Document_and_Entity_Informatio
Document and Entity Information | 6 Months Ended | |
Jun. 30, 2014 | Jul. 30, 2014 | |
Document and Entity Information | ' | ' |
Entity Registrant Name | 'ALLIANCE DATA SYSTEMS CORP | ' |
Entity Central Index Key | '0001101215 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Jun-14 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Current Reporting Status | 'Yes | ' |
Entity Filer Category | 'Large Accelerated Filer | ' |
Entity Common Stock, Shares Outstanding | ' | 55,528,310 |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q2 | ' |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) | Jun. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
ASSETS | ' | ' |
Cash and cash equivalents | $631,167 | $969,822 |
Trade receivables, less allowance for doubtful accounts ($3,868 and $2,262 at June 30, 2014 and December 31, 2013, respectively) | 394,681 | 394,822 |
Credit card and loan receivables: | ' | ' |
Credit card receivables - restricted for securitization investors | 6,737,440 | 7,080,014 |
Other credit card and loan receivables | 1,796,454 | 1,492,868 |
Total credit card and loan receivables | 8,533,894 | 8,572,882 |
Allowance for loan loss | -483,580 | -503,169 |
Credit card and loan receivables, net | 8,050,314 | 8,069,713 |
Loan receivables held for sale | 63,425 | 62,082 |
Deferred tax asset, net | 196,145 | 216,195 |
Other current assets | 444,042 | 177,859 |
Redemption settlement assets, restricted | 565,158 | 510,349 |
Total current assets | 10,344,932 | 10,400,842 |
Property and equipment, net | 337,151 | 299,188 |
Deferred tax asset, net | 2,185 | 2,454 |
Cash collateral, restricted | 34,710 | 34,124 |
Intangible assets, net | 791,186 | 460,404 |
Goodwill | 2,301,305 | 1,735,703 |
Other non-current assets | 403,429 | 311,542 |
Total assets | 14,214,898 | 13,244,257 |
LIABILITIES AND EQUITY | ' | ' |
Accounts payable | 320,678 | 210,019 |
Accrued expenses | 506,231 | 262,307 |
Deposits | 1,752,641 | 1,544,059 |
Non-recourse borrowings of consolidated securitization entities | 643,750 | 1,025,000 |
Current debt | 65,480 | 364,489 |
Other current liabilities | 186,734 | 140,186 |
Deferred revenue | 923,122 | 966,438 |
Deferred tax liability, net | 298 | ' |
Total current liabilities | 4,398,934 | 4,512,498 |
Deferred revenue | 166,707 | 170,748 |
Deferred tax liability, net | 371,604 | 275,757 |
Deposits | 1,257,384 | 1,272,302 |
Non-recourse borrowings of consolidated securitization entities | 3,668,166 | 3,566,916 |
Long-term and other debt | 2,895,933 | 2,435,792 |
Other liabilities | 166,162 | 154,483 |
Total liabilities | 12,924,890 | 12,388,496 |
Commitments and contingencies | ' | ' |
Redeemable non-controlling interest | 342,687 | ' |
Stockholders' equity: | ' | ' |
Common stock, $0.01 par value; authorized, 200,000 shares; issued, 101,600 shares and 98,302 shares at June 30, 2014 and December 31, 2013, respectively | 1,016 | 983 |
Additional paid-in capital | 1,527,167 | 1,512,752 |
Treasury stock, at cost, 47,566 shares and 46,752 shares at June 30, 2014 and December 31, 2013, respectively | -2,890,936 | -2,689,177 |
Retained earnings | 2,324,269 | 2,049,430 |
Accumulated other comprehensive loss | -14,195 | -18,227 |
Total stockholders' equity | 947,321 | 855,761 |
Total liabilities and equity | $14,214,898 | $13,244,257 |
CONDENSED_CONSOLIDATED_BALANCE1
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Jun. 30, 2014 | Dec. 31, 2013 |
In Thousands, except Per Share data, unless otherwise specified | ||
CONDENSED CONSOLIDATED BALANCE SHEETS | ' | ' |
Trade receivables, allowance for doubtful accounts (in dollars) | $3,868 | $2,262 |
Common stock, par value (in dollars per share) | $0.01 | $0.01 |
Common stock, authorized shares | 200,000 | 200,000 |
Common stock, issued shares | 101,600 | 98,302 |
Treasury stock, shares | 47,566 | 46,752 |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (USD $) | 3 Months Ended | 6 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 |
Revenues | ' | ' | ' | ' |
Transaction | $80,248 | $79,573 | $164,228 | $161,921 |
Redemption | 268,504 | 138,342 | 512,194 | 298,354 |
Finance charges, net | 538,186 | 462,739 | 1,074,447 | 940,143 |
Database marketing fees and direct marketing services | 339,819 | 309,495 | 668,288 | 605,101 |
Other revenue | 38,401 | 37,943 | 78,901 | 76,010 |
Total revenue | 1,265,158 | 1,028,092 | 2,498,058 | 2,081,529 |
Operating expenses | ' | ' | ' | ' |
Cost of operations (exclusive of depreciation and amortization disclosed separately below) | 783,369 | 619,285 | 1,555,795 | 1,239,707 |
Provision for loan loss | 96,652 | 57,796 | 167,234 | 124,444 |
General and administrative | 28,302 | 28,255 | 62,329 | 50,547 |
Depreciation and other amortization | 25,973 | 20,446 | 51,485 | 40,006 |
Amortization of purchased intangibles | 48,322 | 33,130 | 96,883 | 66,420 |
Total operating expenses | 982,618 | 758,912 | 1,933,726 | 1,521,124 |
Operating income | 282,540 | 269,180 | 564,332 | 560,405 |
Interest expense | ' | ' | ' | ' |
Securitization funding costs | 22,300 | 24,694 | 45,211 | 49,179 |
Interest expense on deposits | 8,228 | 7,002 | 16,462 | 14,009 |
Interest expense on long-term and other debt, net | 32,404 | 51,770 | 69,006 | 102,822 |
Total interest expense, net | 62,932 | 83,466 | 130,679 | 166,010 |
Income before income tax | 219,608 | 185,714 | 433,653 | 394,395 |
Provision for income taxes | 80,419 | 69,274 | 158,717 | 148,976 |
Net income | 139,189 | 116,440 | 274,936 | 245,419 |
Less: Net income attributable to non-controlling interest | 1,745 | ' | 97 | ' |
Net income attributable to Alliance Data Systems Corporation stockholders | $137,444 | $116,440 | $274,839 | $245,419 |
Net income attributable to Alliance Data Systems Corporation stockholders per share: | ' | ' | ' | ' |
Basic (in dollars per share) | $2.54 | $2.37 | $5.13 | $4.96 |
Diluted (in dollars per share) | $2.19 | $1.71 | $4.27 | $3.62 |
Weighted average shares | ' | ' | ' | ' |
Basic (in shares) | 54,154 | 49,123 | 53,600 | 49,444 |
Diluted (in shares) | 62,637 | 68,167 | 64,354 | 67,746 |
CONDENSED_CONSOLIDATED_STATEME1
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $) | 3 Months Ended | 6 Months Ended | ||
In Thousands, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ' | ' | ' | ' |
Net income | $139,189 | $116,440 | $274,936 | $245,419 |
Other comprehensive income, net of tax | ' | ' | ' | ' |
Net unrealized gain (loss) on securities available-for-sale, net of tax expense (benefit) of $514, $(928), $916 and $(1,080) for the three and six months ended June 30, 2014 and 2013, respectively | 71 | -6,550 | 556 | -5,454 |
Foreign currency translation adjustments | -5,857 | 4,938 | 3,476 | 8,265 |
Other comprehensive (loss) income | -5,786 | -1,612 | 4,032 | 2,811 |
Total comprehensive income, net of tax | 133,403 | 114,828 | 278,968 | 248,230 |
Less: Comprehensive income attributable to non-controlling interest | 1,846 | ' | 263 | ' |
Comprehensive income attributable to Alliance Data Systems Corporation stockholders | $131,557 | $114,828 | $278,705 | $248,230 |
CONDENSED_CONSOLIDATED_STATEME2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) (USD $) | 3 Months Ended | 6 Months Ended | ||
In Thousands, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ' | ' | ' | ' |
Net unrealized gain (loss) on securities available-for-sale, tax expense (benefit) | $514 | ($928) | $916 | ($1,080) |
CONDENSED_CONSOLIDATED_STATEME3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 6 Months Ended | |
In Thousands, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 |
CASH FLOWS FROM OPERATING ACTIVITIES: | ' | ' |
Net income | $274,936 | $245,419 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ' | ' |
Depreciation and amortization | 148,368 | 106,426 |
Deferred income taxes | 13,221 | 1,594 |
Provision for loan loss | 167,234 | 124,444 |
Non-cash stock compensation | 31,497 | 28,015 |
Fair value gain on interest-rate derivatives | -113 | -8,511 |
Amortization of discount on debt | 12,293 | 45,102 |
Amortization of deferred financing costs | 11,301 | 13,319 |
Change in deferred revenue | -41,175 | -37,269 |
Change in other operating assets and liabilities, net of acquisitions | -8,292 | 9,207 |
Originations of loan receivables held for sale | -2,343,434 | ' |
Sales of loan receivables held for sale | 2,342,091 | ' |
Excess tax benefits from stock-based compensation | -26,926 | -10,103 |
Other | 6,797 | 12,822 |
Net cash provided by operating activities | 587,798 | 530,465 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ' | ' |
Change in redemption settlement assets | -57,530 | -47,671 |
Change in cash collateral, restricted | ' | 18,450 |
Change in restricted cash | -58 | -271,132 |
Change in credit card and loan receivables | -151,078 | 83,403 |
Purchase of credit card portfolios | ' | -37,061 |
Payment for acquired business, net of cash | -259,514 | ' |
Capital expenditures | -77,260 | -58,995 |
Purchases of other investments | -105,911 | -18,339 |
Maturities/sales of other investments | 3,209 | 1,002 |
Other | -4,000 | -1,383 |
Net cash used in investing activities | -652,142 | -331,726 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ' | ' |
Borrowings under debt agreements | 1,121,834 | ' |
Repayments of borrowings | -788,805 | -11,475 |
Proceeds from convertible note hedge counterparties | 1,519,833 | 32,671 |
Settlement of convertible note borrowings | -1,864,803 | -65,083 |
Issuances of deposits | 1,194,448 | 732,754 |
Repayments of deposits | -1,000,783 | -705,799 |
Non-recourse borrowings of consolidated securitization entities | 760,000 | 1,268,285 |
Repayments/maturities of non-recourse borrowings of consolidated securitization entities | -1,040,000 | -1,387,339 |
Payment of deferred financing costs | -6,671 | -5,971 |
Excess tax benefits from stock-based compensation | 26,926 | 10,103 |
Proceeds from issuance of common stock | 8,202 | 5,534 |
Purchase of treasury shares | -201,759 | -207,974 |
Other | -1,461 | -11 |
Net cash used in financing activities | -273,039 | -334,305 |
Effect of exchange rate changes on cash and cash equivalents | -1,272 | -7,965 |
Change in cash and cash equivalents | -338,655 | -143,531 |
Cash and cash equivalents at beginning of period | 969,822 | 893,352 |
Cash and cash equivalents at end of period | 631,167 | 749,821 |
SUPPLEMENTAL CASH FLOW INFORMATION: | ' | ' |
Interest paid | 114,986 | 111,633 |
Income taxes paid, net | $69,028 | $95,108 |
SUMMARY_OF_SIGNIFICANT_ACCOUNT
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2014 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' |
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Presentation | |
The unaudited condensed consolidated financial statements included herein have been prepared by Alliance Data Systems Corporation ("ADSC" or, including its consolidated subsidiaries and variable interest entities, the "Company"), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") have been condensed or omitted pursuant to such rules and regulations. However, the Company believes that the disclosures are adequate to make the information presented not misleading. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company's Annual Report filed on Form 10-K for the year ended December 31, 2013, filed with the SEC on February 28, 2014. | |
The unaudited condensed consolidated financial statements included herein reflect all adjustments (consisting of normal, recurring adjustments) which are, in the opinion of management, necessary to state fairly the results for the interim periods presented. The results of operations for the interim periods presented are not necessarily indicative of the operating results to be expected for any subsequent interim period or for the fiscal year. | |
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect (1) the reported amounts of assets; (2) liabilities and disclosure of contingent assets and liabilities at the date of the financial statements; and (3) the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. | |
For purposes of comparability, certain prior period amounts have been reclassified to conform to the current year presentation in accordance with GAAP. | |
Recently Issued Accounting Standards | |
In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, "Revenue from Contracts with Customers," which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard is effective for interim and annual reporting periods beginning after December 15, 2016. Early application is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures. | |
Recently Adopted Accounting Standards | |
In July 2013, the FASB issued ASU 2013-11, "Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists," which provides guidance on financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss or a tax credit carryforward exists. ASU 2013-11 requires an entity to present an unrecognized tax benefit, or a portion of an unrecognized tax benefit, as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward when settlement in this manner is available under the governing tax law. ASU 2013-11 was effective for interim and annual periods beginning after December 15, 2013 and required prospective application. The adoption of ASU 2013-11 did not have a material impact on the Company's financial condition, results of operations or cash flows. |
EARNINGS_PER_SHARE
EARNINGS PER SHARE | 6 Months Ended | ||||||||||||||||
Jun. 30, 2014 | |||||||||||||||||
EARNINGS PER SHARE | ' | ||||||||||||||||
EARNINGS PER SHARE | ' | ||||||||||||||||
2. EARNINGS PER SHARE | |||||||||||||||||
The following table sets forth the computation of basic and diluted net income per share for the periods indicated: | |||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||
June 30, | June 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
(In thousands, except per share amounts) | |||||||||||||||||
Numerator: | |||||||||||||||||
Net income attributable to Alliance Data Systems Corporation stockholders | $ | 137,444 | $ | 116,440 | $ | 274,839 | $ | 245,419 | |||||||||
Denominator: | |||||||||||||||||
Weighted average shares, basic | 54,154 | 49,123 | 53,600 | 49,444 | |||||||||||||
Weighted average effect of dilutive securities: | |||||||||||||||||
Shares from assumed conversion of convertible senior notes | 2,715 | 10,611 | 4,224 | 10,372 | |||||||||||||
Shares from assumed conversion of convertible note warrants | 5,247 | 7,818 | 6,009 | 7,336 | |||||||||||||
Net effect of dilutive stock options and unvested restricted stock | 521 | 615 | 521 | 594 | |||||||||||||
Denominator for diluted calculations | 62,637 | 68,167 | 64,354 | 67,746 | |||||||||||||
Net income attributable to Alliance Data Systems Corporation stockholders per share: | |||||||||||||||||
Basic | $ | 2.54 | $ | 2.37 | $ | 5.13 | $ | 4.96 | |||||||||
Diluted | $ | 2.19 | $ | 1.71 | $ | 4.27 | $ | 3.62 | |||||||||
The Company calculated the effect of its convertible senior notes on diluted net income per share as if they would be settled in cash as the Company had the intent to settle the convertible senior notes for cash. The convertible senior notes were settled with cash upon maturity in August 2013 and May 2014, respectively. | |||||||||||||||||
The Company is also party to prepaid forward contracts to purchase 1,857,400 shares of its common stock that are to be delivered over a settlement period beginning in August 2014 and completing in December 2014. The number of shares to be delivered under the prepaid forward contracts has reduced weighted-average basic and diluted shares outstanding for the three and six months ended June 30, 2014 and 2013. |
ACQUISITION
ACQUISITION | 6 Months Ended | |||
Jun. 30, 2014 | ||||
ACQUISITION | ' | |||
ACQUISITION | ' | |||
3. ACQUISITION | ||||
On January 2, 2014, the Company acquired a 60% ownership interest in BrandLoyalty Group B.V. ("BrandLoyalty"), a Netherlands-based, data-driven loyalty marketer. BrandLoyalty designs, organizes, implements and evaluates innovative and tailor-made loyalty programs for food retailers worldwide. The acquisition expands the Company's presence across Europe, Asia and Latin America. The results of BrandLoyalty have been included since the date of acquisition and are reflected in the Company's LoyaltyOne segment. The initial cash consideration was approximately $259.5 million in addition to the assumption of debt. The goodwill resulting from the acquisition is not deductible for tax purposes. | ||||
The Company also recorded a contingent liability for the earn-out provisions included in the share purchase agreement of approximately $248.7 million as of January 2, 2014, which is included in accrued expenses in the Company's unaudited condensed consolidated balance sheet. The contingent liability was measured at fair value on the date of purchase and any subsequent changes in the fair value of the liability are recorded through earnings. | ||||
The following table summarizes the allocation of consideration and the respective fair values of the assets acquired and liabilities assumed in the BrandLoyalty acquisition as of the date of purchase: | ||||
As of | ||||
2-Jan-14 | ||||
(In thousands) | ||||
Current assets, net of cash acquired | $ | 246,769 | ||
Deferred tax asset | 3,509 | |||
Property and equipment | 19,719 | |||
Other non-current assets | 3,994 | |||
Intangible assets | 423,832 | |||
Goodwill | 565,015 | |||
Total assets acquired | 1,262,838 | |||
Current liabilities | 146,559 | |||
Current portion of long-term debt | 34,180 | |||
Deferred tax liability | 105,512 | |||
Long-term debt (net of current portion) | 126,323 | |||
Other liabilities | 142 | |||
Total liabilities assumed | 412,716 | |||
Redeemable non-controlling interest | 341,907 | |||
Net assets acquired | $ | 508,215 | ||
Pursuant to the BrandLoyalty share purchase agreement, the Company may acquire the remaining 40% ownership interest in BrandLoyalty over a four-year period, 10% per year at predetermined valuation multiples. If specified annual earnings targets are met by BrandLoyalty, the Company must acquire the additional 10% interest for the year achieved; otherwise, the sellers have a put option to sell the Company their 10% interest for the respective year. See Note 11, "Redeemable Non-Controlling Interest," for more information. |
CREDIT_CARD_AND_LOAN_RECEIVABL
CREDIT CARD AND LOAN RECEIVABLES | 6 Months Ended | ||||||||||||||||||||||||
Jun. 30, 2014 | |||||||||||||||||||||||||
CREDIT CARD AND LOAN RECEIVABLES | ' | ||||||||||||||||||||||||
CREDIT CARD AND LOAN RECEIVABLES | ' | ||||||||||||||||||||||||
4. CREDIT CARD AND LOAN RECEIVABLES | |||||||||||||||||||||||||
The Company's credit card and loan receivables are the only portfolio segment or class of financing receivables. Quantitative information about the components of total credit card and loan receivables is presented in the table below: | |||||||||||||||||||||||||
June 30, | December 31, | ||||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||
Principal receivables | $ | 8,096,112 | $ | 8,166,961 | |||||||||||||||||||||
Billed and accrued finance charges | 336,440 | 343,521 | |||||||||||||||||||||||
Other credit card and loan receivables | 101,342 | 62,400 | |||||||||||||||||||||||
Total credit card and loan receivables | 8,533,894 | 8,572,882 | |||||||||||||||||||||||
Less credit card receivables – restricted for securitization investors | 6,737,440 | 7,080,014 | |||||||||||||||||||||||
Other credit card and loan receivables | $ | 1,796,454 | $ | 1,492,868 | |||||||||||||||||||||
Allowance for Loan Loss | |||||||||||||||||||||||||
The Company maintains an allowance for loan loss at a level that is appropriate to absorb probable losses inherent in credit card and loan receivables. The allowance for loan loss covers forecasted uncollectible principal as well as unpaid interest and fees. The allowance for loan loss is evaluated monthly for appropriateness. | |||||||||||||||||||||||||
In estimating the allowance for principal loan losses, management utilizes a migration analysis of delinquent and current credit card and loan receivables. Migration analysis is a technique used to estimate the likelihood that a credit card or loan receivable will progress through the various stages of delinquency and to charge-off. The allowance is maintained through an adjustment to the provision for loan loss. Charge-offs of principal amounts, net of recoveries are deducted from the allowance. In estimating the allowance for uncollectible unpaid interest and fees, the Company utilizes historical charge-off trends, analyzing actual charge-offs for the prior three months. The allowance is maintained through an adjustment to finance charges, net. In evaluating the allowance for loan loss for both principal and unpaid interest and fees, management also considers factors that may impact loan loss experience, including seasoning, loan volume and amounts, seasonality, payment rates and forecasting uncertainties. | |||||||||||||||||||||||||
Net charge-offs include the principal amount of losses from credit cardholders unwilling or unable to pay their account balances, as well as bankrupt and deceased credit cardholders, less recoveries and exclude charged-off interest, fees and fraud losses. Charged‑off interest and fees reduce finance charges, net while fraud losses are recorded as an expense. Credit card and loan receivables, including unpaid interest and fees, are charged-off at the end of the month during which an account becomes 180 days contractually past due, except in the case of customer bankruptcies or death. Credit card and loan receivables, including unpaid interest and fees, associated with customer bankruptcies or death are charged-off at the end of each month subsequent to 60 days after the receipt of notification of the bankruptcy or death, but in any case, not later than the 180-day contractual time frame. The Company records the actual charge-offs for unpaid interest and fees as a reduction to finance charges, net. Actual charge-offs for unpaid interest and fees were $68.5 million and $55.0 million for the three months ended June 30, 2014 and 2013, respectively, and $144.0 million and $113.7 million for the six months ended June 30, 2014 and 2013, respectively. | |||||||||||||||||||||||||
The following table presents the Company's allowance for loan loss for the periods indicated: | |||||||||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||
Balance at beginning of period | $ | 482,658 | $ | 471,016 | $ | 503,169 | $ | 481,958 | |||||||||||||||||
Provision for loan loss | 96,652 | 57,796 | 167,234 | 124,444 | |||||||||||||||||||||
Change in estimate for uncollectible unpaid interest and fees | (5,000 | ) | — | 500 | — | ||||||||||||||||||||
Recoveries | 38,066 | 27,163 | 76,474 | 57,948 | |||||||||||||||||||||
Principal charge-offs | (128,796 | ) | (107,579 | ) | (263,797 | ) | (215,954 | ) | |||||||||||||||||
Balance at end of period | $ | 483,580 | $ | 448,396 | $ | 483,580 | $ | 448,396 | |||||||||||||||||
Delinquencies | |||||||||||||||||||||||||
A credit card account is contractually delinquent if the Company does not receive the minimum payment by the specified due date on the cardholder's statement. It is the Company's policy to continue to accrue interest and fee income on all credit card accounts beyond 90 days, except in limited circumstances, until the credit card account balance and all related interest and other fees are paid or charged off, typically at 180 days delinquent. When an account becomes delinquent, a message is printed on the credit cardholder's billing statement requesting payment. After an account becomes 30 days past due, a proprietary collection scoring algorithm automatically scores the risk of the account becoming further delinquent. The collection system then recommends a collection strategy for the past due account based on the collection score and account balance and dictates the contact schedule and collections priority for the account. If the Company is unable to make a collection after exhausting all in-house collection efforts, the Company may engage collection agencies and outside attorneys to continue those efforts. | |||||||||||||||||||||||||
The following table presents the delinquency trends of the Company's credit card and loan receivables portfolio: | |||||||||||||||||||||||||
June 30, | % of | December 31, | % of | ||||||||||||||||||||||
2014 | Total | 2013 | Total | ||||||||||||||||||||||
(In thousands, except percentages) | |||||||||||||||||||||||||
Receivables outstanding – principal | $ | 8,096,112 | 100 | % | $ | 8,166,961 | 100 | % | |||||||||||||||||
Principal receivables balances contractually delinquent: | |||||||||||||||||||||||||
31 to 60 days | 115,647 | 1.5 | % | 114,430 | 1.4 | % | |||||||||||||||||||
61 to 90 days | 74,923 | 0.9 | 74,700 | 0.9 | |||||||||||||||||||||
91 or more days | 129,309 | 1.6 | 150,425 | 1.9 | |||||||||||||||||||||
