| Segments
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• | Consumer-to-Consumer - The Consumer-to-Consumer operating segment facilitates money transfers between two consumers, primarily through a network of third-party agents. The Company's multi-currency 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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Consulting Service Fees | Severance and Related Employee Benefits | Other | Total | ||||||||||||
Balance, December 31, 2016 | $ | 9.0 | $ | 3.9 | $ | — | $ | 12.9 | |||||||
Expenses (a) | 18.7 | 26.8 | 3.8 | 49.3 | |||||||||||
Cash payments | (26.2 | ) | (9.1 | ) | (3.6 | ) | (38.9 | ) | |||||||
Non-cash benefit (a) | — | 0.9 | — | 0.9 | |||||||||||
Balance, June 30, 2017 | $ | 1.5 | $ | 22.5 | $ | 0.2 | $ | 24.2 |
(a) | Expenses include a non-cash benefit for adjustments to stock compensation for awards forfeited by employees. These expenses have been removed from the liability balance in the table above as they do not impact the business transformation accruals. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Cost of services | $ | 19.5 | $ | — | $ | 23.7 | $ | — | |||||||
Selling, general and administrative | 15.5 | 2.1 | 25.6 | 2.1 | |||||||||||
Total expenses, pre-tax | $ | 35.0 | $ | 2.1 | $ | 49.3 | $ | 2.1 | |||||||
Total expenses, net of tax | $ | 22.7 | $ | 1.3 | $ | 32.0 | $ | 1.3 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||
2017 | 2017 | ||||||
Consumer-to-Consumer | $ | 15.2 | $ | 17.6 | |||
Business Solutions | 5.7 | 6.7 | |||||
Other | 7.6 | 7.9 | |||||
Total | $ | 28.5 | $ | 32.2 |
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Fair Value Measurement Using | Assets/ Liabilities at Fair Value | ||||||||||||||
June 30, 2017 | Level 1 | Level 2 | Level 3 | ||||||||||||
Assets: | |||||||||||||||
Settlement assets: | |||||||||||||||
State and municipal debt securities | $ | — | $ | 982.3 | $ | — | $ | 982.3 | |||||||
State and municipal variable rate demand notes | — | 228.0 | — | 228.0 | |||||||||||
Corporate and other debt securities | — | 27.8 | — | 27.8 | |||||||||||
Other assets: | |||||||||||||||
Derivatives | — | 296.2 | — | 296.2 | |||||||||||
Total assets | $ | — | $ | 1,534.3 | $ | — | $ | 1,534.3 | |||||||
Liabilities: | |||||||||||||||
Derivatives | $ | — | $ | 264.6 | $ | — | $ | 264.6 | |||||||
Total liabilities | $ | — | $ | 264.6 | $ | — | $ | 264.6 | |||||||
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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2017 | 2016 | ||||||
Settlement assets: | |||||||
Cash and cash equivalents | $ | 1,148.2 | $ | 1,190.0 | |||
Receivables from selling agents and Business Solutions customers | 1,260.1 | 1,327.3 | |||||
Investment securities | 1,238.1 | 1,231.8 | |||||
$ | 3,646.4 | $ | 3,749.1 | ||||
Settlement obligations: | |||||||
Money transfer, money order and payment service payables | $ | 2,671.8 | $ | 2,598.2 | |||
Payables to agents | 974.6 | 1,150.9 | |||||
$ | 3,646.4 | $ | 3,749.1 |
June 30, 2017 | Amortized Cost | Fair Value | Gross Unrealized Gains | Gross Unrealized Losses | Net Unrealized Gains | ||||||||||||||
Settlement assets: | |||||||||||||||||||
Available-for-sale securities: | |||||||||||||||||||
State and municipal debt securities (a) | $ | 973.9 | $ | 982.3 | $ | 12.5 | $ | (4.1 | ) | $ | 8.4 | ||||||||
State and municipal variable rate demand notes | 228.0 | 228.0 | — | — | — | ||||||||||||||
Corporate and other debt securities | 27.3 | 27.8 | 0.5 | — | 0.5 | ||||||||||||||
1,229.2 | 1,238.1 | 13.0 | (4.1 | ) | 8.9 | ||||||||||||||
Other assets: | |||||||||||||||||||
Held-to-maturity securities: | |||||||||||||||||||
Foreign corporate debt securities | 51.2 | 51.2 | — | — | — | ||||||||||||||
$ | 1,280.4 | $ | 1,289.3 | $ | 13.0 | $ | (4.1 | ) | $ | 8.9 | |||||||||
December 31, 2016 | Amortized Cost | Fair Value | Gross Unrealized Gains | Gross Unrealized Losses | Net Unrealized Losses | ||||||||||||||
Settlement assets: | |||||||||||||||||||
Available-for-sale securities: | |||||||||||||||||||
State and municipal debt securities (a) | $ | 1,008.5 | $ | 1,002.4 | $ | 5.0 | $ | (11.1 | ) | $ | (6.1 | ) | |||||||
State and municipal variable rate demand notes | 203.4 | 203.4 | — | — | — | ||||||||||||||
Corporate and other debt securities | 26.0 | 26.0 | — | — | — | ||||||||||||||
1,237.9 | 1,231.8 | 5.0 | (11.1 | ) | (6.1 | ) | |||||||||||||
Other assets: | |||||||||||||||||||
Held-to-maturity securities: | |||||||||||||||||||
Foreign corporate debt securities | 36.2 | 36.2 | 0.1 | (0.1 | ) | — | |||||||||||||
$ | 1,274.1 | $ | 1,268.0 | $ | 5.1 | $ | (11.2 | ) | $ | (6.1 | ) |
(a) | The majority of these securities are fixed rate instruments. |
Fair Value | |||
Due within 1 year | $ | 123.2 | |
