UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One) | |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the quarterly period ended | |
or | |
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:
(Exact name of registrant as specified in its charter)
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(Address of principal executive offices, including zip code)
(
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class |
| Trading symbol |
| Name of Exchange on which registered |
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.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).
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 | ☐ | ||
☒ | 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 Exchange Act). Yes
As of May 2, 2022,
LOYALTY VENTURES INC.
INDEX
2
PART I —FINANCIAL INFORMATION
Item 1. Financial Statements
LOYALTY VENTURES INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, | December 31, | |||||
| 2022 |
| 2021 | |||
(in thousands, except per share amounts) | ||||||
ASSETS | ||||||
Cash and cash equivalents | $ | | $ | | ||
Accounts receivable, net, less allowance for doubtful accounts ($ |
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Inventories, net |
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Redemption settlement assets, restricted |
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Other current assets |
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Total current assets |
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Property and equipment, net |
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Right of use assets - operating |
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Deferred tax asset, net |
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Intangible assets, net |
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Goodwill |
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Other non-current assets |
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Total assets | $ | | $ | | ||
LIABILITIES AND EQUITY |
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Accounts payable | $ | | $ | | ||
Accrued expenses |
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Deferred revenue |
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Current operating lease liabilities |
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Current debt | | | ||||
Other current liabilities |
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Total current liabilities |
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Deferred revenue |
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Long-term operating lease liabilities |
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Long-term debt | | | ||||
Other liabilities |
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Total liabilities |
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Commitments and contingencies |
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Common stock, $ | | | ||||
Additional paid-in-capital | | | ||||
Accumulated deficit | ( | ( | ||||
Accumulated other comprehensive loss |
| ( |
| ( | ||
Total equity |
| |
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Total liabilities and equity | $ | | $ | |
See accompanying notes to unaudited condensed consolidated and combined financial statements.
3
LOYALTY VENTURES INC.
UNAUDITED CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF INCOME
Three Months Ended | ||||||
March 31, | ||||||
2022 | 2021 | |||||
| (in thousands, except per share amounts) | |||||
Revenues |
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Redemption, net | $ | | $ | | ||
Services |
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Other |
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Total revenue |
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Operating expenses |
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Cost of operations (exclusive of depreciation and amortization disclosed separately below) |
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General and administrative |
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Depreciation and other amortization |
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Amortization of purchased intangibles |
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Total operating expenses |
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Operating income |
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Interest expense (income), net |
| | ( | |||
Income before income taxes and loss from investment in unconsolidated subsidiary |
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Provision for income taxes |
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Loss from investment in unconsolidated subsidiary – related party, net of tax |
| — | | |||
Net income | $ | | $ | | ||
Net income per share (Note 3): | ||||||
Basic | $ | | $ | | ||
Diluted | $ | | $ | | ||
Weighted average shares (Note 3): | ||||||
Basic | | | ||||
Diluted | | |
See accompanying notes to unaudited condensed consolidated and combined financial statements.
4
LOYALTY VENTURES INC.
UNAUDITED CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF COMPREHENSIVE LOSS
Three Months Ended | ||||||
March 31, | ||||||
2022 | 2021 | |||||
(in thousands) | ||||||
Net income | $ | | $ | | ||
Other comprehensive income (loss): |
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|
|
| ||
Unrealized loss on securities available-for-sale |
| ( | ( | |||
Tax benefit |
| — | — | |||
Unrealized loss on securities available-for-sale, net of tax |
| ( |
| ( | ||
Unrealized gain on cash flow hedges |
| | | |||
Tax benefit (expense) |
| | ( | |||
Unrealized gain on cash flow hedges, net of tax |
| |
| | ||
Foreign currency translation adjustments |
| ( | ( | |||
Other comprehensive loss, net of tax |
| ( |
| ( | ||
Total comprehensive loss, net of tax | $ | ( | $ | ( |
See accompanying notes to unaudited condensed consolidated and combined financial statements.
5
LOYALTY VENTURES INC.
