit product programs are dependent on our issuing bank relationships, and their regulators could at any time limit their ability to issue some or all products on our behalf, or that we service on their behalf, or to modify those products significantly. Any significant interruption of those relationships would result in our being unable to originate new receivables and other credit products. It is possible that a regulatory position or action taken with respect to any of the issuing banks through which we have originated credit products or for whom we service receivables might result in the bank’s inability or unwillingness to originate future credit products on our behalf or in partnership with us. In the current state, such a disruption of our issuing bank relationships principally would adversely affect our ability to conduct credit card issuances in the ~~U.K,~~U.K., and to grow our ~~private label merchant credit~~point-of-sale finance product offerings and underlying receivables.

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Changes to consumer protection laws or changes in their interpretation may impede collection efforts or otherwise adversely impact our business practices. Federal and state consumer protection laws regulate the creation and enforcement of consumer credit card receivables and other loans. Many of these laws (and the related regulations) are focused on sub-prime lenders and are intended to prohibit or curtail industry-standard practices as well as non-standard practices. For instance, Congress enacted legislation that regulates loans to military personnel through imposing interest rate and other limitations and requiring new disclosures, all as regulated by the Department of Defense. Similarly, in 2009 Congress enacted legislation that required changes to a variety of marketing, billing and collection practices, and the Federal Reserve recently adopted significant changes to a number of practices through its issuance of regulations. Additionally, the CFPB is expected to be an active issuer of credit-related regulations in the near-term, and it is impossible to predict the scope or nature of those potential regulations. While our practices are in compliance with these changes, some of the changes (e.g., limitations on the ability to assess up-front fees) have significantly affected the viability of certain of our prior ~~(in particular our lower-tier)~~ product offerings within the U.S. Changes in the consumer protection laws could result in the following:

receivables not originated in compliance with law (or revised interpretations) could become unenforceable and uncollectible under their terms against the obligors;

we may be required to credit or refund previously collected amounts;

certain fees and finance charges could be limited, prohibited or restricted, which would reduce the profitability of certain accounts;

certain of our collection methods could be prohibited, forcing us to revise our practices or adopt more costly or less effective practices;

limitations on the content of marketing materials could be imposed that would result in reduced success for our marketing efforts;

~~federal and state laws may limit~~limitations on our ability to recover on charged-off receivables regardless of any act or omission on our part;

some of our products and services could be banned in certain states or at the federal level;

federal or state bankruptcy or debtor relief laws could offer additional protections to customers seeking bankruptcy protection, providing a court greater leeway to reduce or discharge amounts owed to us; and

a reduction in our ability or willingness to lend to certain individuals, such as military personnel.

Material regulatory developments are likely to adversely impact our business and results from operations.

Our Automobile Lending Activities Involve Risks in Addition to Others Described Herein

Automobile lending exposes us not only to most of the risks described above but also to additional risks, including the regulatory scheme that governs installment loans and those attendant to relying upon automobiles and their repossession and liquidation value as collateral. In addition, our most significant active Auto Finance segment ~~business~~operation acquires loans on a wholesale basis from used car dealers, for which we rely upon the legal compliance and credit determinations by those dealers.

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Declines in automobile sales as we saw in recent years can cause declines in the overall demand for automobile loans. While currently recovering fairly significantly, sales of both new and used cars declined precipitously in recent years. While the unavailability of funding may have had a greater impact on our business, the decline in demand in recent years was consequential as well because it adversely affected the volume of our lending transactions and our recoveries of repossessed vehicles at auction. Any such future declines in demand will adversely impact our business.

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Funding for automobile lending ismay become difficult to obtain and expensive. In large part due to market concerns regarding sub-prime lending, it is difficult to find lenders willing to fund our automobile lending activities. Our inability to obtain debt facilities with desirable terms (e.g., interest rates and advance rates) and the other capital necessary to fund growth within our Auto Finance segment will cause periods (like our current period) of liquidations in our Auto Finance segment receivables and reductions in profitability and returns on equity. Although we did not experience any such adverse effects when our CAR facility began its required amortization period in June 2011 and was repaid in July 2011 (and although any concerns of such adverse effects are now abated given the new lending facility CAR obtained in October 2011), in the event we ~~may not be able~~are unable to renew or replace any ~~future~~ Auto Finance segment facilities that bear refunding or refinancing risks when they become due, our Auto Finance segment could experience significant liquidity constraints and diminution in reported asset values as lenders retain significant cash flows within underlying structured financings or otherwise under security arrangements for repayment of their loans. If we cannot renew or replace future facilities or otherwise are unduly constrained from a liquidity perspective, we may choose to sell part or all of our auto loan portfolios, possibly at less than favorable prices.

Our automobile lending business is dependent upon referrals from dealers. Currently we provide substantially all of our automobile loans only to or through used car dealers. Providers of automobile financing have traditionally competed based on the interest rate charged, the quality of credit accepted and the flexibility of loan terms offered. In order to be successful, we not only ~~will~~ need to be competitive in these areas, but also ~~will~~ need to establish and maintain good relations with dealers and provide them with a level of service greater than what they can obtain from our competitors.

The financial performance of our automobile loan portfolio is in part dependent upon the liquidation of repossessed automobiles. In the event of certain defaults, we may repossess automobiles and sell repossessed automobiles at wholesale auction markets located throughout the U.S. Auction proceeds from these types of sales and other recoveries rarely are sufficient to cover the outstanding balances of the contracts; where we experience these shortfalls, we will experience credit losses. Decreased auction proceeds resulting from depressed prices at which used automobiles may be sold ~~in periods of economic slowdown or recession have resulted~~would result in higher credit losses for us. Additionally, higher gasoline prices (like those experienced during 2008) tend to decrease the auction value of certain types of vehicles, such as SUVs.

Repossession of automobiles entails the risk of litigation and other claims. Although we have contracted with reputable repossession firms to repossess automobiles on defaulted loans, it is not uncommon for consumers to assert that we were not entitled to repossess an automobile or that the repossession was not conducted in accordance with applicable law. These claims increase the cost of our collection efforts and, if correct, can result in awards against us.

We Routinely Explore Various Opportunities to Grow Our Business, to Make Investments and to Purchase and Sell Assets

We routinely consider acquisitions of, or investments in, portfolios and other assets as well as the sale of portfolios and portions of our business. There are a number of risks attendant to any acquisition, including the possibility that we will overvalue the assets to be purchased and that we will not be able to produce the expected level of profitability from the acquired business or assets. Similarly, there are a number of risks attendant to sales, including the possibility that we will undervalue the assets to be sold. As a result, the impact of any acquisition or sale on our future performance may not be as favorable as expected and actually may be adverse.

Portfolio purchases may cause fluctuations in our reported Credit ~~Card~~ and Other Investments segment’s managed receivables data, which may reduce the usefulness of this data in evaluating our business. Our reported Credit ~~Card~~ and Other Investments segment managed receivables data may fluctuate substantially from quarter to quarter as a result of recent and future credit card portfolio acquisitions. As of December 31, ~~2012,~~2013, credit card portfolio acquisitions accounted for ~~38.8%~~34.8% of our total Credit ~~Card~~ and Other Investments segment managed receivables portfolio based on our ownership percentages.

Receivables included in purchased portfolios are likely to have been originated using credit criteria different from the criteria of issuing bank partners that have originated accounts on our behalf. Receivables included in any particular purchased portfolio may have significantly different delinquency rates and charge-off rates than the receivables previously originated and purchased by us. These receivables also may earn different interest rates and fees as compared to other similar receivables in our receivables portfolio. These variables could cause our reported managed receivables data to fluctuate substantially in future periods making the evaluation of our business more difficult.

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Any acquisition or investment that we make will involve risks different from and in addition to the risks to which our business is currently exposed. These include the risks that we will not be able to integrate and operate successfully new businesses, that we will have to incur substantial indebtedness and increase our leverage in order to pay for the acquisitions, that we will be exposed to, and have to comply with, different regulatory regimes and that we will not be able to apply our traditional analytical framework (which is what we expect to be able to do) in a successful and value-enhancing manner.

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Other Risks of Our Business

We are a holding company with no operations of our own. As a result, our cash flow and ability to service our debt is dependent upon distributions from our subsidiaries. Our ability to service our debt is dependent upon the cash flows and operating earnings of our subsidiaries. The distribution of subsidiary earnings, or advances or other distributions of funds by subsidiaries to us, all of which are subject to statutory and could be subject to contractual restrictions, are contingent upon the subsidiaries’ cash flows and earnings and are subject to various business and debt covenant considerations.

The resolution of uncertain tax positions may be unfavorable. Our businesses and the tax accounting for our businesses are very complex, thereby giving rise to a number of tax positions that are under consideration, and in some cases under dispute, in audits of our operations by various taxing authorities, including the Internal Revenue Service at the federal level with respect to net operating losses that we incurred in 2007 and 2008 and that we carried back to obtain tentative refunds of federal taxes paid in earlier years dating back to 2003. It is possible that a court of ultimate jurisdiction may resolve tax positions in favor of the Internal Revenue Service or that we may ultimately settle with the Internal Revenue Service on one or more uncertain tax positions in a manner that differs from the liabilities that we have recorded associated with such positions under our recognition and measurement determinations. The amounts involved in these audits, particularly the amounts of net operating losses that we carried back, are material. To the extent that our ultimate resolution results in more liability than we have recorded, we could experience a material adverse effect on our results of operations and liquidity.

Although our point-of-sale finance offerings are an important part of our strategic plan, we have limited operating history with these offerings. We only recently expanded into our point-of-sale finance offerings, including our rent-to-own offerings. As with many early stage endeavors, these product offerings may experience under-capitalization, delays, lack of funding, and many other problems, delays, and expenses, many of which are beyond our control. These include, but are not limited to:

inability to establish profitable strategic relationships with merchants;

inability to raise sufficient capital to fund our anticipated growth in this area; and

competition from larger and more established competitors, such as banks and finance companies.

Unless we obtain a bank charter, we cannot issue credit cards other than through agreements with banks. Because we do not have a bank charter, we currently cannot issue credit cards other than through agreements with banks. Unless we obtain a bank or credit card bank charter, we will continue to rely upon banking relationships to provide for the issuance of credit cards to our customers. Even if we obtain a bank charter, there may be restrictions on the types of credit that the bank may extend. Our various issuing bank agreements have scheduled ~~expirations~~expiration dates. If we are unable to extend or execute new agreements with our issuing banks at the expirations of our current agreements with them, or if our existing or new agreements with our issuing banks were terminated or otherwise disrupted, there is a risk that we would not be able to enter into agreements with an alternate provider on terms that we consider favorable or in a timely manner without disruption of our business.

We are party to litigation. We are defendants in certain legal proceedings. This includes litigation relating to our former retail micro-loan operations and other litigation customary for a business of our nature. In each case we believe that we have meritorious defenses or that the positions we are asserting otherwise are correct. However, adverse outcomes are possible in these matters, and we could decide to settle one or more of our litigation matters in order to avoid the ongoing cost of litigation or to obtain certainty of outcome. Adverse outcomes or settlements of these matters could require us to pay damages, make restitution, change our business practices or take other actions at a level, or in a manner, that would adversely impact our business.

We face heightened levels of economic risk associated with new investment activities. We recently have made a number of investments in businesses that are not directly allied to our traditional lending activities to, or associated with, the underserved consumer credit market. In addition, some of these investments that we have made and may make in the future are or will be in debt or equity securities of businesses over which we exert little or no control, which likely exposes us to greater risks of loss than investments in activities and operations that we control. While we make only those investments we believe have the potential to provide a favorable return, because some of the investments are outside of our core areas of expertise, they

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entail risks beyond those described elsewhere in this Report. As occurred with respect to certain such investments in 2012 and 2011, ~~as noted above,~~ these risks could result in the loss of part or all of our investments.

Because we outsource account-processing functions that are integral to our business, any disruption or termination of that outsourcing relationship could harm our business. We generally outsource account and payment processing, and in ~~2012,~~2013, we paid Total System Services, Inc. ~~$7.8~~$5.3 million for these services. If these agreements were not renewed or were terminated or the services provided to us were otherwise disrupted, we would have to obtain these services from an alternative provider. There is a risk that we would not be able to enter into a similar agreement with an alternate provider on terms that we consider favorable or in a timely manner without disruption of our business.

Unauthorized or unintentional disclosure of sensitive or confidential customer data could expose us to protracted and costly litigation, and civil and criminal penalties. To conduct our business, we are required to manage, use, and store large amounts of personally identifiable information, consisting primarily of confidential personal and financial data regarding our ~~customers.~~customers across all operations areas. We also depend on our IT networks and systems, and those of third parties, to process, store, and transmit this information. As a result, we are subject to numerous U.S. federal and state laws designed to protect this information. Security breaches involving our files and infrastructure could lead to unauthorized disclosure of confidential information.

We take a number of measures to ensure the security of our hardware and software systems and customer information. Advances in computer capabilities, new discoveries in the field of cryptography or other developments may result in the technology used by us to protect data being breached or compromised. In the past, consumer finance companies have been the subject of sophisticated and highly targeted attacks on their information technology. An increasing number of websites have reported breaches of their security.

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If any person, including our employees or those of third-party vendors, negligently disregards or intentionally breaches our established controls with respect to such data or otherwise mismanages or misappropriates that data, we could be subject to costly litigation, monetary damages, fines, and/or criminal prosecution. We do not maintain cyber-security insurance liability coverage and as such we are exposed to the financial risk and losses associated with such incidents. Any unauthorized disclosure of personally identifiable information could subject us to liability under data privacy laws. Further, under credit card rules and our contracts with our card processors, if there is a breach of credit card information that we store, we could be liable to the credit card issuing banks for their cost of issuing new cards and related expenses. In addition, if we fail to follow credit card industry security standards, even if there is no compromise of customer information, we could incur significant fines. Security breaches could also harm our reputation with our customers, which could potentially cause decreased revenues, the loss of existing merchant credit partners, or difficulty in adding new merchant credit partners.

Internet and data security breaches also could impede us from originating loans over the Internet, cause us to lose customers or otherwise damage our reputation or business. Consumers generally are concerned with security and privacy, particularly on the Internet. As part of our growth strategy, we have originated loans over the Internet. The secure transmission of confidential information over the Internet is essential to maintaining customer confidence in our products and services offered online.

Advances in computer capabilities, new discoveries or other developments could result in a compromise or breach of the technology used by us to protect customer application and transaction data transmitted over the Internet. In addition to the potential for litigation and civil penalties described above, security breaches could damage our reputation and cause customers to become unwilling to do business with us, particularly over the Internet. Any publicized security problems could inhibit the growth of the Internet as a means of conducting commercial transactions. Our ability to solicit new loans over the Internet would be severely impeded if consumers become unwilling to transmit confidential information online.

Also, a party that is able to circumvent our security measures could misappropriate proprietary information, cause interruption in our operations, damage our computers or those of our users, or otherwise damage our reputation and business.

Regulation in the areas of privacy and data security could increase our costs. We are subject to various regulations related to privacy and data security/breach, and we could be negatively impacted by these regulations. For example, we are subject to the safeguards guidelines under the Gramm-Leach-Bliley Act. The safeguards guidelines require that each financial institution develop, implement and maintain a written, comprehensive information security program containing safeguards that are appropriate to the financial institution’s size and complexity, the nature and scope of the financial institution’s activities and the sensitivity of any customer information at issue. Broad-ranging data security laws that affect our business also have been adopted by various states. Compliance with these laws regarding the protection of customer and employee data could result in higher compliance and technology costs for us, as well as potentially significant fines and penalties for non-compliance.

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In addition to the foregoing enhanced data security requirements, various federal banking regulatory agencies, and as many as 46 states, the District of Columbia, Puerto Rico and the Virgin Islands, have enacted data ~~breach~~security regulations and laws requiring varying levels of customer notification in the event of a security breach.

Also, federal legislators and regulators are increasingly pursuing new guidelines, laws and regulations that, if adopted, could further restrict how we collect, use, share and secure customer information, which could impact some of our current or planned business initiatives.

Unplanned system interruptions or system failures could harm our business and reputation. Any interruption in the availability of our transactional processing services due to hardware and operating system failures will reduce our revenues and profits. Any unscheduled interruption in our services results in an immediate, and possibly substantial, loss of revenues. Frequent or persistent interruptions in our services could cause current or potential members to believe that our systems are unreliable, leading them to switch to our competitors or to avoid our websites or services, and could permanently harm our reputation.

Although our systems have been designed around industry-standard architectures to reduce downtime in the event of outages or catastrophic occurrences, they remain vulnerable to damage or interruption from earthquakes, floods, fires, power loss, telecommunication failures, computer viruses, computer denial-of-service attacks, and similar events or disruptions. Some of our systems are not fully redundant, and our disaster recovery planning may not be sufficient for all eventualities. Our systems also are subject to break-ins, sabotage, and intentional acts of vandalism. Despite any precautions we may take, the occurrence of a natural disaster, a decision by any of our third-party hosting providers to close a facility we use without adequate notice for financial or other reasons, or other unanticipated problems at our hosting facilities could cause system interruptions, delays, and loss of critical data, and result in lengthy interruptions in our services. Our business interruption insurance may not be sufficient to compensate us for losses that may result from interruptions in our service as a result of system failures.

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Because of our loan to a small surface coal mining operation (which, due to loan agreement modifications, we were required to consolidate into our financial statements in 2011, but which has since ceased mining operations), we could be subject to (i) significant administrative, civil, and criminal financial and other penalties if this operation does not comply with environmental, health and safety regulations and (ii) liability to third parties for environmental contamination. The coal mining industry is subject to strict regulation by federal, state and local authorities with respect to matters such as employee health and safety, permitting and licensing requirements, the protection of the environment, the protection of historic and natural resources, plants and wildlife, reclamation and restoration of mining properties after mining is completed, and the effects that mining has on groundwater quality and availability. Federal and state authorities inspect coal mines, and in the aftermath of the April 5, 2010 accident at an underground mine in Central Appalachia, mining operations have experienced, and may in the future continue to experience, a significant increase in the frequency and scope of these inspections. Numerous governmental permits and approvals are required for mining operations. Mining operations are required to prepare and present to federal, state and/or local authorities data pertaining to the effect or impact that any proposed exploration for or production of coal may have upon the environment.

The costs, liabilities and requirements associated with the laws and regulations related to these and other environmental matters may be costly and time-consuming. Failure to comply with these laws and regulations may result in the assessment of administrative, civil, and criminal financial and other penalties, the imposition of cleanup and site restoration costs and liens and other enforcement measures.

We also could be subject to claims by third parties under federal and state statutes and/or common law doctrines resulting from damage to the environment or historic or natural resources or exposure to hazardous substances on the mine property or elsewhere. Liability for environmental contamination may be without regard to fault and may be strict, joint and several, so that we may be held responsible for the entire amount of the contamination or related damages. These and other similar unforeseen impacts that the former mining operation may have on the environment, as well as exposures to hazardous substances or wastes associated with the former mining operation, could result in costs and liabilities that could adversely affect us.

Even though this former coal mining operation ceased mining operations as of December 31, 2012 and has always been owned and primarily operated by third parties, our financial relationship with this former coal mining operation could subject us to these types of claims and penalties, particularly if these matters were not properly addressed by the owners and operators of the operation. If we are held responsible for sanctions, costs and liabilities in respect of these matters, our profitability could be materially and adversely affected.

~~Taxing authorities routinely review our tax returns and could challenge the positions that we have taken.~~ ~~Our businesses and the tax accounting for our businesses are very complex, thereby giving rise to a number~~

Table of tax positions that are under consideration, and in some cases under dispute, in audits of our operations by various taxing authorities, including the Internal Revenue Service at the federal level with respect to net operating losses that we incurred in 2007 and 2008 and that we carried back to obtain tentative refunds of federal taxes paid in earlier years dating back to 2003. It is possible that a court of ultimate jurisdiction may resolve tax positions in favor of the Internal Revenue Service or that we may ultimately settle with the Internal Revenue Service on one or more uncertain tax positions in a manner that differs from the liabilities that we have recorded associated with such positions under our recognition and measurement determinations. The amounts involved in these audits, particularly the amounts of net operating losses that we carried back, are material. To the extent that our ultimate resolution results in more liability than we have recorded, we could experience a material adverse effect on our results of operations and liquidity.Contents

Climate change and related regulatory responses may impact our business. Climate change as a result of emissions of greenhouse gases is a significant topic of discussion and may generate federal and other regulatory ~~responses in the near future, including the imposition of a so-called “cap and trade” system.~~responses. It is impracticable to predict with any certainty the impact on our business of climate change or the regulatory responses to it, although we recognize that they could be significant. The most direct impact is likely to be an increase in energy costs, which would adversely impact consumers and their ability to incur and repay indebtedness. However, it is too soon for us to predict with any certainty the ultimate impact, either directionally or quantitatively, of climate change and related regulatory responses.

Risks Relating to an Investment in Our ~~Common Stock~~Securities

The price of our common stock may fluctuate significantly, and this may make it difficult for you to resell your shares of our common stock when you want or at prices you find attractive. The price of our common stock on the NASDAQ Global Select Market constantly changes. We expect that the market price of our common stock will continue to fluctuate. The market price of our common stock may fluctuate in response to numerous factors, many of which are beyond our control. These factors include the following:

actual or anticipated fluctuations in our operating results;

changes in expectations as to our future financial performance, including financial estimates by securities analysts and investors;

the overall financing environment, which is critical to our value;

the operating and stock performance of our competitors and other sub-prime lenders;

announcements by us or our competitors of new products or services or significant contracts, acquisitions, strategic partnerships, joint ventures or capital commitments;

changes in interest rates;

the announcement of enforcement actions or investigations against us or our competitors or other negative publicity relating to us or our industry;

changes in ~~accounting principles generally accepted in the United States of America (“GAAP”),~~GAAP, laws, regulations or the interpretations thereof that affect our various business activities and segments;

general domestic or international economic, market and political conditions;

additions or departures of key personnel; and

future sales of our common stock and the transfer or cancellation of shares of common stock pursuant to ~~the~~a share lending agreement.

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In addition, the stock markets from time to time experience extreme price and volume fluctuations that may be unrelated or disproportionate to the operating performance of companies. These broad fluctuations may adversely affect the trading price of our common stock, regardless of our actual operating performance.

Future sales of our common stock or equity-related securities in the public market, including sales of our common stock pursuant to share lending agreements or short sale transactions by purchasers of convertible senior notes, could adversely affect the trading price of our common stock and our ability to raise funds in new stock offerings. Sales of significant amounts of our common stock or equity-related securities in the public market, including sales pursuant to share lending agreements, or the perception that such sales will occur, could adversely affect prevailing trading prices of our common stock and could impair our ability to raise capital through future offerings of equity or equity-related securities. Future sales of shares of common stock or the availability of shares of common stock for future sale, including sales of our common stock in short sale transactions by purchasers of our convertible senior notes, may have a material adverse effect on the trading price of our common stock.

~~Our business is going through a substantial period of transition and we are exploring various options.~~ We are exploring various options designed to produce the greatest benefit possible for our shareholders. Currently these options include share repurchases, and we may consider additional options in the future. On December 31, 2009, we paid a $.50 per share dividend to our shareholders, and a tender offer that we completed on May 14, 2010 resulted in our repurchase of 12,180,604 shares of our common stock for $85.3 million, in addition to our repurchase of $24.8 million in face amount of our 3.625% convertible senior notes for $14.7 million. Further, in a tender offer completed in April 2011, we repurchased 13,125,000 shares of our common stock at a purchase price of $8.00 per share for an aggregate cost of $105.0 million. Finally, we completed a tender offer in September 2012, whereby we repurchased 8,250,000 shares of our common stock at a purchase price of $10.00 per share for an aggregate cost of $82.5 million.

We have the ability to issue preferred ~~shares,~~stock, warrants, convertible debt and other securities without shareholder approval. Our common ~~shares~~stock may be subordinate to classes of preferred ~~shares~~stock issued in the future in the payment of dividends and other distributions made with respect to common ~~shares,~~stock, including distributions upon liquidation or dissolution. Our articles of incorporation permit our Board of Directors to issue preferred ~~shares~~stock without first obtaining shareholder approval. If we issued preferred ~~shares,~~stock, these additional securities may have dividend or liquidation preferences senior to the common ~~shares.~~stock. If we issue convertible preferred ~~shares,~~stock, a subsequent conversion may dilute the current common shareholders’ interest. We have similar abilities to issue convertible debt, warrants and other equity securities.

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Our executive officers, directors and parties related to them, in the aggregate, control a majority of our ~~voting~~common stock and may have the ability to control matters requiring shareholder approval. Our executive officers, directors and parties related to them own a large enough ~~stake in us~~share of our common stock to have an influence on, if not control of, the matters presented to shareholders. As a result, these shareholders may have the ability to control matters requiring shareholder approval, including the election and removal of directors, the approval of significant corporate transactions, such as any reclassification, reorganization, merger, consolidation or sale of all or substantially all of our assets and the control of our management and affairs. Accordingly, this concentration of ownership may have the effect of delaying, deferring or preventing a change of control of us, impede a merger, consolidation, takeover or other business combination involving us or discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of us, which in turn could have an adverse effect on the market price of our common stock.

The right to receive payments on our convertible senior notes is effectively subordinated to the rights of our existing and future secured creditors. Our convertible senior notes are unsecured and therefore will be effectively subordinated to any of our existing and future secured obligations to the extent of the value of the assets securing such obligations. As a result, in the event of a bankruptcy, liquidation, dissolution, reorganization or similar proceeding of our company, our assets will be available to satisfy obligations of our secured debt before any payment may be made on the convertible senior notes. To the extent that such assets cannot satisfy in full our secured debt, the holders of such debt would have a claim for any shortfall that would rank equally in right of payment (or effectively senior if the debt were issued by a subsidiary) with the convertible senior notes. In such an event, we may not have sufficient assets remaining to pay amounts on any or all of the convertible senior notes.

As of December 31, 2013, Atlanticus Holding Corporation, excluding its subsidiaries, had outstanding $33.7 million of secured indebtedness, which would rank senior in right of payment to the notes; $160.1 million of senior unsecured indebtedness, which includes the convertible senior notes (at face value) and the interest accrued thereon and would rank equal in right of payment to the convertible senior notes, and no subordinated indebtedness. Included in senior secured indebtedness are certain guarantees we have executed in favor of our subsidiaries.

Our convertible senior notes are junior to the indebtedness of our subsidiaries. Our convertible senior notes are structurally subordinated to the existing and future claims of our subsidiaries’ creditors. Holders of the convertible senior notes are not creditors of our subsidiaries. Any claims of holders of the convertible senior notes to the assets of our subsidiaries derive from our own equity interests in those subsidiaries. Claims of our subsidiaries’ creditors will generally have priority as to the assets of our subsidiaries over our own equity interest claims and will therefore have priority over the holders of the convertible senior notes. Consequently, the convertible senior notes are effectively subordinate to all liabilities, whether or not secured, of any of our subsidiaries and any subsidiaries that we may in the future acquire or establish. Our subsidiaries’ creditors also may include general creditors and taxing authorities. As of December 31, 2013, our subsidiaries had total liabilities of approximately $233.3 million (including the $33.7 million of senior secured indebtedness mentioned above), excluding intercompany indebtedness. In addition, in the future, we may decide to increase the portion of our activities that we conduct through subsidiaries.

Note Regarding Risk Factors

The risk factors presented above are all of the ones that we currently consider material. However, they are not the only ones facing our company. Additional risks not presently known to us, or which we currently consider immaterial, may also adversely affect us. There may be risks that a particular investor views differently from us, and our analysis might be wrong. If any of the risks that we face actually occur, our business, financial condition and operating results could be materially adversely affected and could differ materially from any possible results suggested by any forward-looking statements that we have made or might make. In such case, the trading price of our common stock or other securities could decline, and you could lose part or all of your investment. We expressly disclaim any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.



ITEM 1B.	UNRESOLVED STAFF COMMENTS

None

~~None.~~

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ITEM 2.	PROPERTIES

We lease our principal executive offices (which include the primary operations of our Credit ~~Cards~~ and Other Investments segment), and our lease is for 335,000 square feet, of which we have sub-leased approximately 220,000 square feet. Our Auto Finance segment principally operates out of Lake Mary, Florida in approximately 9,600 square feet of leased space, with additional offices and branch locations in various states. Our operations in the U.K. include approximately ~~2,700~~2,880 of aggregate square feet of leased space in Crawley and London. ~~Currently, we have excess facility capacity that we are trying to sublease. As such, we~~We believe that our facilities are suitable to our business and that we will be able to lease or purchase ~~such~~ additional facilities as our needs, if any, require.



ITEM 3.	LEGAL PROCEEDINGS

We are involved in various legal proceedings that are incidental to the conduct of our business. ~~The most significant of these~~There are ~~described below.~~currently no pending material legal proceedings.

~~Certain of our subsidiaries are defendants in a purported class action lawsuit entitled~~ ~~Knox, et al., vs. First Southern Cash Advance, et al.~~, No. 5 CV 0445, filed in the Superior Court of New Hanover County, North Carolina, on February 8, 2005. The plaintiffs allege that in conducting a so-called “payday lending” business, certain subsidiaries within our Retail Micro-Loans segment (the operations of which were sold in October 2011, subject to our retention of liability for this litigation) violated various laws governing consumer finance, lending, check cashing, trade practices and loan brokering. The plaintiffs further allege that certain subsidiaries were the alter ego of our former Retail Micro Loans segment subsidiaries and are liable for their actions. The plaintiffs are seeking damages of up to $75,000 per class member, and attorney’s fees. These claims are similar to those that have been asserted against several other market participants in transactions involving small-balance, short-term loans made to consumers in North Carolina. On January 23, 2012, among other orders, the trial court denied the defendants’ motion to compel arbitration, and granted the plaintiffs’ motion for class certification. We are vigorously defending this lawsuit.



ITEM 4.	MINE SAFETY DISCLOSURES

None

In 2010, we loaned money to a start-up coal strip mine operation located in the State of Alabama. This loan was restructured in late 2011, which resulted in this operation being consolidated onto our financial statements as of December 31, 2011. This restructured financial arrangement may have caused one of our subsidiaries to be deemed a mine “operator” under the Federal Mine Safety and Health Act of 1977, as amended. For this reason, information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K is included in Exhibit 95 to this Annual Report on Form 10-K. As of December 31, 2012, we had written off our investment in the aforementioned coal strip mine operation, and it had ceased operations and had begun reclamation efforts.

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PART II



ITEM 5.	MARKET FOR ~~REGISTRANT’S~~REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock is traded on the NASDAQ Global Select Market under the symbol “ATLC.” The following table sets forth, for the periods indicated, the high and low sales prices per share of our common stock as reported on the NASDAQ Global Select Market. As of ~~February 15, 2013,~~March 21, 2014, there were 5452 record holders of our common stock, which does not include persons whose stock is held in nominee or “street name” accounts through brokers, banks and intermediaries.