Due after 1 year through 5 years | 538.1 | ||
Due after 5 years through 10 years | 247.0 | ||
Due after 10 years | 329.8 | ||
$ | 1,238.1 |
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Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Unrealized gains/(losses) on investment securities, beginning of period | $ | 0.6 | $ | 11.0 | $ | (3.8 | ) | $ | 7.8 | ||||||
Unrealized gains | 8.6 | 6.2 | 15.4 | 12.2 | |||||||||||
Tax expense | (3.1 | ) | (2.3 | ) | (5.5 | ) | (4.4 | ) | |||||||
Reclassification of gains into "Revenues" | (0.4 | ) | (0.7 | ) | (0.4 | ) | (1.8 | ) | |||||||
Tax expense related to reclassifications | 0.1 | 0.3 | 0.1 | 0.7 | |||||||||||
Net unrealized gains on investment securities | 5.2 | 3.5 | 9.6 | 6.7 | |||||||||||
Unrealized gains on investment securities, end of period | $ | 5.8 | $ | 14.5 | $ | 5.8 | $ | 14.5 | |||||||
Unrealized gains on hedging activities, beginning of period | $ | 16.8 | $ | 3.6 | $ | 33.8 | $ | 41.4 | |||||||
Unrealized gains/(losses) | (36.0 | ) | 20.1 | (47.2 | ) | (6.2 | ) | ||||||||
Tax benefit | 0.8 | 0.2 | 1.0 | 2.3 | |||||||||||
Reclassification of gains into "Revenues" | (6.9 | ) | (10.9 | ) | (13.5 | ) | (26.0 | ) | |||||||
Reclassification of losses into "Interest expense" | 0.9 | 0.9 | 1.7 | 1.8 | |||||||||||
Tax expense/(benefit) related to reclassifications | — | 0.4 | (0.2 | ) | 1.0 | ||||||||||
Net unrealized gains/(losses) on hedging activities | (41.2 | ) | 10.7 | (58.2 | ) | (27.1 | ) | ||||||||
Unrealized gains/(losses) on hedging activities, end of period | $ | (24.4 | ) | $ | 14.3 | $ | (24.4 | ) | $ | 14.3 | |||||
Foreign currency translation adjustments, beginning of period | $ | (70.9 | ) | $ | (68.3 | ) | $ | (70.7 | ) | $ | (66.0 | ) | |||
Foreign currency translation adjustments | (2.4 | ) | (0.6 | ) | (2.0 | ) | (3.9 | ) | |||||||
Tax expense/(benefit) | 1.0 | (1.2 | ) | 0.4 | (0.2 | ) | |||||||||
Net foreign currency translation adjustments | (1.4 | ) | (1.8 | ) | (1.6 | ) | (4.1 | ) | |||||||
Foreign currency translation adjustments, end of period | $ | (72.3 | ) | $ | (70.1 | ) | $ | (72.3 | ) | $ | (70.1 | ) | |||
Defined benefit pension plan adjustments, beginning of period | $ | (120.3 | ) | $ | (125.4 | ) | $ | (122.1 | ) | $ | (127.1 | ) | |||
Reclassification of losses into "Cost of services" | 2.9 | 2.6 | 5.7 | 5.3 | |||||||||||
Tax benefit related to reclassifications | (1.1 | ) | (0.9 | ) | (2.1 | ) | (1.9 | ) | |||||||
Net defined benefit pension plan adjustments | 1.8 | 1.7 | 3.6 | 3.4 | |||||||||||
Defined benefit pension plan adjustments, end of period | $ | (118.5 | ) | $ | (123.7 | ) | $ | (118.5 | ) | $ | (123.7 | ) | |||
Accumulated other comprehensive loss, end of period | $ | (209.4 | ) | $ | (165.0 | ) | $ | (209.4 | ) | $ | (165.0 | ) |
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Contracts designated as hedges: | |||
Euro | $ | 377.8 | |
British pound | 125.5 | ||
Canadian dollar | 90.7 | ||
Australian dollar | 48.4 | ||
Swiss franc | 38.4 | ||
Other | 82.6 | ||
Contracts not designated as hedges: | |||
Euro | $ | 282.5 | |
British pound | 71.8 | ||
Canadian dollar | 68.5 | ||
Australian dollar | 54.0 | ||
Mexican peso | 34.0 | ||
Indonesian rupiah | 29.7 | ||
Indian rupee | 29.7 | ||
Japanese yen | 26.4 | ||
Other (a) | 137.9 |
(a) | Comprised of exposures to 19 different currencies. None of these individual currency exposures is greater than $25 million. |
Derivative Assets | Derivative Liabilities | ||||||||||||||||||
Fair Value | Fair Value | ||||||||||||||||||
Balance Sheet Location | June 30, 2017 | December 31, 2016 | Balance Sheet Location | June 30, 2017 | December 31, 2016 | ||||||||||||||
Derivatives — hedges: | |||||||||||||||||||
Interest rate fair value hedges | Other assets | $ | 5.0 | $ | 6.7 | Other liabilities | $ | 0.4 | $ | — | |||||||||
Foreign currency cash flow hedges | Other assets | 11.7 | 48.4 | Other liabilities | 22.4 | 1.2 | |||||||||||||
Total | $ | 16.7 | $ | 55.1 | $ | 22.8 | $ | 1.2 | |||||||||||
Derivatives — undesignated: | |||||||||||||||||||
Business Solutions operations — foreign currency (a) | Other assets | $ | 277.3 | $ | 307.2 | Other liabilities | $ | 236.5 | $ | 258.3 | |||||||||
Foreign currency | Other assets | 2.2 | 3.3 | Other liabilities | 5.3 | 2.8 | |||||||||||||
Total | $ | 279.5 | $ | 310.5 | $ | 241.8 | $ | 261.1 | |||||||||||
Total derivatives | $ | 296.2 | $ | 365.6 | $ | 264.6 | $ | 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. |
June 30, 2017 | Gross Amounts of Recognized Assets | Gross Amounts Offset in the Condensed Consolidated Balance Sheets | Net Amounts Presented in the Condensed Consolidated Balance Sheets | Derivatives Not Offset in the Condensed Consolidated Balance Sheets | Net Amounts | |||||||||||||||
