WESTERN UNION CO, 10-K filed on 2/22/2018
Annual Report
Document and Entity Information (USD $)
In Billions, except Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2017
Feb. 14, 2018
Jun. 30, 2017
Document and Entity Information [Abstract]
 
 
 
Entity Registrant Name
Western Union CO 
 
 
Entity Central Index Key
0001365135 
 
 
Current Fiscal Year End Date
--12-31 
 
 
Entity Filer Category
Large Accelerated Filer 
 
 
Document Type
10-K 
 
 
Document Period End Date
Dec. 31, 2017 
 
 
Document Fiscal Year Focus
2017 
 
 
Document Fiscal Period Focus
FY 
 
 
Amendment Flag
false 
 
 
Entity Common Stock, Shares Outstanding
 
459,298,652 
 
Entity Well-known Seasoned Issuer
Yes 
 
 
Entity Voluntary Filers
No 
 
 
Entity Current Reporting Status
Yes 
 
 
Entity Public Float
 
 
$ 8.7 
Consolidated Statements of Income/(Loss) (USD $)
In Millions, except Per Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Income Statement [Abstract]
 
 
 
Revenues
$ 5,524.3 
$ 5,422.9 
$ 5,483.7 
Expenses:
 
 
 
Cost of services
3,355.4 
3,270.0 
3,199.4 
Selling, general and administrative
1,231.5 
1,669.2 
1,174.9 
Goodwill impairment charge
464.0 
Total expenses
5,050.9 1
4,939.2 1
4,374.3 1
Operating income
473.4 
483.7 
1,109.4 
Other income/(expense):
 
 
 
Interest income
4.9 
3.5 
10.9 
Interest expense
(142.1)
(152.5)
(167.9)
Gain (Loss) on Derivative Instruments, Net, Pretax
7.1 
4.5 
1.2 
Other income/(expense), net
4.2 
2.5 
(11.8)
Total other expense, net
(125.9)
(142.0)
(167.6)
Income before income taxes
347.5 
341.7 
941.8 
Provision for income taxes (Note 10)
904.6 
88.5 
104.0 
Net income/(loss)
$ (557.1)
$ 253.2 
$ 837.8 
Earnings/(loss) per share:
 
 
 
Basic (USD per share)
$ (1.19)
$ 0.52 
$ 1.63 
Diluted (USD per share)
$ (1.19)
$ 0.51 
$ 1.62 
Weighted-average shares outstanding:
 
 
 
Basic (shares)
467.9 
490.2 
512.6 
Diluted (shares)
467.9 
493.5 
516.7 
Cash dividends declared per common share (USD per share)
$ 0.7 
$ 0.64 
$ 0.62 
Consolidated Statements of Comprehensive Income/(Loss) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2017
Sep. 30, 2017
Jun. 30, 2017
Mar. 31, 2017
Dec. 31, 2016
Sep. 30, 2016
Jun. 30, 2016
Mar. 31, 2016
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Statement of Comprehensive Income [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Net income/(loss)
$ (1,120.9)
$ 235.6 
$ 166.5 
$ 161.7 
$ (355.0)
$ 216.9 
$ 205.6 
$ 185.7 
$ (557.1)
$ 253.2 
$ 837.8 
Other comprehensive income/(loss), net of tax (Note 13):
 
 
 
 
 
 
 
 
 
 
 
Unrealized gains/(losses) on investment securities
 
 
 
 
 
 
 
 
6.5 
(11.6)
(1.1)
Unrealized losses on hedging activities
 
 
 
 
 
 
 
 
(74.4)
(7.6)
(7.2)
Foreign currency translation adjustments
 
 
 
 
 
 
 
 
(6.2)
(4.7)
(16.8)
Defined benefit pension plan adjustments
 
 
 
 
 
 
 
 
9.0 
5.0 
0.1 
Total other comprehensive loss
 
 
 
 
 
 
 
 
(65.1)
(18.9)
(25.0)
Comprehensive income/(loss)
 
 
 
 
 
 
 
 
$ (622.2)
$ 234.3 
$ 812.8 
Consolidated Balance Sheets (USD $)
In Millions, unless otherwise specified
Dec. 31, 2017
Dec. 31, 2016
Assets
 
 
Cash and cash equivalents
$ 838.2 
$ 877.5 
Settlement assets
4,188.9 
3,749.1 
Property and equipment, net of accumulated depreciation of $635.7 and $600.0, respectively
214.2 
220.5 
Goodwill
2,727.9 
3,162.0 
Other intangible assets, net of accumulated amortization of $1,042.7 and $958.2, respectively
586.3 
664.2 
Other assets
675.9 
746.3 
Total assets
9,231.4 
9,419.6 
Liabilities:
 
 
Accounts payable and accrued liabilities (Note 5)
718.5 
1,129.6 
Settlement obligations
4,188.9 
3,749.1 
Income taxes payable (Note 10)
1,252.0 
407.3 
Deferred tax liability, net
173.0 
85.9 
Borrowings
3,033.6 
2,786.1 
Other liabilities
356.8 
359.4 
Total liabilities
9,722.8 
8,517.4 
Commitments and contingencies (Note 5)
   
   
Stockholders' equity/(deficit):
 
 
Preferred stock, $1.00 par value; 10 shares authorized; no shares issued
Common stock, $0.01 par value; 2,000 shares authorized; 459.0 shares and 481.5 shares issued and outstanding as of December 31, 2017 and 2016, respectively
4.6 
4.8 
Capital surplus
697.8 
640.9 
Retained earnings/(accumulated deficit)
(965.9)
419.3 
Accumulated other comprehensive loss
(227.9)
(162.8)
Total stockholders' equity/(deficit)
(491.4)
902.2 
Total liabilities and stockholders' equity/(deficit)
$ 9,231.4 
$ 9,419.6 
Consolidated Balance Sheets (Parentheticals) (USD $)
In Millions, except Share data, unless otherwise specified
Dec. 31, 2017
Dec. 31, 2016
Assets
 
 
Accumulated Depreciation on Property Plant and Equipment
$ 635.7 
$ 600.0 
Accumulated Amortization on Other Intangible Assets
$ 1,042.7 
$ 958.2 
Stockholders’ Equity:
 
 
Preferred stock, par value (USD per share)
$ 1 
$ 1 
Preferred stock, shares authorized
10,000,000 
10,000,000 
Preferred stock, shares issued
Common stock, par value (USD per share)
$ 0.01 
$ 0.01 
Common stock, shares authorized
2,000,000,000 
2,000,000,000 
Common stock, shares issued
459,000,000 
481,500,000 
Common stock, shares outstanding
459,000,000 
481,500,000 
Consolidated Statements of Cash Flows (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Cash flows from operating activities
 
 
 
Net income/(loss)
$ (557.1)
$ 253.2 
$ 837.8 
Adjustments to reconcile net income/(loss) to net cash provided by operating activities:
 
 
 
Depreciation
77.1 
74.2 
67.7 
Amortization
185.8 
189.0 
202.5 
Goodwill impairment charge (Note 4)
464.0 
Deferred income tax provision/(benefit) (Note 10)
69.5 
(174.2)
(39.9)
Other non-cash items, net
124.2 
98.3 
63.7 
Increase/(decrease) in cash, excluding the effects of acquisitions, resulting from changes in:
 
 
 
Other assets
(68.7)
(71.4)
(107.4)
Accounts payable and accrued liabilities (Note 5)
(417.6)
522.8 
14.2 
Income taxes payable (Note 10)
850.4 
190.9 
47.1 
Other liabilities
8.2 
(40.9)
(14.6)
Net cash provided by operating activities
735.8 
1,041.9 
1,071.1 
Cash flows from investing activities
 
 
 
Capitalization of contract costs
(74.8)
(107.3)
(122.8)
Capitalization of purchased and developed software
(33.2)
(53.7)
(49.3)
Purchases of property and equipment
(69.1)
(68.8)
(94.4)
Purchases of non-settlement related investments and other
(192.1)
(64.7)
(110.9)
Proceeds from maturity of non-settlement related investments and other
203.8 
53.2 
100.3 
Purchases of held-to-maturity non-settlement related investments
(42.7)
(39.7)
(9.3)
Proceeds from held-to-maturity non-settlement related investments
28.4 
9.9 
Acquisition of businesses, net (Note 4)
(24.9)
Net cash provided by/(used in) investing activities
(204.6)
(271.1)
(286.4)
Cash flows from financing activities
 
 
 
Cash dividends paid
(325.6)
(312.2)
(316.5)
Common stock repurchased (Note 13)
(502.8)
(501.6)
(511.3)
Net proceeds from issuance of borrowings
746.2 
575.0 
Principal payments on borrowings
(500.0)
(1,005.4)
(500.0)
Proceeds from exercise of options and other
11.7 
35.0 
75.8 
Net cash used in financing activities
(570.5)
(1,209.2)
(1,252.0)
Net change in cash and cash equivalents
(39.3)
(438.4)
(467.3)
Cash and cash equivalents at beginning of year
877.5 
1,315.9 
1,783.2 
Cash and cash equivalents at end of year
838.2 
877.5 
1,315.9 
Supplemental cash flow information:
 
 
 
Interest paid
128.0 
159.0 
161.8 
Income taxes (refunded)/paid
$ (11.6)
$ 68.4 
$ 92.8 
Consolidated Statements of Stockholders' Equity/(Deficit) (USD $)
In Millions, unless otherwise specified
Total
Common Stock
Capital Surplus
Retained Earnings/(Accumulated Deficit)
Accumulated Other Comprehensive Loss
Stockholders' equity, beginning balance at Dec. 31, 2014
$ 1,300.4 
$ 5.2 
$ 445.4 
$ 968.7 
$ (118.9)
Common stock outstanding, beginning balance (shares) at Dec. 31, 2014
 
521.5 
 
 
 
Increase/(Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
Net income/(loss)
837.8 
 
 
837.8 
 
Stock-based compensation
42.2 
 
42.2 
 
 
Common stock dividends
(316.5)
 
 
(316.5)
 
Repurchase and retirement of common stock (shares)
 
(25.7)
 
 
 
Repurchase and retirement of common shares
(513.0)
(0.3)
 
(512.7)
 
Shares issued under stock-based compensation plans (shares)
 
6.6 
 
 
 
Shares issued under stock-based compensation plans
79.0 
0.1 
78.9 
 
 
Unrealized gains/(losses) on investment securities, net of tax
(1.1)
 
 
 
(1.1)
Unrealized losses on hedging activities, net of tax
(7.2)
 
 
 
(7.2)
Foreign currency translation adjustments, net of tax
(16.8)
 
 
 
(16.8)
Defined benefit pension plan adjustments, net of tax
0.1 
 
 
 
0.1 
Stockholders' equity, ending balance at Dec. 31, 2015
1,404.9 
5.0 
566.5 
977.3 
(143.9)
Common stock outstanding, ending balance (shares) at Dec. 31, 2015
 
502.4 
 
 
 
Increase/(Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
Net income/(loss)
253.2 
 
 
253.2 
 
Stock-based compensation
41.8 
 
41.8 
 
 
Common stock dividends
(312.2)
 
 
(312.2)
 
Repurchase and retirement of common stock (shares)
 
(25.8)
 
 
 
Repurchase and retirement of common shares
(499.2)
(0.2)
 
(499.0)
 
Shares issued under stock-based compensation plans (shares)
 
4.9 
 
 
 
Shares issued under stock-based compensation plans
32.6 
 
32.6 
 
 
Unrealized gains/(losses) on investment securities, net of tax
(11.6)
 
 
 
(11.6)
Unrealized losses on hedging activities, net of tax
(7.6)
 
 
 
(7.6)
Foreign currency translation adjustments, net of tax
(4.7)
 
 
 
(4.7)
Defined benefit pension plan adjustments, net of tax
5.0 
 
 
 
5.0 
Stockholders' equity, ending balance at Dec. 31, 2016
902.2 
4.8 
640.9 
419.3 
(162.8)
Common stock outstanding, ending balance (shares) at Dec. 31, 2016
481.5 
481.5 
 
 
 
Increase/(Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
Net income/(loss)
(557.1)
 
 
(557.1)
 
Stock-based compensation
43.9 
 
43.9 
 
 
Common stock dividends
(325.6)
 
 
(325.6)
 
Repurchase and retirement of common stock (shares)
 
(25.7)
 
 
 
Repurchase and retirement of common shares
(502.7)
(0.2)
 
(502.5)
 
Shares issued under stock-based compensation plans (shares)
 
3.2 
 
 
 
Shares issued under stock-based compensation plans
13.0 
 
13.0 
 
 
Unrealized gains/(losses) on investment securities, net of tax
6.5 
 
 
 
6.5 
Unrealized losses on hedging activities, net of tax
(74.4)
 
 
 
(74.4)
Foreign currency translation adjustments, net of tax
(6.2)
 
 
 
(6.2)
Defined benefit pension plan adjustments, net of tax
9.0 
 
 
 
9.0 
Stockholders' equity, ending balance at Dec. 31, 2017
$ (491.4)
$ 4.6 
$ 697.8 
$ (965.9)
$ (227.9)
Common stock outstanding, ending balance (shares) at Dec. 31, 2017
459.0 
459.0 
 
 
 
Business and Basis of Presentation
Business and Basis of Presentation
Business and Basis of Presentation

The Western Union Company ("Western Union" or the "Company") is a leader in global money movement and payment services, providing people and businesses with fast, reliable and convenient ways to send money and make payments around the world. The Western Union® brand is globally recognized. The Company's services are primarily available through a network of agent locations in more than 200 countries and territories. Each location in the Company's agent network is capable of providing one or more of the Company's services.

Leadership and organizational structure changes within the Company have impacted how its Chief Operating Decision Maker (“CODM”) manages the Company, resulting in changes to its operating and reportable segments in the second quarter of 2017. Prior to these changes, the Company had organized its business into the following operating segments: Consumer-to-Consumer, Consumer-to-Business, and Business Solutions. As a result of these leadership and organizational structure changes, the components of the historical Consumer-to-Business operating segment have been divided between two executives, with the majority of the Company's cash-based bill payments services under one executive and the majority of the Company's electronic-based bill payments services under the other executive. The CODM allocates resources and assesses performance using discrete information for these separate components, neither of which is material from either a quantitative or qualitative perspective. Accordingly, the Company no longer reports a separate Consumer-to-Business operating segment, and no new reportable segments result from the impact of these changes. The cash-based and electronic-based bill payments services are therefore included in "Other."

The Western Union business consists of the following segments:
 
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 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 and, in certain countries, intra- country transfers. This segment also includes money transfer transactions that can be initiated through websites and mobile devices.

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.

All businesses and other services that have not been classified in the above segments are reported as "Other," which, as noted above, primarily includes the Company's electronic-based and cash-based bill payment services which facilitate bill payments from consumers to businesses and other organizations and which were previously reported in the historical Consumer-to-Business operating segment, and the Company's money order and other services, in addition to costs for the review and closing of acquisitions. Results and balances as of and for the years ended December 31, 2016 and 2015 have been adjusted to conform to the changes in reportable segments discussed above. See Note 17 for further information regarding the Company's segments.

There are legal or regulatory limitations on transferring certain assets of the Company outside of the countries where these assets are located. However, there are generally no limitations on the use of these assets within those countries. Additionally, the Company must meet minimum capital requirements in some countries in order to maintain operating licenses. As of December 31, 2017, the amount of these net asset limitations totaled approximately $265 million.

Various aspects of the Company's services and businesses are subject to United States federal, state and local regulation, as well as regulation by foreign jurisdictions, including certain banking and other financial services regulations.

Spin-off from First Data

On January 26, 2006, the First Data Corporation ("First Data") Board of Directors announced its intention to pursue the distribution of all of its money transfer and consumer payments businesses and its interest in a Western Union money transfer agent, as well as its related assets, including real estate, through a tax-free distribution to First Data shareholders (the "Spin-off"). Effective on September 29, 2006, First Data completed the separation and the distribution of these businesses by distributing The Western Union Company common stock to First Data shareholders (the "Distribution"). Prior to the Distribution, the Company had been a segment of First Data.

Basis of Presentation

The financial statements in this Annual Report on Form 10-K are presented on a consolidated basis and include the accounts of the Company and its majority-owned subsidiaries. All significant intercompany transactions and accounts have been eliminated. Beginning in the first quarter of 2017, the Company has reported total "Revenues" in its Consolidated Statements of Income/(Loss) for all periods presented and no longer presents the subcaptions previously reported, including "Transaction fees," "Foreign exchange revenues," and "Other revenues."

Consistent with industry practice, the accompanying Consolidated Balance Sheets are unclassified due to the short-term nature of the Company's settlement obligations contrasted with the Company's ability to invest cash awaiting settlement in long-term investment securities.
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates.

Principles of Consolidation

The Company consolidates financial results when it has a controlling financial interest in a subsidiary via voting rights or when it has both the power to direct the activities of an entity that most significantly impact the entity's economic performance and the ability to absorb losses or the right to receive benefits of the entity that could potentially be significant to the entity. The Company utilizes the equity method of accounting when it is able to exercise significant influence over the entity's operations, which generally occurs when the Company has an ownership interest of between 20% and 50% in an entity.

Earnings/(Loss) Per Share

The calculation of basic earnings/(loss) per share is computed by dividing net income/(loss) available to common stockholders by the weighted-average number of shares of common stock outstanding for the period. Outstanding options to purchase Western Union stock and unvested shares of restricted stock are excluded from basic shares outstanding. Diluted earnings/(loss) per share reflects the potential dilution that could occur if outstanding stock options at the presented dates are exercised and shares of restricted stock have vested, using the treasury stock method. The treasury stock method assumes proceeds from the exercise price of stock options and the unamortized compensation expense of options and restricted stock are available to acquire shares at an average market price throughout the period, and therefore, reduce the dilutive effect.

For the years ended December 31, 2017, 2016 and 2015, there were 2.8 million, 3.4 million and 6.0 million, respectively, of outstanding options to purchase shares of Western Union stock excluded from the diluted earnings/(loss) per share calculation, as their exercise prices were above the Company's weighted-average share price during the periods and their effect was anti-dilutive. Due to the net loss for the year ended December 31, 2017, an additional 3.0 million shares have been excluded from diluted weighted-average shares outstanding, because the effect of including such shares would be anti-dilutive in the calculation of diluted loss per share.


The following table provides the calculation of diluted weighted-average shares outstanding (in millions):
 
For the Year Ended December 31,
 
2017
 
2016
 
2015
Basic weighted-average shares outstanding
467.9

 
490.2

 
512.6

Common stock equivalents

 
3.3

 
4.1

Diluted weighted-average shares outstanding
467.9

 
493.5

 
516.7



Fair Value Measurements

The Company determines the fair values of its assets and liabilities that are recognized or disclosed at fair value in accordance with the hierarchy described below. The fair values of the assets and liabilities held in the Company's defined benefit plan trust ("Trust") are recognized or disclosed utilizing the same hierarchy. The following three levels of inputs may be used to measure fair value:

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.

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.

In addition, the Trust has other investments 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.
 
Carrying amounts for many of the Company's financial instruments, including cash and cash equivalents, settlement cash and cash equivalents, and settlement receivables and settlement obligations approximate fair value due to their short maturities. Available-for-sale investment securities and derivative financial instruments are carried at fair value and included in Note 8. Fixed rate notes are carried at their original issuance values as adjusted over time to accrete that value to par, except for portions of notes hedged by interest rate swap agreements as disclosed in Note 14. The fair values of fixed rate notes are disclosed in Note 8 and are based on market quotations. The Company's investments in foreign corporate debt securities are classified as held-to-maturity securities. The fair values of the foreign corporate debt securities are disclosed in Note 8 and are based on market quotations.

The fair values of non-financial assets and liabilities related to the Company's business combinations are disclosed in Note 4. The fair value of the assets in the Trust, which holds the assets for the Company's defined benefit plan, is disclosed in Note 11.

Business Combinations

The Company accounts for all business combinations where control over another entity is obtained using the acquisition method of accounting, which requires that most assets (both tangible and intangible), liabilities (including contingent consideration), and remaining noncontrolling interests be recognized at fair value at the date of acquisition. The excess of the purchase price over the fair value of assets less liabilities and noncontrolling interests is recognized as goodwill. Certain adjustments to the assessed fair values of the assets, liabilities, or noncontrolling interests made subsequent to the acquisition date, but within the measurement period, which is one year or less, are recorded as adjustments to goodwill. Any adjustments subsequent to the measurement period are recorded in income. Any cost or equity method interest that the Company holds in the acquired company prior to the acquisition is remeasured to fair value at acquisition with a resulting gain or loss recognized in income for the difference between fair value and existing book value. Results of operations of the acquired company are included in the Company's results from the date of the acquisition forward and include amortization expense arising from acquired intangible assets. The Company expenses all costs as incurred related to or involved with an acquisition in "Selling, general and administrative" expenses.

Cash and Cash Equivalents

Highly liquid investments (other than those included in settlement assets) with maturities of three months or less at the date of purchase (that are readily convertible to cash) are considered to be cash equivalents and are stated at cost, which approximates fair value.

The Company maintains cash and cash equivalent balances, including a portion in money market funds, with a group of globally diversified banks and financial institutions. The Company limits the concentration of its cash and cash equivalents with any one institution and regularly reviews investment concentrations and credit worthiness of these institutions.

Allowance for Doubtful Accounts

The Company records an allowance for doubtful accounts when it is probable that the related receivable balance will not be collected based on its history of collection experience, known collection issues, such as agent suspensions and bankruptcies, consumer chargebacks and insufficient funds, and other matters the Company identifies in its routine collection monitoring. The allowance for doubtful accounts was $64.5 million and $55.4 million as of December 31, 2017 and 2016, respectively, and is recorded in the same Consolidated Balance Sheet caption as the related receivable. During the years ended December 31, 2017, 2016, and 2015, the provision for doubtful accounts (bad debt expense) reflected in the Consolidated Statements of Income/(Loss) was $60.6 million, $63.9 million and $60.3 million, respectively.

Settlement Assets and Obligations

Settlement assets represent funds received or to be received from agents for unsettled money transfers, money orders and consumer payments. The Company records corresponding settlement obligations relating to amounts payable under money transfers, money orders and consumer payment service arrangements. Settlement assets and obligations also include amounts receivable from, and payable to, customers for the value of their cross-currency payment transactions related to the Business Solutions segment.

Settlement assets consist of cash and cash equivalents, receivables from selling agents and Business Solutions customers, and investment securities. Cash received by Western Union agents generally becomes available to the Company within one week after initial receipt by the agent. Cash equivalents consist of short-term time deposits, commercial paper and other highly liquid investments. Receivables from selling agents represent funds collected by such agents, but in transit to the Company. Western Union has a large and diverse agent base, thereby reducing the credit risk of the Company from any one agent. In addition, the Company performs ongoing credit evaluations of its agents' financial condition and credit worthiness. See Note 7 for information concerning the Company's investment securities.

Receivables from Business Solutions customers arise from cross-currency payment transactions in the Business Solutions segment. Receivables occur when funds have been paid out to a beneficiary but not yet received from the customer. Aside from these receivables, the credit risk associated with spot foreign currency exchange contracts is largely mitigated, as in most cases the Company requires the receipt of funds from customers before releasing the associated cross-currency payment.

Settlement obligations consist of money transfer, money order and payment service payables and payables to agents. Money transfer payables represent amounts to be paid to transferees when they request their funds. Most agents typically settle with transferees first and then obtain reimbursement from the Company. Money order payables represent amounts not yet presented for payment. Payment service payables represent amounts to be paid to utility companies, auto finance companies, mortgage servicers, financial service providers, government agencies and others. Due to the agent funding and settlement process, payables to agents represent amounts due to agents for money transfers that have been settled with transferees.

Settlement assets and obligations consisted of the following (in millions):
 
December 31,
 
2017
 
2016
Settlement assets:
 
 
 
Cash and cash equivalents
$
1,264.8

 
$
1,190.0

Receivables from selling agents and Business Solutions customers
1,573.9

 
1,327.3

Investment securities
1,350.2

 
1,231.8

 
$
4,188.9

 
$
3,749.1

Settlement obligations:
 
 
 
Money transfer, money order and payment service payables
$
2,789.2

 
$
2,598.2

Payables to agents
1,399.7

 
1,150.9

 
$
4,188.9

 
$
3,749.1



Property and Equipment

Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the lesser of the estimated life of the related assets (generally three to ten years for equipment and furniture and fixtures, and 30 years for buildings) or the lease term. Maintenance and repairs, which do not extend the useful life of the respective assets, are charged to expense as incurred.

Property and equipment consisted of the following (in millions):
 
December 31,
 
2017
 
2016
Equipment
$
604.7

 
$
585.5

Buildings
88.6

 
88.3

Leasehold improvements
87.4

 
84.3

Furniture and fixtures
42.0

 
40.4

Land and improvements
17.0

 
17.0

Projects in process
10.2

 
5.0

Total property and equipment, gross
849.9

 
820.5

Less accumulated depreciation
(635.7
)
 
(600.0
)
Property and equipment, net
$
214.2

 
$
220.5



Amounts charged to expense for depreciation of property and equipment were $77.1 million, $74.2 million and $67.7 million during the years ended December 31, 2017, 2016 and 2015, respectively.

Goodwill

Goodwill represents the excess of purchase price over the fair value of tangible and other intangible assets acquired, less liabilities assumed arising from business combinations. For the year ended December 31, 2017, the Company recognized a goodwill impairment charge of $464.0 million related to its Business Solutions reporting unit, as disclosed in Note 4. The Company's annual impairment assessment did not identify any goodwill impairment during the years ended December 31, 2016 and 2015.

Other Intangible Assets

Other intangible assets primarily consist of contract costs (primarily amounts paid to agents in connection with establishing and renewing long-term contracts), acquired contracts and software. Other intangible assets are amortized on a straight-line basis over the length of the contract or benefit periods. Included in the Consolidated Statements of Income/(Loss) is amortization expense of $185.8 million, $189.0 million and $202.5 million for the years ended December 31, 2017, 2016 and 2015, respectively.

The Company capitalizes initial payments for new and renewed agent contracts to the extent recoverable through future operations or penalties in the case of early termination. The Company's accounting policy is to limit the amount of capitalized costs for a given contract to the lesser of the estimated future cash flows from the contract or the termination fees the Company would receive in the event of early termination of the contract.

Acquired contracts include customer and contractual relationships and networks of subagents that are recognized in connection with the Company's acquisitions.

The Company purchases and develops software that is used in providing services and in performing administrative functions. Software development costs are capitalized once technological feasibility of the software has been established. Costs incurred prior to establishing technological feasibility are expensed as incurred. Technological feasibility is established when the Company has completed all planning and designing activities that are necessary to determine that a product can be produced to meet its design specifications, including functions, features and technical performance requirements. Capitalization of costs ceases when the product is available for general use. Software development costs and purchased software are generally amortized over a term of three to five years.

The following table provides the components of other intangible assets (in millions):
 
 
December 31, 2017
 
December 31, 2016
 
 
Weighted-
Average
Amortization
Period
(in years)
 
Initial Cost
 


Net of
Accumulated
Amortization
 
Initial Cost
 


Net of
Accumulated
Amortization
Acquired contracts
 
11.5
 
$
600.4

 
$
220.0

 
$
599.6

 
$
264.4

Capitalized contract costs
 
6.2
 
559.5

 
268.2

 
559.2

 
294.0

Internal use software
 
3.2
 
387.8

 
53.1

 
371.3

 
56.4

Acquired trademarks
 
24.8
 
33.2

 
16.9

 
34.2

 
18.5

Projects in process
 
3.0
 
28.1

 
28.1

 
30.6

 
30.6

Other intangibles
 
4.6
 
20.0

 

 
27.5

 
0.3

Total other intangible assets
 
7.7
 
$
1,629.0

 
$
586.3

 
$
1,622.4

 
$
664.2



The estimated future aggregate amortization expense for existing other intangible assets as of December 31, 2017 is expected to be $175.7 million in 2018, $136.2 million in 2019, $109.1 million in 2020, $76.7 million in 2021, $39.8 million in 2022 and $48.8 million thereafter.

Other intangible assets are reviewed for impairment on an annual basis or whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. In such reviews, estimated undiscounted cash flows associated with these assets or operations are compared with their carrying values to determine if a write-down to fair value (normally measured by the present value technique) is required. The Company recorded immaterial impairments related to other intangible assets during the years ended December 31, 2017, 2016 and 2015.

Revenue Recognition

The Company's revenues are primarily derived from consideration paid by customers to transfer money. These revenues vary by transaction based upon send and receive locations, the principal amount sent, whether the money transfer involves different send and receive currencies, the difference between the exchange rate set by the Company to the customer and the rate available in the wholesale foreign exchange market, speed of service, and channel, as applicable. The Company also offers several other services, including foreign exchange and payment services and other bill payment services, for which revenue is impacted by similar factors. Generally, revenues are recorded at the time a transaction is initiated.

Cost of Services

Cost of services primarily consists of agent commissions and expenses for call centers, settlement operations and related information technology costs. Expenses within these functions include personnel, software, equipment, telecommunications, bank fees, depreciation, amortization and other expenses incurred in connection with providing money transfer and other payment services.

Advertising Costs

Advertising costs are charged to operating expenses as incurred. Advertising costs for the years ended December 31, 2017, 2016 and 2015 were $168.3 million, $151.1 million, and $166.3 million, respectively.

Income Taxes

The Company accounts for income taxes under the liability method, which requires that deferred tax assets and liabilities be determined based on the expected future income tax consequences of events that have been recognized in the consolidated financial statements. Deferred tax assets and liabilities are recognized based on temporary differences between the financial statement carrying amounts and tax bases of assets and liabilities using enacted tax rates in effect in the years in which the temporary differences are expected to reverse. The Company assesses the realizability of its deferred tax assets. A valuation allowance must be established when, based upon available evidence, it is more likely than not that all or a portion of the deferred tax assets will not be realized.

The Company recognizes the tax benefits from uncertain tax positions only when it is more likely than not, based on the technical merits of the position, the tax position will be sustained upon examination, including the resolution of any related appeals or litigation. The tax benefits recognized in the consolidated financial statements from such a position are measured as the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate resolution.

Foreign Currency Translation

The United States dollar is the functional currency for substantially all of the Company's businesses. Revenues and expenses are translated at average exchange rates prevailing during the period. Foreign currency denominated assets and liabilities for those businesses for which the local currency is the functional currency are translated into United States dollars based on exchange rates at the end of the year. The effects of foreign exchange gains and losses arising from the translation of assets and liabilities of these businesses are included as a component of "Accumulated other comprehensive loss" in the accompanying Consolidated Balance Sheets. Foreign currency denominated monetary assets and liabilities of businesses for which the United States dollar is the functional currency are remeasured based on exchange rates at the end of the period, and the resulting remeasurement gains and losses are recognized in net income/(loss). Non-monetary assets and liabilities of these operations are remeasured at historical rates in effect when the asset was recognized or the liability was incurred.

Derivatives

The Company uses derivatives to (a) minimize its exposures related to changes in foreign currency exchange rates and interest rates and (b) facilitate cross-currency Business Solutions payments by writing derivatives to customers. The Company recognizes all derivatives in the "Other assets" and "Other liabilities" captions in the accompanying Consolidated Balance Sheets at their fair value. All cash flows associated with derivatives are included in cash flows from operating activities in the Consolidated Statements of Cash Flows.

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, 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 "Revenues."

The fair value of the Company's derivatives is derived from standardized models that use market-based inputs (e.g., forward prices for foreign currency).

The details of each designated hedging relationship are formally documented at the inception of the arrangement, including the risk management objective, hedging strategy, hedged item, specific risks being hedged, the derivative instrument, how effectiveness is being assessed, and how ineffectiveness, if any, will be measured. The derivative must be highly effective in offsetting the changes in cash flows or fair value of the hedged item, and effectiveness is evaluated quarterly on a retrospective and prospective basis.

Legal Contingencies

The Company is a party to certain legal and regulatory proceedings with respect to a variety of matters. The Company records an accrual for these contingencies to the extent that a loss is both probable and reasonably estimable. If some amount within a range of loss appears to be a better estimate than any other amount within the range, that amount is accrued. When no amount within a range of loss appears to be a better estimate than any other amount, the lowest amount in the range is accrued.

Stock-Based Compensation

The Company currently has a stock-based compensation plan that provides for grants of Western Union stock options, restricted stock awards and restricted and unrestricted stock units to employees and non-employee directors of the Company.

All stock-based compensation to employees is required to be measured at fair value and expensed over the requisite service period. The Company recognizes compensation expense on awards on a straight-line basis over the requisite service period for the entire award, with an estimate of forfeitures. Refer to Note 16 for additional discussion regarding details of the Company's stock-based compensation plans.

Severance and Other Related Expenses

The Company records severance-related expenses once they are both probable and estimable in accordance with the provisions of the applicable accounting guidance for severance provided under an ongoing benefit arrangement. One-time, involuntary benefit arrangements and other costs are generally recognized when the liability is incurred. The Company also evaluates impairment issues associated with restructuring and other activities when the carrying amount of the related assets may not be fully recoverable, in accordance with the appropriate accounting guidance.

Recently Adopted Accounting Pronouncements

On January 1, 2017, the Company adopted an accounting pronouncement related to share-based payments to employees. This standard requires all excess tax benefits and tax deficiencies to be recognized as income tax expense (benefit) in the Consolidated Statements of Income/(Loss) and that excess tax benefits be included as an operating activity for the cash flow statement. In addition, these tax benefits must be removed from the dilutive weighted-average shares outstanding calculation as these assumed proceeds will have already been recognized in the Consolidated Statements of Income/(Loss). The Company will continue its current practice of estimating forfeitures when calculating compensation expense. The adoption of this standard did not have a material impact on the Company's financial position, results of operations, cash flows, or related disclosures.

In January 2017, the Financial Accounting Standards Board issued a new accounting pronouncement to simplify the method of measuring a goodwill impairment charge in the event a reporting unit’s carrying amount exceeds its fair value. In those circumstances, the new standard requires the Company to recognize an impairment charge for the amount by which the carrying amount of the reporting unit exceeds its fair value. The Company early-adopted the new standard in the fourth quarter of 2017 and measured its goodwill impairment charge related to its Business Solutions reporting unit under this approach.

Accounting Pronouncements Not Yet Adopted

In May 2014, the Financial Accounting Standards Board issued a new accounting pronouncement regarding revenue from contracts with customers, which the Company is required to adopt on January 1, 2018. This new standard, along with subsequent amendments, provides guidance on recognizing revenue, including a five-step model to determine when revenue recognition is appropriate. The standard requires that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Based on management's analysis of the new standard, for the significant majority of the Company's revenues, the Company has an obligation to perform one integrated service for the customer - collect the consumer's money and make funds available for payment, predominantly on the same day, to a designated recipient in the currency requested. Accordingly, management has determined that the adoption of this standard will not have a material impact on the Company's financial position and results of operations. The Company will adopt the standard using the modified retrospective approach, applied to all contracts with customers, with the cumulative effect of adoption included in retained earnings as of January 1, 2018. Management has completed an analysis of the new disclosure requirements of the standard and has made minor enhancements to its systems and processes to comply with the new disclosure requirements.


In January 2016, the Financial Accounting Standards Board issued a new accounting pronouncement regarding classification and measurement of financial instruments. This new standard provides guidance on how entities measure certain equity investments and present changes in the fair value. This standard requires that entities measure certain equity investments that do not result in consolidation and are not accounted for under the equity method at fair value and recognize any changes in fair value in net income. The Company is required to adopt the new standard on January 1, 2018. Management believes that the adoption of this standard will not have a material impact on the Company's financial position, results of operations, or related disclosures.

In February 2016, the Financial Accounting Standards Board issued a new accounting pronouncement regarding the financial reporting of leasing transactions. This new standard requires a lessee to record assets and liabilities on the balance sheet for the rights and obligations arising from leases with terms of more than 12 months. The Company is required to adopt the new standard on January 1, 2019 using a modified retrospective approach. Management is currently evaluating the potential impact that the adoption of this standard will have on the Company’s financial position, results of operations, and related disclosures.

In June 2016, the Financial Accounting Standards Board issued a new accounting pronouncement regarding credit losses for financial instruments. The new standard requires entities to measure expected credit losses for certain financial assets held at the reporting date using a current expected credit loss model, which is based on historical experience, adjusted for current conditions and reasonable and supportable forecasts. The Company is required to adopt the new standard on January 1, 2020. Management is currently evaluating the potential impact that the adoption of this standard will have on the Company's financial position, results of operations, and related disclosures.

In October 2016, the Financial Accounting Standards Board issued a new accounting pronouncement regarding certain intra-entity asset transfers, requiring that an entity recognize any income tax consequences when the transfer occurs. The Company is required to adopt the new standard on January 1, 2018. Management believes that the adoption of this standard will not have a material impact on the Company's financial position and results of operations.

In March 2017, the Financial Accounting Standards Board issued a new accounting pronouncement to require the service cost component of defined benefit plan pension cost to be included in the same line item as other compensation costs arising from services rendered by relevant employees, with the other non-service cost components of this net benefit cost presented in the Consolidated Statements of Income/(Loss) separately from the service cost component, outside a subtotal of income from operations. The Company's defined benefit pension plan is frozen, thus there are no related service costs. The Company currently records the non-service costs of the defined benefit pension plan in the "Cost of services" line item of the Consolidated Statements of Income/(Loss), whereas the Company expects to record these costs in the "Other income/(expense), net" line item upon adoption of the standard. The Company is required to adopt the new standard on January 1, 2018, with retrospective presentation. Management believes that the adoption of this standard will not have a material impact on the Company's results of operations or related disclosures.

In August 2017, the Financial Accounting Standards Board issued a new accounting pronouncement to improve the financial reporting of hedging relationships to better portray the economic results of an entity's risk management activities in its financial statements. The Company adopted the standard on January 1, 2018, using the amortization approach for excluded components related to the Company's foreign currency hedging program. Additionally, the impact of the excluded components will be recognized in "Revenues" in the Consolidated Statements of Income/(Loss) rather than "Derivative gains, net" as previously reported. The effects of the standard will be recognized prospectively in the Company's financial statements, since for foreign currency hedges existing at the date of adoption that exclude time value from the assessment of effectiveness, the Company will continue using the mark-to-market recognition model for the excluded component. The adoption of this standard will have no impact on the Company's existing interest rate hedges and will not have a material impact on the Company's financial position or results of operations, but will require the addition of certain disclosures.