2011

High

Low

1st Quarter 2011 $ 6.97 $ 5.90
2nd Quarter 2011 $ 6.85 $ 2.32
3rd Quarter 2011 $ 3.20 $ 2.25
4th Quarter 2011 $ 4.21 $ 2.63

2012

High

Low

1st Quarter 2012 $ 6.00 $ 3.78
2nd Quarter 2012 $ 5.96 $ 3.29
3rd Quarter 2012 $ 6.46 $ 3.72
4th Quarter 2012 $ 3.99 $ 3.28




2012	High	Low
1st Quarter 2012	$6.00	$3.78
2nd Quarter 2012	$5.96	$3.29
3rd Quarter 2012	$6.46	$3.72
4th Quarter 2012	$3.99	$3.28

2013	High	Low
1st Quarter 2013	$3.68	$3.20
2nd Quarter 2013	$4.11	$3.40
3rd Quarter 2013	$3.85	$3.50
4th Quarter 2013	$3.75	$3.31

The closing price of our common stock on the NASDAQ Global Select Market on ~~February 15, 2013~~March 21, 2014 was ~~$3.21.~~$2.47.

ISSUER PURCHASES OF EQUITY SECURITIES

~~There were no~~The following table sets forth information with respect to our repurchases of common stock during the three months ended December 31, 2013:



	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased under the Plans or Programs (1)
October 1 - October 31	18,600	$	3.58	18,600	9,673,818
November 1 - November 30	15,600	$	3.55	15,600	9,658,218
December 1 - December 31	30,300	$	3.65	30,300	9,627,918
Total	64,500	$	3.61	64,500	9,627,918


(1)	Because withholding tax-related stock repurchases are permitted outside the scope of our 10,000,000 share Board-authorized repurchase plan, these amounts exclude shares of stock returned to us by employees in satisfaction of withholding tax requirements on vested stock grants. There were no such shares returned to us during the three months ended December 31, 2013.

Pursuant to a share repurchase plan authorized by our Board of Directors on May 11, 2012, we are authorized to repurchase 10,000,000 shares of our common stock ~~during the fourth quarter ended~~through June 30, 2014, of which 9,627,918 shares remained authorized for repurchase as of December 31, ~~2012.~~2013. We will continue to evaluate our stock price relative to other investment opportunities and, to the extent we believe that the repurchase of our stock represents an appropriate return of capital, we will repurchase shares of our stock.

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ITEM 6.	SELECTED FINANCIAL DATA

As a “smaller reporting company,” as defined by Item 10 of Regulation S-K, we are not required to provide this information.

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ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with our consolidated financial statements and the related notes included therein where certain terms have been defined.

This Management’s Discussion and Analysis of Financial Condition and Results of Operations includes forward-looking statements. We base these forward-looking statements on our current plans, expectations and beliefs about future events. There are risks, including the factors discussed in “Risk Factors” in Part I, Item 1A and elsewhere in this Report, that our actual experience will differ materially from the ~~expectations and beliefs reflected in the forward-looking statements in this section. See~~expectations. For more information, see “Cautionary Notice Regarding Forward-Looking Statements.”

OVERVIEW

We are a provider of various credit and related financial services and products to or associated with the financially underserved consumer credit market—a market largely represented by credit risks that regulators classify as ~~“sub-prime.”~~sub-prime.

Currently, within our Credit ~~Cards~~ and Other Investments segment, we are ~~collecting~~applying the experiences and infrastructure associated with our historic credit card offerings to provide point-of-sale financing, whereby we partner with retailers and service providers in various industries across the U.S. to provide credit to their customers for the purchase of goods and services or the rental of merchandise to their customers under rent-to-own arrangements. These products are often extended to customers who may have been declined under traditional financing options. We specialize in providing this "second-look" credit service. Using our infrastructure and technology platform, we also provide loan servicing, including underwriting, marketing, customer service and collections operations for third parties. Also through our Credit and Other Investments segment, we engage in testing and limited investment in ancillary finance, technology and other products as we seek to capitalize on our expertise and infrastructure.

Beyond these activities within our Credit and Other Investments segment, we continue to collect on portfolios of credit card receivables underlying now-closed credit card accounts. These receivables include both receivables we originated through third-party financial institutions and portfolios of receivables we purchased from third-party financial institutions. The only open credit card accounts underlying our credit card receivables are those ~~generated~~we originate through our credit card products in the U.K. ~~Several~~Some of our portfolios of credit card receivables underlying now-closed accounts are encumbered by non-recourse structured financings, and for ~~some of~~ these portfolios our ~~only~~principal remaining economic interest is the servicing compensation we receive as an offset against our servicing costs given that the likely future collections on the portfolios are insufficient to allow for full repayment of the financings. ~~Beyond these activities~~

Lastly, we report within our Credit ~~Cards~~ and Other Investments segment the income earned from investments in two equity-method investees—one that holds credit card receivables for which we are ~~applying~~ the ~~experiences~~servicer and ~~infrastructure associated with our historic~~another that holds structured financing notes underlying credit card ~~offerings to other credit product offerings, including private label merchant credit whereby we partner with retailers to provide credit at the point of sale to their customers~~ ~~who may have been declined under traditional financing options~~. We specialize in providing this "second look" credit service in various industries across the U.S. Using our global infrastructure and technology platform, we also provide loan servicing activities, including underwriting, marketing, customer service and collections operationsreceivables for ~~third parties. Lastly, through our Credit Cards and Other Investments segment,~~which we are engaged in limited investment activities in ancillary finance, technology and other businesses as we seek to build new products and relationships that could allow for greater utilization of our expertise and infrastructure.the servicer.

~~In the current environment, the~~The recurring cash flows we receive within our Credit ~~Cards~~ and Other Investments segment principally include those associated with (1) our point-of-sale finance activities, (2) servicing compensation ~~(2) distributions from one of our equity-method investees that in March 2011 purchased~~ and ~~now holds all of the outstanding notes issued out of our U.K. Portfolio structured financing trust,~~ (3) ~~unencumbered~~ credit card receivables portfolios that ~~have already generated enough cash to allow for~~are unencumbered or where we own a portion of the ~~repayment of their~~ underlying structured financing facilities, and (4) our private label merchant credit receivables. We are closely monitoring and managing our liquidity position, reducing our overhead infrastructure (which was built to accommodate higher account originations and managed receivables levels) and further leveraging our global infrastructure in order to maximize returns to shareholders on existing assets. Some of these actions, while prudent to maximize cash returns on existing assets, have had the effect of reducing our potential for profitability.facility.

~~As is customary in our industry, we~~We historically financed most of our credit card receivables through the asset-backed securitization markets. These markets ~~worsened~~deteriorated significantly in 2008, and the level of “advance ~~rates”~~rates,” or leverage ~~we can achieve~~ against credit card receivable assets, in the current asset-backed securitization markets is far below ~~2008~~pre-2008 levels. Considering this reality ~~along~~coupled with ~~a U.S. regulatory environment in which sub-prime~~constraints on credit card ~~lending~~asset returns ~~on assets are significantly lower than they were before 2008,~~in the U.S., we ~~have concluded that we cannot achieve our desired returns on equity through U.S.~~no longer market or maintain open credit card ~~lending.We continue, however, to originate credit cards~~accounts in the ~~U.K. because we~~U.S. We do believe, ~~the U.K. environment to be more favorable than the U.S. toward possible significant credit card origination growth in the future. Additionally, we believe~~however, that our ~~growing portfolio of private label merchant credit receivables is~~point-of-sale finance activities are generating and will continue to generate attractive returns on assets, thereby allowing us to secure debt financing under terms and conditions (including advance rates and pricing) that will allow us to achieve our desired returns on ~~equity.~~equity, and we continue to pursue aggressive growth in this area.

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Within our Auto Finance segment, our CAR subsidiary operations principally purchase and/or service loans secured by automobiles from or for ~~and also provide floor-plan financing for,~~ a pre-qualified network of independent automotive dealers and automotive finance companies in the buy-here, pay-here, used car business. In 2010, we started offering floor-plan financing to this same group of dealers and finance companies. We purchase ~~the~~ auto loans at a discount and with dealer retentions or holdbacks that provide risk protection. Also within our Auto Finance segment, we are collecting on portfolios of auto finance receivables that we previously originated through franchised and independent auto dealers in connection with prior business ~~activities.~~activities, as well as providing certain lending products in addition to our traditional loans secured by automobiles.

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In August 2012, we ~~completed a transaction~~sold to ~~sell to Flexpoint Fund II, L.P.~~an unrelated third-party for $130.5 million our Investments in Previously Charged-Off Receivables segment, including its balance transfer card operations, the credit card receivables (and underlying activities) of which were historically reflected within our Credit ~~Cards~~ and Other Investments segment. The sales price included (1) $119.7 million ~~(cash of $106.7~~at closing, which included a $13.0 million ~~and a~~ note receivable ~~of $13.0 million, which~~that was subsequently ~~repaid) at closing, of which~~paid and $10.0 million initially held in an indemnification-related escrow account that was released to us in cash ~~will be held in escrow for 12 months following the closing date of the transaction to satisfy certain indemnification provisions,~~on August 5, 2013, and (2) an additional $10.8 million in cash ~~that~~ we received in the fourth quarter of 2012 upon the achievement of certain targets. ~~Our basis in~~For the ~~net assets that were included in~~year ended December 31, 2012, the ~~sale was $67.0 million resulting in a gain on sale (after related expenses and recognition~~results of ~~the additional contingent consideration) of $57.3 million, which is~~these operations are reported within our income from discontinued operations category on our consolidated statements of operations.

We also completed transactions to dispose of our Retail Micro-Loans segment and our U.K. Internet micro-loan operations during 2011 as discussed further below. In accordance with applicable accounting requirements, we have classified the results of all our sold operations as discontinued operations within our consolidated statements of operations for all periods presented.

~~A summary of our most significant business changes or events during 2012 is as follows:~~

·	~~Our receipt of $10 million from a lender to compensate us for excess costs we incurred for the benefit of the lender in servicing a portfolio that collateralized the lender’s loan to us;~~

·	~~The September 2012 repurchase of 8,250,000 shares of our common stock at a purchase price of $10.00 per share for an aggregate cost of $82.5 million, pursuant to a tender offer;~~

·	~~The August 2012 sale of our Investments in Previously Charged-Off Receivables segment, including its balance transfer card operations as described above; and~~

·	~~Our May 2012 repayment to investors in our 3.625% convertible senior notes of $83.5 million in face amount of such then-outstanding notes.~~

Subject to the availability of ~~growth~~ capital at attractive terms and pricing, ~~our shareholders should expect us~~we plan to continue to evaluate and pursue a variety of activities, including: (1) the expansion of our point-of-sale finance products; (2) the acquisition of additional ~~credit card receivables portfolios, and potentially other~~ financial assets ~~that are complementary to~~associated with our ~~financially underserved credit card business; (2)~~point-of-sale finance activities as well as the acquisition of receivables portfolios; (3) investments in other assets or businesses that are not necessarily financial services assets or businesses; ~~(3) additional opportunities to~~(4) the repurchase of our convertible senior notes and other debt or our outstanding common stock; and ~~(4)~~(5) the servicing ~~credit card~~of receivables and ~~other~~related financial assets for third parties (and in which we have limited or no equity interests) to allow us to leverage our expertise and infrastructure.

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CONSOLIDATED RESULTS OF OPERATIONS

Income
For the Year Months Ended December 31, Increases (Decreases)
(In Thousands) 2012 2011 from 2011 to 2012
Total interest income $ 86,810 $ 145,517 $ (58,707 )
Interest expense (31,124 ) (43,828 ) 12,704
Fees and related income on earning assets:
Fees on credit products 16,478 10,474 6,004
Changes in fair value of loans and fees receivable recorded at fair value 89,502 181,502 (92,000 )
Changes in fair value of notes payable associated with structured financings recorded at fair value (30,150 ) (90,524 ) 60,374
Losses on investments in securities (4,254 ) (4,449 ) 195
Loss on sale of JRAS assets - (4,648 ) 4,648
Other (3,366 ) 2,210 (5,576 )
Other operating income:
Servicing income 16,233 3,281 12,952
Other income 2,487 7,070 (4,583 )
Equity in income equity-method investees 9,288 32,657 (23,369 )
Total $ 151,904 $ 239,262 (87,358 )
Losses upon charge off of loans and fees receivable recorded at fair value 90,128 139,480 49,352
Provision for losses on loans and fees receivable recorded at net realizable value 16,770 1,089 (15,681 )
Other operating expenses:
Salaries and benefits 17,317 21,022 3,705
Card and loan servicing 41,095 45,345 4,250
Marketing and solicitation 2,996 3,620 624
Depreciation 2,742 4,642 1,900
Other 24,687 26,110 1,423
Net income 24,132 135,064 (110,932 )
Net loss (income) attributable to noncontrolling interests 319 (1,047 ) 1,366
Net income attributable to controlling interests 24,451 134,017 (109,566 )
Income from discontinued operations before income tax 69,063 140,063 (71,000 )



							Income
	For the Twelve Months Ended December 31,						Increases (Decreases)
(In Thousands)	2013			2012			from 2012 to 2013
Total interest income	$	69,521		$	86,810		$	(17,289	)
Interest expense	(23,872		)	(31,124		)	7,252
Fees and related income on earning assets:
Fees on credit products	23,879			17,474			6,405
Changes in fair value of loans and fees receivable recorded at fair value	45,601			89,502			(43,901		)
Changes in fair value of notes payable associated with structured financings recorded at fair value	(19,423		)	(30,150		)	10,727
Rental revenue	19,759			—			19,759
Other	(707		)	(7,620		)	6,913
Other operating income:
Servicing income	8,218			16,233			(8,015		)
Other income	3,394			2,487			907
Equity in income equity-method investees	8,437			9,288			(851		)
Total	$	134,807		$	152,900		$	(18,093	)
Losses upon charge off of loans and fees receivable recorded at fair value	14,560			90,128			75,568
Provision for losses on loans and fees receivable recorded at net realizable value	29,678			16,770			(12,908		)
Other operating expenses:
Salaries and benefits	17,832			18,313			481
Card and loan servicing	46,119			41,095			(5,024		)
Marketing and solicitation	8,719			2,996			(5,723		)
Depreciation	17,965			2,742			(15,223		)
Other	22,713			24,687			1,974
Net (loss) income	(17,665		)	24,132			(41,797		)
Net (income) loss attributable to noncontrolling interests	(76		)	319			(395		)
Net (loss) income attributable to controlling interests	(17,741		)	24,451			(42,192		)
Income from discontinued operations before income tax	—			69,063			(69,063		)

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Year EndedDecember 31, 2013, Compared to Year EndedDecember 31, 2012 ~~Compared to Year Ended December 31, 2011~~

Total interest income.Total interest income consists primarily of finance charges and late fees earned on our point-of-sale finance, credit card ~~private label merchant credit,~~ and auto finance receivables. The ~~decline period over period is~~period-over-period declines are due to continued net liquidations of our credit card and auto finance receivables over the past ~~year. Moreover, absent~~year, offset to some extent, however, by continued growth in our point-of-sale finance products. Notwithstanding the ~~effects of possible portfolio acquisitions, we expect~~period-over-period declines in our ~~ongoing~~ total interest income, we are currently experiencing growth in our point-of-sale finance products and to ~~decline for~~a lesser extent we are experiencing growth in our CAR receivables—growth which should cause us to experience net period over period growth in our total interest income within the next ~~several quarters along~~few quarters. Future periods' growth is also largely dependent on the addition of new retail partners for our point-of-sale operations as well as continued growth within existing partnerships. This growth will be delayed late in the first quarter of 2014 as a significant retail partner in our point-of-sale operations undergoes a product shift that is expected to result in the temporary suspension of new account originations with ~~continuing expected net liquidations of~~us for both our ~~credit card~~installment lending product as well as our rent-to-own product. We anticipate this disruption will last into the second quarter and ~~auto finance receivables.~~will result in slower growth for that quarter.

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Interest expense. The decrease in interest expense is due to (1) our debt facilities being repaid commensurate with net liquidations of the underlying credit card receivables and auto finance receivables that serve as collateral for the facilities, and (2) the effects of our ~~repurchases of our convertible senior notes throughout 2011 and our~~ May 2012 repayment of substantially all of our 3.625% convertible senior notes as discussed in Note 11, “Convertible Senior Notes,” ~~in the accompanying notes~~ to ~~the~~our consolidated financial statements.

~~We also note that notwithstanding~~ Given new borrowings as evidenced within Note 10, “Notes Payable,” to our consolidated financial statements, anticipated additional debt financing over the next few quarters, and the effects of our convertible senior notes issuance discount accretion in increasing monthly interest expense amounts in the future, we expect ~~lower~~our 2014 quarterly interest expense ~~for these notes~~to be slightly above those experienced in ~~future periods attributable to our 2011 repurchases and our May 2012 repayment of substantially all of our 3.625% convertible senior notes.~~the current year.

Fees and related income on earning assets.The significant factors affecting our differing levels of fees and related income on earning assets include:

The growth in rental revenue we experienced with the addition of our rent-to-own program, which began in earnest in the third quarter of 2013;

·	~~2012 increases in fees earned on our credit products, principally due to billings on credit card accounts in the U.K., net of the effect of continued credit card receivables liquidations;~~

Our 2013 increases in fees on credit products, principally associated with billings on credit card accounts in the U.K.;

Our $2.4 million second quarter 2013 write off of a note we had received from buyers of our JRAS buy-here, pay-here dealer operations that we sold in February 2011, such write off being the primary cause of the 2013 loss reflected in the "Other" category;

~~“Other” category losses arising in 2012 due to operating losses incurred by~~Our 2012 "Other" category losses principally being comprised of losses associated with our required consolidation of a ~~former~~ small coal mining ~~operation we were required to consolidate in the fourth quarter of 2011 based on workout efforts we had undertaken related to a loan we made to the~~ operation; and

The effects of changes in the fair values of credit card receivables recorded at fair value and notes payable associated with structured financings recorded at fair value as addressed below.

·	~~our recognition of a $4.6 million loss in the three months ended March 31, 2011 corresponding to our sale of certain assets associated with our JRAS operations.~~

~~We do not~~As we continue to expand the rent-to-own product offerings, we expect ~~significant ongoing losses with respect~~to see continued increases in billings within the Rental revenue category, although we expect reduced growth in rental revenues during the second quarter of 2014 (when compared to the ~~coal mining operation~~first quarter of 2014) due to shifts in our retail partner operations mentioned above. ~~By December 31, 2012, it had ceased mining operations, and we had written off substantially all~~As for our fees on credit products category, which is primarily influenced by the level of our ~~investment; its only current activity is land reclamation.~~

~~Although not materially different~~originated U.K. credit card receivables, we expect a diminishing level of fee income in ~~amount between 2011 and 2012, we note~~2014 due to currently planned marketing levels for that with our $5.5 million in 2012 and $5.3 million in 2011 losses on investments in securities, we do not hold any material amounts of investments in securities as of December 31, 2012; as such, there is no potential for materialproduct offering. Further, given expected future ~~losses on such securities holdings in the future.~~

~~Given expected~~ net liquidations inof our credit card receivables ~~(absent possible portfolio acquisitions) in the future,~~for which we use fair value accounting, we expect our change in fair value of credit card receivables recorded at fair value and our change in fair value of notes payable associated with structured financings recorded at fair value amounts to gradually diminish (absent significant changes in the assumptions used to determine these fair values) in the future. These amounts, however, are subject to potentially high levels of volatility if we experience changes in the quality of our credit card receivables or if there are significant changes in market valuation factors (e.g., interest rates and spreads) in the future. Such volatility will be muted somewhat, however, by the offsetting nature of the receivables and underlying debt being recorded at fair value and with the expected reductions in the face amounts of such outstanding receivables and debt as we experience further credit card receivables liquidations and associated debt amortizing repayments.

Servicing income. ~~Our reported~~ We earn servicing compensation by servicing loan portfolios for third parties (including our equity-method investees). In 2013, we entered into new servicing agreements with third parties, which resulted in higher 2013 servicing income is comprised of servicing compensation paid to us by third parties associated with our servicing of their loans and fees receivable. Positively impacting 2012 is income from transitional services we providedcompared to the ~~buyer of our Retail Micro-Loans segment, such services having substantially ended, and~~prior year. Offsetting the year over year increase is $10.0 million in reimbursements we currently are providing to the buyer of our Investment in Previously Charged-Off Receivables segment and balance transfer card operations since our disposition of these operations in August 2012. Additionally,received from a counterparty in the fourth quarter of 2012 ~~we received $10.0 million from a lender~~ to compensate us for excess costs we incurred for ~~the~~its benefit ~~of the lender~~ in servicing a credit card portfolio that collateralized the lender’s loan to us. Absent these revenues (none of which are expected to be material servicing income sources for us in 2013), servicing income would have declined commensurate with liquidations in the portfolios of loans and fees receivables we service for third parties.

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~~Currently, servicing income is not a significant income source for us, and~~portfolio. However, unless and/or until we grow the number of contractual servicing relationships we have with ~~other~~ third parties or our current relationships grow their loan portfolios, we will not experience ~~sustained levels of~~significant growth and income within this ~~category. We have started~~category, and we currently expect to ~~receive~~experience future quarterly declines relative to our 2013 servicing income ~~associated with a new partner product rollout; however, revenues associated with this program are not yet sufficient to offset declines we are experiencing in this category.~~level.

Other income. ~~Other~~Historically included within our other income ~~principally is represented by our~~category are ancillary and interchange ~~revenues. The decline in our ancillary interchange~~ revenues, ~~corresponds with our account closure actions and net liquidations we have experienced in all of~~which are now relatively insignificant for us due to our credit card account closures and net credit card receivables ~~portfolios in recent years.~~portfolio liquidations. Absent portfolio acquisitions, we do not expect significant ancillary and interchange revenues in the future. Also included within our other income category are certain reimbursements we received in respect of one of our portfolios; these other income inclusions were negligible in 2012 and in the second quarter of 2013, but were more significant in the other quarters of 2013. This accounts for the respective year over year increases in other income.

Equity in income of equity-method investees. ~~The significant decrease in income associated with~~ Because our equity-method investees ~~is principally related to our 50% interest in~~use the joint venture that purchased in March 2011 the outstanding notes issued out of our U.K. Portfolio structured financing trust. Contemporaneous with our March 2011 acquisition of our 50% interest in the joint venture, it electedfair value option to account for ~~its investment~~their financial assets and liabilities, changes in fair value estimates can cause some volatility in the ~~U.K. Portfolio structured financing notes at their fair value, and it recognized a $34.2 million gain (of which~~earnings of these investees as occurred in the first three quarters of 2013. Although we increased our ~~50% share represented $17.1 million) equal to~~equity interest in one of our two equity-method investees in the ~~excess~~second quarter of ~~the fair value~~2013, because of ~~the notes as of March 31, 2011 over the joint venture’s discounted purchase price of the notes.~~

~~We expect to see~~ continued liquidations in ~~the~~their financial assets (a credit card receivables ~~portfolios~~portfolio held by one equity-method investee and structured financing notes held by ~~our equity-method investees for~~ the ~~foreseeable future. As such,~~other), absent ~~possible~~ additional

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investments in our existing or in new equity-method investees in the future, we expect gradually declining effects from our equity-method investments on our operating results.

Losses upon charge off of loans and fees receivable recorded at fair value.This account reflects charge offs (net of recoveries) of the face amount of credit card receivables we record at fair value on our consolidated balance sheet. We have experienced a general trending decline in, and we expect future trending declines in, these charge offs as we continue to liquidate our credit card receivables. ~~The~~Additionally, our lower net losses in 2013 reflect the effects of ~~this general trending decline were muted~~reimbursements received in ~~2012, however, given our sale~~respect of ~~a large volume of late-stage delinquent accounts and related receivables (which we treated as having been charged off contemporaneous with their sale) out~~one of our ~~U.K. credit card receivables portfolio during the first quarter of 2012.~~portfolios.

Provision for losses on loans and fees receivable recorded at net realizable value. Our provision for losses on loans and fees receivable recorded at net realizable value covers, with respect to such receivables, the aggregate loss exposures on (1) principal receivable balances, (2) finance charges and late fees receivable underlying income amounts included within our total interest income category, and (3) other fees receivable. We have experienced ~~a year over year increase~~year-over-year increases in this category between ~~2011~~2012 and ~~2012~~2013 due to the effects of (1) disproportionately greater reductions in our allowance for uncollectible loans and fees receivables recorded in the year ended December 31, 2011 associated with significant performance improvements experienced at that time, and (2)initial elevated losses incurred on new credit product testing and more recently growth in ~~the year ended December 31, 2012.~~our new installment lending product lines. For the foreseeable future with the exception of the second quarter of 2014 as mentioned above, we expect growth in new product receivables recorded at net realizable value to exceed any further liquidations of our auto finance receivables recorded at net realizable value. Accordingly, we expect increases in our provisions for losses on loans and fees receivable recorded at net realizable value in future quarters—such increases predominantly expected to reflect the effects of volume associated with our point-of-sale finance product offering (i.e., growth of new product receivables), rather than credit quality changes or deterioration. ~~Based on experience~~However, continued testing associated with ~~some of~~ our ~~new products (in particular our U.K.~~ credit card ~~product) in 2012, we expect net improvements~~product in the ~~credit quality~~U.K. is expected to result in slightly higher provisions through the first quarter of ~~our new product receivables throughout 2013.~~2014. See Note 2, “Significant Accounting Policies and Consolidated Financial Statement Components,” to our consolidated financial statements and the discussions of our Credit ~~Cards~~ and Other Investments and Auto Finance ~~segment discussions~~segments for further credit quality statistics and analysis.

Total other operating expense. Total other operating expense ~~decreased~~variances for the year endedDecember 31, ~~2012~~2013 relative to the year endedDecember 31, ~~2011, reflecting~~2012 reflect the following:

·	~~diminished salaries and benefits costs resulting from our ongoing cost-cutting efforts as we continue to adjust our internal operations to reflect the declining size of our existing portfolios;~~

modestly lower 2013 salaries and benefits costs resulting from 2012 cost-cutting efforts, offset by modest increases required to grow our new credit product offerings;

card and loan servicing expenses that are higher in 2013 based on new product efforts, the cost of such efforts overshadowing the cost effects of continuing credit card and auto finance receivables portfolio liquidations;

~~lower card~~increased depreciation in 2013 primarily associated with our rent-to-own program, totaling $16.1 million for the twelve months ended December 31, 2013 with no amounts in prior periods, offset, however, by an impairment charge in the third quarter of 2012 on certain fixed assets held by a small coal mining operation we are required to consolidate; and ~~loan servicing expenses reflecting the effects of continuing credit card and auto finance receivables portfolio liquidations;~~

increases in marketing and solicitation costs consistent with our aforementioned new product efforts.

·	~~decreases in depreciation for the year ended December 31, 2012 reflecting a diminished level of capital investments by us; and~~

·	~~decreases in marketing and solicitation and other expense levels consistent with the aforementioned receivables portfolio liquidations and our cost-cutting efforts.~~

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A large portion of our operating costs are variable based on the levels of accounts we market and receivables we service (both for our own account and for others) and the pace and breadth of our search for, acquisition of and introduction of new business lines, products and services. However, a number of our operating costs are fixed and ~~will over time comprise~~until recently have comprised a larger percentage of our total costs ~~given~~based on the ongoing contraction of our credit card and auto finance loans and fees receivable levels. ~~To this extent,~~This trend is reversing, however, because we are now experiencing net growth in our ~~rate of cost reduction can be expected to slow relative to the rate of contraction in these~~earning assets (including loans and fees ~~receivable.~~receivable and rental merchandise) based principally on growth of our point-of-sale finance product offerings and to a lesser extent, growth within our CAR operations. We ~~do, however, attempt to maximize the utility that we get from our incurrence of fixed costs by our testing and exploration of new products and services and areas of investment, and we~~ continue to perform extensive reviews of all areas of our businesses for cost savings opportunities to better align our costs with our ~~net liquidating~~ portfolio of managed receivables.

Notwithstanding our ~~cost-cutting~~cost-control efforts and focus, we expect increased levels of expenditures associated with growth in our point-of-sale finance operations and while it is relatively easy for us to scale back our variable expenses, it is much more difficult (to which we alluded above) for us to appreciably reduce our fixed and other costs associated with an infrastructure (particularly within our Credit ~~Cards~~ and Other Investments segment) that was built to support growing managed receivables and levels of managed receivables that are significantly higher than both our current levels and the levels that we expect to see in the near future. At this point, our Credit ~~Cards~~ and Other Investments segment cash inflows are sufficient to cover its direct variable costs and a portion, but not all, of its share of overhead costs (including, for example, corporate-level executive and administrative costs and our convertible senior notes interest costs). As such, if we are ~~not successful in further reducing~~unable to contain overhead costs or ~~expanding~~expand revenue-earning activities to levels commensurate with such costs, then, depending upon the sufficiency of excess cash flows and earnings generated from our Auto Finance ~~subsidiary~~segment and those credit card portfolios that have repaid their underlying structured financing facilities and of liquidity we are able to obtain through debt and equity issuances, we may experience continuing pressure on our liquidity position and our ability to ~~be profitable.~~achieve profitability.

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Noncontrolling interests. We reflect the ownership interests of noncontrolling holders of equity in our majority-owned subsidiaries as noncontrolling interests in our consolidated statements of operations. ~~Because of various transactions that took place in early 2011, unless~~Unless we enter into significant new majority-owned subsidiary ventures with noncontrolling interest holders in the future, we expect to have negligible noncontrolling interests in our majority-owned subsidiaries and negligible allocations of income or loss to noncontrolling interest holders in future quarters. ~~Transactions contributing to this development and the decline in net income attributable to noncontrolling interests in 2012 versus 2011 include:~~

·	Our collective January 2011 and April 2011 purchases of most of the noncontrolling interest holders’ ownership interests in our Credit Cards and Other Investments segment majority-owned subsidiaries; and

·	~~Our April 2011 sale of the majority-owned subsidiaries through which we owned our former U.K. Internet micro-loan operations.~~

Income taxes. Computed considering results for only our continuing operations before income taxes, ~~our~~we experienced effective income tax benefit ~~rate was 35.9%~~rates of 22.5% and 35.6% for the ~~year~~years ended December 31, 2013 and 2012, versus our effective income tax benefit rate of 48.5% for the year ended December 31, 2011. We have experienced no material changes in effective tax rates associated with differences in filing jurisdictions, and the variationsrespectively. Variations in our effective tax rates between the periods principally bear the effects of (1) changes in valuation allowances against income statement-oriented federal, foreign and state deferred tax assets ~~(2) variations in the level of our pre-tax income among the different reporting periods relative to the level of our permanent differences within such periods~~ and ~~(3) the effects on financial reporting results of~~(2) intra-period tax allocations associated with our discontinued operations in 2012 as required under GAAP.