Derivatives subject to a master netting arrangement or similar agreement | $ | 135.2 | $ | — | $ | 135.2 | $ | (117.7 | ) | $ | 17.5 | |||||||||
Derivatives that are not or may not be subject to master netting arrangement or similar agreement | 161.0 | |||||||||||||||||||
Total | $ | 296.2 | ||||||||||||||||||
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 |
June 30, 2017 | Gross Amounts of Recognized Liabilities | Gross Amounts Offset in the Condensed Consolidated Balance Sheets | Net Amounts Presented in the Condensed Consolidated Balance Sheets | Derivatives Not Offset in the Condensed Consolidated Balance Sheets | Net Amounts | |||||||||||||||
Derivatives subject to a master netting arrangement or similar agreement | $ | 203.7 | $ | — | $ | 203.7 | $ | (117.7 | ) | $ | 86.0 | |||||||||
Derivatives that are not or may not be subject to master netting arrangement or similar agreement | 60.9 | |||||||||||||||||||
Total | $ | 264.6 | ||||||||||||||||||
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 | June 30, 2017 | June 30, 2016 | Hedged Item | June 30, 2017 | June 30, 2016 | June 30, 2017 | June 30, 2016 | |||||||||||||||||||||||||
Interest rate contracts | Interest expense | $ | 0.7 | $ | 4.2 | Fixed rate debt | Interest expense | $ | (0.1 | ) | $ | (1.6 | ) | Interest expense | $ | — | $ | 0.1 | ||||||||||||||
Total gain/(loss) | $ | 0.7 | $ | 4.2 | $ | (0.1 | ) | $ | (1.6 | ) | $ | — | $ | 0.1 |
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 | June 30, 2017 | June 30, 2016 | Hedged Item | June 30, 2017 | June 30, 2016 | June 30, 2017 | June 30, 2016 | |||||||||||||||||||||||||
Interest rate contracts | Interest expense | $ | (0.5 | ) | $ | 15.4 | Fixed rate debt | Interest expense | $ | 2.4 | $ | (10.1 | ) | Interest expense | $ | — | $ | 0.3 | ||||||||||||||
Total gain/(loss) | $ | (0.5 | ) | $ | 15.4 | $ | 2.4 | $ | (10.1 | ) | $ | — | $ | 0.3 |
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 | June 30, 2017 | June 30, 2016 | June 30, 2017 | June 30, 2016 | June 30, 2017 | June 30, 2016 | ||||||||||||||||||||||
Foreign currency contracts | $ | (36.0 | ) | $ | 20.1 | Revenues | $ | 6.9 | $ | 10.9 | Derivative gains, net | $ | 2.6 | $ | 1.0 | |||||||||||||
Interest rate contracts (c) | — | — | Interest expense | (0.9 | ) | (0.9 | ) | Interest expense | — | — | ||||||||||||||||||
Total gain/(loss) | $ | (36.0 | ) | $ | 20.1 | $ | 6.0 | $ | 10.0 | $ | 2.6 | $ | 1.0 |
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 | June 30, 2017 | June 30, 2016 | June 30, 2017 | June 30, 2016 | June 30, 2017 | June 30, 2016 | ||||||||||||||||||||||
Foreign currency contracts | $ | (47.2 | ) | $ | (6.2 | ) | Revenues | $ | 13.5 | $ | 26.0 | Derivative gains, net | $ | 5.3 | $ | 2.7 | ||||||||||||
Interest rate contracts (c) | — | — | Interest expense | (1.7 | ) | (1.8 | ) | Interest expense | — | — | ||||||||||||||||||
Total gain/(loss) | $ | (47.2 | ) | $ | (6.2 | ) | $ | 11.8 | $ | 24.2 | $ | 5.3 | $ | 2.7 |
Gain/(Loss) Recognized in Income on Derivatives (d) | |||||||||||||||||
Income Statement Location | Amount | ||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||
Derivatives | 2017 | 2016 | 2017 | 2016 | |||||||||||||
Foreign currency contracts (e) | Selling, general and administrative | $ | (12.1 | ) | $ | 3.1 | $ | (22.3 | ) | $ | (14.5 | ) | |||||
Foreign currency contracts (f) | Derivative gains, net | (0.4 | ) | 0.4 | (0.5 | ) | (0.8 | ) | |||||||||
Total gain/(loss) | $ | (12.5 | ) | $ | 3.5 | $ | (22.8 | ) | $ | (15.3 | ) |
(a) | The loss of $0.1 million and $1.6 million in the three months ended June 30, 2017 and 2016, respectively, consisted of a loss in value on the debt of $0.7 million and $4.3 million, respectively, and amortization of hedge accounting adjustments of $0.6 million and $2.7 million, respectively. The gain/(loss) of $2.4 million and $(10.1) million in the six months ended June 30, 2017 and 2016, respectively, consisted of a gain/(loss) in value on the debt of $0.5 million and $(15.7) million, respectively, and amortization of hedge accounting adjustments of $1.9 million and $5.6 million, respectively. |
(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 Condensed Consolidated Balance Sheets. These amounts are reclassified to "Interest expense" in the Condensed Consolidated Statements of Income over the life of the related notes. |
(d) | The Company uses foreign currency forward and option contracts as part of its Business Solutions payments operations. These derivative contracts are excluded from this table as they are managed as part of a broader currency portfolio that includes non-derivative currency exposures. The gains and losses on these derivatives are included as part of the broader disclosure of portfolio revenue for this business discussed above. |