In February 2018, the Financial Accounting Standards Board issued a new accounting pronouncement that gives entities the option to reclassify tax effects included within accumulated other comprehensive income/(loss) as a result of the United States tax reform legislation enacted in December 2017 (the “Tax Act”) to retained earnings. The Company will adopt this standard in the first quarter of 2018 and will record the reclassification in the period of adoption. The adoption of this standard will not have a material impact on the Company's financial position or results of operations, but will require the addition of certain disclosures.
Business Transformation and Productivity and Cost-Savings Initiatives Expenses
Business Transformation and Productivity and Cost-Savings Initiatives Expenses
Business Transformation and Productivity and Cost-Savings Initiatives Expenses

In the second quarter of 2016, the Company began incurring expenses related to a business transformation initiative, referred to as the WU Way. Although the expenses related to the WU Way are specific to that initiative, the types of expenses related to the WU Way initiative are similar to expenses that the Company has previously incurred related to productivity and cost-savings initiatives, and can reasonably be expected to incur in the future. The following table summarizes the activity for the years ended December 31, 2017 and December 31, 2016 for the consulting service fees, severance, and other costs related to the business transformation accruals, which are included in "Accounts payable and accrued liabilities" in the Company's Consolidated Balance Sheets as of December 31, 2017 and December 31, 2016 (in millions):

 
Consulting Service Fees
 
Severance and Related Employee Benefits
 
Other
 
Total
Balance, December 31, 2015
$

 
$

 
$

 
$

Expenses
16.4

 
3.9

 

 
20.3

Cash payments
(7.4
)
 

 

 
(7.4
)
Balance, December 31, 2016
$
9.0

 
$
3.9

 
$

 
$
12.9

Expenses (a)
36.1

 
44.2

 
14.1

 
94.4

Cash payments
(36.9
)
 
(28.2
)
 
(12.2
)
 
(77.3
)
Non-cash benefits/charges (a)

 
3.3

 
(0.3
)
 
3.0

Balance, December 31, 2017
$
8.2

 
$
23.2

 
$
1.6

 
$
33.0

____________

(a)
Expenses incurred during 2017 include a non-cash benefit for adjustments to stock compensation for awards forfeited by employees and other immaterial items. These benefits and charges have been removed from the liability balance in the table above as they do not impact the business transformation accruals.
During the year ended December 31, 2015, the Company implemented initiatives to improve productivity and reduce costs. A significant majority of the productivity and cost-savings initiatives costs related to severance and related expenses, including termination benefits received by certain of the Company's former executives. During the year ended December 31, 2015, the Company incurred $11.1 million of expenses related to productivity and cost-savings initiatives. During the years ended December 31, 2016 and 2015, the Company made cash payments of $12.7 million and $30.0 million, respectively, related to productivity and cost-savings initiatives, and as of December 31, 2016, the amount remaining to be paid related to productivity and cost-savings initiatives was immaterial.

As of December 31, 2017, expenses associated with the WU Way initiative are effectively complete. The following table presents the above expenses related to business transformation and productivity and cost-savings initiatives as reflected in the Consolidated Statements of Income/(Loss) (in millions):
 
Year Ended December 31,
 
2017
 
2016
 
2015
 
Business Transformation
 
Productivity and Cost-Savings Initiatives
Cost of services
$
35.7

 
$
2.5

 
$
1.0

Selling, general and administrative
58.7

 
17.8

 
10.1

Total expenses, pre-tax
$
94.4

 
$
20.3

 
$
11.1

Total expenses, net of tax
$
63.3

 
$
12.9

 
$
7.2



The following table summarizes the business transformation expenses incurred by reportable segment (in millions). Certain business transformation expenses, primarily consulting expenses, are not identifiable to a specific segment, and have therefore been excluded from the table below. These expenses have not been allocated to the Company's segments disclosed in Note 17. While the expenses shown below are identifiable to the Company's segments, they have been excluded from the measurement of segment operating income provided to the CODM for purposes of assessing segment performance and decision making with respect to resource allocation.
 
 
Business Transformation
 
 
Consumer-to-Consumer
 
Business Solutions
 
Other
 
Total
2017 expenses
 
$
30.8

 
$
16.1

 
$
13.6

 
$
60.5

2016 expenses
 
2.7

 
0.6

 
0.5

 
3.8



For those expenses related to initiatives to improve productivity and reduce costs that the Company incurred during the year ended December 31, 2015, $7.6 million, $1.8 million, and $1.7 million were identifiable to the Consumer-to-Consumer and Business Solutions segments, and Other, respectively.
Goodwill
Goodwill
Goodwill

Business Solutions Goodwill Impairment Charge

For the year ended December 31, 2017, the Company recognized a goodwill impairment charge of $464.0 million related to its Business Solutions reporting unit, as the estimated fair value of the reporting unit declined below its carrying value. The reduction in estimated fair value primarily resulted from a decrease in projected revenue growth rates and EBITDA margins and the impact of the Tax Act. Revenue and EBITDA projections were reevaluated due to the declines in revenues and operating results recognized in the fourth quarter of 2017, which were significantly below management’s expectations. Additionally, as disclosed in prior Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q, the total estimated fair value of the Business Solutions reporting unit previously included value derived from strategies to optimize United States cash flow management and global liquidity by utilizing international cash balances (including balances generated by other operating segments) to initially fund global principal payouts for Business Solutions transactions initiated in the United States ("Cash Management Strategies") that would have been available to certain market participants. However, the Tax Act, which imposes a tax on certain previously undistributed foreign earnings and establishes minimum taxes on certain future payments and foreign earnings, eliminated any fair value associated with the Cash Management Strategies.

The Company estimated the fair value of its Business Solutions reporting unit using the income approach. The estimated fair value was derived primarily using unobservable Level 3 inputs, which require significant management judgment and estimation.

Business Combinations

On November 6, 2017, the Company completed the purchase of Opus Software Technologies Private Limited and the assets of its affiliate for total consideration of approximately $25.3 million. The Company expects that the acquisition will assist in enhancing and centralizing the Company’s information technology expertise through a newly established information technology development and maintenance center located in India, which was an integral part of the Company’s WU Way transformation efforts. The Company has recognized $22.2 million of goodwill related to this acquisition. The valuation of the acquisition, which is preliminary, was derived primarily using unobservable Level 3 inputs, which require significant management judgment and estimation.

The Company completed one other immaterial acquisition during the fourth quarter of 2017.

The following table presents changes to goodwill for the years ended December 31, 2017 and 2016 (in millions):

Consumer-to-Consumer
 
Business Solutions
 
Other
 
Total
January 1, 2016 goodwill, net
$
1,950.1

 
$
996.0

 
$
217.7

 
$
3,163.8

Currency translation

 

 
(1.8
)
 
(1.8
)
December 31, 2016 goodwill, net
$
1,950.1

 
$
996.0

 
$
215.9

 
$
3,162.0

Goodwill impairment charge

 
(464.0
)
 

 
(464.0
)
Acquisitions
30.9

 

 

 
30.9

Currency translation

 

 
(1.0
)
 
(1.0
)
December 31, 2017 goodwill, net
$
1,981.0

 
$
532.0

 
$
214.9

 
$
2,727.9



The following table presents accumulated impairment losses for the years ended December 31, 2017, 2016 and 2015 (in millions):
 
 
As of December 31,
 
 
2017
 
2016
 
2015
Goodwill, gross
 
$
3,191.9

 
$
3,162.0

 
$
3,163.8

Accumulated impairment losses
 
(464.0
)
 

 

Goodwill, net
 
$
2,727.9

 
$
3,162.0

 
$
3,163.8

Commitments and Contingencies
Commitments and Contingencies
Commitments and Contingencies

Letters of Credit and Bank Guarantees

The Company had approximately $210 million in outstanding letters of credit and bank guarantees as of December 31, 2017 that are primarily held in connection with safeguarding consumer funds, lease arrangements, and certain agent agreements. The letters of credit and bank guarantees have expiration dates through 2021, with many having a one-year renewal option. The Company expects to renew the letters of credit and bank guarantees prior to expiration in most circumstances.

Litigation and Related Contingencies

The Company is subject to certain claims and litigation that could result in losses, including damages, fines and/or civil penalties, which could be significant, and in some cases, criminal charges. The Company regularly evaluates the status of legal matters to assess whether a loss is probable and reasonably estimable in determining whether an accrual is appropriate. Furthermore, in determining whether disclosure is appropriate, the Company evaluates each legal matter to assess if there is at least a reasonable possibility that a loss or additional loss may have been incurred and whether an estimate of possible loss or range of loss can be made. Unless otherwise specified below, the Company believes that there is at least a reasonable possibility that a loss or additional loss may have been incurred for each of the matters described below.
For those matters that the Company believes there is at least a reasonable possibility that a loss or additional loss may have been incurred and can reasonably estimate the loss or potential loss, the reasonably possible potential litigation losses in excess of the Company’s recorded liability for probable and estimable losses was approximately $100 million as of December 31, 2017. For the remaining matters, management is unable to provide a meaningful estimate of the possible loss or range of loss because, among other reasons: (a) the proceedings are in preliminary stages; (b) specific damages have not been sought; (c) damage claims are unsupported and/or unreasonable; (d) there is uncertainty as to the outcome of pending appeals or motions; (e) there are significant factual issues to be resolved; or (f) novel legal issues or unsettled legal theories are being asserted.
The outcomes of legal actions are unpredictable and subject to significant uncertainties, and it is inherently difficult to determine whether any loss is probable or even possible. It is also inherently difficult to estimate the amount of any loss and there may be matters for which a loss is probable or reasonably possible but not currently estimable. Accordingly, actual losses may be in excess of the established liability or the range of reasonably possible loss.
United States Department of Justice, Federal Trade Commission, Financial Crimes Enforcement Network, and State Attorneys General Settlements

In late November 2016, the Company entered into discussions with the United States Department of Justice (the “DOJ”), the United States Attorney's Office for the Central District of California ("USAO-CDCA"), the United States Attorney’s Office for the Eastern District of Pennsylvania ("USAO-EDPA"), the United States Attorney’s Office for the Middle District of Pennsylvania ("USAO-MDPA"), and the United States Attorney’s Office for the Southern District of Florida (“USAO-SDFL”) to resolve the investigations by the USAO-CDCA, USAO-EDPA, USAO-MDPA, and USAO-SDFL (collectively, the “USAOs”) (collectively, the “USAO Investigations”). On January 19, 2017, the Company announced that it, or its subsidiary Western Union Financial Services, Inc. (“WUFSI”), had entered into (1) a Deferred Prosecution Agreement (the “DPA”) with the DOJ and the USAOs; (2) a Stipulated Order for Permanent Injunction and Final Judgment (the “Consent Order”) with the United States Federal Trade Commission (“FTC”) resolving claims by the FTC alleging unfair acts and practices under the Federal Trade Commission Act and for violations of the FTC Telemarketing Sales Rule; and (3) a Consent to the Assessment of Civil Money Penalty with the Financial Crimes Enforcement Network (“FinCEN”) of the United States Department of Treasury (the “FinCEN Agreement”), to resolve the respective investigations of those agencies. FinCEN provided notice to the Company dated December 16, 2016 of its investigation regarding possible violations of the United States Bank Secrecy Act ("BSA"). On January 31, 2017, the Company entered into assurances of discontinuance/assurances of voluntary compliance with the attorneys general of 49 U.S. states and the District of Columbia named therein to resolve investigations by the state attorneys general, which sought information and documents relating to money transfers sent from the United States to certain countries, consumer fraud complaints that the Company had received and the Company's procedures to help identify and prevent fraudulent transfers. On April 12, 2017, the Company settled with the one remaining state attorney general under effectively the same terms as the January 31, 2017 agreement with no additional monetary payment required. The agreements with the state attorneys general are collectively referred to herein as the "State AG Agreement." The DPA, Consent Order, FinCEN Agreement, and State AG Agreement are collectively referred to herein as the "Joint Settlement Agreements."

Pursuant to the DPA, the USAOs filed a two-count criminal information in the United States District Court for the Middle District of Pennsylvania, charging the Company with aiding and abetting wire fraud and willfully failing to implement an effective anti-money laundering ("AML") program. The USAOs agreed that if the Company fully complies with all of its obligations under the DPA, the USAOs will, at the conclusion of the DPA’s term, seek dismissal with prejudice of the criminal information filed against the Company.

Under the Joint Settlement Agreements, the Company was required to (1) pay an aggregate amount of $586 million to the DOJ to be used to reimburse consumers who were the victims of third-party fraud conducted through the Company’s money transfer services (the “Compensation Payment”), (2) pay an aggregate amount of $5 million to the State Attorneys General to reimburse investigative, enforcement, and other costs, and (3) retain an independent compliance auditor for three years to review and assess actions taken by the Company under the Consent Order to further enhance its oversight of agents and protection of consumers. The FinCEN Agreement also set forth a civil penalty of $184 million, the full amount of which was deemed satisfied by the Compensation Payment, without any additional payment or non-monetary obligations. No separate payment to the FTC was required under the Joint Settlement Agreements. The Company paid the Compensation Payment and the aggregate amount due to the State Attorneys General during the first half of 2017. The Company had accrued the Compensation Payment and the aggregate amount due to the State Attorneys General in "Accounts payable and accrued liabilities" in the Company's Consolidated Balance Sheets as of December 31, 2016. In the second quarter of 2017, pursuant to the terms of the Joint Settlement Agreements, the Company engaged an independent compliance auditor, and during the year ended December 31, 2017, the Company accrued an additional $8 million of expenses related to the independent compliance auditor.

The Joint Settlement Agreements also require, among other things, the Company to adopt certain new or enhanced practices with respect to its compliance program relating to consumer reimbursement, agent due diligence, agent training, monitoring, reporting, and record-keeping by the Company and its agents, consumer fraud disclosures, agent suspensions and terminations, and other items. The changes in the Company’s compliance program required by the Joint Settlement Agreements will have adverse effects on the Company’s business, including additional costs and potential loss of business. The Company has faced (as described below) and could also face additional actions from other regulators as a result of the Joint Settlement Agreements. Further, if the Company fails to comply with the Joint Settlement Agreements, it could face criminal prosecution, civil litigation, significant fines, damage awards or other regulatory consequences. Any or all of these outcomes could have a material adverse effect on the Company's business, financial condition, results of operations, and cash flows.


Shareholder Derivative Actions

On January 13, 2014, Natalie Gordon served the Company with a Verified Shareholder Derivative Complaint and Jury Demand that was filed in District Court, Douglas County, Colorado naming the Company’s President and Chief Executive Officer, one of its former executive officers, one of its former directors, and all but one of its current directors as individual defendants, and the Company as a nominal defendant. The complaint asserts claims for breach of fiduciary duty and gross mismanagement against all of the individual defendants and unjust enrichment against the President and Chief Executive Officer and the former executive officer based on allegations that between February 12, 2012 to October 30, 2012, the individual defendants made or caused the Company to issue false and misleading statements or failed to make adequate disclosures regarding the effects of a settlement agreement signed on February 11, 2010 between WUFSI and the State of Arizona regarding WUFSI's AML compliance programs along the United States and Mexico border ("Southwest Border Agreement"), including regarding the anticipated costs of compliance with the Southwest Border Agreement, potential effects on business operations, and Company projections. Plaintiff also alleges that the individual defendants caused or allowed the Company to lack requisite internal controls, caused or allowed financial statements to be misstated, and caused the Company to be subject to the costs, expenses and liabilities associated with City of Taylor Police and Fire Retirement System v. The Western Union Company, et al., a lawsuit that was subsequently renamed and dismissed. Plaintiff further alleges that the Company’s President and Chief Executive Officer and the former executive officer received excessive compensation based on the allegedly inaccurate financial statements. On March 12, 2014, the Court entered an order granting the parties' joint motion to stay proceedings in the case during the pendency of certain of the shareholder derivative actions described below.

In 2014, Stanley Lieblein, R. Andre Klein, City of Cambridge Retirement System, Mayar Fund Ltd, Louisiana Municipal Police Employees' Retirement System, MARTA/ATU Local 732 Employees Retirement Plan, and The Police Retirement System of St. Louis filed shareholder derivative complaints in the United States District Court for the District of Colorado (or were removed to the United States District Court for the District of Colorado) naming the Company’s President and Chief Executive Officer and certain current and former directors and a former executive officer as individual defendants, and the Company as a nominal defendant. On January 5, 2015, the court entered an order consolidating the actions and appointing City of Cambridge Retirement System and MARTA/ATU Local 732 Employees Retirement Plan as co-lead plaintiffs. On February 4, 2015, co-lead plaintiffs filed a verified consolidated shareholder derivative complaint naming the Company’s President and Chief Executive Officer and nine current or former executive officers and directors as individual defendants, and the Company as a nominal defendant. The consolidated complaint asserts separate claims for breach of fiduciary duty against the director defendants and the officer defendants, claims against all of the individual defendants for violations of section 14(a) of the Securities Exchange Act of 1934 ("Exchange Act"), corporate waste and unjust enrichment, and a claim against the former executive officer for breach of fiduciary duties for insider selling and misappropriation of information. The breach of fiduciary duty claim against the director defendants includes allegations that they declined to implement an effective AML compliance system after receiving numerous red flags indicating prolonged willful illegality, obstructed the efforts of the monitor assigned to the Company pursuant to the Southwest Border Agreement to impose effective compliance systems on the Company, failed to take action in response to alleged Western Union management efforts to undermine the monitor, reappointed the same directors to the Audit Committee and Corporate Governance and Public Policy Committees constituting a majority of those committees between 2006 and 2014, appointed a majority of directors to the Compliance Committee who were directly involved in overseeing the alleged misconduct as members of the Audit Committee and the Corporate Governance and Public Policy Committee, caused the Company to materially breach the Southwest Border Agreement, caused the Company to repurchase its stock at artificially inflated prices, awarded the Company’s senior executives excessive compensation despite their responsibility for the Company’s alleged willful non-compliance with state and federal AML laws, and failed to prevent the former executive officer from misappropriating and profiting from nonpublic information when making allegedly unlawful stock sales. The breach of fiduciary duty claim against the officer defendants includes allegations that they caused the Company and allowed its agents to ignore the recording and reporting requirements of the BSA and parallel AML laws and regulations for a prolonged period of time, authorized and implemented AML policies and practices that they knew or should have known to be inadequate, caused the Company to fail to comply with the Southwest Border Agreement and refused to implement and maintain adequate internal controls.
The claim for violations of section 14(a) of the Exchange Act includes allegations that the individual defendants caused the Company to issue proxy statements in 2012, 2013 and 2014 containing materially incomplete and inaccurate disclosures - in particular, by failing to disclose the extent to which the Company’s financial results depended on the non-compliance with AML requirements, the Board’s awareness of the regulatory and criminal enforcement actions in real time pursuant to the 2003 Consent Agreement with the California Department of Financial Institutions and that the directors were not curing violations and preventing misconduct, the extent to which the Board considered the flood of increasingly severe red flags in their determination to re-nominate certain directors to the Audit Committee between 2006 and 2010, and the extent to which the Board considered ongoing regulatory and criminal investigations in awarding multi-million dollar compensation packages to senior executives. The corporate waste claim includes allegations that the individual defendants paid or approved the payment of undeserved executive and director compensation based on the illegal conduct alleged in the consolidated complaint, which exposed the Company to civil liabilities and fines. The corporate waste claim also includes allegations that the individual defendants made improper statements and omissions, which forced the Company to expend resources in defending itself in City of Taylor Police and Fire Retirement System v. The Western Union Company, et al., a lawsuit that was subsequently renamed and dismissed, authorized the repurchase of over $1.565 billion of the Company’s stock at prices they knew or recklessly were aware, were artificially inflated, failed to maintain sufficient internal controls over the Company’s marketing and sales process, failed to consider the interests of the Company and its shareholders, and failed to conduct the proper supervision. The claim for unjust enrichment includes allegations that the individual defendants derived compensation, fees and other benefits from the Company and were otherwise unjustly enriched by their wrongful acts and omissions in managing the Company. The claim for breach of fiduciary duties for insider selling and misappropriation of information includes allegations that the former executive sold Company stock while knowing material, nonpublic information that would have significantly reduced the market price of the stock. On March 16, 2015, the defendants filed a motion to dismiss the consolidated complaint. On March 31, 2016, the Court entered an order granting the defendants’ collective motion to dismiss without prejudice, denying as moot a separate motion to dismiss that was filed by the former executive officer, and staying the order for 30 days, within which plaintiffs could file an amended complaint that cured the defects noted in the order. On May 2, 2016, co-lead plaintiffs filed a verified amended consolidated shareholder derivative complaint naming the Company’s President and Chief Executive Officer, six of its current directors (including the Company’s President and Chief Executive Officer, who also serves as a director) and three of its former directors as individual defendants, and the Company as a nominal defendant. The amended complaint, among other things, drops the claims against the former executive officer named in the prior complaint, realleges and narrows the breach of fiduciary duty claims, and drops the remaining claims. On June 15, 2016, defendants filed a motion to dismiss the amended consolidated shareholder derivative complaint. On August 1, 2016, plaintiffs filed an opposition to the motion to dismiss. On September 1, 2016, defendants filed a reply brief in support of the motion to dismiss. On February 24, 2017, plaintiffs filed a motion to supplement the amended complaint with allegations relating to the DPA, the criminal information filed in the United States District Court for the Middle District of Pennsylvania, and the FTC’s January 19, 2017 Complaint for Permanent Injunctive and Other Equitable Relief and the Consent Order referenced in the United States Department of Justice, Federal Trade Commission, Financial Crimes Enforcement Network, and State Attorneys General Settlements section above. The same day, the Court granted plaintiffs’ request to supplement the complaint, ordered them to file a second amended complaint, denied without prejudice defendants’ motion to dismiss and granted defendants leave to renew the motion to dismiss. On March 17, 2017, plaintiffs filed a second amended derivative complaint. On September 29, 2017, the Court granted defendants’ motion to dismiss the second amended derivative complaint. On December 19, 2017, plaintiffs filed an appeal brief in the United States Court of Appeals for the Tenth Circuit, seeking reversal of the dismissal, to which the Company filed an opposition on February 20, 2018.

Due to the stages of the actions described above under "Shareholder Derivative Actions," the Company is unable to predict the outcome, or reasonably estimate the possible loss or range of loss, if any, which could be associated with these actions. The Company and the named individuals intend to vigorously defend themselves in all of these matters.

Other Matters

The Company and one of its subsidiaries are defendants in two purported class action lawsuits: James P. Tennille v. The Western Union Company and Robert P. Smet v. The Western Union Company, both of which are pending in the United States District Court for the District of Colorado. The original complaints asserted claims for violation of various consumer protection laws, unjust enrichment, conversion and declaratory relief, based on allegations that the Company waits too long to inform consumers if their money transfers are not redeemed by the recipients and that the Company uses the unredeemed funds to generate income until the funds are escheated to state governments. During the fourth quarter of 2012, the parties executed a settlement agreement, which the Court preliminarily approved on January 3, 2013. On June 25, 2013, the Court entered an order certifying the class and granting final approval to the settlement. Under the approved settlement, a substantial amount of the settlement proceeds, as well as all of the class counsel’s fees, administrative fees and other expenses, would be paid from the class members' unclaimed money transfer funds. During the final approval hearing, the Court overruled objections to the settlement that had been filed by several class members. In July 2013, two of those class members filed notices of appeal. On May 1, 2015, the United States Court of Appeals for the Tenth Circuit affirmed the District Court’s decision to overrule the objections filed by the two class members who appealed. On January 11, 2016, the United States Supreme Court denied petitions for certiorari that were filed by the two class members who appealed. On February 1, 2016, pursuant to the settlement agreement and the Court's June 25, 2013 final approval order, Western Union deposited the class members' unclaimed money transfer funds into a class settlement fund, from which class member claims, administrative fees and class counsel’s fees, as well as other expenses have been paid, with the remainder to go to eligible jurisdictions to which the unclaimed funds would have escheated in the absence of a settlement. Some jurisdictions may opt not to participate in the settlement, taking the position that the Company must escheat those jurisdictions’ full share of the settlement fund and that the pro rata deductions for class counsel's fees, administrative costs, and other expenses that are required under the settlement agreement are not permitted. In that event, there is a reasonable possibility a loss could result up to approximately the pro rata amount of those fees and other expenses.

On March 12, 2014, Jason Douglas filed a purported class action complaint in the United States District Court for the Northern District of Illinois asserting a claim under the Telephone Consumer Protection Act, 47 U.S.C. § 227, et seq., based on allegations that since 2009, the Company has sent text messages to class members’ wireless telephones without their consent. During the first quarter of 2015, the Company's insurance carrier and the plaintiff reached an agreement to create an $8.5 million settlement fund that will be used to pay all class member claims, class counsel’s fees and the costs of administering the settlement. The agreement has been signed by the parties and, on November 10, 2015, the Court granted preliminary approval to the settlement. On January 9, 2018, plaintiff filed a motion requesting decisions on its pending motion to approve the settlement and motion for attorneys’ fees, costs, and incentive award. On January 10, 2018, the Court issued an order stating that the pending motions will be decided shortly and setting a status conference for February 28, 2018. The Company accrued an amount equal to the retention under its insurance policy in previous quarters and believes that any amounts in excess of this accrual will be covered by the insurer. However, if the Company's insurer is unable to or refuses to satisfy its obligations under the policy or the parties are unable to reach a definitive agreement or otherwise agree on a resolution, the Company's financial condition, results of operations, and cash flows could be adversely impacted. As the parties have reached an agreement in this matter, the Company believes that the potential for additional loss in excess of amounts already accrued is remote.


On February 10, 2015, Caryn Pincus filed a purported class action lawsuit in the United States District Court for the Southern District of Florida against Speedpay, Inc. ("Speedpay"), a subsidiary of the Company, asserting claims based on allegations that Speedpay imposed an unlawful surcharge on credit card transactions and that Speedpay engages in money transmission without a license. The complaint requests certification of a class and two subclasses generally comprised of consumers in Florida who made a payment through Speedpay’s bill payment services using a credit card and were charged a surcharge for such payment during the four-year and five-year periods prior to the filing of the complaint through the date of class certification. On April 6, 2015, Speedpay filed a motion to dismiss the complaint. On April 23, 2015, in response to the motion to dismiss, Pincus filed an amended complaint that adds claims (1) under the Florida Civil Remedies for Criminal Practices Act, which authorizes civil remedies for certain criminal conduct; and (2) for violation of the federal Racketeer Influenced and Corrupt Organizations Act ("RICO"). On May 15, 2015, Speedpay filed a motion to dismiss the amended complaint. On October 6, 2015, the Court entered an order denying Speedpay’s motion to dismiss. On October 20, 2015, Speedpay filed an answer to the amended complaint. On December 1, 2015, Pincus filed a second amended complaint that revised her factual allegations, but added no new claims. On December 18, 2015, Speedpay filed an answer to the second amended complaint. On May 20, 2016, Speedpay filed a motion for judgment on the pleadings as to Pincus' Florida Civil Remedies for Criminal Practices Act and federal RICO claims. On June 7, 2016, Pincus filed an opposition to Speedpay's motion for judgment on the pleadings. On June 17, 2016, Speedpay filed a reply brief in support of the motion. On October 28, 2016, Pincus filed a motion seeking class certification. The motion seeks the certification of a class consisting of “All (i) persons in Florida (ii) who paid Speedpay, Inc. a fee for using Speedpay, Inc.’s electronic payment services (iii) during the five-year period prior to the filing of the complaint in this action through the present.” Pincus also filed a motion to file her motion under seal. On November 4, 2016, the Court denied Pincus’ motion for class certification without prejudice and motion to seal and ordered her to file a new motion that redacts proprietary and private information. Later that day, Pincus filed a redacted version of the motion. On November 7, 2016, Speedpay filed a motion for summary judgment on Pincus’ remaining claims. On December 15, 2016, Speedpay filed an opposition to Pincus’ class certification motion. The same day, Pincus filed an opposition to Speedpay’s summary judgment motion and requested summary judgment on her individual and class claims. On January 12, 2017, Speedpay filed a reply in support of its summary judgment motion and Pincus filed a reply in support of her class certification motion. On March 28, 2017, the Court granted Speedpay’s motion for judgment on the pleadings as to Pincus’ Florida Civil Remedies for Criminal Practices Act and federal RICO claims. On June 27, 2017, the Court granted Speedpay’s summary judgment motion, entered judgment in favor of Speedpay and ordered the Court clerk to close the case. On October 19, 2017, Pincus filed an appeal brief in the United States Court of Appeals for the Eleventh Circuit, seeking reversal of the summary judgment, to which the Company filed an opposition on December 4, 2017. Pincus filed her reply brief on January 17, 2018. Due to this pending appeal, the Company is unable to predict the outcome, or the possible loss or range of loss, if any, which could be associated with this action. Speedpay intends to vigorously defend itself in this matter.

In October 2015, Consumidores Financieros Asociación Civil para su Defensa, an Argentinian consumer association, filed a purported class action lawsuit in Argentina’s National Commercial Court No. 19 against the Company’s subsidiary Western Union Financial Services Argentina S.R.L. (“WUFSA”). The lawsuit alleges, among other things, that WUFSA’s fees for money transfers sent from Argentina are excessive and that WUFSA does not provide consumers with adequate information about foreign exchange rates. The plaintiff is seeking, among other things, an order requiring WUFSA to reimburse consumers for the fees they paid and the foreign exchange revenue associated with money transfers sent from Argentina, plus punitive damages. The complaint does not specify a monetary value of the claim or a time period. In November 2015, the Court declared the complaint formally admissible as a class action. The notice of claim was served on WUFSA in May 2016, and in June 2016 WUFSA filed a response to the claim and moved to dismiss it on statute of limitations and standing grounds. In April 2017, the Court deferred ruling on the motion until later in the proceedings. In January 2018, the parties agreed on a notification process for potential class members. After notices are published, the case will move to the evidentiary stage. Due to the stage of this matter, the Company is unable to predict the outcome or the possible loss or range of loss, if any, associated with this matter. WUFSA intends to defend itself vigorously.

On February 22, 2017, the Company, its President and Chief Executive Officer, its Chief Financial Officer, and a former executive officer of the Company were named as defendants in two purported class action lawsuits, both of which asserted claims under section 10(b) of the Exchange Act and Securities and Exchange Commission rule 10b-5 and section 20(a) of the Exchange Act. On May 3, 2017, the two cases were consolidated by the United States District Court for the District of Colorado under the caption Lawrence Henry Smallen and Laura Anne Smallen Revocable Living Trust et al. v. The Western Union Company et al., Civil Action No. 1:17-cv-00474-KLM (D. Colo.). On September 6, 2017, the Court appointed Lawrence Henry Smallen and Laura Anne Smallen Revocable Living Trust as the lead plaintiff. On November 6, 2017, the plaintiffs filed a consolidated amended complaint (“Amended Complaint”) that, among other things, added two other former executive officers as defendants, one of whom subsequently was voluntarily dismissed by the plaintiffs. The Amended Complaint asserts claims under section 10(b) of the Exchange Act and Securities and Exchange Commission rule 10b-5 and section 20(a) of the Exchange Act, and alleges that, during the purported class period of February 24, 2012, through May 2, 2017, the defendants made false or misleading statements or failed to disclose purported adverse material facts regarding, among other things, the Company’s compliance with AML and anti-fraud regulations, the status and likely outcome of certain governmental investigations targeting the Company, the reasons behind the Company’s decisions to make certain regulatory enhancements, and the Company’s premium pricing. The defendants filed a motion to dismiss the complaint on January 16, 2018. The consolidated action is in a preliminary stage and the Company is unable to predict the outcome, or the possible loss or range of loss, if any, which could be associated with it. The Company and the individual defendants intend to vigorously defend themselves in this matter.

On February 13, 2017, the Company’s subsidiary, Western Union Payment Services Ireland Limited (“WUPSIL”), was served with a writ of accusation from the National Court of Spain. The writ charges 98 former Western Union money transfer agents or agent representatives with fraud and money laundering in connection with consumer fraud scams they allegedly perpetrated using Western Union money transfer transactions. The writ also names WUPSIL as a civil defendant, allegedly responsible under Spanish law to pay any portion of the alleged amount in victim losses that cannot be repaid by any of the criminal defendants who are convicted. In accordance with Spanish law, on January 4, 2018, the Company, through its subsidiary Western Union International Limited, provided a corporate guaranty in an amount of approximately €23 million to cover any liability that could theoretically attach to WUPSIL. Due to the preliminary stage of this matter, the Company is unable to predict the outcome, or the amount of loss, if any, associated with this matter.

On March 31, 2017, the Company received a request for the production of documents from the New York State Department of Financial Services (the "NYDFS"), following up on a meeting the Company had with the NYDFS on March 7, 2017. The requests pertain to the Company’s oversight of one current and two former Western Union agents located in New York state. The two former agents were identified in the DPA described in the United States Department of Justice, Federal Trade Commission, Financial Crimes Enforcement Network, and State Attorneys General Settlements section above, and were terminated as agents by the Company prior to 2013. The Company complied with all requests and produced all requested documents to the NYDFS. On July 28, 2017, the NYDFS informed the Company that the facts set forth in the DPA regarding the Company’s anti-money laundering programs over the 2004 through 2012 period gave the NYDFS a basis to take additional enforcement action. On January 4, 2018, the Company’s subsidiary, WUFSI, and the NYDFS agreed to a consent order (the "NYDFS Consent Order"), which resolved the NYDFS investigation into these matters. Under the NYDFS Consent Order, the Company is required, among other things, to pay to the NYDFS a civil monetary penalty of $60 million, which the Company paid on January 12, 2018. In the second quarter of 2017, the Company accrued $49 million towards resolution of this matter, and in the fourth quarter of 2017, the Company accrued the remaining $11 million. The NYDFS Consent Order also imposes certain non-monetary obligations, including a requirement to provide to the NYDFS a remediation plan within 90 days after the date of the NYDFS Consent Order.

In addition to the principal matters described above, the Company is a party to a variety of other legal matters that arise in the normal course of the Company's business. While the results of these other legal matters cannot be predicted with certainty, management believes that the final outcome of these matters will not have a material adverse effect either individually or in the aggregate on the Company's financial condition, results of operations, or cash flows.

On January 26, 2006, the First Data Corporation ("First Data") Board of Directors announced its intention to pursue the distribution of all of its money transfer and consumer payments business and its interest in a Western Union money transfer agent, as well as its related assets, including real estate, through a tax-free distribution to First Data shareholders (the "Spin-off"). The Spin-off resulted in the formation of the Company and these assets and businesses no longer being part of First Data. Pursuant to the separation and distribution agreement with First Data in connection with the Spin-off, First Data and the Company are each liable for, and agreed to perform, all liabilities with respect to their respective businesses. In addition, the separation and distribution agreement also provides for cross-indemnities principally designed to place financial responsibility for the obligations and liabilities of the Company's business with the Company and financial responsibility for the obligations and liabilities of First Data's retained businesses with First Data. The Company also entered into a tax allocation agreement ("Tax Allocation Agreement") that sets forth the rights and obligations of First Data and the Company with respect to taxes imposed on their respective businesses both prior to and after the Spin-off as well as potential tax obligations for which the Company may be liable in conjunction with the Spin-off (see Note 10).
Related Party Transactions
Related Party Transactions
Related Party Transactions
The Company has ownership interests in certain of its agents accounted for under the equity method of accounting. The Company pays these agents commissions for money transfer and other services provided on the Company's behalf. Commission expense recognized for these agents for the years ended December 31, 2017, 2016 and 2015 totaled $65.9 million, $68.0 million and $65.5 million, respectively.
Investment Securities
Investment Securities
Investment Securities

Investment securities included in "Settlement assets" in the Company's Consolidated Balance Sheets consist primarily of highly-rated state and municipal debt securities, including fixed rate term notes and variable rate demand notes. Variable rate demand note securities can be put (sold at par) typically on a daily basis with settlement periods ranging from the same day to one week, but have varying maturities through 2050. These securities may be used by the Company for short-term liquidity needs and held for short periods of time. The Company is required to hold highly-rated, investment grade securities and such investments are restricted to satisfy outstanding settlement obligations in accordance with applicable state and foreign country requirements.

The substantial majority of the Company's investment securities are classified as available-for-sale and recorded at fair value. Investment securities are exposed to market risk due to changes in interest rates and credit risk. Western Union regularly monitors credit risk and attempts to mitigate its exposure by investing in highly-rated securities and through investment diversification.

Unrealized gains and losses on available-for-sale securities are excluded from earnings and presented as a component of accumulated other comprehensive loss, net of related deferred taxes. Proceeds from the sale and maturity of available-for-sale securities during the years ended December 31, 2017, 2016 and 2015 were $7.9 billion, $4.4 billion and $8.7 billion, respectively. The increase in proceeds from the sale and maturity of available-for-sale securities for the year ended December 31, 2017 compared to the year ended December 31, 2016 was primarily due to increased sales of variable rate demand notes securities. The decline in proceeds from the sale and maturity of available-for-sale securities for the year ended December 31, 2016 compared to the year ended December 31, 2015 was primarily due to reduced sales of variable rate demand note securities.

Gains and losses on investments are calculated using the specific-identification method and are recognized during the period in which the investment is sold or when an investment experiences an other-than-temporary decline in value. Factors that could indicate an impairment exists include, but are not limited to: earnings performance, changes in credit rating or adverse changes in the regulatory or economic environment of the asset. If potential impairment exists, the Company assesses whether it has the intent to sell the debt security, more likely than not will be required to sell the debt security before its anticipated recovery or expects that some of the contractual cash flows will not be received. The Company had no material other-than-temporary impairments during the periods presented.






The components of investment securities are as follows (in millions):
December 31, 2017
 
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)
$
955.7

 
$
960.0

 
$
7.9

 
$
(3.6
)
 
$
4.3

State and municipal variable rate demand notes
319.6

 
319.6

 

 

 

Corporate and other debt securities
60.9

 
60.8

 
0.2

 
(0.3
)
 
(0.1
)
United States Treasury securities
9.9

 
9.8

 

 
(0.1
)
 
(0.1
)
 
1,346.1

 
1,350.2

 
8.1

 
(4.0
)
 
4.1

Other assets:
 
 
 
 
 
 
 
 
 
Held-to-maturity securities:
 
 
 
 
 
 
 
 
 
Foreign corporate debt securities
56.2

 
56.2

 

 

 

 
$
1,402.3

 
$
1,406.4

 
$
8.1

 
$
(4.0
)
 
$
4.1

 
 
 
 
 
 
 
 
 
 
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
)
____________

(a) The majority of these securities are fixed rate instruments.
There were no investments with a single issuer or individual securities representing greater than 10% of total investment securities as of December 31, 2017 and 2016.

The following summarizes the contractual maturities of settlement-related debt securities as of December 31, 2017 (in millions):
 
Amortized
Cost
 
Fair
Value
Due within 1 year
$
102.5

 
$
102.4

Due after 1 year through 5 years
525.7

 
527.6

Due after 5 years through 10 years
275.6

 
277.1

Due after 10 years
442.3

 
443.1

 
$
1,346.1

 
$
1,350.2



Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay the obligations or the Company may have the right to put the obligation prior to its contractual maturity, as with variable rate demand notes. Variable rate demand notes, having a fair value of $0.9 million, $15.9 million and $302.8 million are included in the "Due within 1 year", "Due after 5 years through 10 years" and "Due after 10 years" categories, respectively, in the table above. Held-to-maturity foreign corporate debt securities are due within 2 years.
Fair Value Measurements
Fair Value Measurements
Fair Value Measurements

Fair value, as defined by the relevant accounting standards, represents the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. For additional information on how the Company measures fair value, refer to Note 2.

The following tables reflect assets and liabilities that were measured at fair value on a recurring basis (in millions):
  
Fair Value Measurement Using
 
Assets/
Liabilities at
Fair
Value
December 31, 2017
Level 1
 
Level 2
 
Level 3
 
Assets:
 
 
 
 
 
 
 
Settlement assets:
 
 
 
 
 
 
 
State and municipal debt securities
$

 
$
960.0

 
$

 
$
960.0

State and municipal variable rate demand notes

 
319.6

 

 
319.6

Corporate and other debt securities

 
60.8

 

 
60.8

United States Treasury securities
9.8

 

 

 
9.8

Other assets:
 
 
 
 
 
 
 
Derivatives

 
273.4

 

 
273.4

Total assets
$
9.8

 
$
1,613.8

 
$

 
$
1,623.6

Liabilities:
 
 
 
 
 
 
 
Derivatives
$

 
$
263.0

 
$

 
$
263.0

Total liabilities
$

 
$
263.0

 
$

 
$
263.0

 
 
 
 
 
 
 
 
 
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



No non-recurring fair value adjustments were recorded during the years ended December 31, 2017 and 2016, except those associated with a goodwill impairment charge and acquisitions, as disclosed in Note 4, for which fair values were estimated primarily using unobservable Level 3 inputs, which require significant management judgment and estimation.

