UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~June 30, 2018~~March 31, 2019

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________to__________

Commission File Number 1-38315

CURO GROUP HOLDINGS CORP.

(Exact name of registrant as specified in its charter)



Delaware		90-0934597
(State or other jurisdiction Of incorporation or organization)		(I.R.S. Employer Identification No.)

3527 North Ridge Road, Wichita, KS		67205
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (316) ~~425-1410~~772-3801

Former name, former address and former fiscal year, if changed since last report: No Changes

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $0.001 par value per share	CURO	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer	☐		Accelerated filer	☐☒
Non-accelerated filer	☒☐	~~(Do not check if a smaller reporting company)~~
Smaller reporting company	☐		Emerging growth company	☒☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

At ~~July 31, 2018~~May 3, 2019 there were ~~45,770,551~~46,442,628 shares of the registrant’s Common Stock, $0.001 par value per share, outstanding.

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

FORM 10-Q

~~SECOND~~FIRST QUARTER ENDED ~~JUNE 30, 2018~~MARCH 31, 2019

INDEX



		Page
PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)
	Condensed Consolidated Balance Sheets –
	~~June 30, 2018~~March 31, 2019 and December 31, ~~2017~~2018	3
	Condensed Consolidated Statements of ~~Income~~Operations –
	Three ~~and six~~ months ended ~~June 30,~~March 31, 2019 and 2018 ~~and 2017~~	4
	Condensed Consolidated Statements of Comprehensive Income –
	Three ~~and six~~ months ended ~~June 30,~~March 31, 2019 and 2018 ~~and 2017~~	5
	Condensed Consolidated Statements of Cash Flows -
	~~Six~~Three months ended ~~June 30,~~March 31, 2019 and 2018 ~~and 2017~~	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3633
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	6151
Item 4.	Controls and Procedures	6251
PART 2 – OTHER INFORMATION
Item 1.	Legal Proceedings	6253
Item 1A.	Risk Factors	6253
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	6353
Item 3.	Defaults Upon Senior Securities	6353
Item 4.	Mine Safety Disclosures	6353
Item 5.	Other Information	6353
Item 6.	Exhibits	6354

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

(unaudited)


	June 30, 2018			December 31, 2017
	(Unaudited)						March 31, 2019			December 31, 2018
ASSETS
Cash	$	115,105		$	162,374		$	82,859		$	61,175
Restricted cash (includes restricted cash of consolidated VIEs of $7,274 and $6,871 as of June 30, 2018 and December 31, 2017, respectively)	12,448			12,117
Gross loans receivable (includes loans of consolidated VIEs of $199,877 and $213,846 as of June 30, 2018 and December 31, 2017, respectively)	444,627			432,837
Less: allowance for loan losses (includes loans of consolidated VIEs of $28,545 and $46,140 as of June 30, 2018 and December 31, 2017, respectively)	(59,754		)	(69,568		)
Restricted cash (includes restricted cash of consolidated VIEs of $15,460 and $12,840 as of March 31, 2019 and December 31, 2018, respectively)							34,319			25,439
Gross loans receivable (includes loans of consolidated VIEs of $180,631 and $148,876 as of March 31, 2019 and December 31, 2018, respectively)							553,215			571,531
Less: allowance for loan losses (includes allowance for losses of consolidated VIEs of $22,764 and $12,688 as of March 31, 2019 and December 31, 2018, respectively)							(94,322		)	(73,997		)
Loans receivable, net	384,873			363,269			458,893			497,534
Right of use asset - operating leases (Note 1)							135,405			—
Deferred income taxes	3,697			772			5,014			1,534
Income taxes receivable	623			3,455			40,872			16,741
Prepaid expenses and other	36,297			42,512			36,511			43,588
Property and equipment, net	80,420			87,086			75,260			76,750
Goodwill	143,753			145,607			119,878			119,281
Other intangibles, net of accumulated amortization of $42,382 and $41,156 as of June 30, 2018 and December 31, 2017, respectively)	30,825			32,769
Other intangibles, net of accumulated amortization of $35,662 and $34,576 as of March 31, 2019 and December 31, 2018, respectively							29,968			29,784
Other	12,809			9,770			15,151			12,930
Assets from discontinued operations (Note 15)							—			34,861
Total Assets	$	820,850		$	859,731		$	1,034,130		$	919,617
LIABILITIES AND STOCKHOLDER’S EQUITY
LIABILITIES AND STOCKHOLDERS' EQUITY							LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued liabilities	$	53,557		$	55,792		$	52,042		$	49,146
Deferred revenue	10,548			11,984			7,851			9,483
Lease liability - operating leases (Note 1)							143,412			—
Income taxes payable	5,475			4,120			4,425			1,579
Accrued interest (includes accrued interest of consolidated VIEs of $1,237 and $1,266 as of June 30, 2018 and December 31, 2017, respectively)	22,175			25,467
Credit services organization guarantee liability	11,619			17,795
Accrued interest (includes accrued interest of consolidated VIEs of $848 and $831 as of March 31, 2019 and December 31, 2018, respectively)							5,593			20,904
Liability for losses on CSO lender-owned consumer loans							8,662			12,007
Deferred rent	11,481			11,577			—			10,851
Long-term debt (includes long-term debt and issuance costs of consolidated VIEs of $118,427 and $3,653 as of June 30, 2018 and $124,590 and $4,188 as of December 31, 2017, respectively)	626,833			706,225
Subordinated shareholder debt	2,278			2,381
Long-term debt (includes long-term debt and issuance costs of consolidated VIEs of $92,718 and $3,803 as of March 31, 2019 and $111,335 and $3,856 as of December 31, 2018, respectively)							766,068			804,140
Subordinated stockholder debt							2,243			2,196
Other long-term liabilities	6,589			5,768			6,686			5,800
Deferred tax liabilities	17,446			11,486			404			13,730
Liabilities from discontinued operations (Note 15)							—			8,882
Total Liabilities	768,001			852,595			997,386			938,718
Commitments and contingencies
Stockholder's Equity
Commitments and contingencies (Note 13)
Stockholders' Equity
Preferred stock - $0.001 par value, 25,000,000 shares authorized; no shares were issued at either period end	—			—			—			—
Class A common stock - $0.001 par value; 225,000,000 shares authorized; 45,770,551 and 44,561,419 issued and outstanding as of June 30, 2018 and December 31, 2017, respectively)	9			8
Common Stock - $0.001 par value; 225,000,000 shares authorized; 46,431,289 and 46,412,231 issued and outstanding as of March 31, 2019 and December 31, 2018, respectively							9			9
Paid-in capital	62,573			46,079			62,117			60,015
Retained earnings	43,254			3,988
Retained earnings (accumulated deficit)							18,983			(18,065		)
Accumulated other comprehensive loss	(52,987		)	(42,939		)	(44,365		)	(61,060		)
Total Stockholders' Equity	52,849			7,136			36,744			(19,101		)
Total Liabilities and Stockholders' Equity	$	820,850		$	859,731		$	1,034,130		$	919,617

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF ~~INCOME~~OPERATIONS

(in thousands, except per share data)

(unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended March 31,
	2018		2017		2018		2017		2019		2018
Revenue	$	248,983	$	216,944	$	510,741	$	441,524	$	277,939	$	250,843
Provision for losses	91,986		65,446		173,017		127,182		102,385		76,883
Net revenue	156,997		151,498		337,724		314,342		175,554		173,960

Cost of providing services
Salaries and benefits	26,907		26,300		53,826		52,733		28,701		26,918
Occupancy	13,320		13,511		26,747		27,606		14,237		13,427
Office	6,077		4,936		13,057		9,804		5,113		6,453
Other costs of providing services	12,727		13,108		27,127		27,963		14,220		13,431
Advertising	17,554		11,641		27,310		19,329		7,786		7,885
Total cost of providing services	76,585		69,496		148,067		137,435		70,057		68,114
Gross margin	80,412		82,002		189,657		176,907		105,497		105,846

Operating expense
Corporate, district and other	38,655		36,557		79,109		69,550
Corporate, district and other expenses									49,088		35,429
Interest expense	20,465		18,484		42,814		41,850		17,690		22,354
Loss on extinguishment of debt	—		—		11,683		12,458		—		11,683
Total operating expense	59,120		55,041		133,606		123,858		66,778		69,466
Net income before income taxes	21,292		26,961		56,051		53,049
Income from continuing operations before income taxes									38,719		36,380
Provision for income taxes	5,317		10,619		16,784		20,069		10,046		11,467
Net income from continuing operations									28,673		24,913
Net income (loss) from discontinued operations									8,375		(1,621		)
Net income	$	15,975	$	16,342	$	39,267	$	32,980	$	37,048	$	23,292

Weighted average common shares outstanding:
Basic	45,650		37,895		45,578		37,895		46,424		45,506
Diluted	47,996		38,987		47,757		38,983		47,319		47,416
Net income per common share:
Basic earnings per share	$	0.35	$	0.43	$	0.86	$	0.87
Diluted earnings per share:	$	0.33	$	0.42	$	0.82	$	0.85

Basic income (loss) per share:
Continuing operations									$	0.62	$	0.55
Discontinued operations									0.18		(0.04		)
Basic income per share									$	0.80	$	0.51

Diluted income (loss) per share:
Continuing operations									$	0.61	$	0.53
Discontinued operations									0.18		(0.03		)
Diluted income per share									$	0.79	$	0.50

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(unaudited)


	Three Months Ended June 30,					Six Months Ended June 30,					Three Months Ended March 31,
	2018			2017		2018			2017		2019		2018
Net income	$	15,975		$	16,342	$	39,267		$	32,980	$	37,048	$	23,292
Other comprehensive income (loss):
Cash flow hedges, net of $0 tax in all periods	(439		)	375		(385		)	333
Foreign currency translation adjustment, net of $0 tax in all periods	(6,752		)	6,961		(9,663		)	9,751
Cash flow hedges, net of $0 tax in both periods											—		54
Foreign currency translation adjustment, net of $0 tax in both periods											16,695		(2,910		)
Other comprehensive income (loss)	(7,191		)	7,336		(10,048		)	10,084		16,695		(2,856		)
Comprehensive income	$	8,784		$	23,678	$	29,219		$	43,064	$	53,743	$	20,436

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

~~CONDENSED~~ CONSOLIDATED ~~STATEMENTS~~STATEMENT OF CASH FLOWS

(dollars in ~~thousands)~~thousands, unaudited)

~~(unaudited)~~


	Six Months Ended June 30,						Three Months Ended March 31,
	2018			2017			2019			2018
Cash flows from operating activities
Net income	$	39,267		$	32,980
Adjustments to reconcile net income to net cash provided by operating activities:
Net income from continuing operations							$	28,673		$	24,913
Adjustments to reconcile net income to net cash provided by continuing operating activities:
Depreciation and amortization	9,259			9,330			4,920			4,535
Provision for loan losses	173,017			127,182			102,385			76,883
Amortization of debt issuance costs	2,493			1,702
Amortization of bond discount/(premium)	(376		)	424
Amortization of debt issuance costs and bond (premium)/discount							872			1,129
Deferred income tax benefit	3,199			(653		)	(10,343		)	(1,094		)
Loss on disposal of property and equipment	517			244			991			478
Loss on extinguishment of debt	11,683			12,458			—			11,683
Call premium payment from debt extinguishment	(9,300		)	—
Increase in cash surrender value of life insurance	(2,223		)	(679		)	(723		)	(1,482		)
Share-based compensation expense	4,023			219			2,172			1,842
Changes in operating assets and liabilities:
Loans receivable	(206,147		)	(150,450		)
Fees and service charges on loans receivable							1,937			5,093
Prepaid expenses and other assets	6,092			2,974			9,938			9,820
Other assets							(5,651		)	(39		)
Accounts payable and accrued liabilities	(2,292		)	(6,146		)	2,326			(3,172		)
Deferred revenue	(1,215		)	(698		)	(1,709		)	(1,709		)
Income taxes payable	26,727			3,780			29,562			19,629
Income taxes receivable	(18,436		)	3,200			(9,890		)	(7,411		)
Deferred rent	(31		)	31			—			280
Accrued Interest	(3,284		)	—			(15,329		)	(19,084		)
Other liabilities	922			13,876			868			449
Net cash provided by continuing operating activities							140,999			122,743
Net cash (used in) provided by discontinued operating activities							(504		)	1,411
Net cash provided by operating activities	33,895			49,774			140,495			124,154
Cash flows from investing activities
Purchase of property, equipment and software	(3,055		)	(6,828		)	(3,119		)	(1,542		)
Cash paid for Cognical Holdings preferred shares	(958		)	(4,975		)
Changes in restricted cash	(411		)	(4,437		)
Loans receivable originated or acquired							(420,568		)	(500,501		)
Loans receivable repaid							355,621			444,148
Investments in Cognical Holdings							(1,568		)	(958		)
Net cash used in continuing investing activities							(69,634		)	(58,853		)
Net cash used in discontinued investing activities							(14,213		)	(3,782		)
Net cash used in investing activities	(4,424		)	(16,240		)	(83,847		)	(62,635		)
Cash flows from financing activities
Net proceeds from issuance of common stock	12,431			—			—			13,135
Proceeds from exercise of stock options	39			—
Proceeds from Non-Recourse U.S. SPV facility	13,000			41,130			—			3,000
Payments on Non-Recourse U.S. SPV facility	(19,163		)	(25,142		)	—			(12,519		)
Proceeds from issuance of 12.00% Senior Secured Notes	—			461,329
Payments on 10.75% Senior Secured Notes	—			(426,034		)
Proceeds from Non-Recourse Canada SPV facility							3,762			—
Payments on Non-Recourse Canada SPV facility							(24,831		)	—
Payments on 12.00% Senior Secured Notes	(77,500		)	—			—			(77,500		)
Payments on 12.00% Senior Cash Pay Notes	—			(125,000		)
Debt issuance costs paid	(168		)	(14,002		)	(199		)	(71		)
Proceeds from credit facilities	18,798			—			30,478			10,000
Payments on credit facilities	(18,798		)	—			(50,478		)	(10,000		)
Dividends paid to stockholders	—			(28,000		)
Net cash used in financing activities	(71,361		)	(115,719		)
Effect of exchange rate changes on cash	(5,379		)	2,440
Net decrease in cash	(47,269		)	(79,745		)
Cash at beginning of period	162,374			193,525
Cash at end of period	$	115,105		$	113,780
Proceeds from exercise of stock options							40			—
Payments to net share settle restricted stock units vesting							(37		)	—
Net cash used in financing activities ⁽¹⁾							(41,265		)	(83,255		)
Effect of exchange rate changes on cash and restricted cash							1,938			(4,360		)
Net increase (decrease) in cash and restricted cash							17,321			(26,096		)
Cash and restricted cash at beginning of period							99,857			174,491
Cash and restricted cash at end of period							$	117,178		$	148,395
(1) Financing activities include continuing operations only and were not impacted by discontinued operations

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NATURE OF OPERATIONS

Basis of Presentation

The terms ~~“CURO," "we,” “our,” “us,”~~“CURO" and the ~~“Company,”~~“Company” refer to CURO Group Holdings Corp. and its directly and indirectly owned subsidiaries as a combined entity, except where otherwise stated. The term "CFTC" refers to CURO Financial Technologies Corp., a wholly-owned subsidiary, ~~of CURO,~~ and its directly and indirectly owned subsidiaries as a consolidated entity, except where otherwise stated.

~~We have~~The Company has prepared the accompanying unaudited Condensed Consolidated Financial Statements in accordance with accounting principles generally accepted in the United States of America (“US GAAP”), and with the accounting policies described in ~~our 2017~~its Annual Report on Form ~~10-K.~~10-K for the year ended December 31, 2018 ("2018 Form 10-K"). Certain information and note disclosures normally included in ~~our~~ annual financial statements prepared in accordance with US GAAP have been condensed or omitted, although ~~we believe~~the Company believes that the disclosures are adequate to enable a reasonable understanding of the information presented.

The unaudited Condensed Consolidated Financial Statements and the accompanying notes reflect all adjustments, which are, in the opinion of management, necessary to present fairly ~~our~~the Company's results of operations, financial position and cash flows for the periods presented. ~~The adjustments consist solely~~On February 25, 2019, the Company's U.K. segment was placed into administration, which resulted in treatment of ~~normal recurring adjustments. You should read~~ the segment as discontinued operations for all periods presented. Throughout this Quarterly Report on Form 10-Q ("Form 10-Q"), current and prior period financial information is presented as if the U.K. segment was excluded from continuing operations. For further information about the placement of the segment into administration, refer to "--Nature of Operations" below.

The Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and related Notes included in ~~our 2017 Annual Report on~~the 2018 Form 10-K. Interim results of operations are not necessarily indicative of results that may be expected for future interim periods or for the year ending December 31, ~~2018.~~

We completed our initial public offering ("IPO") in December 2017. Prior to our IPO we effected a 36-for-1 split of our common stock. We have retroactively adjusted all share and per share data for all periods presented to reflect the stock split as if the stock split had occurred at the beginning of the earliest period presented.

We qualify as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"). As an emerging growth company, we have elected to take advantage of specified reduced reporting and other requirements that are otherwise generally required of public companies.2019.

Principles of Consolidation

The Condensed Consolidated Financial Statements include the accounts of CURO and its wholly-owned subsidiaries. ~~We have eliminated intercompany~~Intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates

The preparation of Condensed Consolidated Financial Statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements. Estimates also affect the reported amounts of revenues and expenses during the periods reported. Some of the significant estimates that ~~we have~~the Company made in the accompanying Condensed Consolidated Financial Statements include allowances for loan losses, certain assumptions related to goodwill and intangibles, accruals related to self-insurance, ~~Credit Services Organization~~credit services organization ("CSO") ~~guarantee~~ liability for losses and estimated tax liabilities. Actual results may differ from those estimates.

Nature of Operations

~~We are~~CURO is a growth-oriented, technology-enabled, highly-diversified consumer finance company serving a wide range of underbanked consumers in the United States ("U.S."), Canada, and, through February 25, 2019, the United Kingdom ("U.K.").

U.K. Segment Placed into Administration

On February 25, 2019, the Company announced that a proposed Scheme of Arrangement ("SOA"), as described in the Company's Current Report on Form 8-K filed January 31, 2019, would not be implemented. In accordance with the provisions of the U.K. Insolvency Act 1986 and as approved by the boards of directors of the Company’s U.K. subsidiaries, Curo Transatlantic Limited and SRC Transatlantic Limited (collectively, “the U.K. Subsidiaries”), insolvency practitioners from KPMG were appointed as administrators (“Administrators”) for the U.K. Subsidiaries. The effect of the U.K. Subsidiaries’ entry into administration was to place their management, affairs, business and property under the direct control of the Administrators. Accordingly, the Company deconsolidated the U.K. Subsidiaries as of February 25, 2019 and presented the U.K. Subsidiaries as Discontinued Operations for all periods presented in this Form 10-Q.

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Open-End Loss Recognition

Effective January 1, 2019, the Company modified the timeframe for which it charges-off Open-End loans and made related refinements to its loss provisioning methodology. Prior to January 1, 2019, the Company deemed Open-End loans uncollectible and charged-off when a customer missed a scheduled payment, at which point the loan was considered past-due. Because of the continuing shift to Open-End loans in Canada and analysis of payment patterns on early-stage versus late-stage delinquencies, the Company revised its estimates and now consider Open-End loans uncollectible when the loan has been contractually past-due for 90 consecutive days. Consequently, past-due Open-End loans and related accrued interest now remain in loans receivable for 90 days before being charged-off against the allowance for loan losses. All recoveries on charged-off loans are credited to the allowance for loan losses when received. The Company evaluates the adequacy of the allowance for loan losses compared to the related gross loans receivable balances that include accrued interest.

The aforementioned change was treated as a change in accounting estimate and applied prospectively effective January 1, 2019.

The change affects comparability to prior periods as follows:

Gross combined loans receivable: balances as of March 31, 2019 include $32.4 million of Open-End loans that are up to 90 days past-due with related accrued interest, while such balances for prior periods do not include any past-due loans.

Revenues: for the quarter ended March 31, 2019, revenues include accrued interest on past-due loan balances of $8.9 million, while revenues in prior periods do not include comparable amounts.

Provision for Losses: effective January 1, 2019, past-due, unpaid balances plus related accrued interest charge off on day 91. Provision expense is affected by total charge-offs less total recoveries ("NCOs") plus changes to the required allowance for loan losses. Because NCOs now include unpaid principal and up to 90 days of related accrued interest, as compared to prior periods, NCO amounts and rates are higher and the required Open-End Allowance for loan losses as a percentage of Open-End gross loans receivable is higher. The Open-End Allowance for loan losses as a percentage of Open-End gross loans receivable rose from 9.6% as of December 31, 2018, to 19.5% as of March 31, 2019.

Correction of an Immaterial Error in Previously-Issued Financial Statements

During the year ended December 31, 2018, the Company corrected immaterial errors to its prior presentation of cash flows for loan originations and collections on principal. The Company determined that the historical presentation was in error by not conforming to US GAAP because it included outflows for loan originations and receipts on collections in Cash provided by operating activities rather than in Cash used in investing activities. Accordingly the Company corrected previously-filed financial statements by reclassifying cash outflows for loan originations and receipts on collections of principal of $56.4 million from net Cash provided by operating activities to net Cash used in investing activities for the three months ended March 31, 2018. Total cash flows for each period presented did not change. The Company concluded that the errors were immaterial to the unaudited Condensed Consolidated Financial Statements included in the Company’s Quarterly Report on Form 10-Q for the three months ended March 31, 2018. The Company has revised its Condensed Consolidated Financial Statements for the three months ended March 31, 2018 presented in this Form 10-Q. A summary of the correction follows:



(dollars in thousands)	Three Months Ended March 31, 2018
As Reported:⁽¹⁾
Net cash provided by continuing operating activities	$	66,390
Net cash used in continuing investing activities	(2,500		)

As Corrected:
Net cash provided by continuing operating activities	122,743
Net cash used in continuing investing activities	(58,853		)
(1) "As reported" balances include amounts from continuing operations historically presented within these captions.

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Recently Adopted Accounting Pronouncements

ASU 2016-02

In ~~May 2017,~~February 2016, the Financial Accounting Standards Board ("FASB") ~~issued~~established Topic 842, Leases, by issuing ASU ~~2017-09,~~ ~~Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting~~ ("No. 2016-02, which requires lessees to recognize leases on the balance sheet and disclose key information about leasing arrangements. The Company adopted ASU 2017-09"). Under modification accounting, an entity is required to re-value its equity awards each time there is a modification to the terms of the awards. The provisions in ASU 2017-09 provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to account for the effects of a modification, unless certain conditions are met. The amendments in this update were effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. ASU 2017-09 was effective for us2016-02 as of January 1, ~~2018.~~2019, using the modified retrospective approach, which provides a method for recording existing leases at adoption and in comparative periods that approximates the results of a full retrospective approach.

Adoption of the new standard resulted in the recording of right of use assets ("ROU assets") and additional operating lease liabilities ("lease liabilities") of $135.4 million and $143.4 million, respectively, as of March 31, 2019. Prepaid rent of $2.7 million and deferred liability of $10.9 million were included in ROU assets and lease liabilities, respectively. The ~~adoption of this amendment~~standard did not ~~have a material~~materially impact ~~on our Consolidated Financial Statements.~~the Company's consolidated net earnings. See Note 14 - "Leases" for additional information and disclosures required by Topic 842.

~~Recently Issued Accounting Pronouncements Not Yet Adopted~~ASU 2018-12

In February 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive income ("ASU 2018-02")~~. Current US GAAP requires deferred~~, which permits the reclassification to retained earnings of disproportionate tax ~~liabilities and assets to be adjusted for the effect of a change~~effects in ~~tax laws or rates with the effect included in income from continuing operations in the period the change is enacted, including items of~~accumulated other comprehensive income ~~for which the related tax effects are presented in other comprehensive income (“stranded tax effects”). ASU 2018-02 allows, but does not require, companies to reclassify stranded tax effects~~(loss) caused by the Tax Cuts and Jobs Act of 2017 ~~(the "2017~~("2017 Tax Act") ~~from accumulated other comprehensive income to retained earnings. Additionally,~~. The Company adopted ASU 2018-02 ~~requires new disclosures by all companies, whether they opt to do~~as of January 1, 2019, which did not have a material impact on the reclassification or not. The provisions of ASU 2018-02 are effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. Companies should apply the proposed amendments either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the 2017 Tax Act is recognized. We are currently assessing the impact adoption of ASU 2018-02 will have on ourCondensed Consolidated Financial Statements.

~~In September 2017, FASB issued ASU 2017-13,~~ ~~Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842): Amendments to~~ SEC ~~Paragraphs Pursuant to the Staff Announcement at the July 20, 2017 EITF Meeting and Rescission of Prior SEC Staff Announcements and Observer Comments~~ ("ASU 2017-13"). ASU 2017-13 amends the early adoption date option for public entities related to the adoption of ASU No. 2014-09 and ASU No. 2016-02. We are currently assessing the impact adoption of Topic 606 and Topic 842 will have on our Consolidated Financial Statements.Disclosure Update

In ~~January 2017, FASB issued ASU 2017-04,~~the third quarter of 2018, the U.S. Securities and Exchange Commission ("SEC") adopted final rules under SEC Release No. 33-10532, ~~Intangibles - Goodwill~~Disclosure Update and Simplification, amending certain disclosure requirements that had become redundant, duplicative, overlapping, outdated or superseded. Other ~~(Topic 350): Simplifying~~than the ~~Test~~amendment's expanded disclosure requirement for ~~Goodwill Impairment~~ ~~("ASU 2017-04"). ASU 2017-04 simplified the goodwill impairment test by eliminating Step 2~~interim financial statements to disclose both current and comparative quarter and year-to-date reconciliations of the test which requires an entity to compute the implied fair value of goodwill. Instead, an entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value, and is limited to the amount of total goodwill allocated to that reporting unit. Under ASU 2017-04, an entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The provisions of ASU 2017-04 are effective for a public entity's annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019 and effective for us, as an emerging growth company, in fiscal years beginning after December 15, 2021. We are currently assessing the impact adoption of ASU 2017-04 will have on our Consolidated Financial Statements.

~~In January 2017, FASB issued ASU 2017-01,~~ ~~Business Combinations (Topic 805): Clarifying the definition of a Business~~ ("ASU 2017-01"). ASU 2017-01 narrows the definition of a business and provides a framework that gives an entity a basis for making reasonable judgments about whether a transaction involves an asset or a business and provides a screen to determine when a set (an integrated set of assets and activities) is not a business. The screen requires a determination that when substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. If the screen is not met, ASU 2017-01 (i) requires that to be considered a business, a set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output and (ii) remove the evaluation of whether a market participant could replace missing elements. The amendments provide a framework to assist

~~CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

entities in evaluating whether both an input and a substantive process are present. ASU 2017-01 is effective prospectively for public companies for annual periods beginning after December 15, 2017 including interim periods therein, and it will be effective for us, as an emerging growth company, for annual periods beginning after December 15, 2018 and interim periods beginning after December 15, 2019. We are currently assessing the impact adoption of ASU 2017-01 will have on our Consolidated Financial Statements.

~~In November 2016, FASB issued ASU 2016-18,~~ ~~Statement of Cash Flows (Topic 230): Restricted Cash~~ ("ASU 2016-18"). ASU 2016-18 requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. As a result, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. ASU 2016-18 is effective for public companies for fiscal years beginning after December 15, 2017 and interim periods therein, and it will be effective for us, as an emerging growth company, for fiscal years beginning after December 15, 2018 and interim periods beginning after December 15, 2019. The amendments should be applied using a retrospective transition method to each period presented. We are currently assessing the impact adoption of ASU 2016-18 will have on our Consolidated Financial Statements.

~~In August 2016, FASB issued ASU 2016-15,~~ ~~Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force)~~ (“ASU 2016-15”). The amendments in ASU 2016-15 provide guidance on eight specific cash flow issues, including debt prepayment or debt extinguishment costs, contingent consideration payments made after a business combination, distributions received from equity method investees and beneficial interests in securitization transactions. ASU 2016-15 is currently effective for public companies, and it will be effective for us, as an emerging growth company, for fiscal years beginning after December 15, 2018 and interim periods within fiscal years beginning after December 15, 2019. We are currently assessing the potential impact ASU 2016-15 will have on our Consolidated Statements of Cash Flows.

~~In June 2016, FASB issued ASU 2016-13,~~ ~~Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments~~” ("ASU 2016-13"). This ASU modifies the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology, which will result in the more timely recognition of losses. ASU 2016-13 will be effective for public companies for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years, and it will be effective for us, as an emerging growth company, for fiscal years beginning after December 15, 2020 and interim periods within fiscal years beginning after December 15, 2021. We anticipate that ASU 2016-13 will impact our current process for measuring credit losses and are currently assessing the impact it will have on our Consolidated Financial Statements.

~~In February 2016, FASB issued its new lease accounting guidance in ASU No. 2016-02,~~ ~~Leases (Topic 842)~~ (“ASU 2016-02”). ASU 2016-02 requires lessees to recognize the following for all leases (with the exception of short-term leases) at the commencement date: (i) a lease liability, which is a lessee’s obligation to make lease payment arising from a lease, measured on a discounted basis; and (ii) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Under the new guidance, lessor accounting is largely unchanged and lessees will no longer be provided with a source of off-balance sheet financing. ASU 2016-02 will be effective for public companies for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years, and it will be effective for us, as an emerging growth company, for fiscal years beginning after December 15, 2019 and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted. Lessees (for capital and operating leases) and lessors (for sales-type, direct financing, and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees and lessors may not apply a full retrospective transition approach. We expect ASU 2016-02 will have an impact on our balance sheet with recognition of right-of-use assets which were previously operating leases. We are currently assessing the full impact ASU 2016-02 will have on our Consolidated Financial Statements and expect an estimate of impact in the second half of 2018.

~~CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

~~In January 2016, FASB issued ASU No. 2016-01,~~ ~~Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities~~ (“ASU 2016-01”) which requires (i) equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income, (ii) public entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes and (iii) separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (i.e., securities or loans and receivables). ASU 2016-01 eliminates the requirement to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost. ASU 2016-01 is currently effective for public companies, andstockholders' equity, it will be effective for us, as an emerging growth company, for fiscal years beginning after December 15, 2018 and interim periods within fiscal years beginning after December 15, 2019. We are currently assessing the impact this ASU will have on our Consolidated Financial Statements.

~~In November 2015, FASB issued ASU No. 2015-17,~~ ~~Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes~~ (“ASU 2015-17”). ASU 2015-07 eliminates the requirement for organizations to present deferred tax liabilities and assets as current and noncurrent in a classified balance sheet. Instead, organizations will be required to classify all deferred tax assets and liabilities as noncurrent. ASU 2015-17 is currently effective for public companies, and it will be effective for us, as an emerging growth company, for fiscal years beginning after December 15, 2017 and interim periods within fiscal years beginning after December 15, 2018. We dodid not ~~expect that adoption of this amendment will~~ have a material impact on ~~our~~the Company's Condensed Consolidated Financial ~~Statements.~~

~~In August 2015, FASB issued ASU 2015-14,~~ ~~Revenue from Contracts with Customers (Topic 606)~~ ~~(“ASU 2015-14”), which deferred~~Statements or Notes thereto for the ~~effect date of ASU 2014-09,~~ ~~Revenue from Contracts with Customers (Topic 606)~~ ~~(“ASU 2014-09”), for public companies~~three months ended March 31, 2019, nor is it expected to fiscal years beginning after December 15, 2017 and interim periods within those fiscal years, and it will be effective for us, as an emerging growth company, for fiscal years beginning after December 15, 2018 and interim periods within fiscal years beginning after December 15, 2019. If we are no longer an emerging growth company as of December 31, 2018, we must adopt the provision of this standard retroactively as of January 1, 2018. In May 2014, FASB issued ASU 2014-09 which amended the existing accounting standards for revenue recognition. ASU 2014-09 establishes principles for recognizing revenue upon the transfer of promised goods or services to customers, in an amount that reflects the expected consideration received in exchange for those goods or services. We do not expect that adoption of ASU 2014-09 will have a material impact on ~~our Consolidated Financial Statements.~~the Company's annual disclosures or financial statements.

NOTE 2 - VARIABLE INTEREST ENTITIES

~~We hold a credit~~In August 2018, the Company closed on the Non-Recourse Canada SPV facility, whereby ~~we sell~~ certain loan receivables were sold to wholly-owned, bankruptcy-remote special ~~purpose~~purposes subsidiaries ("VIEs") ~~and we incur additional~~to collateralize debt ~~through~~incurred under the ~~Non-Recourse U.S. SPV facility (See Note 5 - Long-Term Debt for further discussion) that is collateralized by these underlying loan receivables.~~facility.

~~We have determined that we are~~As the Company is the primary beneficiary of the VIEs, ~~and are required to consolidate them. We include~~the Company includes the assets and liabilities related to the VIEs in ~~our~~its Condensed Consolidated Financial ~~Statements and we account for them as secured borrowings. We~~Statements. As required, the Company parenthetically ~~disclose~~discloses on ~~our~~the Consolidated Balance Sheets the VIEs’ assets that can only be used to settle the VIEs' obligations and liabilities if the VIEs’ creditors have no recourse against ~~our~~the Company's general credit.