(e) | The Company uses foreign currency forward contracts to offset foreign exchange rate fluctuations on settlement assets and obligations as well as certain foreign currency denominated positions. Foreign exchange 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 Condensed Consolidated Statements of Income, were $10.4 million and $(9.7) million for the three months ended June 30, 2017 and 2016, respectively, and $20.8 million and $6.7 million for the six months ended June 30, 2017 and 2016, 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. |
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June 30, 2017 | December 31, 2016 | ||||||
Commercial paper (a) | $ | 445.0 | $ | — | |||
Notes: | |||||||
2.875% notes due 2017 (b) | 500.0 | 500.0 | |||||
3.650% notes (effective rate of 4.7%) due 2018 | 400.0 | 400.0 | |||||
3.350% notes due 2019 (b) | 250.0 | 250.0 | |||||
5.253% notes due 2020 (b) | 324.9 | 324.9 | |||||
3.600% notes (effective rate of 3.8%) due 2022 (c) | 400.0 | — | |||||
6.200% notes due 2036 (b) | 500.0 | 500.0 | |||||
6.200% notes due 2040 (b) | 250.0 | 250.0 | |||||
Term Loan Facility borrowings (effective rate of 2.6%) | 575.0 | 575.0 | |||||
Total borrowings at par value | 3,644.9 | 2,799.9 | |||||
Fair value hedge accounting adjustments, net (d) | 2.0 | 4.4 | |||||
Unamortized discount and debt issuance costs | (19.5 | ) | (18.2 | ) | |||
Total borrowings at carrying value (e) | $ | 3,627.4 | $ | 2,786.1 |
(a) | Pursuant to the Company's commercial paper program, the Company may issue unsecured commercial paper notes in an amount not to exceed $1.5 billion outstanding at any time, reduced to the extent of borrowings outstanding on the Company's Revolving Credit Facility in excess of $150 million. The commercial paper notes may have maturities of up to 397 days from date of issuance. The Company's commercial paper borrowings as of June 30, 2017 had a weighted-average annual interest rate of approximately 1.4% and a weighted-average term of approximately 3 days. |
(b) | The difference between the stated interest rate and the effective interest rate is not significant. |
(c) | On March 15, 2017, the Company issued $400.0 million of aggregate principal amount of 3.600% unsecured notes due 2022 ("2022 Notes"). |
(d) | 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 Condensed Consolidated Statements of Income over the life of the related notes, and cause the effective rate of interest to differ from the notes’ stated rate. |
(e) | As of June 30, 2017, the Company’s weighted-average effective rate on total borrowings was approximately 4.0%. |
Due within 1 year | $ | 500.0 | |
Due after 1 year through 2 years | 678.7 | ||
Due after 2 years through 3 years | 353.6 | ||
Due after 3 years through 4 years | 517.6 | ||
Due after 4 years through 5 years | 400.0 | ||
Due after 5 years | 750.0 |
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Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Revenues: | |||||||||||||||
Consumer-to-Consumer | $ | 1,087.3 | $ | 1,095.8 | $ | 2,102.3 | $ | 2,113.2 | |||||||
Business Solutions | 96.6 | 100.8 | 190.2 | 200.0 | |||||||||||
Other (a) | 195.0 | 179.1 | 388.8 | 360.2 | |||||||||||
Total consolidated revenues | $ | 1,378.9 | $ | 1,375.7 | $ | 2,681.3 | $ | 2,673.4 | |||||||
Operating income: | |||||||||||||||
Consumer-to-Consumer | $ | 269.9 | $ | 251.9 | $ | 497.5 | $ | 483.2 | |||||||
Business Solutions | 5.3 | 5.2 | 7.6 | 7.6 | |||||||||||
Other (a) | 23.6 | 20.3 | 47.5 | 45.2 | |||||||||||
Total segment operating income | 298.8 | 277.4 | 552.6 | 536.0 | |||||||||||
State regulator matter accrual (Note 5) | (49.0 | ) | — | (49.0 | ) | — | |||||||||
Joint Settlement Agreements (Note 5) | — | (15.0 | ) | — | (15.0 | ) | |||||||||
Business transformation expenses (Note 3) | (35.0 | ) | (2.1 | ) | (49.3 | ) | (2.1 | ) | |||||||
Total consolidated operating income | $ | 214.8 | $ | 260.3 | $ | 454.3 | $ | 518.9 |
(a) | Other consists primarily of the Company's bill payments businesses in the United States and Argentina. |
|
|
Consulting Service Fees | Severance and Related Employee Benefits | Other | Total | ||||||||||||
Balance, December 31, 2016 | $ | 9.0 | $ | 3.9 | $ | — | $ | 12.9 | |||||||
Expenses (a) | 18.7 | 26.8 | 3.8 | 49.3 | |||||||||||
Cash payments | (26.2 | ) | (9.1 | ) | (3.6 | ) | (38.9 | ) | |||||||
Non-cash benefit (a) | — | 0.9 | — | 0.9 | |||||||||||
Balance, June 30, 2017 | $ | 1.5 | $ | 22.5 | $ | 0.2 | $ | 24.2 |