Other Fair Value Measurements

The carrying amounts for many of the Company's financial instruments, including cash and cash equivalents, settlement cash and cash equivalents, and settlement receivables and settlement obligations approximate fair value due to their short maturities. The Company's borrowings are classified as Level 2 of the valuation hierarchy, and the aggregate fair value of these borrowings was based on quotes from multiple banks and excluded the impact of related interest rate swaps. Fixed rate notes are carried in the Company's Consolidated Balance Sheets at their original issuance values as adjusted over time to accrete that value to par, except for portions of notes hedged by these interest rate swaps, as disclosed in Note 14. As of December 31, 2017, the carrying value and fair value of the Company's borrowings were $3,033.6 million and $3,146.5 million, respectively (see Note 15). As of December 31, 2016, the carrying value and fair value of the Company's borrowings were $2,786.1 million and $2,888.7 million, respectively.

The Company holds investments in foreign corporate debt securities that are classified as held-to-maturity securities within Level 2 of the valuation hierarchy and are recorded at amortized cost in "Other Assets" in the Company's Consolidated Balance Sheets. As of December 31, 2017, both the carrying value and fair value of the Company's foreign corporate debt securities was $56.2 million. As of December 31, 2016, both the carrying value and fair value of the Company's foreign corporate debt securities was $36.2 million.
Other Assets and Other Liabilities
Other Assets and Other Liabilities
Other Assets and Other Liabilities

The following table summarizes the components of other assets and other liabilities (in millions):

 
December 31,
 
2017
 
2016
Other assets:
 
 
 
Derivatives
$
273.4

 
$
365.6

Prepaid expenses
120.5

 
126.9

Amounts advanced to agents, net of discounts
53.5

 
58.0

Equity method investments
29.1

 
40.1

Other
199.4

 
155.7

Total other assets
$
675.9

 
$
746.3

Other liabilities:
 
 
 
Derivatives
$
263.0

 
$
262.3

Pension obligations
15.0

 
26.4

Other
78.8

 
70.7

Total other liabilities
$
356.8

 
$
359.4

Income Taxes
Income Taxes
Income Taxes

The components of pre-tax income, generally based on the jurisdiction of the legal entity, were as follows (in millions):
 
Year Ended December 31,
 
2017
 
2016
 
2015
Domestic
$
(238.8
)
 
$
(546.4
)
 
$
(27.0
)
Foreign
586.3

 
888.1

 
968.8

 
$
347.5

 
$
341.7

 
$
941.8



For the years ended December 31, 2017, 2016 and 2015, 169%, 260% and 103% of the Company's pre-tax income was derived from foreign sources, respectively. The increase in domestic pre-tax income for the year ended December 31, 2017 compared to the prior year was primarily due to expenses recorded in 2016 as a result of the Joint Settlement Agreements, described further in Note 5, partially offset by the domestic portion of the goodwill impairment charge related to the Company's Business Solutions reporting unit, the NYDFS Consent Order accrual, as also discussed in Note 5, and an increase in business transformation expenses.

In December 2017, the Tax Act was enacted into United States law. Certain of the Tax Act's impacts have been provisionally estimated and will likely be adjusted in future periods as the Company completes its accounting for these matters in accordance with a recent staff accounting bulletin issued by the SEC. For those areas of the Tax Act where the Company does not have the necessary information available, prepared, or analyzed in reasonable detail to complete its accounting, the Company has recorded estimates which may need to be adjusted in subsequent periods, and those subsequent adjustments will be recorded in the Company's provision for income taxes if the estimates change as the Company completes the accounting for those matters during 2018. While management believes it has made reasonable estimates for the numerous complex provisions in the law, tax expense is provisional for the following items:

With respect to the United States taxation of certain previously undistributed earnings of foreign subsidiaries, the determination of the amount of earnings, the amount of assets which are to be included as cash and other specified assets, and which are therefore subject to the higher effective tax rate specified in the Tax Act, and the related potential foreign tax implications are provisional and subject to further analysis, including the Company's completion of the calculation for the 2017 federal, state, and foreign income tax returns. In addition, the Company is completing this analysis for a significant number of its controlled foreign corporations, as the analysis must be completed for each of the subsidiaries and not consolidated at a higher level. Therefore, the amount of this tax may change until the Company finalizes the calculation. The estimated tax provision amount related to this matter was $916 million in the year ended December 31, 2017.

The Company recorded a provisional $87 million benefit for the remeasurement of deferred tax assets and liabilities and other tax balances to reflect the lower federal income tax rate, among other effects. The Company is still analyzing certain aspects of the Tax Act and refining the calculations, which could potentially affect the measurement of these balances, and the amount is also subject to the Company's completion of the calculation for the 2017 federal, state, and foreign income tax returns.

The Company has provisionally estimated the total amount of outside basis differences with respect to its foreign subsidiaries as of December 31, 2017 to be $254 million (after giving effect to the Tax Act), and no deferred income tax effects have been recognized with respect to such outside basis differences. These outside tax basis differences primarily relate to the remaining undistributed foreign earnings not subject to the tax on certain previously undistributed earnings of foreign subsidiaries pursuant to the Tax Act and additional outside basis difference inherent in certain entities. To the extent such outside basis differences are attributable to undistributed earnings not already subject to United States tax, such undistributed earnings continue to be indefinitely reinvested in foreign operations. Upon the future realization of the Company's basis difference, the Company could be subject to United States income taxes, state income taxes and possible withholding taxes payable to various foreign countries. However, determination of this amount of unrecognized deferred tax liability is not practicable because of the complexities associated with its hypothetical calculation. The amount of total outside basis differences and appropriate deferred tax effects are impacted by the application of the Tax Act and will be finalized during 2018.


Subsequent to the enactment of the Tax Act, the Company must make an accounting policy election to account for the tax effects of global intangible low-tax income either as a component of income tax expense in the period the tax arises, or as a component of deferred taxes on the related investments in foreign subsidiaries. The Company is currently evaluating these provisions of the Tax Act and the related implications and has not finalized its accounting policy election. The Company will finalize its accounting policy election in 2018.

The Company's income tax expense could also increase or decrease in future periods as the effects of the Tax Act are clarified through federal or state regulations, interpretations, or law changes. For example, the Tax Act is broad and complex, and given its recent enactment, regulations or other interpretive guidance is currently limited. Any change in the interpretation of the Tax Act or other legislative proposals or amendments could have a significant effect on the Company's income tax expense in future periods. Furthermore, the effect of the Tax Act on state income taxes, including how the tax on certain previously undistributed earnings of foreign subsidiaries will be interpreted by the states and how states will apply forward-looking provisions of the Tax Act, are currently unclear and subject to potential changes affecting both the amount of state taxes and the remeasurement of the Company's deferred tax assets and liabilities and other tax balances.

The provision for income taxes was as follows (in millions):
 
Year Ended December 31,
 
2017
 
2016
 
2015
Federal
$
848.5

 
$
43.5

 
$
33.2

State and local
5.4

 
2.9

 
(1.0
)
Foreign
50.7

 
42.1

 
71.8

 
$
904.6

 
$
88.5

 
$
104.0



No tax benefit was recorded in either 2017 for the $60 million NYDFS Consent Order accrual or in 2016 for the $586 million Compensation Payment resulting from the Joint Settlement Agreements. Domestic taxes have been incurred on certain pre-tax income amounts that were generated by the Company's foreign operations, including a tax on certain previously undistributed earnings of foreign subsidiaries imposed by the Tax Act. In addition, certain portions of the Company's foreign source income are subject to United States federal and state income tax as earned due to the nature of the income, and dividend repatriations of the Company's foreign source income may be subject to state income tax. Accordingly, the percentage obtained by dividing the total federal, state and local tax provision by the domestic pre-tax income, all as shown in the preceding tables, is higher than the statutory tax rates in the United States.

The Company's effective tax rates differed from statutory rates as follows:
 
Year Ended December 31,
 
2017
 
2016
 
2015
Federal statutory rate
35.0
 %
 
35.0
 %
 
35.0
 %
State income taxes, net of federal income tax benefits
1.7
 %
 
1.2
 %
 
0.4
 %
Foreign rate differential, net of United States tax paid on foreign earnings (1.1%, 24.8% and 3.4%, respectively)
(69.3
)%
 
(50.8
)%
 
(24.6
)%
Tax Act impact
251.5
 %
 
 %
 
 %
Joint Settlement Agreements impact
 %
 
62.1
 %
 
 %
NYDFS Consent Order impact
6.0
 %
 
 %
 
 %
Goodwill impairment
46.7
 %
 
 %
 
 %
Lapse of statute of limitations
(10.0
)%
 
(11.3
)%
 
(0.8
)%
Valuation allowances
0.8
 %
 
(2.8
)%
 
(0.9
)%
Other
(2.1
)%
 
(7.5
)%
 
1.9
 %
Effective tax rate
260.3
 %
 
25.9
 %
 
11.0
 %


The Company's effective tax rate for the year ended December 31, 2017 was significantly impacted by the enactment of the Tax Act into United States law, primarily due to a tax on certain previously undistributed earnings of foreign subsidiaries, partially offset by the remeasurement of the Company's deferred tax assets and liabilities and other tax balances to reflect the lower federal income tax rate, among other effects. The Company's effective tax rate for the year ended December 31, 2017 compared to 2016 was also impacted by the goodwill impairment in the Company's Business Solutions reporting unit, the NYDFS Consent Order accrual recorded in 2017, and the Joint Settlement Agreements recorded during 2016. The increase in the Company's effective tax rate for the year ended December 31, 2016 compared to 2015 was primarily due to the Joint Settlement Agreements and an increase in higher-taxed earnings (excluding the Joint Settlement Agreements) compared to lower-taxed foreign earnings, partially offset by the combined effects of various discrete items, including changes in tax contingency reserves.

The Company's provision for income taxes consisted of the following components (in millions):
 
Year Ended December 31,
 
2017
 
2016
 
2015
Current:
 
 
 
 
 
Federal
$
774.4

 
$
186.2

 
$
59.6

State and local
1.0

 
13.1

 
5.4

Foreign
59.7

 
63.4

 
78.9

Total current taxes
835.1

 
262.7

 
143.9

Deferred:
 
 
 
 
 
Federal
74.1

 
(142.7
)
 
(26.4
)
State and local
4.4

 
(10.2
)
 
(6.4
)
Foreign
(9.0
)
 
(21.3
)
 
(7.1
)
Total deferred taxes
69.5

 
(174.2
)
 
(39.9
)
 
$
904.6

 
$
88.5

 
$
104.0


Deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the book and tax bases of the Company's assets and liabilities. The following table outlines the principal components of deferred tax items (in millions):
 
December 31,
 
2017
 
2016
Deferred tax assets related to:
 
 
 
Reserves, accrued expenses and employee-related items
$
44.8

 
$
279.8

Tax attribute carryovers
27.1

 
39.1

Pension obligations
4.6

 
11.1

Intangibles, property and equipment
11.9

 
9.7

Other
10.7

 
14.8

Valuation allowance
(19.9
)
 
(22.0
)
Total deferred tax assets
79.2

 
332.5

Deferred tax liabilities related to:
 
 
 
Intangibles, property and equipment
239.4

 
394.4

Other
0.9

 
14.3

Total deferred tax liabilities
240.3

 
408.7

Net deferred tax liability (a)
$
161.1

 
$
76.2


____________

(a)
As of December 31, 2017 and 2016, deferred tax assets that cannot be fully offset by deferred tax liabilities in the respective tax jurisdictions of $11.9 million and $9.7 million, respectively, are reflected in "Other assets" in the Consolidated Balance Sheets.

The valuation allowances are primarily the result of uncertainties regarding the Company's ability to recognize tax benefits associated with certain United States foreign tax credit carryforwards and certain foreign and state net operating losses. Such uncertainties include generating sufficient United States foreign tax credit limitation related to passive income and generating sufficient income. Changes in circumstances, or the identification and implementation of relevant tax planning strategies, could make it foreseeable that the Company will recover these deferred tax assets in the future, which could lead to a reversal of these valuation allowances and a reduction in income tax expense.

Uncertain Tax Positions

The Company has established contingency reserves for a variety of material, known tax exposures. As of December 31, 2017, the total amount of tax contingency reserves was $344.0 million, including accrued interest and penalties, net of related items. The Company's tax reserves reflect management's judgment as to the resolution of the issues involved if subject to judicial review or other settlement. While the Company believes its reserves are adequate to cover reasonably expected tax risks, there can be no assurance that, in all instances, an issue raised by a tax authority will be resolved at a financial cost that does not exceed its related reserve. With respect to these reserves, the Company's income tax expense would include (i) any changes in tax reserves arising from material changes during the period in the facts and circumstances (i.e., new information) surrounding a tax issue and (ii) any difference from the Company's tax position as recorded in the financial statements and the final resolution of a tax issue during the period. Such resolution could materially increase or decrease income tax expense in the Company's consolidated financial statements in future periods and could impact operating cash flows.

Unrecognized tax benefits represent the aggregate tax effect of differences between tax return positions and the amounts otherwise recognized in the Company's consolidated financial statements, and are reflected in "Income taxes payable" in the Consolidated Balance Sheets. A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding interest and penalties, is as follows (in millions):
 
2017
 
2016
Balance as of January 1,
$
352.0

 
$
105.6

Increase related to current period tax positions (a)
9.0

 
223.6

Increase related to prior period tax positions

 
71.7

Decrease related to prior period tax positions
(19.8
)
 
(14.9
)
Decrease due to lapse of applicable statute of limitations
(14.0
)
 
(33.1
)
Increase/(decrease) due to effects of foreign currency exchange rates
1.8

 
(0.9
)
Balance as of December 31,
$
329.0

 
$
352.0

____________

(a)
Includes recurring accruals for issues which initially arose in previous periods.

The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate was $319.6 million and $343.3 million as of December 31, 2017 and 2016, respectively, excluding interest and penalties.

The Company recognizes interest and penalties with respect to unrecognized tax benefits in "Provision for income taxes" in its Consolidated Statements of Income/(Loss), and records the associated liability in "Income taxes payable" in its Consolidated Balance Sheets. The Company recognized $2.2 million, $(0.2) million and $1.9 million in interest and penalties during the years ended December 31, 2017, 2016 and 2015, respectively. The Company has accrued $25.4 million and $22.5 million for the payment of interest and penalties as of December 31, 2017 and 2016, respectively.

The unrecognized tax benefits accrual as of December 31, 2017 consists of federal, state and foreign tax matters. It is reasonably possible that the Company's total unrecognized tax benefits will decrease by approximately $19 million during the next 12 months in connection with various matters which may be resolved.

The Company and its subsidiaries file tax returns for the United States, for multiple states and localities, and for various non-United States jurisdictions, and the Company has identified the United States as its major tax jurisdiction, as the income tax imposed by any one foreign country is not material to the Company. The United States federal income tax returns of First Data, which include the Company, are eligible to be examined for 2005 and 2006. The Company's United States federal income tax returns since the Spin-off (other than 2010-2013) are also eligible to be examined.

The United States Internal Revenue Service ("IRS") completed its examination of the United States federal consolidated income tax returns of First Data for 2003 and 2004, which included the Company, and issued a Notice of Deficiency in December 2008. In December 2011, the Company reached an agreement with the IRS resolving substantially all of the issues related to the Company's restructuring of its international operations in 2003 ("IRS Agreement"). As a result of the IRS Agreement, the Company expects to make cash payments of approximately $190 million, plus additional accrued interest, of which $94.1 million has been paid as of December 31, 2017. A substantial majority of these payments were made in the year ended December 31, 2012. The Company may pay the remaining amount in 2018. The IRS completed its examination of the United States federal consolidated income tax returns of First Data, which include the Company's 2005 and pre-Spin-off 2006 taxable periods and issued its report on October 31, 2012 ("FDC 30-Day Letter"). Furthermore, the IRS completed its examination of the Company's United States federal consolidated income tax returns for the 2006 post-Spin-off period through 2009 and issued its report also on October 31, 2012 ("WU 30-Day Letter"). Both the FDC 30-Day Letter and the WU 30-Day Letter propose tax adjustments affecting the Company, some of which are agreed and some of which are unagreed. Both First Data and the Company filed their respective protests with the IRS Appeals Division on November 28, 2012 related to the unagreed proposed adjustments. The Company believes its reserves are adequate with respect to both the agreed and unagreed adjustments. During the year ended December 31, 2016, the Company reached an agreement in principle with the IRS concerning its unagreed adjustments and adjusted its reserves accordingly. The Company anticipates concluding the matters related to these years in 2018.

Tax Allocation Agreement with First Data

The Company and First Data each are liable for taxes imposed on their respective businesses both prior to and after the Spin-off. If such taxes have not been appropriately apportioned between First Data and the Company, subsequent adjustments may occur that may impact the Company's financial condition or results of operations.

Also under the tax allocation agreement, with respect to taxes and other liabilities that result from a final determination that is inconsistent with the anticipated tax consequences of the Spin-off (as set forth in the private letter ruling and relevant tax opinion) ("Spin-off Related Taxes"), the Company will be liable to First Data for any such Spin-off Related Taxes attributable solely to actions taken by or with respect to the Company. In addition, the Company will also be liable for half of any Spin-off Related Taxes (i) that would not have been imposed but for the existence of both an action by the Company and an action by First Data or (ii) where the Company and First Data each take actions that, standing alone, would have resulted in the imposition of such Spin-off Related Taxes. The Company may be similarly liable if it breaches certain representations or covenants set forth in the tax allocation agreement. If the Company is required to indemnify First Data for taxes incurred as a result of the Spin-off being taxable to First Data, it likely would have a material adverse effect on the Company's business, financial condition and results of operations. First Data generally will be liable for all Spin-off Related Taxes, other than those described above.
Employee Benefit Plans
Employee Benefit Plans
Employee Benefit Plans

Defined Contribution Plans

The Company administers several defined contribution plans in various countries globally, including The Western Union Company Incentive Savings Plan (the "401(k)"), which covers eligible employees on the United States payroll. Such plans have vesting and employer contribution provisions that vary by country. In addition, the Company sponsors a non-qualified deferred compensation plan for a select group of highly compensated United States employees. The plan provides tax-deferred contributions and the restoration of Company matching contributions otherwise limited under the 401(k). The aggregate amount charged to expense in connection with all of the above plans was $19.2 million, $17.8 million, and $18.0 million during the years ended December 31, 2017, 2016 and 2015, respectively.

Defined Benefit Plan

The Company has a frozen defined benefit pension plan (the "Plan") and recognizes its funded status, measured as the difference between the fair value of the plan assets and the projected benefit obligation, in "Other liabilities" in the Consolidated Balance Sheets. Plan assets, which are managed in a third-party trust, primarily consist of a diversified blend of approximately 60% fixed income, 20% equity investments, and 20% alternative investments (e.g., hedge funds, royalty rights and private equity funds) and had a total fair value of $271.7 million and $280.0 million as of December 31, 2017 and 2016, respectively. The significant majority of plan assets fall within either Level 1 or Level 2 of the fair value hierarchy. The benefit obligation associated with the Plan will vary over time only as a result of changes in market interest rates, the life expectancy of the plan participants, and benefit payments, since the accrual of benefits was suspended when the Plan was frozen in 1988. The benefit obligation was $286.7 million and $306.4 million, and the discount rate assumption used in the measurement of this obligation was 3.11% and 3.40% as of December 31, 2017 and 2016, respectively. The Company’s unfunded pension obligation was $15.0 million and $26.4 million as of December 31, 2017 and 2016, respectively.

The net periodic benefit cost associated with the Plan was $2.4 million, $3.3 million, and $2.8 million for the years ended December 31, 2017, 2016 and 2015, respectively. The expected long-term return on plan assets assumption is 6.50% for 2018. The Company made no contributions to the Plan for the year ended December 31, 2017 and $38.1 million of contributions to the Plan in the year ended December 31, 2016. No funding to the Plan will be required for 2018. The estimated undiscounted future benefit payments are expected to be $31.5 million in 2018, $29.8 million in 2019, $28.0 million in 2020, $26.3 million in 2021, $24.5 million in 2022, and $98.1 million in 2023 through 2027.
Operating Lease Commitments
Operating Lease Commitments
Operating Lease Commitments

The Company leases certain real properties for use as customer service centers and administrative and sales offices. The Company also leases automobiles and office equipment. Certain of these leases contain renewal options and escalation provisions. Total rent expense under operating leases, net of sublease income, was $51.1 million, $46.2 million and $46.9 million during the years ended December 31, 2017, 2016 and 2015, respectively. Additionally, during the year ended December 31, 2017, the Company entered into lease agreements to move employees in its current corporate headquarters to other locations in the Denver, Colorado area, and is expected to relocate during the second half of 2018.

As of December 31, 2017, the minimum aggregate rental commitments under all non-cancelable operating leases were as follows (in millions):
Year Ending December 31,
 
2018
$
43.2

2019
35.5

2020
32.4

2021
26.3

2022
22.7

Thereafter
118.7

Total future minimum lease payments
$
278.8

Stockholders' Equity/(Deficit)
Stockholders' Equity/(Deficit)
Stockholders' Equity/(Deficit)

Accumulated other comprehensive loss

Accumulated other comprehensive loss includes all changes in equity during a period that have yet to be recognized in income, except those resulting from transactions with shareholders. The major components include unrealized gains and losses on investment securities, unrealized gains and losses from cash flow hedging activities, foreign currency translation adjustments and defined benefit pension plan adjustments.

Unrealized gains and losses on investment securities that are available for sale, primarily state and municipal debt securities, are included in "Accumulated other comprehensive loss" until the investment is either sold or deemed other-than-temporarily impaired. See Note 7 for further discussion.

The effective portion of the change in fair value of derivatives that qualify as cash flow hedges are recorded in "Accumulated other comprehensive loss." Generally, amounts are recognized in income when the related forecasted transaction affects earnings. See Note 14 for further discussion.

The assets and liabilities of foreign subsidiaries whose functional currency is not the United States dollar are translated using the appropriate exchange rate as of the end of the year. Foreign currency translation adjustments represent unrealized gains and losses on assets and liabilities arising from the difference in the foreign country currency compared to the United States dollar. These gains and losses are accumulated in other comprehensive income/(loss). When a foreign subsidiary is substantially liquidated, the cumulative translation gain or loss is removed from "Accumulated other comprehensive loss" and is recognized as a component of the gain or loss on the sale of the subsidiary.

The defined benefit pension plan adjustment is recognized for the difference between estimated assumptions (e.g., asset returns, discount rates, mortality) and actual results. The amount in "Accumulated other comprehensive loss" is amortized to income over the remaining life expectancy of the plan participants. Details of the pension plan's assets and obligations are explained further in Note 11.
    
The following table summarizes the components of accumulated other comprehensive loss, net of tax (in millions). All amounts reclassified from accumulated other comprehensive loss affect the line items as indicated below within the Consolidated Statements of Income/(Loss).
 
Year Ended December 31,
 
2017
 
2016
 
2015
Unrealized gains/(losses) on investment securities, beginning of year
$
(3.8
)
 
$
7.8

 
$
8.9

Unrealized gains/(losses)
12.6

 
(14.9
)
 
0.4

Tax (expense)/benefit
(4.6
)
 
5.4

 
(0.1
)
Reclassification of gains into "Revenues"
(2.4
)
 
(3.3
)
 
(2.2
)
Tax expense related to reclassifications
0.9

 
1.2

 
0.8

Net unrealized gains/(losses) on investment securities
6.5

 
(11.6
)
 
(1.1
)
Unrealized gains/(losses) on investment securities, end of year
$
2.7

 
$
(3.8
)
 
$
7.8

 


 
 
 


Unrealized gain/(losses) on hedging activities, beginning of year
$
33.8

 
$
41.4

 
$
48.6

Unrealized gains/(losses)
(73.9
)
 
34.3

 
70.8

Tax (expense)/benefit
2.2

 
1.0

 
(7.0
)
Reclassification of gains into "Revenues"
(4.8
)
 
(48.0
)
 
(77.8
)
Reclassification of losses into "Interest expense"
3.3

 
3.6

 
3.6

Tax expense/(benefit) related to reclassifications
(1.2
)
 
1.5

 
3.2

Net unrealized gains/(losses) on hedging activities
(74.4
)
 
(7.6
)
 
(7.2
)
Unrealized gains/(losses) on hedging activities, end of year
$
(40.6
)
 
$
33.8

 
$
41.4

 
 
 
 
 


Foreign currency translation adjustments, beginning of year
$
(70.7
)
 
$
(66.0
)
 
$
(49.2
)
Foreign currency translation adjustments
(6.8
)
 
(5.4
)
 
(20.3
)
Tax benefit
0.6

 
0.7

 
3.5

Net foreign currency translation adjustments
(6.2
)
 
(4.7
)
 
(16.8
)
Foreign currency translation adjustments, end of year
$
(76.9
)
 
$
(70.7
)
 
$
(66.0
)
 
 
 
 
 


Defined benefit pension plan adjustments, beginning of year
$
(122.1
)
 
$
(127.1
)
 
$
(127.2
)
Unrealized gains/(losses)
2.3

 
(2.9
)
 
(9.7
)
    Tax (expense)/benefit
(0.5
)
 
1.1

 
2.5

Reclassification of losses into "Cost of services"
11.3

 
10.7

 
11.4

Tax benefit related to reclassifications
(4.1
)
 
(3.9
)
 
(4.1
)
Net defined benefit pension plan adjustments
9.0

 
5.0

 
0.1

Defined benefit pension plan adjustments, end of year
$
(113.1
)
 
$
(122.1
)
 
$
(127.1
)
Accumulated other comprehensive loss, end of year
$
(227.9
)
 
$
(162.8
)
 
$
(143.9
)


Cash Dividends Paid

Cash dividends paid for the years ended December 31, 2017, 2016 and 2015 were $325.6 million, $312.2 million and $316.5 million, respectively. Dividends per share declared quarterly by the Company's Board of Directors during the years ended 2017, 2016 and 2015 were as follows:
Year

Q1

Q2

Q3

Q4
2017

$
0.175

 
$
0.175

 
$
0.175

 
$
0.175

2016

$
0.16

 
$
0.16

 
$
0.16

 
$
0.16

2015

$
0.155

 
$
0.155

 
$
0.155

 
$
0.155



On February 13, 2018, the Company's Board of Directors declared a quarterly cash dividend of $0.19 per common share payable on March 30, 2018.

Share Repurchases

During the years ended December 31, 2017, 2016 and 2015, 24.9 million, 24.8 million and 25.1 million shares, respectively, have been repurchased for $487.0 million, $481.3 million and $500.0 million, respectively, excluding commissions, at an average cost of $19.55, $19.41 and $19.96 per share, respectively. These amounts represent shares authorized by the Board of Directors for repurchase under the publicly announced authorizations. As of December 31, 2017, $943.5 million remained available under the share repurchase authorization approved by the Company's Board of Directors through December 31, 2019. The amounts included in the "Common stock repurchased" line in the Company's Consolidated Statements of Cash Flows represent both shares authorized by the Board of Directors for repurchase under the publicly announced authorization, described earlier, as well as shares withheld from employees to cover tax withholding obligations on restricted stock units that have vested.
Derivatives
Derivatives
Derivatives

The Company is exposed to foreign currency exchange risk resulting from fluctuations in exchange rates, primarily the euro, and to a lesser degree the British pound, Canadian dollar, Australian dollar, Swiss franc, and other currencies, related to forecasted revenues and on settlement assets and obligations as well as on certain foreign currency denominated cash and other asset and liability positions. The Company is also exposed to risk from derivative contracts, primarily from customer derivatives, arising from its cross-currency Business Solutions payments operations. Additionally, the Company is exposed to interest rate risk related to changes in market rates both prior to and subsequent to the issuance of debt. The Company uses derivatives to (a) minimize its exposures related to changes in foreign currency exchange rates and interest rates and (b) facilitate cross-currency Business Solutions payments by writing derivatives to customers.

The Company executes derivatives with established financial institutions, with the substantial majority of these financial institutions having credit ratings of "A-" or better from a major credit rating agency. The Company also writes Business Solutions derivatives mostly with small and medium size enterprises. The primary credit risk inherent in derivative agreements represents the possibility that a loss may occur from the nonperformance of a counterparty to the agreements. The Company performs a review of the credit risk of these counterparties at the inception of the contract and on an ongoing basis. The Company also monitors the concentration of its contracts with any individual counterparty. The Company anticipates that the counterparties will be able to fully satisfy their obligations under the agreements, but takes action when doubt arises about the counterparties' ability to perform. These actions may include requiring Business Solutions customers to post or increase collateral, and for all counterparties, the possible termination of the related contracts. The Company's hedged foreign currency exposures are in liquid currencies; consequently, there is minimal risk that appropriate derivatives to maintain the hedging program would not be available in the future.

Foreign Currency Derivatives
The Company's policy is to use longer-term foreign currency forward contracts, with maturities of up to 36 months at inception and a targeted weighted-average maturity of approximately one year, to help mitigate some of the risk that changes in foreign currency exchange rates compared to the United States dollar could have on forecasted revenues denominated in other currencies related to its business. As of December 31, 2017, the Company's longer-term foreign currency forward contracts had maturities of a maximum of 24 months with a weighted-average maturity of approximately one year. These contracts are accounted for as cash flow hedges of forecasted revenue, with effectiveness assessed based on changes in the spot rate of the affected currencies during the period of designation. Accordingly, all changes in the fair value of the hedges not considered effective or portions of the hedge that are excluded from the measure of effectiveness are recognized immediately in "Derivative gains, net" within the Company's Consolidated Statements of Income/(Loss).
The Company also uses short duration foreign currency forward contracts, generally with maturities from a few days up to one month, to offset foreign exchange rate fluctuations on settlement assets and obligations between initiation and settlement. In addition, forward contracts, typically with maturities of less than one year at inception, are utilized to offset foreign exchange rate fluctuations on certain foreign currency denominated cash and other asset and liability positions. None of these contracts are designated as accounting hedges.
The aggregate equivalent United States dollar notional amounts of foreign currency forward contracts as of December 31, 2017 were as follows (in millions):
Contracts designated as hedges:
 
Euro
$
384.7

British pound
103.4

Canadian dollar
92.9

Australian dollar
52.4

Swiss franc
32.4

Other
62.6

Contracts not designated as hedges:
 
Euro
$
320.0

British pound
74.1

Australian dollar
51.3

Canadian dollar
46.8

Mexican peso
42.8

Indian rupee
35.9

Brazilian real
29.7

Other (a)
156.6


____________________
(a)
Comprised of exposures to 21 different currencies. None of these individual currency exposures is greater than $25 million.

Business Solutions Operations

The Company writes derivatives, primarily foreign currency forward contracts and option contracts, mostly with small and medium size enterprises and derives a currency spread from this activity as part of its Business Solutions operations. The Company aggregates its Business Solutions 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). The derivatives written are part of the broader portfolio of foreign currency positions arising from the Company's cross-currency payments operations, which primarily include spot exchanges of currency in addition to forwards and options. Foreign exchange revenues from the total portfolio of positions were $341.0 million, $352.6 million, and $357.2 million for the years ended December 31, 2017, 2016 and 2015, respectively. None of the derivative contracts used in Business Solutions operations are designated as accounting hedges. The duration of these derivative contracts at inception is generally less than one year.

The aggregate equivalent United States dollar notional amount of foreign currency derivative customer contracts held by the Company in its Business Solutions operations as of December 31, 2017 was approximately $6.0 billion. The significant majority of customer contracts are written in major currencies such as the Australian dollar, British pound, Canadian dollar, and euro.

Interest Rate Hedging

The Company utilizes interest rate swaps 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 Company designates these derivatives as fair value hedges. The change in fair value of the interest rate swaps is offset by a change in the carrying value of the debt being hedged within "Borrowings" in the Consolidated Balance Sheets and "Interest expense" in the Consolidated Statements of Income/(Loss) has been adjusted to include the effects of interest accrued on the swaps.

The Company, at times, utilizes derivatives to hedge the forecasted issuance of fixed-rate debt. These derivatives are designated as cash flow hedges of the variability in the fixed-rate coupon of the debt expected to be issued. The effective portion of the change in fair value of the derivatives is recorded in "Accumulated other comprehensive loss" in the Consolidated Balance Sheets.

The Company held interest rate swaps in an aggregate notional amount of $475.0 million as of December 31, 2017. Of this aggregate notional amount held at December 31, 2017, $300.0 million related to notes due in 2018 and $175.0 million related to notes due in 2020.

Balance Sheet
The following table summarizes the fair value of derivatives reported in the Consolidated Balance Sheets as of December 31, 2017 and December 31, 2016 (in millions):
 
Derivative Assets
 
Derivative Liabilities
 
 
 
Fair Value
 
 
 
Fair Value
 
Balance Sheet
Location
 
December 31,
2017
 
December 31,
2016
 
Balance Sheet
Location
 
December 31,
2017
 
December 31,
2016
Derivatives — hedges:
 
 
 
 
 
 
 
 
 
 
 
Interest rate fair value hedges
Other assets
 
$
3.3

 
$
6.7

 
Other liabilities
 
$

 
$

Foreign currency cash flow hedges
Other assets
 
8.0

 
48.4

 
Other liabilities
 
36.1

 
1.2

Total
 
 
$
11.3

 
$
55.1

 
 
 
$
36.1

 
$
1.2

Derivatives — undesignated:
 
 
 
 
 
 
 
 
 
 
 
Business Solutions operations — foreign currency (a)
Other assets
 
$
260.2

 
$
307.2

 
Other liabilities
 
$
221.6

 
$
258.3

Foreign currency
Other assets
 
1.9

 
3.3

 
Other liabilities
 
5.3

 
2.8

Total
 
 
$
262.1

 
$
310.5

 
 
 
$
226.9

 
$
261.1

Total derivatives
 
 
$
273.4

 
$
365.6

 
 
 
$
263.0

 
$
262.3


____________________
(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 changes in the Company's derivative assets and liabilities that may not directly align to the growth in the underlying derivatives business.
The fair values of derivative assets and liabilities associated with contracts that include netting language that the Company believes to be enforceable have been netted in the following tables to present the Company's net exposure with these counterparties. The Company's rights under these agreements generally allow for transactions to be settled on a net basis, including upon early termination, which could occur upon the counterparty's default, a change in control, or other conditions.
In addition, certain of the Company's other agreements include netting provisions, the enforceability of which may vary from jurisdiction to jurisdiction and depending on the circumstances. Due to the uncertainty related to the enforceability of these provisions, the derivative balances associated with these agreements are included within "Derivatives that are not or may not be subject to master netting arrangement or similar agreement" in the following tables. In certain circumstances, the Company may require its Business Solutions customers to maintain collateral balances which may mitigate the risk associated with potential customer defaults.
The following tables summarize the gross and net fair value of derivative assets and liabilities as of December 31, 2017 and December 31, 2016 (in millions):

Offsetting of Derivative Assets
December 31, 2017
 
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
 
$
115.4

 
$


$
115.4


$
(98.7
)

$
16.7

Derivatives that are not or may not be subject to master netting arrangement or similar agreement
 
158.0

 
 
 
 
 
 
 
 
Total
 
$
273.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2016
 
 
 
 
 
 
 
 
 
 
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

 
 
 
 
 
 
 
 


Offsetting of Derivative Liabilities
December 31, 2017
 
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
 
$
214.9

 
$


$
214.9


$
(98.7
)

$
116.2

Derivatives that are not or may not be subject to master netting arrangement or similar agreement
 
48.1

 
 
 
 
 
 
 
 
Total
 
$
263.0

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2016
 
 
 
 
 
 
 
 
 
 
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

 
 
 
 
 
 
 
 


Income Statement
The following tables summarize the location and amount of gains and losses of derivatives in the Consolidated Statements of Income/(Loss) segregated by designated, qualifying hedging instruments and those that are not, for the years ended December 31, 2017, 2016, and 2015 (in millions):
Fair Value Hedges
The following table presents the location and amount of gains/(losses) from fair value hedges for the years ended December 31, 2017, 2016, and 2015 (in millions):
 
 
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
 
 
2017
 
2016
 
2015
 
Hedged 
Item
 
 
2017
 
2016
 
2015
 
 
2017
 
2016
 
2015
Interest rate contracts
 
Interest  expense
 
$
(1.8
)
 
$
6.2

 
$
15.2

 
Fixed-rate debt
 
Interest  expense
 
$
3.9

 
$
3.2

 
$
(2.3
)
 
Interest  expense
 
$
(0.2
)
 
$

 
$
0.8

Total gain/(loss)
 
 
 
$
(1.8
)
 
$
6.2

 
$
15.2

 
 
 
 
 
$
3.9

 
$
3.2

 
$
(2.3
)
 
 
 
$
(0.2
)
 
$

 
$
0.8


Cash Flow Hedges
The following table presents the location and amount of gains/(losses) from cash flow hedges for the years ended December 31, 2017, 2016, and 2015 (in millions):
 
 
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
 
2017
 
2016
 
2015
 
 
2017
 
2016
 
2015
 
 
2017
 
2016
 
2015
Foreign currency contracts
 
$
(73.9
)
 
$
34.3

 
$
70.8

 
Revenue
 
$
4.8

 
$
48.0

 
$
77.8

 
Derivative gains, net
 
$
9.0

 
$
3.7

 
$
(0.1
)
Interest rate contracts (c)
 

 

 

 
Interest expense
 
(3.3
)
 
(3.6
)
 
(3.6
)
 
Interest expense
 

 

 

Total gain/(loss)
 
$
(73.9
)
 
$
34.3

 
$
70.8

 
 
 
$
1.5

 
$
44.4

 
$
74.2

 
 
 
$
9.0

 
$
3.7

 
$
(0.1
)

Undesignated Hedges
The following table presents the location and amount of net gains/(losses) from undesignated hedges for the years ended December 31, 2017, 2016, and 2015 (in millions):
 
 
Gain/(Loss) Recognized in Income on Derivatives (d)
 
 
Income Statement Location
 
Amount
Derivatives
 
 
 
2017
 
2016
 
2015
Foreign currency contracts (e)
Selling, general and administrative
 
$
(20.5
)
 
$
13.2

 
$
35.9

Foreign currency contracts (f)
Derivative gains, net
 
(0.5
)
 
0.8

 
1.3

Total gain/(loss)
 
 
$
(21.0
)
 
$
14.0

 
$
37.2

 ____________________
(a)
The 2017 gain of $3.9 million consisted of a gain in value on the debt of $2.0 million and amortization of hedge accounting adjustments of $1.9 million. 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.
(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 derivatives' 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/(Loss) 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 gains/(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/(Loss) were $17.5 million, $(21.4) million, and $(36.1) million for the years ended 2017, 2016, and 2015, 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.

