Document and Entity Information
Document and Entity Information - USD ($) $ in Billions | 12 Months Ended | ||
Dec. 31, 2018 | Feb. 13, 2019 | Jun. 29, 2018 | |
Document and Entity Information | |||
Entity Registrant Name | Western Union CO | ||
Entity Central Index Key | 1,365,135 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2018 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Trading Symbol | wu | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Public Float | $ 9 | ||
Entity Common Stock, Shares Outstanding | 435,890,819 | ||
Document Fiscal Year Focus | 2,018 | ||
Document Fiscal Period Focus | FY |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME/(LOSS) - USD ($) shares in Millions, $ in Millions | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||
CONSOLIDATED STATEMENTS OF INCOME/(LOSS) | ||||
Revenues | $ 5,589.9 | $ 5,524.3 | $ 5,422.9 | |
Type of Revenue | us-gaap:ServiceMember | us-gaap:ServiceMember | us-gaap:ServiceMember | |
Expenses: | ||||
Cost of services (Note 2) | $ 3,300.8 | $ 3,353 | $ 3,266.7 | |
Type of Cost of Service | us-gaap:ServiceMember | us-gaap:ServiceMember | us-gaap:ServiceMember | |
Selling, general and administrative | $ 1,167 | $ 1,231.5 | $ 1,669.2 | |
Goodwill impairment charge | 0 | 464 | 0 | |
Total expenses | [1] | 4,467.8 | 5,048.5 | 4,935.9 |
Operating income | 1,122.1 | 475.8 | 487 | |
Other income/(expense): | ||||
Interest income | 4.8 | 4.9 | 3.5 | |
Interest expense | (149.6) | (142.1) | (152.5) | |
Other income, net (Note 2) | 14.1 | 8.9 | 3.7 | |
Total other expense, net | (130.7) | (128.3) | (145.3) | |
Income before income taxes | 991.4 | 347.5 | 341.7 | |
Provision for income taxes (Note 11) | 139.5 | 904.6 | 88.5 | |
Net income/(loss) | $ 851.9 | $ (557.1) | $ 253.2 | |
Earnings/(loss) per share: | ||||
Basic (USD per share) | $ 1.89 | $ (1.19) | $ 0.52 | |
Diluted (USD per share) | $ 1.87 | $ (1.19) | $ 0.51 | |
Weighted-average shares outstanding: | ||||
Basic (shares) | 451.8 | 467.9 | 490.2 | |
Diluted (shares) | 454.4 | 467.9 | 493.5 | |
Cash dividends declared per common share (USD per share) | $ 0.76 | $ 0.70 | $ 0.64 | |
[1] | As further described in Note 7, total expenses include amounts incurred with related parties of $57.6 million, $65.9 million, and $68.0 million for the years ended December 31, 2018, 2017 and 2016, respectively. |
CONSOLIDATED STATEMENTS OF IN_2
CONSOLIDATED STATEMENTS OF INCOME/(LOSS) (Parentheticals) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
CONSOLIDATED STATEMENTS OF INCOME/(LOSS) | |||
Related party expenses | $ 57.6 | $ 65.9 | $ 68 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS) | |||||||||||
Net income/(loss) | $ 212.1 | $ 208.6 | $ 217.6 | $ 213.6 | $ (1,120.9) | $ 235.6 | $ 166.5 | $ 161.7 | $ 851.9 | $ (557.1) | $ 253.2 |
Other comprehensive income/(loss), net of tax (Note 14): | |||||||||||
Unrealized gains/(losses) on investment securities | (4.3) | 6.5 | (11.6) | ||||||||
Unrealized gains/(losses) on hedging activities | 50.3 | (74.4) | (7.6) | ||||||||
Foreign currency translation adjustments | (19.5) | (6.2) | (4.7) | ||||||||
Defined benefit pension plan adjustments | 1.8 | 9 | 5 | ||||||||
Total other comprehensive income/(loss) | 28.3 | (65.1) | (18.9) | ||||||||
Comprehensive income/(loss) | $ 880.2 | $ (622.2) | $ 234.3 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Assets | ||
Cash and cash equivalents | $ 973.4 | $ 838.2 |
Settlement assets | 3,813.8 | 4,188.9 |
Property and equipment, net of accumulated depreciation of $702.4 and $635.7, respectively | 270.4 | 214.2 |
Goodwill | 2,725 | 2,727.9 |
Other intangible assets, net of accumulated amortization of $1,047.6 and $1,042.7, respectively | 598.2 | 586.3 |
Other assets | 616 | 675.9 |
Total assets | 8,996.8 | 9,231.4 |
Liabilities: | ||
Accounts payable and accrued liabilities | 564.9 | 718.5 |
Settlement obligations | 3,813.8 | 4,188.9 |
Income taxes payable (Note 11) | 1,054 | 1,252 |
Deferred tax liability, net | 161.1 | 173 |
Borrowings | 3,433.7 | 3,033.6 |
Other liabilities | 279.1 | 356.8 |
Total liabilities | 9,306.6 | 9,722.8 |
Commitments and contingencies (Note 6) | ||
Stockholders' deficit: | ||
Preferred stock, $1.00 par value; 10 shares authorized; no shares issued | ||
Common stock, $0.01 par value; 2,000 shares authorized; 441.2 shares and 459.0 shares issued and outstanding as of December 31, 2018 and 2017, respectively | 4.4 | 4.6 |
Capital surplus | 755.6 | 697.8 |
Accumulated deficit | (838.8) | (965.9) |
Accumulated other comprehensive loss | (231) | (227.9) |
Total stockholders' deficit | (309.8) | (491.4) |
Total liabilities and stockholders' deficit | $ 8,996.8 | $ 9,231.4 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parentheticals) - USD ($) shares in Millions, $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Assets | ||
Accumulated Depreciation on Property Plant and Equipment | $ 702.4 | $ 635.7 |
Accumulated Amortization on Other Intangible Assets | $ 1,047.6 | $ 1,042.7 |
Stockholders’ Equity: | ||
Preferred stock, par value (USD per share) | $ 1 | $ 1 |
Preferred stock, shares authorized | 10 | 10 |
Preferred stock, shares issued | 0 | 0 |
Common stock, par value (USD per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 2,000 | 2,000 |
Common stock, shares issued | 441.2 | 459 |
Common stock, shares outstanding | 441.2 | 459 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Cash flows from operating activities | |||
Net income/(loss) | $ 851.9 | $ (557.1) | $ 253.2 |
Adjustments to reconcile net income/(loss) to net cash provided by operating activities: | |||
Depreciation | 76.9 | 77.1 | 74.2 |
Amortization | 187.8 | 185.8 | 189 |
Goodwill impairment charge (Note 5) | 0 | 464 | 0 |
Deferred income tax provision/(benefit) (Note 11) | (15.1) | 69.5 | (174.2) |
Other non-cash items, net | 66.2 | 124.2 | 98.3 |
Increase/(decrease) in cash, excluding the effects of acquisitions, resulting from changes in: | |||
Other assets | (31) | (62.5) | (71.4) |
Accounts payable and accrued liabilities (Note 6) | (126.5) | (417.6) | 522.8 |
Income taxes payable (Note 11) | (193.1) | 850.4 | 190.9 |
Other liabilities | 4.2 | 8.2 | (40.9) |
Net cash provided by operating activities | 821.3 | 742 | 1,041.9 |
Cash flows from investing activities | |||
Capitalization of contract costs | (150.3) | (74.8) | (107.3) |
Capitalization of purchased and developed software | (52) | (33.2) | (53.7) |
Purchases of property and equipment | (136.7) | (69.1) | (68.8) |
Purchases of non-settlement related investments and other | (24.2) | (192.1) | (64.7) |
Proceeds from maturity of non-settlement related investments and other | 13.7 | 203.8 | 53.2 |
Purchases of held-to-maturity non-settlement related investments | (2.8) | (42.7) | (39.7) |
Proceeds from held-to-maturity non-settlement related investments | 23.5 | 28.4 | 9.9 |
Acquisition of businesses, net (Note 5) | (24.9) | ||
Net cash used in investing activities | (328.8) | (204.6) | (271.1) |
Cash flows from financing activities | |||
Cash dividends paid | (341.7) | (325.6) | (312.2) |
Common stock repurchased (Note 14) | (412.4) | (502.8) | (501.6) |
Net proceeds from commercial paper | 125 | ||
Net proceeds from issuance of borrowings | 685.4 | 746.2 | 575 |
Principal payments on borrowings | (414.4) | (500) | (1,005.4) |
Proceeds from exercise of options | 10.1 | 13 | 36.4 |
Other financing activities | (9.2) | (1.3) | (1.4) |
Net cash used in financing activities | (357.2) | (570.5) | (1,209.2) |
Net change in cash, cash equivalents and restricted cash | 135.3 | (33.1) | (438.4) |
Cash, cash equivalents and restricted cash at beginning of year | 844.4 | 877.5 | 1,315.9 |
Cash, cash equivalents and restricted cash at end of year | 979.7 | 844.4 | 877.5 |
Supplemental cash flow information: | |||
Interest paid | 142.5 | 128 | 159 |
Income taxes paid/(refunded) | 339.4 | (11.6) | $ 68.4 |
Restricted cash at end of year | $ 6.3 | $ 6.2 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY/(DEFICIT) - USD ($) shares in Millions, $ in Millions | Common Stock | Capital Surplus | Retained Earnings/(Accumulated Deficit) | Accumulated Other Comprehensive Loss | Total |
Beginning balance, Shares at Dec. 31, 2015 | 502.4 | ||||
Beginning balance at Dec. 31, 2015 | $ 5 | $ 566.5 | $ 977.3 | $ (143.9) | $ 1,404.9 |
Increase/(Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income/(loss) | 253.2 | 253.2 | |||
Stock-based compensation | 41.8 | 41.8 | |||
Common stock dividends | (312.2) | (312.2) | |||
Repurchase and retirement of common shares (shares) | (25.8) | ||||
Repurchase and retirement of common shares | $ (0.2) | (499) | (499.2) | ||
Shares issued under stock-based compensation plans (shares) | 4.9 | ||||
Shares issued under stock-based compensation plans | 32.6 | 32.6 | |||
Unrealized gains/(losses) on investment securities, net of tax | (11.6) | (11.6) | |||
Unrealized gains (losses) on hedging activities, net of tax | (7.6) | (7.6) | |||
Foreign currency translation adjustments, net of tax | (4.7) | (4.7) | |||
Defined benefit pension plan adjustments, net of tax | 5 | 5 | |||
Ending balance (shares) at Dec. 31, 2016 | 481.5 | ||||
Ending balance at Dec. 31, 2016 | $ 4.8 | 640.9 | 419.3 | (162.8) | 902.2 |
Increase/(Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income/(loss) | (557.1) | (557.1) | |||
Stock-based compensation | 43.9 | 43.9 | |||
Common stock dividends | (325.6) | (325.6) | |||
Repurchase and retirement of common shares (shares) | (25.7) | ||||
Repurchase and retirement of common shares | $ (0.2) | (502.5) | (502.7) | ||
Shares issued under stock-based compensation plans (shares) | 3.2 | ||||
Shares issued under stock-based compensation plans | 13 | 13 | |||
Unrealized gains/(losses) on investment securities, net of tax | 6.5 | 6.5 | |||
Unrealized gains (losses) on hedging activities, net of tax | (74.4) | (74.4) | |||
Foreign currency translation adjustments, net of tax | (6.2) | (6.2) | |||
Defined benefit pension plan adjustments, net of tax | 9 | $ 9 | |||
Ending balance (shares) at Dec. 31, 2017 | 459 | 459 | |||
Ending balance at Dec. 31, 2017 | $ 4.6 | 697.8 | (965.9) | (227.9) | $ (491.4) |
Increase/(Decrease) in Stockholders' Equity [Roll Forward] | |||||
Adoption of new accounting pronouncements (Note 2) | 30.7 | (31.4) | (0.7) | ||
Net income/(loss) | 851.9 | 851.9 | |||
Stock-based compensation | 47.7 | 47.7 | |||
Common stock dividends | (341.7) | (341.7) | |||
Repurchase and retirement of common shares (shares) | (20.9) | ||||
Repurchase and retirement of common shares | $ (0.2) | (413.8) | (414) | ||
Shares issued under stock-based compensation plans (shares) | 3.1 | ||||
Shares issued under stock-based compensation plans | 10.1 | 10.1 | |||
Unrealized gains/(losses) on investment securities, net of tax | (4.3) | (4.3) | |||
Unrealized gains (losses) on hedging activities, net of tax | 50.3 | 50.3 | |||
Foreign currency translation adjustments, net of tax | (19.5) | (19.5) | |||
Defined benefit pension plan adjustments, net of tax | 1.8 | $ 1.8 | |||
Ending balance (shares) at Dec. 31, 2018 | 441.2 | 441.2 | |||
Ending balance at Dec. 31, 2018 | $ 4.4 | $ 755.6 | $ (838.8) | $ (231) | $ (309.8) |
Business and Basis of Presentat
Business and Basis of Presentation | 12 Months Ended |
Dec. 31, 2018 | |
Business and Basis of Presentation | |
Business and Basis of Presentation | 1. Business and Basis of Presentation Business The Western Union Company (“Western Union” or the “Company”) is a leader in global money movement and payment services, providing people and businesses with fast, reliable and convenient ways to send money and make payments around the world. The Western Union ® brand is globally recognized. The Company’s services are primarily available through a network of agent locations in more than 200 countries and territories and through online money transfer transactions conducted and funded through Western Union branded websites and mobile apps (“westernunion.com”). Each location in the Company’s agent network is capable of providing one or more of the Company’s services. The Western Union business consists of the following segments: · Consumer-to-Consumer - The Consumer-to-Consumer operating segment facilitates money transfers between two consumers, primarily through a network of third-party agents. The Company views its multi-currency money transfer service as one interconnected global network where a money transfer can be sent from one location to another, around the world. This service is available for international cross-border transfers and, in certain countries, intra- country transfers. This segment also includes money transfer transactions that can be initiated through websites and mobile devices. · Business Solutions - The Business Solutions operating segment facilitates payment and foreign exchange solutions, primarily cross-border, cross-currency transactions, for small and medium size enterprises and other organizations and individuals. The majority of the segment’s business relates to exchanges of currency at spot rates, which enable customers to make cross-currency payments. In addition, in certain countries, the Company writes foreign currency forward and option contracts for customers to facilitate future payments. All businesses and other services that have not been classified in the above segments are reported as “Other,” which primarily includes the Company’s electronic-based and cash-based bill payment services which facilitate payments from consumers to businesses and other organizations. The Company’s money order and other services, in addition to certain corporate costs such as costs related to strategic initiatives, including for the review and closing of mergers, acquisitions, and divestitures, are also included in “Other.” See Note 18 for further information regarding the Company’s segments. There are legal or regulatory limitations on transferring certain assets of the Company outside of the countries where these assets are located. However, there are generally no limitations on the use of these assets within those countries. Additionally, the Company must meet minimum capital requirements in some countries in order to maintain operating licenses. As of December 31, 2018, the amount of these net asset limitations totaled approximately $365 million. Various aspects of the Company’s services and businesses are subject to United States federal, state and local regulation, as well as regulation by foreign jurisdictions, including certain banking and other financial services regulations. Basis of Presentation The financial statements in this Annual Report on Form 10‑K are presented on a consolidated basis and include the accounts of the Company and its majority-owned subsidiaries. All significant intercompany transactions and accounts have been eliminated. Beginning in the first quarter of 2018, the Company no longer presents the “Derivative gains, net” line item in its Consolidated Statements of Income/(Loss) for all periods presented due to the early adoption of a new accounting pronouncement to improve the financial reporting of hedging relationships, as further described in Note 2. Amounts previously reported in prior periods in “Derivative gains, net” are now reported in “Other income, net” in the Consolidated Statements of Income/(Loss). Additionally, certain historical amounts reported in the Consolidated Statements of Income/(Loss) for the years ended December 31, 2017 and 2016 have been adjusted due to the adoption of an accounting standard related to pension costs, as further described in Note 2. Consistent with industry practice, the accompanying Consolidated Balance Sheets are unclassified due to the short-term nature of the Company’s settlement obligations contrasted with the Company’s ability to invest cash awaiting settlement in long-term investment securities. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2018 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates. Principles of Consolidation The Company consolidates financial results when it has a controlling financial interest in a subsidiary via voting rights or when it has both the power to direct the activities of an entity that most significantly impact the entity’s economic performance and the ability to absorb losses or the right to receive benefits of the entity that could potentially be significant to the entity. The Company utilizes the equity method of accounting when it is able to exercise significant influence over the entity’s operations, which generally occurs when the Company has an ownership interest of between 20% and 50% in an entity. Earnings/(Loss) Per Share The calculation of basic earnings/(loss) per share is computed by dividing net income/(loss) available to common stockholders by the weighted-average number of shares of common stock outstanding for the period. Outstanding options to purchase Western Union stock and unvested shares of restricted stock are excluded from basic shares outstanding. Diluted earnings/(loss) per share reflects the potential dilution that could occur if outstanding stock options at the presented dates are exercised and shares of restricted stock have vested, using the treasury stock method. The treasury stock method assumes proceeds from the exercise price of stock options and the unamortized compensation expense of options and restricted stock are available to acquire shares at an average market price throughout the period, and therefore, reduce the dilutive effect. For the years ended December 31, 2018, 2017 and 2016, there were 2.6 million, 2.8 million and 3.4 million, respectively, of shares excluded from the diluted earnings/(loss) per share calculation under the treasury stock method, primarily due to outstanding options to purchase shares of Western Union stock, as their exercise prices were above the Company’s weighted-average share price during the periods and their effect was anti-dilutive. Due to the net loss for the year ended December 31, 2017, an additional 3.0 million shares have been excluded from diluted weighted-average shares outstanding, because the effect of including such shares would be anti-dilutive in the calculation of diluted loss per share. The following table provides the calculation of diluted weighted-average shares outstanding (in millions): For the Year Ended December 31, 2018 2017 2016 Basic weighted-average shares outstanding 451.8 467.9 490.2 Common stock equivalents 2.6 — 3.3 Diluted weighted-average shares outstanding 454.4 467.9 493.5 Fair Value Measurements The Company determines the fair values of its assets and liabilities that are recognized or disclosed at fair value in accordance with the hierarchy described below. The fair values of the assets and liabilities held in the Company’s defined benefit plan trust (“Trust”) are recognized or disclosed utilizing the same hierarchy. The following three levels of inputs may be used to measure fair value: · Level 1: Quoted prices in active markets for identical assets or liabilities. · Level 2: Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. For most of these assets, the Company utilizes pricing services that use multiple prices as inputs to determine daily market values. · Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include items where the determination of fair value requires significant management judgment or estimation. The Company has Level 3 assets that are recognized and disclosed at fair value on a non-recurring basis related to the Company’s business combinations, where the values of the intangible assets and goodwill acquired in a purchase are derived utilizing one of the three recognized approaches: the market approach, the income approach or the cost approach. In addition, the Trust has other investments that are valued at net asset value which is not quoted on an active market; however, the unit price is based on underlying investments which are traded on an active market. Carrying amounts for many of the Company’s financial instruments, including cash and cash equivalents, settlement cash and cash equivalents, and settlement receivables and settlement obligations approximate fair value due to their short maturities. Available-for-sale investment securities and derivative financial instruments are carried at fair value and included in Note 9. Fixed rate notes are carried at their original issuance values as adjusted over time to accrete that value to par, except for portions of notes hedged by interest rate swap agreements as disclosed in Note 15. The fair values of fixed rate notes are disclosed in Note 9 and are based on market quotations. The Company’s investments in foreign corporate debt securities are classified as held-to-maturity securities. The fair values of the foreign corporate debt securities are disclosed in Note 9 and are based on market quotations. The fair values of non-financial assets and liabilities related to the Company’s business combinations are disclosed in Note 5. The fair value of the assets in the Trust, which holds the assets for the Company’s defined benefit plan, is disclosed in Note 12. Business Combinations The Company accounts for all business combinations where control over another entity is obtained using the acquisition method of accounting, which requires that most assets (both tangible and intangible), liabilities (including contingent consideration), and remaining noncontrolling interests be recognized at fair value at the date of acquisition. The excess of the purchase price over the fair value of assets less liabilities and noncontrolling interests is recognized as goodwill. Certain adjustments to the assessed fair values of the assets, liabilities, or noncontrolling interests made subsequent to the acquisition date, but within the measurement period, which is one year or less, are recorded as adjustments to goodwill. Any adjustments subsequent to the measurement period are recorded in income. Any cost or equity method interest that the Company holds in the acquired company prior to the acquisition is remeasured to fair value at acquisition with a resulting gain or loss recognized in income for the difference between fair value and existing book value. Results of operations of the acquired company are included in the Company’s results from the date of the acquisition forward and include amortization expense arising from acquired intangible assets. The Company expenses all costs as incurred related to or involved with an acquisition in “Selling, general and administrative” expenses. Cash and Cash Equivalents Highly liquid investments (other than those included in settlement assets) with maturities of three months or less at the date of purchase (that are readily convertible to cash) are considered to be cash equivalents and are stated at cost, which approximates fair value. The Company maintains cash and cash equivalent balances, including a portion in money market funds, with a group of globally diversified banks and financial institutions. The Company limits the concentration of its cash and cash equivalents with any one institution and regularly reviews investment concentrations and credit worthiness of these institutions. Allowance for Doubtful Accounts The Company records an allowance for doubtful accounts when it is probable that the related receivable balance will not be collected based on its history of collection experience, known collection issues, such as agent suspensions and bankruptcies, consumer chargebacks and insufficient funds, and other matters the Company identifies in its routine collection monitoring. The allowance for doubtful accounts was $47.7 million and $64.5 million as of December 31, 2018 and 2017, respectively, and is recorded in the same Consolidated Balance Sheet caption as the related receivable. During the years ended December 31, 2018, 2017 and 2016, the provision for doubtful accounts (bad debt expense) reflected in the Consolidated Statements of Income/(Loss) was $43.9 million, $60.6 million and $63.9 million, respectively. Settlement Assets and Obligations Settlement assets represent funds received or to be received from agents for unsettled money transfers, money orders and consumer payments. The Company records corresponding settlement obligations relating to amounts payable under money transfers, money orders and consumer payment service arrangements. Settlement assets and obligations also include amounts receivable from, and payable to, customers for the value of their cross-currency payment transactions related to the Business Solutions segment. Settlement assets consist of cash and cash equivalents, receivables from selling agents and Business Solutions customers, and investment securities. Cash received by Western Union agents generally becomes available to the Company within one week after initial receipt by the agent. Cash equivalents consist of short-term time deposits, commercial paper and other highly liquid investments. Receivables from selling agents represent funds collected by such agents, but in transit to the Company. Western Union has a large and diverse agent base, thereby reducing the credit risk of the Company from any one agent. In addition, the Company performs ongoing credit evaluations of its agents’ financial condition and credit worthiness. See Note 8 for information concerning the Company’s investment securities. Receivables from Business Solutions customers arise from cross-currency payment transactions in the Business Solutions segment. Receivables occur when funds have been paid out to a beneficiary but not yet received from the customer. Aside from these receivables, the credit risk associated with spot foreign currency exchange contracts is largely mitigated, as in most cases the Company requires the receipt of funds from customers before releasing the associated cross-currency payment. Settlement obligations consist of money transfer, money order and payment service payables and payables to agents. Money transfer payables represent amounts to be paid to transferees when they request their funds. Most agents typically settle with transferees first and then obtain reimbursement from the Company. Money order payables represent amounts not yet presented for payment. Payment service payables represent amounts to be paid to utility companies, auto finance companies, mortgage servicers, financial service providers, government agencies and others. Due to the agent funding and settlement process, payables to agents represent amounts due to agents for money transfers that have been settled with transferees. Settlement assets and obligations consisted of the following (in millions): December 31, 2018 2017 Settlement assets: Cash and cash equivalents $ 1,247.8 $ 1,264.8 Receivables from selling agents and Business Solutions customers 1,355.4 1,573.9 Investment securities 1,210.6 1,350.2 $ 3,813.8 $ 4,188.9 Settlement obligations: Money transfer, money order and payment service payables $ 2,793.6 $ 2,789.2 Payables to agents 1,020.2 1,399.7 $ 3,813.8 $ 4,188.9 Property and Equipment Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the lesser of the estimated life of the related assets (generally three to ten years for equipment and furniture and fixtures, and 30 years for buildings) or the lease term. Maintenance and repairs, which do not extend the useful life of the respective assets, are charged to expense as incurred. Property and equipment consisted of the following (in millions): December 31, 2018 2017 Equipment $ 656.8 $ 604.7 Leasehold improvements 158.6 87.4 Buildings 88.6 88.6 Furniture and fixtures 51.6 42.0 Land and improvements 17.0 17.0 Projects in process 0.2 10.2 Total property and equipment, gross 972.8 849.9 Less accumulated depreciation (702.4) (635.7) Property and equipment, net $ 270.4 $ 214.2 Amounts charged to expense for depreciation of property and equipment were $76.9 million, $77.1 million and $74.2 million during the years ended December 31, 2018, 2017 and 2016 respectively. Goodwill Goodwill represents the excess of purchase price over the fair value of tangible and other intangible assets acquired, less liabilities assumed arising from business combinations. In the event a reporting unit’s carrying amount exceeds its fair value, the Company recognizes an impairment charge for the amount by which the carrying amount of the reporting unit exceeds its fair value. The Company’s annual impairment assessment did not identify any goodwill impairment during the years ended December 31, 2018 and 2016. For the year ended December 31, 2017, the Company recognized a goodwill impairment charge of $464.0 million related to its Business Solutions reporting unit, as disclosed in Note 5. Other Intangible Assets Other intangible assets primarily consist of contract costs (primarily amounts paid to agents in connection with establishing and renewing long-term contracts), acquired contracts and software. Other intangible assets are amortized on a straight-line basis over the length of the contract or benefit periods. Included in the Consolidated Statements of Income/(Loss) is amortization expense of $187.8 million, $185.8 million and $189.0 million for the years ended December 31, 2018, 2017 and 2016, respectively. The Company capitalizes initial payments for new and renewed agent contracts to the extent recoverable through future operations or penalties in the case of early termination. The Company’s accounting policy is to limit the amount of capitalized costs for a given contract to the lesser of the estimated future cash flows from the contract or the termination fees the Company would receive in the event of early termination of the contract. Acquired contracts include customer and contractual relationships and networks of subagents that are recognized in connection with the Company’s acquisitions. The Company purchases and develops software that is used in providing services and in performing administrative functions. Internal and external software development costs incurred that are directly related to the chosen design, development and testing phases of the software are capitalized once the Company has completed all planning and analysis activities. Any other software development related costs are expensed as incurred. Capitalization of costs ceases when the product is available for general use. Software development costs and purchased software are generally amortized over a term of three to seven years. The following table provides the components of other intangible assets (in millions): December 31, 2018 December 31, 2017 Weighted- Average Amortization Net of Net of Period Accumulated Accumulated (in years) Initial Cost Amortization Initial Cost Amortization Acquired contracts 11.5 $ 598.1 $ 171.2 $ 600.4 $ 220.0 Capitalized contract costs 6.2 536.5 318.9 559.5 268.2 Internal use software 3.5 447.3 80.6 387.8 53.1 Acquired trademarks 24.8 32.5 15.5 33.2 16.9 Other intangibles 4.7 19.4 — 20.0 — Projects in process (a) 12.0 12.0 28.1 28.1 Total other intangible assets 7.7 $ 1,645.8 $ 598.2 $ 1,629.0 $ 586.3 (a) Not applicable as the assets have not been placed in service. The estimated future aggregate amortization expense for existing other intangible assets as of December 31, 2018 is expected to be $169.5 million in 2019, $119.5 million in 2020, $103.0 million in 2021, $70.6 million in 2022, $49.5 million in 2023 and $74.1 million thereafter. Other intangible assets are reviewed for impairment on an annual basis or whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. In such reviews, estimated undiscounted cash flows associated with these assets or operations are compared with their carrying values to determine if a write-down to fair value (normally measured by the present value technique) is required. The Company recorded immaterial impairments related to other intangible assets during the years ended December 31, 2018, 2017 and 2016. Revenue Recognition For the Company’s accounting policies with respect to revenue recognition, refer to Note 3. Cost of Services Cost of services primarily consists of agent commissions and expenses for call centers, settlement operations and related information technology costs. Expenses within these functions include personnel, software, equipment, telecommunications, bank fees, depreciation, amortization and other expenses incurred in connection with providing money transfer and other payment services. Advertising Costs Advertising costs are charged to operating expenses as incurred. Advertising costs for the years ended December 31, 2018, 2017 and 2016 were $180.9 million, $168.3 million, and $151.1 million, respectively. Income Taxes The Company accounts for income taxes under the liability method, which requires that deferred tax assets and liabilities be determined based on the expected future income tax consequences of events that have been recognized in the consolidated financial statements. Deferred tax assets and liabilities are recognized based on temporary differences between the financial statement carrying amounts and tax bases of assets and liabilities using enacted tax rates in effect in the years in which the temporary differences are expected to reverse. The Company assesses the realizability of its deferred tax assets. A valuation allowance must be established when, based upon available evidence, it is more likely than not that all or a portion of the deferred tax assets will not be realized. The Company recognizes the tax benefits from uncertain tax positions only when it is more likely than not, based on the technical merits of the position, the tax position will be sustained upon examination, including the resolution of any related appeals or litigation. The tax benefits recognized in the consolidated financial statements from such a position are measured as the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate resolution. During the year ended December 31, 2018, the Company finalized an accounting policy election to account for the tax effects of global intangible low-taxed income as a component of income tax expense in the period the tax arises. Foreign Currency Translation The United States dollar is the functional currency for substantially all of the Company’s businesses. Revenues and expenses are translated at average exchange rates prevailing during the period. Foreign currency denominated assets and liabilities for those businesses for which the local currency is the functional currency are translated into United States dollars based on exchange rates at the end of the year. The effects of foreign exchange gains and losses arising from the translation of assets and liabilities of these businesses are included as a component of “Accumulated other comprehensive loss” in the accompanying Consolidated Balance Sheets. Foreign currency denominated monetary assets and liabilities of businesses for which the United States dollar is the functional currency are remeasured based on exchange rates at the end of the period, and the resulting remeasurement gains and losses are recognized in net income/(loss). Non-monetary assets and liabilities of these operations are remeasured at historical rates in effect when the asset was recognized or the liability was incurred. Derivatives The Company uses derivatives to (a) minimize its exposures related to changes in foreign currency exchange rates and interest rates and (b) facilitate cross-currency Business Solutions payments by writing derivatives to customers. The Company recognizes all derivatives in the “Other assets” and “Other liabilities” captions in the accompanying Consolidated Balance Sheets at their fair value. All cash flows associated with derivatives are included in cash flows from operating activities in the Consolidated Statements of Cash Flows. · Cash flow hedges - Changes in the fair value of derivatives that are designated and qualify as cash flow hedges are recorded in “Accumulated other comprehensive loss.” Cash flow hedges consist of foreign currency hedging of forecasted revenues, as well as hedges of the forecasted issuance of fixed rate debt. Derivative fair value changes that are captured in “Accumulated other comprehensive loss” are reclassified to earnings in the same period the hedged item affects earnings when the instrument is effective in offsetting the change in cash flows attributable to the risk being hedged. On January 1, 2018, the Company early adopted an accounting pronouncement related to hedging activities. As a result of the new accounting pronouncement, for foreign currency cash flow hedges entered into on or after January 1, 2018, the Company excludes time value from the assessment of effectiveness, and the initial value of the excluded components is amortized into “Revenues” within the Consolidated Statements of Income/(Loss). For foreign currency cash flow hedges entered into before January 1, 2018, all changes in the fair value of the excluded components are recognized immediately in “Revenues” for the year ended December 31, 2018. For the years ended December 31, 2017 and 2016, the changes in fair value of the excluded components were recognized immediately within the Consolidated Statements of Income/(Loss) and are included in “Other income, net.” · Fair value hedges - Changes in the fair value of derivatives that are designated as fair value hedges of fixed rate debt are recorded in “Interest expense.” The offsetting change in value of the related debt instrument attributable to changes in the benchmark interest rate is also recorded in “Interest expense.” · Undesignated - Derivative contracts entered into to reduce the variability related to (a) money transfer settlement assets and obligations, generally with maturities from a few days up to one month, and (b) certain foreign currency denominated cash and other asset and liability positions, typically with maturities of less than one year at inception, are not designated as hedges for accounting purposes and changes in their fair value are included in “Selling, general and administrative.” The Company is also exposed to risk from derivative contracts written to its customers arising from its cross-currency Business Solutions payments operations. The duration of these derivative contracts at inception is generally less than one year. The Company aggregates its Business Solutions payments foreign currency exposures arising from customer contracts, including the derivative contracts described above, and hedges the resulting net currency risks by entering into offsetting contracts with established financial institution counterparties (economic hedge contracts) as part of a broader foreign currency portfolio, including significant spot exchanges of currency in addition to forwards and options. The changes in fair value related to these contracts are recorded in “Revenues.” The fair value of the Company’s derivatives is derived from standardized models that use market-based inputs (e.g., forward prices for foreign currency). The details of each designated hedging relationship are formally documented at the inception of the arrangement, including the risk management objective, hedging strategy, hedged item, specific risks being hedged, the derivative instrument, and how effectiveness is being assessed. The derivative must be highly effective in offsetting the changes in cash flows or fair value of the hedged item, and effectiveness is evaluated quarterly on a retrospective and prospective basis. Legal Contingencies The Company is a party to certain legal and regulatory proceedings with respect to a variety of matters. The Company records an accrual for these contingencies to the extent that a loss is both probable and reasonably estimable. If some amount within a range of loss appears to be a better estimate than any other amount within the range, that amount is accrued. When no amount within a range of loss appears to be a better estimate than any other amount, the lowest amount in the range is accrued. Stock-Based Compensation The Company currently has a stock-based compensation plan that provides for grants of Western Union stock options, restricted stock awards and restricted and unrestricted stock units to employees and non-employee directors of the Company. All stock-based compensation to employees is required to be measured at fair value and expensed over the requisite service period. The Company recognizes compensation expense on awards on a straight-line basis over the requisite service period for the entire award, with an estimate of forfeitures. Refer to Note 17 for additional discussion regarding details of the Company’s stock-based compensation plans. Severance and Other Related Expenses The Company records severance-related expenses once they are both probable and estimable in accordance with the provisions of the applicable accounting guidance for severance provided under an ongoing benefit arrangement. One-time, involuntary benefit arrangements and other costs are generally recognized when the liability is incurred. The Company also evaluates impairment issues associated with restructuring and other activities when the carrying amount of the related assets may not be fully recoverable, in accordance with the appropriate accounting guidance. Recently Adopted Accounting Pronouncements On January 1, 2018, the Company adopted a new accounting standard, as amended, regarding revenue from contracts with customers using the modified retrospective approach. This standard provides guidance on recognizing revenue, including a five-step model to determine when revenue recognition is appropriate. The adoption of this standard did not have a material impact on the Company’s financial position and results of operations. Refer to Note 3 for the related additional disclosures. On January 1, 2018, the Company adopted an accounting pronouncement regarding classification and measurement of financial instruments. This standard provides guidance on how entities measure certain equity investments and present changes in fair value. This standard requires that entities measure certain equity investments that do not result in consolidation and are not accounted for under the equity method at fair value and recognize any changes in fair value in net income. The Company’s money market funds have readily determinable fair values, as disclosed in Note 9, and for those equity investments that are not accounted for under the equity method and that do not have readily determinable fair values, the Company has elected to measure these securities at cost less impairment, adjusted for observable price changes for identical or similar investments of the same issuer. The adoption of this standard did not have a material impact on the Company’s financial position, results of operations, or related disclosures. On January 1, 2018, the Company adopted an accounting pronouncement regarding certain intra-entity asset transfers that requires that an entity recognize any income tax consequences when the transfer occurs. The adoption of this standard did not have a material impact on the Company’s financial position. On January 1, 2018, the Company retrospectively adopted an accounting pronouncement that requires restricted cash, which is recorded in “Other assets” in the Company’s Consolidated Balance Sheets, to be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period amounts shown on the statements of cash flows. The adoption of this standard had an immaterial impact on the Company’s historical operating cash flows within the Consolidated Statements of Cash Flows. On January 1, 2018, the Company retrospectively adopted an accounting pronouncement that requires the non-service cost components of defined benefit plan pension costs to be presented in the income statement separately from the service cost component, outside a subtotal of income from operations. The Company has no service costs, as the Company’s defined benefit pension plan is frozen. Prior to the adoption of this standard, the Company recorded the non-service costs of the defined benefit pension plan in the “Cost of services” line item of the Consolidated Statements of Income/(Loss). After the adoption of this standard, the Company records these costs in the “Other income, net” line item, including for the years ended December 31, 2018, 2017 and 2016. The adoption of this standard resulted in reductions to “Cost of services” and “Other income, net” of $2.4 million and $3.3 million for the years ended December 31, 2017 and 2016, respectively, from the amounts previously reported. On January 1, 2018, the Company elected to adopt an accounting pronouncement to improve the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements. The effects of the standard are recognized prospectively in the Company’s financial statements. The adoption of this standard did not have a material impact on the Company’s financial position or results of operations, but does require the addition of certain disclosures. Refer to Note 15 for additional information and the related disclosures. In the first quarter of 2018, the Company adopted a new accounting pronouncement that provides entities the option to reclassify tax effects included within accumulated other comprehensive income/(loss) as a result of the United States tax reform legislation enacted in December 2017 (the “Tax Act”) to retained earnings. The adoption of this standard resulted in an increase to “Accumulated other comprehensive loss” and a decrease to “Accumulated deficit” in the Consolidated Balance Sheet of $31.4 million, which represents the tax effects of the lower federal tax rate on unrealized gains/(losses) on investment securities, hedging activities, and adjustments related to the Company’s defined benefit pension plan, in addition to the release of deferred taxes accrued on undistributed earnings of one of the Company’s subsidiaries that are no longer owed under the Tax Act. The Company will continue to release tax effects remaining in “Accumulated other comprehensive loss” into income as the individual units of account are sold or otherwise extinguished. Refer to Note 14 for additional information. Accounting Pronouncements Not Yet Adopted In February 2016, the Financial Accounting Standards Board issued a new accounting pronouncement that requires lessees to record assets and liabilities on the balance sheet for lease-related rights and obligations and disclose key information about certain leasing arrangements. This new standard establishes a right-of-use (“ROU”) model that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases will be classified as financing or operating, with classification affecting the pattern of expense recognition in the statement of operations. The Company will adopt the new standard, including the related amendments, effective January 1, 2019 using the modified retrospective approach, applying the provisions of the new standard on its effective date. Management has completed its analysis and determined that substantially all of its leasing arrangements will be classified as operating. In June 2016, the Financial Accounting Standards Board issued a new accounting pronouncement regarding credit losses for financial instruments. The new standard requires entities to measure expected credit losses for certain financial assets held at the reporting date using a current expected credit loss model, which is based on historical experience, adjust |
