| Segments
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• | Consumer-to-Consumer - The Consumer-to-Consumer operating segment facilitates money transfers between two consumers, primarily through a network of third-party agents. The Company's multi-currency, real-time money transfer service is viewed by the Company as one interconnected global network where a money transfer can be sent from one location to another, around the world. This service is available for international cross-border transfers - that is, the transfer of funds from one country to another - and, in certain countries, intra-country transfers - that is, money transfers from one location to another in the same country. This segment also includes money transfer transactions that can be initiated through websites and mobile devices. |
• | Consumer-to-Business - The Consumer-to-Business operating segment facilitates bill payments from consumers to businesses and other organizations, including utilities, auto finance companies, mortgage servicers, financial service providers and government agencies. The significant majority of the segment's revenue was generated in the United States during all periods presented, with the remainder primarily generated in Argentina. |
• | Business Solutions - The Business Solutions operating segment facilitates payment and foreign exchange solutions, primarily cross-border, cross-currency transactions, for small and medium size enterprises and other organizations and individuals. The majority of the segment's business relates to exchanges of currency at spot rates, which enable customers to make cross-currency payments. In addition, in certain countries, the Company writes foreign currency forward and option contracts for customers to facilitate future payments. |
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For the Year Ended December 31, | ||||||||
2016 | 2015 | 2014 | ||||||
Basic weighted-average shares outstanding | 490.2 | 512.6 | 533.4 | |||||
Common stock equivalents | 3.3 | 4.1 | 3.4 | |||||
Diluted weighted-average shares outstanding | 493.5 | 516.7 | 536.8 |
• | Level 1: Quoted prices in active markets for identical assets or liabilities. |
• | Level 2: Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. For most of these assets, the Company utilizes pricing services that use multiple prices as inputs to determine daily market values. In addition, the Trust has other investments that fall within Level 2 that are valued at net asset value which is not quoted on an active market; however, the unit price is based on underlying investments which are traded on an active market. The individual redemption restrictions of Trust investments measured at net asset value are also considered when determining whether Level 2 classification is appropriate. |
• | Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include items where the determination of fair value requires significant management judgment or estimation. The Company has Level 3 assets that are recognized and disclosed at fair value on a non-recurring basis related to the Company's business combinations, where the values of the intangible assets and goodwill acquired in a purchase are derived utilizing one of the three recognized approaches: the market approach, the income approach or the cost approach. |
December 31, | |||||||
2016 | 2015 | ||||||
Settlement assets: | |||||||
Cash and cash equivalents | $ | 1,190.0 | $ | 1,075.7 | |||
Receivables from selling agents and Business Solutions customers | 1,327.3 | 1,070.4 | |||||
Investment securities | 1,231.8 | 1,162.6 | |||||
$ | 3,749.1 | $ | 3,308.7 | ||||
Settlement obligations: | |||||||
Money transfer, money order and payment service payables | $ | 2,598.2 | $ | 2,428.5 | |||
Payables to agents | 1,150.9 | 880.2 | |||||
$ | 3,749.1 | $ | 3,308.7 |
December 31, | |||||||
2016 | 2015 | ||||||
Equipment | $ | 585.5 | $ | 529.8 | |||
Buildings | 88.3 | 87.3 | |||||
Leasehold improvements | 84.3 | 83.3 | |||||
Furniture and fixtures | 40.4 | 39.6 | |||||
Land and improvements | 17.0 | 17.0 | |||||
Projects in process | 5.0 | 13.0 | |||||
Total property and equipment, gross | 820.5 | 770.0 | |||||
Less accumulated depreciation | (600.0 | ) | (538.2 | ) | |||
Property and equipment, net | $ | 220.5 | $ | 231.8 |
December 31, 2016 | December 31, 2015 | ||||||||||||||||||
Weighted- Average Amortization Period (in years) | Initial Cost | Net of Accumulated Amortization | Initial Cost | Net of Accumulated Amortization | |||||||||||||||
Acquired contracts | 11.5 | $ | 599.6 | $ | 264.4 | $ | 624.4 | $ | 316.6 | ||||||||||
Capitalized contract costs | 6.2 | 559.2 | 294.0 | 541.2 | 290.4 | ||||||||||||||
Internal use software | 3.2 | 371.3 | 56.4 | 338.1 | 53.8 | ||||||||||||||
Acquired trademarks | 24.5 | 34.2 | 18.5 | 34.7 | 20.2 | ||||||||||||||
Projects in process | 3.0 | 30.6 | 30.6 | 23.5 | 23.5 | ||||||||||||||
Other intangibles | 4.1 | 27.5 | 0.3 | 27.5 | 0.5 | ||||||||||||||
Total other intangible assets | 7.8 | $ | 1,622.4 | $ | 664.2 | $ | 1,589.4 | $ | 705.0 |
• | Cash flow hedges - Changes in the fair value of derivatives that are designated and qualify as cash flow hedges are recorded in "Accumulated other comprehensive loss." Cash flow hedges consist of foreign currency hedging of forecasted revenues, as well as hedges of the forecasted issuance of fixed rate debt. Derivative fair value changes that are captured in "Accumulated other comprehensive loss" are reclassified to earnings in the same period or periods the hedged item affects earnings, to the extent the instrument is effective in offsetting the change in cash flows attributable to the risk being hedged. The portions of the change in fair value that are either considered ineffective or are excluded from the measure of effectiveness are recognized immediately in "Derivative gains/(losses), net." |
• | Fair value hedges - Changes in the fair value of derivatives that are designated as fair value hedges of fixed rate debt are recorded in "Interest expense." The offsetting change in value of the related debt instrument attributable to changes in the benchmark interest rate is also recorded in "Interest expense." |
• | Undesignated - Derivative contracts entered into to reduce the variability related to (a) money transfer settlement assets and obligations, generally with maturities from a few days up to one month, and (b) certain foreign currency denominated cash and other asset and liability positions, typically with maturities of less than one year at inception, are not designated as hedges for accounting purposes and changes in their fair value are included in "Selling, general and administrative." The Company is also exposed to risk from derivative contracts written to its customers arising from its cross-currency Business Solutions payments operations. The duration of these derivative contracts at inception is generally less than one year. The Company aggregates its Business Solutions payments foreign currency exposures arising from customer contracts, including the derivative contracts described above, and hedges the resulting net currency risks by entering into offsetting contracts with established financial institution counterparties (economic hedge contracts) as part of a broader foreign currency portfolio, including significant spot exchanges of currency in addition to forwards and options. The changes in fair value related to these contracts are recorded in "Foreign exchange revenues." |
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Year Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Business Transformation | Productivity and Cost-Savings Initiatives | ||||||||||
Cost of services | $ | 2.5 | $ | 1.0 | $ | 11.6 | |||||
Selling, general and administrative | 17.8 | 10.1 | 18.7 | ||||||||
Total expenses, pre-tax | $ | 20.3 | $ | 11.1 | $ | 30.3 | |||||
Total expenses, net of tax | $ | 12.9 | $ | 7.2 | $ | 20.2 |
Consumer-to-Consumer | Consumer-to-Business | Business Solutions | Other | Total | ||||||||||||||||
2015 expenses | $ | 7.6 | $ | 1.5 | $ | 1.8 | $ | 0.2 | $ | 11.1 | ||||||||||
2014 expenses | 15.7 | 6.7 | 7.3 | 0.6 | 30.3 |
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Consumer-to-Consumer | Consumer-to-Business | Business Solutions | Other | Total | |||||||||||||||
January 1, 2015 balance | $ | 1,950.1 | $ | 209.7 | $ | 996.0 | $ | 13.4 | $ | 3,169.2 | |||||||||
Currency translation | — | (5.2 | ) | — | (0.2 | ) | (5.4 | ) | |||||||||||
December 31, 2015 balance | $ | 1,950.1 | $ | 204.5 | $ | 996.0 | $ | 13.2 | $ | 3,163.8 | |||||||||
Currency translation | — | (1.7 | ) | — | (0.1 | ) | (1.8 | ) | |||||||||||
December 31, 2016 balance | $ | 1,950.1 | $ | 202.8 | $ | 996.0 | $ | 13.1 | $ | 3,162.0 |
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December 31, 2016 | Amortized Cost | Fair Value | Gross Unrealized Gains | Gross Unrealized Losses | Net Unrealized Gains/ (Losses) | ||||||||||||||
Settlement assets: | |||||||||||||||||||
Available-for-sale securities: | |||||||||||||||||||
State and municipal debt securities (a) | $ | 1,008.5 | $ | 1,002.4 | $ | 5.0 | $ | (11.1 | ) | $ | (6.1 | ) | |||||||
State and municipal variable rate demand notes | 203.4 | 203.4 | — | — | — | ||||||||||||||
Corporate and other debt securities | 26.0 | 26.0 | — | — | — | ||||||||||||||
1,237.9 | 1,231.8 | 5.0 | (11.1 | ) | (6.1 | ) | |||||||||||||
Other assets: | |||||||||||||||||||
Held-to-maturity securities: | |||||||||||||||||||
Foreign corporate debt securities | 36.2 | 36.2 | 0.1 | (0.1 | ) | — | |||||||||||||
$ | 1,274.1 | $ | 1,268.0 | $ | 5.1 | $ | (11.2 | ) | $ | (6.1 | ) | ||||||||
December 31, 2015 | Amortized Cost | Fair Value | Gross Unrealized Gains | Gross Unrealized Losses | Net Unrealized Gains/ (Losses) | ||||||||||||||
Settlement assets: | |||||||||||||||||||
Available-for-sale securities: | |||||||||||||||||||
State and municipal debt securities (a) | $ | 1,040.3 | $ | 1,052.5 | $ | 14.2 | $ | (2.0 | ) | $ | 12.2 | ||||||||
State and municipal variable rate demand notes | 42.9 | 42.9 | — | — | — | ||||||||||||||
Corporate and other debt securities | 67.3 | 67.2 | — | (0.1 | ) | (0.1 | ) | ||||||||||||
1,150.5 | 1,162.6 | 14.2 | (2.1 | ) | 12.1 | ||||||||||||||
Other assets: | |||||||||||||||||||
Held-to-maturity securities: | |||||||||||||||||||
Foreign corporate debt securities | 9.3 | 9.3 | — | — | — | ||||||||||||||
$ | 1,159.8 | $ | 1,171.9 | $ | 14.2 | $ | (2.1 | ) | $ | 12.1 |
