CompuCredit (CCRT)

 

		For the Three Months Ended June 30, 2009				For the Six Months Ended June 30, 2009
Unrecovered balance at beginning of period		$	55,488			$	47,676
Acquisitions of defaulted accounts			14,278				31,651
Cash collections			(14,341	)			(28,221	)
Cost-recovery method income recognized on defaulted accounts (included within fees and related income on non-securitized earning assets on our consolidated statements of operations)			3,846				8,165
Unrecovered balance at end of period		$	59,271			$	59,271
Estimated remaining collections (“ERC”)		$	125,844			$	125,844

 

 Our previously charged-off receivables consist of amounts associated with normal delinquency charged-off accounts, accounts for which debtors have filed for bankruptcy protection under Chapter 13 of the United States Bankruptcy Code (“Chapter 13 Bankruptcies”) and accounts participating in or acquired in connection with our balance transfer program prior to such time as we issue credit cards relating to the accounts.

 

We estimate the life of each pool of previously charged-off receivables acquired by us generally to be between twenty-four and thirty-six months for normal delinquency charged-off accounts and approximately sixty months for Chapter 13 Bankruptcies. We anticipate collecting 45.2% of the ERC of the existing accounts over the next twelve months, with the balance to be collected thereafter.

 

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Investments in Securities.> We periodically have invested in debt and equity securities. We generally have classified our purchased debt and equity securities as trading securities and included realized and unrealized gains and losses in earnings in accordance with applicable accounting rules. Additionally, we occasionally have received distributions of debt securities from our equity-method investees, and we have classified such distributed debt securities as held to maturity. The carrying values (in thousands) of our investments in debt and equity securities are as follows:

		As of June 30, 2009				As of  December 31, 2008
Held to maturity:
Investments in debt securities of equity-method investees		$	3,142			$	4,385
Trading:
Investments in equity securities			456				293
Total investments in securities		$	3,598			$	4,678

 

Prepaid Expenses and Other Assets

 

Prepaid expenses and other assets include amounts paid to third parties for marketing and other services. We expense these amounts once services have been performed or marketing efforts have been undertaken. Also included are (1) various deposits (totaling $22.4 million as of June 30, 2009) required to be maintained with our third-party issuing bank partners and retail electronic payment network providers (including $7.1 million as of June 30, 2009 associated with our ongoing servicing efforts in the United Kingdom) and (2) vehicle inventory held by our buy-here, pay-here auto dealerships that we expense as cost of goods sold (within fees and related income on non-securitized earning assets on our consolidated statements of operations) as we earn associated sales revenues.

 

Deferred Costs

 

The principal components of deferred costs include unamortized costs associated with our (1) receivables origination activities and (2) issuances of convertible senior notes and other debt. We defer direct receivables origination costs for our credit card receivables and amortize them against credit card fee income on a straight-line basis over the privilege period, which is typically one year. We generally amortize deferred costs associated with our convertible senior notes into interest expense over the expected life of the instruments; however, we accelerate the recovery of an appropriate pro-rata portion of these costs against gains on repurchases of our convertible senior notes. On January 1, 2009, we were required to adopt a GAAP pronouncement that resulted in the reclassification of $4.8 million of deferred loan costs associated with our convertible senior notes as a reduction to equity, and as required, we have retrospectively applied this pronouncement within prior period consolidated financial statements as if the accounting pronouncement had applied in financial reporting periods prior to its January 1, 2009 effective date. See Note 9, “Convertible Senior Notes, Notes Payable and Other Borrowings,” for additional effects of our adoption of this pronouncement.

 

Income Taxes

 

We account for income taxes based on the liability method required by applicable accounting rules. Under the liability method, deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Additionally, we assess the probability that a tax position we have taken may not ultimately be sustained on audit, and we reevaluate our uncertain tax positions on a quarterly basis. We base these reevaluations on factors including, but not limited to, changes in facts and circumstances, changes in tax law, effectively settled issues under audit, and new audit activity.  A change in recognition or measurement would result in the recognition of a tax benefit or an additional charge to tax expense. The accounting rules also require that we assess the need to establish a valuation allowance against deferred tax assets by evaluating available evidence to determine whether it is more likely than not that some or all of the deferred tax assets will be realized in the future.  To the extent there is insufficient positive evidence to support the realization of the deferred tax assets, we establish a valuation allowance.