Revenue
Revenue | 12 Months Ended |
Dec. 31, 2018 | |
Revenue | |
Revenue | 3. Revenue On January 1, 2018, the Company adopted a new accounting standard, as amended, regarding revenue from contracts with customers using the modified retrospective approach, which was applied to all contracts with customers. The standard requires that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company recognized the cumulative effect of initially applying the new revenue standard as an adjustment to the opening balance of “Accumulated deficit” in the Consolidated Balance Sheet, and the adoption of the new accounting standard did not have a material impact on the Company’s January 1, 2018 accumulated deficit. In accordance with the modified retrospective approach, the comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. The adoption of the new revenue standard did not have a material impact to the Company’s revenues or net income on an ongoing basis. The Company’s revenues are primarily derived from consideration paid by customers to transfer money. These revenues vary by transaction based upon channel, send and receive locations, the principal amount sent, whether the money transfer involves different send and receive currencies, the difference between the exchange rate set by the Company to the customer and the rate available in the wholesale foreign exchange market, and speed of service, as applicable. The Company also offers several other services, including foreign exchange and payment services and other bill payment services, for which revenue is impacted by similar factors. For the substantial majority of the Company’s revenues, the Company acts as the principal in transactions and reports revenue on a gross basis, as the Company controls the service at all times prior to transfer to the customer, is primarily responsible for fulfilling the customer contracts, has the risk of loss, and has the ability to establish transaction prices. Revenue is recognized net of any taxes collected from customers, which are subsequently remitted to governmental authorities. For the year ended December 31, 2018, the Company recognized $5,382.6 million in revenues from contracts with customers. There are no material upfront costs incurred to obtain contracts with customers. Under the Company’s loyalty programs, which are primarily offered in its money transfer services, the Company must fulfill loyalty program rewards earned by customers. The loyalty program redemption activity has been and continues to be insignificant to the Company’s results of operations, and the Company has immaterial contract liability balances, which primarily relate to its customer loyalty programs and other services. Contract asset balances related to customers were also immaterial as of December 31, 2018, as the Company typically receives payment of consideration from its customers prior to satisfying performance obligations under the customer contracts. In addition to revenue generated from contracts with customers, the Company recognizes revenue from other sources which are not in the scope of the new accounting standard, including the sale of derivative financial instruments and investment income generated on settlement assets primarily related to money transfer and money order services. The Company analyzes its different services individually to determine the appropriate basis for revenue recognition, as further described below. Revenues from consumer money transfers are included in the Company’s Consumer-to-Consumer segment, revenues from foreign exchange and payment services are included in the Company’s Business Solutions segment, and revenues from consumer bill payments and other services are not included in the Company’s segments and are reported as “Other.” See Note 18 for further information on the Company’s segments. Consumer Money Transfers For the Company’s money transfer services, customers agree to the Company’s terms and conditions at the time of initiating a transaction. In a money transfer, the Company has one performance obligation as the customer engages the Company to perform one integrated service which typically occurs within minutes — collect the customer’s money and make funds available for payment to a designated person in the currency requested. Therefore, the Company recognizes revenue upon completion of the following: 1) the customer’s acknowledgment of the Company’s terms and conditions and payment information has been received by the Company, 2) the Company has agreed to process the money transfer, 3) the Company has provided the customer a unique transaction identification number, and 4) funds are available to be picked up by the customer designated receiving party. The transaction price is comprised of a transaction fee and the difference between the exchange rate set by the Company to the customer and the rate available in the wholesale foreign exchange market, as applicable, both of which are readily determinable at the time the transaction is initiated. Foreign Exchange and Payment Services For the Company’s foreign exchange and payment services, customers agree to terms and conditions for all transactions, either at the time of initiating a transaction or signing a contract with the Company to provide payment services on the customer’s behalf. In the majority of the Company’s foreign exchange and payment services, the Company makes payments to the recipient to satisfy its performance obligation to the customer, and therefore, the Company recognizes revenue on foreign exchange and payment services when this performance obligation has been fulfilled. Revenues from foreign exchange and payment services are primarily comprised of the difference between the exchange rate set by the Company to the customer and the rate available in the wholesale foreign exchange market. Consumer Bill Payments The Company offers several different bill payment services that vary by considerations such as: 1) who pays the fee to the Company (consumer or biller), 2) whether the service is offered to all potential consumers, or only to those for which the Company has a relationship with the biller, and 3) whether the service utilizes a physical agent network offered for consumers’ convenience, among other factors. The determination of which party is the Company’s customer for revenue recognition purposes is based on these considerations for each of the Company’s bill payment services. For all transactions, the Company’s customers agree to the Company’s terms and conditions, either at the time of initiating a transaction (where the consumer is determined to be the customer for revenue recognition purposes) or upon signing a contract with the Company to provide services on the biller’s behalf (where the biller is determined to be the customer for revenue recognition purposes). As with consumer money transfers, customers engage the Company to perform one integrated service — collect money from the consumer and process the bill payment transaction, thereby providing the billers real-time or near real-time information regarding their customers’ payments and simplifying the billers’ collection efforts. The significant majority of the Company’s revenues from bill payment services are generated from contracts to process transactions at any time during the duration of the contract. The transaction price on bill payment services is contractual and determinable. Certain biller agreements may include per-transaction or fixed periodic rebates, which the Company records as a reduction to revenue. Management has determined that the significant majority of the Company’s revenue is recognized at a point in time. The following table represents the disaggregation of revenue earned from contracts with customers which are in the scope of the new accounting standard, by product type and region for the year ended December 31, 2018 (in millions). The regional split of revenue shown in the table below is based upon where transactions are initiated. Revenues that would have been reported under previous accounting guidance would not have been materially different from the amounts shown below: Year Ended December 31, 2018 Foreign Consumer Exchange Money and Payment Consumer Other Transfers Services Bill Payments Services Total Regions: North America $ 1,632.3 $ 97.6 $ 463.9 $ 57.4 $ 2,251.2 Europe and Russia/CIS 1,399.5 130.0 3.1 3.9 1,536.5 Middle East, Africa, and South Asia 654.4 1.5 0.3 — 656.2 Latin America and the Caribbean 393.2 3.1 152.7 13.7 562.7 East Asia and Oceania 304.6 69.9 1.5 — 376.0 Revenues from contracts with customers $ 4,384.0 $ 302.1 $ 621.5 $ 75.0 $ 5,382.6 Other revenues (a) 69.6 84.7 30.8 22.2 207.3 Total revenues (b) $ 4,453.6 $ 386.8 $ 652.3 $ 97.2 $ 5,589.9 (a) Includes revenue from the sale of derivative financial instruments, investment income generated on settlement assets primarily related to money transfer and money order services, and other sources, which are not subject to the new accounting standard. (b) Revenues from “Consumer money transfers” are included in the Company’s Consumer-to-Consumer segment, revenues from “Foreign exchange and payment services” are included in the Company’s Business Solutions segment, and revenues from “Consumer bill payments” and “Other services” are not included in the Company’s segments and are reported as “Other.” See Note 18 for further information on the Company’s segments. |
Business Transformation Expense
Business Transformation Expenses | 12 Months Ended |
Dec. 31, 2018 | |
Business Transformation Expenses | |
Business Transformation Expenses | 4. Business Transformation Expenses In the second quarter of 2016, the Company began incurring expenses related to a business transformation initiative, referred to as the WU Way. As of December 31, 2017, expenses associated with the WU Way initiative were effectively complete. Although the expenses related to the WU Way are specific to that initiative, the types of expenses related to the WU Way initiative are similar to expenses that the Company has previously incurred and can reasonably be expected to incur in the future. The following table summarizes the activity for the years ended December 31, 2018 and December 31, 2017 for the consulting service fees, severance, and other costs related to the business transformation accruals, which are included in “Accounts payable and accrued liabilities” in the Company’s Consolidated Balance Sheets as of December 31, 2018 and December 31, 2017 (in millions): Severance and Related Consulting Employee Service Fees Benefits Other Total 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 Cash payments and other (8.2) (22.5) (1.6) (32.3) Balance, December 31, 2018 $ — $ 0.7 $ — $ 0.7 (a) Expenses incurred during 2017 include a non-cash benefit for adjustments to stock compensation for awards forfeited by employees and other immaterial items. These benefits and charges have been removed from the liability balance in the table above as they do not impact the business transformation accruals. The following table presents expenses related to business transformation initiatives as reflected in the Consolidated Statements of Income/(Loss) (in millions): Year Ended December 31, 2017 2016 Cost of services $ 35.7 $ 2.5 Selling, general and administrative 58.7 17.8 Total expenses, pre-tax $ 94.4 $ 20.3 Total expenses, net of tax $ 63.3 $ 12.9 The following table summarizes the business transformation expenses incurred by reportable segment (in millions). Certain business transformation expenses, primarily consulting expenses, are not identifiable to a specific segment, and have therefore been excluded from the table below. These expenses were not allocated to the Company’s segments disclosed in Note 18. While certain of these items are identifiable to the Company’s segments, these expenses were excluded from the measurement of segment operating income provided to the Chief Operating Decision Maker (“CODM”) for purposes of assessing segment performance and decision making with respect to resource allocation: Consumer-to- Consumer Business Solutions Other Total 2017 expenses $ 30.8 $ 16.1 $ 13.6 $ 60.5 2016 expenses 2.7 0.6 0.5 3.8 |
Goodwill
Goodwill | 12 Months Ended |
Dec. 31, 2018 | |
Goodwill | |
Goodwill | 5. Goodwill Business Solutions Goodwill Impairment Charge During the year ended December 31, 2017, the Company recognized a goodwill impairment charge of $464.0 million related to its Business Solutions reporting unit, as the estimated fair value of the reporting unit declined below its carrying value. The reduction in estimated fair value primarily resulted from a decrease in projected revenue growth rates and EBITDA margins and the impact of the Tax Act. Revenue and EBITDA projections were reevaluated during the year ended December 31, 2017 due to the declines in revenues and operating results recognized in the fourth quarter of 2017, which were significantly below management’s expectations. Additionally, as disclosed in prior Annual Reports on Form 10‑K and Quarterly Reports on Form 10‑Q, the total estimated fair value of the Business Solutions reporting unit previously included value derived from strategies to optimize United States cash flow management and global liquidity by utilizing international cash balances (including balances generated by other operating segments) to initially fund global principal payouts for Business Solutions transactions initiated in the United States (“Cash Management Strategies”) that would have been available to certain market participants. However, the Tax Act, which imposed a tax on certain previously undistributed foreign earnings and established minimum taxes on certain future payments and foreign earnings, eliminated any fair value associated with the Cash Management Strategies. The Company did not record any goodwill impairments during the years ended December 31, 2018 and December 31, 2016. The Company estimated the fair value of its Business Solutions reporting unit using the income approach. The estimated fair value was derived primarily using unobservable Level 3 inputs, which require significant management judgment and estimation. Business Combinations On November 6, 2017, the Company completed the purchase of Opus Software Technologies Private Limited and the assets of its affiliate for total consideration of approximately $25.3 million. The Company believes that the acquisition has assisted and will continue to assist in enhancing and centralizing the Company’s information technology expertise through a newly established information technology development and maintenance center located in India, which was an integral part of the Company’s WU Way transformation efforts. The acquisition does not and will not impact the Company’s revenues. During the first quarter of 2018, the Company finalized the valuation of the acquisition, for which it has recognized approximately $22.0 million of goodwill. The valuation of the acquisition was derived primarily using unobservable Level 3 inputs, which require significant management judgment and estimation. The Company completed one other immaterial acquisition during the fourth quarter of 2017. The following table presents changes to goodwill for the years ended December 31, 2018 and 2017 (in millions): Consumer-to- Business Consumer Solutions Other Total January 1, 2017 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 Purchase accounting adjustments (0.3) — — (0.3) Currency translation — — (2.6) (2.6) December 31, 2018 goodwill, net $ 1,980.7 $ 532.0 $ 212.3 $ 2,725.0 The following table presents accumulated impairment losses as of December 31, 2018, 2017 and 2016 (in millions): As of December 31, 2018 2017 2016 Goodwill, gross $ 3,189.0 $ 3,191.9 $ 3,162.0 Accumulated impairment losses (464.0) (464.0) — Goodwill, net $ 2,725.0 $ 2,727.9 $ 3,162.0 |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies | |
Commitments and Contingencies | 6. Commitments and Contingencies Letters of Credit and Bank Guarantees The Company had approximately $265 million in outstanding letters of credit and bank guarantees as of December 31, 2018 that are primarily held in connection with safeguarding consumer funds, lease arrangements, and certain agent agreements. The letters of credit and bank guarantees have expiration dates through 2024 with many having a one-year renewal option. The Company expects to renew the letters of credit and bank guarantees prior to expiration in most circumstances. These letters of credit and bank guarantees exclude guarantees that the Company may provide as part of its legal matters, as described below. Litigation and Related Contingencies The Company is subject to certain claims and litigation that could result in losses, including damages, fines and/or civil penalties, which could be significant, and in some cases, criminal charges. The Company regularly evaluates the status of legal matters to assess whether a loss is probable and reasonably estimable in determining whether an accrual is appropriate. Furthermore, in determining whether disclosure is appropriate, the Company evaluates each legal matter to assess if there is at least a reasonable possibility that a loss or additional loss may have been incurred and whether an estimate of possible loss or range of loss can be made. Unless otherwise specified below, the Company believes that there is at least a reasonable possibility that a loss or additional loss may have been incurred for each of the matters described below. For those matters that the Company believes there is at least a reasonable possibility that a loss or additional loss may have been incurred and can reasonably estimate the loss or potential loss, the reasonably possible potential litigation losses in excess of the Company’s recorded liability for probable and estimable losses was approximately $80 million as of December 31, 2018. For the remaining matters, management is unable to provide a meaningful estimate of the possible loss or range of loss because, among other reasons: (a) the proceedings are in preliminary stages; (b) specific damages have not been sought; (c) damage claims are unsupported and/or unreasonable; (d) there is uncertainty as to the outcome of pending appeals or motions; (e) there are significant factual issues to be resolved; or (f) novel legal issues or unsettled legal theories are being asserted. The outcomes of legal actions are unpredictable and subject to significant uncertainties, and it is inherently difficult to determine whether any loss is probable or even possible. It is also inherently difficult to estimate the amount of any loss and there may be matters for which a loss is probable or reasonably possible but not currently estimable. Accordingly, actual losses may be in excess of the established liability or the range of reasonably possible loss. United States Department of Justice, Federal Trade Commission, Financial Crimes Enforcement Network, and State Attorneys General Settlements In late November 2016, the Company entered into discussions with the United States Department of Justice (the “DOJ”), the United States Attorney’s Office for the Central District of California (“USAO-CDCA”), the United States Attorney’s Office for the Eastern District of Pennsylvania (“USAO-EDPA”), the United States Attorney’s Office for the Middle District of Pennsylvania (“USAO-MDPA”), and the United States Attorney’s Office for the Southern District of Florida (“USAO-SDFL”) to resolve the investigations by the USAO-CDCA, USAO-EDPA, USAO-MDPA, and USAO-SDFL (collectively, the “USAOs”) (collectively, the “USAO Investigations”). On January 19, 2017, the Company announced that it, or its subsidiary Western Union Financial Services, Inc. (“WUFSI”), had entered into (1) a Deferred Prosecution Agreement (the “DPA”) with the DOJ and the USAOs; (2) a Stipulated Order for Permanent Injunction and Final Judgment (the “Consent Order”) with the United States Federal Trade Commission (“FTC”) resolving claims by the FTC alleging unfair acts and practices under the Federal Trade Commission Act and for violations of the FTC Telemarketing Sales Rule; and (3) a Consent to the Assessment of Civil Money Penalty with the Financial Crimes Enforcement Network (“FinCEN”) of the United States Department of Treasury (the “FinCEN Agreement”), to resolve the respective investigations of those agencies. FinCEN provided notice to the Company dated December 16, 2016 of its investigation regarding possible violations of the United States Bank Secrecy Act (“BSA”). On January 31, 2017, the Company entered into assurances of discontinuance/assurances of voluntary compliance with the attorneys general of 49 U.S. states and the District of Columbia named therein to resolve investigations by the state attorneys general, which sought information and documents relating to money transfers sent from the United States to certain countries, consumer fraud complaints that the Company had received and the Company’s procedures to help identify and prevent fraudulent transfers. On April 12, 2017, the Company settled with the one remaining state attorney general under effectively the same terms as the January 31, 2017 agreement with no additional monetary payment required. The agreements with the state attorneys general are collectively referred to herein as the “State AG Agreement.” The DPA, Consent Order, FinCEN Agreement, and State AG Agreement are collectively referred to herein as the “Joint Settlement Agreements.” Pursuant to the DPA, the USAOs filed a two-count criminal information in the United States District Court for the Middle District of Pennsylvania, charging the Company with aiding and abetting wire fraud and willfully failing to implement an effective anti-money laundering (“AML”) program. The USAOs agreed that if the Company fully complies with all of its obligations under the DPA, the USAOs will, at the conclusion of the DPA’s term, seek dismissal with prejudice of the criminal information filed against the Company. Under the Joint Settlement Agreements, the Company was required to (1) pay an aggregate amount of $586 million to the DOJ to be used to reimburse consumers who were the victims of third-party fraud conducted through the Company’s money transfer services (the “Compensation Payment”), (2) pay an aggregate amount of $5 million to the State Attorneys General to reimburse investigative, enforcement, and other costs, and (3) retain an independent compliance auditor for three years to review and assess actions taken by the Company under the Consent Order to further enhance its oversight of agents and protection of consumers. The FinCEN Agreement also set forth a civil penalty of $184 million, the full amount of which was deemed satisfied by the Compensation Payment, without any additional payment or non-monetary obligations. No separate payment to the FTC was required under the Joint Settlement Agreements. The Company paid the Compensation Payment and the aggregate amount due to the State Attorneys General during the first and second quarters of 2017. The Company had accrued the Compensation Payment and the aggregate amount due to the State Attorneys General in “Accounts payable and accrued liabilities” in the Company’s Consolidated Balance Sheets as of December 31, 2016. In the second quarter of 2017, pursuant to the terms of the Joint Settlement Agreements, the Company engaged an independent compliance auditor, and during the third quarter of 2017, the Company accrued an additional $8 million of expenses related to the independent compliance auditor. The Joint Settlement Agreements also require, among other things, the Company to adopt certain new or enhanced practices with respect to its compliance program relating to consumer reimbursement, agent due diligence, agent training, monitoring, reporting, and record-keeping by the Company and its agents, consumer fraud disclosures, agent suspensions and terminations, and other items. The changes in the Company’s compliance program required by the Joint Settlement Agreements will have adverse effects on the Company’s business, including additional costs and potential loss of business. The Company has faced (as described below) and could also face additional actions from other regulators as a result of the Joint Settlement Agreements. Further, if the Company fails to comply with the Joint Settlement Agreements, it could face criminal prosecution, civil litigation, significant fines, damage awards or other regulatory consequences. Any or all of these outcomes could have a material adverse effect on the Company’s business, financial condition, results of operations, and cash flows. Shareholder Derivative Actions On January 13, 2014, Natalie Gordon served the Company with a Verified Shareholder Derivative Complaint and Jury Demand that was filed in District Court, Douglas County, Colorado naming the Company’s President and Chief Executive Officer, one of its former executive officers, one of its former directors, and all but one of its current directors as individual defendants, and the Company as a nominal defendant. The complaint asserts claims for breach of fiduciary duty and gross mismanagement against all of the individual defendants and unjust enrichment against the President and Chief Executive Officer and the former executive officer based on allegations that between February 12, 2012 to October 30, 2012, the individual defendants made or caused the Company to issue false and misleading statements or failed to make adequate disclosures regarding the effects of a settlement agreement signed on February 11, 2010 between WUFSI and the State of Arizona regarding WUFSI’s AML compliance programs along the United States and Mexico border (“Southwest Border Agreement”), including regarding the anticipated costs of compliance with the Southwest Border Agreement, potential effects on business operations, and Company projections. Plaintiff also alleges that the individual defendants caused or allowed the Company to lack requisite internal controls, caused or allowed financial statements to be misstated, and caused the Company to be subject to the costs, expenses and liabilities associated with City of Taylor Police and Fire Retirement System v. The Western Union Company, et al., a lawsuit that was subsequently renamed and dismissed. Plaintiff further alleges that the Company’s President and Chief Executive Officer and the former executive officer received excessive compensation based on the allegedly inaccurate financial statements. On March 12, 2014, the Court entered an order granting the parties’ joint motion to stay proceedings in the case during the pendency of certain of the shareholder derivative actions described below. On February 13, 2019, the case was administratively closed, although the Court indicated that a motion could be filed to re-open the matter. In 2014, Stanley Lieblein, R. Andre Klein, City of Cambridge Retirement System, Mayar Fund Ltd, Louisiana Municipal Police Employees’ Retirement System, MARTA/ATU Local 732 Employees Retirement Plan, and The Police Retirement System of St. Louis filed shareholder derivative complaints in the United States District Court for the District of Colorado (or were removed to the United States District Court for the District of Colorado) naming the Company’s President and Chief Executive Officer and certain current and former directors and a former executive officer as individual defendants, and the Company as a nominal defendant. On January 5, 2015, the court entered an order consolidating the actions and appointing City of Cambridge Retirement System and MARTA/ATU Local 732 Employees Retirement Plan as co-lead plaintiffs. On February 4, 2015, co-lead plaintiffs filed a verified consolidated shareholder derivative complaint naming the Company’s President and Chief Executive Officer and nine current or former executive officers and directors as individual defendants, and the Company as a nominal defendant. The consolidated complaint asserts separate claims for breach of fiduciary duty against the director defendants and the officer defendants, claims against all of the individual defendants for violations of section 14(a) of the Securities Exchange Act of 1934 (“Exchange Act”), corporate waste and unjust enrichment, and a claim against the former executive officer for breach of fiduciary duties for insider selling and misappropriation of information. The breach of fiduciary duty claim against the director defendants includes allegations that they declined to implement an effective AML compliance system after receiving numerous red flags indicating prolonged willful illegality, obstructed the efforts of the monitor assigned to the Company pursuant to the Southwest Border Agreement to impose effective compliance systems on the Company, failed to take action in response to alleged Western Union management efforts to undermine the monitor, reappointed the same directors to the Audit Committee and Corporate Governance and Public Policy Committees constituting a majority of those committees between 2006 and 2014, appointed a majority of directors to the Compliance Committee who were directly involved in overseeing the alleged misconduct as members of the Audit Committee and the Corporate Governance and Public Policy Committee, caused the Company to materially breach the Southwest Border Agreement, caused the Company to repurchase its stock at artificially inflated prices, awarded the Company’s senior executives excessive compensation despite their responsibility for the Company’s alleged willful non-compliance with state and federal AML laws, and failed to prevent the former executive officer from misappropriating and profiting from nonpublic information when making allegedly unlawful stock sales. The breach of fiduciary duty claim against the officer defendants includes allegations that they caused the Company and allowed its agents to ignore the recording and reporting requirements of the BSA and parallel AML laws and regulations for a prolonged period of time, authorized and implemented AML policies and practices that they knew or should have known to be inadequate, caused the Company to fail to comply with the Southwest Border Agreement and refused to implement and maintain adequate internal controls. The claim for violations of section 14(a) of the Exchange Act includes allegations that the individual defendants caused the Company to issue proxy statements in 2012, 2013 and 2014 containing materially incomplete and inaccurate disclosures - in particular, by failing to disclose the extent to which the Company’s financial results depended on the non-compliance with AML requirements, the Board’s awareness of the regulatory and criminal enforcement actions in real time pursuant to the 2003 Consent Agreement with the California Department of Financial Institutions and that the directors were not curing violations and preventing misconduct, the extent to which the Board considered the flood of increasingly severe red flags in their determination to re-nominate certain directors to the Audit Committee between 2006 and 2010, and the extent to which the Board considered ongoing regulatory and criminal investigations in awarding multi-million dollar compensation packages to senior executives. The corporate waste claim includes allegations that the individual defendants paid or approved the payment of undeserved executive and director compensation based on the illegal conduct alleged in the consolidated complaint, which exposed the Company to civil liabilities and fines. The corporate waste claim also includes allegations that the individual defendants made improper statements and omissions, which forced the Company to expend resources in defending itself in City of Taylor Police and Fire Retirement System v. The Western Union Company, et al. , a lawsuit that was subsequently renamed and dismissed, authorized the repurchase of over $1.565 billion of the Company’s stock at prices they knew or recklessly were aware, were artificially inflated, failed to maintain sufficient internal controls over the Company’s marketing and sales process, failed to consider the interests of the Company and its shareholders, and failed to conduct the proper supervision. The claim for unjust enrichment includes allegations that the individual defendants derived compensation, fees and other benefits from the Company and were otherwise unjustly enriched by their wrongful acts and omissions in managing the Company. The claim for breach of fiduciary duties for insider selling and misappropriation of information includes allegations that the former executive sold Company stock while knowing material, nonpublic information that would have significantly reduced the market price of the stock. On March 16, 2015, the defendants filed a motion to dismiss the consolidated complaint. On March 31, 2016, the Court entered an order granting the defendants’ collective motion to dismiss without prejudice, denying as moot a separate motion to dismiss that was filed by the former executive officer, and staying the order for 30 days, within which plaintiffs could file an amended complaint that cured the defects noted in the order. On May 2, 2016, co-lead plaintiffs filed a verified amended consolidated shareholder derivative complaint naming the Company’s President and Chief Executive Officer, six of its current directors (including the Company’s President and Chief Executive Officer, who also serves as a director) and three of its former directors as individual defendants, and the Company as a nominal defendant. The amended complaint, among other things, drops the claims against the former executive officer named in the prior complaint, realleges and narrows the breach of fiduciary duty claims, and drops the remaining claims. On June 15, 2016, defendants filed a motion to dismiss the amended consolidated shareholder derivative complaint. On August 1, 2016, plaintiffs filed an opposition to the motion to dismiss. On September 1, 2016, defendants filed a reply brief in support of the motion to dismiss. On February 24, 2017, plaintiffs filed a motion to supplement the amended complaint with allegations relating to the DPA, the criminal information filed in the United States District Court for the Middle District of Pennsylvania, and the FTC’s January 19, 2017 Complaint for Permanent Injunctive and Other Equitable Relief and the Consent Order referenced in the United States Department of Justice, Federal Trade Commission, Financial Crimes Enforcement Network, and State Attorneys General Settlements section above. The same day, the Court granted plaintiffs’ request to supplement the complaint, ordered them to file a second amended complaint, denied without prejudice defendants’ motion to dismiss and granted defendants leave to renew the motion to dismiss. On March 17, 2017, plaintiffs filed a second amended derivative complaint. On September 29, 2017, the Court granted defendants’ motion to dismiss the second amended derivative complaint. On December 19, 2017, plaintiffs filed an appeal brief in the United States Court of Appeals for the Tenth Circuit, seeking reversal of the dismissal, to which the Company filed an opposition on February 20, 2018. Plaintiffs filed a reply brief on March 30, 2018. Due to the stages of the actions described above under “Shareholder Derivative Actions,” the Company is unable to predict the outcome, or reasonably estimate the possible loss or range of loss, if any, which could be associated with these actions. The Company and the named individuals intend to vigorously defend themselves in all of these matters. Other Matters The Company and one of its subsidiaries are defendants in two purported class action lawsuits: James P. Tennille v. The Western Union Company and Robert P. Smet v. The Western Union Company, both of which are pending in the United States District Court for the District of Colorado. The original complaints asserted claims for violation of various consumer protection laws, unjust enrichment, conversion and declaratory relief, based on allegations that the Company waits too long to inform consumers if their money transfers are not redeemed by the recipients and that the Company uses the unredeemed funds to generate income until the funds are escheated to state governments. During the fourth quarter of 2012, the parties executed a settlement agreement, which the Court preliminarily approved on January 3, 2013. On June 25, 2013, the Court entered an order certifying the class and granting final approval to the settlement. Under the approved settlement, a substantial amount of the settlement proceeds, as well as all of the class counsel’s fees, administrative fees and other expenses, would be paid from the class members’ unclaimed money transfer funds. During the final approval hearing, the Court overruled objections to the settlement that had been filed by several class members. In July 2013, two of those class members filed notices of appeal. On May 1, 2015, the United States Court of Appeals for the Tenth Circuit affirmed the District Court’s decision to overrule the objections filed by the two class members who appealed. On January 11, 2016, the United States Supreme Court denied petitions for certiorari that were filed by the two class members who appealed. On February 1, 2016, pursuant to the settlement agreement and the Court’s June 25, 2013 final approval order, Western Union deposited the class members’ unclaimed money transfer funds into a class settlement fund, from which class member claims, administrative fees and class counsel’s fees, as well as other expenses have been paid, with the remainder to go to eligible jurisdictions to which the unclaimed funds would have escheated in the absence of a settlement. On April 3, 2018, the Court entered an order creating a fund for the remainder of the unclaimed funds, which gives eligible jurisdictions one year to execute a release to receive their proportionate share of the fund. Some jurisdictions may opt not to participate in the settlement, taking the position that the Company must escheat those jurisdictions’ full share of the settlement fund and that the pro rata deductions for class counsel’s fees, administrative costs, and other expenses that are required under the settlement agreement are not permitted. In that event, there is a reasonable possibility a loss could result up to approximately the pro rata amount of those fees and other expenses. On March 12, 2014, Jason Douglas filed a purported class action complaint in the United States District Court for the Northern District of Illinois asserting a claim under the Telephone Consumer Protection Act, 47 U.S.C. § 227, et seq., based on allegations that since 2009, the Company has sent text messages to class members’ wireless telephones without their consent. During the first quarter of 2015, the Company’s insurance carrier and the plaintiff reached an agreement to create an $8.5 million settlement fund that will be used to pay all class member claims, class counsel’s fees and the costs of administering the settlement. The agreement has been signed by the parties and, on November 10, 2015, the Court granted preliminary approval to the settlement. On January 9, 2018, plaintiff filed a motion requesting decisions on its pending motion to approve the settlement and motion for attorneys’ fees, costs, and incentive award. On August 31, 2018, the Court issued an order approving the settlement, in which the Court modified the class definition slightly and ordered the parties to provide additional notice to the class. The Company accrued an amount equal to the retention under its insurance policy in previous quarters and believes that any amounts in excess of this accrual will be covered by the insurer. However, if the Company’s insurer is unable to or refuses to satisfy its obligations under the policy or the parties are unable to reach a definitive agreement or otherwise agree on a resolution, the Company’s financial condition, results of operations, and cash flows could be adversely impacted. As the parties have reached an agreement in this matter, the Company believes that the potential for additional loss in excess of amounts already accrued is remote. In October 2015, Consumidores Financieros Asociación Civil para su Defensa, an Argentinian consumer association, filed a purported class action lawsuit in Argentina’s National Commercial Court No. 19 against the Company’s subsidiary Western Union Financial Services Argentina S.R.L. (“WUFSA”). The lawsuit alleges, among other things, that WUFSA’s fees for money transfers sent from Argentina are excessive and that WUFSA does not provide consumers with adequate information about foreign exchange rates. The plaintiff is seeking, among other things, an order requiring WUFSA to reimburse consumers for the fees they paid and the foreign exchange revenue associated with money transfers sent from Argentina, plus punitive damages. The complaint does not specify a monetary value of the claim or a time period. In November 2015, the Court declared the complaint formally admissible as a class action. The notice of claim was served on WUFSA in May 2016, and in June 2016 WUFSA filed a response to the claim and moved to dismiss it on statute of limitations and standing grounds. In April 2017, the Court deferred ruling on the motion until later in the proceedings. The process for notifying potential class members has been completed and the case is currently in the evidentiary stage. Due to the stage of this matter, the Company is unable to predict the outcome or the possible loss or range of loss, if any, associated with this matter. WUFSA intends to defend itself vigorously. On February 22, 2017, the Company, its President and Chief Executive Officer, its Chief Financial Officer, and a former executive officer of the Company were named as defendants in two purported class action lawsuits, both of which asserted claims under section 10(b) of the Exchange Act and Securities and Exchange Commission rule 10b‑5 and section 20(a) of the Exchange Act. On May 3, 2017, the two cases were consolidated by the United States District Court for the District of Colorado under the caption Lawrence Henry Smallen and Laura Anne Smallen Revocable Living Trust et al. v. The Western Union Company et al. , Civil Action No. 1:17‑cv‑00474‑KLM (D. Colo.). On September 6, 2017, the Court appointed Lawrence Henry Smallen and Laura Anne Smallen Revocable Living Trust as the lead plaintiff. On November 6, 2017, the plaintiffs filed a consolidated amended complaint (“Amended Complaint”) that, among other things, added two other former executive officers as defendants, one of whom subsequently was voluntarily dismissed by the plaintiffs. The Amended Complaint asserts claims under section 10(b) of the Exchange Act and Securities and Exchange Commission rule 10b‑5 and section 20(a) of the Exchange Act, and alleges that, during the purported class period of February 24, 2012, through May 2, 2017, the defendants made false or misleading statements or failed to disclose purported adverse material facts regarding, among other things, the Company’s compliance with AML and anti-fraud regulations, the status and likely outcome of certain governmental investigations targeting the Company, the reasons behind the Company’s decisions to make certain regulatory enhancements, and the Company’s premium pricing. The defendants filed a motion to dismiss the complaint on January 16, 2018. The consolidated action is in a preliminary stage and the Company is unable to predict the outcome, or the possible loss or range of loss, if any, which could be associated with it. The Company and the individual defendants intend to vigorously defend themselves in this matter. On February 13, 2017, the Company’s subsidiary, Western Union Payment Services Ireland Limited (“WUPSIL”), was served with a writ of accusation from the National Court of Spain. The writ charges 98 former Western Union money transfer agents or agent representatives with fraud and money laundering in connection with consumer fraud scams they allegedly perpetrated using Western Union money transfer transactions. The writ also names WUPSIL as a civil defendant, allegedly responsible under Spanish law to pay any portion of the alleged amount in victim losses that cannot be repaid by any of the criminal defendants who are convicted. In accordance with Spanish law, on January 4, 2018, the Company, through its subsidiary Western Union International Limited, provided a corporate guaranty in an amount of approximately €23 million to cover any liability that could theoretically attach to WUPSIL. Due to the preliminary stage of this matter, the Company is unable to predict the outcome, or the amount of loss, if any, associated with this matter. On March 31, 2017, the Company received a request for the production of documents from the New York State Department of Financial Services (the “NYDFS”), following up on a meeting the Company had with the NYDFS on March 7, 2017. The requests pertain to the Company’s oversight of one current and two former Western Union agents located in New York state. The two former agents were identified in the DPA described in the United States Department of Justice, Federal Trade Commission, Financial Crimes Enforcement Network, and State Attorneys General Settlements section above, and were terminated as agents by the Company prior to 2013. On July 28, 2017, the NYDFS informed the Company that the facts set forth in the DPA regarding the Company’s anti-money laundering programs over the 2004 through 2012 period gave the NYDFS a basis to take additional enforcement action. On January 4, 2018, the Company’s subsidiary, WUFSI, and the NYDFS agreed to a consent order (the “NYDFS Consent Order”), which resolved the NYDFS investigation into these matters. Under the NYDFS Consent Order, the Company is required, among other things, to pay to the NYDFS a civil monetary penalty of $60 million, which the Company paid on January 12, 2018. The NYDFS Consent Order also imposes certain non-monetary obligations, including a requirement to provide to the NYDFS a remediation plan within 90 days after the date of the NYDFS Consent Order, which the Company provided on April 4, 2018. On April 26, 2018, the Company, its WUFSI subsidiary, its President and Chief Executive Officer, and various “Doe Defendants” (purportedly including Western Union officers, directors, and agents) were named as defendants in a purported class action lawsuit asserting claims for alleged violations of civil Racketeer Influenced and Corrupt Organizations Act (“RICO”) and the Colorado Organized Crime Act, civil theft, negligence, unjust enrichment, and conversion under the caption Frazier et al. v. The Western Union Company et al., Civil Action No. 1:18‑cv‑00998‑KLM (D. Colo.). The complaint alleges that, during the purported class period of January 1, 2004 to the present, and based largely on the admissions and allegations relating to the DPA, the FTC Consent Order, and the NYDFS Consent Order, the defendants engaged in a scheme to defraud customers through Western Union’s money transfer system. The plaintiffs filed an amended complaint on July 17, 2018. The amended complaint is similar to the original complaint, although it adds additional named plaintiffs and additional counts, including claims on behalf of putative California, Florida, Georgia, Illinois, and New Jersey subclasses for alleged violations of the California Unfair Competition Law, the Florida Deceptive and Unfair Trade Practices Act, the Georgia Fair Business Practices Act, the Illinois Consumer Fraud and Deceptive Business Practices Act, and the New Jersey Consumer Fraud Act. On August 28, 2018, the Company and the other defendants moved to stay the action in favor of individual arbitrations with the named plaintiffs, which defendants contend are contractually required. That motion has been fully briefed and remains pending, and the case is otherwise stayed pending a determination of that issue. The action is in a preliminary stage and the Company is unable to predict the outcome, or the possible loss or range of loss, if any, which could be associated with it. The Company and the other defendants intend to vigorously defend themselves in this matter. In addition to the principal matters described above, the Company is a party to a variety of other legal matters that arise |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2018 | |