Amortized Cost | Fair Value | ||||||
Due within 1 year | $ | 118.9 | $ | 119.1 | |||
Due after 1 year through 5 years | 502.6 | 502.0 | |||||
Due after 5 years through 10 years | 286.7 | 285.8 | |||||
Due after 10 years | 329.7 | 324.9 | |||||
$ | 1,237.9 | $ | 1,231.8 |
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Fair Value Measurement Using | Assets/ Liabilities at Fair Value | ||||||||||||||
December 31, 2016 | Level 1 | Level 2 | Level 3 | ||||||||||||
Assets: | |||||||||||||||
Settlement assets: | |||||||||||||||
State and municipal debt securities | $ | — | $ | 1,002.4 | $ | — | $ | 1,002.4 | |||||||
State and municipal variable rate demand notes | — | 203.4 | — | 203.4 | |||||||||||
Corporate and other debt securities | — | 26.0 | — | 26.0 | |||||||||||
Other assets: | |||||||||||||||
Derivatives | — | 365.6 | — | 365.6 | |||||||||||
Total assets | $ | — | $ | 1,597.4 | $ | — | $ | 1,597.4 | |||||||
Liabilities: | |||||||||||||||
Derivatives | $ | — | $ | 262.3 | $ | — | $ | 262.3 | |||||||
Total liabilities | $ | — | $ | 262.3 | $ | — | $ | 262.3 | |||||||
Fair Value Measurement Using | Assets/ Liabilities at Fair Value | ||||||||||||||
December 31, 2015 | Level 1 | Level 2 | Level 3 | ||||||||||||
Assets: | |||||||||||||||
Settlement assets: | |||||||||||||||
State and municipal debt securities | $ | — | $ | 1,052.5 | $ | — | $ | 1,052.5 | |||||||
State and municipal variable rate demand notes | — | 42.9 | — | 42.9 | |||||||||||
Corporate and other debt securities | — | 67.2 | — | 67.2 | |||||||||||
Other assets: | |||||||||||||||
Derivatives | — | 396.3 | — | 396.3 | |||||||||||
Total assets | $ | — | $ | 1,558.9 | $ | — | $ | 1,558.9 | |||||||
Liabilities: | |||||||||||||||
Derivatives | $ | — | $ | 283.7 | $ | — | $ | 283.7 | |||||||
Total liabilities | $ | — | $ | 283.7 | $ | — | $ | 283.7 |
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December 31, | |||||||
2016 | 2015 | ||||||
Other assets: | |||||||
Derivatives | $ | 365.6 | $ | 396.3 | |||
Prepaid expenses | 126.9 | 83.4 | |||||
Amounts advanced to agents, net of discounts | 58.0 | 57.1 | |||||
Equity method investments | 40.1 | 43.3 | |||||
Other | 155.7 | 143.9 | |||||
Total other assets | $ | 746.3 | $ | 724.0 | |||
Other liabilities: | |||||||
Derivatives | $ | 262.3 | $ | 283.7 | |||
Pension obligations | 26.4 | 69.3 | |||||
Other | 70.7 | 76.0 | |||||
Total other liabilities | $ | 359.4 | $ | 429.0 |
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Year Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Domestic | $ | (546.4 | ) | $ | (27.0 | ) | $ | 34.7 | |||
Foreign | 888.1 | 968.8 | 933.5 | ||||||||
$ | 341.7 | $ | 941.8 | $ | 968.2 |
Year Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Federal | $ | 43.5 | $ | 33.2 | $ | 57.0 | |||||
State and local | 2.9 | (1.0 | ) | 4.9 | |||||||
Foreign | 42.1 | 71.8 | 53.9 | ||||||||
$ | 88.5 | $ | 104.0 | $ | 115.8 |
Year Ended December 31, | ||||||||
2016 | 2015 | 2014 | ||||||
Federal statutory rate | 35.0 | % | 35.0 | % | 35.0 | % | ||
State income taxes, net of federal income tax benefits | 1.2 | % | 0.4 | % | 0.6 | % | ||
Foreign rate differential, net of United States tax paid on foreign earnings (24.8%, 3.4% and 4.3%, respectively) | (50.8 | )% | (24.6 | )% | (24.0 | )% | ||
Joint Settlement Agreements impact | 62.1 | % | — | % | — | % | ||
Lapse of statute of limitations | (11.3 | )% | (0.8 | )% | (0.9 | )% | ||
Valuation allowances | (2.8 | )% | (0.9 | )% | 2.5 | % | ||
Other | (7.5 | )% | 1.9 | % | (1.2 | )% | ||
Effective tax rate | 25.9 | % | 11.0 | % | 12.0 | % |
Year Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Current: | |||||||||||
Federal | $ | 186.2 | $ | 59.6 | $ | 76.1 | |||||
State and local | 13.1 | 5.4 | 4.7 | ||||||||
Foreign | 63.4 | 78.9 | 61.8 | ||||||||
Total current taxes | 262.7 | 143.9 | 142.6 | ||||||||
Deferred: | |||||||||||
Federal | (142.7 | ) | (26.4 | ) | (19.1 | ) | |||||
State and local | (10.2 | ) | (6.4 | ) | 0.2 | ||||||
Foreign | (21.3 | ) | (7.1 | ) | (7.9 | ) | |||||
Total deferred taxes | (174.2 | ) | (39.9 | ) | (26.8 | ) | |||||
$ | 88.5 | $ | 104.0 | $ | 115.8 |
December 31, | |||||||
2016 | 2015 | ||||||
Deferred tax assets related to: | |||||||
Reserves, accrued expenses and employee-related items | $ | 279.8 | $ | 87.1 | |||
Tax attribute carryovers | 39.1 | 60.2 | |||||
Pension obligations | 11.1 | 26.5 | |||||
Intangibles, property and equipment | 9.7 | 7.9 | |||||
Other | 14.8 | 10.2 | |||||
Valuation allowance | (22.0 | ) | (33.2 | ) | |||
Total deferred tax assets | 332.5 | 158.7 | |||||
Deferred tax liabilities related to: | |||||||
Intangibles, property and equipment | 394.4 | 410.9 | |||||
Other | 14.3 | 12.5 | |||||
Total deferred tax liabilities | 408.7 | 423.4 | |||||
Net deferred tax liability (a) | $ | 76.2 | $ | 264.7 |
(a) | As of December 31, 2016 and 2015, deferred tax assets that cannot be fully offset by deferred tax liabilities in the respective tax jurisdictions of $9.7 million and $7.9 million, respectively, are reflected in "Other assets" in the Consolidated Balance Sheets. |
2016 | 2015 | ||||||
Balance as of January 1, | $ | 105.6 | $ | 93.4 | |||
Increase related to current period tax positions (a) | 223.6 | 17.1 | |||||
Increase related to prior period tax positions | 71.7 | 7.7 | |||||
Decrease related to prior period tax positions | (14.9 | ) | (5.4 | ) | |||
Decrease due to lapse of applicable statute of limitations | (33.1 | ) | (5.6 | ) | |||
Decrease due to effects of foreign currency exchange rates | (0.9 | ) | (1.6 | ) | |||
Balance as of December 31, | $ | 352.0 | $ | 105.6 |
(a) | Includes recurring accruals for issues which initially arose in previous periods. |
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Year Ending December 31, | |||
2017 | $ | 40.8 | |
2018 | 31.2 | ||
2019 | 19.1 | ||
2020 | 10.6 | ||
2021 | 6.1 | ||
Thereafter | 12.5 | ||
Total future minimum lease payments | $ | 120.3 |
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Year Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Unrealized gains on investment securities, beginning of period | $ | 7.8 | $ | 8.9 | $ | 4.1 | |||||
Unrealized gains/(losses) | (14.9 | ) | 0.4 | 15.5 | |||||||
Tax (expense)/benefit | 5.4 | (0.1 | ) | (5.7 | ) | ||||||
Reclassification of gains into "Other revenues" | (3.3 | ) | (2.2 | ) | (7.8 | ) | |||||
Reclassification of gains into "Interest income" | — | — | (0.2 | ) | |||||||
Tax expense related to reclassifications | 1.2 | 0.8 | 3.0 | ||||||||
Net unrealized gains/(losses) on investment securities | (11.6 | ) | (1.1 | ) | 4.8 | ||||||
Unrealized gains/(losses) on investment securities, end of period | $ | (3.8 | ) | $ | 7.8 | $ | 8.9 | ||||
Unrealized gains/(losses) on hedging activities, beginning of period | $ | 41.4 | $ | 48.6 | $ | (33.0 | ) | ||||
Unrealized gains | 34.3 | 70.8 | 84.0 | ||||||||
Tax (expense)/benefit | 1.0 | (7.0 | ) | (3.7 | ) | ||||||
Reclassification of gains into "Transaction fees" | (33.3 | ) | (55.3 | ) | (1.2 | ) | |||||
Reclassification of gains into "Foreign exchange revenues" | (14.7 | ) | (22.5 | ) | (0.4 | ) | |||||
Reclassification of losses into "Interest expense" | 3.6 | 3.6 | 3.6 | ||||||||
Tax expense/(benefit) related to reclassifications | 1.5 | 3.2 | (0.7 | ) | |||||||
Net unrealized gains/(losses) on hedging activities | (7.6 | ) | (7.2 | ) | 81.6 | ||||||
Unrealized gains on hedging activities, end of period | $ | 33.8 | $ | 41.4 | $ | 48.6 | |||||
Foreign currency translation adjustments, beginning of period | $ | (66.0 | ) | $ | (49.2 | ) | $ | (21.6 | ) | ||
Foreign currency translation adjustments | (5.4 | ) | (20.3 | ) | (14.8 | ) | |||||
Tax (expense)/benefit | 0.7 | 3.5 | (12.8 | ) | |||||||
Net foreign currency translation adjustments | (4.7 | ) | (16.8 | ) | (27.6 | ) | |||||
Foreign currency translation adjustments, end of period | $ | (70.7 | ) | $ | (66.0 | ) | $ | (49.2 | ) | ||
Defined benefit pension plan adjustments, beginning of period | $ | (127.1 | ) | $ | (127.2 | ) | $ | (118.5 | ) | ||
Unrealized losses | (2.9 | ) | (9.7 | ) | (24.3 | ) | |||||
Tax benefit | 1.1 | 2.5 | 9.0 | ||||||||
Reclassification of losses into "Cost of services" | 10.7 | 11.4 | 10.4 | ||||||||
Tax benefit related to reclassifications and other | (3.9 | ) | (4.1 | ) | (3.8 | ) | |||||
Net defined benefit pension plan adjustments | 5.0 | 0.1 | (8.7 | ) | |||||||
Defined benefit pension plan adjustments, end of period | $ | (122.1 | ) | $ | (127.1 | ) | $ | (127.2 | ) | ||
Accumulated other comprehensive loss, end of period | $ | (162.8 | ) | $ | (143.9 | ) | $ | (118.9 | ) |
Year | Q1 | Q2 | Q3 | Q4 | ||||||||||||
2016 | $ | 0.16 | $ | 0.16 | $ | 0.16 | $ | 0.16 | ||||||||
2015 | $ | 0.155 | $ | 0.155 | $ | 0.155 | $ | 0.155 | ||||||||
2014 | $ | 0.125 | $ | 0.125 | $ | 0.125 | $ | 0.125 |
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Contracts designated as hedges: | |||
Euro | $ | 383.2 | |
British pound | 133.4 | ||
Canadian dollar | 92.8 | ||
Australian dollar | 46.3 | ||
Swiss franc | 40.9 | ||
Other | 84.1 | ||
Contracts not designated as hedges: | |||
Euro | $ | 248.8 | |
British pound | 55.4 | ||
Australian dollar | 47.1 | ||
Mexican peso | 40.8 | ||
Canadian dollar | 40.5 | ||
Indian rupee | 29.5 | ||
Other (a) | 166.2 |
(a) | Comprised of exposures to 20 different currencies. None of these individual currency exposures is greater than $25 million. |
Derivative Assets | Derivative Liabilities | ||||||||||||||||||
Fair Value | Fair Value | ||||||||||||||||||
Balance Sheet Location | December 31, 2016 | December 31, 2015 | Balance Sheet Location | December 31, 2016 | December 31, 2015 | ||||||||||||||
Derivatives — hedges: | |||||||||||||||||||
Interest rate fair value hedges | Other assets | $ | 6.7 | $ | 7.6 | Other liabilities | $ | — | $ | — | |||||||||
Foreign currency cash flow hedges | Other assets | 48.4 | 59.7 | Other liabilities | 1.2 | 2.4 | |||||||||||||
Total | $ | 55.1 | $ | 67.3 | $ | 1.2 | $ | 2.4 | |||||||||||
Derivatives — undesignated: | |||||||||||||||||||
Business Solutions operations — foreign currency (a) | Other assets | $ | 307.2 | $ | 326.1 | Other liabilities | $ | 258.3 | $ | 277.1 | |||||||||
Foreign currency | Other assets | 3.3 | 2.9 | Other liabilities | 2.8 | 4.2 | |||||||||||||
Total | $ | 310.5 | $ | 329.0 | $ | 261.1 | $ | 281.3 | |||||||||||
Total derivatives | $ | 365.6 | $ | 396.3 | $ | 262.3 | $ | 283.7 |