Total | $ | 319,879 | 4 | % | $ | 339,555 | 4.2 | % | |||||||||||||||||
Modified Credit Card and Loan Receivables | |||||||||||||||||||||||||
The Company holds certain credit card and loan receivables for which the terms have been modified. The Company's modified credit card and loan receivables include credit card and loan receivables for which temporary hardship concessions have been granted and credit card and loan receivables in permanent workout programs. These modified credit card and loan receivables include concessions consisting primarily of a reduced minimum payment and an interest rate reduction. The temporary programs' concessions remain in place for a period no longer than twelve months, while the permanent programs remain in place through the payoff of the credit card and loan receivables if the credit cardholder complies with the terms of the program. These concessions do not include the forgiveness of unpaid principal, but may involve the reversal of certain unpaid interest or fee assessments. In the case of the temporary programs, at the end of the concession period, credit card and loan receivable terms revert to standard rates. These arrangements are automatically terminated if the customer fails to make payments in accordance with the terms of the program, at which time their account reverts back to its original terms. | |||||||||||||||||||||||||
Credit card and loan receivables for which temporary hardship and permanent concessions were granted are both considered troubled debt restructurings and are collectively evaluated for impairment. Modified credit card and loan receivables are evaluated at their present value with impairment measured as the difference between the credit card and loan receivable balance and the discounted present value of cash flows expected to be collected. Consistent with the Company's measurement of impairment of modified credit card and loan receivables on a pooled basis, the discount rate used for credit card and loan receivables is the average current annual percentage rate the Company applies to non-impaired credit card and loan receivables, which approximates what would have been applied to the pool of modified credit card and loan receivables prior to impairment. In assessing the appropriate allowance for loan loss, these modified credit card and loan receivables are included in the general pool of credit card and loan receivables with the allowance determined under the contingent loss model of Accounting Standards Codification ("ASC") 450-20, "Loss Contingencies." If the Company applied accounting under ASC 310-40, "Troubled Debt Restructurings by Creditors," to the modified credit card and loan receivables in these programs, there would not be a material difference in the allowance for loan loss. | |||||||||||||||||||||||||
The Company had $110.3 million and $118.1 million, respectively, as a recorded investment in impaired credit card and loan receivables with an associated allowance for loan loss of $30.4 million and $33.9 million, respectively, as of June 30, 2014 and December 31, 2013. These modified credit card and loan receivables represented less than 2% of the Company's total credit card and loan receivables as of June 30, 2014 and December 31, 2013, respectively. | |||||||||||||||||||||||||
The average recorded investment in the impaired credit card receivables was $112.4 million and $117.5 million for the three months ended June 30, 2014 and 2013, respectively, and $114.3 million and $117.5 million for the six months ended June 30, 2014 and 2013, respectively. | |||||||||||||||||||||||||
Interest income on these modified credit card and loan receivables is accounted for in the same manner as other accruing credit card and loan receivables. Cash collections on these modified credit card and loan receivables are allocated according to the same payment hierarchy methodology applied to credit card and loan receivables that are not in such programs. The Company recognized $3.1 million and $3.2 million for the three months ended June 30, 2014 and 2013, respectively, and $6.3 million for each of the six months ended June 30, 2014 and 2013, respectively, in interest income associated with modified credit card and loan receivables during the period that such credit card and loan receivables were impaired. | |||||||||||||||||||||||||
The following tables provide information on credit card and loan receivables that are considered troubled debt restructurings as described above, which entered into a modification program during the specified periods: | |||||||||||||||||||||||||
Three Months Ended June 30, 2014 | Six Months Ended June 30, 2014 | ||||||||||||||||||||||||
Number of Restructurings | Pre-modification Outstanding | Post-modification Outstanding | Number of Restructurings | Pre-modification Outstanding | Post-modification Outstanding | ||||||||||||||||||||
Balance | Balance | Balance | Balance | ||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||
Troubled debt restructurings – credit card receivables | 28,602 | $ | 28,922 | $ | 28,896 | 65,154 | $ | 64,708 | $ | 64,651 | |||||||||||||||
Three Months Ended June 30, 2013 | Six Months Ended June 30, 2013 | ||||||||||||||||||||||||
Number of Restructurings | Pre-modification Outstanding | Post-modification Outstanding | Number of Restructurings | Pre-modification Outstanding | Post-modification Outstanding | ||||||||||||||||||||
Balance | Balance | Balance | Balance | ||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||
Troubled debt restructurings – credit card receivables | 35,100 | $ | 32,135 | $ | 32,120 | 72,895 | $ | 66,101 | $ | 66,062 | |||||||||||||||
The tables below summarize troubled debt restructurings that have defaulted in the specified periods where the default occurred within 12 months of their modification date: | |||||||||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||
30-Jun-14 | 30-Jun-14 | ||||||||||||||||||||||||
Number of Restructurings | Outstanding Balance | Number of Restructurings | Outstanding Balance | ||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||
Troubled debt restructurings that subsequently defaulted – credit card receivables | 13,770 | $ | 13,831 | 30,498 | $ | 29,972 | |||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||
30-Jun-13 | 30-Jun-13 | ||||||||||||||||||||||||
Number of Restructurings | Outstanding Balance | Number of Restructurings | Outstanding Balance | ||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||
Troubled debt restructurings that subsequently defaulted – credit card receivables | 15,698 | $ | 14,938 | 31,193 | $ | 29,421 | |||||||||||||||||||
Age of Credit Card and Loan Receivable Accounts | |||||||||||||||||||||||||
The following tables set forth, as of June 30, 2014 and 2013, the number of active credit card and loan accounts with balances and the related principal balances outstanding, based upon the age of the active credit card and loan accounts from origination: | |||||||||||||||||||||||||
30-Jun-14 | |||||||||||||||||||||||||
Age of Accounts Since Origination | Number of | Percentage of | Total | Percentage of | |||||||||||||||||||||
Active Accounts | Active Accounts | Principal | Principal | ||||||||||||||||||||||
with Balances | with Balances | Receivables Outstanding | Receivables Outstanding | ||||||||||||||||||||||
(In thousands, except percentages) | |||||||||||||||||||||||||
0-12 Months | 4,750 | 27.8 | % | $ | 2,031,774 | 25.1 | % | ||||||||||||||||||
13-24 Months | 2,467 | 14.5 | 1,148,807 | 14.2 | |||||||||||||||||||||
25-36 Months | 1,714 | 10 | 838,573 | 10.4 | |||||||||||||||||||||
37-48 Months | 1,245 | 7.3 | 623,665 | 7.7 | |||||||||||||||||||||
49-60 Months | 988 | 5.8 | 520,428 | 6.4 | |||||||||||||||||||||
Over 60 Months | 5,915 | 34.6 | 2,932,865 | 36.2 | |||||||||||||||||||||
Total | 17,079 | 100 | % | $ | 8,096,112 | 100 | % | ||||||||||||||||||
30-Jun-13 | |||||||||||||||||||||||||
Age of Accounts Since Origination | Number of | Percentage of | Total | Percentage of | |||||||||||||||||||||
Active Accounts | Active Accounts | Principal | Principal | ||||||||||||||||||||||
with Balances | with Balances | Receivables Outstanding | Receivables Outstanding | ||||||||||||||||||||||
(In thousands, except percentages) | |||||||||||||||||||||||||
0-12 Months | 4,162 | 26.3 | % | $ | 1,567,355 | 22.8 | % | ||||||||||||||||||
13-24 Months | 2,132 | 13.5 | 868,822 | 12.7 | |||||||||||||||||||||
25-36 Months | 1,492 | 9.4 | 656,544 | 9.6 | |||||||||||||||||||||
37-48 Months | 1,188 | 7.5 | 570,969 | 8.3 | |||||||||||||||||||||
49-60 Months | 939 | 5.9 | 481,828 | 7 | |||||||||||||||||||||
Over 60 Months | 5,920 | 37.4 | 2,721,437 | 39.6 | |||||||||||||||||||||
Total | 15,833 | 100 | % | $ | 6,866,955 | 100 | % | ||||||||||||||||||
Credit Quality | |||||||||||||||||||||||||
The Company uses proprietary scoring models developed specifically for the purpose of monitoring the Company's obligor credit quality. The proprietary scoring models are used as a tool in the underwriting process and for making credit decisions. The proprietary scoring models are based on historical data and require various assumptions about future performance. Information regarding customer performance is factored into these proprietary scoring models to determine the probability of an account becoming 90 or more days past due at any time within the next 12 months. Obligor credit quality is monitored at least monthly during the life of an account. The following table reflects composition of the Company's credit card and loan receivables by obligor credit quality as of June 30, 2014 and 2013: | |||||||||||||||||||||||||
30-Jun-14 | 30-Jun-13 | ||||||||||||||||||||||||
Probability of an Account Becoming 90 or More Days Past | Total | Percentage of | Total | Percentage of | |||||||||||||||||||||
Due or Becoming Charged-off (within the next 12 months) | Principal | Principal | Principal | Principal | |||||||||||||||||||||
Receivables Outstanding | Receivables Outstanding | Receivables Outstanding | Receivables Outstanding | ||||||||||||||||||||||
(In thousands, except percentages) | |||||||||||||||||||||||||
No Score | $ | 144,270 | 1.8 | % | $ | 143,497 | 2.1 | % | |||||||||||||||||
27.1% and higher | 391,005 | 4.8 | 304,557 | 4.4 | |||||||||||||||||||||
17.1% - 27.0% | 748,356 | 9.2 | 618,805 | 9 | |||||||||||||||||||||
12.6% - 17.0% | 886,078 | 11 | 718,748 | 10.5 | |||||||||||||||||||||
3.7% - 12.5% | 3,298,009 | 40.7 | 2,782,404 | 40.5 | |||||||||||||||||||||
1.9% - 3.6% | 1,681,968 | 20.8 | 1,483,852 | 21.6 | |||||||||||||||||||||
Lower than 1.9% | 946,426 | 11.7 | 815,092 | 11.9 | |||||||||||||||||||||
Total | $ | 8,096,112 | 100 | % | $ | 6,866,955 | 100 | % | |||||||||||||||||
Transfer of Financial Assets | |||||||||||||||||||||||||
The Company originates loans under an agreement with one of its clients and after origination, these loan receivables are sold to the client at par value plus accrued interest. These transfers qualify for sale treatment as they meet the conditions established in ASC 860-10, "Transfers and Servicing." Following the sale, the client owns the loan receivables, bears the risk of loss in the event of loan defaults and is responsible for all servicing functions related to the receivables. The loan receivables originated by the Company that have not yet been sold to the client were $63.4 million and $62.1 million at June 30, 2014 and December 31, 2013, respectively, and are included in loan receivables held for sale in the Company's unaudited condensed consolidated balance sheets and carried at the lower of cost or fair value. The carrying value of these loan receivables approximates fair value due to the short duration between origination and sale. Purchases and sales of these loan receivables held for sale are reflected as operating activities in the Company's unaudited condensed consolidated statements of cash flows. | |||||||||||||||||||||||||
Upon the client's purchase of the originated loan receivables, the Company is obligated to purchase a participating interest in a pool of loan receivables that includes the loan receivables originated by the Company. Such interest participates on a pro rata basis in the cash flows of the underlying pool of loan receivables, including principal repayments, finance charges, losses, recoveries, and servicing costs. The Company bears the risk of loss related to its participation interest in this pool. | |||||||||||||||||||||||||
During the six months ended June 30, 2014, the Company purchased $117.1 million of loan receivables under these agreements. The outstanding balance of these loan receivables was $108.4 million and $61.6 million as of June 30, 2014 and December 31, 2013, respectively, and was included in other credit card and loan receivables in the Company's unaudited condensed consolidated balance sheets. | |||||||||||||||||||||||||
Securitized Credit Card Receivables | |||||||||||||||||||||||||
The Company regularly securitizes its credit card receivables through its credit card securitization trusts, consisting of World Financial Network Credit Card Master Trust, World Financial Network Credit Card Master Note Trust ("Master Trust I") and World Financial Network Credit Card Master Trust III ("Master Trust III") (collectively, the "WFN Trusts"), and World Financial Capital Credit Card Master Note Trust (the "WFC Trust"). The Company continues to own and service the accounts that generate credit card receivables held by the WFN Trusts and the WFC Trust. In its capacity as a servicer, each of the respective banks earns a fee from the WFN Trusts and the WFC Trust to service and administer the credit card receivables, collect payments and charge-off uncollectible receivables. These fees are eliminated and therefore are not reflected in the unaudited condensed consolidated statements of income for the three and six months ended June 30, 2014 and 2013. | |||||||||||||||||||||||||
The WFN Trusts and the WFC Trust are variable interest entities ("VIEs") and the assets of these consolidated VIEs include certain credit card receivables that are restricted to settle the obligations of those entities and are not expected to be available to the Company or its creditors. The liabilities of the consolidated VIEs include non-recourse secured borrowings and other liabilities for which creditors or beneficial interest holders do not have recourse to the general credit of the Company. | |||||||||||||||||||||||||
The tables below present quantitative information about the components of total securitized credit card receivables, delinquencies and net charge-offs: | |||||||||||||||||||||||||
June 30, | December 31, | ||||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||
Total credit card receivables – restricted for securitization investors | $ | 6,737,440 | $ | 7,080,014 | |||||||||||||||||||||
Principal amount of credit card receivables – restricted for securitization investors, 90 days or more past due | $ | 109,383 | $ | 131,659 | |||||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||
Net charge-offs of securitized principal | $ | 79,947 | $ | 74,595 | $ | 165,661 | $ | 148,689 | |||||||||||||||||
INVENTORIES
INVENTORIES | 6 Months Ended |
Jun. 30, 2014 | |
INVENTORIES | ' |
INVENTORIES | ' |
5. INVENTORIES | |
Inventories of $222.2 million and $14.6 million at June 30, 2014 and December 31, 2013, respectively, consist of finished goods primarily to be utilized as rewards in the Company's loyalty programs and are included in other current assets in the Company's unaudited condensed consolidated balance sheets. We acquired $198.9 million of finished goods inventory in the BrandLoyalty acquisition on January 2, 2014. | |
Inventories are stated at lower of cost or market and valued primarily on a first-in-first-out basis. The Company records valuation adjustments to its inventories if the cost of inventory exceeds the amount it expects to realize from the ultimate sale or disposal of the inventory. These estimates are based on management's judgment regarding future market conditions and analysis of historical experience. |
OTHER_INVESTMENTS
OTHER INVESTMENTS | 6 Months Ended | ||||||||||||||||||||||||||||||||
Jun. 30, 2014 | |||||||||||||||||||||||||||||||||
OTHER INVESTMENTS | ' | ||||||||||||||||||||||||||||||||
OTHER INVESTMENTS | ' | ||||||||||||||||||||||||||||||||
6. OTHER INVESTMENTS | |||||||||||||||||||||||||||||||||
Other investments consist of restricted cash, marketable securities and U.S. Treasury bonds and are included in other current assets and other assets in the unaudited condensed consolidated balance sheets. The principal components of other investments, which are carried at fair value, are as follows: | |||||||||||||||||||||||||||||||||
30-Jun-14 | 31-Dec-13 | ||||||||||||||||||||||||||||||||
Amortized Cost | Unrealized Gains | Unrealized Losses | Fair Value | Amortized Cost | Unrealized Gains | Unrealized Losses | Fair Value | ||||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||||||
Restricted cash | $ | 30,548 | $ | — | $ | — | $ | 30,548 | $ | 25,988 | $ | — | $ | — | $ | 25,988 | |||||||||||||||||
Marketable securities | 79,963 | 269 | (1,977 | ) | 78,255 | 77,351 | 62 | (4,180 | ) | 73,233 | |||||||||||||||||||||||
U.S. Treasury bonds | 100,086 | — | — | 100,086 | — | — | — | — | |||||||||||||||||||||||||
Total | $ | 210,597 | $ | 269 | $ | (1,977 | ) | $ | 208,889 | $ | 103,339 | $ | 62 | $ | (4,180 | ) | $ | 99,221 | |||||||||||||||
The following tables show the unrealized losses and fair value for those investments that were in an unrealized loss position as of June 30, 2014 and December 31, 2013, aggregated by investment category and the length of time that individual securities have been in a continuous loss position: | |||||||||||||||||||||||||||||||||
30-Jun-14 | |||||||||||||||||||||||||||||||||
Less than 12 months | 12 Months or Greater | Total | |||||||||||||||||||||||||||||||
Fair Value | Unrealized | Fair Value | Unrealized | Fair Value | Unrealized | ||||||||||||||||||||||||||||
Losses | Losses | Losses | |||||||||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||||||
Marketable securities | $ | 19,810 | $ | (138 | ) | $ | 45,149 | $ | (1,839 | ) | $ | 64,959 | $ | (1,977 | ) | ||||||||||||||||||
31-Dec-13 | |||||||||||||||||||||||||||||||||
Less than 12 months | 12 Months or Greater | Total | |||||||||||||||||||||||||||||||
Fair Value | Unrealized | Fair Value | Unrealized | Fair Value | Unrealized | ||||||||||||||||||||||||||||
Losses | Losses | Losses | |||||||||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||||||
Marketable securities | $ | 39,954 | $ | (2,206 | ) | $ | 25,785 | $ | (1,974 | ) | $ | 65,739 | $ | (4,180 | ) | ||||||||||||||||||
The amortized cost and estimated fair value of the marketable securities and U.S. Treasury bonds at June 30, 2014 by contractual maturity are as follows: | |||||||||||||||||||||||||||||||||
Amortized | Fair Value | ||||||||||||||||||||||||||||||||
Cost | |||||||||||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||||||
Due in one year or less | $ | 6,674 | $ | 6,623 | |||||||||||||||||||||||||||||
Due after one year through five years | 100,086 | 100,086 | |||||||||||||||||||||||||||||||
Due after five years through ten years | 4,440 | 4,608 | |||||||||||||||||||||||||||||||
Due after ten years | 68,849 | 67,024 | |||||||||||||||||||||||||||||||
Total | $ | 180,049 | $ | 178,341 | |||||||||||||||||||||||||||||
Market values were determined for each individual security in the investment portfolio. When evaluating the investments for other-than-temporary impairment, the Company reviews factors such as the length of time and extent to which fair value has been below cost basis, the financial condition of the security's issuer, and the Company's intent to sell the security and whether it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis. The Company typically invests in highly-rated securities with low probabilities of default and has the ability to hold the investments until maturity. As of June 30, 2014, the Company does not consider the investments to be other-than-temporarily impaired. | |||||||||||||||||||||||||||||||||
There were no realized gains or losses from the sale of investment securities for the three and six months ended June 30, 2014 and 2013. |
REDEMPTION_SETTLEMENT_ASSETS
REDEMPTION SETTLEMENT ASSETS | 6 Months Ended | ||||||||||||||||||||||||||||||||
Jun. 30, 2014 | |||||||||||||||||||||||||||||||||
REDEMPTION SETTLEMENT ASSETS | ' | ||||||||||||||||||||||||||||||||
REDEMPTION SETTLEMENT ASSETS | ' | ||||||||||||||||||||||||||||||||
7. REDEMPTION SETTLEMENT ASSETS | |||||||||||||||||||||||||||||||||
Redemption settlement assets consist of cash and cash equivalents and securities available-for-sale and are designated for settling redemptions by collectors of the AIR MILES® Reward Program in Canada under certain contractual relationships with sponsors of the AIR MILES Reward Program. These assets are primarily denominated in Canadian dollars. The principal components of redemption settlement assets, which are carried at fair value, are as follows: | |||||||||||||||||||||||||||||||||
30-Jun-14 | 31-Dec-13 | ||||||||||||||||||||||||||||||||
Amortized Cost | Unrealized Gains | Unrealized Losses | Fair Value | Amortized Cost | Unrealized Gains | Unrealized Losses | Fair Value | ||||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 153,794 | $ | — | $ | — | $ | 153,794 | $ | 73,984 | $ | — | $ | — | $ | 73,984 | |||||||||||||||||
Government bonds | 4,788 | — | (1 | ) | 4,787 | — | — | — | — | ||||||||||||||||||||||||
Corporate bonds | 400,741 | 5,844 | (8 | ) | 406,577 | 429,592 | 7,083 | (310 | ) | 436,365 | |||||||||||||||||||||||
Total | $ | 559,323 | $ | 5,844 | $ | (9 | ) | $ | 565,158 | $ | 503,576 | $ | 7,083 | $ | (310 | ) | $ | 510,349 | |||||||||||||||
The following tables show the unrealized losses and fair value for those investments that were in an unrealized loss position as of June 30, 2014 and December 31, 2013, aggregated by investment category and the length of time that individual securities have been in a continuous loss position: | |||||||||||||||||||||||||||||||||
30-Jun-14 | |||||||||||||||||||||||||||||||||
Less than 12 months | 12 Months or Greater | Total | |||||||||||||||||||||||||||||||
Fair Value | Unrealized | Fair Value | Unrealized | Fair Value | Unrealized | ||||||||||||||||||||||||||||
Losses | Losses | Losses | |||||||||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||||||
Government bonds | $ | 4,787 | $ | (1 | ) | $ | — | $ | — | $ | 4,787 | $ | (1 | ) | |||||||||||||||||||
Corporate bonds | 12,818 | (8 | ) | — | — | 12,818 | (8 | ) | |||||||||||||||||||||||||
Total | $ | 17,605 | $ | (9 | ) | $ | — | $ | — | $ | 17,605 | $ | (9 | ) | |||||||||||||||||||
31-Dec-13 | |||||||||||||||||||||||||||||||||
Less than 12 months | 12 Months or Greater | Total | |||||||||||||||||||||||||||||||
Fair Value | Unrealized | Fair Value | Unrealized | Fair Value | Unrealized | ||||||||||||||||||||||||||||
Losses | Losses | Losses | |||||||||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||||||
Corporate bonds | $ | 80,493 | $ | (310 | ) | $ | — | $ | — | $ | 80,493 | $ | (310 | ) | |||||||||||||||||||
The amortized cost and estimated fair value of the securities at June 30, 2014 by contractual maturity are as follows: | |||||||||||||||||||||||||||||||||
Amortized | Fair Value | ||||||||||||||||||||||||||||||||
Cost | |||||||||||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||||||
Due in one year or less | $ | 156,621 | $ | 157,994 | |||||||||||||||||||||||||||||
Due after one year through five years | 248,908 | 253,370 | |||||||||||||||||||||||||||||||
Total | $ | 405,529 | $ | 411,364 | |||||||||||||||||||||||||||||
Market values were determined for each individual security in the investment portfolio. When evaluating the investments for other-than-temporary impairment, the Company reviews factors such as the length of time and extent to which fair value has been below cost basis, the financial condition of the security's issuer, and the Company's intent to sell the security and whether it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis. The Company typically invests in highly-rated securities with low probabilities of default and has the ability to hold the investments until maturity. As of June 30, 2014, the Company does not consider the investments to be other-than-temporarily impaired. | |||||||||||||||||||||||||||||||||
There were no realized gains or losses from the sale of investment securities for the three and six months ended June 30, 2014 and 2013. |
INTANGIBLE_ASSETS_AND_GOODWILL
INTANGIBLE ASSETS AND GOODWILL | 6 Months Ended | ||||||||||||||||||||
Jun. 30, 2014 | |||||||||||||||||||||
INTANGIBLE ASSETS AND GOODWILL | ' | ||||||||||||||||||||
INTANGIBLE ASSETS AND GOODWILL | ' | ||||||||||||||||||||
8. INTANGIBLE ASSETS AND GOODWILL | |||||||||||||||||||||
Intangible Assets | |||||||||||||||||||||