The carrying amounts of consolidated VIEs' assets and liabilities associated with the VIE subsidiaries were as follows:



(in thousands)	March 31, 2019		December 31, 2018
Assets
Restricted cash	$	15,460	$	12,840
Gross loans receivable less allowance for loan losses	157,867		136,187
Total Assets	$	173,327	$	149,027
Liabilities
Accounts payable and accrued liabilities	$	9,717	$	4,980
Deferred revenue	44		40
Accrued interest	848		831
Long-term debt	88,915		107,479
Total Liabilities	$	99,524	$	113,330

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

~~The carrying amounts of consolidated VIEs' assets and liabilities associated with our special purpose subsidiaries were as follows:~~

(in thousands) June 30, 2018 December 31, 2017
Assets
Restricted Cash $ 7,274
$ 6,871
Loans receivable less allowance for loan losses 171,332
167,706
Total Assets $ 178,606
$ 174,577
Liabilities
Accounts payable and accrued liabilities $ 14
$ 12
Accrued interest 1,237
1,266
Long-term debt 114,774
120,402
Total Liabilities $ 116,025
$ 121,680

NOTE 3 – LOANS RECEIVABLE AND REVENUE

The following table summarizes revenue by product for the periods indicated:


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended March 31,
(in thousands)	2018		2017		2018		2017		2019		2018
Unsecured Installment	$	123,473	$	105,149	$	256,419	$	214,580	$	135,778	$	125,379
Secured Installment	25,777		23,173		52,633		46,842		27,477		26,856
Open-End	27,222		15,805		54,445		33,712		52,869		27,223
Single-Pay	61,602		63,241		125,307		127,031		46,761		60,357
Ancillary	10,909		9,576		21,937		19,359		15,054		11,028
Total revenue	$	248,983	$	216,944	$	510,741	$	441,524	$	277,939	$	250,843

The following tables summarize Loans receivable by product and the related delinquent loans receivable at ~~June 30, 2018:~~March 31, 2019:


	June 30, 2018															March 31, 2019
(in thousands)	Single-Pay			Unsecured Installment			Secured Installment			Open-End			Total			Single-Pay			Unsecured Installment			Secured Installment			Open-End			Total
Current loans receivable	$	89,574		$	139,142		$	69,788		$	91,034		$	389,538		$	69,753		$	120,915		$	67,375		$	208,346		$	466,389
Delinquent loans receivable	—			40,272			14,817			—			55,089			—			40,801			13,581			32,444			86,826
Total loans receivable	89,574			179,414			84,605			91,034			444,627			69,753			161,716			80,956			240,790			553,215
Less: allowance for losses	(4,372		)	(35,279		)	(10,386		)	(9,717		)	(59,754		)	(3,897		)	(33,666		)	(9,796		)	(46,963		)	(94,322		)
Loans receivable, net	$	85,202		$	144,135		$	74,219		$	81,317		$	384,873		$	65,856		$	128,050		$	71,160		$	193,827		$	458,893


	June 30, 2018						March 31, 2019
(in thousands)	Unsecured Installment		Secured Installment		Total		Unsecured Installment		Secured Installment		Open-End		Total
Delinquent loans receivable
0-30 days past due	$	17,052	$	7,551	$	24,603	$	13,455	$	6,001	$	12,423	$	31,879
31-60 days past due	11,886		3,892		15,778		11,757		3,555		9,432		24,744
61-90 days past due	11,334		3,374		14,708		15,589		4,025		10,589		30,203
Total delinquent loans receivable	$	40,272	$	14,817	$	55,089	$	40,801	$	13,581	$	32,444	$	86,826

The following tables summarize Loans receivable by product and the related delinquent loans receivable at December 31, 2018:



	December 31, 2018
(in thousands)	Single-Pay			Unsecured Installment			Secured Installment			Open-End			Total
Current loans receivable	$	80,823		$	141,316		$	75,583		$	207,333		$	505,055
Delinquent loans receivable	—			49,087			17,389			—			66,476
Total loans receivable	80,823			190,403			92,972			207,333			571,531
Less: allowance for losses	(4,189		)	(37,716		)	(12,191		)	(19,901		)	(73,997		)
Loans receivable, net	$	76,634		$	152,687		$	80,781		$	187,432		$	497,534

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)



	December 31, 2018
(in thousands)	Unsecured Installment		Secured Installment		Total
Delinquent loans receivable
0-30 days past due	$	17,850	$	7,870	$	25,720
31-60 days past due	14,705		4,725		19,430
61-90 days past due	16,532		4,794		21,326
Total delinquent loans receivable	$	49,087	$	17,389	$	66,476

The following tables summarize loans guaranteed by the Company under CSO programs and the related delinquent receivables at March 31, 2019:



	March 31, 2019
(in thousands)	Unsecured Installment			Secured Installment			Total
Current loans receivable guaranteed by the Company	$	51,773		$	1,847		$	53,620
Delinquent loans receivable guaranteed by the Company	7,967			284			8,251
Total loans receivable guaranteed by the Company	59,740			2,131			61,871
Less: Liability for losses on CSO lender-owned consumer loans	(8,584		)	(78		)	(8,662		)
Loans receivable guaranteed by the Company, net	$	51,156		$	2,053		$	53,209



	March 31, 2019
(in thousands)	Unsecured Installment		Secured Installment		Total
Delinquent loans receivable
0-30 days past due	$	6,388	$	228	$	6,616
31-60 days past due	926		33		959
61-90 days past due	653		23		676
Total delinquent loans receivable	$	7,967	$	284	$	8,251

The following tables summarize loans guaranteed by the Company under CSO programs and the related delinquent receivables at December 31, 2018:



	December 31, 2018
(in thousands)	Unsecured Installment			Secured Installment			Total
Current loans receivable guaranteed by the Company	$	65,743		$	2,504		$	68,247
Delinquent loans receivable guaranteed by the Company	11,708			446			12,154
Total loans receivable guaranteed by the Company	77,451			2,950			80,401
Less: Liability for losses on CSO lender-owned consumer loans	(11,582		)	(425		)	(12,007		)
Loans receivable guaranteed by the Company, net	$	65,869		$	2,525		$	68,394

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)



	December 31, 2018
(in thousands)	Unsecured Installment		Secured Installment		Total
Delinquent loans receivable
0-30 days past due	$	9,684	$	369	$	10,053
31-60 days past due	1,255		48		1,303
61-90 days past due	769		29		798
Total delinquent loans receivable	$	11,708	$	446	$	12,154

The following table summarizes activity in the allowance for loan losses during the three months ended March 31, 2019:



	Three Months Ended March 31, 2019
(in thousands)	Single-Pay			Unsecured Installment			Secured Installment			Open-End			Other			Total
Balance, beginning of period	$	4,189		$	37,716		$	12,191		$	19,901		$	—		$	73,997
Charge-offs	(36,521		)	(44,237		)	(12,671		)	(3,638		)	(1,351		)	(98,418		)
Recoveries	27,911			6,318			3,123			5,159			898			43,409
Net charge-offs	(8,610		)	(37,919		)	(9,548		)	1,521			(453		)	(55,009		)
Provision for losses	8,268			33,845			7,153			25,317			453			75,036
Effect of foreign currency translation	50			24			—			224			—			298
Balance, end of period	$	3,897		$	33,666		$	9,796		$	46,963		$	—		$	94,322
Allowance for loan losses as a percentage of gross loan receivables	5.6		%	20.8		%	12.1		%	19.5		%	N/A			17.0		%

The following table summarizes activity in the liability for losses on CSO lender-owned consumer loans during the three months ended March 31, 2019:



	Three Months Ended March 31, 2019
(in thousands)	Unsecured Installment			Secured Installment			Total
Balance, beginning of period	$	11,582		$	425		$	12,007
Charge-offs	(40,980		)	(1,076		)	(42,056		)
Recoveries	10,560			802			11,362
Net charge-offs	(30,420		)	(274		)	(30,694		)
Provision for losses	27,422			(73		)	27,349
Balance, end of period	$	8,584		$	78		$	8,662

The following table summarizes activity in the allowance for loan losses and the liability for losses on CSO lender-owned consumer loans, in total, during the three months ended March 31, 2019:



	Three Months Ended March 31, 2019
(in thousands)	Single-Pay			Unsecured Installment			Secured Installment			Open-End			Other			Total
Balance, beginning of period	$	4,189		$	49,298		$	12,616		$	19,901		$	—		$	86,004
Charge-offs	(36,521		)	(85,217		)	(13,747		)	(3,638		)	(1,351		)	(140,474		)
Recoveries	27,911			16,878			3,925			5,159			898			54,771
Net charge-offs	(8,610		)	(68,339		)	(9,822		)	1,521			(453		)	(85,703		)
Provision for losses	8,268			61,267			7,080			25,317			453			102,385
Effect of foreign currency translation	50			24			—			224			—			298
Balance, end of period	$	3,897		$	42,250		$	9,874		$	46,963		$	—		$	102,984

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

The following ~~tables summarize Loans receivable by product and the related delinquent loans receivable at December 31, 2017:~~

December 31, 2017
(in thousands) Single-Pay Unsecured Installment Secured Installment Open-End Total
Current loans receivable $ 99,400
$ 151,343
$ 73,165
$ 47,949
$ 371,857
Delinquent loans receivable —
44,963
16,017
—
60,980
Total loans receivable 99,400
196,306
89,182
47,949
432,837
Less: allowance for losses (5,916 ) (43,754 ) (13,472 ) (6,426 ) (69,568 )
Loans receivable, net $ 93,484
$ 152,552
$ 75,710
$ 41,523
$ 363,269

December 31, 2017
(in thousands) Unsecured Installment Secured Installment Total
Delinquent loans receivable

0-30 days past due $ 18,358
$ 8,116
$ 26,474
31-60 days past due 12,836
3,628
16,464
61-90 days past due 13,769
4,273
18,042
Total delinquent loans receivable $ 44,963
$ 16,017
$ 60,980

~~The following tables summarize loans guaranteed by us under our CSO programs and the related delinquent receivables at June 30, 2018:~~

June 30, 2018
(in thousands) Unsecured Installment Secured Installment Total
Current loans receivable guaranteed by the Company $ 56,055
$ 2,379
$ 58,434
Delinquent loans receivable guaranteed by the Company 10,318
428
10,746
Total loans receivable guaranteed by the Company 66,373
2,807
69,180
Less: CSO guarantee liability (11,193 ) (426 ) (11,619 )
Loans receivable guaranteed by the Company, net $ 55,180
$ 2,381
$ 57,561

June 30, 2018
(in thousands) Unsecured Installment Secured Installment Total
Delinquent loans receivable

0-30 days past due $ 8,835
$ 362
$ 9,197
31-60 days past due 1,043
39
1,082
61-90 days past due 440
27
467
Total delinquent loans receivable $ 10,318
$ 428
$ 10,746

~~CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

~~The following tables summarize loans guaranteed by us under our CSO programs and the related delinquent receivables at December 31, 2017:~~

December 31, 2017
(in thousands) Unsecured Installment Secured Installment Total
Current loans receivable guaranteed by the Company $ 62,676
$ 3,098
$ 65,774
Delinquent loans receivable guaranteed by the Company 12,480
537
13,017
Total loans receivable guaranteed by the Company 75,156
3,635
78,791
Less: CSO guarantee liability (17,073 ) (722 ) (17,795 )
Loans receivable guaranteed by the Company, net $ 58,083
$ 2,913
$ 60,996

December 31, 2017
(in thousands) Unsecured Installment Secured Installment Total
Delinquent loans receivable
0-30 days past due $ 10,477
$ 459
$ 10,936
31-60 days past due 1,364
41
1,405
61-90 days past due 639
37
676
Total delinquent loans receivable $ 12,480
$ 537
$ 13,017

~~CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

~~The following~~ table summarizes activity in the allowance for loan losses during the three months ended ~~June 30,~~March 31, 2018:


	Three Months Ended June 30, 2018																		Three Months Ended March 31, 2018
(in thousands)	Single-Pay			Unsecured Installment			Secured Installment			Open-End			Other			Total			Single-Pay			Unsecured Installment			Secured Installment			Open-End			Other			Total
Balance, beginning of period	$	4,485		$	37,916		$	11,639		$	6,846		$	—		$	60,886		$	5,204		$	38,977		$	13,472		$	6,426		$	—		$	64,079
Charge-offs	(44,817		)	(36,102		)	(11,082		)	(23,807		)	(593		)	(116,401		)	(44,336		)	(35,219		)	(11,485		)	(20,349		)	(667		)	(112,056		)
Recoveries	30,274			6,368			2,296			11,883			40			50,861			32,818			5,218			2,866			9,377			39			50,318
Net charge-offs	(14,543		)	(29,734		)	(8,786		)	(11,924		)	(553		)	(65,540		)	(11,518		)	(30,001		)	(8,619		)	(10,972		)	(628		)	(61,738		)
Provision for losses	14,527			27,434			7,533			14,848			553			64,895			9,892			24,739			6,786			11,428			628			53,473
Effect of foreign currency translation	(97		)	(337		)	—			(53		)	—			(487		)	(64		)	(77		)	—			(36		)	—			(177		)
Balance, end of period	$	4,372		$	35,279		$	10,386		$	9,717		$	—		$	59,754		$	3,514		$	33,638		$	11,639		$	6,846		$	—		$	55,637
Allowance for loan losses as a percentage of gross loan receivables	4.9		%	19.7		%	12.3		%	10.7		%	N/A			13.4		%	5.7		%	25.8		%	16.6		%	15.2		%	N/A			18.1		%

The following table summarizes activity in the liability for losses on CSO ~~guarantee liability~~lender-owned consumer loans during the three months ended ~~June 30,~~March 31, 2018:


	Three Months Ended June 30, 2018									Three Months Ended March 31, 2018
(in thousands)	Unsecured Installment			Secured Installment			Total			Unsecured Installment			Secured Installment			Total
Balance, beginning of period	$	9,886		$	526		$	10,412		$	17,073		$	722		$	17,795
Charge-offs	(33,017		)	(993		)	(34,010		)	(41,719		)	(1,219		)	(42,938		)
Recoveries	7,350			776			8,126			10,976			1,169			12,145
Net charge-offs	(25,667		)	(217		)	(25,884		)	(30,743		)	(50		)	(30,793		)
Provision for losses	26,974			117			27,091			23,556			(146		)	23,410
Balance, end of period	$	11,193		$	426		$	11,619		$	9,886		$	526		$	10,412

The following table summarizes activity in the allowance for loan losses and the liability for losses on CSO ~~guarantee liability,~~lender-owned consumer loans, in total, during the three months ended ~~June 30,~~March 31, 2018:

Three Months Ended June 30, 2018
(in thousands) Single-Pay Unsecured Installment Secured Installment Open-End Other Total
Balance, beginning of period $ 4,485
$ 47,802
$ 12,165
$ 6,846
$ —
$ 71,298
Charge-offs (44,817 ) (69,119 ) (12,075 ) (23,807 ) (593 ) (150,411 )
Recoveries 30,274
13,718
3,072
11,883
40
58,987
Net charge-offs (14,543 ) (55,401 ) (9,003 ) (11,924 ) (553 ) (91,424 )
Provision for losses 14,527
54,408
7,650
14,848
553
91,986
Effect of foreign currency translation (97 ) (337 ) —
(53 ) —
(487 )
Balance, end of period $ 4,372
$ 46,472
$ 10,812
$ 9,717
$ —
$ 71,373

~~CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

~~The following table summarizes activity in the allowance for loan losses during the three months ended June 30, 2017:~~

Three Months Ended June 30, 2017
(in thousands) Single-Pay Unsecured Installment Secured Installment Open-End Other Total
Balance, beginning of period $ 4,719
$ 42,040
$ 20,270
$ 4,572
$ —
$ 71,601
Charge-offs (44,020 ) (24,574 ) (6,941 ) (8,447 ) (1,261 ) (85,243 )
Recoveries 30,190
5,716
1,787
4,104
777
42,574
Net charge-offs (13,830 ) (18,858 ) (5,154 ) (4,343 ) (484 ) (42,669 )
Provision for losses 14,284
17,845
4,081
4,298
484
40,992
Effect of foreign currency translation 140
379
(1 ) (4 ) —
514
Balance, end of period $ 5,313
$ 41,406
$ 19,196
$ 4,523
$ —
$ 70,438
Allowance for loan losses as a percentage of gross loan receivables 5.8 % 26.5 % 25.2 % 16.9 % N/A
20.1 %

~~The following table summarizes activity in the CSO guarantee liability during the three months ended June 30, 2017:~~

Three Months Ended June 30, 2017
(in thousands) Single-Pay Unsecured Installment Secured Installment Total
Balance, beginning of period $ 14
$ 18,482
$ 1,287
$ 19,783
Charge-offs (373 ) (33,166 ) (2,141 ) (35,680 )
Recoveries 354
5,857
814
7,025
Net charge-offs (19 ) (27,309 ) (1,327 ) (28,655 )
Provision for losses 5
23,575
874
24,454
Balance, end of period $ —
$ 14,748
$ 834
$ 15,582

~~The following table summarizes activity in the allowance for loan losses and the CSO guarantee liability, in total, during the three months ended June 30, 2017:~~

Three Months Ended June 30, 2017
(in thousands) Single-Pay Unsecured Installment Secured Installment Open-End Other Total
Balance, beginning of period $ 4,733
$ 60,522
$ 21,557
$ 4,572
$ —
$ 91,384
Charge-offs (44,393 ) (57,740 ) (9,082 ) (8,447 ) (1,261 ) (120,923 )
Recoveries 30,544
11,573
2,601
4,104
777
49,599
Net charge-offs (13,849 ) (46,167 ) (6,481 ) (4,343 ) (484 ) (71,324 )
Provision for losses 14,289
41,420
4,955
4,298
484
65,446
Effect of foreign currency translation 140
379
(1 ) (4 ) —
514
Balance, end of period $ 5,313
$ 56,154
$ 20,030
$ 4,523
$ —
$ 86,020

~~CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

~~The following table summarizes activity in the allowance for loan losses during the six months ended June 30, 2018:~~

Six Months Ended June 30, 2018
(in thousands) Single-Pay Unsecured Installment Secured Installment Open-End Other Total
Balance, beginning of period $ 5,916
$ 43,754
$ 13,472
$ 6,426
$ —
$ 69,568
Charge-offs (92,524 ) (75,479 ) (22,567 ) (44,156 ) (1,268 ) (235,994 )
Recoveries 65,283
12,335
5,162
21,260
87
104,127
Net charge-offs (27,241 ) (63,144 ) (17,405 ) (22,896 ) (1,181 ) (131,867 )
Provision for losses 25,829
54,911
14,319
26,276
1,181
122,516
Effect of foreign currency translation (132 ) (242 ) —
(89 ) —
(463 )
Balance, end of period $ 4,372
$ 35,279
$ 10,386
$ 9,717
$ —
$ 59,754
Allowance for loan losses as a percentage of gross loan receivables 4.9 % 19.7 % 12.3 % 10.7 % N/A
13.4 %

~~The following table summarizes activity in the CSO guarantee liability during the six months ended June 30, 2018:~~

Six Months Ended June 30, 2018
(in thousands) Unsecured Installment Secured Installment Total
Balance, beginning of period $ 17,073
$ 722
$ 17,795
Charge-offs (74,736 ) (2,212 ) (76,948 )
Recoveries 18,326
1,945
20,271
Net charge-offs (56,410 ) (267 ) (56,677 )
Provision for losses 50,530
(29 ) 50,501
Balance, end of period $ 11,193
$ 426
$ 11,619

~~The following table summarizes activity in the allowance for loan losses and the CSO guarantee liability, in total, during the six months ended June 30, 2018:~~

Six Months Ended June 30, 2018
(in thousands) Single-Pay Unsecured Installment Secured Installment Open-End Other Total
Balance, beginning of period $ 5,916
$ 60,827
$ 14,194
$ 6,426
$ —
$ 87,363
Charge-offs (92,524 ) (150,215 ) (24,779 ) (44,156 ) (1,268 ) (312,942 )
Recoveries 65,283
30,661
7,107
21,260
87
124,398
Net charge-offs (27,241 ) (119,554 ) (17,672 ) (22,896 ) (1,181 ) (188,544 )
Provision for losses 25,829
105,441
14,290
26,276
1,181
173,017
Effect of foreign currency translation (132 ) (242 ) —
(89 ) —
(463 )
Balance, end of period $ 4,372
$ 46,472
$ 10,812
$ 9,717
$ —
$ 71,373

~~CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

~~The following table summarizes activity in the allowance for loan losses during the six months ended June 30, 2017:~~

Six Months Ended June 30, 2017
(in thousands) Single-Pay Unsecured Installment Secured Installment Open-End Other Total
Balance, beginning of period $ 5,501
$ 17,775
$ 10,737
$ 5,179
$ —
$ 39,192
Charge-offs (88,905 ) (24,574 ) (6,941 ) (17,676 ) (2,400 ) (140,496 )
Recoveries 63,341
10,634
4,815
9,457
1,529
89,776
Net charge-offs (25,564 ) (13,940 ) (2,126 ) (8,219 ) (871 ) (50,720 )
Provision for losses 25,178
37,154
10,585
7,563
871
81,351
Effect of foreign currency translation 198
417
—
—
—
615
Balance, end of period $ 5,313
$ 41,406
$ 19,196
$ 4,523
$ —
$ 70,438
Allowance for loan losses as a percentage of gross loan receivables 5.8 % 26.5 % 25.2 % 16.9 % N/A
20.1 %

~~The following table summarizes activity in the CSO guarantee liability during the six months ended June 30, 2017:~~

Six Months Ended June 30, 2017
(in thousands) Single-Pay Unsecured Installment Secured Installment Total
Balance, beginning of period $ 274
$ 15,630
$ 1,148
$ 17,052
Charge-offs (1,886 ) (61,122 ) (5,303 ) (68,311 )
Recoveries 1,102
16,725
3,183
21,010
Net charge-offs (784 ) (44,397 ) (2,120 ) (47,301 )
Provision for losses 510
43,515
1,806
45,831
Balance, end of period $ —
$ 14,748
$ 834
$ 15,582

~~The following table summarizes activity in the allowance for loan losses and the CSO guarantee liability, in total, during the six months ended June 30, 2017:~~


	Six Months Ended June 30, 2017																		Three Months Ended March 31, 2018
(in thousands)	Single-Pay			Unsecured Installment			Secured Installment			Open-End			Other			Total			Single-Pay			Unsecured Installment			Secured Installment			Open-End			Other			Total
Balance, beginning of period	$	5,775		$	33,405		$	11,885		$	5,179		$	—		$	56,244		$	5,204		$	56,050		$	14,194		$	6,426		$	—		$	81,874
Charge-offs	(90,791		)	(85,696		)	(12,244		)	(17,676		)	(2,400		)	(208,807		)	(44,336		)	(76,938		)	(12,704		)	(20,349		)	(667		)	(154,994		)
Recoveries	64,443			27,359			7,998			9,457			1,529			110,786			32,818			16,194			4,035			9,377			39			62,463
Net charge-offs	(26,348		)	(58,337		)	(4,246		)	(8,219		)	(871		)	(98,021		)	(11,518		)	(60,744		)	(8,669		)	(10,972		)	(628		)	(92,531		)
Provision for losses	25,688			80,669			12,391			7,563			871			127,182			9,892			48,295			6,640			11,428			628			76,883
Effect of foreign currency translation	198			417			—			—			—			615			(64		)	(77		)	—			(36		)	—			(177		)
Balance, end of period	$	5,313		$	56,154		$	20,030		$	4,523		$	—		$	86,020		$	3,514		$	43,524		$	12,165		$	6,846		$	—		$	66,049

NOTE 4 – CREDIT SERVICES ORGANIZATION

The CSO fee receivable amounts under ~~our~~ CSO programs were ~~$11.4~~$11.0 million and ~~$14.5~~$14.3 million at ~~June 30, 2018~~March 31, 2019 and December 31, ~~2017,~~2018, respectively. ~~As noted, we bear~~The Company bears the risk of loss through ~~our~~its guarantee to purchase ~~any defaulted~~specific customer loans that are in default from the lenders. The terms of these loans range from ~~three~~six to 18 months. See the 2018 Form 10-K for further details of the Company's accounting policy. As of ~~June 30, 2018~~March 31, 2019 and December 31, ~~2017,~~2018, the maximum amount payable under all such guarantees was ~~$58.7~~$51.6 million and ~~$65.2~~$66.9 million, respectively. ~~Our guarantee~~If the Company is required to pay any portion of the total amount of the loans it has guaranteed, it will attempt to recover some or the entire amount from the applicable customers. The Company holds no collateral in respect of the guarantees. The Company estimates a liability ~~was $11.6 million and $17.8 million at June 30, 2018 and December 31, 2017, respectively.~~

for losses associated with the guaranty provided

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

~~We have placed $15.2~~to the CSO lenders using assumptions and methodologies similar to the Allowance for loan losses, which it recognizes for its consumer loans. Liability for incurred losses on CSO loans Guaranteed by the Company was $8.7 million and ~~$17.9~~$12.0 million at March 31, 2019 and December 31, 2018, respectively.

The Company placed $13.5 million and $17.2 million in collateral accounts for the benefit of lenders at ~~June 30, 2018~~March 31, 2019 and December 31, ~~2017,~~2018, respectively, which is reflected in "Prepaid expenses and other" in the Condensed Consolidated Balance Sheets. The balances required to be maintained in these collateral accounts vary ~~based upon~~by lender, ~~but are~~ typically based on a percentage of the outstanding loan balances held by the lender. The percentage of outstanding loan balances required for collateral is ~~defined within~~negotiated between the ~~terms agreed to between us~~Company and each such lender.

NOTE 5 – LONG-TERM DEBT

Long-term debt consisted of the following:


(in thousands)	June 30, 2018		December 31, 2017		March 31, 2019		December 31, 2018
2017 Senior Secured Notes (due 2022)	$	512,136	$	585,823
Non-Recourse U.S. SPV Facility	114,697		120,402
8.25% Senior Secured Notes (due 2025)					$	677,153	$	676,661
Non-Recourse Canada SPV Facility					88,915		107,479
Senior Revolver	—		—		—		20,000
Cash Money Revolving Credit Facility	—		—
Long-term debt	$	626,833	$	706,225	$	766,068	$	804,140

8.25% Senior Secured Notes

In August 2018, the Company issued 8.25% Senior Secured Notes which mature on September 1, 2025 ("8.25% Senior Secured Notes"). Interest on the notes is payable semiannually, in arrears, on March 1 and September 1. In connection with the 8.25% Senior Secured Notes, the balance of capitalized financing costs of approximately $12.8 million, net of amortization, is included in the Condensed Consolidated Balance Sheets as a component of "Long-term debt." These costs are amortized over the term of the 8.25% Senior Secured Notes as a component of interest expense.

The proceeds of this issuance were used (i) to redeem the outstanding 12.00% Senior Secured Notes of CFTC, (ii) to repay the outstanding indebtedness under the five-year revolving credit facility of CURO Receivables Finance I, LLC, a wholly-owned subsidiary ("CURO Receivables"), which consisted of a term loan and revolving borrowing capacity, (iii) for general corporate purposes and (iv) to pay fees, expenses, premiums and accrued interest in connection therewith.

As of March 31, 2019 and December 31, 2018, the Company was in full compliance with the covenants and other provisions of the 8.25% Senior Secured Notes.

12.00% Senior Secured Notes

In February and November 2017, CFTC issued $470.0 million and $135.0 million, respectively, of 12.00% Senior Secured Notes due March 1, 2022 ("Senior Secured Notes"). The February issuance refinanced similar notes that were nearing maturity, and the extinguishment of the existing notes resulted in a pretax loss of $12.5 million during the six months ended June 30, 2017.2022. In connection with these 12.00% Senior Secured Notes, wethe Company capitalized financing costs, of approximately $18.3 ~~million, the balance of which is included in the Condensed Consolidated Balance Sheets as a component of Long-term debt and is~~million. These costs were being amortized over the term of the 12.00% Senior Secured Notes ~~and included~~ as a component of interest expense.

On ~~February 5,~~March 7, 2018, CFTC ~~issued a notice of redemption for~~redeemed $77.5 million of its 12.00% Senior Secured Notes using a portion of the proceeds from the Company's initial public offering as required by the underlying indenture (the transaction whereby the 12.00% Senior Secured Notes were partially redeemed, the “Redemption”)~~. The Redemption occurred on March 7, 2018~~, at a price equal to 112.00% of the principal amount of the 12.00% Senior Secured Notes redeemed, plus accrued and unpaid interest paid thereon, to the date of Redemption. The Redemption price and the amortization of a corresponding portion of the capitalized financing costs resulted in a loss on Redemption of $11.7 ~~million.~~million for the three months ended March 31, 2018. Following the Redemption, $527.5 million of the original outstanding principal amount of the 12.00% Senior Secured Notes ~~remain~~remained outstanding. ~~CFTC~~The Redemption was conducted ~~the Redemption~~ pursuant to the Indenture governing the 12.00% Senior Secured Notes (the “Indenture”), dated as of February 15, 2017, by and among CFTC, the guarantors party thereto and TMI Trust Company, as trustee and collateral agent. ~~Consistent with the terms~~

The remainder of the ~~Indenture, CFTC used a portion of the cash proceeds from our IPO to redeem such Senior Secured Notes.~~

~~Subject to the provisions of its~~12.00% Senior Secured Notes ~~CFTC is required to make an offer to purchase~~were extinguished effective September 7, 2018 using proceeds from the ~~maximum principal amount of~~8.25% Senior Secured Notes ~~that may be redeemed with 50%~~as described above. The extinguishment of ~~its Excess Cash Flow (as defined~~the 12.00% Senior Secured Notes resulted in ~~the agreement) within 125 days after the end~~a pretax loss of ~~each fiscal year commencing with~~$69.2 million during the ~~fiscal~~ year ended December 31, 2017. CFTC is not required to make an offer unless its Excess Cash Flow exceeds $5.0 million (with lesser amounts being carried forward for purposes of determining whether the $5.0 million threshold has been met for any future period). Upon completion of each Excess Cash Flow offer, the Excess Cash Flow amount is reset at zero.2018.

On April 5, 2018, CFTC initiated an offer to purchase up to $37.7 million of its Senior Secured Notes at par, which represented 50% of its Excess Cash Flow for the fiscal year ended December 31, 2017. The offer expired on May 2, 2018 and did not result in the tender of any Senior Secured Notes. According to the terms of the Indenture, the Excess Cash Flow amount has been reset at zero.

~~As of June 30, 2018, CFTC was in full compliance with the covenants and other provisions of the Senior Secured Notes.~~

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Non-Recourse Canada SPV Facility

On August 2, 2018, CURO Canada Receivables Limited Partnership, a newly created, bankruptcy-remote special purpose vehicle (the "Canada SPV Borrower") and a wholly-owned subsidiary, entered into a four-year revolving credit facility with Waterfall Asset Management, LLC that provides for C$175.0 million of initial borrowing capacity and the ability to expand such capacity up to C$250.0 million ("Non-Recourse Canada SPV Facility"). The loans bear interest at an annual rate of 6.75% plus the three-month CDOR. The Canada SPV Borrower also pays a 0.50% per annum commitment fee on the unused portion of the commitments. In April 2019, the facility's maturity date was extended one year and now matures in 2023. As of March 31, 2019, the Canada SPV Borrower was in full compliance with the covenants and other provisions of the Non-Recourse Canada SPV Facility.

As of March 31, 2019, outstanding borrowings under the Non-Recourse Canada SPV Facility were $88.9 million. For further information on the Non-Recourse Canada SPV, refer to Note 2, "Variable Interest Entities."

Non-Recourse U.S. SPV Facility

In November 2016, CURO Receivables ~~Finance I, LLC, a Delaware limited liability company (the “SPV Borrower”)~~ and a wholly-owned subsidiary, entered into a five-year revolving credit facility with Victory Park Management, LLC and certain other lenders that provides for an $80.0 million term loan and $70.0 million revolving borrowing capacity that can expand over time ~~(“Non-Recourse~~(collectively, “Non-Recourse U.S. SPV Facility”). AsBorrowings under this facility bear interest at an annual rate of ~~June 30, 2018,~~up to 12.00% plus the greater of (i) 1.0% per annum and (ii) the three-month LIBOR. The SPV Borrower also pays a 0.50% per annum commitment fee on the unused portion of the commitments. In connection with this facility, the balance of capitalized financing costs of approximately $5.3 million, net of amortization, was included in ~~full compliance with~~ the ~~covenants~~Condensed Consolidated Balance Sheet as a component of "Long-term debt" and ~~other provisions~~was being amortized over the term of the Non-Recourse U.S. SPV Facility.

On September 30, 2018, a portion of the proceeds from the 8.25% Senior Secured Notes were used to extinguish the revolver's balance of $42.4 million. In October 2018, the Company extinguished the remaining term loan balance of $80.0 million and made the final termination payment of $2.7 million, resulting in a loss on the extinguishment of debt of $9.7 million for the year ended December 31, 2018.

Senior Revolver

InOn September 1, 2017, ~~CFTC and CURO Intermediate Holdings Corp.~~the Company entered into a $25.0 million Senior Secured Revolving Loan Facility ~~with BayCoast Bank~~ (the “Senior Revolver”). The terms of the Senior Revolver generally conform to the related provisions in the Indenture dated February 15, 2017 for ~~our~~the 12.00% Senior Secured Notes and complements ~~our~~the Company's other financing sources, while providing seasonal short-term liquidity. In February 2018, the Senior Revolver capacity was increased to $29.0 million as permitted by the Indenture to the 12.00% Senior Secured Notes based upon consolidated tangible assets. Additionally, in November 2018, the Senior Revolver capacity was increased to $50.0 million as permitted by the Indenture to the 8.25% Senior Secured Notes. The Senior Revolver is now syndicated with participation by ~~a second bank.~~four banks.

~~There~~Under the Senior Revolver, there is ~~$29.0~~$50.0 million maximum availability, ~~under the Senior Revolver,~~ including up to $5.0 million of standby letters of credit, for a one-year term, renewable for successive terms following annual review. The Senior Revolver accrues interest at the one-month LIBOR plus 5.00% (subject to a 5% overall rate minimum) and is repayable on demand.