(a) | In many circumstances, the Company allows its Business Solutions customers to settle part or all of their derivative contracts prior to maturity. However, the offsetting positions originally entered into with financial institution counterparties do not allow for similar settlement. To mitigate this, additional foreign currency contracts are entered into with financial institution counterparties to offset the original economic hedge contracts. This frequently results in increases in the Company's derivative assets and liabilities that may exceed the growth in the underlying derivatives business. |
December 31, 2016 | Gross Amounts of Recognized Assets | Gross Amounts Offset in the Consolidated Balance Sheets | Net Amounts Presented in the Consolidated Balance Sheets | Derivatives Not Offset in the Consolidated Balance Sheets | Net Amounts | |||||||||||||||
Derivatives subject to a master netting arrangement or similar agreement | $ | 256.3 | $ | — | $ | 256.3 | $ | (146.4 | ) | $ | 109.9 | |||||||||
Derivatives that are not or may not be subject to master netting arrangement or similar agreement | 109.3 | |||||||||||||||||||
Total | $ | 365.6 | ||||||||||||||||||
December 31, 2015 | ||||||||||||||||||||
Derivatives subject to a master netting arrangement or similar agreement | $ | 224.3 | $ | — | $ | 224.3 | $ | (119.2 | ) | $ | 105.1 | |||||||||
Derivatives that are not or may not be subject to master netting arrangement or similar agreement | 172.0 | |||||||||||||||||||
Total | $ | 396.3 |
December 31, 2016 | Gross Amounts of Recognized Liabilities | Gross Amounts Offset in the Consolidated Balance Sheets | Net Amounts Presented in the Consolidated Balance Sheets | Derivatives Not Offset in the Consolidated Balance Sheets | Net Amounts | |||||||||||||||
Derivatives subject to a master netting arrangement or similar agreement | $ | 152.6 | $ | — | $ | 152.6 | $ | (146.4 | ) | $ | 6.2 | |||||||||
Derivatives that are not or may not be subject to master netting arrangement or similar agreement | 109.7 | |||||||||||||||||||
Total | $ | 262.3 | ||||||||||||||||||
December 31, 2015 | ||||||||||||||||||||
Derivatives subject to a master netting arrangement or similar agreement | $ | 169.6 | $ | — | $ | 169.6 | $ | (119.2 | ) | $ | 50.4 | |||||||||
Derivatives that are not or may not be subject to master netting arrangement or similar agreement | 114.1 | |||||||||||||||||||
Total | $ | 283.7 |
Gain/(Loss) Recognized in Income on Derivatives | Gain/(Loss) Recognized in Income on Related Hedged Item (a) | Gain/(Loss) Recognized in Income on Derivatives (Ineffective Portion and Amount Excluded from Effectiveness Testing) | ||||||||||||||||||||||||||||||||||||||||||
Income Statement Location | Amount | Income Statement Location | Amount | Income Statement Location | Amount | |||||||||||||||||||||||||||||||||||||||
Derivatives | 2016 | 2015 | 2014 | Hedged Item | 2016 | 2015 | 2014 | 2016 | 2015 | 2014 | ||||||||||||||||||||||||||||||||||
Interest rate contracts | Interest expense | $ | 6.2 | $ | 15.2 | $ | 17.5 | Fixed-rate debt | Interest expense | $ | 3.2 | $ | (2.3 | ) | $ | (4.4 | ) | Interest expense | $ | — | $ | 0.8 | $ | (0.7 | ) | |||||||||||||||||||
Total gain/(loss) | $ | 6.2 | $ | 15.2 | $ | 17.5 | $ | 3.2 | $ | (2.3 | ) | $ | (4.4 | ) | $ | — | $ | 0.8 | $ | (0.7 | ) |
Gain/(Loss) Recognized | Gain/(Loss) Reclassified | Gain/(Loss) Recognized in Income on | ||||||||||||||||||||||||||||||||||||||
in OCI on Derivatives | from Accumulated OCI into Income | Derivatives (Ineffective Portion and Amount | ||||||||||||||||||||||||||||||||||||||
(Effective Portion) | (Effective Portion) | Excluded from Effectiveness Testing) (b) | ||||||||||||||||||||||||||||||||||||||
Amount | Income Statement Location | Amount | Income Statement Location | Amount | ||||||||||||||||||||||||||||||||||||
Derivatives | 2016 | 2015 | 2014 | 2016 | 2015 | 2014 | 2016 | 2015 | 2014 | |||||||||||||||||||||||||||||||
Foreign currency contracts | $ | 34.3 | $ | 70.8 | $ | 84.0 | Revenue | $ | 48.0 | $ | 77.8 | $ | 1.6 | Derivative gains/(losses), net | $ | 3.7 | $ | (0.1 | ) | $ | (4.4 | ) | ||||||||||||||||||
Interest rate contracts (c) | — | — | — | Interest expense | (3.6 | ) | (3.6 | ) | (3.6 | ) | Interest expense | — | — | — | ||||||||||||||||||||||||||
Total gain/(loss) | $ | 34.3 | $ | 70.8 | $ | 84.0 | $ | 44.4 | $ | 74.2 | $ | (2.0 | ) | $ | 3.7 | $ | (0.1 | ) | $ | (4.4 | ) |
Gain/(Loss) Recognized in Income on Derivatives (d) | ||||||||||||||
Income Statement Location | Amount | |||||||||||||
Derivatives | 2016 | 2015 | 2014 | |||||||||||
Foreign currency contracts (e) | Selling, general and administrative | $ | 13.2 | $ | 35.9 | $ | 46.5 | |||||||
Foreign currency contracts (f) | Derivative gains/(losses), net | 0.8 | 1.3 | 2.2 | ||||||||||
Total gain/(loss) | $ | 14.0 | $ | 37.2 | $ | 48.7 |
(a) | The 2016 gain of $3.2 million was comprised of a loss in value on the debt of $6.2 million and amortization of hedge accounting adjustments of $9.4 million. The 2015 loss of $2.3 million was comprised of a loss in value on the debt of $16.0 million and amortization of hedge accounting adjustments of $13.7 million. The 2014 loss of $4.4 million was comprised of a loss in value on the debt of $16.8 million and amortization of hedge accounting adjustments of $12.4 million. |
(b) | The portion of the change in fair value of a derivative excluded from the effectiveness assessment for foreign currency forward contracts designated as cash flow hedges represents the difference between changes in forward rates and spot rates. |
(c) | The Company uses derivatives to hedge the forecasted issuance of fixed-rate debt and records the effective portion of the derivative's fair value in "Accumulated other comprehensive loss" in the Consolidated Balance Sheets. These amounts are reclassified to "Interest expense" in the Consolidated Statements of Income over the life of the related notes. |
(d) | The Company uses foreign currency forward and option contracts as part of its Business Solutions payments operations. These derivative contracts are excluded from this table as they are managed as part of a broader currency portfolio that includes non-derivative currency exposures. The gains and losses on these derivatives are included as part of the broader disclosure of portfolio revenue for this business discussed above. |
(e) | The Company uses foreign currency forward contracts to offset foreign exchange rate fluctuations on settlement assets and obligations as well as certain foreign currency denominated positions. Foreign exchange losses on settlement assets and obligations, cash balances, and other assets and liabilities, not including amounts related to derivatives activity as displayed above and included in "Selling, general, and administrative" in the Consolidated Statements of Income were $21.4 million, $36.1 million, and $51.8 million for the years ended 2016, 2015, and 2014, respectively. |
(f) | The derivative contracts used in the Company's revenue hedging program are not designated as hedges in the final month of the contract. |
|
December 31, 2016 | December 31, 2015 | ||||||
Notes: | |||||||
5.930% notes due 2016 (a) (b) | $ | — | $ | 1,000.0 | |||
2.875% notes due 2017 (a) | 500.0 | 500.0 | |||||
3.650% notes (effective rate of 4.4%) due 2018 | 400.0 | 400.0 | |||||
3.350% notes due 2019 (a) | 250.0 | 250.0 | |||||
5.253% notes due 2020 (a) | 324.9 | 324.9 | |||||
6.200% notes due 2036 (a) | 500.0 | 500.0 | |||||
6.200% notes due 2040 (a) | 250.0 | 250.0 | |||||
Term Loan Facility borrowings (effective rate of 2.2%) (b) | 575.0 | — | |||||
Other borrowings | — | 5.5 | |||||
Total borrowings at par value | 2,799.9 | 3,230.4 | |||||
Fair value hedge accounting adjustments, net (c) | 4.4 | 7.6 | |||||
Unamortized discount and debt issuance costs (d) | (18.2 | ) | (22.1 | ) | |||
Total borrowings at carrying value (e) | $ | 2,786.1 | $ | 3,215.9 |
(a) | The difference between the stated interest rate and the effective interest rate is not significant. |
(b) | Proceeds from the Company's delayed draw term loan facility, cash, including cash generated from operations, and proceeds from commercial paper borrowings were used to fund the October 2016 maturity of $1.0 billion of aggregate principal amount unsecured notes as discussed further below. |
(c) | The Company utilizes interest rate swaps designated as fair value hedges to effectively change the interest rate payments on a portion of its notes from fixed-rate payments to short-term LIBOR-based variable rate payments in order to manage its overall exposure to interest rates. The changes in fair value of these interest rate swaps result in an offsetting hedge accounting adjustment recorded to the carrying value of the related note. These hedge accounting adjustments will be reclassified as reductions to or increases in "Interest expense" in the Consolidated Statements of Income over the life of the related notes, and cause the effective rate of interest to differ from the notes’ stated rate. |
(d) | On January 1, 2016, the Company adopted an accounting pronouncement that requires capitalized debt issuance costs to be presented as a reduction to the carrying value of debt, with adoption retrospective for periods previously presented. The adoption of this standard resulted in a reduction of $9.7 million to the carrying value of borrowings as of December 31, 2015. |
(e) | As of December 31, 2016, the Company’s weighted-average effective rate on total borrowings was approximately 4.2%. |
Due within 1 year | $ | 500.0 | |
Due after 1 year through 2 years | 414.4 | ||
Due after 2 years through 3 years | 278.8 | ||
Due after 3 years through 4 years | 368.0 | ||
Due after 4 years through 5 years | 488.7 | ||
Due after 5 years | 750.0 |
|
Year Ended December 31, 2016 | ||||||||||||
Options | Weighted-Average Exercise Price | Weighted-Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value | |||||||||
Outstanding as of January 1 | 11.8 | $ | 18.01 | |||||||||
Granted | 0.6 | $ | 18.19 | |||||||||
Exercised | (1.8 | ) | $ | 17.69 | ||||||||
Cancelled/forfeited | (2.5 | ) | $ | 20.07 | ||||||||
Outstanding as of December 31 | 8.1 | $ | 17.46 | 5.3 | $ | 34.5 | ||||||
Options exercisable as of December 31 | 6.1 | $ | 17.65 | 4.6 | $ | 24.9 |
Year Ended December 31, 2016 | |||||
Number Outstanding | Weighted-Average Grant-Date Fair Value | ||||
Non-vested as of January 1 | 7.6 | $ | 15.47 | ||
Granted | 3.7 | $ | 17.05 | ||
Vested | (3.0) | $ | 14.33 | ||
Forfeited | (0.9) | $ | 15.80 | ||