Intangible assets consist of the following: | |||||||||||||||||||||
30-Jun-14 | |||||||||||||||||||||
Gross | Accumulated | Net | Amortization Life and Method | ||||||||||||||||||
Assets | Amortization | ||||||||||||||||||||
(In thousands) | |||||||||||||||||||||
Finite Lived Assets | |||||||||||||||||||||
Customer contracts and lists | $ | 837,270 | $ | (247,017 | ) | $ | 590,253 | 3-12 years—straight line | |||||||||||||
Premium on purchased credit card portfolios | 176,088 | (93,860 | ) | 82,228 | 5-10 years—straight line, accelerated | ||||||||||||||||
Customer database | 161,700 | (131,992 | ) | 29,708 | 4-10 years—straight line | ||||||||||||||||
Collector database | 65,601 | (60,870 | ) | 4,731 | 30 years—15% declining balance | ||||||||||||||||
Tradenames | 85,968 | (22,905 | ) | 63,063 | 3-15 years—straight line | ||||||||||||||||
Purchased data lists | 11,876 | (6,415 | ) | 5,461 | 1-5 years—straight line, accelerated | ||||||||||||||||
Favorable lease | 3,291 | (549 | ) | 2,742 | 10 years—straight line | ||||||||||||||||
Noncompete agreements | 1,300 | (650 | ) | 650 | 3 years—straight line | ||||||||||||||||
$ | 1,343,094 | $ | (564,258 | ) | $ | 778,836 | |||||||||||||||
Indefinite Lived Assets | |||||||||||||||||||||
Tradenames | 12,350 | — | 12,350 | Indefinite life | |||||||||||||||||
Total intangible assets | $ | 1,355,444 | $ | (564,258 | ) | $ | 791,186 | ||||||||||||||
31-Dec-13 | |||||||||||||||||||||
Gross | Accumulated | Net | Amortization Life and Method | ||||||||||||||||||
Assets | Amortization | ||||||||||||||||||||
(In thousands) | |||||||||||||||||||||
Finite Lived Assets | |||||||||||||||||||||
Customer contracts and lists | $ | 440,200 | $ | (187,350 | ) | $ | 252,850 | 3-12 years—straight line | |||||||||||||
Premium on purchased credit card portfolios | 216,041 | (118,006 | ) | 98,035 | 5-10 years—straight line, accelerated | ||||||||||||||||
Customer database | 161,700 | (122,230 | ) | 39,470 | 4-10 years—straight line | ||||||||||||||||
Collector database | 65,895 | (60,711 | ) | 5,184 | 30 years—15% declining balance | ||||||||||||||||
Tradenames | 58,567 | (15,443 | ) | 43,124 | 4-15 years—straight line | ||||||||||||||||
Purchased data lists | 17,567 | (11,959 | ) | 5,608 | 1-5 years—straight line, accelerated | ||||||||||||||||
Favorable lease | 3,291 | (375 | ) | 2,916 | 10 years—straight line | ||||||||||||||||
Noncompete agreements | 1,300 | (433 | ) | 867 | 3 years—straight line | ||||||||||||||||
$ | 964,561 | $ | (516,507 | ) | $ | 448,054 | |||||||||||||||
Indefinite Lived Assets | |||||||||||||||||||||
Tradenames | 12,350 | — | 12,350 | Indefinite life | |||||||||||||||||
Total intangible assets | $ | 976,911 | $ | (516,507 | ) | $ | 460,404 | ||||||||||||||
With the BrandLoyalty acquisition on January 2, 2014, the Company acquired $423.8 million of intangible assets, consisting of $396.5 million of customer contracts and a $27.3 million tradename, which are being amortized over weighted average lives of 7.0 years and 3.0 years, respectively. | |||||||||||||||||||||
The estimated amortization expense related to intangible assets for the next five years and thereafter is as follows: | |||||||||||||||||||||
For Years Ending | |||||||||||||||||||||
December 31, | |||||||||||||||||||||
(In thousands) | |||||||||||||||||||||
2014 (excluding the six months ended June 30, 2014) | $ | 89,393 | |||||||||||||||||||
2015 | 161,487 | ||||||||||||||||||||
2016 | 143,894 | ||||||||||||||||||||
2017 | 109,342 | ||||||||||||||||||||
2018 | 99,217 | ||||||||||||||||||||
2019 & thereafter | 175,503 | ||||||||||||||||||||
Goodwill | |||||||||||||||||||||
The changes in the carrying amount of goodwill for the six months ended June 30, 2014 are as follows: | |||||||||||||||||||||
LoyaltyOne® | Epsilon® | Private Label Services and Credit | Corporate/ | Total | |||||||||||||||||
Other | |||||||||||||||||||||
(In thousands) | |||||||||||||||||||||
December 31, 2013 | $ | 232,449 | $ | 1,241,522 | $ | 261,732 | $ | — | $ | 1,735,703 | |||||||||||
Goodwill acquired during the year | 565,015 | — | — | — | 565,015 | ||||||||||||||||
Effects of foreign currency translation | (155 | ) | 742 | — | — | 587 | |||||||||||||||
June 30, 2014 | $ | 797,309 | $ | 1,242,264 | $ | 261,732 | $ | — | $ | 2,301,305 | |||||||||||
See Note 3, "Acquisition," for more information regarding the BrandLoyalty acquisition. |
DEBT
DEBT | 6 Months Ended | ||||||||||||||||
Jun. 30, 2014 | |||||||||||||||||
DEBT | ' | ||||||||||||||||
DEBT | ' | ||||||||||||||||
9. DEBT | |||||||||||||||||
Debt consists of the following: | |||||||||||||||||
Description | June 30, | December 31, | Maturity | Interest Rate | |||||||||||||
2014 | 2013 | ||||||||||||||||
(Dollars in thousands) | |||||||||||||||||
Long-term and other debt: | |||||||||||||||||
2013 credit facility | $ | 720,000 | $ | 336,000 | Jul-18 | -1 | |||||||||||
2013 term loan | 1,218,750 | 1,234,688 | Jul-18 | -1 | |||||||||||||
BrandLoyalty credit facility | 125,747 | — | Dec-15 | -2 | |||||||||||||
Convertible senior notes due 2014 | — | 333,082 | — | — | |||||||||||||
Senior notes due 2017 | 396,916 | 396,511 | Dec-17 | 5.25% | |||||||||||||
Senior notes due 2020 | 500,000 | 500,000 | Apr-20 | 6.38% | |||||||||||||
Total long-term and other debt | 2,961,413 | 2,800,281 | |||||||||||||||
Less: current portion | (65,480 | ) | (364,489 | ) | |||||||||||||
Long-term portion | $ | 2,895,933 | $ | 2,435,792 | |||||||||||||
Deposits: | |||||||||||||||||
Certificates of deposit | $ | 2,437,647 | $ | 2,486,533 | Various – July 2014 – January 2021 | 0.15% to 3.30% | |||||||||||
Money market deposits | 572,378 | 329,828 | On demand | 0.01% to 0.14% | |||||||||||||
Total deposits | 3,010,025 | 2,816,361 | |||||||||||||||
Less: current portion | (1,752,641 | ) | (1,544,059 | ) | |||||||||||||
Long-term portion | $ | 1,257,384 | $ | 1,272,302 | |||||||||||||
Non-recourse borrowings of consolidated securitization entities: | |||||||||||||||||
Fixed rate asset-backed term note securities | $ | 3,001,916 | $ | 3,001,916 | Various – October 2014 – June 2019 | 0.91% to 6.75% | |||||||||||
Floating rate asset-backed term note securities | 450,000 | — | Feb-16 | -3 | |||||||||||||
Conduit asset-backed securities | 860,000 | 1,590,000 | Various – September 2015 – May 2016 | -4 | |||||||||||||
Total non-recourse borrowings of consolidated securitization entities | 4,311,916 | 4,591,916 | |||||||||||||||
Less: current portion | (643,750 | ) | (1,025,000 | ) | |||||||||||||
Long-term portion | $ | 3,668,166 | $ | 3,566,916 | |||||||||||||
(1) The interest rate is based upon the London Interbank Offered Rate ("LIBOR") plus an applicable margin. At June 30, 2014, the weighted average interest rate was 1.90% for both the 2013 Credit Facility and 2013 Term Loan. | |||||||||||||||||
(2) The interest rate is based upon the Euro Interbank Offered Rate ("EURIBOR") plus an applicable margin. At June 30, 2014, the weighted average interest rate was 3.61%. | |||||||||||||||||
(3) The interest rate is based upon LIBOR plus an applicable margin. At June 30, 2014, the interest rate was 0.53%. | |||||||||||||||||
(4) The interest rate is based upon LIBOR or the asset-backed commercial paper costs of each individual conduit provider plus an applicable margin. At June 30, 2014, the interest rates ranged from 1.05% to 1.70%. | |||||||||||||||||
At June 30, 2014, the Company was in compliance with its covenants. | |||||||||||||||||
Credit Agreement | |||||||||||||||||
The Company, as borrower, and ADS Alliance Data Systems, Inc., ADS Foreign Holdings, Inc., Alliance Data Foreign Holdings, Inc., Epsilon Data Management, LLC, Comenity LLC, Comenity Servicing LLC and Aspen Marketing Services, LLC, as guarantors, are party to a credit agreement that provides for a $1.25 billion term loan (the "2013 Term Loan") with certain principal repayments and a $1.25 billion revolving line of credit (the "2013 Credit Facility"). | |||||||||||||||||
Total availability under the 2013 Credit Facility at June 30, 2014 was $530.0 million. | |||||||||||||||||
In July 2014, the Company exercised in part the accordion feature of the 2013 Credit Agreement and increased the capacity under the 2013 Credit Facility by $50.0 million to $1.3 billion. Also in July 2014, HMI Holding LLC became an additional guarantor under the 2013 Credit Agreement, the Indenture governing the Senior Notes due 2017 and the Indenture governing the Senior Notes due 2020. | |||||||||||||||||
BrandLoyalty Credit Agreement | |||||||||||||||||
As part of the BrandLoyalty acquisition, the Company assumed the debt outstanding under BrandLoyalty's Amended and Restated Senior Facilities Agreement, as amended (the "BrandLoyalty Credit Agreement"). The BrandLoyalty Credit Agreement is secured by the accounts receivable, inventory, fixed assets, bank accounts and shares of BrandLoyalty Group B.V. and certain of its subsidiaries. The BrandLoyalty Credit Agreement consists of term loans of €63.0 million and a revolving line of credit of €87.0 million, both of which are scheduled to mature on December 31, 2015. The term loans provide for quarterly principal payments of €6.25 million through September 2015, with the remaining amount payable upon maturity. As of June 30, 2014, amounts outstanding under the term loans and revolving line of credit were €44.3 million and €47.6 million ($60.6 million and $65.2 million), respectively. | |||||||||||||||||
All advances under the BrandLoyalty Credit Agreement are denominated in Euros. The interest rate fluctuates and is equal to EURIBOR, as defined in the BrandLoyalty Credit Agreement, plus an applicable margin based on BrandLoyalty's senior net leverage ratio. The BrandLoyalty Credit Agreement contains financial covenants, including a senior net leverage ratio and a minimum annual EBITDA, as well as usual and customary negative covenants and customary events of default. | |||||||||||||||||
Convertible Senior Notes | |||||||||||||||||
In June 2009, the Company issued $345.0 million aggregate principal amount of convertible senior notes that matured and were repaid on May 15, 2014 (the "Convertible Senior Notes due 2014"). On or prior to May 15, 2014, the Company settled in cash the Convertible Senior Notes due 2014, which were surrendered for conversion for $1,864.8 million. The Company applied $1,519.8 million of cash from the counterparties in settlement of the related convertible note hedge transactions, including Bank of America, N.A., J.P. Morgan Securities LLC, as agent for JPMorgan Chase Bank, National Association, London Branch, and Barclays Bank PLC (such parties collectively, the "2014 Hedge Counterparties"). | |||||||||||||||||
Interest expense on the convertible senior notes recognized in the Company's unaudited condensed consolidated statements of income for the three and six months ended June 30, 2014 and 2013 is as follows: | |||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||
June 30, | June 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
(In thousands, except percentages) | |||||||||||||||||
Interest expense calculated on contractual interest rate | $ | 1,920 | $ | 7,471 | $ | 5,630 | $ | 14,999 | |||||||||
Amortization of discount on liability component | 4,036 | 22,669 | 11,888 | 44,719 | |||||||||||||
Total interest expense on convertible senior notes | $ | 5,956 | $ | 30,140 | $ | 17,518 | $ | 59,718 | |||||||||
Effective interest rate (annualized) | 14.2 | % | 11 | % | 14.2 | % | 11 | % | |||||||||
In June 2014, the Company entered into amendments to the warrant agreements with the 2014 Hedge Counterparties for the approximately 7.3 million warrants associated with the Convertible Senior Notes due 2014. The amendments, among other things, amend the dates on which the warrants are exercisable and will expire to June 16, 2014 and continuing each business day through August 11, 2014. On July 3, 2014, the Company net settled 2.0 million warrants associated with the Convertible Senior Notes due 2014 by issuing 1.5 million shares of its common stock. | |||||||||||||||||
In the first quarter of 2014, the Company completed the settlement of the final 5.1 million of warrants associated with the convertible senior notes that matured on August 1, 2013 by issuing 2.9 million shares of its common stock. | |||||||||||||||||
Senior Notes Due 2017 | |||||||||||||||||
In November 2012, the Company issued and sold $400.0 million aggregate principal amount of 5.250% senior notes due December 1, 2017 (the "Senior Notes due 2017") at an issue price of 98.912% of the aggregate principal amount. The unamortized discount was $3.1 million and $3.5 million at June 30, 2014 and December 31, 2013, respectively. The discount is being amortized using the effective interest method over the remaining life of the Senior Notes due 2017 which, at June 30, 2014, is a period of 3.4 years at an effective annual interest rate of 5.5%. | |||||||||||||||||
Senior Notes Due 2022 | |||||||||||||||||
In July 2014, the Company issued and sold $600.0 million aggregate principal amount of 5.375% senior notes due August 1, 2022 (the "Senior Notes due 2022"). The Senior Notes due 2022 accrue interest on the principal amount at the rate of 5.375% per annum from July 29, 2014, payable semi-annually in arrears, on February 1 and August 1 of each year, beginning on February 1, 2015. The Senior Notes due 2022 are unsecured and are guaranteed on a senior unsecured basis by each of the existing and future domestic restricted subsidiaries that becomes liable for any debt under the domestic credit facilities, including the 2013 Credit Agreement. | |||||||||||||||||
Non-Recourse Borrowings of Consolidated Securitization Entities | |||||||||||||||||
Asset-Backed Term Notes | |||||||||||||||||
In February 2014, Master Trust I issued $625.0 million of asset-backed term securities, $175.0 million of which was retained by the Company and eliminated from the unaudited condensed consolidated financial statements. These securities mature in February 2016 and have a variable interest rate equal to LIBOR plus a margin of 0.38%. | |||||||||||||||||
In July 2014, Master Trust I issued $394.7 million of asset-backed term securities, $94.7 million of which was retained by the Company and will be eliminated from the unaudited condensed consolidated financial statements. These securities mature in September 2015 and have a fixed interest rate of 0.61%. | |||||||||||||||||
Conduit Facilities | |||||||||||||||||
The Company has access to committed undrawn capacity through three conduit facilities to support the funding of its credit card receivables through Master Trust I, Master Trust III and the WFC Trust. | |||||||||||||||||
In February 2014, Master Trust I renewed its 2009-VFN conduit facility, extending the maturity to February 29, 2016, with a total capacity of $700.0 million. | |||||||||||||||||
In May 2014, the WFC Trust renewed its 2009-VFN conduit facility, extending the maturity to May 31, 2016, with a total capacity of $450.0 million. | |||||||||||||||||
As of June 30, 2014, total capacity under the conduit facilities was $1.6 billion, of which $860.0 million had been drawn and was included in non-recourse borrowings of consolidated securitization entities in the unaudited condensed consolidated balance sheets. | |||||||||||||||||
Derivative Instruments | |||||||||||||||||
As part of its interest rate risk management program, the Company may enter into derivative contracts with institutions that are established dealers to manage its exposure to changes in interest rates for certain obligations. The Company was not a party to any derivative instruments as of December 31, 2013. With the BrandLoyalty acquisition on January 2, 2014, the Company assumed certain derivative instruments. | |||||||||||||||||
These interest rate derivative instruments involve the receipt of variable rate amounts from counterparties in exchange for the Company making fixed rate payments over the life of the agreement without the exchange of the underlying notional amount. These interest rate derivative instruments are not designated as hedges. Such instruments are not speculative and are used to manage interest rate risk, but do not meet the specific hedge accounting requirements of ASC 815, "Derivatives and Hedging." | |||||||||||||||||
At June 30, 2014 the notional amount of the Company's outstanding interest rate derivatives was €59.3 million ($81.2 million), with a weighted average years to maturity of 0.9 years. | |||||||||||||||||
The fair value of the Company's outstanding interest rate derivatives at June 30, 2014 was $0.5 million, of which $0.2 million was included in other current liabilities and $0.3 million was included in other liabilities in the unaudited condensed consolidated balance sheets. | |||||||||||||||||
During the three and six months ended June 30, 2014, a de minimis amount of gains on derivative instruments was recognized in interest expense on long-term and other debt, net within the unaudited condensed consolidated statements of income. During the three and six months ended June 30, 2013, gains on interest rate swaps on securitized borrowings that matured in 2013 of $2.2 million and $8.5 million, respectively, were recognized in securitization funding costs within the unaudited condensed consolidated statements of income. | |||||||||||||||||
The Company limits its exposure on derivatives by entering into contracts with institutions that are established dealers who maintain certain minimum credit criteria established by the Company. At June 30, 2014, the Company does not maintain any derivative instruments subject to master agreements that would require the Company to post collateral or that contain any credit-risk related contingent features. |
DEFERRED_REVENUE
DEFERRED REVENUE | 6 Months Ended | ||||||||||||
Jun. 30, 2014 | |||||||||||||
DEFERRED REVENUE | ' | ||||||||||||
DEFERRED REVENUE | ' | ||||||||||||
10. DEFERRED REVENUE | |||||||||||||
The AIR MILES Reward Program collects fees from its sponsors based on the number of AIR MILES reward miles issued and, in limited circumstances, the number of AIR MILES reward miles redeemed. Because management has determined that the earnings process is not complete at the time an AIR MILES reward mile is issued, the recognition of redemption and service revenue is deferred. | |||||||||||||
A reconciliation of deferred revenue for the AIR MILES Reward Program is as follows: | |||||||||||||
Deferred Revenue | |||||||||||||
Service | Redemption | Total | |||||||||||
(In thousands) | |||||||||||||
December 31, 2013 | $ | 346,631 | $ | 790,555 | $ | 1,137,186 | |||||||
Cash proceeds | 96,377 | 211,608 | 307,985 | ||||||||||
Revenue recognized | (99,975 | ) | (248,940 | ) | (348,915 | ) | |||||||
Other | — | (257 | ) | (257 | ) | ||||||||
Effects of foreign currency translation | (1,640 | ) | (4,530 | ) | (6,170 | ) | |||||||
June 30, 2014 | $ | 341,393 | $ | 748,436 | $ | 1,089,829 | |||||||
Amounts recognized in the unaudited condensed consolidated balance sheets: | |||||||||||||
Current liabilities | $ | 174,686 | $ | 748,436 | $ | 923,122 | |||||||
Non-current liabilities | $ | 166,707 | $ | — | $ | 166,707 | |||||||
REDEEMABLE_NONCONTROLLING_INTE
REDEEMABLE NON-CONTROLLING INTEREST | 6 Months Ended | ||||
Jun. 30, 2014 | |||||
REDEEMABLE NON-CONTROLLING INTEREST | ' | ||||
REDEEMABLE NON-CONTROLLING INTEREST | ' | ||||
11. REDEEMABLE NON-CONTROLLING INTEREST | |||||
On January 2, 2014, the Company acquired a 60% ownership interest in BrandLoyalty. The remaining 40% interest held by minority interest shareholders is considered a redeemable non-controlling interest. Pursuant to the BrandLoyalty share purchase agreement, the Company may acquire the remaining 40% ownership interest in BrandLoyalty over a four-year period, 10% per year at predetermined valuation multiples. If specified annual earnings targets are met by BrandLoyalty, the Company must acquire the additional 10% interest for the year achieved; otherwise, the sellers have a put option to sell the Company their 10% interest for the respective year. The Company recognized a redeemable non-controlling interest in the amount of $341.9 million, which was measured at fair value at the acquisition date. A reconciliation of the changes in the redeemable non-controlling interest is as follows: | |||||
Redeemable | |||||
Non-Controlling Interest | |||||
(In thousands) | |||||
Balance at January 2, 2014 | $ | 341,907 | |||
Net income attributable to non-controlling interest | 97 | ||||
Other comprehensive income attributable to non-controlling interest | 166 | ||||
Foreign currency translation adjustments | 517 | ||||
Balance at June 30, 2014 | $ | 342,687 |
STOCKHOLDERS_EQUITY
STOCKHOLDERS' EQUITY | 6 Months Ended | |||||||||||||||
Jun. 30, 2014 | ||||||||||||||||
STOCKHOLDERS' EQUITY | ' | |||||||||||||||
STOCKHOLDERS' EQUITY | ' | |||||||||||||||
12. STOCKHOLDERS' EQUITY | ||||||||||||||||
Stock Repurchase Program | ||||||||||||||||
On December 5, 2013, the Company's Board of Directors authorized a stock repurchase program to acquire up to $400.0 million of our outstanding common stock from January 1, 2014 through December 31, 2014, subject to any restrictions pursuant to the terms of the Company's credit agreements, indentures, applicable securities laws or otherwise. | ||||||||||||||||
For the six months ended June 30, 2014, the Company acquired a total of 813,317 shares of its common stock for $201.8 million. As of June 30, 2014, the Company had $198.2 million available under the stock repurchase program. | ||||||||||||||||
Stock Compensation Expense | ||||||||||||||||
Total stock-based compensation expense recognized in the Company's unaudited condensed consolidated statements of income for the three and six months ended June 30, 2014 and 2013 is as follows: | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
(In thousands) | ||||||||||||||||
Cost of operations | $ | 11,230 | $ | 10,600 | $ | 22,212 | $ | 19,542 | ||||||||
General and administrative | 4,643 | 4,391 | 9,285 | 8,473 | ||||||||||||
Total | $ | 15,873 | $ | 14,991 | $ | 31,497 | $ | 28,015 | ||||||||
During the six months ended June 30, 2014, the Company awarded 174,590 performance-based restricted stock units with a weighted average grant date fair value per share of $283.93 as determined on the date of grant. The performance restriction on the awards will lapse upon determination by the Board of Directors or the Compensation Committee of the Board of Directors that the Company's earnings before taxes for the period from January 1, 2014 to December 31, 2014 met certain pre-defined vesting criteria that permit a range from 50% to 150% of such performance-based restricted stock units to vest. Upon such determination, the restrictions will lapse with respect to 33% of the award on February 18, 2015, an additional 33% of the award on February 18, 2016 and the final 34% of the award on February 21, 2017, provided that the participant is employed by the Company on each such vesting date. | ||||||||||||||||
During the six months ended June 30, 2014, the Company awarded 52,472 service-based restricted stock units with a weighted average grant date fair value per share of $280.87 as determined on the date of grant. Service-based restricted stock units typically vest ratably over three years provided that the participant is employed by the Company on each such vesting date. |
ACCUMULATED_OTHER_COMPREHENSIV
ACCUMULATED OTHER COMPREHENSIVE INCOME | 6 Months Ended | |||||||||||||
Jun. 30, 2014 | ||||||||||||||
ACCUMULATED OTHER COMPREHENSIVE INCOME | ' | |||||||||||||
ACCUMULATED OTHER COMPREHENSIVE INCOME | ' | |||||||||||||
13. ACCUMULATED OTHER COMPREHENSIVE INCOME | ||||||||||||||
The changes in each component of accumulated comprehensive income (loss), net of tax effects, are as follows: | ||||||||||||||
Net | Foreign Currency Translation Adjustments(1) | Accumulated | ||||||||||||
Three Months Ended June 30, 2014 | Unrealized | Other Comprehensive Income (Loss) | ||||||||||||
Gains (Losses) | ||||||||||||||
on Securities | ||||||||||||||
(In thousands) | ||||||||||||||
Balance as of March 31, 2014 | $ | 4,674 | $ | (13,083 | ) | $ | (8,409 | ) | ||||||
Changes in other comprehensive income (loss) | 71 | (5,857 | ) | (5,786 | ) | |||||||||
Balance as of June 30, 2014 | $ | 4,745 | $ | (18,940 | ) | $ | (14,195 | ) | ||||||
Three Months Ended June 30, 2013 | Net | Foreign Currency Translation Adjustments(1) | Accumulated | |||||||||||
Unrealized | Other Comprehensive Income (Loss) | |||||||||||||
Gains (Losses) | ||||||||||||||
on Securities | ||||||||||||||
(In thousands) | ||||||||||||||
Balance as of March 31, 2013 | $ | 11,417 | $ | (28,855 | ) | $ | (17,438 | ) | ||||||
Changes in other comprehensive income (loss) | (6,550 | ) | 4,938 | (1,612 | ) | |||||||||
Balance as of June 30, 2013 | $ | 4,867 | $ | (23,917 | ) | $ | (19,050 | ) | ||||||