We recognize potential accrued interest and penalties related to unrecognized tax benefits in income tax expense. We recognized ~~$1.9~~$3.1 million ~~and $2.1 million in~~ of potential interest and penalties associated with these uncertain tax positions during the ~~years~~year endedDecember 31, 2013, compared to $1.9 million during the year endedDecember 31, 2012 ~~and 2011, respectively.~~. To the extent ~~such~~ interest and penalties are not assessed as a result of a resolution of ~~the underlying~~an uncertain tax position, amounts accrued are reduced and reflected as a reduction of income tax expense. We recognized $1.0 million of such reductions in each of the years ended December 31, ~~2012~~2013 and ~~2011.~~2012.

Credit ~~Cards~~ and Other Investments Segment

Included at the end of this “Credit Cards and Other Investments Segment” section under the heading “Definitions of Financial, Operating and Statistical Measures” are definitions for various terms we use throughout our discussion of the Credit Cards and Other Investments segment.

Our Credit ~~Cards~~ and Other Investments segment includes our continuing activities relating to investments in and servicing of our point-of-sale finance products and our various credit card receivables portfolios, as well as other product testing and investments ~~and products~~ that ~~are not yet material to our overall financial position but which~~ generally utilize much of the same ~~infrastructure as our credit card operations.~~infrastructure.

The types of revenues we earn from ~~credit card activities~~our products and services primarily include finance charges, the accretion of discounts associated with our point-of-sale finance installment loans or revolving credit offers, late fees, rental revenue, over-limit fees, annual fees, activation fees, monthly maintenance fees, returned-check fees and cash advance fees. Also, while insignificant currently, revenues ~~(during previous periods of broad account origination and in which significant numbers of accounts were open to cardholder purchases)~~ also have included ~~those~~credit card fees associated with (1) our sale of ancillary products such as memberships, subscription services and debt waiver, as well as (2) interchange fees representing a portion of the merchant fee assessed by card associations based on cardholder purchase volumes underlying credit card receivables.

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We record (i) the finance charges, discount accretion and late fees assessed on our Credit ~~Cards~~ and Other Investments segment credit products in the interest income - consumer loans, including past due fees category on our consolidated statements of operations, ~~we include~~(ii) the rental revenue, over-limit, annual, activation, monthly maintenance, returned-check, cash advance and other fees in the fees and ~~other~~related income on earning assets category on our consolidated statements of operations, and ~~we reflect~~(iii) the charge offs (and recoveries thereof) within our provision for losses on loans and fees receivable on our consolidated statements of operations (for all credit product receivables other than those ~~credit card receivables underlying formerly off-balance-sheet securitization structures)~~for which we have elected the fair value option) and within losses upon charge off of loans and fees receivable recorded at fair value on our consolidated statements of operations (for all of our other ~~credit card~~ receivables ~~underlying formerly off-balance-sheet securitization structures~~ for which we have elected the fair value option). Additionally, we show the effects of fair value changes for those credit card receivables for which we have elected the fair value option as a component of fees and related income on earning assets in our consolidated statements of operations.

Depreciation associated with rental merchandise (totaling $16.1 million for the twelve months ended December 31, 2013)

for which we receive rental revenue is included as a component of our overall depreciation in our consolidated statements of operations.

We historically have originated and purchased credit ~~card~~ portfolios through subsidiary entities. Generally, if we control through direct ownership or exert a controlling interest in the entity, we consolidate it and reflect its operations as noted above. If we exert significant influence but do not control the entity, we record our share of its net operating results in the equity in income of equity-method investees category on our consolidated statements of operations.

~~Background~~Managed Receivables

We make various references within our discussion of the Credit ~~Cards~~ and Other Investments segment to our managed receivables. In calculating managed receivables data, we include within managed receivables those receivables we manage for our consolidated subsidiaries, but we exclude from managed receivables any noncontrolling interest holders’ shares of the ~~receivables during applicable periods.~~receivables. Additionally, we include within managed receivables only our economic share of the receivables that we manage for our equity-method investees.

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Financial, operating and statistical data based on aggregate managed receivables are important to any evaluation of ~~our~~the performance ~~in managing~~of our credit ~~card~~ portfolios, including our underwriting, servicing and ~~collecting~~collection activities and our valuing of purchased receivables. In allocating our resources and managing our business, management relies heavily upon financial data and results prepared on this “managed basis.” Analysts, investors and others also consider it important that we provide selected financial, operating and statistical data on a managed basis because this allows a comparison of us to others within the specialty finance industry. Moreover, our management, analysts, investors and others believe it is critical that they understand the credit performance of the entire portfolio of our managed receivables because it reveals information concerning the quality of loan originations and the related credit risks inherent within the portfolios.

Reconciliation of the managed receivables data to our GAAP financial statements requires: (1) an understanding that our managed receivables data are based on billings and actual charge offs as they occur, without regard to any changes in our allowance for uncollectible loans and fees receivable or any changes in the fair value of loans and fees receivable and their associated structured financing notes; (2) inclusion of our economic share of (or equity interest in) the receivables we manage for our equity-method investees; (3) removal of ~~our~~any noncontrolling interest holders’ shares of the managed receivables underlying our GAAP consolidated results; ~~and~~ (4) treatment of the transaction in which our 50%-owned equity-method investee acquired our ~~U.K. Portfolio~~ structured financing trust notes (a) as a deemed sale of the ~~U.K. Portfolio~~ trust receivables at their face amount, (b) followed by the 50%-owned equity-method investee’s deemed repurchase of such receivables for consideration equal to the discounted purchase price that it paid for the notes, and (c) as though the difference between the deemed face amount and the deemed discounted repurchase price of the receivables is to be treated as credit quality discount to be accreted into managed earnings as a reduction of net charge offs over the remaining life of the ~~receivables.~~receivables; and (5) the exclusion from our managed receivables data of certain reimbursements received in respect of one of our portfolios which resulted in pre-tax income benefits within our total interest income, fees and related income on earning assets, losses upon charge off of loans and fees receivable recorded at fair value, net of recoveries, other income, servicing income, and equity in income of equity-method investees line items on our consolidated statements of operations totaling approximately $0.1 million for the three months ended December 31, 2013, $3.9 million for the three months ended September 30, 2013, $1.7 million for the three months ended June 30, 2013, and $5.6 million for the three months ended March 31, 2013. This last category of reconciling items above is excluded because it does not bear on our performance in managing our credit card portfolios, including our underwriting, servicing and collection activities and our valuing of purchased receivables; moreover, it is difficult to determine the future effects of any such reimbursements that may be received.

We typically have purchased credit card receivables portfolios at substantial discounts. In our managed basis statistical data, we apply a portion of these discounts against receivables acquired for which charge off is considered likely, including accounts in late stages of delinquency at the date of acquisition; this portion is measured based on our acquisition date estimate of the shortfall of cash flows expected to be collected on the acquired portfolios relative to the face amount of receivables represented within the acquired portfolios. We refer to the balance of the discount for each purchase not needed for credit quality as accretable yield, which we accrete into ~~net interest margin~~total yield in our managed basis statistical data using the interest method over the estimated life of each acquired portfolio. As of the close of each financial reporting period, we evaluate the appropriateness of the credit quality discount component and the accretable yield component of our acquisition discount based on actual and projected future results.

Asset ~~Quality~~

quality. Our delinquency and charge-off data at any point in time reflect the credit performance of our managed receivables. The average age of the accounts underlying our receivables, the timing of portfolio purchases, the success of our collection and recovery efforts and general economic conditions all affect our delinquency and charge-off rates. The average age of the accounts underlying our receivables portfolio also affects the stability of our delinquency and loss rates. We consider this delinquency and charge-off data in our determination of the fair value of our credit card receivables underlying formerly off-balance-sheet securitization structures, as well as our allowance for uncollectible loans and fees receivable in the case of our other credit product receivables that we report at net realizable value. Our strategy for managing delinquency and receivables losses consists of account management throughout the customer relationship. This strategy includes credit line management and pricing based on the risks. See also our discussion of collection strategies under the ~~heading~~ “How Do We Collect from Our Customers?” in Item 1, “Business,” of this Report.

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The following table presents the delinquency trends of the receivables we manage within our Credit ~~Cards~~ and Other Investments segment, as well as charge-off data and other managed ~~loan~~receivables statistics (in thousands; percentages of total):



	At or for the Three Months Ended
	2013								2012
	Dec. 31		Sept. 30		Jun. 30		Mar. 31		Dec. 31		Sept. 30		Jun. 30		Mar. 31
Period-end managed receivables	$236,740		$248,584		$252,036		$263,265		$294,167		$326,557		$356,897		$401,394
Percent 30 or more days past due	12.5	%	10.9	%	9.2	%	9.4	%	10.0	%	11.0	%	9.9	%	10.4	%
Percent 60 or more days past due	9.2	%	7.8	%	6.3	%	7.0	%	7.2	%	8.1	%	6.9	%	7.9	%
Percent 90 or more days past due	6.4	%	5.2	%	4.3	%	4.9	%	5.1	%	5.8	%	4.6	%	5.9	%
Average managed receivables	$242,272		$246,147		$255,669		$277,457		$309,025		$340,628		$378,227		$438,601
Total yield ratio	33.3	%	36.3	%	31.8	%	29.4	%	15.7	%	23.5	%	24.2	%	22.9	%
Combined gross charge-off ratio	19.1	%	14.6	%	16.9	%	18.5	%	16.5	%	15.3	%	20.7	%	53.9	%
Adjusted charge-off ratio	15.2	%	10.7	%	12.2	%	14.1	%	12.7	%	11.4	%	15.1	%	30.6	%

At or for the Three Months Ended
2012 2011
Dec. 31 Sept. 30 Jun. 30 Mar. 31 Dec. 31 Sept. 30 Jun. 30 Mar. 31
Period-end managed receivables $ 294,167 $ 326,557 $ 356,897 $ 401,394 $ 480,355 $ 540,023 $ 613,747 $ 698,226
Period-end managed accounts 256 281 309 340 390 431 481 543
Percent 30 or more days past due 10.0 % 11.0 % 9.9 % 10.4 % 13.0 % 12.6 % 11.9 % 12.5 %
Percent 60 or more days past due 7.2 % 8.1 % 6.9 % 7.9 % 9.7 % 8.9 % 8.7 % 9.5 %
Percent 90 or more days past due 5.1 % 5.8 % 4.6 % 5.9 % 6.9 % 6.2 % 6.2 % 7.0 %

Average managed receivables $ 309,025 $ 340,628 $ 378,227 $ 438,601 $ 511,834 $ 580,212 $ 659,686 $ 754,300
Combined gross charge-off ratio 16.5 % 15.3 % 20.7 % 53.9 % 19.3 % 20.9 % 24.2 % 29.7 %
Net charge-off ratio 14.4 % 13.1 % 16.8 % 47.4 % 15.2 % 16.7 % 19.8 % 24.1 %
Adjusted charge-off ratio 12.7 % 11.4 % 15.1 % 30.6 % 12.2 % 13.9 % 16.7 % 22.9 %
Total yield ratio 15.7 % 23.5 % 24.2 % 22.9 % 23.2 % 19.2 % 21.8 % 22.0 %
Gross yield ratio 18.1 % 19.2 % 19.9 % 18.9 % 18.6 % 19.3 % 18.9 % 18.6 %
Net interest margin 12.3 % 13.5 % 13.3 % 10.4 % 12.6 % 13.4 % 12.8 % 11.9 %
Other income ratio -2.9 % 3.9 % 3.5 % 2.7 % 3.7 % -1.0 % 2.1 % 2.2 %
Operating ratio 7.3 % 18.5 % 18.2 % 15.3 % 12.1 % 12.3 % 12.5 % 11.0 %

Managed receivables. The consistent quarterly declines in our period-end and average managed receivables over the last eight quarters reflect the net liquidating state of our credit card receivables portfolios given ~~the~~our closure largely in 2008 and 2009 of substantially all credit card accounts underlying the portfolios. Moreover, ~~with the exception of originations~~although we are marketing credit card accounts in the U.K., we have curtailed our U.S. credit card marketing ~~efforts in light~~efforts. Nevertheless, because of ~~(1) dislocation in~~ the liquidity markets and uncertainty as to when and if these markets will rebound sufficiently to facilitate organic growth in our credit card receivables operations and (2) an unfavorable credit card account origination regulatory climate in our primary U.S. market. Despite fairly rapid receivables growth we are experiencing and expect to continue to experience over the coming quarters (assuming sufficient capital) associated with our point-of-sale finance offerings, the rate of decline in our managed receivables levels fell significantly during 2013, and we now expect growth in our managed receivables levels over coming quarters. Future periods' growth is also largely dependent on the addition of new retail partners for our ~~private label merchant credit offering, we do not anticipate receivables additions~~point-of-sale operations as well as continued growth within existing partnerships. This growth will be delayed late in the ~~near term sufficient~~first quarter of 2014 as a significant retail partner in our point-of-sale operations undergoes a product shift that is expected to ~~offset~~result in the temporary suspension of new account originations with us for our installment lending product. We anticipate this disruption will last into the second quarter and will result in declining managed receivables ~~balance contractions noted above.~~during that quarter.

Delinquencies. Delinquencies have the potential to impact net income in the form of net credit losses. Delinquencies also are costly in terms of the personnel and resources dedicated to resolving them. We intend for the account management strategies we use on our ~~portfolio~~portfolios to manage and, to the extent possible, reduce the higher delinquency rates that can be expected in a more mature managed portfolio such as ours. These account management strategies include conservative credit line management, purging of inactive accounts and collection strategies intended to optimize the effective account-to-collector ratio across delinquency categories. We further describe these collection strategies under the heading “How Do We Collect from Our Customers?” in Item 1, “Business” of this Report. We measure the success of these efforts by measuring delinquency rates. These rates exclude accounts that have been charged off.

Our lower-tier credit card receivables typically experience substantially higher delinquency rates and charge-off levels than those of our other originated and purchased portfolios. Our delinquency statistics recently have benefited from a mix change whereby disproportionately higher charge-off levels for our lower-tier credit card portfolios relative to those of our other credit card receivables have caused a decline in lower-tier credit card receivables as a percentage of our aggregate managed credit card receivables.

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Given that ~~our accounts primarily consist~~the vast majority of ~~closed~~our credit card accounts ~~with~~have been closed and there has been no significant ~~account actions taken~~new activity for these accounts in the past several quarters, ~~one would logically expect to see the relatively lower delinquency and charge-off benefits of our more mature portfolios. This trend is bearing out as noted in the trending~~there have been year-over-year declines in our ~~2012~~ delinquency statistics of our credit card accounts relative to corresponding dates in prior ~~years and is consistent with~~years. This trend reversed in the fourth quarter of 2013 primarily due to growth in our ~~expectations for~~point of sale finance operations which generally experience higher delinquency rates than those of our liquidating credit card portfolios. Additionally, our credit card originations in the ~~next few quarters.~~U.K. have experienced higher than average delinquency rates as we continue to test these accounts. We doalso note, however, ~~that we participated in~~the effects on our first quarter 2012 delinquency and charge-off statistics of a unique transaction ~~opportunity during the first~~opportunity. In that quarter, ~~of 2012, whereby~~ we sold for a total of $10.4 million, a price that we viewed as attractive, $44.0 million in face value of our ~~U.K.~~2007 non-U.S. acquired portfolio (the "Non-U.S. Acquired Portfolio") credit cards receivable associated with late-stage delinquent accounts that had not yet reached the 180-day charge-off threshold. These receivables had a GAAP carrying value of $9.8 million on the sale date, thereby rendering an insignificant gain upon their sale. This transaction had two effects on our managed receivables data: (1) the future periods’ charge off of

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these receivables was accelerated into the first quarter of 2012 through our treatment of the accounts as having been charged off in all of our managed receivables charge-off ratios contemporaneous with the sale of these receivables; and (2) the removal of these late-stage delinquent accounts from our March 31, 2012 managed receivables balances contributed to a better-than-typical improvement in our delinquency statistics as of March 31 ~~2012~~ and June 30, 2012. Given this acceleration, we experienced a slight increase in our delinquency rates as of September 30 and December 31, 2012, in part due to the aforementioned transaction, but also in part to the effects of higher delinquency rates associated with our ongoing credit card originations in the U.K. ~~(the effects~~

We expect our point-of-sale finance and other new product offerings to become a larger component of ~~which are also evident~~our managed receivables base, given the acceleration of growth in the table of current loans receivable, current fees receivable and delinquent loans and fees receivable as of December 31, 2012 and December 31, 2011 presented within Note 2, “Significant Accounting Policies and Consolidated Financial Statement Components,” to our consolidated financial statements). Nevertheless,these products. Further, we ~~still~~ expect ~~to see continuing future trending declines in~~ our delinquency rates ~~when compared~~ to ~~similar~~increase slightly as the risk profiles (and thus expected returns) for these receivables are higher than that experienced under our current mix of largely mature credit card receivables underlying closed credit card accounts. These delinquency rates will likely have a higher rate of increase during the second quarter of 2014 due to an overall decline in the managed receivables base as discussed above, coupled with prior ~~year periods.~~period originations reaching peak chargeoff during the same period.

Combined gross charge-off ratio and Adjusted charge-off ratio .~~Charge offs.~~ We generally charge off our Credit ~~Card~~ and Other Investments segment receivables when they become contractually more than 180 days past due or 120 days past due for the point-of-sale finance product. For our rent-to-own products, we generally charge off receivables and impair associated rental merchandise if the customer has not made a payment within ~~30 days of notification and confirmation of a customer’s bankruptcy or death.~~the previous 90 days. However, if a ~~cardholder~~customer makes a payment greater than or equal to two minimum payments within a month of the charge-off date, we may reconsider whether charge-off status remains appropriate. ~~Additionally,~~For all of our products, we generally charge off receivables within 30 days of notification and confirmation of a customer’s bankruptcy or death. However, in some cases of death, we do not charge off receivables ~~are not charged off~~ if ~~with respect to the deceased customer’s account,~~ there is a surviving, contractually liable individual or an estate large enough to pay the debt in full.

~~Our lower-tier~~Certain of our prior originated credit card offerings have higher charge offs relative to their average managed receivables balances, than do our other portfolios. Due to the recent higher rate of decline in these particular originated receivables relative to all of our other outstanding credit card receivables, all things being equal, one would expect reduced charge-off ~~ratios. This is supported by the above overall~~ratios for these receivables. However, this trend ~~of declining year-over-year quarterly charge-off rates in all quarters but the first quarter of 2012. This trend is~~was muted to some degree ~~however, for our net charge-off ratio and our adjusted charge-off ratio (as discussed in more detail below)~~ simply due to a change in the mix of our ~~charge offs toward a~~receivable balances due to growth within our point-of-sale finance operations that have slightly higher ~~relative level of principal charge offs versus finance and fee charge offs.~~charge-off rates than the liquidating credit card portfolios as well as increased charge-offs associated with ongoing credit card origination efforts in the U.K.

~~All of our~~Our combined and adjusted charge-off ratios were skewed higher during the first quarter of 2012 by reason of the unique transaction opportunity ~~mentioned~~described in ~~our~~ the Delinquencies ~~discussion~~section above. ~~In future quarters (and absent any unique transaction opportunities like~~Since that quarter, however, we experienced ~~in the first quarter of 2012), we expect the~~a general ~~rate of~~trending decline in our quarterly charge-off ratios. Such ratios declined significantly in 2013 based largely on the longer weighted average age and maturity of our managed receivables portfolio. This trend reversed somewhat in the fourth quarter of 2013 due primarily to ~~moderate and~~growth within our point-of-sale finance operations that have slightly higher charge-off ~~ratios~~rates than the liquidating credit card portfolios as well as increased charge-offs associated with ongoing credit card origination efforts in the U.K.

In the next few quarters, we expect generally stable to ~~generally stabilize (subject to normal seasonal variations). Our~~perhaps modestly increasing charge off rates on a period-over-period comparison basis. This expectation ~~of a reduced rate of decline in our charge-off ratios~~ is based on (1) the age, maturity and stability of our portfolio of generally liquidating receivables associated with closed credit card accounts, ~~coupled with~~ (2) ~~an expectation of~~modestly higher expected charge off rates on ~~credit card receivables associated with credit card originations in the U.K.~~

~~Combined gross charge-off ratio.~~ ~~See the above general~~ ~~Charge Offs~~ ~~discussion.~~

~~Net charge-off ratio.~~ ~~See the above general~~ ~~Charge Offs~~ ~~discussion.~~

~~Adjusted charge-off ratio.~~ ~~This ratio reflects~~ our net charge offs, less credit quality discount accretion with respect to our acquired portfolios. Therefore, its trend line should follow that of our net charge-off ratio, adjusted for the diminishing impact of past portfolio acquisitions and for the additional impact ofrapidly growing new portfolio acquisitions. In the first and second quarters of 2011, the gap between the net charge-off ratio and the adjusted charge-off ratio widened (as it typically does following each portfolio acquisition at a discounted purchase price) because we determine our managed receivables statistics by treating the transaction in which our 50%-owned equity-method investee acquired our U.K. Portfolio structured financing trust notesproduct offerings such as a deemed sale of the U.K. Portfolio trust receivables at their face amount, followed by the 50%-owned equity-method investee’s repurchase of such receivables for consideration equal to the discounted purchase price that it paid for the notes. Although one would expect the gap between the net charge-off ratio and the adjusted charge-off ratio to gradually narrow (as we saw in the last two quarters of 2011) absent another portfolio acquisition, the unique transaction opportunity mentioned in our ~~Delinquencies~~ discussion above caused a significant widening of the gap between the net charge-off ratio and the adjusted charge-off ratio in the first quarter of 2012. That transaction opportunity caused our first quarter 2012 charge offs to be comprised of a disproportionally higher level of U.K. Portfolio charge offs than normal (for which significant levels of credit quality discount were accreted in the adjusted charge-off ratio computation in the first quarter of 2012).

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We also note that our U.K. credit card receivables originations, which have produced high levels of delinquencies and charge offs for early vintages, caused a mix change whereby a greater proportion than typical of our net charge-offs inwas experienced during the fourth quarter of ~~2012 were comprised of receivables (i.e., early vintage U.K. receivables originations) not represented~~2013, offset by those in portfolios purchased at discounted purchase prices. Accordingly, notwithstanding year-over-year declines in our fourth quarter combined gross charge-off and net charge-off ratios, we experienced a slight increase in our fourth quarter 2012 adjusted charge-off ratio relative to thatlower charge offs associated with ongoing credit card origination efforts in the ~~fourth quarter of 2011.~~U.K. due to reduced marketing levels associated with this product and (3) an overall decline in the managed receivables base as discussed above, coupled with prior period originations reaching peak chargeoff during the same period.

Total ~~yield ratio and gross~~ yield ratio. As noted previously, the mix of our managed receivables generally has shifted away from ~~those receivables of our lower-tier~~certain higher-yielding credit card ~~offerings.~~receivables that we originated prior to 2008. Those particular originated receivables have higher delinquency rates and late and over-limit fee assessments than do our other portfolios, and thus have higher total yield ~~and gross yield~~ ratios as well. Accordingly, we ~~would~~ expect to see a slight generally trending decline in our total yield ~~and gross yield ratios~~ratio consistent with disproportionate reductions in ~~our lower-tier credit card~~these particular originated receivables over the last several quarters due to their higher charge-off ~~levels over the past several quarters.~~levels. Our total ~~and gross~~ yield ~~ratios also have~~ratio has been adversely affected over the past several quarters by our ~~2007 U.K.~~Non-U.S. Acquired Portfolio acquisition. Its total ~~and gross~~ yields are below average as compared to our other portfolios, and the rate of decline in receivables in this portfolio has lagged behind the rate of decline in receivables in our other portfolios, thus continuing to suppress our total yield ~~ratios.~~ratio.

Notwithstanding the above, our ~~addition of lower-tier credit card accounts in the U.K. in 2012 has temporarily reversed and delayed our~~ generally declining total ~~and gross~~ yield ratio ~~trends.~~trends have largely been reversed due to growth in our newer higher yielding products, including our point-of-sale finance product and our originated U.K. credit card products. While ~~the addition of these accounts~~this growth has ~~resulted in temporary~~contributed to increases in our total ~~and gross~~ yield ~~ratios,~~ratio, we expect that general growth in our new product

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offerings will slow or even modestly reverse the trend of our declining charge-off rates as discussed above because we expect these accounts to ~~also reduce the rate of decline in our charge-off rates as the accounts~~ season, mature, and charge off at higher rates than we currently experience on our liquidating pool of credit card receivables associated with closed credit card accounts.

We ~~also note exceptions to~~anticipate continued growth in our new higher yielding products over the ~~trendlines discussed above with respect to~~next few quarters and continued accretive effects of this growth on our total yield ratios.

Although we have seen generally improving total yield ratio ~~wherein~~trend-lines, our fourth quarter 2012 ~~and third quarter 2011~~ total yield ~~ratios were~~ratio was depressed by ~~respective~~a $5.5 million ~~and $5.3 million write-downs~~write-down of our investments in non-marketable debt and equity securities. Absent ~~these write-downs,~~this write-down, our total yield ~~ratios~~ratio would have been 22.9% in ~~both~~ the fourth quarter of ~~2012~~2012.

Rental Merchandise

The following table presents certain trends associated with our merchandise leasing activities within our Credit and Other Investments segment (in thousands; percentages of total):



	At or for the three months ended
	2013
	Dec. 31			Sept. 30
Period-end rental merchandise	$	28,849		$	16,976
Period-end rental merchandise accounts	83			42
Average rental merchandise	$	22,804		$	8,493
Other income ratio	46.7		%	38.1		%

Average rental merchandise. Our merchandise leasing activities began in earnest during the third quarter of ~~2011. These write-downs also adversely impacted~~2013, and prior to this quarter, we had no significant experience or trends with this particular type of product. Subject to the availability of capital on desirable terms, we expect significant ongoing quarterly growth in our ~~Other Income ratio as discussed below.~~

~~Net interest margin~~. ~~Because~~rental merchandise activities in future quarters with the exception of the ~~significance~~second quarter of 2014 due to the ~~late fees charged on our lower-tier credit card receivables as~~aforementioned disruption in new account originations. Our rental merchandise offerings comprise a percentage of outstanding receivables balances, we generally would expect our net interest margin to increase as our lower-tier credit card receivables become a larger percentage and to decrease as they become a smaller percentagesignificant part of our overall managed receivables. Accordingly, the disproportionate reductions we have experienced in our lower-tier credit card receivables levels is the principal factor that has contributed to the continued general declining trend in our net interest margins relative to those experienced in prior years.point-of-sale finance suite of products.

Our net interest margin also is affected by the effects of our 2007 U.K. Portfolio acquisition. The net interest margin for this portfolio is below the weighted average rate of our other portfolios, and the impact of this portfolio continues to be felt as our originated portfolios continue to decline in size at a faster pace than our acquired U.K. Portfolio, thus increasing the impact of this portfolio’s lower net interest margin on the overall results.

~~Consistent with our experiences in the past few quarters, we expect a relatively stable low-double-digit net interest margin for the foreseeable future.~~

Other income ratio. ~~We generally expect~~ The numerator of our other income ratio ~~to increase as~~equals gross revenues associated with our ~~lower-tier receivables become a larger percentage, and to decrease as our lower-tier receivables become a smaller percentage,~~leasing activities less depreciation of our overall managed receivables. When underlying open accounts, these receivables generate significantly higher annual membership, over-limit, monthly maintenance and other fees than do our other portfolios. Consequently, the closurerental merchandise. The denominator of credit card accounts and the mix change discussed above under which our lower-tier receivables comprise a much smaller percentage of our total receivables accounts in significant part for our low other income ratios.

As generally experienced in 2011 and 2012, we expect a positive generally low single-digit other income ratio for the foreseeable future unless we experience material gains or losses associated with future debt repurchases, investment write-downs or other unique transactions, which could cause an increase or decrease in the ratio. Negatively affecting our other income ratio ~~for~~equals average rental merchandise as disclosed in the ~~third~~tables above. Given the rapid growth in these operations, the timing of new account originations could significantly impact our quarterly ratios. Further, because of our limited history with our merchandise leasing activities as well as the expected disruptions in new account originations during the second quarter of ~~2011 were $5.3 million of losses~~2014 discussed above, we are optimistic, but uncertain at this time, that ~~we recognized due to other-than-temporary declines in the values of non-marketable debt securities in which we had previously invested; excluding the impact of these write-downs,~~ our future quarters' other income ratio would have been 2.1%. Similarly in the fourth quarter of 2012, we experienced other-than-temporary declines in the values of non-marketable debt and equity securities in the amount of $5.5 million; excluding the impact of these write-downs, our other income ratio would have been 4.3%.

~~Operating ratio.~~ ~~Although we have been highly focused on expense reduction and cost control efforts, our managed receivables levels are generally falling~~ratios will continue at faster rates than the rates at which we have been able thus far to reduce our costs (particularly when considering our fixed infrastructure costs and costs of other non-receivables-based business initiatives and investments). This accounts for the trendline of generally increasing operating ratios over the past several quarters. In the fourth quarter of 2012, this trend was significantly offset due to the receipt of $10.0 million from a lender to compensate us for excess costs we incurred for the benefit of the lender in servicing a credit card portfolio that collateralized the lender’s loan to us; excluding the impact of this payment, our operating ratio would have been 20.2%.

~~Future Expectations~~

Because the accounts underlying substantially all of our credit card receivables are closed and because of expected liquidations within each of our credit card receivables portfolios, we generally do not expect our yield-oriented managed receivables statistics to improve significantly from their current ~~levels for the foreseeable future.~~

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Our credit card operations within our Credit Cards and Other Investments segment are separate and distinct from our other operations. As such, if we were ever to conclude that the ongoing costs of these operations exceeded their benefits (i.e., cash flows to us and residual asset values), we could liquidate our credit card operations (either by continuing to allow them to decline in size or through more aggressive action) with minimal impact on future financial performance of our other operations. We reference the table included in Note 11, “Convertible Senior Notes,” to our consolidated financial statements, which quantifies the risk to our consolidated total equity position associated with a complete liquidation of our credit cards receivables portfolios.

Definitions of Financial, Operating and Statistical Measures

Total yield ratio.Represents an annualized fraction, the numerator of which includes all finance charge and late fee income billed on all outstanding receivables, plus credit card fees (including over-limit fees, cash advance fees, returned check fees and interchange income), plus earned, amortized amounts of annual membership fees and activation fees with respect to certain of our credit card products, plus ancillary product income, plus amortization of the accretable yield component of our acquisition discounts for portfolio purchases, plus gains (or less losses) on debt repurchases and other activities within our Credit and Other Investments segment less any adjustments to finance and fee billings, and the denominator of which is average managed receivables.