An accumulated other comprehensive pre-tax loss of $23.7 million related to the foreign currency forward contracts is expected to be reclassified into revenue within the next 12 months as of December 31, 2017. Approximately $2.0 million of net losses on the forecasted debt issuance hedges are expected to be recognized in "Interest expense" in the Consolidated Statements of Income/(Loss) within the next 12 months as of December 31, 2017. During the year ended December 31, 2017, $1.4 million of losses were reclassified into earnings from "Accumulated other comprehensive loss" as a result of the underlying transactions being considered probable of not occurring. During the years ended December 31, 2016 and December 31, 2015, no amounts were reclassified into earnings as a result of an underlying transaction being considered probable of not occurring.
Borrowings
Borrowings
Borrowings

The Company’s outstanding borrowings consisted of the following (in millions):
 
December 31, 2017
 
December 31, 2016
Notes:
 
 
 
2.875% notes due 2017 (a)
$

 
$
500.0

3.650% notes (effective rate of 5.0%) due 2018
400.0

 
400.0

3.350% notes due 2019 (b)
250.0

 
250.0

Floating rate notes (effective rate of 2.5%) due 2019 (c)
250.0

 

5.253% notes due 2020 (b)
324.9

 
324.9

3.600% notes (effective rate of 3.7%) due 2022 (d)
500.0

 

6.200% notes due 2036 (b)
500.0

 
500.0

6.200% notes due 2040 (b)
250.0

 
250.0

Term loan facility borrowing (effective rate of 3.0%)
575.0

 
575.0

Total borrowings at par value
3,049.9

 
2,799.9

Fair value hedge accounting adjustments, net (e)
0.5

 
4.4

Debt issuance costs and unamortized discount, net
(16.8
)
 
(18.2
)
Total borrowings at carrying value (f)
$
3,033.6

 
$
2,786.1

____________________ 

(a)
Proceeds from the unsecured floating rate notes due May 22, 2019 ("Floating Rate Notes") and the August 22, 2017 sale of 3.600% unsecured notes due March 15, 2022 ("2022 Notes"), as well as cash generated from operations, were used to repay the December 2017 maturity of $500.0 million of aggregate principal amount unsecured notes, as discussed further below.
(b)
The difference between the stated interest rate and the effective interest rate is not significant.
(c)
On August 22, 2017, the Company issued $250.0 million of aggregate principal amount of Floating Rate Notes.
(d)
On March 15, 2017, the Company issued $400.0 million of aggregate principal amount of 2022 Notes. On August 22, 2017, the Company issued an additional $100.0 million of aggregate principal amount of 2022 Notes, for an aggregate principal total of $500.0 million of 2022 Notes.
(e)
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/(Loss) over the life of the related notes and cause the effective rate of interest to differ from the notes’ stated rate.
(f)
As of December 31, 2017, the Company’s weighted-average effective rate on total borrowings was approximately 4.5%.

The following summarizes the Company's maturities of borrowings at par value as of December 31, 2017 (in millions):

Due within 1 year
$
414.3

Due after 1 year through 2 years
528.8

Due after 2 years through 3 years
368.0

Due after 3 years through 4 years
488.8

Due after 4 years through 5 years
500.0

Due after 5 years
750.0



The Company’s obligations with respect to its outstanding notes, as described below, rank equally.

Commercial Paper Program
 
Pursuant to the Company’s commercial paper program, the Company may issue unsecured commercial paper notes in an amount not to exceed $1.5 billion outstanding at any time, reduced to the extent of borrowings outstanding on the Company’s Revolving Credit Facility in excess of $150 million. The commercial paper notes may have maturities of up to 397 days from date of issuance. The Company had no commercial paper borrowings outstanding as of December 31, 2017 and 2016.

Revolving Credit Facility

On September 29, 2015, the Company entered into a credit agreement which expires in September 2020 providing for unsecured financing facilities in an aggregate amount of $1.65 billion, including a $250.0 million letter of credit sub-facility ("Revolving Credit Facility"). Consistent with the prior facility, the Company is required to maintain compliance with a consolidated interest coverage ratio covenant. The Revolving Credit Facility supports borrowings under the Company’s $1.5 billion commercial paper program.

Interest due under the Revolving Credit Facility is fixed for the term of each borrowing and is payable according to the terms of that borrowing. Generally, interest is calculated using a selected LIBOR rate plus an interest rate margin of 110 basis points. A facility fee of 15 basis points is also payable quarterly on the total facility, regardless of usage. Both the interest rate margin and facility fee percentage are based on certain of the Company’s credit ratings.

As of December 31, 2017 and 2016, the Company had no outstanding borrowings under the Revolving Credit Facility.

Term Loan Facility

On April 11, 2016, the Company entered into a term loan agreement, which matures in April 2021, providing for an unsecured delayed draw term loan facility in an aggregate amount of $575 million (the "Term Loan Facility"). In October 2016, the Company borrowed $575 million under the Term Loan Facility and used the proceeds, in addition to cash, including cash generated from operations, and proceeds from commercial paper borrowings in October 2016 to repay the Company's notes due in October 2016.

The Term Loan Facility requires the Company to maintain a consolidated adjusted EBITDA interest coverage ratio of greater than 3:1 for each period of four consecutive fiscal quarters. The Term Loan Facility also contains customary representations, warranties and events of default.

Generally, interest under the Term Loan Facility is calculated using a selected LIBOR rate plus an interest rate margin of 150 basis points. The interest rate margin percentage is based on certain of the Company's credit ratings and will increase or decrease in the event of certain upgrades or downgrades in the Company's credit ratings.

In addition to the payment of interest, the Company is required to make certain periodic amortization payments with respect to the outstanding principal of the term loan, beginning in July 2018. The final maturity date of the Term Loan Facility is April 11, 2021.

Notes
    
On August 22, 2017, the Company issued $250.0 million of aggregate principal amount of unsecured floating rate notes due May 22, 2019. Interest with respect to the Floating Rate Notes is payable quarterly on each February 22, May 22, August 22 and November 22, beginning November 22, 2017, at a per annum interest rate equal to the three-month LIBOR plus 80 basis points (reset quarterly). The Company may not redeem the Floating Rate Notes prior to maturity.

On March 15, 2017, the Company issued $400.0 million of aggregate principal amount of unsecured notes due March 15, 2022. On August 22, 2017, the Company issued an additional $100.0 million of aggregate principal amount of unsecured notes due March 15, 2022. The notes issued on August 22, 2017 are part of the same series and, accordingly, have the same terms and conditions as the notes issued on March 15, 2017; however, the notes issued on August 22, 2017 were issued at a premium of 101.783% and the Company received $1.57 million of accrued interest upon issuance. Interest with respect to the 2022 Notes is payable semi-annually in arrears on March 15 and September 15 of each year, beginning on September 15, 2017, based on the per annum rate of 3.600%. The interest rate payable on the 2022 Notes will be increased if the debt rating assigned to the note is downgraded by an applicable credit rating agency, beginning at a downgrade below investment grade. However, in no event will the interest rate on the 2022 Notes exceed 5.60% per annum. The interest rate payable on the 2022 Notes may also be adjusted downward for debt rating upgrades subsequent to any debt rating downgrades but may not be adjusted below 3.600% per annum. The Company may redeem the 2022 Notes at any time prior to February 15, 2022 at the greater of par or a price based on the applicable treasury rate plus 25 basis points. The Company may redeem the 2022 Notes at any time after February 15, 2022 at a price equal to par, plus accrued interest.

On November 22, 2013, the Company issued $250.0 million of aggregate principal amount of unsecured notes due May 22, 2019 ("2019 Notes"). Interest with respect to the 2019 Notes is payable semi-annually in arrears on May 22 and November 22 of each year, beginning on May 22, 2014, based on the fixed per annum rate of 3.350%. The interest rate payable on the 2019 Notes will be increased if the debt rating assigned to the note is downgraded by an applicable credit rating agency, beginning at a downgrade below investment grade. However, in no event will the interest rate on the 2019 Notes be increased by more than 2.00% above 3.350% per annum. The interest rate payable on the 2019 Notes may also be adjusted downward for debt rating upgrades subsequent to any debt rating downgrades but may not be adjusted below 3.350% per annum. The Company may redeem the 2019 Notes at any time prior to maturity at the greater of par or a price based on the applicable treasury rate plus 30 basis points.

On August 22, 2013, the Company issued $250.0 million of aggregate principal amount of unsecured floating rate notes due August 21, 2015 ("2015 Floating Rate Notes"). The 2015 Floating Rate Notes matured and were repaid in August 2015.

On December 10, 2012, the Company issued $250.0 million and $500.0 million of aggregate principal amounts of unsecured notes due December 10, 2015 ("2015 Fixed Rate Notes") and December 10. 2017 ("2017 Notes"), respectively. The 2015 Fixed Rate Notes matured and were repaid in December 2015. In December 2017, the 2017 Notes matured and were repaid.

On August 22, 2011, the Company issued $400.0 million of aggregate principal amount of unsecured notes due August 22, 2018 ("2018 Notes"). Interest with respect to the 2018 Notes is payable semi-annually in arrears on February 22 and August 22 of each year, based on the fixed per annum rate of 3.650%. The Company may redeem the 2018 Notes at any time prior to maturity at the greater of par or a price based on the applicable treasury rate plus 35 basis points.

On June 21, 2010, the Company issued $250.0 million of aggregate principal amount of unsecured notes due June 21, 2040 ("2040 Notes"). Interest with respect to the 2040 Notes is payable semi-annually on June 21 and December 21 each year based on the fixed per annum rate of 6.200%. The Company may redeem the 2040 Notes at any time prior to maturity at the greater of par or a price based on the applicable treasury rate plus 30 basis points.

On March 30, 2010, the Company exchanged $303.7 million of aggregate principal amount of unsecured notes due November 17, 2011 for unsecured notes due April 1, 2020 ("2020 Notes"). Interest with respect to the 2020 Notes is payable semi-annually on April 1 and October 1 each year based on the fixed per annum rate of 5.253%. In connection with the exchange, note holders were given a 7% premium ($21.2 million), which approximated market value at the exchange date, as additional principal. As this transaction was accounted for as a debt modification, this premium was not charged to expense. Rather, the premium, along with the offsetting hedge accounting adjustments, will be accreted into "Interest expense" over the life of the notes. The Company may redeem the 2020 Notes at any time prior to maturity at the greater of par or a price based on the applicable treasury rate plus 15 basis points.

On November 17, 2006, the Company issued $500.0 million of aggregate principal amount of unsecured notes due November 17, 2036 ("2036 Notes"). Interest with respect to the 2036 Notes is payable semi-annually on May 17 and November 17 each year based on the fixed per annum rate of 6.200%. The Company may redeem the 2036 Notes at any time prior to maturity at the greater of par or a price based on the applicable treasury rate plus 25 basis points.

On September 29, 2006, the Company issued $1.0 billion of aggregate principal amount of unsecured notes maturing on October 1, 2016 ("2016 Notes"). In October 2016, the 2016 Notes matured and were repaid.

The Revolving Credit Facility and Term Loan Facility contain covenants, subject to certain exceptions, that, among other things, limit or restrict the Company's ability to sell or transfer assets or merge or consolidate with another company, grant certain types of security interests, incur certain types of liens, impose restrictions on subsidiary dividends, enter into sale and leaseback transactions, incur certain subsidiary level indebtedness, or use proceeds in violation of anti-corruption or anti-money laundering laws. The Company's notes are subject to similar covenants except that only the 2020 Notes and the 2036 Notes contain covenants limiting or restricting subsidiary indebtedness and none of the Company's notes are subject to a covenant that limits the Company's ability to impose restrictions on subsidiary dividends.

Certain of the Company’s notes (the Floating Rate Notes, 2018 Notes, 2019 Notes, and 2022 Notes) include a change of control triggering event provision, as defined in the terms of the notes. If a change of control triggering event occurs, holders of the notes may require the Company to repurchase some or all of their notes at a price equal to 101% of the principal amount of their notes, plus any accrued and unpaid interest. A change of control triggering event will occur when there is a change of control involving the Company and among other things, within a specified period in relation to the change of control, the notes are downgraded from an investment grade rating to below an investment grade rating by all three major credit rating agencies.
Stock Compensation Plans
Stock Compensation Plans
Stock Compensation Plans

Stock Compensation Plans

The Western Union Company 2006 Long-Term Incentive Plan and 2015 Long-Term Incentive Plan

The Western Union Company 2015 Long-Term Incentive Plan ("2015 LTIP"), approved on May 15, 2015, provides for the granting of stock options, restricted stock awards and units, unrestricted stock awards and units, and other equity-based awards to employees and non-employee directors of the Company. Prior to this, equity-based awards were granted out of the 2006 Long-Term Incentive Plan ("2006 LTIP"). Shares available for grant under the 2015 LTIP were 28.1 million as of December 31, 2017.

Options granted under the 2015 LTIP and the 2006 LTIP are issued with exercise prices equal to the fair market value of Western Union common stock on the grant date, have 10-year terms, and typically vest over four equal annual increments beginning 12 months after the date of grant, with the exception of options granted to retirement eligible employees, which generally will vest on a prorated basis, upon termination. Compensation expense related to stock options is recognized over the requisite service period, which is the same as the vesting period.
Restricted stock unit grants typically vest over four equal annual increments beginning 12 months after the date of grant. Restricted stock units granted to retirement eligible employees generally vest on a prorated basis upon termination. The fair value of the awards granted is measured based on the fair value of the shares on the date of grant. The majority of stock unit grants do not provide for the payment of dividend equivalents. For those grants, the value of the grants is reduced by the net present value of the foregone dividend equivalent payments. The related compensation expense is recognized over the requisite service period, which is the same as the vesting period.

The compensation committee of the Company's Board of Directors has granted the Company's executives and certain other key employees, excluding the Chief Executive Officer ("CEO"), long-term incentive awards under the 2015 LTIP and 2006 LTIP, which in 2017 and 2016 consisted of 60% Financial PSUs (as defined below), 20% TSR PSUs (as defined below), and 20% restricted stock unit awards. The CEO received long-term incentive awards under the 2015 LTIP and 2006 LTIP, which in 2017 and 2016 consisted of 60% Financial PSUs (as defined below), 20% TSR PSUs (as defined below), and 20% stock option awards. In 2017, the compensation committee granted Senior Vice Presidents ("SVPs") of the Company awards under the 2015 LTIP which consisted of 50% Financial PSUs (as defined below) and 50% restricted stock unit awards. The compensation committee granted the remaining non-executive employees of the Company participating in the 2015 LTIP (other than those non-executive employees receiving the performance-based restricted stock units described above) annual equity grants consisting solely of restricted stock unit awards for 2017. In 2016 the SVPs and the remaining non-executive employees of the Company received annual equity awards consisting solely of restricted stock unit awards.

The performance-based restricted stock units granted to the Company's executives in 2017 are restricted stock units and consist of two separate awards. The first award consists of performance-based restricted stock units, which require the Company to meet certain financial objectives during 2017, 2018 and 2019 ("Financial PSUs"). The second award consists of performance-based restricted stock units with a market condition tied to the Company's total shareholder return in relation to the S&P 500 Index as calculated over a three-year performance period (2017 through 2019) ("TSR PSUs"). Both of these awards will vest 100% on the third anniversary of the grant date, contingent upon threshold market and financial performance metrics being met. The actual number of performance-based restricted stock units that the recipients will receive for both 2017 awards will range from 0% up to 150% of the target number of stock units granted based on actual financial and total shareholder return performance results. The performance-based restricted stock units granted in 2016 were designed similar to the 2017 awards described above. The grant date fair value of the performance-based restricted stock units is fixed and the amount of restricted stock units that will ultimately vest depends upon the level of achievement of the performance and market conditions over the performance period. The fair value of the Financial PSUs is measured similar to the restricted stock units discussed above, while the fair value of the TSR PSUs is determined using the Monte-Carlo simulation model. Unlike the Financial PSUs, compensation costs related to the TSR PSUs are recognized regardless of whether the market condition is satisfied, provided that the requisite service period has been completed.

The Company has also granted deferred stock units out of the 2015 LTIP to the non-employee directors of the Company. Since deferred stock units vest immediately, compensation expense is recognized on the date of grant based on the fair value of the awards when granted. These awards may be settled immediately unless the participant elects to defer the receipt of common shares under the applicable plan rules.

Stock Option Activity

A summary of stock option activity for the year ended December 31, 2017 was as follows (options and aggregate intrinsic value in millions):
 
Year Ended December 31, 2017
 
Options
 
Weighted-Average
Exercise Price
 
Weighted-Average Remaining
Contractual Term
(Years)
 
 
Aggregate
Intrinsic
Value
Outstanding as of January 1
8.1

 
$
17.46

 
 
 
 
Granted
0.4

 
$
19.99

 
 
 
 
Exercised
(0.8
)
 
$
15.57

 
 
 
 
Cancelled/forfeited
(0.4
)
 
$
19.97

 
 
 
 
Outstanding as of December 31
7.3

 
$
17.71

 
4.6
 
$
13.4

Options exercisable as of December 31
6.1

 
$
17.49

 
3.9
 
$
12.7



The Company received $13.0 million, $32.5 million and $80.1 million in cash proceeds related to the exercise of stock options during the years ended December 31, 2017, 2016 and 2015, respectively. Upon the exercise of stock options, shares of common stock are issued from authorized common shares.

The Company realized total tax benefits during the years ended December 31, 2017, 2016 and 2015 from stock option exercises of $1.3 million, $1.6 million and $4.3 million, respectively.

The total intrinsic value of stock options exercised during the years ended December 31, 2017, 2016 and 2015 was $4.0 million, $5.3 million and $15.0 million, respectively.

Restricted Stock Activity

A summary of activity for restricted stock units and performance-based restricted stock units for the year ended December 31, 2017 is listed below (units in millions):
 
Year Ended December 31, 2017
 
Number
Outstanding
 
Weighted-Average
Grant-Date Fair Value
Non-vested as of January 1
7.4
 
$
16.68

Granted
3.6
 
$
17.70

Vested
(2.4)
 
$
16.02

Forfeited
(1.2)
 
$
17.10

Non-vested as of December 31
7.4
 
$
17.32



Stock-Based Compensation

The following table sets forth the total impact on earnings for stock-based compensation expense recognized in the Consolidated Statements of Income/(Loss) resulting from stock options, restricted stock units, performance-based restricted stock units and bonus/deferred stock units for the years ended December 31, 2017, 2016 and 2015 (in millions, except per share data).

 
Year Ended December 31,
 
2017
 
2016
 
2015
Stock-based compensation expense
$
(43.9
)
 
$
(41.8
)
 
$
(42.2
)
Income tax benefit from stock-based compensation expense
12.8

 
12.3

 
12.3

Net income/(loss) impact
$
(31.1
)
 
$
(29.5
)
 
$
(29.9
)
Earnings/(loss) per share:
 
 
 
 
 
Basic and Diluted
$
(0.07
)
 
$
(0.06
)
 
$
(0.06
)


As of December 31, 2017, there was $1.4 million of total unrecognized compensation cost, net of assumed forfeitures, related to non-vested stock options which is expected to be recognized over a weighted-average period of 2.5 years, and there was $64.6 million of total unrecognized compensation cost, net of assumed forfeitures, related to non-vested restricted stock units and performance-based restricted stock units which is expected to be recognized over a weighted-average period of 2.1 years.

Fair Value Assumptions

The Company used the following assumptions for the Black-Scholes option pricing model to determine the value of Western Union options granted.
 
Year Ended December 31,
 
2017
 
2016
 
2015
Stock options granted:
 
 
 
 
 
Weighted-average risk-free interest rate
2.1
%
 
1.4
%
 
1.7
%
Weighted-average dividend yield
3.5
%
 
3.3
%
 
3.6
%
Volatility
24.7
%
 
27.9
%
 
28.2
%
Expected term (in years)
6.05

 
6.32

 
6.00

Weighted-average grant date fair value
$
3.39

 
$
3.44

 
$
3.58



Risk-free interest rate - The risk-free rate for stock options granted during the period is determined by using a United States Treasury rate for the period that coincided with the expected terms listed above.

Expected dividend yield - The Company's expected annual dividend yield is the calculation of the annualized Western Union dividend divided by an average Western Union stock price on each respective grant date.

Expected volatility - For the Company's executives and non-employee directors, the expected volatility for the 2017, 2016 and 2015 grants was 24.7%, 27.9% and 28.2%, respectively. There were no options granted to non-executive employees in 2017, 2016 or 2015. The Company used a blend of implied and historical volatility. Volatility was calculated using the market price of traded options on Western Union's common stock and the historical volatility of Western Union stock data.

Expected term - For 2017 and 2016, Western Union's expected term for the CEO grant was 6 years and approximately 7 years for the non-employee director grants. For 2015, Western Union's expected term for all grants was approximately 6 years. The Company's expected term for options was based upon, among other things, historical exercises, the vesting term of the Company's options and the options' contractual term of ten years.

The assumptions used to calculate the fair value of options granted are evaluated and revised, as necessary, to reflect market conditions and the Company's historical experience and future expectations. The calculated fair value is recognized as compensation cost in the Company's consolidated financial statements over the requisite service period of the entire award. Compensation cost is recognized only for those options expected to vest, with forfeitures estimated at the date of grant and evaluated and adjusted periodically to reflect the Company's historical experience and future expectations. Any change in the forfeiture assumption is accounted for as a change in estimate, with the cumulative effect of the change on periods previously reported being reflected in the consolidated financial statements of the period in which the change is made.
Segments
Segments
Segments

As further described in Note 1, the Company made changes to its operating and reportable segments in the second quarter of 2017, and the historical Consumer-to-Business operating segment is no longer a separate operating segment. The Company currently consists of two reportable segments: Consumer-to-Consumer and Business Solutions. Operating segments are defined as components of an enterprise that engage in business activities, about which separate financial information is available that is evaluated regularly by the Company's CODM in deciding where to allocate resources and in assessing performance.

The Consumer-to-Consumer operating segment facilitates money transfers between two consumers. The Company's 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. The segment includes five geographic regions whose functions are primarily related to generating, managing and maintaining agent relationships and localized marketing activities. The Company includes its online money transfer services initiated through Western Union branded websites ("westernunion.com") in its regions. By means of common processes and systems, these regions, including westernunion.com, create an interconnected network for consumer transactions, thereby constituting one global Consumer-to-Consumer money transfer business and one operating segment.

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.

All businesses and other services that have not been classified in the above segments are reported as "Other," which primarily includes the Company's electronic-based and cash-based bill payment services which facilitate bill payments from consumers to businesses and other organizations and which were previously reported in the historical Consumer-to-Business operating segment, and the Company's money order and other services.

The Company's reportable segments are reviewed separately below because each reportable segment represents a strategic business unit that offers different products and serves different markets. The business segment measurements provided to, and evaluated by, the Company's CODM are computed in accordance with the following principles:

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.

As described in Note 4, for the year ended December 31, 2017, the Company recognized a goodwill impairment charge of $464.0 million related to its Business Solutions reporting unit. While the impairment was identifiable to the Business Solutions segment, it was not allocated to the segment, as it was 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.

Expenses of $60.0 million related to the NYDFS Consent Order for the year ended December 31, 2017, and expenses of $8.0 million and $601.0 million related to the Joint Settlement Agreements for the years ended December 31, 2017 and 2016, respectively, 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 NYDFS Consent Order and the Joint Settlement Agreements, see Note 5.

Business transformation expenses of $94.4 million and $20.3 million for the years ended December 31, 2017 and 2016, respectively, 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.

The following tables present the Company's reportable segment results for the years ended December 31, 2017, 2016 and 2015, respectively (in millions). Results for the years ended 2016 and 2015 have been adjusted to conform to the changes in reportable segments discussed in Note 1.
 
Year Ended December 31,
 
2017
 
2016
 
2015
Revenues:
 
 
 
 
 
Consumer-to-Consumer
$
4,354.5

 
$
4,304.6

 
$
4,343.9

Business Solutions
383.9

 
396.0

 
398.7

Other (a)
785.9

 
722.3

 
741.1

Total consolidated revenues
$
5,524.3

 
$
5,422.9

 
$
5,483.7

Operating income:
 
 
 
 
 
Consumer-to-Consumer
$
1,002.4

 
$
1,008.7

 
$
1,042.0

Business Solutions
13.6

 
21.1

 
2.8

Other (a) (b)
83.8

 
75.2

 
64.6

Total segment operating income
1,099.8

 
1,105.0

 
1,109.4

Goodwill impairment charge (Note 4)
(464.0
)
 

 

NYDFS Consent Order (Note 5)
(60.0
)
 

 

Joint Settlement Agreements (Note 5)
(8.0
)
 
(601.0
)
 

Business transformation expenses (Note 3)
(94.4
)
 
(20.3
)
 

Total consolidated operating income
$
473.4

 
$
483.7

 
$
1,109.4


____________________ 
(a)
Other consists primarily of the Company's bill payments businesses in the United States and Argentina.
(b)
During the year ended December 31, 2015, Other 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,
 
2017
 
2016
 
2015
Assets:
 
 
 
 
 
Consumer-to-Consumer
$
4,850.8

 
$
4,467.7

 
$
4,738.7

Business Solutions (a)
1,575.5

 
2,370.8

 
2,384.4

Other
2,805.1

 
2,581.1

 
2,326.1

Total assets
$
9,231.4

 
$
9,419.6

 
$
9,449.2

 
 
 
 
 
 
Depreciation and amortization:
 
 
 
 
 
Consumer-to-Consumer
$
183.0

 
$
183.5

 
$
183.4

Business Solutions
42.5

 
50.8

 
57.4

Other
37.4

 
28.9

 
29.4

Total consolidated depreciation and amortization
$
262.9

 
$
263.2

 
$
270.2

 
 
 
 
 
 
Capital expenditures:
 
 
 
 
 
Consumer-to-Consumer
$
120.2

 
$
167.7

 
$
191.0

Business Solutions
8.8

 
11.4

 
19.2

Other
48.1

 
50.7

 
56.3

Total capital expenditures
$
177.1

 
$
229.8

 
$
266.5


____________________ 
(a)
The decrease in Business Solutions assets is primarily due to a goodwill impairment charge recognized in the fourth quarter of 2017 in this segment, as further discussed in Note 4.

The geographic revenue split for Consumer-to-Consumer transactions in the table below, including westernunion.com transactions, is determined entirely based upon the region where the money transfer is initiated. Prior to January 1, 2017, for transactions originated and paid in different regions, the Company split the revenue between the two regions, with each region receiving 50%. The results for the years ended December 31, 2016 and 2015 have been adjusted to attribute the revenue entirely to the region where the transaction was initiated. The geographic split of revenue below for the Business Solutions segment and Other is also based upon the country where the transaction is initiated with 100% of the revenue allocated to that country. Long-lived assets, consisting of "Property and equipment, net," are presented based upon the location of the assets.

Based on the method used to attribute revenue between countries described in the paragraph above, each individual country outside the United States accounted for less than 10% of consolidated revenue for the years ended December 31, 2017, 2016 and 2015, respectively. In addition, each individual agent or Business Solutions customer accounted for less than 10% of consolidated revenue during these periods.

Information concerning principal geographic areas was as follows (in millions):
 
Year Ended December 31,
 
2017
 
2016
 
2015
Revenue:
 
 
 
 
 
United States
$
2,159.0

 
$
2,091.5

 
$
1,962.1

International
3,365.3

 
3,331.4

 
3,521.6

Total
$
5,524.3

 
$
5,422.9

 
$
5,483.7

Long-lived assets:
 
 
 
 
 
United States
$
156.8

 
$
174.0

 
$
182.9

International
57.4

 
46.5

 
48.9

Total
$
214.2

 
$
220.5

 
$
231.8

Quarterly Financial Information (Unaudited)
Quarterly Financial Information (Unaudited)
Quarterly Financial Information (Unaudited)

Summarized quarterly results for the years ended December 31, 2017 and 2016 were as follows (in millions, except per share data):
2017 by Quarter:
Q1
 
Q2
 
Q3
 
Q4
 
Year Ended December 31, 2017
 
 
 
 
 
 
 
 
 
 
Revenues
$
1,302.4

 
$
1,378.9

 
$
1,404.7

 
$
1,438.3

 
$
5,524.3

Expenses (a) (b) (c)
1,062.9

 
1,164.1

 
1,133.1

 
1,690.8

 
5,050.9

Operating income/(loss)
239.5

 
214.8

 
271.6

 
(252.5
)
 
473.4

Other expense, net
26.4

 
30.4

 
32.4

 
36.7

 
125.9

Income/(loss) before income taxes
213.1

 
184.4

 
239.2

 
(289.2
)
 
347.5

Provision for income taxes (d)
51.4

 
17.9

 
3.6

 
831.7

 
904.6

Net income/(loss)
$
161.7

 
$
166.5

 
$
235.6

 
$
(1,120.9
)
 
$
(557.1
)
Earnings/(loss) per share:
 
 
 
 
 
 
 
 
 
Basic
$
0.34

 
$
0.35

 
$
0.51

 
$
(2.44
)
 
$
(1.19
)
Diluted
$
0.33

 
$
0.35

 
$
0.51

 
$
(2.44
)
 
$
(1.19
)
Weighted-average shares outstanding:
 
 
 
 
 
 
 
 
 
Basic
479.8

 
469.4

 
462.8

 
459.6

 
467.9

Diluted
483.4

 
472.0

 
465.4

 
459.6

 
467.9



(a)
Includes a goodwill impairment charge of $464.0 million in the fourth quarter related to the Company's Business Solutions reporting unit. For more information, see Note 4.
(b)
Includes a $49 million accrual in the second quarter and an $11 million accrual in the fourth quarter as a result of the NYDFS Consent Order, and an additional $8 million of expenses in the third quarter related to the independent compliance auditor required pursuant to the terms of the Joint Settlement Agreements, as described further in Note 5.
(c)
Includes $14.3 million, $35.0 million, $9.9 million, and $35.2 million in the first, second, third, and fourth quarters, respectively, of expenses related to business transformation. For more information, see Note 3.
(d)
Includes an estimated $828 million in the fourth quarter of 2017 related to the enactment of the Tax Act into United States law, primarily due to a tax on certain previously undistributed earnings of foreign subsidiaries, partially offset by the remeasurement of deferred tax assets and liabilities and other tax balances to reflect the lower federal income tax rate, among other effects. This tax charge, combined with the Company’s other 2017 United States taxable income and tax attributes, results in an estimated United States federal tax liability of $780 million at December 31, 2017, which the Company has elected to pay in periodic installments over the next eight years. As discussed in Note 10, certain of the law's impacts have been provisionally estimated and will likely be adjusted in future periods as the Company completes its accounting for these matters in 2018.
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 (e) (f)
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

____________
 
 
 
 
 
 
 
 
 

(e)
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.
(f)
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.
Schedule I - Condensed Financial Information of the Registrant
Schedule I - Condensed Financial Information of the Registrant
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT

The following lists the condensed financial information for the parent company as of December 31, 2017 and 2016 and statements of income/(loss) and comprehensive income/(loss) and cash flows for each of the three years in the period ended December 31, 2017.

THE WESTERN UNION COMPANY

CONDENSED BALANCE SHEETS
(PARENT COMPANY ONLY)
(in millions, except per share amounts)

 
December 31,
 
2017
 
2016
Assets
 
 
 
Cash and cash equivalents
$
1.0

 
$
0.3

Property and equipment, net of accumulated depreciation of $28.5 and $26.6, respectively
33.9

 
34.7

Other assets
34.2

 
39.4

Investment in subsidiaries
7,236.2

 
7,291.7

Total assets
$
7,305.3

 
$
7,366.1

 
 
 
 
Liabilities and Stockholders’ Equity/(Deficit)
 
 
 
Liabilities:
 
 
 
Accounts payable and accrued liabilities
$
74.6

 
$
645.5

Income taxes payable
887.0

 
20.9

Payable to subsidiaries, net
3,800.8

 
3,010.6

Borrowings
3,033.6

 
2,786.1

Other liabilities
0.7

 
0.8

Total liabilities
7,796.7

 
6,463.9

Stockholders’ equity/(deficit):
 
 
 
Preferred stock, $1.00 par value; 10 shares authorized; no shares issued

 

Common stock, $0.01 par value; 2,000 shares authorized; 459.0 shares and 481.5 shares issued and outstanding as of December 31, 2017 and 2016, respectively
4.6

 
4.8

Capital surplus
697.8

 
640.9

Retained earnings/(accumulated deficit)
(965.9
)
 
419.3

Accumulated other comprehensive loss
(227.9
)
 
(162.8
)
Total stockholders’ equity/(deficit)
(491.4
)
 
902.2

Total liabilities and stockholders’ equity/(deficit)
$
7,305.3

 
$
7,366.1









See Notes to Condensed Financial Statements.
THE WESTERN UNION COMPANY

CONDENSED STATEMENTS OF INCOME/(LOSS) AND COMPREHENSIVE INCOME/(LOSS)
(PARENT COMPANY ONLY)
(in millions)

 
For the Years Ended December 31,
 
2017
 
2016
 
2015
Revenues
$

 
$

 
$

Expenses

 

 

Operating income

 

 

Interest income

 

 
0.2

Interest expense
(177.0
)
 
(168.1
)
 
(171.2
)
Other expense
(0.6
)
 

 

Loss before equity in earnings/(losses) of affiliates and income taxes
(177.6
)
 
(168.1
)
 
(171.0
)
Equity in earnings/(losses) of affiliates, net of tax
(436.1
)
 
357.1

 
943.3

Income tax benefit
56.6

 
64.2

 
65.5

Net income/(loss)
(557.1
)
 
253.2

 
837.8

Other comprehensive income, net of tax
2.1

 
2.3

 
2.2

Other comprehensive loss of affiliates, net of tax
(67.2
)
 
(21.2
)
 
(27.2
)
Comprehensive income/(loss)
$
(622.2
)
 
$
234.3

 
$
812.8






























See Notes to Condensed Financial Statements.
THE WESTERN UNION COMPANY

CONDENSED STATEMENTS OF CASH FLOWS
(PARENT COMPANY ONLY)
(in millions)

 
For the Years Ended December 31,
 
2017
 
2016
 
2015
Cash flows from operating activities
 
 
 
 
 
Net cash (used in)/provided by operating activities
$
(605.0
)
 
$
192.0

 
$
327.1

Cash flows from investing activities
 
 
 
 
 
Purchases of property and equipment and other
(0.7
)
 
(5.9
)
 
(0.1
)
Capital contributed to subsidiaries, net

 
(7.3
)
 
(17.9
)
Distributions received from subsidiaries, net
307.3

 

 

Net cash provided by/(used in) investing activities
306.6

 
(13.2
)
 
(18.0
)
Cash flows from financing activities
 
 
 
 
 
Advances from subsidiaries, net
868.3

 
1,024.0

 
796.1

Net proceeds from issuance of borrowings
746.2

 
575.0

 

Principal payments on borrowings
(500.0
)
 
(1,000.0
)
 
(500.0
)
Proceeds from exercise of options and other
13.0

 
35.0

 
79.7

Cash dividends paid
(325.6
)
 
(312.2
)
 
(316.5
)
Common stock repurchased
(502.8
)
 
(501.6
)
 
(511.3
)
Net cash provided by/(used in) financing activities
299.1

 
(179.8
)
 
(452.0
)
Net change in cash and cash equivalents
0.7

 
(1.0
)
 
(142.9
)
Cash and cash equivalents at beginning of year
0.3

 
1.3

 
144.2

Cash and cash equivalents at end of year
$
1.0

 
$
0.3

 
$
1.3

Supplemental cash flow information:
 
 
 
 
 
Non-cash investing activity, capital contribution to subsidiary (Note 3)
$
916.0

 
$
591.0

 
$

Non-cash financing activity, distribution of note from subsidiary (Note 3)
$
80.3

 
$

 
$























See Notes to Condensed Financial Statements.

CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT

THE WESTERN UNION COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS

1.  Basis of Presentation

The Western Union Company (the "Parent") is a holding company that conducts substantially all of its business operations through its subsidiaries. Under a parent company only presentation, the Parent's investments in its consolidated subsidiaries are presented under the equity method of accounting, and the condensed financial statements do not present the financial statements of the Parent and its subsidiaries on a consolidated basis. These financial statements should be read in conjunction with The Western Union Company's consolidated financial statements.

2.  Restricted Net Assets

Certain assets of the Parent's subsidiaries totaling approximately $265 million constitute restricted net assets, as there are legal or regulatory limitations on transferring such assets outside of the countries where the respective assets are located. Additionally, certain of the Parent's subsidiaries must meet minimum capital requirements in some countries in order to maintain operating licenses.

3.  Related Party Transactions

All transactions described below are with subsidiaries of the Parent. The Parent has issued multiple promissory notes payable to its 100% owned subsidiary First Financial Management Corporation ("FFMC") in exchange for funds distributed to the Parent. All notes pay interest at a fixed rate, may be repaid at any time without penalty and are included within "Payable to subsidiaries, net" in the Condensed Balance Sheets. These promissory notes are as follows:
Date Issued
 
Amount (in millions)
 
Due Date
 
Interest Rate (per annum)
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
%
January 1, 2017
 
$
158.8

 
September 30, 2019
 
0.96
%
March 1, 2017 (a)
 
$
65.5

 
November 30, 2019
 
1.01
%
____________

(a) This note refinanced a note originally issued on a prior date.

On August 2, 2014, the Parent entered into a credit agreement (the "Facility") with its 100% owned subsidiary Custom House Holdings (USA), Ltd., which expires August 2, 2034, providing for unsecured financing facilities in an aggregate amount of $700.0 million. As of December 31, 2017 and 2016, borrowings outstanding under the Facility were $232.6 million and $382.2 million, respectively. The interest rate applicable for outstanding borrowings under the Facility is the six-month LIBOR rate set on the first day of the calendar year, which was 1.84% and 0.84% for the years ended December 31, 2017 and 2016, respectively. Outstanding borrowings under the Facility are included within "Payable to subsidiaries, net" in the Condensed Balance Sheets as of December 31, 2017 and 2016.

On November 8, 2015, the Parent entered into a Revolving Credit Facility agreement (the “Revolver”) with its 100% owned subsidiary RII Holdings, Inc, which expires on November 8, 2035, providing for unsecured financing facilities in an aggregate amount of $3.0 billion. As of December 31, 2017 and 2016, borrowings outstanding under the Revolver were $2.6 billion and $1.5 billion, respectively. The interest rate applicable for outstanding borrowings under the Revolver is the six-month LIBOR rate set on the first day of the calendar year, which was 1.84% and 0.84% for the years ended December 31, 2017 and 2016, respectively. Outstanding borrowings under the Revolver are included within "Payable to subsidiaries, net" in the Condensed Balance Sheets as of December 31, 2017 and 2016.




CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT

THE WESTERN UNION COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS (Continued)

The Parent files its United States federal consolidated income tax return on its and certain of its affiliates' behalf. Accordingly, the Parent has recorded income taxes payable on behalf of its subsidiaries, and these income taxes payable were significant in the year ended December 31, 2017 due to the enactment of the Tax Act into United States law. Effective as of December 31, 2017, the Parent made a non-cash capital contribution of $916.0 million to a subsidiary that was subject to the taxation of certain previously undistributed earnings of its foreign subsidiaries under the Tax Act, and this contribution is reflected as a non-cash investing activity in the Condensed Statements of Cash Flows.

The Parent agreed to fund certain payments related to the Joint Settlement Agreements on behalf of its subsidiaries. As of December 31, 2017, these amounts have been paid and are reflected in operating activities in the Condensed Statements of Cash Flows. As of December 31, 2016, $591.0 million increased the Parent's investment in its subsidiaries, was included within "Accounts payable and accrued liabilities" in the Condensed Balance Sheets, and was reflected as a non-cash investing activity in the Condensed Statements of Cash Flows.

On November 30, 2017, FFMC distributed a promissory note owed by the Parent in the amount of $80.3 million, and this distribution to the Parent is reflected as a non-cash financing activity in the Condensed Statements of Cash Flows in the year ended December 31, 2017.