The terms of the Senior Revolver require that its outstanding balance be zero for at least 30 consecutive days in each calendar year. The Senior Revolver is guaranteed by all subsidiaries that guarantee the 8.25% Senior Secured Notes and is secured by a lien on substantially all assets of CURO and the guarantor subsidiaries that is senior to the lien securing the 8.25% Senior Secured Notes. The revolver was undrawn at ~~June 30, 2018~~March 31, 2019.

The Senior Revolver contains various conditions to borrowing and ~~December 31, 2017.~~affirmative, negative and financial maintenance covenants. Certain of the more significant covenants are (i) minimum eligible collateral value, (ii) consolidated interest coverage ratio and (iii) consolidated leverage ratio. The Senior Revolver also contains various events of default, the occurrence of which could result in termination of the lenders’ commitments to lend and the acceleration of all obligations under the Senior Revolver. As of ~~June 30, 2018, CFTC and CURO Intermediate Holdings Corp. were~~March 31, 2019, the Company was in full compliance with the covenants and other provisions of the Senior Revolver.

Cash Money Revolving Credit Facility

Cash Money Cheque Cashing, Inc., ~~one of our~~a Canadian ~~subsidiaries,~~subsidiary ("Cash Money"), maintains a C$~~7.3~~10.0 million revolving credit facility with Royal Bank of Canada (the "Cash Money Revolving Credit Facility"), which provides short-term liquidity required to meet the working capital needs of ~~our~~the Company's Canadian operations. Aggregate draws under ~~this~~the revolving credit facility are limited to the lesser of: (i) the borrowing base, which is defined as a percentage of cash, deposits in transit and accounts receivable, and

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

(ii) C$~~7.3~~10.0 million. As of ~~December~~March 31, ~~2017,~~2019, the borrowing capacity under ~~our revolving credit facility~~the Cash Money Revolving Credit Facility was reduced by C$0.3 million in stand-by-letters of credit.

The Cash Money Revolving Credit Facility is collateralized by substantially all of Cash Money’s assets and contains various covenants that include, among other things, that the aggregate borrowings outstanding under the facility not exceed the borrowing base, restrictions on the encumbrance of assets and the creation of indebtedness. Borrowings under the Cash Money Revolving Credit Facility bear interest (per annum) at the prime rate of a Canadian chartered bank plus 1.95%.

The Cash Money Revolving Credit Facility was undrawn at ~~June 30, 2018~~March 31, 2019 and December 31, ~~2017.~~2018.

~~In July 2018~~Subordinated Stockholder Debt

As part of the acquisition of Cash Money ~~Revolving Credit Facility capacity~~in 2011, the Company was ~~increased from C$7.3 million~~provided indemnification for certain claims through issuance of an escrow note to ~~C$10.0~~the seller. This note bears interest at 10.0% per annum, and quarterly interest payments are due until the note matures in May 2019. The balance of this note at March 31, 2019 and December 31, 2018 was $2.2 million.

NOTE 6 – SHARE-BASED COMPENSATION

~~On November 8, 2017, our stockholders approved a new incentive plan (“2017 Incentive Plan”).~~ The Company's stockholder-approved 2017 Incentive Plan provides for the issuance of up to 5.0 million shares, subject to certain adjustment provisions, ~~for~~which may be issued in the ~~granting~~form of stock options, restricted stock awards, restricted stock units (“RSUs”), stock appreciation rights, performance awards and other awards that may be settled in or based upon ~~our~~ common stock. Awards may be granted to ~~certain of our~~ officers, employees, consultants and directors. The 2017 Incentive Plan provides that shares of common stock subject to awards granted become available for ~~issuance~~re-issuance if such awards expire, terminate, are canceled for any reason or are forfeited by the recipient.

In March 2019, the Company awarded performance-based RSUs that will vest if certain performance conditions are met by the Company. These RSUs were designed to drive the performance of the management team toward achievement of key corporate objectives and will only vest if the performance targets are met by March 14, 2022. Expense recognition for the performance awards, which was immaterial to the first quarter of 2019, commences if and when it is determined that attainment of the performance goal is probable.

RSUs that have time-based vesting are typically valued at the date of grant based on the value of ~~our~~the Company's common stock and are expensed using the straight-line method over the service period. RSUs that require the achievement of a performance condition to vest are typically valued using the Monte Carlo simulation pricing model. Grants of RSUs do not confer full stockholder rights such as voting rights and cash dividends, but provide for additional dividend equivalent RSU awards in lieu of cash dividends.

~~CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

Unvested shares of ~~restricted stock units~~RSUs may be forfeited upon termination of employment depending on the circumstances of the termination, or failure to achieve the required performance condition, if applicable.

A summary of the status of ~~restricted stock units~~time-based and performance-based RSUs as of ~~June 30, 2018~~March 31, 2019 and changes during the ~~six~~three months ended ~~June 30, 2018 is~~March 31, 2019 are presented in the following table:


	Units		Weighted Average Grant Date Fair Value		Number of RSUs
December 31, 2017	1,516,241		$	14.00
					Time-Based		Performance-Based	Weighted Average Grant Date Fair Value per Share
December 31, 2018					1,060,350		—	$	14.29
Granted	90,372		17.46		434,272		394,752	9.93
Vested	(49,994	)	14.20		(17,406	)	—	15.94
Forfeited	—		—		(68,778	)	—	14.05
June 30, 2018	1,556,619		$	14.19
March 31, 2019					1,408,438		394,752	$	12.28

Share-based compensation expense during the three months ended ~~June 30,~~March 31, 2019 and 2018, ~~and 2017,~~ which includes compensation costs from stock options and RSUs was ~~$2.2~~$2.1 million and ~~$0.1 million, respectively, and during the six months ended June 30, 2018 and 2017 was $4.0 million and $0.2~~$1.8 million, respectively, and is included in the Condensed Consolidated Statements of ~~Income~~Operations as a component of "Corporate, district and other" expense. ~~The increased expense during the six months ended June 30, 2018 is primarily due to grants of RSUs in December 2017, as further disclosed in our 2017 Annual Report on Form 10-K.~~

As of ~~June 30, 2018,~~March 31, 2019, there was ~~$18.4~~$20.4 million of total unrecognized compensation cost related to ~~share-based awards,~~stock options and RSUs, of which we$17.1 million related to stock options and time-based RSUs and $3.3 million related to performance-based RSUs. Total unrecognized compensation costs will ~~recognize~~be recognized over a weighted-average period of ~~2.4~~2.2 years.

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

NOTE 7 – INCOME TAXES

~~Our~~The Company's effective income tax rate from continuing operations was ~~25.0%~~25.9% and ~~39.4% during~~31.5% for the three months ended ~~June 30,~~March 31, 2019 and 2018, ~~and 2017, respectively. Our effective tax rate was 29.9% and 37.8% during the six months ended June 30, 2018 and 2017,~~ respectively.

On December 22, 2017, the 2017 Tax Act became law, which ~~enacted various changes to~~reduced the statutory U.S. ~~corporate tax law. Some of the most significant provisions affecting us include a reduced U.S.~~Federal corporate income tax rate from 35% to 21% ~~effective in 2018,~~, enacted a one-time “deemed repatriation” tax on unremitted earnings accumulated in non-U.S. jurisdictions and ~~reported on the 2017 corporate income tax return, and~~imposed a ~~2018 and forward~~new minimum tax on global intangible low-taxed income ("GILTI"). ~~At 2017 year-end, we recorded~~The Company provided an ~~estimated provisional deemed repatriation tax of $8.1 million. Subsequently, the IRS issued additional guidance regarding the calculation~~estimate of the deemed repatriation tax as of December 31, 2017 and wepursuant to further IRS guidance, the Company recorded an additional accrual of $1.2 million during the ~~period~~three months ended March 31, ~~2018, increasing the effective tax rate by 2.1% for the six months ended June 30,~~ 2018. ~~In 2018, we~~The Company recorded an estimated GILTI tax of $0.4 million and $0.6 million ~~increasing~~during the ~~effective tax rate by 1.1% for the six~~three months ended ~~June 30, 2018. Additionally, we have not recorded a tax benefit for losses in the UK resulting in an increase of 2.4%~~March 31, 2019 and ~~2.5% to the effective tax rate during the six months ended June 30,~~ 2018, ~~and 2017,~~ respectively.

As of June 30, 2018, we estimated and provided U.S. net tax of $9.9 million on our cumulative undistributed non-U.S. earnings as part of the 2017 repatriation tax provision and the 2018 GILTI tax in the 2017 Tax Act. We intendThe Company intends to reinvest ~~our foreign~~Canada earnings indefinitely in ~~our non-U.S.~~its Canadian operations and therefore ~~have~~has not provided for any non-U.S. withholding tax that would be assessed on dividend distributions. If the earnings of $165.8 million were distributed to the U.S., wethe Company would be subject to ~~estimated~~ Canadian withholding taxes of ~~approximately~~estimated $8.3 million. In the event the earnings were distributed to the U.S., wethe Company would adjust ~~our~~the income tax provision for the applicable period and would determine the amount of foreign tax credit that would be available.

~~CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

NOTE 8 – FINANCIAL INSTRUMENTS

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. ~~We are~~The Company is required to use valuation techniques that are consistent with the market approach, income approach and/or cost approach. Inputs to valuation techniques refer to the assumptions that market participants would use in pricing the asset or liability based on observable market data obtained from independent sources, or unobservable, meaning those that reflect ~~our~~the Company's own estimate about the assumptions market participants would use in pricing the asset or liability based on the best information available in the circumstances. Accounting standards establish a three-level fair value hierarchy based upon the assumptions (inputs) used to price assets or liabilities. The hierarchy requires usthe Company to maximize the use of observable inputs and minimize the use of unobservable inputs.

The three levels of inputs used to measure fair value are listed below.

Level 1 – Inputs are unadjusted quoted prices in active markets for identical assets or ~~liabilities.~~liabilities that the Company has access to at the measurement date.

Level 2 – Inputs include quoted market prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).

Level 3 – Unobservable inputs reflecting ~~our~~the Company's own judgments about the assumptions market participants would use in pricing the asset or liability since limited market data exists. ~~We develop~~The Company develops these inputs based on the best information available, including ~~our~~its own data.

~~Financial Assets and Liabilities Not Measured at Fair Value~~

~~The table below presents the carrying amounts and estimated fair values of assets and liabilities that were not recorded at fair value on the Condensed Consolidated Balance Sheets at June 30, 2018.~~

Estimated Fair Value
(dollars in thousands) Carrying Value June 30,
2018 Level 1 Level 2 Level 3 June 30, 2018
Financial assets:
Cash $ 115,105
$ 115,105
$ —
$ —
$ 115,105
Restricted cash 12,448
12,448
—
—
12,448
Loans receivable, net 384,873
—
—
384,873
384,873
Investment in Cognical 6,600
—
—
6,600
6,600
Financial liabilities:
Credit services organization guarantee liability $ 11,619
$ —
$ —
$ 11,619
$ 11,619
Senior secured notes 512,136
—
—
553,308
553,308
Non-Recourse U.S. SPV facility 114,697
—
—
118,427
118,427

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Financial Assets and Liabilities Not Carried at Fair Value

The table below presents the ~~carrying amounts and estimated fair values of~~ assets and liabilities that were not ~~recorded~~carried at fair value on the Condensed Consolidated Balance Sheets at March 31, 2019:



			Estimated Fair Value
(in thousands)	Carrying Value March 31, 2019		Level 1		Level 2		Level 3		March 31, 2019
Financial assets:
Cash	$	82,859	$	82,859	$	—	$	—	$	82,859
Restricted cash	34,319		34,319		—		—		34,319
Loans receivable, net	458,893		—		—		458,893		458,893
Investment in Cognical	6,558		—		—		6,558		6,558
Financial liabilities:
Liability for losses on CSO lender-owned consumer loans	$	8,662	$	—	$	—	$	8,662	$	8,662
8.25% Senior Secured Notes	677,153		—		—		580,659		580,659
Non-Recourse Canada SPV facility	88,915		—		—		92,718		92,718

The table below presents the assets and liabilities that were not carried at fair value on the Condensed Consolidated Balance Sheets at December 31, ~~2017.~~2018:


			Estimated Fair Value										Estimated Fair Value
(dollars in thousands)	Carrying Value December 31, 2017		Level 1		Level 2		Level 3		December 31, 2017
(in thousands)											Carrying Value December 31, 2018		Level 1		Level 2		Level 3		December 31, 2018
Financial assets:
Cash	$	162,374	$	162,374	$	—	$	—	$	162,374	$	61,175	$	61,175	$	—	$	—	$	61,175
Restricted cash	12,117		12,117		—		—		12,117		25,439		25,439		—		—		25,439
Loans receivable, net	363,269		—		—		363,269		363,269		497,534		—		—		497,534		497,534
Investment in Cognical	5,600		—		—		5,600		5,600		6,558		—		—		6,558		6,558
Financial liabilities:
Credit services organization guarantee liability	17,795		—		—		17,795		17,795
2017 Senior Secured notes	585,823		—		—		663,475		663,475
Non-Recourse U.S. SPV facility	120,402		—		—		124,590		124,590
Liability for losses on CSO lender-owned consumer loans											$	12,007	$	—	$	—	$	12,007	$	12,007
8.25% Senior Secured notes											676,661		—		—		531,179		531,179
Non-Recourse Canada SPV facility											107,479		—		—		111,335		111,335
Senior Revolver											20,000		—		—		20,000		20,000

Loans receivable are carried on the Condensed Consolidated Balance Sheets net of the ~~allowance~~Allowance for estimated loan ~~losses, which we calculate primarily based upon models that back-test subsequent collections history for each type of loan product.~~losses. The unobservable inputs used to calculate the carrying ~~value~~values include ~~additional~~ quantitative factors, such as ~~current~~ default ~~trends and changes to the portfolio mix are also~~trends. Also considered in evaluating the accuracy of the models ~~as well as additional qualitative factors such as~~are changes to the loan portfolio mix, the impact of new loan products, changes to underwriting criteria or lending policies, new store development or entrance into new markets, changes in jurisdictional regulations or laws, recent credit trends and general economic conditions. ~~Loans have terms ranging up to 60 months.~~ The carrying value of loans receivable approximates ~~the~~their fair value.

In connection with ~~our~~ CSO programs, ~~we guarantee~~the Company guarantees consumer loan payment obligations to unrelated third-party lenders for loans that ~~we arrange~~the Company arranges for consumers on the third-party lenders’ behalf. ~~We are~~The Company is required to purchase from the lender defaulted loans ~~we have~~that it has guaranteed. The estimated fair value of the guarantee liability related to CSO loans we have guaranteed was $11.6 million and $17.8 million as of June 30, 2018 and December 31, 2017, respectively. We record the initial measurement of this guarantee liability at fair value using Level 3 inputs with subsequent measurement of the liability measured as a contingent loss. The unobservable inputs used to calculate fair value include the nature of the loan products, the creditworthiness of the borrowers in the customer base, our historical loan default history for similar loans, industry loan default history, historical collection rates on similar products, current default trends, past-due account roll rates, changes to underwriting criteria or lending policies, new store development or entrance into new markets, changes in jurisdictional regulations or laws, recent credit trends and general economic conditions.

The fair value of ~~our~~the 8.25% Senior Secured Notes was based on broker quotations. The fair ~~value~~values of the Non-Recourse ~~U.S.~~Canada SPV facility ~~was~~and the Senior Revolver were based on the cash needed for their respective final ~~settlement.~~

~~Derivative Financial Instrument~~

We seek to minimize risks from foreign currency rate fluctuations on anticipated transactions in the ordinary course of business through the use of cash flow hedges. During the six months ended June 30, 2018, we entered into a series of cash flow hedges in which the hedging instruments were forwards to purchase £7.9 million. These contracts will complete in the three months ended September 30, 2018.

~~CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

is assessed based on changes in the hedge instrument’s intrinsic value, the change in the time value of the contract would be excluded from the assessment of hedge effectiveness. We recorded changes in the hedge instrument’s intrinsic value, to the extent that they were effective as a hedge, in "Other comprehensive income." As of June 30, 2018 we have recorded an unrealized loss of $0.4 million in "Other comprehensive income" associated with this hedge.

~~Foreign Currency Forward Contract~~

On June 29, 2018, we entered into a forward contract that is not designated to receive hedge accounting treatment. The purpose of this forward contract is to reduce income statement volatility resulting from our foreign currency denominated assets and liabilities in Canada and to protect the cash required to settle those items. The forward contract is recorded at fair value on the balance sheet with changes in the fair value being recorded in the income statement. As of June 30, 2018, the forward contract did not have a fair value and did not impact the Condensed Consolidated Financial Statements.

~~Purchase of Cognical Holdings Inc. Preferred Shares~~

During the three months ended March 31, 2018, we purchased 560,872 additional preferred shares of Cognical Holdings, Inc. ("Cognical") for $1.0 million. As a result of this transaction, along with share purchases during 2017, we currently own 10.4% of the equity of Cognical. We record these purchases in "Other assets" on our Consolidated Balance Sheets.settlements.

NOTE 9 – STOCKHOLDERS' EQUITY

In connection with ~~our IPO~~the Company's initial public offering in December 2017, the underwriters had a 30-day option to purchase up to an additional 1.0 million shares of the Company's common stock at the initial public offering ~~prices,~~price, less the underwriting discount to

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

for over-allotments, if any. The underwriters exercised this option and purchased 1.0 million shares on January 5, 2018. The exercise of this option provided additional proceeds ~~to us~~ of $13.1 million.

The following table summarizes the changes in stockholders' equity for the three months ended March 31, 2018 and 2019:



	Common Stock			Paid-in capital		Retained Earnings (Deficit)			AOCI ⁽¹⁾			Total Stockholders' Equity
(dollars in thousands)	Shares Outstanding	Par Value		Paid-in capital		Retained Earnings (Deficit)			AOCI ⁽¹⁾			Total Stockholders' Equity
Balances at December 31, 2017	44,561,419	$	8	$	46,079	$	3,988		$	(42,939	)	$	7,136
Net income from continuing operations	—	—		—		24,913			—			24,913
Net loss from discontinued operations	—	—		—		(1,621		)	—			(1,621		)
Foreign currency translation adjustment	—	—		—		—			(2,910		)	(2,910		)
Cash flow hedge expiration	—	—		—		—			54			54
Share based compensation expense	—	—		1,842		—			—			1,842
Initial Public Offering, Net Proceeds (underwriter shares)	1,000,000	1		13,135		—			—			13,136
Balances at March 31, 2018	45,561,419	$	9	$	61,056	$	27,280		$	(45,795	)	$	42,550
⁽¹⁾Accumulated other comprehensive income (loss)



	Common Stock			Paid-in capital			Retained Earnings (Deficit)			AOCI ⁽¹⁾			Total Stockholders' Equity
(dollars in thousands)	Shares Outstanding	Par Value		Paid-in capital			Retained Earnings (Deficit)			AOCI ⁽¹⁾			Total Stockholders' Equity
Balances at December 31, 2018	46,412,231	$	9	$	60,015		$	(18,065	)	$	(61,060	)	$	(19,101	)
Net income from continuing operations	—	—		—			28,673			—			28,673
Net income from discontinued operations	—	—		—			8,375			—			8,375
Foreign currency translation adjustment	—	—		—			—			16,695			16,695
Share based compensation expense	—	—		2,172			—			—			2,172
Proceeds from exercise of stock options	7,888	—		40			—			—			40
Common stock issued for RSU's vesting, net of shares withheld and withholding paid for employee taxes	11,170	—		(110		)	—			—			(110		)
Balances at March 31, 2019	46,431,289	$	9	$	62,117		$	18,983		$	(44,365	)	$	36,744
⁽¹⁾ Accumulated other comprehensive income (loss)

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

NOTE 10 – EARNINGS PER SHARE

The following table presents the computation of basic and diluted earnings per share (in thousands, except per share amounts):

Three Months Ended
June 30, Six Months Ended
June 30,
2018 2017 2018 2017
Basic: ⁽¹⁾

Net income $ 15,975
$ 16,342
$ 39,267
$ 32,980
Weight average common shares 45,650
37,895
45,578
37,895
Basic earnings per share $ 0.35

$ 0.43

$ 0.86
$ 0.87
(1) We have adjusted the share and per share information to reflect the 36-to-1 split of our common stock, which occurred In November 2017.

~~CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

~~The following computation reconciles the differences between the basic and diluted earnings per share presentations (in thousands, except per share amounts):~~


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended March 31,
	2018		2017		2018		2017		2019		2018
Diluted: ⁽¹⁾
Net income from continuing operations									$	28,673	$	24,913
Net income (loss) from discontinued operations, net of tax									8,375		(1,621		)
Net income	$	15,975	$	16,342	$	39,267	$	32,980	$	37,048	$	23,292

Weighted average common shares - basic	45,650		37,895		45,578		37,895		46,424		45,506
Dilutive effect of stock options and restricted stock units	2,346		1,092		2,179		1,088		895		1,910
Weighted average common shares - diluted	47,996		38,987		47,757		38,983		47,319		47,416
Diluted earnings per share	$	0.33	$	0.42	$	0.82	$	0.85
(1) We have adjusted the share and per share information to reflect the 36-to-1 split of our common stock, which occurred in November 2017.

Basic income (loss) per share:
Continuing operations									$	0.62	$	0.55
Discontinued operations									0.18		(0.04		)
Basic income per share									$	0.80	$	0.51

Diluted income (loss) per share:
Continuing operations									$	0.61	$	0.53
Discontinued operations									0.18		(0.03		)
Diluted income per share									$	0.79	$	0.50

Potential shares of common ~~shares~~stock that would have the effect of increasing diluted earnings per share or decreasing diluted loss per share are considered to be anti-dilutive and as such, ~~we do~~these shares are not ~~include these shares~~included in calculating "Diluted earnings per share." For the three ~~and six~~ months ended ~~June 30, 2018~~March 31, 2019~~and 2017,~~ , there were no1.4 million potential shares of common ~~shares~~stock excluded from the calculation of diluted earnings per share because their effect was anti-dilutive. There was no effect for the three months ended March 31, 2018.

The Company utilizes the "control number" concept in the computation of Diluted earnings per share to determine whether potential common stock instruments are dilutive. The control number used is income from continuing operations. The control number concept requires that the same number of potentially dilutive securities applied in computing diluted earnings per share from continuing operations be applied to all other categories of income or loss, regardless of their anti-dilutive effect on such categories.

NOTE 11 – SUPPLEMENTAL CASH FLOW INFORMATION

The following table provides supplemental cash flow information:


	Six Months Ended June 30,				Three Months Ended March 31,
(dollars in thousands)	2018		2017		2019		2018
Cash paid for:
Interest	$	44,250	$	25,788	$	32,195	$	40,225
Income taxes	11,621		14,594		1,456		4,431
Non-cash investing activities:
Property and equipment accrued in accounts payable	$	595	$	40	$	349	$	317

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

NOTE 12 – SEGMENT REPORTING

~~We prepare segment~~Segment information is prepared on the same basis that ~~our~~the Company's chief operating decision maker ("CODM") reviews financial information for operational decision making purposes. ~~We have three~~During the first quarter of 2019, the U.K. subsidiaries met discontinued operations criteria, resulting in two reportable operating segments: the U.S.~~, Canada~~ and ~~the U.K.~~Canada.

~~The segment performance measure below is based on gross margin. In management’s~~Management’s evaluation of performance ~~certain costs, such as corporate expenses, district expenses~~utilizes gross margin and operating profit before the allocation of interest expense ~~are not allocated by segment. Accordingly the~~and professional services. The following reporting segment results ~~do not include such allocated costs. There are no intersegment revenues,~~reflect this basis for evaluation and wewere determined ~~the amounts below~~ in accordance with the same accounting principles used in ~~our~~the Condensed Consolidated Financial Statements.

~~CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

The following table illustrates summarized financial information concerning ~~our~~ reportable segments.


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended March 31,
(dollars in thousands)	2018		2017		2018		2017		2019		2018
Revenues by segment:
U.S.	$	190,126	$	163,764	$	394,719	$	338,086	$	226,119	$	204,593
Canada	47,043		43,595		93,293		85,161		51,820		46,250
U.K.	11,814		9,585		22,729		18,277
Consolidated revenue	$	248,983	$	216,944	$	510,741	$	441,524	$	277,939	$	250,843
Gross margin by segment:
U.S.	$	64,048	$	63,119	$	155,392	$	140,251	$	89,803	$	91,344
Canada	13,300		15,962		27,802		30,262		15,694		14,502
U.K.	3,064		2,921		6,463		6,394
Consolidated gross margin	$	80,412	$	82,002	$	189,657	$	176,907	$	105,497	$	105,846
Segment operating income:
U.S.									$	31,195	$	26,832
Canada									7,524		9,548
Consolidated operating profit									$	38,719	$	36,380
Expenditures for long-lived assets by segment:
U.S.	$	1,195	$	2,976	$	1,983	$	4,648	$	2,430	$	788
Canada	220		61		974		1,352		689		754
U.K.	31		698		98		828
Consolidated expenditures for long-lived assets	$	1,446	$	3,735	$	3,055	$	6,828	$	3,119	$	1,542

The following table provides ~~the proportion of~~ gross loans receivable by segment:


(dollars in thousands)	June 30, 2018		December 31, 2017		March 31, 2019		December 31, 2018
U.S.	$	298,546	$	308,696	$	321,534	$	361,473
Canada	122,042		104,551		231,681		210,058
U.K.	24,039		19,590
Total gross loans receivable	$	444,627	$	432,837	$	553,215	$	571,531

The following table ~~illustrates our~~provides net long-lived assets, comprised of property and equipment, by ~~geographic region.~~segment. These amounts are aggregated on a legal entity basis and do not necessarily reflect where the asset is physically located:


(dollars in thousands)	June 30, 2018		December 31, 2017		March 31, 2019		December 31, 2018
U.S.	$	49,087	$	52,627	$	46,360	$	47,918
Canada	29,957		32,924		28,900		28,832
U.K.	1,376		1,535
Total net long-lived assets	$	80,420	$	87,086	$	75,260	$	76,750

~~Our chief operating decision maker~~The Company's CODM does not review assets by segment for purposes of allocating resources or

decision-making purposes; therefore, total assets by segment are not disclosed.

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

NOTE 13 – CONTINGENT LIABILITIES

~~Harrison, et al v. Principal Investments, Inc. et al~~Securities Litigation

~~During the period relevant to this~~On December 5, 2018, a putative securities fraud class action ~~litigation, we pursued in excess of 16,000 claims~~lawsuit was filed against the Company and its chief executive officer, chief financial officer and chief operating officer in the ~~limited actions~~United States District Court for the District of Kansas, captioned Yellowdog Partners, LP v. CURO Group Holdings Corp., Donald F. Gayhardt, William Baker and ~~jurisdiction court in Clark County, Nevada, seeking payment~~Roger W. Dean, Civil Action No. 18-2662. The complaint alleges that the Company and the individual defendants violated Section 10(b) of ~~loans on which customers had defaulted. We utilized outside counsel~~the Exchange Act and that the individual defendants also violated Section 20(a) of the Exchange Act as “control persons” of CURO. Plaintiffs purport to ~~file~~bring these ~~debt collection lawsuits. On Scene Mediations, a process serving company, was employed to serve the summons and petitions in the majority of these cases. In an unrelated matter, the principal~~

~~CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

~~of On Scene Mediations was convicted of multiple accounts of perjury and filing false affidavits to obtain judgments~~claims on behalf of a ~~Las Vegas collection agency. In September 2010, we were sued by four former customers in a proposed~~ class ~~action suit filed in the District Court in Clark County, Nevada. The plaintiffs in this case claimed that they,~~of investors who purchased Company common stock between July 31, 2018 and ~~others in the proposed class, were not properly served notice of the debt collection lawsuits by the Company.~~October 24, 2018.

~~On June 7, 2017,~~Plaintiffs allege generally that, during the ~~parties reached a settlement in this matter~~putative class period, the Company made misleading statements and ~~we accrued approximately $2.3 million as a result~~omitted material information regarding its efforts to transition the Canadian inventory of ~~this settlement. On October 30, 2017,~~products from Single-Pay loans to Open-End loans. Plaintiffs assert that the ~~District Court in Clark County, Nevada, issued final approval of~~Company and the ~~class settlement. We paid~~individual defendants made these misstatements and omissions to keep the ~~approved settlement amount~~stock price high. Plaintiffs seek unspecified damages and ~~released the related liability.~~other relief.

~~Reimbursement Offer; Possible Changes~~While the Company is vigorously contesting this lawsuit, it cannot determine the final resolution or when it might be resolved. In addition to the expenses incurred in ~~Payment Practices~~

~~During 2017, it was determined~~defending this litigation and any damages that ~~a limited universe of borrowers~~ may have incurred bank overdraft or non-sufficient funds fees because of possible confusion about certain electronic payments we initiated on their loans. As a result, we decided to reimburse such fees through payments or credits against outstanding loan balances, subject to per-customer dollar limitations, upon receipt of (i) claims from potentially affected borrowers stating that they were in fact confused by our practices and (ii) bank statements from such borrowers showing that fees for which reimbursement is sought were incurred at a time that such borrowers might reasonably have been confused about our practices. As of June 30, 2018, net of payments made, a liability of $1.8 million remains for this matter.

Additionally, in June 2018, we discontinued the use of secondary payment cards for affected borrowers referenced above who did not explicitly reauthorize the use of secondary payment cards. For those borrowers,be awarded in the event ~~we were not able~~of an adverse ruling, management’s efforts and attention may be diverted from the ordinary business operations to ~~obtain payment through~~address these claims. Regardless of the ~~bank account or payment card listed~~outcome, this litigation may have a material adverse impact on results because of defense costs, including costs related to indemnification obligations, diversion of resources and other factors.

Related to this securities litigation matter, the ~~borrower’s application, we will need~~Company has also received an inquiry from the SEC regarding the Company's public disclosures surrounding its efforts to ~~rely exclusively on other collection methods such as delinquency notices and/or collection calls. The discontinuation for affected borrowers~~transition the Canadian inventory of ~~our current use of secondary cards will increase collections costs and reduce collections effectiveness.~~products from Single-Pay loans to Open-End loans.

City of Austin

~~We were~~The Company was cited onin July 5, 2016 by the City of Austin, Texas for alleged violations of the Austin ordinance addressing products offered by CSOs. The Austin ordinance regulates aspects of products offered under ~~our Credit Access Business programs,~~the Company's credit access bureau ("CAB") program, including loan sizes and repayment terms. ~~We believe~~The Company believes that: (i) the Austin ordinance ~~(like~~(similar to its counterparts elsewhere in ~~the state)~~Texas) conflicts with Texas state law and (ii) ~~our product~~ in any event, the Company's product complies with the ordinance, when the ordinance is properly construed. The Austin Municipal Court agreed with ~~our~~the Company's position that the ordinance conflicts with Texas law and, accordingly, did not address ~~our~~the second argument. In September 2017, the Travis County Court reversed the Municipal Court’s decision and remanded the case for further proceedings. ~~We do~~To date, a hearing and trial on the merits have not been scheduled. The Company does not anticipate having a final determination of the lawfulness of ~~our~~its CAB program under the Austin ordinance (and similar ordinances in other Texas cities) in the near future. A final adverse decision could potentially result in material monetary liability in Austin and elsewhere in Texas, and would force usthe Company to restructure the loans ~~we originate~~it originates in Austin and elsewhere in Texas.

Other Legal Matters

~~We are also~~The Company is a defendant in certain ~~routine~~ litigation matters encountered in the ordinary course of ~~our~~ business. Certain of these matters may be covered to an extent by insurance. In the opinion of management, based upon the advice of legal counsel, the likelihood is remote that the impact of any of these pending ~~legal proceedings and claims,~~litigation matters, either individually or in the aggregate, would have a material adverse effect on ~~our Consolidated Financial Statements.~~the Company's consolidated financial condition, results of operations or cash flows.

NOTE 14 – LEASES

The Company entered into operating leases for the buildings in which it operates that expire at various times through 2040. The Company determines if an arrangement is a lease at inception. Operating leases are included in "Right of use asset - operating leases" and "Lease liability - operating leases" in the Condensed Consolidated Balance Sheets. The Company currently has finance leases which in the aggregate are immaterial and not presented in the Condensed Consolidated Balance Sheets.

ROU assets and lease liabilities are recognized based on the present value of lease payments over the lease term at commencement date. As most of the Company’s leases do not provide an implicit rate of return, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

The majority of the leases have an original term of five years with two, five-year renewal options. For purposes of calculating operating lease liabilities, lease terms may be deemed to include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Most of the leases have escalation clauses and several also require payment of certain period costs, including maintenance, insurance and property taxes. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The Company had operating lease costs of approximately $8.5 million for the period ended March 31, 2019. Some of the leases are with related parties and have terms similar to the non-related party leases previously described. Operating lease costs on unrelated third-party leases was $7.6 million and for related party leases was $0.8 million for the three months ended March 31, 2019.

During the three months ended March 31, 2019, cash paid for amounts included in the measurement of the liabilities and the operating cash flows was $8.6 million.

The following table summarizes the future minimum lease payments that the Company is contractually obligated to make under operating leases as of March 31, 2019:



(in thousands)	Third-Party			Related-Party			Total
2019	$	23,222		$	2,764		$	25,986
2020	30,338			3,773			34,111
2021	29,918			3,875			33,793
2022	28,906			3,743			32,649
2023	24,411			1,299			25,710
Thereafter	40,326			1,114			41,440
Total	177,121			16,568			193,689
Less: Imputed interest	(46,823		)	(3,429		)	(50,252		)
Operating lease liabilities	$	130,298		$	13,139		$	143,437

As of March 31, 2019, the weighted average remaining lease term was 6.1 years, and the weighted average operating discount rate used to determine the operating lease liability was 10.3%.