Related Party Transactions | |
Related Party Transactions | 7. Related Party Transactions The Company has ownership interests in certain of its agents accounted for under the equity method of accounting. The Company pays these agents commissions for money transfer and other services provided on the Company’s behalf. Commission expense recognized for these agents for the years ended December 31, 2018, 2017 and 2016 totaled $57.6 million, $65.9 million, and $68.0 million, respectively. |
Investment Securities
Investment Securities | 12 Months Ended |
Dec. 31, 2018 | |
Investment Securities | |
Investment Securities | 8. Investment Securities Investment securities included in “Settlement assets” in the Company’s Consolidated Balance Sheets consist primarily of highly-rated state and municipal debt securities, including fixed rate term notes and variable rate demand notes. Variable rate demand note securities can be put (sold at par) typically on a daily basis with settlement periods ranging from the same day to one week, but have varying maturities through 2050. These securities may be used by the Company for short-term liquidity needs and held for short periods of time. The Company is required to hold highly-rated, investment grade securities and such investments are restricted to satisfy outstanding settlement obligations in accordance with applicable state and foreign country requirements. The substantial majority of the Company’s investment securities are classified as available-for-sale and recorded at fair value. Investment securities are exposed to market risk due to changes in interest rates and credit risk. Western Union regularly monitors credit risk and attempts to mitigate its exposure by investing in highly-rated securities and through investment diversification. Unrealized gains and losses on available-for-sale securities are excluded from earnings and presented as a component of accumulated other comprehensive loss, net of related deferred taxes. Proceeds from the sale and maturity of available-for-sale securities during the years ended December 31, 2018, 2017 and 2016 were $7.7 billion, $7.9 billion and $4.4 billion, respectively. Gains and losses on investments are calculated using the specific-identification method and are recognized during the period in which the investment is sold or when an investment experiences an other-than-temporary decline in value. Factors that could indicate an impairment exists include, but are not limited to: earnings performance, changes in credit rating or adverse changes in the regulatory or economic environment of the asset. If potential impairment exists, the Company assesses whether it has the intent to sell the debt security, more likely than not will be required to sell the debt security before its anticipated recovery or expects that some of the contractual cash flows will not be received. The Company had no material other-than-temporary impairments during the periods presented. The components of investment securities are as follows (in millions): Gross Gross Net Amortized Fair Unrealized Unrealized Unrealized December 31, 2018 Cost Value Gains Losses Gains/(Losses) Cash: Money market funds $ 27.0 $ 27.0 $ — $ — $ — Settlement assets: Cash and cash equivalents: Money market funds 23.9 23.9 — — — Available-for-sale securities: State and municipal debt securities (a) 963.4 962.7 6.1 (6.8) (0.7) State and municipal variable rate demand notes 168.7 168.7 — — — Corporate and other debt securities 70.0 69.5 — (0.5) (0.5) United States Treasury securities 9.9 9.7 — (0.2) (0.2) 1,212.0 1,210.6 6.1 (7.5) (1.4) Other assets: Held-to-maturity securities: Foreign corporate debt securities 32.9 32.9 — — — $ 1,295.8 $ 1,294.4 $ 6.1 $ (7.5) $ (1.4) Gross Gross Net Amortized Fair Unrealized Unrealized Unrealized December 31, 2017 Cost Value Gains Losses 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 (a) The majority of these securities are fixed rate instruments. There were no investments with a single issuer or individual securities representing greater than 10% of total investment securities as of December 31, 2018 and 2017. The following summarizes the contractual maturities of settlement-related debt securities as of December 31, 2018 (in millions): Fair Value Due within 1 year $ 128.4 Due after 1 year through 5 years 482.3 Due after 5 years through 10 years 276.0 Due after 10 years 323.9 $ 1,210.6 Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay the obligations or the Company may have the right to put the obligation prior to its contractual maturity, as with variable rate demand notes. Variable rate demand notes, having a fair value of $13.0 million and $155.7 million are included in the “Due after 5 years through 10 years” and “Due after 10 years” categories, respectively, in the table above. The held-to-maturity foreign corporate debt securities are due within 1 year. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2018 | |
Fair Value Measurements | |
Fair Value Measurements | 9. Fair Value Measurements Fair value, as defined by the relevant accounting standards, represents the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. For additional information on how the Company measures fair value, refer to Note 2. The following tables reflect assets and liabilities that were measured at fair value on a recurring basis (in millions): Assets/ Liabilities at Fair Value Measurement Using Fair December 31, 2018 Level 1 Level 2 Level 3 Value Assets: Cash: Measured at fair value through net income: Money market funds $ 27.0 $ — $ — $ 27.0 Settlement assets: Measured at fair value through net income: Money market funds 23.9 — — 23.9 Measured at fair value through other comprehensive income: State and municipal debt securities — 962.7 — 962.7 State and municipal variable rate demand notes — 168.7 — 168.7 Corporate and other debt securities — 69.5 — 69.5 United States Treasury securities 9.7 — — 9.7 Other assets: Derivatives — 245.5 — 245.5 Total assets $ 60.6 $ 1,446.4 $ — $ 1,507.0 Liabilities: Derivatives $ — $ 176.2 $ — $ 176.2 Total liabilities $ — $ 176.2 $ — $ 176.2 Assets/ Liabilities at Fair Value Measurement Using Fair December 31, 2017 Level 1 Level 2 Level 3 Value Assets: Settlement assets: Measured at fair value through other comprehensive income: 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 No non-recurring fair value adjustments were recorded during the years ended December 31, 2018 and 2017, except those associated with a goodwill impairment charge and acquisitions, as disclosed in Note 5, for which fair values were estimated primarily using unobservable Level 3 inputs, which require significant management judgment and estimation. Other Fair Value Measurements The carrying amounts for many of the Company’s financial instruments, including certain cash and cash equivalents, settlement cash and cash equivalents, and settlement receivables and settlement obligations approximate fair value due to their short maturities. The Company’s borrowings are classified as Level 2 of the valuation hierarchy, and the aggregate fair value of these borrowings was based on quotes from multiple banks and excluded the impact of related interest rate swaps. Fixed rate notes are carried in the Company’s Consolidated Balance Sheets at their original issuance values as adjusted over time to accrete that value to par, except for portions of notes hedged by these interest rate swaps, as disclosed in Note 15. As of December 31, 2018, the carrying value and fair value of the Company’s borrowings were $3,433.7 million and $3,394.6 million, respectively (see Note 16). As of December 31, 2017, the carrying value and fair value of the Company’s borrowings were $3,033.6 million and $3,146.5 million, respectively. The Company holds investments in foreign corporate debt securities that are classified as held-to-maturity securities within Level 2 of the valuation hierarchy and are recorded at amortized cost in “Other Assets” in the Company’s Consolidated Balance Sheets. As of December 31, 2018, both the carrying value and fair value of the Company’s foreign corporate debt securities were $32.9 million. As of December 31, 2017, both the carrying value and fair value of the Company’s foreign corporate debt securities were $56.2 million. |
Other Assets and Other Liabilit
Other Assets and Other Liabilities | 12 Months Ended |
Dec. 31, 2018 | |
Other Assets and Other Liabilities | |
Other Assets and Other Liabilities | 10. Other Assets and Other Liabilities The following table summarizes the components of other assets and other liabilities (in millions): December 31, 2018 2017 Other assets: Derivatives $ 245.5 $ 273.4 Prepaid expenses 101.3 120.5 Amounts advanced to agents, net of discounts 57.6 53.5 Equity method investments 31.3 29.1 Other 180.3 199.4 Total other assets $ 616.0 $ 675.9 Other liabilities: Derivatives $ 176.2 $ 263.0 Pension obligations 16.0 15.0 Other 86.9 78.8 Total other liabilities $ 279.1 $ 356.8 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2018 | |
Income Taxes | |
Income Taxes | 11. Income Taxes The components of pre-tax income, generally based on the jurisdiction of the legal entity, were as follows (in millions): Year Ended December 31, 2018 2017 2016 Domestic $ (11.4) $ (238.8) $ (546.4) Foreign 1,002.8 586.3 888.1 $ 991.4 $ 347.5 $ 341.7 For the years ended December 31, 2018, 2017 and 2016, 101%, 169% and 260% of the Company’s pre-tax income was derived from foreign sources, respectively. For the year ended December 31, 2017, domestic pre-tax loss was primarily the result of the domestic portion of the goodwill impairment charge related to the Company’s Business Solutions reporting unit, described further in Note 5, the NYDFS Consent Order accrual, as discussed in Note 6, and an increase in business transformation expenses. For the year ended December 31, 2016, domestic pre-tax loss was primarily the result of the Joint Settlement Agreements, described further in Note 6. In December 2017, the Tax Act was enacted into United States law. During the fourth quarter of 2018, the Company completed its accounting for the Tax Act’s impacts that were provisionally estimated as of December 31, 2017. The Company’s effective tax rate for the year ended December 31, 2018 increased by 2.3% due to adjustments to the accounting for the Tax Act, including the items further described below: · 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 were finalized during the fourth quarter of 2018. The Company filed its federal income tax return in October and filed all remaining state and foreign income tax returns in the fourth quarter of 2018. Additionally, the Company completed its analysis of its controlled foreign corporations. The estimated tax provision amount related to this matter was $916 million for the year ended December 31, 2017. During the year ended December 31, 2018, the Company increased this expense by $26 million, because of revised estimates for the cash and other specified assets that are subject to the higher effective tax rate specified in the Tax Act and the effects of tax liabilities and tax contingency reserves on the Company’s previously undistributed earnings of foreign subsidiaries, so that the final tax provision amount related to this matter is $942 million. · The Company recorded a provisional $87 million benefit for the year ended December 31, 2017 for the remeasurement of deferred tax assets and liabilities and other tax balances to reflect the lower federal income tax rate, among other effects. During the year ended December 31, 2018, the Company increased this provisional benefit by $5 million after further analysis of its tax liabilities, resulting in a final benefit related to this matter of $92 million. · The Company 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). 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 complexities associated with its hypothetical calculation. The amount of total outside basis differences was increased by $11 million to $265 million as the Company completed its analysis during the fourth quarter of 2018. As of December 31, 2018, the total outside basis difference with respect to foreign subsidiaries was $343 million, and the determination of the related unrecognized deferred tax liability continues to not be practicable for the same reason described above. The Tax Act is broad and complex, and the Company’s income tax expense could increase or decrease in future periods as the effects of the Tax Act are clarified through federal or state regulations, interpretations, or law changes. Changes or clarifications in the interpretation of the Tax Act or other legislative proposals or amendments could have a significant effect on the Company’s income tax expense in future periods. Furthermore, the effect of the Tax Act on state income taxes, including how the tax on certain previously undistributed earnings of foreign subsidiaries will be interpreted by the states and how states will apply forward-looking provisions of the Tax Act, are currently unclear and subject to potential changes affecting both the amount of state taxes and the remeasurement of the Company’s deferred tax assets and liabilities and other tax balances. The provision for income taxes was as follows (in millions): Year Ended December 31, 2018 2017 2016 Federal $ 62.9 $ 848.5 $ 43.5 State and local 0.6 5.4 2.9 Foreign 76.0 50.7 42.1 $ 139.5 $ 904.6 $ 88.5 No tax benefit was recorded in either 2017 for the $60 million NYDFS Consent Order accrual or in 2016 for the $586 million Compensation Payment resulting from the Joint Settlement Agreements. Additionally, in 2017, a domestic one-time tax was imposed under the Tax Act on the Company’s previously undistributed earnings of foreign subsidiaries, with certain exceptions. In addition, certain portions of the Company’s foreign source income are subject to ongoing United States federal and state income tax as earned due to the nature of the income, and dividend repatriations of the Company’s foreign source income may be subject to state income tax. Accordingly, the percentage obtained by dividing the total federal, state and local tax provision by the domestic pre-tax income, all as shown in the preceding tables, is higher than the statutory tax rates in the United States. The Company’s effective tax rates differed from statutory rates as follows: Year Ended December 31, 2018 2017 2016 Federal statutory rate 21.0 % 35.0 % 35.0 % State income taxes, net of federal income tax benefits 0.4 % 1.7 % 1.2 % Foreign rate differential, net of United States tax paid on foreign earnings (4.9%, 1.1% and 24.8%, respectively) (8.2) % (69.3) % (50.8) % Tax Act impact 2.3 % 251.5 % — % Joint Settlement Agreements impact — % — % 62.1 % NYDFS Consent Order impact — % 6.0 % — % Goodwill impairment — % 46.7 % — % Base erosion anti-abuse tax (BEAT) 3.0 % — % — % Lapse of statute of limitations (2.2) % (10.0) % (11.3) % Valuation allowances % 0.8 % (2.8) % Other (2.2) % (2.1) % (7.5) % Effective tax rate 14.1 % 260.3 % 25.9 % The decrease in the Company’s effective tax rate for the year ended December 31, 2018 is due to the enactment of the Tax Act into United States law in December 2017 which significantly impacted the Company’s effective tax rate for the year ended December 31, 2017, primarily due to a tax on certain previously undistributed earnings of foreign subsidiaries, partially offset by the remeasurement of the Company’s deferred tax assets and liabilities and other tax balances to reflect the lower federal income tax rate, among other effects, as discussed above. The Company’s effective tax rate for year ended December 31, 2018 compared to 2017 was also impacted by the goodwill impairment in the Company’s Business Solutions reporting unit and the NYDFS Consent Order accrual, both recorded during 2017. The increase in the Company’s effective tax rate for the year ended December 31, 2017 compared to 2016 was primarily due to the enactment of the Tax Act into United States law in December 2017, as described above. The Company’s effective tax rate for year ended December 31, 2017 compared to 2016 was also impacted by the goodwill impairment in the Company’s Business Solutions reporting unit and the NYDFS Consent Order accrual, both recorded in 2017, and the Joint Settlement Agreements recorded during 2016. The Company’s provision for income taxes consisted of the following components (in millions): Year Ended December 31, 2018 2017 2016 Current: Federal $ 69.2 $ 774.4 $ 186.2 State and local 0.0 1.0 13.1 Foreign 85.4 59.7 63.4 Total current taxes 154.6 835.1 262.7 Deferred: Federal (6.3) 74.1 (142.7) State and local 0.6 4.4 (10.2) Foreign (9.4) (9.0) (21.3) Total deferred taxes (15.1) 69.5 (174.2) $ 139.5 $ 904.6 $ 88.5 Deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the book and tax bases of the Company’s assets and liabilities. The following table outlines the principal components of deferred tax items (in millions): December 31, 2018 2017 Deferred tax assets related to: Reserves, accrued expenses and employee-related items $ 42.6 $ 44.8 Tax attribute carryovers 29.9 27.1 Pension obligations 4.8 4.6 Intangibles, property and equipment 8.5 11.9 Other 5.3 10.7 Valuation allowance (15.7) (19.9) Total deferred tax assets 75.4 79.2 Deferred tax liabilities related to: Intangibles, property and equipment 228.0 239.4 Other — 0.9 Total deferred tax liabilities 228.0 240.3 Net deferred tax liability (a) $ 152.6 $ 161.1 (a) As of December 31, 2018 and 2017, deferred tax assets that cannot be fully offset by deferred tax liabilities in the respective tax jurisdictions of $8.5 million and $11.9 million, respectively, are reflected in “Other assets” in the Consolidated Balance Sheets. The valuation allowances are primarily the result of uncertainties regarding the Company’s ability to recognize tax benefits associated with certain United States foreign tax credit carryforwards and certain foreign and state net operating losses. Such uncertainties include generating sufficient United States foreign tax credit limitation related to passive income and generating sufficient income. Changes in circumstances, or the identification and implementation of relevant tax planning strategies, could make it foreseeable that the Company will recover these deferred tax assets in the future, which could lead to a reversal of these valuation allowances and a reduction in income tax expense. Uncertain Tax Positions The Company has established contingency reserves for a variety of material, known tax exposures. As of December 31, 2018, the total amount of tax contingency reserves was $306.8 million, including accrued interest and penalties, net of related items. The Company’s tax reserves reflect management’s judgment as to the resolution of the issues involved if subject to judicial review or other settlement. While the Company believes its reserves are adequate to cover reasonably expected tax risks, there can be no assurance that, in all instances, an issue raised by a tax authority will be resolved at a financial cost that does not exceed its related reserve. With respect to these reserves, the Company’s income tax expense would include (i) any changes in tax reserves arising from material changes during the period in the facts and circumstances (i.e., new information) surrounding a tax issue and (ii) any difference from the Company’s tax position as recorded in the financial statements and the final resolution of a tax issue during the period. Such resolution could materially increase or decrease income tax expense in the Company’s consolidated financial statements in future periods and could impact operating cash flows. Unrecognized tax benefits represent the aggregate tax effect of differences between tax return positions and the amounts otherwise recognized in the Company’s consolidated financial statements, and are reflected in “Income taxes payable” in the Consolidated Balance Sheets. A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding interest and penalties, is as follows (in millions): 2018 2017 Balance as of January 1, $ 329.0 $ 352.0 Increase related to current period tax positions (a) 4.0 9.0 Increase related to prior period tax positions 0.4 — Decrease related to prior period tax positions (18.5) (19.8) Decrease due to lapse of applicable statute of limitations (17.7) (14.0) Increase/(decrease) due to effects of foreign currency exchange rates (2.2) 1.8 Balance as of December 31, $ 295.0 $ 329.0 (a) Includes recurring accruals for issues which initially arose in previous periods. The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate was $284.2 million and $319.6 million as of December 31, 2018 and 2017, respectively, excluding interest and penalties. The Company recognizes interest and penalties with respect to unrecognized tax benefits in “Provision for income taxes” in its Consolidated Statements of Income/(Loss), and records the associated liability in “Income taxes payable” in its Consolidated Balance Sheets. The Company recognized $(0.7) million, $2.2 million and $(0.2) million in interest and penalties during the years ended December 31, 2018, 2017 and 2016, respectively. The Company has accrued $23.9 million and $25.4 million for the payment of interest and penalties as of December 31, 2018 and 2017, respectively. The unrecognized tax benefits accrual as of December 31, 2018 consists of federal, state and foreign tax matters. It is reasonably possible that the Company’s total unrecognized tax benefits will decrease by approximately $8 million during the next 12 months in connection with various matters which may be resolved. The Company and its subsidiaries file tax returns for the United States, for multiple states and localities, and for various non-United States jurisdictions, and the Company has identified the United States as its major tax jurisdiction, as the income tax imposed by any one foreign country is not material to the Company. The Company’s United States federal income tax returns since 2015 are eligible to be examined. The United States Internal Revenue Service (“IRS”) completed its examination of the 2003 and 2004 United States federal consolidated income tax returns of First Data Corporation (“First Data”), from which the Company was spun out in September 2006, and issued a Notice of Deficiency in December 2008. In December 2011, the Company reached an agreement with the IRS resolving substantially all of the issues related to the Company’s restructuring of its international operations in 2003 (“IRS Agreement”). The Company has made payments related to the IRS Agreement in years prior to 2018, with a substantial majority of these payments in the year ended December 31, 2012. During the year ended December 31, 2018, the Company made cash payments under the IRS Agreement of approximately $120 million, including accrued interest and net of related tax benefits. The IRS completed its examination of the United States federal consolidated income tax returns of First Data, which include the Company’s 2005 and pre-spin-off 2006 taxable periods and issued its report on October 31, 2012 (“FDC 30‑Day Letter”). Furthermore, the IRS completed its examination of the Company’s United States federal consolidated income tax returns for the 2006 post-spin-off period through 2009 and issued its report also on October 31, 2012 (“WU 30‑Day Letter”). Both the FDC 30‑Day Letter and the WU 30‑Day Letter propose tax adjustments affecting the Company, some of which are agreed and some of which are unagreed. Both First Data and the Company filed their respective protests with the IRS Appeals Division on November 28, 2012 related to the unagreed proposed adjustments. During the year ended December 31, 2016, the Company reached an agreement in principle with the IRS concerning its unagreed adjustments and adjusted its reserves accordingly. The Company concluded these matters during the year ended December 31, 2018 with no further adjustments to its reserves. |
Employee Benefit Plans
Employee Benefit Plans | 12 Months Ended |
Dec. 31, 2018 | |
Employee Benefit Plans | |
Employee Benefit Plans | 12. Employee Benefit Plans Defined Contribution Plans The Company administers several defined contribution plans in various countries globally, including The Western Union Company Incentive Savings Plan (the “401(k)”), which covers eligible employees on the United States payroll. Such plans have vesting and employer contribution provisions that vary by country. In addition, the Company sponsors a non-qualified deferred compensation plan for a select group of highly compensated United States employees. The plan provides tax-deferred contributions and the restoration of Company matching contributions otherwise limited under the 401(k). The aggregate amount charged to expense in connection with all of the above plans was $20.0 million, $19.2 million, and $17.8 million during the years ended December 31, 2018, 2017 and 2016, respectively. Defined Benefit Plan The Company has a frozen defined benefit pension plan (the “Plan”) and recognizes its funded status, measured as the difference between the fair value of the plan assets and the projected benefit obligation, in “Other liabilities” in the Consolidated Balance Sheets. Plan assets, which are managed in a third-party trust, primarily consist of a diversified blend of approximately 60% fixed income, 20% equity investments, and 20% alternative investments (e.g., hedge funds, royalty rights and private equity funds) and had a total fair value of $234.8 million and $271.7 million as of December 31, 2018 and 2017, respectively. The significant majority of plan assets fall within either Level 1 or Level 2 of the fair value hierarchy or are valued at net asset value, which is not quoted on an active market; however, the unit price is based on underlying investments which are traded on an active market. The benefit obligation associated with the Plan will vary over time only as a result of changes in market interest rates, the life expectancy of the plan participants, and benefit payments, since the accrual of benefits was suspended when the Plan was frozen in 1988. The benefit obligation was $250.8 million and $286.7 million, and the discount rate assumption used in the measurement of this obligation was 3.79% and 3.11% as of December 31, 2018 and 2017, respectively. The Company’s unfunded pension obligation was $16.0 million and $15.0 million as of December 31, 2018 and 2017, respectively. The net periodic benefit cost associated with the Plan was $3.3 million, $2.4 million, and $3.3 million for the years ended December 31, 2018, 2017 and 2016, respectively. The expected long-term return on plan assets assumption is 6.50% for 2019. The Company made no contributions to the Plan for both the years ended December 31, 2018 and 2017. No funding to the Plan will be required for 2019. The estimated undiscounted future benefit payments are expected to be $29.6 million in 2019, $27.8 million in 2020, $26.1 million in 2021, $24.3 million in 2022, $22.6 million in 2023, and $89.4 million in 2024 through 2028. |
Operating Lease Commitments
Operating Lease Commitments | 12 Months Ended |
Dec. 31, 2018 | |
Operating Lease Commitments | |
Operating Lease Commitments | 13. Operating Lease Commitments The Company leases certain real properties for use as administrative and sales offices, including the Company’s corporate headquarters. The Company also leases automobiles and office equipment. Certain of these leases contain renewal options and escalation provisions. Total rent expense under operating leases, net of sublease income, was $59.5 million, $51.1 million and $46.2 million during the years ended December 31, 2018, 2017 and 2016, respectively. As of December 31, 2018, the minimum aggregate rental commitments under all non-cancelable operating leases were as follows (in millions): Year Ending December 31, 2019 $ 51.6 2020 44.1 2021 35.4 2022 31.4 2023 25.2 Thereafter 112.6 Total future minimum lease payments $ 300.3 |
Stockholders' Equity_(Deficit)
Stockholders' Equity/(Deficit) | 12 Months Ended |
Dec. 31, 2018 | |
Stockholders’ Equity/(Deficit) | |
Stockholders' Equity/(Deficit) | 14. Stockholders’ Equity/(Deficit) Accumulated other comprehensive loss Accumulated other comprehensive loss includes all changes in equity during a period that have yet to be recognized in income, except those resulting from transactions with shareholders. The major components include unrealized gains and losses on investment securities, unrealized gains and losses from cash flow hedging activities, foreign currency translation adjustments and defined benefit pension plan adjustments. Unrealized gains and losses on investment securities that are available for sale, primarily state and municipal debt securities, are included in “Accumulated other comprehensive loss” until the investment is either sold or deemed other-than-temporarily impaired. See Note 8 for further discussion. The effective portion of the change in fair value of derivatives that qualify as cash flow hedges are recorded in “Accumulated other comprehensive loss.” Generally, amounts are recognized in income when the related forecasted transaction affects earnings. See Note 15 for further discussion. The assets and liabilities of foreign subsidiaries whose functional currency is not the United States dollar are translated using the appropriate exchange rate as of the end of the year. Foreign currency translation adjustments represent unrealized gains and losses on assets and liabilities arising from the difference in the foreign country currency compared to the United States dollar. These gains and losses are accumulated in other comprehensive income/(loss). When a foreign subsidiary is substantially liquidated, the cumulative translation gain or loss is removed from “Accumulated other comprehensive loss” and is recognized as a component of the gain or loss on the sale of the subsidiary. The defined benefit pension plan adjustment is recognized for the difference between estimated assumptions (e.g., asset returns, discount rates, mortality) and actual results. The amount in “Accumulated other comprehensive loss” is amortized to income over the remaining life expectancy of the plan participants. Details of the pension plan’s assets and obligations are explained further in Note 12. The following table summarizes the components of accumulated other comprehensive loss, net of tax (in millions). All amounts reclassified from accumulated other comprehensive loss affect the line items as indicated below within the Consolidated Statements of Income/(Loss). Additionally, as described in Note 2, in the first quarter of 2018, the Company adopted a new accounting pronouncement and reclassified tax effects included within accumulated other comprehensive income/(loss) as a result of the Tax Act to “Accumulated deficit” in the Consolidated Balance Sheet. Year Ended December 31, 2018 2017 2016 Unrealized gains/(losses) on investment securities, beginning of year $ 2.7 $ (3.8) $ 7.8 Unrealized gains/(losses) (5.9) 12.6 (14.9) Tax (expense)/benefit 1.3 (4.6) 5.4 Reclassification of (gains)/losses into "Revenues" 0.4 (2.4) (3.3) Tax expense/(benefit) related to reclassifications (0.1) 0.9 1.2 Net unrealized gains/(losses) on investment securities (4.3) 6.5 (11.6) Reclassification of Tax Act effects into "Accumulated deficit" (Note 2) 0.5 — — Unrealized gains/(losses) on investment securities, end of year $ (1.1) $ 2.7 $ (3.8) Unrealized gain/(losses) on hedging activities, beginning of year $ (40.6) $ 33.8 $ 41.4 Unrealized gains/(losses) 35.6 (73.9) 34.3 Tax (expense)/benefit (1.6) 2.2 1.0 Reclassification of (gains)/losses into "Revenues" 14.9 (4.8) (48.0) Reclassification of losses into "Interest expense" 2.1 3.3 3.6 Tax expense/(benefit) related to reclassifications (0.7) (1.2) 1.5 Net unrealized gains/(losses) on hedging activities 50.3 (74.4) (7.6) Reclassification of Tax Act effects into "Accumulated deficit" (Note 2) (2.3) — — Unrealized gains/(losses) on hedging activities, end of year $ 7.4 $ (40.6) $ 33.8 Foreign currency translation adjustments, beginning of year $ (76.9) $ (70.7) $ (66.0) Foreign currency translation adjustments (19.5) (6.8) (5.4) Tax benefit — 0.6 0.7 Net foreign currency translation adjustments (19.5) (6.2) (4.7) Reclassification of Tax Act effects into "Accumulated deficit" (Note 2) (4.8) — — Foreign currency translation adjustments, end of year $ (101.2) $ (76.9) $ (70.7) Defined benefit pension plan adjustments, beginning of year $ (113.1) $ (122.1) $ (127.1) Unrealized gains/(losses) (9.3) 2.3 (2.9) Tax (expense)/benefit 2.0 (0.5) 1.1 Reclassification of losses into "Other income, net" 11.7 11.3 10.7 Tax benefit related to reclassifications (2.6) (4.1) (3.9) Net defined benefit pension plan adjustments 1.8 9.0 5.0 Reclassification of Tax Act effects into "Accumulated deficit" (Note 2) (24.8) — — Defined benefit pension plan adjustments, end of year $ (136.1) $ (113.1) $ (122.1) Accumulated other comprehensive loss, end of year $ (231.0) $ (227.9) $ (162.8) Cash Dividends Paid Cash dividends paid for the years ended December 31, 2018, 2017 and 2016, were $341.7 million, $325.6 million and $312.2 million, respectively. Dividends per share declared quarterly by the Company’s Board of Directors during the years ended 2018, 2017 and 2016 were as follows: Year Q1 Q2 Q3 Q4 2018 $ 0.19 $ 0.19 $ 0.19 $ 0.19 2017 $ 0.175 $ 0.175 $ 0.175 $ 0.175 2016 $ 0.16 $ 0.16 $ 0.16 $ 0.16 On February 7, 2019, the Company’s Board of Directors declared a quarterly cash dividend of $0.20 per common share payable on March 29, 2019. Share Repurchases During the years ended December 31, 2018, 2017 and 2016, 20.2 million, 24.9 million and 24.8 million shares, respectively, have been repurchased for $399.2 million, $487.0 million and $481.3 million, respectively, excluding commissions, at an average cost of $19.81, $19.55 and $19.41 per share, respectively. These amounts represent shares authorized by the Board of Directors for repurchase under the publicly announced authorizations. As of December 31, 2018, $544.2 million remained available under the share repurchase authorization approved by the Company’s Board of Directors through December 31, 2019. The amounts included in the “Common stock repurchased” line in the Company’s Consolidated Statements of Cash Flows represent both shares authorized by the Board of Directors for repurchase under the publicly announced authorization, described earlier, as well as shares withheld from employees to cover tax withholding obligations on restricted stock units that have vested. |
Derivatives
Derivatives | 12 Months Ended |
Dec. 31, 2018 | |
Derivatives | |