Excess cash generated from operations of the Parent's subsidiaries that is not required to meet certain regulatory requirements is paid periodically to the Parent and is also included within "Payable to subsidiaries, net" in the Condensed Balance Sheets as of December 31, 2017 and 2016. The Parent's subsidiaries also periodically distribute excess cash balances to the Parent in the form of a dividend, although the amounts of such dividends may vary from year to year.

The Parent files a consolidated United States federal income tax return, and also a number of consolidated state income tax returns on behalf of its subsidiaries. In these circumstances, the Parent is responsible for remitting income tax payments on behalf of the consolidated group. The Parent's provision for income taxes has been computed as if it were a separate tax-paying entity.

4.  Commitments and Contingencies

The Parent had $60.4 million in outstanding letters of credit and bank guarantees as of December 31, 2017 with expiration dates through 2020. The letters of credit and bank guarantees are primarily held in connection with certain agent agreements. The Company expects to renew the letters of credit and bank guarantees prior to expiration in most circumstances.
Summary of Significant Accounting Policies (Policies)
Basis of Presentation

The financial statements in this Annual Report on Form 10-K are presented on a consolidated basis and include the accounts of the Company and its majority-owned subsidiaries. All significant intercompany transactions and accounts have been eliminated. Beginning in the first quarter of 2017, the Company has reported total "Revenues" in its Consolidated Statements of Income/(Loss) for all periods presented and no longer presents the subcaptions previously reported, including "Transaction fees," "Foreign exchange revenues," and "Other revenues."

Consistent with industry practice, the accompanying Consolidated Balance Sheets are unclassified due to the short-term nature of the Company's settlement obligations contrasted with the Company's ability to invest cash awaiting settlement in long-term investment securities.
Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates.
Principles of Consolidation

The Company consolidates financial results when it has a controlling financial interest in a subsidiary via voting rights or when it has both the power to direct the activities of an entity that most significantly impact the entity's economic performance and the ability to absorb losses or the right to receive benefits of the entity that could potentially be significant to the entity. The Company utilizes the equity method of accounting when it is able to exercise significant influence over the entity's operations, which generally occurs when the Company has an ownership interest of between 20% and 50% in an entity.
Earnings/(Loss) Per Share

The calculation of basic earnings/(loss) per share is computed by dividing net income/(loss) available to common stockholders by the weighted-average number of shares of common stock outstanding for the period. Outstanding options to purchase Western Union stock and unvested shares of restricted stock are excluded from basic shares outstanding. Diluted earnings/(loss) per share reflects the potential dilution that could occur if outstanding stock options at the presented dates are exercised and shares of restricted stock have vested, using the treasury stock method. The treasury stock method assumes proceeds from the exercise price of stock options and the unamortized compensation expense of options and restricted stock are available to acquire shares at an average market price throughout the period, and therefore, reduce the dilutive effect.
Fair Value Measurements

The Company determines the fair values of its assets and liabilities that are recognized or disclosed at fair value in accordance with the hierarchy described below. The fair values of the assets and liabilities held in the Company's defined benefit plan trust ("Trust") are recognized or disclosed utilizing the same hierarchy. The following three levels of inputs may be used to measure fair value:

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.

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.

In addition, the Trust has other investments 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.
 
Carrying amounts for many of the Company's financial instruments, including cash and cash equivalents, settlement cash and cash equivalents, and settlement receivables and settlement obligations approximate fair value due to their short maturities. Available-for-sale investment securities and derivative financial instruments are carried at fair value and included in Note 8. Fixed rate notes are carried at their original issuance values as adjusted over time to accrete that value to par, except for portions of notes hedged by interest rate swap agreements as disclosed in Note 14. The fair values of fixed rate notes are disclosed in Note 8 and are based on market quotations. The Company's investments in foreign corporate debt securities are classified as held-to-maturity securities. The fair values of the foreign corporate debt securities are disclosed in Note 8 and are based on market quotations.

Business Combinations

The Company accounts for all business combinations where control over another entity is obtained using the acquisition method of accounting, which requires that most assets (both tangible and intangible), liabilities (including contingent consideration), and remaining noncontrolling interests be recognized at fair value at the date of acquisition. The excess of the purchase price over the fair value of assets less liabilities and noncontrolling interests is recognized as goodwill. Certain adjustments to the assessed fair values of the assets, liabilities, or noncontrolling interests made subsequent to the acquisition date, but within the measurement period, which is one year or less, are recorded as adjustments to goodwill. Any adjustments subsequent to the measurement period are recorded in income. Any cost or equity method interest that the Company holds in the acquired company prior to the acquisition is remeasured to fair value at acquisition with a resulting gain or loss recognized in income for the difference between fair value and existing book value. Results of operations of the acquired company are included in the Company's results from the date of the acquisition forward and include amortization expense arising from acquired intangible assets. The Company expenses all costs as incurred related to or involved with an acquisition in "Selling, general and administrative" expenses.
Cash and Cash Equivalents

Highly liquid investments (other than those included in settlement assets) with maturities of three months or less at the date of purchase (that are readily convertible to cash) are considered to be cash equivalents and are stated at cost, which approximates fair value.

The Company maintains cash and cash equivalent balances, including a portion in money market funds, with a group of globally diversified banks and financial institutions. The Company limits the concentration of its cash and cash equivalents with any one institution and regularly reviews investment concentrations and credit worthiness of these institutions.

Allowance for Doubtful Accounts

The Company records an allowance for doubtful accounts when it is probable that the related receivable balance will not be collected based on its history of collection experience, known collection issues, such as agent suspensions and bankruptcies, consumer chargebacks and insufficient funds, and other matters the Company identifies in its routine collection monitoring.
Settlement Assets and Obligations

Settlement assets represent funds received or to be received from agents for unsettled money transfers, money orders and consumer payments. The Company records corresponding settlement obligations relating to amounts payable under money transfers, money orders and consumer payment service arrangements. Settlement assets and obligations also include amounts receivable from, and payable to, customers for the value of their cross-currency payment transactions related to the Business Solutions segment.

Settlement assets consist of cash and cash equivalents, receivables from selling agents and Business Solutions customers, and investment securities. Cash received by Western Union agents generally becomes available to the Company within one week after initial receipt by the agent. Cash equivalents consist of short-term time deposits, commercial paper and other highly liquid investments. Receivables from selling agents represent funds collected by such agents, but in transit to the Company. Western Union has a large and diverse agent base, thereby reducing the credit risk of the Company from any one agent. In addition, the Company performs ongoing credit evaluations of its agents' financial condition and credit worthiness. See Note 7 for information concerning the Company's investment securities.

Receivables from Business Solutions customers arise from cross-currency payment transactions in the Business Solutions segment. Receivables occur when funds have been paid out to a beneficiary but not yet received from the customer. Aside from these receivables, the credit risk associated with spot foreign currency exchange contracts is largely mitigated, as in most cases the Company requires the receipt of funds from customers before releasing the associated cross-currency payment.

Settlement obligations consist of money transfer, money order and payment service payables and payables to agents. Money transfer payables represent amounts to be paid to transferees when they request their funds. Most agents typically settle with transferees first and then obtain reimbursement from the Company. Money order payables represent amounts not yet presented for payment. Payment service payables represent amounts to be paid to utility companies, auto finance companies, mortgage servicers, financial service providers, government agencies and others. Due to the agent funding and settlement process, payables to agents represent amounts due to agents for money transfers that have been settled with transferees.

Property and Equipment

Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the lesser of the estimated life of the related assets (generally three to ten years for equipment and furniture and fixtures, and 30 years for buildings) or the lease term. Maintenance and repairs, which do not extend the useful life of the respective assets, are charged to expense as incurred.
Goodwill

Goodwill represents the excess of purchase price over the fair value of tangible and other intangible assets acquired, less liabilities assumed arising from business combinations.
Other Intangible Assets

Other intangible assets primarily consist of contract costs (primarily amounts paid to agents in connection with establishing and renewing long-term contracts), acquired contracts and software. Other intangible assets are amortized on a straight-line basis over the length of the contract or benefit periods. Included in the Consolidated Statements of Income/(Loss) is amortization expense of $185.8 million, $189.0 million and $202.5 million for the years ended December 31, 2017, 2016 and 2015, respectively.

The Company capitalizes initial payments for new and renewed agent contracts to the extent recoverable through future operations or penalties in the case of early termination. The Company's accounting policy is to limit the amount of capitalized costs for a given contract to the lesser of the estimated future cash flows from the contract or the termination fees the Company would receive in the event of early termination of the contract.

Acquired contracts include customer and contractual relationships and networks of subagents that are recognized in connection with the Company's acquisitions.

The Company purchases and develops software that is used in providing services and in performing administrative functions. Software development costs are capitalized once technological feasibility of the software has been established. Costs incurred prior to establishing technological feasibility are expensed as incurred. Technological feasibility is established when the Company has completed all planning and designing activities that are necessary to determine that a product can be produced to meet its design specifications, including functions, features and technical performance requirements. Capitalization of costs ceases when the product is available for general use. Software development costs and purchased software are generally amortized over a term of three to five years.

Other intangible assets are reviewed for impairment on an annual basis or whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. In such reviews, estimated undiscounted cash flows associated with these assets or operations are compared with their carrying values to determine if a write-down to fair value (normally measured by the present value technique) is required.
Revenue Recognition

The Company's revenues are primarily derived from consideration paid by customers to transfer money. These revenues vary by transaction based upon send and receive locations, the principal amount sent, whether the money transfer involves different send and receive currencies, the difference between the exchange rate set by the Company to the customer and the rate available in the wholesale foreign exchange market, speed of service, and channel, as applicable. The Company also offers several other services, including foreign exchange and payment services and other bill payment services, for which revenue is impacted by similar factors. Generally, revenues are recorded at the time a transaction is initiated.

Cost of Services

Cost of services primarily consists of agent commissions and expenses for call centers, settlement operations and related information technology costs. Expenses within these functions include personnel, software, equipment, telecommunications, bank fees, depreciation, amortization and other expenses incurred in connection with providing money transfer and other payment services.
Advertising Costs

Advertising costs are charged to operating expenses as incurred.
Income Taxes

The Company accounts for income taxes under the liability method, which requires that deferred tax assets and liabilities be determined based on the expected future income tax consequences of events that have been recognized in the consolidated financial statements. Deferred tax assets and liabilities are recognized based on temporary differences between the financial statement carrying amounts and tax bases of assets and liabilities using enacted tax rates in effect in the years in which the temporary differences are expected to reverse. The Company assesses the realizability of its deferred tax assets. A valuation allowance must be established when, based upon available evidence, it is more likely than not that all or a portion of the deferred tax assets will not be realized.

The Company recognizes the tax benefits from uncertain tax positions only when it is more likely than not, based on the technical merits of the position, the tax position will be sustained upon examination, including the resolution of any related appeals or litigation. The tax benefits recognized in the consolidated financial statements from such a position are measured as the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate resolution.
The Company recognizes interest and penalties with respect to unrecognized tax benefits in "Provision for income taxes" in its Consolidated Statements of Income/(Loss), and records the associated liability in "Income taxes payable" in its Consolidated Balance Sheets.
Foreign Currency Translation

The United States dollar is the functional currency for substantially all of the Company's businesses. Revenues and expenses are translated at average exchange rates prevailing during the period. Foreign currency denominated assets and liabilities for those businesses for which the local currency is the functional currency are translated into United States dollars based on exchange rates at the end of the year. The effects of foreign exchange gains and losses arising from the translation of assets and liabilities of these businesses are included as a component of "Accumulated other comprehensive loss" in the accompanying Consolidated Balance Sheets. Foreign currency denominated monetary assets and liabilities of businesses for which the United States dollar is the functional currency are remeasured based on exchange rates at the end of the period, and the resulting remeasurement gains and losses are recognized in net income/(loss). Non-monetary assets and liabilities of these operations are remeasured at historical rates in effect when the asset was recognized or the liability was incurred.
Derivatives

The Company uses derivatives to (a) minimize its exposures related to changes in foreign currency exchange rates and interest rates and (b) facilitate cross-currency Business Solutions payments by writing derivatives to customers. The Company recognizes all derivatives in the "Other assets" and "Other liabilities" captions in the accompanying Consolidated Balance Sheets at their fair value. All cash flows associated with derivatives are included in cash flows from operating activities in the Consolidated Statements of Cash Flows.

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, 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 "Revenues."

The fair value of the Company's derivatives is derived from standardized models that use market-based inputs (e.g., forward prices for foreign currency).

The details of each designated hedging relationship are formally documented at the inception of the arrangement, including the risk management objective, hedging strategy, hedged item, specific risks being hedged, the derivative instrument, how effectiveness is being assessed, and how ineffectiveness, if any, will be measured. The derivative must be highly effective in offsetting the changes in cash flows or fair value of the hedged item, and effectiveness is evaluated quarterly on a retrospective and prospective basis.

Legal Contingencies

The Company is a party to certain legal and regulatory proceedings with respect to a variety of matters. The Company records an accrual for these contingencies to the extent that a loss is both probable and reasonably estimable. If some amount within a range of loss appears to be a better estimate than any other amount within the range, that amount is accrued. When no amount within a range of loss appears to be a better estimate than any other amount, the lowest amount in the range is accrued.
The Company regularly evaluates the status of legal matters to assess whether a loss is probable and reasonably estimable in determining whether an accrual is appropriate. Furthermore, in determining whether disclosure is appropriate, the Company evaluates each legal matter to assess if there is at least a reasonable possibility that a loss or additional loss may have been incurred and whether an estimate of possible loss or range of loss can be made.
Stock-Based Compensation

The Company currently has a stock-based compensation plan that provides for grants of Western Union stock options, restricted stock awards and restricted and unrestricted stock units to employees and non-employee directors of the Company.

All stock-based compensation to employees is required to be measured at fair value and expensed over the requisite service period. The Company recognizes compensation expense on awards on a straight-line basis over the requisite service period for the entire award, with an estimate of forfeitures. Refer to Note 16 for additional discussion regarding details of the Company's stock-based compensation plans.
Severance and Other Related Expenses

The Company records severance-related expenses once they are both probable and estimable in accordance with the provisions of the applicable accounting guidance for severance provided under an ongoing benefit arrangement. One-time, involuntary benefit arrangements and other costs are generally recognized when the liability is incurred. The Company also evaluates impairment issues associated with restructuring and other activities when the carrying amount of the related assets may not be fully recoverable, in accordance with the appropriate accounting guidance.
Recently Adopted Accounting Pronouncements

On January 1, 2017, the Company adopted an accounting pronouncement related to share-based payments to employees. This standard requires all excess tax benefits and tax deficiencies to be recognized as income tax expense (benefit) in the Consolidated Statements of Income/(Loss) and that excess tax benefits be included as an operating activity for the cash flow statement. In addition, these tax benefits must be removed from the dilutive weighted-average shares outstanding calculation as these assumed proceeds will have already been recognized in the Consolidated Statements of Income/(Loss). The Company will continue its current practice of estimating forfeitures when calculating compensation expense. The adoption of this standard did not have a material impact on the Company's financial position, results of operations, cash flows, or related disclosures.

In January 2017, the Financial Accounting Standards Board issued a new accounting pronouncement to simplify the method of measuring a goodwill impairment charge in the event a reporting unit’s carrying amount exceeds its fair value. In those circumstances, the new standard requires the Company to recognize an impairment charge for the amount by which the carrying amount of the reporting unit exceeds its fair value. The Company early-adopted the new standard in the fourth quarter of 2017 and measured its goodwill impairment charge related to its Business Solutions reporting unit under this approach.

Accounting Pronouncements Not Yet Adopted

In May 2014, the Financial Accounting Standards Board issued a new accounting pronouncement regarding revenue from contracts with customers, which the Company is required to adopt on January 1, 2018. This new standard, along with subsequent amendments, provides guidance on recognizing revenue, including a five-step model to determine when revenue recognition is appropriate. The standard requires that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Based on management's analysis of the new standard, for the significant majority of the Company's revenues, the Company has an obligation to perform one integrated service for the customer - collect the consumer's money and make funds available for payment, predominantly on the same day, to a designated recipient in the currency requested. Accordingly, management has determined that the adoption of this standard will not have a material impact on the Company's financial position and results of operations. The Company will adopt the standard using the modified retrospective approach, applied to all contracts with customers, with the cumulative effect of adoption included in retained earnings as of January 1, 2018. Management has completed an analysis of the new disclosure requirements of the standard and has made minor enhancements to its systems and processes to comply with the new disclosure requirements.


In January 2016, the Financial Accounting Standards Board issued a new accounting pronouncement regarding classification and measurement of financial instruments. This new standard provides guidance on how entities measure certain equity investments and present changes in the fair value. This standard requires that entities measure certain equity investments that do not result in consolidation and are not accounted for under the equity method at fair value and recognize any changes in fair value in net income. The Company is required to adopt the new standard on January 1, 2018. Management believes that the adoption of this standard will not have a material impact on the Company's financial position, results of operations, or related disclosures.

In February 2016, the Financial Accounting Standards Board issued a new accounting pronouncement regarding the financial reporting of leasing transactions. This new standard requires a lessee to record assets and liabilities on the balance sheet for the rights and obligations arising from leases with terms of more than 12 months. The Company is required to adopt the new standard on January 1, 2019 using a modified retrospective approach. Management is currently evaluating the potential impact that the adoption of this standard will have on the Company’s financial position, results of operations, and related disclosures.

In June 2016, the Financial Accounting Standards Board issued a new accounting pronouncement regarding credit losses for financial instruments. The new standard requires entities to measure expected credit losses for certain financial assets held at the reporting date using a current expected credit loss model, which is based on historical experience, adjusted for current conditions and reasonable and supportable forecasts. The Company is required to adopt the new standard on January 1, 2020. Management is currently evaluating the potential impact that the adoption of this standard will have on the Company's financial position, results of operations, and related disclosures.

In October 2016, the Financial Accounting Standards Board issued a new accounting pronouncement regarding certain intra-entity asset transfers, requiring that an entity recognize any income tax consequences when the transfer occurs. The Company is required to adopt the new standard on January 1, 2018. Management believes that the adoption of this standard will not have a material impact on the Company's financial position and results of operations.

In March 2017, the Financial Accounting Standards Board issued a new accounting pronouncement to require the service cost component of defined benefit plan pension cost to be included in the same line item as other compensation costs arising from services rendered by relevant employees, with the other non-service cost components of this net benefit cost presented in the Consolidated Statements of Income/(Loss) separately from the service cost component, outside a subtotal of income from operations. The Company's defined benefit pension plan is frozen, thus there are no related service costs. The Company currently records the non-service costs of the defined benefit pension plan in the "Cost of services" line item of the Consolidated Statements of Income/(Loss), whereas the Company expects to record these costs in the "Other income/(expense), net" line item upon adoption of the standard. The Company is required to adopt the new standard on January 1, 2018, with retrospective presentation. Management believes that the adoption of this standard will not have a material impact on the Company's results of operations or related disclosures.

In August 2017, the Financial Accounting Standards Board issued a new accounting pronouncement to improve the financial reporting of hedging relationships to better portray the economic results of an entity's risk management activities in its financial statements. The Company adopted the standard on January 1, 2018, using the amortization approach for excluded components related to the Company's foreign currency hedging program. Additionally, the impact of the excluded components will be recognized in "Revenues" in the Consolidated Statements of Income/(Loss) rather than "Derivative gains, net" as previously reported. The effects of the standard will be recognized prospectively in the Company's financial statements, since for foreign currency hedges existing at the date of adoption that exclude time value from the assessment of effectiveness, the Company will continue using the mark-to-market recognition model for the excluded component. The adoption of this standard will have no impact on the Company's existing interest rate hedges and will not have a material impact on the Company's financial position or results of operations, but will require the addition of certain disclosures.

In February 2018, the Financial Accounting Standards Board issued a new accounting pronouncement that gives entities the option to reclassify tax effects included within accumulated other comprehensive income/(loss) as a result of the United States tax reform legislation enacted in December 2017 (the “Tax Act”) to retained earnings. The Company will adopt this standard in the first quarter of 2018 and will record the reclassification in the period of adoption. The adoption of this standard will not have a material impact on the Company's financial position or results of operations, but will require the addition of certain disclosures.
Investment Securities

Investment securities included in "Settlement assets" in the Company's Consolidated Balance Sheets consist primarily of highly-rated state and municipal debt securities, including fixed rate term notes and variable rate demand notes. Variable rate demand note securities can be put (sold at par) typically on a daily basis with settlement periods ranging from the same day to one week, but have varying maturities through 2050. These securities may be used by the Company for short-term liquidity needs and held for short periods of time. The Company is required to hold highly-rated, investment grade securities and such investments are restricted to satisfy outstanding settlement obligations in accordance with applicable state and foreign country requirements.

The substantial majority of the Company's investment securities are classified as available-for-sale and recorded at fair value. Investment securities are exposed to market risk due to changes in interest rates and credit risk. Western Union regularly monitors credit risk and attempts to mitigate its exposure by investing in highly-rated securities and through investment diversification.

Unrealized gains and losses on available-for-sale securities are excluded from earnings and presented as a component of accumulated other comprehensive loss, net of related deferred taxes. Proceeds from the sale and maturity of available-for-sale securities during the years ended December 31, 2017, 2016 and 2015 were $7.9 billion, $4.4 billion and $8.7 billion, respectively. The increase in proceeds from the sale and maturity of available-for-sale securities for the year ended December 31, 2017 compared to the year ended December 31, 2016 was primarily due to increased sales of variable rate demand notes securities. The decline in proceeds from the sale and maturity of available-for-sale securities for the year ended December 31, 2016 compared to the year ended December 31, 2015 was primarily due to reduced sales of variable rate demand note securities.

Gains and losses on investments are calculated using the specific-identification method and are recognized during the period in which the investment is sold or when an investment experiences an other-than-temporary decline in value. Factors that could indicate an impairment exists include, but are not limited to: earnings performance, changes in credit rating or adverse changes in the regulatory or economic environment of the asset. If potential impairment exists, the Company assesses whether it has the intent to sell the debt security, more likely than not will be required to sell the debt security before its anticipated recovery or expects that some of the contractual cash flows will not be received. The Company had no material other-than-temporary impairments during the periods presented.
Foreign Currency Derivatives
The Company's policy is to use longer-term foreign currency forward contracts, with maturities of up to 36 months at inception and a targeted weighted-average maturity of approximately one year, to help mitigate some of the risk that changes in foreign currency exchange rates compared to the United States dollar could have on forecasted revenues denominated in other currencies related to its business. As of December 31, 2017, the Company's longer-term foreign currency forward contracts had maturities of a maximum of 24 months with a weighted-average maturity of approximately one year. These contracts are accounted for as cash flow hedges of forecasted revenue, with effectiveness assessed based on changes in the spot rate of the affected currencies during the period of designation. Accordingly, all changes in the fair value of the hedges not considered effective or portions of the hedge that are excluded from the measure of effectiveness are recognized immediately in "Derivative gains, net" within the Company's Consolidated Statements of Income/(Loss).
The Company also uses short duration foreign currency forward contracts, generally with maturities from a few days up to one month, to offset foreign exchange rate fluctuations on settlement assets and obligations between initiation and settlement. In addition, forward contracts, typically with maturities of less than one year at inception, are utilized to offset foreign exchange rate fluctuations on certain foreign currency denominated cash and other asset and liability positions. None of these contracts are designated as accounting hedges.
Business Solutions Operations

The Company writes derivatives, primarily foreign currency forward contracts and option contracts, mostly with small and medium size enterprises and derives a currency spread from this activity as part of its Business Solutions operations. The Company aggregates its Business Solutions 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). The derivatives written are part of the broader portfolio of foreign currency positions arising from the Company's cross-currency payments operations, which primarily include spot exchanges of currency in addition to forwards and options. Foreign exchange revenues from the total portfolio of positions were $341.0 million, $352.6 million, and $357.2 million for the years ended December 31, 2017, 2016 and 2015, respectively. None of the derivative contracts used in Business Solutions operations are designated as accounting hedges. The duration of these derivative contracts at inception is generally less than one year.
Interest Rate Hedging

The Company utilizes interest rate swaps 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 Company designates these derivatives as fair value hedges. The change in fair value of the interest rate swaps is offset by a change in the carrying value of the debt being hedged within "Borrowings" in the Consolidated Balance Sheets and "Interest expense" in the Consolidated Statements of Income/(Loss) has been adjusted to include the effects of interest accrued on the swaps.

The Company, at times, utilizes derivatives to hedge the forecasted issuance of fixed-rate debt. These derivatives are designated as cash flow hedges of the variability in the fixed-rate coupon of the debt expected to be issued. The effective portion of the change in fair value of the derivatives is recorded in "Accumulated other comprehensive loss" in the Consolidated Balance Sheets.
The business segment measurements provided to, and evaluated by, the Company's CODM are computed in accordance with the following principles:

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.

As described in Note 4, for the year ended December 31, 2017, the Company recognized a goodwill impairment charge of $464.0 million related to its Business Solutions reporting unit. While the impairment was identifiable to the Business Solutions segment, it was not allocated to the segment, as it was 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.

Expenses of $60.0 million related to the NYDFS Consent Order for the year ended December 31, 2017, and expenses of $8.0 million and $601.0 million related to the Joint Settlement Agreements for the years ended December 31, 2017 and 2016, respectively, 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 NYDFS Consent Order and the Joint Settlement Agreements, see Note 5.

Business transformation expenses of $94.4 million and $20.3 million for the years ended December 31, 2017 and 2016, respectively, 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.

Summary of Significant Accounting Policies (Tables)
The following table provides the calculation of diluted weighted-average shares outstanding (in millions):
 
For the Year Ended December 31,
 
2017
 
2016
 
2015
Basic weighted-average shares outstanding
467.9

 
490.2

 
512.6

Common stock equivalents

 
3.3

 
4.1

Diluted weighted-average shares outstanding
467.9

 
493.5

 
516.7

Settlement assets and obligations consisted of the following (in millions):
 
December 31,
 
2017
 
2016
Settlement assets:
 
 
 
Cash and cash equivalents
$
1,264.8

 
$
1,190.0

Receivables from selling agents and Business Solutions customers
1,573.9

 
1,327.3

Investment securities
1,350.2

 
1,231.8

 
$
4,188.9

 
$
3,749.1

Settlement obligations:
 
 
 
Money transfer, money order and payment service payables
$
2,789.2

 
$
2,598.2

Payables to agents
1,399.7

 
1,150.9

 
$
4,188.9

 
$
3,749.1

Property and equipment consisted of the following (in millions):
 
December 31,
 
2017
 
2016
Equipment
$
604.7

 
$
585.5

Buildings
88.6

 
88.3

Leasehold improvements
87.4

 
84.3

Furniture and fixtures
42.0

 
40.4

Land and improvements
17.0

 
17.0

Projects in process
10.2

 
5.0

Total property and equipment, gross
849.9

 
820.5

Less accumulated depreciation
(635.7
)
 
(600.0
)
Property and equipment, net
$
214.2

 
$
220.5

The following table provides the components of other intangible assets (in millions):
 
 
December 31, 2017
 
December 31, 2016
 
 
Weighted-
Average
Amortization
Period
(in years)
 
Initial Cost
 


Net of
Accumulated
Amortization
 
Initial Cost
 


Net of
Accumulated
Amortization
Acquired contracts
 
11.5
 
$
600.4

 
$
220.0

 
$
599.6

 
$
264.4

Capitalized contract costs
 
6.2
 
559.5

 
268.2

 
559.2

 
294.0

Internal use software
 
3.2
 
387.8

 
53.1

 
371.3

 
56.4

Acquired trademarks
 
24.8
 
33.2

 
16.9

 
34.2

 
18.5

Projects in process
 
3.0
 
28.1

 
28.1

 
30.6

 
30.6

Other intangibles
 
4.6
 
20.0

 

 
27.5

 
0.3

Total other intangible assets
 
7.7
 
$
1,629.0

 
$
586.3

 
$
1,622.4

 
$
664.2

Business Transformation and Productivity and Cost-Savings Initiatives Expenses (Tables)
The following table summarizes the activity for the years ended December 31, 2017 and December 31, 2016 for the consulting service fees, severance, and other costs related to the business transformation accruals, which are included in "Accounts payable and accrued liabilities" in the Company's Consolidated Balance Sheets as of December 31, 2017 and December 31, 2016 (in millions):

 
Consulting Service Fees
 
Severance and Related Employee Benefits
 
Other
 
Total
Balance, December 31, 2015
$

 
$

 
$

 
$

Expenses
16.4

 
3.9

 

 
20.3

Cash payments
(7.4
)
 

 

 
(7.4
)
Balance, December 31, 2016
$
9.0

 
$
3.9

 
$

 
$
12.9

Expenses (a)
36.1

 
44.2

 
14.1

 
94.4

Cash payments
(36.9
)
 
(28.2
)
 
(12.2
)
 
(77.3
)
Non-cash benefits/charges (a)

 
3.3

 
(0.3
)
 
3.0

Balance, December 31, 2017
$
8.2

 
$
23.2

 
$
1.6

 
$
33.0

____________

(a)
Expenses incurred during 2017 include a non-cash benefit for adjustments to stock compensation for awards forfeited by employees and other immaterial items. These benefits and charges have been removed from the liability balance in the table above as they do not impact the business transformation accruals.
The following table presents the above expenses related to business transformation and productivity and cost-savings initiatives as reflected in the Consolidated Statements of Income/(Loss) (in millions):
 
Year Ended December 31,
 
2017
 
2016
 
2015
 
Business Transformation
 
Productivity and Cost-Savings Initiatives
Cost of services
$
35.7

 
$
2.5

 
$
1.0

Selling, general and administrative
58.7

 
17.8

 
10.1

Total expenses, pre-tax
$
94.4

 
$
20.3

 
$
11.1

Total expenses, net of tax
$
63.3

 
$
12.9

 
$
7.2

The following table summarizes the business transformation expenses incurred by reportable segment (in millions). Certain business transformation expenses, primarily consulting expenses, are not identifiable to a specific segment, and have therefore been excluded from the table below. These expenses have not been allocated to the Company's segments disclosed in Note 17. While the expenses shown below are identifiable to the Company's segments, they have been excluded from the measurement of segment operating income provided to the CODM for purposes of assessing segment performance and decision making with respect to resource allocation.
 
 
Business Transformation
 
 
Consumer-to-Consumer
 
Business Solutions
 
Other
 
Total
2017 expenses
 
$
30.8

 
$
16.1

 
$
13.6

 
$
60.5

2016 expenses
 
2.7

 
0.6

 
0.5

 
3.8

Goodwill (Tables)
The following table presents changes to goodwill for the years ended December 31, 2017 and 2016 (in millions):

Consumer-to-Consumer
 
Business Solutions
 
Other
 
Total
January 1, 2016 goodwill, net
$
1,950.1

 
$
996.0

 
$
217.7

 
$
3,163.8

Currency translation

 

 
(1.8
)
 
(1.8
)
December 31, 2016 goodwill, net
$
1,950.1

 
$
996.0

 
$
215.9

 
$
3,162.0

Goodwill impairment charge

 
(464.0
)
 

 
(464.0
)
Acquisitions
30.9

 

 

 
30.9

Currency translation

 

 
(1.0
)
 
(1.0
)
December 31, 2017 goodwill, net
$
1,981.0

 
$
532.0

 
$
214.9

 
$
2,727.9

The following table presents accumulated impairment losses for the years ended December 31, 2017, 2016 and 2015 (in millions):
 
 
As of December 31,
 
 
2017
 
2016
 
2015
Goodwill, gross
 
$
3,191.9

 
$
3,162.0

 
$
3,163.8

Accumulated impairment losses
 
(464.0
)
 

 

Goodwill, net
 
$
2,727.9

 
$
3,162.0

 
$
3,163.8

Investment Securities (Tables)
The components of investment securities are as follows (in millions):
December 31, 2017
 
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)
$
955.7

 
$
960.0

 
$
7.9

 
$
(3.6
)
 
$
4.3

State and municipal variable rate demand notes
319.6

 
319.6

 

 

 

Corporate and other debt securities
60.9

 
60.8

 
0.2

 
(0.3
)
 
(0.1
)
United States Treasury securities
9.9

 
9.8

 

 
(0.1
)
 
(0.1
)
 
1,346.1

 
1,350.2

 
8.1

 
(4.0
)
 
4.1

Other assets:
 
 
 
 
 
 
 
 
 
Held-to-maturity securities:
 
 
 
 
 
 
 
 
 
Foreign corporate debt securities
56.2

 
56.2

 

 

 

 
$
1,402.3

 
$
1,406.4

 
$
8.1

 
$
(4.0
)
 
$
4.1

 
 
 
 
 
 
 
 
 
 
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
)
____________

(a) The majority of these securities are fixed rate instruments.

The components of investment securities are as follows (in millions):
December 31, 2017
 
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)
$
955.7

 
$
960.0

 
$
7.9

 
$
(3.6
)
 
$
4.3

State and municipal variable rate demand notes
319.6

 
319.6

 

 

 

Corporate and other debt securities
60.9

 
60.8

 
0.2

 
(0.3
)
 
(0.1
)
United States Treasury securities
9.9

 
9.8

 

 
(0.1
)
 
(0.1
)
 
1,346.1

 
1,350.2

 
8.1

 
(4.0
)
 
4.1

Other assets:
 
 
 
 
 
 
 
 
 
Held-to-maturity securities:
 
 
 
 
 
 
 
 
 
Foreign corporate debt securities
56.2

 
56.2

 

 

 

 
$
1,402.3

 
$
1,406.4

 
$
8.1

 
$
(4.0
)
 
$
4.1

 
 
 
 
 
 
 
 
 
 
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
)
____________

(a) The majority of these securities are fixed rate instruments.
The following summarizes the contractual maturities of settlement-related debt securities as of December 31, 2017 (in millions):
 
Amortized
Cost
 
Fair
Value
Due within 1 year
$
102.5

 
$
102.4

Due after 1 year through 5 years
525.7

 
527.6

Due after 5 years through 10 years
275.6

 
277.1

Due after 10 years
442.3

 
443.1

 
$
1,346.1

 
$
1,350.2

Fair Value Measurements (Tables)
Schedule of Fair Value Measurements
The following tables reflect assets and liabilities that were measured at fair value on a recurring basis (in millions):
  
Fair Value Measurement Using
 
Assets/
Liabilities at
Fair
Value
December 31, 2017
Level 1
 
Level 2
 
Level 3
 
Assets:
 
 
 
 
 
 
 
Settlement assets:
 
 
 
 
 
 
 
State and municipal debt securities
$

 
$
960.0

 
$

 
$
960.0

State and municipal variable rate demand notes

 
319.6

 

 
319.6

Corporate and other debt securities

 
60.8

 

 
60.8

United States Treasury securities
9.8

 

 

 
9.8

Other assets:
 
 
 
 
 
 
 
Derivatives

 
273.4

 

 
273.4

Total assets
$
9.8

 
$
1,613.8

 
$

 
$
1,623.6

Liabilities:
 
 
 
 
 
 
 
Derivatives
$

 
$
263.0

 
$

 
$
263.0

Total liabilities
$

 
$
263.0

 
$

 
$
263.0

 
 
 
 
 
 
 
 
 
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

Other Assets and Other Liabilities (Tables)
Schedule of components of other assets and other liabilities
The following table summarizes the components of other assets and other liabilities (in millions):

 
December 31,
 
2017
 
2016
Other assets:
 
 
 
Derivatives
$
273.4

 
$
365.6

Prepaid expenses
120.5

 
126.9

Amounts advanced to agents, net of discounts
53.5

 
58.0

Equity method investments
29.1

 
40.1

Other
199.4

 
155.7

Total other assets
$
675.9

 
$
746.3

Other liabilities:
 
 
 
Derivatives
$
263.0

 
$
262.3

Pension obligations
15.0

 
26.4

Other
78.8

 
70.7

Total other liabilities
$
356.8

 
$
359.4

Income Taxes (Tables)
The components of pre-tax income, generally based on the jurisdiction of the legal entity, were as follows (in millions):
 
Year Ended December 31,
 
2017
 
2016
 
2015
Domestic
$
(238.8
)
 
$
(546.4
)
 
$
(27.0
)
Foreign
586.3

 
888.1

 
968.8

 
$
347.5

 
$
341.7

 
$
941.8

The provision for income taxes was as follows (in millions):
 
Year Ended December 31,
 
2017
 
2016
 
2015
Federal
$
848.5

 
$
43.5

 
$
33.2

State and local
5.4

 
2.9

 
(1.0
)
Foreign
50.7

 
42.1

 
71.8

 
$
904.6

 
$
88.5

 
$
104.0

The Company's effective tax rates differed from statutory rates as follows:
 
Year Ended December 31,
 
2017
 
2016
 
2015
Federal statutory rate
35.0
 %
 
35.0
 %
 
35.0
 %
State income taxes, net of federal income tax benefits
1.7
 %
 
1.2
 %
 
0.4
 %
Foreign rate differential, net of United States tax paid on foreign earnings (1.1%, 24.8% and 3.4%, respectively)
(69.3
)%
 
(50.8
)%
 
(24.6
)%
Tax Act impact
251.5
 %
 
 %
 
 %
Joint Settlement Agreements impact
 %
 
62.1
 %
 
 %
NYDFS Consent Order impact
6.0
 %
 
 %
 
 %
Goodwill impairment
46.7
 %
 
 %
 
 %
Lapse of statute of limitations
(10.0
)%
 
(11.3
)%
 
(0.8
)%
Valuation allowances
0.8
 %
 
(2.8
)%
 
(0.9
)%
Other
(2.1
)%
 
(7.5
)%
 
1.9
 %
Effective tax rate
260.3
 %
 
25.9
 %
 
11.0
 %
The Company's provision for income taxes consisted of the following components (in millions):
 
Year Ended December 31,
 
2017
 
2016
 
2015
Current:
 
 
 
 
 
Federal
$
774.4

 
$
186.2

 
$
59.6

State and local
1.0

 
13.1

 
5.4

Foreign
59.7

 
63.4

 
78.9

Total current taxes
835.1

 
262.7

 
143.9

Deferred:
 
 
 
 
 
Federal
74.1

 
(142.7
)
 
(26.4
)
State and local
4.4

 
(10.2
)
 
(6.4
)
Foreign
(9.0
)
 
(21.3
)
 
(7.1
)
Total deferred taxes
69.5

 
(174.2
)
 
(39.9
)
 
$
904.6

 
$
88.5

 
$
104.0

The following table outlines the principal components of deferred tax items (in millions):
 
December 31,
 
2017
 
2016
Deferred tax assets related to:
 
 
 
Reserves, accrued expenses and employee-related items
$
44.8

 
$
279.8

Tax attribute carryovers
27.1

 
39.1

Pension obligations
4.6

 
11.1

Intangibles, property and equipment
11.9

 
9.7

Other
10.7

 
14.8

Valuation allowance
(19.9
)
 
(22.0
)
Total deferred tax assets
79.2

 
332.5

Deferred tax liabilities related to:
 
 
 
Intangibles, property and equipment
239.4

 
394.4

Other
0.9

 
14.3

Total deferred tax liabilities
240.3

 
408.7

Net deferred tax liability (a)
$
161.1

 
$
76.2


____________

(a)
As of December 31, 2017 and 2016, deferred tax assets that cannot be fully offset by deferred tax liabilities in the respective tax jurisdictions of $11.9 million and $9.7 million, respectively, are reflected in "Other assets" in the Consolidated Balance Sheets.
A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding interest and penalties, is as follows (in millions):
 
2017
 
2016
Balance as of January 1,
$
352.0

 
$
105.6

Increase related to current period tax positions (a)
9.0

 
223.6

Increase related to prior period tax positions

 
71.7

Decrease related to prior period tax positions
(19.8
)
 
(14.9
)
Decrease due to lapse of applicable statute of limitations
(14.0
)
 
(33.1
)
Increase/(decrease) due to effects of foreign currency exchange rates
1.8

 
(0.9
)
Balance as of December 31,
$
329.0

 
$
352.0

____________

(a)
Includes recurring accruals for issues which initially arose in previous periods.
Operating Lease Commitments (Tables)
Schedule of minimum aggregate rental commitments under all non-cancelable operating leases
As of December 31, 2017, the minimum aggregate rental commitments under all non-cancelable operating leases were as follows (in millions):
Year Ending December 31,
 
2018
$
43.2

2019
35.5

2020
32.4

2021
26.3

2022
22.7

Thereafter
118.7

Total future minimum lease payments
$
278.8

Stockholders' Equity/(Deficit) (Tables)
The following table summarizes the components of accumulated other comprehensive loss, net of tax (in millions). All amounts reclassified from accumulated other comprehensive loss affect the line items as indicated below within the Consolidated Statements of Income/(Loss).
 