Non-vested as of December 31 | 7.4 | $ | 16.68 |
Year Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Stock-based compensation expense | $ | (41.8 | ) | $ | (42.2 | ) | $ | (39.7 | ) | ||
Income tax benefit from stock-based compensation expense | 12.3 | 12.3 | 11.5 | ||||||||
Net income impact | $ | (29.5 | ) | $ | (29.9 | ) | $ | (28.2 | ) | ||
Earnings per share: | |||||||||||
Basic and Diluted | $ | (0.06 | ) | $ | (0.06 | ) | $ | (0.05 | ) |
Year Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Stock options granted: | |||||||||||
Weighted-average risk-free interest rate | 1.4 | % | 1.7 | % | 1.9 | % | |||||
Weighted-average dividend yield | 3.3 | % | 3.6 | % | 3.1 | % | |||||
Volatility | 27.9 | % | 28.2 | % | 33.8 | % | |||||
Expected term (in years) | 6.32 | 6.00 | 6.09 | ||||||||
Weighted-average grant date fair value | $ | 3.44 | $ | 3.58 | $ | 3.95 |
|
• | The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies. |
• | Corporate costs, including stock-based compensation and other overhead, are allocated to the segments primarily based on a percentage of the segments' revenue compared to total revenue. |
• | Expenses of $601.0 million related to the Joint Settlement Agreements for the year ended December 31, 2016 were not allocated to the segments. While these items were identifiable to the Company's Consumer-to-Consumer segment, they were not included in the measurement of segment operating income provided to the CODM for purposes of assessing segment performance and decision making with respect to resource allocation. For additional information on the Joint Settlement Agreements, see Note 5. |
• | Business transformation expenses of $20.3 million for the year ended December 31, 2016, were not allocated to the segments. While certain of these items were identifiable to the Company's segments, they were not included in the measurement of segment operating income provided to the CODM for purposes of assessing segment performance and decision making with respect to resource allocation. For additional information on business transformation related activities, see Note 3. |
• | Costs incurred for the review and closing of acquisitions are included in "Other." |
• | All items not included in operating income are excluded from the segments. |
Year Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Revenues: | |||||||||||
Consumer-to-Consumer: | |||||||||||
Transaction fees | $ | 3,123.8 | $ | 3,221.0 | $ | 3,421.8 | |||||
Foreign exchange revenues | 1,116.0 | 1,057.1 | 998.9 | ||||||||
Other revenues | 64.8 | 65.8 | 65.1 | ||||||||
4,304.6 | 4,343.9 | 4,485.8 | |||||||||
Consumer-to-Business: | |||||||||||
Transaction fees | 596.7 | 612.7 | 572.7 | ||||||||
Foreign exchange and other revenues | 24.5 | 25.0 | 26.1 | ||||||||
621.2 | 637.7 | 598.8 | |||||||||
Business Solutions: | |||||||||||
Foreign exchange revenues | 352.6 | 357.2 | 363.1 | ||||||||
Transaction fees and other revenues | 43.4 | 41.5 | 41.5 | ||||||||
396.0 | 398.7 | 404.6 | |||||||||
Other: | |||||||||||
Total revenues | 101.1 | 103.4 | 118.0 | ||||||||
Total consolidated revenues | $ | 5,422.9 | $ | 5,483.7 | $ | 5,607.2 | |||||
Operating income/(loss): | |||||||||||
Consumer-to-Consumer | $ | 1,008.7 | $ | 1,042.0 | 1,050.4 | ||||||
Consumer-to-Business (a) | 64.4 | 68.6 | 98.7 | ||||||||
Business Solutions | 21.1 | 2.8 | (12.1 | ) | |||||||
Other | 10.8 | (4.0 | ) | 3.5 | |||||||
Total segment operating income | 1,105.0 | 1,109.4 | 1,140.5 | ||||||||
Joint Settlement Agreements (Note 5) | (601.0 | ) | — | — | |||||||
Business transformation expenses (Note 3) | (20.3 | ) | — | — | |||||||
Total consolidated operating income | $ | 483.7 | $ | 1,109.4 | $ | 1,140.5 | |||||
(a) | During the year ended December 31, 2015, Consumer-to-Business operating income included $35.3 million of expenses related to a settlement agreement between the Consumer Financial Protection Bureau and one of the Company's subsidiaries, Paymap, Inc. |
Year Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Assets: | |||||||||||
Consumer-to-Consumer | $ | 4,467.7 | $ | 4,738.7 | $ | 5,049.7 | |||||
Consumer-to-Business | 1,161.9 | 1,010.1 | 1,060.2 | ||||||||
Business Solutions | 2,370.8 | 2,384.4 | 2,430.7 | ||||||||
Other (a) | 1,419.2 | 1,316.0 | 1,336.9 | ||||||||
Total assets | $ | 9,419.6 | $ | 9,449.2 | $ | 9,877.5 | |||||
Depreciation and amortization: | |||||||||||
Consumer-to-Consumer | $ | 183.5 | $ | 183.4 | $ | 191.5 | |||||
Consumer-to-Business | 21.7 | 21.7 | 17.3 | ||||||||
Business Solutions | 50.8 | 57.4 | 56.1 | ||||||||
Other | 7.2 | 7.7 | 7.0 | ||||||||
Total consolidated depreciation and amortization | $ | 263.2 | $ | 270.2 | $ | 271.9 | |||||
Capital expenditures: | |||||||||||
Consumer-to-Consumer | $ | 167.7 | $ | 191.0 | $ | 132.1 | |||||
Consumer-to-Business | 42.5 | 46.1 | 27.3 | ||||||||
Business Solutions | 11.4 | 19.2 | 13.0 | ||||||||
Other | 8.2 | 10.2 | 6.6 | ||||||||
Total capital expenditures | $ | 229.8 | $ | 266.5 | $ | 179.0 |
(a) | On January 1, 2016, the Company adopted an accounting pronouncement that requires capitalized debt issuance costs to be presented as a reduction to the carrying value of debt, with adoption retrospective for periods previously presented. The adoption of this standard resulted in a reduction of $9.7 million and $12.9 million to Other as of December 31, 2015 and 2014, respectively. |
Year Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Revenue: | |||||||||||
United States | $ | 1,672.9 | $ | 1,584.7 | $ | 1,564.6 | |||||
International | 3,750.0 | 3,899.0 | 4,042.6 | ||||||||
Total | $ | 5,422.9 | $ | 5,483.7 | $ | 5,607.2 | |||||
Long-lived assets: | |||||||||||
United States | $ | 174.0 | $ | 182.9 | $ | 158.1 | |||||
International | 46.5 | 48.9 | 48.3 | ||||||||
Total | $ | 220.5 | $ | 231.8 | $ | 206.4 |
|
2016 by Quarter: | Q1 | Q2 | Q3 | Q4 | Year Ended December 31, 2016 | |||||||||||||||
Revenues | $ | 1,297.7 | $ | 1,375.7 | $ | 1,377.8 | $ | 1,371.7 | $ | 5,422.9 | ||||||||||
Expenses (a) (b) | 1,039.1 | 1,115.4 | 1,099.5 | 1,685.2 | 4,939.2 | |||||||||||||||
Operating income/(loss) | 258.6 | 260.3 | 278.3 | (313.5 | ) | 483.7 | ||||||||||||||
Other expense, net | 41.1 | 37.8 | 38.3 | 24.8 | 142.0 | |||||||||||||||
Income/(loss) before income taxes | 217.5 | 222.5 | 240.0 | (338.3 | ) | 341.7 | ||||||||||||||
Provision for income taxes | 31.8 | 16.9 | 23.1 | 16.7 | 88.5 | |||||||||||||||
Net income/(loss) | $ | 185.7 | $ | 205.6 | $ | 216.9 | $ | (355.0 | ) | $ | 253.2 | |||||||||
Earnings/(loss) per share: | ||||||||||||||||||||
Basic | $ | 0.37 | $ | 0.42 | $ | 0.45 | $ | (0.73 | ) | $ | 0.52 | |||||||||
Diluted | $ | 0.37 | $ | 0.42 | $ | 0.44 | $ | (0.73 | ) | $ | 0.51 | |||||||||
Weighted-average shares outstanding: | ||||||||||||||||||||
Basic | 500.0 | 490.3 | 487.0 | 483.6 | 490.2 | |||||||||||||||
Diluted | 503.2 | 493.0 | 490.3 | 483.6 | 493.5 |
(a) | Includes $15 million of accruals in each of the second and third quarters and $571 million of additional expenses in the fourth quarter as a result of the Joint Settlement Agreements, as described further in Note 5. |
(b) | Includes $2.1 million, $5.0 million, and $13.2 million in the second, third, and fourth quarters, respectively, of expenses related to business transformation. For more information, see Note 3. |
2015 by Quarter: | Q1 | Q2 | Q3 | Q4 | Year Ended December 31, 2015 | |||||||||||||||
Revenues | $ | 1,320.9 | $ | 1,383.6 | $ | 1,399.2 | $ | 1,380.0 | $ | 5,483.7 | ||||||||||
Expenses (c) (d) | 1,048.6 | 1,132.8 | 1,094.7 | 1,098.2 | 4,374.3 | |||||||||||||||
Operating income | 272.3 | 250.8 | 304.5 | 281.8 | 1,109.4 | |||||||||||||||
Other expense, net | 39.7 | 43.9 | 39.1 | 44.9 | 167.6 | |||||||||||||||
Income before income taxes | 232.6 | 206.9 | 265.4 | 236.9 | 941.8 | |||||||||||||||
Provision for income taxes | 28.7 | 17.6 | 33.1 | 24.6 | 104.0 | |||||||||||||||
Net income | $ | 203.9 | $ | 189.3 | $ | 232.3 | $ | 212.3 | $ | 837.8 | ||||||||||
Earnings per share: | ||||||||||||||||||||
Basic | $ | 0.39 | $ | 0.37 | $ | 0.46 | $ | 0.42 | $ | 1.63 | ||||||||||
Diluted | $ | 0.39 | $ | 0.36 | $ | 0.45 | $ | 0.42 | $ | 1.62 | ||||||||||
Weighted-average shares outstanding: | ||||||||||||||||||||
Basic | 521.0 | 515.2 | 509.6 | 504.5 | 512.6 | |||||||||||||||
Diluted | 525.2 | 519.8 | 513.2 | 508.6 | 516.7 | |||||||||||||||
____________ |
(c) | Includes $35.3 million in the second quarter of expenses related to a settlement agreement reached with the Consumer Financial Protection Bureau regarding the Equity Accelerator sevice of Paymap, Inc., one of the Company's subsidiaries. |
(d) | Includes $11.1 million in the fourth quarter of expenses related to productivity and cost-savings initiatives. For more information, see Note 3. |
|
December 31, | |||||||
2016 | 2015 | ||||||
Assets | |||||||
Cash and cash equivalents | $ | 0.3 | $ | 1.3 | |||
Property and equipment, net of accumulated depreciation of $26.6 and $23.5, respectively | 34.7 | 36.7 | |||||
Other assets | 39.4 | 38.1 | |||||
Investment in subsidiaries | 7,291.7 | 6,652.2 | |||||
Total assets | $ | 7,366.1 | $ | 6,728.3 | |||
Liabilities and Stockholders’ Equity | |||||||
Liabilities: | |||||||
Accounts payable and accrued liabilities | $ | 645.5 | $ | 57.9 | |||
Income taxes payable | 20.9 | 81.4 | |||||
Payable to subsidiaries, net | 3,010.6 | 1,973.0 | |||||
Borrowings | 2,786.1 | 3,210.4 | |||||
Other liabilities | 0.8 | 0.7 | |||||
Total liabilities | 6,463.9 | 5,323.4 | |||||
Stockholders’ equity: | |||||||
Preferred stock, $1.00 par value; 10 shares authorized; no shares issued | — | — | |||||
Common stock, $0.01 par value; 2,000 shares authorized; 481.5 shares and 502.4 shares issued and outstanding as of December 31, 2016 and 2015, respectively | 4.8 | 5.0 | |||||
Capital surplus | 640.9 | 566.5 | |||||
Retained earnings | 419.3 | 977.3 | |||||
Accumulated other comprehensive loss | (162.8 | ) | (143.9 | ) | |||
Total stockholders’ equity | 902.2 | 1,404.9 | |||||
Total liabilities and stockholders’ equity | $ | 7,366.1 | $ | 6,728.3 |
For the Years Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Revenues | $ | — | $ | — | $ | — | |||||
Expenses | — | — | — | ||||||||
Operating income | — | — | — | ||||||||
Interest income | — | 0.2 | 0.6 | ||||||||
Interest expense | (168.1 | ) | (171.2 | ) | (176.5 | ) | |||||
Loss before equity in earnings of affiliates and income taxes | (168.1 | ) | (171.0 | ) | (175.9 | ) | |||||
Equity in earnings of affiliates, net of tax | 357.1 | 943.3 | 960.8 | ||||||||
