Document and Entity Information
Document and Entity Information - USD ($) $ in Billions | 12 Months Ended | ||
Dec. 31, 2020 | Feb. 26, 2021 | Jun. 30, 2020 | |
Document and Entity Information | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Document Period End Date | Dec. 31, 2020 | ||
Entity File Number | 001-15749 | ||
Entity Registrant Name | ALLIANCE DATA SYSTEMS CORP | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 31-1429215 | ||
Entity Address, Address Line One | 3075 Loyalty Circle | ||
Entity Address, City or Town | Columbus | ||
Entity Address, State or Province | OH | ||
Entity Address, Postal Zip Code | 43219 | ||
City Area Code | 614 | ||
Local Phone Number | 729-4000 | ||
Title of 12(b) Security | Common stock, par value $0.01 per share | ||
Trading Symbol | ADS | ||
Security Exchange Name | NYSE | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
ICFR Auditor Attestation Flag | true | ||
Entity Shell Company | false | ||
Entity Common Stock, Shares Outstanding | 49,695,051 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Year Focus | 2020 | ||
Document Fiscal Period Focus | FY | ||
Entity Central Index Key | 0001101215 | ||
Amendment Flag | false | ||
Entity Public Float | $ 2.1 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
ASSETS | ||
Cash and cash equivalents | $ 3,081.5 | $ 3,874.4 |
Accounts receivable, net, less allowance for doubtful accounts ($4.0 and $3.4 at December 31, 2020 and 2019, respectively) | 383.8 | 451.1 |
Credit card and loan receivables: | ||
Credit card and loan receivables - restricted for securitization investors | 11,208.5 | 13,504.2 |
Other credit card and loan receivables | 5,575.9 | 5,958.9 |
Total credit card and loan receivables | 16,784.4 | 19,463.1 |
Allowance for loan loss | (2,008) | (1,171.1) |
Credit card and loan receivables, net | 14,776.4 | 18,292 |
Credit card receivables held for sale | 408 | |
Inventories, net | 164.3 | 218 |
Other current assets | 534.9 | 268.4 |
Redemption settlement assets, restricted | 693.5 | 600.8 |
Total current assets | 19,634.4 | 24,112.7 |
Property and equipment, net | 310.9 | 282.3 |
Right of use assets - operating | 233.2 | 264.3 |
Deferred tax asset, net | 359.2 | 45.2 |
Intangible assets, net | 81.7 | 153.3 |
Goodwill | 1,369.6 | 954.9 |
Other non-current assets | 558.1 | 682.1 |
Total assets | 22,547.1 | 26,494.8 |
LIABILITIES AND STOCKHOLDERS' EQUITY | ||
Accounts payable | 328.2 | 300.8 |
Accrued expenses | 444.7 | 327.8 |
Current operating lease liabilities | 23.6 | 22.6 |
Current portion of deposits | 6,553.9 | 6,942.4 |
Current portion of non-recourse borrowings of consolidated securitization entities | 1,850.7 | 3,030.8 |
Current portion of long-term and other debt | 101.4 | 101.4 |
Other current liabilities | 220.9 | 338.3 |
Deferred revenue | 898.5 | 807.9 |
Total current liabilities | 10,421.9 | 11,872 |
Deferred revenue | 105.5 | 114.1 |
Deferred tax liability, net | 80 | |
Long-term operating lease liabilities | 276.4 | 291.7 |
Deposits | 3,238.7 | 5,209.3 |
Non-recourse borrowings of consolidated securitization entities | 3,859.2 | 4,253.2 |
Long-term and other debt | 2,704.3 | 2,748.5 |
Other liabilities | 419.5 | 337.7 |
Total liabilities | 21,025.5 | 24,906.5 |
Commitments and contingencies (Note 18) | ||
Stockholders' equity: | ||
Common stock, $0.01 par value; authorized, 200.0 shares; issued, 117.1 and 115.0 shares at December 31, 2020 and 2019, respectively | 1.2 | 1.1 |
Additional paid-in capital | 3,427.2 | 3,257.7 |
Treasury stock, at cost, 67.4 shares at each of December 31, 2020 and 2019 | (6,733.9) | (6,733.9) |
Retained earnings | 4,832.1 | 5,163.3 |
Accumulated other comprehensive loss | (5) | (99.9) |
Total stockholders' equity | 1,521.6 | 1,588.3 |
Total liabilities and stockholders' equity | $ 22,547.1 | $ 26,494.8 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Millions, $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
CONSOLIDATED BALANCE SHEETS | ||
Accounts receivable, net, allowance for doubtful accounts (in dollars) | $ 4 | $ 3.4 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, authorized shares | 200 | 200 |
Common stock, issued shares | 117.1 | 115 |
Treasury stock, shares | 67.4 | 67.4 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Millions, $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Revenues | |||
Services | $ 116.9 | $ 215.5 | $ 295.4 |
Redemption, net | 473.1 | 637.3 | 676.3 |
Finance charges, net | 3,931.4 | 4,728.5 | 4,694.9 |
Total revenue | 4,521.4 | 5,581.3 | 5,666.6 |
Operating expenses | |||
Cost of operations (exclusive of depreciation and amortization disclosed separately below) | 2,077.3 | 2,687.8 | 2,537.2 |
Provision for loan loss | 1,266.2 | 1,187.5 | 1,016 |
General and administrative | 105.7 | 150.6 | 162.5 |
Depreciation and other amortization | 98.5 | 79.9 | 80.7 |
Amortization of purchased intangibles | 85.3 | 96.2 | 112.9 |
Loss on extinguishment of debt | 71.9 | ||
Total operating expenses | 3,633 | 4,273.9 | 3,909.3 |
Operating income | 888.4 | 1,307.4 | 1,757.3 |
Interest expense | |||
Securitization funding costs | 165.9 | 213.4 | 220.2 |
Interest expense on deposits | 219.5 | 225.6 | 165.7 |
Interest expense on long-term and other debt, net | 108.5 | 130 | 156.4 |
Total interest expense, net | 493.9 | 569 | 542.3 |
Income from continuing operations before income taxes | 394.5 | 738.4 | 1,215 |
Provision for income taxes | 99.5 | 165.8 | 269.5 |
Income from continuing operations | 295 | 572.6 | 945.5 |
(Loss) income from discontinued operations, net of taxes | (81.3) | (294.6) | 17.6 |
Net income | $ 213.7 | $ 278 | $ 963.1 |
Basic income (loss) per share (Note 4): | |||
Income from continuing operations (in dollars per share) | $ 6.17 | $ 11.25 | $ 17.24 |
(Loss) income from discontinued operations (in dollars per share) | (1.70) | (5.89) | 0.32 |
Net income per share (in dollars per share) | 4.47 | 5.36 | 17.56 |
Diluted income (loss) per share (Note 4): | |||
Income from continuing operations (in dollars per share) | 6.16 | 11.24 | 17.17 |
(Loss) income from discontinued operations (in dollars per share) | (1.70) | (5.78) | 0.32 |
Net income per share (in dollars per share) | $ 4.46 | $ 5.46 | $ 17.49 |
Weighted average shares (Note 4): | |||
Basic (in shares) | 47.8 | 50 | 54.9 |
Diluted (in shares) | 47.9 | 50.9 | 55.1 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||
Net income | $ 213.7 | $ 278 | $ 963.1 |
Other comprehensive income: | |||
Unrealized gain (loss) on securities available-for-sale | 22.3 | 15.5 | (3.1) |
Tax (expense) benefit | (1.6) | (2.3) | 1.1 |
Unrealized gain (loss) on securities available-for-sale, net of tax | 20.7 | 13.2 | (2) |
Unrealized (loss) gain on cash flow hedges | (0.7) | 0.1 | (0.1) |
Tax benefit | 0.1 | ||
Unrealized (loss) gain on cash flow hedges, net of tax | (0.6) | 0.1 | (0.1) |
Unrealized gain on net investment hedge | 6.5 | 39.1 | |
Tax expense | (1.6) | (9.5) | |
Unrealized gain on net investment hedge, net of tax | 4.9 | 29.6 | |
Foreign currency translation adjustments (inclusive of deconsolidation of $3.8 million and $26.8 million for the years ended December 31, 2020 and December 31, 2019, respectively, related to sale of businesses) | 74.8 | 20 | (25.4) |
Other comprehensive income, net of tax | 94.9 | 38.2 | 2.1 |
Total comprehensive income, net of tax | $ 308.6 | $ 316.2 | $ 965.2 |
CONSOLIDATED STATEMENTS OF CO_2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||
Deconsolidation related to sale of businesses | $ 3.8 | $ 26.8 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Millions, $ in Millions | Common Stock | Preferred Stock | Additional Paid-In Capital | Treasury Stock | Retained EarningsPeriod of Adoption Adjustment | Retained Earnings | Accumulated Other Comprehensive Loss | Period of Adoption Adjustment | Total |
Balance (Accounting Standards Update ASC 606) at Dec. 31, 2017 | $ 9.6 | $ 9.6 | |||||||
Balance (Accounting Standards Update ASU 2016-01) at Dec. 31, 2017 | (1.5) | (1.5) | |||||||
Balance at Dec. 31, 2017 | $ 1.1 | $ 3,099.8 | $ (5,272.5) | $ 4,167.1 | $ (140.2) | $ 1,855.3 | |||
Balance (in shares) at Dec. 31, 2017 | 112.8 | ||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||
Net income | 963.1 | 963.1 | |||||||
Other comprehensive income | 2.1 | 2.1 | |||||||
Stock-based compensation | 80.8 | 80.8 | |||||||
Repurchases of common stock | (443.2) | (443.2) | |||||||
Dividends and dividend equivalent rights declared | (125.9) | (125.9) | |||||||
Other | (8.2) | (8.2) | |||||||
Other (in shares) | 0.2 | ||||||||
Balance at Dec. 31, 2018 | $ 1.1 | 3,172.4 | (5,715.7) | 5,012.4 | (138.1) | 2,332.1 | |||
Balance (in shares) at Dec. 31, 2018 | 113 | ||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||
Net income | 278 | 278 | |||||||
Other comprehensive income | 38.2 | 38.2 | |||||||
Stock-based compensation | 54.5 | 54.5 | |||||||
Issuance of preferred stock | 42.1 | (42.1) | |||||||
Issuance of preferred stock (in shares) | 0.2 | ||||||||
Conversion of preferred stock to common stock (in shares) | 1.5 | (0.2) | |||||||
Repurchases of common stock | (976.1) | (976.1) | |||||||
Dividends and dividend equivalent rights declared | (127.1) | (127.1) | |||||||
Other | (11.3) | (11.3) | |||||||
Other (in shares) | 0.5 | ||||||||
Balance (ASU 2016-13) at Dec. 31, 2019 | $ (485) | $ (485) | |||||||
Balance at Dec. 31, 2019 | $ 1.1 | 3,257.7 | (6,733.9) | 5,163.3 | (99.9) | 1,588.3 | |||
Balance (in shares) at Dec. 31, 2019 | 115 | ||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||
Net income | 213.7 | 213.7 | |||||||
Other comprehensive income | 94.9 | 94.9 | |||||||
Stock-based compensation | 21.3 | 21.3 | |||||||
Dividends and dividend equivalent rights declared | (59.9) | (59.9) | |||||||
Common stock issued as consideration for acquired business | $ 0.1 | 149.1 | 149.2 | ||||||
Common stock issued as consideration for acquired business (in shares) | 1.9 | ||||||||
Other | (0.9) | (0.9) | |||||||
Other (in shares) | 0.2 | ||||||||
Balance at Dec. 31, 2020 | $ 1.2 | $ 3,427.2 | $ (6,733.9) | $ 4,832.1 | $ (5) | $ 1,521.6 | |||
Balance (in shares) at Dec. 31, 2020 | 117.1 |
CONSOLIDATED STATEMENTS OF ST_2
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) - $ / shares | 3 Months Ended | 12 Months Ended | ||||
Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY | ||||||
Common Stock dividends and dividend equivalent rights declared (in dollars per share) | $ 0.21 | $ 0.21 | $ 0.21 | $ 0.63 | $ 0.63 | $ 0.57 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | |||
Net income | $ 213.7 | $ 278 | $ 963.1 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 183.8 | 249.3 | 487.3 |
Deferred income taxes | (222.8) | (186.1) | 16.3 |
Provision for loan loss | 1,266.2 | 1,187.5 | 1,016 |
Non-cash stock compensation | 21.3 | 54.8 | 80.8 |
Amortization of deferred financing costs | 36.5 | 43.4 | 47.3 |
Gain on sale of business | (13.7) | (512.2) | |
Loss on extinguishment of debt | 71.9 | ||
Asset impairment charges | 63.7 | 52 | |
Change in other operating assets and liabilities, net of acquisitions and sales of businesses: | |||
Change in deferred revenue | 60.8 | 2.9 | (17.5) |
Change in accounts receivable | 64.9 | 4.1 | (93) |
Change in accounts payable and accrued expenses | 62.1 | (255) | (93.7) |
Change in other assets | 145.4 | (46.8) | (29.8) |
Change in other liabilities | (50.3) | 32.9 | 49.8 |
Originations of credit card and loan receivables held for sale | (4,799) | ||
Sales of credit card and loan receivables held for sale | 4,928.8 | ||
Other | 51.1 | 241 | 198.5 |
Net cash provided by operating activities | 1,882.7 | 1,217.7 | 2,754.9 |
CASH FLOWS FROM INVESTING ACTIVITIES: | |||
Change in redemption settlement assets | (40.7) | (9.5) | (42.2) |
Change in credit card and loan receivables | 1,783.5 | (2,586.8) | (2,749.6) |
Proceeds from sale of business | 26.7 | 4,409.7 | |
Payments for acquired businesses, net of cash and restricted cash | (266.8) | (6.7) | |
Proceeds from sale of credit card portfolios | 289.5 | 2,061.8 | 1,153.5 |
Purchase of credit card portfolios | (924.8) | ||
Proceeds from sale of real estate | 15.1 | ||
Capital expenditures | (54) | (142.3) | (199.8) |
Purchases of other investments | (40.4) | (20.2) | (89.5) |
Maturities/sales of other investments | 76.5 | 60 | 47.4 |
Other | 4.5 | 8.2 | |
Net cash provided by investing activities | 1,774.3 | 2,860.8 | (1,872) |
CASH FLOWS FROM FINANCING ACTIVITIES: | |||
Borrowings under debt agreements | 1,276 | 3,111.3 | 4,575.3 |
Repayments of borrowings | (1,320.5) | (5,981.8) | (4,893) |
Non-recourse borrowings of consolidated securitization entities | 2,419.2 | 4,851.8 | 3,714.6 |
Repayments/maturities of non-recourse borrowings of consolidated securitization entities | (4,095.7) | (5,219) | (4,871) |
Net (decrease) increase in deposits | (2,370) | 355.6 | 864.1 |
Payment of debt extinguishment costs | (46.1) | ||
Payment of deferred financing costs | (18.8) | (45.4) | (25.8) |
Proceeds from issuance of common stock | 2.8 | 12.4 | 17.6 |
Dividends paid | (60.6) | (127.4) | (125.2) |
Purchase of treasury shares | (976.1) | (443.2) | |
Other | 1.1 | (27) | (31.3) |
Net cash used in financing activities | (4,166.5) | (4,091.7) | (1,217.9) |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 14.6 | 3.6 | (12) |
Change in cash, cash equivalents and restricted cash | (494.9) | (9.6) | (347) |
Cash, cash equivalents and restricted cash at beginning of year | 3,958.1 | 3,967.7 | 4,314.7 |
Cash, cash equivalents and restricted cash at end of year | 3,463.2 | 3,958.1 | 3,967.7 |
SUPPLEMENTAL CASH FLOW INFORMATION: | |||
Interest paid | 487.6 | 671.9 | 719.8 |
Income taxes paid, net | $ 267.5 | $ 1,070.6 | $ 234 |
DESCRIPTION OF BUSINESS AND BAS
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION | 12 Months Ended |
Dec. 31, 2020 | |
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION | |
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION | 1. DESCRIPTION OF BUSINES S AND BASIS OF PRESENTATION Description of the Business ® ® ® Basis of Presentation ® |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation In accordance with Accounting Standards Codification (“ASC”) 860, “Transfers and Servicing,” and ASC 810, “Consolidation,” the Company is the primary beneficiary of certain trusts. The Company, through its involvement in the activities of these trusts, has the power to direct the activities that most significantly impact the economic performance of such trusts, and the obligation (or right) to absorb losses (or receive benefits) of the trusts that could potentially be significant. As such, the Company consolidates these trusts in its consolidated financial statements. For investments in any entities in which the Company owns 50% or less of the outstanding voting stock but in which the Company has significant influence over operating and financial decisions, the Company applies the equity method of accounting. Cash and Cash Equivalents Accounts Receivable, net Credit Card and Loan Receivables — and ability to hold credit card and loan receivables for the foreseeable future can be made with a high degree of certainty given the maturity distribution of the Company’s money market deposits, certificates of deposit and other funding instruments; the historic ability to replace maturing certificates of deposits and other borrowings with new deposits or borrowings; and historic credit card and loan payment activity. Due to the homogenous nature of the Company’s credit card and loan receivables, amounts are classified as held for investment on an individual client portfolio basis. Credit Card and Loan Receivables Held for Sale Transfers of Financial Assets Allowance for Loan Loss Under CECL, the allowance for loan loss is an estimate of expected credit losses, measured over the estimated life of its credit card and loan receivables that considers forecasts of future economic conditions in addition to information about past events and current conditions. The estimate under the CECL model is significantly influenced by the composition, characteristics and quality of the Company’s portfolio of credit card and loan receivables, as well as the prevailing economic conditions and forecasts utilized. The estimate of the allowance for loan loss includes an estimate for uncollectible principal as well as unpaid interest and fees. Charge-offs of principal amounts, net of recoveries are deducted from the allowance. Charge-offs for unpaid interest and fees as well as any adjustments to the allowance associated with unpaid interest and fees are recorded as a reduction to finance charges, net. The allowance is maintained through an adjustment to the provision for loan loss and is evaluated for appropriateness. In estimating its allowance for loan loss, for each identified group, management utilizes various models and estimation techniques based on historical loss experience, current conditions, reasonable and supportable forecasts and other relevant factors. These models utilize historical data and applicable macroeconomic variables with statistical analysis and behavioral relationships with credit performance. The Company’s quantitative estimate of expected credit losses under CECL is impacted by certain forecasted economic factors. The Company considers the forecast used to be reasonable and supportable over the estimated life of the credit card and loan receivables, with no reversion period. In addition to the quantitative estimate of expected credit losses, the Company also incorporates qualitative adjustments for certain factors such as Company-specific risks, changes in current economic conditions that may not be captured in the quantitatively derived results, or other relevant factors to ensure the allowance for loan loss reflects the Company’s best estimate of current expected credit losses. As permitted by ASC 326, “Financial Instruments—Credit Losses,” the Company excludes unbilled finance charges from its amortized cost basis of credit card and loan receivables. See Note 8, “Credit Card and Loan Receivables,” for more information about the Company’s allowance for loan loss. Inventories, net 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 an analysis of historical experience. Redemption Settlement Assets, Restricted Property and Equipment one three Goodwill Intangible Assets Income Taxes Deferred income tax assets and liabilities are computed on differences between the financial statement bases and tax bases of assets and liabilities at the enacted tax rates. Changes in deferred income tax assets and liabilities associated with components of other comprehensive income are charged or credited directly to other comprehensive income. Otherwise, changes in deferred income tax assets and liabilities are included as a component of income tax expense. The effect on deferred income tax assets and liabilities attributable to changes in enacted tax rates are charged or credited to income tax expense in the period of enactment. Valuation allowances are established for certain deferred tax assets when realization is less than more-likely-than-not. Liabilities are established for uncertain tax positions taken or positions expected to be taken in income tax returns when such positions, in our judgment, do not meet a more-likely-than-not threshold based on the technical merits of the positions. Additionally, liabilities may be established for uncertain tax positions when, in our judgment, the more-likely-than-not threshold is met, but the position does not rise to the level of highly certain based upon the technical merits of the position. Estimated interest and penalties related to uncertain tax positions are included as a component of income tax expense. The Company uses the portfolio approach relating to the release of stranded tax effects recorded in accumulated other comprehensive loss. Under the portfolio approach, the net unrealized gains or losses recorded in accumulated other comprehensive loss would be eliminated only on the date the entire portfolio of available-for-sale securities is sold or otherwise disposed of. Derivative Instruments Derivatives Designated as Hedging Instruments Derivatives not Designated as Hedging Instruments The Company’s derivative instruments were immaterial to the consolidated balance sheets and statements of income for the periods presented. Other Investments Revenue Recognition See Note 3, “Revenue,” for more information about the Company’s revenue and the associated timing and basis of revenue recognition. Earnings Per Share Currency Translation statements are included in accumulated other comprehensive loss. The Company recognized net foreign transaction losses of $0.5 million for the year ended December 31, 2020, gains of $1.3 million for the year ended December 31, 2019, and gains of $0.6 million for the year ended December 31, 2018. Leases Marketing and Advertising Costs Stock Compensation Expense Management Estimates Recently Issued Accounting Standards In December 2019, the Financial Accounting Standards Board (“FASB”) issued ASU 2019-12, “Simplifying the Accounting for Income Taxes.” ASU 2019-12 eliminates certain exceptions within ASC 740, “Income Taxes,” and clarifies certain aspects of ASC 740 to promote consistency among reporting entities. ASU 2019-12 is effective for interim and annual reporting periods beginning after December 15, 2020, with early adoption permitted. Most amendments within the standard are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis. The Company does not expect the adoption of ASU 2019-12 to have a material impact on its consolidated financial statements. In March 2020, the FASB issued ASU 2020-04, “Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” This ASU provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this ASU apply only to contracts and hedging relationships that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued due to reference rate reform. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022. This ASU is elective and is effective upon issuance for all entities. The Company is evaluating the impact that adoption of ASU 2020-04 will have on its consolidated financial statements. Recently Adopted Accounting Standards In June 2016, the FASB issued ASU 2016-13, “Measurement of Credit Losses on Financial Instruments,” or ASC 326. This standard, referred to as CECL, required entities to utilize a financial instrument impairment model to establish an allowance based on expected losses over the life of the exposure rather than a model based on an incurred loss approach. Estimates of expected credit losses under the CECL model are based on relevant information about past events, current conditions, and reasonable and supportable forward-looking forecasts regarding the collectability of the loan portfolio. The Company adopted CECL on January 1, 2020 and recorded an increase in its allowance for loan loss at adoption of $644.0 million, which was recorded through a cumulative-effect adjustment to retained earnings, net of taxes. CECL also expanded the disclosure requirements regarding an entity’s assumptions, models, and methods for estimating its allowance for loan loss. See Note 8, “Credit Card and Loan Receivables,” for the Company’s CECL disclosures. In addition, CECL modified the impairment model for available-for-sale debt securities and provided for a simplified accounting model for purchased financial assets with credit deterioration since their origination. CECL impacts the Company’s valuation of its accounts receivable and available-for-sale debt securities. The Company’s adoption of CECL with respect to accounts receivable and available-for-sale debt securities did not have a material impact on its consolidated financial statements. In August 2018, the FASB issued ASU 2018-13, “Changes to the Disclosure Requirements for Fair Value Measurement.” ASU 2018-13 modifies the disclosure requirements on fair value measurements from ASC 820, “Fair Value Measurement.” The Company’s adoption of this standard on January 1, 2020 did not have a material impact on its consolidated financial statements. In August 2018, the FASB issued ASU 2018-15, “Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract.” ASU 2018-15 requires customers in a cloud computing arrangement that is a service contract to follow the internal-use software guidance in ASC 350-40, “Intangibles—Goodwill and Other—Internal-Use Software,” to determine which implementation costs may be capitalized. The amendments in ASU 2018-15 can be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Company adopted ASU 2018-15 on January 1, 2020 on a prospective basis and the adoption did not have a material impact on its consolidated financial statements. |
REVENUE
REVENUE | 12 Months Ended |
Dec. 31, 2020 | |
REVENUE | |