 

We conduct business globally, and as a result, one or more of our subsidiaries files U.S. 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 United States, the United Kingdom, and the Netherlands. With a few exceptions, we are no longer subject to U.S. federal, state, local, or foreign income tax examinations for years prior to 2005. Currently, we are under audit by various jurisdictions for various years, including the Internal Revenue Service for the 2007 tax year. Although the audits have not been concluded, we do not expect any changes to the tax liabilities reported in those years. If any such changes arise, however, we do not expect them to be material.

 

 

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We recognize potential accrued interest and penalties related to unrecognized tax benefits in income tax expense.  We recognized $0.7 million and $1.4 million in potential interest and penalties associated with uncertain tax positions during the three and six months ended June 30, 2009 and June 30, 2008.  To the extent such interest and penalties are not assessed as a result of a resolution of the underlying tax position, amounts accrued will be reduced and reflected as a reduction of income tax expense.

 

Our overall effective tax rates (computed considering results for both continuing and discontinued operations before income taxes in the aggregate) were 29.9% and 31.9% for the three and six months ended June 30, 2009, compared to 32.8% and 31.5% for the three and six months ended June 30, 2008. We have experienced no material changes in effective tax rates associated with differences in filing jurisdictions and changes in law between these periods, and the variations in effective tax rates between these periods are substantially related to the effects of a $10.7 million valuation allowance against income statement-oriented U.S. federal deferred tax assets during the three months ended June 30, 2009. As computed without regard to the effects of all U.S. federal, state, local and foreign tax valuation allowances taken against income statement-oriented deferred tax assets, our effective tax rates would have been 35.0% and 33.7% for the three and six months ended June 30, 2009, respectively, and 35.5% and 35.3% for the three and six months ended June 30, 2008, respectively.

 

In addition to the U.S. federal, state, local and foreign tax valuation allowances taken against income statement-oriented deferred tax assets in the three months ended June 30, 2009, we provided a $9.0 million valuation allowance against U.S. federal deferred tax assets related to the accumulated other comprehensive loss component within consolidated shareholders’ equity in the three months ended June 30, 2009.

 

Fees and Related Income on Non-Securitized Earning Assets

 

Fees and related income on non-securitized earning assets primarily include:  (1) lending fees associated with our retail and Internet micro-loan activities; (2) fees associated with our lower-tier credit card receivables during periods in which we have held them on balance sheet; (3) income associated with our investments in previously charged-off receivables; (4) gains and losses associated with our investments in securities; and (5) gross profits from auto sales within our Auto Finance segment.

 

The components (in thousands) of our fees and related income on non-securitized earning assets are as follows:

 

		For the Three Months Ended June 30,								For the Six Months Ended June 30,
		2009				2008				2009				2008
Retail micro-loan fees		$	16,566			$	16,546			$	33,242			$	35,207
Internet micro-loan fees			15,104				10,052				26,892				17,770
Fees on lower-tier credit card receivables while held on balance sheet			—				2,761				—				5,403
Income on investments in previously charged-off receivables			3,846				11,029				8,165				29,826
Gross profit on auto sales			5,138				8,909				13,609				18,007
Gains (losses) on investments in securities			86				(1,090	)			163				(6,251	)
Other			186				1,568				1,501				4,189
Total fees and related income on non-securitized earning assets		$	40,926			$	49,775			$	83,572			$	104,151

 

Loss on Securitized Earning Assets

 

Loss on securitized earning assets is the net of (1) losses on retained interests in credit card receivables securitized and (2) returned-check, cash advance and certain other fees associated with our securitized credit card receivables, both of which are detailed (in thousands) in the following table.