Income tax benefit | 64.2 | 65.5 | 67.5 | ||||||||
Net income | 253.2 | 837.8 | 852.4 | ||||||||
Other comprehensive income, net of tax | 2.3 | 2.2 | 2.2 | ||||||||
Other comprehensive income/(loss) of affiliates, net of tax | (21.2 | ) | (27.2 | ) | 47.9 | ||||||
Comprehensive income | $ | 234.3 | $ | 812.8 | $ | 902.5 |
For the Years Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Cash flows from operating activities | |||||||||||
Net cash provided by operating activities | $ | 192.0 | $ | 327.1 | $ | 380.8 | |||||
Cash flows from investing activities | |||||||||||
Purchases of property and equipment and other | (5.9 | ) | (0.1 | ) | (5.7 | ) | |||||
Capital contributed to subsidiaries | (7.3 | ) | (17.9 | ) | (4.2 | ) | |||||
Proceeds from sale of available-for-sale non-settlement related investments | — | — | 100.2 | ||||||||
Net cash provided by/(used in) investing activities | (13.2 | ) | (18.0 | ) | 90.3 | ||||||
Cash flows from financing activities | |||||||||||
Advances from subsidiaries, net | 1,024.0 | 796.1 | 768.1 | ||||||||
Proceeds from issuance of borrowings | 575.0 | — | — | ||||||||
Principal payments on borrowings | (1,000.0 | ) | (500.0 | ) | (500.0 | ) | |||||
Proceeds from exercise of options and other | 35.0 | 79.7 | 14.2 | ||||||||
Cash dividends paid | (312.2 | ) | (316.5 | ) | (265.2 | ) | |||||
Common stock repurchased | (501.6 | ) | (511.3 | ) | (495.4 | ) | |||||
Net cash used in financing activities | (179.8 | ) | (452.0 | ) | (478.3 | ) | |||||
Net change in cash and cash equivalents | (1.0 | ) | (142.9 | ) | (7.2 | ) | |||||
Cash and cash equivalents at beginning of year | 1.3 | 144.2 | 151.4 | ||||||||
Cash and cash equivalents at end of year | $ | 0.3 | $ | 1.3 | $ | 144.2 | |||||
Supplemental cash flow information: | |||||||||||
Non-cash investing activity, capital contribution to subsidiary (Note 3) | $ | 591.0 | $ | — | $ | — |
Date Issued | Amount (in millions) | Due Date | Interest Rate (per annum) | ||||||
June 1, 2014 | $ | 65.0 | February 28, 2017 | 0.33 | % | ||||
March 1, 2015 | $ | 79.5 | November 30, 2017 | 0.40 | % | ||||
June 1, 2015 | $ | 87.5 | February 28, 2018 | 0.43 | % | ||||
July 1, 2015 (a) | $ | 268.2 | March 31, 2018 | 0.43 | % | ||||
September 1, 2015 | $ | 226.2 | May 31, 2018 | 0.54 | % |
|
• | Level 1: Quoted prices in active markets for identical assets or liabilities. |
• | Level 2: Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. For most of these assets, the Company utilizes pricing services that use multiple prices as inputs to determine daily market values. In addition, the Trust has other investments that fall within Level 2 that are valued at net asset value which is not quoted on an active market; however, the unit price is based on underlying investments which are traded on an active market. The individual redemption restrictions of Trust investments measured at net asset value are also considered when determining whether Level 2 classification is appropriate. |
• | Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include items where the determination of fair value requires significant management judgment or estimation. The Company has Level 3 assets that are recognized and disclosed at fair value on a non-recurring basis related to the Company's business combinations, where the values of the intangible assets and goodwill acquired in a purchase are derived utilizing one of the three recognized approaches: the market approach, the income approach or the cost approach. |
• | Cash flow hedges - Changes in the fair value of derivatives that are designated and qualify as cash flow hedges are recorded in "Accumulated other comprehensive loss." Cash flow hedges consist of foreign currency hedging of forecasted revenues, as well as hedges of the forecasted issuance of fixed rate debt. Derivative fair value changes that are captured in "Accumulated other comprehensive loss" are reclassified to earnings in the same period or periods the hedged item affects earnings, to the extent the instrument is effective in offsetting the change in cash flows attributable to the risk being hedged. The portions of the change in fair value that are either considered ineffective or are excluded from the measure of effectiveness are recognized immediately in "Derivative gains/(losses), net." |
• | Fair value hedges - Changes in the fair value of derivatives that are designated as fair value hedges of fixed rate debt are recorded in "Interest expense." The offsetting change in value of the related debt instrument attributable to changes in the benchmark interest rate is also recorded in "Interest expense." |
• | Undesignated - Derivative contracts entered into to reduce the variability related to (a) money transfer settlement assets and obligations, generally with maturities from a few days up to one month, and (b) certain foreign currency denominated cash and other asset and liability positions, typically with maturities of less than one year at inception, are not designated as hedges for accounting purposes and changes in their fair value are included in "Selling, general and administrative." The Company is also exposed to risk from derivative contracts written to its customers arising from its cross-currency Business Solutions payments operations. The duration of these derivative contracts at inception is generally less than one year. The Company aggregates its Business Solutions payments foreign currency exposures arising from customer contracts, including the derivative contracts described above, and hedges the resulting net currency risks by entering into offsetting contracts with established financial institution counterparties (economic hedge contracts) as part of a broader foreign currency portfolio, including significant spot exchanges of currency in addition to forwards and options. The changes in fair value related to these contracts are recorded in "Foreign exchange revenues." |
• | The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies. |
• | Corporate costs, including stock-based compensation and other overhead, are allocated to the segments primarily based on a percentage of the segments' revenue compared to total revenue. |
• | Expenses of $601.0 million related to the Joint Settlement Agreements for the year ended December 31, 2016 were not allocated to the segments. While these items were identifiable to the Company's Consumer-to-Consumer segment, they were not included in the measurement of segment operating income provided to the CODM for purposes of assessing segment performance and decision making with respect to resource allocation. For additional information on the Joint Settlement Agreements, see Note 5. |
• | Business transformation expenses of $20.3 million for the year ended December 31, 2016, were not allocated to the segments. While certain of these items were identifiable to the Company's segments, they were not included in the measurement of segment operating income provided to the CODM for purposes of assessing segment performance and decision making with respect to resource allocation. For additional information on business transformation related activities, see Note 3. |
• | Costs incurred for the review and closing of acquisitions are included in "Other." |
• | All items not included in operating income are excluded from the segments. |
|
For the Year Ended December 31, | ||||||||
2016 | 2015 | 2014 | ||||||
Basic weighted-average shares outstanding | 490.2 | 512.6 | 533.4 | |||||
Common stock equivalents | 3.3 | 4.1 | 3.4 | |||||
Diluted weighted-average shares outstanding | 493.5 | 516.7 | 536.8 |
December 31, | |||||||
2016 | 2015 | ||||||
Settlement assets: | |||||||
Cash and cash equivalents | $ | 1,190.0 | $ | 1,075.7 | |||
Receivables from selling agents and Business Solutions customers | 1,327.3 | 1,070.4 | |||||
Investment securities | 1,231.8 | 1,162.6 | |||||
$ | 3,749.1 | $ | 3,308.7 | ||||
Settlement obligations: | |||||||
Money transfer, money order and payment service payables | $ | 2,598.2 | $ | 2,428.5 | |||
Payables to agents | 1,150.9 | 880.2 | |||||
$ | 3,749.1 | $ | 3,308.7 |
December 31, | |||||||
2016 | 2015 | ||||||
Equipment | $ | 585.5 | $ | 529.8 | |||
Buildings | 88.3 | 87.3 | |||||
Leasehold improvements | 84.3 | 83.3 | |||||
Furniture and fixtures | 40.4 | 39.6 | |||||
Land and improvements | 17.0 | 17.0 | |||||
Projects in process | 5.0 | 13.0 | |||||
Total property and equipment, gross | 820.5 | 770.0 | |||||
Less accumulated depreciation | (600.0 | ) | (538.2 | ) | |||
Property and equipment, net | $ | 220.5 | $ | 231.8 |
December 31, 2016 | December 31, 2015 | ||||||||||||||||||
Weighted- Average Amortization Period (in years) | Initial Cost | Net of Accumulated Amortization | Initial Cost | Net of Accumulated Amortization | |||||||||||||||
Acquired contracts | 11.5 | $ | 599.6 | $ | 264.4 | $ | 624.4 | $ | 316.6 | ||||||||||
Capitalized contract costs | 6.2 | 559.2 | 294.0 | 541.2 | 290.4 | ||||||||||||||
Internal use software | 3.2 | 371.3 | 56.4 | 338.1 | 53.8 | ||||||||||||||
Acquired trademarks | 24.5 | 34.2 | 18.5 | 34.7 | 20.2 | ||||||||||||||
Projects in process | 3.0 | 30.6 | 30.6 | 23.5 | 23.5 | ||||||||||||||
Other intangibles | 4.1 | 27.5 | 0.3 | 27.5 | 0.5 | ||||||||||||||
Total other intangible assets | 7.8 | $ | 1,622.4 | $ | 664.2 | $ | 1,589.4 | $ | 705.0 |
|
Year Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Business Transformation | Productivity and Cost-Savings Initiatives | ||||||||||
Cost of services | $ | 2.5 | $ | 1.0 | $ | 11.6 | |||||
Selling, general and administrative | 17.8 | 10.1 | 18.7 | ||||||||
Total expenses, pre-tax | $ | 20.3 | $ | 11.1 | $ | 30.3 | |||||
Total expenses, net of tax | $ | 12.9 | $ | 7.2 | $ | 20.2 |
Consumer-to-Consumer | Consumer-to-Business | Business Solutions | Other | Total | ||||||||||||||||
2015 expenses | $ | 7.6 | $ | 1.5 | $ | 1.8 | $ | 0.2 | $ | 11.1 | ||||||||||
2014 expenses | 15.7 | 6.7 | 7.3 | 0.6 | 30.3 |
|
Consumer-to-Consumer | Consumer-to-Business | Business Solutions | Other | Total | |||||||||||||||
January 1, 2015 balance | $ | 1,950.1 | $ | 209.7 | $ | 996.0 | $ | 13.4 | $ | 3,169.2 | |||||||||
Currency translation | — | (5.2 | ) | — | (0.2 | ) | (5.4 | ) | |||||||||||
December 31, 2015 balance | $ | 1,950.1 | $ | 204.5 | $ | 996.0 | $ | 13.2 | $ | 3,163.8 | |||||||||
Currency translation | — | (1.7 | ) | — | (0.1 | ) | (1.8 | ) | |||||||||||