Derivatives | 15. Derivatives The Company is exposed to foreign currency exchange risk resulting from fluctuations in exchange rates, primarily the euro, and to a lesser degree the British pound, Canadian dollar, Australian dollar, Japanese yen, and other currencies, related to forecasted revenues and on settlement assets and obligations as well as on certain foreign currency denominated cash and other asset and liability positions. The Company is also exposed to risk from derivative contracts, primarily from customer derivatives, arising from its cross-currency Business Solutions payments operations. Additionally, the Company is exposed to interest rate risk related to changes in market rates both prior to and subsequent to the issuance of debt. The Company uses derivatives to (a) minimize its exposures related to changes in foreign currency exchange rates and interest rates and (b) facilitate cross-currency Business Solutions payments by writing derivatives to customers. The Company executes derivatives with established financial institutions, with the substantial majority of these financial institutions having credit ratings of “A-” or better from a major credit rating agency. The Company also writes Business Solutions derivatives mostly with small and medium size enterprises. The primary credit risk inherent in derivative agreements represents the possibility that a loss may occur from the nonperformance of a counterparty to the agreements. The Company performs a review of the credit risk of these counterparties at the inception of the contract and on an ongoing basis. The Company also monitors the concentration of its contracts with any individual counterparty. The Company anticipates that the counterparties will be able to fully satisfy their obligations under the agreements, but takes action when doubt arises about the counterparties’ ability to perform. These actions may include requiring Business Solutions customers to post or increase collateral, and for all counterparties, the possible termination of the related contracts. The Company’s hedged foreign currency exposures are in liquid currencies; consequently, there is minimal risk that appropriate derivatives to maintain the hedging program would not be available in the future. Foreign Currency Derivatives The Company’s policy is to use longer-term foreign currency forward contracts, with maturities of up to 36 months at inception and a targeted weighted-average maturity of approximately one year, to help mitigate some of the risk that changes in foreign currency exchange rates compared to the United States dollar could have on forecasted revenues denominated in other currencies related to its business. As of December 31, 2018, the Company’s longer-term foreign currency forward contracts had maturities of a maximum of 24 months with a weighted-average maturity of approximately one year. These contracts are accounted for as cash flow hedges of forecasted revenue, with effectiveness assessed based on changes in the spot rate of the affected currencies during the period of designation and thus time value is excluded from the assessment of effectiveness. As discussed in Note 2, the Company early adopted an accounting pronouncement related to hedging activities as of January 1, 2018. As a result of the new accounting pronouncement, for foreign currency cash flow hedges entered into on or after January 1, 2018, the Company excludes time value from the assessment of effectiveness, and the initial value of the excluded components is amortized into “Revenues” within the Company’s Consolidated Statements of Income/(Loss). For foreign currency cash flow hedges entered into before January 1, 2018, all changes in the fair value of the excluded components are recognized immediately in “Revenues” for the year ended December 31, 2018. For the years ended December 31, 2017 and 2016, the changes in fair value of the excluded components were recognized immediately within the Company’s Consolidated Statements of Income/(Loss) and are included in “Other income, net.” The Company also uses short duration foreign currency forward contracts, generally with maturities from a few days up to one month, to offset foreign exchange rate fluctuations on settlement assets and obligations between initiation and settlement. In addition, forward contracts, typically with maturities of less than one year at inception, are utilized to offset foreign exchange rate fluctuations on certain foreign currency denominated cash and other asset and liability positions. None of these contracts are designated as accounting hedges. The aggregate equivalent United States dollar notional amounts of foreign currency forward contracts as of December 31, 2018 were as follows (in millions): Contracts designated as hedges: Euro $ 364.7 Canadian dollar 97.1 British pound 76.4 Australian dollar 45.3 Japanese Yen 25.2 Other 50.1 Contracts not designated as hedges: Euro $ 274.4 British pound 81.5 Canadian dollar 46.0 Australian dollar 39.0 Indian rupee 37.2 Brazilian real 35.8 Japanese Yen 34.3 Mexican peso 34.2 Other (a) 138.5 (a) Comprised of exposures to 23 different currencies. None of these individual currency exposures is greater than $25 million. Business Solutions Operations The Company writes derivatives, primarily foreign currency forward contracts and option contracts, mostly with small and medium size enterprises and derives a currency spread from this activity as part of its Business Solutions operations. The Company aggregates its Business Solutions foreign currency exposures arising from customer contracts, including the derivative contracts described above, and hedges the resulting net currency risks by entering into offsetting contracts with established financial institution counterparties (economic hedge contracts). The derivatives written are part of the broader portfolio of foreign currency positions arising from the Company’s cross-currency payments operations, which primarily include spot exchanges of currency in addition to forwards and options. Foreign exchange revenues from the total portfolio of positions were $342.3 million, $341.0 million, and $352.6 million for the years ended December 31, 2018, 2017 and 2016, respectively. None of the derivative contracts used in Business Solutions operations are designated as accounting hedges. The duration of these derivative contracts at inception is generally less than one year. The aggregate equivalent United States dollar notional amount of derivative customer contracts held by the Company in its Business Solutions operations as of December 31, 2018 was approximately $6.0 billion. The significant majority of customer contracts are written in major currencies such as the United States dollar, euro, and Canadian dollar. Interest Rate Hedging The Company utilizes interest rate swaps to effectively change the interest rate payments on a portion of its notes from fixed-rate payments to short-term LIBOR-based variable rate payments in order to manage its overall exposure to interest rates. The Company designates these derivatives as fair value hedges. The change in fair value of the interest rate swaps is offset by a change in the carrying value of the debt being hedged within “Borrowings” in the Consolidated Balance Sheets and “Interest expense” in the Consolidated Statements of Income/(Loss) has been adjusted to include the effects of interest accrued on the swaps. The Company held interest rate swaps in an aggregate notional amount of $175.0 million as of December 31, 2018 related to notes due in 2020. Balance Sheet The following table summarizes the fair value of derivatives reported in the Consolidated Balance Sheets as of December 31, 2018 and December 31, 2017 (in millions): Derivative Assets Derivative Liabilities Fair Value Fair Value Balance Sheet December 31, December 31, Balance Sheet December 31, December 31, Location 2018 2017 Location 2018 2017 Derivatives — hedges: Interest rate fair value hedges Other assets $ 0.1 $ 3.3 Other liabilities $ — $ — Foreign currency cash flow hedges Other assets 28.6 8.0 Other liabilities 2.8 36.1 Total $ 28.7 $ 11.3 $ 2.8 $ 36.1 Derivatives — undesignated: Business Solutions operations — foreign currency (a) Other assets $ 214.2 $ 260.2 Other liabilities $ 170.9 $ 221.6 Foreign currency Other assets 2.6 1.9 Other liabilities 2.5 5.3 Total $ 216.8 $ 262.1 $ 173.4 $ 226.9 Total derivatives $ 245.5 $ 273.4 $ 176.2 $ 263.0 (a) In many circumstances, the Company allows its Business Solutions customers to settle part or all of their derivative contracts prior to maturity. However, the offsetting positions originally entered into with financial institution counterparties do not allow for similar settlement. To mitigate this, additional foreign currency contracts are entered into with financial institution counterparties to offset the original economic hedge contracts. This frequently results in changes in the Company’s derivative assets and liabilities that may not directly align to the growth in the underlying derivatives business. The fair values of derivative assets and liabilities associated with contracts that include netting language that the Company believes to be enforceable have been netted in the following tables to present the Company’s net exposure with these counterparties. The Company’s rights under these agreements generally allow for transactions to be settled on a net basis, including upon early termination, which could occur upon the counterparty’s default, a change in control, or other conditions. In addition, certain of the Company’s other agreements include netting provisions, the enforceability of which may vary from jurisdiction to jurisdiction and depending on the circumstances. Due to the uncertainty related to the enforceability of these provisions, the derivative balances associated with these agreements are included within “Derivatives that are not or may not be subject to master netting arrangement or similar agreement” in the following tables. In certain circumstances, the Company may require its Business Solutions customers to maintain collateral balances which may mitigate the risk associated with potential customer defaults. The following tables summarize the gross and net fair value of derivative assets and liabilities as of December 31, 2018 and December 31, 2017 (in millions): Offsetting of Derivative Assets Gross Net Amounts Derivatives Gross Amounts Presented Not Offset Amounts of Offset in the in the in the Recognized Consolidated Consolidated Consolidated December 31, 2018 Assets Balance Sheets Balance Sheets Balance Sheets Net Amounts Derivatives subject to a master netting arrangement or similar agreement $ 162.6 $ — $ 162.6 $ (95.7) $ 66.9 Derivatives that are not or may not be subject to master netting arrangement or similar agreement 82.9 Total $ 245.5 December 31, 2017 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 Offsetting of Derivative Liabilities Gross Net Amounts Derivatives Gross Amounts Presented Not Offset Amounts of Offset in the in the in the Recognized Consolidated Consolidated Consolidated December 31, 2018 Liabilities Balance Sheets Balance Sheets Balance Sheets Net Amounts Derivatives subject to a master netting arrangement or similar agreement $ 104.1 $ — $ 104.1 $ (95.7) $ 8.4 Derivatives that are not or may not be subject to master netting arrangement or similar agreement 72.1 Total $ 176.2 December 31, 2017 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 Income Statement The following tables summarize the location and amount of gains and losses of derivatives in the Consolidated Statements of Income/(Loss) segregated by designated, qualifying hedging instruments and those that are not, for the years ended December 31, 2018, 2017, and 2016 (in millions): Cash Flow and Fair Value Hedges The following table presents the amount of gains/(losses) recognized in other comprehensive income/(loss) from cash flow hedges for the years ended December 31, 2018, 2017, and 2016 (in millions): Amount of Gain/(Loss) Recognized in Other Comprehensive Income/(Loss) on Derivatives Derivatives 2018 2017 2016 Cash Flow Hedges: Foreign currency contracts (a) $ 35.6 $ (73.9) $ 34.3 The following table presents the location and amount of gains/(losses) from fair value and cash flow hedges for the years ended December 31, 2018, 2017, and 2016 (in millions): Location and Amount of Gain/(Loss) Recognized in Income on Fair Value and Cash Flow Hedging Relationships December 31, 2018 December 31, 2017 December 31, 2016 Other Other Other Interest income, Interest income, Interest income, Revenues Expense net Revenues Expense net Revenues Expense net Total amounts presented in the consolidated statements of income/(loss) in which the effects of fair value or cash flow hedges are recorded $ 5,589.9 $ (149.6) $ 14.1 $ 5,524.3 $ (142.1) $ 8.9 $ 5,422.9 $ (152.5) $ 3.7 The effects of fair value and cash flow hedging: Gain/(loss) on fair value hedges: Interest rate contracts: Hedged items — 0.6 — — 3.9 — — 3.2 — Derivatives designated as hedging instruments — (1.6) — — (2.0) — — 6.2 — Gain/(loss) on cash flow hedges: Foreign exchange contracts: Amount of gain/(loss) reclassified from accumulated other comprehensive loss into income (14.9) — — 4.8 — — 48.0 — — Amount excluded from effectiveness testing recognized in earnings based on an amortization approach 4.3 — — — — — — — — Amount excluded from effectiveness testing recognized in earnings based on changes in fair value 7.5 — — — — 9.0 — — 3.7 Amount of gain/(loss) reclassified from accumulated other comprehensive loss into income as a result that a forecasted transaction is no longer probable of occurring — — — — — (1.4) — — — Undesignated Hedges The following table presents the location and amount of net gains/(losses) from undesignated hedges for the years ended December 31, 2018, 2017, and 2016 (in millions): Gain/(Loss) Recognized in Income on Derivatives (b) Income Statement Location Amount Derivatives 2018 2017 2016 Foreign currency contracts (c) Selling, general and administrative $ 58.6 $ (20.5) $ 13.2 Foreign currency contracts (d) Revenues 3.0 — — Foreign currency contracts (d) Other income, net (1.8) (0.5) 0.8 Total gain/(loss) $ 59.8 $ (21.0) $ 14.0 (a) For the year ended December 31, 2018, gains of $0.1 million represent the amounts excluded from the assessment of effectiveness that were recognized in other comprehensive income, for which an amortization approach is applied. For the years ended December 31, 2017 and 2016, there were no amounts recorded in other comprehensive income for amounts excluded from the measurement of effectiveness. (b) 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. (c) 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 $(52.3) million, $17.5 million, and $(21.4) million for the years ended 2018, 2017, and 2016, respectively. (d) All derivative contracts executed in the Company’s revenue hedging program prior to January 1, 2018 are not designated as hedges in the final month of the contract. The change in fair value in this final month was recorded to “Revenues” for the year ended December 31, 2018 and “Other income, net” for the years ended December 31, 2017 and 2016. The amount recorded to “Other income, net” for the year ended December 31, 2018 relates to losses on certain undesignated foreign currency derivative contracts that were recognized after the Company determined that certain forecasted transactions were no longer probable of occurring. All cash flows associated with derivatives are included in cash flows from operating activities in the Consolidated Statements of Cash Flows. An accumulated other comprehensive pre-tax gain of $9.7 million related to the foreign currency forward contracts is expected to be reclassified into revenue within the next 12 months as of December 31, 2018. |
Borrowings
Borrowings | 12 Months Ended |
Dec. 31, 2017 | |
Borrowings | |
Borrowings | 16. Borrowings The Company’s outstanding borrowings consisted of the following (in millions): December 31, 2018 December 31, 2017 Commercial paper $ 125.0 $ — Notes: 3.650% notes due 2018 (a) — 400.0 3.350% notes due 2019 (b) 250.0 250.0 Floating rate notes (effective rate of 3.7%) due 2019 250.0 250.0 5.253% notes (effective rate of 5.9%) due 2020 324.9 324.9 3.600% notes due 2022 (b) 500.0 500.0 4.250% notes (effective rate of 4.5%) due 2023 (c) 300.0 — 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 3.8%) (d) 950.0 575.0 Total borrowings at par value 3,449.9 3,049.9 Fair value hedge accounting adjustments, net (e) (0.1) 0.5 Debt issuance costs and unamortized discount, net (16.1) (16.8) Total borrowings at carrying value (f) $ 3,433.7 $ 3,033.6 (a) Proceeds from the 4.250% unsecured notes due in 2023 (“2023 Notes”), commercial paper and cash, including cash generated from operations, were used to repay the August 2018 maturity of $400.0 million of aggregate principal amount unsecured notes. (b) The difference between the stated interest rate and the effective interest rate is not significant. (c) On June 11, 2018, the Company issued $300.0 million of aggregate principal amount of 4.250% unsecured notes due in 2023. (d) On December 18, 2018, the Company entered into an amended and restated term loan facility providing for up to $950 million in borrowings and extending the final maturity of the facility to January 2024 (the “Term Loan Facility”). As of December 31, 2018, the Company has borrowed the remaining amounts available under the facility. (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 i nterest to differ from the notes’ stated rate. (f) As of December 31, 2018, the Company’s weighted-average effective rate on total borrowings was approximately 4.5%. The following summarizes the Company’s maturities of notes at par value as of December 31, 2018 (in millions): Due within 1 year $ 500.0 Due after 1 year through 2 years 324.9 Due after 2 years through 3 years 47.5 Due after 3 years through 4 years 547.5 Due after 4 years through 5 years 395.0 Due after 5 years 1,510.0 The Company’s obligations with respect to its outstanding notes, as described below, rank equally. Commercial Paper Program Pursuant to the Company’s commercial paper program, the Company may issue unsecured commercial paper notes in an amount not to exceed $1.5 billion outstanding at any time, reduced to the extent of borrowings outstanding on the Company’s Revolving Credit Facility. The commercial paper borrowings may have maturities of up to 397 days from date of issuance. The Company’s commercial paper borrowings as of December 31, 2018 had a weighted-average annual interest rate of approximately 2.9% and a weighted-average term of approximately 3 days. As of December 31, 2018 and 2017, the Company had $125.0 million commercial paper borrowings outstanding and no commercial paper borrowings outstanding, respectively. Revolving Credit Facility On December 18, 2018, the Company entered into a credit agreement which expires in January 2024 providing for unsecured financing facilities in an aggregate amount of $1.5 billion, including a $250.0 million letter of credit sub-facility (“Revolving Credit Facility”). Consistent with the prior facility, the Company is required to maintain compliance with a consolidated interest coverage ratio covenant. The Revolving Credit Facility supports borrowings under the Company’s commercial paper program. Interest due under the Revolving Credit Facility is fixed for the term of each borrowing and is payable according to the terms of that borrowing. Generally, interest is calculated using a selected LIBOR rate plus an interest rate margin of 110 basis points. A facility fee of 15 basis points is also payable quarterly on the total facility, regardless of usage. Both the interest rate margin and facility fee percentage are based on certain of the Company’s credit ratings. As of December 31, 2018 and 2017, the Company had no outstanding borrowings under its current or prior revolving credit facilities. Term Loan Facility On December 18, 2018, the Company extended the Term Loan Facility providing for an unsecured delayed draw term loan facility in an aggregate amount of $950 million. In October 2016, the Company borrowed $575 million under the prior term loan facility and used the proceeds, in addition to cash, including cash generated from operations, and proceeds from commercial paper borrowings in October 2016 to repay the Company’s notes due in October 2016. In December 2018, the Company borrowed the remaining amount available under the facility, with proceeds from the borrowings expected to be used for general corporate purposes. The Term Loan Facility requires the Company to maintain a consolidated adjusted EBITDA interest coverage ratio of greater than 3:1 for each period of four consecutive fiscal quarters. The Term Loan Facility also contains customary representations, warranties and events of default. Generally, interest under the Term Loan Facility is calculated using a selected LIBOR rate plus an interest rate margin of 125 basis points. The interest rate margin percentage is based on certain of the Company’s credit ratings and will increase or decrease in the event of certain upgrades or downgrades in the Company’s credit ratings. In addition to the payment of interest, the Company is required to make certain periodic amortization payments with respect to the outstanding principal of the term loan, beginning in 2021. The final maturity date of the Term Loan Facility is January 8, 2024. Under the terms of the prior term loan facility, the Company was required to make certain amortization payments with respect to the outstanding principal of the prior term loan facility. For the year ended December 31, 2018, the Company made amortization payments of $14.4 million prior to the extension of the term loan agreement. Notes On June 11, 2018, the Company issued $300.0 million of aggregate principal amount of unsecured notes due June 9, 2023. Interest with respect to the 2023 Notes is payable semi-annually in arrears on June 9 and December 9 of each year, beginning on December 9, 2018, based on the per annum rate of 4.250%. The interest rate payable on the 2023 Notes will be increased if the debt rating assigned to the note is downgraded by an applicable credit rating agency, beginning at a downgrade below investment grade. However, in no event will the interest rate on the 2023 Notes exceed 6.250% per annum. The interest rate payable on the 2023 Notes may also be adjusted downward for debt rating upgrades subsequent to any debt rating downgrades but may not be adjusted below 4.250% per annum. The Company may redeem the 2023 Notes, in whole or in part, at any time prior to May 9, 2023 at the greater of par or a price based on the applicable treasury rate plus 25 basis points. The Company may redeem the 2023 Notes at any time after May 9, 2023 at a price equal to par, plus accrued interest. On August 22, 2017, the Company issued $250.0 million of aggregate principal amount of unsecured floating rate notes due May 22, 2019 (“Floating Rate Notes”). Interest with respect to the Floating Rate Notes is payable quarterly on each February 22, May 22, August 22 and November 22, beginning November 22, 2017, at a per annum interest rate equal to the three-month LIBOR plus 80 basis points (reset quarterly). The Company may not redeem the Floating Rate Notes prior to maturity. On March 15, 2017, the Company issued $400.0 million of aggregate principal amount of unsecured notes due March 15, 2022. On August 22, 2017, the Company issued an additional $100.0 million of aggregate principal amount of unsecured notes due March 15, 2022 (“2022 Notes”). The notes issued on August 22, 2017 are part of the same series and, accordingly, have the same terms and conditions as the notes issued on March 15, 2017; however, the notes issued on August 22, 2017 were issued at a premium of 101.783% and the Company received $1.57 million of accrued interest upon issuance. Interest with respect to the 2022 Notes is payable semi-annually in arrears on March 15 and September 15 of each year, beginning on September 15, 2017, based on the per annum rate of 3.600%. The interest rate payable on the 2022 Notes will be increased if the debt rating assigned to the note is downgraded by an applicable credit rating agency, beginning at a downgrade below investment grade. However, in no event will the interest rate on the 2022 Notes exceed 5.60% per annum. The interest rate payable on the 2022 Notes may also be adjusted downward for debt rating upgrades subsequent to any debt rating downgrades but may not be adjusted below 3.600% per annum. The Company may redeem the 2022 Notes at any time prior to February 15, 2022 at the greater of par or a price based on the applicable treasury rate plus 25 basis points. The Company may redeem the 2022 Notes at any time after February 15, 2022 at a price equal to par, plus accrued interest. On November 22, 2013, the Company issued $250.0 million of aggregate principal amount of unsecured notes due May 22, 2019 (“2019 Notes”). Interest with respect to the 2019 Notes is payable semi-annually in arrears on May 22 and November 22 of each year, beginning on May 22, 2014, based on the fixed per annum rate of 3.350%. The interest rate payable on the 2019 Notes will be increased if the debt rating assigned to the note is downgraded by an applicable credit rating agency, beginning at a downgrade below investment grade. However, in no event will the interest rate on the 2019 Notes be increased by more than 2.00% above 3.350% per annum. The interest rate payable on the 2019 Notes may also be adjusted downward for debt rating upgrades subsequent to any debt rating downgrades but may not be adjusted below 3.350% per annum. The Company may redeem the 2019 Notes at any time prior to maturity at the greater of par or a price based on the applicable treasury rate plus 30 basis points. On December 10, 2012, the Company issued $500.0 million of aggregate principal amounts of unsecured notes due December 10, 2017 (“2017 Notes”). In December 2017, the 2017 Notes matured and were repaid. On August 22, 2011, the Company issued $400.0 million of aggregate principal amount of unsecured notes due August 22, 2018 (“2018 Notes”). In August 2018, the 2018 Notes matured and were repaid. On June 21, 2010, the Company issued $250.0 million of aggregate principal amount of unsecured notes due June 21, 2040 (“2040 Notes”). Interest with respect to the 2040 Notes is payable semi-annually on June 21 and December 21 each year based on the fixed per annum rate of 6.200%. The Company may redeem the 2040 Notes at any time prior to maturity at the greater of par or a price based on the applicable treasury rate plus 30 basis points. On March 30, 2010, the Company exchanged $303.7 million of aggregate principal amount of unsecured notes due November 17, 2011 for unsecured notes due April 1, 2020 (“2020 Notes”). Interest with respect to the 2020 Notes is payable semi-annually on April 1 and October 1 each year based on the fixed per annum rate of 5.253%. In connection with the exchange, note holders were given a 7% premium ($21.2 million), which approximated market value at the exchange date, as additional principal. As this transaction was accounted for as a debt modification, this premium was not charged to expense. Rather, the premium, along with the offsetting hedge accounting adjustments, will be accreted into “Interest expense” over the life of the notes. The Company may redeem the 2020 Notes at any time prior to maturity at the greater of par or a price based on the applicable treasury rate plus 15 basis points. On November 17, 2006, the Company issued $500.0 million of aggregate principal amount of unsecured notes due November 17, 2036 (“2036 Notes”). Interest with respect to the 2036 Notes is payable semi-annually on May 17 and November 17 each year based on the fixed per annum rate of 6.200%. The Company may redeem the 2036 Notes at any time prior to maturity at the greater of par or a price based on the applicable treasury rate plus 25 basis points. On September 29, 2006, the Company issued $1.0 billion of aggregate principal amount of unsecured notes maturing on October 1, 2016 (“2016 Notes”). In October 2016, the 2016 Notes matured and were repaid. The Revolving Credit Facility and Term Loan Facility contain covenants, subject to certain exceptions, that, among other things, limit or restrict the Company’s ability to sell or transfer assets or merge or consolidate with another company, grant certain types of security interests, incur certain types of liens, impose restrictions on subsidiary dividends, enter into sale and leaseback transactions, incur certain subsidiary level indebtedness, or use proceeds in violation of anti-corruption or anti-money laundering laws. The Company’s notes are subject to similar covenants except that only the 2020 Notes and the 2036 Notes contain covenants limiting or restricting subsidiary indebtedness and none of the Company’s notes are subject to a covenant that limits the Company’s ability to impose restrictions on subsidiary dividends. Certain of the Company’s notes (including the Floating Rate Notes, 2019 Notes, 2022 Notes, 2023 Notes and 2040 Notes) include a change of control triggering event provision, as defined in the terms of the notes. If a change of control triggering event occurs, holders of the notes may require the Company to repurchase some or all of their notes at a price equal to 101% of the principal amount of their notes, plus any accrued and unpaid interest. A change of control triggering event will occur when there is a change of control involving the Company and among other things, within a specified period in relation to the change of control, the notes are downgraded from an investment grade rating to below an investment grade rating by all three major credit rating agencies. |
Stock Compensation Plans
Stock Compensation Plans | 12 Months Ended |
Dec. 31, 2018 | |
Stock Compensation Plans | |
Stock Compensation Plans | 17. Stock Compensation Plans Stock Compensation Plans The Western Union Company 2006 Long-Term Incentive Plan and 2015 Long-Term Incentive Plan The Western Union Company 2015 Long-Term Incentive Plan (“2015 LTIP”), approved on May 15, 2015, provides for the granting of stock options, restricted stock awards and units, unrestricted stock awards and units, and other equity-based awards to employees and non-employee directors of the Company. Prior to this, equity-based awards were granted out of the 2006 Long-Term Incentive Plan (“2006 LTIP”). Shares available for grant under the 2015 LTIP were 26.5 million as of December 31, 2018. Options granted under the 2015 LTIP and the 2006 LTIP are issued with exercise prices equal to the fair market value of Western Union common stock on the grant date, have 10‑year terms, and typically vest over four equal annual increments beginning 12 months after the date of grant, with the exception of options granted to retirement eligible employees, which generally will vest on a prorated basis, upon termination, and options granted to non-employee directors, which are fully vested at grant. Compensation expense related to stock options is recognized over the requisite service period, which is the same as the vesting period. Restricted stock unit grants typically vest over four equal annual increments beginning 12 months after the date of grant. Restricted stock units granted to retirement eligible employees generally vest on a prorated basis upon termination. The fair value of the awards granted is measured based on the fair value of the shares on the date of grant. The majority of stock unit grants do not provide for the payment of dividend equivalents. For those grants, the value of the grants is reduced by the net present value of the foregone dividend equivalent payments. The related compensation expense is recognized over the requisite service period, which is the same as the vesting period. The compensation committee of the Company’s Board of Directors has granted the Company’s executives and certain other key employees, excluding the Chief Executive Officer (“CEO”), long-term incentive awards under the 2015 LTIP, which in 2018 consisted of 50% Financial PSUs (as defined below), 30% restricted stock unit awards, and 20% TSR PSUs (as defined below) and in 2017 consisted of 60% Financial PSUs (as defined below), 20% TSR PSUs (as defined below), and 20% restricted stock unit awards. The CEO received long-term incentive awards under the 2015 LTIP, which in 2018 consisted of 50% Financial PSUs (as defined below), 20% TSR PSUs (as defined below), 20% stock option awards, and 10% restricted stock unit awards and in 2017 consisted of 60% Financial PSUs (as defined below), 20% TSR PSUs (as defined below), and 20% stock option awards. In 2018 and 2017, the compensation committee granted Senior Vice Presidents (“SVPs”) of the Company awards under the 2015 LTIP, which consisted of 50% Financial PSUs (as defined below) and 50% restricted stock unit awards. The compensation committee granted the remaining non-executive employees of the Company participating in the 2015 LTIP (other than those non-executive employees receiving the performance-based restricted stock units described above) annual equity grants consisting solely of restricted stock unit awards for 2018 and 2017. The performance-based restricted stock units granted to the Company’s executives in 2018 are restricted stock units and consist of two separate awards. The first award consists of performance-based restricted stock units, which require the Company to meet certain financial objectives over a three-year cumulative performance period (2018 through 2020) (“Financial PSUs”). The second award consists of performance-based restricted stock units with a market condition tied to the Company’s total shareholder return in relation to the S&P 500 Index as calculated over a three-year performance period (2018 through 2020) (“TSR PSUs”). Both of these awards will vest 100% on the third anniversary of the grant date, contingent upon threshold market and financial performance metrics being met. The actual number of performance-based restricted stock units that the recipients will receive for both 2018 awards will range from 0% up to 200% of the target number of stock units granted based on actual financial and total shareholder return performance results. In 2017, the Financial PSUs granted require the Company to meet certain financial objectives during 2017, 2018 and 2019, and the TSR PSUs granted in 2017 were designed similar to the 2018 awards described above, but the actual number of performance-based restricted stock units that the recipient will receive for both the 2017 Financial PSUs and TSR PSUs will range from 0% up to 150% of the target number of stock units granted based on actual financial and total shareholder return performance results. The grant date fair value of the performance-based restricted stock units is fixed and the amount of restricted stock units that will ultimately vest depends upon the level of achievement of the performance and market conditions over the performance period. The fair value of the Financial PSUs is measured similar to the restricted stock units discussed above, while the fair value of the TSR PSUs is determined using the Monte-Carlo simulation model. Unlike the Financial PSUs, compensation costs related to the TSR PSUs are recognized regardless of whether the market condition is satisfied, provided that the requisite service period has been completed. The Company has also granted deferred stock units out of the 2015 LTIP to the non-employee directors of the Company. Since deferred stock units vest immediately, compensation expense is recognized on the date of grant based on the fair value of the awards when granted. These awards may be settled immediately unless the participant elects to defer the receipt of common shares under the applicable plan rules. Stock Option Activity A summary of stock option activity for the year ended December 31, 2018 was as follows (options and aggregate intrinsic value in millions): Year Ended December 31, 2018 Weighted-Average Remaining Aggregate Weighted-Average Contractual Term Intrinsic Options Exercise Price (Years) Value Outstanding as of January 1 7.3 $ 17.71 Granted 0.4 $ 20.09 Exercised (0.7) $ 15.50 Cancelled/forfeited (0.8) $ 21.14 Outstanding as of December 31 6.2 $ 17.63 4.6 $ 4.9 Options exercisable as of December 31 5.1 $ 17.23 3.9 $ 4.9 The Company received $10.1 million, $13.0 million and $32.5 million in cash proceeds related to the exercise of stock options during the years ended December 31, 2018, 2017 and 2016, respectively. Upon the exercise of stock options, shares of common stock are issued from authorized common shares. The Company realized total tax benefits during the years ended December 31, 2018, 2017 and 2016 from stock option exercises of $0.6 million, $1.3 million and $1.6 million, respectively. The total intrinsic value of stock options exercised during the years ended December 31, 2018, 2017 and 2016 was $3.1 million, $4.0 million and $5.3 million, respectively. Restricted Stock Activity A summary of activity for restricted stock units and performance-based restricted stock units for the year ended December 31, 2018 is listed below (units in millions): Year Ended December 31, 2018 Number Weighted-Average Outstanding Grant-Date Fair Value Non-vested as of January 1 7.4 $ 17.32 Granted 3.2 $ 18.31 Vested (2.4) $ 17.38 Forfeited (1.1) $ 17.69 Non-vested as of December 31 7.1 $ 17.69 Stock-Based Compensation The following table sets forth the total impact on earnings for stock-based compensation expense recognized in the Consolidated Statements of Income/(Loss) resulting from stock options, restricted stock units, performance-based restricted stock units and bonus/deferred stock units for the years ended December 31, 2018, 2017 and 2016 (in millions, except per share data). Year Ended December 31, 2018 2017 2016 Stock-based compensation expense $ (47.7) $ (43.9) $ (41.8) Income tax benefit from stock-based compensation expense 8.3 12.8 12.3 Net income/(loss) impact $ (39.4) $ (31.1) $ (29.5) Earnings/(loss) per share: Basic and Diluted $ (0.09) $ (0.07) $ (0.06) As of December 31, 2018, there was $1.3 million of total unrecognized compensation cost, net of assumed forfeitures, related to non-vested stock options which is expected to be recognized over a weighted-average period of 2.6 years, and there was $62.3 million of total unrecognized compensation cost, net of assumed forfeitures, related to non-vested restricted stock units and performance-based restricted stock units which is expected to be recognized over a weighted-average period of 2.1 years. Fair Value Assumptions The Company used the following assumptions for the Black-Scholes option pricing model to determine the value of Western Union options granted. Year Ended December 31, 2018 2017 2016 Stock options granted: Weighted-average risk-free interest rate 2.8 % 2.1 % 1.4 % Weighted-average dividend yield 3.9 % 3.5 % 3.3 % Volatility 26.3 % 24.7 % 27.9 % Expected term (in years) 6.05 6.05 6.32 Weighted-average grant date fair value $ 3.66 $ 3.39 $ 3.44 Risk-free interest rate - The risk-free rate for stock options granted during the period is determined by using a United States Treasury rate for the period that coincided with the expected terms listed above. Expected dividend yield - The Company’s expected annual dividend yield is the calculation of the annualized Western Union dividend divided by an average Western Union stock price on each respective grant date. Expected volatility - For the Company’s executives and non-employee directors, the expected volatility for the 2018, 2017 and 2016 grants was 26.3%, 24.7% and 27.9%, respectively. There were no options granted to non-executive employees in 2018, 2017 or 2016. The Company used a blend of implied and historical volatility. Volatility was calculated using the market price of traded options on Western Union’s common stock and the historical volatility of Western Union stock data. Expected term - For 2018, 2017 and 2016, Western Union’s expected term for the CEO grant was 6 years and approximately 7 years for the non-employee director grants. The Company’s expected term for options was based upon, among other things, historical exercises, the vesting term of the Company’s options and the options’ contractual term of ten years. The assumptions used to calculate the fair value of options granted are evaluated and revised, as necessary, to reflect market conditions and the Company’s historical experience and future expectations. The calculated fair value is recognized as compensation cost in the Company’s consolidated financial statements over the requisite service period of the entire award. Compensation cost is recognized only for those options expected to vest, with forfeitures estimated at the date of grant and evaluated and adjusted periodically to reflect the Company’s historical experience and future expectations. Any change in the forfeiture assumption is accounted for as a change in estimate, with the cumulative effect of the change on periods previously reported being reflected in the consolidated financial statements of the period in which the change is made. |
Segments
Segments | 12 Months Ended |
Dec. 31, 2018 | |
Segments | |
Segments | 18. Segments As further described in Note 1, the Company classifies its business into two segments: Consumer-to-Consumer and Business Solutions. Operating segments are defined as components of an enterprise that engage in business activities, about which separate financial information is available that is evaluated regularly by the Company’s CODM in deciding where to allocate resources and in assessing performance. The Consumer-to-Consumer operating segment facilitates money transfers between two consumers. The Company views its money transfer service as one interconnected global network where a money transfer can be sent from one location to another, around the world. The segment includes five geographic regions whose functions are primarily related to generating, managing and maintaining agent relationships and localized marketing activities. The Company includes westernunion.com in its regions. By means of common processes and systems, these regions, including westernunion.com, create an interconnected network for consumer transactions, thereby constituting one global Consumer-to-Consumer money transfer business and one operating segment. The Business Solutions operating segment facilitates payment and foreign exchange solutions, primarily cross-border, cross-currency transactions, for small and medium size enterprises and other organizations and individuals. All businesses and other services that have not been classified in the above segments are reported as “Other,” which primarily include the Company’s electronic-based and cash-based bill payment services which facilitate payments from consumers to businesses and other organizations. The majority of the Company’s cash-based bill payments services are led by one executive, and the majority of the Company’s electronic-based bill payments services are led by another executive. The CODM allocates resources and assesses performance using discrete information for these separate bill payments components, neither of which is material from either a quantitative or qualitative perspective. The Company’s money order and other services are also included in “Other.” The Company’s reportable segments are reviewed separately below because each reportable segment represents a strategic business unit that offers different products and serves different markets. The business segment measurements provided to, and evaluated by, the Company’s CODM are computed in accordance with the following principles: · The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies. · Corporate costs, including stock-based compensation and other overhead, are allocated to the segments primarily based on a percentage of the segments’ revenue compared to total revenue. · On January 1, 2018, the Company adopted an accounting pronouncement that requires the non-service costs of the defined benefit pension plan to be presented outside a subtotal of income from operations, with adoption retrospective for periods previously presented. The adoption of this standard resulted in an increase of $2.4 million and $3.3 million to operating income, respectively, for the years ended December 31, 2017 and 2016, from the amounts previously reported, and this increase was allocated among the segments in a method consistent with the original allocation of this expense. Segment results for the years ended December 31, 2017 and 2016 in table below have been adjusted to conform with the new presentation. · As described in Note 5, during 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. · As described in Note 6, the Company incurred $60.0 million of expenses related to the NYDFS Consent Order during the year ended December 31, 2017, and expenses of $8.0 million and $601.0 million related to the Joint Settlement Agreements during the years ended December 31, 2017 and 2016, respectively. While these expenses were identifiable to the Company’s Consumer-to-Consumer segment, they were not allocated to the segment, as 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. · As of December 31, 2017, expenses associated with the WU Way initiative were effectively complete. The Company incurred expenses related to the WU Way of $94.4 million and $20.3 million during the years ended December 31, 2017 and 2016, respectively. While certain items related to the initiative 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 this business transformation initiative, see Note 4. · The CODM does not review total assets by segment for purposes of assessing segment performance and allocating resources. As such, the disclosure of total assets by segment has not been included below. · All items not included in operating income are excluded from the segments. The following tables present the Company’s reportable segment results for the years ended December 31, 2018, 2017 and 2016, respectively (in millions): Year Ended December 31, 2018 2017 2016 Revenues: Consumer-to-Consumer $ 4,453.6 $ 4,354.5 $ 4,304.6 Business Solutions 386.8 383.9 396.0 Other (a) 749.5 785.9 722.3 Total consolidated revenues $ 5,589.9 $ 5,524.3 $ 5,422.9 Operating income: Consumer-to-Consumer $ 1,048.2 $ 1,004.2 $ 1,011.3 Business Solutions 23.4 13.8 21.3 Other (a) 50.5 84.2 75.7 Total segment operating income 1,122.1 1,102.2 1,108.3 Goodwill impairment charge (Note 5) — (464.0) — NYDFS Consent Order (Note 6) — (60.0) — Joint Settlement Agreements (Note 6) — (8.0) (601.0) Business transformation expenses (Note 4) — (94.4) (20.3) Total consolidated operating income $ 1,122.1 $ 475.8 $ 487.0 (a) Other consists primarily of the Company’s bill payments businesses in the United States and Argentina. Year Ended December 31, 2018 2017 2016 Depreciation and amortization: Consumer-to-Consumer $ 189.9 $ 183.0 $ 183.5 Business Solutions 41.9 42.5 50.8 Other 32.9 37.4 28.9 Total consolidated depreciation and amortization $ 264.7 $ 262.9 $ 263.2 Capital expenditures: Consumer-to-Consumer $ 273.8 $ 120.2 $ 167.7 Business Solutions 11.9 8.8 11.4 Other 53.3 48.1 50.7 Total capital expenditures $ 339.0 $ 177.1 $ 229.8 The geographic split of revenue below for the Consumer-to-Consumer and Business Solutions segments and Other is based upon the country where the transaction is initiated with 100% of the revenue allocated to that country. Long-lived assets, consisting of “Property and equipment, net,” are presented based upon the location of the assets. Based on the method used to attribute revenue between countries described in the paragraph above, each individual country outside the United States accounted for less than 10% of consolidated revenue for the years ended December 31, 2018, 2017 and 2016, respectively. In addition, each individual agent or Business Solutions customer accounted for less than 10% of consolidated revenue during these periods. Information concerning principal geographic areas was as follows (in millions): Year Ended December 31, 2018 2017 2016 Revenue: United States $ 2,126.2 $ 2,159.0 $ 2,091.5 International 3,463.7 3,365.3 3,331.4 Total $ 5,589.9 $ 5,524.3 $ 5,422.9 Long-lived assets: United States $ 207.4 $ 156.8 $ 174.0 International 63.0 57.4 46.5 Total $ 270.4 $ 214.2 $ 220.5 |