UNAUDITED CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF EQUITY
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| Accumulated |
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Additional | Former | Other | ||||||||||||||||||
Common Stock | Paid-In | Accumulated | Parent's Net | Comprehensive | Total | |||||||||||||||
| Shares |
| Amount |
| Capital |
| Deficit |
| Investment |
| Loss |
| Equity | |||||||
(in thousands) | ||||||||||||||||||||
Balance as of January 1, 2022 | | $ | | $ | | $ | ( | $ | — | $ | ( | $ | | |||||||
Net income | — | — | — | | — | — |
| | ||||||||||||
Other comprehensive loss | — | — | — | — | — | ( |
| ( | ||||||||||||
Net transfers from former Parent for Separation-related transactions | — | — | | — | — | — | | |||||||||||||
Stock-based compensation | — | — | | — | — | — | | |||||||||||||
Other | | — | ( | — | — | — | ( | |||||||||||||
Balance as of March 31, 2022 | | $ | | $ | | $ | ( | $ | — | $ | ( | $ | |
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| Accumulated |
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Additional | Former | Other | ||||||||||||||||||
Common Stock | Paid-In | Accumulated | Parent's Net | Comprehensive | Total | |||||||||||||||
| Shares |
| Amount |
| Capital |
| Deficit |
| Investment |
| Income (Loss) |
| Equity | |||||||
(in thousands) | ||||||||||||||||||||
Balance as of January 1, 2021 | — | $ | — | $ | — | $ | — | $ | | $ | | $ | | |||||||
Net income | — | — | — | — | | — |
| | ||||||||||||
Other comprehensive loss | — | — | — | — | — | ( |
| ( | ||||||||||||
Change in former Parent’s net investment | — | — | — | — | ( | — |
| ( | ||||||||||||
Balance as of March 31, 2021 | — | $ | — | $ | — | $ | — | $ | | $ | ( | $ | |
See accompanying notes to unaudited condensed consolidated and combined financial statements.
6
LOYALTY VENTURES INC.
UNAUDITED CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS
Three Months Ended | ||||||
March 31, | ||||||
| 2022 |
| 2021 | |||
(in thousands) | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net income | $ | | $ | | ||
Adjustments to reconcile net income to net cash (used in) provided by operating activities: |
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Depreciation and amortization |
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Deferred income tax benefit |
| ( |
| ( | ||
Non-cash stock compensation |
| |
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Change in other operating assets and liabilities: |
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Change in deferred revenue |
| ( |
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Change in accounts receivable |
| |
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Change in accounts payable and accrued expenses |
| ( |
| ( | ||
Change in other assets |
| ( |
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Change in other liabilities |
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Other |
| |
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Net cash (used in) provided by operating activities |
| ( |
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CASH FLOWS FROM INVESTING ACTIVITIES: |
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| ||
Change in redemption settlement assets, restricted |
| ( | ( | |||
Capital expenditures |
| ( | ( | |||
Distributions from investment in unconsolidated subsidiary – related party |
| — | | |||
Net cash used in investing activities |
| ( |
| ( | ||
CASH FLOWS FROM FINANCING ACTIVITIES: |
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|
|
| ||
Borrowings under debt agreements | | — | ||||
Repayments of borrowings | ( | — | ||||
Dividends paid to former Parent |
| — | ( | |||
Net transfers to former Parent |
| — | ( | |||
Net transfers from former Parent for Separation-related transactions | | — | ||||
Other | ( | — | ||||
Net cash used in financing activities |
| ( |
| ( | ||
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
| ( | ( | |||
Change in cash, cash equivalents and restricted cash |
| ( |
| ( | ||
Cash, cash equivalents and restricted cash at beginning of year |
| | | |||
Cash, cash equivalents and restricted cash at end of year | $ | | $ | | ||
SUPPLEMENTAL CASH FLOW INFORMATION: |
|
|
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| ||
Interest paid | $ | | $ | | ||
Income taxes paid, net | $ | | $ | |
See accompanying notes to unaudited condensed consolidated and combined financial statements.
7
LOYALTY VENTURES INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Description of the Business
On November 5, 2021, Bread Financial Holdings, Inc., previously named Alliance Data Systems Corporation (“former Parent”), completed the spinoff of its LoyaltyOne reportable segment (the “Separation”) into an independent, publicly traded company, Loyalty Ventures Inc. (the “Company” or “Loyalty Ventures”).
Loyalty Ventures provides coalition and campaign-based loyalty solutions through the Canadian AIR MILES® Reward Program and BrandLoyalty Group B.V. (“BrandLoyalty”). The AIR MILES Reward Program is a full-service outsourced coalition loyalty program for its sponsors who pay a fee per AIR MILES reward mile issued, in return for which the AIR MILES Reward Program provides all marketing, customer service, rewards and redemption management. BrandLoyalty designs, implements, conducts and evaluates innovative and tailor-made loyalty programs for high frequency retailers worldwide. These loyalty programs are designed to generate immediate changes in consumer behavior and are offered across Europe and Asia, as well as around the world.