December 31, 2016 balance | $ | 1,950.1 | $ | 202.8 | $ | 996.0 | $ | 13.1 | $ | 3,162.0 |
|
December 31, 2016 | Amortized Cost | Fair Value | Gross Unrealized Gains | Gross Unrealized Losses | Net Unrealized Gains/ (Losses) | ||||||||||||||
Settlement assets: | |||||||||||||||||||
Available-for-sale securities: | |||||||||||||||||||
State and municipal debt securities (a) | $ | 1,008.5 | $ | 1,002.4 | $ | 5.0 | $ | (11.1 | ) | $ | (6.1 | ) | |||||||
State and municipal variable rate demand notes | 203.4 | 203.4 | — | — | — | ||||||||||||||
Corporate and other debt securities | 26.0 | 26.0 | — | — | — | ||||||||||||||
1,237.9 | 1,231.8 | 5.0 | (11.1 | ) | (6.1 | ) | |||||||||||||
Other assets: | |||||||||||||||||||
Held-to-maturity securities: | |||||||||||||||||||
Foreign corporate debt securities | 36.2 | 36.2 | 0.1 | (0.1 | ) | — | |||||||||||||
$ | 1,274.1 | $ | 1,268.0 | $ | 5.1 | $ | (11.2 | ) | $ | (6.1 | ) | ||||||||
December 31, 2015 | Amortized Cost | Fair Value | Gross Unrealized Gains | Gross Unrealized Losses | Net Unrealized Gains/ (Losses) | ||||||||||||||
Settlement assets: | |||||||||||||||||||
Available-for-sale securities: | |||||||||||||||||||
State and municipal debt securities (a) | $ | 1,040.3 | $ | 1,052.5 | $ | 14.2 | $ | (2.0 | ) | $ | 12.2 | ||||||||
State and municipal variable rate demand notes | 42.9 | 42.9 | — | — | — | ||||||||||||||
Corporate and other debt securities | 67.3 | 67.2 | — | (0.1 | ) | (0.1 | ) | ||||||||||||
1,150.5 | 1,162.6 | 14.2 | (2.1 | ) | 12.1 | ||||||||||||||
Other assets: | |||||||||||||||||||
Held-to-maturity securities: | |||||||||||||||||||
Foreign corporate debt securities | 9.3 | 9.3 | — | — | — | ||||||||||||||
$ | 1,159.8 | $ | 1,171.9 | $ | 14.2 | $ | (2.1 | ) | $ | 12.1 |
December 31, 2016 | Amortized Cost | Fair Value | Gross Unrealized Gains | Gross Unrealized Losses | Net Unrealized Gains/ (Losses) | ||||||||||||||
Settlement assets: | |||||||||||||||||||
Available-for-sale securities: | |||||||||||||||||||
State and municipal debt securities (a) | $ | 1,008.5 | $ | 1,002.4 | $ | 5.0 | $ | (11.1 | ) | $ | (6.1 | ) | |||||||
State and municipal variable rate demand notes | 203.4 | 203.4 | — | — | — | ||||||||||||||
Corporate and other debt securities | 26.0 | 26.0 | — | — | — | ||||||||||||||
1,237.9 | 1,231.8 | 5.0 | (11.1 | ) | (6.1 | ) | |||||||||||||
Other assets: | |||||||||||||||||||
Held-to-maturity securities: | |||||||||||||||||||
Foreign corporate debt securities | 36.2 | 36.2 | 0.1 | (0.1 | ) | — | |||||||||||||
$ | 1,274.1 | $ | 1,268.0 | $ | 5.1 | $ | (11.2 | ) | $ | (6.1 | ) | ||||||||
December 31, 2015 | Amortized Cost | Fair Value | Gross Unrealized Gains | Gross Unrealized Losses | Net Unrealized Gains/ (Losses) | ||||||||||||||
Settlement assets: | |||||||||||||||||||
Available-for-sale securities: | |||||||||||||||||||
State and municipal debt securities (a) | $ | 1,040.3 | $ | 1,052.5 | $ | 14.2 | $ | (2.0 | ) | $ | 12.2 | ||||||||
State and municipal variable rate demand notes | 42.9 | 42.9 | — | — | — | ||||||||||||||
Corporate and other debt securities | 67.3 | 67.2 | — | (0.1 | ) | (0.1 | ) | ||||||||||||
1,150.5 | 1,162.6 | 14.2 | (2.1 | ) | 12.1 | ||||||||||||||
Other assets: | |||||||||||||||||||
Held-to-maturity securities: | |||||||||||||||||||
Foreign corporate debt securities | 9.3 | 9.3 | — | — | — | ||||||||||||||
$ | 1,159.8 | $ | 1,171.9 | $ | 14.2 | $ | (2.1 | ) | $ | 12.1 |
Amortized Cost | Fair Value | ||||||
Due within 1 year | $ | 118.9 | $ | 119.1 | |||
Due after 1 year through 5 years | 502.6 | 502.0 | |||||
Due after 5 years through 10 years | 286.7 | 285.8 | |||||
Due after 10 years | 329.7 | 324.9 | |||||
$ | 1,237.9 | $ | 1,231.8 |
|
Fair Value Measurement Using | Assets/ Liabilities at Fair Value | ||||||||||||||
December 31, 2016 | Level 1 | Level 2 | Level 3 | ||||||||||||
Assets: | |||||||||||||||
Settlement assets: | |||||||||||||||
State and municipal debt securities | $ | — | $ | 1,002.4 | $ | — | $ | 1,002.4 | |||||||
State and municipal variable rate demand notes | — | 203.4 | — | 203.4 | |||||||||||
Corporate and other debt securities | — | 26.0 | — | 26.0 | |||||||||||
Other assets: | |||||||||||||||
Derivatives | — | 365.6 | — | 365.6 | |||||||||||
Total assets | $ | — | $ | 1,597.4 | $ | — | $ | 1,597.4 | |||||||
Liabilities: | |||||||||||||||
Derivatives | $ | — | $ | 262.3 | $ | — | $ | 262.3 | |||||||
Total liabilities | $ | — | $ | 262.3 | $ | — | $ | 262.3 | |||||||
Fair Value Measurement Using | Assets/ Liabilities at Fair Value | ||||||||||||||
December 31, 2015 | Level 1 | Level 2 | Level 3 | ||||||||||||
Assets: | |||||||||||||||
Settlement assets: | |||||||||||||||
State and municipal debt securities | $ | — | $ | 1,052.5 | $ | — | $ | 1,052.5 | |||||||
State and municipal variable rate demand notes | — | 42.9 | — | 42.9 | |||||||||||
Corporate and other debt securities | — | 67.2 | — | 67.2 | |||||||||||
Other assets: | |||||||||||||||
Derivatives | — | 396.3 | — | 396.3 | |||||||||||
Total assets | $ | — | $ | 1,558.9 | $ | — | $ | 1,558.9 | |||||||
Liabilities: | |||||||||||||||
Derivatives | $ | — | $ | 283.7 | $ | — | $ | 283.7 | |||||||
Total liabilities | $ | — | $ | 283.7 | $ | — | $ | 283.7 |
|
December 31, | |||||||
2016 | 2015 | ||||||
Other assets: | |||||||
Derivatives | $ | 365.6 | $ | 396.3 | |||
Prepaid expenses | 126.9 | 83.4 | |||||
Amounts advanced to agents, net of discounts | 58.0 | 57.1 | |||||
Equity method investments | 40.1 | 43.3 | |||||
Other | 155.7 | 143.9 | |||||
Total other assets | $ | 746.3 | $ | 724.0 | |||
Other liabilities: | |||||||
Derivatives | $ | 262.3 | $ | 283.7 | |||
Pension obligations | 26.4 | 69.3 | |||||
Other | 70.7 | 76.0 | |||||
Total other liabilities | $ | 359.4 | $ | 429.0 |
|
Year Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Domestic | $ | (546.4 | ) | $ | (27.0 | ) | $ | 34.7 | |||
Foreign | 888.1 | 968.8 | 933.5 | ||||||||
$ | 341.7 | $ | 941.8 | $ | 968.2 |
Year Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Federal | $ | 43.5 | $ | 33.2 | $ | 57.0 | |||||
State and local | 2.9 | (1.0 | ) | 4.9 | |||||||
Foreign | 42.1 | 71.8 | 53.9 | ||||||||
$ | 88.5 | $ | 104.0 | $ | 115.8 |
Year Ended December 31, | ||||||||
2016 | 2015 | 2014 | ||||||
Federal statutory rate | 35.0 | % | 35.0 | % | 35.0 | % | ||
State income taxes, net of federal income tax benefits | 1.2 | % | 0.4 | % | 0.6 | % | ||
Foreign rate differential, net of United States tax paid on foreign earnings (24.8%, 3.4% and 4.3%, respectively) | (50.8 | )% | (24.6 | )% | (24.0 | )% | ||
Joint Settlement Agreements impact | 62.1 | % | — | % | — | % | ||
Lapse of statute of limitations | (11.3 | )% | (0.8 | )% | (0.9 | )% | ||
Valuation allowances | (2.8 | )% | (0.9 | )% | 2.5 | % | ||
Other | (7.5 | )% | 1.9 | % | (1.2 | )% | ||
Effective tax rate | 25.9 | % | 11.0 | % | 12.0 | % |
Year Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Current: | |||||||||||
Federal | $ | 186.2 | $ | 59.6 | $ | 76.1 | |||||
State and local | 13.1 | 5.4 | 4.7 | ||||||||
Foreign | 63.4 | 78.9 | 61.8 | ||||||||
Total current taxes | 262.7 | 143.9 | 142.6 | ||||||||
Deferred: | |||||||||||
Federal | (142.7 | ) | (26.4 | ) | (19.1 | ) | |||||
State and local | (10.2 | ) | (6.4 | ) | 0.2 | ||||||
Foreign | (21.3 | ) | (7.1 | ) | (7.9 | ) | |||||
Total deferred taxes | (174.2 | ) | (39.9 | ) | (26.8 | ) | |||||
$ | 88.5 | $ | 104.0 | $ | 115.8 |
December 31, | |||||||
2016 | 2015 | ||||||
Deferred tax assets related to: | |||||||
Reserves, accrued expenses and employee-related items | $ | 279.8 | $ | 87.1 | |||
Tax attribute carryovers | 39.1 | 60.2 | |||||
Pension obligations | 11.1 | 26.5 | |||||
Intangibles, property and equipment | 9.7 | 7.9 | |||||
Other | 14.8 | 10.2 | |||||
Valuation allowance | (22.0 | ) | (33.2 | ) | |||
Total deferred tax assets | 332.5 | 158.7 | |||||
Deferred tax liabilities related to: | |||||||
Intangibles, property and equipment | 394.4 | 410.9 | |||||
Other | 14.3 | 12.5 | |||||
Total deferred tax liabilities | 408.7 | 423.4 | |||||
Net deferred tax liability (a) | $ | 76.2 | $ | 264.7 |
(a) | As of December 31, 2016 and 2015, deferred tax assets that cannot be fully offset by deferred tax liabilities in the respective tax jurisdictions of $9.7 million and $7.9 million, respectively, are reflected in "Other assets" in the Consolidated Balance Sheets. |
2016 | 2015 | ||||||
Balance as of January 1, | $ | 105.6 | $ | 93.4 | |||
Increase related to current period tax positions (a) | 223.6 | 17.1 | |||||
Increase related to prior period tax positions | 71.7 | 7.7 | |||||
Decrease related to prior period tax positions | (14.9 | ) | (5.4 | ) | |||
Decrease due to lapse of applicable statute of limitations | (33.1 | ) | (5.6 | ) | |||
Decrease due to effects of foreign currency exchange rates | (0.9 | ) | (1.6 | ) | |||
Balance as of December 31, | $ | 352.0 | $ | 105.6 |
(a) | Includes recurring accruals for issues which initially arose in previous periods. |
|
Year Ending December 31, | |||
2017 | $ | 40.8 | |
2018 | 31.2 | ||
2019 | 19.1 | ||
2020 | 10.6 | ||
2021 | 6.1 | ||
Thereafter | 12.5 | ||
Total future minimum lease payments | $ | 120.3 |
|
Year Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Unrealized gains on investment securities, beginning of period | $ | 7.8 | $ | 8.9 | $ | 4.1 | |||||
Unrealized gains/(losses) | (14.9 | ) | 0.4 | 15.5 | |||||||
Tax (expense)/benefit | 5.4 | (0.1 | ) | (5.7 | ) | ||||||
Reclassification of gains into "Other revenues" | (3.3 | ) | (2.2 | ) | (7.8 | ) | |||||
Reclassification of gains into "Interest income" | — | — | (0.2 | ) | |||||||
Tax expense related to reclassifications | 1.2 | 0.8 | 3.0 | ||||||||
Net unrealized gains/(losses) on investment securities | (11.6 | ) | (1.1 | ) | 4.8 | ||||||
Unrealized gains/(losses) on investment securities, end of period | $ | (3.8 | ) | $ | 7.8 | $ | 8.9 | ||||
Unrealized gains/(losses) on hedging activities, beginning of period | $ | 41.4 | $ | 48.6 | $ | (33.0 | ) | ||||
Unrealized gains | 34.3 | 70.8 | 84.0 | ||||||||
Tax (expense)/benefit | 1.0 | (7.0 | ) | (3.7 | ) | ||||||
Reclassification of gains into "Transaction fees" | (33.3 | ) | (55.3 | ) | (1.2 | ) | |||||
Reclassification of gains into "Foreign exchange revenues" | (14.7 | ) | (22.5 | ) | (0.4 | ) | |||||
Reclassification of losses into "Interest expense" | 3.6 | 3.6 | 3.6 | ||||||||
Tax expense/(benefit) related to reclassifications | 1.5 | 3.2 | (0.7 | ) | |||||||
Net unrealized gains/(losses) on hedging activities | (7.6 | ) | (7.2 | ) | 81.6 | ||||||