Six Months Ended June 30, 2014 | Net | Foreign Currency Translation Adjustments(1) | Accumulated | |||||||||||
Unrealized | Other Comprehensive Income (Loss) | |||||||||||||
Gains (Losses) | ||||||||||||||
on Securities | ||||||||||||||
(In thousands) | ||||||||||||||
Balance as of December 31, 2013 | $ | 4,189 | $ | (22,416 | ) | $ | (18,227 | ) | ||||||
Changes in other comprehensive income (loss) | 556 | 3,476 | 4,032 | |||||||||||
Balance as of June 30, 2014 | $ | 4,745 | $ | (18,940 | ) | $ | (14,195 | ) | ||||||
Six Months Ended June 30, 2013 | Net | Foreign Currency Translation Adjustments(1) | Accumulated | |||||||||||
Unrealized | Other Comprehensive Income (Loss) | |||||||||||||
Gains (Losses) | ||||||||||||||
on Securities | ||||||||||||||
(In thousands) | ||||||||||||||
Balance as of December 31, 2012 | $ | 10,321 | $ | (32,182 | ) | $ | (21,861 | ) | ||||||
Changes in other comprehensive income (loss) | (5,454 | ) | 8,265 | 2,811 | ||||||||||
Balance as of June 30, 2013 | $ | 4,867 | $ | (23,917 | ) | $ | (19,050 | ) | ||||||
-1 | Primarily related to the impact of changes in the Canadian dollar and Euro exchange rates for the three and six months ended June 30, 2014 and to the impact of changes in the Canadian dollar exchange rate for the three and six months ended June 30, 2013. | |||||||||||||
There were no reclassifications out of accumulated other comprehensive income (loss) into net income for the three months ended June 30, 2014 and 2013 and the six months ended June 30, 2014. A de minimis amount was reclassified out of accumulated other comprehensive income (loss) into net income for the six months ended June 30, 2013. |
FINANCIAL_INSTRUMENTS
FINANCIAL INSTRUMENTS | 6 Months Ended | |||||||||||||||||
Jun. 30, 2014 | ||||||||||||||||||
FINANCIAL INSTRUMENTS | ' | |||||||||||||||||
FINANCIAL INSTRUMENTS | ' | |||||||||||||||||
14. FINANCIAL INSTRUMENTS | ||||||||||||||||||
In accordance with ASC 825, "Financial Instruments," the Company is required to disclose the fair value of financial instruments for which it is practical to estimate fair value. To obtain fair values, observable market prices are used if available. In some instances, observable market prices are not readily available and fair value is determined using present value or other techniques appropriate for a particular financial instrument. These techniques involve judgment and as a result are not necessarily indicative of the amounts the Company would realize in a current market exchange. The use of different assumptions or estimation techniques may have a material effect on the estimated fair value amounts. | ||||||||||||||||||
Fair Value of Financial Instruments — The estimated fair values of the Company's financial instruments are as follows: | ||||||||||||||||||
30-Jun-14 | 31-Dec-13 | |||||||||||||||||
Carrying | Fair | Carrying | Fair | |||||||||||||||
Amount | Value | Amount | Value | |||||||||||||||
(In thousands) | ||||||||||||||||||
Financial assets | ||||||||||||||||||
Cash and cash equivalents | $ | 631,167 | $ | 631,167 | $ | 969,822 | $ | 969,822 | ||||||||||
Trade receivables, net | 394,681 | 394,681 | 394,822 | 394,822 | ||||||||||||||
Credit card and loan receivables, net | 8,050,314 | 8,050,314 | 8,069,713 | 8,069,713 | ||||||||||||||
Loan receivables held for sale | 63,425 | 63,425 | 62,082 | 62,082 | ||||||||||||||
Redemption settlement assets, restricted | 565,158 | 565,158 | 510,349 | 510,349 | ||||||||||||||
Cash collateral, restricted | 34,710 | 34,710 | 34,124 | 34,124 | ||||||||||||||
Other investments | 208,889 | 208,889 | 99,221 | 99,221 | ||||||||||||||
Financial liabilities | ||||||||||||||||||
Accounts payable | 320,678 | 320,678 | 210,019 | 210,019 | ||||||||||||||
Deposits | 3,010,025 | 3,038,051 | 2,816,361 | 2,836,352 | ||||||||||||||
Non-recourse borrowings of consolidated securitization entities | 4,311,916 | 4,357,684 | 4,591,916 | 4,618,205 | ||||||||||||||
Long-term and other debt | 2,961,413 | 3,007,498 | 2,800,281 | 4,404,500 | ||||||||||||||
Derivative instruments | 465 | 465 | — | — | ||||||||||||||
Contingent liability | 249,067 | 249,067 | — | — | ||||||||||||||
Fair Value of Assets and Liabilities Held at June 30, 2014 and December 31, 2013 | ||||||||||||||||||
The following techniques and assumptions were used by the Company in estimating fair values of financial instruments as disclosed herein: | ||||||||||||||||||
Cash and cash equivalents, trade receivables, net and accounts payable — The carrying amount approximates fair value due to the short maturity and the relatively liquid nature of these assets and liabilities. | ||||||||||||||||||
Credit card and loan receivables, net — Credit card and loan receivables, net includes both receivables issued or purchased by the Company in the normal course of business. The carrying amount of credit card and loan receivables, net approximates fair value due to the short maturity and average interest rates that approximate current market origination rates. | ||||||||||||||||||
Loan receivables held for sale — Loan receivables held for sale are carried at the lower of cost or fair value, and their carrying amount approximates fair value due to the short duration between origination and sale. | ||||||||||||||||||
Redemption settlement assets, restricted — Redemption settlement assets, restricted consists of cash and cash equivalents and government and corporate bonds. The fair value for securities is based on quoted market prices for the same or similar securities. | ||||||||||||||||||
Cash collateral, restricted — The spread deposits are recorded at their fair value based on discounted cash flow models. The Company uses a valuation model that calculates the present value of estimated cash flows for each asset. The fair value is based on the term of the underlying securities and a discount rate. The carrying amount of excess funding deposits approximates its fair value due to the relatively short maturity period and average interest rates, which approximate current market rates. | ||||||||||||||||||
Other investments — Other investments consist of restricted cash, U.S. Treasury bonds and marketable securities. The fair value is based on quoted market prices for the same or similar securities. | ||||||||||||||||||
Deposits — The fair value is estimated based on the current observable market rates available to the Company for similar deposits with similar remaining maturities. | ||||||||||||||||||
Non-recourse borrowings of consolidated securitization entities — The fair value is estimated based on the current observable market rates available to the Company for similar debt instruments with similar remaining maturities or quoted market prices for the same transaction. | ||||||||||||||||||
Long-term and other debt — The fair value is estimated based on the current observable market rates available to the Company for similar debt instruments with similar remaining maturities or quoted market prices for the same transaction. | ||||||||||||||||||
Derivative instruments —The valuation of these instruments was determined using a discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflected the contractual terms of the derivatives, including the period to maturity, and used observable market-based inputs, including interest rate curves and option volatility. | ||||||||||||||||||
Contingent liability — The fair value is determined using a Monte Carlo simulation valuation technique, which is based on certain key assumptions, including the estimated 2014 earnings and net debt of BrandLoyalty, each as defined in the share purchase agreement, earnings volatility, and discount rate. | ||||||||||||||||||
Financial Assets and Financial Liabilities Fair Value Hierarchy | ||||||||||||||||||
ASC 825 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: | ||||||||||||||||||
· | Level 1, defined as observable inputs such as quoted prices in active markets; | |||||||||||||||||
· | Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and | |||||||||||||||||
· | Level 3, defined as unobservable inputs where little or no market data exists, therefore requiring an entity to develop its own assumptions. | |||||||||||||||||
Financial instruments are considered Level 3 when their values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable. Level 3 financial instruments also include those for which the determination of fair value requires significant management judgment or estimation. The use of different techniques to determine fair value of these financial instruments could result in different estimates of fair value at the reporting date. | ||||||||||||||||||
The following tables provide information for the assets and liabilities carried at fair value measured on a recurring basis as of June 30, 2014 and December 31, 2013: | ||||||||||||||||||
Fair Value Measurements at | ||||||||||||||||||
June 30, 2014 Using | ||||||||||||||||||
Balance at | Level 1 | Level 2 | Level 3 | |||||||||||||||
June 30, | ||||||||||||||||||
2014 | ||||||||||||||||||
(In thousands) | ||||||||||||||||||
Government bonds (1) | $ | 4,787 | $ | — | $ | 4,787 | $ | — | ||||||||||
Corporate bonds (1) | 406,577 | — | 406,577 | — | ||||||||||||||
Cash collateral, restricted | 34,710 | — | — | 34,710 | ||||||||||||||
Other investments (2) | 208,889 | 135,659 | 73,230 | — | ||||||||||||||
Total assets measured at fair value | $ | 654,963 | $ | 135,659 | $ | 484,594 | $ | 34,710 | ||||||||||
Derivative instruments (3) | $ | 465 | $ | — | $ | 465 | $ | — | ||||||||||
Contingent liability (4) | 249,067 | — | — | 249,067 | ||||||||||||||
Total liabilities measured at fair value | $ | 249,532 | $ | — | $ | 465 | $ | 249,067 | ||||||||||
Fair Value Measurements at | ||||||||||||||||||
December 31, 2013 Using | ||||||||||||||||||
Balance at | Level 1 | Level 2 | Level 3 | |||||||||||||||
December 31, | ||||||||||||||||||
2013 | ||||||||||||||||||
(In thousands) | ||||||||||||||||||
Corporate bonds (1) | $ | 436,365 | $ | — | $ | 436,365 | $ | — | ||||||||||
Cash collateral, restricted | 34,124 | — | — | 34,124 | ||||||||||||||
Other investments (2) | 99,221 | 30,888 | 68,333 | — | ||||||||||||||
Total assets measured at fair value | $ | 569,710 | $ | 30,888 | $ | 504,698 | $ | 34,124 | ||||||||||
-1 | Amounts are included in redemption settlement assets in the unaudited condensed consolidated balance sheets. | |||||||||||||||||
-2 | Amounts are included in other current assets and other assets in the unaudited condensed consolidated balance sheets. | |||||||||||||||||
-3 | Amount is included in other current liabilities and other liabilities in the unaudited condensed consolidated balance sheets. | |||||||||||||||||
-4 | Amount is included in accrued expenses in the unaudited condensed consolidated balance sheets. | |||||||||||||||||
The following tables summarize the changes in fair value of the Company's asset and liability measured at fair value on a recurring basis using significant unobservable inputs (Level 3) as defined in ASC 825 as of June 30, 2014 and 2013: | ||||||||||||||||||
Cash Collateral, Restricted | ||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||
June 30, | June 30, | |||||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||||
(In thousands) | ||||||||||||||||||
Balance at beginning of period | $ | 34,425 | $ | 63,140 | $ | 34,124 | $ | 62,660 | ||||||||||
Total gains (realized or unrealized): | ||||||||||||||||||
Included in earnings | 285 | 311 | 586 | 791 | ||||||||||||||
Purchases | — | — | — | — | ||||||||||||||
Sales | — | — | — | — | ||||||||||||||
Issuances | — | — | — | — | ||||||||||||||
Settlements | — | (17,500 | ) | — | (17,500 | ) | ||||||||||||
Transfers in or out of Level 3 | — | — | — | — | ||||||||||||||
Balance at end of period | $ | 34,710 | $ | 45,951 | $ | 34,710 | $ | 45,951 | ||||||||||
Gains for the period included in earnings related to assets still held at end of period | $ | 285 | $ | 311 | $ | 586 | $ | 791 | ||||||||||
The spread deposits included in cash collateral, restricted are recorded at their fair value based on discounted cash flow models, utilizing the respective term of each instrument which ranged from 4 to 28 months, with a weighted average term of 11 months. The unobservable input used to calculate the fair value was the discount rate of 3.0%, which was based on an interest rate curve that is observable in the market as adjusted for a credit spread. Significant increases in the term or the discount rate would result in a lower fair value. Conversely, significant decreases in the term or the discount rate would result in a higher fair value. | ||||||||||||||||||
For the three and six months ended June 30, 2014 and 2013, gains included in earnings attributable to cash collateral, restricted are included in securitization funding costs in the Company's unaudited condensed consolidated statements of income. | ||||||||||||||||||
Contingent Liability | ||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||
June 30, | June 30, | |||||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||||
(In thousands) | ||||||||||||||||||
Balance at beginning of period | $ | 250,508 | $ | — | $ | — | $ | — | ||||||||||
Total gains or losses (realized or unrealized): | ||||||||||||||||||
Included in earnings | — | — | — | — | ||||||||||||||
Purchases | — | — | 248,702 | — | ||||||||||||||
Sales | — | — | — | — | ||||||||||||||
Issuances | — | — | — | — | ||||||||||||||
Settlements | — | — | — | — | ||||||||||||||
Foreign currency transaction adjustments | (1,441 | ) | — | 365 | — | |||||||||||||
Transfers in or out of Level 3 | — | — | — | — | ||||||||||||||
Balance at end of period | $ | 249,067 | $ | — | $ | 249,067 | $ | — | ||||||||||
Gains (losses) for the period included in earnings related to liability still held at end of period | $ | 1,441 | $ | — | $ | (365 | ) | $ | — | |||||||||
The contingent liability represents the additional consideration that the Company may be required to pay in the first quarter of 2015 as part of the earn-out provisions included in the share purchase agreement for the BrandLoyalty acquisition. The contingent liability is included in accrued expenses in the Company's unaudited condensed consolidated balance sheets and is recorded at fair value. The fair value was determined using a Monte Carlo simulation valuation technique, which is based on certain key assumptions, including estimated 2014 earnings and net debt for BrandLoyalty, each as defined in the share purchase agreement, earnings volatility and a discount rate. Earnings volatility was determined based on observed market volatility for a guideline set of similar companies. The discount rate was based on observed borrowing rates on debt instruments with similar terms, adjusted for an unobservable risk premium. Significant increases in the estimated 2014 earnings for BrandLoyalty or significant decreases in the earnings volatility, discount rate or net debt for BrandLoyalty would result in an increase in the fair value of the contingent liability. Conversely, significant decreases in the estimated 2014 earnings for BrandLoyalty or significant increases in the earnings volatility, discount rate or net debt for BrandLoyalty would result in a decrease in the fair value of the contingent liability. | ||||||||||||||||||
For the three and six months ended June 30, 2014, foreign currency transaction gains or losses included in earnings attributable to the contingent liability are included in cost of operations in the Company's unaudited condensed consolidated statements of income. | ||||||||||||||||||
There were no transfers between Levels 1 and 2 within the fair value hierarchy for the three and six months ended June 30, 2014 and 2013. | ||||||||||||||||||
Financial Instruments Disclosed but Not Carried at Fair Value | ||||||||||||||||||
The following table provides assets and liabilities disclosed but not carried at fair value as of June 30, 2014 and December 31, 2013: | ||||||||||||||||||
Fair Value Measurements at | ||||||||||||||||||
30-Jun-14 | ||||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||||||
(In thousands) | ||||||||||||||||||
Financial assets | ||||||||||||||||||
Cash and cash equivalents | $ | 631,167 | $ | 631,167 | $ | — | $ | — | ||||||||||
Credit card and loan receivables, net | 8,050,314 | — | — | 8,050,314 | ||||||||||||||
Loan receivables held for sale | 63,425 | — | — | 63,425 | ||||||||||||||
Total | $ | 8,744,906 | $ | 631,167 | $ | — | $ | 8,113,739 | ||||||||||
Financial liabilities | ||||||||||||||||||
Deposits | $ | 3,038,051 | $ | — | $ | 3,038,051 | $ | — | ||||||||||
Non-recourse borrowings of consolidated securitization entities | 4,357,684 | — | 4,357,684 | — | ||||||||||||||
Long-term and other debt | 3,007,498 | — | 3,007,498 | — | ||||||||||||||
Total | $ | 10,403,233 | $ | — | $ | 10,403,233 | $ | — | ||||||||||
Fair Value Measurements at | ||||||||||||||||||
31-Dec-13 | ||||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||||||
(In thousands) | ||||||||||||||||||
Financial assets | ||||||||||||||||||
Cash and cash equivalents | $ | 969,822 | $ | 969,822 | $ | — | $ | — | ||||||||||
Credit card and loan receivables, net | 8,069,713 | — | — | 8,069,713 | ||||||||||||||
Loan receivables held for sale | 62,082 | — | — | 62,082 | ||||||||||||||
Total | $ | 9,101,617 | $ | 969,822 | $ | — | $ | 8,131,795 | ||||||||||
Financial liabilities | ||||||||||||||||||
Deposits | $ | 2,836,352 | $ | — | $ | 2,836,352 | $ | — | ||||||||||
Non-recourse borrowings of consolidated securitization entities | 4,618,205 | — | 4,618,205 | — | ||||||||||||||
Long-term and other debt | 4,404,500 | — | 4,404,500 | — | ||||||||||||||
Total | $ | 11,859,057 | $ | — | $ | 11,859,057 | $ | — | ||||||||||
INCOME_TAXES
INCOME TAXES | 6 Months Ended |
Jun. 30, 2014 | |
INCOME TAXES | ' |
INCOME TAXES | ' |
15. INCOME TAXES | |
For each of the three and six months ended June 30, 2014, the Company utilized an effective tax rate of 36.6% to calculate its provision for income taxes. For the three and six months ended June 30, 2013, the Company utilized an effective tax rate of 37.3% and 37.8%, respectively, to calculate its provision for income taxes. In accordance with ASC 740‑270, "Income Taxes — Interim Reporting," the Company's expected annual effective tax rate for calendar year 2014 based on all known variables is 36.6%. |
SEGMENT_INFORMATION
SEGMENT INFORMATION | 6 Months Ended | |||||||||||||||||||||||||
Jun. 30, 2014 | ||||||||||||||||||||||||||
SEGMENT INFORMATION | ' | |||||||||||||||||||||||||
SEGMENT INFORMATION | ' | |||||||||||||||||||||||||
16. SEGMENT INFORMATION | ||||||||||||||||||||||||||
Operating segments are defined by ASC 280, "Segment Reporting," as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company's chief operating decision maker is the President and Chief Executive Officer. The operating segments are reviewed separately because each operating segment represents a strategic business unit that generally offers different products and serves different markets. | ||||||||||||||||||||||||||
The Company operates in the following reportable segments: LoyaltyOne, Epsilon, and Private Label Services and Credit. Segment operations consist of the following: | ||||||||||||||||||||||||||
• | LoyaltyOne includes the Company's Canadian AIR MILES Reward Program and BrandLoyalty; | |||||||||||||||||||||||||
• | Epsilon provides end-to-end, integrated direct marketing solutions that leverage transactional data to help clients more effectively acquire and build stronger relationships with their customers; and | |||||||||||||||||||||||||
• | Private Label Services and Credit provides risk management solutions, account origination, funding, transaction processing, customer care, collections and marketing services for the Company's private label and co-brand credit card programs. | |||||||||||||||||||||||||
Corporate and other immaterial businesses are reported collectively as an "all other" category labeled "Corporate/Other." Income taxes are not allocated to the segments in the computation of segment operating profit for internal evaluation purposes and have also been included in "Corporate/Other." Total assets are not allocated to the segments. | ||||||||||||||||||||||||||
Three Months Ended June 30, 2014 | LoyaltyOne | Epsilon | Private Label | Corporate/ Other | Eliminations | Total | ||||||||||||||||||||
Services and | ||||||||||||||||||||||||||
Credit | ||||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||
Revenues | $ | 355,583 | $ | 357,088 | $ | 557,258 | $ | 187 | $ | (4,958 | ) | $ | 1,265,158 | |||||||||||||
Income (loss) before income taxes | 60,056 | 25,598 | 194,891 | (60,937 | ) | — | 219,608 | |||||||||||||||||||
Interest expense, net | 2,082 | (6 | ) | 29,785 | 31,071 | — | 62,932 | |||||||||||||||||||
Operating income (loss) | 62,138 | 25,592 | 224,676 | (29,866 | ) | — | 282,540 | |||||||||||||||||||
Depreciation and amortization | 22,723 | 36,838 | 12,981 | 1,753 | — | 74,295 | ||||||||||||||||||||
Stock compensation expense | 2,705 | 5,262 | 3,263 | 4,643 | — | 15,873 | ||||||||||||||||||||
Adjusted EBITDA (1) | 87,566 | 67,692 | 240,920 | (23,470 | ) | — | 372,708 | |||||||||||||||||||
Less: Securitization funding costs | — | — | 22,300 | — | — | 22,300 | ||||||||||||||||||||
Less: Interest expense on deposits | — | — | 8,228 | — | — | 8,228 | ||||||||||||||||||||
Less: Adjusted EBITDA attributable to non-controlling interest | 10,214 | — | — | — | — | 10,214 | ||||||||||||||||||||
Adjusted EBITDA, net (1) | $ | 77,352 | $ | 67,692 | $ | 210,392 | $ | (23,470 | ) | $ | — | $ | 331,966 | |||||||||||||
Three Months Ended June 30, 2013 | LoyaltyOne | Epsilon | Private Label | Corporate/ Other | Eliminations | Total | ||||||||||||||||||||
Services and | ||||||||||||||||||||||||||
Credit | ||||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||
Revenues | $ | 220,137 | $ | 331,841 | $ | 479,875 | $ | — | $ | (3,761 | ) | $ | 1,028,092 | |||||||||||||
Income (loss) before income taxes | 59,177 | 24,166 | 184,450 | (82,079 | ) | — | 185,714 | |||||||||||||||||||
Interest expense, net | (139 | ) | (23 | ) | 31,173 | 52,455 | — | 83,466 | ||||||||||||||||||
Operating income (loss) | 59,038 | 24,143 | 215,623 | (29,624 | ) | — | 269,180 | |||||||||||||||||||
Depreciation and amortization | 4,337 | 34,708 | 13,162 | 1,369 | — | 53,576 | ||||||||||||||||||||
Stock compensation expense | 2,800 | 4,742 | 3,059 | 4,390 | — | 14,991 | ||||||||||||||||||||
Adjusted EBITDA (1) | 66,175 | 63,593 | 231,844 | (23,865 | ) | — | 337,747 | |||||||||||||||||||
Less: Securitization funding costs | — | — | 24,694 | — | — | 24,694 | ||||||||||||||||||||
Less: Interest expense on deposits | — | — | 7,002 | — | — | 7,002 | ||||||||||||||||||||
Less: Adjusted EBITDA attributable to non-controlling interest | — | — | — | — | — | — | ||||||||||||||||||||
Adjusted EBITDA, net (1) | $ | 66,175 | $ | 63,593 | $ | 200,148 | $ | (23,865 | ) | $ | — | $ | 306,051 | |||||||||||||
Six Months Ended June 30, 2014 | LoyaltyOne | Epsilon | Private Label | Corporate/ Other | Eliminations | Total | ||||||||||||||||||||
Services and | ||||||||||||||||||||||||||
Credit | ||||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||
Revenues | $ | 684,553 | $ | 704,557 | $ | 1,119,054 | $ | 228 | $ | (10,334 | ) | $ | 2,498,058 | |||||||||||||
Income (loss) before income taxes | 104,432 | 38,745 | 423,246 | (132,770 | ) | — | 433,653 | |||||||||||||||||||
Interest expense, net | 3,644 | (19 | ) | 60,191 | 66,863 | — | 130,679 | |||||||||||||||||||
Operating income (loss) | 108,076 | 38,726 | 483,437 | (65,907 | ) | — | 564,332 | |||||||||||||||||||
Depreciation and amortization | 44,972 | 73,915 | 25,674 | 3,807 | — | 148,368 | ||||||||||||||||||||
Stock compensation expense | 5,489 | 10,253 | 6,470 | 9,285 | — | 31,497 | ||||||||||||||||||||
Adjusted EBITDA (1) | 158,537 | 122,894 | 515,581 | (52,815 | ) | — | 744,197 | |||||||||||||||||||
Less: Securitization funding costs | — | — | 45,211 | — | — | 45,211 | ||||||||||||||||||||
Less: Interest expense on deposits | — | — | 16,462 | — | — | 16,462 | ||||||||||||||||||||
Less: Adjusted EBITDA attributable to non-controlling interest | 16,003 | — | — | — | — | 16,003 | ||||||||||||||||||||
Adjusted EBITDA, net (1) | $ | 142,534 | $ | 122,894 | $ | 453,908 | $ | (52,815 | ) | $ | — | $ | 666,521 | |||||||||||||
Six Months Ended June 30, 2013 | LoyaltyOne | Epsilon | Private Label | Corporate/ Other | Eliminations | Total | ||||||||||||||||||||
Services and | ||||||||||||||||||||||||||
Credit | ||||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||
Revenues | $ | 461,044 | $ | 649,754 | $ | 977,223 | $ | — | $ | (6,492 | ) | $ | 2,081,529 | |||||||||||||
Income (loss) before income taxes | 115,320 | 40,392 | 395,817 | (157,134 | ) | — | 394,395 | |||||||||||||||||||
Interest expense, net | (420 | ) | (39 | ) | 62,227 | 104,242 | — | 166,010 | ||||||||||||||||||