		For the Three Months Ended June 30,								For the Six Months Ended June 30,
		2009				2008				2009				2008
Loss on retained interests in credit card receivables securitized		$	(165,579	)		$	(68,160	)		$	(323,834	)		$	(33,838	)
Fees on securitized receivables			3,891				7,499				10,120				15,770
Total loss on securitized earning assets		$	(161,688	)		$	(60,661	)		$	(313,714	)		$	(18,068	)

 

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Recent Accounting Pronouncements

 

In June 2009, the Financial Accounting Standards Board (the “FASB”) issued new accounting rules that, in addition to requiring certain new securitization and structured financing-related disclosures that have been incorporated into our condensed consolidated financial statements as of and for the three and six months ended June 30, 2009, are expected to result in the consolidation of our securitization trusts onto our consolidated balance sheet effective as of January 1, 2010. As a result, cash and credit card receivables held by our securitization trusts and debt issued from those entities will be presented as assets and liabilities on our consolidated balance sheet effective on that date. Initial adoption of these new accounting rules is expected to have a material impact on our reported financial condition. However, because we have not yet decided whether to exercise an available option under these rules under which we would be required to value both the credit card receivables and debt outstanding within our securitization trusts at fair value, we are uncertain whether our adoption of the new rules will result in materially favorable or adverse effects on our reported financial condition. If we exercise the fair value option permitted under the new rules, we expect favorable effects on our reported financial condition; whereas, if we do not exercise the fair value option, we expect adverse effects on our reported financial condition. Moreover, after adoption of these new rules, we will no longer reflect our securitization trusts’ results of operations within losses on retained interests in credit card receivables securitized, but will instead report interest income and provisions for loan losses (as well as gains and/or losses associated with fair value changes should we exercise the fair value option) with respect to the credit card receivables held within our securitization trusts; similarly, we will begin to separately report interest expense (as well as gains and/or losses associated with fair value changes should we exercise the fair value option) with respect to the debt issued from the securitization trusts. Lastly, because we will account for our securitization transactions under these new accounting rules as secured borrowings rather than asset sales, we will begin to present the cash flows from these transactions as cash flows from financing activities, rather than as cash flows from investing activities.

 

In April 2009, the FASB issued new other-than-temporary impairment accounting rules for debt securities, indicating that a company should continue to assess its intent and ability to hold a security to maturity and to assess whether the fair value of a debt security is less than its amortized cost basis. If the fair value is determined to be less than the amortized cost basis, the company should make the determination of whether the impairment is other-than-temporary. The new rules also call for additional disclosure and are effective for periods ending after June 15, 2009. As of June 30, 2009, our investments in securities totaled only $3.6 million, and our adoption of these rules did not have a material impact on our condensed consolidated financial statements.

 

In March 2009, the Emerging Issues Task Force (the “EITF”) reached a consensus-for-exposure stating that at the date of issuance, a share-lending arrangement entered into on an entity's own shares in contemplation of a convertible debt offering or other financing is required to be measured at fair value and recognized as a debt issuance cost in the financial statements of the entity. The debt issuance cost shall be amortized using the effective interest method over the life of the financing arrangement as interest cost.  The EITF also reached a consensus-for-exposure that the loaned shares are excluded from basic and diluted earnings per share unless default of the share-lending arrangement occurs, at which time the loaned shares would be included in the common and diluted earnings per share calculations.  The EITF reached a consensus-for-exposure that this guidance would be effective for fiscal years, and interim periods within those years, beginning after December 15, 2009 and would be applied retrospectively to all arrangements outstanding on the date the issue becomes effective.  The consensus-for-exposure has been ratified by the FASB, the comment period has passed and the FASB is currently considering comments received on the draft. We currently are assessing the impact of this development on our convertible senior notes.

In June 2008, the FASB ratified a consensus reached by the EITF on the determination of whether an equity-linked financial instrument (or embedded feature) is indexed to an entity's own stock. After considering these new rules, we re-affirmed our conclusion reached in 2005 that we are not required to bifurcate and separately account for any of the embedded features within our convertible senior notes.

