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• | Consumer-to-Consumer - The Consumer-to-Consumer operating segment facilitates money transfers between two consumers, primarily through a network of third-party agents. The Company's multi-currency 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. |
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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 |
• | 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. |
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 |
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 |
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 |
• | 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." |
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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. |
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 |
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 |
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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 |
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 |
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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 | ) |
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 |
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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 |
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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 |
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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 |
• | 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. |
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 |
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 | % |
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 |
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. |
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. |
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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 |
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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 | ) |
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 |
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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. |
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. |
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 |
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 |
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 |
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 | ) |
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. |
|
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%. |
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 |
|
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 |
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 |
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 | ) |
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 |
|
• | 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. |
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. |
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 |
|
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. |
|
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 |
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 |
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 | $ | — | $ | — |
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 | % |
|
• | 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. |
• | 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 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. |
|
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 |
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 |
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 |
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 |
|
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. |
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 |
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 |
|
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 |
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 |
|
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 | ) |
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 | ) |
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 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 |
|
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 |
|
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 |
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 |
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 | % |
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 |
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. |
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. |
|
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 |
|
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 | ) |
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 |
|
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. |
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. |
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 |
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 |
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 |
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 | ) |
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. |
|
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%. |
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 |
|
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 |
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 |
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 | ) |
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 |
|
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. |
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 |
|
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. |
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