Operating income (loss) | 114,900 | 40,353 | 458,044 | (52,892 | ) | — | 560,405 | |||||||||||||||||||
Depreciation and amortization | 8,659 | 68,928 | 26,496 | 2,343 | — | 106,426 | ||||||||||||||||||||
Stock compensation expense | 5,219 | 8,729 | 5,595 | 8,472 | — | 28,015 | ||||||||||||||||||||
Adjusted EBITDA (1) | 128,778 | 118,010 | 490,135 | (42,077 | ) | — | 694,846 | |||||||||||||||||||
Less: Securitization funding costs | — | — | 49,179 | — | — | 49,179 | ||||||||||||||||||||
Less: Interest expense on deposits | — | — | 14,009 | — | — | 14,009 | ||||||||||||||||||||
Less: Adjusted EBITDA attributable to non-controlling interest | — | — | — | — | — | — | ||||||||||||||||||||
Adjusted EBITDA, net (1) | $ | 128,778 | $ | 118,010 | $ | 426,947 | $ | (42,077 | ) | $ | — | $ | 631,658 | |||||||||||||
-1 | Adjusted EBITDA is a non-GAAP financial measure equal to net income, the most directly comparable financial measure based on GAAP, plus stock compensation expense, provision for income taxes, interest expense, net, depreciation and other amortization and amortization of purchased intangibles. Adjusted EBITDA, net is also a non-GAAP financial measure equal to adjusted EBITDA less securitization funding costs, interest expense on deposits and adjusted EBITDA attributable to the non-controlling interest. Adjusted EBITDA and adjusted EBITDA, net are presented in accordance with ASC 280, "Segment Reporting," as they are the primary performance metrics utilized to assess performance of the segments. |
SUBSEQUENT_EVENT
SUBSEQUENT EVENT | 6 Months Ended |
Jun. 30, 2014 | |
SUBSEQUENT EVENT | ' |
SUBSEQUENT EVENT | ' |
17. SUBSEQUENT EVENT | |
On July 30, 2014, the Company acquired the existing co-brand credit card portfolio of Coldwater Creek. The purchase price was approximately $279.5 million, which is subject to customary purchase price adjustments. |
EARNINGS_PER_SHARE_Tables
EARNINGS PER SHARE (Tables) | 6 Months Ended | ||||||||||||||||
Jun. 30, 2014 | |||||||||||||||||
EARNINGS PER SHARE | ' | ||||||||||||||||
Schedule of computation of basic and diluted net income per share | ' | ||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||
June 30, | June 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
(In thousands, except per share amounts) | |||||||||||||||||
Numerator: | |||||||||||||||||
Net income attributable to Alliance Data Systems Corporation stockholders | $ | 137,444 | $ | 116,440 | $ | 274,839 | $ | 245,419 | |||||||||
Denominator: | |||||||||||||||||
Weighted average shares, basic | 54,154 | 49,123 | 53,600 | 49,444 | |||||||||||||
Weighted average effect of dilutive securities: | |||||||||||||||||
Shares from assumed conversion of convertible senior notes | 2,715 | 10,611 | 4,224 | 10,372 | |||||||||||||
Shares from assumed conversion of convertible note warrants | 5,247 | 7,818 | 6,009 | 7,336 | |||||||||||||
Net effect of dilutive stock options and unvested restricted stock | 521 | 615 | 521 | 594 | |||||||||||||
Denominator for diluted calculations | 62,637 | 68,167 | 64,354 | 67,746 | |||||||||||||
Net income attributable to Alliance Data Systems Corporation stockholders per share: | |||||||||||||||||
Basic | $ | 2.54 | $ | 2.37 | $ | 5.13 | $ | 4.96 | |||||||||
Diluted | $ | 2.19 | $ | 1.71 | $ | 4.27 | $ | 3.62 | |||||||||
ACQUISITION_Tables
ACQUISITION (Tables) | 6 Months Ended | |||
Jun. 30, 2014 | ||||
ACQUISITION | ' | |||
Summary of allocation of the consideration and the respective fair values of the assets acquired and liabilities assumed | ' | |||
As of | ||||
2-Jan-14 | ||||
(In thousands) | ||||
Current assets, net of cash acquired | $ | 246,769 | ||
Deferred tax asset | 3,509 | |||
Property and equipment | 19,719 | |||
Other non-current assets | 3,994 | |||
Intangible assets | 423,832 | |||
Goodwill | 565,015 | |||
Total assets acquired | 1,262,838 | |||
Current liabilities | 146,559 | |||
Current portion of long-term debt | 34,180 | |||
Deferred tax liability | 105,512 | |||
Long-term debt (net of current portion) | 126,323 | |||
Other liabilities | 142 | |||
Total liabilities assumed | 412,716 | |||
Redeemable non-controlling interest | 341,907 | |||
Net assets acquired | $ | 508,215 | ||
CREDIT_CARD_AND_LOAN_RECEIVABL1
CREDIT CARD AND LOAN RECEIVABLES (Tables) | 6 Months Ended | ||||||||||||||||||||||||
Jun. 30, 2014 | |||||||||||||||||||||||||
CREDIT CARD AND LOAN RECEIVABLES | ' | ||||||||||||||||||||||||
Schedule of components of total credit card and loan receivables | ' | ||||||||||||||||||||||||
June 30, | December 31, | ||||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||
Principal receivables | $ | 8,096,112 | $ | 8,166,961 | |||||||||||||||||||||
Billed and accrued finance charges | 336,440 | 343,521 | |||||||||||||||||||||||
Other credit card and loan receivables | 101,342 | 62,400 | |||||||||||||||||||||||
Total credit card and loan receivables | 8,533,894 | 8,572,882 | |||||||||||||||||||||||
Less credit card receivables – restricted for securitization investors | 6,737,440 | 7,080,014 | |||||||||||||||||||||||
Other credit card and loan receivables | $ | 1,796,454 | $ | 1,492,868 | |||||||||||||||||||||
Schedule of Company's allowance for loan loss | ' | ||||||||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||
Balance at beginning of period | $ | 482,658 | $ | 471,016 | $ | 503,169 | $ | 481,958 | |||||||||||||||||
Provision for loan loss | 96,652 | 57,796 | 167,234 | 124,444 | |||||||||||||||||||||
Change in estimate for uncollectible unpaid interest and fees | (5,000 | ) | — | 500 | — | ||||||||||||||||||||
Recoveries | 38,066 | 27,163 | 76,474 | 57,948 | |||||||||||||||||||||
Principal charge-offs | (128,796 | ) | (107,579 | ) | (263,797 | ) | (215,954 | ) | |||||||||||||||||
Balance at end of period | $ | 483,580 | $ | 448,396 | $ | 483,580 | $ | 448,396 | |||||||||||||||||
Schedule of delinquency trends of the Company's credit card and loan receivables portfolio | ' | ||||||||||||||||||||||||
June 30, | % of | December 31, | % of | ||||||||||||||||||||||
2014 | Total | 2013 | Total | ||||||||||||||||||||||
(In thousands, except percentages) | |||||||||||||||||||||||||
Receivables outstanding – principal | $ | 8,096,112 | 100 | % | $ | 8,166,961 | 100 | % | |||||||||||||||||
Principal receivables balances contractually delinquent: | |||||||||||||||||||||||||
31 to 60 days | 115,647 | 1.5 | % | 114,430 | 1.4 | % | |||||||||||||||||||
61 to 90 days | 74,923 | 0.9 | 74,700 | 0.9 | |||||||||||||||||||||
91 or more days | 129,309 | 1.6 | 150,425 | 1.9 | |||||||||||||||||||||
Total | $ | 319,879 | 4 | % | $ | 339,555 | 4.2 | % | |||||||||||||||||
Schedule of information on credit card and loan receivables that are considered troubled debt restructurings, which entered into a modification program | ' | ||||||||||||||||||||||||
The following tables provide information on credit card and loan receivables that are considered troubled debt restructurings as described above, which entered into a modification program during the specified periods: | |||||||||||||||||||||||||
Three Months Ended June 30, 2014 | Six Months Ended June 30, 2014 | ||||||||||||||||||||||||
Number of Restructurings | Pre-modification Outstanding | Post-modification Outstanding | Number of Restructurings | Pre-modification Outstanding | Post-modification Outstanding | ||||||||||||||||||||
Balance | Balance | Balance | Balance | ||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||
Troubled debt restructurings – credit card receivables | 28,602 | $ | 28,922 | $ | 28,896 | 65,154 | $ | 64,708 | $ | 64,651 | |||||||||||||||
Three Months Ended June 30, 2013 | Six Months Ended June 30, 2013 | ||||||||||||||||||||||||
Number of Restructurings | Pre-modification Outstanding | Post-modification Outstanding | Number of Restructurings | Pre-modification Outstanding | Post-modification Outstanding | ||||||||||||||||||||
Balance | Balance | Balance | Balance | ||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||
Troubled debt restructurings – credit card receivables | 35,100 | $ | 32,135 | $ | 32,120 | 72,895 | $ | 66,101 | $ | 66,062 | |||||||||||||||
The tables below summarize troubled debt restructurings that have defaulted in the specified periods where the default occurred within 12 months of their modification date: | |||||||||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||
30-Jun-14 | 30-Jun-14 | ||||||||||||||||||||||||
Number of Restructurings | Outstanding Balance | Number of Restructurings | Outstanding Balance | ||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||
Troubled debt restructurings that subsequently defaulted – credit card receivables | 13,770 | $ | 13,831 | 30,498 | $ | 29,972 | |||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||
30-Jun-13 | 30-Jun-13 | ||||||||||||||||||||||||
Number of Restructurings | Outstanding Balance | Number of Restructurings | Outstanding Balance | ||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||
Troubled debt restructurings that subsequently defaulted – credit card receivables | 15,698 | $ | 14,938 | 31,193 | $ | 29,421 | |||||||||||||||||||
Schedule of number of active credit card and loan accounts with balances and the related principal balances outstanding, based upon the age of the active credit card accounts from origination | ' | ||||||||||||||||||||||||
30-Jun-14 | |||||||||||||||||||||||||
Age of Accounts Since Origination | Number of | Percentage of | Total | Percentage of | |||||||||||||||||||||
Active Accounts | Active Accounts | Principal | Principal | ||||||||||||||||||||||
with Balances | with Balances | Receivables Outstanding | Receivables Outstanding | ||||||||||||||||||||||
(In thousands, except percentages) | |||||||||||||||||||||||||
0-12 Months | 4,750 | 27.8 | % | $ | 2,031,774 | 25.1 | % | ||||||||||||||||||
13-24 Months | 2,467 | 14.5 | 1,148,807 | 14.2 | |||||||||||||||||||||
25-36 Months | 1,714 | 10 | 838,573 | 10.4 | |||||||||||||||||||||
37-48 Months | 1,245 | 7.3 | 623,665 | 7.7 | |||||||||||||||||||||
49-60 Months | 988 | 5.8 | 520,428 | 6.4 | |||||||||||||||||||||
Over 60 Months | 5,915 | 34.6 | 2,932,865 | 36.2 | |||||||||||||||||||||
Total | 17,079 | 100 | % | $ | 8,096,112 | 100 | % | ||||||||||||||||||
30-Jun-13 | |||||||||||||||||||||||||
Age of Accounts Since Origination | Number of | Percentage of | Total | Percentage of | |||||||||||||||||||||
Active Accounts | Active Accounts | Principal | Principal | ||||||||||||||||||||||
with Balances | with Balances | Receivables Outstanding | Receivables Outstanding | ||||||||||||||||||||||
(In thousands, except percentages) | |||||||||||||||||||||||||
0-12 Months | 4,162 | 26.3 | % | $ | 1,567,355 | 22.8 | % | ||||||||||||||||||
13-24 Months | 2,132 | 13.5 | 868,822 | 12.7 | |||||||||||||||||||||
25-36 Months | 1,492 | 9.4 | 656,544 | 9.6 | |||||||||||||||||||||
37-48 Months | 1,188 | 7.5 | 570,969 | 8.3 | |||||||||||||||||||||
49-60 Months | 939 | 5.9 | 481,828 | 7 | |||||||||||||||||||||
Over 60 Months | 5,920 | 37.4 | 2,721,437 | 39.6 | |||||||||||||||||||||
Total | 15,833 | 100 | % | $ | 6,866,955 | 100 | % | ||||||||||||||||||
Schedule of composition of obligor credit quality | ' | ||||||||||||||||||||||||
30-Jun-14 | 30-Jun-13 | ||||||||||||||||||||||||
Probability of an Account Becoming 90 or More Days Past | Total | Percentage of | Total | Percentage of | |||||||||||||||||||||
Due or Becoming Charged-off (within the next 12 months) | Principal | Principal | Principal | Principal | |||||||||||||||||||||
Receivables Outstanding | Receivables Outstanding | Receivables Outstanding | Receivables Outstanding | ||||||||||||||||||||||
(In thousands, except percentages) | |||||||||||||||||||||||||
No Score | $ | 144,270 | 1.8 | % | $ | 143,497 | 2.1 | % | |||||||||||||||||
27.1% and higher | 391,005 | 4.8 | 304,557 | 4.4 | |||||||||||||||||||||
17.1% - 27.0% | 748,356 | 9.2 | 618,805 | 9 | |||||||||||||||||||||
12.6% - 17.0% | 886,078 | 11 | 718,748 | 10.5 | |||||||||||||||||||||
3.7% - 12.5% | 3,298,009 | 40.7 | 2,782,404 | 40.5 | |||||||||||||||||||||
1.9% - 3.6% | 1,681,968 | 20.8 | 1,483,852 | 21.6 | |||||||||||||||||||||
Lower than 1.9% | 946,426 | 11.7 | 815,092 | 11.9 | |||||||||||||||||||||
Total | $ | 8,096,112 | 100 | % | $ | 6,866,955 | 100 | % | |||||||||||||||||
Schedule of securitized credit card receivables, delinquencies and net charge-offs | ' | ||||||||||||||||||||||||
June 30, | December 31, | ||||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||
Total credit card receivables – restricted for securitization investors | $ | 6,737,440 | $ | 7,080,014 | |||||||||||||||||||||
Principal amount of credit card receivables – restricted for securitization investors, 90 days or more past due | $ | 109,383 | $ | 131,659 | |||||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||
Net charge-offs of securitized principal | $ | 79,947 | $ | 74,595 | $ | 165,661 | $ | 148,689 | |||||||||||||||||
OTHER_INVESTMENTS_Tables
OTHER INVESTMENTS (Tables) | 6 Months Ended | ||||||||||||||||||||||||||||||||
Jun. 30, 2014 | |||||||||||||||||||||||||||||||||
OTHER INVESTMENTS | ' | ||||||||||||||||||||||||||||||||
Schedule of principal components of other investments, which are carried at fair value | ' | ||||||||||||||||||||||||||||||||
30-Jun-14 | 31-Dec-13 | ||||||||||||||||||||||||||||||||
Amortized Cost | Unrealized Gains | Unrealized Losses | Fair Value | Amortized Cost | Unrealized Gains | Unrealized Losses | Fair Value | ||||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||||||
Restricted cash | $ | 30,548 | $ | — | $ | — | $ | 30,548 | $ | 25,988 | $ | — | $ | — | $ | 25,988 | |||||||||||||||||
Marketable securities | 79,963 | 269 | (1,977 | ) | 78,255 | 77,351 | 62 | (4,180 | ) | 73,233 | |||||||||||||||||||||||
U.S. Treasury bonds | 100,086 | — | — | 100,086 | — | — | — | — | |||||||||||||||||||||||||
Total | $ | 210,597 | $ | 269 | $ | (1,977 | ) | $ | 208,889 | $ | 103,339 | $ | 62 | $ | (4,180 | ) | $ | 99,221 | |||||||||||||||
Schedule of unrealized losses and fair value for investments that were in an unrealized loss position, aggregated by investment category and the length of time that individual securities have been in a continuous loss position | ' | ||||||||||||||||||||||||||||||||
30-Jun-14 | |||||||||||||||||||||||||||||||||
Less than 12 months | 12 Months or Greater | Total | |||||||||||||||||||||||||||||||
Fair Value | Unrealized | Fair Value | Unrealized | Fair Value | Unrealized | ||||||||||||||||||||||||||||
Losses | Losses | Losses | |||||||||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||||||
Marketable securities | $ | 19,810 | $ | (138 | ) | $ | 45,149 | $ | (1,839 | ) | $ | 64,959 | $ | (1,977 | ) | ||||||||||||||||||
31-Dec-13 | |||||||||||||||||||||||||||||||||
Less than 12 months | 12 Months or Greater | Total | |||||||||||||||||||||||||||||||
Fair Value | Unrealized | Fair Value | Unrealized | Fair Value | Unrealized | ||||||||||||||||||||||||||||
Losses | Losses | Losses | |||||||||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||||||
Marketable securities | $ | 39,954 | $ | (2,206 | ) | $ | 25,785 | $ | (1,974 | ) | $ | 65,739 | $ | (4,180 | ) | ||||||||||||||||||
Schedule of marketable securities and U.S. Treasury bonds by contractual maturity date | ' | ||||||||||||||||||||||||||||||||
Amortized | Fair Value | ||||||||||||||||||||||||||||||||
Cost | |||||||||||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||||||
Due in one year or less | $ | 6,674 | $ | 6,623 | |||||||||||||||||||||||||||||
Due after one year through five years | 100,086 | 100,086 | |||||||||||||||||||||||||||||||
Due after five years through ten years | 4,440 | 4,608 | |||||||||||||||||||||||||||||||
Due after ten years | 68,849 | 67,024 | |||||||||||||||||||||||||||||||
Total | $ | 180,049 | $ | 178,341 | |||||||||||||||||||||||||||||
REDEMPTION_SETTLEMENT_ASSETS_T
REDEMPTION SETTLEMENT ASSETS (Tables) | 6 Months Ended | ||||||||||||||||||||||||||||||||
Jun. 30, 2014 | |||||||||||||||||||||||||||||||||
REDEMPTION SETTLEMENT ASSETS | ' | ||||||||||||||||||||||||||||||||
Schedule of Redemption Settlement Assets | ' | ||||||||||||||||||||||||||||||||
30-Jun-14 | 31-Dec-13 | ||||||||||||||||||||||||||||||||
Amortized Cost | Unrealized Gains | Unrealized Losses | Fair Value | Amortized Cost | Unrealized Gains | Unrealized Losses | Fair Value | ||||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 153,794 | $ | — | $ | — | $ | 153,794 | $ | 73,984 | $ | — | $ | — | $ | 73,984 | |||||||||||||||||
Government bonds | 4,788 | — | (1 | ) | 4,787 | — | — | — | — | ||||||||||||||||||||||||
Corporate bonds | 400,741 | 5,844 | (8 | ) | 406,577 | 429,592 | 7,083 | (310 | ) | 436,365 | |||||||||||||||||||||||
Total | $ | 559,323 | $ | 5,844 | $ | (9 | ) | $ | 565,158 | $ | 503,576 | $ | 7,083 | $ | (310 | ) | $ | 510,349 | |||||||||||||||
Schedule of unrealized losses and fair value for investments that were in an unrealized loss position, aggregated by investment category and the length of time that individual securities have been in a continuous loss position | ' | ||||||||||||||||||||||||||||||||
30-Jun-14 | |||||||||||||||||||||||||||||||||
Less than 12 months | 12 Months or Greater | Total | |||||||||||||||||||||||||||||||
Fair Value | Unrealized | Fair Value | Unrealized | Fair Value | Unrealized | ||||||||||||||||||||||||||||
Losses | Losses | Losses | |||||||||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||||||
Government bonds | $ | 4,787 | $ | (1 | ) | $ | — | $ | — | $ | 4,787 | $ | (1 | ) | |||||||||||||||||||
Corporate bonds | 12,818 | (8 | ) | — | — | 12,818 | (8 | ) | |||||||||||||||||||||||||
Total | $ | 17,605 | $ | (9 | ) | $ | — | $ | — | $ | 17,605 | $ | (9 | ) | |||||||||||||||||||
31-Dec-13 | |||||||||||||||||||||||||||||||||
Less than 12 months | 12 Months or Greater | Total | |||||||||||||||||||||||||||||||
Fair Value | Unrealized | Fair Value | Unrealized | Fair Value | Unrealized | ||||||||||||||||||||||||||||
Losses | Losses | Losses | |||||||||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||||||
Corporate bonds | $ | 80,493 | $ | (310 | ) | $ | — | $ | — | $ | 80,493 | $ | (310 | ) | |||||||||||||||||||
Schedule of redemption settlement assets by contractual maturity date | ' | ||||||||||||||||||||||||||||||||
Amortized | Fair Value | ||||||||||||||||||||||||||||||||
Cost | |||||||||||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||||||
Due in one year or less | $ | 156,621 | $ | 157,994 | |||||||||||||||||||||||||||||
Due after one year through five years | 248,908 | 253,370 | |||||||||||||||||||||||||||||||
Total | $ | 405,529 | $ | 411,364 | |||||||||||||||||||||||||||||
INTANGIBLE_ASSETS_AND_GOODWILL1
INTANGIBLE ASSETS AND GOODWILL (Tables) | 6 Months Ended | ||||||||||||||||||||
Jun. 30, 2014 | |||||||||||||||||||||
INTANGIBLE ASSETS AND GOODWILL | ' | ||||||||||||||||||||
Schedule of intangible assets | ' | ||||||||||||||||||||
30-Jun-14 | |||||||||||||||||||||
Gross | Accumulated | Net | Amortization Life and Method | ||||||||||||||||||
Assets | Amortization | ||||||||||||||||||||
(In thousands) | |||||||||||||||||||||
Finite Lived Assets | |||||||||||||||||||||
Customer contracts and lists | $ | 837,270 | $ | (247,017 | ) | $ | 590,253 | 3-12 years—straight line | |||||||||||||
Premium on purchased credit card portfolios | 176,088 | (93,860 | ) | 82,228 | 5-10 years—straight line, accelerated | ||||||||||||||||
Customer database | 161,700 | (131,992 | ) | 29,708 | 4-10 years—straight line | ||||||||||||||||
Collector database | 65,601 | (60,870 | ) | 4,731 | 30 years—15% declining balance | ||||||||||||||||
Tradenames | 85,968 | (22,905 | ) | 63,063 | 3-15 years—straight line | ||||||||||||||||
Purchased data lists | 11,876 | (6,415 | ) | 5,461 | 1-5 years—straight line, accelerated | ||||||||||||||||
Favorable lease | 3,291 | (549 | ) | 2,742 | 10 years—straight line | ||||||||||||||||
Noncompete agreements | 1,300 | (650 | ) | 650 | 3 years—straight line | ||||||||||||||||
$ | 1,343,094 | $ | (564,258 | ) | $ | 778,836 | |||||||||||||||
Indefinite Lived Assets | |||||||||||||||||||||
Tradenames | 12,350 | — | 12,350 | Indefinite life | |||||||||||||||||
Total intangible assets | $ | 1,355,444 | $ | (564,258 | ) | $ | 791,186 | ||||||||||||||
31-Dec-13 | |||||||||||||||||||||
Gross | Accumulated | Net | Amortization Life and Method | ||||||||||||||||||
Assets | Amortization | ||||||||||||||||||||
(In thousands) | |||||||||||||||||||||
Finite Lived Assets | |||||||||||||||||||||
Customer contracts and lists | $ | 440,200 | $ | (187,350 | ) | $ | 252,850 | 3-12 years—straight line | |||||||||||||
Premium on purchased credit card portfolios | 216,041 | (118,006 | ) | 98,035 | 5-10 years—straight line, accelerated | ||||||||||||||||
Customer database | 161,700 | (122,230 | ) | 39,470 | 4-10 years—straight line | ||||||||||||||||
Collector database | 65,895 | (60,711 | ) | 5,184 | 30 years—15% declining balance | ||||||||||||||||
Tradenames | 58,567 | (15,443 | ) | 43,124 | 4-15 years—straight line | ||||||||||||||||
Purchased data lists | 17,567 | (11,959 | ) | 5,608 | 1-5 years—straight line, accelerated | ||||||||||||||||
Favorable lease | 3,291 | (375 | ) | 2,916 | 10 years—straight line | ||||||||||||||||
Noncompete agreements | 1,300 | (433 | ) | 867 | 3 years—straight line | ||||||||||||||||
$ | 964,561 | $ | (516,507 | ) | $ | 448,054 | |||||||||||||||
Indefinite Lived Assets | |||||||||||||||||||||
Tradenames | 12,350 | — | 12,350 | Indefinite life | |||||||||||||||||
Total intangible assets | $ | 976,911 | $ | (516,507 | ) | $ | 460,404 | ||||||||||||||
Schedule of estimated amortization expense related to intangible assets | ' | ||||||||||||||||||||
For Years Ending | |||||||||||||||||||||
December 31, | |||||||||||||||||||||
(In thousands) | |||||||||||||||||||||
2014 (excluding the six months ended June 30, 2014) | $ | 89,393 | |||||||||||||||||||
2015 | 161,487 | ||||||||||||||||||||
2016 | 143,894 | ||||||||||||||||||||
2017 | 109,342 | ||||||||||||||||||||
2018 | 99,217 | ||||||||||||||||||||
2019 & thereafter | 175,503 | ||||||||||||||||||||
Schedule of changes in carrying amount of goodwill | ' | ||||||||||||||||||||
LoyaltyOne® | Epsilon® | Private Label Services and Credit | Corporate/ | Total | |||||||||||||||||
Other | |||||||||||||||||||||
(In thousands) | |||||||||||||||||||||
December 31, 2013 | $ | 232,449 | $ | 1,241,522 | $ | 261,732 | $ | — | $ | 1,735,703 | |||||||||||
Goodwill acquired during the year | 565,015 | — | — | — | 565,015 | ||||||||||||||||
Effects of foreign currency translation | (155 | ) | 742 | — | — | 587 | |||||||||||||||
June 30, 2014 | $ | 797,309 | $ | 1,242,264 | $ | 261,732 | $ | — | $ | 2,301,305 |
DEBT_Tables
DEBT (Tables) | 6 Months Ended | ||||||||||||||||
Jun. 30, 2014 | |||||||||||||||||
DEBT | ' | ||||||||||||||||
Schedule of debt | ' | ||||||||||||||||
Description | June 30, | December 31, | Maturity | Interest Rate | |||||||||||||
2014 | 2013 | ||||||||||||||||
(Dollars in thousands) | |||||||||||||||||
Long-term and other debt: | |||||||||||||||||
2013 credit facility | $ | 720,000 | $ | 336,000 | Jul-18 | -1 | |||||||||||
2013 term loan | 1,218,750 | 1,234,688 | Jul-18 | -1 | |||||||||||||
BrandLoyalty credit facility | 125,747 | — | Dec-15 | -2 | |||||||||||||
Convertible senior notes due 2014 | — | 333,082 | — | — | |||||||||||||
Senior notes due 2017 | 396,916 | 396,511 | Dec-17 | 5.25% | |||||||||||||
Senior notes due 2020 | 500,000 | 500,000 | Apr-20 | 6.38% | |||||||||||||
Total long-term and other debt | 2,961,413 | 2,800,281 | |||||||||||||||
Less: current portion | (65,480 | ) | (364,489 | ) | |||||||||||||
Long-term portion | $ | 2,895,933 | $ | 2,435,792 | |||||||||||||
Deposits: | |||||||||||||||||
Certificates of deposit | $ | 2,437,647 | $ | 2,486,533 | Various – July 2014 – January 2021 | 0.15% to 3.30% | |||||||||||
Money market deposits | 572,378 | 329,828 | On demand | 0.01% to 0.14% | |||||||||||||
Total deposits | 3,010,025 | 2,816,361 | |||||||||||||||
Less: current portion | (1,752,641 | ) | (1,544,059 | ) | |||||||||||||
Long-term portion | $ | 1,257,384 | $ | 1,272,302 | |||||||||||||
Non-recourse borrowings of consolidated securitization entities: | |||||||||||||||||
Fixed rate asset-backed term note securities | $ | 3,001,916 | $ | 3,001,916 | Various – October 2014 – June 2019 | 0.91% to 6.75% | |||||||||||
Floating rate asset-backed term note securities | 450,000 | — | Feb-16 | -3 | |||||||||||||
Conduit asset-backed securities | 860,000 | 1,590,000 | Various – September 2015 – May 2016 | -4 | |||||||||||||
Total non-recourse borrowings of consolidated securitization entities | 4,311,916 | 4,591,916 | |||||||||||||||
Less: current portion | (643,750 | ) | (1,025,000 | ) | |||||||||||||
Long-term portion | $ | 3,668,166 | $ | 3,566,916 | |||||||||||||
(1) The interest rate is based upon the London Interbank Offered Rate ("LIBOR") plus an applicable margin. At June 30, 2014, the weighted average interest rate was 1.90% for both the 2013 Credit Facility and 2013 Term Loan. | |||||||||||||||||