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

NOTE 15 – DISCONTINUED OPERATIONS

On February 25, 2019, in accordance with the provisions of the U.K. Insolvency Act 1986 and as approved by the boards of directors of the U.K. Subsidiaries, insolvency practitioners from KPMG were appointed as Administrators for the U.K. Subsidiaries. The effect of the U.K. Subsidiaries’ entry into administration was to place their management, affairs, business and property of the U.K. Subsidiaries under the direct control of the Administrators. Accordingly, the Company deconsolidated the U.K. Subsidiaries, which comprised the U.K. reportable operating segment, as of February 25, 2019 and are classified as Discontinued Operations for all periods presented.

The following table presents financial results of the U.K. Subsidiaries, which meet the criteria of Discontinued Operations and, therefore, are excluded from the Company's results of continuing operations:



	Three Months Ended March 31,
(in thousands)	2019⁽¹⁾			2018
Revenue	$	6,957		$	10,915
Provision for losses	1,703			4,148
Net revenue	5,254			6,767

Cost of providing services
Office	246			528
Other costs of providing services	61			969
Advertising	775			1,871
Total cost of providing services	1,082			3,368
Gross margin	4,172			3,399
Operating expense (income)
Corporate, district and other	3,810			5,025
Interest income	(4		)	(5		)
Total operating expense	3,806			5,020
Income (loss) from operations of discontinued operations	366			(1,621		)
Gain on disposal of discontinued operations, net of estimated income tax benefit of $47,423	8,009			—
Income from discontinued operations	$	8,375		$	(1,621	)
(1) Includes U.K. Subsidiaries financial results from January 1, 2019 to February 25, 2019.

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

The following table presents the aggregate carrying amounts of the assets and liabilities of the U.K. Subsidiaries:



(in thousands)	March 31, 2019		December 31, 2018
ASSETS
Cash	$	—	$	9,859
Restricted cash	—		3,384
Gross loans receivable	—		25,256
Less: allowance for loan losses	—		(5,387		)
Loans receivable, net	—		19,869
Prepaid expenses and other	—		1,482
Other	—		267
Total assets classified as discontinued operations in the Condensed Consolidated Balance Sheets	$	—	$	34,861
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued liabilities	$	—	$	8,136
Deferred revenue	—		180
Accrued interest	—		(5		)
Deferred rent	—		149
Other long-term liabilities	—		422
Total liabilities classified as discontinued operations in the Condensed Consolidated Balance Sheets	$	—	$	8,882

The following table presents cash flows of the U.K. Subsidiaries:



	Three Months Ended March 31,
(in thousands)	2019⁽¹⁾			2018
Net cash (used in) / provided by discontinued operating activities	$	(504	)	$	1,411
Net cash used in discontinued investing activities	(14,213		)	(3,782		)
Net cash used in discontinued financing activities	—			—
(1) Includes U.K. Subsidiaries financial results from January 1, 2019 to February 25, 2019.

NOTE 1416 – CONDENSED CONSOLIDATING FINANCIAL INFORMATION

In August 2018, CGHC issued $690.0 million of 8.25% Senior Secured Notes due September 1, 2025. The proceeds from issuance of the 8.25% Senior Secured Notes were used to extinguish the February and November 2017 12.00% Senior Secured Notes due March 1, 2022. The redemption was conducted pursuant to the indenture governing the 8.25% Senior Secured Notes. See Note 5, "Long-Term Debt," for additional details.

In August 2018, CURO Canada Receivables Limited Partnership, a newly created, bankruptcy-remote special purpose vehicle (the "Canada SPV Borrower") and a wholly-owned subsidiary, entered into a four-year revolving credit facility with Waterfall Asset Management, LLC that provided for C$175.0 million of initial borrowing capacity and the ability to expand such capacity up to C$250.0 million ("Non-Recourse Canada SPV Facility"). See Note 5. "Long-Term Debt" for additional details.

In March 2018, CFTC redeemed $77.5 million of the 12.00% Senior Secured Notes at a price equal to 112.00% of the principal amount plus accrued and unpaid interest to the date of redemption. The redemption was conducted pursuant to the indenture governing the 12.00% Senior Secured Notes, dated as of February 15, 2017, by and among CFTC, the guarantors party thereto and TMI Trust Company, as trustee and collateral agent. Consistent with the terms of the Indenture, CFTC used a portion of the cash proceeds from the Company's initial public offering, to redeem the 12.00% Senior Secured Notes.

In November 2017, CFTC issued $135.0 million aggregate principal amount of additional 12.00% Senior Secured Notes in a private offering exempt from the registration requirements of the Securities Act (the "Additional Notes Offering"). CFTC used the proceeds from the Additional Notes Offering, together with available cash, to (i) pay a cash dividend, in an amount of $140.0 million to the Company, CFTC’s sole stockholder, and ultimately the Company's stockholders and (ii) pay fees, expenses, premiums and accrued interest in connection with the Additional Notes Offering. CFTC received the consent of the holders of a majority of

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

the outstanding principal amount of the current Senior Secured Notes to a one-time waiver with respect to the restrictions contained in Section 5.07(a) of the indenture governing the 12.00% Senior Secured Notes to permit the dividend.

In February 2017, CFTC issued $470.0 million aggregate principal amount 12.00% Senior Secured Notes, the proceeds ofof which were used together with available cash, to (i) redeem the outstanding 10.75% Senior Secured Notes due 2018 of ~~our wholly owned subsidiary,~~ CURO Intermediate, (ii) redeem the outstanding 12.00% Senior Cash Pay Notes due 2017 and (iii) pay fees, expenses, premiums and accrued interest in connection with the offering. CFTC sold the Senior Secured Notes to qualified institutional buyers under Rule 144A of the Securities Act of 1933, as amended (the “Securities Act”); or outside the U.S. to non-U.S. persons in compliance with Regulation S of the Securities Act.

In November 2017, CFTC issued $135.0 million aggregate principal amount of additional Senior Secured Notes in a private offering exempt from the registration requirements of the Securities Act (the "Additional Notes Offering"). CFTC used the proceeds from the Additional Notes Offering, together with available cash, to (i) pay a cash dividend, in an amount of $140.0 million to us, CFTC’s sole stockholder, and ultimately our stockholders and (ii) pay fees, expenses, premiums and accrued interest in connection with the Additional Notes Offering. CFTC received the consent of the holders of a majority of the outstanding principal amount of the current Senior Secured Notes to a one-time waiver with respect to the restrictions contained in Section 5.07(a) of the indenture governing the Senior Secured Notes to permit the dividend.

On March 7, 2018, CFTC redeemed $77.5 million of the Senior Secured Notes at a price equal to 112.00% of the principal amount plus accrued and unpaid interest to the date of redemption. Following the redemption, $527.5 million of the original outstanding principal amount of the Senior Secured Notes remain outstanding. The redemption was conducted pursuant to the indenture governing the Senior Secured Notes, dated as of February 15, 2017, by and among CFTC, the guarantors party thereto and TMI Trust Company, as trustee and collateral agent. Consistent with the terms of the indenture, CFTC used a portion of the cash proceeds from our IPO, to redeem such Senior Secured Notes. See Note 5, "Long-Term Debt," for additional details.

The following condensed consolidating financing information, which has been prepared in accordance with the requirements for presentation of Rule 3-10(d) of Regulation S-X promulgated under the Securities Act, presents the condensed consolidating financial information separately for:


(i)	~~CFTC~~CURO as the issuer of the 8.25% Senior Secured Notes;


(ii)	~~CURO Intermediate as the issuer of the 10.75% senior secured notes that were redeemed in February 2017;~~

~~(iii)~~

~~Our~~The Company's subsidiary guarantors, which are comprised of ~~our~~its domestic subsidiaries, ~~excluding~~including CFTC ~~SPV, and~~as the issuer of the 12.00% Senior Secured Notes that were redeemed in August 2018, CURO Intermediate, and U.S. SPV as the issuer of the Non-Recourse U.S. SPV Facility that was extinguished in October 2018, and excluding Canada SPV (the “Subsidiary Guarantors”), on a consolidated basis, which are 100% owned by CURO, and which are guarantors of the 8.25% Senior Secured Notes issued in ~~February 2017 and the 10.75% senior secured notes redeemed in February 2017;~~August 2018;


~~(iv)~~(iii)	~~Our~~The Company's other subsidiaries on a consolidated basis, which are not guarantors of the 8.25% Senior Secured Notes (the “Subsidiary Non-Guarantors”)


~~(v)~~(iv)	Consolidating and eliminating entries representing adjustments to:


a.	eliminate intercompany transactions between or among us, the Subsidiary Guarantors and the Subsidiary Non-Guarantors; and


b.	eliminate the investments in ~~our~~ subsidiaries;


~~(vi)~~(v)	UsThe Company and ~~our~~its subsidiaries on a consolidated basis.

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Condensed Consolidating Balance Sheets


	June 30, 2018																											March 31, 2019
(dollars in thousands)	CFTC			CURO Intermediate		Subsidiary Guarantors			Subsidiary Non-Guarantors			SPV Subs			Eliminations			CFTC Consolidated			CURO			Eliminations		CURO Consolidated		Subsidiary Guarantors			Subsidiary Non-Guarantors		Canada SPV			CURO			Eliminations			CURO Consolidated
Assets:
Cash	$	—		$	—	$	69,013		$	46,092		$	—		$	—		$	115,105		$	—		$	—	$	115,105	$	62,729		$	20,130	$	—		$	—		$	—		$	82,859
Restricted cash	—			—		1,679			3,495			7,274			—			12,448			—			—		12,448		15,775			3,084		15,460			—			—			34,319
Loans receivable, net	—			—		81,387			132,154			171,332			—			384,873			—			—		384,873		254,622			46,403		157,868			—			—			458,893
Right of use asset - operating leases																												74,840			60,565		—			—			—			135,405
Deferred income taxes	—			—		—			3,697			—			—			3,697			—			—		3,697		(6,445		)	5,014		—			6,445			—			5,014
Income taxes receivable	—			—		—			623			—			—			623			—			—		623		—			—		—			40,872			—			40,872
Prepaid expenses and other	—			—		32,921			3,376			—			—			36,297			—			—		36,297		30,459			6,052		—			—			—			36,511
Property and equipment, net	—			—		49,087			31,333			—			—			80,420			—			—		80,420		46,360			28,900		—			—			—			75,260
Goodwill	—			—		91,131			52,622			—			—			143,753			—			—		143,753		91,131			28,747		—			—			—			119,878
Other intangibles, net	15			—		4,582			26,228			—			—			30,825			—			—		30,825		8,165			21,803		—			—			—			29,968
Intercompany receivable	—			38,781		42,511			(20,439		)	—			(60,853		)	—			—			—		—		74,174			—		—			—			(74,174		)	—
Investment in subsidiaries	53,213			1,016,398		—			—			—			(1,069,611		)	—			(52,249		)	52,249		—		—			—		—			(36,075		)	36,075			—
Other	6,608			—		5,230			971			—			—			12,809			—			—		12,809		14,473			678		—			—			—			15,151
Total assets	$	59,836		$	1,055,179	$	377,541		$	280,152		$	178,606		$	(1,130,464	)	$	820,850		$	(52,249	)	$	52,249	$	820,850	$	666,283		$	221,376	$	173,328		$	11,242		$	(38,099	)	$	1,034,130
Liabilities and Stockholder's equity:
Liabilities and Stockholders' equity:
Accounts payable and accrued liabilities	$	2,334		$	9	$	35,755		$	15,288		$	14		$	—		$	53,400		$	157		$	—	$	53,557	$	39,420		$	2,886	$	9,717		$	19		$	—		$	52,042
Deferred revenue	—			—		5,488			5,081			(21		)	—			10,548			—			—		10,548		4,574			3,233		44			—			—			7,851
Lease liability - operating leases																												82,667			60,745		—			—			—			143,412
Income taxes payable	(64,622		)	96,958		(22,534		)	—			—			—			9,802			(4,327		)	—		5,475		(26,737		)	4,425		—			26,737			—			4,425
Accrued interest	20,946			—		—			(8		)	1,237			—			22,175			—			—		22,175		2			—		847			4,744			—			5,593
Payable to CURO Holdings Corp.	38,847			—		62,081			—			—			—			100,928			(100,928		)	—		—		738,730			—		—			(738,730		)	—			—
CSO guarantee liability	—			—		11,619			—			—			—			11,619			—			—		11,619
Deferred rent	—			—		9,772			1,709			—			—			11,481			—			—		11,481
CSO liability for losses																												8,662			—		—			—			—			8,662
Long-term debt (excluding current maturities)	512,135			—		—			(76		)	114,774			—			626,833			—			—		626,833		—			—		88,915			677,153			—			766,068
Subordinated shareholder debt	—			—		—			2,278			—			—			2,278			—			—		2,278		—			2,243		—			—			—			2,243
Intercompany payable	(395,121		)	895,349		(347,983		)	60,853			(152,245		)	(60,853		)	—			—			—		—		—			337		73,837			—			(74,174		)	—
Other long-term liabilities	—			—		5,095			1,494			—			—			6,589			—			—		6,589
Other liabilities																												5,942			744		—			—			—			6,686
Deferred tax liabilities	(2,434		)	9,650		2,534			7,696			—			—			17,446			—			—		17,446		(4,171		)	—		—			4,575			—			404
Total liabilities	112,085			1,001,966		(238,173		)	94,315			(36,241		)	(60,853		)	873,099			(105,098		)	—		768,001		849,089			74,613		173,360			(25,502		)	(74,174		)	997,386
Stockholder’s equity	(52,249		)	53,213		615,714			185,837			214,847			(1,069,611		)	(52,249		)	52,849			52,249		52,849		(182,806		)	146,763		(32		)	36,744			36,075			36,744
Total liabilities and stockholder’s equity	$	59,836		$	1,055,179	$	377,541		$	280,152		$	178,606		$	(1,130,464	)	$	820,850		$	(52,249	)	$	52,249	$	820,850	$	666,283		$	221,376	$	173,328		$	11,242		$	(38,099	)	$	1,034,130

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)


	December 31, 2017																												December 31, 2018
(dollars in thousands)	CFTC			CURO Intermediate			Subsidiary Guarantors			Subsidiary Non-Guarantors			SPV Subs			Eliminations			CFTC Consolidated			CURO			Eliminations		CURO Consolidated		Subsidiary Guarantors			Subsidiary Non-Guarantors		Canada SPV			CURO			Eliminations			CURO Consolidated
Assets:
Cash	$	—		$	—		$	117,379		$	44,915		$	—		$	—		$	162,294		$	80		$	—	$	162,374	$	42,403		$	18,772	$	—		$	—		$	—		$	61,175
Restricted cash	—			—			1,677			3,569			6,871			—			12,117			—			—		12,117		9,993			2,606		12,840			—			—			25,439
Loans receivable, net	—			—			84,912			110,651			167,706			—			363,269			—			—		363,269		304,542			56,805		136,187			—			—			497,534
Deferred income taxes	—			2,154			(4,646		)	3,502			—			—			1,010			(238		)	—		772		—			1,534		—			—			—			1,534
Income taxes receivable	—			—			—			—			—			—			—			3,455			—		3,455		7,190			—		—			9,551			—			16,741
Prepaid expenses and other	—			—			38,277			3,353			—			—			41,630			882			—		42,512		37,866			5,722		—			—			—			43,588
Property and equipment, net	—			—			52,627			34,459			—			—			87,086			—			—		87,086		47,918			28,832		—			—			—			76,750
Goodwill	—			—			91,131			54,476			—			—			145,607			—			—		145,607		91,131			28,150		—			—			—			119,281
Other intangibles, net	16			—			5,418			27,335			—			—			32,769			—			—		32,769		8,418			21,366		—			—			—			29,784
Intercompany receivable	—			37,877			33,062			(30,588		)	—			(40,351		)	—			—			—		—		77,009			—		—			—			(77,009		)	—
Investment in subsidiaries	(14,504		)	899,371			—			—			—			(884,867		)	—			(84,889		)	84,889		—		—			—		—			(101,665		)	101,665			—
Other	5,713			—			3,017			1,040			—			—			9,770			—			—		9,770		12,253			677		—			—			—			12,930
Assets from discontinued operations																													—			2,406		—			—			32,455			34,861
Total assets	$	(8,775	)	$	939,402		$	422,854		$	252,712		$	174,577		$	(925,218	)	$	855,552		$	(80,710	)	$	84,889	$	859,731	$	638,723		$	166,870	$	149,027		$	(92,114	)	$	57,111		$	919,617
Liabilities and Stockholder's equity:
Accounts payable and accrued liabilities	$	2,606		$	13		$	35,753		$	15,954		$	12		$	—		$	54,338		$	1,454		$	—	$	55,792	$	38,240		$	5,734	$	4,980		$	192		$	—		$	49,146
Deferred revenue	—			—			6,529			5,455			—			—			11,984			—			—		11,984		5,981			3,462		40			—			—			9,483
Income taxes payable	(49,738		)	70,231			(18,450		)	2,077			—			—			4,120			—			—		4,120		—			1,579		—			—			—			1,579
Accrued interest	24,201			—			—			—			1,266			—			25,467			—			—		25,467		149			—		831			19,924			—			20,904
Payable to CURO Holdings Corp.	184,348			—			(95,048		)	—			—			—			89,300			(89,300		)	—		—		768,345			—		—			(768,345		)	—			—
CSO guarantee liability	—			—			17,795			—			—			—			17,795			—			—		17,795
CSO liability for losses																													12,007			—		—			—			—			12,007
Deferred rent	—			—			9,896			1,681			—			—			11,577			—			—		11,577		9,559			1,292		—			—			—			10,851
Long-term debt	585,823			—			—			—			120,402			—			706,225			—			—		706,225		20,000			—		107,479			676,661			—			804,140
Subordinated shareholder debt	—			—			—			2,381			—			—			2,381			—			—		2,381		—			2,196		—			—			—			2,196
Intercompany payable	(668,536		)	876,869			(124,332		)	40,351			(84,001		)	(40,351		)	—			—			—		—		—			224		44,330			—			(44,554		)	—
Other long-term liabilities	—			—			3,969			1,799			—			—			5,768			—			—		5,768
Other liabilities																													4,967			833		—			—			—			5,800
Deferred tax liabilities	(2,590		)	6,793			(143		)	7,426			—			—			11,486			—			—		11,486		15,175			—		—			(1,445		)	—			13,730
Liabilities from discontinued operations																													—			8,882		—			—			—			8,882
Total liabilities	76,114			953,906			(164,031		)	77,124			37,679			(40,351		)	940,441			(87,846		)	—		852,595		874,423			24,202		157,660			(73,013		)	(44,554		)	938,718
Stockholder’s equity	(84,889		)	(14,504		)	586,885			175,588			136,898			(884,867		)	(84,889		)	7,136			84,889		7,136		(235,700		)	142,668		(8,633		)	(19,101		)	101,665			(19,101		)
Total liabilities and stockholder’s equity	$	(8,775	)	$	939,402		$	422,854		$	252,712		$	174,577		$	(925,218	)	$	855,552		$	(80,710	)	$	84,889	$	859,731	$	638,723		$	166,870	$	149,027		$	(92,114	)	$	57,111		$	919,617

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Condensed Consolidating Statements of ~~Income~~Operations


	Three Months Ended June 30, 2018																											Three Months Ended March 31, 2019
(dollars in thousands)	CFTC			CURO Intermediate			Subsidiary Guarantors			Subsidiary Non-Guarantors			SPV Subs		Eliminations			CFTC Consolidated		CURO			Eliminations			CURO Consolidated		Subsidiary Guarantors			Subsidiary Non-Guarantors			Canada SPV		CURO			Eliminations			CURO Consolidated
Revenue	$	—		$	—		$	118,034		$	58,857		$	72,092				$	248,983	$	—		$	—		$	248,983	$	226,119		$	26,774		$	25,046	$	—		$	—		$	277,939
Provision for losses	—			—			46,320			19,999			25,667					91,986		—			—			91,986		84,980			4,099			13,306		—			—			102,385
Net revenue	—			—			71,714			38,858			46,425		—			156,997		—			—			156,997		141,139			22,675			11,740		—			—			175,554
Cost of providing services:
Salaries and benefits	—			—			18,070			8,837			—		—			26,907		—			—			26,907		19,951			8,750			—		—			—			28,701
Occupancy	—			—			7,643			5,677			—		—			13,320		—			—			13,320		8,010			6,227			—		—			—			14,237
Office	—			—			4,247			1,830			—		—			6,077		—			—			6,077		3,889			1,224			—		—			—			5,113
Other costs of providing services	—			—			11,254			1,007			466		—			12,727		—			—			12,727		13,132			1,088			—		—			—			14,220
Advertising	—			—			12,409			5,145			—		—			17,554		—			—			17,554		6,354			1,432			—		—			—			7,786
Total cost of providing services	—			—			53,623			22,496			466		—			76,585		—			—			76,585		51,336			18,721			—		—			—			70,057
Gross margin	—			—			18,091			16,362			45,959		—			80,412		—			—			80,412		89,803			3,954			11,740		—			—			105,497
Operating (income) expense:
Corporate, district and other	458			18			25,383			10,434			46		—			36,339		2,316			—			38,655		41,538			5,183			25		2,342			—			49,088
Intercompany management fee	—			—			(6,920		)	3,281			3,639		—			—		—			—			—		(3,403		)	3,395			8		—			—			—
Interest expense	16,585			—			(60		)	—			3,940		—			20,465		—			—			20,465		290			71			2,891		14,438			—			17,690
Loss on extinguishment of debt	—			—			—			—			—		—			—		—			—			—
Intercompany interest (income) expense	—			(904		)	(180		)	1,084			—		—			—		—			—			—		(1,071		)	1,071			—		—			—			—
Total operating expense	17,043			(886		)	18,223			14,799			7,625		—			56,804		2,316			—			59,120		37,354			9,720			2,924		16,780			—			66,778
Net income (loss) before income taxes	(17,043		)	886			(132		)	1,563			38,334		—			23,608		(2,316		)	—			21,292
Provision for income tax expense (benefit)	(5,418		)	13,668			(4,458		)	2,101			—		—			5,893		(576		)	—			5,317
Net income (loss)	(11,625		)	(12,782		)	4,326			(538		)	38,334		—			17,715		(1,740		)	—			15,975
Income (loss) from continuing operations before income taxes																												52,449			(5,766		)	8,816		(16,780		)	—			38,719
Provision (benefit) for income tax expense																												14,020			1,034			—		(5,008		)	—			10,046
Net income (loss) from continuing operations																												38,429			(6,800		)	8,816		(11,772		)	—			28,673
Net loss on discontinued operations																												—			8,375			—		—			—			8,375
Net (loss) income																												38,429			1,575			8,816		(11,772		)	—			37,048
Equity in net income (loss) of subsidiaries:
CFTC	—			—			—			—			—		—			—		17,715			(17,715		)	—		—			—			—		48,820			(48,820		)	—
CURO Intermediate	(12,782		)	—			—			—			—		12,782			—		—			—			—
Guarantor Subsidiaries	4,326			—			—			—			—		(4,326		)	—		—			—			—		38,429			—			—		—			(38,429		)	—
Non-Guarantor Subsidiaries	(538		)	—			—			—			—		538			—		—			—			—		1,575			—			—		—			(1,575		)	—
SPV Subs	38,334			—			—			—			—		(38,334		)	—		—			—			—		8,816			—			—		—			(8,816		)	—
Net income (loss) attributable to CURO	$	17,715		$	(12,782	)	$	4,326		$	(538	)	$	38,334	$	(29,340	)	$	17,715	$	15,975		$	(17,715	)	$	15,975	$	87,249		$	1,575		$	8,816	$	37,048		$	(97,640	)	$	37,048

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)


	Three Months Ended June 30, 2017																											Three Months Ended March 31, 2018
(dollars in thousands)	CFTC			CURO Intermediate			Subsidiary Guarantors			Subsidiary Non-Guarantors		SPV Subs			Eliminations			CFTC Consolidated		CURO			Eliminations			CURO Consolidated		CFTC			CURO Intermediate			Subsidiary Guarantors			Subsidiary Non-Guarantors			SPV Subs		Eliminations			CFTC Consolidated			CURO			Eliminations			CURO Consolidated
Revenue	$	—		$	—		$	102,189		$	53,180	$	61,575		$	—		$	216,944	$	—		$	—		$	216,944	$	—		$	—		$	128,408		$	46,250		$	76,185	$	—		$	250,843		$	—		$	—		$	250,843
Provision for losses	—			—			36,079			13,489		15,878			—			65,446		—			—			65,446		—			—			35,769			12,550			28,564		—			76,883			—			—			76,883
Net revenue	—			—			66,110			39,691		45,697			—			151,498		—			—			151,498		—			—			92,639			33,700			47,621		—			173,960			—			—			173,960
Cost of providing services:
Salaries and benefits	—			—			17,736			8,564		—			—			26,300		—			—			26,300		—			—			18,018			8,900			—		—			26,918			—			—			26,918
Occupancy	—			—			7,791			5,720		—			—			13,511		—			—			13,511		—			—			7,646			5,781			—		—			13,427			—			—			13,427
Office	—			—			3,721			1,215		—			—			4,936		—			—			4,936		—			—			5,582			871			—		—			6,453			—			—			6,453
Other store operating expenses	—			—			11,513			1,566		29			—			13,108		—			—			13,108		—			—			12,030			920			481		—			13,431			—			—			13,431
Advertising	—			—			7,898			3,743		—			—			11,641		—			—			11,641		—			—			5,159			2,726			—		—			7,885			—			—			7,885
Total cost of providing services	—			—			48,659			20,808		29			—			69,496		—			—			69,496		—			—			48,435			19,198			481		—			68,114			—			—			68,114
Gross Margin	—			—			17,451			18,883		45,668			—			82,002		—			—			82,002		—			—			44,204			14,502			47,140		—			105,846			—			—			105,846
Operating (income) expense:
Corporate, district and other	2,447			(78		)	21,484			8,563		4,067			—			36,483		74			—			36,557		448			7			27,992			4,897			30		—			33,374			2,055			—			35,429
Intercompany management fee	—			—			(3,865		)	3,865		—			—			—		—			—			—		—			—			(6,443		)	3,035			3,408		—			—			—			—			—
Interest expense	15,174			—			—			61		3,249			—			18,484		—			—			18,484		18,322			—			(112		)	57			4,087		—			22,354			—			—			22,354
Intercompany interest (income) expense	—			(1,042		)	1,691			1,207		(1,856		)	—			—		—			—			—		—			(801		)	(79		)	880			—		—			—			—			—			—
Loss on extinguishment of debt																												11,683			—			—			—			—		—			11,683			—			—			11,683
Total operating expense	17,621			(1,120		)	19,310			13,696		5,460			—			54,967		74			—			55,041		30,453			(794		)	21,358			8,869			7,525		—			67,411			2,055			—			69,466
Net (loss) income before income taxes	(17,621		)	1,120			(1,859		)	5,187		40,208			—			27,035		(74		)	—			26,961
Provision for income tax (benefit) expense	(6,166		)	17,560			(3,072		)	2,389		—			—			10,711		(92		)	—			10,619
Net income (loss)	(11,455		)	(16,440		)	1,213			2,798		40,208			—			16,324		18			—			16,342
(Loss) income from continuing operations before income taxes																												(30,453		)	794			22,846			5,633			39,615		—			38,435			(2,055		)	—			36,380
(Benefit) provision for income tax expense																												(6,841		)	18,497			(1,585		)	1,929			—		—			12,000			(533		)	—			11,467
Net (loss) income from continuing operations																												(23,612		)	(17,703		)	24,431			3,704			39,615		—			26,435			(1,522		)	—			24,913
Net loss from discontinued operations																												—			—			—			(1,621		)	—		—			(1,621		)	—			—			(1,621		)
Net (loss) income																												(23,612		)	(17,703		)	24,431			2,083			39,615		—			24,814			(1,522		)	—			23,292
Equity in net income (loss) of subsidiaries:
CFTC	—			—			—			—		—			—			—		16,324			(16,324		)	—		—			—			—			—			—		—			—			24,814			(24,814		)	—
CURO Intermediate	(16,440		)	—			—			—		—			16,440			—		—			—			—		(17,703		)	—			—			—			—		17,703			—			—			—			—
Guarantor Subsidiaries	1,213			—			—			—		—			(1,213		)	—		—			—			—		24,431			—			—			—			—		(24,431		)	—			—			—			—
Non-Guarantor Subsidiaries	2,798			—			—			—		—			(2,798		)	—		—			—			—		3,704			—			—			—			—		(3,704		)	—			—			—			—
SPV Subs	40,208			—			—			—		—			(40,208		)	—		—			—			—		39,615			—			—			—			—		(39,615		)	—			—			—			—
Net income (loss) attributable to CURO	$	16,324		$	(16,440	)	$	1,213		$	2,798	$	40,208		$	(27,779	)	$	16,324	$	16,342		$	(16,324	)	$	16,342	$	26,435		$	(17,703	)	$	24,431		$	2,083		$	39,615	$	(50,047	)	$	24,814		$	23,292		$	(24,814	)	$	23,292

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Condensed Consolidating Statements of Cash Flows

Six Months Ended June 30, 2018
(dollars in thousands) CFTC CURO Intermediate Subsidiary
Guarantors Subsidiary
Non-Guarantors SPV Subs Eliminations CFTC Consolidated CURO Eliminations CURO
Consolidated
Revenue $ —
$ —
$ 246,442
$ 116,022
$ 148,277

$ 510,741
$ —
$ —
$ 510,741
Provision for losses —
—
82,089
36,697
54,231

173,017
—
—
173,017
Net revenue —
—
164,353
79,325
94,046
—
337,724
—
—
337,724
Cost of providing services:
Salaries and benefits —
—
36,089
17,737
—
—
53,826
—
—
53,826
Occupancy —
—
15,289
11,458
—
—
26,747
—
—
26,747
Office —
—
9,830
3,227
—
—
13,057
—
—
13,057
Other costs of providing services —
—
23,284
2,896
947
—
27,127
—
—
27,127
Advertising —
—
17,568
9,742
—
—
27,310
—
—
27,310
Total cost of providing services —
—
102,060
45,060
947
—
148,067
—
—
148,067
Gross margin —
—
62,293
34,265
93,099
—
189,657
—
—
189,657
Operating (income) expense:
Corporate, district and other 906
25
53,375
20,356
76
—
74,738
4,371
—
79,109
Intercompany management fee —
—
(13,822 ) 6,775
7,047
—
—
—
—
—
Interest expense 34,907
—
(172 ) 52
8,027
—
42,814
—
—
42,814
Loss on extinguishment of debt 11,683
—
—
—
—
—
11,683
—
—
11,683
Intercompany interest (income) expense —
(1,784 ) (259 ) 2,043
—
—
—
—
—
—
Total operating expense 47,496
(1,759 ) 39,122
29,226
15,150
—
129,235
4,371
—
133,606
Net income (loss) before income taxes (47,496 ) 1,759
23,171
5,039
77,949
—
60,422
(4,371 ) —
56,051
Provision for income tax expense (benefit) (12,259 ) 32,165
(6,043 ) 4,030
—
—
17,893
(1,109 ) —
16,784
Net income (loss) (35,237 ) (30,406 ) 29,214
1,009
77,949
—
42,529
(3,262 ) —
39,267
Equity in net income (loss) of subsidiaries:
CFTC —
—
—
—
—
—
—
42,529
(42,529 ) —
CURO Intermediate (30,406 ) —
—
—
—
30,406
—
—
—
—
Guarantor Subsidiaries 29,214
—
—
—
—
(29,214 ) —
—
—
—
Non-Guarantor Subsidiaries 1,009
—
—
—
—
(1,009 ) —
—
—
—
SPV Subs 77,949
—
—
—
—
(77,949 ) —
—
—
—
Net income (loss) attributable to CURO $ 42,529
$ (30,406 ) $ 29,214
$ 1,009
$ 77,949
$ (77,766 ) $ 42,529
$ 39,267
$ (42,529 ) $ 39,267



	Three Months Ended March 31, 2019
(dollars in thousands)	Subsidiary Guarantors			Subsidiary Non-Guarantors			Canada SPV			CURO			Eliminations			CURO Consolidated
Cash flows from operating activities
Net cash provided by (used in) continuing operating activities	$	88,291		$	(1,574	)	$	53,969		$	67		$	246		$	140,999
Net cash used in discontinued operating activities	—			(504		)	—			—			—			(504		)
Cash flows from investing activities:
Purchase of property, equipment and software	(2,430		)	(689		)	—			—			—			(3,119		)
Investment in Cognical Holdings	(1,568		)	—			—			—			—			(1,568		)
Originations of loans, net	(38,226		)	3,652			(30,373		)	—			—			(64,947		)
Net cash (used in) provided by continuing investing activities	(42,224		)	2,963			(30,373		)	—			—			(69,634		)
Net cash used in discontinued investing activities	—			(14,213		)	—			—			—			(14,213		)
Cash flows from financing activities:
Proceeds from Non-Recourse Canada SPV facility	—			—			3,762			—			—			3,762
Payments on Non-Recourse Canada SPV facility	—			—			(24,831		)	—			—			(24,831		)
Proceeds from revolving credit facilities	15,000			15,478			—			—			—			30,478
Payments on revolving credit facilities	(35,000		)	(15,478		)	—			—			—			(50,478		)
Payments to net share settle RSUs	—			—			—			(37		)	—			(37		)
Proceeds from exercise of stock options	40			—			—			—			—			40
Debt issuance costs paid	—			—			(169		)	(30		)	—			(199		)
Net cash used in provided by financing activities ⁽¹⁾	(19,960		)	—			(21,238		)	(67		)	—			(41,265		)