REVENUE | 3. REVENUE Under ASC 606, revenue is recognized when control of the promised goods or services is transferred to the customer, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The Company’s contracts with its customers state the terms of sale, including the description, quantity, and price of the product or service purchased. Payment terms can vary by contract, but the period between invoicing and when payment is due is not significant. Taxes assessed on revenue-producing transactions are excluded from revenues. The Company’s products and services are reported under two segments—LoyaltyOne and Card Services, as shown below. The following tables present revenue disaggregated by major source, as well as geographic region based on the location of the subsidiary that generally correlates with the location of the customer: Corporate/ Year Ended December 31, 2020 LoyaltyOne Card Services Other Total (in millions) Disaggregation of Revenue by Major Source: Coalition loyalty program $ 262.5 $ — $ — $ 262.5 Short-term loyalty programs 487.7 — — 487.7 Servicing fees, net — (174.9) — (174.9) Other 1.8 — 0.1 1.9 Revenue from contracts with customers $ 752.0 $ (174.9) $ 0.1 $ 577.2 Finance charges, net — 3,931.4 — 3,931.4 Investment income 12.8 — — 12.8 Total $ 764.8 $ 3,756.5 $ 0.1 $ 4,521.4 Corporate/ Year Ended December 31, 2019 LoyaltyOne Card Services Other Total (in millions) Disaggregation of Revenue by Major Source: Coalition loyalty program $ 290.1 $ — $ — $ 290.1 Short-term loyalty programs 635.5 — — 635.5 Servicing fees, net — (180.7) — (180.7) Other 94.9 — 0.4 95.3 Revenue from contracts with customers $ 1,020.5 $ (180.7) $ 0.4 $ 840.2 Finance charges, net — 4,728.5 — 4,728.5 Investment income 12.6 — — 12.6 Total $ 1,033.1 $ 4,547.8 $ 0.4 $ 5,581.3 Corporate/ Year Ended December 31, 2018 LoyaltyOne Card Services Other Total (in millions) Disaggregation of Revenue by Major Source: Coalition loyalty program $ 352.3 $ — $ — $ 352.3 Short-term loyalty programs 613.8 — — 613.8 Servicing fees, net — (97.3) — (97.3) Other 90.7 — 0.6 91.3 Revenue from contracts with customers $ 1,056.8 $ (97.3) $ 0.6 $ 960.1 Finance charges, net — 4,694.9 — 4,694.9 Investment income 11.6 — — 11.6 Total $ 1,068.4 $ 4,597.6 $ 0.6 $ 5,666.6 Corporate/ Year Ended December 31, 2020 LoyaltyOne Card Services Other Total (in millions) Disaggregation of Revenue by Geographic Region: United States $ 11.1 $ 3,756.5 $ 0.1 $ 3,767.7 Canada 286.9 — — 286.9 Europe, Middle East and Africa 332.6 — — 332.6 Asia Pacific 80.5 — — 80.5 Other 53.7 — — 53.7 Total $ 764.8 $ 3,756.5 $ 0.1 $ 4,521.4 Corporate/ Year Ended December 31, 2019 LoyaltyOne Card Services Other Total (in millions) Disaggregation of Revenue by Geographic Region: United States $ 40.1 $ 4,547.8 $ 0.4 $ 4,588.3 Canada 352.2 — — 352.2 Europe, Middle East and Africa 449.1 — — 449.1 Asia Pacific 121.7 — — 121.7 Other 70.0 — — 70.0 Total $ 1,033.1 $ 4,547.8 $ 0.4 $ 5,581.3 Corporate/ Year Ended December 31, 2018 LoyaltyOne Card Services Other Total (in millions) Disaggregation of Revenue by Geographic Region: United States $ 23.1 $ 4,597.6 $ 0.6 $ 4,621.3 Canada 411.3 — — 411.3 Europe, Middle East and Africa 463.2 — — 463.2 Asia Pacific 122.0 — — 122.0 Other 48.8 — — 48.8 Total $ 1,068.4 $ 4,597.6 $ 0.6 $ 5,666.6 LoyaltyOne LoyaltyOne provides coalition and short-term loyalty programs through the Company’s Canadian AIR MILES Reward Program and BrandLoyalty. The AIR MILES Reward Program is a coalition loyalty program for sponsors, who pay LoyaltyOne a fee per AIR MILES reward mile issued, in return for which LoyaltyOne provides all marketing, customer service, rewards and redemption management. BrandLoyalty designs, implements, conducts and evaluates innovative and tailor-made short-term loyalty programs for grocers worldwide. Total consideration from the issuance of AIR MILES reward miles is allocated to three performance obligations: redemption, service, and brand, based on a relative standalone selling price basis. Because the standalone selling price is not directly observable for the three performance obligations, the Company estimates the standalone selling price for the redemption and the service performance obligations based on cost plus a reasonable margin. The Company estimates the standalone selling price of the brand performance obligation using a relief from royalty approach. Accordingly, management determines the estimated standalone selling price by considering multiple inputs and methods, including discounted cash flows and available market data in consideration of applicable margins and royalty rates to utilize. The number of AIR MILES reward miles issued and redeemed are factored into the estimates, as management estimates the standalone selling prices and volumes over the term of the respective agreements in order to determine the allocation of consideration to each performance obligation delivered. The redemption performance obligation incorporates the expected number of AIR MILES reward miles to be redeemed, and therefore, the amount of redemption revenue recognized is subject to management’s estimate of breakage, or those AIR MILES reward miles estimated to be unredeemed by the collector base. Redemption revenue is recognized at a point in time, as the AIR MILES reward miles are redeemed. For the fulfillment of certain rewards where the AIR MILES Reward Program does not control the goods or services before they are transferred to the collector, revenue is recorded on a net basis. Service revenue is recognized over time using a time-elapsed output method, the estimated life of an AIR MILES reward mile. Revenue from the brand is recognized over time, using an output method, when an AIR MILES reward mile is issued. Revenue associated with both the service and brand is included in service revenue in the Company’s consolidated statements of income. The amount of revenue recognized in a period is subject to the estimate of breakage and the estimated life of an AIR MILES reward mile. Breakage and the life of an AIR MILES reward mile are based on management’s estimate after viewing and analyzing various historical trends including vintage analysis, current run rates and other pertinent factors, such as the impact of macroeconomic factors and changes in the program structure. For the years ended December 31, 2018, 2019 and 2020, the Company’s breakage rate was 20%. For the years ended December 31, 2018, 2019 and 2020, the Company’s estimated life of a mile was 38 months. The short-term loyalty programs typically last between 6 20 weeks Contract Liabilities A reconciliation of contract liabilities for the AIR MILES Reward Program is as follows: Deferred Revenue Service Redemption Total (in millions) Balance at January 1, 2019 $ 248.0 $ 627.3 $ 875.3 Cash proceeds 192.0 313.3 505.3 Revenue recognized (1) (193.7) (309.2) (502.9) Other — 0.6 0.6 Effects of foreign currency translation 12.3 31.4 43.7 Balance at December 31, 2019 $ 258.6 $ 663.4 $ 922.0 Cash proceeds 173.1 286.2 459.3 Revenue recognized (1) (188.8) (211.5) (400.3) Other — 1.4 1.4 Effects of foreign currency translation 4.3 17.3 21.6 Balance at December 31, 2020 $ 247.2 $ 756.8 $ 1,004.0 Amounts recognized in the consolidated balance sheets: Deferred revenue (current) $ 141.7 $ 756.8 $ 898.5 Deferred revenue (non-current) $ 105.5 $ — $ 105.5 (1) Reported on a gross basis herein. The deferred redemption obligation associated with the AIR MILES Reward Program is effectively due on demand from the collector base, thus the timing of revenue recognition is based on the redemption by the collector. Service revenue is amortized over the expected life of a mile, with the deferred revenue balance expected to be recognized into revenue in the amount of $141.7 million in 20 21 2022 2023 2024 Additionally, contract liabilities for the Company’s short-term loyalty programs are recognized in other current liabilities in the Company’s consolidated balance sheets. In 2020, the beginning balance as of January 1, 2020 was $122.8 million and the closing balance as of December 31, 2020 was $66.9 million, with the change due to revenue recognized of approximately $375.9 million, offset in part by cash payments received in advance of program performance revenue during the year ended December 31, 2020. In 2019, the beginning balance as of January 1, 2019 was $110.2 million and the closing balance as of December 31, 2019 was $122.8 million, with the change due to cash payments received in advance of program performance, offset in part by revenue recognized of approximately $526.6 million during the year ended December 31, 2019. Card Services Card Services is a comprehensive provider of market-leading private label, co-brand, general purpose and business credit card programs, digital payments, including Bread, and Comenity-branded financial services. Card Services provides risk management solutions, account origination, funding, transaction processing, customer care, collections and marketing services. Finance charges, net Servicing fees, net Revenue earned from retailers primarily consists of merchant and interchange fees, which are transaction fees charged to the merchant for the processing of credit card transactions. Merchant and interchange fees are recognized at a point in time upon the cardholder purchase. Revenue earned from cardholders primarily consists of monthly fees from the purchase of certain payment protection products purchased by our cardholders. The fees are based on the average cardholder account balance, and these products can be cancelled at any time by the cardholder. Revenue is recognized over time using a time-elapsed output method. Contract Costs. Amortization of contract costs recorded as a reduction to revenue totaled $65.3 million, $71.8 million and $68.7 million for the years ended December 31, 2020, 2019 and 2018, respectively. Amortization of contract costs recorded to cost of operations expense totaled $11.9 million, $11.9 million and $9.8 million for the years ended December 31, 2020, 2019 and 2018, respectively. The Company performs an impairment assessment when events or changes in circumstances indicate that the carrying amount of contract costs may not be recoverable. Due to deteriorated economic conditions from COVID-19 resulting in retail store closures and a significant decline in credit sales, the Company’s impairment assessments for certain of its Card Services deferred contract costs resulted in asset impairment charges of $38.1 million that are included in cost of operations in its consolidated statement of income for the year ended December 31, 2020. No impairment related to deferred contract costs was incurred during the years ended December 31, 2019 and 2018. Practical Expedients The Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year The Company has elected the practical expedient from ASC 340-40 with respect to contract costs, and expenses the incremental costs as incurred for those costs that would otherwise be recognized with an amortization period of one year |
EARNINGS PER SHARE
EARNINGS PER SHARE | 12 Months Ended |
Dec. 31, 2020 | |
EARNINGS PER SHARE | |
EARNINGS PER SHARE | 4. EARNINGS PER SHARE The following table sets forth the computation of basic and diluted net income per share of common stock for the periods indicated: Years Ended December 31, 2020 2019 2018 (in millions, except per share amounts) Basic income per share: Numerator: Income from continuing operations $ 295.0 $ 572.6 $ 945.5 Less: Dividends declared on preferred stock — 2.8 — Less: Allocation of undistributed earnings — 6.8 — Income from continuing operations - basic 295.0 563.0 945.5 (Loss) income from discontinued operations, net of tax (81.3) (294.6) 17.6 Net income - basic $ 213.7 $ 268.4 $ 963.1 Denominator: Weighted average shares, basic 47.8 50.0 54.9 Basic income (loss) attributable to common stockholders per share: Income from continuing operations $ 6.17 $ 11.25 $ 17.24 (Loss) income from discontinued operations $ (1.70) $ (5.89) $ 0.32 Net income per share $ 4.47 $ 5.36 $ 17.56 Diluted income per share (1) : Numerator: Income from continuing operations $ 295.0 $ 572.6 $ 945.5 (Loss) income from discontinued operations, net of tax (81.3) (294.6) 17.6 Net income $ 213.7 $ 278.0 $ 963.1 Denominator: Weighted average shares, basic 47.8 50.0 54.9 Weighted average effect of dilutive securities: Shares from assumed conversion of preferred stock — 0.8 — Net effect of dilutive stock options and unvested restricted stock (2) 0.1 0.1 0.2 Denominator for diluted calculation 47.9 50.9 55.1 Diluted income (loss) attributable to common stockholders per share: Income from continuing operations $ 6.16 $ 11.24 $ 17.17 (Loss) income from discontinued operations $ (1.70) $ (5.78) $ 0.32 Net income per share $ 4.46 $ 5.46 $ 17.49 (1) Computed using the if-converted method, as the result was more dilutive. (2) For the years ended December 31, 2020, 2019 and 2018, a de minimis amount of restricted stock units was excluded from each calculation of weighted average dilutive common shares as the effect would have been anti-dilutive. On April 25, 2019, the Company entered into an exchange agreement with ValueAct Holdings, L.P. pursuant to which ValueAct exchanged an aggregate of 1,500,000 shares of the Company’s common stock for an aggregate of 150,000 shares of Series A Non-Voting Convertible Preferred Stock (“preferred stock”). In October 2019, ValueAct converted all 150,000 shares of preferred stock back to common stock. For the year ended December 31, 2019, the Company’s calculation of basic and diluted EPS was computed using the two-class method for those periods in which participating securities were outstanding. The two-class method is an earnings allocation that determines EPS for each class of common stock and participating securities according to dividends declared and participation rights in undistributed earnings. |
ACQUISITIONS
ACQUISITIONS | 12 Months Ended |
Dec. 31, 2020 | |
ACQUISITIONS | |
ACQUISITIONS | 5. ACQUISITIONS 2020 Acquisitions: Bread On September 28, 2020, the Company acquired 3.5 million preferred Series D Shares of Lon Inc., a Delaware corporation (“Bread”), for approximately $25.0 million, which represented an approximate 6% ownership interest in Bread. Bread is a technology-driven digital payments company, offering an omnichannel solution for retailers and platform capabilities to bank partners. On December 3, 2020, the Company acquired the remaining interest in Bread. In accordance with ASC 805, the Company’s approximate 6% interest was remeasured at fair value when control of Bread was obtained on December 3, 2020; no gain or loss was recognized on the remeasurement. Consideration for the 100% ownership of Bread consisted of cash of $275.0 million, equity of $149.2 million with the issuance of 1.9 million shares of the Company’s common stock, and deferred cash consideration of $75.0 million due December 2021, subject to customary closing purchase price adjustments. Consideration, net of cash and restricted cash acquired, was $491.0 million. The following table summarizes the allocation of the consideration and the respective fair values of the assets acquired and liabilities assumed in the Bread transaction as of the acquisition date, net of cash acquired: As of (in millions) Installment loan receivables $ 111.7 Accounts receivable 0.2 Other current assets 0.6 Property and equipment 0.3 Developed technology 90.7 Right of use assets - operating 3.6 Deferred tax asset, net 7.0 Intangible assets 11.3 Goodwill 369.6 Total assets acquired 595.0 Accounts payable 2.0 Accrued expenses 2.9 Operating lease liabilities 3.5 Non-recourse borrowings of consolidated securitization entities 95.6 Total liabilities assumed 104.0 Net assets acquired, net of cash and restricted cash $ 491.0 The goodwill resulting from the acquisition was not deductible for tax purposes. Bread utilizes certain statutory trusts to securitize its installment loan receivables. As part of its acquisition, the Company acquired $111.7 million of installment loan receivables restricted for securitization investors. In addition, the Company assumed two warehouse facilities of $95.6 million utilized to fund securitized loan receivables. See Note 17, “Debt,” for more information. 2019 Acquisitions: On February 7, 2019, the Company acquired certain assets as well as the assembled workforce and related office lease agreements of blispay inc. (“Blispay”), a financial technology company, for cash consideration of $6.7 million, and a $1.0 million limited guarantee was issued by the Company as part of the transaction. The acquisition was determined to constitute a business combination under ASC 805, “Business Combinations.” Total assets acquired were $7.3 million, including $5.0 million of capitalized software and $2.3 million of goodwill, with the fair value of the guarantee determined to be approximately $0.6 million on the acquisition date. |
DISPOSITION
DISPOSITION | 12 Months Ended |
Dec. 31, 2020 | |
DISPOSITION | |
DISPOSITION | 6. DISPOSITION On January 10, 2020, the Company sold Precima ® January 10, 2020 (in millions) Total consideration (1) $ 43.8 Net carrying value of assets and liabilities (including other comprehensive income) 26.8 Allocation of goodwill 3.2 Strategic transaction costs 5.8 Pre-tax gain on sale of business, net of strategic transaction costs $ 8.0 (1) Consideration as defined included cash associated with the sold Precima entities, which was $10.8 million . |
DISCONTINUED OPERATIONS
DISCONTINUED OPERATIONS | 12 Months Ended |
Dec. 31, 2020 | |
DISCONTINUED OPERATIONS | |
DISCONTINUED OPERATIONS | 7. DISCONTINUED OPERATIONS Effective April 12, 2019, the Company entered into a definitive agreement to sell its Epsilon segment to Publicis Groupe S.A. for $4.4 billion in cash, subject to certain specified adjustments. Beginning in the first quarter of 2019, Epsilon met the criteria set forth in ASC 205-20, “Presentation of Financial Statements — Discontinued Operations.” The sale of Epsilon was completed on July 1, 2019, and the pre-tax gain is shown in the table below. July 1, 2019 (in millions) Consideration received (1) $ 4,451.9 Net carrying value of assets and liabilities (including other comprehensive income) 3,939.7 Pre-tax gain on deconsolidation $ 512.2 (1) Consideration as defined included cash associated with the sold Epsilon entities, which was $42.2 million. The Company recorded transaction costs of approximately $79.0 million for the year ended December 31, 2019 and recorded an after-tax loss on sale of $252.1 million, which is included in loss from discontinued operations, net of taxes. Following the sale of Epsilon, Card Services has continued its existing contractual relationships with Epsilon for digital marketing services. The following table summarizes the results of discontinued operations for the periods presented: Years Ended December 31, 2020 2019 2018 (in millions) Revenue $ — $ 999.6 $ 2,175.1 Cost of operations (exclusive of depreciation and amortization disclosed separately below) 110.0 993.9 1,744.4 Depreciation and other amortization — 29.7 115.4 Amortization of purchased intangibles — 43.5 178.3 Interest expense (1) — 64.1 128.3 Gain on sale of Epsilon — (512.2) — Income before (benefit) provision from income taxes (110.0) 380.6 8.7 (Benefit) provision for income taxes (28.7) 675.2 (8.9) (Loss) income from discontinued operations, net of taxes $ (81.3) $ (294.6) $ 17.6 (1) The Company’s credit agreement, as amended, provided that upon consummation of the sale of Epsilon, a mandatory payment of $500.0 million of the revolving credit facility was required and all of the Company’s outstanding senior notes were required to be redeemed. As such, interest expense has been allocated to discontinued operations on the basis of the Company’s $500.0 million mandatory repayment of its revolving line of credit and redemption of its $1.9 billion in senior notes outstanding. For the year ended December 31, 2020, loss from discontinued operations reflects a loss contingency associated with indemnification issues with the purchaser. For the years ended December 31, 2019 and 2018, loss from discontinued operations reflects the results of operations of the Company’s former Epsilon segment, direct costs identifiable to the Epsilon segment including a loss contingency associated with indemnification issues with the purchaser and the allocation of interest expense on corporate debt. See Note 18, “Commitments and Contingencies,” for additional information with respect to the loss contingency. Depreciation and amortization and capital expenditures from discontinued operations for the periods presented are as follows: Years Ended December 31, 2020 2019 2018 (in millions) Depreciation and amortization $ — $ 73.2 $ 293.7 Capital expenditures $ — $ 55.8 $ 106.5 |
CREDIT CARD AND LOAN RECEIVABLE
CREDIT CARD AND LOAN RECEIVABLES | 12 Months Ended |
Dec. 31, 2020 | |
CREDIT CARD AND LOAN RECEIVABLES | |
CREDIT CARD AND LOAN RECEIVABLES | 8. CREDIT CARD AND LOAN RECEIVABLES Quantitative information about the components of the Company’s credit card and loan receivables is presented in the table below: December 31, December 31, 2020 2019 (in millions) Credit card receivables $ 16,376.4 $ 19,047.8 Installment loan receivables 118.0 — Other 290.0 415.3 Total credit card and loan receivables 16,784.4 19,463.1 Less: Credit card and loan receivables – restricted for securitization investors 11,208.5 13,504.2 Other credit card and loan receivables $ 5,575.9 $ 5,958.9 Allowance for Loan Loss Effective January 1, 2020, the Company adopted ASC 326 on a modified retrospective approach and applied a CECL model to determine its allowance for loan loss. The allowance for loan loss is an estimate of expected credit losses, measured over the estimated life of its credit card and loan receivables that considers forecasts of future economic conditions in addition to information about past events and current conditions. The estimate under the CECL model is significantly influenced by the composition, characteristics and quality of the Company’s portfolio of credit card and loan receivables, as well as the prevailing economic conditions and forecasts utilized. The estimate of the allowance for loan loss includes an estimate for uncollectible principal as well as unpaid interest and fees. Charge-offs of principal amounts, net of recoveries are deducted from the allowance. The allowance is maintained through an adjustment to the provision for loan loss and is evaluated for appropriateness. Prior to January 1, 2020, the Company’s allowance for loan loss was determined utilizing an incurred loss model under ASC 450, “Contingencies.” Credit Card Receivables ASC 326 requires entities to use a “pooled” approach to estimate expected credit losses for financial assets with similar risk characteristics. As part of its CECL implementation, the Company evaluated multiple risk characteristics of its credit card receivables portfolio, and determined delinquency status and credit quality to be the most significant characteristics for estimating expected credit losses. To estimate its allowance for loan loss, the Company segregates its credit card receivables into four groups with similar risk characteristics, on the basis of delinquency status and credit quality risk score. These risk characteristics are evaluated on at least an annual basis, or more frequently as facts and circumstances warrant. The Company’s credit card receivables do not have stated maturities and therefore prepayments are not factored into the determination of the estimated life of the credit card receivables. In determining the estimated life of a credit card and loan receivable, payments were applied to the measurement date balance with no payments allocated to future purchase activity. The Company uses a combination of First In First Out (“FIFO”) and the Credit Card Accountability, Responsibility, and Disclosure Act of 2009 (“CARD Act”) methodology to model balance paydown. The Company’s groups of pooled financial assets with similar risk characteristics and their estimated life is as follows: Estimated Life (in months) Group A (Current, risk score - high) 14 Group B (Current, risk score - low) 19 Group C (Delinquent, risk score - high) 17 Group D (Delinquent, risk score - low) 26 In estimating its allowance for loan loss, for each identified group, management utilizes various models and estimation techniques based on historical loss experience, current conditions, reasonable and supportable forecasts and other relevant factors. These models utilize historical data and applicable macroeconomic variables with statistical analysis and behavioral relationships with credit performance. The Company’s quantitative estimate of expected credit losses under CECL is impacted by certain forecasted economic factors. Management utilizes a third party service to analyze a number of scenarios, but uses one scenario to determine the macroeconomic variables over the forecast period. The Company considers the forecast used to be reasonable and supportable over the estimated life of the credit card receivables, with no reversion period. In addition to the quantitative estimate of expected credit losses, the Company also incorporates qualitative adjustments for certain factors such as Company-specific risks, changes in current economic conditions that may not be captured in the quantitatively derived results, or other relevant factors to ensure the allowance for loan loss reflects the Company’s best estimate of current expected credit losses. As permitted by ASC 326, the Company excludes unbilled finance charges from its amortized cost basis of credit card and loan receivables. At December 31, 2020, unbilled finance charges were $219.4 million and included in other credit card and loan receivables in the Company’s consolidated balance sheet. Installment Loan Receivables As part of its acquisition of Bread, the Company acquired certain installment loan receivables, and in accordance with ASC 326, the Company established on the date of acquisition, an allowance for loan loss of approximately $5.7 million, which was recorded through the provision for loan loss. The allowance for loan loss was established by utilizing a migration model over the remaining life of the loans. The model segmented accounts based on three attributes: delinquency, risk score and remaining term. As of December 31, 2020, the allowance for loan loss related to installment loan receivables was $5.7 million. Allowance for Loan Loss Rollforward The following table presents the Company’s allowance for loan loss for its credit card and loan receivables for the years indicated. Years Ended December 31, 2020 (1) 2019 2018 (in millions) Balance at beginning of year $ 1,171.1 $ 1,038.3 $ 1,119.3 Adoption of ASC 326 (2) 644.0 — — Provision for loan loss 1,266.2 1,187.5 1,016.0 Allowance associated with credit card and loan receivables transferred — — (54.8) Change in estimate for uncollectible unpaid interest and fees 10.0 — 25.0 Recoveries 204.6 234.5 214.2 Principal charge-offs (1,287.9) (1,289.2) (1,281.4) Balance at end of year $ 2,008.0 $ 1,171.1 $ 1,038.3 (1) With the acquisition of Bread in December 2020, the Company acquired certain installment loans which represented a separate portfolio segment. As the amount of the allowance for loan loss was immaterial, the amounts were included in the above table. (2) Recorded January 1, 2020 through a cumulative-effect adjustment to retained earnings, net of taxes. During the year ended December 31, 2020, the increase in the allowance for loan loss was due to a $644.0 million cumulative-effect adjustment for the adoption of ASC 326 as well as deterioration of the macroeconomic outlook due to COVID-19. Net Charge-offs Net charge-offs include the principal amount of losses that are deemed uncollectible, 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 a cost of operations expense. Credit card receivables, including unpaid interest and fees, are charged-off in the month during which an account becomes 180 days contractually past due, except in the case of customer bankruptcies or death. Installment loan receivables, including unpaid interest, are charged-off when a loan is 120 days past due. Credit card receivables, including unpaid interest and fees, associated with customer bankruptcies or death are charged-off in 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 The Company records the actual charge-offs for unpaid interest and fees as a reduction to finance charges, net. For the years ended December 31, 2020, 2019 and 2018, actual charge-offs for unpaid interest and fees were $717.4 million, $808.6 million and $803.1 million, respectively. Delinquencies An account is contractually delinquent if the Company does not receive the minimum payment by the specified due date. It is the Company’s policy to continue to accrue interest and fee income on all accounts, except in limited circumstances, until the account balance and all related interest and other fees are paid or charged-off, typically at 180 days delinquent for credit card receivables and 120 days delinquent for installment loan receivables. 