(2) The interest rate is based upon the Euro Interbank Offered Rate ("EURIBOR") plus an applicable margin. At June 30, 2014, the weighted average interest rate was 3.61%. | |||||||||||||||||
(3) The interest rate is based upon LIBOR plus an applicable margin. At June 30, 2014, the interest rate was 0.53%. | |||||||||||||||||
(4) The interest rate is based upon LIBOR or the asset-backed commercial paper costs of each individual conduit provider plus an applicable margin. At June 30, 2014, the interest rates ranged from 1.05% to 1.70%. | |||||||||||||||||
Schedule of interest expense on convertible senior notes | ' | ||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||
June 30, | June 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
(In thousands, except percentages) | |||||||||||||||||
Interest expense calculated on contractual interest rate | $ | 1,920 | $ | 7,471 | $ | 5,630 | $ | 14,999 | |||||||||
Amortization of discount on liability component | 4,036 | 22,669 | 11,888 | 44,719 | |||||||||||||
Total interest expense on convertible senior notes | $ | 5,956 | $ | 30,140 | $ | 17,518 | $ | 59,718 | |||||||||
Effective interest rate (annualized) | 14.2 | % | 11 | % | 14.2 | % | 11 | % | |||||||||
DEFERRED_REVENUE_Tables
DEFERRED REVENUE (Tables) | 6 Months Ended | ||||||||||||
Jun. 30, 2014 | |||||||||||||
DEFERRED REVENUE | ' | ||||||||||||
Schedule of reconciliation of deferred revenue for the AIR MILES Reward Program | ' | ||||||||||||
Deferred Revenue | |||||||||||||
Service | Redemption | Total | |||||||||||
(In thousands) | |||||||||||||
December 31, 2013 | $ | 346,631 | $ | 790,555 | $ | 1,137,186 | |||||||
Cash proceeds | 96,377 | 211,608 | 307,985 | ||||||||||
Revenue recognized | (99,975 | ) | (248,940 | ) | (348,915 | ) | |||||||
Other | — | (257 | ) | (257 | ) | ||||||||
Effects of foreign currency translation | (1,640 | ) | (4,530 | ) | (6,170 | ) | |||||||
June 30, 2014 | $ | 341,393 | $ | 748,436 | $ | 1,089,829 | |||||||
Amounts recognized in the unaudited condensed consolidated balance sheets: | |||||||||||||
Current liabilities | $ | 174,686 | $ | 748,436 | $ | 923,122 | |||||||
Non-current liabilities | $ | 166,707 | $ | — | $ | 166,707 | |||||||
REDEEMABLE_NONCONTROLLING_INTE1
REDEEMABLE NON-CONTROLLING INTEREST (Tables) | 6 Months Ended | ||||
Jun. 30, 2014 | |||||
REDEEMABLE NON-CONTROLLING INTEREST | ' | ||||
Schedule of reconciliation of the changes in the Redeemable noncontrolling interest | ' | ||||
Redeemable | |||||
Non-Controlling Interest | |||||
(In thousands) | |||||
Balance at January 2, 2014 | $ | 341,907 | |||
Net income attributable to non-controlling interest | 97 | ||||
Other comprehensive income attributable to non-controlling interest | 166 | ||||
Foreign currency translation adjustments | 517 | ||||
Balance at June 30, 2014 | $ | 342,687 |
STOCKHOLDERS_EQUITY_Tables
STOCKHOLDERS' EQUITY (Tables) | 6 Months Ended | |||||||||||||||
Jun. 30, 2014 | ||||||||||||||||
STOCKHOLDERS' EQUITY | ' | |||||||||||||||
Schedule of stock-based compensation expense | ' | |||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
(In thousands) | ||||||||||||||||
Cost of operations | $ | 11,230 | $ | 10,600 | $ | 22,212 | $ | 19,542 | ||||||||
General and administrative | 4,643 | 4,391 | 9,285 | 8,473 | ||||||||||||
Total | $ | 15,873 | $ | 14,991 | $ | 31,497 | $ | 28,015 | ||||||||
ACCUMULATED_OTHER_COMPREHENSIV1
ACCUMULATED OTHER COMPREHENSIVE INCOME (Tables) | 6 Months Ended | |||||||||||||
Jun. 30, 2014 | ||||||||||||||
ACCUMULATED OTHER COMPREHENSIVE INCOME | ' | |||||||||||||
Schedule of changes in each component of accumulated comprehensive income (loss), net of tax effects | ' | |||||||||||||
Net | Foreign Currency Translation Adjustments(1) | Accumulated | ||||||||||||
Three Months Ended June 30, 2014 | Unrealized | Other Comprehensive Income (Loss) | ||||||||||||
Gains (Losses) | ||||||||||||||
on Securities | ||||||||||||||
(In thousands) | ||||||||||||||
Balance as of March 31, 2014 | $ | 4,674 | $ | (13,083 | ) | $ | (8,409 | ) | ||||||
Changes in other comprehensive income (loss) | 71 | (5,857 | ) | (5,786 | ) | |||||||||
Balance as of June 30, 2014 | $ | 4,745 | $ | (18,940 | ) | $ | (14,195 | ) | ||||||
Three Months Ended June 30, 2013 | Net | Foreign Currency Translation Adjustments(1) | Accumulated | |||||||||||
Unrealized | Other Comprehensive Income (Loss) | |||||||||||||
Gains (Losses) | ||||||||||||||
on Securities | ||||||||||||||
(In thousands) | ||||||||||||||
Balance as of March 31, 2013 | $ | 11,417 | $ | (28,855 | ) | $ | (17,438 | ) | ||||||
Changes in other comprehensive income (loss) | (6,550 | ) | 4,938 | (1,612 | ) | |||||||||
Balance as of June 30, 2013 | $ | 4,867 | $ | (23,917 | ) | $ | (19,050 | ) | ||||||
Six Months Ended June 30, 2014 | Net | Foreign Currency Translation Adjustments(1) | Accumulated | |||||||||||
Unrealized | Other Comprehensive Income (Loss) | |||||||||||||
Gains (Losses) | ||||||||||||||
on Securities | ||||||||||||||
(In thousands) | ||||||||||||||
Balance as of December 31, 2013 | $ | 4,189 | $ | (22,416 | ) | $ | (18,227 | ) | ||||||
Changes in other comprehensive income (loss) | 556 | 3,476 | 4,032 | |||||||||||
Balance as of June 30, 2014 | $ | 4,745 | $ | (18,940 | ) | $ | (14,195 | ) | ||||||
Six Months Ended June 30, 2013 | Net | Foreign Currency Translation Adjustments(1) | Accumulated | |||||||||||
Unrealized | Other Comprehensive Income (Loss) | |||||||||||||
Gains (Losses) | ||||||||||||||
on Securities | ||||||||||||||
(In thousands) | ||||||||||||||
Balance as of December 31, 2012 | $ | 10,321 | $ | (32,182 | ) | $ | (21,861 | ) | ||||||
Changes in other comprehensive income (loss) | (5,454 | ) | 8,265 | 2,811 | ||||||||||
Balance as of June 30, 2013 | $ | 4,867 | $ | (23,917 | ) | $ | (19,050 | ) | ||||||
-1 | Primarily related to the impact of changes in the Canadian dollar and Euro exchange rates for the three and six months ended June 30, 2014 and to the impact of changes in the Canadian dollar exchange rate for the three and six months ended June 30, 2013. |
FINANCIAL_INSTRUMENTS_Tables
FINANCIAL INSTRUMENTS (Tables) | 6 Months Ended | |||||||||||||||||
Jun. 30, 2014 | ||||||||||||||||||
FINANCIAL INSTRUMENTS | ' | |||||||||||||||||
Schedule of estimated fair value of Company's financial instruments | ' | |||||||||||||||||
30-Jun-14 | 31-Dec-13 | |||||||||||||||||
Carrying | Fair | Carrying | Fair | |||||||||||||||
Amount | Value | Amount | Value | |||||||||||||||
(In thousands) | ||||||||||||||||||
Financial assets | ||||||||||||||||||
Cash and cash equivalents | $ | 631,167 | $ | 631,167 | $ | 969,822 | $ | 969,822 | ||||||||||
Trade receivables, net | 394,681 | 394,681 | 394,822 | 394,822 | ||||||||||||||
Credit card and loan receivables, net | 8,050,314 | 8,050,314 | 8,069,713 | 8,069,713 | ||||||||||||||
Loan receivables held for sale | 63,425 | 63,425 | 62,082 | 62,082 | ||||||||||||||
Redemption settlement assets, restricted | 565,158 | 565,158 | 510,349 | 510,349 | ||||||||||||||
Cash collateral, restricted | 34,710 | 34,710 | 34,124 | 34,124 | ||||||||||||||
Other investments | 208,889 | 208,889 | 99,221 | 99,221 | ||||||||||||||
Financial liabilities | ||||||||||||||||||
Accounts payable | 320,678 | 320,678 | 210,019 | 210,019 | ||||||||||||||
Deposits | 3,010,025 | 3,038,051 | 2,816,361 | 2,836,352 | ||||||||||||||
Non-recourse borrowings of consolidated securitization entities | 4,311,916 | 4,357,684 | 4,591,916 | 4,618,205 | ||||||||||||||
Long-term and other debt | 2,961,413 | 3,007,498 | 2,800,281 | 4,404,500 | ||||||||||||||
Derivative instruments | 465 | 465 | — | — | ||||||||||||||
Contingent liability | 249,067 | 249,067 | — | — | ||||||||||||||
Schedule of assets and liabilities carried at fair value measured on recurring basis | ' | |||||||||||||||||
Fair Value Measurements at | ||||||||||||||||||
June 30, 2014 Using | ||||||||||||||||||
Balance at | Level 1 | Level 2 | Level 3 | |||||||||||||||
June 30, | ||||||||||||||||||
2014 | ||||||||||||||||||
(In thousands) | ||||||||||||||||||
Government bonds (1) | $ | 4,787 | $ | — | $ | 4,787 | $ | — | ||||||||||
Corporate bonds (1) | 406,577 | — | 406,577 | — | ||||||||||||||
Cash collateral, restricted | 34,710 | — | — | 34,710 | ||||||||||||||
Other investments (2) | 208,889 | 135,659 | 73,230 | — | ||||||||||||||
Total assets measured at fair value | $ | 654,963 | $ | 135,659 | $ | 484,594 | $ | 34,710 | ||||||||||
Derivative instruments (3) | $ | 465 | $ | — | $ | 465 | $ | — | ||||||||||
Contingent liability (4) | 249,067 | — | — | 249,067 | ||||||||||||||
Total liabilities measured at fair value | $ | 249,532 | $ | — | $ | 465 | $ | 249,067 | ||||||||||
Fair Value Measurements at | ||||||||||||||||||
December 31, 2013 Using | ||||||||||||||||||
Balance at | Level 1 | Level 2 | Level 3 | |||||||||||||||
December 31, | ||||||||||||||||||
2013 | ||||||||||||||||||
(In thousands) | ||||||||||||||||||
Corporate bonds (1) | $ | 436,365 | $ | — | $ | 436,365 | $ | — | ||||||||||
Cash collateral, restricted | 34,124 | — | — | 34,124 | ||||||||||||||
Other investments (2) | 99,221 | 30,888 | 68,333 | — | ||||||||||||||
Total assets measured at fair value | $ | 569,710 | $ | 30,888 | $ | 504,698 | $ | 34,124 | ||||||||||
-1 | Amounts are included in redemption settlement assets in the unaudited condensed consolidated balance sheets. | |||||||||||||||||
-2 | Amounts are included in other current assets and other assets in the unaudited condensed consolidated balance sheets. | |||||||||||||||||
-3 | Amount is included in other current liabilities and other liabilities in the unaudited condensed consolidated balance sheets. | |||||||||||||||||
-4 | Amount is included in accrued expenses in the unaudited condensed consolidated balance sheets. | |||||||||||||||||
Summary of changes in fair value of the Company's asset and liability measured on a recurring basis using significant unobservable inputs (Level 3) | ' | |||||||||||||||||
Cash Collateral, Restricted | ||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||
June 30, | June 30, | |||||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||||
(In thousands) | ||||||||||||||||||
Balance at beginning of period | $ | 34,425 | $ | 63,140 | $ | 34,124 | $ | 62,660 | ||||||||||
Total gains (realized or unrealized): | ||||||||||||||||||
Included in earnings | 285 | 311 | 586 | 791 | ||||||||||||||
Purchases | — | — | — | — | ||||||||||||||
Sales | — | — | — | — | ||||||||||||||
Issuances | — | — | — | — | ||||||||||||||
Settlements | — | (17,500 | ) | — | (17,500 | ) | ||||||||||||
Transfers in or out of Level 3 | — | — | — | — | ||||||||||||||
Balance at end of period | $ | 34,710 | $ | 45,951 | $ | 34,710 | $ | 45,951 | ||||||||||
Gains for the period included in earnings related to assets still held at end of period | $ | 285 | $ | 311 | $ | 586 | $ | 791 | ||||||||||
Contingent Liability | ||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||
June 30, | June 30, | |||||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||||
(In thousands) | ||||||||||||||||||
Balance at beginning of period | $ | 250,508 | $ | — | $ | — | $ | — | ||||||||||
Total gains or losses (realized or unrealized): | ||||||||||||||||||
Included in earnings | — | — | — | — | ||||||||||||||
Purchases | — | — | 248,702 | — | ||||||||||||||
Sales | — | — | — | — | ||||||||||||||
Issuances | — | — | — | — | ||||||||||||||
Settlements | — | — | — | — | ||||||||||||||
Foreign currency transaction adjustments | (1,441 | ) | — | 365 | — | |||||||||||||
Transfers in or out of Level 3 | — | — | — | — | ||||||||||||||
Balance at end of period | $ | 249,067 | $ | — | $ | 249,067 | $ | — | ||||||||||
Gains (losses) for the period included in earnings related to liability still held at end of period | $ | 1,441 | $ | — | $ | (365 | ) | $ | — | |||||||||
Schedule of assets and liabilities disclosed but not carried at fair value | ' | |||||||||||||||||
Fair Value Measurements at | ||||||||||||||||||
30-Jun-14 | ||||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||||||
(In thousands) | ||||||||||||||||||
Financial assets | ||||||||||||||||||
Cash and cash equivalents | $ | 631,167 | $ | 631,167 | $ | — | $ | — | ||||||||||
Credit card and loan receivables, net | 8,050,314 | — | — | 8,050,314 | ||||||||||||||
Loan receivables held for sale | 63,425 | — | — | 63,425 | ||||||||||||||
Total | $ | 8,744,906 | $ | 631,167 | $ | — | $ | 8,113,739 | ||||||||||
Financial liabilities | ||||||||||||||||||
Deposits | $ | 3,038,051 | $ | — | $ | 3,038,051 | $ | — | ||||||||||
Non-recourse borrowings of consolidated securitization entities | 4,357,684 | — | 4,357,684 | — | ||||||||||||||
Long-term and other debt | 3,007,498 | — | 3,007,498 | — | ||||||||||||||
Total | $ | 10,403,233 | $ | — | $ | 10,403,233 | $ | — | ||||||||||
Fair Value Measurements at | ||||||||||||||||||
31-Dec-13 | ||||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||||||
(In thousands) | ||||||||||||||||||
Financial assets | ||||||||||||||||||
Cash and cash equivalents | $ | 969,822 | $ | 969,822 | $ | — | $ | — | ||||||||||
Credit card and loan receivables, net | 8,069,713 | — | — | 8,069,713 | ||||||||||||||
Loan receivables held for sale | 62,082 | — | — | 62,082 | ||||||||||||||
Total | $ | 9,101,617 | $ | 969,822 | $ | — | $ | 8,131,795 | ||||||||||
Financial liabilities | ||||||||||||||||||
Deposits | $ | 2,836,352 | $ | — | $ | 2,836,352 | $ | — | ||||||||||
Non-recourse borrowings of consolidated securitization entities | 4,618,205 | — | 4,618,205 | — | ||||||||||||||
Long-term and other debt | 4,404,500 | — | 4,404,500 | — | ||||||||||||||
Total | $ | 11,859,057 | $ | — | $ | 11,859,057 | $ | — | ||||||||||
SEGMENT_INFORMATION_Tables
SEGMENT INFORMATION (Tables) | 6 Months Ended | |||||||||||||||||||||||||
Jun. 30, 2014 | ||||||||||||||||||||||||||
SEGMENT INFORMATION | ' | |||||||||||||||||||||||||
Schedule of segment information | ' | |||||||||||||||||||||||||
Three Months Ended June 30, 2014 | LoyaltyOne | Epsilon | Private Label | Corporate/ Other | Eliminations | Total | ||||||||||||||||||||
Services and | ||||||||||||||||||||||||||
Credit | ||||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||
Revenues | $ | 355,583 | $ | 357,088 | $ | 557,258 | $ | 187 | $ | (4,958 | ) | $ | 1,265,158 | |||||||||||||
Income (loss) before income taxes | 60,056 | 25,598 | 194,891 | (60,937 | ) | — | 219,608 | |||||||||||||||||||
Interest expense, net | 2,082 | (6 | ) | 29,785 | 31,071 | — | 62,932 | |||||||||||||||||||
Operating income (loss) | 62,138 | 25,592 | 224,676 | (29,866 | ) | — | 282,540 | |||||||||||||||||||
Depreciation and amortization | 22,723 | 36,838 | 12,981 | 1,753 | — | 74,295 | ||||||||||||||||||||
Stock compensation expense | 2,705 | 5,262 | 3,263 | 4,643 | — | 15,873 | ||||||||||||||||||||
Adjusted EBITDA (1) | 87,566 | 67,692 | 240,920 | (23,470 | ) | — | 372,708 | |||||||||||||||||||
Less: Securitization funding costs | — | — | 22,300 | — | — | 22,300 | ||||||||||||||||||||
Less: Interest expense on deposits | — | — | 8,228 | — | — | 8,228 | ||||||||||||||||||||
Less: Adjusted EBITDA attributable to non-controlling interest | 10,214 | — | — | — | — | 10,214 | ||||||||||||||||||||
Adjusted EBITDA, net (1) | $ | 77,352 | $ | 67,692 | $ | 210,392 | $ | (23,470 | ) | $ | — | $ | 331,966 | |||||||||||||
Three Months Ended June 30, 2013 | LoyaltyOne | Epsilon | Private Label | Corporate/ Other | Eliminations | Total | ||||||||||||||||||||
Services and | ||||||||||||||||||||||||||
Credit | ||||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||
Revenues | $ | 220,137 | $ | 331,841 | $ | 479,875 | $ | — | $ | (3,761 | ) | $ | 1,028,092 | |||||||||||||
Income (loss) before income taxes | 59,177 | 24,166 | 184,450 | (82,079 | ) | — | 185,714 | |||||||||||||||||||
Interest expense, net | (139 | ) | (23 | ) | 31,173 | 52,455 | — | 83,466 | ||||||||||||||||||
Operating income (loss) | 59,038 | 24,143 | 215,623 | (29,624 | ) | — | 269,180 | |||||||||||||||||||
Depreciation and amortization | 4,337 | 34,708 | 13,162 | 1,369 | — | 53,576 | ||||||||||||||||||||
Stock compensation expense | 2,800 | 4,742 | 3,059 | 4,390 | — | 14,991 | ||||||||||||||||||||
Adjusted EBITDA (1) | 66,175 | 63,593 | 231,844 | (23,865 | ) | — | 337,747 | |||||||||||||||||||
Less: Securitization funding costs | — | — | 24,694 | — | — | 24,694 | ||||||||||||||||||||
Less: Interest expense on deposits | — | — | 7,002 | — | — | 7,002 | ||||||||||||||||||||
Less: Adjusted EBITDA attributable to non-controlling interest | — | — | — | — | — | — | ||||||||||||||||||||
Adjusted EBITDA, net (1) | $ | 66,175 | $ | 63,593 | $ | 200,148 | $ | (23,865 | ) | $ | — | $ | 306,051 | |||||||||||||
Six Months Ended June 30, 2014 | LoyaltyOne | Epsilon | Private Label | Corporate/ Other | Eliminations | Total | ||||||||||||||||||||
Services and | ||||||||||||||||||||||||||
Credit | ||||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||
Revenues | $ | 684,553 | $ | 704,557 | $ | 1,119,054 | $ | 228 | $ | (10,334 | ) | $ | 2,498,058 | |||||||||||||
Income (loss) before income taxes | 104,432 | 38,745 | 423,246 | (132,770 | ) | — | 433,653 | |||||||||||||||||||
Interest expense, net | 3,644 | (19 | ) | 60,191 | 66,863 | — | 130,679 | |||||||||||||||||||
Operating income (loss) | 108,076 | 38,726 | 483,437 | (65,907 | ) | — | 564,332 | |||||||||||||||||||
Depreciation and amortization | 44,972 | 73,915 | 25,674 | 3,807 | — | 148,368 | ||||||||||||||||||||
Stock compensation expense | 5,489 | 10,253 | 6,470 | 9,285 | — | 31,497 | ||||||||||||||||||||
Adjusted EBITDA (1) | 158,537 | 122,894 | 515,581 | (52,815 | ) | — | 744,197 | |||||||||||||||||||
Less: Securitization funding costs | — | — | 45,211 | — | — | 45,211 | ||||||||||||||||||||
Less: Interest expense on deposits | — | — | 16,462 | — | — | 16,462 | ||||||||||||||||||||
Less: Adjusted EBITDA attributable to non-controlling interest | 16,003 | — | — | — | — | 16,003 | ||||||||||||||||||||
Adjusted EBITDA, net (1) | $ | 142,534 | $ | 122,894 | $ | 453,908 | $ | (52,815 | ) | $ | — | $ | 666,521 | |||||||||||||
Six Months Ended June 30, 2013 | LoyaltyOne | Epsilon | Private Label | Corporate/ Other | Eliminations | Total | ||||||||||||||||||||
Services and | ||||||||||||||||||||||||||
Credit | ||||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||
Revenues | $ | 461,044 | $ | 649,754 | $ | 977,223 | $ | — | $ | (6,492 | ) | $ | 2,081,529 | |||||||||||||
Income (loss) before income taxes | 115,320 | 40,392 | 395,817 | (157,134 | ) | — | 394,395 | |||||||||||||||||||
Interest expense, net | (420 | ) | (39 | ) | 62,227 | 104,242 | — | 166,010 | ||||||||||||||||||
Operating income (loss) | 114,900 | 40,353 | 458,044 | (52,892 | ) | — | 560,405 | |||||||||||||||||||
Depreciation and amortization | 8,659 | 68,928 | 26,496 | 2,343 | — | 106,426 | ||||||||||||||||||||
Stock compensation expense | 5,219 | 8,729 | 5,595 | 8,472 | — | 28,015 | ||||||||||||||||||||
Adjusted EBITDA (1) | 128,778 | 118,010 | 490,135 | (42,077 | ) | — | 694,846 | |||||||||||||||||||
Less: Securitization funding costs | — | — | 49,179 | — | — | 49,179 | ||||||||||||||||||||
Less: Interest expense on deposits | — | — | 14,009 | — | — | 14,009 | ||||||||||||||||||||
Less: Adjusted EBITDA attributable to non-controlling interest | — | — | — | — | — | — | ||||||||||||||||||||
Adjusted EBITDA, net (1) | $ | 128,778 | $ | 118,010 | $ | 426,947 | $ | (42,077 | ) | $ | — | $ | 631,658 | |||||||||||||
-1 | Adjusted EBITDA is a non-GAAP financial measure equal to net income, the most directly comparable financial measure based on GAAP, plus stock compensation expense, provision for income taxes, interest expense, net, depreciation and other amortization and amortization of purchased intangibles. Adjusted EBITDA, net is also a non-GAAP financial measure equal to adjusted EBITDA less securitization funding costs, interest expense on deposits and adjusted EBITDA attributable to the non-controlling interest. Adjusted EBITDA and adjusted EBITDA, net are presented in accordance with ASC 280, "Segment Reporting," as they are the primary performance metrics utilized to assess performance of the segments. |
EARNINGS_PER_SHARE_Details
EARNINGS PER SHARE (Details) (USD $) | 3 Months Ended | 6 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 |
Numerator: | ' | ' | ' | ' |
Net income attributable to Alliance Data Systems Corporation stockholders | $137,444 | $116,440 | $274,839 | $245,419 |
Denominator: | ' | ' | ' | ' |
Weighted average shares, basic | 54,154,000 | 49,123,000 | 53,600,000 | 49,444,000 |
Weighted average effect of dilutive securities: | ' | ' | ' | ' |
Shares from assumed conversion of convertible senior notes | 2,715,000 | 10,611,000 | 4,224,000 | 10,372,000 |
Shares from assumed conversion of convertible note warrants | 5,247,000 | 7,818,000 | 6,009,000 | 7,336,000 |
Net effect of dilutive stock options and unvested restricted stock (in shares) | 521,000 | 615,000 | 521,000 | 594,000 |
Denominator for diluted calculation (in shares) | 62,637,000 | 68,167,000 | 64,354,000 | 67,746,000 |
Net income attributable to Alliance Data Systems Corporation stockholders per share: | ' | ' | ' | ' |
Basic (in dollars per share) | $2.54 | $2.37 | $5.13 | $4.96 |
Diluted (in dollars per share) | $2.19 | $1.71 | $4.27 | $3.62 |
Prepaid forward contracts to purchase common stock that are to be delivered over a settlement period in 2014 (in shares) | ' | ' | 1,857,400 | ' |
ACQUISITION_Details
ACQUISITION (Details) (USD $) | 6 Months Ended | 0 Months Ended | 6 Months Ended | |
Jun. 30, 2014 | Dec. 31, 2013 | Jan. 02, 2014 | Jun. 30, 2014 | |
Brand Loyalty | Brand Loyalty | |||
Acquisition | ' | ' | ' | ' |
Ownership interest acquired (as a percent) | ' | ' | 60.00% | ' |
Initial cash consideration | $259,514,000 | ' | $259,500,000 | ' |
Contingent liability | ' | ' | 248,700,000 | ' |
Fair values of assets acquired and liabilities assumed in acquisition | ' | ' | ' | ' |
Current assets, net of cash acquired | ' | ' | 246,769,000 | ' |
Deferred tax assets | ' | ' | 3,509,000 | ' |
Property and equipment | ' | ' | 19,719,000 | ' |
Other non-current assets | ' | ' | 3,994,000 | ' |
Intangible assets | ' | ' | 423,832,000 | ' |
Goodwill | 2,301,305,000 | 1,735,703,000 | 565,015,000 | ' |
Total assets acquired | ' | ' | 1,262,838,000 | ' |
Current liabilities | ' | ' | 146,559,000 | ' |
Current portion of long-term debt | ' | ' | 34,180,000 | ' |
Deferred tax liability | ' | ' | 105,512,000 | ' |
Long-term debt (net of current portion) | ' | ' | 126,323,000 | ' |
Other liabilities | ' | ' | 142,000 | ' |
Total liabilities assumed | ' | ' | 412,716,000 | ' |
Redeemable noncontrolling interest | ' | ' | 341,907,000 | ' |
Net assets acquired | ' | ' | $508,215,000 | ' |
Ownership interest that may be acquired over a four-year period (as a percent) | ' | ' | ' | 40.00% |
Period over which remaining ownership interest may be acquired | ' | ' | ' | '4 years |
Ownership interest that may be acquired each year (as a percent) | ' | ' | ' | 10.00% |
Additional interest which the entity must acquire if specified annual earnings targets are met (as a percent) | ' | ' | ' | 10.00% |
Ownership interest for which sellers have a put option to sell if specified annual earnings targets are not met (as a percent) | ' | ' | ' | 10.00% |
CREDIT_CARD_AND_LOAN_RECEIVABL2
CREDIT CARD AND LOAN RECEIVABLES (Details) (USD $) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Dec. 31, 2013 | |
CREDIT CARD AND LOAN RECEIVABLES | ' | ' | ' | ' | ' |
Principal receivables | $8,096,112,000 | ' | $8,096,112,000 | ' | $8,166,961,000 |
Billed and accrued finance charges | 336,440,000 | ' | 336,440,000 | ' | 343,521,000 |
Other credit card and loan receivables | 101,342,000 | ' | 101,342,000 | ' | 62,400,000 |
Total credit card and loan receivables | 8,533,894,000 | ' | 8,533,894,000 | ' | 8,572,882,000 |
Less credit card receivables - restricted for securitization investors | 6,737,440,000 | ' | 6,737,440,000 | ' | 7,080,014,000 |
Other credit card and loan receivables | 1,796,454,000 | ' | 1,796,454,000 | ' | 1,492,868,000 |
Allowance for Loan Loss | ' | ' | ' | ' | ' |
The period over which the Company analyzes actual charge-offs | ' | ' | '3 months | ' | ' |
Number of days a loan is contractually past due before resulting in charge-off | ' | ' | '180 days | ' | ' |
Number of days after notification of creditor's bankruptcy or death when an account is charged-off | ' | ' | '60 days | ' | ' |
Actual charge-offs for unpaid interest and fees | 68,500,000 | 55,000,000 | 144,000,000 | 113,700,000 | ' |
Balance at beginning of period | 482,658,000 | 471,016,000 | 503,169,000 | 481,958,000 | ' |
Provision for loan loss | 96,652,000 | 57,796,000 | 167,234,000 | 124,444,000 | ' |
Change in estimate for uncollectible unpaid interest and fees | -5,000,000 | ' | 500,000 | ' | ' |
Recoveries | 38,066,000 | 27,163,000 | 76,474,000 | 57,948,000 | ' |