Effect of exchange rate changes on cash and restricted cash	—			1,922			262			—			(246		)	1,938
Net increase (decrease) in cash and restricted cash	26,107			(11,406		)	2,620			—			—			17,321
Cash and restricted cash at beginning of period	52,397			34,620			12,840			—			—			99,857
Cash at end of period	$	78,504		$	23,214		$	15,460		$	—		$	—		$	117,178
(1) Financing activities include continuing operations only and were not impacted by discontinued operations

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Six Months Ended June 30, 2017
(dollars in thousands) CFTC CURO Intermediate Subsidiary Guarantors Subsidiary Non-Guarantors SPV Subs Eliminations
CFTC
Consolidated
CURO Eliminations CURO Consolidated
Revenue $ —
$ —
$ 214,312
$ 103,438
$ 123,774
$ —
$ 441,524
$ —
$ —
$ 441,524
Provision for losses —
—
64,136
26,030
37,016
—
127,182
—
—
127,182
Net revenue —
—
150,176
77,408
86,758
—
314,342
—
—
314,342
Cost of providing services:
Salaries and benefits —
—
35,589
17,144
—
—
52,733
—
—
52,733
Occupancy —
—
15,936
11,670
—
—
27,606
—
—
27,606
Office —
—
7,486
2,318
—
—
9,804
—
—
9,804
Other store operating expenses —
—
25,015
2,884
64
—
27,963
—
—
27,963
Advertising —
—
12,592
6,737
—
—
19,329
—
—
19,329
Total cost of providing services —
—
96,618
40,753
64
—
137,435
—
—
137,435
Gross Margin —
—
53,558
36,655
86,694
—
176,907
—
—
176,907
Operating (income) expense:
Corporate, district and other 2,977
(70 ) 43,787
16,507
4,181
—
67,382
2,168
—
69,550
Intercompany management fee —
—
(6,809 ) 6,809
—
—
—
—
—
—
Interest expense 22,456
9,613
1
82
6,388
—
38,540
3,310
—
41,850
Intercompany interest (income) expense —
(2,190 ) (330 ) 2,520
—
—
—
—
—
—
Loss on extinguishment of debt —
11,884
—
—
—
—
11,884
574
—
12,458
Total operating expense 25,433
19,237
36,649
25,918
10,569
—
117,806
6,052
—
123,858
Net (loss) income before income taxes (25,433 ) (19,237 ) 16,909
10,737
76,125
—
59,101
(6,052 ) —
53,049
Provision for income tax (benefit) expense (10,126 ) 34,172
(6,047 ) 4,433
—
—
22,432
(2,363 ) —
20,069
Net income (loss) (15,307 ) (53,409 ) 22,956
6,304
76,125
—
36,669
(3,689 ) —
32,980
Equity in net income (loss) of subsidiaries:
CFTC —
—
—
—
—
—
—
36,669
(36,669 ) —
CURO Intermediate (53,409 ) —
—
—
—
53,409
—
—
—
—
Guarantor Subsidiaries 22,956
—
—
—
—
(22,956 ) —
—
—
—
Non-Guarantor Subsidiaries 6,304
—
—
—
—
(6,304 ) —
—
—
—
SPV Subs 76,125
—
—
—
—
(76,125 ) —
—
—
—
Net income (loss) attributable to CURO $ 36,669
$ (53,409 ) $ 22,956
$ 6,304
$ 76,125
$ (51,976 ) $ 36,669
$ 32,980
$ (36,669 ) $ 32,980



	Three Months Ended March 31, 2018
(dollars in thousands)	CFTC			CURO Intermediate		Subsidiary Guarantors			Subsidiary Non-Guarantors			SPV Subs			Eliminations			CFTC Consolidated			CURO			CURO Consolidated
Cash flows from operating activities
Net cash provided (used) in continuing operating activities	$	87,829		$	—	$	(5,956	)	$	15,391		$	29,225		$	9,469		$	135,958		$	(13,215	)	$	122,743
Net cash provided by (used in) discontinued operating activities	—			—		—			6,958			—			(5,547		)	1,411			—			1,411
Cash flows from investing activities:
Purchase of property, equipment and software	—			—		(788		)	(754		)	—			—			(1,542		)	—			(1,542		)
Originations of loans, net	—			—		(28,277		)	(13,767		)	(14,309		)	—			(56,353		)	—			(56,353		)
Investment in Cognical Holdings	(958		)	—		—			—			—			—			(958		)	—			(958		)
Net cash (used in) provided by continuing operating activities	(958		)	—		(29,065		)	(14,521		)	(14,309		)	—			(58,853		)	—			(58,853		)
Net cash provided by (used in) discontinued investing activities	—			—		—			(3,782		)	—			—			(3,782		)	—			(3,782		)
Cash flows from financing activities:
Proceeds from Non-Recourse U.S. SPV facility	—			—		—			—			3,000			—			3,000			—			3,000
Payments on Non-Recourse U.S. SPV facility	—			—		—			—			(12,519		)	—			(12,519		)	—			(12,519		)
Proceeds from revolving credit facilities	10,000			—		—			—			—			—			10,000			—			10,000
Payments on revolving credit facilities	(10,000		)	—		—			—			—			—			(10,000		)	—			(10,000		)
Net proceeds from issuance of common stock	—			—		—			—			—			—			—			13,135			13,135
Payments on 12.00% Senior Secured Notes	(77,500		)	—		—			—			—			—			(77,500		)	—			(77,500		)
Payments of call premiums from early debt extinguishments	(9,300		)	—		—			—			—			—			(9,300		)	—			(9,300		)
Debt issuance costs paid	(71		)	—		—			—			—			—			(71		)	—			(71		)
Net cash (used in) provided by financing activities⁽¹⁾	(86,871		)	—		—			—			(9,519		)	—			(96,390		)	13,135			(83,255		)

Effect of exchange rate changes on cash	—			—		—			(438		)	—			(3,922		)	(4,360		)	—			(4,360		)
Net (decrease) increase in cash and restricted cash	—			—		(35,021		)	3,608			5,397			—			(26,016		)	(80		)	(26,096		)
Cash and restricted cash at beginning of period	—			—		119,056			48,484			6,871			—			174,411			80			174,491
Cash and restricted cash at end of period	$	—		$	—	$	84,035		$	52,092		$	12,268		$	—		$	148,395		$	—		$	148,395
(1) Financing activities included continuing operations only and were not impacted by discontinued.

CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

~~Condensed Consolidating Statements of Cash Flows~~

Six Months Ended June 30, 2018
(dollars in thousands) CFTC CURO Intermediate Subsidiary Guarantors
Subsidiary
Non-Guarantors
SPV Subs Eliminations CFTC
Consolidated CURO Eliminations CURO Consolidated
Cash flows from operating activities

Net cash provided (used) $ 78,548
$ —
$ (46,381 ) $ 4,174
$ 6,566
$ 3,538
$ 46,445
$ (12,550 ) $ —
$ 33,895
Cash flows from investing activities:

Purchase of property, equipment and software —
—
(1,983 ) (1,072 ) —
—
(3,055 ) —
—
(3,055 )
Cash paid for Cognical Holdings preferred shares (958 ) —
—
—
—
—
(958 ) —
—
(958 )
Change in restricted cash —
—
(2 ) (6 ) (403 ) —
(411 ) —
—
(411 )
Net cash used (958 ) —
(1,985 ) (1,078 ) (403 ) —
(4,424 ) —
—
(4,424 )
Cash flows from financing activities:

Proceeds from Non-Recourse U.S. SPV facility —
—
—
—
13,000
—
13,000
—
—
13,000
Payments on Non-Recourse U.S. SPV facility —
—
—
—
(19,163 ) —
(19,163 ) —
—
(19,163 )
Proceeds from revolving credit facilities 10,000
—
—
8,798
—
—
18,798
—
—
18,798
Payments on revolving credit facilities (10,000 ) —
—
(8,798 ) —
—
(18,798 ) —
—
(18,798 )
Proceeds from issuance of common stock —
—
—
—
—
—
—
12,431
—
12,431
Proceeds from exercise of stock options —
—
—
—
—
—
—
39
—
39
Payments on 12.00% Senior Secured Notes (77,500 ) —
—
—
—
—
(77,500 ) —
—
(77,500 )
Debt issuance costs paid (90 ) —
—
(78 ) —
—
(168 ) —
—
(168 )
Net cash provided (used) (77,590 ) —
—
(78 ) (6,163 ) —
(83,831 ) 12,470
—
(71,361 )
Effect of exchange rate changes on cash —
—
—
(1,841 ) —
(3,538 ) (5,379 ) —
—
(5,379 )
Net increase (decrease) in cash —
—
(48,366 ) 1,177
—
—
(47,189 ) (80 ) —
(47,269 )
Cash at beginning of period —
—
117,379
44,915
—
—
162,294
80
—
162,374
Cash at end of period $ —
$ —
$ 69,013
$ 46,092
$ —
$ —
$ 115,105
$ —
$ —
$ 115,105
NOTE 17 – SUBSEQUENT EVENTS

~~CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

Share Repurchase Program

Six Months Ended June 30, 2017
(dollars in thousands) CFTC CURO Intermediate Subsidiary Guarantors
Subsidiary
Non-Guarantors
SPV Subs Eliminations
CFTC
Consolidated
CURO Eliminations CURO
Consolidated
Cash flows from operating activities
Net cash (used) provided $ (284,269 ) $ 424,080
$ (55,496 ) $ (17,605 ) $ (11,422 ) $ (431 ) $ 54,857
$ (5,083 ) $ —
$ 49,774
Cash flows from investing activities:
Purchase of property, equipment and software —
—
(4,648 ) (2,180 ) —
—
(6,828 ) —
—
(6,828 )
Cash paid for Cognical investment (4,975 ) —
—
—
—
—
(4,975 ) —
—
(4,975 )
Change in restricted cash —
—
8
121
(4,566 ) —
(4,437 ) —
—
(4,437 )
Net cash used (4,975 ) —
(4,640 ) (2,059 ) (4,566 ) —
(16,240 ) —
—
(16,240 )
Cash flows from financing activities:
Proceeds from Non-Recourse U.S. SPV facility and ABL facility —
—
—
—
41,130
—
41,130
—
—
41,130
Payments on Non-Recourse U.S. SPV facility and ABL facility —
—
—
—
(25,142 ) —
(25,142 ) —
—
(25,142 )
Proceeds from issuance of 12.00% Senior Secured Notes 461,329
—
—
—
—
—
461,329
—
—
461,329
Payments on 10.75% Senior Secured Notes —
(426,034 ) —
—
—
—
(426,034 ) —
—
(426,034 )
Payments on 12.00% Senior Cash Pay Notes —
—
—
—
—
—
—
(125,000 ) —
(125,000 )
Dividends (paid) received (158,083 ) —
—
—
—
—
(158,083 ) 130,083
—
(28,000 )
Debt issuance costs paid (14,002 ) —
—
—
—
—
(14,002 ) —
—
(14,002 )
Net cash provided (used) 289,244
(426,034 ) —
—
15,988
—
(120,802 ) 5,083
—
(115,719 )
Effect of exchange rate changes on cash —
—
—
2,009
—
431
2,440
—
—
2,440
Net decrease in cash —
(1,954 ) (60,136 ) (17,655 ) —
—
(79,745 ) —
—
(79,745 )
Cash at beginning of period —
1,954
127,712
63,779
—
—
193,445
80
—
193,525
Cash at end of period $ —
$ —
$ 67,576
$ 46,124
$ —
$ —
$ 113,700
$ 80
$ —
$ 113,780
In April 2019, the Company's Board of Directors authorized a share repurchase program providing for the repurchase of up to $50.0 million of its common stock. The repurchase program will continue until completed or terminated. CURO expects the purchases to be made from time-to-time in the open market, in privately negotiated transactions, or both, at the Company's discretion and subject to market conditions and other factors. Any repurchased shares will be available for use in connection with equity plans or other corporate purposes.

Cognical Investment

In April 2019, as part of a broader capital structure reorganization, the Company made an additional $2.8 million cash investment in Cognical Holdings, which operates under the Zibby brand. This funding round is expected to remain open through June 11, 2019. As a result of its investments in Cognical as well as Cognical’s overall reorganization, the Company expects to own a 30% to 35% interest in its outstanding shares, dependent upon total new capital contributed by other investors. When the funding round is completed, the Company expects to have financial information to determine the fair market value of its investments in Cognical Holdings.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

~~Forward Looking~~Forward-Looking Statements

The following discussion of financial condition, results of operations, liquidity and capital resources and certain factors that may affect future results, including economic and industry-wide factors, should be read in conjunction with our Condensed Consolidated Financial Statements and accompanying notes included herein. This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements. The matters discussed in these forward-looking statements are subject to risk, uncertainties and other factors that could cause actual results to differ materially from those made, projected or implied in the forward-looking statements. Except as required by applicable law and regulations, we undertake no obligation to update any forward-looking statements or other statements we may make in the following discussion or elsewhere in this document even though these statements may be affected by events or circumstances occurring after the forward-looking statements or other statements were made. Please see the sections titled ~~"Cautionary Statement Regarding Forward-Looking Statements” and~~ “Risk Factors” in our ~~2017~~ Annual Report on Form 10-K for the year ended December 31, 2018 ("the "2018 Form 10-K") for a discussion of the uncertainties, risks and assumptions associated with these statements.

Overview

We are a growth-oriented, technology-enabled, highly-diversified, multi-channel and multi-product consumer finance company serving a wide range of underbanked consumers in the United States ("U.S."), Canada and, through February 25, 2019, the United Kingdom ("U.K.") ~~and are a market leader in our industry based on revenues.~~.

History

~~The~~ CURO ~~business~~ was founded in 1997 to meet the growing needs of underbanked consumers looking for access to credit. ~~The Company set out~~With more than 20 years of experience, we seek to offer a variety of convenient, easily-accessible financial and loan services ~~and over its 20 years~~in all of ~~operations, expanded across the U.S., Canada and the U.K.~~our markets.

CURO Financial Technologies Corp. ~~("CFTC") (then~~, previously known as Speedy Cash Holdings Corp. ("CFTC"), was incorporated in Delaware onin July ~~16,~~ 2008. On September 10, 2008, our founders sold or otherwise contributed all of the outstanding equity of the various operating entities that comprised the CURO business to a wholly-owned subsidiary of CFTC in connection with an investment in CFTC by Friedman Fleischer & Lowe Capital Partners II, L.P. and its affiliated funds. CURO Group Holdings Corp. ~~(then~~, previously known as Speedy Group Holdings Corp.), was incorporated in Delaware ~~on February 7,~~in 2013 as the parent company of CFTC. ~~On May 11, 2016, we changed~~The terms “CURO," "we,” “our,” “us” and the ~~name of Speedy Group Holdings Corp.~~“Company” refer to CURO Group Holdings Corp. ~~We similarly changed the names of some of~~and its ~~subsidiaries.~~directly and indirectly owned subsidiaries as a combined entity, except where otherwise stated. The term "CFTC" refers to CURO Financial Technologies Corp., our wholly-owned subsidiary, and its directly and indirectly owned subsidiaries as a consolidated entity, except where otherwise stated.

Our growth has been fueled by acquisitions in the U.S., and Canada, ~~and the U.K.,~~ as well as organically, including the launch of new brands. Recent brand launches include the March 2016 launch of LendDirect, ana primarily online ~~installment loan~~Installment and Open-End brand in Alberta, Canada ~~that is now offered in four provinces,~~ and the June 2017 launch of Avio Credit, an online Installment and Open-End Loan brand in the U.S. market that is currently available in ~~eleven~~11 states.

Recent Developments

Revolve Finance. In February 2019, we launched Revolve Finance, sponsored by Republic Bank of Chicago, which is being introduced across the Company's U.S. branches. This product provides customers with a checking account solution, with FDIC-insured deposits, that combines a Visa-branded debit card, a number of technology-enabled tools and optional overdraft protection.

Metabank.In April 2018, we announced that we expect to begin offering U.S. consumers a new line of credit product through a relationship with MetaBank® ("Meta"), a wholly-owned subsidiary of Meta Financial Group, Inc. ~~CURO~~We are working closely with Meta towards an eventual product launch. Given that the agreement with Meta does not contain any exclusive dealing provisions, we are also evaluating opportunities with other potential bank partners to offer similar products.

Credit facilities. For recent developments related to our Senior Secured Notes, SPV facilities and ~~Meta are currently developing~~other capital resources, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.”

U.K. Developments. On February 25, 2019, we announced that a proposed Scheme of Arrangement ("SOA"), as described in our Current Report on Form 8-K dated January 31, 2019, related to Curo Transatlantic Limited and SRC Transatlantic Limited (collectively the ~~pilot launch. Under~~"U.K. Subsidiaries"), would not be implemented. We also announced that effective February 25, 2019, in accordance with the ~~program partnership agreement, Meta may hold up~~provisions of the U.K. Insolvency Act 1986 and as approved by the boards of directors of our U.K. Subsidiaries, insolvency practitioners from KPMG were appointed as administrators ("Administrators") for the U.K. Subsidiaries. The effect of the U.K. Subsidiaries’ entry into administration was to ~~$350.0~~place the management, affairs, business and property of the U.K. Subsidiaries under the direct control of the Administrators. As a result, we deconsolidated the U.K. Subsidiaries as of February 25, 2019 and presented the U.K. Subsidiaries as Discontinued Operations in this Quarterly Report on Form 10-Q ("Form 10-Q").

In our Current Report on Form 8-K dated January 31, 2019, our results of operations included a $30.3 million expense comprised of (i) a proposed $23.6 million fund to settle historical redress claims and (ii) $6.7 million in advisory and other costs that would be required to execute the SOA. We subsequently concluded that pursuant to ASC 450, Contingencies, the SOA did not represent an estimate of loss for the redress loss contingency but instead was offered in ongoing negotiation of a potential compromised settlement with creditors. Therefore, the settlement offered through the SOA did not meet the recognition threshold pursuant to ASC 450 and should not have been accrued as a contingent liability for customer redress claims as of December 31, 2018. Our Current Report on Form 8-K filed March 1, 2019 appropriately included $4.6 million of ~~product receivables on its balance sheet~~fourth quarter 2018 redress costs and related charges which represents known claims as of December 31, 2018. See "Controls and Procedures" in our 2018 Form 10-K for ~~the first three years of the relationship, although there can be no assurance as to the level of success in selling this credit product.~~

On May 21, 2018, certain of our stockholders sold shares of our common stock pursuant to an underwritten public offering, at a price to the public of $23.00 per share. The underwriters subsequently exercised their option to purchase additional shares of our common stock from certain of these selling stockholders, which together

with the May offering, totaled more than 5.5 million shares. We did not sell any shares in the offering and did not receive any proceeds from the sale of the shares offered by the selling stockholders in the offering.further discussion.

Discussion of Revenue by Product and Segment and Related Loan Portfolio Performance

Revenue by Product

The following table summarizes revenue by product, including ~~CSO~~ fees for credit services organization ("CSO"), for the periods ~~indicated:~~indicated. Year-over-year comparisons for Open-End were affected by the Q1 2019 Open-End Loss Recognition Change. Throughout this Form 10-Q, we do not include information for our U.K. Subsidiaries as they were discontinued in February 2019.


	Three Months Ended																For the Three Months Ended
	June 30, 2018								June 30, 2017								March 31, 2019						March 31, 2018
(in thousands)	U.S.		Canada		U.K.		Total		U.S.		Canada		U.K.		Total		U.S.		Canada		Total		U.S.		Canada		Total
Unsecured Installment	$	111,244	$	3,692	$	8,537	$	123,473	$	94,897	$	4,223	$	6,029	$	105,149	$	134,003	$	1,775	$	135,778	$	120,476	$	4,903	$	125,379
Secured Installment	25,777		—		—		25,777		23,173		—		—		23,173		27,477		—		27,477		26,856		—		26,856
Open-End	23,261		3,961		—		27,222		15,805		—		—		15,805		32,593		20,276		52,869		25,834		1,389		27,223
Single-Pay	24,978		33,347		3,277		61,602		24,881		34,947		3,413		63,241		27,168		19,593		46,761		26,065		34,292		60,357
Ancillary	4,866		6,043		—		10,909		5,008		4,425		143		9,576		4,878		10,176		15,054		5,362		5,666		11,028
Total revenue	$	190,126	$	47,043	$	11,814	$	248,983	$	163,764	$	43,595	$	9,585	$	216,944	$	226,119	$	51,820	$	277,939	$	204,593	$	46,250	$	250,843

During the three months ended ~~June 30, 2018,~~March 31, 2019, total ~~lending~~ revenue ~~(excluding revenues from ancillary products)~~ grew ~~$30.7~~$27.1 million, or ~~14.8%~~10.8%, to ~~$238.1~~$277.9 million, compared to the ~~prior year~~prior-year period, predominantly driven by growth in Installment and Open-End ~~loans.~~loans from strong customer demand and product introductions in new markets. Geographically, total revenue in the U.S., and Canada grew 10.5% and ~~the U.K. grew 16.1%, 7.9% and 23.3%~~12.0%, respectively. From a product perspective, Unsecured Installment ~~revenues rose 17.4%~~ and Secured Installment revenues rose ~~11.2%~~8.3% and 2.3%, respectively, driven by related loan growth. Year-over-year Single-Pay ~~revenues were affected primarily~~usage was negatively impacted by regulatory changes in ~~Canada (rate changes in Alberta,~~ Ontario ~~and British Columbia) and~~as well as a continued general product mix shift from Single-Pay to Installment and Open-End loans in ~~all countries.~~the U.S. and Canada. Open-End revenues rose ~~72.2%~~94.2% on organic growth in legacy states in the U.S. and growth in Canada, primarily after the introduction of Open-End products in ~~Virginia and Canada.~~Ontario in the third quarter of 2018. Open-End ~~adoption~~loans in Canada ~~accelerated this~~grew $26.0 million, or 16.4%, sequentially (which means the change from the fourth quarter ~~as related~~of 2018 to the first quarter of 2019) and Single-Pay loan balances ~~grew $34.3 million sequentially from the first quarter. Even with the accelerated Open-End growth, Single-Pay balances~~stabilized in Canada ~~only shrank sequentially by $1.4 million.~~sequentially. Ancillary revenues increased ~~13.9%~~36.5% versus the same quarter a year ago, primarily due to ~~non-lending revenue in Canada.~~

~~The following table summarizes revenue by product, including CSO fees, for~~ the ~~periods indicated:~~

Six Months Ended
June 30, 2018 June 30, 2017
(in thousands) U.S. Canada U.K. Total U.S. Canada U.K. Total
Unsecured Installment $ 231,720
$ 8,595
$ 16,104
$ 256,419
$ 195,651
$ 7,643
$ 11,286
$ 214,580
Secured Installment 52,633
—
—
52,633
46,842
—
—
46,842
Open-End 49,095
5,350
—
54,445
33,712
—
—
33,712
Single-Pay 51,043
67,639
6,625
125,307
51,208
69,126
6,697
127,031
Ancillary 10,228
11,709
—
21,937
10,673
8,392
294
19,359
Total revenue $ 394,719
$ 93,293
$ 22,729
$ 510,741
$ 338,086
$ 85,161
$ 18,277
$ 441,524

During the six months ended June 30, 2018, total lending revenue (excluding revenues from ancillary products) grew $66.6 million, or 15.8%, to $488.8 million, compared to the prior year period, predominantly driven by growth in Installment loans in all three countries and Open-End loans in the U.S. and Canada. Geographically, revenue in the U.S., Canada and U.K. grew 16.8%, 9.5% and 24.4%, respectively. From a product perspective, Unsecured Installment revenues rose 19.5% and Secured Installment revenues rose 12.4% becausesale of loan growth. Single-Pay revenues and combined loans receivable were affected primarily by regulatory changes in Canada (rate changes in Alberta, Ontario and British Columbia) and continued product shift from Single-Payinsurance to Installment and Open-End ~~loans~~loan customers in ~~all countries. Open-End revenues rose 61.5% on organic growth in the U.S. and the introduction of Open-End products in Virginia and~~ Canada. Earning assets for our Open-End product in Canada, which we began offering in the fourth quarter of 2017, was $50.0 million as of June 30, 2018. Ancillary revenues increased 13.3% versus the same quarter a year ago primarily due to non-lending revenue in Canada.

The following charts present revenue composition, including CSO fees, of the products and services that we currently offer for the three months ended ~~June 30, 2018~~March 31, 2019 and ~~2017:~~2018:

For the three months ended ~~June 30,~~March 31, 2019 and 2018, ~~and 2017,~~ revenue generated through our online channel was ~~43%~~46% and ~~36%~~41%, respectively, of consolidated revenue.

~~The following charts present revenue composition, including CSO fees, of the products and services that we currently offer for the six months ended June 30, 2018 and 2017:~~

~~For the six months ended June 30, 2018 and 2017, revenue generated through our online channel was 43% and 36%, respectively, of consolidated revenue.~~

Loan Volume and Portfolio Performance Analysis

Unsecured Installment Loans

Unsecured Installment revenue and gross combined loans receivable increased from the prior year quarter due to growth in the ~~United States,~~U.S., primarily in California and ~~growth in the United Kingdom. Gross combined~~CSO. Unsecured Installment ~~Loan balances~~gross combined loans receivable grew~~$31.4~~ $11.2 million, or ~~14.6%~~5.3%, compared to ~~June 30, 2017, but the comparisons are affected by~~March 31, 2018, despite a decline in Canada of $22.6 million due to mix shift into Open-End loans. In the U.S., Unsecured Installment gross combined loans receivable increased 19.5% year-over-year. Canada ~~from Installment to Open-End. As expected, Canadian~~was negatively impacted by the growth and customer preference of Open-End during 2018, as further discussed below. In Canada, total Unsecured Installment loan ~~balances~~originations declined ~~by $19.4~~$14.5 million, ~~while Open-End balances in Canada grew by $51.3 million year-over-year.~~

Because of the aforementioned effects of the Q1 Loss Recognition Change on the first half of 2017, we utilize sequential trends in analyzing net charge-off rates and allowance levels. Net charge-off rates for Company-owned Unsecured Installment loans improved 488 basis points sequentially compared toor 66.3%, from the first quarter of ~~2018. Similarly,~~2018 also due to mix shift. U.S. originations were up $12.1 million, or 9.5%, versus the prior-year quarter.

The net charge-off (“NCO”) rate for Company Owned Unsecured Installment gross loans receivables in the first quarter of 2019 increased approximately 377 bps from the first quarter of 2018, primarily due to geographic mix shift from Canada to the U.S. Canadian balances were down $22.6 million compared to the prior year due to shifting customer preference from Installment to Open-End, while U.S. balances grew $28.4 million due to customer demand and higher advertising spend. As a result, the U.S. percentage mix of total Company Owned Unsecured Installment gross loans receivable rose from 76.4% last year to 91.2% this year. The absolute level of NCO rates in the U.S. is higher than Canada, so the relative growth in the U.S. balances resulted in an overall increase in the consolidated NCO rate for Company Owned Unsecured Installment loans. In addition, the NCO rate in the U.S. rose from 20.5% in the first quarter of 2018 to 23.3% in the first quarter of 2019, because of both credit-line increases and expansion of the Avio brand. As an immature portfolio, Avio has higher relative NCO rates.

The required Unsecured Installment Allowance for loan losses as a percentage of Company Owned Unsecured Installment gross loans receivable ("allowance coverage") increased sequentially from 19.8% to 20.8%, primarily as a result of higher NCO rates. Past-due Company Owned Unsecured Installment gross loans receivable as a percentage of related total receivables increased 230 bps to 25.2% from 22.9% in the prior-year quarter on a consolidated basis. NCO rates for Unsecured Installment loans Guaranteed by the Company ~~improved nearly 2,000 basis points versus last quarter. First-pay default rates ("FPDs") reflect the number of payments made by customers~~decreased 314 bps compared to the ~~number~~same quarter in 2018. The required CSO liability for losses decreased sequentially from 15.0% to 14.4% during the first quarter of ~~payments scheduled~~2019 due to ~~be paid during a period. First-pay default metrics cited in this Quarterly Report on Form 10-Q are calculated based on originations from January through May of 2017~~improving NCO and 2018. FPDs for Company Owned Unsecured Installment loans were stable overall to the same periods last year but improved for California which is the largest portion of the portfolio. FPDs for Unsecured Installment loans Guaranteed by the Company improved by an average of nearly 140 basis points, or 8%.The improvement in net charge-off rates, FPDs and the related underlying improvement in cumulative loss development trends in open vintages resulted in lower required allowance coverage for Unsecured installment, primarily due to: (i) loan growth proportionally being driven by the extension of more credit to our best customers, (ii) tightening of credit scoring and approval rates during first quarter’s U.S. income tax refund season and (iii) continuing improvement in scoring models.

past-due rate comparisons.


	2018						2017									2019			2018
(dollars in thousands, unaudited)	Second Quarter			First Quarter			Fourth Quarter			Third Quarter			Second Quarter			First Quarter			Fourth Quarter			Third Quarter			Second Quarter			First Quarter
Unsecured Installment loans:
Revenue - Company Owned	$	63,404		$	66,004		$	67,800		$	61,653		$	52,550		$	65,542		$	69,748		$	64,146		$	54,868		$	58,437
Provision for losses - Company Owned	27,434			27,477			29,917			29,079			17,845			33,845			39,565			32,946			23,219			24,739
Net revenue - Company Owned	$	35,970		$	38,527		$	37,883		$	32,574		$	34,705		$	31,697		$	30,183		$	31,200		$	31,649		$	33,698
Net charge-offs - Company Owned	$	29,734		$	33,410		$	32,894		$	23,858		$	18,858		$	37,919		$	37,951		$	27,308		$	26,527		$	30,001
Revenue - Guaranteed by the Company	$	60,069		$	66,942		$	69,078		$	67,132		$	52,599		$	70,236		$	75,559		$	73,514		$	60,069		$	66,942
Provision for losses - Guaranteed by the Company	26,974			23,556			32,915			36,212			23,575			27,422			37,352			39,552			26,974			23,556
Net revenue - Guaranteed by the Company	$	33,095		$	43,386		$	36,163		$	30,920		$	29,024		$	42,814		$	38,207		$	33,962		$	33,095		$	43,386
Net charge-offs - Guaranteed by the Company	$	25,667		$	30,743		$	31,898		$	34,904		$	27,309		$	30,421		$	38,522		$	37,995		$	25,667		$	30,743
Unsecured Installment gross combined loans receivable:
Company Owned	$	179,414		$	171,432		$	196,306		$	181,831		$	156,075		$	161,716		$	190,403		$	185,130		$	160,285		$	155,957
Guaranteed by the Company⁽¹⁾⁽²⁾	66,351			54,332			75,156			67,438			58,289			59,740			77,451			75,807			66,351			54,332
Unsecured Installment gross combined loans receivable⁽¹⁾⁽²⁾	$	245,765		$	225,764		$	271,462		$	249,269		$	214,364		$	221,456		$	267,854		$	260,937		$	226,636		$	210,289

Average gross loans receivable:
Average Unsecured Installment gross loans receivable - Company Owned																$	176,060		$	187,767		$	172,708		$	158,121		$	168,773
Average Unsecured Installment gross loans receivable - Guaranteed by the Company																$	68,596		$	76,629		$	71,079		$	60,342		$	64,744
Allowance for loan losses and CSO liability for losses:
Unsecured Installment Allowance for loan losses⁽³⁾	$	35,277		$	37,916		$	43,755		$	46,938		$	41,406		$	33,666		$	37,716		$	36,160		$	30,291		$	33,638
Unsecured Installment CSO guarantee liability⁽³⁾	$	11,193		$	9,886		$	17,072		$	16,056		$	14,748
Unsecured Installment CSO liability for losses ⁽³⁾																$	8,584		$	11,582		$	12,750		$	11,193		$	9,886
Unsecured Installment Allowance for loan losses as a percentage of Unsecured Installment gross loans receivable	19.7		%	22.1		%	22.3		%	25.8		%	26.5		%	20.8		%	19.8		%	19.5		%	18.9		%	21.6		%
Unsecured Installment CSO guarantee liability as a percentage of Unsecured Installment gross loans guaranteed by the Company	16.9		%	18.2		%	22.7		%	23.8		%	25.3		%
Unsecured Installment CSO liability for losses as a percentage of Unsecured Installment gross loans guaranteed by the Company																14.4		%	15.0		%	16.8		%	16.9		%	18.2		%
Unsecured Installment past-due balances:
Unsecured Installment gross loans receivable	$	40,272		$	39,273		$	44,963		$	41,353		$	33,534		$	40,801		$	49,087		$	49,637		$	36,125		$	35,647
Unsecured Installment gross loans guaranteed by the Company	$	10,319		$	8,410		$	12,480		$	10,462		$	8,204		$	7,967		$	11,708		$	12,120		$	10,319		$	8,410
Past-due Unsecured Installment gross loans receivable -- percentage⁽²⁾	22.4		%	22.9		%	22.9		%	22.7		%	21.5		%	25.2		%	25.8		%	26.8		%	22.5		%	22.9		%
Past-due Unsecured Installment gross loans guaranteed by the Company -- percentage⁽²⁾	15.6		%	15.5		%	16.6		%	15.5		%	14.1		%	13.3		%	15.1		%	16.0		%	15.6		%	15.5		%
Unsecured Installment other information:
Originations-Company Owned	$	128,146		$	99,418		$	135,284		$	137,618		$	119,636		$	78,515		$	114,182		$	121,415		$	114,038		$	89,183
Originations - Guaranteed by the Company⁽¹⁾	$	84,082		$	60,593		$	82,326		$	83,680		$	68,338		$	68,899		$	89,319		$	91,828		$	84,082		$	60,593
Unsecured Installment ratios:
Provision as a percentage of originations - Company Owned	21.4		%	27.6		%	22.1		%	21.1		%	14.9		%
Provision as a percentage of gross loans receivable - Company Owned	15.3		%	16.0		%	15.2		%	16.0		%	11.4		%	20.9		%	20.8		%	17.8		%	14.5		%	15.9		%
Provision as a percentage of originations - Guaranteed by the Company	32.1		%	38.9		%	40.0		%	43.3		%	34.5		%
Provision as a percentage of gross loans receivable - Guaranteed by the Company	40.7		%	43.4		%	43.8		%	53.7		%	40.4		%	45.9		%	48.2		%	52.2		%	40.7		%	43.4		%
(1) Includes loans originated by third-party lenders through CSO programs, which are not included in our consolidated financial statements.
(2) Non-GAAP measure.
(3) Allowance for loan losses is reported as a contra-asset reducing gross loans receivable while the CSO guarantee liability is reported as a liability on our Condensed Consolidated Balance Sheets.
(1) Includes loans originated by third-party lenders through CSO programs, which are not included in the Condensed Consolidated Financial Statements.																(1) Includes loans originated by third-party lenders through CSO programs, which are not included in the Condensed Consolidated Financial Statements.
(2) Non-GAAP measure - Refer to "Non-GAAP Financial Measures" for further details.																(2) Non-GAAP measure - Refer to "Non-GAAP Financial Measures" for further details.
(3) Allowance for loan losses is reported as a contra-asset reducing gross loans receivable while the CSO liability for losses is reported as a liability on the Condensed Consolidated Balance Sheets.																(3) Allowance for loan losses is reported as a contra-asset reducing gross loans receivable while the CSO liability for losses is reported as a liability on the Condensed Consolidated Balance Sheets.