Basis of Presentation
Prior to the Separation, the Company had operated as part of the former Parent and not as a standalone company. The unaudited condensed combined financial statements for the three months ended March 31, 2021 have been derived from the former Parent’s historical accounting records and are presented on a “carve-out” basis. The unaudited condensed combined financial statements for the three months ended March 31, 2021 also include allocations of certain general and administrative expenses from the former Parent that directly or indirectly benefited Loyalty Ventures’ business. However, amounts recognized by the Company are not necessarily representative of the amounts that would have been reflected in the unaudited condensed combined financial statements had the Company operated independently. The former Parent’s third-party long-term debt and the related interest expense was not allocated for the three months ended March 31, 2021 as the Company was not the legal obligor of such debt. The former Parent’s net investment represents its interest in the recorded net assets of the Company. All significant transactions between the Company and its former Parent have been included in the accompanying unaudited condensed combined financial statements. Transactions with the former Parent as contributions to the carve-out entity or distributions from the carve-out entity are reflected in the accompanying unaudited condensed combined statements of equity as “Change in former Parent’s net investment.”
The unaudited consolidated financial statements for the three months ended March 31, 2022 were based on the reported results of Loyalty Ventures as a standalone company and prepared on a consolidated basis.
All significant intercompany accounts and transactions between the businesses comprising the Company have been eliminated in the accompanying unaudited condensed consolidated and combined financial statements.
The Company’s unaudited condensed consolidated and combined financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company’s unaudited condensed consolidated and combined financial statements and accompanying notes are presented in U.S. Dollars (“USD”), the Company’s reporting currency.
The unaudited condensed consolidated and combined financial statements included herein reflect all adjustments (consisting of normal, recurring adjustments) which are, in the opinion of management, necessary to state fairly the results for the interim periods presented. The results of operations for the interim periods presented are not necessarily
8
LOYALTY VENTURES INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS – (CONTINUED)
indicative of the operating results to be expected for any subsequent interim period or for the fiscal year. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. However, the Company believes that the disclosures are adequate to make the information presented not misleading. These unaudited condensed consolidated and combined financial statements should be read in conjunction with the consolidated and combined financial statements and the notes thereto for the year ended December 31, 2021 included in the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission (“SEC”) on February 28, 2022.
Recently Issued Accounting Standards
In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04, “Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” This ASU provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this ASU apply only to contracts and hedging relationships that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued due to reference rate reform. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022. This ASU is elective and is effective upon issuance for all entities. The Company is evaluating the impact that adoption of ASU 2020-04 will have on its consolidated financial statements.
In October 2021, the FASB issued ASU 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers,” which requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities in accordance with Accounting Standards Codification (“ASC”) 606. ASU 2021-08 is effective for fiscal years beginning after December 15, 2022 and early adoption is permitted. The Company is evaluating the impact that adoption of ASU 2021-08 will have on its consolidated financial statements.