Year Ended December 31,
 
2017
 
2016
 
2015
Unrealized gains/(losses) on investment securities, beginning of year
$
(3.8
)
 
$
7.8

 
$
8.9

Unrealized gains/(losses)
12.6

 
(14.9
)
 
0.4

Tax (expense)/benefit
(4.6
)
 
5.4

 
(0.1
)
Reclassification of gains into "Revenues"
(2.4
)
 
(3.3
)
 
(2.2
)
Tax expense related to reclassifications
0.9

 
1.2

 
0.8

Net unrealized gains/(losses) on investment securities
6.5

 
(11.6
)
 
(1.1
)
Unrealized gains/(losses) on investment securities, end of year
$
2.7

 
$
(3.8
)
 
$
7.8

 


 
 
 


Unrealized gain/(losses) on hedging activities, beginning of year
$
33.8

 
$
41.4

 
$
48.6

Unrealized gains/(losses)
(73.9
)
 
34.3

 
70.8

Tax (expense)/benefit
2.2

 
1.0

 
(7.0
)
Reclassification of gains into "Revenues"
(4.8
)
 
(48.0
)
 
(77.8
)
Reclassification of losses into "Interest expense"
3.3

 
3.6

 
3.6

Tax expense/(benefit) related to reclassifications
(1.2
)
 
1.5

 
3.2

Net unrealized gains/(losses) on hedging activities
(74.4
)
 
(7.6
)
 
(7.2
)
Unrealized gains/(losses) on hedging activities, end of year
$
(40.6
)
 
$
33.8

 
$
41.4

 
 
 
 
 


Foreign currency translation adjustments, beginning of year
$
(70.7
)
 
$
(66.0
)
 
$
(49.2
)
Foreign currency translation adjustments
(6.8
)
 
(5.4
)
 
(20.3
)
Tax benefit
0.6

 
0.7

 
3.5

Net foreign currency translation adjustments
(6.2
)
 
(4.7
)
 
(16.8
)
Foreign currency translation adjustments, end of year
$
(76.9
)
 
$
(70.7
)
 
$
(66.0
)
 
 
 
 
 


Defined benefit pension plan adjustments, beginning of year
$
(122.1
)
 
$
(127.1
)
 
$
(127.2
)
Unrealized gains/(losses)
2.3

 
(2.9
)
 
(9.7
)
    Tax (expense)/benefit
(0.5
)
 
1.1

 
2.5

Reclassification of losses into "Cost of services"
11.3

 
10.7

 
11.4

Tax benefit related to reclassifications
(4.1
)
 
(3.9
)
 
(4.1
)
Net defined benefit pension plan adjustments
9.0

 
5.0

 
0.1

Defined benefit pension plan adjustments, end of year
$
(113.1
)
 
$
(122.1
)
 
$
(127.1
)
Accumulated other comprehensive loss, end of year
$
(227.9
)
 
$
(162.8
)
 
$
(143.9
)
Dividends per share declared quarterly by the Company's Board of Directors during the years ended 2017, 2016 and 2015 were as follows:
Year

Q1

Q2

Q3

Q4
2017

$
0.175

 
$
0.175

 
$
0.175

 
$
0.175

2016

$
0.16

 
$
0.16

 
$
0.16

 
$
0.16

2015

$
0.155

 
$
0.155

 
$
0.155

 
$
0.155

Derivatives (Tables)
The aggregate equivalent United States dollar notional amounts of foreign currency forward contracts as of December 31, 2017 were as follows (in millions):
Contracts designated as hedges:
 
Euro
$
384.7

British pound
103.4

Canadian dollar
92.9

Australian dollar
52.4

Swiss franc
32.4

Other
62.6

Contracts not designated as hedges:
 
Euro
$
320.0

British pound
74.1

Australian dollar
51.3

Canadian dollar
46.8

Mexican peso
42.8

Indian rupee
35.9

Brazilian real
29.7

Other (a)
156.6


____________________
(a)
Comprised of exposures to 21 different currencies. None of these individual currency exposures is greater than $25 million.

The following table summarizes the fair value of derivatives reported in the Consolidated Balance Sheets as of December 31, 2017 and December 31, 2016 (in millions):
 
Derivative Assets
 
Derivative Liabilities
 
 
 
Fair Value
 
 
 
Fair Value
 
Balance Sheet
Location
 
December 31,
2017
 
December 31,
2016
 
Balance Sheet
Location
 
December 31,
2017
 
December 31,
2016
Derivatives — hedges:
 
 
 
 
 
 
 
 
 
 
 
Interest rate fair value hedges
Other assets
 
$
3.3

 
$
6.7

 
Other liabilities
 
$

 
$

Foreign currency cash flow hedges
Other assets
 
8.0

 
48.4

 
Other liabilities
 
36.1

 
1.2

Total
 
 
$
11.3

 
$
55.1

 
 
 
$
36.1

 
$
1.2

Derivatives — undesignated:
 
 
 
 
 
 
 
 
 
 
 
Business Solutions operations — foreign currency (a)
Other assets
 
$
260.2

 
$
307.2

 
Other liabilities
 
$
221.6

 
$
258.3

Foreign currency
Other assets
 
1.9

 
3.3

 
Other liabilities
 
5.3

 
2.8

Total
 
 
$
262.1

 
$
310.5

 
 
 
$
226.9

 
$
261.1

Total derivatives
 
 
$
273.4

 
$
365.6

 
 
 
$
263.0

 
$
262.3


____________________
(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 changes in the Company's derivative assets and liabilities that may not directly align to the growth in the underlying derivatives business.
The following tables summarize the gross and net fair value of derivative assets and liabilities as of December 31, 2017 and December 31, 2016 (in millions):

Offsetting of Derivative Assets
December 31, 2017
 
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
 
$
115.4

 
$


$
115.4


$
(98.7
)

$
16.7

Derivatives that are not or may not be subject to master netting arrangement or similar agreement
 
158.0

 
 
 
 
 
 
 
 
Total
 
$
273.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2016
 
 
 
 
 
 
 
 
 
 
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

 
 
 
 
 
 
 
 
Offsetting of Derivative Liabilities
December 31, 2017
 
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
 
$
214.9

 
$


$
214.9


$
(98.7
)

$
116.2

Derivatives that are not or may not be subject to master netting arrangement or similar agreement
 
48.1

 
 
 
 
 
 
 
 
Total
 
$
263.0

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2016
 
 
 
 
 
 
 
 
 
 
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

 
 
 
 
 
 
 
 
The following tables summarize the location and amount of gains and losses of derivatives in the Consolidated Statements of Income/(Loss) segregated by designated, qualifying hedging instruments and those that are not, for the years ended December 31, 2017, 2016, and 2015 (in millions):
Fair Value Hedges
The following table presents the location and amount of gains/(losses) from fair value hedges for the years ended December 31, 2017, 2016, and 2015 (in millions):
 
 
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
 
 
2017
 
2016
 
2015
 
Hedged 
Item
 
 
2017
 
2016
 
2015
 
 
2017
 
2016
 
2015
Interest rate contracts
 
Interest  expense
 
$
(1.8
)
 
$
6.2

 
$
15.2

 
Fixed-rate debt
 
Interest  expense
 
$
3.9

 
$
3.2

 
$
(2.3
)
 
Interest  expense
 
$
(0.2
)
 
$

 
$
0.8

Total gain/(loss)
 
 
 
$
(1.8
)
 
$
6.2

 
$
15.2

 
 
 
 
 
$
3.9

 
$
3.2

 
$
(2.3
)
 
 
 
$
(0.2
)
 
$

 
$
0.8


Cash Flow Hedges
The following table presents the location and amount of gains/(losses) from cash flow hedges for the years ended December 31, 2017, 2016, and 2015 (in millions):
 
 
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
 
2017
 
2016
 
2015
 
 
2017
 
2016
 
2015
 
 
2017
 
2016
 
2015
Foreign currency contracts
 
$
(73.9
)
 
$
34.3

 
$
70.8

 
Revenue
 
$
4.8

 
$
48.0

 
$
77.8

 
Derivative gains, net
 
$
9.0

 
$
3.7

 
$
(0.1
)
Interest rate contracts (c)
 

 

 

 
Interest expense
 
(3.3
)
 
(3.6
)
 
(3.6
)
 
Interest expense
 

 

 

Total gain/(loss)
 
$
(73.9
)
 
$
34.3

 
$
70.8

 
 
 
$
1.5

 
$
44.4

 
$
74.2

 
 
 
$
9.0

 
$
3.7

 
$
(0.1
)

Undesignated Hedges
The following table presents the location and amount of net gains/(losses) from undesignated hedges for the years ended December 31, 2017, 2016, and 2015 (in millions):
 
 
Gain/(Loss) Recognized in Income on Derivatives (d)
 
 
Income Statement Location
 
Amount
Derivatives
 
 
 
2017
 
2016
 
2015
Foreign currency contracts (e)
Selling, general and administrative
 
$
(20.5
)
 
$
13.2

 
$
35.9

Foreign currency contracts (f)
Derivative gains, net
 
(0.5
)
 
0.8

 
1.3

Total gain/(loss)
 
 
$
(21.0
)
 
$
14.0

 
$
37.2

 ____________________
(a)
The 2017 gain of $3.9 million consisted of a gain in value on the debt of $2.0 million and amortization of hedge accounting adjustments of $1.9 million. 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.
(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 derivatives' 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/(Loss) 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 gains/(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/(Loss) were $17.5 million, $(21.4) million, and $(36.1) million for the years ended 2017, 2016, and 2015, 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.

Borrowings (Tables)
The Company’s outstanding borrowings consisted of the following (in millions):
 
December 31, 2017
 
December 31, 2016
Notes:
 
 
 
2.875% notes due 2017 (a)
$

 
$
500.0

3.650% notes (effective rate of 5.0%) due 2018
400.0

 
400.0

3.350% notes due 2019 (b)
250.0

 
250.0

Floating rate notes (effective rate of 2.5%) due 2019 (c)
250.0

 

5.253% notes due 2020 (b)
324.9

 
324.9

3.600% notes (effective rate of 3.7%) due 2022 (d)
500.0

 

6.200% notes due 2036 (b)
500.0

 
500.0

6.200% notes due 2040 (b)
250.0

 
250.0

Term loan facility borrowing (effective rate of 3.0%)
575.0

 
575.0

Total borrowings at par value
3,049.9

 
2,799.9

Fair value hedge accounting adjustments, net (e)
0.5

 
4.4

Debt issuance costs and unamortized discount, net
(16.8
)
 
(18.2
)
Total borrowings at carrying value (f)
$
3,033.6

 
$
2,786.1

____________________ 

(a)
Proceeds from the unsecured floating rate notes due May 22, 2019 ("Floating Rate Notes") and the August 22, 2017 sale of 3.600% unsecured notes due March 15, 2022 ("2022 Notes"), as well as cash generated from operations, were used to repay the December 2017 maturity of $500.0 million of aggregate principal amount unsecured notes, as discussed further below.
(b)
The difference between the stated interest rate and the effective interest rate is not significant.
(c)
On August 22, 2017, the Company issued $250.0 million of aggregate principal amount of Floating Rate Notes.
(d)
On March 15, 2017, the Company issued $400.0 million of aggregate principal amount of 2022 Notes. On August 22, 2017, the Company issued an additional $100.0 million of aggregate principal amount of 2022 Notes, for an aggregate principal total of $500.0 million of 2022 Notes.
(e)
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/(Loss) over the life of the related notes and cause the effective rate of interest to differ from the notes’ stated rate.
(f)
As of December 31, 2017, the Company’s weighted-average effective rate on total borrowings was approximately 4.5%.

The following summarizes the Company's maturities of borrowings at par value as of December 31, 2017 (in millions):

Due within 1 year
$
414.3

Due after 1 year through 2 years
528.8

Due after 2 years through 3 years
368.0

Due after 3 years through 4 years
488.8

Due after 4 years through 5 years
500.0

Due after 5 years
750.0

Stock Compensation Plans (Tables)
A summary of stock option activity for the year ended December 31, 2017 was as follows (options and aggregate intrinsic value in millions):
 
Year Ended December 31, 2017
 
Options
 
Weighted-Average
Exercise Price
 
Weighted-Average Remaining
Contractual Term
(Years)
 
 
Aggregate
Intrinsic
Value
Outstanding as of January 1
8.1

 
$
17.46

 
 
 
 
Granted
0.4

 
$
19.99

 
 
 
 
Exercised
(0.8
)
 
$
15.57

 
 
 
 
Cancelled/forfeited
(0.4
)
 
$
19.97

 
 
 
 
Outstanding as of December 31
7.3

 
$
17.71

 
4.6
 
$
13.4

Options exercisable as of December 31
6.1

 
$
17.49

 
3.9
 
$
12.7

A summary of activity for restricted stock units and performance-based restricted stock units for the year ended December 31, 2017 is listed below (units in millions):
 
Year Ended December 31, 2017
 
Number
Outstanding
 
Weighted-Average
Grant-Date Fair Value
Non-vested as of January 1
7.4
 
$
16.68

Granted
3.6
 
$
17.70

Vested
(2.4)
 
$
16.02

Forfeited
(1.2)
 
$
17.10

Non-vested as of December 31
7.4
 
$
17.32

The following table sets forth the total impact on earnings for stock-based compensation expense recognized in the Consolidated Statements of Income/(Loss) resulting from stock options, restricted stock units, performance-based restricted stock units and bonus/deferred stock units for the years ended December 31, 2017, 2016 and 2015 (in millions, except per share data).

 
Year Ended December 31,
 
2017
 
2016
 
2015
Stock-based compensation expense
$
(43.9
)
 
$
(41.8
)
 
$
(42.2
)
Income tax benefit from stock-based compensation expense
12.8

 
12.3

 
12.3

Net income/(loss) impact
$
(31.1
)
 
$
(29.5
)
 
$
(29.9
)
Earnings/(loss) per share:
 
 
 
 
 
Basic and Diluted
$
(0.07
)
 
$
(0.06
)
 
$
(0.06
)
The Company used the following assumptions for the Black-Scholes option pricing model to determine the value of Western Union options granted.
 
Year Ended December 31,
 
2017
 
2016
 
2015
Stock options granted:
 
 
 
 
 
Weighted-average risk-free interest rate
2.1
%
 
1.4
%
 
1.7
%
Weighted-average dividend yield
3.5
%
 
3.3
%
 
3.6
%
Volatility
24.7
%
 
27.9
%
 
28.2
%
Expected term (in years)
6.05

 
6.32

 
6.00

Weighted-average grant date fair value
$
3.39

 
$
3.44

 
$
3.58

Segments (Tables)
The following tables present the Company's reportable segment results for the years ended December 31, 2017, 2016 and 2015, respectively (in millions). Results for the years ended 2016 and 2015 have been adjusted to conform to the changes in reportable segments discussed in Note 1.
 
Year Ended December 31,
 
2017
 
2016
 
2015
Revenues:
 
 
 
 
 
Consumer-to-Consumer
$
4,354.5

 
$
4,304.6

 
$
4,343.9

Business Solutions
383.9

 
396.0

 
398.7

Other (a)
785.9

 
722.3

 
741.1

Total consolidated revenues
$
5,524.3

 
$
5,422.9

 
$
5,483.7

Operating income:
 
 
 
 
 
Consumer-to-Consumer
$
1,002.4

 
$
1,008.7

 
$
1,042.0

Business Solutions
13.6

 
21.1

 
2.8

Other (a) (b)
83.8

 
75.2

 
64.6

Total segment operating income
1,099.8

 
1,105.0

 
1,109.4

Goodwill impairment charge (Note 4)
(464.0
)
 

 

NYDFS Consent Order (Note 5)
(60.0
)
 

 

Joint Settlement Agreements (Note 5)
(8.0
)
 
(601.0
)
 

Business transformation expenses (Note 3)
(94.4
)
 
(20.3
)
 

Total consolidated operating income
$
473.4

 
$
483.7

 
$
1,109.4


____________________ 
(a)
Other consists primarily of the Company's bill payments businesses in the United States and Argentina.
(b)
During the year ended December 31, 2015, Other 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,
 
2017
 
2016
 
2015
Assets:
 
 
 
 
 
Consumer-to-Consumer
$
4,850.8

 
$
4,467.7

 
$
4,738.7

Business Solutions (a)
1,575.5

 
2,370.8

 
2,384.4

Other
2,805.1

 
2,581.1

 
2,326.1

Total assets
$
9,231.4

 
$
9,419.6

 
$
9,449.2

 
 
 
 
 
 
Depreciation and amortization:
 
 
 
 
 
Consumer-to-Consumer
$
183.0

 
$
183.5

 
$
183.4

Business Solutions
42.5

 
50.8

 
57.4

Other
37.4

 
28.9

 
29.4

Total consolidated depreciation and amortization
$
262.9

 
$
263.2

 
$
270.2

 
 
 
 
 
 
Capital expenditures:
 
 
 
 
 
Consumer-to-Consumer
$
120.2

 
$
167.7

 
$
191.0

Business Solutions
8.8

 
11.4

 
19.2

Other
48.1

 
50.7

 
56.3

Total capital expenditures
$
177.1

 
$
229.8

 
$
266.5


____________________ 
(a)
The decrease in Business Solutions assets is primarily due to a goodwill impairment charge recognized in the fourth quarter of 2017 in this segment, as further discussed in Note 4.
Information concerning principal geographic areas was as follows (in millions):
 
Year Ended December 31,
 
2017
 
2016
 
2015
Revenue:
 
 
 
 
 
United States
$
2,159.0

 
$
2,091.5

 
$
1,962.1

International
3,365.3

 
3,331.4

 
3,521.6

Total
$
5,524.3

 
$
5,422.9

 
$
5,483.7

Long-lived assets:
 
 
 
 
 
United States
$
156.8

 
$
174.0

 
$
182.9

International
57.4

 
46.5

 
48.9

Total
$
214.2

 
$
220.5

 
$
231.8

Quarterly Financial Information (Unaudited) (Tables)
Schedule of quarterly results
Summarized quarterly results for the years ended December 31, 2017 and 2016 were as follows (in millions, except per share data):
2017 by Quarter:
Q1
 
Q2
 
Q3
 
Q4
 
Year Ended December 31, 2017
 
 
 
 
 
 
 
 
 
 
Revenues
$
1,302.4

 
$
1,378.9

 
$
1,404.7

 
$
1,438.3

 
$
5,524.3

Expenses (a) (b) (c)
1,062.9

 
1,164.1

 
1,133.1

 
1,690.8

 
5,050.9

Operating income/(loss)
239.5

 
214.8

 
271.6

 
(252.5
)
 
473.4

Other expense, net
26.4

 
30.4

 
32.4

 
36.7

 
125.9

Income/(loss) before income taxes
213.1

 
184.4

 
239.2

 
(289.2
)
 
347.5

Provision for income taxes (d)
51.4

 
17.9

 
3.6

 
831.7

 
904.6

Net income/(loss)
$
161.7

 
$
166.5

 
$
235.6

 
$
(1,120.9
)
 
$
(557.1
)
Earnings/(loss) per share:
 
 
 
 
 
 
 
 
 
Basic
$
0.34

 
$
0.35

 
$
0.51

 
$
(2.44
)
 
$
(1.19
)
Diluted
$
0.33

 
$
0.35

 
$
0.51

 
$
(2.44
)
 
$
(1.19
)
Weighted-average shares outstanding:
 
 
 
 
 
 
 
 
 
Basic
479.8

 
469.4

 
462.8

 
459.6

 
467.9

Diluted
483.4

 
472.0

 
465.4

 
459.6

 
467.9



(a)
Includes a goodwill impairment charge of $464.0 million in the fourth quarter related to the Company's Business Solutions reporting unit. For more information, see Note 4.
(b)
Includes a $49 million accrual in the second quarter and an $11 million accrual in the fourth quarter as a result of the NYDFS Consent Order, and an additional $8 million of expenses in the third quarter related to the independent compliance auditor required pursuant to the terms of the Joint Settlement Agreements, as described further in Note 5.
(c)
Includes $14.3 million, $35.0 million, $9.9 million, and $35.2 million in the first, second, third, and fourth quarters, respectively, of expenses related to business transformation. For more information, see Note 3.
(d)
Includes an estimated $828 million in the fourth quarter of 2017 related to the enactment of the Tax Act into United States law, primarily due to a tax on certain previously undistributed earnings of foreign subsidiaries, partially offset by the remeasurement of deferred tax assets and liabilities and other tax balances to reflect the lower federal income tax rate, among other effects. This tax charge, combined with the Company’s other 2017 United States taxable income and tax attributes, results in an estimated United States federal tax liability of $780 million at December 31, 2017, which the Company has elected to pay in periodic installments over the next eight years. As discussed in Note 10, certain of the law's impacts have been provisionally estimated and will likely be adjusted in future periods as the Company completes its accounting for these matters in 2018.
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 (e) (f)
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

____________
 
 
 
 
 
 
 
 
 

(e)
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.
(f)
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.
Business and Basis of Presentation - Narrative (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2017
CountryAndTerritory
Apr. 1, 2017
employee
Organization, Consolidation and Presentation of Financial Statements [Abstract]
 
 
Number of countries and territories where services are primarily available through a network of agent locations (more than)
200 
 
Number of executives
 
Net assets subject to limitations
$ 265 
 
Summary of Significant Accounting Policies - Narrative (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2017
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Accounting Policies [Abstract]
 
 
 
 
Allowance for doubtful accounts
$ 64.5 
$ 64.5 
$ 55.4 
 
Provision for doubtful accounts
 
60.6 
63.9 
60.3 
Goodwill impairment charge
464.0 
464.0 
Advertising costs
 
$ 168.3 
$ 151.1 
$ 166.3 
Summary of Significant Accounting Policies - Diluted Weighted-Average Shares Outstanding (Details)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2017
Sep. 30, 2017
Jun. 30, 2017
Mar. 31, 2017
Dec. 31, 2016
Sep. 30, 2016
Jun. 30, 2016
Mar. 31, 2016
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Weighted-average shares outstanding, diluted:
 
 
 
 
 
 
 
 
 
 
 
Outstanding options to purchase shares of stock excluded from the diluted earnings per share calculation
 
 
 
 
 
 
 
 
2.8 
3.4 
6.0 
Additional outstanding options to purchase shares of stock excluded from the diluted earnings per share calculation
 
 
 
 
 
 
 
 
3.0 
 
 
Basic weighted-average shares outstanding
459.6 
462.8 
469.4 
479.8 
483.6 
487.0 
490.3 
500.0 
467.9 
490.2 
512.6 
Common stock equivalents
 
 
 
 
 
 
 
 
3.3 
4.1 
Diluted weighted-average shares outstanding
459.6 
465.4 
472.0 
483.4 
483.6 
490.3 
493.0 
503.2 
467.9 
493.5 
516.7 
Summary of Significant Accounting Policies - Settlement Assets and Obligations (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2017
Dec. 31, 2016
Settlement assets:
 
 
Cash and cash equivalents
$ 1,264.8 
$ 1,190.0 
Receivables from selling agents and Business Solutions customers
1,573.9 
1,327.3 
Investment securities
1,350.2 
1,231.8 
Total settlement assets
4,188.9 
3,749.1 
Settlement obligations:
 
 
Money transfer, money order and payment service payables
2,789.2 
2,598.2 
Payables to agents
1,399.7 
1,150.9 
Total settlement obligations
$ 4,188.9 
$ 3,749.1 
Summary of Significant Accounting Policies - Property and Equipment (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Property and Equipment (Textual) [Abstract]
 
 
 
Depreciation
$ 77.1 
$ 74.2 
$ 67.7 
Property And Equipment
 
 
 
Property and equipment, gross
849.9 
820.5 
 
Accumulated depreciation
(635.7)
(600.0)
 
Property and equipment, net
214.2 
220.5 
231.8 
Equipment
 
 
 
Property And Equipment
 
 
 
Property and equipment, gross
604.7 
585.5 
 
Buildings
 
 
 
Property and Equipment (Textual) [Abstract]
 
 
 
Property, plant and equipment useful life
30 years 
 
 
Property And Equipment
 
 
 
Property and equipment, gross
88.6 
88.3 
 
Leasehold improvements
 
 
 
Property And Equipment
 
 
 
Property and equipment, gross
87.4 
84.3 
 
Furniture and fixtures
 
 
 
Property And Equipment
 
 
 
Property and equipment, gross
42.0 
40.4 
 
Land and improvements
 
 
 
Property And Equipment
 
 
 
Property and equipment, gross
17.0 
17.0 
 
Projects in process
 
 
 
Property And Equipment
 
 
 
Property and equipment, gross
$ 10.2 
$ 5.0 
 
Minimum |
Equipment
 
 
 
Property and Equipment (Textual) [Abstract]
 
 
 
Property, plant and equipment useful life
3 years 
 
 
Minimum |
Furniture and fixtures
 
 
 
Property and Equipment (Textual) [Abstract]
 
 
 
Property, plant and equipment useful life
3 years 
 
 
Maximum |
Equipment
 
 
 
Property and Equipment (Textual) [Abstract]
 
 
 
Property, plant and equipment useful life
10 years 
 
 
Maximum |
Furniture and fixtures
 
 
 
Property and Equipment (Textual) [Abstract]
 
 
 
Property, plant and equipment useful life
10 years 
 
 
Summary of Significant Accounting Policies - Components of Other Intangible Assets (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Other Intangible Assets
 
 
 
Weighted- Average Amortization Period (in years)
7 years 8 months 12 days 
 
 
Initial Cost
$ 1,629.0 
$ 1,622.4 
 
Net of Accumulated Amortization
586.3 
664.2 
 
Intangible Assets, (Textual) [Abstract]
 
 
 
Amortization expense
185.8 
189.0 
202.5 
Estimated future aggregate amortization expense, 2018
175.7 
 
 
Estimated future aggregate amortization expense, 2019
136.2 
 
 
Estimated future aggregate amortization expense, 2020
109.1 
 
 
Estimated future aggregate amortization expense, 2021
76.7 
 
 
Estimated future aggregate amortization expense, 2022
39.8 
 
 
Estimated future aggregate amortization expense, thereafter
48.8 
 
 
Intangible Impairments
Acquired contracts
 
 
 
Other Intangible Assets
 
 
 
Weighted- Average Amortization Period (in years)
11 years 6 months 
 
 
Initial Cost
600.4 
599.6 
 
Net of Accumulated Amortization
220.0 
264.4 
 
Capitalized contract costs
 
 
 
Other Intangible Assets
 
 
 
Weighted- Average Amortization Period (in years)
6 years 2 months 12 days 
 
 
Initial Cost
559.5 
559.2 
 
Net of Accumulated Amortization
268.2 
294.0 
 
Internal use software
 
 
 
Other Intangible Assets
 
 
 
Weighted- Average Amortization Period (in years)
3 years 2 months 12 days 
 
 
Initial Cost
387.8 
371.3 
 
Net of Accumulated Amortization
53.1 
56.4 
 
Acquired trademarks
 
 
 
Other Intangible Assets
 
 
 
Weighted- Average Amortization Period (in years)
24 years 9 months 18 days 
 
 
Initial Cost
33.2 
34.2 
 
Net of Accumulated Amortization
16.9 
18.5 
 
Projects in process
 
 
 
Other Intangible Assets
 
 
 
Weighted- Average Amortization Period (in years)
3 years 
 
 
Initial Cost
28.1 
30.6 
 
Net of Accumulated Amortization
28.1 
30.6 
 
Other intangibles
 
 
 
Other Intangible Assets
 
 
 
Weighted- Average Amortization Period (in years)
4 years 7 months 6 days 
 
 
Initial Cost
20.0 
27.5 
 
Net of Accumulated Amortization
$ 0 
$ 0.3 
 
Minimum |
Internal use software
 
 
 
Intangible Assets, (Textual) [Abstract]
 
 
 
Amortization period of intangible assets
3 years 
 
 
Maximum |
Internal use software
 
 
 
Intangible Assets, (Textual) [Abstract]
 
 
 
Amortization period of intangible assets
5 years 
 
 
Summary of Significant Accounting Policies - Derivatives (Details) (Not designated as hedges)
12 Months Ended
Dec. 31, 2017
Maximum |
Uncollected settlement assets and obligations
 
Derivative Instruments and Hedging Activities Disclosures [Line Items]
 
Derivative contracts maturity range
1 month 
Maximum |
Foreign currency denominated cash and other asset and other liability positions
 
Derivative Instruments and Hedging Activities Disclosures [Line Items]
 
Derivative contracts maturity range
1 year 
Minimum |
Uncollected settlement assets and obligations
 
Derivative Instruments and Hedging Activities Disclosures [Line Items]
 
Derivative contracts maturity range
2 days 
Business Solutions |
Maximum
 
Derivative Instruments and Hedging Activities Disclosures [Line Items]
 
Derivative contracts maturity range
1 year 
Business Transformation and Productivity and Cost-Savings Initiatives Expenses - Narrative (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Business Transformation and Productivity and Cost-Savings Initiatives Expenses [Abstract]
 
 
Expenses - productivity and cost-savings
 
$ 11.1 
Cash payments - productivity and cost-savings
$ 12.7 
$ 30.0 
Business Transformation and Productivity and Cost-Savings Initiatives Expenses - Business Transformation Expenses by Reportable Segment (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2017
Sep. 30, 2017
Jun. 30, 2017
Mar. 31, 2017
Dec. 31, 2016
Sep. 30, 2016
Jun. 30, 2016
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Productivity and cost-savings initiatives by segment
 
 
 
 
 
 
 
 
 
 
Expenses - business transformation
$ 35.2 
$ 9.9 
$ 35.0 
$ 14.3 
$ 13.2 
$ 5.0 
$ 2.1 
$ 94.4 
$ 20.3 
 
Expenses - productivity and cost-savings
 
 
 
 
 
 
 
 
 
11.1 
Consumer-to-Consumer
 
 
 
 
 
 
 
 
 
 
Productivity and cost-savings initiatives by segment
 
 
 
 
 
 
 
 
 
 
Expenses - business transformation
 
 
 
 
 
 
 
30.8 
2.7 
 
Expenses - productivity and cost-savings
 
 
 
 
 
 
 
 
 
7.6 
Business Solutions
 
 
 
 
 
 
 
 
 
 
Productivity and cost-savings initiatives by segment
 
 
 
 
 
 
 
 
 
 
Expenses - business transformation
 
 
 
 
 
 
 
16.1 
0.6 
 
Expenses - productivity and cost-savings
 
 
 
 
 
 
 
 
 
1.8 
Other
 
 
 
 
 
 
 
 
 
 
Productivity and cost-savings initiatives by segment
 
 
 
 
 
 
 
 
 
 
Expenses - business transformation
 
 
 
 
 
 
 
13.6 
0.5 
 
Expenses - productivity and cost-savings
 
 
 
 
 
 
 
 
 
1.7 
Total allocatable to segments
 
 
 
 
 
 
 
 
 
 
Productivity and cost-savings initiatives by segment
 
 
 
 
 
 
 
 
 
 
Expenses - business transformation
 
 
 
 
 
 
 
$ 60.5 
$ 3.8 
 
Goodwill - Narrative (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended 0 Months Ended
Dec. 31, 2017
acquisition
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Nov. 6, 2017
Opus Software Technologies Private Limited
Nov. 6, 2017
Opus Software Technologies Private Limited
Business Acquisition [Line Items]
 
 
 
 
 
 
Goodwill impairment charge
$ 464.0 
$ 464.0 
$ 0 
$ 0 
 
 
Total consideration
 
 
 
 
25.3 
 
Goodwill
$ 2,727.9 
$ 2,727.9 
$ 3,162.0 
$ 3,163.8 
 
$ 22.2 
Number of immaterial acquisitions during period
 
 
 
 
 
Goodwill - Changes to Goodwill (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2017
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Goodwill [Roll Forward]
 
 
 
 
Goodwill, beginning balance
 
$ 3,162.0 
$ 3,163.8 
 
Goodwill impairment charge
(464.0)
(464.0)
Acquisitions
 
30.9 
 
 
Currency translation
 
(1.0)
(1.8)
 
Goodwill, ending balance
2,727.9 
2,727.9 
3,162.0 
3,163.8 
Operating Segments |
Consumer-to-Consumer
 
 
 
 
Goodwill [Roll Forward]
 
 
 
 
Goodwill, beginning balance
 
1,950.1 
1,950.1 
 
Goodwill impairment charge
 
 
 
Acquisitions
 
30.9 
 
 
Currency translation
 
 
Goodwill, ending balance
1,981.0 
1,981.0 
1,950.1 
 
Operating Segments |
Business Solutions
 
 
 
 
Goodwill [Roll Forward]
 
 
 
 
Goodwill, beginning balance
 
996.0 
996.0 
 
Goodwill impairment charge
 
(464.0)
 
 
Acquisitions
 
 
 
Currency translation
 
 
Goodwill, ending balance
532.0 
532.0 
996.0 
 
Other
 
 
 
 
Goodwill [Roll Forward]
 
 
 
 
Goodwill, beginning balance
 
215.9 
217.7 
 
Goodwill impairment charge
 
 
 
Acquisitions
 
 
 
Currency translation
 
(1.0)
(1.8)
 
Goodwill, ending balance
$ 214.9 
$ 214.9 
$ 215.9 
 
Goodwill - Accumulated Impairment Losses (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Goodwill and Intangible Assets Disclosure [Abstract]
 
 
 
Goodwill, gross
$ 3,191.9 
$ 3,162.0 
$ 3,163.8 
Accumulated impairment losses
(464.0)
Goodwill, net
$ 2,727.9 
$ 3,162.0 
$ 3,163.8 
Commitments and Contingencies - Narrative (Details)
3 Months Ended 12 Months Ended 0 Months Ended 108 Months Ended 48 Months Ended 60 Months Ended 0 Months Ended 12 Months Ended 3 Months Ended 3 Months Ended 36 Months Ended 0 Months Ended
Dec. 31, 2017
USD ($)
Sep. 30, 2017
USD ($)
Jun. 30, 2017
USD ($)
Dec. 31, 2016
USD ($)
Sep. 30, 2016
USD ($)
Jun. 30, 2016
USD ($)
Dec. 31, 2017
USD ($)
Dec. 31, 2016
USD ($)
Dec. 31, 2015
USD ($)
Dec. 31, 2017
NYDFS Consent Order
USD ($)
Mar. 31, 2016
Pending Litigation
Defendants under the shareholder derivative complaints filed in US District Court for the District of Colorado
Dec. 31, 2014
Pending Litigation
Defendants under the shareholder derivative complaints filed in US District Court for the District of Colorado
USD ($)
Feb. 10, 2015
Pending Litigation
United States District Court for the Southern District of Florida
Subclass
Feb. 10, 2015
Pending Litigation
United States District Court for the Southern District of Florida
Subclass
May 3, 2017
Pending Litigation
Lawrence Henry Smallen and Laura Anne Smallen Revocable Living Trust
lawsuit
Feb. 22, 2017
Pending Litigation
Lawrence Henry Smallen and Laura Anne Smallen Revocable Living Trust
lawsuit
Jan. 31, 2017
Settled Litigation
Joint Settlement Agreements
USD ($)
Count
state
Dec. 31, 2017
Settled Litigation
Joint Settlement Agreements
USD ($)
Apr. 12, 2017
Settled Litigation
Joint Settlement Agreements
State
Jan. 31, 2017
Settled Litigation
Joint Settlement Agreements
USD ($)
state
Dec. 31, 2012
Settled Litigation
District of Colorado
lawsuit
Jan. 11, 2016
Settled Litigation
District of Colorado
class_member
May 1, 2015
Settled Litigation
District of Colorado
class_member
Jul. 31, 2013
Settled Litigation
District of Colorado
class_member
Mar. 31, 2015
Settled Litigation
Northern District of Illinois
USD ($)
Dec. 31, 2017
Settled Litigation
NYDFS Consent Order
USD ($)
Jun. 30, 2017
Settled Litigation
NYDFS Consent Order
USD ($)
Jan. 4, 2018
Subsequent Event
Pending Litigation
National Court of Spain
EUR (€)
Jan. 31, 2020
Subsequent Event
Settled Litigation
Joint Settlement Agreements
Jan. 4, 2018
Subsequent Event
Settled Litigation
NYDFS Consent Order
USD ($)
Jan. 13, 2014
Executive Officer
Pending Litigation
Defendants under the shareholder complaint filed in District Court, Douglas Country
Defendant
Feb. 4, 2015
Executive Officer
Pending Litigation
Defendants under the shareholder derivative complaints filed in US District Court for the District of Colorado
Defendant
Nov. 6, 2017
Executive Officer
Pending Litigation
Lawrence Henry Smallen and Laura Anne Smallen Revocable Living Trust
Defendant
Jan. 13, 2014
Director
Pending Litigation
Defendants under the shareholder complaint filed in District Court, Douglas Country
Defendant
May 2, 2016
Director
Pending Litigation
Defendants under the shareholder derivative complaints filed in US District Court for the District of Colorado
Defendant
May 2, 2016
Former Director
Pending Litigation
Defendants under the shareholder derivative complaints filed in US District Court for the District of Colorado
Defendant
Mar. 31, 2017
Current Agent
Settled Litigation
NYDFS Consent Order
agent
Feb. 13, 2017
Former Agent
Pending Litigation
National Court of Spain
agent
Mar. 31, 2017
Former Agent
Settled Litigation
NYDFS Consent Order
agent
Loss Contingencies [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Letters of credit outstanding and bank guarantees
$ 210,000,000 
 
 
 
 
 
$ 210,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Maximum maturity year for letters of credit
 
 
 
 
 
 
2021 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Letters of credit renewal option
 
 
 
 
 
 
1 year 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Range of possible loss, portion not accrued
100,000,000 
 
 
 
 
 
100,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of state attorneys general
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
49 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Count- criminal information
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Compensation payment
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
586,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
State attorneys general payment
 
8,000,000 
 
571,000,000 
15,000,000 
15,000,000 
8,000,000 
601,000,000 
 
 
 
 
 
 
 
 
5,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Period to retain an independent compliance auditor
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3 years 
 
 
 
 
 
 
 
 
 
 
Civil penalty assessed by the FinCEN Agreement
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
184,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loss contingency accrual increase (decrease) during period
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8,000,000 
 
 
 
 
 
 
 
11,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of defendants
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock repurchased
 
 
 
 
 
 
487,000,000 
481,300,000 
500,000,000 
 
 
1,565,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Period plaintiffs may file an amended complaint
 