Secured Installment Loans

Secured Installment gross combined loans receivable balances as of ~~June 30, 2018~~March 31, 2019 increased by ~~$7.4~~$0.6 million, or ~~9.2%~~0.7%, compared to ~~June 30, 2017, primarily due to growth in Arizona,~~March 31, 2018 while related Secured Installment revenue grew ~~11.2%~~2.3%.

The NCO rate was fairly stable and the past-due rate improved 120 bps year-over-year. Secured Installment Allowance for loan losses and CSO ~~guarantee~~ liability for losses as a percentage of Secured Installment gross combined loans receivable ~~improved~~decreased sequentially from 13.2% to 11.9% during the first quarter of 2018 from 14.7% to 12.4%. For the three months ended June 30, 2018, delinquency rates of 17.4% and net charge offs of $9.0 million were consistent with the first quarter delinquency rates of 17.9% and net charge offs of $8.7 million. Net charge off rates for Secured Installment rose 282 basis points sequentially versus the first quarter of 2018. FPDs have improved an average of nearly 200 basis points, or 11.9%, versus the same periods last year. The lower required Allowance for loan losses and CSO guarantee liability as a percentage of gross combined loans receivable is largely due to origination mix and modest improvement in vintage cumulative loss development.2019.


	2018						2017									2019			2018
(dollars in thousands, unaudited)	Second Quarter			First Quarter			Fourth Quarter			Third Quarter			Second Quarter			First Quarter			Fourth Quarter			Third Quarter			Second Quarter			First Quarter
Secured Installment loans:
Revenue	$	25,777		$	26,856		$	27,732		$	26,407		$	23,173		$	27,477		$	29,482		$	28,562		$	25,777		$	26,856
Provision for losses	7,650			6,640			10,051			6,512			4,955			7,080			12,035			10,188			7,650			6,640
Net revenue	$	18,127		$	20,216		$	17,681		$	19,895		$	18,218		$	20,397		$	17,447		$	18,374		$	18,127		$	20,216
Net charge-offs	$	9,003		$	8,669		$	10,802		$	11,597		$	6,481		$	9,822		$	11,132		$	9,285		$	9,003		$	8,669
Secured Installment gross combined loan balances:
Secured Installment gross combined loans receivable⁽²⁾⁽³⁾	$	87,434		$	82,534		$	92,817		$	88,730		$	80,077		$	83,087		$	95,922		$	94,194		$	87,434		$	82,534
Secured Installment Allowance for loan losses and CSO guarantee liability⁽³⁾	$	10,812		$	12,165		$	14,194		$	14,945		$	20,030
Secured Installment Allowance for loan losses and CSO guarantee liability as a percentage of Secured Installment gross combined loans receivable	12.4		%	14.7		%	15.3		%	16.8		%	25.0		%
Average Secured Installment gross combined loans receivable																$	89,505		$	95,058		$	90,814		$	84,984		$	87,676
Secured Installment Allowance for loan losses and CSO liability for losses ⁽³⁾																$	9,874		$	12,616		$	11,714		$	10,812		$	12,165
Secured Installment Allowance for loan losses and CSO liability for losses as a percentage of Secured Installment gross combined loans receivable																11.9		%	13.2		%	12.4		%	12.4		%	14.7		%
Secured Installment past-due balances:
Secured Installment past-due gross loans receivable and gross loans guaranteed by the Company	$	15,246		$	14,756		$	16,554		$	15,265		$	12,630		$	13,866		$	17,835		$	17,754		$	15,246		$	14,756
Past-due Secured Installment gross loans receivable and gross loans guaranteed by the Company -- percentage⁽²⁾	17.4		%	17.9		%	17.8		%	17.2		%	15.8		%	16.7		%	18.6		%	18.8		%	17.4		%	17.9		%
Secured Installment other information:
Originations⁽¹⁾	$	53,597		$	34,750		$	48,577		$	52,526		$	45,596		$	33,490		$	49,217		$	51,742		$	53,597		$	34,750
Secured Installment ratios:
Provision as a percentage of originations	14.3		%	19.1		%	20.7		%	12.4		%	10.9		%
Provision as a percentage of gross combined loans receivable	8.7		%	8.0		%	10.8		%	7.3		%	6.2		%	8.5		%	12.5		%	10.8		%	8.7		%	8.0		%
(1) Includes loans originated by third-party lenders through CSO programs, which are not included in our consolidated financial statements.
(2) Non-GAAP measure.
(3) Allowance for loan losses is reported as a contra-asset reducing gross loans receivable while the CSO guarantee liability is reported as a liability on our Condensed Consolidated Balance Sheets.
(1) Includes loans originated by third-party lenders through CSO programs, which are not included in the Condensed Consolidated Financial Statements.																(1) Includes loans originated by third-party lenders through CSO programs, which are not included in the Condensed Consolidated Financial Statements.
(2) Non-GAAP measure - Refer to "Non-GAAP Financial Measures" for further details.																(2) Non-GAAP measure - Refer to "Non-GAAP Financial Measures" for further details.
(3) Allowance for loan losses is reported as a contra-asset reducing gross loans receivable while the CSO liability for losses is reported as a liability on the Condensed Consolidated Balance Sheets.																(3) Allowance for loan losses is reported as a contra-asset reducing gross loans receivable while the CSO liability for losses is reported as a liability on the Condensed Consolidated Balance Sheets.

Open-End Loans

Open-End loan balances as of ~~June 30, 2018~~March 31, 2019 increased by ~~$64.3~~$189.2 million ~~or 240.0%~~ compared to ~~June 30, 2017 from year-over-year growth in Kansas and Tennessee of 26.9% and 20.6%, respectively,~~March 31, 2018, primarily due to the ~~third quarter of 2017~~ launch of Open-End in ~~Virginia, conversion~~Canada in late 2017, which accounted for $167.1 million of ~~most of Alberta's Unsecured Installment loans to~~the total loan growth. Open-End ~~loans and the launch of Open-End loans in Ontario. Open-End adoption~~balances in Canada ~~accelerated this quarter as related loan balances~~ grew ~~$34.3~~$26.0 million sequentially from the ~~first quarter.~~fourth quarter of 2018 ($22.2 million on a constant currency basis). Remaining year-over-year loan growth was driven by the organic growth in seasoned markets, such as Virginia, Tennessee and Kansas.

Q1 2019 Open-End Loss Recognition Change

Effective January 1, 2019, we modified the timeframe in which we charge-off Open-End loans and made related refinements to our loss provisioning methodology. Prior to January 1, 2019, we deemed Open-End loans uncollectible and charged-off when a customer missed a scheduled payment and the loan was considered past-due. Because of our continuing shift to Open-End loans in Canada and our analysis of payment patterns on early-stage versus late-stage delinquencies, we revised our estimates and now consider Open-End loans uncollectible when the loan has been contractually past-due for 90 consecutive days. Consequently, past-due Open-End loans and related accrued interest now remain in loans receivable for 90 days before being charged off against the allowance for loan losses. All recoveries on charged-off loans are credited to the allowance for loan losses. We evaluate the adequacy of the allowance for loan losses compared to the related gross loans receivable balances that include accrued interest.

The aforementioned change was treated as a change in accounting estimate and applied prospectively beginning January 1, 2019.

The change affects comparability to prior periods as follows:

Revenues: for the quarter ended March 31, 2019, revenues include accrued interest on past-due loan balances of $8.9 million, while revenues in prior periods do not include comparable amounts.

Provision for Losses: prospectively, past-due, unpaid balances plus related accrued interest charge-off on day 91. Provision expense is affected by total charge-offs less total recoveries ("NCOs") plus changes to the required allowance for loan losses. Because NCOs prospectively include unpaid principal and up to 90 days of related accrued interest, NCO amounts and rates are higher and the required Open-End Allowance for loan losses as a percentage of Open-End gross loans receivable is higher. The Open-End Allowance for loan losses as a percentage of Open-End gross loans receivable ~~declined year-over-year and sequentially, primarily due~~rose from 9.6% as of December 31, 2018 to ~~geographic mix and seasoning~~19.5% as of March 31, 2019.

The following table reports first quarter Open-End loan performance including the effect of the ~~U.S. portfolio. At June 30,~~Q1 2019 Open-End Loss Recognition Change:



	2019			2018
(dollars in thousands, unaudited)	First Quarter			Fourth Quarter			Third Quarter			Second Quarter			First Quarter
Open-End loans:
Revenue	$	52,869		$	47,228		$	40,290		$	27,222		$	27,223
Provision for losses	25,317			28,337			31,686			14,848			11,428
Net revenue	$	27,552		$	18,891		$	8,604		$	12,374		$	15,795
Net charge-offs	$	(1,521	)	$	25,218		$	23,579		$	11,924		$	10,972
Open-End gross loan balances:
Open-End gross loans receivable	$	240,790		$	207,333		$	184,067		$	91,033		$	51,564
Average Open-End gross loans receivable	$	224,062		$	195,700		$	137,550		$	71,299		$	49,756
Open-End allowance for loan losses:
Allowance for loan losses	$	46,963		$	19,901		$	18,013		$	9,717		$	6,846
Open-End Allowance for loan losses as a percentage of Open-End gross loans receivable	19.5		%	9.6		%	9.8		%	10.7		%	13.3		%
Open-End past-due balances:
Open-End past-due gross loans receivable	$	32,444		$	—		$	—		$	—		$	—
Past-due Open-End gross loans receivable - percentage	13.5		%	—		%	—		%	—		%	—		%

In addition, the following table illustrates, on a pro forma basis, the results in the first quarter of 2019 if the Q1 2019 Open-End Loss Recognition Change had been applied to our outstanding Open-End loan portfolio as of December 31, 2018. This table is illustrative of retrospective application to determine the NCOs that would have been incurred in first quarter of 2019 from the December 31, 2018 ~~Canadian~~loan book. The purpose of this pro forma illustration is primarily to provide a representative level of NCO rates from applying the Q1 2019 Open-End gross loans receivable comprised 56.4% of the total, compared to none at the end of the prior year quarter. FPDs for the U.S. Open-End portfolio have improved an average of approximately 50 basis points, or 2%, versus the same periods a year ago primarily because of seasoning and scoring improvements in mature states, and are improving sequentially as the Virginia new market portfolio seasons.Loss Recognition Change.


	2018						2017
Pro Forma																2019
(dollars in thousands, unaudited)	Second Quarter			First Quarter			Fourth Quarter			Third Quarter			Second Quarter			First Quarter
Open-End loans:
Revenue	$	27,222		$	27,223		$	21,154		$	18,630		$	15,805		$	52,869
Provision for losses	14,848			11,428			8,334			6,348			4,298			25,317
Net revenue	$	12,374		$	15,795		$	12,820		$	12,282		$	11,507		$	27,552
Net charge-offs	$	11,924		$	10,972		$	6,799		$	5,991		$	4,343		$	31,788
Open-End gross loan balances:
Open-End gross loans receivable	$	91,033		$	51,564		$	47,949		$	32,133		$	26,771		$	240,790
Average Open-End gross loans receivable																$	245,096
Net-charge offs as a percentage of average gross loans receivable																13.0		%
Open-End allowance for loan losses:
Allowance for loan losses	$	9,717		$	6,846		$	6,426		$	4,880		$	4,523		$	46,963
Open-End Allowance for loan losses as a percentage of Open-End gross loans receivable	10.7		%	13.3		%	13.4		%	15.2		%	16.9		%	19.5		%
Open-End ratios:
Provision as a percentage of gross loans receivable	16.3		%	22.2		%	17.4		%	19.8		%	16.1		%
Open-End past-due balances:
Open-End past-due gross loans receivable																$	32,444
Past-due Open-End gross loans receivable - percentage																13.5		%

Single-Pay

Single-Pay revenue and related loans receivable during the three months ended ~~June 30,~~March 31, 2019 declined year-over-year compared to the three months ended March 31, 2018, ~~declined slightly year-over-year,~~ primarily due to regulatory changes in Canada (rate changes in ~~Alberta,~~ Ontario and British Columbia) ~~and~~that accelerated the shift to Open-End loans, as well as a continued general product shift away from Single-Pay to Installment and Open-End loans in ~~all countries compared to~~ the ~~three months ended June 30, 2017. Even with the~~U.S. and Canada. The aforementioned ~~accelerated~~ Open-End growth in Canada ($167.1 million year-over-year) in part came at the expense of Single-Pay loan balances, ~~in Canada only~~which shrank ~~sequentially~~year-over-year by ~~$1.4~~$15.4 million. ~~Provision for losses and Net charge-offs were consistent for the quarter and Single Pay Allowance for loan losses as a percentage of gross loans receivable remained consistent sequentially.~~

The Single-Pay NCO rate improved 160 bps year-over-year.


	2018						2017									2019			2018
(dollars in thousands, unaudited)	Second Quarter			First Quarter			Fourth Quarter			Third Quarter			Second Quarter			First Quarter			Fourth Quarter			Third Quarter			Second Quarter			First Quarter
Single-pay loans:
Revenue	$	61,602		$	63,705		$	70,868		$	70,895		$	63,241		$	46,761		$	49,696		$	50,614		$	58,325		$	60,357
Provision for losses	14,527			11,302			17,952			20,632			14,289			8,268			12,825			12,757			13,101			9,892
Net revenue	$	47,075		$	52,403		$	52,916		$	50,263		$	48,952		$	38,493		$	36,871		$	37,857		$	45,224		$	50,465
Net charge-offs	$	14,543		$	12,698		$	17,362		$	20,515		$	13,849		$	8,610		$	11,838		$	12,892		$	12,976		$	11,518
Single-Pay gross loan balances:
Single-Pay gross loans receivable	$	89,575		$	87,075		$	99,400		$	94,476		$	91,230		$	69,753		$	80,823		$	77,390		$	84,665		$	82,041
Average Single-Pay gross loans receivable																$	75,288		$	79,107		$	81,028		$	83,353		$	88,285
Single-Pay Allowance for loan losses	$	4,372		$	4,485		$	5,915		$	5,342		$	5,313		$	3,897		$	4,189		$	3,293		$	3,604		$	3,514
Single-Pay Allowance for loan losses as a percentage of Single-Pay gross loans receivable	4.9		%	5.2		%	6.0		%	5.7		%	5.8		%	5.6		%	5.2		%	4.3		%	4.3		%	4.3		%

Gross Combined Loans Receivable

The following table summarizes Company Owned gross loans receivable, a GAAP balance sheet measure, and reconciles it to gross combined loans receivable, a non-GAAP measure⁽¹⁾, including loans originated by third-party lenders through CSO programs, which are not included in our Condensed Consolidated Financial Statements but from which we earn revenue and for which we provide a guarantee to the ~~lender. Management believes this analysis provides investors with important information needed to evaluate overall lending performance.~~

lender:


	Three Months Ended										For the Period Ended
(in millions)	June 30, 2018		March 31, 2018		December 31, 2017		September 30, 2017		June 30, 2017		March 31, 2019		December 31, 2018		September 30, 2018		June 30, 2018		March 31, 2018
Company Owned gross loans receivable	$	444.6	$	389.8	$	432.8	$	393.4	$	350.3	$	553.2	$	571.5	$	537.8	$	420.6	$	369.3
Gross loans receivable Guaranteed by the Company	69.2		57.1		78.8		71.2		62.1		61.9		80.4		78.8		69.2		57.1
Gross combined loans receivable	$	513.8	$	446.9	$	511.6	$	464.6	$	412.4	$	615.1	$	651.9	$	616.6	$	489.8	$	426.4
(1) See "Non-GAAP Financial Measures" below for definition and additional information.											(1) See "Non-GAAP Financial Measures" below for definition and additional information.

Gross combined loans receivable by product are presented ~~below:~~below (year-over-year sequential comparisons for Open-End are affected by the Q1 2019 Open-End Loss Recognition Change):

Gross combined loans receivable increased ~~$101.4~~$188.7 million, or ~~24.6%~~44.2%, to ~~$513.8~~$615.1 million as of ~~June 30, 2018~~March 31, 2019 compared to ~~$412.4~~$426.4 million as of ~~June 30, 2017.~~March 31, 2018. Geographically, gross combined loans receivable grew ~~23.6%, 33.8%~~18.4% and ~~36.0%~~125.8%, respectively, in the U.S. and Canada, explained further by product in the following sections. Sequentially, gross combined loans receivable declined $36.8 million, or 5.7%, for the three months ended March 31, 2019 compared to $65.6 million, or 13.3%, for the three months ended March 31, 2018 on expected and normal seasonal trends from U.S. federal income tax refunds. The sequential decline for the three months ended March 31, 2019 was offset by continued growth in Canada ~~and U.K.~~Open-End products, discussed further below.

Results of Operations - CURO Group Consolidated Operations

Condensed Consolidated Statements of ~~Income~~Operations

(Unaudited)


(in thousands)	Three Months Ended June 30,									Six Months Ended June 30,
	2018		2017		Change $			Change %		2018		2017		Change $			Change %
(in thousands, unaudited)																			Three Months Ended March 31,
																			2019		2018			Change $			Change %
Revenue	$	248,983	$	216,944	$	32,039		14.8	%	$	510,741	$	441,524	$	69,217		15.7	%	$	277,939	$	250,843		$	27,096		10.8	%
Provision for losses	91,986		65,446		26,540			40.6	%	173,017		127,182		45,835			36.0	%	102,385		76,883			25,502			33.2	%
Net revenue	156,997		151,498		5,499			3.6	%	337,724		314,342		23,382			7.4	%	175,554		173,960			1,594			0.9	%
Advertising costs	17,554		11,641		5,913			50.8	%	27,310		19,329		7,981			41.3	%	7,786		7,885			(99		)	(1.3	)%
Non-advertising costs of providing services	59,031		57,855		1,176			2.0	%	120,757		118,106		2,651			2.2	%	62,271		60,229			2,042			3.4	%
Total cost of providing services	76,585		69,496		7,089			10.2	%	148,067		137,435		10,632			7.7	%	70,057		68,114			1,943			2.9	%
Gross margin	80,412		82,002		(1,590		)	(1.9	)%	189,657		176,907		12,750			7.2	%	105,497		105,846			(349		)	(0.3	)%

Operating (income) expense
Corporate, district and other	38,655		36,557		2,098			5.7	%	79,109		69,550		9,559			13.7	%
Operating expense
Corporate, district and other expenses																			49,088		35,429			13,659			38.6	%
Interest expense	20,465		18,484		1,981			10.7	%	42,814		41,850		964			2.3	%	17,690		22,354			(4,664		)	(20.9	)%
Loss on extinguishment of debt	—		—		—			#		11,683		12,458		(775		)	(6.2	)%	—		11,683			(11,683		)	#
Total operating expense	59,120		55,041		4,079			7.4	%	133,606		123,858		9,748			7.9	%	66,778		69,466			(2,688		)	(3.9	)%
Net income before income taxes	21,292		26,961		(5,669		)	(21.0	)%	56,051		53,049		3,002			5.7	%
Income from continuing operations before income taxes																			38,719		36,380			2,339			6.4	%
Provision for income taxes	5,317		10,619		(5,302		)	(49.9	)%	16,784		20,069		(3,285		)	(16.4	)%	10,046		11,467			(1,421		)	(12.4	)%
Net income from continuing operations																			28,673		24,913			3,760			15.1	%
Net income (loss) from discontinued operations, net of tax																			8,375		(1,621		)	9,996			#
Net income	$	15,975	$	16,342	$	(367	)	(2.2	)%	$	39,267	$	32,980	$	6,287		19.1	%	$	37,048	$	23,292		$	13,756		59.1	%
# - Variance greater than 100% or not meaningful.
# - Change greater than 100% or not meaningful.																			# - Change greater than 100% or not meaningful.

For the three months ended ~~June 30,~~March 31, 2019 and 2018 ~~and 2017~~

Revenue and Net Revenue

Revenue increased ~~$32.0~~$27.1 million, or ~~14.8%~~10.8%, to ~~$249.0~~$277.9 million for the three months ended ~~June 30, 2018~~March 31, 2019 from ~~$216.9~~$250.8 million for the three months ended ~~June 30, 2017.~~March 31, 2018. Revenue for the three months ended March 31, 2019 includes accrued interest on past-due Open-End loan balances of $8.9 million from the Q1 2019 Open-End Loss Recognition Change, offset by higher provision rate and higher allowance discussed further below. U.S. revenue increased ~~16.1% on~~10.5% driven by volume growth. Canadian revenue increased ~~7.9%~~12.0% (13.9% on a constant currency basis) as volume growth offset yield compression from negative regulatory impacts on Single-Pay loan rates and the significant product ~~mix. U.K. revenue increased by 23.3%.~~mix-shift to Open-End loans.

Provision for losses increased ~~$26.5~~$25.5 million, or ~~40.6%~~33.2%, to ~~$92.0~~$102.4 million for the three months ended ~~June 30, 2018~~March 31, 2019 from ~~$65.4~~$76.9 million for the three months ended ~~June 30, 2017. Refer to~~March 31, 2018 because of the Q1 2019 Open-End Loss Recognition Change, increased earning asset volume year-over-year and higher NCO rates as further described in "--Segment Analysis" ~~below for further explanations on the provision for losses.~~below.

Cost of Providing Services

The total cost of providing services increased ~~$7.1~~$1.9 million, or ~~10.2%~~2.9%, to ~~$76.6~~$70.1 million in the three months ended ~~June 30, 2018,~~March 31, 2019, compared to ~~$69.5~~$68.1 million in the three months ended ~~June 30, 2017~~March 31, 2018, primarily because of increased loan servicing costs on higher volume, higher performance-based variable compensation and $0.2 million of restructuring costs to better align our store staffing with in-store customer ~~acquisition spend analyzed further in "--Segment Analysis" below.~~traffic growth as more of our customers transact with us digitally.

Operating Expenses

Corporate, district and other ~~expense~~expenses increased ~~$2.1~~$13.7 million, or ~~5.7%~~38.6%, primarily as a result of $7.8 million for the bondholder consent associated with discontinuing our U.K. operations and other related ~~to increased headcount and $1.0~~U.K. separation costs, $1.5 million of ~~additional share-based compensation expense.~~restructuring costs from our previously-announced reduction-in-force during January 2019, higher professional fees associated with our first year-end for full compliance with Sarbanes-Oxley, and higher performance-based variable compensation.

Provision for Income Taxes

The effective income tax rate from continuing operations for the three months ended ~~June 30, 2018~~March 31, 2019 was ~~25.0%~~25.9%, compared to ~~39.4%~~31.5% for the three months ended ~~June 30, 2017.~~March 31, 2018. As a result of the Tax Cuts and Jobs Act of 2017 ~~("2017~~(the "2017 Tax Act"), the corporate income tax rate for the U.S. decreased from 35% in 2017 to 21%, effective in 2018. NoThe income tax ~~benefit is recognized~~provision for ~~losses in~~ the ~~U.K.~~

~~For the six~~three months ended ~~June 30,~~March 31, 2018 ~~and 2017~~

~~Revenue and Net Revenue~~

Revenue increased $69.2 million, or 15.7%, to $510.7 million for the six months ended June 30, 2018 from $441.5 million for the six months ended June 30, 2017. U.S. revenue increased 16.8% on volume growth. Canadian revenue increased 9.5% as volume growth offset regulatory impacts on rates and product mix. U.K. revenue increased by 24.4%.

Provision for losses increased $45.8 million, or 36.0%, to $173.0 million for the six months ended June 30, 2018 from $127.2 million for the six months ended June 30, 2017. Refer to "--Segment Analysis" below for further explanations on the provision for losses.

~~Cost of Providing Services~~

The total cost of providing services increased $10.6 million, or 7.7%, to $148.1 million in the six months ended June 30, 2018, compared to $137.4 million in the six months ended June 30, 2017, primarily because of higher customer acquisition spend.

~~Operating Expenses~~

Corporate, district and other expense increased $9.6 million, or 13.7%, primarily due to $5.1 million in additional compensation expense related to increased collections activity, online customer support and technology headcount and $2.7 million of additional share-based compensation expense.

~~Provision for Income Taxes~~

The effective tax rate for the six months ended June 30, 2018 was 29.9% compared to 37.8% for the six months ended June 30, 2017. As a result of the 2017 Tax Act, the federal corporate income tax rate for the U.S. decreased from 35% to 21%, effective in 2018. The provision for income tax as of June 30, 2018 includes an additional accrualincluded accruals of $1.2 million for adjustments to estimates of the tax on prior years' foreign repatriation and ~~an estimated~~$0.6 million for the then-new Global Intangible Low-Taxed Income ("GILTI") ~~tax of $0.6 million.~~tax. The $1.2 million additional provision on prior years' foreign repatriation was the result of additional interpretative guidance from the IRS issued during the

first quarter of 2018. These two items increased the effective income tax rate by 4.9 percentage points. Excluding the impact of these items, the effective income tax rate for the three months ended March 31, 2018 ~~while the GILTI provision is a new, continuous requirement under the 2017 Tax Act.~~

would have been 26.6%.

Segment Analysis

We report financial results for ~~three~~two reportable segments: the U.S.~~, Canada~~ and ~~the U.K.~~Canada. Following is a ~~recap~~summary of results of operations for the segment and period indicated:


U.S. Segment Results	Three Months Ended June 30,											Three Months Ended March 31,
(dollars in thousands)	2018			2017			Change $			Change %
(dollars in thousands, unaudited)												2019			2018			Change $			Change %
Revenue	$	190,126		$	163,764		$	26,362		16.1	%	$	226,119		$	204,593		$	21,526		10.5	%
Provision for losses	71,987			51,958			20,029			38.5	%	84,980			64,333			20,647			32.1	%
Net revenue	118,139			111,806			6,333			5.7	%	141,139			140,260			879			0.6	%
Advertising costs	12,409			7,897			4,512			57.1	%	6,354			5,159			1,195			23.2	%
Non-advertising costs of providing services	41,682			40,790			892			2.2	%	44,982			43,757			1,225			2.8	%
Total cost of providing services	54,091			48,687			5,404			11.1	%	51,336			48,916			2,420			4.9	%
Gross margin	64,048			63,119			929			1.5	%	89,803			91,344			(1,541		)	(1.7	)%
Corporate, district and other	28,221			27,993			228			0.8	%
Corporate, district and other expenses												43,880			30,532			13,348			43.7	%
Interest expense	20,465			18,423			2,042			11.1	%	14,728			22,297			(7,569		)	(33.9	)%
Loss on extinguishment of debt												—			11,683			(11,683		)	#
Total operating expense	48,686			46,416			2,270			4.9	%	58,608			64,512			(5,904		)	(9.2	)%
Segment operating income	15,362			16,703			(1,341		)	(8.0	)%	31,195			26,832			4,363			16.3	%
Interest expense	20,465			18,423			2,042			11.1	%	14,728			22,297			(7,569		)	(33.9	)%
Depreciation and amortization	3,379			3,393			(14		)	(0.4	)%	3,726			3,407			319			9.4	%
EBITDA	39,206			38,519			687			1.8	%	49,649			52,536			(2,887		)	(5.5	)%
Legal settlement cost	—			1,950			(1,950		)
Loss on extinguishment of debt												—			11,683			(11,683		)
Restructuring and other costs												1,617			—			1,617
Other adjustments	(66		)	(20		)	(46		)			(105		)	(59		)	(46		)
Transaction related costs	—			146			(146		)
Transaction-related costs												7,817			—			7,817
Share-based cash and non-cash compensation	2,181			1,176			1,005					2,172			1,842			330
Adjusted EBITDA	$	41,321		$	41,771		$	(450	)	(1.1	)%	$	61,150		$	66,002		$	(4,852	)	(7.4	)%
# - Change greater than 100% or not meaningful.												# - Change greater than 100% or not meaningful.

U.S. Segment Results - For the three months ended ~~June 30,~~March 31, 2019 and 2018 ~~and 2017~~

~~Second~~First quarter U.S. revenues increased by ~~$26.4~~$21.5 million, or ~~16.1%~~10.5%, to ~~$190.1~~$226.1 million.

~~U.S~~ U.S. revenue growth was driven by a ~~$64.2~~$59.6 million, or ~~21.1%~~18.4%, increase in gross combined loans receivable to ~~$367.7~~$383.4 million at ~~June 30, 2018~~March 31, 2019, compared to ~~$303.6~~$323.8 million at ~~June 30, 2017. We experienced volume growth primarily~~March 31, 2018. Additionally, U.S. revenue for the three months ended March 31, 2019 includes accrued interest on past-due Open-End loan balances of $7.6 million from the Q1 2019 Open-End Loss Recognition Change, offset by higher provision rate and higher allowance discussed further below. Unsecured Installment receivables ~~which~~ increased year-over-year ~~$44.0~~$33.8 million, or ~~27.6%~~19.5%. Open-End receivables increased $22.2 million, or 64.2% year-over-year, primarily because of organic growth in Virginia, Tennessee and Kansas. Secured Installment gross combined receivables increased from the prior year period by ~~$7.4~~$0.6 million, or ~~9.2%~~0.7%, ~~and Open-End~~while Single-Pay receivables ~~increased $12.9~~grew $3.1 million, or 48.3% compared to the prior year period. Open-End growth was driven by year-over-year expansion in Kansas and Tennessee of 26.9% and 20.6%, respectively, and the 2017 third quarter launch of Open-End in Virginia.9.3%.

The increase of ~~$20.0~~$20.6 million, or ~~38.5%~~32.1%, in the provision for losses was ~~primarily driven by~~due to (i) the ~~increase in combined loans receivable and the aforementioned 2017~~ Q1 2019 Open-End Loss Recognition ~~Change.~~Change, (ii) year-over-year higher earning asset volume for Unsecured Installment loans, (iii) higher NCO rates, primarily for Company Owned Unsecured Installment loans, and (iv) the first quarter 2018 provision for losses, which was impacted favorably by adjustments to allowance coverage levels. The provision for loan losses and related loan portfolio performance is further analyzed under "Loan Volume and Performance Analysis" above.

U.S. cost of providing services for the three months ended ~~June 30, 2018 were $54.1~~March 31, 2019 was $51.3 million, an increase of ~~$5.4~~$2.4 million, or ~~11.1%~~4.9%, compared to ~~$48.7~~$48.9 million for the three months ended ~~June 30, 2017, primarily~~March 31, 2018. The increase was due to ~~$4.5~~$1.2 million, or ~~57.1%~~23.2%, higher advertising ~~costs. Advertising for~~costs, concentrated in the ~~U.S.~~ online ~~channel comprised $3.4 million of the year-over-year increase, $2.6 million of which related to our new Avio installment loans. U.S. store advertising rose 22.2% year-over-year.~~channel. Advertising as a percentage of revenue was ~~6.5%~~2.8% for the three months ended March 31, 2019, up slightly from the prior-year period of 2.5%. The remaining increase is due to higher performance-based variable compensation costs and in the ~~range we expected given the ramping of Avio and mix shift to online.~~aforementioned restructuring costs.

Corporate, district and other operating expenses ~~remained consistent with~~increased $13.3 million, or 43.7%, compared to the same period in the prior ~~year. Interest~~year, primarily due to $7.8 million of U.K. disposition-related costs, $1.9 million higher performance-based variable compensation costs, $1.4 million of restructuring costs and $1.3 million higher professional fees.

U.S. interest expense ~~increased $2.0~~for the first quarter of 2019 decreased by $7.6 million ~~resulting~~compared to the prior-year period, primarily due to our refinancing activities in 2018. During the third quarter of 2018, we issued $690.0 million of 8.25% Senior Secured Notes and used the proceeds from ~~interest on~~ the ~~additional~~issuance to extinguish our higher interest-rate $527.5 million 12.00% Senior Secured ~~Notes issued~~Notes. In addition, we entered into a Non-Recourse Canada SPV Facility in ~~November 2017.~~

the third quarter of 2018 with a lower interest rate than our previous U.S. SPV facility, which we fully repaid with the proceeds from our 8.25% Senior Secured Notes.