Combined gross charge-off ratio. Represents an annualized fraction the numerator of which is the aggregate amounts of finance charge, fee and principal losses from customers unwilling or unable to pay their receivables balances, as well as from bankrupt and deceased customers, less current-period recoveries, and the denominator of which is average managed receivables. Recoveries on managed receivables represent all amounts received related to managed receivables that previously have been charged off, including payments received directly from customers and proceeds received from the sale of those charged-off receivables. Recoveries typically have represented less than 2% of average managed receivables.

~~Net~~Adjusted charge-off ratio.Represents an annualized fraction the numerator of which is the principal amount of losses, net of recoveries and the denominator of which is average managed receivables. (The numerator excludes finance charge and fee charge offs, which are charged against the related income item at the time of charge off, as well as losses from fraudulent activity in accounts, which are included separately in other operating expenses.)

~~Adjusted charge-off ratio.~~ ~~Represents an annualized fraction the numerator of which is principal net charge offs~~ as adjusted to apply discount accretion related to the credit quality of acquired portfolios to offset a portion of the actual face amount of net charge offs, and the denominator of which is average managed receivables. (Historically, upon our acquisitions of credit card receivables, a portion of the discount reflected within our acquisition prices has related to the credit quality of the acquired receivables—that portion representing the excess of the face amount of the receivables acquired over the future cash flows expected to be collected from the receivables. Because we treat the credit

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quality discount component of our acquisition discount as related exclusively to acquired principal balances, the difference between our net charge offs and our adjusted charge offs for each respective reporting period represents the total dollar amount of our charge offs that were charged against our credit quality discount during each respective reporting period.)

~~Total yield~~Other income ratio. Represents an annualized fraction, the numerator of which includes all finance charge and late fee income billed on all outstanding receivables, plus credit card fees (including over-limit fees, cash advance fees, returned check fees and interchange income), plus earned, amortized amounts of annual membership fees and activation feesequals revenues associated with ~~respect to certain~~our leasing activities less depreciation of our credit card products, plus ancillary product income, plus amortization of the accretable yield component of our acquisition discounts for portfolio purchases, plus gains (or less losses) on debt repurchases and other activities within our Credit Cards and Other Investments segment,rental merchandise and the denominator of which is average ~~managed receivables.~~rental merchandise.

~~Gross yield ratio.~~ ~~Represents an annualized fraction, the numerator of which is finance charges and late fees, and the denominator of which is average managed receivables.~~

~~Net interest margin.~~ Represents an annualized fraction, the numerator of which includes finance charge and late fee income billed on all outstanding receivables, plus amortization of the accretable yield component of our acquisition discounts for portfolio purchases, less interest expense associated with portfolio-specific structured financing debt facilities and finance charge and late fee charge offs, and the denominator of which is average managed receivables. (Net interest margins are influenced by a number of factors, including (1) the level of finance charges and late fees, (2) the weighted average cost of funds underlying portfolio-specific debt or within our securitization structures, (3) amortization of the accretable yield component of our acquisition discounts for portfolio purchases and (4) the level of our finance charge and late fee charge offs.)

~~Other income ratio.~~ Represents an annualized fraction, the numerator of which includes credit card fees (including over-limit fees, cash advance fees, returned check fees and interchange income), plus earned, amortized amounts of annual membership fees and activation fees with respect to certain of our credit card products, plus ancillary product income, less all fee charge offs (with the exception of late fee charge offs, which are netted against the net interest margin), plus realized and unrealized gains (or less losses) on debt repurchases, investments in debt and equity securities, and other activities within our Credit Cards and Other Investments segment, and the denominator of which is average managed receivables.

~~Operating ratio.~~ Represents an annualized fraction, the numerator of which includes all expenses (other than marketing and solicitation expenses) associated with our Credit Cards and Other Investments segment, net of any servicing income we receive from third parties, and the denominator of which is average managed receivables.

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Auto Finance Segment

Our Auto Finance segment historically included a variety of auto sales and lending activities.

Our original platform, CAR, acquired in April 2005, principally purchases and/or services loans secured by automobiles from or for and also provides floor-plan financing for a pre-qualified network of independent automotive dealers and automotive finance companies in the buy-here, pay-here used car business. We have expanded these operations to also include certain installment lending products in addition to our traditional loans secured by automobiles. While not currently material, these loans could represent a meaningful investment in the future.

We also historically owned substantially all of JRAS, a buy-here, pay-here dealer we acquired in 2007 and operated from that time until our disposition of certain JRAS operating assets in the first quarter of 2011.

~~Lastly,~~Additionally, our ACC platform acquired during 2007 historically purchased retail installment contracts from franchised car dealers. We ceased origination efforts within the ACC platform during 2009 and outsourced the collection of its portfolio of auto finance receivables.

Collectively, as of December 31, 2013, we ~~currently serve~~served more than ~~675~~600 dealers through our Auto Finance segment in 37 states.

Managed Receivables Background

For reasons set forth previously within our Credit ~~Cards~~ and Other Investments segment discussion, we also provide managed-receivables-based financial, operating and statistical data for our Auto Finance segment. Reconciliation of the auto finance managed receivables data to our GAAP financial statements requires an understanding that our managed receivables data are based on billings and actual charge offs as they occur, without regard to any changes in our allowance for uncollectible loans and fees receivable.

Analysis of Statistical Data

Financial, operating and statistical metrics for our Auto Finance segment are detailed (dollars and numbers of accounts in thousands; percentages of total) in the following ~~tables:~~table:

At or for the Three Months Ended
2012 2011
Dec. 31 Sept. 30 Jun. 30 Mar. 31 Dec. 31 Sept. 30 Jun. 30 Mar. 31
Period-end managed receivables $ 64,158 $ 67,858 $ 72,886 $ 75,275 $ 87,755 $ 99,237 $ 113,316 $ 128,254
Period-end managed accounts 23 23 24 24 26 27 29 30
Percent 30 or more days past due 14.0 % 13.3 % 10.7 % 8.3 % 12.8 % 11.9 % 10.2 % 8.6 %
Percent 60 or more days past due 5.0 % 5.4 % 3.6 % 3.3 % 4.9 % 4.7 % 3.8 % 3.6 %
Percent 90 or more days past due 2.1 % 2.4 % 1.1 % 1.6 % 2.1 % 2.3 % 1.5 % 1.5 %
Average managed receivables $ 65,065 $ 69,538 $ 75,877 $ 80,503 $ 92,719 $ 106,881 $ 120,773 $ 140,132
Gross yield ratio 36.8 % 35.3 % 35.2 % 33.9 % 36.3 % 35.5 % 32.6 % 29.2 %
Adjusted charge-off ratio 5.9 % 3.9 % 4.2 % 8.2 % 8.3 % 9.8 % 10.9 % 21.1 %
Recovery ratio 3.5 % 3.9 % 4.7 % 6.0 % 7.1 % 5.6 % 7.0 % 3.4 %
Net interest margin 35.6 % 23.8 % 32.0 % 17.0 % 24.4 % 25.6 % 23.8 % 20.5 %
Other income ratio 3.8 % 2.7 % 2.3 % 2.3 % 1.4 % 1.2 % 0.9 % -11.2 %
Operating ratio 26.1 % 24.7 % 24.0 % 29.9 % 21.3 % 19.5 % 18.7 % 18.7 %



	At or for the Three Months Ended
	2013												2012
	Dec 31.			Sept. 30			Jun. 30			Mar. 31			Dec. 31			Sept. 30			Jun. 30			Mar. 31
Period-end managed receivables	$	63,491		$	59,249		$	60,706		$	60,449		$	64,158		$	67,858		$	72,886		$	75,275
Percent 30 or more days past due	13.1		%	12.3		%	12.1		%	10.0		%	14.0		%	13.3		%	10.7		%	8.3		%
Percent 60 or more days past due	4.3		%	4.2		%	3.6		%	3.6		%	5.0		%	5.4		%	3.6		%	3.3		%
Percent 90 or more days past due	1.7		%	1.6		%	1.1		%	1.5		%	2.1		%	2.4		%	1.1		%	1.6		%
Average managed receivables	$	61,263		$	59,126		$	60,359		$	61,803		$	65,065		$	69,538		$	75,877		$	80,503
Total yield ratio	40.2		%	41.0		%	25.5		%	40.9		%	40.6		%	38.1		%	37.5		%	36.1		%
Combined gross charge-off ratio	4.0		%	4.4		%	4.1		%	2.2		%	6.4		%	4.5		%	4.9		%	9.2		%
Recovery ratio	1.6		%	1.8		%	2.2		%	5.1		%	3.5		%	3.9		%	4.7		%	6.0		%

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Managed receivables. ~~Period-end~~ Average managed receivables have gradually declined because we curtailed purchasing and origination activities within our ACC and JRAS operations prior to 2011 ~~(and sold our JRAS operations, but not its underlying~~and those receivables ~~in February 2011).~~have declined over time. For all of the periods set forth above, only CAR continues to purchase/originate loans, but until the second quarter of 2013, it had not done so at growth levels significant enough to offset the gradual ~~liquidations~~liquidation of our ACC and JRAS portfolios’ managed receivables. ACC and JRAS managed receivables are substantially liquidated at this point, and we are beginning to see and expect stability in the ~~pace~~level of ~~decline in~~ our managed receivables ~~levels~~with some growth as receivable purchase opportunities arise. Although we seek to ~~abate significantly over~~expand our CAR operations, the ~~next few quarters. We also expect to begin seeing net growth~~Auto Finance segment faces strong competition from other specialty finance lenders, as well as the indirect effects on us of our buy-here, pay-here dealership customers' competition with more traditional franchise dealerships for consumers interested in ~~our managed receivables within the next year.~~purchasing automobiles.

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Delinquencies. Our ACC and JRAS receivables are substantially ~~liquiditated~~liquidated and are at ~~largely~~relatively insignificant levels relative to our better performing CAR receivables, which have significantly lower late stage (60 or more days past due) delinquency and charge-off rates; this fact and a recovering economy accounted for ~~the modest year-over-year general improvement in~~our generally improving delinquency statistics through the end of the second quarter of 2012. Because the JRAS and ACC receivables are ~~largely~~relatively insignificant, we do not expect any material further improvements in our delinquency statistics associated with further liquidations of these receivables. Delinquencies rose somewhat within our CAR receivables portfolio in the third and fourth quarters of 2012, primarily due to seasonal patterns and a slightly weakened market. ~~Delinquencies~~These delinquency rates abated in 2013 although they were still slightly higher in the first and second quarters of 2013 than those experienced in ~~2011~~the first and ~~early 2012 reflected historically low~~second quarters of 2012. In the first quarter of both years in particular, we saw the benefits of seasonally strong payment patterns associated with year-end tax refunds for most of our customers. Our delinquency rates declined in the third and fourth quarters of 2013 relative to the same period in the prior year, and the current levels we are experiencing more closely represent what we would expect going forward. ~~Even~~We are not generally concerned with modest fluctuations in delinquency rates and do not believe they will have a significantly positive or adverse impact on our results of operations; even at the slightly elevated rates ~~(when compared to last year), because~~like we saw period over period in the first two quarters of this year, we earn significant yields on CAR’s receivables and have significant dealer reserves (i.e., retainages or holdbacks on the amount of funding CAR provides to its dealer customers) to protect against credit ~~losses, we are not currently concerned that the rise in delinquencies will have a significantly adverse impact on our adjusted charge-off ratio.~~losses.

~~Gross~~Total yield ~~ratio, net interest margin and other income~~ ratio. With the exception of the ~~first and third quarters~~second quarter of ~~2012,~~2013, we have experienced a general ~~trend line~~trend-line of improving ~~net interest margins is evident relative~~total yield ratios compared to ~~comparable~~ prior year periods due in part to liquidation of the JRAS and ACC receivables, thereby causing the ~~better-performing~~higher yielding CAR receivables to comprise a ~~greater~~larger percentage of our average managed auto finance receivables. This increasing trend is generally expected to cease as the impact of the JRAS and ACC receivables are no longer a significant component of the overall pool of receivables and as such we expect this ratio to remain relatively stable throughout 2014. The ~~terms~~significant decrease in the second quarter of 2013 was caused by the adverse effects of a $2.4 million write-off of a note we had received from buyers of our ACC debt facility provide that 37.5% of any cash flows (net of contractual servicing compensation) generated on the ACC auto finance receivables portfolio after repayment of the notes will be allocated to the note holders as additional compensation for the use of their capital. Significant recent improvements in performance of the ACC receivables caused us to resume significant accruals of contingent interest expense under the debt facility, and our accruals of such additional interest during the first and third quarters of 2012 caused the decline in our net interest margin relative to our improving net interest margin trend line. Because all principal under the ACC debt facility has now been repaid (and the only remaining obligation under the facility is for contingent interest that we have fully accrued at this point), we do not expect any significant future effects on our net interest margin associated with contingent interest under the ACC debt facility.

Consistent with our recent experiences, because our liquidating ACC and JRAS receivables are now largely insignificant relative to our total portfolio of auto finance receivables, the higher gross yields we achieve within our CAR operations generally are expected to continue to result in slightly higher trending gross yield ratios and net interest margins in future quarters relative to comparable prior year quarterly levels.

~~The principal component of our other income ratio was the gross profit that our former~~ JRAS buy-here, pay-here dealer operations ~~generated from their auto sales prior to our sale of these operations~~that we sold in February ~~2011. As such,~~2011; excluding the ~~other~~impact of this write-off, our second quarter 2013 total yield ratio would have been 41.1% (and we would have had GAAP Auto Finance segment income ratio historically moved in relative tandem with the volume of JRAS’s auto sales. Our other income ratio in the first quarter of 2011 reflects the $4.6 million loss recognized on the sale of our JRAS operating assets in February 2011. Because of the sale of these operations (and the commensurate elimination of the principal source of other income), we expect an insignificant other income ratio for the foreseeable future in line with what we have experienced in 2012 quarters.during that quarter).

~~Adjusted~~Combined gross charge-off ratio and recovery ratio. We generally charge off auto finance receivables when they are between 120 and 180 days past due, unless the collateral is repossessed and sold before that point, in which case we will record a charge off when the proceeds are received. The ~~adjusted~~combined gross charge-off ratio ~~reflects our net~~represents an annualized fraction the numerator of which is the aggregate amounts of finance charge, ~~offs,~~fee and principal losses from customers unwilling or unable to pay their receivables balances, as well as from bankrupt and deceased customers, less credit quality discount accretion with respect to our acquired portfolios. Our adjusted charge-off ratio was significantly elevated in the first quarter of 2011, principally reflecting the adverse effects of five 2010 JRAS lot closurescurrent-period recoveries, and the ~~corresponding negative impact this had on JRAS collections.~~denominator of which is average managed receivables. Because our ACC receivables and the receivables of our JRAS operations that we retained in connection with ~~our~~the sale of our JRAS operations ~~in February 2011~~ have declined and are now largely insignificant relative to our total portfolio of auto finance receivables and because of significantly improved performance of the ACC and JRAS receivables due both to the aging of the portfolios and some economic recovery and better than expected tax refund seasonal effects, our ~~adjusted~~combined gross charge-off ratio has declined ~~significantly subsequent to the first quarter of 2011.~~significantly. Our CAR receivables, which experience significantly lower charge offs, now comprise a more significant proportion of our average managed auto finance receivables—a factor that ~~not only~~has contributed most significantly to our general trend-line of lower combined gross charge-off ratios. In the ~~2011 decline in our adjusted charge-off ratio, but is also expected to result in lower adjusted charge-off ratios in future quarters. Also serving to reduce our second~~first quarter ~~2011 adjusted charge-off ratio as well as increase our second quarter 2011~~of 2013, we experienced larger than anticipated recovery ~~ratio was a large sale of repossessed autos at auction related to the receivables of~~sales associated with our former JRAS operations, which ~~had accumulated a growing inventory of such vehicles leading into the second quarter of 2011 as well as increased recoveries experienced~~helped to improve our recovery ratio and combined gross charge-off ratio in ~~our ACC portfolio. A similar increase in recoveries was seen during the fourth quarter of 2011 in our ACC portfolio.~~that quarter. We expect our recovery rate to fluctuate modestly from quarter to quarter due to the timing of the sale of repossessed autos, but more importantly, we expect our recovery rate to fall gradually with the declining effects of ACC and JRAS on our operations; CAR experiences significantly lower charge offs and recoveries than we experienced ~~in ACC’s~~with respect to ACC and ~~JRAS’s operations.~~JRAS.

~~Operating ratio.~~ We have experienced a modest general trend line of increasing year-over-year operating ratios, which largely reflects the higher costs of our CAR operations as a percentage of receivables than such operating costs of our ACC and JRAS operations as a percentage of their receivables in prior periods. (Such higher costs correspond with the significantly higher gross yield ratios and net interest margins within our CAR operations.) As noted above, our CAR receivables and operating costs now comprise a greater percentage of respective total Auto Finance segment receivables and operating costs given the gradual liquidation of ACC and JRAS receivables. Notwithstanding this general trend line, we do not expect a significantly higher operating ratio for the foreseeable future. The spike in the first quarter of 2012 operating ratio arose due to an impairment charge of $1.2 million recognized during that quarter associated with unfavorable terms on the sublease of our former ACC offices and certain non-recurring costs we incurred in the collection of our JRAS receivables.

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Future Expectations

Our CAR operations ~~are performing~~continue to perform well in the current environment (achieving consistent profitability) and are expected to continue at current levels for the foreseeable future. Generally offsetting these positive results are ACC and JRAS operations, which are expected to modestly depress overall Auto Finance segment results relative to CAR’s stand-alone results for 2012. However, becauseBecause ACC’s and JRAS’s receivables are now substantially

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liquidated, ~~they~~the history of negative effects of these operations on our Auto Finance segment results should ~~have a small and further diminishing adverse~~be abated in future ~~effect~~periods. We continue to focus on growing our profitable CAR operations primarily from the ~~positive results we are experiencing within our CAR operations. Additionally, planned modest expansions~~addition of new branch operations in 2013, ~~will have an initial negative impact on our operating ratio as~~which we ~~incur start up costs associated with the new locations.~~expect to add to this segment's profitability in 2014.

Liquidity, Funding and Capital Resources

~~We continue to see some dislocation~~As noted elsewhere in ~~the availability of attractively priced and termed liquidity as a result of the market disruptions that began in 2007. This ongoing disruption has resulted in~~this Report, a decline in liquidity available to fund sub-prime credit card receivables ~~wider spreads above the underlying interest indices (typically LIBOR for our borrowings) for the loans that lenders are willing~~at acceptable advance rates and terms (coupled to ~~make against~~some degree with constraints on credit card ~~receivables, and a decrease~~asset returns in ~~advance rates for those loans. Moreover,~~ the most recent global financial crisis differs in key respects from our experiences during other down economic and financing cycles. First, while we had difficulty obtaining asset-backed financing for our originatedU.S.) caused us to cease credit card ~~portfolio activities at attractive advance rates~~marketing operations in the last down cycle (2001 through 2003), the credit spreads (above base pricing indices like LIBOR) at that time were not as wide (expensive) as those seen during the recent crisis. Additionally, while we were successful during that down cycleU.S. beginning in ~~obtaining asset-backed financing for credit card portfolio acquisitions at attractive advance rates, pricing~~late 2007 and ~~other terms, that financing has not been available from traditional market participants since the advent of the most recent crisis.~~

~~Although we are hopeful that subprime credit card liquidity markets ultimately will return~~ to more traditional levels, we are not able to predict when or if that will occur, and we are managing our business with the assumption that such liquidity markets will not return to more traditional levels in the near term. We have closedclose substantially all of our credit card accounts (other than those associated with our originated U.K. accounts). ToUntil the ~~extent possible given constraints thus far on our ability to reduce expenses at the same rate as~~third quarter of 2013, we experienced net liquidations of our managed receivables at faster rates than we were able to reduce our costs. This resulted from the significant level of fixed infrastructure costs that had built up to support our significant legacy credit card lending operations. Our infrastructure costs are ~~liquidating,~~still high now, and while we ~~are managing~~had in the past been focused on cost reduction, our primary focus now is on growing our point-of-sale finance offerings so that our revenues from these product offerings can cover our infrastructure costs and return us to profitability. In this regard, we experienced, for the first time in several years, growth in our earning assets (consisting of our managed receivables ~~portfolios~~and rental merchandise) during the last two quarters of 2013, and we expect, subject to the availability of capital to us at acceptable pricing and terms, to continue to experience growth in future quarters. This growth will be delayed late in the first quarter of 2014 as a significant retail partner in our point-of-sale operations undergoes a product shift that is expected to result in the temporary suspension of new account originations with ~~a goal of generating~~us for both our installment lending product as well as our rent-to-own product. We anticipate this disruption will last into the ~~necessary cash flows over~~second quarter and will result in slower growth for that quarter.

Accordingly, we expect our key challenges in the coming quarters ~~for us~~ to ~~use in de-leveraging~~be (i) containing costs (as opposed to our ~~business, while continuing~~recent focus on reducing expenses) and (ii) obtaining the funding necessary to ~~enhance shareholder value~~meet capital needs required by the growth of our new product offerings and to ~~the greatest extent possible.~~cover our infrastructure costs until our new product offerings generate enough revenues and cash flows to cover such costs.

All of our Credit ~~Cards~~ and Other Investments segment’s structured financing facilities are expected to amortize down with collections on the receivables within their underlying trusts ~~with no bullet repayment requirements~~and should not represent significant refunding or refinancing ~~balance sheet~~ risks to ~~us. Accordingly,~~our consolidated balance sheet. Additionally, we ~~now have~~do not expect any imminent refunding or financing needs associated with our convertible senior notes given that the next redemption date for the remaining $0.5 million outstanding balance on our 3.625% convertible senior notes is May 30, 2015 and the remaining $139.5 million outstanding balance on our 5.875% convertible senior notes is not due for repayment until 2035. As such, the only ~~one structured financing facility~~facilities that ~~presents repayment requirements~~could represent near-term refunding or refinancing ~~balance sheet risks to us—that being our CAR structured finance facility into which we entered~~needs as of December 31, 2013 are those associated with the following notes payable in ~~October of 2011 and which does not mature until October 2014.~~the amounts indicated (in millions):



Amortizing debt facility (expiring April 1, 2016) that is secured by certain receivables	$	0.5
Revolving credit facility (expiring May 17, 2014) that is secured by the financial and operating assets of the entity	4.0
Amortizing debt facility (expiring April 20, 2015) that is secured by certain receivables	5.8
Amortizing debt facility (expiring September 11, 2014) that is secured by certain receivables	3.5
Amortizing debt facility (expiring December 15, 2014) that is secured by certain receivables	3.3
Amortizing debt facility (expiring July 15, 2015) that is secured by certain receivables	8.3
Revolving credit facility (expiring December 3, 2016) that is secured by originated U.K. credit card receivables portfolio	8.2
Revolving credit facility (expiring October 4, 2014) that is secured by the financial and operating assets of our CAR operations	22.0
Total	$	55.6

~~Our focus~~Further details concerning the above debt facilities are provided in Note 10, “Notes Payable,” and Note 11, “Convertible Senior Notes,” to our consolidated financial statements included herein. Based on the state of the debt capital markets, the performance of our assets that serve as security for the above facilities, and our relationships with the lenders, we view imminent refunding or refinancing risks with respect to the above facilities as low in the current environment, and we believe that the quality of our new product offering assets should allow us to raise more capital through increasing the size of our facilities with our existing lenders and attracting new lending relationships.

While not representing a debt facility, we also note that there may be liquidity ~~has resulted~~risks associated with our uncertain tax positions. Although we believe we are several years away from ultimate resolution, and possible settlement and payment, with

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respect to our uncertain tax positions, including those taken in the 2007 and ~~will continue to result~~2008 years under audit by the Internal Revenue Service, it is possible that we may ultimately resolve one or more uncertain tax positions in ~~growth and profitability trade-offs. For example, as noted throughout this Report, we have closed substantially~~a manner that results in a significant payment. Substantially all of our credit card accounts (other than those underlying our accounts in the U.K.); consequently, our portfolio of our managed credit card receivables is expected to show net liquidations for the foreseeable future.

At $55.3 million income tax liability at December 31, ~~2012,~~2013 represents our liability accrued for uncertain tax positions.

At December 31, 2013, we had ~~$67.9~~$50.9 million in unrestricted cash. Because the characteristics of our assets and liabilities change, liquidity management has been a dynamic process for us affected by the pricing and maturity of our assets and liabilities. We historically have financed our business through cash flows from operations, asset-backed structured financings and the issuance of debt and equity. Details concerning our cash flows for the twelve months ended December 31, 2013 are as follows:

During the twelve months ended December 31, 2013, we used$26.9 million in cash flows from operations compared to generating$3.0 million of cash flows from operations during the twelve months ended December 31, 2012. The decrease was principally related to (1) lower collections of credit card finance charge receivables in the twelve months ended December 31, 2013 relative to the same period in 2012, given diminished receivables levels, and (2) purchases of rental merchandise associated with our point-of-sale finance operations during the twelve months ended December 31, 2013, offset, however, by lower payments of accounts payable and accrued expenses in the twelve months ended December 31, 2013 relative to the same period in 2012.

During the twelve months ended December 31, 2013, we generated$49.7 million of cash through our investing activities, compared to generating$229.2 million of cash in investing activities during the twelve months ended December 31, 2012. This decrease is primarily due to the reduced levels of our outstanding investments and the cash returns thereof in 2013 based on the shrinking size of our liquidating credit card and auto finance receivable portfolios as well as the net proceeds received during the year ended December 31, 2012 ~~are~~from the sale of our Investments in Previously Charged-Off Receivables segment, including its balance transfer card operations, offset by growth in our point-of-sale finance product as ~~follow:~~

During the year ended December 31, 2012, we generated $32.9 million in cash flows from operations compared to $83.8 million of cash flows from operations generated during the year ended December 31, 2011. The decrease was principally related to (1) lower collections of credit card finance charge receivables in the year ended December 31, 2012 relative to the same period in 2011, given diminished receivables levels, (2) the lack of any finance and fee collections associated with our U.K. Internet micro-loan operations in the year ended December 31, 2012, given our sale of these operations in April 2011, and (3) reduced net liquidations of receivables associated with our JRAS operations in 2012 versus 2011.

During the year ended December 31, 2012, we generated $199.3 million of cash through our investing activities, compared to generating $433.5 million of cash in investing activities during the year ended December 31, 2011. This decrease is primarily due to the reduced levels of our outstanding investments and the cash returns thereof in 2012 based on the shrinking size of our liquidating credit card and auto finance receivable portfolios, as well as the net proceeds we received from the sale of our MEM and JRAS operations during the year ended December 31, 2011. Offsetting this decline are net proceeds received during the year ended December 31, 2012 from the sale of our Investments in Previously Charged-Off Receivables segment, including its balance transfer card operations.

During the year ended December 31, 2012, we used $309.4 million of cash in financing activities, compared to our use of $458.6 million of cash in financing activities during the year ended December 31, 2011. In both periods, the data reflect net repayments of debt facilities corresponding with net declines in our loans and fees receivable that serve as the underlying collateral for the facilities (principally credit card and auto loans and fees receivable). Beyond the effects of higher 2011 than 2012 repayment levels based on receivables liquidations under our structured financing facilities, we used more cash to fund stock repurchases in 2011 than in 2012. We used $105.0 million in proceeds to repurchase stock in a April 2011 tender offer, versus our use of $82.5 million to repurchase stock in a September 2012 tender offer. These effects were partially offset, however, by the fact that we used only $59.7 million of cash for convertible senior notes repurchases in the year ended December 31, 2011, versus the $83.5 million we used to repay our 3.625% convertible senior notes upon the exercise by note holders of a put right in May 2012.

well as our U.K. originated credit card receivables.

~~Table~~During the twelve months ended December 31, 2013, we used$40.7 million of ~~Contents~~cash in financing activities, compared to our use of $309.4 million of cash in financing activities during the twelve months ended December 31, 2012. In both periods, the data reflect net repayments of debt facilities corresponding with net declines in our loans and fees receivable that serve as the underlying collateral for the facilities (principally credit card and auto loans and fees receivable). Also impacting prior year results is the May 2012 repayment of $83.5 million of our 3.625% convertible senior notes upon the exercise of a then-existing noteholder put right, as well as our use of $82.5 million to repurchase 8,250,000 shares of our common stock at a purchase price of $10.00 per share in September 2012. Offsetting our 2013 use of cash in financing activities are borrowings associated with our new credit products.

We note that the ~~$67.9~~$50.9 million in aggregate December 31, ~~2012~~2013 unrestricted cash referenced above represents the aggregate of all unrestricted cash held by our various business subsidiaries.

Beyond our immediate financing efforts discussed throughout this Report, ~~shareholders should expect us~~we will continue to evaluate debt and equity issuances as a means to fund our investment opportunities. We expect to take advantage of any opportunities to raise additional capital if terms and pricing are attractive to us. Any proceeds raised under these efforts or additional liquidity available to us could be used to fund (1) ~~potential~~the acquisition of additional financial assets associated with our point-of-sale finance activities as well as the acquisition of credit card receivables ~~portfolio acquisitions, which may represent attractive opportunities for us in the current liquidity environment,~~portfolios, (2) further repurchases of our convertible senior notes and common stock, and (3) investments in certain financial and non-financial assets or businesses. Pursuant to a share repurchase plan authorized by our Board of Directors on May 11, 2012, we are authorized as of December 31, 2013to repurchase ~~10,000,000~~up to 9,627,918 shares of our common stock through June 30, 2014.

Lastly, we note that as of this Report date the only remaining material refunding or refinancing risks to us are those of the CAR financing facility into which we entered in October 2011 and which does not mature until October 2014 and our 5.875% convertible senior notes which are due in November 2035.

Contractual Obligations, Commitments and Off-Balance-Sheet Arrangements

Commitments and Contingencies

We do not currently have any off-balance-sheet arrangements; however, we do have certain contractual arrangements that would require us to make payments or provide funding if certain circumstances occur (“contingent commitments”). We do not currently expect that these contingent commitments will result in any material amounts being paid by us. See Note 12, “Commitments and Contingencies,” to our consolidated financial statements included herein for further discussion of these matters.

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Recent Accounting Pronouncements

See Note 2, “Significant Accounting Policies and Consolidated Financial Statement Components,” to our consolidated financial statements included herein for a discussion of recent accounting pronouncements.