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 amortized cost basis of the aging analysis of the Company’s credit card and loan receivables portfolio: Aging Analysis of Delinquent Amortized Cost 31 to 60 days 61 to 90 days 91 or more days delinquent Total Current Total (in millions) As of December 31, 2020 (1) $ 272.5 $ 203.3 $ 439.8 $ 915.6 $ 15,578.8 $ 16,494.4 As of December 31, 2019 $ 399.1 $ 293.9 $ 698.4 $ 1,391.4 $ 17,656.4 $ 19,047.8 (1) With the acquisition of Bread in December 2020, the Company acquired certain installment loans. As the amount of the delinquencies related to installment loans was immaterial, the amounts were included in the above table. The practice of re-aging an account may affect credit card receivables delinquencies and charge-offs. A re-age of an account is intended to assist delinquent cardholders who have experienced financial difficulties but who demonstrate both an ability and willingness to repay the amounts due. Accounts meeting specific defined criteria are re-aged when the cardholder makes one or more consecutive payments aggregating a certain pre-defined amount of their account balance. With re-aging, the outstanding balance of a delinquent account is returned to a current status. For the years ended December 31, 2020, 2019 and 2018, the Company’s re-aged accounts represented 2.8%, 2.4% and 2.1%, respectively, of total credit card and loan receivables for each period and thus do not have a significant impact on the Company’s delinquencies or net charge-offs. The Company’s re-aging practices comply with regulatory guidelines. Modified Credit Card Receivables Forbearance Programs In response to the COVID-19 pandemic, the Company offered forbearance programs, which provide for short-term modifications in the form of payment deferrals and late fee waivers to borrowers who were current with their payments prior to any relief. Specifically, the Company provided for late fee waivers and payment deferrals for up to two months for approximately $2.2 billion of credit card receivables, based on the balance in the month of enrollment, through December 31, 2020 and the extension of certain promotional plans of approximately $89.0 million for up to three months. As of December 31, 2020, the credit card receivables in these deferral forbearance programs was approximately $157.4 million. Additionally, the Company instituted two short-term programs with durations of three which provide concessions consisting primarily of a reduced minimum payment and an interest rate reduction, the balance of which was $67.3 million as of December 31, 2020. As these short-term modifications were made in response to COVID-19 to borrowers who were current prior to any relief, these are not considered troubled debt restructurings under the Interagency Statement guidance on certain loan modifications and an interpretation of ASC 310-40, “Receivables—Troubled Debt Restructurings by Creditors.” Troubled Debt Restructurings The Company holds certain credit card receivables for which the terms have been modified. The Company’s modified credit card receivables include credit card receivables for which temporary hardship concessions have been granted and credit card receivables in permanent workout programs. These modified credit card 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 receivables if the credit cardholder complies with the terms of the program. Additionally, the Company instituted two temporary hardship programs with durations of three Troubled debt restructuring 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 hardship programs, at the end of the concession period, credit card 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 receivables for which temporary hardship and permanent concessions were granted are each considered troubled debt restructurings and are collectively evaluated for impairment. Modified credit card receivables are evaluated at their present value with impairment measured as the difference between the credit card 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 receivables on a pooled basis, the discount rate used for credit card receivables is the average current annual percentage rate the Company applies to non-impaired credit card receivables, which approximates what would have been applied to the pool of modified credit card receivables prior to impairment. In assessing the appropriate allowance for loan loss, these modified credit card receivables are included in the general pool of credit card receivables with the allowance determined under the contingent loss model of ASC 450-20, “Loss Contingencies.” If the Company applied accounting under ASC 310-40, “Troubled Debt Restructurings by Creditors,” to the modified credit card receivables in these programs, there would not be a material difference in the allowance for loan loss. The Company had $489.8 million and $308.7 million, respectively, as a recorded investment in impaired credit card receivables with an associated allowance for loan loss of $165.8 million and $75.4 million, respectively, as of December 31, 2020 and 2019. These modified credit card receivables represented less than 3.0% of the Company’s total credit card receivables as of both December 31, 2020 and 2019. The average recorded investment in the impaired credit card receivables was $412.4 million and $295.4 million for the years ended December 31, 2020 and 2019, respectively. Interest income on these modified credit card receivables is accounted for in the same manner as other accruing credit card receivables. Cash collections on these modified credit card receivables are allocated according to the same payment hierarchy methodology applied to credit card receivables that are not in such programs. The Company recognized $30.1 million, $22.6 million and $27.9 million for the years ended December 31, 2020, 2019 and 2018, respectively, in interest income associated with modified credit card receivables during the period that such credit card receivables were impaired. The following table provides information on credit card receivables that are considered troubled debt restructurings as described above, which entered into a modification program during the specified periods: Year Ended December 31, 2020 Year Ended December 31, 2019 Pre- Post- Pre- Post- modification modification modification modification Number of Outstanding Outstanding Number of Outstanding Outstanding Restructurings Balance Balance Restructurings Balance Balance (Dollars in millions) Troubled debt restructurings – credit card receivables 391,049 $ 554.5 $ 552.6 259,311 $ 381.4 $ 380.8 The table below summarizes troubled debt restructurings that have defaulted in the specified periods where the default occurred within 12 months of their modification date: Year Ended December 31, 2020 Year Ended December 31, 2019 Number of Outstanding Number of Outstanding Restructurings Balance Restructurings Balance (Dollars in millions) Troubled debt restructurings that subsequently defaulted – credit card receivables 118,600 $ 161.8 126,476 $ 170.8 Credit Quality Credit Card Receivables The Company uses proprietary scoring models developed specifically for the purpose of monitoring the Company’s obligor credit quality for its credit card receivables. 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, which the Company updates periodically. Information regarding customer performance is factored into these proprietary scoring models to determine the probability of an account becoming 91 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 the composition of the Company’s credit card receivables by obligor credit quality as of December 31, 2020 and 2019: Amortized Cost Revolving Credit Card Receivables December 31, 2020 December 31, 2019 Percentage of Percentage of Amortized Amortized Probability of an Account Becoming 91 or More Days Past Amortized Cost Basis Amortized Cost Basis Due or Becoming Charged-off (within the next 12 months) Cost Basis Outstanding Cost Basis Outstanding (in millions, except percentages) No Score $ 204.1 1.2 % $ 298.4 1.6 % 27.1% and higher 1,390.4 8.5 1,648.8 8.7 17.1% - 27.0% 848.8 5.2 1,108.5 5.8 12.6% - 17.0% 937.0 5.7 1,171.7 6.2 3.7% - 12.5% 7,305.5 44.6 8,292.1 43.5 1.9% - 3.6% 2,939.5 17.9 3,375.3 17.7 Lower than 1.9% 2,751.1 16.9 3,153.0 16.5 Total $ 16,376.4 100.0 % $ 19,047.8 100.0 % Note: The Company’s credit card receivables are revolving receivables as they do not have stated maturities and are exempted from certain vintage disclosures required under ASC 326. The proprietary scoring models are based on historical data and require various assumptions about future performance, which the Company updates periodically. Obligor credit quality is monitored at least monthly during the life of an account. Installment Loan Receivables With the December 3, 2020 acquisition of Bread, the Company acquired installment loan receivables. At origination of these loans, credit bureau scores from Fair Isaac Corporation (“FICO”) were obtained relating to the customer’s broader credit performance as a tool in the underwriting process and for making credit decisions. As of December 31, 2020, the amortized cost basis of the Company’s installment loan receivables totaled $118.0 million, with approximately 86% of these loans originated by customers with FICO scores 660 or above, and approximately 14% of these loans originated by customers with FICO scores below 660. Transfer of Financial Assets During 2018, the Company originated loan receivables under one previous client agreement, and after origination, these loan receivables were sold to the client at par value plus accrued interest. These transfers qualified for sale treatment as they met the conditions established in ASC 860-10, “Transfers and Servicing.” Following the sale, the client owned the loan receivables, assumed the risk of loss in the event of loan defaults and was responsible for all servicing functions related to the loan receivables. Effective July 2, 2018, the Company no longer originates loan receivables for this client. Originations and sales of these loan receivables held for sale were reflected as operating activities in the Company’s consolidated statement of cash flows for the year ended December 31, 2018. Portfolios Held for Sale The Company had certain credit card portfolios held for sale, which are carried at the lower of cost or fair value, of $408.0 million as of December 31, 2019. As of December 31, 2020, there were no credit card portfolios held for sale. During the year ended December 31, 2020, the Company sold a During the year ended December 31, 2019, the Company transferred one credit card portfolio totaling approximately $510.3 million into credit card receivables held for sale, and sold 13 credit card portfolios for cash consideration of approximately $2.1 billion and recognized approximately $43.9 million in net gains on the transactions. The Company recorded portfolio valuation adjustments of $189.8 million for the year ended December 31, 2019. For the year ended December 31, 2019, the portfolio sales were as follows: ● In April 2019, the Company sold one credit card portfolio for final cash consideration of approximately $356.6 million and recognized a $0.4 million loss on the transaction. ● In June 2019, the Company sold three credit card portfolios for final cash consideration of approximately $217.7 million and recognized approximately $2.9 million in gains on the transactions. ● In August 2019, the Company sold one credit card portfolio for final cash consideration of approximately $70.4 million and recognized a $1.7 million gain on the transaction. ● In September 2019, the Company sold one credit card portfolio for final cash consideration of approximately $334.7 million and recognized a $15.2 million gain on the transaction. ● In December 2019, the Company sold seven credit card portfolios for final cash consideration of approximately $1,082.4 million and recognized approximately $24.5 million in net gains on the transactions. Portfolio Acquisitions During the year ended December 31, 2019, the Company acquired four credit card portfolios for cash consideration of approximately $924.8 million, which consisted of approximately $843.5 million of credit card receivables, $35.7 million of intangible assets and $45.6 million of other non-current assets. No portfolio acquisitions were made during the year ended December 31, 2020. Securitized Credit Card and Loan Receivables The Company regularly securitizes its credit card and loan receivables through its trusts. The Company continues to own and service the accounts that generate credit card and loan receivables held by the trusts. In its capacity as a servicer, each of the respective entities earns a fee from the trusts to service and administer the credit card and loan receivables, collect payments and charge-off uncollectible receivables. These fees are eliminated and therefore are not reflected in the consolidated statements of income for the years ended December 31, 2020, 2019 and 2018. The trusts are 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. For its securitized credit card receivables, during the initial phase of a securitization reinvestment period, the Company generally retains principal collections in exchange for the transfer of additional credit card receivables into the securitized pool of assets. During the amortization or accumulation period of a securitization, the investors’ share of principal collections (in certain cases, up to a maximum specified amount each month) is either distributed to the investors or held in an account until it accumulates to the total amount due, at which time it is paid to the investors in a lump sum. The Company is required to maintain minimum interests ranging from 4% to 10% of the securitized credit card receivables. This requirement is met through transferor’s interest and is supplemented through excess funding deposits. Excess funding deposits represent cash amounts deposited with the trustee of the securitizations. Cash collateral, restricted deposits are generally released proportionately as investors are repaid, although some cash collateral, restricted deposits are released only when investors have been paid in full. No cash collateral, restricted deposits were required to be used to cover losses on securitized credit card receivables in the years ended December 31, 2020, 2019 and 2018. The tables below present quantitative information about the components of total securitized credit card and loan receivables, delinquencies and net charge-offs: December 31, December 31, 2020 2019 (in millions) Total credit card and loan receivables – restricted for securitization investors $ 11,208.5 $ 13,504.2 Principal amount of credit card and loan receivables – restricted for securitization investors, 91 days or more past due $ 200.8 $ 321.8 Years Ended December 31, 2020 2019 2018 (in millions) Net charge-offs of securitized principal $ 756.1 $ 907.7 $ 927.0 |
INVENTORIES, NET
INVENTORIES, NET | 12 Months Ended |
Dec. 31, 2020 | |
INVENTORIES, NET | |
INVENTORIES, NET | 9. INVENTORIES, NET Inventories, net of $164.3 million and $218.0 million at December 31, 2020 and 2019, respectively, primarily consist of finished goods to be utilized as rewards in the Company’s loyalty programs. For the year ended December 31, 2019, asset impairment charges of $18.4 million related to the discontinuance of certain reward product lines within inventory were recorded to the LoyaltyOne segment. |
OTHER INVESTMENTS
OTHER INVESTMENTS | 12 Months Ended |
Dec. 31, 2020 | |
OTHER INVESTMENTS | |
OTHER INVESTMENTS | 10. OTHER INVESTMENTS Other investments consist of marketable securities and U.S. Treasury bonds and are included in other current assets and other non-current assets in the Company’s consolidated balance sheets. Marketable securities include available for sale debt securities, mutual funds and domestic certificate of deposit investments. The principal components of other investments, which are carried at fair value, are as follows: December 31, 2020 December 31, 2019 Amortized Unrealized Unrealized Amortized Unrealized Unrealized Cost Gains Losses Fair Value Cost Gains Losses Fair Value (in millions) Marketable securities $ 219.0 $ 6.4 $ — $ 225.4 $ 257.2 $ 3.0 $ (0.4) $ 259.8 Total $ 219.0 $ 6.4 $ — $ 225.4 $ 257.2 $ 3.0 $ (0.4) $ 259.8 The following table shows the unrealized losses and fair value for those investments that were in an unrealized loss position as of December 31, 2019, aggregated by investment category and the length of time that individual securities have been in a continuous loss position. Unrealized losses as of December 31, 2020 were de minimis. December 31, 2019 Less than 12 months 12 Months or Greater Total Unrealized Unrealized Unrealized Fair Value Losses Fair Value Losses Fair Value Losses (in millions) Marketable securities $ 18.8 $ (0.2) $ 13.1 $ (0.2) $ 31.9 $ (0.4) Total $ 18.8 $ (0.2) $ 13.1 $ (0.2) $ 31.9 $ (0.4) The amortized cost and estimated fair value of the marketable securities at December 31, 2020 by contractual maturity are as follows: Amortized Estimated Cost Fair Value (in millions) Due in one year or less (1) $ 44.9 $ 44.9 Due after one year through five years 1.0 1.0 Due after five years through ten years — — Due after ten years 173.1 179.5 Total $ 219.0 $ 225.4 (1) Includes mutual funds, which do not have a stated maturity. Market values were determined for each individual security in the investment portfolio. Effective January 1, 2020, the Company adopted ASC 326, which replaced the other-than-temporary impairment model for available-for-sale debt securities. For available-for-sale debt securities in which fair value is less than cost, ASC 326 requires that credit-related impairment, if any, be recognized through an allowance for credit losses and adjusted each period for changes in credit risk. The Company typically invests in highly-rated securities with low probabilities of default and has the intent and ability to hold the investments until maturity, and the Company performs an assessment each period for credit-related impairment. As of December 31, 2020, the Company does not consider its investments to be impaired There were no realized gains or losses from the sale of investment securities for the years ended December 31, 2020, 2019 and 2018. |
REDEMPTION SETTLEMENT ASSETS
REDEMPTION SETTLEMENT ASSETS | 12 Months Ended |
Dec. 31, 2020 | |
REDEMPTION SETTLEMENT ASSETS | |
REDEMPTION SETTLEMENT ASSETS | 11. REDEMPTION SETTLEMENT ASSETS Redemption settlement assets consist of restricted cash 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. The principal components of redemption settlement assets, which are carried at fair value, are as follows: December 31, 2020 December 31, 2019 Amortized Unrealized Unrealized Amortized Unrealized Unrealized Cost Gains Losses Fair Value Cost Gains Losses Fair Value (in millions) Restricted cash $ 55.4 $ — $ — $ 55.4 $ 39.3 $ — $ — $ 39.3 Mutual funds 26.9 — — 26.9 25.1 — — 25.1 Corporate bonds 592.3 19.1 (0.2) 611.2 536.0 2.4 (2.0) 536.4 Total $ 674.6 $ 19.1 $ (0.2) $ 693.5 $ 600.4 $ 2.4 $ (2.0) $ 600.8 The following tables show the unrealized losses and fair value for those investments that were in an unrealized loss position as of December 31, 2020 and 2019, respectively, aggregated by investment category and the length of time that individual securities have been in a continuous loss position: December 31, 2020 Less than 12 months 12 Months or Greater Total Unrealized Unrealized Unrealized Fair Value Losses Fair Value Losses Fair Value Losses (in millions) Corporate bonds $ 46.2 $ (0.1) $ 10.3 $ (0.1) $ 56.5 $ (0.2) Total $ 46.2 $ (0.1) $ 10.3 $ (0.1) $ 56.5 $ (0.2) December 31, 2019 Less than 12 months 12 Months or Greater Total Unrealized Unrealized Unrealized Fair Value Losses Fair Value Losses Fair Value Losses (in millions) Corporate bonds $ 166.6 $ (1.3) $ 155.1 $ (0.7) $ 321.7 $ (2.0) Total $ 166.6 $ (1.3) $ 155.1 $ (0.7) $ 321.7 $ (2.0) The amortized cost and estimated fair value of the securities at December 31, 2020 by contractual maturity are as follows: Amortized Estimated Cost Fair Value (in millions) Due in one year or less (1) $ 144.9 $ 146.0 Due after one year through five years 470.2 488.0 Due after five year through ten years 4.1 4.1 Total $ 619.2 $ 638.1 (1) Includes mutual funds, which do not have a stated maturity. Market values were determined for each individual security in the investment portfolio. Effective January 1, 2020, the Company adopted ASC 326, which replaced the other-than-temporary impairment model for available-for-sale debt securities. For available-for-sale debt securities in which fair value is less than cost, ASC 326 requires that credit-related impairment, if any, be recognized through an allowance for credit losses and adjusted each period for changes in credit risk. The Company typically invests in highly-rated securities with low probabilities of default and has the intent and ability to hold the investments until maturity, and the Company performs an assessment each period for credit-related impairment. As of December 31, 2020, the Company does not consider its investments to be impaired. There were no realized gains or losses from the sale of investment securities for the year ended December 31, 2020. For the years ended December 31, 2019 and 2018, realized gains and losses from the sale of investment securities were de minimis. |
LEASES
LEASES | 12 Months Ended |
Dec. 31, 2020 | |
LEASES | |
LEASES | 12. LEASES The Company has operating leases for general office properties, warehouses, data centers, customer care centers, automobiles and certain equipment. As of December 31, 2020, the Company’s leases have remaining lease terms of less than 1 year to 18 years, some of which may include renewal options. The components of lease expense were as follows: Years Ended December 31, 2020 2019 (in millions) Operating lease cost $ 40.5 $ 41.1 Short-term lease cost 1.0 2.7 Variable lease cost 6.2 6.8 Total $ 47.7 $ 50.6 Lease expense was $47.5 million for the year ended December 31, 2018. Other information related to leases was as follows: December 31, December 31, 2020 2019 Weighted-average remaining lease term (in years): Operating leases 10.8 11.5 Weighted-average discount rate: Operating leases 5.2% 5.2% Supplemental cash flow information related to leases was as follows: Years Ended December 31, 2020 2019 (in millions) Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 45.8 $ 46.6 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 7.6 $ 28.4 Maturities of the lease liabilities as of December 31, 2020 were as follows: Operating Year Leases (in millions) 2021 $ 38.8 2022 41.2 2023 38.3 2024 36.0 2025 35.2 Thereafter 209.6 Total undiscounted lease liabilities 399.1 Less: Amount representing interest (99.1) Total present value of minimum lease payments $ 300.0 Amounts recognized in the December 31, 2020 consolidated balance sheet: Current operating lease liabilities $ 23.6 Long-term operating lease liabilities 276.4 Total $ 300.0 The Company evaluates its right of use (“ROU”) assets for impairment in accordance with ASC 360, “Property, Plant and Equipment,” when events or changes in circumstances indicate that a ROU asset’s carrying amount may not be recoverable. The Company performed an impairment assessment for the ROU assets associated with its locations where it ceased use with the intent to sublease. As a result, the Company recorded an asset impairment charge of $18.4 million in its Card Services segment. The impairment charge is included in cost of operations in the Company’s consolidated statements of income for the year ended December 31, 2020. Following the incurred impairment, the ROU assets for these locations will be amortized on an accelerated basis in accordance with ASC 842. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2020 | |
PROPERTY AND EQUIPMENT | |
PROPERTY AND EQUIPMENT | 13. PROPERTY AND EQUIPMENT Property and equipment consist of the following: December 31, 2020 2019 (in millions) Computer software and development $ 410.5 $ 327.1 Furniture and equipment 151.0 164.3 Land, buildings and leasehold improvements 122.7 126.0 Construction in progress 32.9 46.2 Total 717.1 663.6 Accumulated depreciation and amortization (406.2) (381.3) Property and equipment, net $ 310.9 $ 282.3 Depreciation expense totaled $65.5 million, $40.6 million and $41.2 million for the years ended December 31, 2020, 2019 and 2018, respectively, and includes purchased software. Amortization expense on capitalized software totaled $35.5 million, $39.3 million and $39.5 million for the years ended December 31, 2020, 2019 and 2018, respectively. As of December 31, 2020 and 2019, the net amount of unamortized capitalized software costs included in the consolidated balance sheets was $165.5 million and $74.0 million, respectively. With the Bread acquisition on December 3, 2020, the Company acquired $90.7 million of developed technology, which is being amortized over a 5.0 year life. See Note 5, “Acquisitions,” for more information. In addition, with the acquisition of Bread, the Company determined certain capitalized software was no longer expected to be used and an impairment charge of $4.1 million was incurred, which is included in cost of operations in its consolidated statement of income for the year ended December 31, 2020. In the fourth quarter of 2020, the Company determined it would reduce its real estate footprint and cease use of certain properties with the intent to sublease, which triggered an impairment analysis of certain property and equipment in accordance with ASC 360. As a result of the analysis, the Company recorded asset impairment charges of $3.0 million and accelerated depreciation expense of $24.7 million, both within its Card Services segment. Sale of Real Estate In October 2019, the Company sold a building and land for cash proceeds of $15.1 million and simultaneously entered into a new 15 year lease agreement for the building, with four consecutive tenant options to extend the lease for five-year terms. Under the criteria of ASC 842, the transaction met the definition of a sale and the Company recognized a $6.1 million gain on the transaction, which was included in cost of operations in the Company’s consolidated statement of income for the year ended December 31, 2019. |
INTANGIBLE ASSETS AND GOODWILL
INTANGIBLE ASSETS AND GOODWILL | 12 Months Ended |
Dec. 31, 2020 | |
INTANGIBLE ASSETS AND GOODWILL | |
INTANGIBLE ASSETS AND GOODWILL | 14. INTANGIBLE ASSETS AND GOODWILL Intangible Assets Intangible assets consist of the following: December 31, 2020 Gross Accumulated Assets Amortization Net Amortization Life and Method (in millions) Definite-Lived Assets Customer contracts and lists $ 363.0 $ (354.5) $ 8.5 3-7 years—straight line Premium on purchased credit card portfolios 137.2 (72.8) 64.4 3-13 years—straight line Collector database 55.0 (54.5) 0.5 5 years—straight line Tradenames 35.0 (30.1) 4.9 4-15 years—straight line Non-compete agreements 2.2 — 2.2 5 years—straight line $ 592.4 $ (511.9) $ 80.5 Indefinite-Lived Assets Tradename 1.2 — 1.2 Indefinite life Total intangible assets $ 593.6 $ (511.9) $ 81.7 December 31, 2019 Gross Accumulated Assets Amortization Net Amortization Life and Method (in millions) Definite-Lived Assets Customer contracts and lists $ 325.1 $ (278.7) $ 46.4 7 years—straight line Premium on purchased credit card portfolios 192.6 (93.2) 99.4 1-13 years—straight line Collector database 53.9 (52.9) 1.0 5 years—straight line Tradenames 31.8 (26.5) 5.3 8-15 years—straight line $ 603.4 $ (451.3) $ 152.1 Indefinite-Lived Assets Tradename 1.2 — 1.2 Indefinite life Total intangible assets $ 604.6 $ (451.3) $ 153.3 With the Bread acquisition on December 3, 2020, the Company acquired $11.3 million of intangible assets, consisting of customer relationships of $8.8 million, a non-compete agreement of $2.2 million, and a tradename of $0.3 million, which are being amortized over weighted average lives of 3.0 years, 5.0 years, and 4.0 years, respectively. See Note 5, “Acquisitions,” for more information. As part of the portfolio acquisitions during the year ended December 31, 2019, the Company acquired $35.7 million of intangible assets, consisting of $21.8 million of customer relationships being amortized over a life of 2.7 years and $13.9 million of marketing relationships being amortized over a life of 5.9 years. Amortization expense related to intangible assets was approximately The estimated amortization expense related to intangible assets for the next five years and thereafter is as follows: For the Years Ending December 31, (in millions) 2021 $ 25.8 2022 21.0 2023 16.1 2024 11.2 2025 2.4 Thereafter 4.0 Goodwill The changes in the carrying amount of goodwill for the years ended December 31, 2020 and 2019, respectively, are as follows: LoyaltyOne Card Services Total (in millions) Balance at January 1, 2019 $ 693.1 $ 261.7 $ 954.8 Goodwill acquired during the period — 2.3 2.3 Effects of foreign currency translation (2.2) — (2.2) Balance at December 31, 2019 $ 690.9 $ 264.0 $ 954.9 Goodwill acquired during the period — 369.6 369.6 Goodwill allocated to sale of Precima (3.2) — (3.2) Effects of foreign currency translation 48.3 — 48.3 Balance at December 31, 2020 $ 736.0 $ 633.6 $ 1,369.6 Approximately $3.2 million of LoyaltyOne goodwill was allocated to Precima upon sale in January 2020, based on a relative fair value allocation of the businesses. As part of the acquisition of Bread in December 2020, the Company acquired $369.6 million of goodwill. See Note 5, “Acquisitions,” for further information. The Company completed annual impairment tests for goodwill on July 31, 2019 and 2018 and determined at each date that no impairment exists. On July 1, 2020, the Company voluntarily changed its annual goodwill impairment testing date from July 31 to July 1 to allow additional time for testing due to the COVID-19 pandemic and current uncertainty in the macroeconomic environment. Accordingly, management determined that the change in accounting principle is preferable under the circumstance. This change has been applied prospectively from July 1, 2020, as retrospective application is deemed impracticable due to the inability to objectively determine the assumptions and significant estimates used in earlier periods without the benefit of hindsight. This change was not material to the Company’s consolidated financial statements as it did not delay, accelerate, or avoid any potential goodwill impairment charge. As of December 31, 2020, the Company does not believe it is more-likely-than-not that the fair value of any reporting unit is less than its carrying amount. No further testing of goodwill impairments will be performed until July 1, 2021, unless events occur or circumstances indicate an impairment is probable. |