 

Also in June 2008, the FASB issued new rules addressing whether unvested equity-based awards are participating securities and, therefore, need to be included in the earnings allocation in computing earnings per share under the two-class method described in previously issued accounting rules.  These new rules were effective for us January 1, 2009, and all prior period earnings per share data presented in financial statements have been adjusted retrospectively to conform to the new rules.  See Note 12, “Net Income Attributable to Controlling Interests Per Common Share,” for further information regarding the computation of earnings per share.

 

In May 2008, the FASB issued new rules addressing convertible instruments that may be settled in cash upon conversion (including partial cash settlement). These rules address instruments commonly referred to as Instrument C type instruments. Those instruments essentially require the issuer to settle the principal amount in cash and the conversion spread in cash or net shares at the issuer’s option.

 

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These rules are effective for fiscal periods beginning after December 15, 2008, did not permit early application, and are required to be applied retrospectively to all periods presented. Our January 1, 2009 adoption of these rules resulted in an increase in shareholders’ equity of $56.1 million.  See the table below for a roll-forward of the impacts of our adoption of these rules.

 

 In December 2007, the FASB issued new accounting rules that significantly changed the accounting for business combinations. Under these rules, an acquiring entity is required, with limited exceptions, to recognize all the assets acquired and liabilities assumed in a transaction at the acquisition-date fair value. The rules change the accounting treatment for certain specific items, including:

 

•

Acquisition costs generally are expensed as incurred;

 

•

Noncontrolling interests (formerly known as minority interests) are valued at fair value at the acquisition date;

 

•

Acquired contingent liabilities are recorded at fair value at the acquisition date and subsequently measured at either the higher of such amount or the amount determined under previously existing rules for non-acquired contingencies;

 

•

In-process research and development is recorded at fair value as an indefinite-lived intangible asset at the acquisition date;

 

•

Restructuring costs associated with a business combination are generally expensed subsequent to the acquisition date; and

 

•

Changes in deferred tax asset valuation allowances and income tax uncertainties after the acquisition date generally affect income tax expense.

 

The new rules also include a substantial number of new disclosure requirements. They apply prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008, and earlier adoption was prohibited. While the new rules significantly affect the way that we will account for future acquisitions, we adopted them on January 1, 2009 with no material effects on our consolidated results of operations, financial position or cash flows.

 

Also in December 2007, the FASB issued new accounting requirements that establish new accounting and reporting standards for the noncontrolling interests in a subsidiary and for the deconsolidation of a subsidiary. Specifically, these rules require the recognition of any noncontrolling interests (minority interests) as equity in the consolidated financial statements and separate from the parent's equity. The amount of net income attributable to the noncontrolling interests is included in consolidated net income on the face of the income statement. The rules also clarify that changes in a parent's ownership interest in a subsidiary that do not result in deconsolidation are equity transactions if the parent retains its controlling financial interest. In addition, the rules require that a parent recognize a gain or loss in net income when a subsidiary is deconsolidated. Such gain or loss is measured using the fair value of the noncontrolling equity investment on the deconsolidation date. The rules also include expanded disclosure requirements regarding the interests of the parent and its noncontrolling interests. These new rules are effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008, and earlier adoption was prohibited. We adopted these rules on January 1, 2009 with no material effects (other than the effects of reclassification of our noncontrolling interests as a component of equity) on our consolidated results of operations, financial position or cash flows.