Critical Accounting Estimates

We have prepared our financial statements in accordance with GAAP. These principles are numerous and complex. We have summarized our significant accounting policies in the notes to our consolidated financial statements. In many instances, the application of GAAP requires management to make estimates or to apply subjective principles to particular facts and circumstances. A variance in the estimates used or a variance in the application or interpretation of GAAP could yield a materially different accounting result. It is impracticable for us to summarize every accounting principle that requires us to use judgment or estimates in our application. Nevertheless, we describe below the areas for which we believe that the estimations, judgments or interpretations that we have made, if different, would have yielded the most significant differences in our consolidated financial statements.

On a quarterly basis, we review our significant accounting policies and the related assumptions, in particular, those mentioned below, with the audit committee of the Board of Directors.

Measurements for Loans and Fees Receivable at Fair Value and Notes Payable Associated with Structured Financings at Fair Value

Our valuation of loans and fees receivable, at fair value is based on the present value of future cash flows using a valuation model of expected cash flows and the estimated cost to service and collect those cash flows. We estimate the present value of these future cash flows using a valuation model consisting of internally developed estimates of assumptions third-party market participants would use in determining fair value, including estimates of net collected yield, principal payment rates, expected principal credit loss rates, costs of funds, discount rates and servicing costs. Similarly, our valuation of notes payable associated with structured financings, at fair value is based on the present value of future cash flows utilized in repayment of the outstanding principal and interest under the facilities using a valuation model of expected cash flows net of the contractual service expenses within the facilities. We estimate the present value of these future cash flows using a valuation model consisting of internally developed estimates of assumptions third-party market participants would use in determining fair value, including: estimates of net collected yield, principal payment rates and expected principal credit loss rates on the credit card receivables that secure the non-recourse notes payable; costs of funds; discount rates; and contractual servicing fees.

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The ~~aforementioned~~estimates for credit losses, payment rates, servicing costs, contractual servicing fees, costs of funds, discount rates and yields earned on credit card receivables ~~estimates~~ significantly affect the reported amount of our loans and fees receivable, at fair value and our notes payable associated with structured financings, at fair value on our consolidated balance sheet, and they likewise affect our changes in fair value of loans and fees receivable recorded at fair value and changes in fair value of notes payable associated with structured financings recorded at fair value categories within our fees and related income on earning assets line item on our consolidated statement of operations.

Allowance for Uncollectible Loans and Fees

Through our analysis of loan performance, delinquency data, charge-off data, economic trends and the potential effects of those economic trends on our customers, we establish an allowance for uncollectible loans and fees receivable as an estimate of the probable losses inherent within those loans and fees receivable that we do not report at fair value. To the extent that actual results differ from our estimates of uncollectible loans and fees receivable, our results of operations and liquidity could be materially affected.

Recognition and Measurements with Respect to Uncertain Tax Positions

Our businesses and the tax accounting for our businesses are very complex, thereby giving rise to a number of uncertain tax positions, several of which are matters that are under consideration, and in some cases under dispute, in audits of our operations by various taxing authorities (including the Internal Revenue Service at the federal level with respect to net operating losses that we incurred in 2007 and 2008 and that we carried back to obtain tentative refunds of federal taxes paid in earlier years dating back to 2003).

In determining whether we are entitled to recognize, and in measuring the level of benefits that we are entitled to recognize associated with, uncertain tax positions, we (and experts we have hired to advise us) make an evaluation of the

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technical merits of a tax position derived from sources of authorities in the tax law (legislation and statutes, legislative intent, regulations, rulings, and case law) and their applicability to the facts and circumstances underlying our tax position. Although we believe we are several years away from ultimate resolution, and possible settlement and payment, with respect to our uncertain tax positions, including those taken in the 2007 and 2008 years under audit by the Internal Revenue Service, it is possible that we may ultimately resolve one or more uncertain tax positions in a manner that differs from the liabilities we have recorded associated with such positions under our recognition and measurement determinations.

To the extent that our ultimate resolutions result in less liability than we have recorded associated with our uncertain tax positions, we could experience a material release of liability, increase in income, and greater liquidity than our investors might otherwise expect. Alternatively, to the extent that our ultimate resolutions result in more liability than we have recorded, our results of operations and liquidity could be materially adversely affected.

Valuation Allowances Against Net Deferred Tax Assets

Certain of our deferred tax assets relate to federal, foreign and state net operating losses, and the realization of our net deferred tax assets is primarily dependent upon generating sufficient taxable income prior to the expiration of these net operating loss carry-forwards. Our recorded tax benefits (or deferred tax assets) associated with net operating loss carry-forwards exceed our net deferred tax assets, and we provide valuation allowances against all of our net deferred tax assets because it is more likely than not that we will not be able to use our net operating losses to reduce future tax liabilities in applicable federal, foreign and state tax jurisdictions. To the extent we are able to realize recorded tax benefits associated with some or all of our net operating losses, our financial position could improve materially relative to that reported on our December 31, 2013 consolidated balance sheet.

Rental Merchandise

Our rental merchandise consists of consumer electronics and furniture that we initially record on our consolidated balance sheets at our cost. After our initial recording of the rental merchandise at cost, we reduce its carrying value for depreciation thereof. We typically depreciate our rental merchandise over contract rental periods, generally 12 months (monthly agreements) or 26 periods (bi-weekly agreements) under a $-0- salvage value assumption. These assumptions are periodically adjusted based on actual results and impairments as they occur. We follow this method to match, as closely as practicable, the recognition of depreciation expense with revenues associated with our customers' use of the rental merchandise. Currently, we do not maintain any levels of rental merchandise beyond what actually has been rented to our customers under our contracts with them.

Revenue Recognition for Rental Merchandise

Our rent-to-own terms with our customers typically provide for 26, non-refundable, bi-weekly rental payments over a contract period of 12 months. Generally, the customer can take ownership of the merchandise by exercising a purchase option or making all required rental payments. We accrue periodic billed rental amounts (net of allowances for uncollectible billings) into revenues over the rental period to which the billed amounts relate, and we defer recognition in revenues of any advanced customer rental payments until the rental period in which they are properly recognizable under the terms of the contract. Additionally, we do not recognize a receivable for future periods' rental obligations due to us from our customers as our customers can terminate their rental agreements at any time with no further obligation to us, other than the return of rental merchandise.



ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a “smaller reporting company,” as defined by Item 10 of Regulation S-K, we are not required to provide this information.



ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See the Index to Financial Statements in Item 15, “Exhibits and Financial Statements Schedules.”

Management’s Report on Internal Control over Financial Reporting

Management of Atlanticus Holdings Corporation is responsible for establishing and maintaining adequate internal control over financial reporting (as such term is defined in ~~Exchange~~ Act Rules 13a-15(f)) for Atlanticus Holdings Corporation and our

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subsidiaries. Our internal control over financial reporting is a process designed under the supervision of our principal executive and financial officers to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external reporting purposes in accordance with GAAP. Under the supervision and with the participation of management, including our principal executive and financial officers, we conducted an evaluation of the effectiveness of internal control over financial reporting as of December 31, ~~2012,~~2013, based on the framework in Internal ~~Control—Integrated~~Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”)Internal Control-Integrated Framework (1992).

Based on our evaluation under the framework in Internal ~~Control—Integrated~~Control-Integrated Framework, management has concluded that internal control over financial reporting was effective as of December 31, ~~2012.~~2013.

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ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.



ITEM 9A.	CONTROLS AND PROCEDURES

As of December 31, ~~2012,~~2013, an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Act) was carried out on behalf of Atlanticus Holdings Corporation and our subsidiaries by our management with the participation of our Chief Executive Officer and Chief Financial Officer. Based upon the evaluation, management concluded that these disclosure controls and procedures were effective as of December 31, ~~2012.~~2013. During the fourth quarter of our year ended December 31, ~~2012,~~2013, no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Act) occurred that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Management’s Report on Internal Control over Financial Reporting is set forth in Part II, Item 8 of this Annual Report on Form 10-K.

This Annual Report does not include an attestation report of our ~~registered~~independent public accounting firm regarding internal control over financial reporting. Management’s report is not subject to attestation by our ~~registered~~independent public accounting firm pursuant to SEC rules that permit us to provide only management’s report in this Annual Report.



ITEM 9B.	OTHER INFORMATION

None.

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PART III



ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by this Item will be set forth in our Proxy Statement for the ~~2013~~2014 Annual Meeting of Shareholders in the sections entitled “Proposal One: Election of Directors,” “Executive Officers of Atlanticus,” “Section 16(a) Beneficial Ownership Reporting Compliance” and “Corporate Governance” and is incorporated by reference.



ITEM 11.	EXECUTIVE COMPENSATION

The information required by this Item will be set forth in our Proxy Statement for the ~~2013~~2014 Annual Meeting of Shareholders in the section entitled “Executive and Director Compensation” and is incorporated by reference.



ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

~~Equity Compensation Plan Information~~

We maintain two stock-based employee compensation plans (our Employee Stock Purchase Plan or “ESPP” and our 2008 Equity Incentive Plan). The 2008 Equity Incentive Plan provides for grants of stock options, stock appreciation rights, restricted stock awards, restricted stock units and incentive awards. The maximum aggregate number of shares of common stock that may be issued under this plan and to which awards may relate is 2,000,000 shares (of which 953,518 remained as of December 31, 2012). Upon shareholder approval of the 2008 Equity Incentive Plan in May 2008, all remaining shares available for grant under our previous stock option and restricted stock plans were terminated.

All employees, excluding executive officers, are eligible to participate in the ESPP. Under the ESPP, employees can elect to have up to 10% of their annual wages withheld to purchase common stock in Atlanticus up to a fair market value of $10,000. The amounts deducted and accumulated by each participant are used to purchase shares of common stock at the end of each one-month offering period. The price of stock purchased under the ESPP is approximately 85% of the fair market value per share of our common stock on the last day of the offering period.

~~The following table provides information about our outstanding option and restricted stock unit awards as of December 31, 2012.~~

Plan Category

Number of
Securities to Be
Issued upon Exercise of
Outstanding
Options and Vesting of Restricted Stock Units (1)

Weighted-Average
Exercise Price of
Outstanding Options

Number of Securities Remaining Available for
Future Issuance under
Employee Compensation Plans (Excluding
Securities Reflected in
First Column) (2)

Equity compensation plans previously approved by security holders 522,492 $ 40.99 1,013,518
Equity compensation plans not approved by security holders — — —
Total 522,492 $ 40.99 1,013,518

~~(1)~~

~~Does not include outstanding shares of previously awarded restricted stock.~~

~~(2)~~

~~Includes 953,518 options or other share-based awards available under our 2008 Equity Incentive Plan and 60,000 shares available under our ESPP as of December 31, 2012.~~

Further information required by this Item will be set forth in our Proxy Statement for the 2013 Annual Meeting of Shareholders in the section entitled “Security Ownership of Certain Beneficial Owners and Management” and is incorporated by reference.

~~ITEM 13.~~

~~CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE~~

The information required by this Item will be set forth in our Proxy Statement for the ~~2013~~2014 Annual Meeting of Shareholders in the sections entitled “Security Ownership of Certain Beneficial Owners and Management” and "Equity Compensation Plan Information" and is incorporated by reference.



ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by this Item will be set forth in our Proxy Statement for the 2014 Annual Meeting of Shareholders in the sections entitled “Related Party Transactions” and “Corporate Governance” and is incorporated by reference.



ITEM 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by this Item will be set forth in our Proxy Statement for the ~~2013~~2014 Annual Meeting of Shareholders in the section entitled “Auditor Fees” and is incorporated by reference.

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PART IV



ITEM 15.	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

The following documents are filed as part of this Report:

1. Financial Statements

INDEX TO FINANCIAL STATEMENTS



	Page
Report of Independent ~~Registered~~ Public Accounting Firm		~~F-1~~	F- 1
Consolidated Balance Sheets as of December 31, ~~2012~~2013 and ~~2011~~ 2012		~~F-2~~	F- 2
Consolidated Statements of Operations for the Years Ended December 31, ~~2012~~2013 and ~~2011~~ 2012		~~F-3~~	F- 3
Consolidated Statements of Comprehensive Income for the Years Ended December 31, ~~2012~~2013 and ~~2011~~ 2012		~~F-4~~	F- 4
Consolidated Statements of Equity for the Years Ended December 31, ~~2012~~2013 and ~~2011~~ 2012		~~F-5~~	F- 5
Consolidated Statements of Cash Flows for the Years Ended December 31, ~~2012~~2013 and ~~2011~~ 2012		~~F-6~~	F- 6
Notes to Consolidated Financial Statements as of December 31, ~~2012~~2013 and ~~2011~~		~~F-7~~

2012

2. ~~Financial Statement Schedules~~F- 7

2. Financial Statement Schedules

None.

Table of Contents

3. Exhibits



Exhibit Number				Description of Exhibit	Incorporated by Reference from ~~Atlanticus’s~~ Atlanticus’ SEC Filings Unless Otherwise Indicated(1)
	2.1		Agreement for the sale and purchase of the entire issued share capital of Purpose UK Holdings Limited and certain shares in MEM Holdings Limited, dated December 31, 2010, among CCRT International Holdings B.V., Atlanticus Holdings Corporation (formerly CompuCredit Holdings Corporation), Dollar Financial U.K. Limited and Dollar Financial Corp.			March 4, 2011, Form 10-K, exhibit 2.2
	2.2		Asset Purchase Agreement, dated August 5, 2011, by and among Advance America, Cash Advance Centers, Inc., AAFA Acquisition, Inc., Atlanticus Holdings Corporation (formerly CompuCredit Holdings Corporation), CCIP Corp. (formerly CompuCredit Intellectual Property Holdings Corp. II), Valued Services, LLC, Valued Services of Alabama, LLC, Valued Services of Colorado, LLC, Valued Services of Kentucky, LLC, Valued Services of Oklahoma, LLC, Valued Services of Mississippi, LLC, Valued Services of Tennessee, LLC, Valued Services of Wisconsin, LLC, Valued Services of Ohio, LLC, VS of Ohio, LLC, Valued Services of South Carolina, LLC, and VS of South Carolina, ~~LLC.~~LLC			August 8, 2011, Form 8-K, exhibit 2.1
	2.3		Membership Interest Purchase Agreement between Atlanticus Holdings Corporation (formerly CompuCredit Holdings Corporation) and JCAP Transitory Acquisition Sub, LLC			August 9, 2012, Form 10-Q, exhibit 2.1
	3.1		Articles of ~~Incorporation.~~Incorporation			June 8, 2009, Proxy Statement/Prospectus, Annex B
	~~3.1~~	~~(a)~~3.1(a)	Articles of Amendment to Articles of Incorporation			November 30, 2012, Form 8-K exhibit 3.1
	3.2		Amended and Restated Bylaws (as amended through November 30, 2012).			November 30, 2012, Form 8-K exhibit 3.2
	4.1		Form of common stock ~~certificate.~~certificate			July 7, 2009, Form 8-K, exhibit 3.3
	4.2		Indenture dated May 27, 2005 with U.S. Bank National Association, as successor to Wachovia Bank, National ~~Association.~~Association			May 31, 2005, Form 8-K, exhibit 4.1
	4.3		Supplemental Indenture dated June 30, 2009 with U.S. Bank National Association, as successor to Wachovia Bank, National ~~Association.~~Association			July 7, 2009, Form 8-K, exhibit 4.1
	4.4		Indenture dated November 23, 2005 with U.S. Bank National Association, as successor to Wachovia Bank, National ~~Association.~~Association			November 28, 2005, Form 8-K, exhibit 4.1
	4.5		Supplemental Indenture dated June 30, 2009 with U.S. Bank National Association, as successor to Wachovia Bank, National ~~Association.~~Association			July 7, 2009, Form 8-K, exhibit 4.2
	10.1		Stockholders Agreement dated as of April 28, ~~1999.~~1999			January 18, 2000, Form S-1, exhibit 10.1
	~~10.2~~	†10.2†	2008 Equity Incentive Plan			April 16, 2008, Schedule 14A, Appendix A
	~~10.2~~	~~(a)~~10.2(a)†	Form of Restricted Stock ~~Agreement—Directors.~~Agreement–Directors			May 13, 2008, Form 8-K, exhibit 10.2
	~~10.2~~	~~(b)~~10.2(b)†	Form of Restricted Stock ~~Agreement—Employees.~~Agreement–Employees			May 13, 2008, Form 8-K, exhibit 10.3
	~~10.2~~	~~(c)~~10.2(c)†	Form of Stock Option ~~Agreement—Directors.~~Agreement–Directors			May 13, 2008, Form 8-K, exhibit 10.4
	~~10.2~~	~~(d)~~10.2(d)†	Form of Stock Option ~~Agreement—Employees.~~Agreement–Employees			May 13, 2008, Form 8-K, exhibit 10.5
	~~10.2~~	~~(e)~~10.2(e)†	Form of Restricted Stock Unit ~~Agreement—Directors.~~Agreement–Directors			May 13, 2008, Form 8-K, exhibit 10.6
	~~10.2~~	~~(f)~~10.2(f)†	Form of Restricted Stock Unit ~~Agreement—Employees.~~Agreement–Employees			May 13, 2008, Form 8-K, exhibit 10.7
	~~10.3~~	†10.3†	Amended and Restated Employee Stock Purchase ~~Plan.~~Plan			April 16, 2008, Schedule 14A, Appendix B
	~~10.4~~	†10.4†	Amended and Restated Employment Agreement for Richard R. House, Jr.			December 29, 2008, Form 8-K, exhibit 10.4
	~~10.4~~	~~(a)†~~	~~Restricted Stock Agreement, dated May 9, 2006 between Atlanticus Holdings Corporation (formerly CompuCredit Holdings Corporation) and Richard R. House, Jr.~~	~~May 15, 2006, Form 8-K, exhibit 10.1~~
	~~10.4~~	~~(b)†~~	~~Option Agreement, dated May 9, 2006 between Atlanticus Holdings Corporation (formerly CompuCredit Holdings Corporation) and Richard R. House, Jr.~~	~~May 15, 2006, Form 8-K, exhibit 10.2~~

Table of Contents



Exhibit Number	Description of Exhibit			Incorporated by Reference from Atlanticus’ SEC Filings Unless Otherwise Indicated(1)
~~Exhibit~~ ~~Number~~		~~Description of Exhibit~~	~~Incorporated by Reference from Atlanticus’s SEC Filings Unless Otherwise Indicated (1)~~
	~~10.5~~	†10.5†	Amended and Restated Employment Agreement for David G. ~~Hanna.~~Hanna			December 29, 2008, Form 8-K, exhibit 10.1
	~~10.6~~	†10.6†	Amended and Restated Employment Agreement for Richard W. ~~Gilbert.~~Gilbert			December 29, 2008, Form 8-K, exhibit 10.3
10.7†	~~10.7~~			†	~~Amended and Restated~~ Employment Agreement for ~~J.Paul Whitehead, III.~~Jeffrey A. Howard	~~August 9, 2012,~~Filed herewith
10.8†	Employment Agreement for William R. McCamey			Filed herewith
10.9†	Outside Director Compensation Package			November 12, 2013, Form 10-Q, exhibit 10.1
	~~10.8~~	†	~~Outside Director Compensation Package.~~	~~Filed herewith~~
	~~10.9~~	10.10	Master Indenture, dated as of July 14, 2000, among CompuCredit Credit Card Master Note Business Trust, The Bank of New York, and ~~Credigistics~~Atlanticus Services Corporation (formerly CompuCredit Corporation).			November 14, 2000, Form 10-Q, exhibit 10.1
	~~10. 9~~	10.10 (a)	First Amendment to Master Indenture dated as of September 7, ~~2000.~~2000			November 14, 2000, Form 10-Q, exhibit 10.1(a)
	~~10. 9~~	10.10 (b)	Second Amendment to Master Indenture dated as of April 1, ~~2001.~~2001			March 1, 2004, Form 10-K, exhibit 10.9(b)
	~~10. 9~~	10.10 (c)	Third Amendment to Master Indenture dated as of March 18, ~~2002.~~2002			March 1, 2004, Form 10-K, exhibit 10.9(c)
	~~10. 9~~	10.10 (d)	Form of Indenture Supplement.			November 22, 2000, Form 10-Q/A, exhibit 10.1(b)
	~~10. 9~~	10.10 (e)	Amended and Restated Series 2004-One Indenture Supplement, dated March 1, 2010, to the Master ~~Indenture.~~Indenture			June 25, 2010, Form 8-K/A, exhibit 10.2
	~~10. 9~~	10.10 (f)	Transfer and Servicing Agreement, dated as of July 14, 2000, among CCFC Corp. (formerly CompuCredit Funding Corp.), ~~Credigistics~~ Atlanticus Services Corporation (formerly CompuCredit Corporation), CompuCredit Credit Card Master Note Business Trust and The Bank of New ~~York.~~York			March 24, 2003, Form 10-K, exhibit 10.11
	~~10. 9~~	10.10 (g)	First Amendment to Transfer and Servicing Agreement dated as of September 7, ~~2000.~~2000			November 14, 2000, Form 10-Q, exhibit 10.2(a)
	~~10. 9~~	10.10 (h)	Second Amendment to Transfer and Servicing Agreement dated as of December 28, 2000.			March 30, 2001, Form 10-K, exhibit 10.8(b)
	~~10. 9~~	10.10 (i)	Third Amendment to Transfer and Servicing Agreement dated as of April 1, ~~2001.~~2001			March 1, 2004, Form 10-K, exhibit 10.10(c)
	~~10. 9~~	10.10 (j)	Fourth Amendment to Transfer and Servicing Agreement dated as of August 3, ~~2001.~~2001			March 1, 2004, Form 10-K, exhibit 10.10(d)
	~~10. 9~~	10.10 (k)	Fifth Amendment to Transfer and Servicing Agreement dated as of August 20, ~~2002.~~2002			March 1, 2004, Form 10-K, exhibit 10.10(e)
	~~10. 9~~	10.10 (l)	Sixth Amendment to Transfer and Servicing Agreement dated as of April 1, ~~2003.~~2003			March 1, 2004, Form 10-K, exhibit 10.10(f)
	~~10. 9~~	10.10 (m)	Seventh Amendment to Transfer and Servicing Agreement dated as of June 26, ~~2003.~~2003			March 1, 2004, Form 10-K, exhibit 10.10(g)
	~~10. 9~~	10.10 (n)	Eighth Amendment to Transfer and Servicing Agreement dated as of December 1, ~~2004.~~2004			March 2, 2006, Form 10-K, exhibit 10.10(o)
	~~10. 9~~	10.10 (o)	Ninth Amendment to Transfer and Servicing Agreement dated as of June 10, ~~2005.~~2005			March 2, 2006, Form 10-K, exhibit 10.10(p)

Table of Contents



Exhibit Number		Description of Exhibit	Incorporated by Reference from ~~Atlanticus’s~~ Atlanticus’ SEC Filings unless Otherwise Indicated (1)
	~~10.10~~	10.11	Amended and Restated Note Purchase Agreement, dated March 1, 2010, among Merrill Lynch Mortgage Capital Inc., CCFC Corp. (formerly CompuCredit Funding Corp.), ~~Credigistics~~Atlanticus Services Corporation (formerly CompuCredit Corporation), and CompuCredit Credit Card Master Note Business ~~Trust.~~Trust	June 25, 2010, Form 8-K/A, exhibit 10.1
	~~10.11~~	10.12	Share Lending ~~Agreement.~~Agreement	November 22, 2005, Form 8-K, exhibit 10.1
	~~10.11~~	~~(a)~~10.12(a)	Amendment to Share Lending Agreement	March 6, 2012, Form 10-K, exhibit 10.12(a)
	~~10.12~~	10.13	Agreement relating to the Sale and Purchase of Monument Business, dated April 4, ~~2007.~~2007	August 1, 2007, Form 10-Q, exhibit 10.1
	~~10.12~~	~~(a)~~10.13(a)	Account Ownership Agreement for Partridge Acquired Portfolio Business Trust, dated April 4, 2007, with R Raphael & Sons ~~PLC.~~PLC	August 1, 2007, Form 10-Q, exhibit 10.2
10.13(b)	~~10.12~~	~~(b)~~	Receivables Purchase Agreement for Partridge Acquired Portfolio Business Trust, dated April 4, 2007, with R Raphael & Sons ~~PLC.~~PLC	August 1, 2007, Form 10-Q, exhibit 10.3
10.13(c)	~~10.12~~	~~(c)~~	Receivables Purchase Agreement for Partridge Acquired Portfolio Business Trust, dated April 4, 2007, with Partridge Funding ~~Corporation.~~Corporation	August 1, 2007, Form 10-Q, exhibit 10.4
	~~10.12~~	~~(d)~~10.13(d)	Master Indenture for Partridge Acquired Portfolio Business Trust, dated April 4, 2007, among Partridge Acquired Portfolio Business Trust, Deutsche Bank Trust Company Americas, Deutsche Bank AG, London Branch and CIAC Corporation (formerly CompuCredit International Acquisition ~~Corporation.~~Corporation)	August 1, 2007, Form 10-Q, exhibit 10.5
	~~10.12~~	~~(e)~~10.13(e)	Series 2007-One Indenture Supplement for Partridge Acquired Portfolio Business Trust, dated April 4, ~~2007.~~2007	August 1, 2007, Form 10-Q, exhibit 10.6
	~~10.12~~	~~(f)~~10.13(f)	Transfer and Servicing Agreement for Partridge Acquired Portfolio Business Trust, dated April 4, 2007, among Partridge Funding Corporation, CIAC Corporation (formerly CompuCredit International Acquisition Corporation), Partridge Acquired Portfolio Business Trust and Deutsche Bank Trust Company ~~Americas.~~Americas	August 1, 2007, Form 10-Q, exhibit 10.7
	~~10.13~~	10.14	Assumption Agreement dated June 30, 2009 between Atlanticus Holdings Corporation (formerly CompuCredit Holdings Corporation) and ~~Credigistics~~Atlanticus Services Corporation (formerly CompuCredit Corporation)	July 7, 2009, Form 8-K, exhibit 10.1

Table of Contents



Exhibit Number		Description of Exhibit	Incorporated by Reference from ~~Atlanticus’s~~ Atlanticus’ SEC Filings unless Otherwise Indicated (1)
	~~10.14~~	10.15	Loan and Security Agreement, dated October 4, 2011 among CARS Acquisition LLC, et al and Wells Fargo Preferred Capital, Inc.	March 6, 2012, Form 10-K, exhibit 10.16(a)
10.15(a)	~~10.14~~First Amendment to Loan and Security Agreement	~~(a)~~August 13, 2013, Form 10-Q, exhibit 10.1
10.15(b)	Second Amendment and Joinder to Loan and Security Agreement	August 13, 2013, Form 10-Q, exhibit 10.2
10.15(c)	Third Amendment to Loan and Security Agreement	Filed herewith
10.15(d)	Fourth Amendment to Loan and Security Agreement	Filed herewith
10.15(e)	Agreement by Atlanticus Holdings Corporation (formerly CompuCredit Holdings Corporation) in favor of Wells Fargo Preferred Capital, ~~Inc~~Inc.	March 6, 2012, Form 10-K, exhibit 10.16(a)
	~~10.15~~		~~Credit Agreement, dated November 2, 2011, by and among Jefferson Capital Systems, LLC, Jefferson Capital Card Services, LLC and The Private Bank and Trust Company~~	~~February 24, 2012, Form 8-K/A, exhibit 10.1~~
	~~10.15~~	~~(a)~~	~~Security Agreement, dated November 2, 2011 by and between Jefferson Capital Systems, LLC and The Private Bank and Trust Company.~~	~~February 24, 2012, Form 8-K/A, exhibit 10.2~~
	~~10.15~~	~~(b)~~	~~Security Agreement, dated November 2, 2011 by and between Jefferson Capital Card Services, LLC and The Private Bank and Trust Company.~~	~~February 24, 2012, Form 8-K/A, exhibit 10.3~~
	21.1		Subsidiaries of the ~~Registrant.~~Registrant	Filed herewith
	23.1		Consent of BDO USA, ~~LLP.~~LLP	Filed herewith
	31.1		Certification of Principal Executive Officer pursuant to Rule 13a-14(a).	Filed herewith
	31.2		Certification of Principal Financial Officer pursuant to Rule 13a-14(a).	Filed herewith
	32.1		Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section ~~1350.~~1350	Filed herewith
	95		~~Mine Safety Disclosure~~	~~Filed Herewith~~
	~~99.1~~		~~Charter of the Audit Committee of the Board of Directors.~~	~~Filed Herewith~~
	~~99.2~~		~~Charter of the Nominating and Corporate Governance Committee of the Board of Directors.~~	~~March 1, 2004, Form 10-K, exhibit 99.2~~
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.LAB		XBRL Taxonomy Extension Label Linkbase Document	Filed herewith
101.PRE		XBRL Taxonomy Presentation Linkbase Document	Filed herewith
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document	Filed herewith


†	Management contract, compensatory plan or arrangement.


(1)	Documents incorporated by reference from SEC filings made prior to June 2009 were filed under CompuCredit Corporation (now ~~Credigistics~~Atlanticus Services Corporation) (File No. 000-25751), our predecessor issuer.