U.S. Segment Results Six Months Ended June 30,
(dollars in thousands) 2018 2017 Change $ Change %
Revenue $ 394,719
$ 338,086
$ 56,633
16.8 %
Provision for losses 136,320
101,152
35,168
34.8 %
Net revenue 258,399
236,934
21,465
9.1 %
Advertising costs 17,568
12,591
4,977
39.5 %
Non-advertising costs of providing services 85,439
84,091
1,348
1.6 %
Total cost of providing services 103,007
96,682
6,325
6.5 %
Gross margin 155,392
140,252
15,140
10.8 %
Corporate, district and other 58,753
53,042
5,711
10.8 %
Interest expense 42,762
41,768
994
2.4 %
Gain on extinguishment of debt 11,683
12,458
(775 ) (6.2 )%
Total operating expense 113,198
107,268
5,930
5.5 %
Segment operating income 42,194
32,984
9,210
27.9 %
Interest expense 42,762
41,768
994
2.4 %
Depreciation and amortization 6,786
6,753
33
0.5 %
EBITDA 91,742
81,505
10,237
12.6 %
Gain on extinguishment of debt 11,683
12,458
(775 )
Legal settlement cost —
1,950
(1,950 )
Other adjustments (125 ) (14 ) (111 )
Transaction related costs —
2,400
(2,400 )
Share-based cash and non-cash compensation 4,023
1,302
2,721

Adjusted EBITDA $ 107,323
$ 99,601
$ 7,722
7.8 %

~~U.S. Segment Results - For the six months ended June 30, 2018 and 2017~~

~~U.S. revenues increased by $56.6 million, or 16.8%, to $394.7 million for the six months ended June 30, 2018.~~

U.S revenue growth was driven by a $64.2 million, or 21.1%, increase in gross combined loans receivable to $367.7 million at June 30, 2018 compared to $303.6 million in the prior year period. We experienced volume growth primarily from Unsecured Installment receivables, which increased year-over-year $44.0 million, or 27.6%. Secured Installment receivables increased from the prior year period by $7.4 million, or 9.2%, and Open-End receivables increased $12.9 million, or 48.3%, compared to the prior year period. Open-End growth was driven by year-over-year expansion in Kansas and Tennessee of 26.9% and 20.6%, respectively, and the 2017 third quarter launch of Open-End in Virginia.

~~The increase of $35.2 million, or 34.8%, in provision for losses was primarily driven by the increase in combined loans receivable as previously discussed.~~

U.S. cost of providing services were $103.0 million, an increase of $6.3 million, or 6.5%, compared to $96.7 million for the six months ended June 30, 2017. The increase is primarily due to $5.0 million, or 39.5%, higher advertising costs.

The $5.7 million increase of corporate, district and other operating expenses includes $4.0 million of additional compensation expense, primarily due to increased collections, online customer support and technology headcount and $2.7 million of additional share-based compensation expense.


Canada Segment Results	Three Months Ended June 30,										Three Months Ended March 31,
(dollars in thousands)	2018		2017			Change $			Change %
(dollars in thousands, unaudited)											2019			2018		Change $			Change %
Revenue	$	47,043	$	43,595		$	3,448		7.9	%	$	51,820		$	46,250	$	5,570		12.0	%
Provision for losses	14,360		10,300			4,060			39.4	%	17,405			12,550		4,855			38.7	%
Net revenue	32,683		33,295			(612		)	(1.8	)%	34,415			33,700		715			2.1	%
Advertising costs	2,704		2,264			440			19.4	%	1,432			2,726		(1,294		)	(47.5	)%
Non-advertising costs of providing services	16,679		15,069			1,610			10.7	%	17,289			16,472		817			5.0	%
Total cost of providing services	19,383		17,333			2,050			11.8	%	18,721			19,198		(477		)	(2.5	)%
Gross margin	13,300		15,962			(2,662		)	(16.7	)%	15,694			14,502		1,192			8.2	%
Corporate, district and other	4,759		4,372			387			8.9	%
Corporate, district and other expenses											5,208			4,897		311			6.4	%
Interest expense	7		53			(46		)	(86.8	)%	2,962			57		2,905			#
Total operating expense	4,766		4,425			341			7.7	%	8,170			4,954		3,216			64.9	%
Segment operating income	8,534		11,537			(3,003		)	(26.0	)%	7,524			9,548		(2,024		)	(21.2	)%
Interest expense	7		53			(46		)	(86.8	)%	2,962			57		2,905			#
Depreciation and amortization	1,091		1,100			(9		)	(0.8	)%	1,194			1,128		66			5.9	%
EBITDA	9,632		12,690			(3,058		)	(24.1	)%	11,680			10,733		947			8.8	%
Restructuring and other costs											135			—		135
Other adjustments	157		(158		)	315					(111		)	16		(127		)
Adjusted EBITDA	$	9,789	$	12,532		$	(2,743	)	(21.9	)%	$	11,704		$	10,749	$	955		8.9	%
# - Change greater than 100% or not meaningful.											# - Change greater than 100% or not meaningful.

Canada Segment Results - For the three months ended ~~June 30,~~March 31, 2019 and 2018 ~~and 2017~~

Canada revenue ~~improved $3.4~~increased $5.6 million, or ~~7.9%~~12.0%, to ~~$47.0~~$51.8 million for the three months ended ~~June 30, 2018~~March 31, 2019 from ~~$43.6~~$46.3 million in the prior year period. On a constant currency basis, revenue ~~was up $1.6~~increased $6.5 million, or ~~3.6%~~13.9%. Revenue growth in Canada was impacted by the significant asset growth and product mix shift from the accelerated transition from Single-Pay and Unsecured Installment loans to ~~Unsecured Installment and~~ Open-End loans that have a lower yield. Additionally, Canada revenues for the three months ended March 31, 2019 includes accrued interest on past-due Open-End loan balances of $1.3 million from the Q1 2019 Open-End Loss Recognition Change, offset by higher provision rate and ~~the impact of~~higher allowance discussed further below. Single-Pay yields were negatively affected by regulatory rate changes in ~~Alberta,~~ Ontario and British Columbia. On a constant currency basis, total gross loan receivables grew by $137.3 million, or 133.8%, compared to the same period in the prior year.

As expected, Single-Pay revenue decreased ~~$1.6~~$14.7 million, or ~~4.6%~~42.9%, to ~~$33.3~~$19.6 million for the three months ended ~~June 30, 2018~~March 31, 2019, and Single-Pay ~~ending~~ receivables decreased ~~$1.1~~$15.4 million, or ~~2.2%~~31.5%, to ~~$47.3~~$33.4 million from ~~$48.4~~$48.7 million in the prior ~~year period~~year. The decreases in Single-Pay revenue and receivables were due to the product mix shift in ~~Ontario where we launched~~Canada from Single-Pay loans to Open-End loans ~~in the fourth quarter of 2017.~~and by regulatory changes effective January and July 2018 that lowered Single Pay pricing year-over-year.

Canadian non-Single-Pay revenue increased ~~$5.0~~$20.3 million, or ~~58.4%~~169.5%, to ~~$13.7~~$32.2 million compared to ~~$8.6~~$12.0 million the same quarter a year ago, on ~~$31.9~~$144.5 million, or ~~74.5%~~268.2%, growth in related loan balances. The increase was primarily related to the launch of Open-End products in Alberta and Ontario in the fourth quarter of ~~2017.~~2017, and significant expansion of the Open-End product in Ontario in late 2018.

The provision for losses increased ~~$4.1~~$4.9 million, or ~~39.4%~~38.7%, to ~~$14.4~~$17.4 million for the three months ended ~~June 30, 2018~~March 31, 2019 compared to ~~$10.3~~$12.6 million in the ~~prior year~~prior-year period, because of upfront provisioning on ~~relative~~Open-End loan volumes ~~(total Open-End and Installment loans grew sequentially by $20.9 million this second quarter compared to $10.9 million in the second quarter of 2017),~~ and mix shift from Single-Pay loans toand Unsecured Installment ~~and~~to Open-End loans. Total Open-End and Installment loans grew by $24.8 million sequentially during the first quarter of 2019, compared to sequential growth of $1.9 million in the first quarter of 2018. On a constant currency basis, provision for losses increased ~~$3.5~~by $5.1 million, or ~~33.7%~~41.0%.

The total cost of providing services in Canada ~~increased $2.1 million, or 11.8%, to $19.4 million~~remained consistent for the three months ended ~~June 30, 2018,~~March 31, 2019 compared to ~~$17.3 million in~~ the ~~prior year~~prior-year period. Advertising ~~rose 19.4% due to increased spend for online and stores to support the ramp up of our LendDirect brand. The~~costs were lower by $1.3 million, or 47.5%, partially offset by an increase in non-advertising cost of providing services of $0.8 million. There was ~~due primarily to an increase in salary expense and occupancy expense from higher store counts. We have opened seven LendDirect stores since~~no material impact on the ~~second quarter of 2017. On a constant currency basis,~~ cost of providing services ~~increased $1.3 million, or 7.3%.~~from exchange rate changes.

Canada operating expenses ~~remained relatively flat~~increased $3.2 million, or 64.9%, to ~~the same period in the prior year. Total operating expense increased to $4.8~~$8.2 million in the three months ended ~~June 30, 2018,~~March 31, 2019 from ~~$4.4 million in the prior year period.~~

Canada Segment Results Six Months Ended June 30,
(dollars in thousands) 2018 2017 Change $ Change %
Revenue $ 93,293
$ 85,161
$ 8,132
9.5 %
Provision for losses 26,910
20,528
6,382
31.1 %
Net revenue 66,383
64,633
1,750
2.7 %
Advertising costs 5,430
4,045
1,385
34.2 %
Non-advertising costs of providing services 33,151
30,326
2,825
9.3 %
Total cost of providing services 38,581
34,371
4,210
12.2 %
Gross margin 27,802
30,262
(2,460 ) (8.1 )%
Corporate, district and other 9,656
7,747
1,909
24.6 %
Interest expense 64
82
(18 ) (22.0 )%
Total operating expense 9,720
7,829
1,891
24.2 %
Segment operating income 18,082
22,433
(4,351 ) (19.4 )%
Interest expense 64
82
(18 ) (22.0 )%
Depreciation and amortization 2,219
2,219
—
— %
EBITDA 20,365
24,734
(4,369 ) (17.7 )%
Other adjustments 173
(472 ) 645

Adjusted EBITDA $ 20,538
$ 24,262
$ (3,724 ) (15.3 )%

~~Canada Segment Results - For the six months ended June 30, 2018 and 2017~~

Canada revenue improved $8.1 million, or 9.5%, to $93.3 million for the six months ended June 30, 2018 from $85.2 million in the prior year period. On a constant currency basis, revenue was up $4.2 million, or 4.9%. Revenue growth in Canada was impacted by the product transition from Single-Pay loans to Unsecured Installment and Open-End loans and the impact of regulatory rate changes in Alberta, Ontario and British Columbia.

Single-Pay revenue decreased $1.5 million, or 2.2%, to $67.6 million for the six months ended June 30, 2018 on related Single-Pay ending receivables decrease of $1.1 million, or 2.2%, to $47.3 million from $48.4$5.0 million in the prior year period, primarily due to ~~mix shift~~interest expense on the Non-Recourse Canada SPV Facility that began in ~~Ontario where we launched Open-End loans in the fourth quarter of 2017.~~

Canadian non-Single-Pay revenue increased $9.6 million, or 60.0%, to $25.7 million compared to $16.0 million the same period a year ago on $31.9 million, or 74.5%, growth in related loan balances. The increase was primarily related to the launch of Open-End products in Alberta and Ontario in the fourth quarter of 2017.

The provision for losses increased $6.4 million, or 31.1%, to $26.9 million for the six months ended June 30, 2018 compared to $20.5 million in the prior year period, because of relative loan volumes and mix shift from Single-Pay loans to Unsecured Installment and Open-End loans. On a constant currency basis, provision for losses increased $5.3 million, or 25.6%.

The cost of providing services in Canada increased $4.2 million, or 12.2%, to $38.6 million for the six months ended June 30, 2018, compared to $34.4 million in the prior year period. The increase was due primarily to $1.4 million, or 34.2%, higher advertising costs compared to the prior year period and an increase in occupancy expense from higher store counts. We have opened seven LendDirect stores since the second quarter of 2017. On a constant currency basis, cost of providing services increased $2.6 million, or 7.5%.

Operating expenses increased $1.9 million, or 24.2%, to $9.7 million in the six months ended June 30, 2018, from $7.8 million in the prior year period, due to increased collections and customer support payroll expenses from seasonality, increased volumes, expansion of the LendDirect business and product shifts from Single-Pay loans to Unsecured Installment and Open-End loans. On a constant currency basis, operating expenses increased $1.5 million, or 19.0%.August 2018.

U.K. Segment Results Three Months Ended June 30,
(dollars in thousands) 2018 2017 Change $ Change %
Revenue $ 11,814
$ 9,585
$ 2,229
23.3 %
Provision for losses 5,639
3,188
2,451
76.9 %
Net revenue 6,175
6,397
(222 ) (3.5 )%
Advertising costs 2,441
1,479
962
65.0 %
Non-advertising costs of providing services 670
1,997
(1,327 ) (66.4 )%
Total cost of providing services 3,111
3,476
(365 ) (10.5 )%
Gross margin 3,064
2,921
143
4.9 %
Corporate, district and other 5,675
4,192
1,483
35.4 %
Interest income (7 ) 9
16
#
Total operating expense 5,668
4,201
1,467
34.9 %
Segment operating loss (2,604 ) (1,280 ) (1,324 ) (103.4 )%
Interest income (7 ) 9
16
#
Depreciation and amortization 128
182
(54 ) (29.7 )%
EBITDA (2,483 ) (1,089 ) (1,394 ) (128.0 )%
Other adjustments (6 ) (12 ) 6

Adjusted EBITDA $ (2,489 ) $ (1,101 ) $ (1,388 ) (126.1 )%
# - Variance greater than 100% or not meaningful

~~U.K. Segment Results - For the three months ended June 30, 2018 and 2017~~

U.K. revenue improved $2.2 million, or 23.3%, to $11.8 million for the three months ended June 30, 2018 from $9.6 million in the prior year period. On a constant currency basis, revenue was up $1.5 million, or 16.0%. Provision for losses increased $2.5 million, and on a constant currency basis, increased $2.1 million, or 66.0%, due to upfront provisioning on volume growth and the high percentage of new customers in the origination mix. Installment loans in the U.K. grew sequentially by $3.7 million in the second quarter compared to $1.9 million in the second quarter of 2017.

The cost of providing services in the U.K. decreased $0.4 million, or 10.5%, for the three months ended June 30, 2018 compared to prior year period due to reduction in costs related to the completion of store closures in the third quarter of 2017, partially offset by higher customer acquisition spend. On a constant currency basis, the cost of providing services decreased $0.6 million, or 16.4%.

Corporate, district and other expenses increased $1.5 million, or 35.4%, to $5.7 million for the three months ended June 30, 2018 compared to the prior year period. This increase includes costs related to customer redress pursuant to a complaint resolution process for all lenders in the U.K. The cost in the second quarter of 2018 to administer the complaint resolution process and the direct customer redress paid or accrued totaled $1.4 million, an increase of $0.9 million compared to the prior year period. On a constant currency basis, corporate, district and other expenses increased $1.2 million, or 27.6%.

U.K. Segment Results Six Months Ended June 30,
(dollars in thousands) 2018 2017 Change $ Change %
Revenue $ 22,729
$ 18,277
$ 4,452
24.4 %
Provision for losses 9,787
5,502
4,285
77.9 %
Net revenue 12,942
12,775
167
1.3 %
Advertising costs 4,312
2,692
1,620
60.2 %
Non-advertising costs of providing services 2,167
3,689
(1,522 ) (41.3 )%
Total cost of providing services 6,479
6,381
98
1.5 %
Gross margin 6,463
6,394
69
1.1 %
Corporate, district and other 10,700
8,761
1,939
22.1 %
Interest income (12 ) 1
13
#
Total operating expense 10,688
8,762
1,926
22.0 %
Segment operating loss (4,225 ) (2,368 ) (1,857 ) 78.4 %
Interest income (12 ) 1
13
#
Depreciation and amortization 254
357
(103 ) (28.9 )%
EBITDA (3,983 ) (2,010 ) (1,973 ) 98.2 %
Other adjustments (42 ) (18 ) (24 )
Adjusted EBITDA $ (4,025 ) $ (2,028 ) $ (1,997 ) 98.5 %
# - Variance greater than 100% or not meaningful

~~U.K. Segment Results - For the six months ended June 30, 2018 and 2017~~

U.K. revenue improved $4.5 million, or 24.4%, to $22.7 million for the six months ended June 30, 2018 from $18.3 million in the prior year period. On a constant currency basis, revenue was up $2.5 million, or 13.9%. Provision for losses increased $4.3 million, and, on a constant currency basis, increased $3.5 million, or 62.9%, due to volume growth.

The cost of providing services in the U.K. increased $0.1 million, or 1.5%, for the six months ended June 30, 2018 compared to prior year period due to higher customer acquisition spend offset by a lower cost basis upon completion of store closures in the third quarter of 2017. On a constant currency basis, the cost of providing services decreased $0.5 million, or 7.4%.

Corporate, district and other expenses increased $1.9 million, or 22.1%, to $10.7 million for the six months ended June 30, 2018 compared to the prior year period. This increase includes costs related to customer redress pursuant to a complaint resolution process for all lenders in the U.K. The cost in the six months ended June 30, 2018 to administer the complaint resolution process and the direct customer redress paid or accrued totaled $2.9 million, an increase of $2.0 million compared to the prior year period. On a constant currency basis, corporate, district and other expenses increased $1.0 million, or 12.0%.

Supplemental Non-GAAP Financial Information

Non-GAAP Financial Measures

In addition to the financial information prepared in conformity with U.S. GAAP, we provide certain “non-GAAP financial ~~measures” as defined under SEC rules,~~measures,” including:

Adjusted Net Income and Adjusted Earnings Per Share, or the Adjusted Earnings Measures (net income from continuing operations plus or minus gain (loss) on extinguishment of debt, restructuring and other costs, goodwill and intangible asset impairments, transaction-related costs, share-based compensation, intangible asset amortization and cumulative tax effect of adjustments, on a total and per share basis);

EBITDA (earnings before interest, income taxes, depreciation and amortization);

Adjusted EBITDA (EBITDA plus or minus certain non-cash and other adjusting items); and

Gross Combined Loans Receivable (includes loans originated by third-party lenders through CSO programs which are not included in our ~~consolidated financial statements)~~Condensed Consolidated Financial Statements).

We believe that presentation of non-GAAP financial information is meaningful and useful in understanding the activities and business metrics of ~~our~~the Company's operations. We believe that these non-GAAP financial measures ~~reflect an additional~~offer another way ~~of viewing~~to view aspects of our business that, when viewed with ~~its~~our GAAP results, provide a more complete understanding of factors and trends affecting our business.

We believe that investors regularly rely on non-GAAP financial measures, such as Adjusted Net Income, Adjusted Earnings per Share, EBITDA and Adjusted EBITDA, to assess operating performance and that such measures may highlight trends in ~~our~~the business that may not otherwise be apparent when relying on financial measures calculated in accordance with U.S. GAAP. WeIn addition, we believe that the adjustments shown below are useful to investors in order to allow them to compare our financial results during the periods shown without the effect of each of these income or expense items. In addition, we believe that Adjusted Net Income, Adjusted Earnings per Share, EBITDA and Adjusted EBITDA are frequently used by securities analysts, investors and other interested parties in the evaluation of public companies in our industry, many of which present Adjusted Net Income, Adjusted Earnings per Share, EBITDA and/or Adjusted EBITDA when reporting their results.

In addition to reporting loans receivable information in accordance with U.S. GAAP, we provide Gross Combined Loans Receivable consisting of owned loans receivable plus loans originated by third-party lenders through the CSO programs, which we guarantee but do not include in the Condensed Consolidated Financial Statements. Management believes this analysis provides investors with important information needed to evaluate overall lending performance.

We provide non-GAAP financial information for informational purposes and to enhance understanding of our U.S. GAAP ~~consolidated financial statements.~~Condensed Consolidated Financial Statements. Adjusted Net Income, Adjusted Earnings per Share, EBITDA, Adjusted EBITDA and Gross Combined Loans Receivable should not be considered as alternatives to income from continuing operations, segment operating income or any other performance measure derived in accordance with U.S. GAAP, or as an alternative to cash flows from operating activities or any other liquidity measure derived in accordance with U.S. GAAP. ~~Rather, these measures~~Readers should ~~be considered~~consider the information in addition to, ~~results~~but not instead of or superior to, the financial statements prepared in accordance with U.S. ~~GAAP, but should not be considered a substitute for, or superior to, U.S. GAAP results.~~GAAP. This non-GAAP financial information may be determined or calculated differently by other companies, limiting the usefulness of those measures for comparative purposes.

Description and Reconciliations of Non-GAAP Financial Measures

Adjusted Net Income, Adjusted Earnings ~~Measures,~~per Share, EBITDA and Adjusted EBITDA measures have limitations as analytical tools, and you should not consider these measures in isolation or as a substitute for analysis of our income or cash flows as reported under U.S. GAAP. Some of these limitations are:

they do not include ~~our~~ cash expenditures or future requirements for capital expenditures or contractual commitments;

they do not include changes in, or cash requirements for, ~~our~~ working capital needs;

they do not include the interest expense, or the cash requirements necessary to service interest or principal payments on ~~our~~ debt;

depreciation and amortization are non-cash expense items reported in ~~our~~the statements of cash flows; and

other companies in our industry may calculate these measures differently, limiting their usefulness as comparative measures.

We calculate Adjusted Earnings per Share utilizing diluted shares outstanding at year-end. If we record a loss from continuing operations under U.S. GAAP, shares outstanding utilized to calculate Diluted Earnings per Share from continuing operations are equivalent to basic shares outstanding. Shares outstanding utilized to calculate Adjusted Earnings per Share from continuing

operations reflect the number of diluted shares we would have reported if reporting net income from continuing operations under U.S. GAAP.

As noted above, Gross Combined Loans Receivable includes loans originated by third-party lenders through CSO programs which are not included in the ~~consolidated financial statements~~Condensed Consolidated Financial Statements but from which we earn revenue and for which we provide a guarantee to the lender. Management believes this analysis provides investors with important information needed to evaluate overall lending performance.

We evaluate our stores based on revenue per store, ~~net charge-offs~~provision for losses at each store and store-level EBITDA, ~~per store,~~ with consideration given to the length of time a store has been open and its geographic location. We monitor newer stores for their progress to profitability and their rate of revenue growth.

We believe Adjusted Net Income, Adjusted Earnings ~~Measures,~~per Share, EBITDA and Adjusted EBITDA are used by investors to analyze operating performance and evaluate our ability to incur and service debt and ~~our~~the capacity for making capital expenditures. Adjusted EBITDA is also useful to investors to help assess our estimated enterprise value. The computation of Adjusted EBITDA as presented ~~below~~in this Form 10-Q may differ from the computation of similarly-titled measures provided by other companies.

Reconciliation of Net ~~Income~~income from continuing operations and Diluted Earnings per Share to Adjusted Net ~~Income~~income and Adjusted Diluted Earnings per Share, non-GAAP measures

Three Months Ended
June 30, Change
(in thousands except per share data) 2018 2017 $ %
Net income $ 15,975
$ 16,342
$ (367 ) (2.2 )%
Adjustments:
Loss on extinguishment of debt⁽¹⁾
—
—

Legal settlement costs⁽⁷⁾
—
1,950

Transaction related costs⁽²⁾
—
146

Share-based compensation⁽³⁾
2,181
1,180

Intangible asset amortization 655
590

Impact of tax law changes⁽⁶⁾
—
—

Cumulative tax effect of adjustments (709 ) (1,523 )
Adjusted Net Income $ 18,102
$ 18,685
$ (583 ) (3.1 )%

Net income $ 15,975
$ 16,342

Diluted Weighted Average Shares Outstanding⁽⁴⁾
47,996
38,987

Diluted Earnings per Share ⁽⁴⁾
$ 0.33
$ 0.42
$ (0.09 ) (21.4 )%
Per Share impact of adjustments to Net Income ⁽⁴⁾
0.05
0.06

Adjusted Diluted Earnings per Share ⁽⁴⁾
$ 0.38
$ 0.48
$ (0.10 ) (20.8 )%

Six Months Ended
June 30, Change
(in thousands except per share data) 2018 2017 $ %
Net income $ 39,267
$ 32,980
$ 6,287
19.1 %
Adjustments:
Loss on extinguishment of debt⁽¹⁾
11,683
12,458

Legal settlement costs⁽⁷⁾
—
1,950

Transaction related costs⁽²⁾
—
2,400

Share-based compensation⁽³⁾
4,023
1,306

Intangible asset amortization 1,331
1,173

Impact of tax law changes⁽⁶⁾
1,800
—

Cumulative tax effect of adjustments (4,401 ) (7,105 )
Adjusted Net Income $ 53,703
$ 45,162
$ 8,541
18.9 %

Net income $ 39,267
$ 32,980

Diluted Weighted Average Shares Outstanding⁽⁴⁾
47,757
38,983

Diluted Earnings per Share ⁽⁴⁾
$ 0.82
$ 0.85
$ (0.03 ) (3.5 )%
Per Share impact of adjustments to Net Income ⁽⁴⁾
0.31
0.31

Adjusted Diluted Earnings per Share ⁽⁴⁾
$ 1.13
$ 1.16
$ (0.03 ) (2.6 )%



	Three Months Ended March 31,
(in thousands except per share data, unaudited)	2019			2018			Change $		Change %
Net income from continuing operations	$	28,673		$	24,913		$	3,760	15.1	%
Adjustments:
Loss on extinguishment of debt ⁽¹⁾	—			11,683
Restructuring costs ⁽²⁾	1,752			—
U.K. related costs ⁽³⁾	7,817			—
Share-based cash and non-cash compensation ⁽⁴⁾	2,172			1,842
Intangible asset amortization	796			663
Impact of tax law changes ⁽⁵⁾	—			1,800
Cumulative tax effect of adjustments	(3,260		)	(3,689		)
Adjusted Net Income	$	37,950		$	37,212		$	738	2.0	%

Net income from continuing operations	$	28,673		$	24,913
Diluted Weighted Average Shares Outstanding	47,319			47,416
Diluted Earnings per Share from continuing operations	$	0.61		$	0.53		$	0.08	15.1	%
Per Share impact of adjustments to Net Income	0.19			0.25
Adjusted Diluted Earnings per Share	$	0.80		$	0.78		$	0.02	2.6	%

Reconciliation of Net income from continuing operations to EBITDA and Adjusted EBITDA, non-GAAP measures


	Three Months Ended June 30,						Change					Three Months Ended March 31,
(dollars in thousands)	2018			2017			$			%
Net income	$	15,975		$	16,342		$	(367	)	(2.2	)%
(in thousands, except per share data, unaudited)												2019			2018			Change $			Change %
Net income from continuing operations												$	28,673		$	24,913		$	3,760		15.1	%
Provision for income taxes	5,317			10,619			(5,302		)	(49.9	)%	10,046			11,467			(1,421		)	(12.4	)%
Interest expense	20,465			18,484			1,981			10.7	%	17,690			22,354			(4,664		)	(20.9	)%
Depreciation and amortization	4,598			4,676			(78		)	(1.7	)%	4,920			4,535			385			8.5	%
EBITDA	46,355			50,121			$	(3,766	)	(7.5	)%	61,329			63,269			$	(1,940	)	(3.1	)%
Loss on extinguishment of debt⁽¹⁾	—			—								—			11,683
Legal Settlement costs⁽⁷⁾	—			1,950
Transaction related costs⁽²⁾	—			146
Share-based compensation⁽³⁾	2,181			1,180
Restructuring costs ⁽²⁾												1,752			—
U.K. related costs ⁽³⁾												7,817			—
Share-based cash and non-cash compensation ⁽⁴⁾												2,172			1,842
Other adjustments⁽⁵⁾⁽⁶⁾	85			(201		)						(216		)	(43		)
Adjusted EBITDA	48,621			53,196			(4,575		)	(8.6	)%	72,854			76,751			(3,897		)	(5.1	)%
Adjusted EBITDA Margin	19.5		%	24.5		%						26.2		%	30.6		%

Six Months Ended
June 30, Change
(dollars in thousands) 2018 2017 $ %
Net income $ 39,267
$ 32,980
$ 6,287
19.1 %
Provision for income taxes 16,784
20,069
(3,285 ) (16.4 )%
Interest expense 42,814
41,850
964
2.3 %
Depreciation and amortization 9,259
9,330
(71 ) (0.8 )%
EBITDA 108,124
104,229
$ 3,895
3.7 %
Loss on extinguishment of debt⁽¹⁾
11,683
12,458

Legal settlement costs —
1,950

Transaction related costs⁽²⁾
—
2,400

Share-based compensation⁽³⁾
4,023
1,306

Other adjustments⁽⁵⁾
6
(515 )
Adjusted EBITDA 123,836
121,828
2,008
1.6 %
Adjusted EBITDA Margin 24.2 % 27.6 %
⁽¹⁾ For the six months ended June 30, 2018, the $11.7 million loss from the extinguishment of debt was due to the redemption of CFTC's 12.00% Senior Secured Notes due 2022. For the six months ended June 30, 2017, the $12.5 million loss from extinguishment of debt was due to the redemption of CURO Intermediate Holding Corp's 10.75% Senior Secured Notes due 2018 and the 12.00% Senior Cash Pay Notes due 2017.
⁽²⁾Transaction-related costs include professional fees paid in connection with potential transactions and the original issuance of $470.0 million of Senior Secured Notes due 2022 in the first quarter of 2017.
⁽³⁾ The Company approved the adoption of a share-based compensation plans during 2010 and 2017 for key members of its senior management team. The estimated fair value of share-based awards is recognized as non-cash compensation expense on a straight-line basis over the vesting period.
⁽⁴⁾ The share and per share information have been adjusted to give effect to the 36-to-1 split of the Company's common stock that occurred during the fourth quarter of 2017.
⁽⁵⁾ Other adjustments include deferred rent and the intercompany foreign exchange impact. Deferred rent represents the non-cash component of rent expense. Rent expense is recognized ratably on a straight-line basis over the lease term.
⁽⁶⁾As a result of the 2017 Tax Act, which became law on December 22, 2017, we provided an estimate of the new repatriation tax as of December 31, 2017. Subsequent to further guidance published in the first quarter of 2018, we booked additional tax expense of $1.2 million for the 2017 repatriation tax. Additionally, the 2017 Tax Act provided for a new GILTI tax starting in 2018 and we estimated and provided tax expense of $0.6 million as of June 30, 2018.
⁽⁷⁾ Legal settlement cost for the three and six months ended June 30, 2017 includes $2.0 million for the settlement of the Harrison, et. al. v. Principal Investment Inc. et al. For more information, see Note 18 -- "Contingent Liabilities" of the Notes to the Consolidated Financial Statements included in the Company's Form 10-K filed with the SEC on March 13, 2018.



(1)	For the three months ended March 31, 2018, the $11.7 million of loss on extinguishment of debt was for the redemption of $77.5 million of the 12.00% Senior Secured Notes due 2022 issued by CFTC.
(2)	Restructuring costs of $1.7 million for the three months ended March 31, 2019 were due to eliminating 121 positions in North America. The store employee reductions help better align store staffing with in-store customer traffic and volume patterns, as more of our growth comes from online channels and as store customers require less time in stores as they conduct more of the follow-up activities online. The elimination of certain corporate positions relate to efficiency initiatives and will allow the Company to reallocate investment to strategic growth activities.
(3)	U.K. related costs of $7.8 million for the three months ended March 31, 2019 relate to placing the U.K. Subsidiaries into administration on February 25, 2019, which includes $7.6 million to obtain consent from the holders of the 8.25% Senior Secured Notes to deconsolidate the U.K. Segment and $0.2 million for other costs.
(4)	We approved the adoption of share-based compensation plans during 2010 and 2017 for key members of senior management. The estimated fair value of share-based awards is recognized as non-cash compensation expense on a straight-line basis over the vesting period.
(5)	As a result of the 2017 Tax Act, which became law on December 22, 2017, we provided an estimate of the new repatriation tax as of December 31, 2017. Subsequent to further guidance published in the first quarter of 2018, we booked additional tax expense of $1.2 million for the 2017 repatriation tax. Additionally, the 2017 Tax Act provided for the GILTI tax starting in 2018 and we estimated and provided tax expense of $0.6 million as of March 31, 2018.
(6)	Other adjustments include deferred rent and the intercompany foreign exchange impact. Deferred rent represents the non-cash component of rent expense.

Currency Information

We operate in the U.S., and Canada, and discontinued operating in the U.K. ~~and report our~~as of February 25, 2019. Our consolidated results are reported in U.S. dollars.

Changes in our reported revenues and net income include the effect of changes in currency exchange rates. ~~All~~We translate all balance sheet accounts ~~are translated~~ into U.S. dollars at the currency exchange rate in effect at the end of each period. ~~The income~~We translate the statement ~~is translated~~of operations at the average rates of exchange for the period. ~~Currency~~We record currency translation adjustments ~~are recorded~~ as a component of Accumulated Other Comprehensive Income in Stockholders’ Equity.

Constant Currency Analysis

We have operations in the U.S. and Canada. In the three months ended ~~June 30,~~March 31, 2019 and 2018, approximately 18.6% and ~~2017, approximately 23.6% and 24.5%~~18.4%, respectively, of our revenues were originated in ~~currencies other than the U.S. Dollar.~~Canadian Dollars. As a result, changes in our reported results include the impacts of changes in foreign currency exchange rates for the Canadian ~~Dollar and the British Pound Sterling.~~Dollar.