2. REVENUE
The Company’s products and services are reported under
| AIR MILES |
|
|
| ||||||||
Three Months Ended March 31, 2022 | Reward Program | BrandLoyalty | Eliminations | Total | ||||||||
(in thousands) | ||||||||||||
Disaggregation of Revenue by Major Source: | ||||||||||||
Coalition loyalty program | $ | | $ | — | $ | — | $ | | ||||
Campaign-based loyalty programs |
| — |
| | — |
| | |||||
Other |
| |
| | ( |
| | |||||
Revenue from contracts with customers | $ | | $ | | $ | ( | $ | | ||||
Investment income |
| |
| — | — |
| | |||||
Total | $ | | $ | | $ | ( | $ | |
9
LOYALTY VENTURES INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS – (CONTINUED)
| AIR MILES |
|
|
|
| |||||||
Three Months Ended March 31, 2021 | Reward Program | BrandLoyalty | Eliminations | Total | ||||||||
(in thousands) | ||||||||||||
Disaggregation of Revenue by Major Source: | ||||||||||||
Coalition loyalty program | $ | | $ | — | $ | — | $ | | ||||
Campaign-based loyalty programs |
| — |
| | — |
| | |||||
Other |
| — |
| — | — |
| — | |||||
Revenue from contracts with customers | $ | | $ | | $ | — | $ | | ||||
Investment income |
| |
| — | — |
| | |||||
Total | $ | | $ | | $ | — | $ | |
| AIR MILES |
|
|
| ||||||||
Three Months Ended March 31, 2022 | Reward Program | BrandLoyalty | Eliminations | Total | ||||||||
(in thousands) | ||||||||||||
Disaggregation of Revenue by Geographic Region: | ||||||||||||
United States | $ | — | $ | — | $ | — | $ | — | ||||
Canada |
| |
| | ( |
| | |||||
Europe, Middle East and Africa |
| — |
| | — |
| | |||||
Asia Pacific |
| — |
| | — |
| | |||||
Other |
| — |
| | — |
| | |||||
Total | $ | | $ | | $ | ( | $ | |
| AIR MILES |
|
|
| ||||||||
Three Months Ended March 31, 2021 | Reward Program | BrandLoyalty | Eliminations | Total | ||||||||
(in thousands) | ||||||||||||
Disaggregation of Revenue by Geographic Region: | ||||||||||||
United States | $ | — | $ | | $ | — | $ | | ||||
Canada |
| |
| | — |
| | |||||
Europe, Middle East and Africa |
| — |
| | — |
| | |||||
Asia Pacific |
| — |
| | — |
| | |||||
Other |
| — |
| | — |
| | |||||
Total | $ | | $ | | $ | — | $ | |
Contract Liabilities
The Company records a contract liability when cash payments are received in advance of its performance, which applies to the service and redemption of an AIR MILES reward mile and the reward products for its campaign-based loyalty programs.
10
LOYALTY VENTURES INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS – (CONTINUED)
A reconciliation of contract liabilities for the AIR MILES Reward Program is as follows:
Deferred Revenue | |||||||||
| Service |
| Redemption |
| Total | ||||
(in thousands) | |||||||||
Balance at January 1, 2022 | $ | | $ | | $ | | |||
Cash proceeds |
| | |
| | ||||
Revenue recognized (1) |
| ( | ( |
| ( | ||||
Other |
| — | |
| | ||||
Effects of foreign currency translation |
| | |
| | ||||
Balance at March 31, 2022 | $ | | $ | | $ | | |||
Amounts recognized in the consolidated balance sheets: |
|
|
|
|
|
| |||
Deferred revenue (current) | $ | | $ | | $ | | |||
Deferred revenue (non-current) | $ | | $ | — | $ | |
(1) | Reported on a gross basis herein. |
The deferred redemption obligation associated with the AIR MILES Reward Program is effectively due on demand from the collector base, thus the timing of revenue recognition is based on the redemption by the collector. Service revenue is amortized over the expected life of a mile, with the deferred revenue balance expected to be recognized into revenue in the amount of $
The contract liabilities for BrandLoyalty’s campaign-based loyalty programs are recognized in other current liabilities in the Company’s unaudited condensed consolidated balance sheets. The beginning balance as of January 1, 2022 was $
3. EARNINGS PER SHARE
A total of
For the three months ended March 31, 2022, the calculation of basic and diluted earnings per share is based on the weighted average number of common shares outstanding. The dilutive effect of equity awards of Loyalty Ventures granted subsequent to the Separation is included in the diluted calculation.