RESTRUCTURING AND OTHER CHARGES
RESTRUCTURING AND OTHER CHARGES | 12 Months Ended |
Dec. 31, 2020 | |
RESTRUCTURING AND OTHER CHARGES | |
RESTRUCTURING AND OTHER CHARGES | 15. RESTRUCTURING AND OTHER CHARGES In 2019, the Company, under the direction of the board of directors, evaluated the cost structure and executed on certain cost saving initiatives at each segment. These charges included restructuring and other exit activities related to reductions in force, terminations of certain reward product lines, reduction or closure of certain leased office space, asset impairments, changes in management structure and fundamental reorganizations that affect the nature and focus of operations. Restructuring and other charges incurred at the Corporate segment were recorded to general and administrative expense in the Company’s consolidated statements of income, and restructuring and other charges incurred in the LoyaltyOne and Card Services segments were recorded to cost of operations in the Company’s consolidated statements of income. These charges related to actions taken in 2019 did not continue in 2020. The restructuring and other charges incurred in 2020 relate to changes in the Company’s original estimate and consisted of adjustments to the Company’s liability. The following tables summarize the restructuring and other charges incurred by reportable segment for all restructuring activities for the periods presented: Termination Asset Lease Other Year Ended December 31, 2020 Benefits Impairments Termination Costs Exit Costs Total (in millions) Corporate/Other $ — $ — $ — $ — $ — LoyaltyOne 0.1 — — — 0.1 Card Services (8.3) — — — (8.3) Total $ (8.2) $ — $ — $ — $ (8.2) Termination Asset Lease Other Year Ended December 31, 2019 Benefits Impairments Termination Costs Exit Costs Total (in millions) Corporate/Other $ 18.6 $ 11.1 $ 7.0 $ 1.2 $ 37.9 LoyaltyOne 7.6 40.7 0.2 2.3 50.8 Card Services 27.3 0.2 1.9 — 29.4 Total $ 53.5 $ 52.0 $ 9.1 $ 3.5 $ 118.1 The Company’s liability for restructuring and other charges is recognized in accrued expenses and other liabilities in its consolidated balance sheets. The following table summarizes the activities related to the restructuring and other charges, as discussed above, for the periods presented: Termination Asset Lease Other Benefits Impairments Termination Costs Exit Costs Total (in millions) Liability as of January 1, 2019 $ — $ — $ — $ — $ — Charged to expense 53.5 52.0 9.1 3.5 118.1 Adjustments for non-cash charges — (52.0) 0.7 (0.1) (51.4) Cash payments (18.8) — (9.8) (3.3) (31.9) Liability as of December 31, 2019 $ 34.7 $ — $ — $ 0.1 $ 34.8 Charged to expense — — — — — Adjustments for non-cash charges (8.2) — — — (8.2) Cash payments (23.2) — — (0.1) (23.3) Liability as of December 31, 2020 $ 3.3 $ — $ — $ — $ 3.3 The Company’s outstanding liability related to restructuring and other charges is expected to be settled by the end of 2021. |
ACCRUED EXPENSES
ACCRUED EXPENSES | 12 Months Ended |
Dec. 31, 2020 | |
ACCRUED EXPENSES | |
ACCRUED EXPENSES | 16. ACCRUED EXPENSES Accrued expenses consist of the following: December 31, 2020 2019 (in millions) Accrued payroll and benefits $ 116.9 $ 133.4 Accrued taxes 57.6 18.1 Accrued other liabilities 270.2 176.3 Accrued expenses $ 444.7 $ 327.8 |
DEBT
DEBT | 12 Months Ended |
Dec. 31, 2020 | |
DEBT | |
DEBT | 17. DEBT Debt consists of the following: December 31, December 31, Description 2020 2019 Maturity Interest Rate (Dollars in millions) Long-term and other debt: 2017 revolving line of credit $ — $ — December 2022 (1) 2017 term loans 1,484.3 2,028.8 December 2022 (2) BrandLoyalty credit agreement — — April 2023 (3) Senior notes due 2024 850.0 850.0 December 2024 4.750% Senior notes due 2026 500.0 — January 2026 7.000% Total long-term and other debt 2,834.3 2,878.8 Less: Unamortized debt issuance costs 28.6 28.9 Less: Current portion 101.4 101.4 Long-term portion $ 2,704.3 $ 2,748.5 Deposits: Certificates of deposit $ 6,014.9 $ 8,585.2 Various – Jan 2021 to Dec 2025 0.15% to 3.75% Money market deposits 3,790.2 3,589.8 Non-maturity (4) Total deposits 9,805.1 12,175.0 Less: Unamortized debt issuance costs 12.5 23.3 Less: Current portion 6,553.9 6,942.4 Long-term portion $ 3,238.7 $ 5,209.3 Non-recourse borrowings of consolidated securitization entities: Fixed rate asset-backed term note securities $ 3,423.8 $ 4,891.0 Various – Feb 2021 to Sep 2022 2.03% to 3.95% Conduit asset-backed securities 2,205.1 2,405.0 Various – Apr 2022 to Oct 2022 (5) Secured loan facility 86.3 — November 2022 (6) Total non-recourse borrowings of consolidated securitization entities 5,715.2 7,296.0 Less: Unamortized debt issuance costs 5.3 12.0 Less: Current portion 1,850.7 3,030.8 Long-term portion $ 3,859.2 $ 4,253.2 (1) The interest rate is based upon LIBOR plus an applicable margin. (2) The interest rate is based upon LIBOR plus an applicable margin. The weighted average interest rate for the term loans was 1.90% and 3.30% at December 31, 2020 and 2019, respectively. (3) The interest rate is based upon the Euro Interbank Offered Rate plus an applicable margin. (4) The interest rates are based on the Federal Funds rate plus an applicable margin. At December 31, 2020, the interest rates ranged from 0.38% to 3.50% . At December 31, 2019, the interest rates ranged from 1.84% to 3.50% . (5) The interest rate is based upon LIBOR or the asset-backed commercial paper costs of each individual conduit provider plus an applicable margin. At December 31, 2020, the interest rates ranged from 1.39% to 1.89% . At December 31, 2019, the interest rates ranged from 2.79% to 2.96% . (6) The interest rate is based upon LIBOR plus an applicable margin. At December 31, 2020, the weighted average interest rate for the secured loan facility was 3.90% . At December 31, 2020, the Company was in compliance with its financial covenants. Long-term and Other Debt Credit Agreement The Company, as borrower, and ADS Alliance Data Systems, Inc., ADS Foreign Holdings, Inc., Alliance Data Foreign Holdings, Inc., Alliance Data International LLC, Comenity LLC and Comenity Servicing LLC, as guarantors, are party to a credit agreement with various agents and lenders dated June 14, 2017 (the “2017 Credit Agreement”). On April 30, 2019, the Company amended its credit agreement to provide that, upon consummation of the sale of Epsilon, the maturity date of the credit agreement would be reduced by one year from June 14, 2022 to June 14, 2021, a mandatory payment of $500.0 million of the revolving credit facility would be required, the aggregate revolving credit commitments would be reduced in the same amount (to $1,072.4 million), all of the Company’s outstanding senior notes would be required to be redeemed, net proceeds from future asset sales in excess of $50.0 million must be applied to repayment of the credit agreement and certain other minor amendments. In July 2019, with the proceeds from the sale of Epsilon, the Company made the mandatory prepayment on the revolving credit facility and extinguished all of its then outstanding senior notes of $1.9 billion. As a result, the Company incurred a loss from the extinguishment of debt of approximately $71.9 million, resulting from the redemption price of each of the notes of $49.9 million and the write-off of deferred issuance costs of $22.0 million. On December 20, 2019, the Company amended its credit agreement to extend the maturity date from June 14, 2021 to December 31, 2022, reduce the aggregate revolving credit commitments from $1,072.4 million to $750.0 million, add a consolidated minimum tangible net worth covenant upon certain triggering events and make certain other amendments. The amendment also required the Company to prepay the term loans to $2,028.8 million upon consummation of the offering of the $850.0 million aggregate principal amount of 4.750% senior notes due December 15, 2024 (“Senior Notes due 2024”), which obligation was satisfied in full with a prepayment of $833.0 million, representing the net proceeds from the offering of the Senior Notes due 2024. At December 31, 2019, the credit agreement, as amended, provided for $2,028.8 million in term loans (the “2017 term loans”), subject to certain principal repayments, and a $750.0 million revolving credit facility (the “2017 revolving line of credit”). Total availability under the 2017 revolving line of credit at December 31, 2019 was $750.0 million. The loans under the credit agreement are scheduled to mature on December 31, 2022. The 2017 term loans provide for aggregate principal payments of 1.25% of the $2,028.8 million term loan amount, payable in equal quarterly installments beginning on March 31, 2020. The credit agreement is unsecured. The credit agreement contains the usual and customary negative covenants for transactions of this type, including, but not limited to, restrictions on the Company’s ability and in certain instances, its subsidiaries’ ability to consolidate or merge; substantially change the nature of its business; sell, lease, or otherwise transfer any substantial part of its assets; create or incur indebtedness; create liens; and make acquisitions. The negative covenants are subject to certain exceptions as specified in the credit agreement. The credit agreement also requires the Company to satisfy certain financial covenants, including a maximum total leverage ratio and a minimum ratio of consolidated operating EBITDA to consolidated interest expense, each as determined in accordance with the credit agreement. The credit agreement also includes customary events of default. In September 2020, the Company amended its credit agreement to (a) increase the maximum total leverage ratio, (b) decrease the minimum interest coverage ratio, and (c) increase the maximum permitted average delinquency ratios, for the periods ending March 31, 2021 through June 30, 2022, and to make certain other amendments. The amendment also required the Company to prepay the term loans upon consummation of the offering of the Senior Notes due 2026 with a prepayment in an amount equal to the net proceeds from the offering, which obligation was satisfied in full with a prepayment of $493.8 million. The prepayment was first applied to the scheduled quarterly installments payable in September 2020 and December 2020, and second, to the bullet payment of the term loans due at maturity. As of December 31, 2020, the Company had $1,484.3 million in term loans outstanding with $750.0 million total availability under the revolving line of credit. BrandLoyalty Credit Agreement BrandLoyalty and certain of its subsidiaries, as borrower and guarantors, were parties to a credit agreement that provided for an A-1 term loan facility of €90.0 million and an A-2 term loan facility of €100.0 million, subject to certain principal repayments, a committed revolving line of credit of €37.5 million and an uncommitted revolving line of credit of €37.5 million. In September 2019, the Company repaid the €115.0 million in term loans outstanding under the BrandLoyalty credit agreement, originally scheduled to mature in June 2020, and repaid the €32.5 million amount outstanding under the revolving line of credit. In April 2020, BrandLoyalty and certain of its subsidiaries, as borrowers and guarantors, terminated its existing facility and entered into a new credit agreement (the “2020 BrandLoyalty Credit Agreement”) that provides for a committed revolving line of credit of €30.0 million ($36.6 million as of December 31, 2020), an uncommitted revolving line of credit of €30.0 million ($36.6 million as of December 31, 2020), and an accordion feature permitting BrandLoyalty to request an increase in either the committed or uncommitted line of credit up to €80.0 million ($97.7 million as of December 31, 2020) in aggregate. Each of the committed and uncommitted revolving line of credit are scheduled to mature on April 3, 2023, subject to BrandLoyalty’s request to extend for two additional one-year terms at the absolute discretion of the lenders at the time of such requests. All advances under the 2020 BrandLoyalty Credit Agreement are denominated in Euros. The interest rate fluctuates and is equal to EURIBOR, as defined in the 2020 BrandLoyalty Credit Agreement, plus an applicable margin based on BrandLoyalty’s senior net leverage ratio. The 2020 BrandLoyalty Credit Agreement contains a senior net leverage ratio financial covenant, as well as usual and customary negative covenants, representations, general and information undertakings and events of default. As of December 31, 2020, there were no amounts outstanding under the 2020 BrandLoyalty Credit Agreement. Senior Notes The senior notes set forth below are each governed by their respective indenture that includes usual and customary negative covenants and events of default for transactions of these types. These senior notes are unsecured and are guaranteed on a senior unsecured basis by certain of the Company’s existing and future domestic restricted subsidiaries that incurs or in any other manner becomes liable for any debt under the Company’s domestic credit facilities, including the 2017 Credit Agreement. Due 2024 In December 2019, the Company issued and sold $850.0 million aggregate principal amount of 4.750% senior notes due December 15, 2024 (the “Senior Notes due 2024”). The Senior Notes due 2024 accrue interest on the principal amount at the rate of 4.750% per annum from December 20, 2019, payable semi-annually in arrears, on June 15 and December 15 of each year, beginning on June 15, 2020. The Senior Notes due 2024 will mature on December 15, 2024, subject to earlier repurchase or redemption. Due 2026 In September 2020, the Company issued and sold $500.0 million aggregate principal amount of 7.000% senior notes due January 15, 2026 (the “Senior Notes due 2026”). The Senior Notes due 2026 accrue interest on the principal amount at the rate of 7.000% per annum from September 22, 2020, payable semi-annually in arrears, on March 15 and September 15 of each year, beginning on March 15, 2021. The Senior Notes due 2026 will mature on January 15, 2026, subject to earlier repurchase or redemption. Deposits Comenity Bank and Comenity Capital Bank issue certificates of deposit in denominations of at least $100,000 and $1,000, respectively, in various maturities ranging between January 2021 and December 2025 and with effective annual interest rates ranging from 0.15% to 3.75%, with a weighted average interest rate of 2.58%, at December 31, 2020. At December 31, 2019, interest rates ranged from 1.33% to 4.00%, with a weighted average interest rate of 2.66%. Interest is paid monthly and at maturity. Comenity Bank and Comenity Capital Bank offer non-maturity deposit programs through contractual arrangements with various financial counterparties. Money market deposits are redeemable on demand by the customer and, as such, have no scheduled maturity date. As of December 31, 2020, Comenity Bank and Comenity Capital Bank had $3.8 billion in money market deposits outstanding with annual interest rates ranging from 0.38% to 3.50%, with a weighted average interest rate of 1.00%. As of December 31, 2019, Comenity Bank and Comenity Capital Bank had $3.6 billion in money market deposits outstanding with annual interest rates ranging from 1.84% to 3.50%, with a weighted average interest rate of 2.05% . Non-Recourse Borrowings of Consolidated Securitization Entities An asset-backed security is a security whose value and income payments are derived from and collateralized (or “backed”) by a specified pool of underlying assets. The sale of the pool of underlying assets to general investors is accomplished through a securitization process. The Company regularly sells its receivables to its securitization trusts, which are consolidated on the balance sheets of the Company under ASC 860 and ASC 810. The liabilities of the consolidated VIEs include asset-backed securities for which creditors or beneficial interest holders do not have recourse to the general credit of the Company. Asset-Backed Term Notes For the year ended December 31, 2020, no asset-backed term notes were issued, and the following asset-backed term notes matured and were repaid: ● In May 2020, $450.7 million of Series 2017-A asset-backed term notes, $50.7 million of which were retained by the Company and eliminated from the Company’s consolidated balance sheets. ● In August 2020, $625.0 million of Series 2015-B asset-backed term notes, $150.0 million of which were retained by the Company and eliminated from the Company’s consolidated balance sheets. ● In October 2020, $619.7 million of Series 2017-C asset-backed term notes, $27.5 million of which were retained by the Company and eliminated from the Company’s consolidated balance sheets. As of December 31, 2020, the Company collected $291.8 million of principal payments made by its credit cardholders during the accumulation period for the repayment of the Series 2018-A notes, which matured in February 2021. The cash is restricted to the securitization investors and is reflected in other current assets in the Company’s consolidated balance sheet as of December 31, 2020. Conduit Facilities The Company has access to committed undrawn capacity through three conduit facilities to support the funding of its credit card receivables for certain of its trusts. Borrowings outstanding under each facility bear interest at a margin above LIBOR or the asset-backed commercial paper costs of each individual conduit provider. During the year ended December 31, 2020, the Company reduced the commitments under its conduit facilities by $1.5 billion and extended the respective maturities to April 2022 and October 2022. Total capacity under the conduit facilities was $3.2 billion, of which $2.2 billion had been drawn and was included in non-recourse borrowings of consolidated securitization entities in the consolidated balance sheets. Secured Loan Facility With the acquisition of Bread in December 2020, the Company assumed two warehouse facilities used to fund their securitized loan receivables. In December 2020, one of the warehouse facilities was terminated and the Company repaid $28.5 million owed under the agreement. The second warehouse facility was amended to a secured loan facility with an outstanding balance of $86.3 million at December 31, 2020. The secured loan facility accrues interest on the principal amount at the rate of LIBOR plus an applicable margin. The principal amount is due upon maturity at November 19, 2022, with prepayment permitted. Maturities The future principal payments for the Company’s debt as of December 31, 2020 are as follows: Non-Recourse Borrowings of Long-Term Consolidated and Securitization Year Other Debt Deposits Entities (in millions) 2021 $ 101.4 $ 6,555.6 $ 1,852.1 2022 1,382.9 1,739.6 3,863.1 2023 — 966.1 — 2024 850.0 530.6 — 2025 — 13.2 — Thereafter 500.0 — — Total maturities 2,834.3 9,805.1 5,715.2 Unamortized debt issuance costs (28.6) (12.5) (5.3) $ 2,805.7 $ 9,792.6 $ 5,709.9 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2020 | |
COMMITMENTS AND CONTINGENCIES. | |
COMMITMENTS AND CONTINGENCIES | 18. COMMITMENTS AND CONTINGENCIES AIR MILES Reward Program The Company has entered into contractual arrangements with certain AIR MILES Reward Program sponsors that result in fees being billed to those sponsors upon the redemption of AIR MILES reward miles issued by those sponsors. The Company has obtained letters of credit and other assurances from those sponsors for the Company’s benefit that expire at various dates. These letters of credit and other assurances totaled $150.5 million at December 31, 2020, which exceeds the amount of the Company’s estimate of its obligation to provide travel and other rewards upon the redemption of the AIR MILES reward miles issued by those sponsors. The Company currently has an obligation to provide AIR MILES Reward Program collectors with travel and other rewards upon the redemption of AIR MILES reward miles. The Company believes that the redemption settlement assets, including the letters of credit and other assurances mentioned above, are sufficient to meet that obligation. The Company has entered into certain long-term arrangements with airlines and other suppliers in connection with reward redemptions under the AIR MILES Reward Program. These long-term arrangements allow the Company to retain preferred pricing subject to meeting agreed upon annual volume commitments for rewards purchased. Regulatory Matters Comenity Bank is regulated, supervised and examined by the State of Delaware and the Federal Deposit Insurance Corporation (“FDIC”). Comenity Bank remains subject to regulation by the Board of the Governors of the Federal Reserve System. The Company’s industrial bank, Comenity Capital Bank, is regulated, supervised and examined by the State of Utah and the FDIC. Both Comenity Bank and Comenity Capital Bank are under the supervision of the Consumer Financial Protection Bureau (“CFPB”), a federal consumer protection regulator with authority to make further changes to the federal consumer protection laws and regulations, and the CFPB may, from time to time, conduct reviews of their practices. Quantitative measures established by regulations to ensure capital adequacy require Comenity Bank and Comenity Capital Bank (collectively, the “Banks”) to maintain minimum amounts and ratios of Common Equity Tier 1, Tier 1 and total capital to risk weighted assets and of Tier 1 capital to average assets. Based on these guidelines, the Banks are considered well capitalized. The actual capital ratios and minimum ratios as of December 31, 2020 are as follows: Minimum Ratio to be Minimum Ratio for Well Capitalized under Actual Capital Adequacy Prompt Corrective Ratio Purposes Action Provisions Comenity Bank Tier 1 capital to average assets 19.0 % 4.0 % 5.0 % Common Equity Tier 1 capital to risk-weighted assets 20.7 4.5 6.5 Tier 1 capital to risk-weighted assets 20.7 6.0 8.0 Total capital to risk-weighted assets 22.0 8.0 10.0 Comenity Capital Bank Tier 1 capital to average assets 14.8 % 4.0 % 5.0 % Common Equity Tier 1 capital to risk-weighted assets 15.6 4.5 6.5 Tier 1 capital to risk-weighted assets 15.6 6.0 8.0 Total capital to risk-weighted assets 16.9 8.0 10.0 The actual capital ratios and minimum ratios as of December 31, 2019 are as follows: Minimum Ratio to be Minimum Ratio for Well Capitalized under Actual Capital Adequacy Prompt Corrective Ratio Purposes Action Provisions Comenity Bank Tier 1 capital to average assets 12.9 % 4.0 % 5.0 % Common Equity Tier 1 capital to risk-weighted assets 14.6 4.5 6.5 Tier 1 capital to risk-weighted assets 14.6 6.0 8.0 Total capital to risk-weighted assets 15.9 8.0 10.0 Comenity Capital Bank Tier 1 capital to average assets 11.9 % 4.0 % 5.0 % Common Equity Tier 1 capital to risk-weighted assets 14.4 4.5 6.5 Tier 1 capital to risk-weighted assets 14.4 6.0 8.0 Total capital to risk-weighted assets 15.7 8.0 10.0 On September 10, 2019, Comenity Capital Bank submitted a bank merger application to the Federal Deposit Insurance Corporation (“FDIC”) seeking the FDIC’s approval to merge Comenity Bank with and into Comenity Capital Bank as the surviving bank entity. On the same date, Comenity Capital Bank and Comenity Bank each submitted counterpart bank merger applications to the Utah Department of Financial Institutions and the Delaware Office of the State Bank Commissioner, respectively, in connection with the proposed merger. The merger application remains subject to regulatory review and approval and no guarantee can be provided as to the outcome or timing of such review. Cardholders The Company’s Card Services segment is active in originating private label and co-brand credit cards in the United States. The Company reviews each potential customer’s credit application and evaluates the applicant’s financial history and ability and perceived willingness to repay. Credit card loans are made primarily on an unsecured basis. Cardholders reside throughout the United States and are not significantly concentrated in any one area. Holders of credit cards issued by the Company have available lines of credit, which vary by cardholder. These lines of credit represent elements of risk in excess of the amount recognized in the financial statements. The lines of credit are subject to change or cancellation by the Company. At December 31, 2020, the Company had 45.5 million total accounts, including both active and inactive, having unused lines of credit averaging $2,367 per account. Indemnification On July 1, 2019, the Company completed the sale of its Epsilon segment to Publicis Groupe S.A. (“Publicis”). Under the terms of the agreement governing that transaction, the Company agreed to indemnify Publicis and its affiliates from and against any losses arising out of or related to a United States Department of Justice (“DOJ”) investigation. The DOJ investigation related to third-party marketers who sent, or allegedly sent, deceptive mailings and the provision of data and services to those marketers by Epsilon’s data practice. Epsilon actively cooperated with the DOJ in connection with the investigation. On January 19, 2021, Epsilon entered into a deferred prosecution agreement (“DPA”) with the DOJ to resolve the matters that were the subject of the investigation. Pursuant to the DPA, Epsilon agreed, among other things, to pay penalties and consumer compensation in the aggregate amount of $150.0 million, to be paid in two equal installments, the first in January 2021 and the second in January 2022. In accordance with ASC 450, the Company records a loss contingency when a loss is probable and an amount can be reasonably estimated. For the year ended December 31, 2019, the Company recorded a loss contingency of $40.0 million, or $32.9 million net of tax, which was included in loss from discontinued operations. For the year ended December 31, 2020, the Company recorded an additional loss contingency of $110.0 million, or $81.3 million net of tax, which was included in loss from discontinued operations. Legal Proceedings From time to time the Company is involved in various claims and lawsuits arising in the ordinary course of business that it believes will not have a material effect on its business, financial condition or cash flows, including claims and lawsuits alleging breaches of the Company’s contractual obligations. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 12 Months Ended |
Dec. 31, 2020 | |
STOCKHOLDERS' EQUITY | |