Table of Contents

Report of Independent ~~Registered~~ Public Accounting Firm

The Board of Directors

Atlanticus Holdings Corporation

We have audited the accompanying consolidated balance sheets of Atlanticus Holdings Corporation as of December 31, ~~2012~~2013 and ~~2011~~2012 and the related consolidated statements of operations, comprehensive income (loss), equity, and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion ofon the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Atlanticus Holdings Corporation at December 31, ~~2012~~2013 and ~~2011,~~2012, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

/s/ BDO USA, LLP

Atlanta, Georgia

~~February 25, 2013~~March 28, 2014

F- 1

~~F-1~~

Table of Contents

Atlanticus Holdings Corporation and Subsidiaries

Consolidated Balance Sheets

(Dollars in thousands)


	December 31,			December 31,
	2012			2011			December 31, 2013			December 31, 2012

Assets
Unrestricted cash and cash equivalents	$	67,915		$	144,913		$	50,873		$	67,915
Restricted cash and cash equivalents		12,921			23,759		18,871			12,921
Loans and fees receivable:
Loans and fees receivable, net (of $8,252 and $7,480 in deferred revenue and $8,763 and $7,156 in allowances for uncollectible loans and fees receivable at December 31, 2012 and December 31, 2011, respectively)		59,952			64,721
Loans and fees receivable pledged as collateral under structured financings, net (of $22 and $511 in deferred revenue and $2,388 and $7,537 in allowances for uncollectible loans and fees receivable at December 31, 2012 and December 31, 2011, respectively)		9,673			31,902
Loans and fees receivable, net (of $13,258 and $8,274 in deferred revenue and $24,214 and $11,151 in allowances for uncollectible loans and fees receivable at December 31, 2013 and December 31, 2012, respectively)							97,208			69,625
Loans and fees receivable, at fair value		20,378			28,226		12,080			20,378
Loans and fees receivable pledged as collateral under structured financings, at fair value		133,595			238,763		88,132			133,595
Investments in previously charged-off receivables		-			37,110
Rental merchandise, net of depreciation							28,849			—
Property at cost, net of depreciation		7,192			8,098		8,937			7,192
Investments in equity-method investees		37,756			49,862		35,134			37,756
Deposits		16,397			2,968		1,908			16,397
Prepaid expenses and other assets		14,647			17,585		10,243			14,647
Total assets	$	380,426		$	647,907		$	352,235		$	380,426
Liabilities
Accounts payable and accrued expenses	$	38,596		$	47,140		$	48,625		$	38,596
Notes payable, at face value		22,670			23,765		56,740			26,747
Notes payable associated with structured financings, at face value		4,077			23,151
Notes payable associated with structured financings, at fair value		140,127			241,755		94,523			140,127
Convertible senior notes		95,335			176,400		95,934			95,335
Income tax liability		60,434			59,368		55,255			60,434
Total liabilities		361,239			571,579		351,077			361,239

Commitments and contingencies (Note 13)

Commitments and contingencies (Note 12)
Equity
Common stock, no par value, 150,000,000 shares authorized: 15,509,179 shares issued and outstanding (including 1,672,656 loaned shares to be returned) at December 31, 2012; and 31,997,581 shares issued and 23,559,402 shares outstanding (including 1,672,656 loaned shares to be returned) at December 31, 2011		-			-
Common stock, no par value, 150,000,000 shares authorized: 15,594,325 shares issued and outstanding (including 1,672,656 loaned shares to be returned) at December 31, 2013; and 15,509,179 shares issued and outstanding (including 1,672,656 loaned shares to be returned) at December 31, 2012							—			—
Additional paid-in capital		211,122			294,246		210,315			211,122
Treasury stock, at cost, 0 and 8,438,179 shares at December 31, 2012 and December 31, 2011, respectively		-			(187,615	)
Accumulated other comprehensive loss		(1,154	)		(2,257	)	(737		)	(1,154		)
Retained deficit		(190,673	)		(28,257	)	(208,414		)	(190,673		)
Total shareholders’ equity		19,295			76,117		1,164			19,295
Noncontrolling interests		(108	)		211		(6		)	(108		)
Total equity		19,187			76,328		1,158			19,187
Total liabilities and equity	$	380,426		$	647,907		$	352,235		$	380,426

See accompanying notes.

F- 2

~~F-2~~

Table of Contents

Atlanticus Holdings Corporation and Subsidiaries

Consolidated Statements of Operations

(Dollars in thousands, except per share data)


	For the Year Ended December 31,						For the Twelve Months Ended December 31,
	2012			2011			2013			2012
Interest income:
Consumer loans, including past due fees	$	85,801		$	144,331		$	69,265		$	85,801
Other		1,009			1,186		256			1,009
Total interest income		86,810			145,517		69,521			86,810
Interest expense		(31,124	)		(43,828	)	(23,872		)	(31,124		)
Net interest income before fees and related income on earning assets and provision for losses on loans and fees receivable	��	55,686			101,689		45,649			55,686
Fees and related income on earning assets		68,210			94,565		69,109			69,206
Losses upon charge off of loans and fees receivable recorded at fair value		(90,128	)		(139,480	)
Losses upon charge off of loans and fees receivable recorded at fair value, net of recoveries							(14,560		)	(90,128		)
Provision for losses on loans and fees receivable recorded at net realizable value		(16,770	)		(1,089	)	(29,678		)	(16,770		)
Net interest income, fees and related income on earning assets		16,998			55,685		70,520			17,994
Other operating income:
Servicing income		16,233			3,281		8,218			16,233
Other Income		2,487			7,070
Other income							3,394			2,487
Equity in income of equity-method investees		9,288			32,657		8,437			9,288
Total other operating income		28,008			43,008		20,049			28,008
Other operating expense:
Salaries and benefits		17,317			21,022		17,832			18,313
Card and loan servicing		41,095			45,345		46,119			41,095
Marketing and solicitation		2,996			3,620		8,719			2,996
Depreciation		2,742			4,642		17,965			2,742
Other		24,687			26,110		22,713			24,687
Total other operating expense		88,837			100,739		113,348			89,833
Loss on from continuing operations before income taxes		(43,831	)		(2,046	)
Loss on continuing operations before income taxes							(22,779		)	(43,831		)
Income tax benefit		15,609			994		5,114			15,609
Loss on continuing operations		(28,222	)		(1,052	)	(17,665		)	(28,222		)
Discontinued operations:
Income from discontinued operations before income taxes		69,063			140,063		—			69,063
Income tax expense		(16,709	)		(3,947	)	—			(16,709		)
Income from discontinued operations		52,354			136,116		—			52,354
Net income		24,132			135,064
Net loss (income) attributable to noncontrolling interests (including $1,129 of income associated with noncontrolling interests in discontinued operations during the year ended December 31, 2011)		319			(1,047	)
Net income attributable to controlling interests	$	24,451		$	134,017
Net (loss) income							(17,665		)	24,132
Net loss (income) attributable to noncontrolling interests in continuing operations							(76		)	319
Net (loss) income attributable to controlling interests							$	(17,741	)	$	24,451
Loss on continuing operations attributable to controlling interests per common share—basic	$	(1.45	)	$	(0.04	)	$	(1.29	)	$	(1.45	)
Loss on continuing operations attributable to controlling interests per common share—diluted	$	(1.45	)	$	(0.04	)	$	(1.29	)	$	(1.45	)
Income from discontinued operations attributable to controlling interests per common share—basic	$	2.72		$	5.25		$	—		$	2.72
Income from discontinued operations attributable to controlling interests per common share—diluted	$	2.71		$	5.23		$	—		$	2.71
Net income attributable to controlling interests per common share—basic	$	1.27		$	5.21
Net income attributable to controlling interests per common share—diluted	$	1.26		$	5.19
Net (loss) income attributable to controlling interests per common share—basic							$	(1.29	)	$	1.27
Net (loss) income attributable to controlling interests per common share—diluted							$	(1.29	)	$	1.26

See accompanying notes.

F- 3

~~F-3~~

Table of Contents

~~(1)~~

(1)

Loan is subject to certain affirmative covenants, including a coverage ratio, a leverage ratio and a collateral performance test, the failure of which could result in required early repayment of all or a portion of the outstanding balance by our CAR Auto Finance operations. The assets of Atlanticus Holdings Corporation are not subject to creditor claims arising due to asset performance-related covenants under this loan.


(2)	Loans are from the same lender and are cross-collateralized; thus, combined security interests are subject to claims upon the default of either lending arrangement.


(3)	Loans are subject to certain affirmative covenants tied to default rates and other performance metrics the failure of which could result in required early repayment of the remaining unamortized balances of the notes.


(4)	Loans are from the same lender and are cross-collateralized; thus, combined security interests are subject to claims upon the default of either lending arrangement.

(5)

The terms of this lending agreement ~~provided~~provide for the application of all excess cash flows from the underlying auto finance receivables portfolio (above and beyond interest costs and contractual servicing compensation to our outsourced third-party servicer) to reduce the outstanding principal balance of the debt, and the outstanding principal balance was repaid in the fourth quarter of 2012. Now that we have repaid the principal portion of the note, the lending agreement requires that we remit 37.5% of future cash flows (net of contractual servicing compensation) generated on the auto finance receivables portfolio to the note holders as additional compensation for the use of their capital. Based on current estimates of this additional compensation, we currently are accruing interest expense on this liability at a 25.6% effective interest rate; and the amount disclosed in the above table represents our accrued interest expense liability under this lending agreement.

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compensation) generated on the auto finance receivables portfolio to the note holders as additional compensation for the use of their capital. Based on current estimates of this additional compensation, we currently are accruing interest expense on this liability at a 25.4% effective interest rate based on current expectations of future collections, and the amount disclosed in the above table represents our accrued interest expense liability under this lending agreement. The assets of Atlanticus Holdings Corporation are not subject to creditor claims arising under this loan.

~~(2)~~

~~In connection~~

In May 2013, the revolving credit facility associated with our CAR operations was amended and expanded to allow for borrowings against certain receivables associated with our point-of-sale finance operations under the existing $40.0 million facility borrowing limits. The terms remained unchanged with our sale of JRAS’s operations in February 2011, we received a $2.4 million note secured by JRAS’s assets, we retained receivables with a December 31, 2012 carrying amount of $0.5 million that were originated while JRAS was under our ownership, we pledged those receivables as security for a then $9.4 million non-recourse loan to us, and we contracted with JRAS to service those receivables on our behalf. This non-recourse loan was repaid in August of 2012 and the remaining receivables are now serviced by our CAR subsidiary.

~~Similar to our credit cards receivable structured financings, the structured financing facilities secured by the assets scheduled above (with~~ the exception of the ~~vendor-financed software and equipment lending arrangements) generally provide~~maturity date for ~~a priority distribution of cash flows to us (or alternative loan servicers) to service any underlying pledged receivables, a distribution of cash flows to pay interest and principal due on~~borrowings under the ~~notes, and a distribution of all excess cash flows to us, other than the additional compensation referred to in footnote (1) to the above table. The receivables-backed structured financing facilities~~point-of-sale finance portion, which was set as May 17, 2014 as indicated in the ~~above~~ table are amortizing down along with collections of the underlying receivables and there are no provisions within the debt agreements that represent any risks of acceleration or bullet repayment of the facilities prior to the facility expiration dates. Accordingly, we believe that, for all intents and purposes, there is no practical risk of material equity loss associated with lender seizure of assets under the facilities. Nevertheless, the aggregate carrying amount of the receivables that provide security for the $4.1 million of structured financing notes in the above table at December 31, 2012 was $9.7 million, which means that our maximum aggregate exposure to pre-tax equity loss associated with the above structured financing arrangements was $5.6 million on that date.above.

Beyond our role as servicer of the underlying assets within the above-scheduled structured financings, we have provided no other financial or other support to the structures, and we have no explicit or implicit arrangements that could require us to provide financial support to the structures.

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The scheduled maturities and repayments of our notes payable in the above table are $0.1 million in 2013 and $0.1 million in 2014. Because the ACC auto finance debt facility payouts are based on actual collections, there are no scheduled maturities or repayments.

~~Notes Payable, at Face Value~~

Other notes payable outstanding as of December 31, 2012 and 2011 that are secured by the financial and operating assets of either the borrower, another of our subsidiaries or both, include the following, scheduled (in millions):

As of
December 31, 2012 December 31, 2011
Revolving credit facility (expiring October 4, 2014) at a an annual rate equal to 4.75% that is secured by the financial and operating assets of CAR with an aggregate carrying amount of $50.8 million (1) $ 20.0 $ 23.8
Revolving credit facility associated with our merchant credit product that can be drawn to the extent of outstanding eligible principal receivables up to $2.0 million, expiring October 10, 2013 with an annual rate equal to the lender’s cost of funds plus 6.0% (6.8% as of December 31, 2012) 1.5 -
Revolving credit facility associated with our test accounts in the U.K. that can be drawn to the extent of outstanding eligible principal receivables up to £5.0 million, expiring December 1, 2016 with an annual rate equal to the lender’s cost of funds plus 7.0% (10.3% as of December 31, 2012) 1.2 -
Total notes payable outstanding $ 22.7 $ 23.8

~~(1)~~

In March 2012, we entered into an interest rate swap related to ~~$20.0~~the $20.0 million ~~of the $20.0 million~~ amount drawn on the CAR facility discussed in the table above. The interest rate swap effectively fixes our interest rate to 4.75% from LIBOR plus 4.0%. We include the fair value of the interest rate swap and changes in its fair value in our consolidated balance sheets and statements of operations, respectively. See Note 7, “Fair Values of Assets and Liabilities,” for more information regarding this interest rate swap.

~~As of December 31, 2012, we were in compliance with all outstanding debt covenants.~~


11.	Convertible Senior Notes

~~3.625% Convertible Senior Notes Due 2025~~

In May 2005, we issued ~~$250.0~~$250.0 million aggregate principal amount of 3.625% convertible senior notes due 2025 ~~to qualified institutional buyers~~(“3.625% convertible senior notes”), and in ~~a private placement, and~~November 2005, we ~~subsequently registered the notes for resale with the SEC. For the year ended December 31, 2011, we repurchased $62.0~~issued $300.0 million ~~in face~~ aggregate principal amount of ~~these~~5.875% convertible senior notes ~~in open market transactions. The purchase price for these~~due 2035 (“5.875% convertible senior notes”). These notes ~~totaled $59.3 million (including accrued interest) and resulted in an aggregate gain of $0.3 million~~ (net of repurchases since the ~~notes’ applicable share of deferred costs, which were written off in connection with the purchases).~~issuance dates) are reflected within convertible senior notes on our consolidated balance sheets. In May 2012, ~~holders of~~ substantially all of the holders of our 3.625% convertible senior notes exercised a then-existing put right, under which we repaid ~~$83.5~~$83.5 million in face amount of such notes outstanding at par. ~~As of December 31, 2012, $450,000 of these notes remained outstanding.~~

No such put rights exist under our 5.875% ~~Convertible Senior Notes Due 2035~~

~~In November 2005, we issued $300.0 million aggregate principal amount of 5.875%~~ convertible senior ~~notes due 2035 to qualified institutional buyers in a private placement, and we subsequently registered the notes for resale~~notes. The following summarizes (in thousands) components of our consolidated balance sheets associated with ~~the SEC. These notes are reflected within~~ our convertible senior notes balance on our consolidated balance sheets. In 2011 we repurchased $1.0 million in face amount of these notes in open market transactions. The purchase price for these notes totaled $0.4 million (including accrued interest) and resulted in an aggregate gain of $0.3 million (net of the notes’ applicable share of deferred costs, which were written off in connection with the purchases). We did not repurchase in the open market any of our convertible senior notes during the year ended December 31, 2012.

notes:

~~F-29~~



	As of
	December 31, 2013			December 31, 2012
Face amount of 3.625% convertible senior notes	$	450		$	450
Face amount of 5.875% convertible senior notes	139,467			139,467
Discount	(43,983		)	(44,582		)
Net carrying value	$	95,934		$	95,335
Carrying amount of equity component included in additional paid-in capital	$	108,714		$	108,714
Excess of instruments’ if-converted values over face principal amounts	$	—		$	—

~~Table of Contents~~

During certain periods and subject to certain conditions, the remaining $139.5 million of outstanding 5.875% notes as of December 31, ~~2012~~2013 (as referenced in the table ~~below)~~above) will be convertible by holders into cash and, if applicable, shares of our common stock at an adjusted effective conversion rate of 40.63 shares of common stock per $1,000 principal amount of notes, subject to further adjustment; the conversion rate is based on an adjusted conversion price of $24.61 per share of common stock. Upon conversion of the notes, we will deliver to holders of the notes cash of up to $1,000 per $1,000 aggregate principal amount of notes and, at our option, either cash or shares of our common stock in respect of the remainder of the conversion obligation, if any. The maximum number of shares of common ~~shares~~stock that any note holder may receive upon conversion is fixed at 40.63 shares per $1,000 aggregate principal amount of notes, and we have a sufficient number of authorized shares of our common stock to satisfy both this conversion obligation and the conversion obligation under the 3.625% convertible senior notes should they arise. Beginning with the six-month period commencing on January 30, 2009, we could pay contingent interest on the notes during a six-month period if the average trading price of the notes is above a specified level. Thus far we have not paid any contingent interest on these notes. In addition, holders of the notes may require us to repurchase the notes upon certain specified events.

In conjunction with the offering of the 5.875% convertible senior notes, ~~due 2035 offering,~~ we entered into a thirty-year share lending agreement with Bear, Stearns International Limited (“BSIL”) and Bear, Stearns & Co. Inc, as agent for BSIL, pursuant to which

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we lent BSIL 5,677,950 shares of our common stock that we exclude from all earnings per share computations and for which we received a fee upon consummation of the agreement of $0.001 per loaned share. The obligations of Bear Stearns were assumed by JP Morgan in 2008. JP Morgan (as the guarantor of the obligation) is required to return the loaned shares to us at the end of the thirty-year term of the share lending agreement or earlier upon the occurrence of specified events. Such events include the bankruptcy of JP Morgan, its failure to make payments when due, its failure to post collateral when required or return loaned shares when due, notice of its inability to perform obligations, or its untrue representations. If an event of default occurs, then the borrower (JP Morgan) may settle the obligation in cash. Further, in the event that JP Morgan’s credit rating drops below A/A2, it would be required to post collateral for the market value of the lent shares ($~~5.6~~5.9 million based on the 1,672,656 of shares remaining outstanding under the share lending arrangement as of December 31, ~~2012)~~2013). JP Morgan has agreed to use the loaned shares for the purpose of directly or indirectly facilitating the hedging of our convertible senior notes by the holders thereof or for such other purpose as reasonably determined by us. We deem it highly remote that any event of default will occur and therefore cash settlement, while an option, is an unlikely scenario.

We analogize the share lending agreement to a prepaid forward contract, which we have evaluated under applicable accounting guidance. We determined that the instrument was not a derivative in its entirety and that the embedded derivative would not require separate accounting. The net effect on shareholders’ equity of the shares lent pursuant to the share lending agreement, which includes our requirement to lend the shares and the counterparties’ requirement to return the shares, is the fee received upon our lending of the shares.

Accounting for Convertible Senior Notes

Because our convertible senior notes are Instrument C convertible notes, the accounting for the issuance of the notes includes (1) allocation of the issuance proceeds between the notes and additional paid-in capital, (2) establishment of a discount to the face amount of the notes equal to the portion of the issuance proceeds that are allocable to additional paid-in capital, (3) creation of a deferred tax liability related to the discount on the notes, and (4) an allocation of issuance costs between the portion of such costs considered to be associated with the notes and the portion of such costs considered to be associated with the equity component of the notes’ issuances (i.e., additional paid-in capital). We are amortizing the discount to the remaining face amount of the notes into interest expense over the expected life of the notes, which results in a corresponding release of associated deferred tax liability (and which ended May 2012 for our 3.625% convertible senior notes). Amortization for the years ended December 31, 2013 and 2012 ~~and 2011~~ totaled ~~$2.4~~$0.6 million and ~~$6.4~~$2.4 million, respectively. Actual incurred interest (based on the contractual interest rates within the two convertible senior notes series) totaled ~~$9.5~~$8.2 million and ~~$12.5~~$9.5 million for the years ended December 31, ~~2012~~2013 and ~~2011,~~2012, respectively. We will amortize the discount remaining at December 31, ~~2012~~2013 into interest expense over the expected term of the 5.875% convertible senior notes (currently expected to be October 2035). The weighted average effective interest rate for the 3.625% and 5.875% convertible senior notes was 9.2% for all periods presented.

~~The following summarizes (in thousands) components of our consolidated balance sheets associated with our convertible senior notes after giving effect to the accounting treatment described above:~~

As of
December 31, 2012 December 31, 2011
Face amount of 3.625% convertible senior notes due 2025 $ 450 $ 83,943
Face amount of 5.875% convertible senior notes due 2035 139,467 139,467
Discount (44,582 ) (47,010 )
Net carrying value $ 95,335 $ 176,400
Carrying amount of equity component included in additional paid-in capital $ 108,714 $ 108,714
Excess of instruments’ if-converted values over face principal amounts $ - $ -

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12.	Commitments and Contingencies

General

In the normal course of business through the origination of unsecured credit card receivables, we incur off-balance-sheet risks. These risks include commitments of ~~£578,000 ($935,000)~~£2.2 million ($3.7 million) at December 31, ~~2012~~2013 to purchase receivables associated with cardholders who have the right to borrow in excess of their current balances up to the maximum credit limit on their credit card accounts. We have never experienced a situation in which all of our customers have exercised their entire available line of credit at any given point in time, nor do we anticipate this will ever occur in the future. Moreover, there would be a concurrent increase in assets should there be any exercise of these lines of credit. We also have the effective right to reduce or cancel these available lines of credit at any ~~time, which our Credit Cards and Other Investments segment did with respect to substantially all of its outstanding cardholder accounts.~~time. At December 31, ~~2012,~~2013, our remaining available lines of credit associated with credit cards related ~~solely~~ to ~~credit~~those cards issued under programs in the U.K.

Additionally our CAR operations provide floor-plan financing for a pre-qualified network of independent automotive dealers and automotive finance companies in the buy-here, pay-here used car business. The financings allow dealers and finance companies to borrow in excess of their current balances up to the maximum pre-approved credit limit allowed in order to finance ongoing inventory needs. These loans are secured by the underlying auto inventory and, in certain cases where we have other lending products outstanding with the dealer, are ~~also~~ secured by the collateral under those lending arrangements as well, including any outstanding dealer reserves. As of December 31, ~~2012, these~~2013, CAR had unfunded outstanding floor-plan financing commitments ~~totaled $4.2 million.~~totaling $7.6 million. Each draw against unused commitments is reviewed for conformity to pre-established guidelines.

~~Credigistics~~Under our point-of-sale finance products, we give consumers the ability to borrow up to the maximum credit limit assigned to each individual’s account. Our unfunded commitments under these products aggregated $61.0 million at

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December 31, 2013. We have never experienced a situation in which all of our customers have exercised their entire available line of credit at any given point in time, nor do we anticipate this will ever occur in the future. Moreover, there would be a concurrent increase in assets should there be any exercise of these lines of credit. We also have the effective right to reduce or cancel these available lines of credit at any time.

Atlanticus Services Corporation’s (formerly CompuCredit Corporation, and a wholly owned subsidiary) of Atlanticus Holdings Corporation) third-party originating financial institution relationships require security (collateral) related to their issuance of credit cards and cardholder purchases thereunder, ~~and notwithstanding the closure of all credit card accounts the receivables~~ of which ~~Credigistics Corporation previously purchased, these institutions hold a remaining $0.2~~$0.5 million of remains pledged ~~collateral as of December 31, 2012.~~to support various ongoing contractual obligations. In addition, in connection with our ~~U.K.~~Non-U.S. Acquired Portfolio acquisition, ~~Credigistics~~Atlanticus Services Corporation guarantees certain obligations of its subsidiaries and its third-party originating financial institution to one of the European payment systems ($($0.2 million as of December 31, ~~2012)~~2013). Those obligations include, among other things, compliance with one of the European payment system’s operating regulations and by-laws. ~~Credigistics~~Atlanticus Services Corporation also guarantees certain performance obligations of its servicer affiliate to the indenture trustee and the trust created under the structured financing relating to our ~~U.K.~~Non-U.S. Acquired Portfolio.

Under agreements with third-party originating and other financial institutions, we have agreed to ~~(1)~~ indemnify the financial institutions for certain liabilities associated with the financial institutions’ card issuance and certain other ~~lending~~ activities on our behalf—such indemnification obligations generally being limited to instances in which we either (a) have been afforded the opportunity to defend against any potentially indemnifiable claims or (b) have reached agreement with the financial institutions regarding settlement of potentially indemnifiable ~~claims, and (2) certain contingent liabilities (capped at $4.4 million) that could arise for us upon the non-performance by third parties under their financial obligations.~~claims. As of December 31, ~~2012,~~2013, we have assessed the likelihood of any potential payments related to the aforementioned contingencies as remote. We will accrue liabilities related to these contingencies in any future period if and in which we assess the likelihood of an estimable payment as probable. In October 2013, we were released from certain contingent liabilities which resulted in the release of $4.4 million of cash previously held in escrow and previously included on our consolidated balance sheet as a deposit within our prepaid expenses and other assets category.

Total System Services, Inc. provides certain services to ~~Credigistics~~Atlanticus Services Corporation as a system of record provider under an agreement that extends through May 2015. ~~Were Credigistics~~If Atlanticus Services Corporation were to terminate its U.S. relationship with Total System Services, Inc. prior to the contractual termination period, it would incur significant penalties ~~($11.1~~($7.2 million as of December 31, ~~2012)~~2013).

We also are subject to certain minimum payments under cancelable and non-cancelable lease arrangements. For further information regarding these commitments See Note 9, “Leases.”

Litigation

We are involved in various legal proceedings that are incidental to the conduct of our ~~business. The most significant~~business, none of ~~these is described below.~~which are material to us.

~~F-31~~

~~Table of Contents~~

~~CompuCredit Corporation and five of our other subsidiaries are the named defendants in a purported class action lawsuit entitled~~ ~~Knox, et al., vs. First Southern Cash Advance, et al.~~, No. 5 CV 0445, filed in the Superior Court of New Hanover County, North Carolina, on February 8, 2005. The plaintiffs allege that in conducting a so-called “payday lending” business, certain subsidiaries within our Retail Micro-Loans segment (the operations of which were sold in October 2011, subject to our retention of liability for this litigation) violated various laws governing consumer finance, lending, check cashing, trade practices and loan brokering. The plaintiffs further allege that CompuCredit Corporation was the alter ego of the subsidiaries and is liable for their actions. The plaintiffs are seeking damages of up to $75,000 per class member, and attorney’s fees. These claims are similar to those that have been asserted against several other market participants in transactions involving small-balance, short-term loans made to consumers in North Carolina. On January 23, 2012, among other orders, the trial court denied the defendants’ motion to compel arbitration, and granted the plaintiffs’ motion for class certification. We are vigorously defending this lawsuit.

~~13.~~
13.	Income Taxes

Deferred tax assets and liabilities reflect the effects of tax losses, credits, and the future income tax effects of temporary differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases and are measured using enacted tax rates that apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

As shown with respect to our continuing operations, the current and deferred portions (in thousands) of federal and state income tax benefit or expense as the case may be are as follows:

For the Year Ended December 31,

2012

2011

Federal income tax benefit:
Current tax benefit $ 743 $ 767
Deferred tax benefit 15,420 989
Total federal income tax benefit 16,163 1,756
Foreign income tax benefit (expense):
Current tax expense (30 ) (5 )
Deferred tax benefit - 2
Total foreign income tax expense (30 ) (3 )
State and other income tax expense:
Current tax expense (4 ) (111 )
Deferred tax expense (520 ) (648 )
Total state and other income tax expense (524 ) (759 )
Total income tax benefit $ 15,609 $ 994

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	For the Year Ended December 31,
	2013			2012
Federal income tax benefit:
Current tax benefit (expense)	$	(52	)	$	743
Deferred tax benefit	3,270			15,420
Total federal income tax benefit	3,218			16,163
Foreign income tax benefit (expense):
Current tax expense	(42		)	(30		)
Deferred tax benefit	892			—
Total foreign income tax benefit (expense)	850			(30		)
State and other income tax benefit:
Current tax benefit (expense)	7			(4		)
Deferred tax benefit (expense)	1,039			(520		)
Total state and other income tax benefit (expense)	1,046			(524		)
Total income tax benefit	$	5,114		$	15,609

Computed considering results for only our continuing operations before income taxes, ~~our~~we experienced effective income tax benefit ~~rate was 35.9%~~rates of 22.5% and 35.6% for the ~~year~~years ended December 31, 2013 and 2012, ~~versus our effective income tax benefit rate of 48.5% for the year ended December 31, 2011.~~respectively. We have experienced no material changes in effective tax rates associated with differences in filing jurisdictions, and the variations in our effective tax rates between the periods principally bear the effects of (1) changes in valuation allowances against income statement-oriented federal, foreign and state deferred tax assets ~~(2) variations in the level of our pre-tax income among the different reporting periods relative to the level of our permanent differences within such periods~~ and ~~(3)~~(2) the effects on financial reporting results of intra-period tax allocations associated with our discontinued operations in 2012 as required under GAAP.

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Income tax benefits in ~~2012~~2013 and ~~2011~~2012 differed from amounts computed by applying the statutory federal income tax benefit rate to pretax income or loss from ~~consolidated~~continuing operations principally as a result of the impact of changes in valuation allowances on certain federal and state deferred tax assets, foreign tax expense, and unfavorable permanent differences, including the effects of accruals for uncertain tax positions. The following table reconciles our effective tax ~~expense~~benefit rates for ~~2012~~2013 and ~~2011~~2012 to the federal statutory rate:

For the Year Ended December 31,

2012

2011

Statutory tax benefit rate
35.0 % 35.0 %
Increase (decrease) in statutory tax benefit rate resulting from:
Changes in valuation allowances 6.4 106.9
Interest and penalties related to uncertain tax positions 1.7 35.8
Foreign income taxes 0.1 (14.5 )
Permanent and other differences (9.1 ) (2.4 )
State and other income taxes, net 1.8 (112.3 )
Effective tax benefit rate
35.9 % 48.5 %



	For the Year Ended December 31,
	2013		2012
Statutory tax benefit rate	35.0	%	35.0	%
(Decrease) increase in statutory tax benefit rate resulting from:
Changes in valuation allowances	(9.7	)%	6.4	%
Interest and penalties related to uncertain tax positions	(0.6	)%	1.7	%
Foreign income taxes	(1.6	)%	0.1	%
Permanent and other differences	(0.5	)%	(9.1	)%
State and other income taxes, net	(0.1	)%	1.5	%
Effective tax benefit rate	22.5	%	35.6	%

As of December 31, ~~2012~~2013 and December 31, ~~2011,~~2012, the significant components (in thousands) of our deferred tax assets and liabilities were:

As of December 31,

2012

2011

Deferred tax assets:
Software development costs/fixed assets
$ 4,421 $ 6,133
Equity in income of equity-method investees
— 3,961
Goodwill and intangible assets
7,724 8,246
Deferred costs
424 627
Provision for loan loss
5,576 5,085
Equity-based compensation
3,051 3,223
Charitable contributions
961 2,712
Other
3,479 4,271
Accruals for state taxes and interest associated with unrecognized tax benefits 5,260 5,550
Federal net operating loss carry-forward
107,703 130,534
Federal credit carry-forward
1,073 1,073
Foreign net operating loss carry-forward
818 1,725
State tax benefits
35,744 37,644
176,234 210,784
Valuation allowances
(56,030 ) (70,999 )
120,204 139,785
Deferred tax liabilities:
Prepaid expenses
(286 ) (369 )
Equity in income of equity-method investees (4,055 ) —
Mark-to-market
(1,266 ) (3,075 )
Credit card fair value election differences
(24,537 ) (33,993 )
Interest on debentures
(15,135 ) (26,511 )
Convertible senior notes
(16,320 ) (16,653 )
Cancellation of indebtedness income
(65,843 ) (66,082 )
(127,442 ) (146,683 )
Net deferred tax liability
$ (7,238 ) $ (6,898 )

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	As of December 31,
	2013			2012
Deferred tax assets:
Software development costs/fixed assets	$	3,304		$	4,421
Goodwill and intangible assets	6,702			7,724
Deferred costs	—			424
Provision for loan loss	12,442			5,576
Equity-based compensation	125			3,051
Charitable contributions	—			961
Other	2,098			3,479
Accruals for state taxes and interest associated with unrecognized tax benefits	5,329			5,260
Federal net operating loss carry-forward	121,524			107,703
Federal credit carry-forward	1,073			1,073
Foreign net operating loss carry-forward	706			818
State tax benefits	36,354			35,744
	189,657			176,234
Valuation allowances	(52,601		)	(56,030		)
	137,056			120,204
Deferred tax liabilities:
Prepaid expenses	(296		)	(286		)
Equity in income of equity-method investees	(4,796		)	(4,055		)
Mark-to-market	(342		)	(1,266		)
Credit card fair value election differences	(32,476		)	(24,537		)
Deferred costs	(332		)	—
Interest on debentures	(18,772		)	(15,135		)
Convertible senior notes	(16,091		)	(16,320		)
Cancellation of indebtedness income	(65,949		)	(65,843		)
	(139,054		)	(127,442		)
Net deferred tax liability	$	(1,998	)	$	(7,238	)

The amounts reported for both ~~2012~~2013 and ~~2011~~2012 have been adjusted to account for the reclassification of unrecognized tax benefits as required by applicable accounting literature.