Quarterly Financial Information
Quarterly Financial Information (Unaudited) | 12 Months Ended |
Dec. 31, 2018 | |
Quarterly Financial Information (Unaudited) | |
Quarterly Financial Information (Unaudited) | 19. Quarterly Financial Information (Unaudited) Summarized quarterly results for the years ended December 31, 2018 and 2017 were as follows (in millions, except per share data): Year Ended December 31, 2018 by Quarter: Q1 Q2 Q3 Q4 2018 Revenues $ 1,389.4 $ 1,411.1 $ 1,387.8 $ 1,401.6 $ 5,589.9 Expenses 1,124.5 1,127.5 1,085.2 1,130.6 4,467.8 Operating income 264.9 283.6 302.6 271.0 1,122.1 Other expense, net 30.4 28.1 36.2 36.0 130.7 Income before income taxes 234.5 255.5 266.4 235.0 991.4 Provision for income taxes (a) 20.9 37.9 57.8 22.9 139.5 Net income $ 213.6 $ 217.6 $ 208.6 $ 212.1 $ 851.9 Earnings per share: Basic $ 0.46 $ 0.48 $ 0.47 $ 0.48 $ 1.89 Diluted $ 0.46 $ 0.47 $ 0.46 $ 0.48 $ 1.87 Weighted-average shares outstanding: Basic 460.3 457.2 446.8 442.9 451.8 Diluted 463.6 459.6 449.0 445.4 454.4 Year Ended December 31, 2017 by Quarter: Q1 Q2 Q3 Q4 2017 Revenues $ 1,302.4 $ 1,378.9 $ 1,404.7 $ 1,438.3 $ 5,524.3 Expenses (b) (c) (d) (e) 1,062.3 1,163.5 1,132.5 1,690.2 5,048.5 Operating income/(loss) (e) 240.1 215.4 272.2 (251.9) 475.8 Other expense, net (e) 27.0 31.0 33.0 37.3 128.3 Income/(loss) before income taxes 213.1 184.4 239.2 (289.2) 347.5 Provision for income taxes (f) 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 ($6.0 million), ($6.2 million), $26.6 million, and $8.1 million in the first, second, third, and fourth quarters, respectively, of adjustments related to the Tax Act, as further described in Note 11. (b) 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 5. (c) Includes a $49.0 million accrual in the second quarter and an $11.0 million accrual in the fourth quarter as a result of the NYDFS Consent Order, and an additional $8.0 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 6. (d) 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 4. (e) On January 1, 2018, the Company adopted an accounting pronouncement that requires the non-service costs of a defined benefit pension plan to be presented outside a subtotal of income from operations, with adoption retrospective for periods previously presented. The adoption of this standard resulted in an increase of $0.6 million to operating income/(loss) and decreases to operating expenses and other expense, net in the first, second, third and fourth quarters for the year ended December 31, 2017, respectively, from the amounts previously reported. Refer to Note 2 for further information. (f) Includes an estimated $828.0 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. As discussed in Note 11, during the fourth quarter of 2018, the Company completed its accounting for the Tax Act’s impacts that were provisionally estimated as of December 31, 2017. |
Schedule I - Condensed Financia
Schedule I - Condensed Financial Information of the Registrant | 12 Months Ended |
Dec. 31, 2018 | |
CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT | |
Schedule I - Condensed Financial Information of the Registrant | THE WESTERN UNION COMPANY SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT The following lists the condensed financial information for the parent company as of December 31, 2018 and 2017 and Condensed Statements of Income/(Loss) and Comprehensive Income/(Loss) and Condensed Statements of Cash Flows for each of the three years in the period ended December 31, 2018. THE WESTERN UNION COMPANY CONDENSED BALANCE SHEETS (PARENT COMPANY ONLY) (in millions, except per share amounts) December 31, 2018 2017 Assets Cash and cash equivalents $ 0.2 $ 1.0 Property and equipment, net of accumulated depreciation of $33.5 and $28.5, respectively 107.3 33.9 Other assets 48.6 34.2 Investment in subsidiaries 5,665.5 7,236.2 Total assets $ 5,821.6 $ 7,305.3 Liabilities and Stockholders’ Deficit Liabilities: Accounts payable and accrued liabilities $ 100.2 $ 74.6 Income taxes payable 727.0 887.0 Payable to subsidiaries, net 1,869.6 3,800.8 Borrowings 3,433.7 3,033.6 Other liabilities 0.9 0.7 Total liabilities 6,131.4 7,796.7 Stockholders’ deficit: Preferred stock, $1.00 par value; 10 shares authorized; no shares issued — — Common stock, $0.01 par value; 2,000 shares authorized; 441.2 shares and 459.0 shares issued and outstanding as of December 31, 2018 and 2017, respectively 4.4 4.6 Capital surplus 755.6 697.8 Accumulated deficit (838.8) (965.9) Accumulated other comprehensive loss (231.0) (227.9) Total stockholders’ deficit (309.8) (491.4) Total liabilities and stockholders’ deficit $ 5,821.6 $ 7,305.3 See Notes to Condensed Financial Statements. THE WESTERN UNION COMPANY CONDENSED STATEMENTS OF INCOME/(LOSS) AND COMPREHENSIVE INCOME/(LOSS) (PARENT COMPANY ONLY) (in millions) For the Years Ended December 31, 2018 2017 2016 Revenues $ — $ — $ — Expenses — — — Operating income — — — Interest income — — — Interest expense (197.6) (177.0) (168.1) Other expense (1.0) (0.6) — Loss before equity in losses of affiliates and income taxes (198.6) (177.6) (168.1) Equity in earnings/(losses) of affiliates, net of tax 997.2 (436.1) 357.1 Income tax benefit 53.3 56.6 64.2 Net income/(loss) 851.9 (557.1) 253.2 Other comprehensive income, net of tax 1.6 2.1 2.3 Other comprehensive income/(loss) of affiliates, net of tax 26.7 (67.2) (21.2) Comprehensive income/(loss) $ 880.2 $ (622.2) $ 234.3 See Notes to Condensed Financial Statements. THE WESTERN UNION COMPANY CONDENSED STATEMENTS OF CASH FLOWS (PARENT COMPANY ONLY) (in millions) For the Years Ended December 31, 2018 2017 2016 Cash flows from operating activities Net cash provided by/(used in) operating activities $ 539.1 $ (605.0) $ 192.0 Cash flows from investing activities Purchases of property and equipment and other (78.9) (0.7) (5.9) Capital contributed to/(distributions received from) subsidiaries, net (456.3) 307.3 (7.3) Net cash provided by/(used in) investing activities (535.2) 306.6 (13.2) Cash flows from financing activities Advances from subsidiaries, net 345.5 868.3 1,024.0 Net proceeds from commercial paper 125.0 — — Net proceeds from issuance of borrowings 685.4 746.2 575.0 Principal payments on borrowings (414.4) (500.0) (1,000.0) Proceeds from exercise of options and other 7.9 13.0 35.0 Cash dividends paid (341.7) (325.6) (312.2) Common stock repurchased (412.4) (502.8) (501.6) Net cash provided by/(used in) financing activities (4.7) 299.1 (179.8) Net change in cash and cash equivalents (0.8) 0.7 (1.0) Cash and cash equivalents at beginning of year 1.0 0.3 1.3 Cash and cash equivalents at end of year $ 0.2 $ 1.0 $ 0.3 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) $ 2,256.1 $ 80.3 $ — See Notes to Condensed Financial Statements. CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT THE WESTERN UNION COMPANY NOTES TO CONDENSED FINANCIAL STATEMENTS 1. Basis of Presentation The Western Union Company (the “Parent”) is a holding company that conducts substantially all of its business operations through its subsidiaries. Under a parent company only presentation, the Parent’s investments in its consolidated subsidiaries are presented under the equity method of accounting, and the condensed financial statements do not present the financial statements of the Parent and its subsidiaries on a consolidated basis. These financial statements should be read in conjunction with The Western Union Company’s consolidated financial statements. 2. Restricted Net Assets Certain assets of the Parent’s subsidiaries totaling approximately $365 million constitute restricted net assets, as there are legal or regulatory limitations on transferring such assets outside of the countries where the respective assets are located. Additionally, certain of the Parent’s subsidiaries must meet minimum capital requirements in some countries in order to maintain operating licenses. 3. Related Party Transactions All transactions described below are with subsidiaries of the Parent. The Parent has issued multiple promissory notes payable to its 100% owned subsidiary First Financial Management Corporation (“FFMC”) in exchange for funds distributed to the Parent. All notes pay interest at a fixed rate, may be repaid at any time without penalty and are included within “Payable to subsidiaries, net” in the Condensed Balance Sheets. These promissory notes are as follows: Amount (in Interest Rate (per Date Issued millions) Due Date annum) January 1, 2017 $ 158.8 September 30, 2019 0.96 % March 1, 2017 (a) $ 65.5 November 30, 2019 1.01 % March 1, 2018 (a) $ 88.5 November 30, 2020 1.96 % April 1, 2018 (a) $ 273.0 December 31, 2020 2.12 % June 1, 2018 (a) $ 229.6 February 28, 2021 2.34 % (a) This note refinanced a note originally issued on a prior date. On August 2, 2014, the Parent entered into a credit agreement (the “Facility”) with its 100% owned subsidiary Custom House Holdings (USA), Ltd., which expires August 2, 2034, providing for unsecured financing facilities in an aggregate amount of $700.0 million. As of December 31, 2018 and 2017, borrowings outstanding under the Facility were $12.3 million and $232.6 million, respectively. The interest rate applicable for outstanding borrowings under the Facility is the six-month LIBOR rate set on the first day of the calendar year, which was 2.87% and 1.84% as of December 31, 2018 and 2017, respectively. Outstanding borrowings under the Facility are included within “Payable to subsidiaries, net” in the Condensed Balance Sheets as of December 31, 2018 and 2017. On November 8, 2015, the Parent entered into a Revolving Credit Facility agreement (the “Revolver”) with its 100% owned subsidiary RII Holdings, Inc, which expires on November 8, 2035, providing for unsecured financing facilities in an aggregate amount of $3.0 billion. As of December 31, 2018 and 2017, borrowings outstanding under the Revolver were $914.6 million and $2.6 billion, respectively. The interest rate applicable for outstanding borrowings under the Revolver is the six-month LIBOR rate set on the first day of the calendar year, which was 2.87% and 1.84% as of December 31, 2018 and 2017, respectively. Outstanding borrowings under the Revolver are included within “Payable to subsidiaries, net” in the Condensed Balance Sheets as of December 31, 2018 and 2017. During the year ended December 31, 2018, significant amounts of the outstanding balances were repaid by means of non-cash distributions by the Parent’s subsidiaries. CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT THE WESTERN UNION COMPANY NOTES TO CONDENSED FINANCIAL STATEMENTS (Continued) The Parent files its United States federal consolidated income tax return on its and certain of its affiliates’ behalf. Accordingly, the Parent has recorded income taxes payable on behalf of its subsidiaries, and these income taxes payable were significant in the years ended December 31, 2018 and 2017 due to the enactment of the Tax Act into United States law. Effective as of December 31, 2017, the Parent made a non-cash capital contribution of $916.0 million to a subsidiary that was subject to the taxation of certain previously undistributed earnings of its foreign subsidiaries under the Tax Act, and this contribution is reflected as a non-cash investing activity in the Condensed Statements of Cash Flows. The Parent agreed to fund certain payments related to the Joint Settlement Agreements on behalf of its subsidiaries. As of December 31, 2017, these amounts have been paid and are reflected in operating activities in the Condensed Statements of Cash Flows. As of December 31, 2016, $591.0 million increased the Parent’s investment in its subsidiaries, and was reflected as a non-cash investing activity in the Condensed Statements of Cash Flows. On November 30, 2017, FFMC distributed a promissory note owed by the Parent in the amount of $80.3 million, and this distribution to the Parent is reflected as a non-cash financing activity in the Condensed Statements of Cash Flows in the year ended December 31, 2017. Excess cash generated from operations of the Parent’s subsidiaries that is not required to meet certain regulatory requirements may be periodically distributed to the Parent in the form of a distribution, although the amounts of such distributions may vary from year to year. The Parent files a consolidated United States federal income tax return, and also a number of consolidated state income tax returns on behalf of its subsidiaries. In these circumstances, the Parent is responsible for remitting income tax payments on behalf of the consolidated group. The Parent’s provision for income taxes has been computed as if it were a separate tax-paying entity. 4. Commitments and Contingencies The Parent had $89.6 million in outstanding letters of credit and bank guarantees as of December 31, 2018 with expiration dates through 2020. The letters of credit and bank guarantees are primarily held in connection with certain agent agreements. The Company expects to renew the letters of credit and bank guarantees prior to expiration in most circumstances. The Parent leases certain real properties for use as administrative and sales offices, including the Parent’s corporate headquarters. The rent expense associated with these operating leases has been allocated to its subsidiaries for the years ended December 31, 2018, 2017 and 2016. As of December 31, 2018, the minimum aggregate rental commitments under all non-cancelable operating leases entered into by the Parent were as follows (in millions): Year Ending December 31, 2019 $ 13.1 2020 14.2 2021 13.9 2022 13.7 2023 13.7 Thereafter 84.9 Total future minimum lease payments $ 153.5 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Summary of Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation The financial statements in this Annual Report on Form 10‑K are presented on a consolidated basis and include the accounts of the Company and its majority-owned subsidiaries. All significant intercompany transactions and accounts have been eliminated. Beginning in the first quarter of 2018, the Company no longer presents the “Derivative gains, net” line item in its Consolidated Statements of Income/(Loss) for all periods presented due to the early adoption of a new accounting pronouncement to improve the financial reporting of hedging relationships, as further described in Note 2. Amounts previously reported in prior periods in “Derivative gains, net” are now reported in “Other income, net” in the Consolidated Statements of Income/(Loss). Additionally, certain historical amounts reported in the Consolidated Statements of Income/(Loss) for the years ended December 31, 2017 and 2016 have been adjusted due to the adoption of an accounting standard related to pension costs, as further described in Note 2. Consistent with industry practice, the accompanying Consolidated Balance Sheets are unclassified due to the short-term nature of the Company’s settlement obligations contrasted with the Company’s ability to invest cash awaiting settlement in long-term investment securities. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates. |
Principles of Consolidation | Principles of Consolidation The Company consolidates financial results when it has a controlling financial interest in a subsidiary via voting rights or when it has both the power to direct the activities of an entity that most significantly impact the entity’s economic performance and the ability to absorb losses or the right to receive benefits of the entity that could potentially be significant to the entity. The Company utilizes the equity method of accounting when it is able to exercise significant influence over the entity’s operations, which generally occurs when the Company has an ownership interest of between 20% and 50% in an entity. |
Earnings/(Loss) Per Share | Earnings/(Loss) Per Share The calculation of basic earnings/(loss) per share is computed by dividing net income/(loss) available to common stockholders by the weighted-average number of shares of common stock outstanding for the period. Outstanding options to purchase Western Union stock and unvested shares of restricted stock are excluded from basic shares outstanding. Diluted earnings/(loss) per share reflects the potential dilution that could occur if outstanding stock options at the presented dates are exercised and shares of restricted stock have vested, using the treasury stock method. The treasury stock method assumes proceeds from the exercise price of stock options and the unamortized compensation expense of options and restricted stock are available to acquire shares at an average market price throughout the period, and therefore, reduce the dilutive effect. For the years ended December 31, 2018, 2017 and 2016, there were 2.6 million, 2.8 million and 3.4 million, respectively, of shares excluded from the diluted earnings/(loss) per share calculation under the treasury stock method, primarily due to outstanding options to purchase shares of Western Union stock, as their exercise prices were above the Company’s weighted-average share price during the periods and their effect was anti-dilutive. Due to the net loss for the year ended December 31, 2017, an additional 3.0 million shares have been excluded from diluted weighted-average shares outstanding, because the effect of including such shares would be anti-dilutive in the calculation of diluted loss per share. The following table provides the calculation of diluted weighted-average shares outstanding (in millions): For the Year Ended December 31, 2018 2017 2016 Basic weighted-average shares outstanding 451.8 467.9 490.2 Common stock equivalents 2.6 — 3.3 Diluted weighted-average shares outstanding 454.4 467.9 493.5 |
Fair Value Measurements | Fair Value Measurements The Company determines the fair values of its assets and liabilities that are recognized or disclosed at fair value in accordance with the hierarchy described below. The fair values of the assets and liabilities held in the Company’s defined benefit plan trust (“Trust”) are recognized or disclosed utilizing the same hierarchy. The following three levels of inputs may be used to measure fair value: · Level 1: Quoted prices in active markets for identical assets or liabilities. · Level 2: Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. For most of these assets, the Company utilizes pricing services that use multiple prices as inputs to determine daily market values. · Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include items where the determination of fair value requires significant management judgment or estimation. The Company has Level 3 assets that are recognized and disclosed at fair value on a non-recurring basis related to the Company’s business combinations, where the values of the intangible assets and goodwill acquired in a purchase are derived utilizing one of the three recognized approaches: the market approach, the income approach or the cost approach. In addition, the Trust has other investments that are valued at net asset value which is not quoted on an active market; however, the unit price is based on underlying investments which are traded on an active market. Carrying amounts for many of the Company’s financial instruments, including cash and cash equivalents, settlement cash and cash equivalents, and settlement receivables and settlement obligations approximate fair value due to their short maturities. Available-for-sale investment securities and derivative financial instruments are carried at fair value and included in Note 9. Fixed rate notes are carried at their original issuance values as adjusted over time to accrete that value to par, except for portions of notes hedged by interest rate swap agreements as disclosed in Note 15. The fair values of fixed rate notes are disclosed in Note 9 and are based on market quotations. The Company’s investments in foreign corporate debt securities are classified as held-to-maturity securities. The fair values of the foreign corporate debt securities are disclosed in Note 9 and are based on market quotations. The fair values of non-financial assets and liabilities related to the Company’s business combinations are disclosed in Note 5. The fair value of the assets in the Trust, which holds the assets for the Company’s defined benefit plan, is disclosed in Note 12. |
Business Combinations | Business Combinations The Company accounts for all business combinations where control over another entity is obtained using the acquisition method of accounting, which requires that most assets (both tangible and intangible), liabilities (including contingent consideration), and remaining noncontrolling interests be recognized at fair value at the date of acquisition. The excess of the purchase price over the fair value of assets less liabilities and noncontrolling interests is recognized as goodwill. Certain adjustments to the assessed fair values of the assets, liabilities, or noncontrolling interests made subsequent to the acquisition date, but within the measurement period, which is one year or less, are recorded as adjustments to goodwill. Any adjustments subsequent to the measurement period are recorded in income. Any cost or equity method interest that the Company holds in the acquired company prior to the acquisition is remeasured to fair value at acquisition with a resulting gain or loss recognized in income for the difference between fair value and existing book value. Results of operations of the acquired company are included in the Company’s results from the date of the acquisition forward and include amortization expense arising from acquired intangible assets. The Company expenses all costs as incurred related to or involved with an acquisition in “Selling, general and administrative” expenses. |
Cash and Cash Equivalents | Cash and Cash Equivalents Highly liquid investments (other than those included in settlement assets) with maturities of three months or less at the date of purchase (that are readily convertible to cash) are considered to be cash equivalents and are stated at cost, which approximates fair value. The Company maintains cash and cash equivalent balances, including a portion in money market funds, with a group of globally diversified banks and financial institutions. The Company limits the concentration of its cash and cash equivalents with any one institution and regularly reviews investment concentrations and credit worthiness of these institutions. |
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts The Company records an allowance for doubtful accounts when it is probable that the related receivable balance will not be collected based on its history of collection experience, known collection issues, such as agent suspensions and bankruptcies, consumer chargebacks and insufficient funds, and other matters the Company identifies in its routine collection monitoring. The allowance for doubtful accounts was $47.7 million and $64.5 million as of December 31, 2018 and 2017, respectively, and is recorded in the same Consolidated Balance Sheet caption as the related receivable. During the years ended December 31, 2018, 2017 and 2016, the provision for doubtful accounts (bad debt expense) reflected in the Consolidated Statements of Income/(Loss) was $43.9 million, $60.6 million and $63.9 million, respectively. |
Settlement Assets and Obligations | Settlement Assets and Obligations Settlement assets represent funds received or to be received from agents for unsettled money transfers, money orders and consumer payments. The Company records corresponding settlement obligations relating to amounts payable under money transfers, money orders and consumer payment service arrangements. Settlement assets and obligations also include amounts receivable from, and payable to, customers for the value of their cross-currency payment transactions related to the Business Solutions segment. Settlement assets consist of cash and cash equivalents, receivables from selling agents and Business Solutions customers, and investment securities. Cash received by Western Union agents generally becomes available to the Company within one week after initial receipt by the agent. Cash equivalents consist of short-term time deposits, commercial paper and other highly liquid investments. Receivables from selling agents represent funds collected by such agents, but in transit to the Company. Western Union has a large and diverse agent base, thereby reducing the credit risk of the Company from any one agent. In addition, the Company performs ongoing credit evaluations of its agents’ financial condition and credit worthiness. See Note 8 for information concerning the Company’s investment securities. Receivables from Business Solutions customers arise from cross-currency payment transactions in the Business Solutions segment. Receivables occur when funds have been paid out to a beneficiary but not yet received from the customer. Aside from these receivables, the credit risk associated with spot foreign currency exchange contracts is largely mitigated, as in most cases the Company requires the receipt of funds from customers before releasing the associated cross-currency payment. Settlement obligations consist of money transfer, money order and payment service payables and payables to agents. Money transfer payables represent amounts to be paid to transferees when they request their funds. Most agents typically settle with transferees first and then obtain reimbursement from the Company. Money order payables represent amounts not yet presented for payment. Payment service payables represent amounts to be paid to utility companies, auto finance companies, mortgage servicers, financial service providers, government agencies and others. Due to the agent funding and settlement process, payables to agents represent amounts due to agents for money transfers that have been settled with transferees. Settlement assets and obligations consisted of the following (in millions): December 31, 2018 2017 Settlement assets: Cash and cash equivalents $ 1,247.8 $ 1,264.8 Receivables from selling agents and Business Solutions customers 1,355.4 1,573.9 Investment securities 1,210.6 1,350.2 $ 3,813.8 $ 4,188.9 Settlement obligations: Money transfer, money order and payment service payables $ 2,793.6 $ 2,789.2 Payables to agents 1,020.2 1,399.7 $ 3,813.8 $ 4,188.9 |
Property and Equipment | Property and Equipment Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the lesser of the estimated life of the related assets (generally three to ten years for equipment and furniture and fixtures, and 30 years for buildings) or the lease term. Maintenance and repairs, which do not extend the useful life of the respective assets, are charged to expense as incurred. Property and equipment consisted of the following (in millions): December 31, 2018 2017 Equipment $ 656.8 $ 604.7 Leasehold improvements 158.6 87.4 Buildings 88.6 88.6 Furniture and fixtures 51.6 42.0 Land and improvements 17.0 17.0 Projects in process 0.2 10.2 Total property and equipment, gross 972.8 849.9 Less accumulated depreciation (702.4) (635.7) Property and equipment, net $ 270.4 $ 214.2 Amounts charged to expense for depreciation of property and equipment were $76.9 million, $77.1 million and $74.2 million during the years ended December 31, 2018, 2017 and 2016 respectively. |
Goodwill | Goodwill Goodwill represents the excess of purchase price over the fair value of tangible and other intangible assets acquired, less liabilities assumed arising from business combinations. In the event a reporting unit’s carrying amount exceeds its fair value, the Company recognizes an impairment charge for the amount by which the carrying amount of the reporting unit exceeds its fair value. The Company’s annual impairment assessment did not identify any goodwill impairment during the years ended December 31, 2018 and 2016. For the year ended December 31, 2017, the Company recognized a goodwill impairment charge of $464.0 million related to its Business Solutions reporting unit, as disclosed in Note 5. |
Other Intangible Assets | Other Intangible Assets Other intangible assets primarily consist of contract costs (primarily amounts paid to agents in connection with establishing and renewing long-term contracts), acquired contracts and software. Other intangible assets are amortized on a straight-line basis over the length of the contract or benefit periods. Included in the Consolidated Statements of Income/(Loss) is amortization expense of $187.8 million, $185.8 million and $189.0 million for the years ended December 31, 2018, 2017 and 2016, respectively. The Company capitalizes initial payments for new and renewed agent contracts to the extent recoverable through future operations or penalties in the case of early termination. The Company’s accounting policy is to limit the amount of capitalized costs for a given contract to the lesser of the estimated future cash flows from the contract or the termination fees the Company would receive in the event of early termination of the contract. Acquired contracts include customer and contractual relationships and networks of subagents that are recognized in connection with the Company’s acquisitions. The Company purchases and develops software that is used in providing services and in performing administrative functions. Internal and external software development costs incurred that are directly related to the chosen design, development and testing phases of the software are capitalized once the Company has completed all planning and analysis activities. Any other software development related costs are expensed as incurred. Capitalization of costs ceases when the product is available for general use. Software development costs and purchased software are generally amortized over a term of three to seven years. The following table provides the components of other intangible assets (in millions): December 31, 2018 December 31, 2017 Weighted- Average Amortization Net of Net of Period Accumulated Accumulated (in years) Initial Cost Amortization Initial Cost Amortization Acquired contracts 11.5 $ 598.1 $ 171.2 $ 600.4 $ 220.0 Capitalized contract costs 6.2 536.5 318.9 559.5 268.2 Internal use software 3.5 447.3 80.6 387.8 53.1 Acquired trademarks 24.8 32.5 15.5 33.2 16.9 Other intangibles 4.7 19.4 — 20.0 — Projects in process (a) 12.0 12.0 28.1 28.1 Total other intangible assets 7.7 $ 1,645.8 $ 598.2 $ 1,629.0 $ 586.3 (a) Not applicable as the assets have not been placed in service. The estimated future aggregate amortization expense for existing other intangible assets as of December 31, 2018 is expected to be $169.5 million in 2019, $119.5 million in 2020, $103.0 million in 2021, $70.6 million in 2022, $49.5 million in 2023 and $74.1 million thereafter. Other intangible assets are reviewed for impairment on an annual basis or whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. In such reviews, estimated undiscounted cash flows associated with these assets or operations are compared with their carrying values to determine if a write-down to fair value (normally measured by the present value technique) is required. The Company recorded immaterial impairments related to other intangible assets during the years ended December 31, 2018, 2017 and 2016. |
Revenue Recognition | The Company’s revenues are primarily derived from consideration paid by customers to transfer money. These revenues vary by transaction based upon channel, send and receive locations, the principal amount sent, whether the money transfer involves different send and receive currencies, the difference between the exchange rate set by the Company to the customer and the rate available in the wholesale foreign exchange market, and speed of service, as applicable. The Company also offers several other services, including foreign exchange and payment services and other bill payment services, for which revenue is impacted by similar factors. For the substantial majority of the Company’s revenues, the Company acts as the principal in transactions and reports revenue on a gross basis, as the Company controls the service at all times prior to transfer to the customer, is primarily responsible for fulfilling the customer contracts, has the risk of loss, and has the ability to establish transaction prices. Revenue is recognized net of any taxes collected from customers, which are subsequently remitted to governmental authorities. |
Cost of Services | Cost of Services Cost of services primarily consists of agent commissions and expenses for call centers, settlement operations and related information technology costs. Expenses within these functions include personnel, software, equipment, telecommunications, bank fees, depreciation, amortization and other expenses incurred in connection with providing money transfer and other payment services. |
Advertising Costs | Advertising Costs Advertising costs are charged to operating expenses as incurred. Advertising costs for the years ended December 31, 2018, 2017 and 2016 were $180.9 million, $168.3 million, and $151.1 million, respectively. |
Income Taxes | Income Taxes The Company accounts for income taxes under the liability method, which requires that deferred tax assets and liabilities be determined based on the expected future income tax consequences of events that have been recognized in the consolidated financial statements. Deferred tax assets and liabilities are recognized based on temporary differences between the financial statement carrying amounts and tax bases of assets and liabilities using enacted tax rates in effect in the years in which the temporary differences are expected to reverse. The Company assesses the realizability of its deferred tax assets. A valuation allowance must be established when, based upon available evidence, it is more likely than not that all or a portion of the deferred tax assets will not be realized. The Company recognizes the tax benefits from uncertain tax positions only when it is more likely than not, based on the technical merits of the position, the tax position will be sustained upon examination, including the resolution of any related appeals or litigation. The tax benefits recognized in the consolidated financial statements from such a position are measured as the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate resolution. During the year ended December 31, 2018, the Company finalized an accounting policy election to account for the tax effects of global intangible low-taxed income as a component of income tax expense in the period the tax arises. |
Foreign Currency Translation | Foreign Currency Translation The United States dollar is the functional currency for substantially all of the Company’s businesses. Revenues and expenses are translated at average exchange rates prevailing during the period. Foreign currency denominated assets and liabilities for those businesses for which the local currency is the functional currency are translated into United States dollars based on exchange rates at the end of the year. The effects of foreign exchange gains and losses arising from the translation of assets and liabilities of these businesses are included as a component of “Accumulated other comprehensive loss” in the accompanying Consolidated Balance Sheets. Foreign currency denominated monetary assets and liabilities of businesses for which the United States dollar is the functional currency are remeasured based on exchange rates at the end of the period, and the resulting remeasurement gains and losses are recognized in net income/(loss). Non-monetary assets and liabilities of these operations are remeasured at historical rates in effect when the asset was recognized or the liability was incurred. |
Derivatives | Derivatives The Company uses derivatives to (a) minimize its exposures related to changes in foreign currency exchange rates and interest rates and (b) facilitate cross-currency Business Solutions payments by writing derivatives to customers. The Company recognizes all derivatives in the “Other assets” and “Other liabilities” captions in the accompanying Consolidated Balance Sheets at their fair value. All cash flows associated with derivatives are included in cash flows from operating activities in the Consolidated Statements of Cash Flows. · Cash flow hedges - Changes in the fair value of derivatives that are designated and qualify as cash flow hedges are recorded in “Accumulated other comprehensive loss.” Cash flow hedges consist of foreign currency hedging of forecasted revenues, as well as hedges of the forecasted issuance of fixed rate debt. Derivative fair value changes that are captured in “Accumulated other comprehensive loss” are reclassified to earnings in the same period the hedged item affects earnings when the instrument is effective in offsetting the change in cash flows attributable to the risk being hedged. On January 1, 2018, the Company early adopted an accounting pronouncement related to hedging activities. As a result of the new accounting pronouncement, for foreign currency cash flow hedges entered into on or after January 1, 2018, the Company excludes time value from the assessment of effectiveness, and the initial value of the excluded components is amortized into “Revenues” within the Consolidated Statements of Income/(Loss). For foreign currency cash flow hedges entered into before January 1, 2018, all changes in the fair value of the excluded components are recognized immediately in “Revenues” for the year ended December 31, 2018. For the years ended December 31, 2017 and 2016, the changes in fair value of the excluded components were recognized immediately within the Consolidated Statements of Income/(Loss) and are included in “Other income, net.” · Fair value hedges - Changes in the fair value of derivatives that are designated as fair value hedges of fixed rate debt are recorded in “Interest expense.” The offsetting change in value of the related debt instrument attributable to changes in the benchmark interest rate is also recorded in “Interest expense.” · Undesignated - Derivative contracts entered into to reduce the variability related to (a) money transfer settlement assets and obligations, generally with maturities from a few days up to one month, and (b) certain foreign currency denominated cash and other asset and liability positions, typically with maturities of less than one year at inception, are not designated as hedges for accounting purposes and changes in their fair value are included in “Selling, general and administrative.” The Company is also exposed to risk from derivative contracts written to its customers arising from its cross-currency Business Solutions payments operations. The duration of these derivative contracts at inception is generally less than one year. The Company aggregates its Business Solutions payments foreign currency exposures arising from customer contracts, including the derivative contracts described above, and hedges the resulting net currency risks by entering into offsetting contracts with established financial institution counterparties (economic hedge contracts) as part of a broader foreign currency portfolio, including significant spot exchanges of currency in addition to forwards and options. The changes in fair value related to these contracts are recorded in “Revenues.” The fair value of the Company’s derivatives is derived from standardized models that use market-based inputs (e.g., forward prices for foreign currency). The details of each designated hedging relationship are formally documented at the inception of the arrangement, including the risk management objective, hedging strategy, hedged item, specific risks being hedged, the derivative instrument, and how effectiveness is being assessed. The derivative must be highly effective in offsetting the changes in cash flows or fair value of the hedged item, and effectiveness is evaluated quarterly on a retrospective and prospective basis. |
Legal Contingencies | Legal Contingencies The Company is a party to certain legal and regulatory proceedings with respect to a variety of matters. The Company records an accrual for these contingencies to the extent that a loss is both probable and reasonably estimable. If some amount within a range of loss appears to be a better estimate than any other amount within the range, that amount is accrued. When no amount within a range of loss appears to be a better estimate than any other amount, the lowest amount in the range is accrued. |
Stock-Based Compensation | Stock-Based Compensation The Company currently has a stock-based compensation plan that provides for grants of Western Union stock options, restricted stock awards and restricted and unrestricted stock units to employees and non-employee directors of the Company. All stock-based compensation to employees is required to be measured at fair value and expensed over the requisite service period. The Company recognizes compensation expense on awards on a straight-line basis over the requisite service period for the entire award, with an estimate of forfeitures. Refer to Note 17 for additional discussion regarding details of the Company’s stock-based compensation plans. |
Severance and Other Related Expenses | Severance and Other Related Expenses The Company records severance-related expenses once they are both probable and estimable in accordance with the provisions of the applicable accounting guidance for severance provided under an ongoing benefit arrangement. One-time, involuntary benefit arrangements and other costs are generally recognized when the liability is incurred. The Company also evaluates impairment issues associated with restructuring and other activities when the carrying amount of the related assets may not be fully recoverable, in accordance with the appropriate accounting guidance. |