(a) | Expenses include a non-cash benefit for adjustments to stock compensation for awards forfeited by employees. These expenses have been removed from the liability balance in the table above as they do not impact the business transformation accruals. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Cost of services | $ | 19.5 | $ | — | $ | 23.7 | $ | — | |||||||
Selling, general and administrative | 15.5 | 2.1 | 25.6 | 2.1 | |||||||||||
Total expenses, pre-tax | $ | 35.0 | $ | 2.1 | $ | 49.3 | $ | 2.1 | |||||||
Total expenses, net of tax | $ | 22.7 | $ | 1.3 | $ | 32.0 | $ | 1.3 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||
2017 | 2017 | ||||||
Consumer-to-Consumer | $ | 15.2 | $ | 17.6 | |||
Business Solutions | 5.7 | 6.7 | |||||
Other | 7.6 | 7.9 | |||||
Total | $ | 28.5 | $ | 32.2 |
|
Fair Value Measurement Using | Assets/ Liabilities at Fair Value | ||||||||||||||
June 30, 2017 | Level 1 | Level 2 | Level 3 | ||||||||||||
Assets: | |||||||||||||||
Settlement assets: | |||||||||||||||
State and municipal debt securities | $ | — | $ | 982.3 | $ | — | $ | 982.3 | |||||||
State and municipal variable rate demand notes | — | 228.0 | — | 228.0 | |||||||||||
Corporate and other debt securities | — | 27.8 | — | 27.8 | |||||||||||
Other assets: | |||||||||||||||
Derivatives | — | 296.2 | — | 296.2 | |||||||||||
Total assets | $ | — | $ | 1,534.3 | $ | — | $ | 1,534.3 | |||||||
Liabilities: | |||||||||||||||
Derivatives | $ | — | $ | 264.6 | $ | — | $ | 264.6 | |||||||
Total liabilities | $ | — | $ | 264.6 | $ | — | $ | 264.6 | |||||||
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 |
|
2017 | 2016 | ||||||
Settlement assets: | |||||||
Cash and cash equivalents | $ | 1,148.2 | $ | 1,190.0 | |||
Receivables from selling agents and Business Solutions customers | 1,260.1 | 1,327.3 | |||||
Investment securities | 1,238.1 | 1,231.8 | |||||
$ | 3,646.4 | $ | 3,749.1 | ||||
Settlement obligations: | |||||||
Money transfer, money order and payment service payables | $ | 2,671.8 | $ | 2,598.2 | |||
Payables to agents | 974.6 | 1,150.9 | |||||
$ | 3,646.4 | $ | 3,749.1 |
June 30, 2017 | Amortized Cost | Fair Value | Gross Unrealized Gains | Gross Unrealized Losses | Net Unrealized Gains | ||||||||||||||
Settlement assets: | |||||||||||||||||||
Available-for-sale securities: | |||||||||||||||||||
State and municipal debt securities (a) | $ | 973.9 | $ | 982.3 | $ | 12.5 | $ | (4.1 | ) | $ | 8.4 | ||||||||
State and municipal variable rate demand notes | 228.0 | 228.0 | — | — | — | ||||||||||||||
Corporate and other debt securities | 27.3 | 27.8 | 0.5 | — | 0.5 | ||||||||||||||
1,229.2 | 1,238.1 | 13.0 | (4.1 | ) | 8.9 | ||||||||||||||
Other assets: | |||||||||||||||||||
Held-to-maturity securities: | |||||||||||||||||||
Foreign corporate debt securities | 51.2 | 51.2 | — | — | — | ||||||||||||||
$ | 1,280.4 | $ | 1,289.3 | $ | 13.0 | $ | (4.1 | ) | $ | 8.9 | |||||||||
December 31, 2016 | Amortized Cost | Fair Value | Gross Unrealized Gains | Gross Unrealized Losses | Net Unrealized Losses | ||||||||||||||
Settlement assets: | |||||||||||||||||||
Available-for-sale securities: | |||||||||||||||||||
State and municipal debt securities (a) | $ | 1,008.5 | $ | 1,002.4 | $ | 5.0 | $ | (11.1 | ) | $ | (6.1 | ) | |||||||
State and municipal variable rate demand notes | 203.4 | 203.4 | — | — | — | ||||||||||||||
Corporate and other debt securities | 26.0 | 26.0 | — | — | — | ||||||||||||||
1,237.9 | 1,231.8 | 5.0 | (11.1 | ) | (6.1 | ) | |||||||||||||
Other assets: | |||||||||||||||||||
Held-to-maturity securities: | |||||||||||||||||||
Foreign corporate debt securities | 36.2 | 36.2 | 0.1 | (0.1 | ) | — | |||||||||||||
$ | 1,274.1 | $ | 1,268.0 | $ | 5.1 | $ | (11.2 | ) | $ | (6.1 | ) |
(a) | The majority of these securities are fixed rate instruments. |
June 30, 2017 | Amortized Cost | Fair Value | Gross Unrealized Gains | Gross Unrealized Losses | Net Unrealized Gains | ||||||||||||||
Settlement assets: | |||||||||||||||||||
Available-for-sale securities: | |||||||||||||||||||
State and municipal debt securities (a) | $ | 973.9 | $ | 982.3 | $ | 12.5 | $ | (4.1 | ) | $ | 8.4 | ||||||||
State and municipal variable rate demand notes | 228.0 | 228.0 | — | — | — | ||||||||||||||
Corporate and other debt securities | 27.3 | 27.8 | 0.5 | — | 0.5 | ||||||||||||||
1,229.2 | 1,238.1 | 13.0 | (4.1 | ) | 8.9 | ||||||||||||||
Other assets: | |||||||||||||||||||
Held-to-maturity securities: | |||||||||||||||||||
Foreign corporate debt securities | 51.2 | 51.2 | — | — | — | ||||||||||||||
$ | 1,280.4 | $ | 1,289.3 | $ | 13.0 | $ | (4.1 | ) | $ | 8.9 | |||||||||
December 31, 2016 | Amortized Cost | Fair Value | Gross Unrealized Gains | Gross Unrealized Losses | Net Unrealized Losses | ||||||||||||||
Settlement assets: | |||||||||||||||||||
Available-for-sale securities: | |||||||||||||||||||