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We have recorded a deferred tax asset of $107.7 million reflecting the benefit of loss carryforwards, which expire in varying amounts between 2028 and 2030. Realization of this deferred tax asset is dependent on generating sufficient taxable income prior to expiration of the loss carryforwards, and we have provided a valuation allowance against our net deferred tax assets.

Certain of our deferred tax assets relate to federal, foreign and state net operating losses as noted in the above table, and we have no other net operating losses or credit carry-forwards other than those noted herein. Our ~~$56.0~~$52.6 million of deferred tax asset valuation allowances are primarily the result of uncertainties regarding the future realization of recorded tax benefits, principally net operating losses and credits from operations in the U.S. (both federal and state) and foreign jurisdictions (including U.S. territories), and it is more likely than not that these recorded tax benefits will not be utilized to reduce future federal, foreign and state tax liabilities in these jurisdictions.

We conduct business globally, and as a result, one or more of our subsidiaries files federal, state and/or foreign income tax returns. In the normal course of business we are subject to examination by taxing authorities throughout the world, including such major jurisdictions as the U.S., the U.K., and ~~the Netherlands.~~various U.S. territories. With a few exceptions, we are no longer subject to federal, state, local, or foreign income tax examinations for years prior to ~~2009.~~2010. Currently, we are under audit by various jurisdictions for various years, including by the Internal Revenue Service for the 2007 and 2008 tax years. Although the audits have not been concluded, we do not expect any changes to our reported tax positions in those years that would have a material effect on our consolidated financial statements. Moreover, if any material payments are ultimately determined to be owed as a result of ongoing audits (e.g., through settlement or litigation with taxing authorities), we do not anticipate having to make such payments, if any, for several more years.

We recognize potential accrued interest and penalties related to unrecognized tax benefits in income tax expense. We recognized ~~$1.9 million and $2.1~~$3.1 million in potential interest and penalties associated with these uncertain tax positions during the ~~years~~year ended December 31, ~~2012 and 2011, respectively.~~2013, compared to $1.9 million during the year ended December 31, 2012. To the extent such interest and

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penalties are not assessed as a result of a resolution of ~~the~~an underlying tax position, amounts accrued are reduced and reflected as a reduction of income tax expense. We recognized $1.0 million of such reductions in each of the years ended December 31, ~~2012~~2013 and ~~2011.~~2012.

Reconciliation (in thousands) of unrecognized tax benefits from the beginning to the end of ~~2012~~2013 and ~~2011~~2012 is as follows:

2012

2011

Balance at January 1,
$ (54,146 ) $ (54,011 )
Reductions based on tax positions related to prior years 2,753 2,890
Additions based on tax positions related to prior years (124 ) 0
Additions based on tax positions related to the current year (1,237 ) (879 )
Interest and penalties accrued
(1,889 ) (2,146 )
Reductions for tax positions of prior years for lapses of applicable statute of limitations — —
Balance at December 31,
$ (54,643 ) $ (54,146 )



	2013			2012
Balance at January 1,	$	(54,643	)	$	(54,146	)
Reductions based on tax positions related to prior years	2,943			2,753
Additions based on tax positions related to prior years	(1		)	(124		)
Additions based on tax positions related to the current year	(11		)	(1,237		)
Interest and penalties accrued	(3,063		)	(1,889		)
Balance at December 31,	$	(54,775	)	$	(54,643	)

Unrecognized tax benefits that, if recognized, would affect the effective tax rate totaled ~~$17.2~~$17.4 million and ~~$16.8~~$17.2 million at December 31, ~~2012~~2013 and ~~2011,~~2012, respectively.

Absent the effects of potential agreements to extend statutes of limitations periods (as we recently did with respect to our 2007 and 2008 federal income tax returns), the total amount of unrecognized tax benefits with respect to certain of our unrecognized tax positions will significantly change as a result of the lapse of applicable limitations periods in the next 12 months. However, it is not reasonably possible to determine which (if any) limitations periods will lapse in the next 12 months due to the effect of existing and new tax audits and tax agency determinations. Moreover, the net amount of such change cannot be reasonably estimated because our operations over the next 12 months may cause other changes to the total amount of unrecognized tax benefits. Due to the complexity of the tax rules underlying our uncertain tax position liabilities, and the unclear timing of tax audits, tax agency determinations, and other events (such as the outcomes of tax controversies involving related issues with unrelated taxpayers), we cannot establish reasonably reliable estimates for the periods in which the cash settlement of our uncertain tax position liabilities will occur.


14.	Net (Loss) Income ~~(Loss)~~ Attributable to Controlling Interests Per Common Share

We compute net (loss) income ~~(loss)~~ attributable to controlling interests per common share by dividing (loss) income ~~(loss)~~ attributable to controlling interests by the weighted-average common shares (including participating securities) outstanding during the period, as discussed below. Diluted computations applicable in financial reporting periods in which we report income reflect the potential dilution to the basic income per common share computations that could occur if securities or other contracts to issue common stock were exercised, were converted into common stock or were to result in the issuance of common stock that would share in our ~~income or losses.~~income. In performing our net (loss) income ~~(loss)~~ attributable to controlling interests per common share computations, we apply accounting rules that require us to include all unvested stock awards that contain non-forfeitable rights to dividends or dividend equivalents, whether paid or unpaid, in the number of shares outstanding in our basic and diluted calculations. Common stock and unvested share-based payment awards earn dividends equally, and we have included all outstanding restricted stock awards in our basic and diluted calculations for current and prior periods.

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The following table sets forth the computations of net (loss) income ~~(loss)~~ per common share (in thousands, except per share data):



	For the Twelve Months Ended December 31,
	2013			2012
Numerator:
Loss on continuing operations attributable to controlling interests	$	(17,741	)	$	(27,903	)
Income from discontinued operations attributable to controlling interests	—			52,354
Net (loss) income attributable to controlling interests	$	(17,741	)	$	24,451
Denominator:
Basic (including unvested share-based payment awards) (1)	13,774			19,271
Effect of dilutive stock compensation arrangements (2)	—			43
Diluted (including unvested share-based payment awards) (1)	13,774			19,314
Loss on continuing operations attributable to controlling interests per common share—basic	$	(1.29	)	$	(1.45	)
Loss on continuing operations attributable to controlling interests per common share—diluted	$	(1.29	)	$	(1.45	)
Income from discontinued operations attributable to controlling interests per common share—basic	$	—		$	2.72
Income from discontinued operations attributable to controlling interests per common share—diluted	$	—		$	2.71
Net (loss) income attributable to controlling interests per common share—basic	$	(1.29	)	$	1.27
Net (loss) income attributable to controlling interests per common share—diluted	$	(1.29	)	$	1.26

For the Year Ended December 31,
2012 2011
Numerator:
Loss on continuing operations attributable to controlling interests $ (27,903 ) $ (970 )
Income from discontinued operations attributable to controlling interests $ 52,354 $ 134,987
Net income attributable to controlling interests $ 24,451 $ 134,017
Denominator:
Basic (including unvested share-based payment awards) (1) 19,271 25,735
Effect of dilutive stock compensation arrangements (2) 43 86
Diluted (including unvested share-based payment awards) (1) 19,314 25,821
Loss on continuing operations attributable to controlling interests per common share—basic $ (1.45 ) $ (0.04 )
Loss on continuing operations attributable to controlling interests per common share—diluted $ (1.45 ) $ (0.04 )

Income from discontinued operations attributable to controlling interests per common share—basic $ 2.72 $ 5.25
Income from discontinued operations attributable to controlling interests per common share—diluted $ 2.71 $ 5.23
Net income attributable to controlling interests per common share—basic $ 1.27 $ 5.21
Net income attributable to controlling interests per common share—diluted $ 1.26 $ 5.19

~~(1)~~
(1)	Shares related to unvested share-based payment awards we included in our basic and diluted share counts are ~~136,174 and 194,841~~272,479 for the ~~years~~year endedDecember 31, 2013, compared to 136,174 shares for the year endedDecember 31, 2012 ~~and 2011, respectively.~~.


(2)	The effect of dilutive options is shown only for informational purposes where we are in a net loss position. In such situations, the effect of including outstanding options and restricted stock would be anti-dilutive, and they are thus excluded from all loss period calculations.

As their effects were anti-dilutive, we excluded all of our stock options from our net (loss) income ~~(loss)~~ per share computations for the ~~years~~year ended December 31, 2012 ~~and 2011.~~. There were no options outstanding as of December 31, 2013.

For the years ended December 31, ~~2012~~2013 and ~~2011,~~2012, there were no shares potentially issuable and thus includible in the diluted net ~~loss~~(loss) income attributable to controlling interests per common share ~~calculation~~calculations under our 3.625% convertible senior notes ~~due 2025 issued in May 2005~~ and 5.875% convertible senior ~~notes due 2035 issued in November 2005.~~notes. However, in future reporting periods during which our closing stock price is above the respective ~~$20.22~~$20.22 and ~~$24.61~~$24.61 conversion prices for the ~~May 2005~~3.625% convertible senior notes and ~~November 2005~~5.875% convertible senior notes, and depending on the closing stock price at conversion, the maximum potential dilution under the conversion provisions of ~~the May 2005 and November 2005 convertible senior~~such notes is 22,246 and 5.7 million shares, respectively, which could be included in diluted share counts in net income per common share calculations. See Note 11, “Convertible Senior Notes,” for a further discussion of these convertible securities.

15. Stock-Based Compensation

~~F-35~~

~~Table of Contents~~

~~15.~~

~~Stock-Based Compensation~~

We currently have two stock-based compensation plans, ~~including an~~the Employee Stock Purchase Plan (the “ESPP”) and athe 2008 Equity Incentive Plan (the “2008 Plan”).

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The 2008 Plan provides for grants of stock options, stock appreciation rights, restricted stock awards, restricted stock units and incentive awards. The maximum aggregate number of shares of common stock that may be issued under this plan and to which awards may relate is 2,000,000 shares, and ~~953,518~~510,346 shares remained available for grant under this plan as of December 31, ~~2012.~~2013. Exercises and vestings under our stock-based ~~employee~~ compensation plans resulted in no income tax-related benefits or charges to additional paid-in capital during the years ended December 31, ~~2012~~2013 and ~~2011.~~2012.

Stock Options

Our 2008 Plan ~~and its predecessor plans provide~~provides that we may grant options on or shares of our common stock (and other types of equity awards) to members of our Board of Directors, employees, consultants and advisors. The exercise price per share of the options may be less than, equal to, or greater than the market price on the date the option is granted. The option period may not exceed 10 years from the date of grant. ~~The vesting requirements for options granted by us range from immediate to 5 years. During the years ended~~ As of December 31, 2012 and 2011, we expensed stock option-related compensation costs of $0 and $0.5 million, respectively. We recognize stock option-related compensation expense for any awards with graded vesting on a straight-line basis over the vesting period for the entire award. Information related to options outstanding is as follows:2013

For the Year Ended December 31, 2012
Weighted- Weighted- Aggregate
Number of Average Average of Remaining Intrinsic
Shares Exercise Price Contractual Life Value
Outstanding at December 31, 2011 570,000 $ 39.24
Issued/Cancelled/Forfeited (70,000 ) -
Outstanding at December 31, 2012 500,000 $ 40.99 0.4 $ -
Exercisable at December 31, 2012 500,000 $ 40.99 0.4 $ -

For the Year Ended December 31, 2011
Weighted- Weighted- Aggregate
Number of Average Average of Remaining Intrinsic
Shares Exercise Price Contractual Life Value
Outstanding at December 31, 2010 570,000 $ 39.24
Issued/Cancelled/Forfeited - -
Outstanding at December 31, 2011 570,000 $ 39.24 1.2 $ -
Exercisable at December 31, 2011 570,000 $ 39.24 1.2 $ -

~~As of December 31, 2012,~~, we had no ~~unamortized deferred compensation costs associated with non-vested stock options and all~~ outstanding options ~~are exercisable. There were no stock option exercises during the years ended December 31, 2012 and 2011. No options were granted in the years ended December 31, 2012 or 2011.~~under this plan.

~~F-36~~

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Restricted Stock and Restricted Stock Unit Awards

During the ~~years~~twelve months ended December 31, ~~2012~~2013 and ~~2011,~~2012, we granted ~~150,000~~441,572 and ~~44,000~~150,000 shares of aggregate restricted stock and restricted stock units, respectively, with aggregate grant date fair values of ~~$0.6~~$1.5 million and ~~$0.3~~$0.6 million, respectively. When we grant restricted ~~shares,~~stock, we defer the grant date value of the restricted ~~shares~~stock and amortize that value (net of the ~~grant date values of these shares (net~~value of anticipated forfeitures) as compensation expense with an offsetting entry to the additional paid-in capital component of our consolidated shareholders’ equity. Our ~~issued~~ restricted ~~shares~~stock generally ~~vest~~vests over a range of ~~twenty-four~~12 to ~~sixty~~60 months and ~~are being~~is amortized to salaries and benefits expense ratably over applicable vesting periods. As of December 31, ~~2012,~~2013, our unamortized deferred compensation costs associated with non-vested restricted stock awards were ~~$0.4~~$1.3 million with a weighted-average remaining amortization period of ~~2.4 years.~~1.7 years.

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16.	Employee Benefit Plans

We maintain a defined contribution retirement plan (“401(k) plan”) for our U.S. employees that provides for a matching contribution by us. All full time U.S. employees are eligible to participate in the 401(k) plan. Our U.K. credit card subsidiary offers eligible employees membership in a Group Personal Pension Plan which is set up with Friends Provident. This plan is a defined contribution plan in which all permanent employees who have completed three months of continuous service are eligible to join the plan. Company matching contributions are available to U.K. employees who contribute a minimum of 3% of their salaries under our Group Personal Pension Plan and to U.S. employees who participate in our 401(k) plan. We made matching contributions under our U.S. and U.K. plans of ~~$0.3 million~~$271,000 and ~~$0.3 million~~$300,000 in ~~2012~~2013 and ~~2011,~~2012, respectively.

Also, all employees, excluding executive officers, are eligible to participate in the ESPP to which we referred above. Under the ESPP, employees can elect to have up to 10% of their annual wages withheld to purchase our common stock up to a fair market value of $10,000. The amounts deducted and accumulated by each participant are used to purchase shares of common stock at the end of each one-month offering period. The price of stock purchased under the ESPP is approximately 85% of the fair market value per share of our common stock on the last day of the offering period. Employees contributed ~~$0.02 million~~$26,754 to purchase 8,391 shares of common stock in 2013 and $22,389 to purchase 6,133 shares of common stock in 2012 ~~and $0.03 million to purchase 10,383 shares of common stock in 2011~~ under the ESPP. The ESPP covers up to 150,000 shares of common stock. Our charge to expense associated with the ESPP was $6,000 and $4,500 in 2013 and ~~$6,000 in~~ 2012, ~~and 2011,~~ respectively.


17.	Related Party Transactions

In our September 2012 tender offer, we purchased for $10 per share the following shares of common stock from ~~our~~the following executive officers, members of our Board of Directors, and a 10-percent shareholder:

Number of Shares

Total Price

Executive Officers

David G. Hanna, Chief Executive Officer and Chairman of the Board 2,344,323 $ 23,443,230
Richard R. House, Jr., President and Director 100,240 $ 1,002,400
Richard W. Gilbert, Chief Operating Officer and Vice Chairman of the Board 212,023 $ 2,120,230
J.Paul Whitehead, III, Chief Financial Officer 49,949 $ 499,490
Board Members

Deal W. Hudson 18,700 $ 187,000
Mack F. Mattingly 20,726 $ 207,260
Thomas G. Rosencrants 16,172 $ 161,720
10% Shareholder

Frank J. Hanna, III 2,344,324 $ 23,443,240



	Number of Shares	Total Price
Executive Officers
David G. Hanna, Chief Executive Officer and Chairman of the Board	2,344,323	$	23,443,230
Richard R. House, Jr., President and Director (1)	100,240	$	1,002,400
Jeffrey A. Howard, President and Director (1)	17,647	$	176,470
Richard W. Gilbert, Chief Operating Officer and Vice Chairman of the Board	212,023	$	2,120,230
J.Paul Whitehead, III, Chief Financial Officer (2)	49,949	$	499,490
Board Members
Deal W. Hudson	18,700	$	187,000
Mack F. Mattingly	20,726	$	207,260
Thomas G. Rosencrants	16,172	$	161,720
10% Shareholder
Frank J. Hanna, III	2,344,324	$	23,443,240

(1) Mr. House resigned as President and Director on February 21, 2014 (effective March 31, 2014). Mr. Howard was appointed President and Director on February 21, 2014 (effective April 1, 2014).

(2) Mr. Whitehead resigned as Chief Financial Officer on November 18, 2013 (effective December 31, 2013).

~~F-37~~

~~Table of Contents~~

~~Additionally, as part~~The purchases from the individuals listed above were on the same terms that were available to all of our ~~April 2011 tender offer, we purchased for $8 per share the following shares from our executive officers and then-members of our Board of Directors:~~shareholders.

Number of Shares

Total Price

Executive Officers

David G. Hanna, Chief Executive Officer and Chairman of the Board 3,656,028 $ 29,248,224
Richard R. House, Jr., President and Director 202,610 $ 1,620,880
Richard W. Gilbert, Chief Operating Officer and Vice Chairman of the Board 330,654 $ 2,645,232
J.Paul Whitehead, III, Chief Financial Officer 23,984 $ 191,872
Board Members

Frank J. Hanna, III 3,656,028 $ 29,248,224
Deal W. Hudson 19,231 $ 153,848
Mack F. Mattingly 20,974 $ 167,792
Thomas G. Rosencrants 13,871 $ 110,968
Gregory J. Corona 29,574 $ 236,592

Under a shareholders’ agreement into which we entered with David G. Hanna, Frank J. Hanna, III, Richard R. House, Jr., Richard W. Gilbert and certain trusts that were Hanna affiliates, following our initial public offering (1) if one or more of the shareholders accepts a bona fide offer from a third party to purchase more than 50% of the outstanding common stock, each of the other shareholders that ~~are~~is a party to the agreement may elect to sell ~~their~~his shares to the purchaser on the same terms and conditions, and (2) if shareholders that are a party to the agreement owning more than 50% of the common stock propose to transfer all of their shares to a third party, then such transferring shareholders may require the other shareholders that are a party to the agreement to sell all of the shares owned by them to the proposed transferee on the same terms and conditions.

D~~uring~~During 2012, we loaned $155,000 to yBuy, Inc. (“yBuy”); the loan bore interest at 5% and was secured by yBuy’s assets. At the time of the loan, David G. Hanna was a director of yBuy and an entity controlled by David G. Hanna and members of David G. Hanna’s immediate family was a shareholder of yBuy. In November 2012, Mr. Hanna resigned from the

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Board of yBuy and the affiliated entity disposed of its stock in yBuy for a negligible amount. In November 2012, we entered into an agreement with yBuy to purchase certain of yBuy’s assets for consideration equal to the outstanding balance of our loan to yBuy. The assets purchased from yBuy included the rights to a domain name and other immaterial intangible assets. Following the receipt of these assets, there is no outstanding balance on our loan to yBuy. While the loan was outstanding, yBuy did not pay us any principal or interest.

In June 2008, Mr. Rosencrants and two family members as joint tenants with right of survivorship purchased $200,000 principal amount of our 3.625% convertible senior notes from unrelated third parties at prevailing market prices. In January 2009, two of Mr. Rosencrants’ immediate family members purchased $200,000 aggregate principal amount of the 3.625% convertible senior notes from unrelated third parties at prevailing market prices. The 3.625% convertible senior notes bear interest at a rate of 3.625% per year, payable semi-annually in arrears. we repurchased all of these notes from the Rosencrants family in May 2012 at the full face value of such notes. This repurchase was pursuant to a put option that was available to all holders of the 3.625% convertible senior notes and was on the same terms as those available to all note holders. From January 1, 2011 through the repurchase date, we paid the Rosencrants family an aggregate of $21,750 of interest and $400,000 of principal on these notes.

In June 2007 we entered into a sublease for 1,000 square feet of excess office space at our Atlanta headquarters ~~office location, to~~with HBR Capital, Ltd. ("HBR"), a ~~corporation~~company co-owned by David G. Hanna and Frank J. Hanna, III. The sublease rate of ~~$24.30~~$24.79 per square foot is the same as the rate that we pay on the prime lease. This sublease expires in May of 2022.

In June, 2007, a partnership formed by Richard W. Gilbert (our Chief Operating Officer and then-Vice Chairman of our Board of Directors), Richard R. House, Jr. (our President and a member of our Board of Directors), J. Paul Whitehead III (our Chief Financial Officer), Krishnakumar Srinivasan (then-President of our Credit Cards and Other Investments segment), and other individual investors (including an unrelated third-party individual investor), acquired £4.7 million ($9.2 million) of class “B” notes originally issued to another investor out of our U.K. Portfolio structured financing trust. This acquisition priceJanuary 2013, HBR began leasing four employees from us. HBR reimburses us for the full cost of the ~~notes was~~employees, based on the ~~same price at which~~amount of time devoted to HBR. In the original investor had sold $60 million of notes to another unrelated third party. Due to various partnership member terminations in 2009 and 2010, only Richard W. Gilbert, Richard R. House, Jr. and one other individual investor remained as partners in the partnership at twelve months ended December 31, ~~2010. In March 2011,~~2013, we ~~invested in a 50.0%-owned joint venture that purchased the outstanding notes issued out~~received $181,030 of ~~our U.K. Portfolio structured financing trust including those owned by this partnership; no consideration was paid for the notes.~~reimbursed costs from HBR associated with these leased employees.

In December 2006, we established a contractual relationship with Urban Trust Bank, a federally chartered savings bank (“Urban Trust”), pursuant to which we purchase credit card receivables underlying specified Urban Trust credit card accounts. Under this arrangement, in general, Urban Trust was entitled to receive 5% of all payments received from cardholders and was obligated to pay 5% of all net costs incurred by us in connection with managing the program, including the costs of purchasing, marketing, servicing and collecting the receivables. In April 2009, however, we amended our contractual relationship with Urban Trust such that, in exchange for a payment by us of $300,000, Urban Trust would sell back its ownership interest in the economics underlying cards issued through Urban Trust Bank. The purchase of this interest resulted in a net gain of $1.1 million which we recorded in our second quarter 2009 results of operations. Frank J. Hanna, Jr., who is the father of David. G. Hanna and Frank J. Hanna, III, owns a substantial noncontrolling interest in Urban Trust and serves on its Board of Directors. In December 2006, we deposited $0.3 million with Urban Trust to cover purchases by Urban Trust cardholders. As of December 31, 2011, we had no remaining deposit and had terminated our agreement with Urban Trust.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Atlanta, State of Georgia, on ~~February 25, 2013.~~March 28, 2014.



	Atlanticus Holdings Corporation

By:	/s/ David G. Hanna
	David G. Hanna Chief Executive Officer and Chairman of the Board

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been signed below by the following persons in the capacities and on the dates indicated.




Signature	Title	Date

/s/ DAVID G. HANNA David G. Hanna	Chief Executive Officer and Chairman of the Board (Principal Executive Officer)	~~February 25, 2013~~March 28, 2014

/s/ ~~J. P~~W~~AUL~~ILLIAM R. McCAMEY W~~HITEHEAD, III~~ ~~J. Paul Whitehead, III~~ William R. McCamey	Chief Financial Officer and Treasurer (Principal Financial ~~& Accounting~~ Officer)	~~February 25, 2013~~March 28, 2014

/s/ RM~~ICHARD~~ITCHELL C. SAUNDERS ~~R. HOUSE, J~~R. ~~Richard R. House, Jr.~~ Mitchell C. Saunders	~~Director~~Chief Accounting Officer (Principal Accounting Officer)	~~February 25, 2013~~March 28, 2014

/s/ DR~~EAL~~ICHARD W. R. H~~UDSON~~ OUSE, J R. ~~Deal W. Hudson~~ Richard R. House, Jr.	Director	~~February 25, 2013~~March 28, 2014

/s/ MD~~ACK~~EAL W. HUDSON ~~F. MATTINGLY~~ ~~Mack F. Mattingly~~ Deal W. Hudson	Director	~~February 25, 2013~~March 28, 2014

/s/ MACK F. MATTINGLY Mack F. Mattingly	Director	March 28, 2014

/s/ THOMAS G. ROSENCRANTS Thomas G. Rosencrants	Director	~~February 25, 2013~~March 28, 2014

~~Part I~~						~~Page~~
~~Item 1.~~	~~Business~~			1
~~Item 1A.~~					~~Risk Factors~~		7	Page
~~Item 1B.~~					~~Unresolved Staff Comments~~		15
~~Item 2.~~	~~Properties~~			16
~~Item 3.~~	~~Legal Proceedings~~			16
~~Item 4.~~	~~Mine Safety Disclosures~~			16	Part I
	Item 1.	Business		1
	Item 1A.	Risk Factors		6
	Item 1B.	Unresolved Staff Comments		16
	Item 2.	Properties		16
	Item 3.	Legal Proceedings		17
	Item 4.	Mine Safety Disclosures		17

Part II

Item 5.	Market for ~~Registrant’s~~Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		18
		17
Item 6.	Selected Financial Data		18
		18
Item 7.	~~Management’s~~Management's Discussion and Analysis of Financial Condition and Results of Operations		20
		18
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk		35
		33
Item 8.	Financial Statements and Supplementary Data		35
		33
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure				34
~~Item 9A.~~	~~Controls and Procedures~~36			34
~~Item 9B.~~	~~Other Information~~			34
	Item 9A.	Controls and Procedures		36
	Item 9B.	Other Information		36

Part III

Item 10.	Directors, Executive Officers and Corporate Governance		37
		35
Item 11.	Executive Compensation		37
		35
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		37
		35
Item 13.	Certain Relationships and Related Transactions, and Director Independence		37
		35
Item 14.	Principal Accountant Fees and Services		37

Part IV
	Item 15.	35Exhibits and Financial Statement Schedules		38

~~Part IV~~
~~Item 15.~~	~~Exhibits and Financial Statement Schedules~~			36

	For the Year Ended December 31,
	2012			2011
Net income	$	24,132		$	135,064
Other comprehensive income:
Foreign currency translation adjustment		1,147			588
Reclassifications of foreign currency translation adjustment to consolidated statements of operations		(19	)		2,699
Income tax (expense) benefit related to other comprehensive income		(25	)		64
Comprehensive income		25,235			138,415
Comprehensive loss (income) attributable to noncontrolling interests		319			(1,047	)
Comprehensive income attributable to controlling interests	$	25,554		$	137,368



	For the Twelve Months Ended December 31,
	2013			2012
Net (loss) income	$	(17,665	)	$	24,132
Other comprehensive (loss) income:
Foreign currency translation adjustment	562			1,147
Reclassifications of foreign currency translation adjustment to consolidated statements of operations	—			(19		)
Income tax expense related to other comprehensive income	(145		)	(25		)
Comprehensive (loss) income	(17,248		)	25,235
Comprehensive (income) loss attributable to noncontrolling interests in continuing operations	(76		)	319
Comprehensive (loss) income attributable to controlling interests	$	(17,324	)	$	25,554


	For the Year Months Ended December 31,						For the Twelve Months Ended December 31,
	2012			2011			2013			2012
Operating activities
Net income	$	24,132		$	135,064
Adjustments to reconcile net income to net cash provided by operating activities:
Net (loss) income							$	(17,665	)	$	24,132
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Depreciation of rental merchandise							16,146			—
Depreciation, amortization and accretion, net		2,574			6,187		1,553			2,574
Losses upon charge off of loans and fees receivable recorded at fair value		90,128			139,480		27,843			90,128
Provision for losses on loans and fees receivable		19,343			20,576		29,678			19,343
Accretion of discount on convertible senior notes		2,428			6,442
Stock-based compensation expense		320			2,460
Interest expense from accretion of discount on convertible senior notes							600			2,428
Income from accretion of discount associated with receivables purchases							(29,907		)	(29,963		)
Unrealized gain on loans and fees receivable and underlying notes payable held at fair value		(59,352	)		(90,978	)	(26,178		)	(59,352		)
Deferred taxes		329			374
Income from equity-method investments		(9,288	)		(32,657	)	(8,437		)	(9,288		)
Gain on buy-out of equity-method investee members		-			(619	)
Net gain on sale of subsidiary operations		(57,341	)		(106,481	)	—			(57,341		)
Other non cash adjustments to income		1,602			(261	)
Other non-cash adjustments to income							159			1,931
Changes in assets and liabilities, exclusive of business acquisitions:
Decrease (increase) in uncollected fees on earning assets		15,597			(12,617	)
Decrease in JRAS auto loans receivable		3,801			12,805
Increase (decrease) in income tax liability		737			(3,903	)
(Increase) decrease in uncollected fees on earning assets							(2,466		)	19,398
(Decrease) increase in income tax liability							(5,277		)	737
Decrease (increase) in deposits							14,489			(13,429		)
(Increase) decrease in prepaid expenses		(3,734	)		9,001		(43		)	9,695
Decrease in accounts payable and accrued expenses		(3,501	)		(4,660	)
Increase (decrease) in accounts payable and accrued expenses							9,480			(3,501		)
Additions to rental merchandise							(44,996		)	—
Other		5,172			3,560		8,165			5,492
Net cash provided by operating activities		32,947			83,773
Net cash (used in) provided by operating activities							(26,856		)	2,984
Investing activities
Decrease in restricted cash		9,611			13,752
(Increase) decrease in restricted cash							(5,948		)	9,611
Investment in equity-method investees		(1,354	)		(34,336	)	(3,750		)	(1,354		)
Proceeds from equity-method investees		23,808			23,383		15,746			23,808
Investments in earning assets		(227,293	)		(611,231	)	(196,903		)	(197,330		)
Proceeds from earning assets		298,009			852,419		244,057			298,009
Investments in subsidiaries		(3,514	)		(2,013	)	—			(3,514		)
Net cash associated with newly acquired consolidated subsidiaries		-			1,025
Proceeds from sale of subsidiary operations		102,191			192,054
Proceeds from sale of subsidiary							—			102,191
Purchases and development of property, net of disposals		(2,186	)		(1,541	)	(3,487		)	(2,186		)
Net cash provided by investing activities		199,272			433,512		49,715			229,235
Financing activities
Noncontrolling interests contributions, net		-			663		26			—
Purchase of outstanding stock subject to tender offer		(82,500	)		(105,000	)	—			(82,500		)
Purchase of treasury stock		(196	)		(3,388	)
Purchases of noncontrolling interests		-			(4,067	)
Purchase and retirement of outstanding stock							(1,396		)	(196		)
Proceeds from borrowings		21,280			33,462		48,981			21,280
Repayment of borrowings		(247,983	)		(380,288	)	(88,326		)	(247,983		)
Net cash used in financing activities		(309,399	)		(458,618	)	(40,715		)	(309,399		)
Effect of exchange rate changes on cash		182			896		814			182
Net (decrease) increase in unrestricted cash		(76,998	)		59,563
Net decrease in unrestricted cash							(17,042		)	(76,998		)
Unrestricted cash and cash equivalents at beginning of period		144,913			85,350		67,915			144,913
Unrestricted cash and cash equivalents at end of period	$	67,915		$	144,913		$	50,873		$	67,915
Supplemental cash flow information
Cash paid for interest	$	28,959		$	38,083		$	23,208		$	28,959
Net cash income tax payments	$	49		$	6,479		$	163		$	49
Supplemental non-cash information
Issuance of stock options and restricted stock	$	559		$	303		$	1,512		$	559
Notes payable associated with capital leases	$	182		$	-		$	155		$	182