Principal charge-offs | -128,796,000 | -107,579,000 | -263,797,000 | -215,954,000 | ' |
Balance at end of period | 483,580,000 | 448,396,000 | 483,580,000 | 448,396,000 | ' |
Period beyond which interest and fee income accrue on credit card accounts | ' | ' | '90 days | ' | ' |
Period for which interest and fee income accrue until balance, interest and fees paid or charged off | ' | ' | '180 days | ' | ' |
Period an account becomes past due before a proprietary collection scoring algorithm automatically scores the risk of an account becoming further delinquent | ' | ' | '30 days | ' | ' |
Credit card and loan receivables portfolio delinquency trend | ' | ' | ' | ' | ' |
Receivables outstanding - principal | 8,096,112,000 | ' | 8,096,112,000 | ' | 8,166,961,000 |
Principal receivables balances contractually delinquent: | ' | ' | ' | ' | ' |
31 to 60 days | 115,647,000 | ' | 115,647,000 | ' | 114,430,000 |
61 to 90 days | 74,923,000 | ' | 74,923,000 | ' | 74,700,000 |
91 or more days | 129,309,000 | ' | 129,309,000 | ' | 150,425,000 |
Total | 319,879,000 | ' | 319,879,000 | ' | 339,555,000 |
Percentage Principal receivables balances contractually delinquent : | ' | ' | ' | ' | ' |
Receivables outstanding - principal (as a percent) | 100.00% | ' | 100.00% | ' | 100.00% |
Principal receivables balances contractually delinquent: | ' | ' | ' | ' | ' |
31 to 60 days (as a percent) | 1.50% | ' | 1.50% | ' | 1.40% |
61 to 90 days (as a percent) | 0.90% | ' | 0.90% | ' | 0.90% |
91 or more days (as a percent) | 1.60% | ' | 1.60% | ' | 1.90% |
Total (as a percent) | 4.00% | ' | 4.00% | ' | 4.20% |
Modified Credit Card and Loan Receivables | ' | ' | ' | ' | ' |
Maximum period of time temporary programs' concessions remain in place | ' | ' | '12 months | ' | ' |
Impaired credit card and loan receivables | 110,300,000 | ' | 110,300,000 | ' | 118,100,000 |
Allowance for loan loss on impaired credit card and loan receivables | 30,400,000 | ' | 30,400,000 | ' | 33,900,000 |
Maximum percentage of credit card and loan receivables to total portfolio | 2.00% | ' | 2.00% | ' | 2.00% |
Average recorded investment in impaired credit card and loan receivables | 112,400,000 | 117,500,000 | 114,300,000 | 117,500,000 | ' |
Interest income on modified credit card and loan receivables | 3,100,000 | 3,200,000 | 6,300,000 | 6,300,000 | ' |
Troubled debt restructurings - credit card receivables | ' | ' | ' | ' | ' |
Modifications related to troubled debt restructurings within credit card and loan receivables | ' | ' | ' | ' | ' |
Number of Restructurings | 28,602 | 35,100 | 65,154 | 72,895 | ' |
Pre-modification Outstanding Balance | 28,922,000 | 32,135,000 | 64,708,000 | 66,101,000 | ' |
Post-modification Outstanding Balance | 28,896,000 | 32,120,000 | 64,651,000 | 66,062,000 | ' |
Troubled debt restructurings that subsequently defaulted - credit card receivables | ' | ' | ' | ' | ' |
Modifications related to troubled debt restructurings within credit card and loan receivables | ' | ' | ' | ' | ' |
Number of Restructurings | 13,770 | 15,698 | 30,498 | 31,193 | ' |
Outstanding Balance | $13,831,000 | $14,938,000 | $29,972,000 | $29,421,000 | ' |
CREDIT_CARD_AND_LOAN_RECEIVABL3
CREDIT CARD AND LOAN RECEIVABLES (Details 2) (USD $) | Jun. 30, 2014 | Jun. 30, 2013 |
In Thousands, unless otherwise specified | account | account |
Age of Accounts Since Origination | ' | ' |
Number of Active Accounts with Balances | 17,079,000 | 15,833,000 |
Percentage of Active Accounts with Balances | 100.00% | 100.00% |
Total Principal Receivables Outstanding | $8,096,112 | $6,866,955 |
Percentage of Principal Receivables Outstanding | 100.00% | 100.00% |
0-12 Months | ' | ' |
Age of Accounts Since Origination | ' | ' |
Number of Active Accounts with Balances | 4,750,000 | 4,162,000 |
Percentage of Active Accounts with Balances | 27.80% | 26.30% |
Total Principal Receivables Outstanding | 2,031,774 | 1,567,355 |
Percentage of Principal Receivables Outstanding | 25.10% | 22.80% |
13-24 Months | ' | ' |
Age of Accounts Since Origination | ' | ' |
Number of Active Accounts with Balances | 2,467,000 | 2,132,000 |
Percentage of Active Accounts with Balances | 14.50% | 13.50% |
Total Principal Receivables Outstanding | 1,148,807 | 868,822 |
Percentage of Principal Receivables Outstanding | 14.20% | 12.70% |
25-36 Months | ' | ' |
Age of Accounts Since Origination | ' | ' |
Number of Active Accounts with Balances | 1,714,000 | 1,492,000 |
Percentage of Active Accounts with Balances | 10.00% | 9.40% |
Total Principal Receivables Outstanding | 838,573 | 656,544 |
Percentage of Principal Receivables Outstanding | 10.40% | 9.60% |
37-48 Months | ' | ' |
Age of Accounts Since Origination | ' | ' |
Number of Active Accounts with Balances | 1,245,000 | 1,188,000 |
Percentage of Active Accounts with Balances | 7.30% | 7.50% |
Total Principal Receivables Outstanding | 623,665 | 570,969 |
Percentage of Principal Receivables Outstanding | 7.70% | 8.30% |
49-60 Months | ' | ' |
Age of Accounts Since Origination | ' | ' |
Number of Active Accounts with Balances | 988,000 | 939,000 |
Percentage of Active Accounts with Balances | 5.80% | 5.90% |
Total Principal Receivables Outstanding | 520,428 | 481,828 |
Percentage of Principal Receivables Outstanding | 6.40% | 7.00% |
Over 60 Months | ' | ' |
Age of Accounts Since Origination | ' | ' |
Number of Active Accounts with Balances | 5,915,000 | 5,920,000 |
Percentage of Active Accounts with Balances | 34.60% | 37.40% |
Total Principal Receivables Outstanding | $2,932,865 | $2,721,437 |
Percentage of Principal Receivables Outstanding | 36.20% | 39.60% |
CREDIT_CARD_AND_LOAN_RECEIVABL4
CREDIT CARD AND LOAN RECEIVABLES (Details 3) (USD $) | 6 Months Ended | ||
Jun. 30, 2014 | Dec. 31, 2013 | Jun. 30, 2013 | |
Probability of an Account Becoming 90 or More Days Past Due or Becoming Charged-off (within the next 12 months) | ' | ' | ' |
Total Principal Receivables Outstanding | $8,096,112,000 | ' | $6,866,955,000 |
Percentage of Principal Receivables Outstanding | 100.00% | ' | 100.00% |
Transfer of Financial Assets | ' | ' | ' |
Loan receivables originated that have not yet been sold to the client | 63,425,000 | 62,082,000 | ' |
Purchase of loan receivables generated in the client program | 117,100,000 | ' | ' |
Loan receivables | 108,400,000 | 61,600,000 | ' |
No Score | ' | ' | ' |
Probability of an Account Becoming 90 or More Days Past Due or Becoming Charged-off (within the next 12 months) | ' | ' | ' |
Total Principal Receivables Outstanding | 144,270,000 | ' | 143,497,000 |
Percentage of Principal Receivables Outstanding | 1.80% | ' | 2.10% |
27.1% and higher | ' | ' | ' |
Probability of an Account Becoming 90 or More Days Past Due or Becoming Charged-off (within the next 12 months) | ' | ' | ' |
Total Principal Receivables Outstanding | 391,005,000 | ' | 304,557,000 |
Percentage of Principal Receivables Outstanding | 4.80% | ' | 4.40% |
17.1% - 27.0% | ' | ' | ' |
Probability of an Account Becoming 90 or More Days Past Due or Becoming Charged-off (within the next 12 months) | ' | ' | ' |
Total Principal Receivables Outstanding | 748,356,000 | ' | 618,805,000 |
Percentage of Principal Receivables Outstanding | 9.20% | ' | 9.00% |
12.6% - 17.0% | ' | ' | ' |
Probability of an Account Becoming 90 or More Days Past Due or Becoming Charged-off (within the next 12 months) | ' | ' | ' |
Total Principal Receivables Outstanding | 886,078,000 | ' | 718,748,000 |
Percentage of Principal Receivables Outstanding | 11.00% | ' | 10.50% |
3.7% - 12.5% | ' | ' | ' |
Probability of an Account Becoming 90 or More Days Past Due or Becoming Charged-off (within the next 12 months) | ' | ' | ' |
Total Principal Receivables Outstanding | 3,298,009,000 | ' | 2,782,404,000 |
Percentage of Principal Receivables Outstanding | 40.70% | ' | 40.50% |
1.9% - 3.6% | ' | ' | ' |
Probability of an Account Becoming 90 or More Days Past Due or Becoming Charged-off (within the next 12 months) | ' | ' | ' |
Total Principal Receivables Outstanding | 1,681,968,000 | ' | 1,483,852,000 |
Percentage of Principal Receivables Outstanding | 20.80% | ' | 21.60% |
Lower than 1.9% | ' | ' | ' |
Probability of an Account Becoming 90 or More Days Past Due or Becoming Charged-off (within the next 12 months) | ' | ' | ' |
Total Principal Receivables Outstanding | $946,426,000 | ' | $815,092,000 |
Percentage of Principal Receivables Outstanding | 11.70% | ' | 11.90% |
CREDIT_CARD_AND_LOAN_RECEIVABL5
CREDIT CARD AND LOAN RECEIVABLES (Details 4) (USD $) | 3 Months Ended | 6 Months Ended | |||
In Thousands, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Dec. 31, 2013 |
Securitized Credit Card Receivables | ' | ' | ' | ' | ' |
Credit card receivables - restricted for securitization investors | $6,737,440 | ' | $6,737,440 | ' | $7,080,014 |
Principal amount of credit card receivables - restricted for securitization investors, 90 days or more past due | 109,383 | ' | 109,383 | ' | 131,659 |
Net charge-offs of securitized principal | $79,947 | $74,595 | $165,661 | $148,689 | ' |
INVENTORIES_Details
INVENTORIES (Details) (USD $) | Jun. 30, 2014 | Jan. 02, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | |||
INVENTORIES | ' | ' | ' |
Inventories | $222.20 | ' | $14.60 |
Amount of finished goods inventory acquired in the BrandLoyalty acquisition | ' | $198.90 | ' |
OTHER_INVESTMENTS_Details
OTHER INVESTMENTS (Details) (USD $) | 3 Months Ended | 6 Months Ended | |||
In Thousands, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Dec. 31, 2013 |
Restricted cash | ' | ' | ' | ' | ' |
Amortized Cost | $30,548 | ' | $30,548 | ' | $25,988 |
Fair value | 30,548 | ' | 30,548 | ' | 25,988 |
Marketable securities | ' | ' | ' | ' | ' |
Amortized Cost | 79,963 | ' | 79,963 | ' | 77,351 |
Unrealized Gains | 269 | ' | 269 | ' | 62 |
Unrealized Losses | -1,977 | ' | -1,977 | ' | -4,180 |
Fair Value | 78,255 | ' | 78,255 | ' | 73,233 |
U.S. Treasury bonds | ' | ' | ' | ' | ' |
Amortized Cost | 100,086 | ' | 100,086 | ' | ' |
Fair Value | 100,086 | ' | 100,086 | ' | ' |
Other Investments, Total | ' | ' | ' | ' | ' |
Amortized Cost | 210,597 | ' | 210,597 | ' | 103,339 |
Unrealized Gains | 269 | ' | 269 | ' | 62 |
Unrealized Losses | -1,977 | ' | -1,977 | ' | -4,180 |
Fair Value | 208,889 | ' | 208,889 | ' | 99,221 |
Fair Value, Marketable securities | ' | ' | ' | ' | ' |
Less than 12 months | 19,810 | ' | 19,810 | ' | 39,954 |
12 Months or Greater | 45,149 | ' | 45,149 | ' | 25,785 |
Total | 64,959 | ' | 64,959 | ' | 65,739 |
Unrealized Losses, Marketable securities | ' | ' | ' | ' | ' |
Less than 12 months | -138 | ' | -138 | ' | -2,206 |
12 Months or Greater | -1,839 | ' | -1,839 | ' | -1,974 |
Total | -1,977 | ' | -1,977 | ' | -4,180 |
Amortized Cost | ' | ' | ' | ' | ' |
Due in one year or less | 6,674 | ' | 6,674 | ' | ' |
Due after one year through five years | 100,086 | ' | 100,086 | ' | ' |
Due after five years through ten years | 4,440 | ' | 4,440 | ' | ' |
Due after ten years | 68,849 | ' | 68,849 | ' | ' |
Total | 180,049 | ' | 180,049 | ' | ' |
Fair Value | ' | ' | ' | ' | ' |
Due in one year or less | 6,623 | ' | 6,623 | ' | ' |
Due after one year through five years | 100,086 | ' | 100,086 | ' | ' |
Due after five years through ten years | 4,608 | ' | 4,608 | ' | ' |
Due after ten years | 67,024 | ' | 67,024 | ' | ' |
Fair Value | 178,341 | ' | 178,341 | ' | ' |
Realized gains or losses | ' | ' | ' | ' | ' |
Realized gains or losses from the sale of investment securities | $0 | $0 | $0 | $0 | ' |
REDEMPTION_SETTLEMENT_ASSETS_D
REDEMPTION SETTLEMENT ASSETS (Details) (USD $) | 3 Months Ended | 6 Months Ended | |||
In Thousands, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Dec. 31, 2013 |
REDEMPTION SETTLEMENT ASSETS | ' | ' | ' | ' | ' |
Amortized Cost | $559,323 | ' | $559,323 | ' | $503,576 |
Unrealized Gains | 5,844 | ' | 5,844 | ' | 7,083 |
Unrealized Losses | -9 | ' | -9 | ' | -310 |
Total | 565,158 | ' | 565,158 | ' | 510,349 |
Fair value for investments in unrealized loss position | ' | ' | ' | ' | ' |
Less than 12 months | 17,605 | ' | 17,605 | ' | ' |
Total | 17,605 | ' | 17,605 | ' | ' |
Unrealized losses for investments in unrealized loss position | ' | ' | ' | ' | ' |
Less than 12 months | -9 | ' | -9 | ' | ' |
Total | -9 | ' | -9 | ' | ' |
Amortized cost of the redemption settlement assets by contractual maturity | ' | ' | ' | ' | ' |
Due in one year or less | 156,621 | ' | 156,621 | ' | ' |
Due after one year through five years | 248,908 | ' | 248,908 | ' | ' |
Total | 405,529 | ' | 405,529 | ' | ' |
Estimated fair value of the redemption settlement assets by contractual maturity | ' | ' | ' | ' | ' |
Due in one year or less | 157,994 | ' | 157,994 | ' | ' |
Due after one year through five years | 253,370 | ' | 253,370 | ' | ' |
Total | 411,364 | ' | 411,364 | ' | ' |
Realized gains or losses from the sale of investment securities | 0 | 0 | 0 | 0 | ' |
Cash and cash equivalents | ' | ' | ' | ' | ' |
REDEMPTION SETTLEMENT ASSETS | ' | ' | ' | ' | ' |
Amortized Cost | 153,794 | ' | 153,794 | ' | 73,984 |
Total | 153,794 | ' | 153,794 | ' | 73,984 |
Government bonds | ' | ' | ' | ' | ' |
REDEMPTION SETTLEMENT ASSETS | ' | ' | ' | ' | ' |
Amortized Cost | 4,788 | ' | 4,788 | ' | ' |
Unrealized Losses | -1 | ' | -1 | ' | ' |
Total | 4,787 | ' | 4,787 | ' | ' |
Fair value for investments in unrealized loss position | ' | ' | ' | ' | ' |
Less than 12 months | 4,787 | ' | 4,787 | ' | ' |
Total | 4,787 | ' | 4,787 | ' | ' |
Unrealized losses for investments in unrealized loss position | ' | ' | ' | ' | ' |
Less than 12 months | -1 | ' | -1 | ' | ' |
Total | -1 | ' | -1 | ' | ' |
Corporate bonds | ' | ' | ' | ' | ' |
REDEMPTION SETTLEMENT ASSETS | ' | ' | ' | ' | ' |
Amortized Cost | 400,741 | ' | 400,741 | ' | 429,592 |
Unrealized Gains | 5,844 | ' | 5,844 | ' | 7,083 |
Unrealized Losses | -8 | ' | -8 | ' | -310 |
Total | 406,577 | ' | 406,577 | ' | 436,365 |
Fair value for investments in unrealized loss position | ' | ' | ' | ' | ' |
Less than 12 months | 12,818 | ' | 12,818 | ' | 80,493 |
Total | 12,818 | ' | 12,818 | ' | 80,493 |
Unrealized losses for investments in unrealized loss position | ' | ' | ' | ' | ' |
Less than 12 months | -8 | ' | -8 | ' | -310 |
Total | ($8) | ' | ($8) | ' | ($310) |
INTANGIBLE_ASSETS_AND_GOODWILL2
INTANGIBLE ASSETS AND GOODWILL (Details) (USD $) | 6 Months Ended | 12 Months Ended |
In Thousands, unless otherwise specified | Jun. 30, 2014 | Dec. 31, 2013 |
Schedule of Finite and Indefinite-lived Intangible Assets | ' | ' |
Finite lived assets, gross | 1,343,094 | 964,561 |
Accumulated Amortization | -564,258 | -516,507 |
Finite lived assets, net | 778,836 | 448,054 |
Total Intangible Assets | ' | ' |
Gross Assets | 1,355,444 | 976,911 |
Accumulated Amortization | -564,258 | -516,507 |
Net | 791,186 | 460,404 |
Trade names | ' | ' |
Indefinite Lived Assets | ' | ' |
Indefinite lived assets | 12,350 | 12,350 |
Total Intangible Assets | ' | ' |
Net | 12,350 | 12,350 |
Customer contracts and lists | ' | ' |
Schedule of Finite and Indefinite-lived Intangible Assets | ' | ' |
Finite lived assets, gross | 837,270 | 440,200 |
Accumulated Amortization | -247,017 | -187,350 |
Finite lived assets, net | 590,253 | 252,850 |
Total Intangible Assets | ' | ' |
Accumulated Amortization | -247,017 | -187,350 |
Customer contracts and lists | Minimum | ' | ' |
Amortization Life and Method | ' | ' |
Useful life | '3 years | '3 years |
Customer contracts and lists | Maximum | ' | ' |
Amortization Life and Method | ' | ' |
Useful life | '12 years | '12 years |
Premium on purchased credit card portfolios | ' | ' |
Schedule of Finite and Indefinite-lived Intangible Assets | ' | ' |
Finite lived assets, gross | 176,088 | 216,041 |
Accumulated Amortization | -93,860 | -118,006 |
Finite lived assets, net | 82,228 | 98,035 |
Total Intangible Assets | ' | ' |
Accumulated Amortization | -93,860 | -118,006 |
Premium on purchased credit card portfolios | Minimum | ' | ' |
Amortization Life and Method | ' | ' |
Useful life | '5 years | '5 years |
Premium on purchased credit card portfolios | Maximum | ' | ' |
Amortization Life and Method | ' | ' |
Useful life | '10 years | '10 years |
Customer database | ' | ' |
Schedule of Finite and Indefinite-lived Intangible Assets | ' | ' |
Finite lived assets, gross | 161,700 | 161,700 |
Accumulated Amortization | -131,992 | -122,230 |
Finite lived assets, net | 29,708 | 39,470 |
Total Intangible Assets | ' | ' |
Accumulated Amortization | -131,992 | -122,230 |
Customer database | Minimum | ' | ' |
Amortization Life and Method | ' | ' |
Useful life | '4 years | '4 years |
Customer database | Maximum | ' | ' |
Amortization Life and Method | ' | ' |
Useful life | '10 years | '10 years |
Collector database | ' | ' |
Schedule of Finite and Indefinite-lived Intangible Assets | ' | ' |
Finite lived assets, gross | 65,601 | 65,895 |
Accumulated Amortization | -60,870 | -60,711 |
Finite lived assets, net | 4,731 | 5,184 |
Amortization Life and Method | ' | ' |
Useful life | '30 years | '30 years |
Declining balance (as a percent) | 15.00% | 15.00% |
Total Intangible Assets | ' | ' |
Accumulated Amortization | -60,870 | -60,711 |
Tradenames | ' | ' |
Schedule of Finite and Indefinite-lived Intangible Assets | ' | ' |
Finite lived assets, gross | 85,968 | 58,567 |
Accumulated Amortization | -22,905 | -15,443 |
Finite lived assets, net | 63,063 | 43,124 |
Total Intangible Assets | ' | ' |
Accumulated Amortization | -22,905 | -15,443 |
Tradenames | Minimum | ' | ' |
Amortization Life and Method | ' | ' |
Useful life | '3 years | '4 years |
Tradenames | Maximum | ' | ' |
Amortization Life and Method | ' | ' |
Useful life | '15 years | '15 years |
Purchased data lists | ' | ' |
Schedule of Finite and Indefinite-lived Intangible Assets | ' | ' |
Finite lived assets, gross | 11,876 | 17,567 |
Accumulated Amortization | -6,415 | -11,959 |
Finite lived assets, net | 5,461 | 5,608 |
Total Intangible Assets | ' | ' |
Accumulated Amortization | -6,415 | -11,959 |
Purchased data lists | Minimum | ' | ' |
Amortization Life and Method | ' | ' |
Useful life | '1 year | '1 year |
Purchased data lists | Maximum | ' | ' |
Amortization Life and Method | ' | ' |
Useful life | '5 years | '5 years |
Favorable lease | ' | ' |
Schedule of Finite and Indefinite-lived Intangible Assets | ' | ' |
Finite lived assets, gross | 3,291 | 3,291 |
Accumulated Amortization | -549 | -375 |
Finite lived assets, net | 2,742 | 2,916 |
Amortization Life and Method | ' | ' |
Useful life | '10 years | '10 years |
Total Intangible Assets | ' | ' |
Accumulated Amortization | -549 | -375 |
Noncompete agreements | ' | ' |
Schedule of Finite and Indefinite-lived Intangible Assets | ' | ' |
Finite lived assets, gross | 1,300 | 1,300 |
Accumulated Amortization | -650 | -433 |
Finite lived assets, net | 650 | 867 |
Amortization Life and Method | ' | ' |
Useful life | '3 years | '3 years |
Total Intangible Assets | ' | ' |
Accumulated Amortization | -650 | -433 |
INTANGIBLE_ASSETS_AND_GOODWILL3
INTANGIBLE ASSETS AND GOODWILL (Details 2) (USD $) | Dec. 31, 2013 | Jan. 02, 2014 | Jan. 02, 2014 | Jan. 02, 2014 |
Brand Loyalty | Brand Loyalty | Brand Loyalty | ||
Customer Contracts | Trade names | |||
Intangible assets | ' | ' | ' | ' |
Acquired intangible assets | ' | $423,800,000 | $396,500,000 | $27,300,000 |
Weighted average lives | ' | ' | '7 years | '3 years |
Estimated amortization expense related to intangible assets for the next five years and thereafter | ' | ' | ' | ' |
2014 (excluding the six months ended June 30, 2014) | 89,393,000 | ' | ' | ' |
2015 | 161,487,000 | ' | ' | ' |
2016 | 143,894,000 | ' | ' | ' |
2017 | 109,342,000 | ' | ' | ' |
2018 | 99,217,000 | ' | ' | ' |
2019 & thereafter | $175,503,000 | ' | ' | ' |
INTANGIBLE_ASSETS_AND_GOODWILL4
INTANGIBLE ASSETS AND GOODWILL (Details 3) (USD $) | 6 Months Ended | ||||
In Thousands, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | Dec. 31, 2013 |
LoyaltyOne | Epsilon | Private Label Services and Credit | Private Label Services and Credit | ||
Goodwill | ' | ' | ' | ' | ' |
Beginning Balance | $1,735,703 | $232,449 | $1,241,522 | $261,732 | $261,732 |
Goodwill acquired during year | 565,015 | 565,015 | ' | ' | ' |
Effects of foreign currency translation | 587 | -155 | 742 | ' | ' |
Ending Balance | $2,301,305 | $797,309 | $1,242,264 | $261,732 | $261,732 |
DEBT_Details
DEBT (Details) | 6 Months Ended | 6 Months Ended | 6 Months Ended | 6 Months Ended | 6 Months Ended | 1 Months Ended | 6 Months Ended | 6 Months Ended | 1 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | 1 Months Ended | 0 Months Ended | 3 Months Ended | 6 Months Ended | ||||||||||||||||||||||||||||||||
Share data in Millions, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | Dec. 31, 2013 | Jun. 30, 2014 | Dec. 31, 2013 | Jun. 30, 2014 | Dec. 31, 2013 | Jun. 30, 2014 | Dec. 31, 2013 | Jun. 30, 2014 | Dec. 31, 2013 | Jun. 30, 2014 | Dec. 31, 2013 | Jun. 30, 2014 | Jun. 30, 2014 | Dec. 31, 2013 | 31-May-14 | Feb. 28, 2014 | Feb. 28, 2014 | Jul. 31, 2014 | Jun. 30, 2014 | Dec. 31, 2013 | Jun. 30, 2014 | Dec. 31, 2013 | Nov. 30, 2012 | Jun. 30, 2014 | Dec. 31, 2013 | Jul. 31, 2014 | Jun. 30, 2014 | Dec. 31, 2013 | Jul. 31, 2014 | Jun. 30, 2014 | Dec. 31, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | 15-May-14 | Dec. 31, 2013 | Jun. 30, 2009 | Jul. 03, 2014 | Mar. 31, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 |
USD ($) | USD ($) | USD ($) | Total deposits | Total deposits | Certificates of deposit | Certificates of deposit | Money market deposits | Money market deposits | Non-recourse borrowings of consolidated securitization entities | Non-recourse borrowings of consolidated securitization entities | Fixed rate asset-backed term note securities | Fixed rate asset-backed term note securities | Floating rate asset-backed term note securities | Conduit asset-backed securities | Conduit asset-backed securities | 2009-VFN conduit facility under World Financial Capital Credit Card Master Trust I | 2009-VFN conduit facility under World Financial Capital Credit Card Master Trust I | Master Trust I | Master Trust I | Long-term and other debt | Long-term and other debt | Senior Notes due 2017 | Senior Notes due 2017 | Senior Notes due 2017 | Senior Notes Due 2020 | Senior Notes Due 2020 | Senior Notes due 2022 | 2013 Credit Facility | 2013 Credit Facility | 2013 Credit Facility | 2013 Term Loan | 2013 Term Loan | Convertible Senior Notes | Convertible Senior Notes | Convertible Senior Notes | Convertible Senior Notes | Convertible senior notes due 2014 | Convertible senior notes due 2014 | Convertible senior notes due 2014 | Convertible senior notes due 2014 | Convertible senior notes due 2014 | Convertible senior notes due 2013 | BrandLoyalty credit facility | Term Facility | Term Facility | Revolving Facility | Revolving Facility | |
USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | February 2014 issuance | July 2014 issuance | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | Subsequent event | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | Subsequent event | USD ($) | Brand Loyalty | Brand Loyalty | Brand Loyalty | Brand Loyalty | ||||||
item | USD ($) | Subsequent event | USD ($) | EUR (€) | USD ($) | USD ($) | EUR (€) | |||||||||||||||||||||||||||||||||||||||||
USD ($) | ||||||||||||||||||||||||||||||||||||||||||||||||
Debt | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total long-term and other debt | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $2,961,413,000 | $2,800,281,000 | $396,916,000 | $396,511,000 | $400,000,000 | $500,000,000 | $500,000,000 | $600,000,000 | $720,000,000 | $336,000,000 | ' | $1,218,750,000 | $1,234,688,000 | ' | ' | ' | ' | ' | ' | $333,082,000 | $345,000,000 | ' | ' | $125,747,000 | € 44,300,000 | $60,600,000 | $65,200,000 | € 47,600,000 |
Less current portion | -65,480,000 | ' | -364,489,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | -65,480,000 | -364,489,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Long-term and other debt | 2,895,933,000 | ' | 2,435,792,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2,895,933,000 | 2,435,792,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Interest Rate (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0.53% | ' | ' | ' | ' | ' | 0.61% | ' | ' | 5.25% | ' | 5.25% | 6.38% | ' | 5.38% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Deposits | ' | ' | ' | ' | ' | ' | ' | 572,378,000 | 329,828,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Deposits | ' | ' | ' | 3,010,025,000 | 2,816,361,000 | 2,437,647,000 | 2,486,533,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Less: current portion | -1,752,641,000 | ' | -1,544,059,000 | -1,752,641,000 | -1,544,059,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Long-term portion | 1,257,384,000 | ' | 1,272,302,000 | 1,257,384,000 | 1,272,302,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total non-recourse borrowings of consolidated securitization | ' | ' | ' | ' | ' | ' | ' | ' | ' | 4,311,916,000 | 4,591,916,000 | 3,001,916,000 | 3,001,916,000 | 450,000,000 | 860,000,000 | 1,590,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Less: current portion | -643,750,000 | ' | -1,025,000,000 | ' | ' | ' | ' | ' | ' | -643,750,000 | -1,025,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Long-term portion | 3,668,166,000 | ' | 3,566,916,000 | ' | ' | ' | ' | ' | ' | 3,668,166,000 | 3,566,916,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Interest Rate - minimum (as a percent) | ' | ' | ' | ' | ' | 0.15% | ' | 0.01% | ' | ' | ' | 0.91% | ' | ' | 1.05% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Interest Rate - maximum (as a percent) | ' | ' | ' | ' | ' | 3.30% | ' | 0.14% | ' | ' | ' | 6.75% | ' | ' | 1.70% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Weighted average interest rate (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1.90% | ' | ' | 1.90% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 3.61% | ' | ' | ' | ' |