State and municipal debt securities (a) | $ | 1,008.5 | $ | 1,002.4 | $ | 5.0 | $ | (11.1 | ) | $ | (6.1 | ) | |||||||
State and municipal variable rate demand notes | 203.4 | 203.4 | — | — | — | ||||||||||||||
Corporate and other debt securities | 26.0 | 26.0 | — | — | — | ||||||||||||||
1,237.9 | 1,231.8 | 5.0 | (11.1 | ) | (6.1 | ) | |||||||||||||
Other assets: | |||||||||||||||||||
Held-to-maturity securities: | |||||||||||||||||||
Foreign corporate debt securities | 36.2 | 36.2 | 0.1 | (0.1 | ) | — | |||||||||||||
$ | 1,274.1 | $ | 1,268.0 | $ | 5.1 | $ | (11.2 | ) | $ | (6.1 | ) |
(a) | The majority of these securities are fixed rate instruments. |
Fair Value | |||
Due within 1 year | $ | 123.2 | |
Due after 1 year through 5 years | 538.1 | ||
Due after 5 years through 10 years | 247.0 | ||
Due after 10 years | 329.8 | ||
$ | 1,238.1 |
|
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Unrealized gains/(losses) on investment securities, beginning of period | $ | 0.6 | $ | 11.0 | $ | (3.8 | ) | $ | 7.8 | ||||||
Unrealized gains | 8.6 | 6.2 | 15.4 | 12.2 | |||||||||||
Tax expense | (3.1 | ) | (2.3 | ) | (5.5 | ) | (4.4 | ) | |||||||
Reclassification of gains into "Revenues" | (0.4 | ) | (0.7 | ) | (0.4 | ) | (1.8 | ) | |||||||
Tax expense related to reclassifications | 0.1 | 0.3 | 0.1 | 0.7 | |||||||||||
Net unrealized gains on investment securities | 5.2 | 3.5 | 9.6 | 6.7 | |||||||||||
Unrealized gains on investment securities, end of period | $ | 5.8 | $ | 14.5 | $ | 5.8 | $ | 14.5 | |||||||
Unrealized gains on hedging activities, beginning of period | $ | 16.8 | $ | 3.6 | $ | 33.8 | $ | 41.4 | |||||||
Unrealized gains/(losses) | (36.0 | ) | 20.1 | (47.2 | ) | (6.2 | ) | ||||||||
Tax benefit | 0.8 | 0.2 | 1.0 | 2.3 | |||||||||||
Reclassification of gains into "Revenues" | (6.9 | ) | (10.9 | ) | (13.5 | ) | (26.0 | ) | |||||||
Reclassification of losses into "Interest expense" | 0.9 | 0.9 | 1.7 | 1.8 | |||||||||||
Tax expense/(benefit) related to reclassifications | — | 0.4 | (0.2 | ) | 1.0 | ||||||||||
Net unrealized gains/(losses) on hedging activities | (41.2 | ) | 10.7 | (58.2 | ) | (27.1 | ) | ||||||||
Unrealized gains/(losses) on hedging activities, end of period | $ | (24.4 | ) | $ | 14.3 | $ | (24.4 | ) | $ | 14.3 | |||||
Foreign currency translation adjustments, beginning of period | $ | (70.9 | ) | $ | (68.3 | ) | $ | (70.7 | ) | $ | (66.0 | ) | |||
Foreign currency translation adjustments | (2.4 | ) | (0.6 | ) | (2.0 | ) | (3.9 | ) | |||||||
Tax expense/(benefit) | 1.0 | (1.2 | ) | 0.4 | (0.2 | ) | |||||||||
Net foreign currency translation adjustments | (1.4 | ) | (1.8 | ) | (1.6 | ) | (4.1 | ) | |||||||
Foreign currency translation adjustments, end of period | $ | (72.3 | ) | $ | (70.1 | ) | $ | (72.3 | ) | $ | (70.1 | ) | |||
Defined benefit pension plan adjustments, beginning of period | $ | (120.3 | ) | $ | (125.4 | ) | $ | (122.1 | ) | $ | (127.1 | ) | |||
Reclassification of losses into "Cost of services" | 2.9 | 2.6 | 5.7 | 5.3 | |||||||||||
Tax benefit related to reclassifications | (1.1 | ) | (0.9 | ) | (2.1 | ) | (1.9 | ) | |||||||
Net defined benefit pension plan adjustments | 1.8 | 1.7 | 3.6 | 3.4 | |||||||||||
Defined benefit pension plan adjustments, end of period | $ | (118.5 | ) | $ | (123.7 | ) | $ | (118.5 | ) | $ | (123.7 | ) | |||
Accumulated other comprehensive loss, end of period | $ | (209.4 | ) | $ | (165.0 | ) | $ | (209.4 | ) | $ | (165.0 | ) |
|
Contracts designated as hedges: | |||
Euro | $ | 377.8 | |
British pound | 125.5 | ||
Canadian dollar | 90.7 | ||
Australian dollar | 48.4 | ||
Swiss franc | 38.4 | ||
Other | 82.6 | ||
Contracts not designated as hedges: | |||
Euro | $ | 282.5 | |
British pound | 71.8 | ||
Canadian dollar | 68.5 | ||
Australian dollar | 54.0 | ||
Mexican peso | 34.0 | ||
Indonesian rupiah | 29.7 | ||
Indian rupee | 29.7 | ||
Japanese yen | 26.4 | ||
Other (a) | 137.9 |
(a) | Comprised of exposures to 19 different currencies. None of these individual currency exposures is greater than $25 million. |
Derivative Assets | Derivative Liabilities | ||||||||||||||||||
Fair Value | Fair Value | ||||||||||||||||||
Balance Sheet Location | June 30, 2017 | December 31, 2016 | Balance Sheet Location | June 30, 2017 | December 31, 2016 | ||||||||||||||
Derivatives — hedges: | |||||||||||||||||||
Interest rate fair value hedges | Other assets | $ | 5.0 | $ | 6.7 | Other liabilities | $ | 0.4 | $ | — | |||||||||
Foreign currency cash flow hedges | Other assets | 11.7 | 48.4 | Other liabilities | 22.4 | 1.2 | |||||||||||||
Total | $ | 16.7 | $ | 55.1 | $ | 22.8 | $ | 1.2 | |||||||||||
Derivatives — undesignated: | |||||||||||||||||||
Business Solutions operations — foreign currency (a) | Other assets | $ | 277.3 | $ | 307.2 | Other liabilities | $ | 236.5 | $ | 258.3 | |||||||||