STOCKHOLDERS' EQUITY | 19. STOCKHOLDERS’ EQUITY Stock Repurchase Programs During the year ended December 31, 2020, the Company did not repurchase any shares of its common stock. During the years ended December 31, 2019 and 2018, the Company repurchased approximately 6.3 million and 2.2 million and shares of its common stock, respectively, for an aggregate amount of $976.1 million and $443.2 million, respectively. 2018 Aut horization On July 26, 2018, the Company’s board of directors authorized a new stock repurchase program to acquire up to $500.0 million of the Company’s outstanding common stock from August 1, 2018 through July 31, 2019. For the year ended December 31, 2018, the Company acquired approximately 0.8 million shares of its common stock for $166.0 million under its previously authorized stock repurchase program and acquired approximately 1.4 million shares of its common stock for $277.2 million under its authorized 2018 stock repurchase program. For the six months ended June 30, 2019, the Company acquired a total of 1.3 million shares of its common stock for $222.8 million under its stock repurchase program. As of June 30, 2019, the Company did not have any amounts remaining under its authorized stock repurchase program. 2019 Aut horization In July 2019, the Company’s board of directors authorized a new stock repurchase program to acquire up to On July 19, 2019, the Company commenced a “modified Dutch Auction” tender offer to acquire up to $750.0 million in aggregate purchase price of its issued and outstanding common stock at a price not greater than $162.00 nor less than $144.00 per share, to the seller in cash, less any applicable withholding taxes and without interest, upon the terms and subject to the conditions described in the Offer to Purchase dated July 19, 2019 and in the related Letter of Transmittal. The tender offer expired on August 15, 2019, and the Company repurchased 5,050,505 shares of its issued and outstanding common stock at a price of $148.50 per share, for an aggregate cost of approximately $750.0 million. Additionally, the Company incurred approximately $3.3 million of direct costs related to the repurchase, including $2.2 million in commissions, which have been recorded to treasury stock in the Company’s consolidated balance sheets. As of December 31, 2019, the Company had $347.8 million remaining under its authorized stock repurchase program. The stock repurchase program expired on June 30, 2020, and $347.8 million of this program expired unused. Stock Compensation Plans The Company has adopted equity compensation plans to advance the interests of the Company by rewarding certain employees for their contributions to the financial success of the Company and thereby motivating them to continue to make such contributions in the future. The 2010 Omnibus Incentive Plan became effective July 1, 2010 and reserved 3,000,000 shares of common stock for grants of nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units, performance share awards, cash incentive awards, deferred stock units, and other stock-based and cash-based awards to selected officers, employees, non-employee directors and consultants who performed services for the Company or its affiliates, with only employees eligible to receive incentive stock options. The 2010 Omnibus Incentive Plan expired on June 30, 2015. The 2015 Omnibus Incentive Plan became effective July 1, 2015 and reserved 5,100,000 shares of common stock for grants of nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units, performance share awards, cash incentive awards, deferred stock units, and other stock-based and cash-based awards to selected officers, employees, non-employee directors and consultants who performed services for the Company or its affiliates, with only employees eligible to receive incentive stock options. The 2015 Omnibus Incentive Plan expired on June 30, 2020. In March 2020, the Company’s board of directors adopted the 2020 Omnibus Incentive Plan (the “2020 Plan”), which was subsequently approved by the Company’s stockholders on June 9, 2020. The 2020 Plan became effective July 1, 2020 and expires on June 30, 2030. The 2020 Plan reserves 2,400,000 shares of common stock for grants of nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units, performance share awards, cash incentive awards, deferred stock units, and other stock-based and cash-based awards to selected officers, employees, non-employee directors and consultants performing services for the Company or its affiliates, with only employees being eligible to receive incentive stock options. The maximum amount that may be awarded to any independent member of the Company’s board of directors in any one calendar year may not exceed $1.0 million. On June 9, 2020, the Company registered 2,400,000 shares of its common stock for issuance in accordance with the 2020 Plan pursuant to a Registration Statement on Form S-8, File No. 333-239040. Beginning February 15, 2017, the restricted stock unit award agreements under the 2015 Plan and the 2020 Plan provide for dividend equivalent rights (“DERs”), which entitle holders of restricted stock units to the same dividend value per share as holders of common stock. DERs are subject to the same vesting and other terms and conditions as the corresponding unvested restricted stock units. DERs are paid only when the underlying shares vest. Terms of all awards under the 2020 Plan are determined by the board of directors or the compensation committee of the board of directors or its designee at the time of award. Stock Compensation Expense Under the fair value recognition provisions, stock-based compensation expense is measured at the grant date based on the fair value of the award and is recognized ratably over the requisite service period. Stock-based compensation expense recognized in the Company’s consolidated statements of income for the years ended December 31, 2020, 2019 and 2018, is as follows: Years Ended December 31, 2020 2019 2018 (in millions) Cost of operations $ 12.5 $ 16.5 $ 23.3 General and administrative 8.8 8.6 21.1 Total $ 21.3 $ 25.1 $ 44.4 Effective April 12, 2019, the Company entered into a definitive agreement to sell its Epsilon segment to Publicis for $4.4 billion in cash, subject to certain specified adjustments. The agreement provided for certain unvested restricted stock units held by Epsilon employees to be modified, with original vesting conditions to be accelerated upon consummation of the sale of Epsilon. Additionally, the agreement provided for certain other awards held by Epsilon employees to be forfeited upon consummation of the sale of Epsilon, which occurred July 1, 2019. As a result, in April 2019 the Company recorded $19.4 million of incremental stock-based compensation expense in discontinued operations related to the modifications, net of forfeitures. Stock-based compensation expense included in loss from discontinued operations totaled $29.7 million and $36.4 million for the years ended December 31, 2019 and 2018, respectively. The income tax benefits related to stock-based compensation expense for the years ended December 31, 2020, 2019 and 2018 were $3.0 million, $3.6 million and $7.3 million, respectively. As the amount of stock-based compensation expense recognized is based on awards ultimately expected to vest, the amount recognized in the Company’s results of operations has been reduced for estimated forfeitures. In connection with the Company’s adoption of ASU 2016-09, the Company elected to continue to estimate forfeitures at each grant date, with forfeiture estimates to be revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Forfeitures were estimated based on the Company’s historical experience, with a forfeiture rate of 5% for the years ended December 31, 2020, 2019 and 2018. As of December 31, 2020, there was approximately $24.7 million of unrecognized expense, adjusted for estimated forfeitures, related to non-vested, stock-based equity awards granted to employees, which is expected to be recognized over a weighted average period of approximately 1.5 years. Restricted Stock Unit Awards During 2020, the Company awarded 241,610 service-based, 219,186 performance-based and 20,770 market-based restricted stock units. In accordance with ASC 718, the Company recognizes the estimated stock-based compensation expense, net of estimated forfeitures, over the applicable service period. For service-based and performance-based awards, the fair value of the restricted stock units was estimated using the Company’s closing share price on the date of grant. Service-based restricted stock unit awards typically vest ratably over a three year period. Performance-based restricted stock unit awards typically vest ratably over a three year period if specified performance measures tied to the Company’s financial performance are met. For the performance-based restricted stock units awarded in 2020, the pre-defined vesting criteria typically permit a range from 0% to 150% to be earned. Accruals of compensation cost for an award with a performance condition are based on the probable outcome of that performance condition. For the year ended December 31, 2020, stock compensation expense was not accrued for the 2020 performance-based awards, as the probable outcome was 0% achievement. For the market-based award granted in 2020, the fair value of the restricted stock units was estimated utilizing Monte Carlo simulations of the Company’s stock price correlation ( The following table summarizes restricted stock unit activity under the Company’s equity compensation plans: Weighted Market- Performance- Service- Average Based (1) Based (1) Based Total Fair Value Balance at January 1, 2018 28,172 450,579 329,059 807,810 $ 207.45 Shares granted 28,057 263,542 138,160 429,759 233.98 Shares vested — (188,680) (130,823) (319,503) 224.62 Shares forfeited — (102,199) (18,955) (121,154) 227.66 Balance at December 31, 2018 56,229 423,242 317,441 796,912 $ 218.81 Shares granted 37,878 420,239 246,118 704,235 161.05 Shares vested — (262,773) (178,730) (441,503) 218.45 Shares forfeited (69,819) (350,436) (126,257) (546,512) 188.40 Balance at December 31, 2019 24,288 230,272 258,572 513,132 $ 172.06 Shares granted 20,770 219,186 241,610 481,566 89.11 Shares vested — (42,097) (127,921) (170,018) 175.09 Shares forfeited (22,831) (186,135) (38,447) (247,413) 166.93 Balance at December 31, 2020 22,227 221,226 333,814 577,267 $ 103.89 Outstanding and Expected to Vest 345,266 $ 105.49 (1) Shares granted reflects a 100% target attainment of the respective market-based or performance -based metric. Shares forfeited include those restricted stock units forfeited as a result of the Company not meeting the respective market-based or performance-based metric conditions. The total fair value of restricted stock units vested was $29.8 million, $96.4 million and $71.8 million for the years ended December 31, 2020, 2019 and 2018, respectively. The aggregate intrinsic value of restricted stock units outstanding and expected to vest was $25.6 million at December 31, 2020. The weighted-average remaining contractual life for unvested restricted stock units was 1.5 years at December 31, 2020. Stock Options Stock option awards are granted with an exercise price equal to the market price of the Company’s stock on the date of grant. Options typically vest ratably over three years and expire ten years after the date of grant. There were no stock options outstanding as of December 31, 2020. The following table summarizes stock option activity under the Company’s equity compensation plans: Outstanding Exercisable Weighted Weighted Average Average Options Exercise Price Options Exercise Price Balance at January 1, 2018 11,859 $ 23.87 11,859 $ 23.87 Options granted — — Options exercised (886) 12.70 Options forfeited (119) 2.74 Balance at December 31, 2018 10,854 $ 25.01 10,854 $ 25.01 Options granted — — Options exercised (10,854) 25.01 Options forfeited — — Balance at December 31, 2019 — $ — — $ — Options granted — — Options exercised — — Options forfeited — — Balance at December 31, 2020 — $ — — $ — Based on the market value on their respective exercise dates, the total intrinsic value of stock options exercised was approximately $1.3 million and $0.2 million for the years ended December 31, 2019 and 2018, respectively. There were no stock options exercised during the year ended December 31, 2020. Dividends During the year ended December 31, 2020, the Company declared quarterly cash dividends of $0.63 per share for the three months ended March 31, 2020 and $0.21 per share for each of the three months ended June 30, 2020, September 30, 2020 and December 31, 2020, for a total of $59.9 million. The Company paid cash dividends and dividend equivalents aggregating $60.6 million for the year ended December 31, 2020, and $0.6 million of dividend equivalents were accrued but not yet paid at December 31, 2020. During the year ended December 31, 2019, the Company declared quarterly cash dividends of $0.63 per share, for a total of $127.1 million. The Company paid cash dividends and dividend equivalents aggregating $127.4 million for the year ended December 31, 2019, and $1.2 million of dividend equivalents were accrued but not yet paid at December 31, 2019. During the year ended December 31, 2018, the Company declared quarterly cash dividends of $0.57 per share, for a total of $125.9 million. The Company paid cash dividends and dividend equivalents aggregating $125.2 million for the year ended December 31, 2018, and $0.7 million of dividend equivalents were accrued but not yet paid at December 31, 2018. On January 28, 2021 the Company’s board of directors declared a quarterly cash dividend of $0.21 per share on the Company’s common stock, payable on March 18, 2021 to stockholders of record at the close of business on February 12, 2021. |
EMPLOYEE BENEFIT PLANS
EMPLOYEE BENEFIT PLANS | 12 Months Ended |
Dec. 31, 2020 | |
EMPLOYEE BENEFIT PLANS | |
EMPLOYEE BENEFIT PLANS | 20. EMPLOYEE BENEFIT PLANS Employee Stock Purchase Plan In March 2015, the Company’s board of directors adopted the 2015 Employee Stock Purchase Plan (the “2015 ESPP”), which was subsequently approved by the Company’s stockholders on June 3, 2015. The 2015 ESPP became effective July 1, 2015 with no definitive expiration date. The Company’s board of directors may at any time and for any reason terminate or amend the 2015 ESPP. No employee may purchase more than $25,000 worth of stock under the 2015 ESPP in any calendar year, and no employee may purchase stock under the 2015 ESPP if such purchase would cause the employee to own more than 5% of the voting power or value of the Company’s common stock. The 2015 ESPP provides for six month offering periods, commencing on the first trading day of the first and third calendar quarter of each year and ending on the last trading day of each subsequent calendar quarter. The purchase price of the common stock upon exercise shall be 85% of the fair market value of shares on the applicable purchase date as determined by averaging the high and low trading prices of the last trading day of the six-month period. An employee elects to participate and have contributions deducted through payroll deductions. The 2015 ESPP provides for the issuance of any remaining shares available for issuance under the 2005 ESPP, which were 441,327 shares at June 30, 2015. The 2015 ESPP reserved an additional 1,000,000 shares of the Company’s common stock for issuance under the 2015 Plan, bringing the maximum number of shares reserved for issuance under the 2015 ESPP to 1,441,327 shares, subject to adjustment as provided in the 2015 ESPP. On June 5, 2015, the Company registered 1,441,327 shares of its common stock for issuance in accordance with the 2015 ESPP pursuant to a Registration Statement on Form S-8, File No. 333-204759. During the year ended December 31, 2020, the Company issued 65,430 shares of common stock under the 2015 ESPP at a weighted-average issue price of $46.73. Since its adoption on July 1, 2015, 514,112 shares of common stock have been issued, with 927,215 shares available for issuance under the 2015 ESPP. 401(k) Retirement Savings Plan The Alliance Data Systems 401(k) and Retirement Savings Plan is a defined contribution plan that is qualified under Section 401(k) of the Internal Revenue Code of 1986. The Company amended its 401(k) and Retirement Savings Plan effective December 3, 2020. The 401(k) and Retirement Savings Plan is an IRS-approved safe harbor plan design that eliminates the need for most discrimination testing. Eligible employees can participate in the 401(k) and Retirement Savings Plan immediately upon joining the Company and after 180 days of employment begin receiving company matching contributions. In addition, “seasonal” or “on-call” employees must complete a year The Company matches an employee’s contribution dollar-for-dollar up to five percent of the employee’s eligible compensation. All company matching contributions are immediately vested. Company matching contributions for the years ended December 31, 2020, 2019 and 2018 were $15.7 million, $35.3 million and $44.8 million, respectively. The participants in the plan can direct their contributions and the Company’s matching contribution to numerous investment options, including the Company’s common stock. On July 20, 2001, the Company registered 1,500,000 shares of its common stock for issuance in accordance with its 401(k) and Retirement Savings Plan pursuant to a Registration Statement on Form S-8, File No. 333-65556. As of December 31, 2020, 341,096 of such shares remain available for issuance. Group Retirement Savings Plan and Deferred Profit Sharing Plan (LoyaltyOne) The Company provides for its Canadian employees the Group Retirement Savings Plan of the Loyalty Group (“GRSP”), which is a group retirement savings plan registered with the Canada Revenue Agency. Contributions made by Canadian employees on their behalf or on behalf of their spouse to the GRSP, and income earned on these contributions, are not taxable to employees until withdrawn from the GRSP. Employee contributions eligible for company match may not exceed the overall maximum allowed by the Income Tax Act (Canada); the maximum tax-deductible GRSP contribution is set by the Canada Revenue Agency each year. The Deferred Profit Sharing Plan (“DPSP”) is a legal trust registered with the Canada Revenue Agency. Eligible full-time employees can participate in the GRSP after three months of employment and eligible part-time employees after six months of employment. Employees become eligible to receive company matching contributions into the DPSP on the first day of the calendar quarter following twelve months of employment. Based on the eligibility guidelines, the Company matches an employee’s contribution dollar-for-dollar up to five percent of the employee’s eligible compensation. Contributions made to the DPSP reduce an employee’s maximum contribution amounts to the GRSP under the Income Tax Act (Canada) for the following year. All company matching contributions into the DPSP vest after receipt of one Executive Deferred Compensation Plan and the Canadian Supplemental Executive Retirement Plan The Company also maintains an Executive Deferred Compensation Plan (“EDCP”). The EDCP permits a defined group of management and highly compensated employees to defer on a pre-tax basis a portion of their base salary and incentive compensation (as defined in the EDCP) payable for services rendered. Deferrals under the EDCP are unfunded and subject to the claims of the Company’s creditors. Each participant in the EDCP is 100% vested in their account, and account balances accrue interest at a rate established and adjusted periodically by the compensation committee. The Company provides a Canadian Supplemental Executive Retirement Plan for a defined group of management and highly compensated employees of LoyaltyOne, Co., one of the Company’s wholly-owned subsidiaries. Similar to the EDCP, participants may defer on a pre-tax basis a portion of their compensation and bonuses payable for services rendered and to receive certain employer contributions. As of December 31, 2020 and 2019, the Company’s outstanding liability related to these plans and included in accrued expenses in the Company’s consolidated balance sheets was $19.9 million and $33.3 million, respectively. |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE LOSS | 12 Months Ended |
Dec. 31, 2020 | |
ACCUMULATED OTHER COMPREHENSIVE LOSS. | |
ACCUMULATED OTHER COMPREHENSIVE LOSS | 21. ACCUMULATED OTHER COMPREHENSIVE LOSS The changes in each component of accumulated other comprehensive loss, net of tax effects, are as follows: Accumulated Net Unrealized Net Unrealized Net Unrealized Foreign Currency Other Gains (Losses) on Gains (Losses) on Gains (Losses) on Translation Comprehensive Securities Cash Flow Hedges Net Investment Hedge Adjustments (1) Loss (in millions) Balance as of January 1, 2018 $ (8.7) $ (0.1) $ (42.0) $ (89.4) $ (140.2) Changes in other comprehensive income (loss) (2.0) (0.1) 29.6 (25.4) 2.1 Balance at December 31, 2018 $ (10.7) $ (0.2) $ (12.4) $ (114.8) $ (138.1) Changes in other comprehensive income (loss) 13.2 0.1 4.9 (6.8) 11.4 Recognition resulting from the sale of Epsilon's foreign subsidiaries — — — 26.8 26.8 Balance at December 31, 2019 $ 2.5 $ (0.1) $ (7.5) $ (94.8) $ (99.9) Changes in other comprehensive income (loss) 20.7 (0.6) — 71.0 91.1 Recognition resulting from the sale of Precima's foreign subsidiaries — — — 3.8 3.8 Balance at December 31, 2020 $ 23.2 $ (0.7) $ (7.5) $ (20.0) $ (5.0) (1) Primarily related to the impact of changes in the Canadian dollar and Euro foreign currency exchange rates. In accordance with ASC 830, “Foreign Currency Matters,” upon the sale of Precima on January 10, 2020, $3.8 million of accumulated foreign currency translation adjustments attributable to Precima’s foreign subsidiaries sold were reclassified from accumulated other comprehensive loss and included in the calculation of the gain on sale of Precima. Upon the sale of Epsilon on July 1, 2019, $26.8 million of accumulated foreign currency translation adjustments attributable to Epsilon’s foreign subsidiaries sold were reclassified from accumulated other comprehensive loss and included in the calculation of the gain/loss on sale of Epsilon segment. Additionally, as of January 1, 2018, a cumulative-effect adjustment of $1.5 million, net of tax, was reclassified from accumulated other comprehensive loss to retained earnings related to the adoption of ASU 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities.” Other reclassifications from accumulated other comprehensive loss into net income for each of the periods presented were not material. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2020 | |
INCOME TAXES | |
INCOME TAXES | 22. INCOME TAXES The components of income from continuing operations before income taxes and income tax expense are as follows: Years Ended December 31, 2020 2019 2018 (in millions) Components of income from continuing operations before income taxes: Domestic $ 281.7 $ 591.9 $ 1,052.7 Foreign 112.8 146.5 162.3 Total $ 394.5 $ 738.4 $ 1,215.0 Components of income tax expense: Current Federal $ 209.2 $ 126.0 $ 152.2 State 36.6 35.8 58.0 Foreign 47.8 11.5 52.8 Total current 293.6 173.3 263.0 Deferred Federal (135.1) (11.8) 48.0 State (37.6) 6.7 14.7 Foreign (21.4) (2.4) (56.2) Total deferred (194.1) (7.5) 6.5 Total provision for income taxes $ 99.5 $ 165.8 $ 269.5 A reconciliation of recorded federal provision for income taxes to the expected amount computed by applying the federal statutory rate for all periods to income from continuing operations before income taxes is as follows: Years Ended December 31, 2020 2019 2018 (in millions) Expected expense at statutory rate $ 82.8 $ 155.1 $ 255.1 Increase (decrease) in income taxes resulting from: State income taxes, net of federal benefit (0.8) 33.6 57.4 Foreign rate differential 4.1 (2.3) 11.6 Foreign restructuring 3.6 — (48.0) Impact of 2017 Tax Reform (2.4) (30.2) (29.7) Global intangible low-taxed income (7.8) 8.7 15.5 Non-deductible expenses (non-taxable income) 8.3 9.1 3.7 IRC Section 199, net of tax reserves 12.5 — (0.8) Other (0.8) (8.2) 4.7 Total $ 99.5 $ 165.8 $ 269.5 H.R. 1, originally known as the Tax Cuts and Jobs Act of 2017 (the “2017 Tax Reform”) was enacted on December 22, 2017. The 2017 Tax Reform permanently reduced the corporate tax rate to 21% from 35%, effective January 1, 2018 and implemented a change from a system of worldwide taxation with deferral to a hybrid territorial system. This system taxes excess foreign profits above a deemed routine return through the Global Intangible Low-Taxed Income (“GILTI”) regime. The Company recognizes tax on GILTI as an expense in the period incurred. For the year ended December 31, 2020, the Company recorded an income tax benefit of approximately $2.4 million related to the rate benefit for a capital loss that will be carried back to a year preceding the 2017 Tax Reform rate reduction. Additionally, the Company recorded a benefit of $7.8 million for the year ended December 31, 2020 related to the impact of the final regulations issued by the Treasury and Internal Revenue Service regarding GILTI. The Company is currently under audit with the Internal Revenue Service for years 2012-2017. For years 2012-2014, the audit is limited in scope to research and development tax credits and IRC Section 199 deductions claimed on amended returns. As a result of the preliminary audit findings, the Company increased its reserve for IRC Section 199 deductions by $12.5 million during the year ended December 31, 2020. For years ended December 31, 2019 and 2018, the Company recorded an income tax benefit of approximately $30.2 million related to a decrease in unrecognized tax benefits as a result of a tax accounting method change required by the 2017 Tax Reform and an income tax benefit of approximately $29.7 million related to the impact of the 2017 Tax Reform rate differential as a result of certain tax accounting method changes related to projects initiated in 2018, respectively. Deferred tax assets and liabilities consist of the following: December 31, 2020 2019 (in millions) Deferred tax assets Deferred revenue $ 29.2 $ 9.5 Allowance for loan loss 482.3 267.6 Net operating loss carryforwards and other carryforwards 106.2 69.0 Stock-based compensation and other employee benefits 3.8 13.7 Lease liabilities 74.4 74.4 Accrued expenses and other 81.0 40.3 Intangible assets 5.5 23.2 Total deferred tax assets 782.4 497.7 Valuation allowance (50.1) (64.0) Deferred tax assets, net of valuation allowance 732.3 433.7 Deferred tax liabilities Deferred income $ 290.9 $ 365.6 Depreciation 25.2 41.8 Right of use assets 57.0 61.1 Total deferred tax liabilities 373.1 468.5 Net deferred tax asset (liability) $ 359.2 $ (34.8) Amounts recognized in the consolidated balance sheets: Non-current assets $ 359.2 $ 45.2 Non-current liabilities — (80.0) Total – Net deferred tax asset (liability) $ 359.2 $ (34.8) At December 31, 2020, included in the Company’s U.S. tax returns are approximately $146.4 million of U.S. federal net operating loss carryovers (“NOLs”) and approximately $33.8 million of foreign tax credits. With the exception of NOLs generated after December 31, 2017, these attributes expire at various times through the year 2037. Pursuant to Section 382 of the Internal Revenue Code, the Company’s utilization of a portion of such NOLs is subject to an annual limitation. The Company does not believe it is more-likely-than-not that all of its NOLs will be utilized and has therefore, in accordance with ASC 740-10-30, “Income Taxes—Overall—Initial Measurement,” established a valuation allowance against a portion of the NOLs. At December 31, 2020, the Company has state income tax NOLs of approximately $232.3 million and state credits of approximately $3.0 million available to offset future state taxable income. The Company also has state capital losses of approximately $10.6 million to offset capital gains. The state NOLs, capital losses and credits will expire at various times through the year 2039. The Company believes a majority of these NOLs and all of the capital losses will expire before utilization and has therefore established a valuation allowance against those NOLs and capital losses expected to expire unutilized. The Company has $240.9 million of foreign NOLs and $6.6 million of foreign capital losses at December 31, 2020. The foreign NOLs and capital losses have an unlimited carryforward period. The Company does not believe it is more-likely-than-not that some of the NOLs or any of the capital losses will be utilized and has therefore, in accordance with ASC 740-10-30, established a valuation allowance against those unlikely to be utilized. The Company’s valuation allowance, and corresponding NOLs, decreased $13.9 million during the year ended December 31, 2020, due primarily to nondeductible expenses in foreign jurisdictions. The Company’s valuation allowance increased $27.7 million during the year ended December 31, 2019 and decreased $40.1 million during the year ended December 31, 2018. Should certain substantial changes in the Company’s ownership occur, there could be an annual limitation on the amount of carryovers and credits that can be utilized. The impact of such a limitation would likely not be significant. At December 31, 2020, the Company did not have any excess financial reporting basis over tax basis from a U.S. federal tax perspective primarily as a result of the GILTI regime pursuant to the 2017 Tax Reform. The Company may have, in certain state or foreign jurisdictions, amounts of financial reporting basis that exceeds tax basis as of December 31, 2020. However, these amounts are immaterial and no additional state or foreign tax liability has been recorded. Finally, despite the immaterial nature, the Company intends to permanently reinvest any previously undistributed earnings of our foreign subsidiaries in the operations outside the United States to support its international growth. Net deferred tax assets increased by $159.0 million in 2020 as a result of the adoption of CECL. This tax impact was recorded to retained earnings. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in millions): Balance at January 1, 2018 $ 208.3 Increases related to prior years’ tax positions 41.3 Decreases related to prior years’ tax positions (9.6) Increases related to current year tax positions 61.5 Settlements during the period (1.0) Lapses of applicable statutes of limitation (4.2) Balance at December 31, 2018 $ 296.3 Increases related to prior years’ tax positions 2.7 Decreases related to prior years’ tax positions (76.6) Increases related to current year tax positions 58.3 Settlements during the period (0.6) Lapses of applicable statutes of limitation (5.8) Balance at December 31, 2019 $ 274.3 Increases related to prior years’ tax positions 64.7 Decreases related to prior years’ tax positions (63.5) Increases related to current year tax positions 10.7 Settlements during the period (4.6) Lapses of applicable statutes of limitation (8.3) Balance at December 31, 2020 $ 273.3 Included in the balance at December 31, 2020 are tax positions reclassified from deferred income taxes. Deductibility or taxability is highly certain for these tax positions but there is uncertainty about the timing of such deductibility or taxability. Because of the impact of deferred tax accounting, other than interest and penalties, this timing uncertainty, if realized, would not have a material effect on the annual effective tax rate but could accelerate the payment of cash to the taxing authority to an earlier period. The Company recognizes potential accrued interest and penalties related to unrecognized tax benefits in income tax expense. The Company has potential cumulative interest and penalties with respect to unrecognized tax benefits of approximately $74.7 million, $67.0 million and $66.7 million at December 31, 2020, 2019 and 2018, respectively. For the years ended December 31, 2020, 2019 and 2018, the Company recorded approximately an $7.6 million expense, a $0.8 million benefit and a $24.5 million expense, respectively, for potential interest and penalties with respect to unrecognized tax benefits. At December 31, 2020, 2019 and 2018, the Company had unrecognized tax benefits of approximately $257.8 million, $255.1 million and $247.7 million, respectively, that, if recognized, would impact the effective tax rate. The Company does not anticipate a significant change to the total amount of unrecognized tax benefits over the next twelve months. The Company files income tax returns in the U.S. federal jurisdiction and in many state and foreign jurisdictions. With some exceptions, the tax returns filed by the Company are no longer subject to U.S. federal income tax and state and local examinations for the years before 2015 or foreign income tax examinations for years before 2013. |