	Balance at December 31, 2011			Additions			Subtractions			Assets Sold			Balance at December 31, 2012			Balance at December 31, 2012			Additions			Subtractions			Sale of Assets			Balance at December 31, 2013
Loans and fees receivable, gross	$	119.3		$	178.7		$	(190.3	)	$	(18.6	)	$	89.1		$	89.1		$	255.3		$	(209.7	)	—			$	134.7
Deferred revenue		(8.0	)		(26.5	)		26.2		$	-			(8.3	)	(8.3		)	(34.9		)	29.9			—			(13.3		)
Allowance for uncollectible loans and fees receivable		(14.7	)		(19.4	)		19.3		$	3.6			(11.2	)	(11.2		)	(29.7		)	16.7			—			(24.2		)
Loans and fees receivable, net	$	96.6		$	132.8		$	(144.8	)	$	(15.0	)	$	69.6		$	69.6		$	190.7		$	(163.1	)	$	—		$	97.2
																Balance at December 31, 2011			Additions			Subtractions			Sale of Assets			Balance at December 31, 2012
	Balance at December 31, 2010			Additions			Subtractions			Transfer to Assets Held for Sale			Balance at December 31, 2011
Loans and fees receivable, gross	$	227.7		$	366.6		$	(432.7	)	$	(42.3	)	$	119.3		$	119.3		$	178.7		$	(190.3	)	$	(18.6	)	$	89.1
Deferred revenue		(20.5	)		(36.9	)		43.6			5.8			(8.0	)	(8.0		)	(26.5		)	26.2			—			(8.3		)
Allowance for uncollectible loans and fees receivable		(37.6	)		(9.9	)		28.8			4.0			(14.7	)	(14.7		)	(19.4		)	19.3			3.6			(11.2		)
Loans and fees receivable, net	$	169.6		$	319.8		$	(360.3	)	$	(32.5	)	$	96.6		$	96.6		$	132.8		$	(144.8	)	$	(15.0	)	$	69.6


2011	High		Low
1st Quarter 2011	$	6.97	$	5.90
2nd Quarter 2011	$	6.85	$	2.32
3rd Quarter 2011	$	3.20	$	2.25
4th Quarter 2011	$	4.21	$	2.63

2012	High		Low
1st Quarter 2012	$	6.00	$	3.78
2nd Quarter 2012	$	5.96	$	3.29
3rd Quarter 2012	$	6.46	$	3.72
4th Quarter 2012	$	3.99	$	3.28

Plan Category	Number of Securities to Be Issued upon Exercise of Outstanding Options and Vesting of Restricted Stock Units (1)		Weighted-Average Exercise Price of Outstanding Options		Number of Securities Remaining Available for Future Issuance under Employee Compensation Plans (Excluding Securities Reflected in First Column) (2)
Equity compensation plans previously approved by security holders		522,492	$	40.99		1,013,518
Equity compensation plans not approved by security holders		—		—		—
Total		522,492	$	40.99		1,013,518

	Common Stock
	Shares Issued			Amount		Additional Paid-In Capital			Treasury Stock			Accumulated Other Comprehensive Loss			Retained Deficit			Noncontrolling Interests			Total Equity
																								Common Stock
Balance at December 31, 2010		46,217,050			—	$	408,751		$	(208,696	)	$	(5,608	)	$	(151,609	)	$	18,979		$	61,817
Use of treasury stock for stock-based compensation plans		(550,414	)		—		(13,804	)		24,469			—			(10,665	)		—			—
Compensatory stock issuances		35,677			—		—			—			—			—			—			—
Amortization of deferred stock-based compensation costs		—			—		2,460			—			—			—			—			2,460
Purchase of treasury stock		—			—		—			(3,388	)		—			—			—			(3,388	)
Repurchase of noncontrolling interests		—			—		5,385			—			—			—			(20,243	)		(14,858	)
Contributions by owners of noncontrolling interests		—			—		—			—			—			—			663			663
Redemption and retirement of shares		(13,704,732	)				(105,000	)		—			—			—			—			(105,000	)
Consolidation of variable interest entity		—			—		—			—			—			—			(235	)		(235	)
Settlement of stock-based compensation plan		—			—		(3,513	)		—			—			—			—			(3,513	)
Net income		—			—		—			—			—			134,017			1,047			135,064
Foreign currency translation adjustment, net of tax		—			—		(33	)		—			3,351			—						3,318
																								Shares Issued		Amount		Additional Paid-In Capital			Treasury Stock			Accumulated Other Comprehensive Loss			Retained Deficit			Noncontrolling Interests			Total Equity
Balance at December 31, 2011		31,997,581			-		294,246			(187,615	)		(2,257	)		(28,257	)		211			76,328		31,997,581		—		294,246			(187,615		)	(2,257		)	(28,257		)	211			76,328
Use of treasury stock for stock-based compensation plans		(118,277	)		-		(944	)		5,169			-			(4,225	)		-			-		(118,277	)	—		(944		)	5,169			—			(4,225		)	—			—
Compensatory stock issuances		199,777			-		-			-			-			-			-			-		199,777		—		—			—			—			—			—			—
Amortization of deferred stock-based compensation costs		-			-		320			-			-			-			-			320		—		—		320			—			—			—			—			320
Purchase of treasury stock		-			-		-			(196	)		-			-			-			(196	)	—		—		—			(196		)	—			—			—			(196		)
Redemption and retirement of shares		(16,569,902	)		-		(82,500	)		182,642			-			(182,642	)		-			(82,500	)	(16,569,902	)	—		(82,500		)	182,642			—			(182,642		)	—			(82,500		)
Net income		-			-		-			-			-			24,451			(319	)		24,132		—		—		—			—			—			24,451			(319		)	24,132
Foreign currency translation adjustment, net of tax		-			-		-			-			1,103			-			-			1,103		—		—		—			—			1,103			—			—			1,103
Balance at December 31, 2012		15,509,179		$	-	$	211,122		$	-		$	(1,154	)	$	(190,673	)	$	(108	)	$	19,187		15,509,179		$	—	$	211,122		$	—		$	(1,154	)	$	(190,673	)	$	(108	)	$	19,187
Compensatory stock issuances																								465,664		—		—			—			—			—			—			—
Contributions by owners of noncontrolling interests																								—		—		—			—			—			—			26			26
Amortization of deferred stock-based compensation costs																								—		—		589			—			—			—			—			589
Redemption and retirement of shares																								(380,518	)	—		(1,396		)	—			—			—			—			(1,396		)
Net loss																								—		—		—			—			—			(17,741		)	76			(17,665		)
Foreign currency translation adjustment, net of tax																								—		—		—			—			417			—			—			417
Balance at December 31, 2013																								15,594,325		$	—	$	210,315		$	—		$	(737	)	$	(208,414	)	$	(6	)	$	1,158


2.	Significant Accounting Policies and Consolidated Financial Statement Components

For the Year Ended December 31, 2012	Credit Cards			Auto Finance			Other Unsecured Lending Products			Total
Allowance for uncollectible loans and fees receivable:

For the Twelve Months Ended December 31, 2013													Credit Cards			Auto Finance			Other Unsecured Lending Products			Total
Allowance for uncollectible loans and fees receivable:
Balance at beginning of period	$	(4.0	)	$	(8.4	)	$	(2.3	)	$	(14.7	)	$	(4.6	)	$	(3.1	)	$	(3.5	)	$	(11.2	)
Provision for loan losses (includes $2.6 million of provision netted within income from discontinued operations)		(14.6	)		1.0			(5.8	)		(19.4	)
Provision for loan losses													(16.3		)	(0.3		)	(13.1		)	(29.7		)
Charge offs		11.2			7.6			4.7			23.5		9.5			3.6			5.6			18.7
Recoveries		(0.8	)		(3.3	)		(0.1	)		(4.2	)	(0.2		)	(1.6		)	(0.2		)	(2.0		)
Sale of Assets		3.6			-			-			3.6
Balance at end of period	$	(4.6	)	$	(3.1	)	$	(3.5	)	$	(11.2	)	$	(11.6	)	$	(1.4	)	$	(11.2	)	$	(24.2	)
Balance at end of period individually evaluated for impairment	$	-		$	-		$	-		$	-		$	—		$	—		$	—		$	—
Balance at end of period collectively evaluated for impairment	$	(4.6	)	$	(3.1	)	$	(3.5	)	$	(11.2	)	$	(11.6	)	$	(1.4	)	$	(11.2	)	$	(24.2	)
Loans and fees receivable:
Loans and fees receivable, gross	$	7.2		$	64.2		$	17.7		$	89.1		$	21.9		$	63.5		$	49.3		$	134.7
Loans and fees receivable individually evaluated for impairment	$	-		$	-		$	-		$	-		$	—		$	0.2		$	—		$	0.2
Loans and fees receivable collectively evaluated for impairment	$	7.2		$	64.2		$	17.7		$	89.1		$	21.9		$	63.3		$	49.3		$	134.5

For the Year Ended December 31, 2011	Credit Cards			Auto Finance			Other Unsecured Lending Products			Total
Allowance for uncollectible loans and fees receivable:
Balance at beginning of period	$	(4.0	)	$	(28.3	)	$	(5.3	)	$	(37.6	)
Provision for loan losses (includes $8.8 million of provision netted within income from discontinued operations)		(4.2	)		3.7			(9.4	)		(9.9	)
Charge offs		5.3			16.7			8.8			30.8
Recoveries		(1.1	)		(1.2	)		(0.4	)		(2.7	)
Transfer to assets held for sale		-			-			4.0			4.0
Sale of assets		-			0.7			-			0.7
Balance at end of period	$	(4.0	)	$	(8.4	)	$	(2.3	)	$	(14.7	)
Balance at end of period individually evaluated for impairment	$	-		$	(0.2	)	$	-		$	(0.2	)
Balance at end of period collectively evaluated for impairment	$	(4.0	)	$	(8.2	)	$	(2.3	)	$	(14.5	)
Loans and fees receivable:
Loans and fees receivable, gross	$	20.5		$	91.5		$	7.3		$	119.3
Loans and fees receivable individually evaluated for impairment	$	-		$	0.6		$	-		$	0.6
Loans and fees receivable collectively evaluated for impairment	$	20.5		$	90.9		$	7.3		$	118.7



	December 31, 2013		December 31, 2012
Current loans receivable	$	103.3	$	71.4
Current fees receivable	6.0		0.8
Delinquent loans and fees receivable	25.4		16.9
Loans and fees receivable, gross	$	134.7	$	89.1

As of December 31, 2012	Credit Cards		Auto Finance		Other Unsecured Lending Products		Total

Balance at December 31, 2013									Credit Cards		Auto Finance		Other Unsecured Lending Products		Total
30-59 days past due	$	0.7	$	5.4	$	0.6	$	6.7	$	1.6	$	5.6	$	2.5	$	9.7
60-89 days past due		1.0		2.0		0.5		3.5	1.9		1.7		2.2		5.8
90 or more days past due		4.2		1.6		0.9		6.7	5.6		1.1		3.2		9.9
Delinquent loans and fees receivable, gross		5.9		9.0		2.0		16.9	9.1		8.4		7.9		25.4
Current loans and fees receivable, gross		1.3		55.2		15.7		72.2	12.8		55.1		41.4		109.3
Total loans and fees receivable, gross	$	7.2	$	64.2	$	17.7	$	89.1	$	21.9	$	63.5	$	49.3	$	134.7
Balance of loans greater than 90-days delinquent still accruing interest and fees	$	-	$	0.5	$	-	$	0.5
Balance of loans 90 or more days past due and still accruing interest and fees									$	—	$	0.1	$	3.2	$	3.3

As of December 31, 2011	Credit Cards		Auto Finance		Other Unsecured Lending Products		Total
Balance at December 31, 2012									Credit Cards		Auto Finance		Other Unsecured Lending Products		Total
30-59 days past due	$	0.8	$	6.9	$	0.7	$	8.4	$	0.7	$	5.4	$	0.6	$	6.7
60-89 days past due		0.7		2.5		0.6		3.8	1.0		2.0		0.5		3.5
90 or more days past due		1.5		1.9		0.9		4.3	4.2		1.6		0.9		6.7
Delinquent loans and fees receivable, gross		3.0		11.3		2.2		16.5	5.9		9.0		2.0		16.9
Current loans and fees receivable, gross		17.5		80.2		5.1		102.8	1.3		55.2		15.7		72.2
Total loans and fees receivable, gross	$	20.5	$	91.5	$	7.3	$	119.3	$	7.2	$	64.2	$	17.7	$	89.1
Balance of loans greater than 90-days delinquent still accruing interest and fees	$	-	$	1.3	$	-	$	1.3
Balance of loans 90 or more days past due and still accruing interest and fees									$	—	$	0.5	$	0.9	$	1.4



	Twelve months ended December 31,
	2013			2012
Fees on credit products	$	23,879		$	17,474
Changes in fair value of loans and fees receivable recorded at fair value	45,601			89,502
Changes in fair value of notes payable associated with structured financings recorded at fair value	(19,423		)	(30,150		)
Rental revenue	19,759			—
Other	(707		)	(7,620		)
Total fees and related income on earning assets	$	69,109		$	69,206



	Twelve months ended December 31, 2012
Net interest income, fees and related income on earning assets	$	37,137
Other operating expense	(25,415		)
Gain on sale of assets	57,341
Income before income taxes	69,063
Income tax expense	(16,709		)
Net income	$	52,354
Net income attributable to noncontrolling interests	$	—



ITEM 1.	BUSINESS

	Credit Cards
	and Other			Auto
Year Ended December 31, 2012	Investments			Finance			Total
Interest income:
Consumer loans, including past due fees	$	61,423		$	24,378		$	85,801
Other		740			269			1,009
Total interest income		62,163			24,647			86,810
Interest expense		(25,472	)		(5,652	)		(31,124	)
Net interest income before fees and related income on earning assets and provision for losses on loans and fees receivable		36,691			18,995			55,686
Fees and related income on earning assets		66,939			1,271			68,210
Servicing income		15,438			795			16,233
Equity in income of equity-method investees		9,288			-			9,288
Income tax benefit (expense)		17,989			(2,380	)		15,609
(Loss on) income from continuing operations before income taxes	$	(46,666	)	$	2,835		$	(43,831	)
Total assets	$	316,511		$	63,915		$	380,426



Twelve months ended December 31, 2013	Credit and Other Investments			Auto Finance			Total
Interest income:
Consumer loans, including past due fees	$	46,050		$	23,215		$	69,265
Other	139			117			256
Total interest income	46,189			23,332			69,521
Interest expense	(22,470		)	(1,402		)	(23,872		)
Net interest income before fees and related income on earning assets and provision for losses on loans and fees receivable	$	23,719		$	21,930		$	45,649
Fees and related income (loss) on earning assets	$	71,286		$	(2,177	)	$	69,109
Servicing income	$	7,411		$	807		$	8,218
Depreciation of rental merchandise	(16,146		)	—			(16,146		)
Equity in income of equity-method investees	$	8,437		$	—		$	8,437
(Loss on) income from continuing operations before income taxes	$	(25,294	)	$	2,515		$	(22,779	)
Income tax benefit (expense)	$	6,349		$	(1,235	)	$	5,114
Total assets	$	292,748		$	59,487		$	352,235

	As of
	December 31, 2012		December 31, 2011
Investments in non-marketable debt securities, at fair value	$	46,564	$	81,639
Total assets	$	47,125	$	83,210
Total liabilities	$	-	$	-
Members’ capital	$	47,125	$	83,210



Assets – As of December 31, 2013 (1)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Carrying Amount of Assets
Loans and fees receivable, net for which it is practicable to estimate fair value	$	—	$	—	$	94,579	$	92,924
Loans and fees receivable, net for which it is not practicable to estimate fair value (2)	$	—	$	—	$	—	$	4,284
Loans and fees receivable, at fair value	$	—	$	—	$	12,080	$	12,080
Loans and fees receivable pledged as collateral, at fair value	$	—	$	—	$	88,132	$	88,132



Assets – As of December 31, 2012 (1)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Carrying Amount of Assets
Loans and fees receivable, net for which it is practicable to estimate fair value	$	—	$	—	$	76,384	$	65,198
Loans and fees receivable, net for which it is not practicable to estimate fair value (2)	$	—	$	—	$	—	$	4,427
Loans and fees receivable, at fair value	$	—	$	—	$	20,378	$	20,378
Loans and fees receivable pledged as collateral, at fair value	$	—	$	—	$	133,595	$	133,595

Assets – As of December 31, 2012 (1)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Carrying Amount of Assets
Investment securities—trading	$	-	$	-	$	-	$	-
Loans and fees receivable, net for which it is practicable to estimate fair value	$	-	$	-	$	65,290	$	55,525
Loans and fees receivable, net for which it is not practicable to estimate fair value (2)	$	-	$	-	$	-	$	4,427
Loans and fees receivable pledged as collateral under structured financings, net	$	-	$	-	$	11,094	$	9,673
Loans and fees receivable, at fair value	$	-	$	-	$	20,378	$	20,378
Loans and fees receivable pledged as collateral under structured financings, at fair value	$	-	$	-	$	133,595	$	133,595


Assets – As of December 31, 2011 (1)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Carrying Amount of Assets
Investment securities—trading	$	151	$	-	$	-	$	151
Loans and fees receivable, net for which it is practicable to estimate fair value	$	-	$	-	$	51,327	$	43,671
Loans and fees receivable, net for which it is not practicable to estimate fair value (2)	$	-	$	-	$	-	$	21,050
Loans and fees receivable pledged as collateral under structured financings, net	$	-	$	-	$	26,530	$	28,732
Loans and fees receivable pledged as collateral under structured financings, at face value for which it is not practicable to estimate fair value	$	-	$	-	$	-	$	3,170
Loans and fees receivable, at fair value	$	-	$	-	$	28,226	$	28,226
Loans and fees receivable pledged as collateral under structured financings, at fair value	$	-	$	-	$	238,763	$	238,763


(1)	For cash, deposits and other short-term investments (including our investments in rental merchandise), the carrying amount is a reasonable estimate of fair value.


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

	Loans and Fees Receivable, at Fair Value			Loans and Fees Receivable Pledged as Collateral under Structured Financings, at Fair Value			Total
Balance at January 1, 2011	$	12,437		$	373,155		$	385,592
Transfers in due to consolidation of equity-method investees		-			14,587			14,587

										Loans and Fees Receivable, at Fair Value			Loans and Fees Receivable Pledged as Collateral under Structured Financings, at Fair Value			Total
Balance at January 1, 2013										$	20,378		$	133,595		$	153,973
Total gains—realized/unrealized:
Net revaluations of loans and fees receivable pledged as collateral under structured financings, at fair value										—			38,066			38,066
Net revaluations of loans and fees receivable, at fair value										7,535			—			7,535
Settlements, net										(15,833		)	(83,727		)	(99,560		)
Impact of foreign currency translation										—			198			198
Net transfers in and/or out of Level 3										—			—			—
Balance at December 31, 2013										$	12,080		$	88,132		$	100,212
Balance at January 1, 2012										$	28,226		$	238,763		$	266,989
Total gains—realized/unrealized:		-			-			-
Net revaluations of loans and fees receivable pledged as collateral under structured financings, at fair value		-			169,994			169,994		—			77,083			77,083
Net revaluations of loans and fees receivable, at fair value		11,508			-			11,508		12,419			—			12,419
Settlements, net		(25,024	)		(289,717	)		(314,741	)	(23,770		)	(181,964		)	(205,734		)
Impact of foreign currency translation		-			49			49		—			3,216			3,216
Net transfers between categories		29,305			(29,305	)		-		3,503			(3,503		)	—
Net transfers in and/or out of Level 3		-			-			-		—			—			—
Balance at December 31, 2011	$	28,226		$	238,763		$	266,989
Transfers in due to consolidation of equity-method investees		-			-			-
Total gains—realized/unrealized:		-			-			-
Net revaluations of loans and fees receivable pledged as collateral under structured financings, at fair value		-			77,083			77,083
Net revaluations of loans and fees receivable, at fair value		12,419			-			12,419
Settlements, net		(23,770	)		(181,964	)		(205,734	)
Impact of foreign currency translation		-			3,216			3,216
Net transfers between categories		3,503			(3,503	)		-
Net transfers in and/or out of Level 3		-			-			-

Balance at December 31, 2012	$	20,378		$	133,595		$	153,973		$	20,378		$	133,595		$	153,973



Liabilities – As of December 31, 2013	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Carrying Amount of Liabilities
Liabilities not carried at fair value
CAR revolving credit facility	$	—	$	—	$	22,000	$	22,000
ACC amortizing debt facility	$	—	$	—	$	928	$	928
Amortizing debt facility	$	—	$	—	$	21,411	$	21,411
Revolving credit facility	$	—	$	—	$	4,000	$	4,000
U.K. credit card accounts revolving credit facility	$	—	$	—	$	8,245	$	8,245
5.875% convertible senior notes	$	—	$	57,007	$	—	$	95,484
Liabilities carried at fair value
Interest rate swap underlying CAR facility	$	—	$	97	$	—	$	97
Economic sharing arrangement liability	$	—	$	—	$	354	$	354
Notes payable associated with structured financings, at fair value	$	—	$	—	$	94,523	$	94,523

	Quoted Prices in
	Active Markets for		Significant Other		Significant
	Identical Assets		Observable Inputs		Unobservable Inputs		Carrying Amount
Liabilities - As of December 31, 2012	(Level 1)		(Level 2)		(Level 3)		of Liabilities
Liabilities not carried at fair value
CAR revolving credit facility	$	-	$	-	$	20,000	$	20,000
ACC amortizing debt facility	$	-	$	-	$	3,896	$	3,896
5.875% Convertible Senior Notes	$	-	$	55,787	$	-	$	94,886
Liabilities carried at fair value
Interest rate swap underlying CAR facility	$	-	$	175	$	-	$	175
Economic sharing arrangement liability	$	-	$	-	$	815	$	815
Notes payable associated with structured financings, at fair value	$	-	$	-	$	140,127	$	140,127


	Quoted Prices in
	Active Markets for		Significant Other		Significant
	Identical Assets		Observable Inputs		Unobservable Inputs		Carrying Amount
Liabilities - As of December 31, 2011	(Level 1)		(Level 2)		(Level 3)		of Liabilities
Liabilities not carried at fair value
CAR revolving credit facility	$	-	$	-	$	23,765	$	23,765
ACC amortizing debt facility	$	-	$	-	$	20,406	$	20,406
3.625% Convertible Senior Notes	$	-	$	82,060	$	-	$	82,060
5.875% Convertible Senior Notes	$	-	$	55,089	$	-	$	94,340
Liabilities carried at fair value
Notes payable associated with structured financings, at fair value	$	-	$	-	$	241,755	$	241,755


	Notes Payable Associated with
	Structured Financings, at Fair Value						Notes Payable Associated with Structured Financings, at Fair Value
	2012			2011			2013			2012
Beginning balance, January 1	$	241,755		$	370,544		$	140,127		$	241,755
Transfers in due to consolidation of equity-method investees		-			15,537		—			—
Total (gains) losses—realized/unrealized:
Net revaluations of notes payable associated with structured financings, at fair value		30,150			90,524		19,423			30,150
Repayments on outstanding notes payable, net		(134,724	)		(235,268	)	(65,264		)	(134,724		)
Impact of foreign currency translation		2,946			418		237			2,946
Net transfers in and/or out of Level 3		-			-		—			—
Ending balance, December 31	$	140,127		$	241,755		$	94,523		$	140,127

Quantitative information about Level 3 Fair Value Measurements
	Fair Value at
	December 31, 2012				Range
Fair value measurements	(in thousands)		Valuation Technique	Unobservable Input	(Weighted Average)
Notes payable associated with structured financings, at fair value	$	140,127	Discounted cash flows	Gross yield	11.2% to 24.8% (17.9%)
				Principal payment rate	1.6% to 5.2% (2.3%)
				Expected credit loss rate	11.0% to 23.4% (18.9%)
				Discount rate	6.2% to 16.4% (15.8%)



Quantitative Information about Level 3 Fair Value Measurements
Fair Value Measurements	Fair Value at December 31, 2013 (in Thousands)		Valuation Technique	Unobservable Input	Range (Weighted Average)
Notes payable associated with structured financings, at fair value	$	94,523	Discounted cash flows	Gross yield	17.0% to 27.5% (23.4%)
				Principal payment rate	1.7% to 3.2% (2.6%)
				Expected credit loss rate	9.9% to 18.0% (14.9%)
				Discount rate	15.9% to 20.6% (17.7%)

	Loans and Fees Receivable		Loans and Fees Receivable Pledged as Collateral under Structured Financings
As of December 31, 2012	at Fair Value		at Fair Value
Aggregate unpaid principal balance within loans and fees receivable that are reported at fair value	$	26,154	$	192,433
Aggregate fair value of loans and fees receivable that are reported at fair value	$	20,378	$	133,595
Aggregate fair value of receivables carried at fair value that are 90 days or more past due (which also coincides with finance charge and fee non-accrual policies)	$	36	$	957
Aggregate excess of balance of unpaid principal receivables within loans and fees receivable that are reported at fair value and are 90 days or more past due (which also coincides with finance charge and fee non-accrual policies) over the fair value of such loans and fees receivable	$	1,643	$	7,591

	Notes Payable		Notes Payable
	Associated with		Associated with
	Structured Financings,		Structured Financings,
	at Fair Value as of		at Fair Value as of
Notes Payable	December 31, 2012		December 31, 2011
Aggregate unpaid principal balance of notes payable	$	287,711	$	420,936
Aggregate fair value of notes payable	$	140,127	$	241,755



As of December 31, 2013	Loans and Fees Receivable at Fair Value		Loans and Fees Receivable Pledged as Collateral under Structured Financings at Fair Value
Aggregate unpaid principal balance within loans and fees receivable that are reported at fair value	$	16,620	$	109,945
Aggregate fair value of loans and fees receivable that are reported at fair value	$	12,080	$	88,132
Aggregate fair value of receivables carried at fair value that are 90 days or more past due (which also coincides with finance charge and fee non-accrual policies)	$	31	$	299
Aggregate excess of balance of unpaid principal receivables within loans and fees receivable that are reported at fair value and are 90 days or more past due (which also coincides with finance charge and fee non-accrual policies) over the fair value of such loans and fees receivable	$	728	$	4,555



As of December 31, 2012	Loans and Fees Receivable at Fair Value		Loans and Fees Receivable Pledged as Collateral under Structured Financings at Fair Value
Aggregate unpaid principal balance within loans and fees receivable that are reported at fair value	$	26,154	$	192,433
Aggregate fair value of loans and fees receivable that are reported at fair value	$	20,378	$	133,595
Aggregate fair value of receivables carried at fair value that are 90 days or more past due (which also coincides with finance charge and fee non-accrual policies)	$	36	$	957
Aggregate excess of balance of unpaid principal receivables within loans and fees receivable that are reported at fair value and are 90 days or more past due (which also coincides with finance charge and fee non-accrual policies) over the fair value of such loans and fees receivable	$	1,643	$	7,591

			Sublease
	Gross		Income			Net
2013	$	10,116	$	(5,208	)	$	4,908
								Gross		Sublease Income			Net
2014		8,965		(5,331	)		3,634	$	8,631	$	(5,331	)	$	3,300
2015		8,282		(5,290	)		2,992	8,282		(5,290		)	2,992
2016		7,253		(5,442	)		1,811	7,253		(5,442		)	1,811
2017		7,912		(5,597	)		2,315	7,912		(5,597		)	2,315
2018								8,062		(5,587		)	2,475
Thereafter		36,832		(25,461	)		11,371	28,771		(19,851		)	8,920
Total	$	79,360	$	(52,329	)	$	27,031	$	68,911	$	(47,098	)	$	21,813

	Carrying Amounts at Fair Value as of
	December 31, 2012		December 31, 2011
Amortizing securitization facility issued out of our upper-tier originated portfolio master trust (stated maturity of June 2013), outstanding face amount of $201.0 million bearing interest at a weighted average 3.5% interest rate, which is secured by credit card receivables and restricted cash aggregating $93.6 million in carrying amount	$	93.6	$	154.1
Amortizing term securitization facility (denominated and referenced in U.K. sterling and a stated maturity of April 2014) issued out of our U.K. Portfolio securitization trust, outstanding face amount of $86.6 million bearing interest at a weighted average 5.1% interest rate, which is secured by credit card receivables and restricted cash aggregating $47.3 million in carrying amount		46.5		81.6
Amortizing term structured financing facility issued out of a trust underlying a portfolio acquisition by one of our former equity investees, the controlling interests in which we acquired in February 2011, such facility having been repaid in November 2012		-		6.1
Total structured financing notes reported at fair value that are secured by credit card receivables and to which we are subordinated	$	140.1	$	241.8