SEC Comment Letter for ENCORE CAPITAL GROUP INC (ECPG) (CIK 0001084961) (ECPG) — Apr 10, 2020
ENCORE CAPITAL GROUP INC (ECPG) (CIK 0001084961)
Date: April 10, 2020 · CIK: 0001084961 · Accession: 0000000000-20-003113
AI Filing Summary & Sentiment
File numbers found in text: 000-26489
Referenced dates: September 14, 2012
Letter
April 9, 2020 Jonathan Clark Executive Vice President, Chief Financial Officer and Treasurer Encore Capital Group Inc. 350 Camino de La Reina, Suite 100 San Diego, California 92108 Re:ENCORE CAPITAL GROUP INC Form 10-K Filed February 26, 2020 File No. 000-26489 Dear Mr. Clark: We have reviewed your filing and have the following comments. In some of our comments, we may ask you to provide us with information so we may better understand your disclosure. Please respond to these comments within ten business days by providing the requested information or advise us as soon as possible when you will respond. If you do not believe our comments apply to your facts and circumstances, please tell us why in your response. After reviewing your response to these comments, we may have additional comments. Form 10-K filed February 26, 2020 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Purchases and Collections Cabot (Europe), page 29 1.We note your disclosure on page 30 regarding the “co-investment agreements” you entered into during the fourth quarter of 2019 and the $9.3 million gain recognized on the sale of certain portfolios related to these agreements. Please revise future filings to discuss any:
•material terms, conditions, and obligations under the agreements, and
•material impact on your liquidity, capital resources or results of operations, including any trends and uncertainties.
In addition please file these agreements as an exhibit or tell us why they are not required.
FirstName LastNameJonathan Clark Comapany NameEncore Capital Group Inc. April 9, 2020 Page 2 FirstName LastName Jonathan Clark Encore Capital Group Inc. April 9, 2020 Page 2 Refer to Item 601(b)(10) of Regulation S-K. Notes to Consolidated Financial Statements Note 1. Ownership, Description of Business, and Summary of Significant Accounting Policies - Recent Accounting Pronouncements, page F-8 2.We note your disclosure that upon adoption of ASU 2016-13, you will include expected recoveries of upfront court costs in the measurement of the investment in receivable portfolios at a discounted value. We also note that you provided us information related to court costs and accounting literature supporting your prior policy in your response to comment six in your letter dated September 14, 2012. Please tell us if the information is still accurate. If not, please clarify and specifically identify the accounting guidance that supports your new policy. Also, please tell us:
•when you recognize an amount for expected recoveries of upfront court costs in your receivables portfolio. For example, do you include these cash flows in your initial estimate of cash flows at acquisition, when court costs are paid, etc., •how the cash flows impact your income recognition on your receivables portfolio, •whether you would include expected recoveries of upfront court costs only in situations where you expect to collect the full unpaid principal balance, and •if you believe these amounts represent expected recoveries of amounts previously written off as used in ASC 326.
Lastly, please provide us example journal entries with supporting commentary illustrating your new accounting policies. 3.We note your disclosure that upon adoption of ASU 2016-13, an adjustment will be made to retained earnings to reflect the net change from an undiscounted to discounted value prior to writing-off uncollectible court costs and that the decrease to opening retained earnings is estimated to be between $40 and $50 million. Please tell us in detail how you calculated the estimated decrease to opening retained earnings. We remind you that the company and its management are responsible for the accuracy and adequacy of their disclosures, notwithstanding any review, comments, action or absence of action by the staff. You may contact William Schroeder, Staff Accountant, at 202-551-3294 or Michael Volley, Staff Accountant, at 202-551-3437 if you have any questions. Sincerely, Division of Corporation Finance Office of Finance
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April 9, 2020
Jonathan Clark
Executive Vice President, Chief Financial Officer and Treasurer
Encore Capital Group Inc.
350 Camino de La Reina, Suite 100
San Diego, California 92108
Re:ENCORE CAPITAL GROUP INC
Form 10-K
Filed February 26, 2020
File No. 000-26489
Dear Mr. Clark:
We have reviewed your filing and have the following comments. In some of our
comments, we may ask you to provide us with information so we may better understand your
disclosure.
Please respond to these comments within ten business days by providing the requested
information or advise us as soon as possible when you will respond. If you do not believe our
comments apply to your facts and circumstances, please tell us why in your response.
After reviewing your response to these comments, we may have additional comments.
Form 10-K filed February 26, 2020
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Purchases and Collections
Cabot (Europe), page 29
1.We note your disclosure on page 30 regarding the “co-investment agreements” you
entered into during the fourth quarter of 2019 and the $9.3 million gain recognized on the
sale of certain portfolios related to these agreements. Please revise future filings to
discuss any:
•material terms, conditions, and obligations under the agreements, and
•material impact on your liquidity, capital resources or results of operations, including
any trends and uncertainties.
In addition please file these agreements as an exhibit or tell us why they are not required.
FirstName LastNameJonathan Clark
Comapany NameEncore Capital Group Inc.
April 9, 2020 Page 2
FirstName LastName
Jonathan Clark
Encore Capital Group Inc.
April 9, 2020
Page 2
Refer to Item 601(b)(10) of Regulation S-K.
Notes to Consolidated Financial Statements
Note 1. Ownership, Description of Business, and Summary of Significant Accounting
Policies - Recent Accounting Pronouncements, page F-8
2.We note your disclosure that upon adoption of ASU 2016-13, you will include expected
recoveries of upfront court costs in the measurement of the investment in receivable
portfolios at a discounted value. We also note that you provided us information related to
court costs and accounting literature supporting your prior policy in your response to
comment six in your letter dated September 14, 2012. Please tell us if the information is
still accurate. If not, please clarify and specifically identify the accounting guidance that
supports your new policy. Also, please tell us:
•when you recognize an amount for expected recoveries of upfront court costs in your
receivables portfolio. For example, do you include these cash flows in your initial
estimate of cash flows at acquisition, when court costs are paid, etc.,
•how the cash flows impact your income recognition on your receivables portfolio,
•whether you would include expected recoveries of upfront court costs only in
situations where you expect to collect the full unpaid principal balance, and
•if you believe these amounts represent expected recoveries of amounts previously
written off as used in ASC 326.
Lastly, please provide us example journal entries with supporting commentary illustrating
your new accounting policies.
3.We note your disclosure that upon adoption of ASU 2016-13, an adjustment will be made
to retained earnings to reflect the net change from an undiscounted to discounted value
prior to writing-off uncollectible court costs and that the decrease to opening retained
earnings is estimated to be between $40 and $50 million. Please tell us in detail how you
calculated the estimated decrease to opening retained earnings.
We remind you that the company and its management are responsible for the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action or absence of
action by the staff.
You may contact William Schroeder, Staff Accountant, at 202-551-3294 or
Michael Volley, Staff Accountant, at 202-551-3437 if you have any questions.
Sincerely,
Division of Corporation Finance
Office of Finance