Unrealized gains on hedging activities, end of period | $ | 33.8 | $ | 41.4 | $ | 48.6 | |||||
Foreign currency translation adjustments, beginning of period | $ | (66.0 | ) | $ | (49.2 | ) | $ | (21.6 | ) | ||
Foreign currency translation adjustments | (5.4 | ) | (20.3 | ) | (14.8 | ) | |||||
Tax (expense)/benefit | 0.7 | 3.5 | (12.8 | ) | |||||||
Net foreign currency translation adjustments | (4.7 | ) | (16.8 | ) | (27.6 | ) | |||||
Foreign currency translation adjustments, end of period | $ | (70.7 | ) | $ | (66.0 | ) | $ | (49.2 | ) | ||
Defined benefit pension plan adjustments, beginning of period | $ | (127.1 | ) | $ | (127.2 | ) | $ | (118.5 | ) | ||
Unrealized losses | (2.9 | ) | (9.7 | ) | (24.3 | ) | |||||
Tax benefit | 1.1 | 2.5 | 9.0 | ||||||||
Reclassification of losses into "Cost of services" | 10.7 | 11.4 | 10.4 | ||||||||
Tax benefit related to reclassifications and other | (3.9 | ) | (4.1 | ) | (3.8 | ) | |||||
Net defined benefit pension plan adjustments | 5.0 | 0.1 | (8.7 | ) | |||||||
Defined benefit pension plan adjustments, end of period | $ | (122.1 | ) | $ | (127.1 | ) | $ | (127.2 | ) | ||
Accumulated other comprehensive loss, end of period | $ | (162.8 | ) | $ | (143.9 | ) | $ | (118.9 | ) |
Year | Q1 | Q2 | Q3 | Q4 | ||||||||||||
2016 | $ | 0.16 | $ | 0.16 | $ | 0.16 | $ | 0.16 | ||||||||
2015 | $ | 0.155 | $ | 0.155 | $ | 0.155 | $ | 0.155 | ||||||||
2014 | $ | 0.125 | $ | 0.125 | $ | 0.125 | $ | 0.125 |
|
Contracts designated as hedges: | |||
Euro | $ | 383.2 | |
British pound | 133.4 | ||
Canadian dollar | 92.8 | ||
Australian dollar | 46.3 | ||
Swiss franc | 40.9 | ||
Other | 84.1 | ||
Contracts not designated as hedges: | |||
Euro | $ | 248.8 | |
British pound | 55.4 | ||
Australian dollar | 47.1 | ||
Mexican peso | 40.8 | ||
Canadian dollar | 40.5 | ||
Indian rupee | 29.5 | ||
Other (a) | 166.2 |
(a) | Comprised of exposures to 20 different currencies. None of these individual currency exposures is greater than $25 million. |
Derivative Assets | Derivative Liabilities | ||||||||||||||||||
Fair Value | Fair Value | ||||||||||||||||||
Balance Sheet Location | December 31, 2016 | December 31, 2015 | Balance Sheet Location | December 31, 2016 | December 31, 2015 | ||||||||||||||
Derivatives — hedges: | |||||||||||||||||||
Interest rate fair value hedges | Other assets | $ | 6.7 | $ | 7.6 | Other liabilities | $ | — | $ | — | |||||||||
Foreign currency cash flow hedges | Other assets | 48.4 | 59.7 | Other liabilities | 1.2 | 2.4 | |||||||||||||
Total | $ | 55.1 | $ | 67.3 | $ | 1.2 | $ | 2.4 | |||||||||||
Derivatives — undesignated: | |||||||||||||||||||
Business Solutions operations — foreign currency (a) | Other assets | $ | 307.2 | $ | 326.1 | Other liabilities | $ | 258.3 | $ | 277.1 | |||||||||
Foreign currency | Other assets | 3.3 | 2.9 | Other liabilities | 2.8 | 4.2 | |||||||||||||
Total | $ | 310.5 | $ | 329.0 | $ | 261.1 | $ | 281.3 | |||||||||||
Total derivatives | $ | 365.6 | $ | 396.3 | $ | 262.3 | $ | 283.7 |
(a) | In many circumstances, the Company allows its Business Solutions customers to settle part or all of their derivative contracts prior to maturity. However, the offsetting positions originally entered into with financial institution counterparties do not allow for similar settlement. To mitigate this, additional foreign currency contracts are entered into with financial institution counterparties to offset the original economic hedge contracts. This frequently results in increases in the Company's derivative assets and liabilities that may exceed the growth in the underlying derivatives business. |
December 31, 2016 | Gross Amounts of Recognized Assets | Gross Amounts Offset in the Consolidated Balance Sheets | Net Amounts Presented in the Consolidated Balance Sheets | Derivatives Not Offset in the Consolidated Balance Sheets | Net Amounts | |||||||||||||||
Derivatives subject to a master netting arrangement or similar agreement | $ | 256.3 | $ | — | $ | 256.3 | $ | (146.4 | ) | $ | 109.9 | |||||||||
Derivatives that are not or may not be subject to master netting arrangement or similar agreement | 109.3 | |||||||||||||||||||
Total | $ | 365.6 | ||||||||||||||||||
December 31, 2015 | ||||||||||||||||||||
Derivatives subject to a master netting arrangement or similar agreement | $ | 224.3 | $ | — | $ | 224.3 | $ | (119.2 | ) | $ | 105.1 | |||||||||
Derivatives that are not or may not be subject to master netting arrangement or similar agreement | 172.0 | |||||||||||||||||||
Total | $ | 396.3 |
December 31, 2016 | Gross Amounts of Recognized Liabilities | Gross Amounts Offset in the Consolidated Balance Sheets | Net Amounts Presented in the Consolidated Balance Sheets | Derivatives Not Offset in the Consolidated Balance Sheets | Net Amounts | |||||||||||||||
Derivatives subject to a master netting arrangement or similar agreement | $ | 152.6 | $ | — | $ | 152.6 | $ | (146.4 | ) | $ | 6.2 | |||||||||
Derivatives that are not or may not be subject to master netting arrangement or similar agreement | 109.7 | |||||||||||||||||||
Total | $ | 262.3 | ||||||||||||||||||
December 31, 2015 | ||||||||||||||||||||
Derivatives subject to a master netting arrangement or similar agreement | $ | 169.6 | $ | — | $ | 169.6 | $ | (119.2 | ) | $ | 50.4 | |||||||||
Derivatives that are not or may not be subject to master netting arrangement or similar agreement | 114.1 | |||||||||||||||||||
Total | $ | 283.7 |
Gain/(Loss) Recognized in Income on Derivatives | Gain/(Loss) Recognized in Income on Related Hedged Item (a) | Gain/(Loss) Recognized in Income on Derivatives (Ineffective Portion and Amount Excluded from Effectiveness Testing) | ||||||||||||||||||||||||||||||||||||||||||
Income Statement Location | Amount | Income Statement Location | Amount | Income Statement Location | Amount | |||||||||||||||||||||||||||||||||||||||
Derivatives | 2016 | 2015 | 2014 | Hedged Item | 2016 | 2015 | 2014 | 2016 | 2015 | 2014 | ||||||||||||||||||||||||||||||||||
Interest rate contracts | Interest expense | $ | 6.2 | $ | 15.2 | $ | 17.5 | Fixed-rate debt | Interest expense | $ | 3.2 | $ | (2.3 | ) | $ | (4.4 | ) | Interest expense | $ | — | $ | 0.8 | $ | (0.7 | ) | |||||||||||||||||||
Total gain/(loss) | $ | 6.2 | $ | 15.2 | $ | 17.5 | $ | 3.2 | $ | (2.3 | ) | $ | (4.4 | ) | $ | — | $ | 0.8 | $ | (0.7 | ) |
Gain/(Loss) Recognized | Gain/(Loss) Reclassified | Gain/(Loss) Recognized in Income on | ||||||||||||||||||||||||||||||||||||||
in OCI on Derivatives | from Accumulated OCI into Income | Derivatives (Ineffective Portion and Amount | ||||||||||||||||||||||||||||||||||||||
(Effective Portion) | (Effective Portion) | Excluded from Effectiveness Testing) (b) | ||||||||||||||||||||||||||||||||||||||
Amount | Income Statement Location | Amount | Income Statement Location | Amount | ||||||||||||||||||||||||||||||||||||
Derivatives | 2016 | 2015 | 2014 | 2016 | 2015 | 2014 | 2016 | 2015 | 2014 | |||||||||||||||||||||||||||||||
Foreign currency contracts | $ | 34.3 | $ | 70.8 | $ | 84.0 | Revenue | $ | 48.0 | $ | 77.8 | $ | 1.6 | Derivative gains/(losses), net | $ | 3.7 | $ | (0.1 | ) | $ | (4.4 | ) | ||||||||||||||||||
Interest rate contracts (c) | — | — | — | Interest expense | (3.6 | ) | (3.6 | ) | (3.6 | ) | Interest expense | — | — | — | ||||||||||||||||||||||||||
Total gain/(loss) | $ | 34.3 | $ | 70.8 | $ | 84.0 | $ | 44.4 | $ | 74.2 | $ | (2.0 | ) | $ | 3.7 | $ | (0.1 | ) | $ | (4.4 | ) |
Gain/(Loss) Recognized in Income on Derivatives (d) | ||||||||||||||
Income Statement Location | Amount | |||||||||||||
Derivatives | 2016 | 2015 | 2014 | |||||||||||
Foreign currency contracts (e) | Selling, general and administrative | $ | 13.2 | $ | 35.9 | $ | 46.5 | |||||||
Foreign currency contracts (f) | Derivative gains/(losses), net | 0.8 | 1.3 | 2.2 | ||||||||||
Total gain/(loss) | $ | 14.0 | $ | 37.2 | $ | 48.7 |
(a) | The 2016 gain of $3.2 million was comprised of a loss in value on the debt of $6.2 million and amortization of hedge accounting adjustments of $9.4 million. The 2015 loss of $2.3 million was comprised of a loss in value on the debt of $16.0 million and amortization of hedge accounting adjustments of $13.7 million. The 2014 loss of $4.4 million was comprised of a loss in value on the debt of $16.8 million and amortization of hedge accounting adjustments of $12.4 million. |
(b) | The portion of the change in fair value of a derivative excluded from the effectiveness assessment for foreign currency forward contracts designated as cash flow hedges represents the difference between changes in forward rates and spot rates. |
(c) | The Company uses derivatives to hedge the forecasted issuance of fixed-rate debt and records the effective portion of the derivative's fair value in "Accumulated other comprehensive loss" in the Consolidated Balance Sheets. These amounts are reclassified to "Interest expense" in the Consolidated Statements of Income over the life of the related notes. |
(d) | The Company uses foreign currency forward and option contracts as part of its Business Solutions payments operations. These derivative contracts are excluded from this table as they are managed as part of a broader currency portfolio that includes non-derivative currency exposures. The gains and losses on these derivatives are included as part of the broader disclosure of portfolio revenue for this business discussed above. |
(e) | The Company uses foreign currency forward contracts to offset foreign exchange rate fluctuations on settlement assets and obligations as well as certain foreign currency denominated positions. Foreign exchange losses on settlement assets and obligations, cash balances, and other assets and liabilities, not including amounts related to derivatives activity as displayed above and included in "Selling, general, and administrative" in the Consolidated Statements of Income were $21.4 million, $36.1 million, and $51.8 million for the years ended 2016, 2015, and 2014, respectively. |
(f) | The derivative contracts used in the Company's revenue hedging program are not designated as hedges in the final month of the contract. |
|
December 31, 2016 | December 31, 2015 | ||||||
Notes: | |||||||
5.930% notes due 2016 (a) (b) | $ | — | $ | 1,000.0 | |||
2.875% notes due 2017 (a) | 500.0 | 500.0 | |||||
3.650% notes (effective rate of 4.4%) due 2018 | 400.0 | 400.0 | |||||
3.350% notes due 2019 (a) | 250.0 | 250.0 | |||||
5.253% notes due 2020 (a) | 324.9 | 324.9 | |||||
6.200% notes due 2036 (a) | 500.0 | 500.0 | |||||