Recently Adopted Accounting Pronouncements and Accounting Pronouncements Not Yet Adopted | Recently Adopted Accounting Pronouncements On January 1, 2018, the Company adopted a new accounting standard, as amended, regarding revenue from contracts with customers using the modified retrospective approach. This standard provides guidance on recognizing revenue, including a five-step model to determine when revenue recognition is appropriate. The adoption of this standard did not have a material impact on the Company’s financial position and results of operations. Refer to Note 3 for the related additional disclosures. On January 1, 2018, the Company adopted an accounting pronouncement regarding classification and measurement of financial instruments. This standard provides guidance on how entities measure certain equity investments and present changes in fair value. This standard requires that entities measure certain equity investments that do not result in consolidation and are not accounted for under the equity method at fair value and recognize any changes in fair value in net income. The Company’s money market funds have readily determinable fair values, as disclosed in Note 9, and for those equity investments that are not accounted for under the equity method and that do not have readily determinable fair values, the Company has elected to measure these securities at cost less impairment, adjusted for observable price changes for identical or similar investments of the same issuer. The adoption of this standard did not have a material impact on the Company’s financial position, results of operations, or related disclosures. On January 1, 2018, the Company adopted an accounting pronouncement regarding certain intra-entity asset transfers that requires that an entity recognize any income tax consequences when the transfer occurs. The adoption of this standard did not have a material impact on the Company’s financial position. On January 1, 2018, the Company retrospectively adopted an accounting pronouncement that requires restricted cash, which is recorded in “Other assets” in the Company’s Consolidated Balance Sheets, to be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period amounts shown on the statements of cash flows. The adoption of this standard had an immaterial impact on the Company’s historical operating cash flows within the Consolidated Statements of Cash Flows. On January 1, 2018, the Company retrospectively adopted an accounting pronouncement that requires the non-service cost components of defined benefit plan pension costs to be presented in the income statement separately from the service cost component, outside a subtotal of income from operations. The Company has no service costs, as the Company’s defined benefit pension plan is frozen. Prior to the adoption of this standard, the Company recorded the non-service costs of the defined benefit pension plan in the “Cost of services” line item of the Consolidated Statements of Income/(Loss). After the adoption of this standard, the Company records these costs in the “Other income, net” line item, including for the years ended December 31, 2018, 2017 and 2016. The adoption of this standard resulted in reductions to “Cost of services” and “Other income, net” of $2.4 million and $3.3 million for the years ended December 31, 2017 and 2016, respectively, from the amounts previously reported. On January 1, 2018, the Company elected to adopt an accounting pronouncement to improve the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements. The effects of the standard are recognized prospectively in the Company’s financial statements. The adoption of this standard did not have a material impact on the Company’s financial position or results of operations, but does require the addition of certain disclosures. Refer to Note 15 for additional information and the related disclosures. In the first quarter of 2018, the Company adopted a new accounting pronouncement that provides entities the option to reclassify tax effects included within accumulated other comprehensive income/(loss) as a result of the United States tax reform legislation enacted in December 2017 (the “Tax Act”) to retained earnings. The adoption of this standard resulted in an increase to “Accumulated other comprehensive loss” and a decrease to “Accumulated deficit” in the Consolidated Balance Sheet of $31.4 million, which represents the tax effects of the lower federal tax rate on unrealized gains/(losses) on investment securities, hedging activities, and adjustments related to the Company’s defined benefit pension plan, in addition to the release of deferred taxes accrued on undistributed earnings of one of the Company’s subsidiaries that are no longer owed under the Tax Act. The Company will continue to release tax effects remaining in “Accumulated other comprehensive loss” into income as the individual units of account are sold or otherwise extinguished. Refer to Note 14 for additional information. Accounting Pronouncements Not Yet Adopted In February 2016, the Financial Accounting Standards Board issued a new accounting pronouncement that requires lessees to record assets and liabilities on the balance sheet for lease-related rights and obligations and disclose key information about certain leasing arrangements. This new standard establishes a right-of-use (“ROU”) model that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases will be classified as financing or operating, with classification affecting the pattern of expense recognition in the statement of operations. The Company will adopt the new standard, including the related amendments, effective January 1, 2019 using the modified retrospective approach, applying the provisions of the new standard on its effective date. Management has completed its analysis and determined that substantially all of its leasing arrangements will be classified as operating. In June 2016, the Financial Accounting Standards Board issued a new accounting pronouncement regarding credit losses for financial instruments. The new standard requires entities to measure expected credit losses for certain financial assets held at the reporting date using a current expected credit loss model, which is based on historical experience, adjusted for current conditions and reasonable and supportable forecasts. Additionally, the standard requires certain credit losses relating to investment securities classified as available-for-sale to be recorded through an allowance for credit losses. The Company is required to adopt the new standard on January 1, 2020. Management is currently evaluating the potential impact that the adoption of this standard will have on the Company’s financial position, results of operations, and related disclosures. |
Investment Securities | Investment securities included in “Settlement assets” in the Company’s Consolidated Balance Sheets consist primarily of highly-rated state and municipal debt securities, including fixed rate term notes and variable rate demand notes. Variable rate demand note securities can be put (sold at par) typically on a daily basis with settlement periods ranging from the same day to one week, but have varying maturities through 2050. These securities may be used by the Company for short-term liquidity needs and held for short periods of time. The Company is required to hold highly-rated, investment grade securities and such investments are restricted to satisfy outstanding settlement obligations in accordance with applicable state and foreign country requirements. The substantial majority of the Company’s investment securities are classified as available-for-sale and recorded at fair value. Investment securities are exposed to market risk due to changes in interest rates and credit risk. Western Union regularly monitors credit risk and attempts to mitigate its exposure by investing in highly-rated securities and through investment diversification. Unrealized gains and losses on available-for-sale securities are excluded from earnings and presented as a component of accumulated other comprehensive loss, net of related deferred taxes. Proceeds from the sale and maturity of available-for-sale securities during the years ended December 31, 2018, 2017 and 2016 were $7.7 billion, $7.9 billion and $4.4 billion, respectively. Gains and losses on investments are calculated using the specific-identification method and are recognized during the period in which the investment is sold or when an investment experiences an other-than-temporary decline in value. Factors that could indicate an impairment exists include, but are not limited to: earnings performance, changes in credit rating or adverse changes in the regulatory or economic environment of the asset. If potential impairment exists, the Company assesses whether it has the intent to sell the debt security, more likely than not will be required to sell the debt security before its anticipated recovery or expects that some of the contractual cash flows will not be received. The Company had no material other-than-temporary impairments during the periods presented. |
Foreign Currency — Derivatives | Foreign Currency Derivatives The Company’s policy is to use longer-term foreign currency forward contracts, with maturities of up to 36 months at inception and a targeted weighted-average maturity of approximately one year, to help mitigate some of the risk that changes in foreign currency exchange rates compared to the United States dollar could have on forecasted revenues denominated in other currencies related to its business. As of December 31, 2018, the Company’s longer-term foreign currency forward contracts had maturities of a maximum of 24 months with a weighted-average maturity of approximately one year. These contracts are accounted for as cash flow hedges of forecasted revenue, with effectiveness assessed based on changes in the spot rate of the affected currencies during the period of designation and thus time value is excluded from the assessment of effectiveness. As discussed in Note 2, the Company early adopted an accounting pronouncement related to hedging activities as of January 1, 2018. As a result of the new accounting pronouncement, for foreign currency cash flow hedges entered into on or after January 1, 2018, the Company excludes time value from the assessment of effectiveness, and the initial value of the excluded components is amortized into “Revenues” within the Company’s Consolidated Statements of Income/(Loss). For foreign currency cash flow hedges entered into before January 1, 2018, all changes in the fair value of the excluded components are recognized immediately in “Revenues” for the year ended December 31, 2018. For the years ended December 31, 2017 and 2016, the changes in fair value of the excluded components were recognized immediately within the Company’s Consolidated Statements of Income/(Loss) and are included in “Other income, net.” The Company also uses short duration foreign currency forward contracts, generally with maturities from a few days up to one month, to offset foreign exchange rate fluctuations on settlement assets and obligations between initiation and settlement. In addition, forward contracts, typically with maturities of less than one year at inception, are utilized to offset foreign exchange rate fluctuations on certain foreign currency denominated cash and other asset and liability positions. None of these contracts are designated as accounting hedges. |
Foreign Currency — Business Solutions | Business Solutions Operations The Company writes derivatives, primarily foreign currency forward contracts and option contracts, mostly with small and medium size enterprises and derives a currency spread from this activity as part of its Business Solutions operations. The Company aggregates its Business Solutions foreign currency exposures arising from customer contracts, including the derivative contracts described above, and hedges the resulting net currency risks by entering into offsetting contracts with established financial institution counterparties (economic hedge contracts). The derivatives written are part of the broader portfolio of foreign currency positions arising from the Company’s cross-currency payments operations, which primarily include spot exchanges of currency in addition to forwards and options. Foreign exchange revenues from the total portfolio of positions were $342.3 million, $341.0 million, and $352.6 million for the years ended December 31, 2018, 2017 and 2016, respectively. None of the derivative contracts used in Business Solutions operations are designated as accounting hedges. The duration of these derivative contracts at inception is generally less than one year. The aggregate equivalent United States dollar notional amount of derivative customer contracts held by the Company in its Business Solutions operations as of December 31, 2018 was approximately $6.0 billion. The significant majority of customer contracts are written in major currencies such as the United States dollar, euro, and Canadian dollar. |
Interest Rate Hedging | Interest Rate Hedging The Company utilizes interest rate swaps to effectively change the interest rate payments on a portion of its notes from fixed-rate payments to short-term LIBOR-based variable rate payments in order to manage its overall exposure to interest rates. The Company designates these derivatives as fair value hedges. The change in fair value of the interest rate swaps is offset by a change in the carrying value of the debt being hedged within “Borrowings” in the Consolidated Balance Sheets and “Interest expense” in the Consolidated Statements of Income/(Loss) has been adjusted to include the effects of interest accrued on the swaps. |
Segments | The Company’s reportable segments are reviewed separately below because each reportable segment represents a strategic business unit that offers different products and serves different markets. The business segment measurements provided to, and evaluated by, the Company’s CODM are computed in accordance with the following principles: · The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies. · Corporate costs, including stock-based compensation and other overhead, are allocated to the segments primarily based on a percentage of the segments’ revenue compared to total revenue. · On January 1, 2018, the Company adopted an accounting pronouncement that requires the non-service costs of the defined benefit pension plan to be presented outside a subtotal of income from operations, with adoption retrospective for periods previously presented. The adoption of this standard resulted in an increase of $2.4 million and $3.3 million to operating income, respectively, for the years ended December 31, 2017 and 2016, from the amounts previously reported, and this increase was allocated among the segments in a method consistent with the original allocation of this expense. Segment results for the years ended December 31, 2017 and 2016 in table below have been adjusted to conform with the new presentation. · As described in Note 5, during 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. · As described in Note 6, the Company incurred $60.0 million of expenses related to the NYDFS Consent Order during the year ended December 31, 2017, and expenses of $8.0 million and $601.0 million related to the Joint Settlement Agreements during the years ended December 31, 2017 and 2016, respectively. While these expenses were identifiable to the Company’s Consumer-to-Consumer segment, they were not allocated to the segment, as 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. · As of December 31, 2017, expenses associated with the WU Way initiative were effectively complete. The Company incurred expenses related to the WU Way of $94.4 million and $20.3 million during the years ended December 31, 2017 and 2016, respectively. While certain items related to the initiative 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 this business transformation initiative, see Note 4. · The CODM does not review total assets by segment for purposes of assessing segment performance and allocating resources. As such, the disclosure of total assets by segment has not been included below. · All items not included in operating income are excluded from the segments. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Summary of Significant Accounting Policies | |
Schedule of diluted weighted-average shares outstanding | The following table provides the calculation of diluted weighted-average shares outstanding (in millions): For the Year Ended December 31, 2018 2017 2016 Basic weighted-average shares outstanding 451.8 467.9 490.2 Common stock equivalents 2.6 — 3.3 Diluted weighted-average shares outstanding 454.4 467.9 493.5 |
Schedule of settlement assets and obligations | Settlement assets and obligations consisted of the following (in millions): December 31, 2018 2017 Settlement assets: Cash and cash equivalents $ 1,247.8 $ 1,264.8 Receivables from selling agents and Business Solutions customers 1,355.4 1,573.9 Investment securities 1,210.6 1,350.2 $ 3,813.8 $ 4,188.9 Settlement obligations: Money transfer, money order and payment service payables $ 2,793.6 $ 2,789.2 Payables to agents 1,020.2 1,399.7 $ 3,813.8 $ 4,188.9 |
Schedule of property and equipment | Property and equipment consisted of the following (in millions): December 31, 2018 2017 Equipment $ 656.8 $ 604.7 Leasehold improvements 158.6 87.4 Buildings 88.6 88.6 Furniture and fixtures 51.6 42.0 Land and improvements 17.0 17.0 Projects in process 0.2 10.2 Total property and equipment, gross 972.8 849.9 Less accumulated depreciation (702.4) (635.7) Property and equipment, net $ 270.4 $ 214.2 |
Schedule of components of other intangible assets | The following table provides the components of other intangible assets (in millions): December 31, 2018 December 31, 2017 Weighted- Average Amortization Net of Net of Period Accumulated Accumulated (in years) Initial Cost Amortization Initial Cost Amortization Acquired contracts 11.5 $ 598.1 $ 171.2 $ 600.4 $ 220.0 Capitalized contract costs 6.2 536.5 318.9 559.5 268.2 Internal use software 3.5 447.3 80.6 387.8 53.1 Acquired trademarks 24.8 32.5 15.5 33.2 16.9 Other intangibles 4.7 19.4 — 20.0 — Projects in process (a) 12.0 12.0 28.1 28.1 Total other intangible assets 7.7 $ 1,645.8 $ 598.2 $ 1,629.0 $ 586.3 (a) Not applicable as the assets have not been placed in service. |
Revenue (Tables)
Revenue (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Revenue | |
Disaggregation of revenue earned from contracts with customers | Management has determined that the significant majority of the Company’s revenue is recognized at a point in time. The following table represents the disaggregation of revenue earned from contracts with customers which are in the scope of the new accounting standard, by product type and region for the year ended December 31, 2018 (in millions). The regional split of revenue shown in the table below is based upon where transactions are initiated. Revenues that would have been reported under previous accounting guidance would not have been materially different from the amounts shown below: Year Ended December 31, 2018 Foreign Consumer Exchange Money and Payment Consumer Other Transfers Services Bill Payments Services Total Regions: North America $ 1,632.3 $ 97.6 $ 463.9 $ 57.4 $ 2,251.2 Europe and Russia/CIS 1,399.5 130.0 3.1 3.9 1,536.5 Middle East, Africa, and South Asia 654.4 1.5 0.3 — 656.2 Latin America and the Caribbean 393.2 3.1 152.7 13.7 562.7 East Asia and Oceania 304.6 69.9 1.5 — 376.0 Revenues from contracts with customers $ 4,384.0 $ 302.1 $ 621.5 $ 75.0 $ 5,382.6 Other revenues (a) 69.6 84.7 30.8 22.2 207.3 Total revenues (b) $ 4,453.6 $ 386.8 $ 652.3 $ 97.2 $ 5,589.9 (a) Includes revenue from the sale of derivative financial instruments, investment income generated on settlement assets primarily related to money transfer and money order services, and other sources, which are not subject to the new accounting standard. (b) Revenues from “Consumer money transfers” are included in the Company’s Consumer-to-Consumer segment, revenues from “Foreign exchange and payment services” are included in the Company’s Business Solutions segment, and revenues from “Consumer bill payments” and “Other services” are not included in the Company’s segments and are reported as “Other.” See Note 18 for further information on the Company’s segments. |
Business Transformation Expen_2
Business Transformation Expenses (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Business Transformation Expenses | |
Schedule of Business Transformation expenses accrual by type of cost | The following table summarizes the activity for the years ended December 31, 2018 and December 31, 2017 for the consulting service fees, severance, and other costs related to the business transformation accruals, which are included in “Accounts payable and accrued liabilities” in the Company’s Consolidated Balance Sheets as of December 31, 2018 and December 31, 2017 (in millions): Severance and Related Consulting Employee Service Fees Benefits Other Total 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 Cash payments and other (8.2) (22.5) (1.6) (32.3) Balance, December 31, 2018 $ — $ 0.7 $ — $ 0.7 (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. |
Schedule of business transformation and productivity and cost-savings initiatives expenses in the Consolidated Statements of Income | The following table presents expenses related to business transformation initiatives as reflected in the Consolidated Statements of Income/(Loss) (in millions): Year Ended December 31, 2017 2016 Cost of services $ 35.7 $ 2.5 Selling, general and administrative 58.7 17.8 Total expenses, pre-tax $ 94.4 $ 20.3 Total expenses, net of tax $ 63.3 $ 12.9 |
Schedule of business transformation expenses incurred by reportable segment | The following table summarizes the business transformation expenses incurred by reportable segment (in millions). Certain business transformation expenses, primarily consulting expenses, are not identifiable to a specific segment, and have therefore been excluded from the table below. These expenses were not allocated to the Company’s segments disclosed in Note 18. While certain of these items are identifiable to the Company’s segments, these expenses were excluded from the measurement of segment operating income provided to the Chief Operating Decision Maker (“CODM”) for purposes of assessing segment performance and decision making with respect to resource allocation: Consumer-to- Consumer Business Solutions Other Total 2017 expenses $ 30.8 $ 16.1 $ 13.6 $ 60.5 2016 expenses 2.7 0.6 0.5 3.8 |
Goodwill (Tables)
Goodwill (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Goodwill | |
Schedule of changes to goodwill | The following table presents changes to goodwill for the years ended December 31, 2018 and 2017 (in millions): Consumer-to- Business Consumer Solutions Other Total January 1, 2017 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 Purchase accounting adjustments (0.3) — — (0.3) Currency translation — — (2.6) (2.6) December 31, 2018 goodwill, net $ 1,980.7 $ 532.0 $ 212.3 $ 2,725.0 |
Schedule of accumulated impairment losses of goodwill | The following table presents accumulated impairment losses as of December 31, 2018, 2017 and 2016 (in millions): As of December 31, 2018 2017 2016 Goodwill, gross $ 3,189.0 $ 3,191.9 $ 3,162.0 Accumulated impairment losses (464.0) (464.0) — Goodwill, net $ 2,725.0 $ 2,727.9 $ 3,162.0 |
Investment Securities (Tables)
Investment Securities (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Investment Securities | |
Schedule of components of investment securities | The components of investment securities are as follows (in millions): Gross Gross Net Amortized Fair Unrealized Unrealized Unrealized December 31, 2018 Cost Value Gains Losses Gains/(Losses) Cash: Money market funds $ 27.0 $ 27.0 $ — $ — $ — Settlement assets: Cash and cash equivalents: Money market funds 23.9 23.9 — — — Available-for-sale securities: State and municipal debt securities (a) 963.4 962.7 6.1 (6.8) (0.7) State and municipal variable rate demand notes 168.7 168.7 — — — Corporate and other debt securities 70.0 69.5 — (0.5) (0.5) United States Treasury securities 9.9 9.7 — (0.2) (0.2) 1,212.0 1,210.6 6.1 (7.5) (1.4) Other assets: Held-to-maturity securities: Foreign corporate debt securities 32.9 32.9 — — — $ 1,295.8 $ 1,294.4 $ 6.1 $ (7.5) $ (1.4) Gross Gross Net Amortized Fair Unrealized Unrealized Unrealized December 31, 2017 Cost Value Gains Losses 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 (a) The majority of these securities are fixed rate instruments. |
Schedule of contractual maturities of debt securities | The following summarizes the contractual maturities of settlement-related debt securities as of December 31, 2018 (in millions): Fair Value Due within 1 year $ 128.4 Due after 1 year through 5 years 482.3 Due after 5 years through 10 years 276.0 Due after 10 years 323.9 $ 1,210.6 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Fair Value Measurements | |
Schedule of assets and liabilities measured at fair value on a recurring basis | The following tables reflect assets and liabilities that were measured at fair value on a recurring basis (in millions): Assets/ Liabilities at Fair Value Measurement Using Fair December 31, 2018 Level 1 Level 2 Level 3 Value Assets: Cash: Measured at fair value through net income: Money market funds $ 27.0 $ — $ — $ 27.0 Settlement assets: Measured at fair value through net income: Money market funds 23.9 — — 23.9 Measured at fair value through other comprehensive income: State and municipal debt securities — 962.7 — 962.7 State and municipal variable rate demand notes — 168.7 — 168.7 Corporate and other debt securities — 69.5 — 69.5 United States Treasury securities 9.7 — — 9.7 Other assets: Derivatives — 245.5 — 245.5 Total assets $ 60.6 $ 1,446.4 $ — $ 1,507.0 Liabilities: Derivatives $ — $ 176.2 $ — $ 176.2 Total liabilities $ — $ 176.2 $ — $ 176.2 Assets/ Liabilities at Fair Value Measurement Using Fair December 31, 2017 Level 1 Level 2 Level 3 Value Assets: Settlement assets: Measured at fair value through other comprehensive income: 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 |
Other Assets and Other Liabil_2
Other Assets and Other Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Other Assets and Other Liabilities | |
Schedule of components of other assets and other liabilities | The following table summarizes the components of other assets and other liabilities (in millions): December 31, 2018 2017 Other assets: Derivatives $ 245.5 $ 273.4 Prepaid expenses 101.3 120.5 Amounts advanced to agents, net of discounts 57.6 53.5 Equity method investments 31.3 29.1 Other 180.3 199.4 Total other assets $ 616.0 $ 675.9 Other liabilities: Derivatives $ 176.2 $ 263.0 Pension obligations 16.0 15.0 Other 86.9 78.8 Total other liabilities $ 279.1 $ 356.8 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Taxes | |
Schedule of components of pre-tax income | The components of pre-tax income, generally based on the jurisdiction of the legal entity, were as follows (in millions): Year Ended December 31, 2018 2017 2016 Domestic $ (11.4) $ (238.8) $ (546.4) Foreign 1,002.8 586.3 888.1 $ 991.4 $ 347.5 $ 341.7 |
Schedule of provision for income taxes | The provision for income taxes was as follows (in millions): Year Ended December 31, 2018 2017 2016 Federal $ 62.9 $ 848.5 $ 43.5 State and local 0.6 5.4 2.9 Foreign 76.0 50.7 42.1 $ 139.5 $ 904.6 $ 88.5 |
Schedule of effective tax rate reconciliation | The Company’s effective tax rates differed from statutory rates as follows: Year Ended December 31, 2018 2017 2016 Federal statutory rate 21.0 % 35.0 % 35.0 % State income taxes, net of federal income tax benefits 0.4 % 1.7 % 1.2 % Foreign rate differential, net of United States tax paid on foreign earnings (4.9%, 1.1% and 24.8%, respectively) (8.2) % (69.3) % (50.8) % Tax Act impact 2.3 % 251.5 % — % Joint Settlement Agreements impact — % — % 62.1 % NYDFS Consent Order impact — % 6.0 % — % Goodwill impairment — % 46.7 % — % Base erosion anti-abuse tax (BEAT) 3.0 % — % — % Lapse of statute of limitations (2.2) % (10.0) % (11.3) % Valuation allowances % 0.8 % (2.8) % Other (2.2) % (2.1) % (7.5) % Effective tax rate 14.1 % 260.3 % 25.9 % |
Schedule of components of provision for income taxes, current and deferred | The Company’s provision for income taxes consisted of the following components (in millions): Year Ended December 31, 2018 2017 2016 Current: Federal $ 69.2 $ 774.4 $ 186.2 State and local 0.0 1.0 13.1 Foreign 85.4 59.7 63.4 Total current taxes 154.6 835.1 262.7 Deferred: Federal (6.3) 74.1 (142.7) State and local 0.6 4.4 (10.2) Foreign (9.4) (9.0) (21.3) Total deferred taxes (15.1) 69.5 (174.2) $ 139.5 $ 904.6 $ 88.5 |
Schedule of components of deferred tax items | The following table outlines the principal components of deferred tax items (in millions): December 31, 2018 2017 Deferred tax assets related to: Reserves, accrued expenses and employee-related items $ 42.6 $ 44.8 Tax attribute carryovers 29.9 27.1 Pension obligations 4.8 4.6 Intangibles, property and equipment 8.5 11.9 Other 5.3 10.7 Valuation allowance (15.7) (19.9) Total deferred tax assets 75.4 79.2 Deferred tax liabilities related to: Intangibles, property and equipment 228.0 239.4 Other — 0.9 Total deferred tax liabilities 228.0 240.3 Net deferred tax liability (a) $ 152.6 $ 161.1 (a) As of December 31, 2018 and 2017, deferred tax assets that cannot be fully offset by deferred tax liabilities in the respective tax jurisdictions of $8.5 million and $11.9 million, respectively, are reflected in “Other assets” in the Consolidated Balance Sheets. |
Schedule of unrecognized tax benefits reconciliation | A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding interest and penalties, is as follows (in millions): 2018 2017 Balance as of January 1, $ 329.0 $ 352.0 Increase related to current period tax positions (a) 4.0 9.0 Increase related to prior period tax positions 0.4 — Decrease related to prior period tax positions (18.5) (19.8) Decrease due to lapse of applicable statute of limitations (17.7) (14.0) Increase/(decrease) due to effects of foreign currency exchange rates (2.2) 1.8 Balance as of December 31, $ 295.0 $ 329.0 (a) Includes recurring accruals for issues which initially arose in previous periods. |
Operating Lease Commitments (Ta
Operating Lease Commitments (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Operating Lease Commitments | |
Schedule of minimum aggregate rental commitments under all non-cancelable operating leases | As of December 31, 2018, the minimum aggregate rental commitments under all non-cancelable operating leases were as follows (in millions): Year Ending December 31, 2019 $ 51.6 2020 44.1 2021 35.4 2022 31.4 2023 25.2 Thereafter 112.6 Total future minimum lease payments $ 300.3 |
Stockholders' Equity_(Deficit)
Stockholders' Equity/(Deficit) (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Stockholders’ Equity/(Deficit) | |
Schedule of components of accumulated other comprehensive income/(loss), net of tax | The following table summarizes the components of accumulated other comprehensive loss, net of tax (in millions). All amounts reclassified from accumulated other comprehensive loss affect the line items as indicated below within the Consolidated Statements of Income/(Loss). Additionally, as described in Note 2, in the first quarter of 2018, the Company adopted a new accounting pronouncement and reclassified tax effects included within accumulated other comprehensive income/(loss) as a result of the Tax Act to “Accumulated deficit” in the Consolidated Balance Sheet. Year Ended December 31, 2018 2017 2016 Unrealized gains/(losses) on investment securities, beginning of year $ 2.7 $ (3.8) $ 7.8 Unrealized gains/(losses) (5.9) 12.6 (14.9) Tax (expense)/benefit 1.3 (4.6) 5.4 Reclassification of (gains)/losses into "Revenues" 0.4 (2.4) (3.3) Tax expense/(benefit) related to reclassifications (0.1) 0.9 1.2 Net unrealized gains/(losses) on investment securities (4.3) 6.5 (11.6) Reclassification of Tax Act effects into "Accumulated deficit" (Note 2) 0.5 — — Unrealized gains/(losses) on investment securities, end of year $ (1.1) $ 2.7 $ (3.8) Unrealized gain/(losses) on hedging activities, beginning of year $ (40.6) $ 33.8 $ 41.4 Unrealized gains/(losses) 35.6 (73.9) 34.3 Tax (expense)/benefit (1.6) 2.2 1.0 Reclassification of (gains)/losses into "Revenues" 14.9 (4.8) (48.0) Reclassification of losses into "Interest expense" 2.1 3.3 3.6 Tax expense/(benefit) related to reclassifications (0.7) (1.2) 1.5 Net unrealized gains/(losses) on hedging activities 50.3 (74.4) (7.6) Reclassification of Tax Act effects into "Accumulated deficit" (Note 2) (2.3) — — Unrealized gains/(losses) on hedging activities, end of year $ 7.4 $ (40.6) $ 33.8 Foreign currency translation adjustments, beginning of year $ (76.9) $ (70.7) $ (66.0) Foreign currency translation adjustments (19.5) (6.8) (5.4) Tax benefit — 0.6 0.7 Net foreign currency translation adjustments (19.5) (6.2) (4.7) Reclassification of Tax Act effects into "Accumulated deficit" (Note 2) (4.8) — — Foreign currency translation adjustments, end of year $ (101.2) $ (76.9) $ (70.7) Defined benefit pension plan adjustments, beginning of year $ (113.1) $ (122.1) $ (127.1) Unrealized gains/(losses) (9.3) 2.3 (2.9) Tax (expense)/benefit 2.0 (0.5) 1.1 Reclassification of losses into "Other income, net" 11.7 11.3 10.7 Tax benefit related to reclassifications (2.6) (4.1) (3.9) Net defined benefit pension plan adjustments 1.8 9.0 5.0 Reclassification of Tax Act effects into "Accumulated deficit" (Note 2) (24.8) — — Defined benefit pension plan adjustments, end of year $ (136.1) $ (113.1) $ (122.1) Accumulated other comprehensive loss, end of year $ (231.0) $ (227.9) $ (162.8) |
Schedule of dividends declared | Dividends per share declared quarterly by the Company’s Board of Directors during the years ended 2018, 2017 and 2016 were as follows: Year Q1 Q2 Q3 Q4 2018 $ 0.19 $ 0.19 $ 0.19 $ 0.19 2017 $ 0.175 $ 0.175 $ 0.175 $ 0.175 2016 $ 0.16 $ 0.16 $ 0.16 $ 0.16 |
Derivatives (Tables)
Derivatives (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Derivatives | |
Schedule of notional amounts of foreign currency forward contracts | The aggregate equivalent United States dollar notional amounts of foreign currency forward contracts as of December 31, 2018 were as follows (in millions): Contracts designated as hedges: Euro $ 364.7 Canadian dollar 97.1 British pound 76.4 Australian dollar 45.3 Japanese Yen 25.2 Other 50.1 Contracts not designated as hedges: Euro $ 274.4 British pound 81.5 Canadian dollar 46.0 Australian dollar 39.0 Indian rupee 37.2 Brazilian real 35.8 Japanese Yen 34.3 Mexican peso 34.2 Other (a) 138.5 (a) Comprised of exposures to 23 different currencies. None of these individual currency exposures is greater than $25 million. |
Schedule of fair value of derivatives | The following table summarizes the fair value of derivatives reported in the Consolidated Balance Sheets as of December 31, 2018 and December 31, 2017 (in millions): Derivative Assets Derivative Liabilities Fair Value Fair Value Balance Sheet December 31, December 31, Balance Sheet December 31, December 31, Location 2018 2017 Location 2018 2017 Derivatives — hedges: Interest rate fair value hedges Other assets $ 0.1 $ 3.3 Other liabilities $ — $ — Foreign currency cash flow hedges Other assets 28.6 8.0 Other liabilities 2.8 36.1 Total $ 28.7 $ 11.3 $ 2.8 $ 36.1 Derivatives — undesignated: Business Solutions operations — foreign currency (a) Other assets $ 214.2 $ 260.2 Other liabilities $ 170.9 $ 221.6 Foreign currency Other assets 2.6 1.9 Other liabilities 2.5 5.3 Total $ 216.8 $ 262.1 $ 173.4 $ 226.9 Total derivatives $ 245.5 $ 273.4 $ 176.2 $ 263.0 (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. |
Schedule of gross and net fair value of derivative assets | Offsetting of Derivative Assets Gross Net Amounts Derivatives Gross Amounts Presented Not Offset Amounts of Offset in the in the in the Recognized Consolidated Consolidated Consolidated December 31, 2018 Assets Balance Sheets Balance Sheets Balance Sheets Net Amounts Derivatives subject to a master netting arrangement or similar agreement $ 162.6 $ — $ 162.6 $ (95.7) $ 66.9 Derivatives that are not or may not be subject to master netting arrangement or similar agreement 82.9 Total $ 245.5 December 31, 2017 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 |
Schedule of gross and net fair value of derivative liabilities | Offsetting of Derivative Liabilities Gross Net Amounts Derivatives Gross Amounts Presented Not Offset Amounts of Offset in the in the in the Recognized Consolidated Consolidated Consolidated December 31, 2018 Liabilities Balance Sheets Balance Sheets Balance Sheets Net Amounts Derivatives subject to a master netting arrangement or similar agreement $ 104.1 $ — $ 104.1 $ (95.7) $ 8.4 Derivatives that are not or may not be subject to master netting arrangement or similar agreement 72.1 Total $ 176.2 December 31, 2017 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 |
Schedule of location and amount of gains/(losses) from hedging activities | The following tables summarize the location and amount of gains and losses of derivatives in the Consolidated Statements of Income/(Loss) segregated by designated, qualifying hedging instruments and those that are not, for the years ended December 31, 2018, 2017, and 2016 (in millions): Cash Flow and Fair Value Hedges The following table presents the amount of gains/(losses) recognized in other comprehensive income/(loss) from cash flow hedges for the years ended December 31, 2018, 2017, and 2016 (in millions): Amount of Gain/(Loss) Recognized in Other Comprehensive Income/(Loss) on Derivatives Derivatives 2018 2017 2016 Cash Flow Hedges: Foreign currency contracts (a) $ 35.6 $ (73.9) $ 34.3 The following table presents the location and amount of gains/(losses) from fair value and cash flow hedges for the years ended December 31, 2018, 2017, and 2016 (in millions): Location and Amount of Gain/(Loss) Recognized in Income on Fair Value and Cash Flow Hedging Relationships December 31, 2018 December 31, 2017 December 31, 2016 Other Other Other Interest income, Interest income, Interest income, Revenues Expense net Revenues Expense net Revenues Expense net Total amounts presented in the consolidated statements of income/(loss) in which the effects of fair value or cash flow hedges are recorded $ 5,589.9 $ (149.6) $ 14.1 $ 5,524.3 $ (142.1) $ 8.9 $ 5,422.9 $ (152.5) $ 3.7 The effects of fair value and cash flow hedging: Gain/(loss) on fair value hedges: Interest rate contracts: Hedged items — 0.6 — — 3.9 — — 3.2 — Derivatives designated as hedging instruments — (1.6) — — (2.0) — — 6.2 — Gain/(loss) on cash flow hedges: Foreign exchange contracts: Amount of gain/(loss) reclassified from accumulated other comprehensive loss into income (14.9) — — 4.8 — — 48.0 — — Amount excluded from effectiveness testing recognized in earnings based on an amortization approach 4.3 — — — — — — — — Amount excluded from effectiveness testing recognized in earnings based on changes in fair value 7.5 — — — — 9.0 — — 3.7 Amount of gain/(loss) reclassified from accumulated other comprehensive loss into income as a result that a forecasted transaction is no longer probable of occurring — — — — — (1.4) — — — Undesignated Hedges The following table presents the location and amount of net gains/(losses) from undesignated hedges for the years ended December 31, 2018, 2017, and 2016 (in millions): Gain/(Loss) Recognized in Income on Derivatives (b) Income Statement Location Amount Derivatives 2018 2017 2016 Foreign currency contracts (c) Selling, general and administrative $ 58.6 $ (20.5) $ 13.2 Foreign currency contracts (d) Revenues 3.0 — — Foreign currency contracts (d) Other income, net (1.8) (0.5) 0.8 Total gain/(loss) $ 59.8 $ (21.0) $ 14.0 (a) For the year ended December 31, 2018, gains of $0.1 million represent the amounts excluded from the assessment of effectiveness that were recognized in other comprehensive income, for which an amortization approach is applied. For the years ended December 31, 2017 and 2016, there were no amounts recorded in other comprehensive income for amounts excluded from the measurement of effectiveness. (b) 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. (c) 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 $(52.3) million, $17.5 million, and $(21.4) million for the years ended 2018, 2017, and 2016, respectively. (d) All derivative contracts executed in the Company’s revenue hedging program prior to January 1, 2018 are not designated as hedges in the final month of the contract. The change in fair value in this final month was recorded to “Revenues” for the year ended December 31, 2018 and “Other income, net” for the years ended December 31, 2017 and 2016. The amount recorded to “Other income, net” for the year ended December 31, 2018 relates to losses on certain undesignated foreign currency derivative contracts that were recognized after the Company determined that certain forecasted transactions were no longer probable of occurring. |
Borrowings (Tables)
Borrowings (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Borrowings | |
Schedule of borrowings | The Company’s outstanding borrowings consisted of the following (in millions): December 31, 2018 December 31, 2017 Commercial paper $ 125.0 $ — Notes: 3.650% notes due 2018 (a) — 400.0 3.350% notes due 2019 (b) 250.0 250.0 Floating rate notes (effective rate of 3.7%) due 2019 250.0 250.0 5.253% notes (effective rate of 5.9%) due 2020 324.9 324.9 3.600% notes due 2022 (b) 500.0 500.0 4.250% notes (effective rate of 4.5%) due 2023 (c) 300.0 — 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 3.8%) (d) 950.0 575.0 Total borrowings at par value 3,449.9 3,049.9 Fair value hedge accounting adjustments, net (e) (0.1) 0.5 Debt issuance costs and unamortized discount, net (16.1) (16.8) Total borrowings at carrying value (f) $ 3,433.7 $ 3,033.6 (a) Proceeds from the 4.250% unsecured notes due in 2023 (“2023 Notes”), commercial paper and cash, including cash generated from operations, were used to repay the August 2018 maturity of $400.0 million of aggregate principal amount unsecured notes. (b) The difference between the stated interest rate and the effective interest rate is not significant. (c) On June 11, 2018, the Company issued $300.0 million of aggregate principal amount of 4.250% unsecured notes due in 2023. (d) On December 18, 2018, the Company entered into an amended and restated term loan facility providing for up to $950 million in borrowings and extending the final maturity of the facility to January 2024 (the “Term Loan Facility”). As of December 31, 2018, the Company has borrowed the remaining amounts available under the facility. (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 i nterest to differ from the notes’ stated rate. (f) As of December 31, 2018, the Company’s weighted-average effective rate on total borrowings was approximately 4.5%. |
Schedule of maturities of borrowings | The following summarizes the Company’s maturities of notes at par value as of December 31, 2018 (in millions): Due within 1 year $ 500.0 Due after 1 year through 2 years 324.9 Due after 2 years through 3 years 47.5 Due after 3 years through 4 years 547.5 Due after 4 years through 5 years 395.0 Due after 5 years 1,510.0 |
Stock Compensation Plans (Table
Stock Compensation Plans (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Stock Compensation Plans | |
Schedule of stock option activity | A summary of stock option activity for the year ended December 31, 2018 was as follows (options and aggregate intrinsic value in millions): Year Ended December 31, 2018 Weighted-Average Remaining Aggregate Weighted-Average Contractual Term Intrinsic Options Exercise Price (Years) Value Outstanding as of January 1 7.3 $ 17.71 Granted 0.4 $ 20.09 Exercised (0.7) $ 15.50 Cancelled/forfeited (0.8) $ 21.14 Outstanding as of December 31 6.2 $ 17.63 4.6 $ 4.9 Options exercisable as of December 31 5.1 $ 17.23 3.9 $ 4.9 |
Schedule of restricted stock units and performance based restricted stock units activity | A summary of activity for restricted stock units and performance-based restricted stock units for the year ended December 31, 2018 is listed below (units in millions): Year Ended December 31, 2018 Number Weighted-Average Outstanding Grant-Date Fair Value Non-vested as of January 1 7.4 $ 17.32 Granted 3.2 $ 18.31 Vested (2.4) $ 17.38 Forfeited (1.1) $ 17.69 Non-vested as of December 31 7.1 $ 17.69 |
Schedule of impact on earnings for stock-based compensation expense | The following table sets forth the total impact on earnings for stock-based compensation expense recognized in the Consolidated Statements of Income/(Loss) resulting from stock options, restricted stock units, performance-based restricted stock units and bonus/deferred stock units for the years ended December 31, 2018, 2017 and 2016 (in millions, except per share data). Year Ended December 31, 2018 2017 2016 Stock-based compensation expense $ (47.7) $ (43.9) $ (41.8) Income tax benefit from stock-based compensation expense 8.3 12.8 12.3 Net income/(loss) impact $ (39.4) $ (31.1) $ (29.5) Earnings/(loss) per share: Basic and Diluted $ (0.09) $ (0.07) $ (0.06) |
Schedule of assumptions for the Black-Scholes option pricing model to determine the value of options granted | The Company used the following assumptions for the Black-Scholes option pricing model to determine the value of Western Union options granted. Year Ended December 31, 2018 2017 2016 Stock options granted: Weighted-average risk-free interest rate 2.8 % 2.1 % 1.4 % Weighted-average dividend yield 3.9 % 3.5 % 3.3 % Volatility 26.3 % 24.7 % 27.9 % Expected term (in years) 6.05 6.05 6.32 Weighted-average grant date fair value $ 3.66 $ 3.39 $ 3.44 |
Segments (Tables)
Segments (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Segments | |
Schedule of segment results | The following tables present the Company’s reportable segment results for the years ended December 31, 2018, 2017 and 2016, respectively (in millions): Year Ended December 31, 2018 2017 2016 Revenues: Consumer-to-Consumer $ 4,453.6 $ 4,354.5 $ 4,304.6 Business Solutions 386.8 383.9 396.0 Other (a) 749.5 785.9 722.3 Total consolidated revenues $ 5,589.9 $ 5,524.3 $ 5,422.9 Operating income: Consumer-to-Consumer $ 1,048.2 $ 1,004.2 $ 1,011.3 Business Solutions 23.4 13.8 21.3 Other (a) 50.5 84.2 75.7 Total segment operating income 1,122.1 1,102.2 1,108.3 Goodwill impairment charge (Note 5) — (464.0) — NYDFS Consent Order (Note 6) — (60.0) — Joint Settlement Agreements (Note 6) — (8.0) (601.0) Business transformation expenses (Note 4) — (94.4) (20.3) Total consolidated operating income $ 1,122.1 $ 475.8 $ 487.0 (a) Other consists primarily of the Company’s bill payments businesses in the United States and Argentina. Year Ended December 31, 2018 2017 2016 Depreciation and amortization: Consumer-to-Consumer $ 189.9 $ 183.0 $ 183.5 Business Solutions 41.9 42.5 50.8 Other 32.9 37.4 28.9 Total consolidated depreciation and amortization $ 264.7 $ 262.9 $ 263.2 Capital expenditures: Consumer-to-Consumer $ 273.8 $ 120.2 $ 167.7 Business Solutions 11.9 8.8 11.4 Other 53.3 48.1 50.7 Total capital expenditures $ 339.0 $ 177.1 $ 229.8 |