FINANCIAL INSTRUMENTS
FINANCIAL INSTRUMENTS | 12 Months Ended |
Dec. 31, 2020 | |
FINANCIAL INSTRUMENTS | |
FINANCIAL INSTRUMENTS | 23. 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 December 31, 2020 December 31, 2019 Carrying Fair Carrying Fair Amount Value Amount Value (in millions) Financial assets Credit card and loan receivables, net $ 14,776.4 $ 17,301.2 $ 18,292.0 $ 19,126.0 Credit card receivables held for sale — — 408.0 436.2 Redemption settlement assets, restricted 693.5 693.5 600.8 600.8 Other investments 225.4 225.4 259.8 259.8 Derivative instruments 0.4 0.4 0.2 0.2 Financial liabilities Derivative instruments 1.5 1.5 0.3 0.3 Deposits 9,792.6 10,015.9 12,151.7 12,303.6 Non-recourse borrowings of consolidated securitization entities 5,709.9 5,783.4 7,284.0 7,333.6 Long-term and other debt 2,805.7 2,875.1 2,849.9 2,878.8 The following techniques and assumptions were used by the Company in estimating fair values of financial instruments as disclosed herein: Credit card and loan receivables, net — . Credit card receivables held for sale — Redemption settlement assets, restricted — Other investments Deposits Non-recourse borrowings of consolidated securitization entities Long-term and other debt Derivative instruments Financial Assets and Financial Liabilities Fair Value Hierarchy ASC 820, “Fair Value Measurement,” 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 December 31, 2020 and 2019: Fair Value Measurements at December 31, 2020 Using Balance at December 31, 2020 Level 1 Level 2 Level 3 (in millions) Mutual funds (1) $ 26.9 $ 26.9 $ — $ — Corporate bonds (1) 611.2 — 611.2 — Marketable securities (2) 225.4 34.2 191.2 — Derivative instruments (3) 0.4 — 0.4 — Total assets measured at fair value $ 863.9 $ 61.1 $ 802.8 $ — Derivative instruments (3) $ 1.5 $ — $ 1.5 $ — Total liabilities measured at fair value $ 1.5 $ — $ 1.5 $ — Fair Value Measurements at December 31, 2019 Using Balance at December 31, 2019 Level 1 Level 2 Level 3 (in millions) Mutual funds (1) $ 25.1 $ 25.1 $ — $ — Corporate bonds (1) 536.4 — 536.4 — Marketable securities (2) 259.8 26.2 233.6 — Derivative instruments (3) 0.2 — 0.2 — Total assets measured at fair value $ 821.5 $ 51.3 $ 770.2 $ — Derivative instruments (3) $ 0.3 $ — $ 0.3 $ — Total liabilities measured at fair value $ 0.3 $ — $ 0.3 $ — (1) Amounts are included in redemption settlement assets in the consolidated balance sheets. (2) Amounts are included in other current assets and other non-current assets in the consolidated balance sheets. (3) Amounts are included in other current assets and other current liabilities in the consolidated balance sheets. There were no transfers between Levels 1 and 2 within the fair value hierarchy for the years ended December 31, 2020 and 2019. Financial Instruments Disclosed but Not Carried at Fair Value The following tables provide assets and liabilities disclosed but not carried at fair value as of December 31, 2020 and 2019: Fair Value Measurements at December 31, 2020 Total Level 1 Level 2 Level 3 (in millions) Financial assets: Credit card and loan receivables, net $ 17,301.2 $ — $ — $ 17,301.2 Total $ 17,301.2 $ — $ — $ 17,301.2 Financial liabilities: Deposits $ 10,015.9 $ — $ 10,015.9 $ — Non-recourse borrowings of consolidated securitization entities 5,783.4 — 5,783.4 — Long-term and other debt 2,875.1 — 2,875.1 — Total $ 18,674.4 $ — $ 18,674.4 $ — Fair Value Measurements at December 31, 2019 Total Level 1 Level 2 Level 3 (in millions) Financial assets: Credit card and loan receivables, net $ 19,126.0 $ — $ — $ 19,126.0 Credit card receivables held for sale 436.2 — — 436.2 Total $ 19,562.2 $ — $ — $ 19,562.2 Financial liabilities: Deposits $ 12,303.6 $ — $ 12,303.6 $ — Non-recourse borrowings of consolidated securitization entities 7,333.6 — 7,333.6 — Long-term and other debt 2,878.8 — 2,878.8 — Total $ 22,516.0 $ — $ 22,516.0 $ — Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis Certain assets and liabilities are recognized or disclosed at fair value on a nonrecurring basis, including property and equipment, ROU assets, deferred contract assets, goodwill, and intangible assets. These assets are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances, including when there is evidence of impairment. For the year ended December 31, 2020, the Company recorded asset impairment charges of $63.7 million related to certain deferred contract costs, fixed assets and ROU assets. The fair value was determined utilizing discounted cash flow models over the estimated life of each asset. The principal assumptions used in the Company’s impairment analysis were forecasted future cash flows and the discount rate, which are considered Level 3 inputs. See Note 3, “Revenue,” Note 12, “Leases,” and Note 13, “Property and Equipment,” for more information regarding asset impairments. For the year ended December 31, 2019, as part of restructuring and other charges, the Company recorded asset impairments of $52.0 million. See Note 15, “Restructuring and Other Charges,” for more information. |
PARENT-ONLY FINANCIAL STATEMENT
PARENT-ONLY FINANCIAL STATEMENTS | 12 Months Ended |
Dec. 31, 2020 | |
PARENT-ONLY FINANCIAL STATEMENTS | |
PARENT-ONLY FINANCIAL STATEMENTS | 24. PARENT-ONLY FINANCIAL STATEMENTS The following ADSC financial statements are provided in accordance with the rules of the Securities and Exchange Commission, which require such disclosure when the restricted net assets of consolidated subsidiaries exceed 25 percent of consolidated net assets. Certain of the Company’s subsidiaries may be restricted in distributing cash or other assets to ADSC, which could be utilized to service its indebtedness. The stand-alone parent-only financial statements are presented below. Balance Sheets December 31, 2020 2019 (in millions) Assets: Cash and cash equivalents $ 0.2 $ 0.2 Investment in subsidiaries 5,127.0 5,326.2 Other assets 41.8 3.4 Total assets $ 5,169.0 $ 5,329.8 Liabilities: Current portion of long-term and other debt $ 101.4 $ 101.4 Long-term and other debt 2,704.3 2,748.5 Intercompany liabilities, net 742.0 806.7 Other liabilities 99.7 84.9 Total liabilities 3,647.4 3,741.5 Stockholders’ equity 1,521.6 1,588.3 Total liabilities and stockholders’ equity $ 5,169.0 $ 5,329.8 See Note 17, “Debt,” for more information regarding the Company’s long-term and other debt. Statements of Income Years Ended December 31, 2020 2019 2018 (in millions) Interest from loans to subsidiaries $ 12.6 $ 19.2 $ 17.9 Dividends from subsidiaries 256.3 922.6 810.1 Total revenue 268.9 941.8 828.0 Loss on extinguishment of debt — 71.9 — Interest expense, net 109.5 130.0 281.2 Other expenses, net 1.7 (0.7) (0.4) Total expenses 111.2 201.2 280.8 Income before income taxes and equity in undistributed net income (loss) of subsidiaries 157.7 740.6 547.2 Benefit for income taxes 21.2 42.1 7.0 Income before equity in undistributed net income (loss) of subsidiaries 178.9 782.7 554.2 Equity in undistributed net income (loss) of subsidiaries 34.8 (504.7) 408.9 Net income $ 213.7 $ 278.0 $ 963.1 Statements of Comprehensive Income Years Ended December 31, 2020 2019 2018 (in millions) Net income $ 213.7 $ 278.0 $ 963.1 Other comprehensive income, net of tax — 4.9 29.6 Total comprehensive income, net of tax $ 213.7 $ 282.9 $ 992.7 Statements of Cash Flows Years Ended December 31, 2020 2019 2018 (in millions) Net cash (used in) provided by operating activities $ (137.6) $ (1,029.1) $ 82.3 Investing activities: Investment in subsidiaries (3.2) (135.0) — Proceeds from sale of business — 4,118.3 — Dividends received 256.3 922.6 810.1 Net cash provided by investing activities 253.1 4,905.9 810.1 Financing activities: Borrowings under debt agreements 1,276.0 3,083.0 4,527.0 Repayments of borrowings (1,320.5) (5,778.2) (4,838.3) Payment of debt extinguishment costs — (46.1) — Payment of deferred financing costs (9.1) (20.7) (4.6) Purchase of treasury shares — (976.1) (443.2) Dividends paid (60.6) (127.4) (125.2) Proceeds from issuance of common stock 2.8 12.4 17.6 Other (4.1) (23.6) (25.7) Net cash used in financing activities (115.5) (3,876.7) (892.4) Change in cash, cash equivalents and restricted cash — 0.1 — Cash, cash equivalents and restricted cash at beginning of year 0.2 0.1 0.1 Cash, cash equivalents and restricted cash at end of year $ 0.2 $ 0.2 $ 0.1 Non-cash investing and financing activities related to the parent-only statement of cash flows for the year ended December 31, 2020 included the issuance of approximately 1.9 million shares of the Company’s common stock as non-cash consideration in the acquisition of Bread on December 3, 2020. For more information, see Note 5, “Acquisitions.” Non-cash investing activities related to the parent-only statement of cash flows for the year ended December 31, 2019 included a $3.0 billion non-cash dividend in the form of an intercompany return of capital from ADS Alliance Data Systems, Inc. to ADSC. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 12 Months Ended |
Dec. 31, 2020 | |
SEGMENT INFORMATION | |
SEGMENT INFORMATION | 25. 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 operating segments are reviewed separately because each operating segment represents a strategic business unit that generally offers different products and services. As discussed in Note 7, “Discontinued Operations,” in the first quarter of 2019, the Company’s Epsilon segment was classified as a discontinued operation and was sold on July 1, 2019. The Company operates in the LoyaltyOne and Card Services reportable segments, which consist of the following: ● LoyaltyOne provides coalition and short-term loyalty programs through the Company’s Canadian AIR MILES Reward Program and BrandLoyalty; and ● Card Services provides private label , co-brand, general purpose and business credit card programs, digital payments, including Bread, and Comenity-branded financial services. Card Services provides risk management solutions, account origination, funding, transaction processing, customer care, collections and marketing services. 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.” Corporate/ Year Ended December 31, 2020 LoyaltyOne Card Services Other Total (in millions) Revenues $ 764.8 $ 3,756.5 $ 0.1 $ 4,521.4 Income (loss) before income taxes $ 111.0 $ 501.5 $ (218.0) $ 394.5 Interest expense, net (0.8) 385.4 109.3 493.9 Operating income (loss) 110.2 886.9 (108.7) 888.4 Depreciation and amortization 78.0 102.8 3.0 183.8 Stock compensation expense 5.5 7.0 8.8 21.3 Gain on sale of business, net of strategic transaction costs (8.0) — — (8.0) Strategic transaction costs 0.4 0.3 15.2 15.9 Asset impairments — 63.7 — 63.7 Restructuring and other charges 0.1 (8.3) — (8.2) Adjusted EBITDA (1) 186.2 1,052.4 (81.7) 1,156.9 Less: Securitization funding costs — 165.9 — 165.9 Less: Interest expense on deposits — 219.5 — 219.5 Adjusted EBITDA, net (1) $ 186.2 $ 667.0 $ (81.7) $ 771.5 Capital expenditures $ 24.3 $ 29.4 $ 0.3 $ 54.0 Corporate/ Year Ended December 31, 2019 LoyaltyOne Card Services Other Total (in millions) Revenues $ 1,033.1 $ 4,547.8 $ 0.4 $ 5,581.3 Income (loss) before income taxes $ 103.1 $ 991.7 $ (356.4) $ 738.4 Interest expense, net 2.3 439.0 127.7 569.0 Operating income (loss) 105.4 1,430.7 (228.7) 1,307.4 Depreciation and amortization 80.1 89.3 6.7 176.1 Stock compensation expense 7.2 9.3 8.6 25.1 Strategic transaction costs 1.0 — 10.7 11.7 Restructuring and other charges 50.8 29.4 37.9 118.1 Loss on extinguishment of debt — — 71.9 71.9 Adjusted EBITDA (1) 244.5 1,558.7 (92.9) 1,710.3 Less: Securitization funding costs — 213.4 — 213.4 Less: Interest expense on deposits — 225.6 — 225.6 Adjusted EBITDA, net (1) $ 244.5 $ 1,119.7 $ (92.9) $ 1,271.3 Capital expenditures $ 41.5 $ 44.2 $ 0.8 $ 86.5 Corporate/ Year Ended December 31, 2018 LoyaltyOne Card Services Other Total (in millions) Revenues $ 1,068.4 $ 4,597.6 $ 0.6 $ 5,666.6 Income (loss) before income taxes $ 153.8 $ 1,381.6 $ (320.4) $ 1,215.0 Interest expense, net 5.6 385.9 150.8 542.3 Operating income (loss) 159.4 1,767.5 (169.6) 1,757.3 Depreciation and amortization 84.8 101.1 7.7 193.6 Stock compensation expense 10.0 13.3 21.1 44.4 Adjusted EBITDA (1) 254.2 1,881.9 (140.8) 1,995.3 Less: Securitization funding costs — 220.2 — 220.2 Less: Interest expense on deposits — 165.7 — 165.7 Adjusted EBITDA, net (1) $ 254.2 $ 1,496.0 $ (140.8) $ 1,609.4 Capital expenditures $ 34.0 $ 53.8 $ 5.5 $ 93.3 (1) Adjusted EBITDA is a non-GAAP financial measure equal to income from continuing operations, 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 also excludes the gain on the sale of Precima, strategic transaction costs, which represent costs for professional services associated with strategic initiatives, asset impairments, restructuring and other charges, and loss related to the Company’s extinguishment of debt in July 2019. Adjusted EBITDA, net is also a non-GAAP financial measure equal to adjusted EBITDA less securitization funding costs and interest expense on deposits. Adjusted EBITDA and adjusted EBITDA, net are presented in accordance with ASC 280 as they are the primary performance metrics utilized to assess performance of the segments. The table below reconciles the reportable segments’ total assets to consolidated total assets: LoyaltyOne Card Services Corporate/ Other Total (in millions) Total Assets December 31, 2020 $ 2,422.3 $ 19,884.6 $ 240.2 $ 22,547.1 December 31, 2019 $ 2,338.0 $ 23,931.1 $ 225.7 $ 26,494.8 With respect to information concerning principal geographic areas, revenues are based on the location of the subsidiary that generally correlates with the location of the customer. Information concerning principal geographic areas is as follows: Europe, United Middle East States Canada and Africa Asia Pacific Other Total (in millions) Revenues Year Ended December 31, 2020 $ 3,767.7 $ 286.9 $ 332.6 $ 80.5 $ 53.7 $ 4,521.4 Year Ended December 31, 2019 $ 4,588.3 $ 352.2 $ 449.1 $ 121.7 $ 70.0 $ 5,581.3 Year Ended December 31, 2018 $ 4,621.3 $ 411.3 $ 463.2 $ 122.0 $ 48.8 $ 5,666.6 Long Lived Assets December 31, 2020 $ 1,874.9 $ 310.7 $ 714.3 $ 11.4 $ 1.4 $ 2,912.7 December 31, 2019 $ 1,361.1 $ 311.1 $ 696.2 $ 12.8 $ 0.9 $ 2,382.1 As of December 31, 2020, 2019 and 2018, revenues from L Brands and its affiliates represented approximately 10.3% , 10.6% and 10.8% , respectively, of consolidated revenues and are included in the Card Services segment |
SUPPLEMENTAL CASH FLOW INFORMAT
SUPPLEMENTAL CASH FLOW INFORMATION | 12 Months Ended |
Dec. 31, 2020 | |
SUPPLEMENTAL CASH FLOW INFORMATION | |
SUPPLEMENTAL CASH FLOW INFORMATION | 26. SUPPLEMENTAL CASH FLOW INFORMATION The consolidated statements of cash flows are presented with the combined cash flows from discontinued operations with cash flows from continuing operations within each cash flow statement category. The following table provides a reconciliation of cash and cash equivalents to the total of the amounts reported in the consolidated statements of cash flows: December 31, December 31, December 31, 2020 2019 2018 (in millions) Cash and cash equivalents $ 3,081.5 $ 3,874.4 $ 3,863.1 Restricted cash included within other current assets (1) 326.3 44.4 60.7 Restricted cash included within redemption settlement assets, restricted (2) 55.4 39.3 43.9 Total cash, cash equivalents and restricted cash $ 3,463.2 $ 3,958.1 $ 3,967.7 (1) Includes cash restricted for principal and interest repayments of non-recourse borrowings of consolidated securitized debt and other restricted cash within other current assets. At December 31, 2020, restricted cash included $291.8 million in principal accumulation for the repayment of non-recourse borrowings of consolidated securitized debt that matured in February 2021. (2) See Note 11, “Redemption Settlement Assets,” for additional information regarding the nature of restrictions on redemption settlement assets. Non-cash investing and financing activities for the year ended December 31, 2020 included $75.0 million of deferred consideration and the issuance of approximately 1.9 million shares of the Company’s common stock as non-cash consideration in the acquisition of Bread on December 3, 2020. For more information, see Note 5, “Acquisitions.” Non-cash financing activities for the year ended December 31, 2019 included an exchange agreement with ValueAct Holdings, L.P. pursuant to which ValueAct exchanged an aggregate of 1,500,000 shares of the Company’s common stock for an aggregate of 150,000 shares of preferred stock, and ValueAct’s subsequent conversion of all 150,000 shares of preferred stock back to common stock. |
QUARTERLY RESULTS OF OPERATIONS
QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) | 12 Months Ended |
Dec. 31, 2020 | |
QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) | |
QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) | 27. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) Unaudited quarterly results of operations for the years ended December 31, 2020 and 2019 are presented below. Quarter Ended March 31, June 30, September 30, December 31, 2020 2020 2020 2020 (in millions, except per share amounts) Revenues $ 1,381.8 $ 979.3 $ 1,050.5 $ 1,109.8 Operating expenses 1,217.8 804.6 759.5 851.1 Operating income 164.0 174.7 291.0 258.7 Interest expense, net 138.6 127.7 115.1 112.5 Income from continuing operations before income taxes 25.4 47.0 175.9 146.2 Provision for income taxes (4.6) 8.6 42.6 52.9 Income from continuing operations 30.0 38.4 133.3 93.3 Loss from discontinued operations, net of taxes — — — (81.3) Net income $ 30.0 $ 38.4 $ 133.3 $ 12.0 Basic income (loss) per share: Income from continuing operations $ 0.63 $ 0.81 $ 2.79 $ 1.93 Loss from discontinued operations $ — $ — $ — $ (1.68) Net income per share $ 0.63 $ 0.81 $ 2.79 $ 0.25 Diluted income (loss) per share: Income from continuing operations $ 0.63 $ 0.81 $ 2.79 $ 1.93 Loss from discontinued operations $ — $ — $ — $ (1.68) Net income per share $ 0.63 $ 0.81 $ 2.79 $ 0.25 Quarter Ended March 31, June 30, September 30, December 31, 2019 2019 2019 2019 (in millions, except per share amounts) Revenues $ 1,334.2 $ 1,348.5 $ 1,437.6 $ 1,461.0 Operating expenses 977.3 1,011.2 1,133.4 1,152.0 Operating income 356.9 337.3 304.2 309.0 Interest expense, net 143.9 143.5 140.0 141.6 Income from continuing operations before income taxes 213.0 193.8 164.2 167.4 Provision for income taxes 34.8 51.4 42.6 37.0 Income from continuing operations 178.2 142.4 121.6 130.4 Loss from discontinued operations, net of taxes (29.1) (3.4) (229.2) (32.9) Net income (loss) $ 149.1 $ 139.0 $ (107.6) $ 97.5 Basic income (loss) per share: Income from continuing operations $ 3.36 $ 2.72 $ 2.47 $ 2.73 Loss from discontinued operations $ (0.55) $ (0.07) $ (4.69) $ (0.70) Net income (loss) per share $ 2.81 $ 2.65 $ (2.22) $ 2.03 Diluted income (loss) per share: Income from continuing operations $ 3.35 $ 2.71 $ 2.41 $ 2.74 Loss from discontinued operations $ (0.55) $ (0.07) $ (4.54) $ (0.69) Net income (loss) per share $ 2.80 $ 2.64 $ (2.13) $ 2.05 |
SCHEDULE II CONSOLIDATED VALUAT
SCHEDULE II CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS | 12 Months Ended |
Dec. 31, 2020 | |
SCHEDULE II CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS | |
SCHEDULE II CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS | SCHEDULE II ALLIANCE DATA SYSTEMS CORPORATION CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS Balance at Charged to Write-Offs Balance at Beginning of Costs and Net of End of Description Year Expenses Recoveries (1) Year (in millions) Allowance for Doubtful Accounts—Accounts receivable: Year Ended December 31, 2020 $ 3.4 $ 1.1 $ (0.5) $ 4.0 Year Ended December 31, 2019 $ 0.4 $ 3.5 $ (0.5) $ 3.4 Year Ended December 31, 2018 $ 0.1 $ 0.4 $ (0.1) $ 0.4 (1) Accounts written off during the year, net of recoveries and foreign exchange impact . |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Principles of Consolidation | Principles of Consolidation In accordance with Accounting Standards Codification (“ASC”) 860, “Transfers and Servicing,” and ASC 810, “Consolidation,” the Company is the primary beneficiary of certain trusts. The Company, through its involvement in the activities of these trusts, has the power to direct the activities that most significantly impact the economic performance of such trusts, and the obligation (or right) to absorb losses (or receive benefits) of the trusts that could potentially be significant. As such, the Company consolidates these trusts in its consolidated financial statements. For investments in any entities in which the Company owns 50% or less of the outstanding voting stock but in which the Company has significant influence over operating and financial decisions, the Company applies the equity method of accounting. |
Cash and Cash Equivalents | Cash and Cash Equivalents |
Accounts Receivable, net | Accounts Receivable, net |
Credit Card and Loan Receivables | Credit Card and Loan Receivables — and ability to hold credit card and loan receivables for the foreseeable future can be made with a high degree of certainty given the maturity distribution of the Company’s money market deposits, certificates of deposit and other funding instruments; the historic ability to replace maturing certificates of deposits and other borrowings with new deposits or borrowings; and historic credit card and loan payment activity. Due to the homogenous nature of the Company’s credit card and loan receivables, amounts are classified as held for investment on an individual client portfolio basis. |
Credit Card and Loan Receivables Held for Sale | Credit Card and Loan Receivables Held for Sale |
Transfers of Financial Assets | Transfers of Financial Assets |
Allowance for Loan Loss | Allowance for Loan Loss Under CECL, the allowance for loan loss is an estimate of expected credit losses, measured over the estimated life of its credit card and loan receivables that considers forecasts of future economic conditions in addition to information about past events and current conditions. The estimate under the CECL model is significantly influenced by the composition, characteristics and quality of the Company’s portfolio of credit card and loan receivables, as well as the prevailing economic conditions and forecasts utilized. The estimate of the allowance for loan loss includes an estimate for uncollectible principal as well as unpaid interest and fees. Charge-offs of principal amounts, net of recoveries are deducted from the allowance. Charge-offs for unpaid interest and fees as well as any adjustments to the allowance associated with unpaid interest and fees are recorded as a reduction to finance charges, net. The allowance is maintained through an adjustment to the provision for loan loss and is evaluated for appropriateness. In estimating its allowance for loan loss, for each identified group, management utilizes various models and estimation techniques based on historical loss experience, current conditions, reasonable and supportable forecasts and other relevant factors. These models utilize historical data and applicable macroeconomic variables with statistical analysis and behavioral relationships with credit performance. The Company’s quantitative estimate of expected credit losses under CECL is impacted by certain forecasted economic factors. The Company considers the forecast used to be reasonable and supportable over the estimated life of the credit card and loan receivables, with no reversion period. In addition to the quantitative estimate of expected credit losses, the Company also incorporates qualitative adjustments for certain factors such as Company-specific risks, changes in current economic conditions that may not be captured in the quantitatively derived results, or other relevant factors to ensure the allowance for loan loss reflects the Company’s best estimate of current expected credit losses. As permitted by ASC 326, “Financial Instruments—Credit Losses,” the Company excludes unbilled finance charges from its amortized cost basis of credit card and loan receivables. See Note 8, “Credit Card and Loan Receivables,” for more information about the Company’s allowance for loan loss. |
Inventories, net | Inventories, net 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 an analysis of historical experience. |
Redemption Settlement Assets, Restricted | Redemption Settlement Assets, Restricted |
Property and Equipment | Property and Equipment one three |
Goodwill and Other Intangible Assets | Goodwill Intangible Assets |