6.200% notes due 2040 (a) | 250.0 | 250.0 | |||||
Term Loan Facility borrowings (effective rate of 2.2%) (b) | 575.0 | — | |||||
Other borrowings | — | 5.5 | |||||
Total borrowings at par value | 2,799.9 | 3,230.4 | |||||
Fair value hedge accounting adjustments, net (c) | 4.4 | 7.6 | |||||
Unamortized discount and debt issuance costs (d) | (18.2 | ) | (22.1 | ) | |||
Total borrowings at carrying value (e) | $ | 2,786.1 | $ | 3,215.9 |
(a) | The difference between the stated interest rate and the effective interest rate is not significant. |
(b) | Proceeds from the Company's delayed draw term loan facility, cash, including cash generated from operations, and proceeds from commercial paper borrowings were used to fund the October 2016 maturity of $1.0 billion of aggregate principal amount unsecured notes as discussed further below. |
(c) | The Company utilizes interest rate swaps designated as fair value hedges to effectively change the interest rate payments on a portion of its notes from fixed-rate payments to short-term LIBOR-based variable rate payments in order to manage its overall exposure to interest rates. The changes in fair value of these interest rate swaps result in an offsetting hedge accounting adjustment recorded to the carrying value of the related note. These hedge accounting adjustments will be reclassified as reductions to or increases in "Interest expense" in the Consolidated Statements of Income over the life of the related notes, and cause the effective rate of interest to differ from the notes’ stated rate. |
(d) | On January 1, 2016, the Company adopted an accounting pronouncement that requires capitalized debt issuance costs to be presented as a reduction to the carrying value of debt, with adoption retrospective for periods previously presented. The adoption of this standard resulted in a reduction of $9.7 million to the carrying value of borrowings as of December 31, 2015. |
(e) | As of December 31, 2016, the Company’s weighted-average effective rate on total borrowings was approximately 4.2%. |
Due within 1 year | $ | 500.0 | |
Due after 1 year through 2 years | 414.4 | ||
Due after 2 years through 3 years | 278.8 | ||
Due after 3 years through 4 years | 368.0 | ||
Due after 4 years through 5 years | 488.7 | ||
Due after 5 years | 750.0 |
|
Year Ended December 31, 2016 | ||||||||||||
Options | Weighted-Average Exercise Price | Weighted-Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value | |||||||||
Outstanding as of January 1 | 11.8 | $ | 18.01 | |||||||||
Granted | 0.6 | $ | 18.19 | |||||||||
Exercised | (1.8 | ) | $ | 17.69 | ||||||||
Cancelled/forfeited | (2.5 | ) | $ | 20.07 | ||||||||
Outstanding as of December 31 | 8.1 | $ | 17.46 | 5.3 | $ | 34.5 | ||||||
Options exercisable as of December 31 | 6.1 | $ | 17.65 | 4.6 | $ | 24.9 |
Year Ended December 31, 2016 | |||||
Number Outstanding | Weighted-Average Grant-Date Fair Value | ||||
Non-vested as of January 1 | 7.6 | $ | 15.47 | ||
Granted | 3.7 | $ | 17.05 | ||
Vested | (3.0) | $ | 14.33 | ||
Forfeited | (0.9) | $ | 15.80 | ||
Non-vested as of December 31 | 7.4 | $ | 16.68 |
Year Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Stock-based compensation expense | $ | (41.8 | ) | $ | (42.2 | ) | $ | (39.7 | ) | ||
Income tax benefit from stock-based compensation expense | 12.3 | 12.3 | 11.5 | ||||||||
Net income impact | $ | (29.5 | ) | $ | (29.9 | ) | $ | (28.2 | ) | ||
Earnings per share: | |||||||||||
Basic and Diluted | $ | (0.06 | ) | $ | (0.06 | ) | $ | (0.05 | ) |
Year Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Stock options granted: | |||||||||||
Weighted-average risk-free interest rate | 1.4 | % | 1.7 | % | 1.9 | % | |||||
Weighted-average dividend yield | 3.3 | % | 3.6 | % | 3.1 | % | |||||
Volatility | 27.9 | % | 28.2 | % | 33.8 | % | |||||
Expected term (in years) | 6.32 | 6.00 | 6.09 | ||||||||
Weighted-average grant date fair value | $ | 3.44 | $ | 3.58 | $ | 3.95 |
|
Year Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Revenues: | |||||||||||
Consumer-to-Consumer: | |||||||||||
Transaction fees | $ | 3,123.8 | $ | 3,221.0 | $ | 3,421.8 | |||||
Foreign exchange revenues | 1,116.0 | 1,057.1 | 998.9 | ||||||||
Other revenues | 64.8 | 65.8 | 65.1 | ||||||||
4,304.6 | 4,343.9 | 4,485.8 | |||||||||
Consumer-to-Business: | |||||||||||
Transaction fees | 596.7 | 612.7 | 572.7 | ||||||||
Foreign exchange and other revenues | 24.5 | 25.0 | 26.1 | ||||||||
621.2 | 637.7 | 598.8 | |||||||||
Business Solutions: | |||||||||||
Foreign exchange revenues | 352.6 | 357.2 | 363.1 | ||||||||
Transaction fees and other revenues | 43.4 | 41.5 | 41.5 | ||||||||
396.0 | 398.7 | 404.6 | |||||||||
Other: | |||||||||||
Total revenues | 101.1 | 103.4 | 118.0 | ||||||||
Total consolidated revenues | $ | 5,422.9 | $ | 5,483.7 | $ | 5,607.2 | |||||
Operating income/(loss): | |||||||||||
Consumer-to-Consumer | $ | 1,008.7 | $ | 1,042.0 | 1,050.4 | ||||||
Consumer-to-Business (a) | 64.4 | 68.6 | 98.7 | ||||||||
Business Solutions | 21.1 | 2.8 | (12.1 | ) | |||||||
Other | 10.8 | (4.0 | ) | 3.5 | |||||||
Total segment operating income | 1,105.0 | 1,109.4 | 1,140.5 | ||||||||
Joint Settlement Agreements (Note 5) | (601.0 | ) | — | — | |||||||
Business transformation expenses (Note 3) | (20.3 | ) | — | — | |||||||
Total consolidated operating income | $ | 483.7 | $ | 1,109.4 | $ | 1,140.5 | |||||
(a) | During the year ended December 31, 2015, Consumer-to-Business operating income included $35.3 million of expenses related to a settlement agreement between the Consumer Financial Protection Bureau and one of the Company's subsidiaries, Paymap, Inc. |
Year Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Assets: | |||||||||||
Consumer-to-Consumer | $ | 4,467.7 | $ | 4,738.7 | $ | 5,049.7 | |||||
Consumer-to-Business | 1,161.9 | 1,010.1 | 1,060.2 | ||||||||
Business Solutions | 2,370.8 | 2,384.4 | 2,430.7 | ||||||||
Other (a) | 1,419.2 | 1,316.0 | 1,336.9 | ||||||||
Total assets | $ | 9,419.6 | $ | 9,449.2 | $ | 9,877.5 | |||||
Depreciation and amortization: | |||||||||||
Consumer-to-Consumer | $ | 183.5 | $ | 183.4 | $ | 191.5 | |||||
Consumer-to-Business | 21.7 | 21.7 | 17.3 | ||||||||
Business Solutions | 50.8 | 57.4 | 56.1 | ||||||||
Other | 7.2 | 7.7 | 7.0 | ||||||||
Total consolidated depreciation and amortization | $ | 263.2 | $ | 270.2 | $ | 271.9 | |||||
Capital expenditures: | |||||||||||
Consumer-to-Consumer | $ | 167.7 | $ | 191.0 | $ | 132.1 | |||||
Consumer-to-Business | 42.5 | 46.1 | 27.3 | ||||||||
Business Solutions | 11.4 | 19.2 | 13.0 | ||||||||
Other | 8.2 | 10.2 | 6.6 | ||||||||
Total capital expenditures | $ | 229.8 | $ | 266.5 | $ | 179.0 |
(a) | On January 1, 2016, the Company adopted an accounting pronouncement that requires capitalized debt issuance costs to be presented as a reduction to the carrying value of debt, with adoption retrospective for periods previously presented. The adoption of this standard resulted in a reduction of $9.7 million and $12.9 million to Other as of December 31, 2015 and 2014, respectively. |
Year Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Revenue: | |||||||||||
United States | $ | 1,672.9 | $ | 1,584.7 | $ | 1,564.6 | |||||
International | 3,750.0 | 3,899.0 | 4,042.6 | ||||||||
Total | $ | 5,422.9 | $ | 5,483.7 | $ | 5,607.2 | |||||
Long-lived assets: | |||||||||||
United States | $ | 174.0 | $ | 182.9 | $ | 158.1 | |||||
International | 46.5 | 48.9 | 48.3 | ||||||||
Total | $ | 220.5 | $ | 231.8 | $ | 206.4 |
|
2016 by Quarter: | Q1 | Q2 | Q3 | Q4 | Year Ended December 31, 2016 | |||||||||||||||
Revenues | $ | 1,297.7 | $ | 1,375.7 | $ | 1,377.8 | $ | 1,371.7 | $ | 5,422.9 | ||||||||||
Expenses (a) (b) | 1,039.1 | 1,115.4 | 1,099.5 | 1,685.2 | 4,939.2 | |||||||||||||||
Operating income/(loss) | 258.6 | 260.3 | 278.3 | (313.5 | ) | 483.7 | ||||||||||||||
Other expense, net | 41.1 | 37.8 | 38.3 | 24.8 | 142.0 | |||||||||||||||
Income/(loss) before income taxes | 217.5 | 222.5 | 240.0 | (338.3 | ) | 341.7 | ||||||||||||||
Provision for income taxes | 31.8 | 16.9 | 23.1 | 16.7 | 88.5 | |||||||||||||||
Net income/(loss) | $ | 185.7 | $ | 205.6 | $ | 216.9 | $ | (355.0 | ) | $ | 253.2 | |||||||||
Earnings/(loss) per share: | ||||||||||||||||||||
Basic | $ | 0.37 | $ | 0.42 | $ | 0.45 | $ | (0.73 | ) | $ | 0.52 | |||||||||
Diluted | $ | 0.37 | $ | 0.42 | $ | 0.44 | $ | (0.73 | ) | $ | 0.51 | |||||||||
Weighted-average shares outstanding: | ||||||||||||||||||||
Basic | 500.0 | 490.3 | 487.0 | 483.6 | 490.2 | |||||||||||||||
Diluted | 503.2 | 493.0 | 490.3 | 483.6 | 493.5 |
(a) | Includes $15 million of accruals in each of the second and third quarters and $571 million of additional expenses in the fourth quarter as a result of the Joint Settlement Agreements, as described further in Note 5. |
(b) | Includes $2.1 million, $5.0 million, and $13.2 million in the second, third, and fourth quarters, respectively, of expenses related to business transformation. For more information, see Note 3. |
2015 by Quarter: | Q1 | Q2 | Q3 | Q4 | Year Ended December 31, 2015 | |||||||||||||||
Revenues | $ | 1,320.9 | $ | 1,383.6 | $ | 1,399.2 | $ | 1,380.0 | $ | 5,483.7 | ||||||||||
Expenses (c) (d) | 1,048.6 | 1,132.8 | 1,094.7 | 1,098.2 | 4,374.3 | |||||||||||||||
Operating income | 272.3 | 250.8 | 304.5 | 281.8 | 1,109.4 | |||||||||||||||
Other expense, net | 39.7 | 43.9 | 39.1 | 44.9 | 167.6 | |||||||||||||||
Income before income taxes | 232.6 | 206.9 | 265.4 | 236.9 | 941.8 | |||||||||||||||
Provision for income taxes | 28.7 | 17.6 | 33.1 | 24.6 | 104.0 | |||||||||||||||
Net income | $ | 203.9 | $ | 189.3 | $ | 232.3 | $ | 212.3 | $ | 837.8 | ||||||||||
Earnings per share: | ||||||||||||||||||||
Basic | $ | 0.39 | $ | 0.37 | $ | 0.46 | $ | 0.42 | $ | 1.63 | ||||||||||
Diluted | $ | 0.39 | $ | 0.36 | $ | 0.45 | $ | 0.42 | $ | 1.62 | ||||||||||
Weighted-average shares outstanding: | ||||||||||||||||||||
Basic | 521.0 | 515.2 | 509.6 | 504.5 | 512.6 | |||||||||||||||
Diluted | 525.2 | 519.8 | 513.2 | 508.6 | 516.7 | |||||||||||||||
____________ |
(c) | Includes $35.3 million in the second quarter of expenses related to a settlement agreement reached with the Consumer Financial Protection Bureau regarding the Equity Accelerator sevice of Paymap, Inc., one of the Company's subsidiaries. |
(d) | Includes $11.1 million in the fourth quarter of expenses related to productivity and cost-savings initiatives. For more information, see Note 3. |
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