Three Months Ended ~~June 30,~~March 31, 2019 and 2018 ~~and 2017~~

Average Exchange Rates
Three Months Ended June 30, Change
2018 2017 $ %
Canadian Dollar $ 0.7749
$ 0.7434

$0.0315
4.2 %
British Pound Sterling $ 1.3610
$ 1.2784

$0.0826
6.5 %

~~Six Months Ended June 30, 2018 and 2017~~

Average Exchange Rates
Six Months Ended June 30, Change
2018 2017 $ %
Canadian Dollar $ 0.7831
$ 0.7495

$0.0336
4.5 %
British Pound Sterling $ 1.3763
$ 1.2587

$0.1176
9.3 %



	Average Exchange Rates
	Three Months Ended March 31,				Change
	2019		2018		$			%
Canadian Dollar	$	0.7525	$	0.7912		($0.0387	)	(4.9	)%

The following constant currency analysis removes the impact of the fluctuation in foreign exchange rates and utilizes constant currency results in our analysis of segment performance. Our constant currency assessment assumes foreign exchange rates in the current fiscal periods remained the same as in the prior fiscal periods. All conversion rates below are based on the U.S. Dollar equivalent to ~~one of~~ the ~~applicable foreign currencies.~~Canadian Dollar. We believe that the constant currency assessment below is a useful measure in assessing the comparable growth and profitability of our operations.

The revenues and gross margin below during the three months ended ~~June 30, 2018~~March 31, 2019 were calculated using the actual average exchange rate during the three months ended ~~June 30, 2017.~~March 31, 2018.

Three Months Ended
June 30, Change
(dollars in thousands) 2018 2017 $ %
Revenues – constant currency basis:
Canada $ 45,146
$ 43,595
$ 1,551
3.6 %
United Kingdom 11,115
9,585
1,530
16.0 %
Gross margin - constant currency basis:
Canada 12,777
15,962
(3,185 ) (20.0 )%
United Kingdom 2,915
2,921
(6 ) (0.2 )%

~~The revenues and gross margin below during the six months ended June 30, 2018 were calculated using the actual average exchange rate during the six months ended June 30, 2017.~~

Six Months Ended
June 30, Change
(dollars in thousands) 2018 2017 $ %
Revenues – constant currency basis:
Canada $ 89,343
$ 85,161
$ 4,182
4.9 %
United Kingdom 20,818
18,277
2,541
13.9 %
Gross margin - constant currency basis:
Canada 26,630
30,262
(3,632 ) (12.0 )%
United Kingdom 5,946
6,394
(448 ) (7.0 )%



	Three Months Ended March 31,				Change
(dollars in thousands)	2019		2018		$		%
Canada – constant currency basis:
Revenues	$	52,701	$	46,250	$	6,451	13.9	%
Gross Margin	15,970		14,502		1,468		10.1	%

LIQUIDITY AND CAPITAL RESOURCES

Our principal sources of liquidity to fund the loans we make to our customers are cash provided by operations, our Senior Revolver, ~~(defined below),~~ funds from third party lenders under our CSO programs, ~~and~~ our Non-Recourse U.S. SPV Facility ~~which finances the originations of eligible U.S. Unsecured~~ and ~~Secured Installment Loans at an advance rate of 80%~~our Non-Recourse Canada SPV Facility (defined below). ~~In 2017,~~During August 2018, we issued ~~our~~$690.0 million 8.25% Senior Secured Notes due September 2025 ("8.25% Senior Secured Notes") to (i) redeem the outstanding 12.00% Senior Secured Notes due ~~March 1,~~ 2022 ~~("Senior Secured Notes")~~of CFTC, (ii) to ~~refinance similar notes that were nearing maturity~~repay the outstanding indebtedness under the five-year revolving credit facility of CURO Receivables Finance I, LLC, our wholly-owned subsidiary, which consists of a term loan and revolving borrowing capacity, (iii) for general corporate purposes and (iv) to pay ~~dividends to our stockholders.~~ fees, expenses, premiums and accrued interest in connection with the foregoing.

As of ~~June 30, 2018,~~March 31, 2019, we were in compliance with all financial ratios, covenants and other requirements set forth in our debt agreements. We anticipate that our primary use of cash will be to fund growth in our working capital, finance capital expenditures, ~~and~~ meet our debt ~~obligations.~~obligations, and fund our share repurchase program. Our level of cash flow provided by operating activities typically experiences some seasonal fluctuation related to our levels of net income and changes in working capital levels, particularly loans receivable.

Unexpected changes in our financial condition or other unforeseen factors may result in our inability to obtain third-party financing or could increase our borrowing costs in the future. We have the ability to adjust our volume of lending to consumers which would reduce cash outflow requirements while increasing cash inflows through loan repayments to the extent we experience any short-term or long-term funding shortfalls. We may also sell or securitize our assets, draw on our available revolving credit facility or line of credit, enter into additional refinancing agreements and reduce our capital spending in order to generate additional liquidity. We believe our cash on hand and available borrowings provide us with sufficient liquidity for at least the next 12 months.

Borrowings

Our long-term debt consisted of the following as of ~~June 30, 2018~~March 31, 2019 and December 31, ~~2017~~2018 (net of deferred financing costs):


	June 30,		December 31,		March 31,		December 31,
(dollars in thousands)	2018		2017		2019		2018
2017 Senior Secured Notes (due 2022)	$	512,136	$	585,823
Non-Recourse U.S. SPV Facility	114,697		120,402
8.25% Senior Secured Notes (due 2025)					$	677,153	$	676,661
Non-Recourse Canada SPV Facility					88,915		107,479
Senior Revolver	—		—		—		20,000
Cash Money Revolving Credit Facility	—		—		—		—
Long-term debt	$	626,833	$	706,225	$	766,068	$	804,140

Available Credit Facilities and Other Resources

8.25% Senior Secured Notes

As noted above, we issued our 8.25% Senior Secured Notes in August 2018. Interest on the notes is payable semiannually, in arrears, on March 1 and September 1 of each year. In connection with the 8.25% Senior Secured Notes, we capitalized financing costs of approximately $12.9 million, the balance of which is included in the Condensed Consolidated Balance Sheets as a component of Long-Term Debt, and is being amortized over the term of the 8.25% Senior Secured Notes and included as a component of interest expense.

12.00% Senior Secured Notes

In February and November 2017, CFTC issued $470.0 million and $135.0 million, respectively, of 12.00% Senior Secured ~~Notes.~~Notes ("12.00% Senior Secured Notes"). Interest on the 12.00% Senior Secured Notes is payable semiannually, in arrears, on March 1 and September 1 of each year, beginning on September 1, 2017. The February 2017 issuance refinanced similar notes that were nearing maturity. The extinguishment of the existing notes resulted in a pretax loss of ~~$11.7~~$12.5 million during the ~~six months ended June 30, 2017.~~September 2018. In connection with these 2017 debt issuances we capitalized financing costs of approximately $18.3 million, the balance of which is included in the Condensed Consolidated Balance Sheets as a component of Long-Term Debt, and is being amortized over the term of the 12.00% Senior Secured Notes and included as a component of interest expense.

On March 7, 2018, CFTC redeemed $77.5 million of its 12.00% Senior Secured Notes using a portion of the proceeds from our initial public offering as required by the underlying indentures (the transaction whereby the 12.00% Senior Secured Notes were partially redeemed, the “Redemption”) at a price equal to 112.00% of the principal amount of the 12.00% Senior Secured Notes redeemed, plus accrued and unpaid interest paid thereon to the date of Redemption. Following the Redemption, $527.5 million of the original outstanding principal amount of the 12.00% Senior Secured Notes remain outstanding. The Redemption was conducted pursuant to the Indenture governing the 12.00% Senior Secured Notes (the “Indenture”), dated as of February 15, 2017, by and among CFTC, the guarantors party thereto and TMI Trust Company, as trustee and collateral agent. ~~Consistent with the terms~~

The remainder of the ~~Indenture, CFTC used~~12.00% Senior Secured Notes were extinguished effective September 7, 2018 as a ~~portion~~result of the ~~cash proceeds from our initial public offering, completed in December 2017, to redeem such~~issuance of the 8.25% Senior Secured ~~Notes.~~Notes as described above.

Non-Recourse U.S. SPV Facility

In November 2016, CURO Receivables Finance I, LLC, a Delaware limited liability company (the “SPV Borrower”) and a wholly-owned subsidiary, entered into a five-year revolving credit facility with Victory Park Management, LLC and certain other lenders that ~~provides~~provided for an $80.0 million term loan and $70.0 million of revolving borrowing capacity that can expand over time (“Non-Recourse U.S. SPV Facility”). The loans bear interest at an annual rate of up to 12.00% plus the greater of (i) 1.0% per annum and (ii) the three-month LIBOR. The SPV Borrower also pays a 0.50% per annum commitment fee on the unused portion of the commitments. In connection with this facility, we capitalized financing costs of approximately $5.3 million, the balance of which we include in the Condensed Consolidating Balance Sheets as a component of Long-term debt and was being amortized over the term of the Non-Recourse U.S. SPV Facility. During September 2018, a portion of the proceeds from the 8.25% Senior Secured Notes were used to extinguish the revolver's balance of $42.4 million.

On October 11, 2018, we extinguished the remaining term loan balance of $80.0 million. We made the final termination payment of $2.7 million on October 26, 2018, resulting in a loss on the extinguishment of debt of $9.7 million for the quarter ending December 31, 2018.

Non-Recourse Canada SPV Facility

On August 2, 2018, CURO Canada Receivables Limited Partnership, a newly created, bankruptcy-remote special purpose vehicle (the “Canada SPV Borrower”) and a wholly-owned subsidiary, entered into a four-year revolving credit facility with Waterfall Asset Management, LLC that provides for C$175.0 million of initial borrowing capacity and the ability to expand such capacity up to C$250.0 million (“Non-Recourse Canada SPV Facility”). The loans bear interest at an annual rate of 6.75% plus the three-month CDOR. As of March 31, 2019, the carrying amount of outstanding borrowings from the Non-Recourse Canada SPV Facility was $88.9 million, after a reduction of net balances drawn of $20.9 million during the quarter.

Senior Revolver

InOn September 1, 2017, we closed on a $25.0 million Senior Secured Revolving Loan Facility (the "Senior Revolver"). In February 2018, the Senior Revolver capacity was increased to $29.0 million. In November 2018, the Senior Revolver capacity was increased to $50.0 million as permitted by the Indenture to the Senior Secured ~~Notes based upon consolidated tangible assets.~~Notes. The Senior Revolver is now syndicated with participation by ~~a second bank.~~four banks. The negative covenants of the Senior Revolver generally conform to the related provisions in the Indenture for our ~~12.00%~~8.25% Senior Secured Notes. We believe this facility complements our other financing sources, while providing seasonal short-term liquidity. Under the Senior Revolver, there is ~~$29.0~~$50.0 million maximum availability, including up to $5.0 million of standby letters of credit, for a one-year term, renewable for successive terms following annual review. The Senior Revolver accrues interest at the one-month LIBOR (which may not be negative) plus ~~5.00%~~5% per annum and is repayable on demand. The terms of the Senior Revolver require that the outstanding balance be reduced to $0zero for at least 30 consecutive days in each calendar year. The Senior Revolver is guaranteed by all ~~subsidiaries~~ of ~~CURO~~our subsidiaries that guarantee our ~~12.00%~~8.25% Senior Secured Notes and is secured by a lien on substantially all ~~assets~~ of ~~CURO~~our assets and the guarantor subsidiaries that is senior to the lien securing our ~~12.00%~~8.25% Senior Secured Notes. The Senior Revolver was undrawn at ~~June 30, 2018.~~March 31, 2019, after paying down the outstanding balance of $20.0 million during the quarter.

In connection with this facility we capitalized financing costs of approximately $0.1 million, the balance of which we included in the Condensed Consolidated Balance Sheets as a component of “Other assets,” and are being amortized over the term of the facility and included as a component of interest expense.

Cash Money Revolving Credit Facility

Cash Money Cheque Cashing, Inc., one of our Canadian subsidiaries, maintains a C$~~7.3~~10 million revolving credit facility with Royal Bank of Canada. The Cash Money Revolving Credit Facility provides short-term liquidity required to meet the working capital needs of our Canadian operations. Aggregate draws under the revolving credit facility are limited to the lesser of: (i) the borrowing base, which is defined as a percentage of cash, deposits in transit and accounts receivable, and (ii) C$~~7.3~~10 million. As of March 31, 2019 and December 31, ~~2017,~~2018, the borrowing capacity under our revolving credit facility was reduced by C$0.3 million in stand-by-letters of credit.

The Cash Money Revolving Credit Facility was undrawn at ~~June 30, 2018~~March 31, 2019 and December 31, ~~2017.~~2018.

Cash Flows

The following highlights our cash flow activity and the sources and uses of funding during the periods indicated:

Six Months Ended June 30,
(dollars in thousands) 2018 2017
Net cash provided by operating activities $ 33,895
$ 49,774
Net cash used in investing activities (4,424 ) (16,240 )
Net cash used in financing activities (71,361 ) (115,719 )



	Three Months Ended March 31,
(dollars in thousands)	2019			2018
Net cash provided by continuing operating activities	$	140,999		$	122,743
Net cash used in continuing investing activities	(69,634		)	(58,853		)
Net cash used in continuing financing activities	(41,265		)	(83,255		)

Continuing Operating ~~activities~~Activities

Net cash provided by continuing operating activities for the ~~six~~three months ended ~~June 30, 2018~~March 31, 2019 was ~~$33.9 million. Contributing~~$141.0 million, primarily attributable to ~~current year net cash provided by operating activities were~~ net income of ~~$39.3~~$28.7 million, provision for loan losses of $102.4 million and changes in our operating assets and liabilities of $12.1 million, partially offset by other non-cash expenses of ~~$192.3~~$2.1 million. Major components of non-cash expenses include depreciation and amortization, provision for loan losses, and ~~loss on debt extinguishment. Contributions from~~share-based compensation expense.

Net cash provided by continuing operating activities for the three months ended March 31, 2018 was $122.7 million, primarily attributable to net income of $24.9 million, and non-cash expenses, ~~were~~such as depreciation and amortization and the provision for

loan losses for a total of $94.0 million, partially offset by changes in our operating assets and liabilities of ~~$197.7~~$3.9 million. ~~Our~~Fees and service charges on our loans receivable change represented ~~$206.1~~$5.1 million of the total change in operating assets and liabilities.

Continuing Investing Activities

Net cash ~~provided by operating~~used in continuing investing activities for the ~~six~~three months ended ~~June 30, 2017~~March 31, 2019 was ~~$49.8~~$69.6 million, primarily reflecting the net origination of loans of $64.9 million. ~~Contributing~~In addition, we used cash to ~~net cash provided by operating activities were net income~~purchase approximately $3.1 million of ~~$33.0 million,~~property and non-cash expenses, such as depreciation and amortization, the provision for loan losses, and a loss on debt extinguishment for a total of $150.2 million, partially offset by changes in our operating assets and liabilities of $133.4 million. The most significant change within operating assets and liabilities was a $150.5 million increase in loans receivable, net of provision for losses.equipment, including software licenses.

~~Loans receivable~~Net cash used in continuing investing activities for the three months ended March 31, 2018 was $58.9 million, primarily reflecting the net origination of loans of $56.4 million. In addition, we used cash to purchase approximately $1.5 million of property and equipment, including software licenses, and to purchase $1.0 million of Cognical Holding preferred shares.

Origination of loans will fluctuate from ~~period to period~~period-to-period, depending on the timing of loan issuances and collections. A seasonal decline in consumer loans receivable typically ~~takes place~~occurs during the first quarter of the year and is driven by income tax refunds in the ~~United States.~~U.S. Typically, customers will use the proceeds from income tax refunds to pay outstanding loan balances, resulting in an increase ofin our net cash balances and a decrease ofin our consumer loans receivable balances. Consumer loans receivable balances typically reflect growth during the remainder of the year.

~~Investing activities~~Continuing Financing Activities

Net cash ~~used in investing~~provided by continuing financing activities for the ~~six~~three months ended ~~June 30, 2018~~March 31, 2019 was ~~$4.4~~$41.3 million. ~~We used cash~~During the quarter, we made a $20.0 million payment on the Senior Revolver to ~~purchase approximately $3.1~~reduce the outstanding balance to zero and made net repayments of $20.9 million ~~of property and equipment, including software licenses, and to purchase $1.0 million of Cognical Holdings preferred shares. Additionally,~~on the ~~increase in restricted cash of $0.4 million was primarily attributable to our~~ Non-Recourse ~~U.S.~~Canada SPV Facility.

Net cash used in investing activities for the six months ended June 30, 2017 was $16.2 million. Restricted cash increased by approximately $4.4 million primarily attributable to our Non-Recourse U.S. SPV Facility. Additionally, we purchased approximately $6.8 million of property and equipment, including software licenses, and $5.0 million of Cognical Holdings preferred shares.

~~Financing activities~~

~~Net cash used in~~continuing financing activities for the ~~six~~three months ended ~~June 30,~~March 31, 2018 was ~~$71.4~~$83.3 million. We redeemed $77.5 million of our 12.00% Senior Secured Notes for $86.8 million (which included $9.3 million of call premium). The underwriters ~~from~~of our 2017 initial public offering exercised their over-allotment option on January 5, 2018 and acquired one million shares of our common stock, providing net proceeds to us of ~~$12.4 million as of June 30, 2018.~~$13.1 million. We also had net borrowings of ~~$6.2 million from our U.S. SPV Facility.~~

Net cash used in financing activities for the six months ended June 30, 2017 was $115.7 million. During this period, CFTC extinguished its 10.75% Senior Secured Notes for $426.0 million (which included $8.9 million of call premium) and extinguished our Senior Cash Pay Notes for $125.0 million. We also paid a dividend of $28.0 million to our stockholders in May 2017. These payments were partially financed by proceeds of $447.6 million (net of $14.0 million of debt issuance costs and $8.5 million of discount on notes issued) from the issuance of our 12.00% Senior Secured Notes due 2022. We had net borrowings of $16.0$9.5 million from our U.S. SPV Facility and our ABL Facility.

Contractual Obligations

There have been no significant developments with respect to our contractual obligations since December 31, ~~2017,~~2018, as described in our ~~Annual Report on~~2018 Form 10-K.

Regulatory Environment and Compliance

There have been no significant developments with respect to our regulatory environment and compliance since December 31, ~~2017,~~2018, as described in our ~~Annual Report on~~2018 Form 10-K ~~other than the following:~~

~~Recent developments regarding the CFPB Rule~~

The CFPB adopted a new rule applicable to payday vehicle title, and certain high-cost installment loans in November 2017 (the "CFPB Rule"), with most provisions currently scheduled to become effective in August 2019. In January 2018, the CFPB announced that it intends to engage in a rulemaking process to reconsider the CFPB Rule pursuant to the Administrative Procedure Act ("APA"). On April 9, 2018, the Community Financial Services Association of America ("CFSA") and the Consumer Service Alliance of Texas ("CSAT") filed a lawsuit against the CFPB in the U.S. District Court for the Western District of Texas, Austin Division, seeking to invalidate the CFPB Rule. The lawsuit alleges that the rule violates the APA because it exceeds the CFPB's statutory authority and is arbitrary, capricious and unsupported by substantial evidence. The lawsuit also argues that the CFPB’s structure is unconstitutional under the Constitution’s separation of powers because the agency’s powers are concentrated in a single, unchecked Director who is improperly insulated from both presidential supervision and congressional appropriation, and hence unaccountable to the American people. On Mayyear ended December 31, 2018, CFSA together with CSAT and CFPB filed a joint motion to effectively stay the litigation between the parties and stay the compliance date of the CFPB Rule. On June 12, 2018, the judge granted the motion to stay the litigation but denied the motion to stay the compliance date of the CFPB Rule. On June 22, 2018, CFSA and CSAT filed a motion for reconsideration to stay the compliance date of the CFPB Rule. The court has not yet ruled on such motion for reconsideration. It is impossible to predict whether and when the CFPB Rule will go into effect and, if so, whether and how it might be modified.

~~California legislative activity~~

Three bills were introduced in the California Assembly which would have directly impacted the products currently offered by us. Assembly Bill 2500 as introduced would have imposed a 36% APR cap on all consumer loans between $2,500 and $5,000 and, a 24% APR cap on all consumer loans between $5,000 and $10,000. Assembly Bill 2953 would have imposed a 36% APR cap on all auto title loans. Assembly Bill 3010 as introduced would have limited borrowers to one outstanding payday loan at a time across all lenders using a common database to enforce the one loan restriction.

Assembly Bill 2500 did not pass out of the Assembly by the May 31, 2018 deadline. Assembly Bills 2953 and 3010 advanced to the Senate but did not pass out of the Senate Banking and Insurance Committee by the June 30, 2018 deadline. As a result, activity for all three bills has concluded for this legislative session. California represented 18.2% and 18.0%, respectively, of our consolidated revenues for the three and six months ended June 30, 2018.

~~Ohio legislative activity~~

House Bill 123 was first introduced in March of 2017. As initially introduced, the bill would significantly limit the permissible fees and charges on short term loans and eliminate the CSO arrangement. In late July 2018, the Ohio legislature passed House Bill 123 and the Governor signed the bill into law on July 30, 2018. The bill is effective in 90 days and, certain sections apply to loans made 180 calendar days after the effective date. As a result, loan product changes will occur on or near May 1, 2019.

~~Ohio revenue for the trailing twelve months ended June 30, 2018, was $20.1 million. After loss provisions and direct costs, state-level contribution from Ohio was immaterial.~~

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

For quantitative and qualitative disclosures about our market risks, see "Quantitative and Qualitative Disclosures about Market Risk" in our ~~2017 Annual Report on~~2018 Form ~~10-K.~~10-K for the year ended December 31, 2018. There have been no material changes to the amounts presented ~~therein except for the following:~~therein.

~~Foreign Currency Exchange Rate Risk~~

As foreign currency exchange rates change, translation of the financial results of the U.K. and Canadian operations into U.S. Dollars will be impacted. Our operations in Canada and the U.K. represent a significant portion of our total operations, and as a result, a material change in foreign currency exchange rates in either country could have a significant impact on our consolidated financial position, results of operations or cash flows. From time to time, we may elect to purchase financial instruments as hedges against foreign exchange rate risks with the objective of protecting our results of operations in the U.K. and/or Canada against foreign currency fluctuations. We typically hedge anticipated cash flows between our foreign subsidiaries and domestic subsidiaries.

During the six months ended June 30, 2018, we entered into a series of cash flow hedges in which the hedging instruments were forwards to purchase GBP 7.9 million. These contracts will complete during the three months ended September 30, 2018.

We performed an assessment that determined all critical terms of the hedging instrument and the hedged transaction match and, as such, have qualitatively concluded that changes in the hedge instrument’s intrinsic value will completely offset the change in the expected cash flows based on changes in the spot rate. Since the effectiveness of this hedge is assessed based on changes in the hedge instrument’s intrinsic value, the change in the time value of the contract would be excluded from the assessment of hedge effectiveness. We recorded changes in the hedge instrument’s intrinsic value, to the extent that they were effective as a hedge, in "Other comprehensive income."

ITEM 4. CONTROLS AND PROCEDURES

Disclosure controls and procedures

We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in the reports we file or submit under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, including without limitation, controls and procedures designed to ensure that information required to be disclosed in reports we file under the Exchange Act is accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Based on an evaluation of our disclosure controls and procedures as disclosed in Item 9A of our 2018 Form 10-K for the year ended December 31, 2018, our management concluded that our internal control over financial reporting was not effective at December 31, 2018 because of the identification of a material weakness. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.

Remediation and changes in internal control over financial reporting

We are taking actions to improve our internal control over financial reporting, including implementing plans as identified in Item 9A of our 2018 Form 10-K, filed with the SEC on March 18, 2019, to address our material weakness. The material weakness will not be considered remediated until the applicable remedial controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. We expect that the remediation of this material weakness will be completed in 2019.

Except as noted above, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) during the three months ended March 31, 2019, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitation on the effectiveness of controls

Our management, including our CEO and CFO, does not expect that our disclosure controls or our internal control over financial reporting will prevent or detect all errors and all fraud. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objective and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. ~~Based on an evaluation~~A control system also can be circumvented by collusion or improper management override. Because of ~~our~~such limitations, disclosure controls and procedures as of the end of the period covered by this report conducted by our management, with the participation of the Chief Executive Officer and Chief Financial Officer, the Chief Executive Officer and Chief Financial Officer concluded that these controls and procedures were effective as of June 30, 2018.

~~Internal control over financial reporting~~

~~There were no changes in our~~ internal control over financial reporting ~~(as defined in Rules 13a-15(e) and 15d-15(e) under~~cannot prevent or detect all misstatements, whether unintentional errors or fraud. However, these inherent limitations are known features of the ~~Exchange Act) during~~financial reporting process, therefore, it is possible to design into the ~~three months ended June 30, 2018, that have materially affected, or are reasonably likely~~process safeguards to ~~materially affect, our internal control over financial reporting.~~reduce, though not eliminate, this risk.

PART 2. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The information required by this item is included in Note 13 - ~~Contingent Liabilities~~"Contingent Liabilities" of the Notes to the Condensed Consolidated Financial Statements in this ~~Quarterly Report~~Form 10-Q and is incorporated herein by reference.

ITEM 1A. RISK FACTORS

There were no material changes to our risk factors as described in our ~~Annual Report on~~2018 Form 10-K for the year ended December 31, ~~2017 other than the following:~~2018.

~~The CFPB promulgated new rules applicable to our loans that could have a material adverse effect on our business and results of operations.~~

In January 2018, the CFPB announced that it intends to engage in a rulemaking process to reconsider the CFPB Rule pursuant to the Administrative Procedure Act ("APA"). On April 9 2018, the Community Financial Services Association of America ("CFSA") and the Consumer Service Alliance of Texas filed a lawsuit against the CFPB in the U.S. District Court for the Western District of Texas, Austin Division, seeking to invalidate the CFPB Rule. The lawsuit alleges that the rule violates the APA because it exceeds the CFPB’s statutory authority and is arbitrary, capricious and unsupported by substantial evidence. The lawsuit also argues that the CFPB’s structure is unconstitutional under the Constitution’s separation of powers because the agency’s powers are concentrated in a single, unchecked Director who is improperly insulated from both presidential supervision and congressional appropriation, and hence unaccountable to the American people. On May 31, 2018, CFSA together with CSAT and CFPB filed a joint motion to effectively stay the litigation between the parties and stay the compliance date of the CFPB Rule. On June 12, 2018, the judge granted the motion to stay the litigation but denied the motion to stay the compliance date of the CFPB Rule. On June 22, 2018, CFSA and CSAT filed a motion for reconsideration to stay the compliance date of the CFPB Rule. The court has not yet ruled on such motion for reconsideration. It is impossible to predict whether and when the CFPB Rule will go into effect and, if so, whether and how it might be modified.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION

(a) Disclosure of Unreported 8-K Information

None.

(b) Material Changes to Director Nominee Procedures

None.

ITEM 6. EXHIBITS



Exhibit no.		Exhibit Description
3.1		Amended and Restated Certificate of Incorporation of the Registrant (previously filed as Exhibit 3.1 to the Current Report on Form 8-K filed on December 11, 2017)
3.2		Form of Amended and Restated Bylaws of the Registrant (previously filed as Exhibit 3.2 to the Current Report on Form 8-K filed on December 11, 2017)
10.1		CURO Group Holdings Corp. 2019 Short-Term Incentive Compensation Program (previously filed as Exhibit 99.1 to the Current Report on Form 8-K filed on March 19, 2019)
10.2		CURO Group Holdings Corp. 2019 U.S. Long-Term Incentive Compensation Program (previously filed as Exhibit 99.2 to the Current Report on Form 8-K filed on March 19, 2019)
10.3		CURO Group Holdings Corp. 2019 non-U.S. Long-Term Incentive Compensation Program (previously filed as Exhibit 99.3 to the Current Report on Form 8-K filed on March 19, 2019)
31.1		Certifications of Chief Executive Officer of the Company under Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 *
31.2		Certifications of Chief Financial Officer of the Company under Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 *
32.1		Certifications of the Chief Executive Officer ~~pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. This certification accompanies this report~~ and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed for purposes of §18 of the Securities Exchange Act of 1934, as amended **
~~32.2~~		~~Certifications of the~~ Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. This certification accompanies this report and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed for purposes of §18 of the Securities Exchange Act of 1934, as amended **
101		The following unaudited financial information from the Company's Quarterly Report on Form 10-Q for the period ended ~~June 30, 2018,~~March 31, 2019, filed with the SEC on ~~August 1, 2018,~~May 6, 2019, formatted in Extensible Business Reporting Language (“XBRL”) includes: (i) Condensed Consolidated Balance Sheets at ~~June 30, 2018~~March 31, 2019 and December 31, ~~2017,~~2018, (ii) Condensed Consolidated Statements of ~~Income~~Operations for the quarter ended ~~June 30,~~March 31, 2019 and 2018, ~~and 2017,~~ (iii) Condensed Consolidated Statements of Comprehensive Income for the quarter ended ~~June 30,~~March 31, 2019 and 2018, ~~and 2017,~~ (iv) Condensed Consolidated Statements of Cash Flows for the quarter ended ~~June 30,~~March 31, 2019 and 2018, ~~and 2017,~~ and (v) Notes to Condensed Consolidated Financial Statements**

*		~~Filed herewith.~~
**		~~Furnished herewith.~~

SIGNATURE

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: ~~August 2, 2018~~May 6, 2019 CURO Group Holdings Corp.



	By:	/s/ ~~ROGER DEAN~~Roger Dean
		Roger Dean
		Executive Vice-President and Chief Financial Officer

6454



	Six Months Ended June 30, 2018
(in thousands)	Single-Pay			Unsecured Installment			Secured Installment			Open-End			Other			Total
Balance, beginning of period	$	5,916		$	43,754		$	13,472		$	6,426		$	—		$	69,568
Charge-offs	(92,524		)	(75,479		)	(22,567		)	(44,156		)	(1,268		)	(235,994		)
Recoveries	65,283			12,335			5,162			21,260			87			104,127
Net charge-offs	(27,241		)	(63,144		)	(17,405		)	(22,896		)	(1,181		)	(131,867		)
Provision for losses	25,829			54,911			14,319			26,276			1,181			122,516
Effect of foreign currency translation	(132		)	(242		)	—			(89		)	—			(463		)
Balance, end of period	$	4,372		$	35,279		$	10,386		$	9,717		$	—		$	59,754
Allowance for loan losses as a percentage of gross loan receivables	4.9		%	19.7		%	12.3		%	10.7		%	N/A			13.4		%



			Estimated Fair Value
(dollars in thousands)	Carrying Value June 30, 2018		Level 1		Level 2		Level 3		June 30, 2018
Financial assets:
Cash	$	115,105	$	115,105	$	—	$	—	$	115,105
Restricted cash	12,448		12,448		—		—		12,448
Loans receivable, net	384,873		—		—		384,873		384,873
Investment in Cognical	6,600		—		—		6,600		6,600
Financial liabilities:
Credit services organization guarantee liability	$	11,619	$	—	$	—	$	11,619	$	11,619
Senior secured notes	512,136		—		—		553,308		553,308
Non-Recourse U.S. SPV facility	114,697		—		—		118,427		118,427



	Six Months Ended
	June 30, 2018								June 30, 2017
(in thousands)	U.S.		Canada		U.K.		Total		U.S.		Canada		U.K.		Total
Unsecured Installment	$	231,720	$	8,595	$	16,104	$	256,419	$	195,651	$	7,643	$	11,286	$	214,580
Secured Installment	52,633		—		—		52,633		46,842		—		—		46,842
Open-End	49,095		5,350		—		54,445		33,712		—		—		33,712
Single-Pay	51,043		67,639		6,625		125,307		51,208		69,126		6,697		127,031
Ancillary	10,228		11,709		—		21,937		10,673		8,392		294		19,359
Total revenue	$	394,719	$	93,293	$	22,729	$	510,741	$	338,086	$	85,161	$	18,277	$	441,524



U.K. Segment Results	Three Months Ended June 30,
(dollars in thousands)	2018			2017			Change $			Change %
Revenue	$	11,814		$	9,585		$	2,229		23.3	%
Provision for losses	5,639			3,188			2,451			76.9	%
Net revenue	6,175			6,397			(222		)	(3.5	)%
Advertising costs	2,441			1,479			962			65.0	%
Non-advertising costs of providing services	670			1,997			(1,327		)	(66.4	)%
Total cost of providing services	3,111			3,476			(365		)	(10.5	)%
Gross margin	3,064			2,921			143			4.9	%
Corporate, district and other	5,675			4,192			1,483			35.4	%
Interest income	(7		)	9			16			#
Total operating expense	5,668			4,201			1,467			34.9	%
Segment operating loss	(2,604		)	(1,280		)	(1,324		)	(103.4	)%
Interest income	(7		)	9			16			#
Depreciation and amortization	128			182			(54		)	(29.7	)%
EBITDA	(2,483		)	(1,089		)	(1,394		)	(128.0	)%
Other adjustments	(6		)	(12		)	6
Adjusted EBITDA	$	(2,489	)	$	(1,101	)	$	(1,388	)	(126.1	)%
# - Variance greater than 100% or not meaningful



	Three Months Ended June 30,						Change
(in thousands except per share data)	2018			2017			$			%
Net income	$	15,975		$	16,342		$	(367	)	(2.2	)%
Adjustments:
Loss on extinguishment of debt⁽¹⁾	—			—
Legal settlement costs⁽⁷⁾	—			1,950
Transaction related costs⁽²⁾	—			146
Share-based compensation⁽³⁾	2,181			1,180
Intangible asset amortization	655			590
Impact of tax law changes⁽⁶⁾	—			—
Cumulative tax effect of adjustments	(709		)	(1,523		)
Adjusted Net Income	$	18,102		$	18,685		$	(583	)	(3.1	)%

Net income	$	15,975		$	16,342
Diluted Weighted Average Shares Outstanding⁽⁴⁾	47,996			38,987
Diluted Earnings per Share ⁽⁴⁾	$	0.33		$	0.42		$	(0.09	)	(21.4	)%
Per Share impact of adjustments to Net Income ⁽⁴⁾	0.05			0.06
Adjusted Diluted Earnings per Share ⁽⁴⁾	$	0.38		$	0.48		$	(0.10	)	(20.8	)%