Schedule of revenue and long-lived assets by geographic areas | Information concerning principal geographic areas was as follows (in millions): Year Ended December 31, 2018 2017 2016 Revenue: United States $ 2,126.2 $ 2,159.0 $ 2,091.5 International 3,463.7 3,365.3 3,331.4 Total $ 5,589.9 $ 5,524.3 $ 5,422.9 Long-lived assets: United States $ 207.4 $ 156.8 $ 174.0 International 63.0 57.4 46.5 Total $ 270.4 $ 214.2 $ 220.5 |
Quarterly Financial Informati_2
Quarterly Financial Information (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Quarterly Financial Information (Unaudited) | |
Schedule of quarterly results | Summarized quarterly results for the years ended December 31, 2018 and 2017 were as follows (in millions, except per share data): Year Ended December 31, 2018 by Quarter: Q1 Q2 Q3 Q4 2018 Revenues $ 1,389.4 $ 1,411.1 $ 1,387.8 $ 1,401.6 $ 5,589.9 Expenses 1,124.5 1,127.5 1,085.2 1,130.6 4,467.8 Operating income 264.9 283.6 302.6 271.0 1,122.1 Other expense, net 30.4 28.1 36.2 36.0 130.7 Income before income taxes 234.5 255.5 266.4 235.0 991.4 Provision for income taxes (a) 20.9 37.9 57.8 22.9 139.5 Net income $ 213.6 $ 217.6 $ 208.6 $ 212.1 $ 851.9 Earnings per share: Basic $ 0.46 $ 0.48 $ 0.47 $ 0.48 $ 1.89 Diluted $ 0.46 $ 0.47 $ 0.46 $ 0.48 $ 1.87 Weighted-average shares outstanding: Basic 460.3 457.2 446.8 442.9 451.8 Diluted 463.6 459.6 449.0 445.4 454.4 Year Ended December 31, 2017 by Quarter: Q1 Q2 Q3 Q4 2017 Revenues $ 1,302.4 $ 1,378.9 $ 1,404.7 $ 1,438.3 $ 5,524.3 Expenses (b) (c) (d) (e) 1,062.3 1,163.5 1,132.5 1,690.2 5,048.5 Operating income/(loss) (e) 240.1 215.4 272.2 (251.9) 475.8 Other expense, net (e) 27.0 31.0 33.0 37.3 128.3 Income/(loss) before income taxes 213.1 184.4 239.2 (289.2) 347.5 Provision for income taxes (f) 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 ($6.0 million), ($6.2 million), $26.6 million, and $8.1 million in the first, second, third, and fourth quarters, respectively, of adjustments related to the Tax Act, as further described in Note 11. (b) 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 5. (c) Includes a $49.0 million accrual in the second quarter and an $11.0 million accrual in the fourth quarter as a result of the NYDFS Consent Order, and an additional $8.0 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 6. (d) 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 4. (e) On January 1, 2018, the Company adopted an accounting pronouncement that requires the non-service costs of a defined benefit pension plan to be presented outside a subtotal of income from operations, with adoption retrospective for periods previously presented. The adoption of this standard resulted in an increase of $0.6 million to operating income/(loss) and decreases to operating expenses and other expense, net in the first, second, third and fourth quarters for the year ended December 31, 2017, respectively, from the amounts previously reported. Refer to Note 2 for further information. (f) Includes an estimated $828.0 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. As discussed in Note 11, during the fourth quarter of 2018, the Company completed its accounting for the Tax Act’s impacts that were provisionally estimated as of December 31, 2017. |
Business and Basis of Present_2
Business and Basis of Presentation - Narrative (Details) $ in Millions | Dec. 31, 2018USD ($)item |
Business and Basis of Presentation | |
Number of countries and territories where services are primarily available through a network of agent locations (more than) | item | 200 |
Net assets subject to limitations | $ | $ 365 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Diluted Weighted-Average Shares Outstanding (Details) - shares shares in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Earnings/(Loss) Per Share | |||||||||||
Outstanding options to purchase shares of stock excluded from the diluted earnings per share calculation | 2.6 | 2.8 | 3.4 | ||||||||
Additional outstanding options to purchase shares of stock excluded from the diluted earnings per share calculation | 3 | ||||||||||
Calculation of diluted weighted-average shares outstanding | |||||||||||
Basic weighted-average shares outstanding | 442.9 | 446.8 | 457.2 | 460.3 | 459.6 | 462.8 | 469.4 | 479.8 | 451.8 | 467.9 | 490.2 |
Common stock equivalents | 2.6 | 3.3 | |||||||||
Diluted weighted-average shares outstanding | 445.4 | 449 | 459.6 | 463.6 | 459.6 | 465.4 | 472 | 483.4 | 454.4 | 467.9 | 493.5 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Allowance for Doubtful Accounts (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Allowance for Doubtful Accounts | |||
Allowance for doubtful accounts | $ 47.7 | $ 64.5 | |
Provision for doubtful accounts | $ 43.9 | $ 60.6 | $ 63.9 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Settlement Assets and Obligations (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Settlement assets: | ||
Cash and cash equivalents | $ 1,247.8 | $ 1,264.8 |
Receivables from selling agents and Business Solutions customers | 1,355.4 | 1,573.9 |
Investment securities | 1,210.6 | 1,350.2 |
Total settlement assets | 3,813.8 | 4,188.9 |
Settlement obligations: | ||
Money transfer, money order and payment service payables | 2,793.6 | 2,789.2 |
Payables to agents | 1,020.2 | 1,399.7 |
Total settlement obligations | $ 3,813.8 | $ 4,188.9 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Property and Equipment (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Property And Equipment | |||
Property and equipment, gross | $ 972.8 | $ 849.9 | |
Accumulated depreciation | (702.4) | (635.7) | |
Property and equipment, net | 270.4 | 214.2 | $ 220.5 |
Depreciation of Property and Equipment | |||
Depreciation | 76.9 | 77.1 | $ 74.2 |
Equipment | |||
Property And Equipment | |||
Property and equipment, gross | 656.8 | 604.7 | |
Leasehold improvements | |||
Property And Equipment | |||
Property and equipment, gross | $ 158.6 | 87.4 | |
Buildings | |||
Property and Equipment | |||
Property, plant and equipment useful life | 30 years | ||
Property And Equipment | |||
Property and equipment, gross | $ 88.6 | 88.6 | |
Furniture and fixtures | |||
Property And Equipment | |||
Property and equipment, gross | 51.6 | 42 | |
Land and improvements | |||
Property And Equipment | |||
Property and equipment, gross | 17 | 17 | |
Projects in process | |||
Property And Equipment | |||
Property and equipment, gross | $ 0.2 | $ 10.2 | |
Minimum | Equipment | |||
Property and Equipment | |||
Property, plant and equipment useful life | 3 years | ||
Minimum | Furniture and fixtures | |||
Property and Equipment | |||
Property, plant and equipment useful life | 3 years | ||
Maximum | Equipment | |||
Property and Equipment | |||
Property, plant and equipment useful life | 10 years | ||
Maximum | Furniture and fixtures | |||
Property and Equipment | |||
Property, plant and equipment useful life | 10 years |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Goodwill (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Goodwill | ||||
Goodwill impairment charge | $ 464 | $ 0 | $ 464 | $ 0 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Components of Other Intangible Assets (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Other Intangible Assets | |||
Amortization expense | $ 187.8 | $ 185.8 | $ 189 |
Initial Cost | 1,645.8 | 1,629 | |
Net of Accumulated Amortization | 598.2 | 586.3 | |
Estimated future aggregate amortization expense | |||
Estimated future aggregate amortization expense, 2019 | 169.5 | ||
Estimated future aggregate amortization expense, 2020 | 119.5 | ||
Estimated future aggregate amortization expense, 2021 | 103 | ||
Estimated future aggregate amortization expense, 2022 | 70.6 | ||
Estimated future aggregate amortization expense, 2023 | 49.5 | ||
Estimated future aggregate amortization expense, thereafter | 74.1 | ||
Acquired contracts | |||
Other Intangible Assets | |||
Initial Cost | 598.1 | 600.4 | |
Net of Accumulated Amortization | 171.2 | 220 | |
Capitalized contract costs | |||
Other Intangible Assets | |||
Initial Cost | 536.5 | 559.5 | |
Net of Accumulated Amortization | 318.9 | 268.2 | |
Internal use software | |||
Other Intangible Assets | |||
Initial Cost | 447.3 | 387.8 | |
Net of Accumulated Amortization | 80.6 | 53.1 | |
Acquired trademarks | |||
Other Intangible Assets | |||
Initial Cost | 32.5 | 33.2 | |
Net of Accumulated Amortization | 15.5 | 16.9 | |
Projects in process | |||
Other Intangible Assets | |||
Initial Cost | 12 | 28.1 | |
Net of Accumulated Amortization | 12 | 28.1 | |
Other intangibles | |||
Other Intangible Assets | |||
Initial Cost | $ 19.4 | $ 20 | |
Minimum | Internal use software | |||
Other Intangible Assets | |||
Amortization period of intangible assets | 3 years | ||
Maximum | Internal use software | |||
Other Intangible Assets | |||
Amortization period of intangible assets | 7 years | ||
Weighted Average | |||
Other Intangible Assets | |||
Amortization period of intangible assets | 7 years 8 months 12 days | ||
Weighted Average | Acquired contracts | |||
Other Intangible Assets | |||
Amortization period of intangible assets | 11 years 6 months | ||
Weighted Average | Capitalized contract costs | |||
Other Intangible Assets | |||
Amortization period of intangible assets | 6 years 2 months 12 days | ||
Weighted Average | Internal use software | |||
Other Intangible Assets | |||
Amortization period of intangible assets | 3 years 6 months | ||
Weighted Average | Acquired trademarks | |||
Other Intangible Assets | |||
Amortization period of intangible assets | 24 years 9 months 18 days | ||
Weighted Average | Other intangibles | |||
Other Intangible Assets | |||
Amortization period of intangible assets | 4 years 8 months 12 days |
Summary of Significant Accou_10
Summary of Significant Accounting Policies - Advertising Costs (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Advertising Costs | |||
Advertising costs | $ 180.9 | $ 168.3 | $ 151.1 |
Summary of Significant Accou_11
Summary of Significant Accounting Policies - Derivatives (Details) | 12 Months Ended |
Dec. 31, 2018 | |
Minimum | Uncollected settlement assets and obligations | |
Derivatives | |
Derivative contracts maturity range | 2 days |
Maximum | Uncollected settlement assets and obligations | |
Derivatives | |
Derivative contracts maturity range | 1 month |
Maximum | Foreign currency denominated cash and other asset and other liability positions | |
Derivatives | |
Derivative contracts maturity range | 1 year |
Business Solutions | Maximum | Cross Currency | |
Derivatives | |
Derivative contracts maturity range | 1 year |
Summary of Significant Accou_12
Summary of Significant Accounting Policies - Recently Adopted Accounting Pronouncements (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Recently Adopted Accounting Pronouncements | ||||
Cost of services | $ 3,300.8 | $ 3,353 | $ 3,266.7 | |
Other income, net (Note 2) | $ 14.1 | 8.9 | 3.7 | |
Reclassification of Tax Act effects into Accumulated Deficit | $ 31.4 | |||
ASC 2014-07 | ||||
Recently Adopted Accounting Pronouncements | ||||
Cost of services | (2.4) | (3.3) | ||
Other income, net (Note 2) | $ (2.4) | $ (3.3) |
Revenue - Narrative - (Details)
Revenue - Narrative - (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2018USD ($)item | |
Revenue | |
Revenues from contracts with customers | $ | $ 5,382.6 |
Consumer money transfers | |
Revenue | |
Revenues from contracts with customers | $ | $ 4,384 |
Number of performance obligations | item | 1 |
Number of integrated services involved in a transaction | item | 1 |
Consumer bill payments | |
Revenue | |
Revenues from contracts with customers | $ | $ 621.5 |
Number of integrated services involved in a transaction | item | 1 |
Revenue - Disaggregation of rev
Revenue - Disaggregation of revenue - (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Revenue | |||||||||||
Revenues from contracts with customers | $ 5,382.6 | ||||||||||
Other revenue | 207.3 | ||||||||||
Revenues, Total | $ 1,401.6 | $ 1,387.8 | $ 1,411.1 | $ 1,389.4 | $ 1,438.3 | $ 1,404.7 | $ 1,378.9 | $ 1,302.4 | 5,589.9 | $ 5,524.3 | $ 5,422.9 |
Consumer money transfers | |||||||||||
Revenue | |||||||||||
Revenues from contracts with customers | 4,384 | ||||||||||
Other revenue | 69.6 | ||||||||||
Revenues, Total | 4,453.6 | ||||||||||
Foreign exchange and payment services | |||||||||||
Revenue | |||||||||||
Revenues from contracts with customers | 302.1 | ||||||||||
Other revenue | 84.7 | ||||||||||
Revenues, Total | 386.8 | ||||||||||
Consumer bill payments | |||||||||||
Revenue | |||||||||||
Revenues from contracts with customers | 621.5 | ||||||||||
Other revenue | 30.8 | ||||||||||
Revenues, Total | 652.3 | ||||||||||
Other services | |||||||||||
Revenue | |||||||||||
Revenues from contracts with customers | 75 | ||||||||||
Other revenue | 22.2 | ||||||||||
Revenues, Total | 97.2 | ||||||||||
North America | |||||||||||
Revenue | |||||||||||
Revenues from contracts with customers | 2,251.2 | ||||||||||
North America | Consumer money transfers | |||||||||||
Revenue | |||||||||||
Revenues from contracts with customers | 1,632.3 | ||||||||||
North America | Foreign exchange and payment services | |||||||||||
Revenue | |||||||||||
Revenues from contracts with customers | 97.6 | ||||||||||
North America | Consumer bill payments | |||||||||||
Revenue | |||||||||||
Revenues from contracts with customers | 463.9 | ||||||||||
North America | Other services | |||||||||||
Revenue | |||||||||||
Revenues from contracts with customers | 57.4 | ||||||||||
Europe and Russia/CIS | |||||||||||
Revenue | |||||||||||
Revenues from contracts with customers | 1,536.5 | ||||||||||
Europe and Russia/CIS | Consumer money transfers | |||||||||||
Revenue | |||||||||||
Revenues from contracts with customers | 1,399.5 | ||||||||||
Europe and Russia/CIS | Foreign exchange and payment services | |||||||||||
Revenue | |||||||||||
Revenues from contracts with customers | 130 | ||||||||||
Europe and Russia/CIS | Consumer bill payments | |||||||||||
Revenue | |||||||||||
Revenues from contracts with customers | 3.1 | ||||||||||
Europe and Russia/CIS | Other services | |||||||||||
Revenue | |||||||||||
Revenues from contracts with customers | 3.9 | ||||||||||
Middle East, Africa, and South Asia | |||||||||||
Revenue | |||||||||||
Revenues from contracts with customers | 656.2 | ||||||||||
Middle East, Africa, and South Asia | Consumer money transfers | |||||||||||
Revenue | |||||||||||
Revenues from contracts with customers | 654.4 | ||||||||||
Middle East, Africa, and South Asia | Foreign exchange and payment services | |||||||||||
Revenue | |||||||||||
Revenues from contracts with customers | 1.5 | ||||||||||
Middle East, Africa, and South Asia | Consumer bill payments | |||||||||||
Revenue | |||||||||||
Revenues from contracts with customers | 0.3 | ||||||||||
Latin America and the Caribbean | |||||||||||
Revenue | |||||||||||
Revenues from contracts with customers | 562.7 | ||||||||||
Latin America and the Caribbean | Consumer money transfers | |||||||||||
Revenue | |||||||||||
Revenues from contracts with customers | 393.2 | ||||||||||
Latin America and the Caribbean | Foreign exchange and payment services | |||||||||||
Revenue | |||||||||||
Revenues from contracts with customers | 3.1 | ||||||||||
Latin America and the Caribbean | Consumer bill payments | |||||||||||
Revenue | |||||||||||
Revenues from contracts with customers | 152.7 | ||||||||||
Latin America and the Caribbean | Other services | |||||||||||
Revenue | |||||||||||
Revenues from contracts with customers | 13.7 | ||||||||||
East Asia and Oceania | |||||||||||
Revenue | |||||||||||
Revenues from contracts with customers | 376 | ||||||||||
East Asia and Oceania | Consumer money transfers | |||||||||||
Revenue | |||||||||||
Revenues from contracts with customers | 304.6 | ||||||||||
East Asia and Oceania | Foreign exchange and payment services | |||||||||||
Revenue | |||||||||||
Revenues from contracts with customers | 69.9 | ||||||||||
East Asia and Oceania | Consumer bill payments | |||||||||||
Revenue | |||||||||||
Revenues from contracts with customers | $ 1.5 |
Business Transformation Expen_3
Business Transformation Expenses - Costs Related to Business Transformation Accruals (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Summary of business transformation activity | |||||||
Balance at period start | $ 12.9 | $ 33 | $ 12.9 | ||||
Expenses | $ 35.2 | $ 9.9 | $ 35 | 14.3 | 94.4 | $ 20.3 | |
Cash payments and other | (32.3) | (77.3) | |||||
Non-cash benefits/charges | 3 | ||||||
Balance at period end | 33 | 0.7 | 33 | 12.9 | |||
Consulting Service Fees | |||||||
Summary of business transformation activity | |||||||
Balance at period start | 9 | 8.2 | 9 | ||||
Expenses | 36.1 | ||||||
Cash payments and other | (8.2) | (36.9) | |||||
Balance at period end | 8.2 | 8.2 | 9 | ||||
Severance and Related Employee Benefits | |||||||
Summary of business transformation activity | |||||||
Balance at period start | $ 3.9 | 23.2 | 3.9 | ||||
Expenses | 44.2 | ||||||
Cash payments and other | (22.5) | (28.2) | |||||
Non-cash benefits/charges | 3.3 | ||||||
Balance at period end | 23.2 | 0.7 | 23.2 | $ 3.9 | |||
Other | |||||||
Summary of business transformation activity | |||||||
Balance at period start | 1.6 | ||||||
Expenses | 14.1 | ||||||
Cash payments and other | $ (1.6) | (12.2) | |||||
Non-cash benefits/charges | (0.3) | ||||||
Balance at period end | $ 1.6 | $ 1.6 |
Business Transformation Expen_4
Business Transformation Expenses - Related Expenses (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Business transformation initiatives as reflected in the Consolidated Statements of Income/(Loss) | ||||||
Total Expenses, pre-tax | $ 35.2 | $ 9.9 | $ 35 | $ 14.3 | $ 94.4 | $ 20.3 |
Total expenses, net of tax | 63.3 | 12.9 | ||||
Cost of services | ||||||
Business transformation initiatives as reflected in the Consolidated Statements of Income/(Loss) | ||||||
Total Expenses, pre-tax | 35.7 | 2.5 | ||||
Selling, general and administrative | ||||||
Business transformation initiatives as reflected in the Consolidated Statements of Income/(Loss) | ||||||
Total Expenses, pre-tax | $ 58.7 | $ 17.8 |
Business Transformation Expen_5
Business Transformation Expenses - Business Transformation Expenses by Reportable Segment (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Business Transformation Expenses | ||||||
Expenses | $ 35.2 | $ 9.9 | $ 35 | $ 14.3 | $ 94.4 | $ 20.3 |
Operating Segments | ||||||
Business Transformation Expenses | ||||||
Expenses | 60.5 | 3.8 | ||||
Operating Segments | Consumer-to-Consumer | ||||||
Business Transformation Expenses | ||||||
Expenses | 30.8 | 2.7 | ||||
Operating Segments | Business Solutions | ||||||
Business Transformation Expenses | ||||||
Expenses | 16.1 | 0.6 | ||||
Operating Segments | Other | ||||||
Business Transformation Expenses | ||||||
Expenses | $ 13.6 | $ 0.5 |
Goodwill - Narrative (Details)
Goodwill - Narrative (Details) $ in Millions | Nov. 06, 2017USD ($) | Dec. 31, 2017USD ($)item | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) |
Business Solutions Goodwill Impairment Charge | |||||
Goodwill | $ 2,727.9 | $ 2,725 | $ 2,727.9 | $ 3,162 | |
Goodwill Impairment Charge | |||||
Goodwill impairment charge | $ 464 | $ 0 | $ 464 | $ 0 | |
Business Combinations | |||||
Number of acquisitions during period | item | 1 | ||||
Opus Software Technologies Private Limited | |||||
Business Solutions Goodwill Impairment Charge | |||||
Total consideration | $ 25.3 | ||||
Goodwill | $ 22 |
Goodwill - Changes to Goodwill
Goodwill - Changes to Goodwill (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Changes to goodwill | ||||
Goodwill, beginning balance | $ 2,727.9 | $ 3,162 | ||
Goodwill impairment charge | $ (464) | 0 | (464) | $ 0 |
Acquisitions | 30.9 | |||
Purchase accounting adjustments | (0.3) | |||
Currency translation | (2.6) | (1) | ||
Goodwill, ending balance | 2,727.9 | 2,725 | 2,727.9 | 3,162 |
Consumer-to-Consumer | ||||
Changes to goodwill | ||||
Goodwill, beginning balance | 1,981 | 1,950.1 | ||
Acquisitions | 30.9 | |||
Purchase accounting adjustments | (0.3) | |||
Goodwill, ending balance | 1,981 | 1,980.7 | 1,981 | 1,950.1 |
Business Solutions | ||||
Changes to goodwill | ||||
Goodwill, beginning balance | 532 | 996 | ||
Goodwill impairment charge | (464) | |||
Goodwill, ending balance | 532 | 532 | 532 | 996 |
Other | ||||
Changes to goodwill | ||||
Goodwill, beginning balance | 214.9 | 215.9 | ||
Currency translation | (2.6) | (1) | ||
Goodwill, ending balance | $ 214.9 | $ 212.3 | $ 214.9 | $ 215.9 |
Goodwill - Accumulated Impairme
Goodwill - Accumulated Impairment Losses (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Goodwill | |||
Goodwill, gross | $ 3,189 | $ 3,191.9 | $ 3,162 |
Accumulated impairment losses | (464) | (464) | |
Goodwill, net | $ 2,725 | $ 2,727.9 | $ 3,162 |
Commitments and Contingencies -
Commitments and Contingencies - Narrative (Details) € in Millions, $ in Millions | Apr. 03, 2018 | Jan. 04, 2018USD ($) | Nov. 06, 2017defendant | May 03, 2017lawsuit | Feb. 22, 2017lawsuit | Jan. 31, 2017USD ($)stateitem | May 02, 2016defendant | Mar. 31, 2016 | Feb. 04, 2015defendant | Jan. 13, 2014defendant | Dec. 31, 2017USD ($) | Sep. 30, 2017USD ($) | Jun. 30, 2017USD ($) | Mar. 31, 2015USD ($) | Dec. 31, 2018USD ($)lawsuit | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2014USD ($) | Jan. 04, 2018EUR (€) | Apr. 12, 2017state | Mar. 31, 2017item | Feb. 13, 2017item | Jan. 11, 2016item | May 01, 2015item | Jul. 31, 2013item |
Commitments and Contingencies | |||||||||||||||||||||||||
Letters of credit outstanding and bank guarantees | $ 265 | ||||||||||||||||||||||||
Maximum maturity year for letters of credit | 2,024 | ||||||||||||||||||||||||
Letters of credit renewal option | 1 year | ||||||||||||||||||||||||
Stock repurchased | $ 399.2 | $ 487 | $ 481.3 | ||||||||||||||||||||||
Joint Settlement Agreements | |||||||||||||||||||||||||
Commitments and Contingencies | |||||||||||||||||||||||||
State attorneys general payment | $ 8 | 8 | 601 | ||||||||||||||||||||||
Litigation settlement awarded to other party | $ 586 | ||||||||||||||||||||||||
NYDFS Consent Order | |||||||||||||||||||||||||
Commitments and Contingencies | |||||||||||||||||||||||||
State attorneys general payment | $ 11 | $ 49 | 60 | ||||||||||||||||||||||
Damages awarded | $ 60 | ||||||||||||||||||||||||
Pending Litigation | |||||||||||||||||||||||||
Commitments and Contingencies | |||||||||||||||||||||||||
Range of possible loss, portion not accrued | $ 80 | ||||||||||||||||||||||||
Pending Litigation | Defendants under the shareholder complaint filed in District Court, Douglas Country | Executive Officer | |||||||||||||||||||||||||
Commitments and Contingencies | |||||||||||||||||||||||||
Number of defendants | defendant | 1 | ||||||||||||||||||||||||
Pending Litigation | Defendants under the shareholder complaint filed in District Court, Douglas Country | Director | |||||||||||||||||||||||||
Commitments and Contingencies | |||||||||||||||||||||||||
Number of defendants | defendant | 1 | ||||||||||||||||||||||||
Pending Litigation | Defendants under the shareholder derivative complaints filed in US District Court for the District of Colorado | |||||||||||||||||||||||||
Commitments and Contingencies | |||||||||||||||||||||||||
Stock repurchased | $ 1,565 | ||||||||||||||||||||||||
Period plaintiffs may file an amended complaint | 30 days | ||||||||||||||||||||||||
Pending Litigation | Defendants under the shareholder derivative complaints filed in US District Court for the District of Colorado | Executive Officer | |||||||||||||||||||||||||
Commitments and Contingencies | |||||||||||||||||||||||||
Number of defendants | defendant | 9 | ||||||||||||||||||||||||
Pending Litigation | Defendants under the shareholder derivative complaints filed in US District Court for the District of Colorado | Director | |||||||||||||||||||||||||
Commitments and Contingencies | |||||||||||||||||||||||||
Number of defendants | defendant | 6 | ||||||||||||||||||||||||
Pending Litigation | Defendants under the shareholder derivative complaints filed in US District Court for the District of Colorado | Former Director | |||||||||||||||||||||||||
Commitments and Contingencies | |||||||||||||||||||||||||
Number of defendants | defendant | 3 | ||||||||||||||||||||||||
Pending Litigation | Lawrence Henry Smallen and Laura Anne Smallen Revocable Living Trust | |||||||||||||||||||||||||
Commitments and Contingencies | |||||||||||||||||||||||||
Number of purported class action lawsuits | lawsuit | 2 | ||||||||||||||||||||||||
Number of claims consolidated | lawsuit | 2 | ||||||||||||||||||||||||
Pending Litigation | Lawrence Henry Smallen and Laura Anne Smallen Revocable Living Trust | Executive Officer | |||||||||||||||||||||||||
Commitments and Contingencies | |||||||||||||||||||||||||
Number of defendants | defendant | 2 | ||||||||||||||||||||||||
Number of defendants voluntarily dismissed | defendant | 1 | ||||||||||||||||||||||||
Pending Litigation | National Court of Spain | |||||||||||||||||||||||||
Commitments and Contingencies | |||||||||||||||||||||||||
Guaranty liabilities | € | € 23 | ||||||||||||||||||||||||
Pending Litigation | National Court of Spain | Former Agent | |||||||||||||||||||||||||
Commitments and Contingencies | |||||||||||||||||||||||||
Number of agents | item | 98 | ||||||||||||||||||||||||
Settled Litigation | Joint Settlement Agreements | |||||||||||||||||||||||||
Commitments and Contingencies | |||||||||||||||||||||||||
Number of state attorneys general | state | 49 | 1 | |||||||||||||||||||||||
Count- criminal information | item | 2 | ||||||||||||||||||||||||
Compensation payment | $ 586 | ||||||||||||||||||||||||
State attorneys general payment | $ 5 | ||||||||||||||||||||||||
Period to retain an independent compliance auditor | 3 years | ||||||||||||||||||||||||
Civil penalty assessed by the FinCEN Agreement | $ 184 | ||||||||||||||||||||||||
Loss contingency accrual increase (decrease) during period | $ 8 | ||||||||||||||||||||||||
Settled Litigation | District of Colorado | |||||||||||||||||||||||||
Commitments and Contingencies | |||||||||||||||||||||||||
Number of purported class action lawsuits | lawsuit | 2 | ||||||||||||||||||||||||
Number of class members who filed appeals | item | 2 | 2 | 2 | ||||||||||||||||||||||
Period to execute release | 1 year | ||||||||||||||||||||||||
Settled Litigation | Northern District of Illinois | |||||||||||||||||||||||||
Commitments and Contingencies | |||||||||||||||||||||||||
Litigation settlement awarded to other party | $ 8.5 | ||||||||||||||||||||||||
Settled Litigation | NYDFS Consent Order | |||||||||||||||||||||||||
Commitments and Contingencies | |||||||||||||||||||||||||
Damages awarded | $ 60 | ||||||||||||||||||||||||
Period to provide remediation plan | 90 days | ||||||||||||||||||||||||
Settled Litigation | NYDFS Consent Order | Current Agent | |||||||||||||||||||||||||
Commitments and Contingencies | |||||||||||||||||||||||||
Number of agents | item | 1 | ||||||||||||||||||||||||
Settled Litigation | NYDFS Consent Order | Former Agent | |||||||||||||||||||||||||
Commitments and Contingencies | |||||||||||||||||||||||||
Number of agents | item | 2 |
Related Party Transactions - Na
Related Party Transactions - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Related Party Transactions | |||
Commission expense | $ 57.6 | $ 65.9 | $ 68 |
Equity Method Investee | |||
Related Party Transactions | |||
Commission expense | $ 57.6 | $ 65.9 | $ 68 |
Investment Securities - Compone
Investment Securities - Components of Securities (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Investment Securities | |||
Variable rate demand notes, maximum maturity year | 2,050 | ||
Proceeds from sale and maturity of available-for-sale securities | $ 7,700 | $ 7,900 | $ 4,400 |
Cash: | |||
Amortized Cost | 973.4 | 838.2 | |
Settlement assets: | |||
Amortized Cost | 1,212 | 1,346.1 | |
Fair Value | 1,210.6 | 1,350.2 | |
Gross Unrealized Gains | 6.1 | 8.1 | |
Gross Unrealized Losses | (7.5) | (4) | |
Net Unrealized Gains/ (Losses) | (1.4) | 4.1 | |
Other assets: | |||
Amortized Cost | 1,295.8 | 1,402.3 | |
Fair Value | 1,294.4 | 1,406.4 | |
Gross Unrealized Gains | 6.1 | 8.1 | |
Gross Unrealized Losses | (7.5) | (4) | |
Net Unrealized Gains/ (Losses) | (1.4) | 4.1 | |
Money market funds | Cash | |||
Cash: | |||
Amortized Cost | 27 | ||
Fair Value | 27 | ||
Money market funds | Settlement Assets | |||
Cash: | |||
Amortized Cost | 23.9 | ||
Fair Value | 23.9 | ||
State and municipal debt securities | |||
Settlement assets: | |||
Amortized Cost | 963.4 | 955.7 | |
Fair Value | 962.7 | 960 | |
Gross Unrealized Gains | 6.1 | 7.9 | |
Gross Unrealized Losses | (6.8) | (3.6) | |
Net Unrealized Gains/ (Losses) | (0.7) | 4.3 | |
State and municipal variable rate demand notes | |||
Settlement assets: | |||
Amortized Cost | 168.7 | 319.6 | |
Fair Value | 168.7 | 319.6 | |
Corporate and other debt securities | |||
Settlement assets: | |||
Amortized Cost | 70 | 60.9 | |
Fair Value | 69.5 | 60.8 | |
Gross Unrealized Gains | 0.2 | ||
Gross Unrealized Losses | (0.5) | (0.3) | |
Net Unrealized Gains/ (Losses) | (0.5) | (0.1) | |
United States Treasury securities | |||
Settlement assets: | |||
Amortized Cost | 9.9 | 9.9 | |
Fair Value | 9.7 | 9.8 | |
Gross Unrealized Losses | (0.2) | (0.1) | |
Net Unrealized Gains/ (Losses) | (0.2) | (0.1) | |
Foreign corporate debt securities | |||
Other assets: | |||
Amortized Cost | 32.9 | 56.2 | |
Fair Value | $ 32.9 | $ 56.2 |
Investment Securities - Maturit
Investment Securities - Maturity Schedule of Settlement-Related Debt Securities (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Fair Value | ||
Due within 1 year | $ 128.4 | |
Due after 1 year through 5 years | 482.3 | |
Due after 5 years through 10 years | 276 | |
Due after 10 years | 323.9 | |
Total investment securities | 1,210.6 | $ 1,350.2 |
State and municipal variable rate demand notes | ||
Fair Value | ||
Due after 5 years through 10 years | 13 | |
Due after 10 years | 155.7 | |
Total investment securities | $ 168.7 | $ 319.6 |
Fair Value Measurements - Fair
Fair Value Measurements - Fair Value of Assets and Liabilities (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Assets: | ||
Settlement assets | $ 3,813.8 | $ 4,188.9 |
Derivatives | 245.5 | 273.4 |
Liabilities: | ||
Derivatives | 176.2 | 263 |
Recurring | ||
Assets: | ||
Derivatives | 245.5 | 273.4 |
Total assets | 1,507 | 1,623.6 |
Liabilities: | ||
Derivatives | 176.2 | 263 |
Total liabilities | 176.2 | 263 |
Recurring | State and municipal debt securities | ||
Assets: | ||
Settlement assets | 962.7 | 960 |
Recurring | State and municipal variable rate demand notes | ||
Assets: | ||
Settlement assets | 168.7 | 319.6 |
Recurring | Corporate and other debt securities | ||
Assets: | ||
Settlement assets | 69.5 | 60.8 |
Recurring | United States Treasury securities | ||
Assets: | ||
Settlement assets | 9.7 | 9.8 |
Recurring | Money market funds | ||
Assets: | ||
Cash | 27 | |
Settlement assets | 23.9 | |
Recurring | Level 1 | ||
Assets: | ||
Total assets | 60.6 | 9.8 |
Recurring | Level 1 | United States Treasury securities | ||
Assets: | ||
Settlement assets | 9.7 | 9.8 |
Recurring | Level 1 | Money market funds | ||
Assets: | ||
Cash | 27 | |
Settlement assets | 23.9 | |
Recurring | Level 2 | ||
Assets: | ||
Derivatives | 245.5 | 273.4 |
Total assets | 1,446.4 | 1,613.8 |
Liabilities: | ||
Derivatives | 176.2 | 263 |
Total liabilities | 176.2 | 263 |
Recurring | Level 2 | State and municipal debt securities | ||
Assets: | ||
Settlement assets | 962.7 | 960 |
Recurring | Level 2 | State and municipal variable rate demand notes | ||
Assets: | ||
Settlement assets | 168.7 | 319.6 |
Recurring | Level 2 | Corporate and other debt securities | ||
Assets: | ||
Settlement assets | $ 69.5 | $ 60.8 |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Carrying Value | ||
Other Fair Value Measurements | ||
Notes and other borrowings | $ 3,433.7 | $ 3,033.6 |
Level 2 | Fair Value | ||
Other Fair Value Measurements | ||
Notes and other borrowings | 3,394.6 | 3,146.5 |
Foreign corporate debt securities | Carrying Value | ||
Other Fair Value Measurements | ||
Carrying value of foreign corporate debt securities | 32.9 | 56.2 |
Foreign corporate debt securities | Level 2 | Fair Value | ||
Other Fair Value Measurements | ||
Fair value of foreign corporate debt securities | 32.9 | 56.2 |
Non-recurring | ||
Fair Value Adjustments | ||
Non-recurring asset fair value adjustments | 0 | 0 |
Non-recurring liability fair value adjustments | $ 0 | $ 0 |
Other Assets and Other Liabil_3
Other Assets and Other Liabilities - Summary (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Other assets: | ||
Derivatives | $ 245.5 | $ 273.4 |
Prepaid expenses | 101.3 | 120.5 |
Amounts advanced to agents, net of discounts | 57.6 | 53.5 |
Equity method investments | 31.3 | 29.1 |
Other | 180.3 | 199.4 |
Total other assets | 616 | 675.9 |
Other liabilities: | ||
Derivatives | 176.2 | 263 |
Pension obligations | 16 | 15 |
Other | 86.9 | 78.8 |
Total other liabilities | $ 279.1 | $ 356.8 |
Income Taxes - Components of Pr
Income Taxes - Components of Pre-Tax Income (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Components of pre-tax income | |||||||||||
Domestic | $ (11.4) | $ (238.8) | $ (546.4) | ||||||||
Foreign | 1,002.8 | 586.3 | 888.1 | ||||||||
Income before income taxes | $ 235 | $ 266.4 | $ 255.5 | $ 234.5 | $ (289.2) | $ 239.2 | $ 184.4 | $ 213.1 | $ 991.4 | $ 347.5 | $ 341.7 |
Geographic Concentration Risk | |||||||||||
Components of pre-tax income | |||||||||||
Percent of pre-tax income derived from foreign sources | 101.00% | 169.00% | 260.00% |
Income Taxes - Tax Act (Details
Income Taxes - Tax Act (Details) - USD ($) $ in Millions | 12 Months Ended | 24 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | |
Tax and Jobs Act of 2017 | |||
Increase to the effective tax rate related to provisional accounting for the tax | 2.30% | ||
Income tax expense (benefit) for undistributed earnings of foreign subsidiaries | $ 26 | $ 916 | $ 942 |
Income tax benefit for the remeasurement of deferred tax assets and liabilities | 5 | 87 | 92 |
Provisional liability related to accumulated foreign earnings | 265 | $ 254 | 265 |
Increase/(decrease) in provisional liability related to accumulated foreign earnings | 11 | ||
Total outside basis difference related to foreign subsidiaries | $ 343 | $ 343 |
Income Taxes - Provision for In
Income Taxes - Provision for Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Provision for income taxes | |||||||||||
Federal | $ 62.9 | $ 848.5 | $ 43.5 | ||||||||
State and local | 0.6 | 5.4 | 2.9 | ||||||||
Foreign | 76 | 50.7 | 42.1 | ||||||||
Provision for income taxes | $ 22.9 | $ 57.8 | $ 37.9 | $ 20.9 | $ 831.7 | $ 3.6 | $ 17.9 | $ 51.4 | $ 139.5 | 904.6 | 88.5 |
NYDFS Consent Order | |||||||||||
Provision for income taxes | |||||||||||
Provision for income taxes | 0 | ||||||||||
Damages awarded | $ 60 | ||||||||||
Joint Settlement Agreements | |||||||||||
Provision for income taxes | |||||||||||
Provision for income taxes | 0 | ||||||||||
Litigation settlement awarded to other party | $ 586 |
Income Taxes - Effective Tax Ra
Income Taxes - Effective Tax Rates (Details) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Effective tax rate reconciliation | |||
Federal statutory rate | 21.00% | 35.00% | 35.00% |
State income taxes, net of federal income tax benefits | 0.40% | 1.70% | 1.20% |
Foreign rate differential, net of United States tax paid on foreign earnings (4.9%, 1.1% and 24.8%, respectively) | (8.20%) | (69.30%) | (50.80%) |
Tax Act impact | 2.30% | 251.50% | |
Joint Settlement Agreements impact | 62.10% | ||
NYDFS Consent Order impact | 6.00% | ||
Goodwill impairment | 46.70% | ||
Base erosion anti-abuse tax (BEAT) | 3.00% | ||
Lapse of statute of limitations | (2.20%) | (10.00%) | (11.30%) |
Valuation allowances | 0.00% | 0.80% | (2.80%) |
Other | (2.20%) | (2.10%) | (7.50%) |
Effective tax rate | 14.10% | 260.30% | 25.90% |
US tax paid on foreign earnings | 4.90% | 1.10% | 24.80% |
Income Taxes - Current and Defe
Income Taxes - Current and Deferred Components of Provision for Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Current: | |||||||||||
Federal | $ 69.2 | $ 774.4 | $ 186.2 | ||||||||
State and local | 0 | 1 | 13.1 | ||||||||
Foreign | 85.4 | 59.7 | 63.4 | ||||||||
Total current taxes | 154.6 | 835.1 | 262.7 | ||||||||
Deferred: | |||||||||||
Federal | (6.3) | 74.1 | (142.7) | ||||||||
State and local | 0.6 | 4.4 | (10.2) | ||||||||
Foreign | (9.4) | (9) | (21.3) | ||||||||
Total deferred taxes | (15.1) | 69.5 | (174.2) | ||||||||
Provision for income taxes | $ 22.9 | $ 57.8 | $ 37.9 | $ 20.9 | $ 831.7 | $ 3.6 | $ 17.9 | $ 51.4 | $ 139.5 | $ 904.6 | $ 88.5 |
Income Taxes - Deferred Taxes (
Income Taxes - Deferred Taxes (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Deferred tax assets related to: | ||
Reserves, accrued expenses and employee-related items | $ 42.6 | $ 44.8 |
Tax attribute carryovers | 29.9 | 27.1 |
Pension obligations | 4.8 | 4.6 |
Intangibles, property and equipment | 8.5 | 11.9 |
Other | 5.3 | 10.7 |
Valuation allowance | (15.7) | (19.9) |
Total deferred tax assets | 75.4 | 79.2 |
Deferred tax liabilities related to: | ||
Intangibles, property and equipment | 228 | 239.4 |
Other | 0.9 | |
Total deferred tax liabilities | 228 | 240.3 |
Net deferred tax liability | 152.6 | 161.1 |
Other assets | ||
Deferred tax liabilities related to: | ||
Gross deferred tax assets | $ 8.5 | $ 11.9 |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of Unrecognized Tax Benefits (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Tax Contingency Reserves | |||
Total tax contingency reserve | $ 306.8 | ||
Reconciliation of Unrecognized Tax Benefits | |||
Balance at beginning of period | 329 | $ 352 | |
Increase related to current period tax positions | 4 | 9 | |
Increase related to prior period tax positions | 0.4 | ||
Decrease related to prior period tax positions | (18.5) | (19.8) | |
Decrease due to lapse of applicable statute of limitations | (17.7) | (14) | |
Increase/(decrease) due to effects of foreign currency exchange rates | 1.8 | ||
Increase/(decrease) due to effects of foreign currency exchange rates | (2.2) | ||
Balance at end of period | 295 | 329 | $ 352 |
Unrecognized Tax Benefits | |||
Unrecognized tax benefits that, if recognized, would affect the effective tax rate | 284.2 | 319.6 | |
Interest and penalties, recognized | (0.7) | 2.2 | $ (0.2) |
Interest and penalties, accrued | 23.9 | $ 25.4 | |
Reasonably possible decrease to the Company's total unrecognized tax benefits during the next 12 months | 8 | ||
Cash payments made to date as a result of the IRS Agreement | $ 120 |
Employee Benefit Plans - Narrat
Employee Benefit Plans - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Defined Contribution Plans | ||||
Total expenses | $ 20 | $ 19.2 | $ 17.8 | |
Defined Benefit Plan | ||||
Fair value of plan assets | 234.8 | 271.7 | ||
Benefit obligation | $ 250.8 | $ 286.7 | ||
Discount rate assumption | 3.79% | 3.11% | ||
Unfunded pension obligation | $ (16) | $ (15) | ||
Net Periodic Benefit Cost | ||||
Net periodic benefit cost | 3.3 | 2.4 | $ 3.3 | |
Company contributions to the Plan | 0 | $ 0 | ||
Estimated future company contributions in 2019 | 0 | |||
Estimated Undiscounted Future Benefit Payments | ||||
Expected future benefit payments, 2019 | 29.6 | |||
Expected future benefit payments, 2020 | 27.8 | |||
Expected future benefit payments, 2021 | 26.1 | |||
Expected future benefit payments, 2022 | 24.3 | |||
Expected future benefit payments, 2023 | 22.6 | |||
Expected future benefit payments, 2024 through 2028 | $ 89.4 | |||
Forecast | ||||
Net Periodic Benefit Cost | ||||
Expected long-term return on plan assets assumption | 6.50% | |||
Fixed Income | ||||
Defined Benefit Plan | ||||
Target allocation | 60.00% | |||
Equity Securities [Member] | ||||
Defined Benefit Plan | ||||
Target allocation | 20.00% | |||
Alternative Investments | ||||
Defined Benefit Plan | ||||
Target allocation | 20.00% |
Operating Lease Commitments - S
Operating Lease Commitments - Summary (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Operating Leases | |||
Total rent expense under operating leases, net of sublease income | $ 59.5 | $ 51.1 | $ 46.2 |
Minimum Aggregate Rental Commitments | |||
2,019 | 51.6 | ||
2,020 | 44.1 | ||
2,021 | 35.4 | ||
2,022 | 31.4 | ||
2,023 | 25.2 | ||
Thereafter | 112.6 | ||
Total future minimum lease payments | $ 300.3 |
Stockholders' Equity_(Deficit_2
Stockholders' Equity/(Deficit) - Components of Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Unrealized gains on investment securities: | |||
Unrealized gains/(losses) on investment securities, beginning of year | $ 2.7 | $ (3.8) | $ 7.8 |
Unrealized gains/(losses) | (5.9) | 12.6 | (14.9) |
Tax (expense)/benefit | 1.3 | (4.6) | 5.4 |
Tax expense/(benefit) related to reclassifications | (0.1) | 0.9 | 1.2 |
Net unrealized gains/(losses) on investment securities | (4.3) | 6.5 | (11.6) |
Reclassification of Tax Act effects into "Accumulated deficit" (Note 2) | 0.5 | ||
Unrealized gains/(losses) on investment securities, end of year | (1.1) | 2.7 | (3.8) |
Unrealized gains/(losses) on hedging activities: | |||
Unrealized gain/(losses) on hedging activities, beginning of year | (40.6) | 33.8 | 41.4 |
Unrealized gains/(losses) | 35.6 | (73.9) | 34.3 |
Tax (expense)/benefit | (1.6) | 2.2 | 1 |
Tax expense/(benefit) related to reclassifications | (0.7) | (1.2) | 1.5 |
Net unrealized gains/(losses) on hedging activities | 50.3 | (74.4) | (7.6) |
Reclassification of Tax Act effects into "Accumulated deficit" (Note 2) | (2.3) | ||
Unrealized gains/(losses) on hedging activities, end of year | 7.4 | (40.6) | 33.8 |
Foreign currency translation adjustments: | |||
Foreign currency translation adjustments, beginning of year | (76.9) | (70.7) | (66) |
Foreign currency translation adjustments | (19.5) | (6.8) | (5.4) |
Tax (expense)/benefit | 0.6 | 0.7 | |
Net foreign currency translation adjustments | (19.5) | (6.2) | (4.7) |
Reclassification of Tax Act effects into "Accumulated deficit" (Note 2) | (4.8) | ||
Foreign currency translation adjustments, end of year | (101.2) | (76.9) | (70.7) |
Defined benefit pension plan adjustments: | |||
Defined benefit pension plan adjustments, beginning of year | (113.1) | (122.1) | (127.1) |
Unrealized gains/(losses) | (9.3) | 2.3 | (2.9) |
Tax (expense)/benefit | 2 | (0.5) | 1.1 |
Tax benefit related to reclassifications | (2.6) | (4.1) | (3.9) |
Net defined benefit pension plan adjustments | 1.8 | 9 | 5 |
Reclassification of Tax Act effects into "Accumulated deficit" (Note 2) | (24.8) | ||
Defined benefit pension plan adjustments, end of year | (136.1) | (113.1) | (122.1) |
Accumulated other comprehensive loss, end of year | (231) | (227.9) | (162.8) |
Other income, net | |||
Defined benefit pension plan adjustments: | |||
Reclassification of losses into "Other income, net" | 11.7 | 11.3 | 10.7 |
Reclassification out of Accumulated Other Comprehensive Income (Loss) | Revenue | |||
Unrealized gains on investment securities: | |||
Reclassification of (gains)/losses into "Revenues" | 0.4 | (2.4) | (3.3) |
Unrealized gains/(losses) on hedging activities: | |||
Reclassification of gains/(losses) into Revenues/Interest expense | 14.9 | (4.8) | (48) |
Reclassification out of Accumulated Other Comprehensive Income (Loss) | Interest Expense | |||
Unrealized gains/(losses) on hedging activities: | |||
Reclassification of gains/(losses) into Revenues/Interest expense | $ 2.1 | $ 3.3 | $ 3.6 |
Stockholders' Equity_(Deficit_3
Stockholders' Equity/(Deficit) - Cash Dividends Paid (Details) - USD ($) $ / shares in Units, $ in Millions | Feb. 07, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Cash Dividends Paid | ||||||||||||||||
Cash dividends paid | $ 341.7 | $ 325.6 | $ 312.2 | |||||||||||||
Cash dividends declared per common share (USD per share) | $ 0.19 | $ 0.19 | $ 0.19 | $ 0.19 | $ 0.175 | $ 0.175 | $ 0.175 | $ 0.175 | $ 0.16 | $ 0.16 | $ 0.16 | $ 0.16 | $ 0.76 | $ 0.70 | $ 0.64 | |
Subsequent Event | ||||||||||||||||
Cash Dividends Paid | ||||||||||||||||
Cash dividends declared per common share (USD per share) | $ 0.20 |
Stockholders' Equity_(Deficit_4
Stockholders' Equity/(Deficit) - Narrative (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Stockholders’ Equity/(Deficit) | |||
Stock repurchased and retired, publicly announced authorizations (shares) | 20.2 | 24.9 | 24.8 |