Income Taxes | Income Taxes Deferred income tax assets and liabilities are computed on differences between the financial statement bases and tax bases of assets and liabilities at the enacted tax rates. Changes in deferred income tax assets and liabilities associated with components of other comprehensive income are charged or credited directly to other comprehensive income. Otherwise, changes in deferred income tax assets and liabilities are included as a component of income tax expense. The effect on deferred income tax assets and liabilities attributable to changes in enacted tax rates are charged or credited to income tax expense in the period of enactment. Valuation allowances are established for certain deferred tax assets when realization is less than more-likely-than-not. Liabilities are established for uncertain tax positions taken or positions expected to be taken in income tax returns when such positions, in our judgment, do not meet a more-likely-than-not threshold based on the technical merits of the positions. Additionally, liabilities may be established for uncertain tax positions when, in our judgment, the more-likely-than-not threshold is met, but the position does not rise to the level of highly certain based upon the technical merits of the position. Estimated interest and penalties related to uncertain tax positions are included as a component of income tax expense. The Company uses the portfolio approach relating to the release of stranded tax effects recorded in accumulated other comprehensive loss. Under the portfolio approach, the net unrealized gains or losses recorded in accumulated other comprehensive loss would be eliminated only on the date the entire portfolio of available-for-sale securities is sold or otherwise disposed of. |
Derivative Instruments | Derivative Instruments Derivatives Designated as Hedging Instruments Derivatives not Designated as Hedging Instruments The Company’s derivative instruments were immaterial to the consolidated balance sheets and statements of income for the periods presented. |
Other Investments | Other Investments |
Revenue Recognition | Revenue Recognition See Note 3, “Revenue,” for more information about the Company’s revenue and the associated timing and basis of revenue recognition. |
Earnings Per Share | Earnings Per Share |
Currency Translation | Currency Translation statements are included in accumulated other comprehensive loss. The Company recognized net foreign transaction losses of $0.5 million for the year ended December 31, 2020, gains of $1.3 million for the year ended December 31, 2019, and gains of $0.6 million for the year ended December 31, 2018. |
Leases | Leases |
Marketing and Advertising Costs | Marketing and Advertising Costs |
Stock Compensation Expense | Stock Compensation Expense |
Management Estimates | Management Estimates |
Recently Issued and Adopted Accounting Standards | Recently Issued Accounting Standards In December 2019, the Financial Accounting Standards Board (“FASB”) issued ASU 2019-12, “Simplifying the Accounting for Income Taxes.” ASU 2019-12 eliminates certain exceptions within ASC 740, “Income Taxes,” and clarifies certain aspects of ASC 740 to promote consistency among reporting entities. ASU 2019-12 is effective for interim and annual reporting periods beginning after December 15, 2020, with early adoption permitted. Most amendments within the standard are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis. The Company does not expect the adoption of ASU 2019-12 to have a material impact on its consolidated financial statements. In March 2020, the FASB issued ASU 2020-04, “Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” This ASU provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this ASU apply only to contracts and hedging relationships that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued due to reference rate reform. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022. This ASU is elective and is effective upon issuance for all entities. The Company is evaluating the impact that adoption of ASU 2020-04 will have on its consolidated financial statements. Recently Adopted Accounting Standards In June 2016, the FASB issued ASU 2016-13, “Measurement of Credit Losses on Financial Instruments,” or ASC 326. This standard, referred to as CECL, required entities to utilize a financial instrument impairment model to establish an allowance based on expected losses over the life of the exposure rather than a model based on an incurred loss approach. Estimates of expected credit losses under the CECL model are based on relevant information about past events, current conditions, and reasonable and supportable forward-looking forecasts regarding the collectability of the loan portfolio. The Company adopted CECL on January 1, 2020 and recorded an increase in its allowance for loan loss at adoption of $644.0 million, which was recorded through a cumulative-effect adjustment to retained earnings, net of taxes. CECL also expanded the disclosure requirements regarding an entity’s assumptions, models, and methods for estimating its allowance for loan loss. See Note 8, “Credit Card and Loan Receivables,” for the Company’s CECL disclosures. In addition, CECL modified the impairment model for available-for-sale debt securities and provided for a simplified accounting model for purchased financial assets with credit deterioration since their origination. CECL impacts the Company’s valuation of its accounts receivable and available-for-sale debt securities. The Company’s adoption of CECL with respect to accounts receivable and available-for-sale debt securities did not have a material impact on its consolidated financial statements. In August 2018, the FASB issued ASU 2018-13, “Changes to the Disclosure Requirements for Fair Value Measurement.” ASU 2018-13 modifies the disclosure requirements on fair value measurements from ASC 820, “Fair Value Measurement.” The Company’s adoption of this standard on January 1, 2020 did not have a material impact on its consolidated financial statements. In August 2018, the FASB issued ASU 2018-15, “Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract.” ASU 2018-15 requires customers in a cloud computing arrangement that is a service contract to follow the internal-use software guidance in ASC 350-40, “Intangibles—Goodwill and Other—Internal-Use Software,” to determine which implementation costs may be capitalized. The amendments in ASU 2018-15 can be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Company adopted ASU 2018-15 on January 1, 2020 on a prospective basis and the adoption did not have a material impact on its consolidated financial statements. |
REVENUE (Tables)
REVENUE (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
REVENUE | |
Schedule of disaggregation of revenue by major source and geographic region | Corporate/ Year Ended December 31, 2020 LoyaltyOne Card Services Other Total (in millions) Disaggregation of Revenue by Major Source: Coalition loyalty program $ 262.5 $ — $ — $ 262.5 Short-term loyalty programs 487.7 — — 487.7 Servicing fees, net — (174.9) — (174.9) Other 1.8 — 0.1 1.9 Revenue from contracts with customers $ 752.0 $ (174.9) $ 0.1 $ 577.2 Finance charges, net — 3,931.4 — 3,931.4 Investment income 12.8 — — 12.8 Total $ 764.8 $ 3,756.5 $ 0.1 $ 4,521.4 Corporate/ Year Ended December 31, 2019 LoyaltyOne Card Services Other Total (in millions) Disaggregation of Revenue by Major Source: Coalition loyalty program $ 290.1 $ — $ — $ 290.1 Short-term loyalty programs 635.5 — — 635.5 Servicing fees, net — (180.7) — (180.7) Other 94.9 — 0.4 95.3 Revenue from contracts with customers $ 1,020.5 $ (180.7) $ 0.4 $ 840.2 Finance charges, net — 4,728.5 — 4,728.5 Investment income 12.6 — — 12.6 Total $ 1,033.1 $ 4,547.8 $ 0.4 $ 5,581.3 Corporate/ Year Ended December 31, 2018 LoyaltyOne Card Services Other Total (in millions) Disaggregation of Revenue by Major Source: Coalition loyalty program $ 352.3 $ — $ — $ 352.3 Short-term loyalty programs 613.8 — — 613.8 Servicing fees, net — (97.3) — (97.3) Other 90.7 — 0.6 91.3 Revenue from contracts with customers $ 1,056.8 $ (97.3) $ 0.6 $ 960.1 Finance charges, net — 4,694.9 — 4,694.9 Investment income 11.6 — — 11.6 Total $ 1,068.4 $ 4,597.6 $ 0.6 $ 5,666.6 Corporate/ Year Ended December 31, 2020 LoyaltyOne Card Services Other Total (in millions) Disaggregation of Revenue by Geographic Region: United States $ 11.1 $ 3,756.5 $ 0.1 $ 3,767.7 Canada 286.9 — — 286.9 Europe, Middle East and Africa 332.6 — — 332.6 Asia Pacific 80.5 — — 80.5 Other 53.7 — — 53.7 Total $ 764.8 $ 3,756.5 $ 0.1 $ 4,521.4 Corporate/ Year Ended December 31, 2019 LoyaltyOne Card Services Other Total (in millions) Disaggregation of Revenue by Geographic Region: United States $ 40.1 $ 4,547.8 $ 0.4 $ 4,588.3 Canada 352.2 — — 352.2 Europe, Middle East and Africa 449.1 — — 449.1 Asia Pacific 121.7 — — 121.7 Other 70.0 — — 70.0 Total $ 1,033.1 $ 4,547.8 $ 0.4 $ 5,581.3 Corporate/ Year Ended December 31, 2018 LoyaltyOne Card Services Other Total (in millions) Disaggregation of Revenue by Geographic Region: United States $ 23.1 $ 4,597.6 $ 0.6 $ 4,621.3 Canada 411.3 — — 411.3 Europe, Middle East and Africa 463.2 — — 463.2 Asia Pacific 122.0 — — 122.0 Other 48.8 — — 48.8 Total $ 1,068.4 $ 4,597.6 $ 0.6 $ 5,666.6 |
Schedule of reconciliation of contract liabilities for the AIR MILES Reward Program | Deferred Revenue Service Redemption Total (in millions) Balance at January 1, 2019 $ 248.0 $ 627.3 $ 875.3 Cash proceeds 192.0 313.3 505.3 Revenue recognized (1) (193.7) (309.2) (502.9) Other — 0.6 0.6 Effects of foreign currency translation 12.3 31.4 43.7 Balance at December 31, 2019 $ 258.6 $ 663.4 $ 922.0 Cash proceeds 173.1 286.2 459.3 Revenue recognized (1) (188.8) (211.5) (400.3) Other — 1.4 1.4 Effects of foreign currency translation 4.3 17.3 21.6 Balance at December 31, 2020 $ 247.2 $ 756.8 $ 1,004.0 Amounts recognized in the consolidated balance sheets: Deferred revenue (current) $ 141.7 $ 756.8 $ 898.5 Deferred revenue (non-current) $ 105.5 $ — $ 105.5 (1) Reported on a gross basis herein. |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
EARNINGS PER SHARE | |
Schedule of computation of basic and diluted net income per share | Years Ended December 31, 2020 2019 2018 (in millions, except per share amounts) Basic income per share: Numerator: Income from continuing operations $ 295.0 $ 572.6 $ 945.5 Less: Dividends declared on preferred stock — 2.8 — Less: Allocation of undistributed earnings — 6.8 — Income from continuing operations - basic 295.0 563.0 945.5 (Loss) income from discontinued operations, net of tax (81.3) (294.6) 17.6 Net income - basic $ 213.7 $ 268.4 $ 963.1 Denominator: Weighted average shares, basic 47.8 50.0 54.9 Basic income (loss) attributable to common stockholders per share: Income from continuing operations $ 6.17 $ 11.25 $ 17.24 (Loss) income from discontinued operations $ (1.70) $ (5.89) $ 0.32 Net income per share $ 4.47 $ 5.36 $ 17.56 Diluted income per share (1) : Numerator: Income from continuing operations $ 295.0 $ 572.6 $ 945.5 (Loss) income from discontinued operations, net of tax (81.3) (294.6) 17.6 Net income $ 213.7 $ 278.0 $ 963.1 Denominator: Weighted average shares, basic 47.8 50.0 54.9 Weighted average effect of dilutive securities: Shares from assumed conversion of preferred stock — 0.8 — Net effect of dilutive stock options and unvested restricted stock (2) 0.1 0.1 0.2 Denominator for diluted calculation 47.9 50.9 55.1 Diluted income (loss) attributable to common stockholders per share: Income from continuing operations $ 6.16 $ 11.24 $ 17.17 (Loss) income from discontinued operations $ (1.70) $ (5.78) $ 0.32 Net income per share $ 4.46 $ 5.46 $ 17.49 (1) Computed using the if-converted method, as the result was more dilutive. (2) For the years ended December 31, 2020, 2019 and 2018, a de minimis amount of restricted stock units was excluded from each calculation of weighted average dilutive common shares as the effect would have been anti-dilutive. |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
ACQUISITIONS | |
Summary of the fair values of the assets acquired and liabilities assumed | As of (in millions) Installment loan receivables $ 111.7 Accounts receivable 0.2 Other current assets 0.6 Property and equipment 0.3 Developed technology 90.7 Right of use assets - operating 3.6 Deferred tax asset, net 7.0 Intangible assets 11.3 Goodwill 369.6 Total assets acquired 595.0 Accounts payable 2.0 Accrued expenses 2.9 Operating lease liabilities 3.5 Non-recourse borrowings of consolidated securitization entities 95.6 Total liabilities assumed 104.0 Net assets acquired, net of cash and restricted cash $ 491.0 |
DISPOSITION (Tables)
DISPOSITION (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
DISPOSITION | |
Schedule of information related to disposition of business | January 10, 2020 (in millions) Total consideration (1) $ 43.8 Net carrying value of assets and liabilities (including other comprehensive income) 26.8 Allocation of goodwill 3.2 Strategic transaction costs 5.8 Pre-tax gain on sale of business, net of strategic transaction costs $ 8.0 (1) Consideration as defined included cash associated with the sold Precima entities, which was $10.8 million . |
DISCONTINUED OPERATIONS (Tables
DISCONTINUED OPERATIONS (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
DISCONTINUED OPERATIONS | |
Schedule of financial statement information for discontinued operations | July 1, 2019 (in millions) Consideration received (1) $ 4,451.9 Net carrying value of assets and liabilities (including other comprehensive income) 3,939.7 Pre-tax gain on deconsolidation $ 512.2 (1) Consideration as defined included cash associated with the sold Epsilon entities, which was $42.2 million. Years Ended December 31, 2020 2019 2018 (in millions) Revenue $ — $ 999.6 $ 2,175.1 Cost of operations (exclusive of depreciation and amortization disclosed separately below) 110.0 993.9 1,744.4 Depreciation and other amortization — 29.7 115.4 Amortization of purchased intangibles — 43.5 178.3 Interest expense (1) — 64.1 128.3 Gain on sale of Epsilon — (512.2) — Income before (benefit) provision from income taxes (110.0) 380.6 8.7 (Benefit) provision for income taxes (28.7) 675.2 (8.9) (Loss) income from discontinued operations, net of taxes $ (81.3) $ (294.6) $ 17.6 (1) The Company’s credit agreement, as amended, provided that upon consummation of the sale of Epsilon, a mandatory payment of $500.0 million of the revolving credit facility was required and all of the Company’s outstanding senior notes were required to be redeemed. As such, interest expense has been allocated to discontinued operations on the basis of the Company’s $500.0 million mandatory repayment of its revolving line of credit and redemption of its $1.9 billion in senior notes outstanding. For the year ended December 31, 2020, loss from discontinued operations reflects a loss contingency associated with indemnification issues with the purchaser. For the years ended December 31, 2019 and 2018, loss from discontinued operations reflects the results of operations of the Company’s former Epsilon segment, direct costs identifiable to the Epsilon segment including a loss contingency associated with indemnification issues with the purchaser and the allocation of interest expense on corporate debt. See Note 18, “Commitments and Contingencies,” for additional information with respect to the loss contingency. Years Ended December 31, 2020 2019 2018 (in millions) Depreciation and amortization $ — $ 73.2 $ 293.7 Capital expenditures $ — $ 55.8 $ 106.5 |
CREDIT CARD AND LOAN RECEIVAB_2
CREDIT CARD AND LOAN RECEIVABLES (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
CREDIT CARD AND LOAN RECEIVABLES | |
Schedule of components of total credit card and loan receivables | December 31, December 31, 2020 2019 (in millions) Credit card receivables $ 16,376.4 $ 19,047.8 Installment loan receivables 118.0 — Other 290.0 415.3 Total credit card and loan receivables 16,784.4 19,463.1 Less: Credit card and loan receivables – restricted for securitization investors 11,208.5 13,504.2 Other credit card and loan receivables $ 5,575.9 $ 5,958.9 |
Schedule of Company's group similar risk characteristics and estimated life | Estimated Life (in months) Group A (Current, risk score - high) 14 Group B (Current, risk score - low) 19 Group C (Delinquent, risk score - high) 17 Group D (Delinquent, risk score - low) 26 |
Schedule of Company's allowance for loan loss | Years Ended December 31, 2020 (1) 2019 2018 (in millions) Balance at beginning of year $ 1,171.1 $ 1,038.3 $ 1,119.3 Adoption of ASC 326 (2) 644.0 — — Provision for loan loss 1,266.2 1,187.5 1,016.0 Allowance associated with credit card and loan receivables transferred — — (54.8) Change in estimate for uncollectible unpaid interest and fees 10.0 — 25.0 Recoveries 204.6 234.5 214.2 Principal charge-offs (1,287.9) (1,289.2) (1,281.4) Balance at end of year $ 2,008.0 $ 1,171.1 $ 1,038.3 (1) With the acquisition of Bread in December 2020, the Company acquired certain installment loans which represented a separate portfolio segment. As the amount of the allowance for loan loss was immaterial, the amounts were included in the above table. (2) Recorded January 1, 2020 through a cumulative-effect adjustment to retained earnings, net of taxes. |
Schedule of aging analysis of total credit card and loan receivables at amortized cost basis | Aging Analysis of Delinquent Amortized Cost 31 to 60 days 61 to 90 days 91 or more days delinquent Total Current Total (in millions) As of December 31, 2020 (1) $ 272.5 $ 203.3 $ 439.8 $ 915.6 $ 15,578.8 $ 16,494.4 As of December 31, 2019 $ 399.1 $ 293.9 $ 698.4 $ 1,391.4 $ 17,656.4 $ 19,047.8 |
Schedule of information on credit card and loan receivables that are considered troubled debt restructurings, which entered into a modification program | Year Ended December 31, 2020 Year Ended December 31, 2019 Pre- Post- Pre- Post- modification modification modification modification Number of Outstanding Outstanding Number of Outstanding Outstanding Restructurings Balance Balance Restructurings Balance Balance (Dollars in millions) Troubled debt restructurings – credit card receivables 391,049 $ 554.5 $ 552.6 259,311 $ 381.4 $ 380.8 The table below summarizes troubled debt restructurings that have defaulted in the specified periods where the default occurred within 12 months of their modification date: Year Ended December 31, 2020 Year Ended December 31, 2019 Number of Outstanding Number of Outstanding Restructurings Balance Restructurings Balance (Dollars in millions) Troubled debt restructurings that subsequently defaulted – credit card receivables 118,600 $ 161.8 126,476 $ 170.8 |
Schedule of composition of obligor credit quality | Amortized Cost Revolving Credit Card Receivables December 31, 2020 December 31, 2019 Percentage of Percentage of Amortized Amortized Probability of an Account Becoming 91 or More Days Past Amortized Cost Basis Amortized Cost Basis Due or Becoming Charged-off (within the next 12 months) Cost Basis Outstanding Cost Basis Outstanding (in millions, except percentages) No Score $ 204.1 1.2 % $ 298.4 1.6 % 27.1% and higher 1,390.4 8.5 1,648.8 8.7 17.1% - 27.0% 848.8 5.2 1,108.5 5.8 12.6% - 17.0% 937.0 5.7 1,171.7 6.2 3.7% - 12.5% 7,305.5 44.6 8,292.1 43.5 1.9% - 3.6% 2,939.5 17.9 3,375.3 17.7 Lower than 1.9% 2,751.1 16.9 3,153.0 16.5 Total $ 16,376.4 100.0 % $ 19,047.8 100.0 % |
Schedule of securitized credit card receivables, delinquencies and net charge-offs | December 31, December 31, 2020 2019 (in millions) Total credit card and loan receivables – restricted for securitization investors $ 11,208.5 $ 13,504.2 Principal amount of credit card and loan receivables – restricted for securitization investors, 91 days or more past due $ 200.8 $ 321.8 Years Ended December 31, 2020 2019 2018 (in millions) Net charge-offs of securitized principal $ 756.1 $ 907.7 $ 927.0 |
OTHER INVESTMENTS (Tables)
OTHER INVESTMENTS (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
OTHER INVESTMENTS | |
Schedule of principal components of other investments, which are carried at fair value | December 31, 2020 December 31, 2019 Amortized Unrealized Unrealized Amortized Unrealized Unrealized Cost Gains Losses Fair Value Cost Gains Losses Fair Value (in millions) Marketable securities $ 219.0 $ 6.4 $ — $ 225.4 $ 257.2 $ 3.0 $ (0.4) $ 259.8 Total $ 219.0 $ 6.4 $ — $ 225.4 $ 257.2 $ 3.0 $ (0.4) $ 259.8 |
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 | December 31, 2019 Less than 12 months 12 Months or Greater Total Unrealized Unrealized Unrealized Fair Value Losses Fair Value Losses Fair Value Losses (in millions) Marketable securities $ 18.8 $ (0.2) $ 13.1 $ (0.2) $ 31.9 $ (0.4) Total $ 18.8 $ (0.2) $ 13.1 $ (0.2) $ 31.9 $ (0.4) |
Schedule of securities by contractual maturity date | Amortized Estimated Cost Fair Value (in millions) Due in one year or less (1) $ 44.9 $ 44.9 Due after one year through five years 1.0 1.0 Due after five years through ten years — — Due after ten years 173.1 179.5 Total $ 219.0 $ 225.4 (1) Includes mutual funds, which do not have a stated maturity. |
REDEMPTION SETTLEMENT ASSETS (T
REDEMPTION SETTLEMENT ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
REDEMPTION SETTLEMENT ASSETS | |
Schedule of redemption settlement assets | December 31, 2020 December 31, 2019 Amortized Unrealized Unrealized Amortized Unrealized Unrealized Cost Gains Losses Fair Value Cost Gains Losses Fair Value (in millions) Restricted cash $ 55.4 $ — $ — $ 55.4 $ 39.3 $ — $ — $ 39.3 Mutual funds 26.9 — — 26.9 25.1 — — 25.1 Corporate bonds 592.3 19.1 (0.2) 611.2 536.0 2.4 (2.0) 536.4 Total $ 674.6 $ 19.1 $ (0.2) $ 693.5 $ 600.4 $ 2.4 $ (2.0) $ 600.8 |
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 | December 31, 2020 Less than 12 months 12 Months or Greater Total Unrealized Unrealized Unrealized Fair Value Losses Fair Value Losses Fair Value Losses (in millions) Corporate bonds $ 46.2 $ (0.1) $ 10.3 $ (0.1) $ 56.5 $ (0.2) Total $ 46.2 $ (0.1) $ 10.3 $ (0.1) $ 56.5 $ (0.2) December 31, 2019 Less than 12 months 12 Months or Greater Total Unrealized Unrealized Unrealized Fair Value Losses Fair Value Losses Fair Value Losses (in millions) Corporate bonds $ 166.6 $ (1.3) $ 155.1 $ (0.7) $ 321.7 $ (2.0) Total $ 166.6 $ (1.3) $ 155.1 $ (0.7) $ 321.7 $ (2.0) |
Schedule of redemption settlement assets by contractual maturity date | Amortized Estimated Cost Fair Value (in millions) Due in one year or less (1) $ 144.9 $ 146.0 Due after one year through five years 470.2 488.0 Due after five year through ten years 4.1 4.1 Total $ 619.2 $ 638.1 (1) Includes mutual funds, which do not have a stated maturity. |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
LEASES | |
Schedule of lease cost | The components of lease expense were as follows: Years Ended December 31, 2020 2019 (in millions) Operating lease cost $ 40.5 $ 41.1 Short-term lease cost 1.0 2.7 Variable lease cost 6.2 6.8 Total $ 47.7 $ 50.6 Other information related to leases was as follows: December 31, December 31, 2020 2019 Weighted-average remaining lease term (in years): Operating leases 10.8 11.5 Weighted-average discount rate: Operating leases 5.2% 5.2% Supplemental cash flow information related to leases was as follows: Years Ended December 31, 2020 2019 (in millions) Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 45.8 $ 46.6 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 7.6 $ 28.4 |
Schedule of maturities of lease liabilities | Operating Year Leases (in millions) 2021 $ 38.8 2022 41.2 2023 38.3 2024 36.0 2025 35.2 Thereafter 209.6 Total undiscounted lease liabilities 399.1 Less: Amount representing interest (99.1) Total present value of minimum lease payments $ 300.0 Amounts recognized in the December 31, 2020 consolidated balance sheet: Current operating lease liabilities $ 23.6 Long-term operating lease liabilities 276.4 Total $ 300.0 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
PROPERTY AND EQUIPMENT | |
Schedule of property and equipment | December 31, 2020 2019 (in millions) Computer software and development $ 410.5 $ 327.1 Furniture and equipment 151.0 164.3 Land, buildings and leasehold improvements 122.7 126.0 Construction in progress 32.9 46.2 Total 717.1 663.6 Accumulated depreciation and amortization (406.2) (381.3) Property and equipment, net $ 310.9 $ 282.3 |
INTANGIBLE ASSETS AND GOODWILL
INTANGIBLE ASSETS AND GOODWILL (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
INTANGIBLE ASSETS AND GOODWILL | |
Schedule of intangible assets | December 31, 2020 Gross Accumulated Assets Amortization Net Amortization Life and Method (in millions) Definite-Lived Assets Customer contracts and lists $ 363.0 $ (354.5) $ 8.5 3-7 years—straight line Premium on purchased credit card portfolios 137.2 (72.8) 64.4 3-13 years—straight line Collector database 55.0 (54.5) 0.5 5 years—straight line Tradenames 35.0 (30.1) 4.9 4-15 years—straight line Non-compete agreements 2.2 — 2.2 5 years—straight line $ 592.4 $ (511.9) $ 80.5 Indefinite-Lived Assets Tradename 1.2 — 1.2 Indefinite life Total intangible assets $ 593.6 $ (511.9) $ 81.7 December 31, 2019 Gross Accumulated Assets Amortization Net Amortization Life and Method (in millions) Definite-Lived Assets Customer contracts and lists $ 325.1 $ (278.7) $ 46.4 7 years—straight line Premium on purchased credit card portfolios 192.6 (93.2) 99.4 1-13 years—straight line Collector database 53.9 (52.9) 1.0 5 years—straight line Tradenames 31.8 (26.5) 5.3 8-15 years—straight line $ 603.4 $ (451.3) $ 152.1 Indefinite-Lived Assets Tradename 1.2 — 1.2 Indefinite life Total intangible assets $ 604.6 $ (451.3) $ 153.3 |
Schedule of estimated amortization expense related to intangible assets | For the Years Ending December 31, (in millions) 2021 $ 25.8 2022 21.0 2023 16.1 2024 11.2 2025 2.4 Thereafter 4.0 |
Schedule of changes in carrying amount of goodwill | LoyaltyOne Card Services Total (in millions) Balance at January 1, 2019 $ 693.1 $ 261.7 $ 954.8 Goodwill acquired during the period — 2.3 2.3 Effects of foreign currency translation (2.2) — (2.2) Balance at December 31, 2019 $ 690.9 $ 264.0 $ 954.9 Goodwill acquired during the period — 369.6 369.6 Goodwill allocated to sale of Precima (3.2) — (3.2) Effects of foreign currency translation 48.3 — 48.3 Balance at December 31, 2020 $ 736.0 $ 633.6 $ 1,369.6 |
RESTRUCTURING AND OTHER CHARG_2
RESTRUCTURING AND OTHER CHARGES (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
RESTRUCTURING AND OTHER CHARGES | |
Schedule of restructuring and other charges incurred by reportable segment | Termination Asset Lease Other Year Ended December 31, 2020 Benefits Impairments Termination Costs Exit Costs Total (in millions) Corporate/Other $ — $ — $ — $ — $ — LoyaltyOne 0.1 — — — 0.1 Card Services (8.3) — — — (8.3) Total $ (8.2) $ — $ — $ — $ (8.2) Termination Asset Lease Other Year Ended December 31, 2019 Benefits Impairments Termination Costs Exit Costs Total (in millions) Corporate/Other $ 18.6 $ 11.1 $ 7.0 $ 1.2 $ 37.9 LoyaltyOne 7.6 40.7 0.2 2.3 50.8 Card Services 27.3 0.2 1.9 — 29.4 Total $ 53.5 $ 52.0 $ 9.1 $ 3.5 $ 118.1 |
Schedule of liability and activities related to restructuring and other charges | Termination Asset Lease Other Benefits Impairments Termination Costs Exit Costs Total (in millions) Liability as of January 1, 2019 $ — $ — $ — $ — $ — Charged to expense 53.5 52.0 9.1 3.5 118.1 Adjustments for non-cash charges — (52.0) 0.7 (0.1) (51.4) Cash payments (18.8) — (9.8) (3.3) (31.9) Liability as of December 31, 2019 $ 34.7 $ — $ — $ 0.1 $ 34.8 Charged to expense — — — — — Adjustments for non-cash charges (8.2) — — — (8.2) Cash payments (23.2) — — (0.1) (23.3) Liability as of December 31, 2020 $ 3.3 $ — $ — $ — $ 3.3 |
ACCRUED EXPENSES (Tables)
ACCRUED EXPENSES (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
ACCRUED EXPENSES | |
Schedule of accrued expenses | December 31, 2020 2019 (in millions) Accrued payroll and benefits $ 116.9 $ 133.4 Accrued taxes 57.6 18.1 Accrued other liabilities 270.2 176.3 Accrued expenses $ 444.7 $ 327.8 |
DEBT (Tables)
DEBT (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
DEBT | |