 
 
 
 
 
 
 
 
 
30 days 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of purported class action lawsuits
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of class members who filed appeals
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Litigation settlement awarded to other party
11,000,000 
 
49,000,000 
 
 
 
 
586,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8,500,000.0 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of subclasses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Look back period for consumers in Florida
 
 
 
 
 
 
 
 
 
 
 
 
4 years 
5 years 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of claims consolidated
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of defendants voluntarily dismissed
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of agents
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
98 
Guaranty liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
23,000,000 
 
 
 
 
 
 
 
 
 
 
 
Damages awarded
 
 
 
 
 
 
 
 
 
60,000,000.0 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
60,000,000 
 
 
 
 
 
 
 
 
 
Loss contingency accrual
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 49,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
Period to provide remediation plan
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
90 days 
 
 
 
 
 
 
 
 
 
Related Party Transactions - Narrative (Details) (Equity Method Investee, USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Equity Method Investee
 
 
 
Related Party Transactions
 
 
 
Commission expense
$ 65.9 
$ 68.0 
$ 65.5 
Investment Securities - Components of Securities (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2017
Dec. 31, 2016
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized Cost
$ 1,346.1 
$ 1,237.9 
Fair Value
1,350.2 
1,231.8 
Gross Unrealized Gains
8.1 
5.0 
Gross Unrealized Losses
(4.0)
(11.1)
Net Unrealized Gains/ (Losses)
4.1 
(6.1)
Amortized Cost
1,402.3 
1,274.1 
Fair Value
1,406.4 
1,268.0 
Gross Unrealized Gains
8.1 
5.1 
Gross Unrealized Losses
(4.0)
(11.2)
Net Unrealized Gains/ (Losses)
4.1 
(6.1)
State and municipal debt securities
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized Cost
955.7 
1,008.5 
Fair Value
960.0 
1,002.4 
Gross Unrealized Gains
7.9 
5.0 
Gross Unrealized Losses
(3.6)
(11.1)
Net Unrealized Gains/ (Losses)
4.3 
(6.1)
State and municipal variable rate demand notes
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized Cost
319.6 
203.4 
Fair Value
319.6 
203.4 
Gross Unrealized Gains
Gross Unrealized Losses
Net Unrealized Gains/ (Losses)
Corporate and other debt securities
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized Cost
60.9 
26.0 
Fair Value
60.8 
26.0 
Gross Unrealized Gains
0.2 
Gross Unrealized Losses
(0.3)
Net Unrealized Gains/ (Losses)
(0.1)
United States Treasury securities
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized Cost
9.9 
 
Fair Value
9.8 
 
Gross Unrealized Gains
 
Gross Unrealized Losses
(0.1)
 
Net Unrealized Gains/ (Losses)
(0.1)
 
Foreign corporate debt securities
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized Cost
56.2 
36.2 
Fair Value
56.2 
36.2 
Gross Unrealized Gains
0.1 
Gross Unrealized Losses
(0.1)
Net Unrealized Gains/ (Losses)
$ 0 
$ 0 
Investment Securities - Narrative (Details) (USD $)
12 Months Ended
Dec. 31, 2017
investment
Dec. 31, 2016
investment
Dec. 31, 2015
Schedule of Available-for-sale Securities [Line Items]
 
 
 
Variable rate demand notes, maximum maturity year
2050 
 
 
Proceeds from sale and maturity of available-for-sale securities
$ 7,900,000,000 
$ 4,400,000,000 
$ 8,700,000,000 
Number of investments representing greater than 10% of total investment securities
 
State and municipal variable rate demand notes
 
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
 
Due within 1 year
900,000 
 
 
Due after 5 years through 10 years
15,900,000 
 
 
Due after 10 years
$ 302,800,000 
 
 
Fair Value Measurements - Fair Value of Assets and Liabilities (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2017
Dec. 31, 2016
Assets:
 
 
Settlement assets
$ 4,188.9 
$ 3,749.1 
Derivatives
273.4 
365.6 
Total assets
1,623.6 
1,597.4 
Liabilities:
 
 
Derivatives
263.0 
262.3 
Total liabilities
263.0 
262.3 
State and municipal debt securities
 
 
Assets:
 
 
Settlement assets
960.0 
1,002.4 
State and municipal variable rate demand notes
 
 
Assets:
 
 
Settlement assets
319.6 
203.4 
Corporate and other debt securities
 
 
Assets:
 
 
Settlement assets
60.8 
26.0 
United States Treasury securities
 
 
Assets:
 
 
Settlement assets
9.8 
 
Level 1
 
 
Assets:
 
 
Derivatives
Total assets
9.8 
Liabilities:
 
 
Derivatives
Total liabilities
Level 1 |
State and municipal debt securities
 
 
Assets:
 
 
Settlement assets
Level 1 |
State and municipal variable rate demand notes
 
 
Assets:
 
 
Settlement assets
Level 1 |
Corporate and other debt securities
 
 
Assets:
 
 
Settlement assets
Level 1 |
United States Treasury securities
 
 
Assets:
 
 
Settlement assets
9.8 
 
Level 2
 
 
Assets:
 
 
Derivatives
273.4 
365.6 
Total assets
1,613.8 
1,597.4 
Liabilities:
 
 
Derivatives
263.0 
262.3 
Total liabilities
263.0 
262.3 
Level 2 |
State and municipal debt securities
 
 
Assets:
 
 
Settlement assets
960.0 
1,002.4 
Level 2 |
State and municipal variable rate demand notes
 
 
Assets:
 
 
Settlement assets
319.6 
203.4 
Level 2 |
Corporate and other debt securities
 
 
Assets:
 
 
Settlement assets
60.8 
26.0 
Level 2 |
United States Treasury securities
 
 
Assets:
 
 
Settlement assets
 
Level 3
 
 
Assets:
 
 
Derivatives
Total assets
Liabilities:
 
 
Derivatives
Total liabilities
Level 3 |
State and municipal debt securities
 
 
Assets:
 
 
Settlement assets
Level 3 |
State and municipal variable rate demand notes
 
 
Assets:
 
 
Settlement assets
Level 3 |
Corporate and other debt securities
 
 
Assets:
 
 
Settlement assets
Level 3 |
United States Treasury securities
 
 
Assets:
 
 
Settlement assets
$ 0 
 
Fair Value Measurements - Narrative (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Non-recurring fair value adjustments
$ 0 
$ 0 
Carrying Value
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Notes and other borrowings
3,033.6 
2,786.1 
Level 2 |
Fair Value
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Notes and other borrowings
3,146.5 
2,888.7 
Foreign corporate debt securities
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Carrying value of foreign corporate debt securities
56.2 
36.2 
Fair value of foreign corporate debt securties
56.2 
36.2 
Foreign corporate debt securities |
Carrying Value
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Carrying value of foreign corporate debt securities
56.2 
36.2 
Foreign corporate debt securities |
Level 2 |
Fair Value
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Fair value of foreign corporate debt securties
$ 56.2 
$ 36.2 
Other Assets and Other Liabilities - Summary (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2017
Dec. 31, 2016
Other assets:
 
 
Derivatives
$ 273.4 
$ 365.6 
Prepaid expenses
120.5 
126.9 
Amounts advanced to agents, net of discounts
53.5 
58.0 
Equity method investments
29.1 
40.1 
Other
199.4 
155.7 
Total other assets
675.9 
746.3 
Other liabilities:
 
 
Derivatives
263.0 
262.3 
Pension obligations
15.0 
26.4 
Other
78.8 
70.7 
Total other liabilities
$ 356.8 
$ 359.4 
Income Taxes - Components of Pre-Tax Income (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2017
Sep. 30, 2017
Jun. 30, 2017
Mar. 31, 2017
Dec. 31, 2016
Sep. 30, 2016
Jun. 30, 2016
Mar. 31, 2016
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Components of pre-tax income
 
 
 
 
 
 
 
 
 
 
 
Domestic
 
 
 
 
 
 
 
 
$ (238.8)
$ (546.4)
$ (27.0)
Foreign
 
 
 
 
 
 
 
 
586.3 
888.1 
968.8 
Income before income taxes
$ (289.2)
$ 239.2 
$ 184.4 
$ 213.1 
$ (338.3)
$ 240.0 
$ 222.5 
$ 217.5 
$ 347.5 
$ 341.7 
$ 941.8 
Income Taxes - Provision for Income Taxes (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2017
Sep. 30, 2017
Jun. 30, 2017
Mar. 31, 2017
Dec. 31, 2016
Sep. 30, 2016
Jun. 30, 2016
Mar. 31, 2016
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Provision for income taxes
 
 
 
 
 
 
 
 
 
 
 
Federal
 
 
 
 
 
 
 
 
$ 848.5 
$ 43.5 
$ 33.2 
State and local
 
 
 
 
 
 
 
 
5.4 
2.9 
(1.0)
Foreign
 
 
 
 
 
 
 
 
50.7 
42.1 
71.8 
Provision for income taxes
$ 831.7 
$ 3.6 
$ 17.9 
$ 51.4 
$ 16.7 
$ 23.1 
$ 16.9 
$ 31.8 
$ 904.6 
$ 88.5 
$ 104.0 
Income Taxes - Effective Tax Rates (Details)
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Effective tax rate reconciliation
 
 
 
Federal statutory rate
35.00% 
35.00% 
35.00% 
State income taxes, net of federal income tax benefits
1.70% 
1.20% 
0.40% 
Foreign rate differential, net of United States tax paid on foreign earnings (1.1%, 24.8% and 3.4%, respectively)
(69.30%)
(50.80%)
(24.60%)
Tax Act impact
251.50% 
0.00% 
0.00% 
Joint Settlement Agreements impact
0.00% 
62.10% 
0.00% 
NYDFS Consent Order impact
6.00% 
0.00% 
0.00% 
Goodwill impairment
46.70% 
0.00% 
0.00% 
Lapse of statute of limitations
(10.00%)
(11.30%)
(0.80%)
Valuation allowances
0.80% 
(2.80%)
(0.90%)
Other
(2.10%)
(7.50%)
1.90% 
Effective tax rate
260.30% 
25.90% 
11.00% 
US tax paid on foreign earnings
1.10% 
24.80% 
3.40% 
Income Taxes - Current and Deferred Components of Provision for Income Taxes (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2017
Sep. 30, 2017
Jun. 30, 2017
Mar. 31, 2017
Dec. 31, 2016
Sep. 30, 2016
Jun. 30, 2016
Mar. 31, 2016
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Current:
 
 
 
 
 
 
 
 
 
 
 
Federal
 
 
 
 
 
 
 
 
$ 774.4 
$ 186.2 
$ 59.6 
State and local
 
 
 
 
 
 
 
 
1.0 
13.1 
5.4 
Foreign
 
 
 
 
 
 
 
 
59.7 
63.4 
78.9 
Total current taxes
 
 
 
 
 
 
 
 
835.1 
262.7 
143.9 
Deferred:
 
 
 
 
 
 
 
 
 
 
 
Federal
 
 
 
 
 
 
 
 
74.1 
(142.7)
(26.4)
State and local
 
 
 
 
 
 
 
 
4.4 
(10.2)
(6.4)
Foreign
 
 
 
 
 
 
 
 
(9.0)
(21.3)
(7.1)
Total deferred taxes
 
 
 
 
 
 
 
 
69.5 
(174.2)
(39.9)
Provision for income taxes
$ 831.7 
$ 3.6 
$ 17.9 
$ 51.4 
$ 16.7 
$ 23.1 
$ 16.9 
$ 31.8 
$ 904.6 
$ 88.5 
$ 104.0 
Income Taxes - Deferred Taxes (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2017
Dec. 31, 2016
Deferred tax assets related to:
 
 
Reserves, accrued expenses and employee-related items
$ 44.8 
$ 279.8 
Tax attribute carryovers
27.1 
39.1 
Pension obligations
4.6 
11.1 
Intangibles, property and equipment
11.9 
9.7 
Other
10.7 
14.8 
Valuation allowance
(19.9)
(22.0)
Total deferred tax assets
79.2 
332.5 
Deferred tax liabilities related to:
 
 
Intangibles, property and equipment
239.4 
394.4 
Other
0.9 
14.3 
Total deferred tax liabilities
240.3 
408.7 
Net deferred tax liability
161.1 
76.2 
Other Assets
 
 
Deferred tax liabilities related to:
 
 
Gross deferred tax assets
$ 11.9 
$ 9.7 
Income Taxes - Reconciliation of Unrecognized Tax Benefits (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Unrecognized tax benefits reconciliation
 
 
Balance at beginning of period
$ 352.0 
$ 105.6 
Increase related to current period tax positions
9.0 
223.6 
Increase related to prior period tax positions
71.7 
Decrease related to prior period tax positions
(19.8)
(14.9)
Decrease due to lapse of applicable statute of limitations
(14.0)
(33.1)
Increase/(decrease) due to effects of foreign currency exchange rates
1.8 
 
Increase/(decrease) due to effects of foreign currency exchange rates
 
(0.9)
Balance at end of period
$ 329.0 
$ 352.0 
Income Taxes - Narrative (Details) (USD $)
3 Months Ended 12 Months Ended
Dec. 31, 2017
Sep. 30, 2017
Jun. 30, 2017
Mar. 31, 2017
Dec. 31, 2016
Sep. 30, 2016
Jun. 30, 2016
Mar. 31, 2016
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Income Tax Examination [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Provisional income tax expense (benefit) related to the Tax and Jobs Act of 2017
 
 
 
 
 
 
 
 
$ 916,000,000 
 
 
Provisional income tax benefit related to change in tax rate
 
 
 
 
 
 
 
 
87,000,000 
 
 
Provisional liability related to accumulated foreign earnings
254,000,000 
 
 
 
 
 
 
 
254,000,000 
 
 
Income tax benefit
(831,700,000)
(3,600,000)
(17,900,000)
(51,400,000)
(16,700,000)
(23,100,000)
(16,900,000)
(31,800,000)
(904,600,000)
(88,500,000)
(104,000,000)
Litigation settlement awarded to other party
11,000,000 
 
49,000,000 
 
 
 
 
 
 
586,000,000 
 
Income Tax Uncertainties [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Total tax contingency reserve
344,000,000 
 
 
 
 
 
 
 
344,000,000 
 
 
Unrecognized tax benefits that, if recognized, would affect the effective tax rate
319,600,000 
 
 
 
343,300,000 
 
 
 
319,600,000 
343,300,000 
 
Interest and penalties, recognized
 
 
 
 
 
 
 
 
2,200,000 
(200,000)
1,900,000 
Interest and penalties, accrued
25,400,000 
 
 
 
22,500,000 
 
 
 
25,400,000 
22,500,000 
 
Reasonably possible decrease to the Company's total unrecognized tax benefits during the next 12 months
19,000,000 
 
 
 
 
 
 
 
19,000,000 
 
 
Expected cash payments as a result of the IRS Agreement
190,000,000 
 
 
 
 
 
 
 
190,000,000 
 
 
Cash payments made to date as a result of the IRS Agreement
94,100,000 
 
 
 
 
 
 
 
94,100,000 
 
 
Foreign Tax Authority |
Pre-tax Income |
Geographic Concentration Risk
 
 
 
 
 
 
 
 
 
 
 
Income Tax Examination [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Percent of pre-tax income derived from foreign sources
 
 
 
 
 
 
 
 
169.00% 
260.00% 
103.00% 
NYDFS Consent Order
 
 
 
 
 
 
 
 
 
 
 
Income Tax Examination [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Income tax benefit
 
 
 
 
 
 
 
 
 
Damages awarded
 
 
 
 
 
 
 
 
$ 60,000,000.0 
 
 
Employee Benefit Plans - Narrative (Details) (USD $)
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2018
Forecast
Dec. 31, 2017
Fixed Income
Dec. 31, 2017
Equity Securities
Dec. 31, 2017
Alternative Investments
Defined Contribution Plan [Abstract]
 
 
 
 
 
 
 
Total expenses
$ 19,200,000 
$ 17,800,000 
$ 18,000,000 
 
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
 
 
 
 
Target allocation
 
 
 
 
60.00% 
20.00% 
20.00% 
Fair value of plan assets
271,700,000 
280,000,000 
 
 
 
 
 
Benefit obligation
286,700,000 
306,400,000 
 
 
 
 
 
Discount rate assumption
3.11% 
3.40% 
 
 
 
 
 
Unfunded pension obligation
15,000,000 
26,400,000 
 
 
 
 
 
Net periodic benefit cost
2,400,000 
3,300,000 
2,800,000 
 
 
 
 
Expected long-term return on plan assets assumption
 
 
 
6.50% 
 
 
 
Company contributions to the Plan
38,100,000 
 
 
 
 
 
Estimated future company contributions in 2018
 
 
 
 
 
 
Defined Benefit Plan, Expected Future Benefit Payment [Abstract]
 
 
 
 
 
 
 
Expected future benefit payments, 2018
31,500,000 
 
 
 
 
 
 
Expected future benefit payments, 2019
29,800,000 
 
 
 
 
 
 
Expected future benefit payments, 2020
28,000,000 
 
 
 
 
 
 
Expected future benefit payments, 2021
26,300,000 
 
 
 
 
 
 
Expected future benefit payments, 2022
24,500,000 
 
 
 
 
 
 
Expected future benefit payments, 2023 through 2027
$ 98,100,000 
 
 
 
 
 
 
Operating Lease Commitments - Summary (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Operating leases, rent expense, net [Abstract]
 
 
 
Total rent expense under operating leases, net of sublease income
$ 51.1 
$ 46.2 
$ 46.9 
Operating leases, future minimum lease payments [Abstract]
 
 
 
2018
43.2 
 
 
2019
35.5 
 
 
2020
32.4 
 
 
2021
26.3 
 
 
2022
22.7 
 
 
Thereafter
118.7 
 
 
Total future minimum lease payments
$ 278.8 
 
 
Stockholders' Equity/(Deficit) - Components of Accumulated Other Comprehensive Loss (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Unrealized gains on investment securities:
 
 
 
Unrealized gains/(losses) on investment securities, beginning of year
$ (3.8)
$ 7.8 
$ 8.9 
Unrealized gains/(losses)
12.6 
(14.9)
0.4 
Tax (expense)/benefit
(4.6)
5.4 
(0.1)
Tax expense related to reclassifications
0.9 
1.2 
0.8 
Unrealized gains/(losses) on investment securities
6.5 
(11.6)
(1.1)
Unrealized gains/(losses) on investment securities, end of year
2.7 
(3.8)
7.8 
Unrealized gains/(losses) on hedging activities:
 
 
 
Unrealized gain/(losses) on hedging activities, beginning of year
33.8 
41.4 
48.6 
Unrealized gains/(losses)
(73.9)
34.3 
70.8 
Tax (expense)/benefit
2.2 
1.0 
(7.0)
Tax expense/(benefit) related to reclassifications
(1.2)
1.5 
3.2 
Unrealized losses on hedging activities
(74.4)
(7.6)
(7.2)
Unrealized gains/(losses) on hedging activities, end of year
(40.6)
33.8 
41.4 
Foreign currency translation adjustments:
 
 
 
Foreign currency translation adjustments, beginning of year
(70.7)
(66.0)
(49.2)
Foreign currency translation adjustments
(6.8)
(5.4)
(20.3)
Tax benefit
0.6 
0.7 
3.5 
Net foreign currency translation adjustments
(6.2)
(4.7)
(16.8)
Foreign currency translation adjustments, end of year
(76.9)
(70.7)
(66.0)
Defined benefit pension plan adjustments:
 
 
 
Defined benefit pension plan adjustments, beginning of year
(122.1)
(127.1)
(127.2)
Unrealized gains/(losses)
2.3 
(2.9)
(9.7)
Tax (expense)/benefit
(0.5)
1.1 
2.5 
Tax benefit related to reclassifications
(4.1)
(3.9)
(4.1)
Defined benefit pension plan adjustments, net of tax
9.0 
5.0 
0.1 
Defined benefit pension plan adjustments, end of year
(113.1)
(122.1)
(127.1)
Accumulated other comprehensive loss, end of year
(227.9)
(162.8)
(143.9)
Revenue
 
 
 
Unrealized gains on investment securities:
 
 
 
Reclassification of gains into Revenues
(2.4)
(3.3)
(2.2)
Unrealized gains/(losses) on hedging activities:
 
 
 
Reclassification of gains/(losses) into Revenues/Interest expense
(4.8)
(48.0)
(77.8)
Interest Expense
 
 
 
Unrealized gains/(losses) on hedging activities:
 
 
 
Reclassification of gains/(losses) into Revenues/Interest expense
3.3 
3.6 
3.6 
Cost of Services
 
 
 
Defined benefit pension plan adjustments:
 
 
 
Reclassification of losses into Cost of services
$ 11.3 
$ 10.7 
$ 11.4 
Stockholders' Equity/(Deficit) - Narrative (Details) (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended 12 Months Ended 0 Months Ended
Dec. 31, 2017
Sep. 30, 2017
Jun. 30, 2017
Mar. 31, 2017
Dec. 31, 2016
Sep. 30, 2016
Jun. 30, 2016
Mar. 31, 2016
Dec. 31, 2015
Sep. 30, 2015
Jun. 30, 2015
Mar. 31, 2015
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Feb. 13, 2018
Subsequent Event
Dec. 31, 2017
2017 Authorization
Dividends, Common Stock [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash dividends paid
 
 
 
 
 
 
 
 
 
 
 
 
$ 325.6 
$ 312.2 
$ 316.5 
 
 
Cash dividends declared per common share (USD per share)
$ 0.175 
$ 0.175 
$ 0.175 
$ 0.175 
$ 0.16 
$ 0.16 
$ 0.16 
$ 0.16 
$ 0.155 
$ 0.155 
$ 0.155 
$ 0.155 
$ 0.7 
$ 0.64 
$ 0.62 
$ 0.19 
 
Disclosure of Repurchase Agreements [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock repurchased and retired, publicly announced authorizations (shares)
 
 
 
 
 
 
 
 
 
 
 
 
24.9 
24.8 
25.1 
 
 
Stock repurchased and retired, publicly announced authorizations, value excluding commissions
 
 
 
 
 
 
 
 
 
 
 
 
487.0 
481.3 
500.0 
 
 
Stock repurchased and retired, publicly announced authorizations, average cost per share excluding commissions (USD per share)
 
 
 
 
 
 
 
 
 
 
 
 
$ 19.55 
$ 19.41 
$ 19.96 
 
 
Remaining amount available under share repurchase authorization through December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 943.5 
Derivatives - Narrative (Details) (USD $)
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Derivative instruments [Line Items]
 
 
 
Accumulated other comprehensive pre-tax loss to be reclassified into revenue within the next 12 months
$ 23,700,000 
 
 
Forecasted debt issuance losses to be recognized on hedges within the next 12 months
2,000,000 
 
 
Foreign currency cash flow hedge loss reclassified to earnings
1,400,000 
 
 
Business Solutions
 
 
 
Derivative instruments [Line Items]
 
 
 
Foreign exchange revenues
341,000,000 
352,600,000 
357,200,000 
Interest rate contracts
 
 
 
Derivative instruments [Line Items]
 
 
 
Notional amounts
475,000,000 
 
 
Interest rate contracts |
Notes due 2018
 
 
 
Derivative instruments [Line Items]
 
 
 
Notional amounts
300,000,000 
 
 
Interest rate contracts |
Notes due 2020
 
 
 
Derivative instruments [Line Items]
 
 
 
Notional amounts
175,000,000 
 
 
Designated as hedges |
Foreign currency contracts
 
 
 
Derivative instruments [Line Items]
 
 
 
Derivative policy - contract maturity period maximum
36 months 
 
 
Derivative policy - targeted weighted-average maturity
1 year 
 
 
Maximum remaining maturity of foreign currency derivatives
24 months 
 
 
Derivative weighted-average maturity
1 year 
 
 
Not designated as hedges |
Foreign currency contracts |
Business Solutions
 
 
 
Derivative instruments [Line Items]
 
 
 
Notional amounts
$ 6,000,000,000 
 
 
Minimum |
Not designated as hedges |
Uncollected settlement assets and obligations
 
 
 
Derivative instruments [Line Items]
 
 
 
Foreign currency forward contracts maturity range
2 days 
 
 
Maximum |
Not designated as hedges |
Business Solutions
 
 
 
Derivative instruments [Line Items]
 
 
 
Foreign currency forward contracts maturity range
1 year 
 
 
Maximum |
Not designated as hedges |
Uncollected settlement assets and obligations
 
 
 
Derivative instruments [Line Items]
 
 
 
Foreign currency forward contracts maturity range
1 month 
 
 
Maximum |
Not designated as hedges |
Foreign currency denominated cash and other asset and other liability positions
 
 
 
Derivative instruments [Line Items]
 
 
 
Foreign currency forward contracts maturity range
1 year 
 
 
Derivatives - Foreign Currency Forward Contracts (Details) (Foreign currency contracts, USD $)
Dec. 31, 2017
Designated as hedges |
Euro
 
Notional amounts of foreign currency forward contracts [Abstract]
 
Notional amounts
$ 384,700,000 
Designated as hedges |
British pound
 
Notional amounts of foreign currency forward contracts [Abstract]
 
Notional amounts
103,400,000 
Designated as hedges |
Canadian dollar
 
Notional amounts of foreign currency forward contracts [Abstract]
 
Notional amounts
92,900,000 
Designated as hedges |
Australian dollar
 
Notional amounts of foreign currency forward contracts [Abstract]
 
Notional amounts
52,400,000 
Designated as hedges |
Swiss franc
 
Notional amounts of foreign currency forward contracts [Abstract]
 
Notional amounts
32,400,000 
Designated as hedges |
Other
 
Notional amounts of foreign currency forward contracts [Abstract]
 
Notional amounts
62,600,000 
Not designated as hedges
 
Notional amounts of foreign currency forward contracts [Abstract]
 
Number of currency exposures within 'Other'
21 
Maximum individual currency exposure within 'Other'
25,000,000 
Not designated as hedges |
Euro
 
Notional amounts of foreign currency forward contracts [Abstract]
 
Notional amounts
320,000,000 
Not designated as hedges |
British pound
 
Notional amounts of foreign currency forward contracts [Abstract]
 
Notional amounts
74,100,000 
Not designated as hedges |
Canadian dollar
 
Notional amounts of foreign currency forward contracts [Abstract]
 
Notional amounts
46,800,000 
Not designated as hedges |
Australian dollar
 
Notional amounts of foreign currency forward contracts [Abstract]
 
Notional amounts
51,300,000 
Not designated as hedges |
Mexican peso
 
Notional amounts of foreign currency forward contracts [Abstract]
 
Notional amounts
42,800,000 
Not designated as hedges |
Indian rupee
 
Notional amounts of foreign currency forward contracts [Abstract]
 
Notional amounts
35,900,000 
Not designated as hedges |
Brazilian real
 
Notional amounts of foreign currency forward contracts [Abstract]
 
Notional amounts
29,700,000 
Not designated as hedges |
Other
 
Notional amounts of foreign currency forward contracts [Abstract]
 
Notional amounts
$ 156,600,000 
Derivatives - Fair Value of Derivatives (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2017
Dec. 31, 2016
Fair Value of Derivatives [Abstract]
 
 
Derivative Assets
$ 273.4 
$ 365.6 
Derivative Liabilities
263.0 
262.3 
Designated as hedges
 
 
Fair Value of Derivatives [Abstract]
 
 
Derivative Assets
11.3 
55.1 
Derivative Liabilities
36.1 
1.2 
Designated as hedges |
Other assets |
Interest rate fair value hedges
 
 
Fair Value of Derivatives [Abstract]
 
 
Derivative Assets
3.3 
6.7 
Designated as hedges |
Other assets |
Foreign currency cash flow hedges
 
 
Fair Value of Derivatives [Abstract]
 
 
Derivative Assets
8.0 
48.4 
Designated as hedges |
Other liabilities |
Interest rate fair value hedges
 
 
Fair Value of Derivatives [Abstract]
 
 
Derivative Liabilities
Designated as hedges |
Other liabilities |
Foreign currency cash flow hedges
 
 
Fair Value of Derivatives [Abstract]
 
 
Derivative Liabilities
36.1 
1.2 
Not designated as hedges
 
 
Fair Value of Derivatives [Abstract]
 
 
Derivative Assets
262.1 
310.5 
Derivative Liabilities
226.9 
261.1 
Not designated as hedges |
Other assets |
Foreign currency cash flow hedges
 
 
Fair Value of Derivatives [Abstract]
 
 
Derivative Assets
1.9 
3.3 
Not designated as hedges |
Other liabilities |
Foreign currency cash flow hedges
 
 
Fair Value of Derivatives [Abstract]
 
 
Derivative Liabilities
5.3 
2.8 
Not designated as hedges |
Business Solutions |
Other assets |
Foreign currency cash flow hedges
 
 
Fair Value of Derivatives [Abstract]
 
 
Derivative Assets
260.2 
307.2 
Not designated as hedges |
Business Solutions |
Other liabilities |
Foreign currency cash flow hedges
 
 
Fair Value of Derivatives [Abstract]
 
 
Derivative Liabilities
$ 221.6 
$ 258.3 
Derivatives - Gross and Net Fair Value of Derivative Assets and Liabilities (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2017
Dec. 31, 2016
Offsetting of Derivative Assets [Abstract]
 
 
Gross Amounts of Recognized Assets
$ 115.4 
$ 256.3 
Gross Amounts Offset in the Consolidated Balance Sheets
Net Amounts Presented in the Consolidated Balance Sheets
115.4 
256.3 
Derivatives Not Offset in the Consolidated Balance Sheets
(98.7)
(146.4)
Net Amounts
16.7 
109.9 
Derivatives that are not or may not be subject to master netting arrangement or similar agreement
158.0 
109.3 
Total
273.4 
365.6 
Offsetting of Derivative Liabilities [Abstract]
 
 
Gross Amounts of Recognized Liabilities
214.9 
152.6 
Gross Amounts Offset in the Consolidated Balance Sheets
Net Amounts Presented in the Consolidated Balance Sheets
214.9 
152.6 
Derivatives Not Offset in the Consolidated Balance Sheets
(98.7)
(146.4)
Net Amounts
116.2 
6.2 
Derivatives that are not or may not be subject to master netting arrangement or similar agreement
48.1 
109.7 
Total
$ 263.0 
$ 262.3 
Derivatives - Net Gains/(Losses) from Hedging Activities (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Hedges [Abstract]
 
 
 
Foreign exchange gain/(loss)
$ 17.5 
$ (21.4)
$ (36.1)
Not designated as hedges
 
 
 
Hedges [Abstract]
 
 
 
Gain/(Loss) Recognized in Income on Derivatives
(21.0)
14.0 
37.2 
Not designated as hedges |
Selling, general and administrative
 
 
 
Hedges [Abstract]
 
 
 
Gain/(Loss) Recognized in Income on Derivatives
(20.5)
13.2 
35.9 
Not designated as hedges |
Derivative gains, net
 
 
 
Hedges [Abstract]
 
 
 
Gain/(Loss) Recognized in Income on Derivatives
(0.5)
0.8 
1.3 
Fair Value Hedges
 
 
 
Hedges [Abstract]
 
 
 
Gain/(Loss) Recognized in Income on Derivatives
(1.8)
6.2 
15.2 
Gain/(Loss) Recognized in Income on Related Hedged Item
3.9 
3.2 
(2.3)
Gain/(Loss) Recognized in Income on Derivatives (Ineffective Portion and Amount Excluded from Effectiveness Testing)
(0.2)
0.8 
Fair Value Hedges |
Interest rate contracts |
Interest expense
 
 
 
Hedges [Abstract]
 
 
 
Gain/(Loss) Recognized in Income on Derivatives
(1.8)
6.2 
15.2 
Gain/(Loss) Recognized in Income on Derivatives (Ineffective Portion and Amount Excluded from Effectiveness Testing)
(0.2)
0.8 
Fair Value Hedges |
Fixed-rate debt |
Interest expense
 
 
 
Hedges [Abstract]
 
 
 
Gain/(Loss) Recognized in Income on Related Hedged Item
3.9 
3.2 
(2.3)
Gain/(loss) in value of debt
2.0 
(6.2)
(16.0)
Amortization of hedge accounting adjustments
(1.9)
(9.4)
(13.7)
Cash Flow Hedges
 
 
 
Hedges [Abstract]
 
 
 
Gain/(Loss) Recognized in OCI on Derivatives (Effective Portion)
(73.9)
34.3 
70.8 
Gain/(Loss) Reclassified from Accumulated OCI into Income (Effective Portion)
1.5 
44.4 
74.2 
Gain/(Loss) Recognized in Income on Derivatives (Ineffective Portion and Amount Excluded from Effectiveness Testing)
9.0 
3.7 
(0.1)
Cash Flow Hedges |
Interest rate contracts
 
 
 
Hedges [Abstract]
 
 
 
Gain/(Loss) Recognized in OCI on Derivatives (Effective Portion)
Cash Flow Hedges |
Interest rate contracts |
Interest expense
 
 
 
Hedges [Abstract]
 
 
 
Gain/(Loss) Reclassified from Accumulated OCI into Income (Effective Portion)
(3.3)
(3.6)
(3.6)
Gain/(Loss) Recognized in Income on Derivatives (Ineffective Portion and Amount Excluded from Effectiveness Testing)
Cash Flow Hedges |
Foreign currency contracts
 
 
 
Hedges [Abstract]
 
 
 
Gain/(Loss) Recognized in OCI on Derivatives (Effective Portion)
(73.9)
34.3 
70.8 
Cash Flow Hedges |
Foreign currency contracts |
Revenue
 
 
 
Hedges [Abstract]
 
 
 
Gain/(Loss) Reclassified from Accumulated OCI into Income (Effective Portion)
4.8 
48.0 
77.8 
Cash Flow Hedges |
Foreign currency contracts |
Derivative gains, net
 
 
 
Hedges [Abstract]
 
 
 
Gain/(Loss) Recognized in Income on Derivatives (Ineffective Portion and Amount Excluded from Effectiveness Testing)
$ 9.0 
$ 3.7 
$ (0.1)
Borrowings - Outstanding Borrowings (Details) (USD $)
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2017
2.875% notes due 2017
Dec. 31, 2016
2.875% notes due 2017
Dec. 10, 2012
2.875% notes due 2017
Dec. 31, 2017
3.650% notes (effective rate of 5.0%) due 2018
Dec. 31, 2016
3.650% notes (effective rate of 5.0%) due 2018
Aug. 22, 2011
3.650% notes (effective rate of 5.0%) due 2018
Dec. 31, 2017
3.350% notes due 2019
Dec. 31, 2016
3.350% notes due 2019
Nov. 22, 2013
3.350% notes due 2019
Dec. 31, 2017
Floating rate notes due 2019
Aug. 22, 2017
Floating rate notes due 2019
Dec. 31, 2016
Floating rate notes due 2019
Dec. 31, 2017
5.253% notes due 2020
Dec. 31, 2016
5.253% notes due 2020
Mar. 30, 2010
5.253% notes due 2020
Dec. 31, 2017
3.600% notes due 2022
Aug. 22, 2017
3.600% notes due 2022
Mar. 15, 2017
3.600% notes due 2022
Dec. 31, 2016
3.600% notes due 2022
Dec. 31, 2017
6.200% notes due 2036
Dec. 31, 2016
6.200% notes due 2036
Nov. 17, 2006
6.200% notes due 2036
Dec. 31, 2017
6.200% notes due 2040
Dec. 31, 2016
6.200% notes due 2040
Jun. 21, 2010
6.200% notes due 2040
Dec. 31, 2017
Term loan facility borrowing (effective rate of 3.0%)
Dec. 31, 2016
Term loan facility borrowing (effective rate of 3.0%)
Debt Instrument [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total borrowings at par value
$ 3,049,900,000 
$ 2,799,900,000 
$ 0 
$ 500,000,000 
$ 500,000,000 
$ 400,000,000 
$ 400,000,000 
$ 400,000,000 
$ 250,000,000 
$ 250,000,000 
$ 250,000,000 
$ 250,000,000 
$ 250,000,000.0 
$ 0 
$ 324,900,000 
$ 324,900,000 
 
$ 500,000,000.0 
$ 100,000,000.0 
$ 400,000,000.0 
$ 0 
$ 500,000,000 
$ 500,000,000 
$ 500,000,000 
$ 250,000,000 
$ 250,000,000 
$ 250,000,000 
$ 575,000,000 
$ 575,000,000 
Fair value hedge accounting adjustments, net
500,000 
4,400,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unamortized discount and debt issuance costs
(16,800,000)
(18,200,000)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total borrowings at carrying value
$ 3,033,600,000 
$ 2,786,100,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stated interest rate (as a percent)
 
 
2.875% 
2.875% 
 
3.65% 
3.65% 
3.65% 
3.35% 
3.35% 
3.35% 
 
 
 
5.253% 
5.253% 
5.253% 
3.60% 
3.60% 
3.60% 
3.60% 
6.20% 
6.20% 
6.20% 
6.20% 
6.20% 
6.20% 
 
 
Effective interest rate
 
 
 
 
 
5.00% 
 
 
 
 
 
2.50% 
 
 
 
 
 
3.70% 
 
 
 
 
 
 
 
 
 
3.00% 
 
Weighted-average effective interest rate
4.50% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Borrowings - Maturity Schedule of Borrowings (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2017
Borrowings maturities at par value [Abstract]
 
Due within 1 year
$ 414.3 
Due after 1 year through 2 years
528.8 
Due after 2 years through 3 years
368.0 
Due after 3 years through 4 years
488.8 
Due after 4 years through 5 years
500.0 
Due after 5 years
$ 750.0 
Borrowings - Narrative (Details) (USD $)
12 Months Ended 12 Months Ended 12 Months Ended 0 Months Ended 12 Months Ended 0 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2017
Commercial paper
Dec. 31, 2016
Commercial paper
Dec. 31, 2017
Revolving credit facility
Dec. 31, 2016
Revolving credit facility
Sep. 29, 2015
Revolving credit facility
Sep. 29, 2015
Letter of credit sub-facility
Dec. 31, 2017
Term loan facility
Dec. 31, 2016
Term loan facility
Oct. 31, 2016
Term loan facility
Apr. 11, 2016
Term loan facility
Dec. 31, 2017
Floating rate notes due 2019
Aug. 22, 2017
Floating rate notes due 2019
Dec. 31, 2016
Floating rate notes due 2019
Aug. 22, 2017
Notes due 2022
Dec. 31, 2017
Notes due 2022
Aug. 22, 2017
Notes due 2022
Mar. 15, 2017
Notes due 2022
Dec. 31, 2016
Notes due 2022
Mar. 15, 2017
Notes due 2022
Maximum
Mar. 15, 2017
Notes due 2022
Minimum
Dec. 31, 2017
Notes due 2019
Dec. 31, 2016
Notes due 2019
Nov. 22, 2013
Notes due 2019
Nov. 22, 2013
Notes due 2019
Maximum
Nov. 22, 2013
Notes due 2019
Minimum
Dec. 10, 2012
Floating rate notes due 2015
Dec. 10, 2012
Notes due 2015
Dec. 31, 2017
Notes due 2017
Dec. 31, 2016
Notes due 2017
Dec. 10, 2012
Notes due 2017
Dec. 31, 2017
Notes due 2018
Dec. 31, 2016
Notes due 2018
Aug. 22, 2011
Notes due 2018
Dec. 31, 2017
Notes due 2040
Dec. 31, 2016
Notes due 2040
Jun. 21, 2010
Notes due 2040
Dec. 31, 2017
Notes due 2020
Dec. 31, 2016
Notes due 2020
Mar. 30, 2010
Notes due 2020
Dec. 31, 2017
Notes due 2036
Dec. 31, 2016
Notes due 2036
Nov. 17, 2006
Notes due 2036
Sep. 29, 2006
Notes due 2016
Schedule of Long-term and Short-term Debt Instruments [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Maximum borrowing capacity
 