Stock repurchased and retired, publicly announced authorizations, value excluding commissions | $ 399.2 | $ 487 | $ 481.3 |
Stock repurchased and retired, publicly announced authorizations, average cost per share excluding commissions (USD per share) | $ 19.81 | $ 19.55 | $ 19.41 |
Remaining amount available under share repurchase authorization through December 31, 2019 | $ 544.2 |
Derivatives - Narrative (Detail
Derivatives - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Derivatives | |||
Gain (Loss) excluded from effectiveness testing recognized in other comprehensive income | $ 0.1 | $ 0 | $ 0 |
Foreign exchange gains/(losses) on settlement assets and obligations, cash balances, and other assets and liabilities | (52.3) | 17.5 | (21.4) |
Accumulated other comprehensive pre-tax loss to be reclassified into revenue within the next 12 months | (9.7) | ||
Business Solutions | |||
Derivatives | |||
Foreign exchange revenues | 342.3 | $ 341 | $ 352.6 |
Interest rate contracts | Notes due 2020 | |||
Derivatives | |||
Notional amounts | $ 175 | ||
Designated as hedges | Foreign currency contracts | |||
Derivatives | |||
Derivative policy - contract maturity period maximum | 36 months | ||
Derivative policy - targeted weighted-average maturity | 1 year | ||
Maximum remaining maturity of foreign currency derivatives | 24 months | ||
Derivative weighted-average maturity | 1 year | ||
Not designated as hedges | Foreign currency contracts | Business Solutions | |||
Derivatives | |||
Notional amounts | $ 6,000 | ||
Minimum | Uncollected settlement assets and obligations | |||
Derivatives | |||
Foreign currency forward contracts maturity range | 2 days | ||
Maximum | Uncollected settlement assets and obligations | |||
Derivatives | |||
Foreign currency forward contracts maturity range | 1 month | ||
Maximum | Foreign currency denominated cash and other asset and other liability positions | |||
Derivatives | |||
Foreign currency forward contracts maturity range | 1 year | ||
Maximum | Not designated as hedges | Uncollected settlement assets and obligations | |||
Derivatives | |||
Foreign currency forward contracts maturity range | 1 month | ||
Maximum | Not designated as hedges | Foreign currency contracts | Business Solutions | |||
Derivatives | |||
Foreign currency forward contracts maturity range | 1 year | ||
Maximum | Not designated as hedges | Foreign currency denominated cash and other asset and other liability positions | |||
Derivatives | |||
Foreign currency forward contracts maturity range | 1 year |
Derivatives - Foreign Currency
Derivatives - Foreign Currency Forward Contracts (Details) - Foreign currency contracts $ in Millions | Dec. 31, 2018USD ($)country |
Designated as hedges | Euro | |
Notional Amounts of Foreign Currency Forward Contracts | |
Notional amounts | $ 364.7 |
Designated as hedges | British pound | |
Notional Amounts of Foreign Currency Forward Contracts | |
Notional amounts | 76.4 |
Designated as hedges | Canadian dollar | |
Notional Amounts of Foreign Currency Forward Contracts | |
Notional amounts | 97.1 |
Designated as hedges | Australian dollar | |
Notional Amounts of Foreign Currency Forward Contracts | |
Notional amounts | 45.3 |
Designated as hedges | Japanese Yen | |
Notional Amounts of Foreign Currency Forward Contracts | |
Notional amounts | 25.2 |
Designated as hedges | Other | |
Notional Amounts of Foreign Currency Forward Contracts | |
Notional amounts | 50.1 |
Not designated as hedges | Euro | |
Notional Amounts of Foreign Currency Forward Contracts | |
Notional amounts | 274.4 |
Not designated as hedges | British pound | |
Notional Amounts of Foreign Currency Forward Contracts | |
Notional amounts | 81.5 |
Not designated as hedges | Canadian dollar | |
Notional Amounts of Foreign Currency Forward Contracts | |
Notional amounts | 46 |
Not designated as hedges | Australian dollar | |
Notional Amounts of Foreign Currency Forward Contracts | |
Notional amounts | 39 |
Not designated as hedges | Indian rupee | |
Notional Amounts of Foreign Currency Forward Contracts | |
Notional amounts | 37.2 |
Not designated as hedges | Brazilian real | |
Notional Amounts of Foreign Currency Forward Contracts | |
Notional amounts | 35.8 |
Not designated as hedges | Japanese Yen | |
Notional Amounts of Foreign Currency Forward Contracts | |
Notional amounts | 34.3 |
Not designated as hedges | Mexican peso | |
Notional Amounts of Foreign Currency Forward Contracts | |
Notional amounts | 34.2 |
Not designated as hedges | Other | |
Notional Amounts of Foreign Currency Forward Contracts | |
Notional amounts | $ 138.5 |
Number of currency exposures within 'Other' | country | 23 |
Maximum individual currency exposure within 'Other' | $ 25 |
Derivatives - Fair Value of Der
Derivatives - Fair Value of Derivatives (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Fair Value of Derivatives | ||
Derivative Assets | $ 245.5 | $ 273.4 |
Derivative Liabilities | 176.2 | 263 |
Designated as hedges | ||
Fair Value of Derivatives | ||
Derivative Assets | 28.7 | 11.3 |
Derivative Liabilities | 2.8 | 36.1 |
Designated as hedges | Other assets | Interest rate contracts | ||
Fair Value of Derivatives | ||
Derivative Assets | 0.1 | 3.3 |
Designated as hedges | Other assets | Foreign currency contracts | ||
Fair Value of Derivatives | ||
Derivative Assets | 28.6 | 8 |
Designated as hedges | Other liabilities | Foreign currency contracts | ||
Fair Value of Derivatives | ||
Derivative Liabilities | 2.8 | 36.1 |
Not designated as hedges | ||
Fair Value of Derivatives | ||
Derivative Assets | 216.8 | 262.1 |
Derivative Liabilities | 173.4 | 226.9 |
Not designated as hedges | Other assets | Foreign currency contracts | ||
Fair Value of Derivatives | ||
Derivative Assets | 2.6 | 1.9 |
Not designated as hedges | Other liabilities | Foreign currency contracts | ||
Fair Value of Derivatives | ||
Derivative Liabilities | 2.5 | 5.3 |
Not designated as hedges | Business Solutions | Other assets | Foreign currency contracts | ||
Fair Value of Derivatives | ||
Derivative Assets | 214.2 | 260.2 |
Not designated as hedges | Business Solutions | Other liabilities | Foreign currency contracts | ||
Fair Value of Derivatives | ||
Derivative Liabilities | $ 170.9 | $ 221.6 |
Derivatives - Gross and Net Fai
Derivatives - Gross and Net Fair Value of Derivative Assets and Liabilities (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Offsetting of Derivative Assets | ||
Gross Amounts of Recognized Assets | $ 162.6 | $ 115.4 |
Net Amounts Presented in the Consolidated Balance Sheets | 162.6 | 115.4 |
Derivatives Not Offset in the Consolidated Balance Sheets | (95.7) | (98.7) |
Net Amounts | 66.9 | 16.7 |
Derivatives that are not or may not be subject to master netting arrangement or similar agreement | 82.9 | 158 |
Total | 245.5 | 273.4 |
Offsetting of Derivative Liabilities | ||
Gross Amounts of Recognized Liabilities | 104.1 | 214.9 |
Net Amounts Presented in the Consolidated Balance Sheets | 104.1 | 214.9 |
Derivatives Not Offset in the Consolidated Balance Sheets | (95.7) | (98.7) |
Net Amounts | 8.4 | 116.2 |
Derivatives that are not or may not be subject to master netting arrangement or similar agreement | 72.1 | 48.1 |
Total | $ 176.2 | $ 263 |
Derivatives - Net Gains_(Losses
Derivatives - Net Gains/(Losses) from Hedging Activities (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Gains/(Losses) from Derivatives | |||||||||||
Revenues | $ 1,401.6 | $ 1,387.8 | $ 1,411.1 | $ 1,389.4 | $ 1,438.3 | $ 1,404.7 | $ 1,378.9 | $ 1,302.4 | $ 5,589.9 | $ 5,524.3 | $ 5,422.9 |
Interest expense | (149.6) | (142.1) | (152.5) | ||||||||
Other income, net (Note 2) | 14.1 | 8.9 | 3.7 | ||||||||
Cash Flow and Fair Value Hedges | |||||||||||
Gain/(Loss) Recognized in OCI on Derivatives | 35.6 | (73.9) | 34.3 | ||||||||
Not designated as hedges | |||||||||||
Cash Flow and Fair Value Hedges | |||||||||||
Gain/(Loss) Recognized in Income on Derivatives | 59.8 | (21) | 14 | ||||||||
Not designated as hedges | Selling, general and administrative | |||||||||||
Cash Flow and Fair Value Hedges | |||||||||||
Gain/(Loss) Recognized in Income on Derivatives | 58.6 | (20.5) | 13.2 | ||||||||
Not designated as hedges | Revenue | |||||||||||
Cash Flow and Fair Value Hedges | |||||||||||
Gain/(Loss) Recognized in Income on Derivatives | 3 | ||||||||||
Not designated as hedges | Other Income | |||||||||||
Cash Flow and Fair Value Hedges | |||||||||||
Gain/(Loss) Recognized in Income on Derivatives | (1.8) | (0.5) | 0.8 | ||||||||
Fair Value Hedges | Interest rate contracts | Interest Expense | |||||||||||
Cash Flow and Fair Value Hedges | |||||||||||
Hedged items | 0.6 | 3.9 | 3.2 | ||||||||
Derivatives designated as hedging instruments | (1.6) | (2) | 6.2 | ||||||||
Cash Flow Hedges | Foreign currency contracts | Revenue | |||||||||||
Cash Flow and Fair Value Hedges | |||||||||||
Amount of gain/(loss) reclassified from accumulated other comprehensive loss into income | (14.9) | 4.8 | 48 | ||||||||
Amount excluded from effectiveness testing recognized in earnings based on an amortization approach | 4.3 | ||||||||||
Amount excluded from effectiveness testing recognized in earnings based on changes in fair value | $ 7.5 | ||||||||||
Cash Flow Hedges | Foreign currency contracts | Other Income | |||||||||||
Cash Flow and Fair Value Hedges | |||||||||||
Amount excluded from effectiveness testing recognized in earnings based on changes in fair value | 9 | $ 3.7 | |||||||||
Amount of gain/(loss) reclassified from accumulated other comprehensive loss into income as a result that a forecasted transaction is no longer probable of occurring | $ (1.4) |
Borrowings - Outstanding Borrow
Borrowings - Outstanding Borrowings (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 18, 2018 | Aug. 22, 2018 | Jun. 11, 2018 | Dec. 31, 2017 | Aug. 22, 2017 | Mar. 15, 2017 | Nov. 22, 2013 | Aug. 22, 2011 | Jun. 21, 2010 | Mar. 30, 2010 | Nov. 17, 2006 |
Outstanding Borrowings | ||||||||||||
Total borrowings at par value | $ 3,449.9 | $ 3,049.9 | ||||||||||
Fair value hedge accounting adjustments, net | (0.1) | 0.5 | ||||||||||
Unamortized discount and debt issuance costs | (16.1) | (16.8) | ||||||||||
Total borrowings at carrying value | $ 3,433.7 | 3,033.6 | ||||||||||
Effective interest rate | 4.50% | |||||||||||
Commercial paper | ||||||||||||
Outstanding Borrowings | ||||||||||||
Total borrowings at par value | $ 125 | 0 | ||||||||||
Notes due 2018 | ||||||||||||
Outstanding Borrowings | ||||||||||||
Total borrowings at par value | $ 400 | $ 400 | $ 400 | |||||||||
Stated interest rate (as a percent) | 3.65% | |||||||||||
3.350% notes due 2019 | ||||||||||||
Outstanding Borrowings | ||||||||||||
Total borrowings at par value | $ 250 | $ 250 | $ 250 | |||||||||
Stated interest rate (as a percent) | 3.35% | 3.35% | 3.35% | |||||||||
Floating rate notes due 2019 | ||||||||||||
Outstanding Borrowings | ||||||||||||
Total borrowings at par value | $ 250 | $ 250 | $ 250 | |||||||||
Effective interest rate | 3.70% | |||||||||||
Notes due 2020 | ||||||||||||
Outstanding Borrowings | ||||||||||||
Total borrowings at par value | $ 324.9 | $ 324.9 | ||||||||||
Stated interest rate (as a percent) | 5.253% | 5.253% | 5.253% | |||||||||
Effective interest rate | 5.90% | |||||||||||
3.600% notes due 2022 | ||||||||||||
Outstanding Borrowings | ||||||||||||
Total borrowings at par value | $ 500 | $ 500 | $ 100 | $ 400 | ||||||||
Stated interest rate (as a percent) | 3.60% | 3.60% | 3.60% | |||||||||
4.250% notes due 2023 | ||||||||||||
Outstanding Borrowings | ||||||||||||
Total borrowings at par value | $ 300 | $ 300 | ||||||||||
Stated interest rate (as a percent) | 4.25% | 4.25% | ||||||||||
Effective interest rate | 4.50% | |||||||||||
6.200% notes due 2036 | ||||||||||||
Outstanding Borrowings | ||||||||||||
Total borrowings at par value | $ 500 | $ 500 | $ 500 | |||||||||
Stated interest rate (as a percent) | 6.20% | 6.20% | 6.20% | |||||||||
6.200% notes due 2040 | ||||||||||||
Outstanding Borrowings | ||||||||||||
Total borrowings at par value | $ 250 | $ 250 | $ 250 | |||||||||
Stated interest rate (as a percent) | 6.20% | 6.20% | 6.20% | |||||||||
Term loan facility borrowing | ||||||||||||
Outstanding Borrowings | ||||||||||||
Total borrowings at par value | $ 950 | $ 950 | $ 575 | |||||||||
Effective interest rate | 3.80% |
Borrowings - Maturity Schedule
Borrowings - Maturity Schedule of Borrowings (Details) $ in Millions | Dec. 31, 2018USD ($) |
Borrowings maturities at par value | |
Due within 1 year | $ 500 |
Due after 1 year through 2 years | 324.9 |
Due after 2 years through 3 years | 47.5 |
Due after 3 years through 4 years | 547.5 |
Due after 4 years through 5 years | 395 |
Due after 5 years | $ 1,510 |
Borrowings - Narrative (Details
Borrowings - Narrative (Details) - USD ($) $ in Thousands | Aug. 22, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 18, 2018 | Aug. 22, 2018 | Jun. 11, 2018 | Mar. 15, 2017 | Oct. 31, 2016 | Nov. 22, 2013 | Dec. 10, 2012 | Aug. 22, 2011 | Jun. 21, 2010 | Mar. 30, 2010 | Nov. 17, 2006 | Sep. 29, 2006 |
Long-term and Short-term Debt Instruments | ||||||||||||||||
Total borrowings at par value | $ 3,449,900 | $ 3,049,900 | ||||||||||||||
Effective interest rate | 4.50% | |||||||||||||||
Amortization payments of term loan | $ 414,400 | 500,000 | $ 1,005,400 | |||||||||||||
Commercial paper | ||||||||||||||||
Long-term and Short-term Debt Instruments | ||||||||||||||||
Weighted-average effective interest rate | 2.90% | |||||||||||||||
Commercial Paper Program Weighted Average Initial Term | 3 days | |||||||||||||||
Threshold over which Commercial Paper Program limit will be reduced for borrowings on Revolving Credit Facility | $ 1,500,000 | |||||||||||||||
Maximum days to maturity | 397 days | |||||||||||||||
Total borrowings at par value | $ 125,000 | 0 | ||||||||||||||
Revolving credit facility | ||||||||||||||||
Long-term and Short-term Debt Instruments | ||||||||||||||||
Maximum borrowing capacity | $ 1,500,000 | |||||||||||||||
Revolver balance outstanding at the end of period | $ 0 | 0 | ||||||||||||||
Interest rate margin on revolving credit facility (as a percent) | 1.10% | |||||||||||||||
Facility fee (as a percent) | 0.15% | |||||||||||||||
Letter of credit sub-facility | ||||||||||||||||
Long-term and Short-term Debt Instruments | ||||||||||||||||
Maximum borrowing capacity | 250,000 | |||||||||||||||
Term loan facility borrowing | ||||||||||||||||
Long-term and Short-term Debt Instruments | ||||||||||||||||
Maximum borrowing capacity | 950,000 | |||||||||||||||
Outstanding borrowings under term loan facility | $ 575,000 | |||||||||||||||
EBITDA interest coverage ratio | 3 | |||||||||||||||
Total borrowings at par value | $ 950,000 | 575,000 | $ 950,000 | |||||||||||||
Effective interest rate | 3.80% | |||||||||||||||
Term loan facility, interest rate margin (as a percent) | 1.25% | |||||||||||||||
Amortization payments of term loan | $ 14,400 | |||||||||||||||
Floating rate notes due 2019 | ||||||||||||||||
Long-term and Short-term Debt Instruments | ||||||||||||||||
Total borrowings at par value | $ 250,000 | $ 250,000 | 250,000 | |||||||||||||
Effective interest rate | 3.70% | |||||||||||||||
Basis spread on floating rate debt (as a percent) | 0.80% | |||||||||||||||
Repurchase provisions, percentage of principal | 101.00% | |||||||||||||||
3.600% notes due 2022 | ||||||||||||||||
Long-term and Short-term Debt Instruments | ||||||||||||||||
Total borrowings at par value | $ 100,000 | $ 500,000 | $ 500,000 | $ 400,000 | ||||||||||||
Redemption price (as a percent) | 101.783% | |||||||||||||||
Accrued interest received upon issuance | $ 1,570 | |||||||||||||||
Stated interest rate (as a percent) | 3.60% | 3.60% | 3.60% | |||||||||||||
Repurchase provisions, percentage of principal | 101.00% | |||||||||||||||
3.600% notes due 2022 | Maximum | ||||||||||||||||
Long-term and Short-term Debt Instruments | ||||||||||||||||
Effective interest rate | 5.60% | |||||||||||||||
3.600% notes due 2022 | Minimum | ||||||||||||||||
Long-term and Short-term Debt Instruments | ||||||||||||||||
Effective interest rate | 3.60% | |||||||||||||||
3.350% notes due 2019 | ||||||||||||||||
Long-term and Short-term Debt Instruments | ||||||||||||||||
Total borrowings at par value | $ 250,000 | $ 250,000 | $ 250,000 | |||||||||||||
Stated interest rate (as a percent) | 3.35% | 3.35% | 3.35% | |||||||||||||
Maximum interest increase after credit rating downgrade | 2.00% | |||||||||||||||
Minimum interest charged after credit rating upgrade | 3.35% | |||||||||||||||
Premium on early redemptions (as a percent) | 0.30% | |||||||||||||||
Repurchase provisions, percentage of principal | 101.00% | |||||||||||||||
Notes due 2017 | ||||||||||||||||
Long-term and Short-term Debt Instruments | ||||||||||||||||
Total borrowings at par value | $ 500,000 | |||||||||||||||
Notes due 2018 | ||||||||||||||||
Long-term and Short-term Debt Instruments | ||||||||||||||||
Total borrowings at par value | $ 400,000 | $ 400,000 | $ 400,000 | |||||||||||||
Stated interest rate (as a percent) | 3.65% | |||||||||||||||
6.200% notes due 2040 | ||||||||||||||||
Long-term and Short-term Debt Instruments | ||||||||||||||||
Total borrowings at par value | $ 250,000 | $ 250,000 | $ 250,000 | |||||||||||||
Stated interest rate (as a percent) | 6.20% | 6.20% | 6.20% | |||||||||||||
Premium on early redemptions (as a percent) | 0.30% | |||||||||||||||
Notes due 2020 | ||||||||||||||||
Long-term and Short-term Debt Instruments | ||||||||||||||||
Total borrowings at par value | $ 324,900 | $ 324,900 | ||||||||||||||
Stated interest rate (as a percent) | 5.253% | 5.253% | 5.253% | |||||||||||||
Effective interest rate | 5.90% | |||||||||||||||
Debt instrument, original face amount | $ 303,700 | |||||||||||||||
Unamortized premium of debt instrument | $ 21,200 | |||||||||||||||
Premium on early redemptions (as a percent) | 0.15% | |||||||||||||||
Premium given to note holders (as a percent) | 7.00% | |||||||||||||||
6.200% notes due 2036 | ||||||||||||||||
Long-term and Short-term Debt Instruments | ||||||||||||||||
Total borrowings at par value | $ 500,000 | $ 500,000 | $ 500,000 | |||||||||||||
Stated interest rate (as a percent) | 6.20% | 6.20% | 6.20% | |||||||||||||
Premium on early redemptions (as a percent) | 0.25% | |||||||||||||||
Notes due 2016 | ||||||||||||||||
Long-term and Short-term Debt Instruments | ||||||||||||||||
Total borrowings at par value | $ 1,000,000 | |||||||||||||||
4.250% notes due 2023 | ||||||||||||||||
Long-term and Short-term Debt Instruments | ||||||||||||||||
Total borrowings at par value | $ 300,000 | $ 300,000 | ||||||||||||||
Stated interest rate (as a percent) | 4.25% | 4.25% | ||||||||||||||
Effective interest rate | 4.50% | |||||||||||||||
Premium on early redemptions (as a percent) | 0.25% | |||||||||||||||
Repurchase provisions, percentage of principal | 101.00% | |||||||||||||||
4.250% notes due 2023 | Maximum | ||||||||||||||||
Long-term and Short-term Debt Instruments | ||||||||||||||||
Effective interest rate | 6.25% | |||||||||||||||
4.250% notes due 2023 | Minimum | ||||||||||||||||
Long-term and Short-term Debt Instruments | ||||||||||||||||
Effective interest rate | 4.25% |
Stock Compensation Plans - Narr
Stock Compensation Plans - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Long-Term Incentive Plan | |||
Volatility (as a percent) | 26.30% | 24.70% | 27.90% |
Options granted (shares) | 400,000 | ||
Expected term (in years) | 6 years 18 days | 6 years 18 days | 6 years 3 months 26 days |
Chief Executive Officer | |||
Long-Term Incentive Plan | |||
Expected term (in years) | 6 years | 6 years | 6 years |
Non-executive employees | |||
Long-Term Incentive Plan | |||
Options granted (shares) | 0 | 0 | 0 |
Director | |||
Long-Term Incentive Plan | |||
Expected term (in years) | 7 years | 7 years | 7 years |
Employee Stock Option | |||
Long-Term Incentive Plan | |||
Options expiration period | 10 years | ||
Award vesting period | 4 years | ||
Unrecognized compensation cost | $ 1.3 | ||
Weighted average recognition period | 2 years 7 months 6 days | ||
Award vesting (as a percent) | 25.00% | ||
Employee Stock Option | Chief Executive Officer | |||
Long-Term Incentive Plan | |||
Long-term incentive award stock option awards (as a percent) | 20.00% | 20.00% | |
Restricted Stock Units | |||
Long-Term Incentive Plan | |||
Award vesting period | 4 years | ||
Award vesting (as a percent) | 25.00% | ||
Restricted Stock Units | Executive Excluding CEO [Member] | |||
Long-Term Incentive Plan | |||
Long-term incentive award restricted stock units (as a percent) | 30.00% | 20.00% | |
Restricted Stock Units | Chief Executive Officer | |||
Long-Term Incentive Plan | |||
Long-term incentive award restricted stock units (as a percent) | 10.00% | ||
Restricted Stock Units | Senior Vice Presidents | |||
Long-Term Incentive Plan | |||
Long-term incentive award restricted stock units (as a percent) | 50.00% | 50.00% | |
Financial PSUs | |||
Long-Term Incentive Plan | |||
Award vesting period | 3 years | ||
Award vesting (as a percent) | 100.00% | ||
Financial PSUs | Minimum | |||
Long-Term Incentive Plan | |||
Stock units granted that recipients receive as performance based restricted stock units (as a percent) | 0.00% | 0.00% | |
Financial PSUs | Maximum | |||
Long-Term Incentive Plan | |||
Stock units granted that recipients receive as performance based restricted stock units (as a percent) | 200.00% | 150.00% | |
Financial PSUs | Executive Excluding CEO [Member] | |||
Long-Term Incentive Plan | |||
Long-term incentive award performance based restricted stock units (as a percent) | 50.00% | 60.00% | |
Financial PSUs | Chief Executive Officer | |||
Long-Term Incentive Plan | |||
Long-term incentive award performance based restricted stock units (as a percent) | 50.00% | 60.00% | |
Financial PSUs | Senior Vice Presidents | |||
Long-Term Incentive Plan | |||
Long-term incentive award performance based restricted stock units (as a percent) | 50.00% | 50.00% | |
TSR PSUs | |||
Long-Term Incentive Plan | |||
Award vesting period | 3 years | ||
Award vesting (as a percent) | 100.00% | ||
TSR PSUs | Executive Excluding CEO [Member] | |||
Long-Term Incentive Plan | |||
Long-term incentive award performance based restricted stock units (as a percent) | 20.00% | 20.00% | |
TSR PSUs | Chief Executive Officer | |||
Long-Term Incentive Plan | |||
Long-term incentive award performance based restricted stock units (as a percent) | 20.00% | 20.00% | |
RSUs and PSUs | |||
Long-Term Incentive Plan | |||
Unrecognized compensation cost | $ 62.3 | ||
Weighted average recognition period | 2 years 1 month 6 days | ||
2015 LTIP | |||
Long-Term Incentive Plan | |||
Shares available for grant (shares) | 26,500,000 |
Stock Compensation Plans - Stoc
Stock Compensation Plans - Stock Option Activity (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Stock Option Activity | |||
Outstanding at beginning of period (shares) | 7.3 | ||
Granted (shares) | 0.4 | ||
Exercised (shares) | (0.7) | ||
Cancelled/forfeited (shares) | (0.8) | ||
Outstanding at end of period (shares) | 6.2 | 7.3 | |
Options exercisable at end of period (shares) | 5.1 | ||
Weighted-Average Exercise Price | |||
Outstanding at beginning of period (USD per share) | $ 17.71 | ||
Granted (USD per share) | 20.09 | ||
Exercised (USD per share) | 15.50 | ||
Cancelled/forfeited (USD per share) | 21.14 | ||
Outstanding at end of period (USD per share) | 17.63 | $ 17.71 | |
Options exercisable at end of period (USD per share) | $ 17.23 | ||
Stock Options, Additional Disclosures | |||
Weighted-average remaining contractual term, outstanding at end of period (years) | 4 years 7 months 6 days | ||
Weighted-average remaining contractual term, options exercisable at end of period (years) | 3 years 10 months 24 days | ||
Aggregate intrinsic value, outstanding at end of period | $ 4.9 | ||
Aggregate intrinsic value, options exercisable at end of period | 4.9 | ||
Cash Proceeds from Exercise of Stock Options | |||
Cash received from exercise of stock options | 10.1 | $ 13 | $ 32.5 |
Tax benefit from exercise of stock options | 0.6 | 1.3 | 1.6 |
Intrinsic value of stock options exercised | $ 3.1 | $ 4 | $ 5.3 |
Stock Compensation Plans - Acti
Stock Compensation Plans - Activity of Restricted Stock Units and Performance-Based Restricted Stock Units (Details) shares in Millions | 12 Months Ended |
Dec. 31, 2018$ / sharesshares | |
Restricted Stock Activity | |
Non-vested at beginning of period (shares) | shares | 7.4 |
Granted (shares) | shares | 3.2 |
Vested (shares) | shares | (2.4) |
Forfeited (shares) | shares | (1.1) |
Non-vested at end of period (shares) | shares | 7.1 |
Restricted Stock Weighted-Average Grant-Date Fair Value | |
Non-vested at beginning of period (USD per share) | $ / shares | $ 17.32 |
Granted (USD per share) | $ / shares | 18.31 |
Vested (USD per share) | $ / shares | 17.38 |
Forfeited (USD per share) | $ / shares | 17.69 |
Non-vested at end of period (USD per share) | $ / shares | $ 17.69 |
Stock Compensation Plans - Impa
Stock Compensation Plans - Impact on Earnings (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Stock-Based Compensation | |||
Stock-based compensation expense | $ (47.7) | $ (43.9) | $ (41.8) |
Income tax benefit from stock-based compensation expense | 8.3 | 12.8 | 12.3 |
Net income/(loss) impact | $ (39.4) | $ (31.1) | $ (29.5) |
Earnings/(loss) per share: | |||
Basic and Diluted (USD per share) | $ (0.09) | $ (0.07) | $ (0.06) |
Stock Compensation Plans - Assu
Stock Compensation Plans - Assumptions for the Black-Scholes Option Pricing Model (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Stock options granted: | |||
Weighted-average risk-free interest rate (as a percent) | 2.80% | 2.10% | 1.40% |
Weighted-average dividend yield (as a percent) | 3.90% | 3.50% | 3.30% |
Volatility (as a percent) | 26.30% | 24.70% | 27.90% |
Expected term (in years) | 6 years 18 days | 6 years 18 days | 6 years 3 months 26 days |
Weighted-average grant date fair value (USD per share) | $ 3.66 | $ 3.39 | $ 3.44 |
Segments - Narrative (Details)
Segments - Narrative (Details) $ in Millions | 3 Months Ended | 12 Months Ended | |||||
Dec. 31, 2017USD ($) | Sep. 30, 2017USD ($) | Jun. 30, 2017USD ($) | Mar. 31, 2017USD ($) | Dec. 31, 2018USD ($)regioncustomersegment | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | |
Segments | |||||||
Goodwill impairment charge | $ 464 | $ 0 | $ 464 | $ 0 | |||
Expenses | 35.2 | $ 9.9 | $ 35 | $ 14.3 | 94.4 | 20.3 | |
Utilized to allocate revenue to the country where the transaction is initiated (as a percent) | 100.00% | ||||||
ASC 2014-07 | |||||||
Segments | |||||||
Reclassification of Defined Benefit Non-Service Costs | (2.4) | (3.3) | |||||
Operating Segments | |||||||
Segments | |||||||
Number of operating segments | segment | 2 | ||||||
Expenses | 60.5 | 3.8 | |||||
Not Allocated To Segments | |||||||
Segments | |||||||
Goodwill impairment charge | 464 | ||||||
Settlement expense | 8 | 601 | |||||
Expenses | 94.4 | 20.3 | |||||
NYDFS Consent Order | |||||||
Segments | |||||||
Damages awarded | 60 | ||||||
Settlement expense | $ 11 | $ 49 | 60 | ||||
Joint Settlement Agreements | |||||||
Segments | |||||||
Settlement expense | $ 8 | 8 | 601 | ||||
Consumer-to-Consumer | Operating Segments | |||||||
Segments | |||||||
Number of consumers in money transfer | customer | 2 | ||||||
Number of geographic regions in segment | region | 5 | ||||||
Expenses | 30.8 | 2.7 | |||||
Business Solutions | |||||||
Segments | |||||||
Goodwill impairment charge | 464 | ||||||
Business Solutions | Operating Segments | |||||||
Segments | |||||||
Expenses | $ 16.1 | $ 0.6 |
Segments - Reportable Segments
Segments - Reportable Segments Results (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Revenues: | |||||||||||
Total consolidated revenues | $ 1,401.6 | $ 1,387.8 | $ 1,411.1 | $ 1,389.4 | $ 1,438.3 | $ 1,404.7 | $ 1,378.9 | $ 1,302.4 | $ 5,589.9 | $ 5,524.3 | $ 5,422.9 |
Operating income: | |||||||||||
Operating income/(loss) | 271 | $ 302.6 | $ 283.6 | $ 264.9 | (251.9) | 272.2 | 215.4 | 240.1 | 1,122.1 | 475.8 | 487 |
Goodwill impairment charge | (464) | 0 | (464) | 0 | |||||||
Business transformation expenses | (35.2) | $ (9.9) | $ (35) | $ (14.3) | (94.4) | (20.3) | |||||
Assets: | |||||||||||
Total assets | $ 8,996.8 | $ 9,231.4 | 8,996.8 | 9,231.4 | |||||||
Depreciation and amortization: | |||||||||||
Total consolidated depreciation and amortization | 264.7 | 262.9 | 263.2 | ||||||||
Capital expenditures: | |||||||||||
Total capital expenditures | 339 | 177.1 | 229.8 | ||||||||
Operating Segments | |||||||||||
Operating income: | |||||||||||
Operating income/(loss) | 1,122.1 | 1,102.2 | 1,108.3 | ||||||||
Business transformation expenses | (60.5) | (3.8) | |||||||||
Not Allocated To Segments | |||||||||||
Operating income: | |||||||||||
Goodwill impairment charge | (464) | ||||||||||
NYDFS Consent Order | (60) | ||||||||||
Joint Settlement Agreements | (8) | (601) | |||||||||
Business transformation expenses | (94.4) | (20.3) | |||||||||
Consumer-to-Consumer | Operating Segments | |||||||||||
Revenues: | |||||||||||
Total consolidated revenues | 4,453.6 | 4,354.5 | 4,304.6 | ||||||||
Operating income: | |||||||||||
Operating income/(loss) | 1,048.2 | 1,004.2 | 1,011.3 | ||||||||
Business transformation expenses | (30.8) | (2.7) | |||||||||
Depreciation and amortization: | |||||||||||
Total consolidated depreciation and amortization | 189.9 | 183 | 183.5 | ||||||||
Capital expenditures: | |||||||||||
Total capital expenditures | 273.8 | 120.2 | 167.7 | ||||||||
Business Solutions | |||||||||||
Operating income: | |||||||||||
Goodwill impairment charge | (464) | ||||||||||
Business Solutions | Operating Segments | |||||||||||
Revenues: | |||||||||||
Total consolidated revenues | 386.8 | 383.9 | 396 | ||||||||
Operating income: | |||||||||||
Operating income/(loss) | 23.4 | 13.8 | 21.3 | ||||||||
Business transformation expenses | (16.1) | (0.6) | |||||||||
Depreciation and amortization: | |||||||||||
Total consolidated depreciation and amortization | 41.9 | 42.5 | 50.8 | ||||||||
Capital expenditures: | |||||||||||
Total capital expenditures | 11.9 | 8.8 | 11.4 | ||||||||
Other | Operating Segments | |||||||||||
Revenues: | |||||||||||
Total consolidated revenues | 749.5 | 785.9 | 722.3 | ||||||||
Operating income: | |||||||||||
Operating income/(loss) | 50.5 | 84.2 | 75.7 | ||||||||
Business transformation expenses | (13.6) | (0.5) | |||||||||
Depreciation and amortization: | |||||||||||
Total consolidated depreciation and amortization | 32.9 | 37.4 | 28.9 | ||||||||
Capital expenditures: | |||||||||||
Total capital expenditures | $ 53.3 | $ 48.1 | $ 50.7 |
Segments - Information on Princ
Segments - Information on Principal Geographic Areas (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Revenue: | |||||||||||
Revenues | $ 1,401.6 | $ 1,387.8 | $ 1,411.1 | $ 1,389.4 | $ 1,438.3 | $ 1,404.7 | $ 1,378.9 | $ 1,302.4 | $ 5,589.9 | $ 5,524.3 | $ 5,422.9 |
Long-lived assets: | |||||||||||
Property and equipment, net | 270.4 | 214.2 | 270.4 | 214.2 | 220.5 | ||||||
United States | Operating Segments | |||||||||||
Revenue: | |||||||||||
Revenues | 2,126.2 | 2,159 | 2,091.5 | ||||||||
Long-lived assets: | |||||||||||
Property and equipment, net | 207.4 | 156.8 | 207.4 | 156.8 | 174 | ||||||
International | Operating Segments | |||||||||||
Revenue: | |||||||||||
Revenues | 3,463.7 | 3,365.3 | 3,331.4 | ||||||||
Long-lived assets: | |||||||||||
Property and equipment, net | $ 63 | $ 57.4 | $ 63 | $ 57.4 | $ 46.5 |
Quarterly Financial Informati_3
Quarterly Financial Information (Unaudited) - Summarized Quarterly Results (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 12 Months Ended | ||||||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||||
Summarized Quarterly Results | ||||||||||||||
Revenues | $ 1,401.6 | $ 1,387.8 | $ 1,411.1 | $ 1,389.4 | $ 1,438.3 | $ 1,404.7 | $ 1,378.9 | $ 1,302.4 | $ 5,589.9 | $ 5,524.3 | $ 5,422.9 | |||
Expenses | 1,130.6 | 1,085.2 | 1,127.5 | 1,124.5 | 1,690.2 | 1,132.5 | 1,163.5 | 1,062.3 | 4,467.8 | [1] | 5,048.5 | [1] | 4,935.9 | [1] |
Operating income/(loss) | 271 | 302.6 | 283.6 | 264.9 | (251.9) | 272.2 | 215.4 | 240.1 | 1,122.1 | 475.8 | 487 | |||
Other expense, net | 36 | 36.2 | 28.1 | 30.4 | 37.3 | 33 | 31 | 27 | 130.7 | 128.3 | 145.3 | |||
Income/(loss) before income taxes | 235 | 266.4 | 255.5 | 234.5 | (289.2) | 239.2 | 184.4 | 213.1 | 991.4 | 347.5 | 341.7 | |||
Provision for income taxes | 22.9 | 57.8 | 37.9 | 20.9 | 831.7 | 3.6 | 17.9 | 51.4 | 139.5 | 904.6 | 88.5 | |||
Net income/(loss) | $ 212.1 | $ 208.6 | $ 217.6 | $ 213.6 | $ (1,120.9) | $ 235.6 | $ 166.5 | $ 161.7 | $ 851.9 | $ (557.1) | $ 253.2 | |||
Earnings/(loss) per share: | ||||||||||||||
Basic (USD per share) | $ 0.48 | $ 0.47 | $ 0.48 | $ 0.46 | $ (2.44) | $ 0.51 | $ 0.35 | $ 0.34 | $ 1.89 | $ (1.19) | $ 0.52 | |||
Diluted (USD per share) | $ 0.48 | $ 0.46 | $ 0.47 | $ 0.46 | $ (2.44) | $ 0.51 | $ 0.35 | $ 0.33 | $ 1.87 | $ (1.19) | $ 0.51 | |||
Weighted-average shares outstanding: | ||||||||||||||
Basic (shares) | 442.9 | 446.8 | 457.2 | 460.3 | 459.6 | 462.8 | 469.4 | 479.8 | 451.8 | 467.9 | 490.2 | |||
Diluted (shares) | 445.4 | 449 | 459.6 | 463.6 | 459.6 | 465.4 | 472 | 483.4 | 454.4 | 467.9 | 493.5 | |||
[1] | As further described in Note 7, total expenses include amounts incurred with related parties of $57.6 million, $65.9 million, and $68.0 million for the years ended December 31, 2018, 2017 and 2016, respectively. |
Quarterly Financial Informati_4
Quarterly Financial Information (Unaudited) - Parenthetical (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Summarized Quarterly Results | |||||||||||
Adjustments related to Tax Act | $ 8.1 | $ 26.6 | $ (6.2) | $ (6) | |||||||
Goodwill impairment charge | $ 464 | $ 0 | $ 464 | $ 0 | |||||||
Expenses | 35.2 | $ 9.9 | $ 35 | $ 14.3 | 94.4 | 20.3 | |||||
Operating income | $ 271 | $ 302.6 | $ 283.6 | $ 264.9 | (251.9) | 272.2 | 215.4 | 240.1 | $ 1,122.1 | 475.8 | 487 |
Provisional income tax expense (benefit) related to the Tax and Jobs Act of 2017 | 828 | ||||||||||
ASC 2014-07 | |||||||||||
Summarized Quarterly Results | |||||||||||
Operating income | 0.6 | 0.6 | 0.6 | $ 0.6 | |||||||
NYDFS Consent Order | |||||||||||
Summarized Quarterly Results | |||||||||||
Settlement expense | $ 11 | $ 49 | 60 | ||||||||
Joint Settlement Agreements | |||||||||||
Summarized Quarterly Results | |||||||||||
Settlement expense | $ 8 | $ 8 | $ 601 |
Schedule I - Condensed Financ_2
Schedule I - Condensed Financial Information of the Registrant - Condensed Balance Sheets (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Assets: | ||||
Cash and cash equivalents | $ 973.4 | $ 838.2 | ||
Property and equipment, net of accumulated depreciation of $33.5 and $28.5, respectively | 270.4 | 214.2 | $ 220.5 | |
Other assets | 616 | 675.9 | ||
Total assets | 8,996.8 | 9,231.4 | ||
Liabilities: | ||||
Accounts payable and accrued liabilities | 564.9 | 718.5 | ||
Income taxes payable | 1,054 | 1,252 | ||
Borrowings | 3,433.7 | 3,033.6 | ||
Other liabilities | 279.1 | 356.8 | ||
Total liabilities | 9,306.6 | 9,722.8 | ||
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; 441.2 shares and 459.0 shares issued and outstanding as of December 31, 2018 and 2017, respectively | 4.4 | 4.6 | ||
Capital surplus | 755.6 | 697.8 | ||
Accumulated deficit | (838.8) | (965.9) | ||
Accumulated other comprehensive loss | (231) | (227.9) | (162.8) | |
Total stockholders' deficit | (309.8) | (491.4) | $ 902.2 | $ 1,404.9 |
Total liabilities and stockholders' deficit | 8,996.8 | 9,231.4 | ||
Balance Sheet Parenthetical | ||||
Accumulated depreciation | $ 702.4 | $ 635.7 | ||
Preferred stock, par value (USD per share) | $ 1 | $ 1 | ||
Preferred stock, shares authorized | 10 | 10 | ||
Preferred stock, shares issued | 0 | 0 | ||
Common stock, par value (USD per share) | $ 0.01 | $ 0.01 | ||
Common stock, shares authorized | 2,000 | 2,000 | ||
Common stock, shares issued | 441.2 | 459 | ||
Common stock, shares outstanding | 441.2 | 459 | ||
Parent Company | ||||
Assets: | ||||
Cash and cash equivalents | $ 0.2 | $ 1 | ||
Property and equipment, net of accumulated depreciation of $33.5 and $28.5, respectively | 107.3 | 33.9 | ||
Other assets | 48.6 | 34.2 | ||
Investment in subsidiaries | 5,665.5 | 7,236.2 | ||
Total assets | 5,821.6 | 7,305.3 | ||
Liabilities: | ||||
Accounts payable and accrued liabilities | 100.2 | 74.6 | ||
Income taxes payable | 727 | 887 | ||
Payable to subsidiaries, net | 1,869.6 | 3,800.8 | ||
Borrowings | 3,433.7 | 3,033.6 | ||
Other liabilities | 0.9 | 0.7 | ||
Total liabilities | 6,131.4 | 7,796.7 | ||
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; 441.2 shares and 459.0 shares issued and outstanding as of December 31, 2018 and 2017, respectively | 4.4 | 4.6 | ||
Capital surplus | 755.6 | 697.8 | ||
Accumulated deficit | (838.8) | (965.9) | ||
Accumulated other comprehensive loss | (231) | (227.9) | ||
Total stockholders' deficit | (309.8) | (491.4) | ||
Total liabilities and stockholders' deficit | 5,821.6 | 7,305.3 | ||
Balance Sheet Parenthetical | ||||
Accumulated depreciation | $ 33.5 | $ 28.5 | ||
Preferred stock, par value (USD per share) | $ 1 | $ 1 | ||
Preferred stock, shares authorized | 10 | 10 | ||
Preferred stock, shares issued | 0 | 0 | ||
Common stock, par value (USD per share) | $ 0.01 | $ 0.01 | ||
Common stock, shares authorized | 2,000 | 2,000 | ||
Common stock, shares issued | 441.2 | 459 | ||
Common stock, shares outstanding | 441.2 | 459 |
Schedule I - Condensed Financ_3
Schedule I - Condensed Financial Information of the Registrant - Condensed Statements of Income/(Loss) and Comprehensive Income/(Loss) (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||||||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||||
CONDENSED STATEMENTS OF INCOME/(LOSS) AND COMPREHENSIVE INCOME/(LOSS) | ||||||||||||||
Revenues | $ 1,401.6 | $ 1,387.8 | $ 1,411.1 | $ 1,389.4 | $ 1,438.3 | $ 1,404.7 | $ 1,378.9 | $ 1,302.4 | $ 5,589.9 | $ 5,524.3 | $ 5,422.9 | |||
Expenses | 1,130.6 | 1,085.2 | 1,127.5 | 1,124.5 | 1,690.2 | 1,132.5 | 1,163.5 | 1,062.3 | 4,467.8 | [1] | 5,048.5 | [1] | 4,935.9 | [1] |
Operating income | 271 | 302.6 | 283.6 | 264.9 | (251.9) | 272.2 | 215.4 | 240.1 | 1,122.1 | 475.8 | 487 | |||
Interest income | 4.8 | 4.9 | 3.5 | |||||||||||
Interest expense | (149.6) | (142.1) | (152.5) | |||||||||||
Other expense | 14.1 | 8.9 | 3.7 | |||||||||||
Income tax benefit | (22.9) | (57.8) | (37.9) | (20.9) | (831.7) | (3.6) | (17.9) | (51.4) | (139.5) | (904.6) | (88.5) | |||
Net income/(loss) | $ 212.1 | $ 208.6 | $ 217.6 | $ 213.6 | $ (1,120.9) | $ 235.6 | $ 166.5 | $ 161.7 | 851.9 | (557.1) | 253.2 | |||
Other comprehensive income, net of tax | 28.3 | (65.1) | (18.9) | |||||||||||
Comprehensive income/(loss) | 880.2 | (622.2) | 234.3 | |||||||||||
Parent Company | ||||||||||||||
CONDENSED STATEMENTS OF INCOME/(LOSS) AND COMPREHENSIVE INCOME/(LOSS) | ||||||||||||||
Interest expense | (197.6) | (177) | (168.1) | |||||||||||
Other expense | (1) | (0.6) | ||||||||||||
Loss before equity in losses of affiliates and income taxes | (198.6) | (177.6) | (168.1) | |||||||||||
Equity in earnings/(losses) of affiliates, net of tax | 997.2 | (436.1) | 357.1 | |||||||||||
Income tax benefit | 53.3 | 56.6 | 64.2 | |||||||||||
Net income/(loss) | 851.9 | (557.1) | 253.2 | |||||||||||
Other comprehensive income, net of tax | 1.6 | 2.1 | 2.3 | |||||||||||
Other comprehensive income/(loss) of affiliates, net of tax | 26.7 | (67.2) | (21.2) | |||||||||||
Comprehensive income/(loss) | $ 880.2 | $ (622.2) | $ 234.3 | |||||||||||
[1] | As further described in Note 7, total expenses include amounts incurred with related parties of $57.6 million, $65.9 million, and $68.0 million for the years ended December 31, 2018, 2017 and 2016, respectively. |
Schedule I - Condensed Financ_4
Schedule I - Condensed Financial Information of the Registrant - Condensed Statements of Cash Flow (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Cash flows from operating activities | |||
Net cash provided by/(used in) operating activities | $ 821.3 | $ 742 | $ 1,041.9 |
Cash flows from investing activities | |||
Purchases of property and equipment and other | (136.7) | (69.1) | (68.8) |
Net cash used in investing activities | (328.8) | (204.6) | (271.1) |
Cash flows from financing activities | |||
Net proceeds from commercial paper | 125 | ||
Net proceeds from issuance of borrowings | 685.4 | 746.2 | 575 |
Principal payments on borrowings | (414.4) | (500) | (1,005.4) |
Proceeds from exercise of options | 10.1 | 13 | 36.4 |
Cash dividends paid | (341.7) | (325.6) | (312.2) |
Common stock repurchased | (412.4) | (502.8) | (501.6) |
Net cash used in financing activities | (357.2) | (570.5) | (1,209.2) |
Net change in cash, cash equivalents and restricted cash | 135.3 | (33.1) | (438.4) |
Cash, cash equivalents and restricted cash at beginning of year | 844.4 | 877.5 | 1,315.9 |
Cash, cash equivalents and restricted cash at end of year | 979.7 | 844.4 | 877.5 |
Parent Company | |||
Cash flows from operating activities | |||
Net cash provided by/(used in) operating activities | 539.1 | (605) | 192 |
Cash flows from investing activities | |||
Purchases of property and equipment and other | (78.9) | (0.7) | (5.9) |
Capital contributed to/(distributions received from) subsidiaries, net | (456.3) | 307.3 | (7.3) |
Net cash used in investing activities | (535.2) | 306.6 | (13.2) |
Cash flows from financing activities | |||
Advances from subsidiaries, net | 345.5 | 868.3 | 1,024 |
Net proceeds from commercial paper | 125 | ||
Net proceeds from issuance of borrowings | 685.4 | 746.2 | 575 |
Principal payments on borrowings | (414.4) | (500) | (1,000) |
Proceeds from exercise of options | 7.9 | 13 | 35 |
Cash dividends paid | (341.7) | (325.6) | (312.2) |
Common stock repurchased | (412.4) | (502.8) | (501.6) |
Net cash used in financing activities | (4.7) | 299.1 | (179.8) |
Net change in cash, cash equivalents and restricted cash | (0.8) | 0.7 | (1) |
Cash, cash equivalents and restricted cash at beginning of year | 1 | 0.3 | 1.3 |
Cash, cash equivalents and restricted cash at end of year | 0.2 | 1 | 0.3 |
Supplemental cash flow information: | |||
Non-cash investing activity, capital contribution to subsidiary (Note 3) | 916 | $ 591 | |
Non-cash financing activity, distribution of note from subsidiary (Note 3) | $ 2,256.1 | $ 80.3 |
Schedule I - Condensed Financ_5
Schedule I - Condensed Financial Information of the Registrant - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | |||||||||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Jun. 01, 2018 | Apr. 01, 2018 | Mar. 01, 2018 | Mar. 01, 2017 | Jan. 01, 2017 | Nov. 08, 2015 | Aug. 02, 2014 | |
NOTES TO CONDENSED FINANCIAL STATEMENTS | ||||||||||
Net assets subject to limitations | $ 365 | |||||||||
Letters of credit outstanding and bank guarantees | 265 | |||||||||
Parent Company | ||||||||||
NOTES TO CONDENSED FINANCIAL STATEMENTS | ||||||||||
Net assets subject to limitations | 365 | |||||||||
Notes payable to subsidiary | $ 229.6 | $ 273 | $ 88.5 | $ 65.5 | $ 158.8 | |||||
Stated interest rate (as a percent) | 2.34% | 2.12% | 1.96% | 1.01% | 0.96% | |||||
Non-cash investing activity, capital contribution to subsidiary (Note 3) | $ 916 | $ 591 | ||||||||
Non-cash financing activity, distribution of note from subsidiary (Note 3) | 2,256.1 | $ 80.3 | ||||||||
Letters of credit outstanding and bank guarantees | $ 89.6 | |||||||||
Parent Company | Facility - Parent Company | ||||||||||
NOTES TO CONDENSED FINANCIAL STATEMENTS | ||||||||||
Stated interest rate (as a percent) | 2.87% | 1.84% | ||||||||
Maximum borrowing capacity on unsecured borrowing facilities | $ 700 | |||||||||
Outstanding borrowings on unsecured financing facilities | $ 12.3 | $ 232.6 | ||||||||
Parent Company | Revolver - Parent Company | ||||||||||
NOTES TO CONDENSED FINANCIAL STATEMENTS | ||||||||||
Stated interest rate (as a percent) | 2.87% | 1.84% | ||||||||
Maximum borrowing capacity on unsecured borrowing facilities | $ 3,000 | |||||||||
Outstanding borrowings on unsecured financing facilities | $ 914.6 | $ 2,600 |
Schedule I - Condensed Financ_6
Schedule I - Condensed Financial Information of the Registrant - Operating Lease Commitments (Details) $ in Millions | Dec. 31, 2018USD ($) |
Minimum Aggregate Rental Commitments | |
2,019 | $ 51.6 |
2,020 | 44.1 |
2,021 | 35.4 |
2,022 | 31.4 |
2,023 | 25.2 |
Thereafter | 112.6 |
Total future minimum lease payments | 300.3 |
Parent Company | |
Minimum Aggregate Rental Commitments | |
2,019 | 13.1 |
2,020 | 14.2 |
2,021 | 13.9 |
2,022 | 13.7 |
2,023 | 13.7 |
Thereafter | 84.9 |
Total future minimum lease payments | $ 153.5 |