 

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The following details (in thousands, except per share data) the effects of retrospective application of the new accounting rules concerning Instrument C convertible debt and noncontrolling interests:

 

		As originally reported				Retrospective application of Instrument C convertible debt rules				Retrospective application of noncontrolling interests rules				As adjusted
Additional paid-in capital (as of December 31, 2008)		$	413,857			$	108,714			$	—			$	522,571
Retained earnings (as of December 31, 2008)		$	505,728			$	(52,579	)		$	—			$	453,149
Total equity (as of December 31,2008)		$	665,844			$	56,135			$	24,878			$	746,857
Loss from continuing operations (for the three months ended June 30, 2008) (1)		$	(42,906	)		$	(10,762	)		$	(518	)		$	(54,186	)
Net loss (for the three months ended June 30, 2008)		$	(44,920	)		$	(10,762	)		$	(518	)		$	(56,200	)
Loss from continuing operations attributable to controlling interests per common share (for the three months ended June 30, 2008)—basic (1)		$	(0.92	)		$	(0.21	)		$	—			$	(1.13	)
Loss from continuing operations attributable to controlling interests per common share (for the three months ended June 30, 2008)—diluted (1)		$	(0.92	)		$	(0.21	)		$	—			$	(1.13	)
Net loss attributable to controlling interests per common share (for the three months ended June 30, 2008)—basic		$	(0.96	)		$	(0.21	)		$	—			$	(1.17	)
Net loss attributable to controlling interests per common share (for the three months ended June 30, 2008)—diluted		$	(0.96	)		$	(0.21	)		$	—			$	(1.17	)
Loss from continuing operations (for the six months ended June 30, 2008) (1)		$	(37,788	)		$	(12,307	)		$	1,501			$	(48,594	)
Net loss (for the six months ended June 30, 2008)		$	(42,452	)		$	(12,307	)		$	1,501			$	(53,258	)
Loss from continuing operations attributable to controlling interests per common share (for the six months ended June 30, 2008)—basic (1)		$	(0.81	)		$	(0.24	)		$	—			$	(1.05	)
Loss from continuing operations attributable to controlling interests per common share (for the six months ended June 30, 2008)—diluted (1)		$	(0.81	)		$	(0.24	)		$	—			$	(1.05	)
Net loss attributable to controlling interests per common share (for the six months ended June 30, 2008)—basic		$	(0.91	)		$	(0.24	)		$	—			$	(1.15	)
Net loss attributable to controlling interests per common share(for the six months ended June 30, 2008)—diluted		$	(0.91	)		$	(0.24	)		$	—			$	(1.15	)

 

(1) Prior period “As originally reported” amounts have been restated to report the impact of discontinued operations.

 

3.      Discontinued Operations

 

In the May 2009, we discontinued our Retail Micro-Loans segment’s Arkansas operations based on ongoing regulatory opposition that we faced within that state; as such, our Arkansas retail micro-loan results of operations have been classified as discontinued operations for all periods presented and the remaining assets (principally net loans and fees receivable upon which we are collecting) and liabilities of these operations are identified as discontinued assets and liabilities on our condensed consolidated balance sheet. Reflecting both our discontinued Arkansas operations, as well as those of other Retail Micro-Loan segment states that we discontinued in prior reporting periods, the components (in thousands) of our discontinued operations are as follows:

 

 

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		For the Three Months Ended June 30,								For the Six Months Ended June 30,
		2009				2008				2009				2008
Net interest income, fees and related income on non-securitized earning assets		$	375			$	3,353			$	1,684			$	7,647
Other operating expense			863				5,680				2,021				12,920
Estimated loss upon sale			2,779				771				2,779				771
Goodwill impairment			3,483				—				3,483				1,132
Loss before income taxes			(6,750	)			(3,098	)			(6,599	)			(7,176	)
Income tax benefit			2,363				1,084				2,310				2,512
Net loss		$	( 4,387	)		$	(2,014	)		$	( 4,289	)		$	(4,664	)

 

4.	Segment Reporting

 

We operate primarily within one industry consisting of five reportable segments by which we manage our business. Our five reportable segments are:  Credit Cards; Investments in Previously Charged-Off Receivables; Retail Micro-Loans; Auto Finance; and Other. We measure the profitability of our reportable segments based on their income after allocation of specific costs and corporate overhead. Overhead costs are allocated based on headcounts and other applicable measures to better align costs with the associated revenues, and there are no charges against segment operations for the internal (i.e., non-third-party) costs of capital that we have allocated to the segments. Summary operating segment information (in thousands) is as follows:

 

Three Months Ended June 30, 2009		Credit Cards				Investments in Previously Charged-Off Receivables				Retail Micro-Loans				Auto Finance				Other				Total
Net interest income, fees and related income (loss) on non-securitized earning assets		$	(6,268	)		$	3,743			$	14,118			$	9,414			$	10,565			$	31,572
Total other operating (loss) income		$	(111,950	)		$	27			$	—			$	90			$	1			$	(111,832	)
(Loss) income from continuing operations before income taxes		$	(176,765	)		$	(7,049	)		$	(16,549	)		$	(6,165	)		$	4,773			$	(201,755	)
Loss from discontinued operations before income taxes		$	—			$	—			$	(6,750	)		$	—			$	—			$	(6,750	)
Loans and fees receivable, gross		$	1,385			$	—			$	33,492			$	325,854			$	28,045			$	388,776
Loans and fees receivable, net		$	1,039			$	—			$	27,811			$	260,968			$	19,413			$	309,231
Total assets		$	609,806			$	68,386			$	66,793			$	300,349			$	61,021			$	1,106,355
Three Months Ended June 30, 2008		Credit Cards				Investments in Previously Charged-Off Receivables				Retail Micro-Loans				Auto Finance				Other				Total
Net interest income, fees and related income (loss) on non-securitized earning assets		$	(5,353	)		$	11,094			$	14,728			$	19,857			$	7,052			$	47,378
Total other operating income		$	20,402			$	225			$	—			$	—			$	—			$	20,627
Income (loss) from continuing operations before income taxes		$	(88,038	)		$	5,717			$	2,583			$	(762	)		$	119			$	(80,381	)
Loss from discontinued operations before income taxes		$	—			$	—			$	(2,649	)		$	—			$	(449	)		$	(3,098	)
Loans and fees receivable, gross		$	30,842			$	—			$	31,912			$	387,137			$	18,981			$	468,872
Loans and fees receivable, net		$	25,668			$	—			$	26,934			$	317,153			$	13,673			$	383,428
Total assets		$	1,208,792			$	38,299			$	97,902			$	395,595			$	65,345			$	1,805,933

 

 

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Six Months Ended June 30, 2009		Credit Cards				Investments in Previously Charged-Off Receivables				Retail Micro-Loans				Auto Finance				Other				Total
Net interest income, fees and related income (loss) on non-securitized earning assets		$	(11,884	)		$	7,948			$	28,492			$	27,998			$	19,349			$	71,903
Total other operating (loss) income		$	(220,937	)		$	55			$	—			$	403			$	1			$	(220,478	)
(Loss) income from continuing operations before income taxes		$	(354,790	)		$	(9,377	)		$	(17,627	)		$	(4,135	)		$	8,331			$	(377,598	)
Loss from discontinued operations before income taxes		$	—			$	—			$	(6,599	)		$	—			$	—			$	(6,599	)
Loans and fees receivable, gross		$	1,385			$	—			$	33,492			$	325,854			$	28,045			$	388,776
Loans and fees receivable, net		$	1,039			$	—			$	27,811			$	260,968			$	19,413			$	309,231
Total assets		$	609,806			$	68,386			$	66,793			$	300,349			$	61,021			$	1,106,355

 

Six Months Ended June 30, 2008		Credit Cards				Investments in Previously Charged-Off Receivables				Retail Micro-Loans				Auto Finance				Other				Total
Net interest income, fees and related income (loss) on non-securitized earning assets		$	(13,256	)		$	30,031			$	30,925			$	35,669			$	9,213			$	92,582
Total other operating income		$	134,767			$	438			$	—			$	196			$	—			$	135,401
Income (loss) from continuing operations before income taxes		$	(87,979	)		$	19,290			$	6,408			$	(4,522	)		$	(3,680	)		$	(70,483	)
Loss from discontinued operations before income taxes		$	—			$	—			$	(6,227	)		$	—			$	(949	)		$	(7,176	)
Loans and fees receivable, gross		$	30,842			$	—			$	31,912			$	387,137			$	18,981			$	468,872
Loans and fees receivable, net		$	25,668			$	—			$	26,934			$	317,153			$	13,673			$	383,428
Total assets		$	1,208,792			$	38,299			$	97,902			$	395,595			$	65,345			$	1,805,933