Foreign currency | Other assets | 2.2 | 3.3 | Other liabilities | 5.3 | 2.8 | |||||||||||||
Total | $ | 279.5 | $ | 310.5 | $ | 241.8 | $ | 261.1 | |||||||||||
Total derivatives | $ | 296.2 | $ | 365.6 | $ | 264.6 | $ | 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. |
June 30, 2017 | Gross Amounts of Recognized Assets | Gross Amounts Offset in the Condensed Consolidated Balance Sheets | Net Amounts Presented in the Condensed Consolidated Balance Sheets | Derivatives Not Offset in the Condensed Consolidated Balance Sheets | Net Amounts | |||||||||||||||
Derivatives subject to a master netting arrangement or similar agreement | $ | 135.2 | $ | — | $ | 135.2 | $ | (117.7 | ) | $ | 17.5 | |||||||||
Derivatives that are not or may not be subject to master netting arrangement or similar agreement | 161.0 | |||||||||||||||||||
Total | $ | 296.2 | ||||||||||||||||||
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 |
June 30, 2017 | Gross Amounts of Recognized Liabilities | Gross Amounts Offset in the Condensed Consolidated Balance Sheets | Net Amounts Presented in the Condensed Consolidated Balance Sheets | Derivatives Not Offset in the Condensed Consolidated Balance Sheets | Net Amounts | |||||||||||||||
Derivatives subject to a master netting arrangement or similar agreement | $ | 203.7 | $ | — | $ | 203.7 | $ | (117.7 | ) | $ | 86.0 | |||||||||
Derivatives that are not or may not be subject to master netting arrangement or similar agreement | 60.9 | |||||||||||||||||||
Total | $ | 264.6 | ||||||||||||||||||
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 | June 30, 2017 | June 30, 2016 | Hedged Item | June 30, 2017 | June 30, 2016 | June 30, 2017 | June 30, 2016 | |||||||||||||||||||||||||
Interest rate contracts | Interest expense | $ | 0.7 | $ | 4.2 | Fixed rate debt | Interest expense | $ | (0.1 | ) | $ | (1.6 | ) | Interest expense | $ | — | $ | 0.1 | ||||||||||||||
Total gain/(loss) | $ | 0.7 | $ | 4.2 | $ | (0.1 | ) | $ | (1.6 | ) | $ | — | $ | 0.1 |
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 | June 30, 2017 | June 30, 2016 | Hedged Item | June 30, 2017 | June 30, 2016 | June 30, 2017 | June 30, 2016 | |||||||||||||||||||||||||
Interest rate contracts | Interest expense | $ | (0.5 | ) | $ | 15.4 | Fixed rate debt | Interest expense | $ | 2.4 | $ | (10.1 | ) | Interest expense | $ | — | $ | 0.3 | ||||||||||||||
Total gain/(loss) | $ | (0.5 | ) | $ | 15.4 | $ | 2.4 | $ | (10.1 | ) | $ | — | $ | 0.3 |
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 | June 30, 2017 | June 30, 2016 | June 30, 2017 | June 30, 2016 | June 30, 2017 | June 30, 2016 | ||||||||||||||||||||||
Foreign currency contracts | $ | (36.0 | ) | $ | 20.1 | Revenues | $ | 6.9 | $ | 10.9 | Derivative gains, net | $ | 2.6 | $ | 1.0 | |||||||||||||
Interest rate contracts (c) | — | — | Interest expense | (0.9 | ) | (0.9 | ) | Interest expense | — | — | ||||||||||||||||||
Total gain/(loss) | $ | (36.0 | ) | $ | 20.1 | $ | 6.0 | $ | 10.0 | $ | 2.6 | $ | 1.0 |
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 | June 30, 2017 | June 30, 2016 | June 30, 2017 | June 30, 2016 | June 30, 2017 | June 30, 2016 | ||||||||||||||||||||||
Foreign currency contracts | $ | (47.2 | ) | $ | (6.2 | ) | Revenues | $ | 13.5 | $ | 26.0 | Derivative gains, net | $ | 5.3 | $ | 2.7 | ||||||||||||
Interest rate contracts (c) | — | — | Interest expense | (1.7 | ) | (1.8 | ) | Interest expense | — | — | ||||||||||||||||||
Total gain/(loss) | $ | (47.2 | ) | $ | (6.2 | ) | $ | 11.8 | $ | 24.2 | $ | 5.3 | $ | 2.7 |
Gain/(Loss) Recognized in Income on Derivatives (d) | |||||||||||||||||
Income Statement Location | Amount | ||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||
Derivatives | 2017 | 2016 | 2017 | 2016 | |||||||||||||
Foreign currency contracts (e) | Selling, general and administrative | $ | (12.1 | ) | $ | 3.1 | $ | (22.3 | ) | $ | (14.5 | ) | |||||
Foreign currency contracts (f) | Derivative gains, net | (0.4 | ) | 0.4 | (0.5 | ) | (0.8 | ) | |||||||||
Total gain/(loss) | $ | (12.5 | ) | $ | 3.5 | $ | (22.8 | ) | $ | (15.3 | ) |
(a) | The loss of $0.1 million and $1.6 million in the three months ended June 30, 2017 and 2016, respectively, consisted of a loss in value on the debt of $0.7 million and $4.3 million, respectively, and amortization of hedge accounting adjustments of $0.6 million and $2.7 million, respectively. The gain/(loss) of $2.4 million and $(10.1) million in the six months ended June 30, 2017 and 2016, respectively, consisted of a gain/(loss) in value on the debt of $0.5 million and $(15.7) million, respectively, and amortization of hedge accounting adjustments of $1.9 million and $5.6 million, respectively. |