11
LOYALTY VENTURES INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS – (CONTINUED)
The following table sets forth the computation of basic and diluted earnings per share of common stock:
Three Months Ended | ||||||
March 31, | ||||||
| 2022 |
| 2021 | |||
(in thousands, except per share amounts) | ||||||
Numerator: | ||||||
Net income | $ | | $ | | ||
Denominator: | ||||||
Weighted average shares, basic | | | ||||
Weighted average effect of dilutive securities: | ||||||
Net effect of dilutive unvested restricted stock(1) | | — | ||||
Denominator for diluted calculation | | | ||||
Basic net income per share: | $ | | $ | | ||
Diluted net income per share: | $ | | $ | |
(1) | For the three months ended March 31, 2022, there were |
4. INVENTORIES, NET
Inventories, net of $
5. REDEMPTION SETTLEMENT ASSETS, RESTRICTED
Redemption settlement assets consist of restricted cash, mutual funds, and securities available-for-sale and are designated for settling redemptions by collectors of the AIR MILES Reward Program in Canada under certain contractual relationships with sponsors of the AIR MILES Reward Program. The principal components of redemption settlement assets, which are carried at fair value, are as follows:
March 31, | December 31, | |||||
2022 | 2021 | |||||
| Fair Value |
| Fair Value | |||
(in thousands) | ||||||
Restricted cash | $ | | $ | | ||
Mutual funds |
| |
| | ||
Corporate bonds |
| |
| | ||
Total | $ | | $ | |
12
LOYALTY VENTURES INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS – (CONTINUED)
The following table shows the amortized cost, unrealized gains and losses, and fair value of securities available-for-sale as of March 31, 2022 and December 31, 2021, respectively:
March 31, 2022 | December 31, 2021 | ||||||||||||||||||||||||
Amortized | Unrealized | Unrealized | Amortized | Unrealized | Unrealized | ||||||||||||||||||||
| Cost |
| Gains |
| Losses |
| Fair Value |
| Cost |
| Gains |
| Losses |
| Fair Value | ||||||||||
(in thousands) | |||||||||||||||||||||||||
Corporate bonds | $ | | $ | | $ | ( | $ | | $ | | $ | | $ | ( | $ | | |||||||||
Total | $ | | $ | | $ | ( | $ | | $ | | $ | | $ | ( | $ | |
The following tables show the unrealized losses and fair value for those investments that were in an unrealized loss position as of March 31, 2022 and December 31, 2021, respectively, aggregated by investment category and the length of time that individual securities have been in a continuous loss position:
March 31, 2022 | ||||||||||||||||||
Less than 12 months | 12 Months or Greater | Total | ||||||||||||||||
Unrealized | Unrealized | Unrealized | ||||||||||||||||
Fair Value | Losses | Fair Value | Losses | Fair Value | Losses | |||||||||||||
(in thousands) | ||||||||||||||||||
Corporate bonds |
| $ | | $ | ( | $ | | $ | ( | $ | | $ | ( | |||||
Total | $ | | $ | ( | $ | | $ | ( | $ | | $ | ( |
December 31, 2021 | ||||||||||||||||||
Less than 12 months | 12 Months or Greater | Total | ||||||||||||||||
Unrealized | Unrealized | Unrealized | ||||||||||||||||
Fair Value | Losses | Fair Value | Losses | Fair Value | Losses | |||||||||||||
(in thousands) | ||||||||||||||||||
Corporate bonds |
| $ | | $ | ( | $ | | $ | ( |
| $ | |
| $ | ( | |||
Total | $ | | $ | ( | $ | | $ | ( | $ | | $ | ( |
The amortized cost and estimated fair value of the securities available-for-sale at March 31, 2022 by contractual maturity are as follows:
| Amortized |
| Estimated | |||
Cost | Fair Value | |||||
(in thousands) | ||||||
Due in one year or less | $ | | $ | | ||
Due after one year through five years |
| |
| | ||
Due after five years through ten years |
| |
| | ||
Total | $ | | $ | |
Market values were determined for each individual security in the investment portfolio. The Company recorded losses associated with the change in fair value of mutual funds of $
For available-for-sale debt securities in which fair value is less than cost, ASC 326, “Financial Instruments – Credit Losses,” requires that credit-related impairment, if any, is recognized through an allowance for credit losses and adjusted each period for changes in credit risk. The Company typically invests in highly rated securities with low probabilities of default and has the intent and ability to hold the investments until maturity, and the Company performs an assessment each period for credit-related impairment. As of March 31, 2022, the Company does not consider its investments to be impaired.
13
LOYALTY VENTURES INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS – (CONTINUED)
Gains from the sale of investment securities were de minimis for the three months ended March 31, 2022. There were
6. LEASES
The Company has operating leases for general office properties, warehouses, data centers, customer care centers, automobiles and certain equipment. As of March 31, 2022, the Company’s leases have remaining lease terms of less than
Leases with an initial term of 12 months or less are not recognized on the balance sheet; the Company recognizes lease expense for these leases on a straight-line basis over the lease term. Additionally, the Company accounts for lease and nonlease components as a single lease component for its identified asset classes.
The components of lease expense were as follows:
Three Months Ended | ||||||
March 31, | ||||||
| 2022 |
| 2021 | |||
(in thousands) | ||||||
Operating lease cost | $ | | $ | |