 

5.    Treasury Stock Transactions

 

At our discretion, we use treasury shares to satisfy option exercises and restricted stock vesting, and we use the cost approach when accounting for the repurchase and reissuance of our treasury stock. We reissued treasury shares totaling 8,006 and 111,644 during the three and six months ended June 30, 2009 at gross costs of $0.1 million and $2.0 million, respectively, in satisfaction of restricted stock vestings. We also effectively purchased shares totaling 2,939 and 36,888 during the three and six months ended June 30, 2009 at a gross cost of $0.01 million and $0.11 million, respectively, by having employees who were vesting in their restricted stock grants exchange a portion of their stock for our payment of required minimum tax withholdings.

 

6.    Investments in Equity-Method Investees

 

In the following tables, we summarize (in thousands) combined balance sheet and results of operations data for our equity-method investees:

 

		As of June 30, 2009				As of December 31, 2008
Securitized earning assets		$	60,819			$	116,510
Total assets		$	62,345			$	118,962
Total liabilities		$	1,565			$	1,967
Members’ capital		$	60,779			$	116,995

 

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		For the Three Months Ended June 30,								For the Six Months Ended June 30,
		2009				2008				2009				2008
Net interest income, fees and related income on non-securitized earning assets		$	—			$	—			$	—			$	1
Fees and related (loss) income on securitized earning assets		$	(22,841	)		$	15,929			$	(31,011	)		$	33,231
Total other operating (loss) income		$	(21,745	)		$	18,210			$	(28,605	)		$	37,866
Net (loss) income		$	(15,359	)		$	17,055			$	(23,000	)		$	35,649

 

In May 2009, we recognized a gain of $21.0 million that is separately classified on our condensed consolidated statement of operations associated with our buy-out of all other members of our then-longest standing equity-method investee. Subsequent to this buy-out event, we have included the operations of this former equity-method investee and its underlying assets and liabilities within our consolidated results of operations and condensed consolidated balance sheet items, as opposed to the income from equity-method investees and investment in equity-method investee categories.

 

7.     Securitizations and Structured Financings

 

As of June 30, 2009, substantially all of our credit card receivables had been sold to securitization trusts. Within this Report, we refer to such transfers of financial assets to off-balance-sheet securitization trusts as “securitizations,” as contrasted with our use of the term “structured financings” to refer to non-recourse, on-balance-sheet debt financings.

 

 Securitizations>

 

Our credit card receivables securitization transactions do not affect the relationship we have with our customers, and we continue to service the securitized credit card receivables. Our ownership of retained interests in our securitized credit card receivables, the guarantee and note purchase agreements with respect to securitizations of acquired credit card receivables portfolios as described in Note 11, “Commitments and Contingencies,” and our obligation to service securitized receivables represent our only continuing involvement with our securitized credit card receivables.

 

The table below summarizes (in thousands) our securitization activities for the periods presented. As with other tables included herein, it does not include the securitization activities of our equity-method investees:

 

		For the Three Months Ended June 30,								For the Six Months Ended June 30,
		2009				2008				2009				2008
Gross amount of receivables securitized at period end		$	1,984,497			$	3,002,547			$	1,984,497			$	3,002,547
Proceeds from new transfers of financial assets to securitization trusts		$	213,102			$	362,939			$	304,728			$	749,926
Proceeds from collections reinvested in revolving-period securitizations		$	148,443			$	371,482			$	275,462			$	789,899
Excess cash flows received on retained interests		$	24,826			$	37,172			$	55,484			$	89,834
Loss on retained interests in credit card receivables securitized		$	(165,579	)		$	(68,160	)		$	(323,834	)		$	(33,838	)
Fees on securitized receivables			3,891				7,499				10,120