(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 Condensed Consolidated Balance Sheets. These amounts are reclassified to "Interest expense" in the Condensed Consolidated Statements of Income over the life of the related notes. |
(d) | The Company uses foreign currency forward and option contracts as part of its Business Solutions payments operations. These derivative contracts are excluded from this table as they are managed as part of a broader currency portfolio that includes non-derivative currency exposures. The gains and losses on these derivatives are included as part of the broader disclosure of portfolio revenue for this business discussed above. |
(e) | The Company uses foreign currency forward contracts to offset foreign exchange rate fluctuations on settlement assets and obligations as well as certain foreign currency denominated positions. Foreign exchange 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 Condensed Consolidated Statements of Income, were $10.4 million and $(9.7) million for the three months ended June 30, 2017 and 2016, respectively, and $20.8 million and $6.7 million for the six months ended June 30, 2017 and 2016, 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. |
|
June 30, 2017 | December 31, 2016 | ||||||
Commercial paper (a) | $ | 445.0 | $ | — | |||
Notes: | |||||||
2.875% notes due 2017 (b) | 500.0 | 500.0 | |||||
3.650% notes (effective rate of 4.7%) due 2018 | 400.0 | 400.0 | |||||
3.350% notes due 2019 (b) | 250.0 | 250.0 | |||||
5.253% notes due 2020 (b) | 324.9 | 324.9 | |||||
3.600% notes (effective rate of 3.8%) due 2022 (c) | 400.0 | — | |||||
6.200% notes due 2036 (b) | 500.0 | 500.0 | |||||
6.200% notes due 2040 (b) | 250.0 | 250.0 | |||||
Term Loan Facility borrowings (effective rate of 2.6%) | 575.0 | 575.0 | |||||
Total borrowings at par value | 3,644.9 | 2,799.9 | |||||
Fair value hedge accounting adjustments, net (d) | 2.0 | 4.4 | |||||
Unamortized discount and debt issuance costs | (19.5 | ) | (18.2 | ) | |||
Total borrowings at carrying value (e) | $ | 3,627.4 | $ | 2,786.1 |
(a) | Pursuant to the Company's commercial paper program, the Company may issue unsecured commercial paper notes in an amount not to exceed $1.5 billion outstanding at any time, reduced to the extent of borrowings outstanding on the Company's Revolving Credit Facility in excess of $150 million. The commercial paper notes may have maturities of up to 397 days from date of issuance. The Company's commercial paper borrowings as of June 30, 2017 had a weighted-average annual interest rate of approximately 1.4% and a weighted-average term of approximately 3 days. |
(b) | The difference between the stated interest rate and the effective interest rate is not significant. |
(c) | On March 15, 2017, the Company issued $400.0 million of aggregate principal amount of 3.600% unsecured notes due 2022 ("2022 Notes"). |
(d) | 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 Condensed Consolidated Statements of Income over the life of the related notes, and cause the effective rate of interest to differ from the notes’ stated rate. |
(e) | As of June 30, 2017, the Company’s weighted-average effective rate on total borrowings was approximately 4.0% |
Due within 1 year | $ | 500.0 | |
Due after 1 year through 2 years | 678.7 | ||
Due after 2 years through 3 years | 353.6 | ||
Due after 3 years through 4 years | 517.6 | ||
Due after 4 years through 5 years | 400.0 | ||
Due after 5 years | 750.0 |
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Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Revenues: | |||||||||||||||
Consumer-to-Consumer | $ | 1,087.3 | $ | 1,095.8 | $ | 2,102.3 | $ | 2,113.2 | |||||||
Business Solutions | 96.6 | 100.8 | 190.2 | 200.0 | |||||||||||
Other (a) | 195.0 | 179.1 | 388.8 | 360.2 | |||||||||||
Total consolidated revenues | $ | 1,378.9 | $ | 1,375.7 | $ | 2,681.3 | $ | 2,673.4 | |||||||
Operating income: | |||||||||||||||
Consumer-to-Consumer | $ | 269.9 | $ | 251.9 | $ | 497.5 | $ | 483.2 | |||||||
Business Solutions | 5.3 | 5.2 | 7.6 | 7.6 | |||||||||||
Other (a) | 23.6 | 20.3 | 47.5 | 45.2 | |||||||||||
Total segment operating income | 298.8 | 277.4 | 552.6 | 536.0 | |||||||||||
State regulator matter accrual (Note 5) | (49.0 | ) | — | (49.0 | ) | — | |||||||||
Joint Settlement Agreements (Note 5) | — | (15.0 | ) | — | (15.0 | ) | |||||||||
Business transformation expenses (Note 3) | (35.0 | ) | (2.1 | ) | (49.3 | ) | (2.1 | ) | |||||||
Total consolidated operating income | $ | 214.8 | $ | 260.3 | $ | 454.3 | $ | 518.9 |
(a) | Other consists primarily of the Company's bill payments businesses in the United States and Argentina. |
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