Maximum borrowing capacity under certain circumstances | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,250,000,000 | ' | ' | 1,250,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Maximum borrowing capacity | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,600,000,000 | ' | 450,000,000 | 700,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,300,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total availability under Credit Facility | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 530,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Increase in Credit Facility | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 50,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Loan amount | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 63,000,000 | ' | ' | 87,000,000 |
Quarterly principal payments | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 6,250,000 | ' | ' | ' |
Conversion amount | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,864,800,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Amount applied from convertible note hedge counterparties | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,519,800,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Amount borrowed | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 625,000,000 | 394,700,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Retained amount of subordinated class of notes | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 175,000,000 | 94,700,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Interest expense on debt recognized | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Interest expense calculated on contractual interest rate | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,920,000 | 7,471,000 | 5,630,000 | 14,999,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Amortization of discount on liability component | 12,293,000 | 45,102,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 4,036,000 | 22,669,000 | 11,888,000 | 44,719,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total interest expense on convertible senior notes | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 5,956,000 | 30,140,000 | 17,518,000 | 59,718,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Effective interest rate (annualized) (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 14.20% | 11.00% | 14.20% | 11.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Approximate number of warrants associated with the Convertible Senior Notes due 2014 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 7.3 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of warrants net settled by issuing shares of common stock | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2 | 5.1 | ' | ' | ' | ' | ' |
Shares of common stock issued to net settle warrants | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1.5 | 2.9 | ' | ' | ' | ' | ' |
Issue price as a percentage of the aggregate principal amount | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 98.91% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Unamortized discount | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | -3,100,000 | -3,500,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Period over which discount will be amortized as interest expense | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '3 years 4 months 24 days | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Effective annual interest rate (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 5.50% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Amount drawn | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $860,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt instrument description of Variable rate basis | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 'LIBOR | 'LIBOR | ' | ' | ' | 'LIBOR | ' | ' | ' | ' | ' | ' | ' | ' | ' | 'LIBOR | ' | ' | 'LIBOR | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 'EURIBOR | ' | ' | ' | ' |
Basis spread on variable rate (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0.38% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of facilities | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 3 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
DEBT_Details_2
DEBT (Details 2) (Not designated as hedging instrument, Interest rate derivatives) | 6 Months Ended | |||
In Millions, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 |
USD ($) | EUR (€) | Other current liabilities | Other liabilities | |
USD ($) | USD ($) | |||
Notional amount, fair value and classification of the company's outstanding interest rate contracts | ' | ' | ' | ' |
Notional Amount | $81.20 | € 59.30 | ' | ' |
Weighted Average Years to Maturity | '10 months 24 days | '10 months 24 days | ' | ' |
Fair Value | ' | ' | 0.2 | ' |
Fair Value | $0.50 | ' | ' | $0.30 |
DEBT_Details_3
DEBT (Details 3) (Securitization funding costs, USD $) | 3 Months Ended | 6 Months Ended |
In Millions, unless otherwise specified | Jun. 30, 2013 | Jun. 30, 2013 |
Securitization funding costs | ' | ' |
Activity related to company's outstanding interest rate contracts and location | ' | ' |
Gains on interest rate swaps on securitized borrowings | $2.20 | $8.50 |
DEFERRED_REVENUE_Details
DEFERRED REVENUE (Details) (USD $) | 6 Months Ended | |
In Thousands, unless otherwise specified | Jun. 30, 2014 | Dec. 31, 2013 |
Movement in deferred revenue | ' | ' |
Beginning balance | $1,137,186 | ' |
Cash proceeds | 307,985 | ' |
Revenue recognized | -348,915 | ' |
Other | -257 | ' |
Effects of foreign currency translation | -6,170 | ' |
Ending balance | 1,089,829 | ' |
Amounts recognized in the unaudited condensed consolidated balance sheets: | ' | ' |
Current liabilities | 923,122 | 966,438 |
Non-current liabilities | 166,707 | 170,748 |
Service | ' | ' |
Movement in deferred revenue | ' | ' |
Beginning balance | 346,631 | ' |
Cash proceeds | 96,377 | ' |
Revenue recognized | -99,975 | ' |
Effects of foreign currency translation | -1,640 | ' |
Ending balance | 341,393 | ' |
Amounts recognized in the unaudited condensed consolidated balance sheets: | ' | ' |
Current liabilities | 174,686 | ' |
Non-current liabilities | 166,707 | ' |
Redemption | ' | ' |
Movement in deferred revenue | ' | ' |
Beginning balance | 790,555 | ' |
Cash proceeds | 211,608 | ' |
Revenue recognized | -248,940 | ' |
Other | -257 | ' |
Effects of foreign currency translation | -4,530 | ' |
Ending balance | 748,436 | ' |
Amounts recognized in the unaudited condensed consolidated balance sheets: | ' | ' |
Current liabilities | $748,436 | ' |
REDEEMABLE_NONCONTROLLING_INTE2
REDEEMABLE NON-CONTROLLING INTEREST (Details) (USD $) | 3 Months Ended | 6 Months Ended | ||
In Thousands, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | Jan. 02, 2014 |
Brand Loyalty | Brand Loyalty | |||
Redeemable noncontrolling interest | ' | ' | ' | ' |
Ownership interest acquired (as a percent) | ' | ' | ' | 60.00% |
Ownership interest held by minority interest (as a percent) | ' | ' | ' | 40.00% |
Ownership interest that may be acquired over a four-year period (as a percent) | ' | ' | 40.00% | ' |
Period over which remaining ownership interest may be acquired | ' | ' | '4 years | ' |
Ownership interest that may be acquired each year (as a percent) | ' | ' | 10.00% | ' |
Additional interest which the entity must acquire if specified annual earnings targets are met (as a percent) | ' | ' | 10.00% | ' |
Ownership interest for which sellers have a put option to sell if specified annual earnings targets are not met (as a percent) | ' | ' | 10.00% | ' |
Redeemable non-controlling interest recognized | ' | ' | ' | $341,907 |
Reconciliation of the changes in the redeemable noncontrolling interest | ' | ' | ' | ' |
Net income attributable to non-controlling interest | 1,745 | 97 | ' | ' |
Other comprehensive income attributable to non-controlling interest | ' | 166 | ' | ' |
Foreign currency translation adjustments | ' | 517 | ' | ' |
Balance at the end of the period | $342,687 | $342,687 | ' | ' |
STOCKHOLDERS_EQUITY_Details
STOCKHOLDERS' EQUITY (Details) (USD $) | 0 Months Ended | 6 Months Ended |
In Millions, except Share data, unless otherwise specified | Dec. 05, 2013 | Jun. 30, 2014 |
Stock Repurchase Programs | ' | ' |
Amount of company's outstanding common stock authorized to be repurchased | $400 | ' |
Stock acquired (in shares) | ' | 813,317 |
Total cost of shares repurchased | ' | 201.8 |
Available balance under stock repurchase program | ' | $198.20 |
STOCKHOLDERS_EQUITY_Details_2
STOCKHOLDERS' EQUITY (Details 2) (USD $) | 3 Months Ended | 6 Months Ended | ||
In Thousands, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs | ' | ' | ' | ' |
Stock-based compensation expense | $15,873 | $14,991 | $31,497 | $28,015 |
Cost of operations | ' | ' | ' | ' |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs | ' | ' | ' | ' |
Stock-based compensation expense | 11,230 | 10,600 | 22,212 | 19,542 |
General and administrative | ' | ' | ' | ' |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs | ' | ' | ' | ' |
Stock-based compensation expense | $4,643 | $4,391 | $9,285 | $8,473 |
STOCKHOLDERS_EQUITY_Details_3
STOCKHOLDERS' EQUITY (Details 3) (USD $) | 6 Months Ended |
Jun. 30, 2014 | |
Performance-based restricted stock unit awards | ' |
Stock Compensation Plans | ' |
Shares granted | 174,590 |
Weighted average grant-date fair value (in dollars per share) | $283.93 |
Percentage of stock units for which restrictions lapse on February 18, 2015 | 33.00% |
Percentage of stock units for which restrictions lapse on February 18, 2016 | 33.00% |
Percentage of stock units for which restrictions lapse on February 21, 2017 | 34.00% |
Performance-based restricted stock unit awards | Minimum | ' |
Stock Compensation Plans | ' |
Percentage of stock units to vest | 50.00% |
Performance-based restricted stock unit awards | Maximum | ' |
Stock Compensation Plans | ' |
Percentage of stock units to vest | 150.00% |
Service-based restricted stock unit awards | ' |
Stock Compensation Plans | ' |
Shares granted | 52,472 |
Weighted average grant-date fair value (in dollars per share) | $280.87 |
Award vesting period | '3 years |
ACCUMULATED_OTHER_COMPREHENSIV2
ACCUMULATED OTHER COMPREHENSIVE INCOME (Details) (USD $) | 3 Months Ended | 6 Months Ended | ||
In Thousands, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 |
Accumulated Other Comprehensive Income | ' | ' | ' | ' |
Balance at the beginning of the period | ' | ' | ($18,227) | ' |
Changes in other comprehensive income (loss) | -5,786 | -1,612 | 4,032 | 2,811 |
Balance at the end of the period | -14,195 | ' | -14,195 | ' |
Reclassifications out of accumulated other comprehensive income (loss) into net income | 0 | 0 | 0 | ' |
Net Unrealized Gains (Losses) on Securities | ' | ' | ' | ' |
Accumulated Other Comprehensive Income | ' | ' | ' | ' |
Balance at the beginning of the period | 4,674 | 11,417 | 4,189 | 10,321 |
Changes in other comprehensive income (loss) | 71 | -6,550 | 556 | -5,454 |
Balance at the end of the period | 4,745 | 4,867 | 4,745 | 4,867 |
Foreign Currency Translation Adjustments | ' | ' | ' | ' |
Accumulated Other Comprehensive Income | ' | ' | ' | ' |
Balance at the beginning of the period | -13,083 | -28,855 | -22,416 | -32,182 |
Changes in other comprehensive income (loss) | -5,857 | 4,938 | 3,476 | 8,265 |
Balance at the end of the period | -18,940 | -23,917 | -18,940 | -23,917 |
Accumulated Other Comprehensive Income (Loss) | ' | ' | ' | ' |
Accumulated Other Comprehensive Income | ' | ' | ' | ' |
Balance at the beginning of the period | -8,409 | -17,438 | -18,227 | -21,861 |
Changes in other comprehensive income (loss) | -5,786 | -1,612 | 4,032 | 2,811 |
Balance at the end of the period | ($14,195) | ($19,050) | ($14,195) | ($19,050) |
FINANCIAL_INSTRUMENTS_Details
FINANCIAL INSTRUMENTS (Details) (USD $) | Jun. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Financial assets | ' | ' |
Cash and cash equivalents | $631,167 | $969,822 |
Credit card and loan receivables, net | 8,050,314 | 8,069,713 |
Loan receivables held for sale | 63,425 | 62,082 |
Redemption settlement assets, restricted | 565,158 | 510,349 |
Cash collateral, restricted | 34,710 | 34,124 |
Other investments | 208,889 | 99,221 |
Financial liabilities | ' | ' |
Deposits | 3,038,051 | 2,836,352 |
Non-recourse borrowings of consolidated securitization entities | 4,357,684 | 4,618,205 |
Long-term and other debt | 3,007,498 | 4,404,500 |
Carrying Amount | ' | ' |
Financial assets | ' | ' |
Cash and cash equivalents | 631,167 | 969,822 |
Trade receivables, net | 394,681 | 394,822 |
Credit card and loan receivables, net | 8,050,314 | 8,069,713 |
Loan receivables held for sale | 63,425 | 62,082 |
Redemption settlement assets, restricted | 565,158 | 510,349 |
Cash collateral, restricted | 34,710 | 34,124 |
Other investments | 208,889 | 99,221 |
Financial liabilities | ' | ' |
Accounts payable | 320,678 | 210,019 |
Deposits | 3,010,025 | 2,816,361 |
Non-recourse borrowings of consolidated securitization entities | 4,311,916 | 4,591,916 |
Long-term and other debt | 2,961,413 | 2,800,281 |
Derivative instruments | 465 | ' |
Contingent liability | 249,067 | ' |
Fair Value | ' | ' |
Financial assets | ' | ' |
Cash and cash equivalents | 631,167 | 969,822 |
Trade receivables, net | 394,681 | 394,822 |
Credit card and loan receivables, net | 8,050,314 | 8,069,713 |
Loan receivables held for sale | 63,425 | 62,082 |
Redemption settlement assets, restricted | 565,158 | 510,349 |
Cash collateral, restricted | 34,710 | 34,124 |
Other investments | 208,889 | 99,221 |
Financial liabilities | ' | ' |
Accounts payable | 320,678 | 210,019 |
Deposits | 3,038,051 | 2,836,352 |
Non-recourse borrowings of consolidated securitization entities | 4,357,684 | 4,618,205 |
Long-term and other debt | 3,007,498 | 4,404,500 |
Derivative instruments | 465 | ' |
Contingent liability | $249,067 | ' |
FINANCIAL_INSTRUMENTS_Details_
FINANCIAL INSTRUMENTS (Details 2) (USD $) | Jun. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Assets disclosed at fair value | ' | ' |
Cash collateral, restricted | $34,710 | $34,124 |
Other investments | 208,889 | 99,221 |
Total assets measured at fair value | 8,744,906 | 9,101,617 |
Liabilities disclosed at fair value | ' | ' |
Total liabilities measured at fair value | 10,403,233 | 11,859,057 |
Level 1 | ' | ' |
Assets disclosed at fair value | ' | ' |
Total assets measured at fair value | 631,167 | 969,822 |
Level 2 | ' | ' |
Liabilities disclosed at fair value | ' | ' |
Total liabilities measured at fair value | 10,403,233 | 11,859,057 |
Level 3 | ' | ' |
Assets disclosed at fair value | ' | ' |
Total assets measured at fair value | 8,113,739 | 8,131,795 |
Recurring | ' | ' |
Assets disclosed at fair value | ' | ' |
Government bonds | 4,787 | ' |
Corporate bonds | 406,577 | 436,365 |
Cash collateral, restricted | 34,710 | 34,124 |
Other investments | 208,889 | 99,221 |
Total assets measured at fair value | 654,963 | 569,710 |
Liabilities disclosed at fair value | ' | ' |
Derivative instruments | 465 | ' |
Contingent liability | 249,067 | ' |
Total liabilities measured at fair value | 249,532 | ' |
Recurring | Level 1 | ' | ' |
Assets disclosed at fair value | ' | ' |
Other investments | 135,659 | 30,888 |
Total assets measured at fair value | 135,659 | 30,888 |
Recurring | Level 2 | ' | ' |
Assets disclosed at fair value | ' | ' |
Government bonds | 4,787 | ' |
Corporate bonds | 406,577 | 436,365 |
Other investments | 73,230 | 68,333 |
Total assets measured at fair value | 484,594 | 504,698 |
Liabilities disclosed at fair value | ' | ' |
Derivative instruments | 465 | ' |
Total liabilities measured at fair value | 465 | ' |
Recurring | Level 3 | ' | ' |
Assets disclosed at fair value | ' | ' |
Cash collateral, restricted | 34,710 | 34,124 |
Total assets measured at fair value | 34,710 | 34,124 |
Liabilities disclosed at fair value | ' | ' |
Contingent liability | 249,067 | ' |
Total liabilities measured at fair value | $249,067 | ' |
FINANCIAL_INSTRUMENTS_Details_1
FINANCIAL INSTRUMENTS (Details 3) (USD $) | 3 Months Ended | 6 Months Ended | ||
In Thousands, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 |
Changes in fair value of the Company's liability measured on a recurring basis using significant unobservable inputs (Level 3) | ' | ' | ' | ' |
Fair value assets amount transfer from level 1 to level 2 | $0 | $0 | $0 | $0 |
Fair value assets amount transfer from level 2 to level 1 | 0 | 0 | 0 | 0 |
Fair value liabilities amount transfer from level 1 to level 2 | 0 | 0 | 0 | 0 |
Fair value liabilities amount transfer from level 2 to level 1 | 0 | 0 | 0 | 0 |
Contingent Liability | ' | ' | ' | ' |
Changes in fair value of the Company's liability measured on a recurring basis using significant unobservable inputs (Level 3) | ' | ' | ' | ' |
Balance at beginning of period | 250,508 | ' | ' | ' |
Purchases | ' | ' | 248,702 | ' |
Foreign currency transaction adjustments | -1,441 | ' | 365 | ' |
Balance at end of period | 249,067 | ' | 249,067 | ' |
Gains (losses) for the period included in earnings related to liability still held at end of period | 1,441 | ' | -365 | ' |
Cash Collateral, Restricted | ' | ' | ' | ' |
Changes in fair value of the Company's asset measured on a recurring basis using significant unobservable inputs (Level 3) | ' | ' | ' | ' |
Balance at beginning of period | 34,425 | 63,140 | 34,124 | 62,660 |
Total gains (realized or unrealized) included in earnings | 285 | 311 | 586 | 791 |
Settlements | ' | -17,500 | ' | -17,500 |
Balance at end of period | 34,710 | 45,951 | 34,710 | 45,951 |
Gains for the period included in earnings related to assets still held | $285 | $311 | $586 | $791 |
Discount rate (as a percent) | ' | ' | 3.00% | ' |
Cash Collateral, Restricted | Minimum | ' | ' | ' | ' |
Changes in fair value of the Company's asset measured on a recurring basis using significant unobservable inputs (Level 3) | ' | ' | ' | ' |
Term | ' | ' | '4 months | ' |
Cash Collateral, Restricted | Maximum | ' | ' | ' | ' |
Changes in fair value of the Company's asset measured on a recurring basis using significant unobservable inputs (Level 3) | ' | ' | ' | ' |
Term | ' | ' | '28 months | ' |
Cash Collateral, Restricted | Weighted average | ' | ' | ' | ' |
Changes in fair value of the Company's asset measured on a recurring basis using significant unobservable inputs (Level 3) | ' | ' | ' | ' |
Term | ' | ' | '11 months | ' |
FINANCIAL_INSTRUMENTS_Details_2
FINANCIAL INSTRUMENTS (Details 4) (USD $) | Jun. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Financial assets | ' | ' |
Cash and cash equivalents | $631,167 | $969,822 |
Credit card and loan receivables, net | 8,050,314 | 8,069,713 |
Loan receivables held for sale | 63,425 | 62,082 |
Total assets measured at fair value | 8,744,906 | 9,101,617 |
Financial liabilities | ' | ' |
Deposits | 3,038,051 | 2,836,352 |
Non-recourse borrowings of consolidated securitization entities | 4,357,684 | 4,618,205 |
Long-term and other debt | 3,007,498 | 4,404,500 |
Total liabilities measured at fair value | 10,403,233 | 11,859,057 |
Level 1 | ' | ' |
Financial assets | ' | ' |
Cash and cash equivalents | 631,167 | 969,822 |
Total assets measured at fair value | 631,167 | 969,822 |
Level 2 | ' | ' |
Financial liabilities | ' | ' |
Deposits | 3,038,051 | 2,836,352 |
Non-recourse borrowings of consolidated securitization entities | 4,357,684 | 4,618,205 |
Long-term and other debt | 3,007,498 | 4,404,500 |
Total liabilities measured at fair value | 10,403,233 | 11,859,057 |
Level 3 | ' | ' |
Financial assets | ' | ' |
Credit card and loan receivables, net | 8,050,314 | 8,069,713 |
Loan receivables held for sale | 63,425 | 62,082 |
Total assets measured at fair value | $8,113,739 | $8,131,795 |
INCOME_TAXES_Details
INCOME TAXES (Details) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Dec. 31, 2014 | |
INCOME TAXES | ' | ' | ' | ' | ' |
Effective tax rate utilized (as a percent) | 36.60% | 37.30% | 36.60% | 37.80% | 36.60% |
SEGMENT_INFORMATION_Details
SEGMENT INFORMATION (Details) (USD $) | 3 Months Ended | 6 Months Ended | ||
In Thousands, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 |
Segment information | ' | ' | ' | ' |
Revenues | $1,265,158 | $1,028,092 | $2,498,058 | $2,081,529 |
Income (loss) before income taxes | 219,608 | 185,714 | 433,653 | 394,395 |
Interest expense, net | 62,932 | 83,466 | 130,679 | 166,010 |
Operating income | 282,540 | 269,180 | 564,332 | 560,405 |
Depreciation and amortization | 74,295 | 53,576 | 148,368 | 106,426 |
Stock compensation expense | 15,873 | 14,991 | 31,497 | 28,015 |
Adjusted EBITDA | 372,708 | 337,747 | 744,197 | 694,846 |
Less: Securitization funding costs | 22,300 | 24,694 | 45,211 | 49,179 |
Less: Interest expense on deposits | 8,228 | 7,002 | 16,462 | 14,009 |
Less: Adjusted EBITDA attributable to non-controlling interest | 10,214 | ' | 16,003 | ' |
Adjusted EBITDA, net | 331,966 | 306,051 | 666,521 | 631,658 |
Operating segment | LoyaltyOne | ' | ' | ' | ' |
Segment information | ' | ' | ' | ' |
Revenues | 355,583 | 220,137 | 684,553 | 461,044 |
Income (loss) before income taxes | 60,056 | 59,177 | 104,432 | 115,320 |
Interest expense, net | 2,082 | -139 | 3,644 | -420 |
Operating income | 62,138 | 59,038 | 108,076 | 114,900 |
Depreciation and amortization | 22,723 | 4,337 | 44,972 | 8,659 |
Stock compensation expense | 2,705 | 2,800 | 5,489 | 5,219 |
Adjusted EBITDA | 87,566 | 66,175 | 158,537 | 128,778 |
Less: Adjusted EBITDA attributable to non-controlling interest | 10,214 | ' | 16,003 | ' |
Adjusted EBITDA, net | 77,352 | 66,175 | 142,534 | 128,778 |
Operating segment | Epsilon | ' | ' | ' | ' |
Segment information | ' | ' | ' | ' |
Revenues | 357,088 | 331,841 | 704,557 | 649,754 |
Income (loss) before income taxes | 25,598 | 24,166 | 38,745 | 40,392 |
Interest expense, net | -6 | -23 | -19 | -39 |
Operating income | 25,592 | 24,143 | 38,726 | 40,353 |
Depreciation and amortization | 36,838 | 34,708 | 73,915 | 68,928 |
Stock compensation expense | 5,262 | 4,742 | 10,253 | 8,729 |
Adjusted EBITDA | 67,692 | 63,593 | 122,894 | 118,010 |
Adjusted EBITDA, net | 67,692 | 63,593 | 122,894 | 118,010 |
Operating segment | Private Label Services and Credit | ' | ' | ' | ' |
Segment information | ' | ' | ' | ' |
Revenues | 557,258 | 479,875 | 1,119,054 | 977,223 |
Income (loss) before income taxes | 194,891 | 184,450 | 423,246 | 395,817 |
Interest expense, net | 29,785 | 31,173 | 60,191 | 62,227 |
Operating income | 224,676 | 215,623 | 483,437 | 458,044 |
Depreciation and amortization | 12,981 | 13,162 | 25,674 | 26,496 |
Stock compensation expense | 3,263 | 3,059 | 6,470 | 5,595 |
Adjusted EBITDA | 240,920 | 231,844 | 515,581 | 490,135 |
Less: Securitization funding costs | 22,300 | 24,694 | 45,211 | 49,179 |
Less: Interest expense on deposits | 8,228 | 7,002 | 16,462 | 14,009 |
Adjusted EBITDA, net | 210,392 | 200,148 | 453,908 | 426,947 |
Corporate/Other | ' | ' | ' | ' |
Segment information | ' | ' | ' | ' |
Revenues | 187 | ' | 228 | ' |
Income (loss) before income taxes | -60,937 | -82,079 | -132,770 | -157,134 |
Interest expense, net | 31,071 | 52,455 | 66,863 | 104,242 |
Operating income | -29,866 | -29,624 | -65,907 | -52,892 |
Depreciation and amortization | 1,753 | 1,369 | 3,807 | 2,343 |
Stock compensation expense | 4,643 | 4,390 | 9,285 | 8,472 |
Adjusted EBITDA | -23,470 | -23,865 | -52,815 | -42,077 |
Adjusted EBITDA, net | -23,470 | -23,865 | -52,815 | -42,077 |
Eliminations | ' | ' | ' | ' |
Segment information | ' | ' | ' | ' |
Revenues | ($4,958) | ($3,761) | ($10,334) | ($6,492) |
SUBSEQUENT_EVENT_Details
SUBSEQUENT EVENT (Details) (Subsequent event, Coldwater Creek Co-brand Credit Card Portfolio, USD $) | Jul. 30, 2014 |
In Millions, unless otherwise specified | |
Subsequent event | Coldwater Creek Co-brand Credit Card Portfolio | ' |
Subsequent Event | ' |
Purchase price of credit card portfolio | $279.50 |