 
$ 1,500,000,000 
 
 
 
$ 1,650,000,000 
$ 250,000,000 
 
 
 
$ 575,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Threshold over which Commercial Paper Program limit will be reduced for borrowings on Revolving Credit Facility
 
 
150,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Maximum days to maturity
 
 
397 days 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revolver balance outstanding at the end of period
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Outstanding borrowings under term loan facility
 
 
 
 
 
 
 
 
 
 
575,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EBITDA interest coverage ratio
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total borrowings at par value
3,049,900,000 
2,799,900,000 
 
 
 
 
575,000,000 
575,000,000 
 
 
250,000,000 
250,000,000.0 
 
500,000,000.0 
100,000,000.0 
400,000,000.0 
 
 
250,000,000 
250,000,000 
250,000,000 
 
 
250,000,000.0 
250,000,000.0 
500,000,000 
500,000,000 
400,000,000 
400,000,000 
400,000,000 
250,000,000 
250,000,000 
250,000,000 
324,900,000 
324,900,000 
 
500,000,000 
500,000,000 
500,000,000 
1,000,000,000.0 
Redemption price (as a percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
101.783% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accrued interest received upon issuance
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,570,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stated interest rate (as a percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3.60% 
3.60% 
3.60% 
3.60% 
 
 
3.35% 
3.35% 
3.35% 
 
 
 
 
2.875% 
2.875% 
 
3.65% 
3.65% 
3.65% 
6.20% 
6.20% 
6.20% 
5.253% 
5.253% 
5.253% 
6.20% 
6.20% 
6.20% 
 
Increase (decrease) in interest rate (as a percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5.60% 
3.60% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Maximum interest increase after credit rating downgrade
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Minimum interest charged after credit rating upgrade
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3.35% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt instrument, original face amount
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
303,700,000 
 
 
 
 
Unamortized premium of debt instrument
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 21,200,000 
 
 
 
 
Basis spread on floating rate debt (as a percent)
 
 
 
 
 
 
 
 
 
 
 
 
0.80% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Premium on early redemptions (as a percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
0.25% 
 
 
 
 
 
0.30% 
 
 
 
 
 
 
 
 
 
0.35% 
 
 
0.30% 
 
 
0.15% 
 
 
0.25% 
 
 
 
Premium given to note holders (as a percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
7.00% 
 
 
 
 
Interest rate margin on revolving credit facility (as a percent)
 
 
 
 
1.10% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Facility fee (as a percent)
 
 
 
 
0.15% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Term loan facility, interest rate margin (as a percent)
 
 
 
 
 
 
 
 
1.50% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Repurchase provisions, percentage of principal
 
 
 
 
 
 
 
 
 
 
 
 
101.00% 
 
 
 
101.00% 
 
 
 
 
 
101.00% 
 
 
 
 
 
 
 
 
 
101.00% 
 
 
 
 
 
 
 
 
 
 
 
 
Stock Compensation Plans - Narrative (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Stock Compensation Plans (Numeric) [Abstract]
 
 
 
Cash received from exercise of stock options
$ 13.0 
$ 32.5 
$ 80.1 
Tax benefit from exercise of stock options
1.3 
1.6 
4.3 
Intrinsic value of stock options exercised
4.0 
5.3 
15.0 
Volatility (as a percent)
24.70% 
27.90% 
28.20% 
Options granted (shares)
0.4 
 
 
Expected term (in years)
6 years 18 days 
6 years 3 months 26 days 
6 years 
Chief Executive Officer
 
 
 
Stock Compensation Plans (Numeric) [Abstract]
 
 
 
Expected term (in years)
6 years 
 
 
Non-executive employees
 
 
 
Stock Compensation Plans (Numeric) [Abstract]
 
 
 
Options granted (shares)
 
 
Director
 
 
 
Stock Compensation Plans (Numeric) [Abstract]
 
 
 
Expected term (in years)
7 years 
 
 
Employee Stock Option
 
 
 
Stock Compensation Plans (Numeric) [Abstract]
 
 
 
Options expiration period
10 years 
 
 
Award vesting period
4 years 
 
 
Unrecognized compensation cost
1.4 
 
 
Weighted average recognition period
2 years 6 months 
 
 
Award vesting (as a percent)
25.00% 
 
 
Employee Stock Option |
Chief Executive Officer
 
 
 
Stock Compensation Plans (Numeric) [Abstract]
 
 
 
Long-term incentive award stock option awards (as a percent)
20.00% 
 
 
Restricted Stock Units
 
 
 
Stock Compensation Plans (Numeric) [Abstract]
 
 
 
Award vesting period
4 years 
 
 
Award vesting (as a percent)
25.00% 
 
 
Restricted Stock Units |
Executives excluding CEO
 
 
 
Stock Compensation Plans (Numeric) [Abstract]
 
 
 
Long-term incentive award restricted stock units (as a percent)
20.00% 
 
 
Restricted Stock Units |
Senior Vice Presidents
 
 
 
Stock Compensation Plans (Numeric) [Abstract]
 
 
 
Long-term incentive award restricted stock units (as a percent)
50.00% 
 
 
Financial PSUs
 
 
 
Stock Compensation Plans (Numeric) [Abstract]
 
 
 
Award vesting (as a percent)
100.00% 
 
 
Financial PSUs |
Minimum
 
 
 
Stock Compensation Plans (Numeric) [Abstract]
 
 
 
Stock units granted that recipients receive as performance based restricted stock units (as a percent)
0.00% 
 
 
Financial PSUs |
Maximum
 
 
 
Stock Compensation Plans (Numeric) [Abstract]
 
 
 
Stock units granted that recipients receive as performance based restricted stock units (as a percent)
150.00% 
 
 
Financial PSUs |
Executives excluding CEO
 
 
 
Stock Compensation Plans (Numeric) [Abstract]
 
 
 
Long-term incentive award performance based restricted stock units (as a percent)
60.00% 
 
 
Financial PSUs |
Chief Executive Officer
 
 
 
Stock Compensation Plans (Numeric) [Abstract]
 
 
 
Long-term incentive award performance based restricted stock units (as a percent)
60.00% 
 
 
Financial PSUs |
Senior Vice Presidents
 
 
 
Stock Compensation Plans (Numeric) [Abstract]
 
 
 
Long-term incentive award performance based restricted stock units (as a percent)
50.00% 
 
 
TSR PSUs
 
 
 
Stock Compensation Plans (Numeric) [Abstract]
 
 
 
Award vesting period
3 years 
 
 
TSR PSUs |
Executives excluding CEO
 
 
 
Stock Compensation Plans (Numeric) [Abstract]
 
 
 
Long-term incentive award performance based restricted stock units (as a percent)
20.00% 
 
 
TSR PSUs |
Chief Executive Officer
 
 
 
Stock Compensation Plans (Numeric) [Abstract]
 
 
 
Long-term incentive award performance based restricted stock units (as a percent)
20.00% 
 
 
RSUs and PSUs
 
 
 
Stock Compensation Plans (Numeric) [Abstract]
 
 
 
Unrecognized compensation cost
$ 64.6 
 
 
Weighted average recognition period
2 years 1 month 
 
 
2015 LTIP
 
 
 
Stock Compensation Plans (Numeric) [Abstract]
 
 
 
Shares available for grant (shares)
28.1 
 
 
Stock Compensation Plans - Stock Option Activity (Details) (USD $)
In Millions, except Per Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2017
Stock Option Activity
 
Outstanding at beginning of period (shares)
8.1 
Granted (shares)
0.4 
Exercised (shares)
(0.8)
Cancelled/forfeited (shares)
(0.4)
Outstanding at end of period (shares)
7.3 
Options exercisable at end of period (shares)
6.1 
Weighted-Average Exercise Price
 
Outstanding at beginning of period (USD per share)
$ 17.46 
Granted (USD per share)
$ 19.99 
Exercised (USD per share)
$ 15.57 
Cancelled/forfeited (USD per share)
$ 19.97 
Outstanding at end of period (USD per share)
$ 17.71 
Options exercisable at end of period (USD per share)
$ 17.49 
Stock Options, Additional Disclosures
 
Weighted-average remaining contractual term, outstanding at end of period (years)
4 years 7 months 6 days 
Weighted-average remaining contractual term, options exercisable at end of period (years)
3 years 10 months 24 days 
Aggregate intrinsic value, outstanding at end of period
$ 13.4 
Aggregate intrinsic value, options exercisable at end of period
$ 12.7 
Stock Compensation Plans - Activity of Restricted Stock Units and Preformance-Based Restricted Stock Units (Details) (USD $)
In Millions, except Per Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2017
Restricted Stock Activity
 
Non-vested at beginning of period (shares)
7.4 
Granted (shares)
3.6 
Vested (shares)
(2.4)
Forfeited (shares)
(1.2)
Non-vested at end of period (shares)
7.4 
Restricted Stock Weighted-Average Grant-Date Fair Value
 
Non-vested at beginning of period (USD per share)
$ 16.68 
Granted (USD per share)
$ 17.70 
Vested (USD per share)
$ 16.02 
Forfeited (USD per share)
$ 17.10 
Non-vested at end of period (USD per share)
$ 17.32 
Stock Compensation Plans - Impact on Earnings (Details) (USD $)
In Millions, except Per Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Stock-Based Compensation
 
 
 
Stock-based compensation expense
$ (43.9)
$ (41.8)
$ (42.2)
Income tax benefit from stock-based compensation expense
12.8 
12.3 
12.3 
Net income/(loss) impact
$ (31.1)
$ (29.5)
$ (29.9)
Earnings/(loss) per share:
 
 
 
Basic and Diluted (USD per share)
$ (0.07)
$ (0.06)
$ (0.06)
Stock Compensation Plans - Assumptions for the Black-Scholes Option Pricing Model (Details)
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Stock options granted:
 
 
 
Weighted-average risk-free interest rate (as a percent)
2.10% 
1.40% 
1.70% 
Weighted-average dividend yield (as a percent)
3.50% 
3.30% 
3.60% 
Volatility (as a percent)
24.70% 
27.90% 
28.20% 
Expected term (in years)
6 years 18 days 
6 years 3 months 26 days 
6 years 
Weighted-average grant date fair value (USD per share)
$ 3.39 
$ 3.44 
$ 3.58 
Segments - Narrative (Details) (USD $)
3 Months Ended 12 Months Ended
Dec. 31, 2017
Sep. 30, 2017
Jun. 30, 2017
Mar. 31, 2017
Dec. 31, 2016
Sep. 30, 2016
Jun. 30, 2016
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Segment (Numeric) [Abstract]
 
 
 
 
 
 
 
 
 
 
Goodwill impairment charge
$ 464,000,000 
 
 
 
 
 
 
$ 464,000,000 
$ 0 
$ 0 
Joint settlement agreements
 
8,000,000 
 
 
571,000,000 
15,000,000 
15,000,000 
8,000,000 
601,000,000 
 
Expenses - business transformation
35,200,000 
9,900,000 
35,000,000 
14,300,000 
13,200,000 
5,000,000 
2,100,000 
94,400,000 
20,300,000 
 
Litigation settlement awarded to other party
11,000,000 
 
49,000,000 
 
 
 
 
 
586,000,000 
 
Consumer-to-Consumer
 
 
 
 
 
 
 
 
 
 
Segment (Numeric) [Abstract]
 
 
 
 
 
 
 
 
 
 
Expenses - business transformation
 
 
 
 
 
 
 
30,800,000 
2,700,000 
 
Business Solutions
 
 
 
 
 
 
 
 
 
 
Segment (Numeric) [Abstract]
 
 
 
 
 
 
 
 
 
 
Expenses - business transformation
 
 
 
 
 
 
 
16,100,000 
600,000 
 
Operating Segments
 
 
 
 
 
 
 
 
 
 
Segment (Numeric) [Abstract]
 
 
 
 
 
 
 
 
 
 
Number of operating segments
 
 
 
 
 
 
 
 
 
Operating Segments |
Consumer-to-Consumer
 
 
 
 
 
 
 
 
 
 
Segment (Numeric) [Abstract]
 
 
 
 
 
 
 
 
 
 
Number of geographic regions in segment
 
 
 
 
 
 
 
 
 
Goodwill impairment charge
 
 
 
 
 
 
 
 
 
Number of regions in revenue split
 
 
 
 
 
 
 
 
 
Utilized to split revenue for transactions originated and paid in different regions (as a percent)
 
 
 
 
 
 
 
 
50.00% 
 
Operating Segments |
Business Solutions
 
 
 
 
 
 
 
 
 
 
Segment (Numeric) [Abstract]
 
 
 
 
 
 
 
 
 
 
Goodwill impairment charge
 
 
 
 
 
 
 
464,000,000 
 
 
Utilized to allocate revenue to the country where the transaction is initiated (as a percent)
 
 
 
 
 
 
 
100.00% 
 
 
Other
 
 
 
 
 
 
 
 
 
 
Segment (Numeric) [Abstract]
 
 
 
 
 
 
 
 
 
 
Goodwill impairment charge
 
 
 
 
 
 
 
 
 
Litigation settlement awarded to other party
 
 
 
 
 
 
 
 
 
(35,300,000)
Utilized to allocate revenue to the country where the transaction is initiated (as a percent)
 
 
 
 
 
 
 
100.00% 
 
 
NYDFS Consent Order
 
 
 
 
 
 
 
 
 
 
Segment (Numeric) [Abstract]
 
 
 
 
 
 
 
 
 
 
Damages awarded
 
 
 
 
 
 
 
$ 60,000,000.0 
 
 
Segments - Reportable Segments Results (Details) (USD $)
3 Months Ended 12 Months Ended
Dec. 31, 2017
Sep. 30, 2017
Jun. 30, 2017
Mar. 31, 2017
Dec. 31, 2016
Sep. 30, 2016
Jun. 30, 2016
Mar. 31, 2016
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Revenues:
 
 
 
 
 
 
 
 
 
 
 
Total consolidated revenues
$ 1,438,300,000 
$ 1,404,700,000 
$ 1,378,900,000 
$ 1,302,400,000 
$ 1,371,700,000 
$ 1,377,800,000 
$ 1,375,700,000 
$ 1,297,700,000 
$ 5,524,300,000 
$ 5,422,900,000 
$ 5,483,700,000 
Operating income:
 
 
 
 
 
 
 
 
 
 
 
Operating income/(loss)
(252,500,000)
271,600,000 
214,800,000 
239,500,000 
(313,500,000)
278,300,000 
260,300,000 
258,600,000 
473,400,000 
483,700,000 
1,109,400,000 
Goodwill impairment charge (Note 4)
(464,000,000)
 
 
 
 
 
 
 
(464,000,000)
Joint Settlement Agreements (Note 5)
 
(8,000,000)
 
 
(571,000,000)
(15,000,000)
(15,000,000)
 
(8,000,000)
(601,000,000)
 
Business transformation expenses (Note 3)
(35,200,000)
(9,900,000)
(35,000,000)
(14,300,000)
(13,200,000)
(5,000,000)
(2,100,000)
 
(94,400,000)
(20,300,000)
 
Litigation settlements
(11,000,000)
 
(49,000,000)
 
 
 
 
 
 
(586,000,000)
 
Assets:
 
 
 
 
 
 
 
 
 
 
 
Total assets
9,231,400,000 
 
 
 
9,419,600,000 
 
 
 
9,231,400,000 
9,419,600,000 
9,449,200,000 
Depreciation and amortization:
 
 
 
 
 
 
 
 
 
 
 
Total consolidated depreciation and amortization
 
 
 
 
 
 
 
 
262,900,000 
263,200,000 
270,200,000 
Capital expenditures:
 
 
 
 
 
 
 
 
 
 
 
Total capital expenditures
 
 
 
 
 
 
 
 
177,100,000 
229,800,000 
266,500,000 
Consumer-to-Consumer
 
 
 
 
 
 
 
 
 
 
 
Operating income:
 
 
 
 
 
 
 
 
 
 
 
Business transformation expenses (Note 3)
 
 
 
 
 
 
 
 
(30,800,000)
(2,700,000)
 
Business Solutions
 
 
 
 
 
 
 
 
 
 
 
Operating income:
 
 
 
 
 
 
 
 
 
 
 
Business transformation expenses (Note 3)
 
 
 
 
 
 
 
 
(16,100,000)
(600,000)
 
Operating Segments
 
 
 
 
 
 
 
 
 
 
 
Operating income:
 
 
 
 
 
 
 
 
 
 
 
Operating income/(loss)
 
 
 
 
 
 
 
 
1,099,800,000 
1,105,000,000 
1,109,400,000 
Operating Segments |
Consumer-to-Consumer
 
 
 
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
 
 
 
Total consolidated revenues
 
 
 
 
 
 
 
 
4,354,500,000 
4,304,600,000 
4,343,900,000 
Operating income:
 
 
 
 
 
 
 
 
 
 
 
Operating income/(loss)
 
 
 
 
 
 
 
 
1,002,400,000 
1,008,700,000 
1,042,000,000 
Goodwill impairment charge (Note 4)
 
 
 
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
 
 
 
 
Total assets
4,850,800,000 
 
 
 
4,467,700,000 
 
 
 
4,850,800,000 
4,467,700,000 
4,738,700,000 
Depreciation and amortization:
 
 
 
 
 
 
 
 
 
 
 
Total consolidated depreciation and amortization
 
 
 
 
 
 
 
 
183,000,000 
183,500,000 
183,400,000 
Capital expenditures:
 
 
 
 
 
 
 
 
 
 
 
Total capital expenditures
 
 
 
 
 
 
 
 
120,200,000 
167,700,000 
191,000,000 
Operating Segments |
Business Solutions
 
 
 
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
 
 
 
Total consolidated revenues
 
 
 
 
 
 
 
 
383,900,000 
396,000,000 
398,700,000 
Operating income:
 
 
 
 
 
 
 
 
 
 
 
Operating income/(loss)
 
 
 
 
 
 
 
 
13,600,000 
21,100,000 
2,800,000 
Goodwill impairment charge (Note 4)
 
 
 
 
 
 
 
 
(464,000,000)
 
 
Assets:
 
 
 
 
 
 
 
 
 
 
 
Total assets
1,575,500,000 
 
 
 
2,370,800,000 
 
 
 
1,575,500,000 
2,370,800,000 
2,384,400,000 
Depreciation and amortization:
 
 
 
 
 
 
 
 
 
 
 
Total consolidated depreciation and amortization
 
 
 
 
 
 
 
 
42,500,000 
50,800,000 
57,400,000 
Capital expenditures:
 
 
 
 
 
 
 
 
 
 
 
Total capital expenditures
 
 
 
 
 
 
 
 
8,800,000 
11,400,000 
19,200,000 
Other
 
 
 
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
 
 
 
Total consolidated revenues
 
 
 
 
 
 
 
 
785,900,000 
722,300,000 
741,100,000 
Operating income:
 
 
 
 
 
 
 
 
 
 
 
Operating income/(loss)
 
 
 
 
 
 
 
 
83,800,000 
75,200,000 
64,600,000 
Goodwill impairment charge (Note 4)
 
 
 
 
 
 
 
 
 
 
Litigation settlements
 
 
 
 
 
 
 
 
 
 
35,300,000 
Assets:
 
 
 
 
 
 
 
 
 
 
 
Total assets
2,805,100,000 
 
 
 
2,581,100,000 
 
 
 
2,805,100,000 
2,581,100,000 
2,326,100,000 
Depreciation and amortization:
 
 
 
 
 
 
 
 
 
 
 
Total consolidated depreciation and amortization
 
 
 
 
 
 
 
 
37,400,000 
28,900,000 
29,400,000 
Capital expenditures:
 
 
 
 
 
 
 
 
 
 
 
Total capital expenditures
 
 
 
 
 
 
 
 
48,100,000 
50,700,000 
56,300,000 
Not Allocated To Segments
 
 
 
 
 
 
 
 
 
 
 
Operating income:
 
 
 
 
 
 
 
 
 
 
 
Goodwill impairment charge (Note 4)
 
 
 
 
 
 
 
 
(464,000,000)
NYDFS Consent Order (Note 5)
 
 
 
 
 
 
 
 
(60,000,000)
Joint Settlement Agreements (Note 5)
 
 
 
 
 
 
 
 
(8,000,000)
(601,000,000)
Business transformation expenses (Note 3)
 
 
 
 
 
 
 
 
$ (94,400,000)
$ (20,300,000)
$ 0 
Segments - Information on Principal Geographic Areas (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2017
Sep. 30, 2017
Jun. 30, 2017
Mar. 31, 2017
Dec. 31, 2016
Sep. 30, 2016
Jun. 30, 2016
Mar. 31, 2016
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Revenue:
 
 
 
 
 
 
 
 
 
 
 
Revenues
$ 1,438.3 
$ 1,404.7 
$ 1,378.9 
$ 1,302.4 
$ 1,371.7 
$ 1,377.8 
$ 1,375.7 
$ 1,297.7 
$ 5,524.3 
$ 5,422.9 
$ 5,483.7 
Long-lived assets:
 
 
 
 
 
 
 
 
 
 
 
Property and equipment, net
214.2 
 
 
 
220.5 
 
 
 
214.2 
220.5 
231.8 
Operating Segments |
United States
 
 
 
 
 
 
 
 
 
 
 
Revenue:
 
 
 
 
 
 
 
 
 
 
 
Revenues
 
 
 
 
 
 
 
 
2,159.0 
2,091.5 
1,962.1 
Long-lived assets:
 
 
 
 
 
 
 
 
 
 
 
Property and equipment, net
156.8 
 
 
 
174.0 
 
 
 
156.8 
174.0 
182.9 
Operating Segments |
International
 
 
 
 
 
 
 
 
 
 
 
Revenue:
 
 
 
 
 
 
 
 
 
 
 
Revenues
 
 
 
 
 
 
 
 
3,365.3 
3,331.4 
3,521.6 
Long-lived assets:
 
 
 
 
 
 
 
 
 
 
 
Property and equipment, net
$ 57.4 
 
 
 
$ 46.5 
 
 
 
$ 57.4 
$ 46.5 
$ 48.9 
Quarterly Financial Information (Unaudited) - Summarized Quarterly Results (Details) (USD $)
Share data in Millions, except Per Share data, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2017
Sep. 30, 2017
Jun. 30, 2017
Mar. 31, 2017
Dec. 31, 2016
Sep. 30, 2016
Jun. 30, 2016
Mar. 31, 2016
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Quarterly Financial Information Disclosure [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Goodwill impairment charge
$ 464,000,000 
 
 
 
 
 
 
 
$ 464,000,000 
$ 0 
$ 0 
Litigation settlement awarded to other party
11,000,000 
 
49,000,000 
 
 
 
 
 
 
586,000,000 
 
Joint settlement agreements
 
8,000,000 
 
 
571,000,000 
15,000,000 
15,000,000 
 
8,000,000 
601,000,000 
 
Expenses - business transformation
35,200,000 
9,900,000 
35,000,000 
14,300,000 
13,200,000 
5,000,000 
2,100,000 
 
94,400,000 
20,300,000 
 
Provisional income tax expense (benefit) related to the Tax and Jobs Act of 2017
828,000,000 
 
 
 
 
 
 
 
 
 
 
Federal tax liability including effect of Tax Act
780,000,000 
 
 
 
 
 
 
 
780,000,000 
 
 
2017 & 2016 by Quarter:
 
 
 
 
 
 
 
 
 
 
 
Revenues
1,438,300,000 
1,404,700,000 
1,378,900,000 
1,302,400,000 
1,371,700,000 
1,377,800,000 
1,375,700,000 
1,297,700,000 
5,524,300,000 
5,422,900,000 
5,483,700,000 
Expenses
1,690,800,000 
1,133,100,000 
1,164,100,000 
1,062,900,000 
1,685,200,000 
1,099,500,000 
1,115,400,000 
1,039,100,000 
5,050,900,000 1
4,939,200,000 1
4,374,300,000 1
Operating income/(loss)
(252,500,000)
271,600,000 
214,800,000 
239,500,000 
(313,500,000)
278,300,000 
260,300,000 
258,600,000 
473,400,000 
483,700,000 
1,109,400,000 
Other expense, net
36,700,000 
32,400,000 
30,400,000 
26,400,000 
24,800,000 
38,300,000 
37,800,000 
41,100,000 
125,900,000 
142,000,000 
167,600,000 
Income/(loss) before income taxes
(289,200,000)
239,200,000 
184,400,000 
213,100,000 
(338,300,000)
240,000,000 
222,500,000 
217,500,000 
347,500,000 
341,700,000 
941,800,000 
Provision for income taxes
831,700,000 
3,600,000 
17,900,000 
51,400,000 
16,700,000 
23,100,000 
16,900,000 
31,800,000 
904,600,000 
88,500,000 
104,000,000 
Net income/(loss)
$ (1,120,900,000)
$ 235,600,000 
$ 166,500,000 
$ 161,700,000 
$ (355,000,000)
$ 216,900,000 
$ 205,600,000 
$ 185,700,000 
$ (557,100,000)
$ 253,200,000 
$ 837,800,000 
Earnings/(loss) per share:
 
 
 
 
 
 
 
 
 
 
 
Basic (USD per share)
$ (2.44)
$ 0.51 
$ 0.35 
$ 0.34 
$ (0.73)
$ 0.45 
$ 0.42 
$ 0.37 
$ (1.19)
$ 0.52 
$ 1.63 
Diluted (USD per share)
$ (2.44)
$ 0.51 
$ 0.35 
$ 0.33 
$ (0.73)
$ 0.44 
$ 0.42 
$ 0.37 
$ (1.19)
$ 0.51 
$ 1.62 
Weighted-average shares outstanding:
 
 
 
 
 
 
 
 
 
 
 
Basic (shares)
459.6 
462.8 
469.4 
479.8 
483.6 
487.0 
490.3 
500.0 
467.9 
490.2 
512.6 
Diluted (shares)
459.6 
465.4 
472.0 
483.4 
483.6 
490.3 
493.0 
503.2 
467.9 
493.5 
516.7 
Schedule I - Condensed Financial Information of the Registrant - Condensed Balance Sheets (Details) (USD $)
In Millions, except Share data, unless otherwise specified
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Assets:
 
 
 
 
Cash and cash equivalents
$ 838.2 
$ 877.5 
$ 1,315.9 
$ 1,783.2 
Property and equipment, net of accumulated depreciation of $28.5 and $26.6, respectively
214.2 
220.5 
231.8 
 
Other assets
675.9 
746.3 
 
 
Total assets
9,231.4 
9,419.6 
9,449.2 
 
Liabilities:
 
 
 
 
Accounts payable and accrued liabilities
718.5 
1,129.6 
 
 
Income taxes payable
1,252.0 
407.3 
 
 
Borrowings
3,033.6 
2,786.1 
 
 
Other liabilities
356.8 
359.4 
 
 
Total liabilities
9,722.8 
8,517.4 
 
 
Stockholders’ equity/(deficit):
 
 
 
 
Preferred stock, $1.00 par value; 10 shares authorized; no shares issued
 
 
Common stock, $0.01 par value; 2,000 shares authorized; 459.0 shares and 481.5 shares issued and outstanding as of December 31, 2017 and 2016, respectively
4.6 
4.8 
 
 
Capital surplus
697.8 
640.9 
 
 
Retained earnings/(accumulated deficit)
(965.9)
419.3 
 
 
Accumulated other comprehensive loss
(227.9)
(162.8)
(143.9)
 
Total stockholders' equity/(deficit)
(491.4)
902.2 
1,404.9 
1,300.4 
Total liabilities and stockholders' equity/(deficit)
9,231.4 
9,419.6 
 
 
Condensed Financial Information of Registrant (Parenthetical) [Abstract]
 
 
 
 
Accumulated depreciation
635.7 
600.0 
 
 
Preferred stock, par value (USD per share)
$ 1 
$ 1 
 
 
Preferred stock, shares authorized
10,000,000 
10,000,000 
 
 
Preferred stock, shares issued
 
 
Common stock, par value (USD per share)
$ 0.01 
$ 0.01 
 
 
Common stock, shares authorized
2,000,000,000 
2,000,000,000 
 
 
Common stock, shares issued
459,000,000 
481,500,000 
 
 
Common stock, shares outstanding
459,000,000 
481,500,000 
 
 
Parent Company
 
 
 
 
Assets:
 
 
 
 
Cash and cash equivalents
1.0 
0.3 
1.3 
144.2 
Property and equipment, net of accumulated depreciation of $28.5 and $26.6, respectively
33.9 
34.7 
 
 
Other assets
34.2 
39.4 
 
 
Investment in subsidiaries
7,236.2 
7,291.7 
 
 
Total assets
7,305.3 
7,366.1 
 
 
Liabilities:
 
 
 
 
Accounts payable and accrued liabilities
74.6 
645.5 
 
 
Income taxes payable
887.0 
20.9 
 
 
Payable to subsidiaries, net
3,800.8 
3,010.6 
 
 
Borrowings
3,033.6 
2,786.1 
 
 
Other liabilities
0.7 
0.8 
 
 
Total liabilities
7,796.7 
6,463.9 
 
 
Stockholders’ equity/(deficit):
 
 
 
 
Preferred stock, $1.00 par value; 10 shares authorized; no shares issued
 
 
Common stock, $0.01 par value; 2,000 shares authorized; 459.0 shares and 481.5 shares issued and outstanding as of December 31, 2017 and 2016, respectively
4.6 
4.8 
 
 
Capital surplus
697.8 
640.9 
 
 
Retained earnings/(accumulated deficit)
(965.9)
419.3 
 
 
Accumulated other comprehensive loss
(227.9)
(162.8)
 
 
Total stockholders' equity/(deficit)
(491.4)
902.2 
 
 
Total liabilities and stockholders' equity/(deficit)
7,305.3 
7,366.1 
 
 
Condensed Financial Information of Registrant (Parenthetical) [Abstract]
 
 
 
 
Accumulated depreciation
$ 28.5 
$ 26.6 
 
 
Preferred stock, par value (USD per share)
$ 1 
$ 1 
 
 
Preferred stock, shares authorized
10,000,000 
10,000,000 
 
 
Preferred stock, shares issued
 
 
Common stock, par value (USD per share)
$ 0.01 
$ 0.01 
 
 
Common stock, shares authorized
2,000,000,000 
2,000,000,000 
 
 
Common stock, shares issued
459,000,000 
481,500,000 
 
 
Common stock, shares outstanding
459,000,000 
481,500,000 
 
 
Schedule I - Condensed Financial Information of the Registrant - Condensed Statements of Income/(Loss) and Comprehensive Income/(Loss) (Details) (USD $)
3 Months Ended 12 Months Ended
Dec. 31, 2017
Sep. 30, 2017
Jun. 30, 2017
Mar. 31, 2017
Dec. 31, 2016
Sep. 30, 2016
Jun. 30, 2016
Mar. 31, 2016
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Parent Company
 
 
 
 
 
 
 
 
 
 
 
Revenues
$ 1,438,300,000 
$ 1,404,700,000 
$ 1,378,900,000 
$ 1,302,400,000 
$ 1,371,700,000 
$ 1,377,800,000 
$ 1,375,700,000 
$ 1,297,700,000 
$ 5,524,300,000 
$ 5,422,900,000 
$ 5,483,700,000 
Expenses
1,690,800,000 
1,133,100,000 
1,164,100,000 
1,062,900,000 
1,685,200,000 
1,099,500,000 
1,115,400,000 
1,039,100,000 
5,050,900,000 1
4,939,200,000 1
4,374,300,000 1
Operating income
(252,500,000)
271,600,000 
214,800,000 
239,500,000 
(313,500,000)
278,300,000 
260,300,000 
258,600,000 
473,400,000 
483,700,000 
1,109,400,000 
Interest income
 
 
 
 
 
 
 
 
4,900,000 
3,500,000 
10,900,000 
Interest expense
 
 
 
 
 
 
 
 
(142,100,000)
(152,500,000)
(167,900,000)
Other expense
 
 
 
 
 
 
 
 
4,200,000 
2,500,000 
(11,800,000)
Income tax benefit
(831,700,000)
(3,600,000)
(17,900,000)
(51,400,000)
(16,700,000)
(23,100,000)
(16,900,000)
(31,800,000)
(904,600,000)
(88,500,000)
(104,000,000)
Net income/(loss)
(1,120,900,000)
235,600,000 
166,500,000 
161,700,000 
(355,000,000)
216,900,000 
205,600,000 
185,700,000 
(557,100,000)
253,200,000 
837,800,000 
Other comprehensive income, net of tax
 
 
 
 
 
 
 
 
(65,100,000)
(18,900,000)
(25,000,000)
Comprehensive income/(loss)
 
 
 
 
 
 
 
 
(622,200,000)
234,300,000 
812,800,000 
Parent Company
 
 
 
 
 
 
 
 
 
 
 
Parent Company
 
 
 
 
 
 
 
 
 
 
 
Revenues
 
 
 
 
 
 
 
 
Expenses
 
 
 
 
 
 
 
 
Operating income
 
 
 
 
 
 
 
 
Interest income
 
 
 
 
 
 
 
 
200,000 
Interest expense
 
 
 
 
 
 
 
 
(177,000,000)
(168,100,000)
(171,200,000)
Other expense
 
 
 
 
 
 
 
 
(600,000)
Loss before equity in earnings/(losses) of affiliates and income taxes
 
 
 
 
 
 
 
 
(177,600,000)
(168,100,000)
(171,000,000)
Equity in earnings/(losses) of affiliates, net of tax
 
 
 
 
 
 
 
 
(436,100,000)
357,100,000 
943,300,000 
Income tax benefit
 
 
 
 
 
 
 
 
56,600,000 
64,200,000 
65,500,000 
Net income/(loss)
 
 
 
 
 
 
 
 
(557,100,000)
253,200,000 
837,800,000 
Other comprehensive income, net of tax
 
 
 
 
 
 
 
 
2,100,000 
2,300,000 
2,200,000 
Other comprehensive loss of affiliates, net of tax
 
 
 
 
 
 
 
 
(67,200,000)
(21,200,000)
(27,200,000)
Comprehensive income/(loss)
 
 
 
 
 
 
 
 
$ (622,200,000)
$ 234,300,000 
$ 812,800,000 
Schedule I - Condensed Financial Information of the Registrant - Condensed Statements of Cash Flow (Details) (USD $)
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Cash flows from operating activities
 
 
 
Net cash (used in)/provided by operating activities
$ 735,800,000 
$ 1,041,900,000 
$ 1,071,100,000 
Cash flows from investing activities
 
 
 
Purchases of property and equipment and other
(69,100,000)
(68,800,000)
(94,400,000)
Capital contributed to subsidiaries, net
(916,000,000)
(591,000,000)
 
Net cash provided by/(used in) investing activities
(204,600,000)
(271,100,000)
(286,400,000)
Cash flows from financing activities
 
 
 
Net proceeds from issuance of borrowings
746,200,000 
575,000,000 
Principal payments on borrowings
(500,000,000)
(1,005,400,000)
(500,000,000)
Proceeds from exercise of options and other
11,700,000 
35,000,000 
75,800,000 
Cash dividends paid
(325,600,000)
(312,200,000)
(316,500,000)
Common stock repurchased
(502,800,000)
(501,600,000)
(511,300,000)
Net cash used in financing activities
(570,500,000)
(1,209,200,000)
(1,252,000,000)
Net change in cash and cash equivalents
(39,300,000)
(438,400,000)
(467,300,000)
Cash and cash equivalents at beginning of year
877,500,000 
1,315,900,000 
1,783,200,000 
Cash and cash equivalents at end of year
838,200,000 
877,500,000 
1,315,900,000 
Parent Company
 
 
 
Cash flows from operating activities
 
 
 
Net cash (used in)/provided by operating activities
(605,000,000)
192,000,000 
327,100,000 
Cash flows from investing activities
 
 
 
Purchases of property and equipment and other
(700,000)
(5,900,000)
(100,000)
Capital contributed to subsidiaries, net
(7,300,000)
(17,900,000)
Distributions received from subsidiaries, net
307,300,000 
Net cash provided by/(used in) investing activities
306,600,000 
(13,200,000)
(18,000,000)
Cash flows from financing activities
 
 
 
Advances from subsidiaries, net
868,300,000 
1,024,000,000 
796,100,000 
Net proceeds from issuance of borrowings
746,200,000 
575,000,000 
Principal payments on borrowings
(500,000,000)
(1,000,000,000)
(500,000,000)
Proceeds from exercise of options and other
13,000,000 
35,000,000 
79,700,000 
Cash dividends paid
(325,600,000)
(312,200,000)
(316,500,000)
Common stock repurchased
(502,800,000)
(501,600,000)
(511,300,000)
Net cash used in financing activities
299,100,000 
(179,800,000)
(452,000,000)
Net change in cash and cash equivalents
700,000 
(1,000,000)
(142,900,000)
Cash and cash equivalents at beginning of year
300,000 
1,300,000 
144,200,000 
Cash and cash equivalents at end of year
1,000,000 
300,000 
1,300,000 
Supplemental cash flow information:
 
 
 
Non-cash investing activity, capital contribution to subsidiary (Note 3)
916,000,000 
591,000,000 
Non-cash financing activity, distribution of note from subsidiary (Note 3)
$ 80,300,000 
$ 0 
$ 0 
Schedule I - Condensed Financial Information of the Registrant - Narrative (Details) (USD $)
0 Months Ended 12 Months Ended
Nov. 30, 2017
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2017
Parent Company
Dec. 31, 2016
Parent Company
Dec. 31, 2015
Parent Company
Mar. 1, 2017
Parent Company
Jan. 1, 2017
Parent Company
Sep. 1, 2015
Parent Company
Jul. 1, 2015
Parent Company
Jun. 1, 2015
Parent Company
Dec. 31, 2017
Parent Company
Facility - Parent Company
Dec. 31, 2016
Parent Company
Facility - Parent Company
Aug. 2, 2014
Parent Company
Facility - Parent Company
Dec. 31, 2017
Parent Company
Revolver - Parent Company
Dec. 31, 2016
Parent Company
Revolver - Parent Company
Nov. 8, 2015
Parent Company
Revolver - Parent Company
Parent Company Numerics
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net assets subject to limitations
 
$ 265,000,000 
 
$ 265,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
Notes payable to subsidiary
 
 
 
 
 
 
65,500,000 
158,800,000 
226,200,000 
268,200,000 
87,500,000 
 
 
 
 
 
 
Stated interest rate (as a percent)
 
 
 
 
 
 
1.01% 
0.96% 
0.54% 
0.43% 
0.43% 
1.84% 
0.84% 
 
1.84% 
0.84% 
 
Capital Contributed to Subsidiaries
 
916,000,000 
591,000,000 
7,300,000 
17,900,000 
 
 
 
 
 
 
 
 
 
 
 
Maximum borrowing capacity on unsecured borrowing facilities
 
 
 
 
 
 
 
 
 
 
 
 
 
700,000,000.0 
 
 
3,000,000,000.0 
Outstanding borrowings on unsecured financing facilities
 
 
 
 
 
 
 
 
 
 
 
232,600,000 
382,200,000 
 
2,600,000,000 
1,500,000,000 
 
Forgiveness of note
80,300,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Letters of credit outstanding and bank guarantees
 
$ 210,000,000 
 
$ 60,400,000