Schedule of debt | December 31, December 31, Description 2020 2019 Maturity Interest Rate (Dollars in millions) Long-term and other debt: 2017 revolving line of credit $ — $ — December 2022 (1) 2017 term loans 1,484.3 2,028.8 December 2022 (2) BrandLoyalty credit agreement — — April 2023 (3) Senior notes due 2024 850.0 850.0 December 2024 4.750% Senior notes due 2026 500.0 — January 2026 7.000% Total long-term and other debt 2,834.3 2,878.8 Less: Unamortized debt issuance costs 28.6 28.9 Less: Current portion 101.4 101.4 Long-term portion $ 2,704.3 $ 2,748.5 Deposits: Certificates of deposit $ 6,014.9 $ 8,585.2 Various – Jan 2021 to Dec 2025 0.15% to 3.75% Money market deposits 3,790.2 3,589.8 Non-maturity (4) Total deposits 9,805.1 12,175.0 Less: Unamortized debt issuance costs 12.5 23.3 Less: Current portion 6,553.9 6,942.4 Long-term portion $ 3,238.7 $ 5,209.3 Non-recourse borrowings of consolidated securitization entities: Fixed rate asset-backed term note securities $ 3,423.8 $ 4,891.0 Various – Feb 2021 to Sep 2022 2.03% to 3.95% Conduit asset-backed securities 2,205.1 2,405.0 Various – Apr 2022 to Oct 2022 (5) Secured loan facility 86.3 — November 2022 (6) Total non-recourse borrowings of consolidated securitization entities 5,715.2 7,296.0 Less: Unamortized debt issuance costs 5.3 12.0 Less: Current portion 1,850.7 3,030.8 Long-term portion $ 3,859.2 $ 4,253.2 (1) The interest rate is based upon LIBOR plus an applicable margin. (2) The interest rate is based upon LIBOR plus an applicable margin. The weighted average interest rate for the term loans was 1.90% and 3.30% at December 31, 2020 and 2019, respectively. (3) The interest rate is based upon the Euro Interbank Offered Rate plus an applicable margin. (4) The interest rates are based on the Federal Funds rate plus an applicable margin. At December 31, 2020, the interest rates ranged from 0.38% to 3.50% . At December 31, 2019, the interest rates ranged from 1.84% to 3.50% . (5) The interest rate is based upon LIBOR or the asset-backed commercial paper costs of each individual conduit provider plus an applicable margin. At December 31, 2020, the interest rates ranged from 1.39% to 1.89% . At December 31, 2019, the interest rates ranged from 2.79% to 2.96% . (6) The interest rate is based upon LIBOR plus an applicable margin. At December 31, 2020, the weighted average interest rate for the secured loan facility was 3.90% . |
Schedule of maturity of debt | The future principal payments for the Company’s debt as of December 31, 2020 are as follows: Non-Recourse Borrowings of Long-Term Consolidated and Securitization Year Other Debt Deposits Entities (in millions) 2021 $ 101.4 $ 6,555.6 $ 1,852.1 2022 1,382.9 1,739.6 3,863.1 2023 — 966.1 — 2024 850.0 530.6 — 2025 — 13.2 — Thereafter 500.0 — — Total maturities 2,834.3 9,805.1 5,715.2 Unamortized debt issuance costs (28.6) (12.5) (5.3) $ 2,805.7 $ 9,792.6 $ 5,709.9 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
COMMITMENTS AND CONTINGENCIES. | |
Schedule of actual capital ratios and minimum ratios | The actual capital ratios and minimum ratios as of December 31, 2020 are as follows: Minimum Ratio to be Minimum Ratio for Well Capitalized under Actual Capital Adequacy Prompt Corrective Ratio Purposes Action Provisions Comenity Bank Tier 1 capital to average assets 19.0 % 4.0 % 5.0 % Common Equity Tier 1 capital to risk-weighted assets 20.7 4.5 6.5 Tier 1 capital to risk-weighted assets 20.7 6.0 8.0 Total capital to risk-weighted assets 22.0 8.0 10.0 Comenity Capital Bank Tier 1 capital to average assets 14.8 % 4.0 % 5.0 % Common Equity Tier 1 capital to risk-weighted assets 15.6 4.5 6.5 Tier 1 capital to risk-weighted assets 15.6 6.0 8.0 Total capital to risk-weighted assets 16.9 8.0 10.0 The actual capital ratios and minimum ratios as of December 31, 2019 are as follows: Minimum Ratio to be Minimum Ratio for Well Capitalized under Actual Capital Adequacy Prompt Corrective Ratio Purposes Action Provisions Comenity Bank Tier 1 capital to average assets 12.9 % 4.0 % 5.0 % Common Equity Tier 1 capital to risk-weighted assets 14.6 4.5 6.5 Tier 1 capital to risk-weighted assets 14.6 6.0 8.0 Total capital to risk-weighted assets 15.9 8.0 10.0 Comenity Capital Bank Tier 1 capital to average assets 11.9 % 4.0 % 5.0 % Common Equity Tier 1 capital to risk-weighted assets 14.4 4.5 6.5 Tier 1 capital to risk-weighted assets 14.4 6.0 8.0 Total capital to risk-weighted assets 15.7 8.0 10.0 |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
STOCKHOLDERS' EQUITY | |
Schedule of stock-based compensation expense | Years Ended December 31, 2020 2019 2018 (in millions) Cost of operations $ 12.5 $ 16.5 $ 23.3 General and administrative 8.8 8.6 21.1 Total $ 21.3 $ 25.1 $ 44.4 |
Schedule of performance-based and service-based restricted stock unit awards | Weighted Market- Performance- Service- Average Based (1) Based (1) Based Total Fair Value Balance at January 1, 2018 28,172 450,579 329,059 807,810 $ 207.45 Shares granted 28,057 263,542 138,160 429,759 233.98 Shares vested — (188,680) (130,823) (319,503) 224.62 Shares forfeited — (102,199) (18,955) (121,154) 227.66 Balance at December 31, 2018 56,229 423,242 317,441 796,912 $ 218.81 Shares granted 37,878 420,239 246,118 704,235 161.05 Shares vested — (262,773) (178,730) (441,503) 218.45 Shares forfeited (69,819) (350,436) (126,257) (546,512) 188.40 Balance at December 31, 2019 24,288 230,272 258,572 513,132 $ 172.06 Shares granted 20,770 219,186 241,610 481,566 89.11 Shares vested — (42,097) (127,921) (170,018) 175.09 Shares forfeited (22,831) (186,135) (38,447) (247,413) 166.93 Balance at December 31, 2020 22,227 221,226 333,814 577,267 $ 103.89 Outstanding and Expected to Vest 345,266 $ 105.49 (1) Shares granted reflects a 100% target attainment of the respective market-based or performance -based metric. Shares forfeited include those restricted stock units forfeited as a result of the Company not meeting the respective market-based or performance-based metric conditions. |
Summary of stock option activity | Outstanding Exercisable Weighted Weighted Average Average Options Exercise Price Options Exercise Price Balance at January 1, 2018 11,859 $ 23.87 11,859 $ 23.87 Options granted — — Options exercised (886) 12.70 Options forfeited (119) 2.74 Balance at December 31, 2018 10,854 $ 25.01 10,854 $ 25.01 Options granted — — Options exercised (10,854) 25.01 Options forfeited — — Balance at December 31, 2019 — $ — — $ — Options granted — — Options exercised — — Options forfeited — — Balance at December 31, 2020 — $ — — $ — |
ACCUMULATED OTHER COMPREHENSI_2
ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
ACCUMULATED OTHER COMPREHENSIVE LOSS. | |
Schedule of changes in each component of accumulated comprehensive income (loss), net of tax effects | Accumulated Net Unrealized Net Unrealized Net Unrealized Foreign Currency Other Gains (Losses) on Gains (Losses) on Gains (Losses) on Translation Comprehensive Securities Cash Flow Hedges Net Investment Hedge Adjustments (1) Loss (in millions) Balance as of January 1, 2018 $ (8.7) $ (0.1) $ (42.0) $ (89.4) $ (140.2) Changes in other comprehensive income (loss) (2.0) (0.1) 29.6 (25.4) 2.1 Balance at December 31, 2018 $ (10.7) $ (0.2) $ (12.4) $ (114.8) $ (138.1) Changes in other comprehensive income (loss) 13.2 0.1 4.9 (6.8) 11.4 Recognition resulting from the sale of Epsilon's foreign subsidiaries — — — 26.8 26.8 Balance at December 31, 2019 $ 2.5 $ (0.1) $ (7.5) $ (94.8) $ (99.9) Changes in other comprehensive income (loss) 20.7 (0.6) — 71.0 91.1 Recognition resulting from the sale of Precima's foreign subsidiaries — — — 3.8 3.8 Balance at December 31, 2020 $ 23.2 $ (0.7) $ (7.5) $ (20.0) $ (5.0) (1) Primarily related to the impact of changes in the Canadian dollar and Euro foreign currency exchange rates. |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
INCOME TAXES | |
Schedule of components of income before income taxes and components of income tax expense | Years Ended December 31, 2020 2019 2018 (in millions) Components of income from continuing operations before income taxes: Domestic $ 281.7 $ 591.9 $ 1,052.7 Foreign 112.8 146.5 162.3 Total $ 394.5 $ 738.4 $ 1,215.0 Components of income tax expense: Current Federal $ 209.2 $ 126.0 $ 152.2 State 36.6 35.8 58.0 Foreign 47.8 11.5 52.8 Total current 293.6 173.3 263.0 Deferred Federal (135.1) (11.8) 48.0 State (37.6) 6.7 14.7 Foreign (21.4) (2.4) (56.2) Total deferred (194.1) (7.5) 6.5 Total provision for income taxes $ 99.5 $ 165.8 $ 269.5 |
Summary of reconciliation of recorded federal provision for income taxes to the expected amount computed by applying the federal statutory rate | Years Ended December 31, 2020 2019 2018 (in millions) Expected expense at statutory rate $ 82.8 $ 155.1 $ 255.1 Increase (decrease) in income taxes resulting from: State income taxes, net of federal benefit (0.8) 33.6 57.4 Foreign rate differential 4.1 (2.3) 11.6 Foreign restructuring 3.6 — (48.0) Impact of 2017 Tax Reform (2.4) (30.2) (29.7) Global intangible low-taxed income (7.8) 8.7 15.5 Non-deductible expenses (non-taxable income) 8.3 9.1 3.7 IRC Section 199, net of tax reserves 12.5 — (0.8) Other (0.8) (8.2) 4.7 Total $ 99.5 $ 165.8 $ 269.5 |
Summary of deferred tax assets and liabilities | December 31, 2020 2019 (in millions) Deferred tax assets Deferred revenue $ 29.2 $ 9.5 Allowance for loan loss 482.3 267.6 Net operating loss carryforwards and other carryforwards 106.2 69.0 Stock-based compensation and other employee benefits 3.8 13.7 Lease liabilities 74.4 74.4 Accrued expenses and other 81.0 40.3 Intangible assets 5.5 23.2 Total deferred tax assets 782.4 497.7 Valuation allowance (50.1) (64.0) Deferred tax assets, net of valuation allowance 732.3 433.7 Deferred tax liabilities Deferred income $ 290.9 $ 365.6 Depreciation 25.2 41.8 Right of use assets 57.0 61.1 Total deferred tax liabilities 373.1 468.5 Net deferred tax asset (liability) $ 359.2 $ (34.8) Amounts recognized in the consolidated balance sheets: Non-current assets $ 359.2 $ 45.2 Non-current liabilities — (80.0) Total – Net deferred tax asset (liability) $ 359.2 $ (34.8) |
Summary of reconciliation of unrecognized tax benefits | A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in millions): Balance at January 1, 2018 $ 208.3 Increases related to prior years’ tax positions 41.3 Decreases related to prior years’ tax positions (9.6) Increases related to current year tax positions 61.5 Settlements during the period (1.0) Lapses of applicable statutes of limitation (4.2) Balance at December 31, 2018 $ 296.3 Increases related to prior years’ tax positions 2.7 Decreases related to prior years’ tax positions (76.6) Increases related to current year tax positions 58.3 Settlements during the period (0.6) Lapses of applicable statutes of limitation (5.8) Balance at December 31, 2019 $ 274.3 Increases related to prior years’ tax positions 64.7 Decreases related to prior years’ tax positions (63.5) Increases related to current year tax positions 10.7 Settlements during the period (4.6) Lapses of applicable statutes of limitation (8.3) Balance at December 31, 2020 $ 273.3 |
FINANCIAL INSTRUMENTS (Tables)
FINANCIAL INSTRUMENTS (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
FINANCIAL INSTRUMENTS | |
Schedule of estimated fair value of Company's financial instruments | December 31, 2020 December 31, 2019 Carrying Fair Carrying Fair Amount Value Amount Value (in millions) Financial assets Credit card and loan receivables, net $ 14,776.4 $ 17,301.2 $ 18,292.0 $ 19,126.0 Credit card receivables held for sale — — 408.0 436.2 Redemption settlement assets, restricted 693.5 693.5 600.8 600.8 Other investments 225.4 225.4 259.8 259.8 Derivative instruments 0.4 0.4 0.2 0.2 Financial liabilities Derivative instruments 1.5 1.5 0.3 0.3 Deposits 9,792.6 10,015.9 12,151.7 12,303.6 Non-recourse borrowings of consolidated securitization entities 5,709.9 5,783.4 7,284.0 7,333.6 Long-term and other debt 2,805.7 2,875.1 2,849.9 2,878.8 |
Schedule of assets and liabilities carried at fair value measured on recurring basis | Fair Value Measurements at December 31, 2020 Using Balance at December 31, 2020 Level 1 Level 2 Level 3 (in millions) Mutual funds (1) $ 26.9 $ 26.9 $ — $ — Corporate bonds (1) 611.2 — 611.2 — Marketable securities (2) 225.4 34.2 191.2 — Derivative instruments (3) 0.4 — 0.4 — Total assets measured at fair value $ 863.9 $ 61.1 $ 802.8 $ — Derivative instruments (3) $ 1.5 $ — $ 1.5 $ — Total liabilities measured at fair value $ 1.5 $ — $ 1.5 $ — Fair Value Measurements at December 31, 2019 Using Balance at December 31, 2019 Level 1 Level 2 Level 3 (in millions) Mutual funds (1) $ 25.1 $ 25.1 $ — $ — Corporate bonds (1) 536.4 — 536.4 — Marketable securities (2) 259.8 26.2 233.6 — Derivative instruments (3) 0.2 — 0.2 — Total assets measured at fair value $ 821.5 $ 51.3 $ 770.2 $ — Derivative instruments (3) $ 0.3 $ — $ 0.3 $ — Total liabilities measured at fair value $ 0.3 $ — $ 0.3 $ — (1) Amounts are included in redemption settlement assets in the consolidated balance sheets. (2) Amounts are included in other current assets and other non-current assets in the consolidated balance sheets. (3) Amounts are included in other current assets and other current liabilities in the consolidated balance sheets. |
Schedule of assets and liabilities disclosed but not carried at fair value | Fair Value Measurements at December 31, 2020 Total Level 1 Level 2 Level 3 (in millions) Financial assets: Credit card and loan receivables, net $ 17,301.2 $ — $ — $ 17,301.2 Total $ 17,301.2 $ — $ — $ 17,301.2 Financial liabilities: Deposits $ 10,015.9 $ — $ 10,015.9 $ — Non-recourse borrowings of consolidated securitization entities 5,783.4 — 5,783.4 — Long-term and other debt 2,875.1 — 2,875.1 — Total $ 18,674.4 $ — $ 18,674.4 $ — Fair Value Measurements at December 31, 2019 Total Level 1 Level 2 Level 3 (in millions) Financial assets: Credit card and loan receivables, net $ 19,126.0 $ — $ — $ 19,126.0 Credit card receivables held for sale 436.2 — — 436.2 Total $ 19,562.2 $ — $ — $ 19,562.2 Financial liabilities: Deposits $ 12,303.6 $ — $ 12,303.6 $ — Non-recourse borrowings of consolidated securitization entities 7,333.6 — 7,333.6 — Long-term and other debt 2,878.8 — 2,878.8 — Total $ 22,516.0 $ — $ 22,516.0 $ — |
PARENT-ONLY FINANCIAL STATEME_2
PARENT-ONLY FINANCIAL STATEMENTS (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
PARENT-ONLY FINANCIAL STATEMENTS | |
Schedule of balance sheets | December 31, 2020 2019 (in millions) Assets: Cash and cash equivalents $ 0.2 $ 0.2 Investment in subsidiaries 5,127.0 5,326.2 Other assets 41.8 3.4 Total assets $ 5,169.0 $ 5,329.8 Liabilities: Current portion of long-term and other debt $ 101.4 $ 101.4 Long-term and other debt 2,704.3 2,748.5 Intercompany liabilities, net 742.0 806.7 Other liabilities 99.7 84.9 Total liabilities 3,647.4 3,741.5 Stockholders’ equity 1,521.6 1,588.3 Total liabilities and stockholders’ equity $ 5,169.0 $ 5,329.8 |
Schedule of statements of income | Statements of Income Years Ended December 31, 2020 2019 2018 (in millions) Interest from loans to subsidiaries $ 12.6 $ 19.2 $ 17.9 Dividends from subsidiaries 256.3 922.6 810.1 Total revenue 268.9 941.8 828.0 Loss on extinguishment of debt — 71.9 — Interest expense, net 109.5 130.0 281.2 Other expenses, net 1.7 (0.7) (0.4) Total expenses 111.2 201.2 280.8 Income before income taxes and equity in undistributed net income (loss) of subsidiaries 157.7 740.6 547.2 Benefit for income taxes 21.2 42.1 7.0 Income before equity in undistributed net income (loss) of subsidiaries 178.9 782.7 554.2 Equity in undistributed net income (loss) of subsidiaries 34.8 (504.7) 408.9 Net income $ 213.7 $ 278.0 $ 963.1 |
Schedule of statements of comprehensive income | Statements of Comprehensive Income Years Ended December 31, 2020 2019 2018 (in millions) Net income $ 213.7 $ 278.0 $ 963.1 Other comprehensive income, net of tax — 4.9 29.6 Total comprehensive income, net of tax $ 213.7 $ 282.9 $ 992.7 |
Schedule of statements of cash flows | Statements of Cash Flows Years Ended December 31, 2020 2019 2018 (in millions) Net cash (used in) provided by operating activities $ (137.6) $ (1,029.1) $ 82.3 Investing activities: Investment in subsidiaries (3.2) (135.0) — Proceeds from sale of business — 4,118.3 — Dividends received 256.3 922.6 810.1 Net cash provided by investing activities 253.1 4,905.9 810.1 Financing activities: Borrowings under debt agreements 1,276.0 3,083.0 4,527.0 Repayments of borrowings (1,320.5) (5,778.2) (4,838.3) Payment of debt extinguishment costs — (46.1) — Payment of deferred financing costs (9.1) (20.7) (4.6) Purchase of treasury shares — (976.1) (443.2) Dividends paid (60.6) (127.4) (125.2) Proceeds from issuance of common stock 2.8 12.4 17.6 Other (4.1) (23.6) (25.7) Net cash used in financing activities (115.5) (3,876.7) (892.4) Change in cash, cash equivalents and restricted cash — 0.1 — Cash, cash equivalents and restricted cash at beginning of year 0.2 0.1 0.1 Cash, cash equivalents and restricted cash at end of year $ 0.2 $ 0.2 $ 0.1 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
SEGMENT INFORMATION | |
Schedule of segment information | Corporate/ Year Ended December 31, 2020 LoyaltyOne Card Services Other Total (in millions) Revenues $ 764.8 $ 3,756.5 $ 0.1 $ 4,521.4 Income (loss) before income taxes $ 111.0 $ 501.5 $ (218.0) $ 394.5 Interest expense, net (0.8) 385.4 109.3 493.9 Operating income (loss) 110.2 886.9 (108.7) 888.4 Depreciation and amortization 78.0 102.8 3.0 183.8 Stock compensation expense 5.5 7.0 8.8 21.3 Gain on sale of business, net of strategic transaction costs (8.0) — — (8.0) Strategic transaction costs 0.4 0.3 15.2 15.9 Asset impairments — 63.7 — 63.7 Restructuring and other charges 0.1 (8.3) — (8.2) Adjusted EBITDA (1) 186.2 1,052.4 (81.7) 1,156.9 Less: Securitization funding costs — 165.9 — 165.9 Less: Interest expense on deposits — 219.5 — 219.5 Adjusted EBITDA, net (1) $ 186.2 $ 667.0 $ (81.7) $ 771.5 Capital expenditures $ 24.3 $ 29.4 $ 0.3 $ 54.0 Corporate/ Year Ended December 31, 2019 LoyaltyOne Card Services Other Total (in millions) Revenues $ 1,033.1 $ 4,547.8 $ 0.4 $ 5,581.3 Income (loss) before income taxes $ 103.1 $ 991.7 $ (356.4) $ 738.4 Interest expense, net 2.3 439.0 127.7 569.0 Operating income (loss) 105.4 1,430.7 (228.7) 1,307.4 Depreciation and amortization 80.1 89.3 6.7 176.1 Stock compensation expense 7.2 9.3 8.6 25.1 Strategic transaction costs 1.0 — 10.7 11.7 Restructuring and other charges 50.8 29.4 37.9 118.1 Loss on extinguishment of debt — — 71.9 71.9 Adjusted EBITDA (1) 244.5 1,558.7 (92.9) 1,710.3 Less: Securitization funding costs — 213.4 — 213.4 Less: Interest expense on deposits — 225.6 — 225.6 Adjusted EBITDA, net (1) $ 244.5 $ 1,119.7 $ (92.9) $ 1,271.3 Capital expenditures $ 41.5 $ 44.2 $ 0.8 $ 86.5 Corporate/ Year Ended December 31, 2018 LoyaltyOne Card Services Other Total (in millions) Revenues $ 1,068.4 $ 4,597.6 $ 0.6 $ 5,666.6 Income (loss) before income taxes $ 153.8 $ 1,381.6 $ (320.4) $ 1,215.0 Interest expense, net 5.6 385.9 150.8 542.3 Operating income (loss) 159.4 1,767.5 (169.6) 1,757.3 Depreciation and amortization 84.8 101.1 7.7 193.6 Stock compensation expense 10.0 13.3 21.1 44.4 Adjusted EBITDA (1) 254.2 1,881.9 (140.8) 1,995.3 Less: Securitization funding costs — 220.2 — 220.2 Less: Interest expense on deposits — 165.7 — 165.7 Adjusted EBITDA, net (1) $ 254.2 $ 1,496.0 $ (140.8) $ 1,609.4 Capital expenditures $ 34.0 $ 53.8 $ 5.5 $ 93.3 (1) Adjusted EBITDA is a non-GAAP financial measure equal to income from continuing operations, 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 also excludes the gain on the sale of Precima, strategic transaction costs, which represent costs for professional services associated with strategic initiatives, asset impairments, restructuring and other charges, and loss related to the Company’s extinguishment of debt in July 2019. Adjusted EBITDA, net is also a non-GAAP financial measure equal to adjusted EBITDA less securitization funding costs and interest expense on deposits. Adjusted EBITDA and adjusted EBITDA, net are presented in accordance with ASC 280 as they are the primary performance metrics utilized to assess performance of the segments. The table below reconciles the reportable segments’ total assets to consolidated total assets: LoyaltyOne Card Services Corporate/ Other Total (in millions) Total Assets December 31, 2020 $ 2,422.3 $ 19,884.6 $ 240.2 $ 22,547.1 December 31, 2019 $ 2,338.0 $ 23,931.1 $ 225.7 $ 26,494.8 |
Schedule of information concerning principal geographic areas | Europe, United Middle East States Canada and Africa Asia Pacific Other Total (in millions) Revenues Year Ended December 31, 2020 $ 3,767.7 $ 286.9 $ 332.6 $ 80.5 $ 53.7 $ 4,521.4 Year Ended December 31, 2019 $ 4,588.3 $ 352.2 $ 449.1 $ 121.7 $ 70.0 $ 5,581.3 Year Ended December 31, 2018 $ 4,621.3 $ 411.3 $ 463.2 $ 122.0 $ 48.8 $ 5,666.6 Long Lived Assets December 31, 2020 $ 1,874.9 $ 310.7 $ 714.3 $ 11.4 $ 1.4 $ 2,912.7 December 31, 2019 $ 1,361.1 $ 311.1 $ 696.2 $ 12.8 $ 0.9 $ 2,382.1 |
SUPPLEMENTAL CASH FLOW INFORM_2
SUPPLEMENTAL CASH FLOW INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
SUPPLEMENTAL CASH FLOW INFORMATION | |
Schedule of reconciliation of cash and cash equivalents | December 31, December 31, December 31, 2020 2019 2018 (in millions) Cash and cash equivalents $ 3,081.5 $ 3,874.4 $ 3,863.1 Restricted cash included within other current assets (1) 326.3 44.4 60.7 Restricted cash included within redemption settlement assets, restricted (2) 55.4 39.3 43.9 Total cash, cash equivalents and restricted cash $ 3,463.2 $ 3,958.1 $ 3,967.7 (1) Includes cash restricted for principal and interest repayments of non-recourse borrowings of consolidated securitized debt and other restricted cash within other current assets. At December 31, 2020, restricted cash included $291.8 million in principal accumulation for the repayment of non-recourse borrowings of consolidated securitized debt that matured in February 2021. (2) See Note 11, “Redemption Settlement Assets,” for additional information regarding the nature of restrictions on redemption settlement assets. |
QUARTERLY RESULTS OF OPERATIO_2
QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) | |
Summary of unaudited quarterly results of operations | Quarter Ended March 31, June 30, September 30, December 31, 2020 2020 2020 2020 (in millions, except per share amounts) Revenues $ 1,381.8 $ 979.3 $ 1,050.5 $ 1,109.8 Operating expenses 1,217.8 804.6 759.5 851.1 Operating income 164.0 174.7 291.0 258.7 Interest expense, net 138.6 127.7 115.1 112.5 Income from continuing operations before income taxes 25.4 47.0 175.9 146.2 Provision for income taxes (4.6) 8.6 42.6 52.9 Income from continuing operations 30.0 38.4 133.3 93.3 Loss from discontinued operations, net of taxes — — — (81.3) Net income $ 30.0 $ 38.4 $ 133.3 $ 12.0 Basic income (loss) per share: Income from continuing operations $ 0.63 $ 0.81 $ 2.79 $ 1.93 Loss from discontinued operations $ — $ — $ — $ (1.68) Net income per share $ 0.63 $ 0.81 $ 2.79 $ 0.25 Diluted income (loss) per share: Income from continuing operations $ 0.63 $ 0.81 $ 2.79 $ 1.93 Loss from discontinued operations $ — $ — $ — $ (1.68) Net income per share $ 0.63 $ 0.81 $ 2.79 $ 0.25 Quarter Ended March 31, June 30, September 30, December 31, 2019 2019 2019 2019 (in millions, except per share amounts) Revenues $ 1,334.2 $ 1,348.5 $ 1,437.6 $ 1,461.0 Operating expenses 977.3 1,011.2 1,133.4 1,152.0 Operating income 356.9 337.3 304.2 309.0 Interest expense, net 143.9 143.5 140.0 141.6 Income from continuing operations before income taxes 213.0 193.8 164.2 167.4 Provision for income taxes 34.8 51.4 42.6 37.0 Income from continuing operations 178.2 142.4 121.6 130.4 Loss from discontinued operations, net of taxes (29.1) (3.4) (229.2) (32.9) Net income (loss) $ 149.1 $ 139.0 $ (107.6) $ 97.5 Basic income (loss) per share: Income from continuing operations $ 3.36 $ 2.72 $ 2.47 $ 2.73 Loss from discontinued operations $ (0.55) $ (0.07) $ (4.69) $ (0.70) Net income (loss) per share $ 2.81 $ 2.65 $ (2.22) $ 2.03 Diluted income (loss) per share: Income from continuing operations $ 3.35 $ 2.71 $ 2.41 $ 2.74 Loss from discontinued operations $ (0.55) $ (0.07) $ (4.54) $ (0.69) Net income (loss) per share $ 2.80 $ 2.64 $ (2.13) $ 2.05 |
DESCRIPTION OF BUSINESS AND B_2
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION (Details) | 12 Months Ended |
Dec. 31, 2020segment | |
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION | |
Number of reportable segments | 2 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property and Equipment (Details) | 12 Months Ended |
Dec. 31, 2020 | |
Property, plant and equipment other than software development and conversion cost | Minimum | |
Property and Equipment | |
Estimated useful life | 1 year |
Property, plant and equipment other than software development and conversion cost | Maximum | |
Property and Equipment | |
Estimated useful life | 11 years |
Software Development and Conversion Costs | Minimum | |
Property and Equipment | |
Estimated useful life | 3 years |
Software Development and Conversion Costs | Maximum | |
Property and Equipment | |
Estimated useful life | 7 years |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Derivative Instruments (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
DERIVATIVE INSTRUMENTS | |||
Unrealized (loss) gain on cash flow hedges, net of tax | $ (0.6) | $ 0.1 | $ (0.1) |
Notional amount, fair value and classification of the company's outstanding derivative contracts | |||
Unrealized gain on net investment hedges | $ 4.9 | $ 29.6 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Marketing Costs and Other (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Currency Translation | |||
Foreign currency transaction gains (losses) recognized | $ (0.5) | $ 1.3 | $ 0.6 |
Marketing and Advertising Costs | |||
Marketing and advertising expense | $ 165.7 | $ 229.4 | $ 244.5 |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Recently Issued and Adopted Accounting Standards (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2020USD ($) | |
Adjustment | ASU 2016-13 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Allowance for loan loss | $ 644 |
REVENUE (Details)
REVENUE (Details) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2020USD ($) | Sep. 30, 2020USD ($) | Jun. 30, 2020USD ($) | Mar. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Sep. 30, 2019USD ($) | Jun. 30, 2019USD ($) | Mar. 31, 2019USD ($) | Dec. 31, 2020USD ($)itemsegment | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | |
Disaggregation of revenue | |||||||||||
Number of segments | segment | 2 | ||||||||||
Revenue from contracts with customers | $ 577.2 | $ 840.2 | $ 960.1 | ||||||||
Finance charges, net | 3,931.4 | 4,728.5 | 4,694.9 | ||||||||
Investment income | 12.8 | 12.6 | 11.6 | ||||||||
Total revenue | $ 1,109.8 | $ 1,050.5 | $ 979.3 | $ 1,381.8 | $ 1,461 | $ 1,437.6 | $ 1,348.5 | $ 1,334.2 | $ 4,521.4 | $ 5,581.3 | $ 5,666.6 |
Number of performance obligations | item | 3 | ||||||||||
Estimated breakage rate | 20.00% | 20.00% | 20.00% | 20.00% | 20.00% | ||||||
Estimated Life of an AIR MILES reward mile | 38 months | 38 months | 38 months | ||||||||
Coalition loyalty program | |||||||||||
Disaggregation of revenue | |||||||||||
Revenue from contracts with customers | $ 262.5 | $ 290.1 | $ 352.3 | ||||||||
Short-term loyalty programs | |||||||||||
Disaggregation of revenue | |||||||||||
Revenue from contracts with customers | 487.7 | 635.5 | 613.8 | ||||||||
Servicing fees, net | |||||||||||
Disaggregation of revenue | |||||||||||
Revenue from contracts with customers | (174.9) | (180.7) | (97.3) | ||||||||
Other | |||||||||||
Disaggregation of revenue | |||||||||||
Revenue from contracts with customers | 1.9 | 95.3 | 91.3 | ||||||||
United States | |||||||||||
Disaggregation of revenue | |||||||||||
Total revenue | 3,767.7 | 4,588.3 | 4,621.3 | ||||||||
Canada | |||||||||||
Disaggregation of revenue | |||||||||||
Total revenue | 286.9 | 352.2 | 411.3 | ||||||||
Europe, Middle East and Africa | |||||||||||
Disaggregation of revenue | |||||||||||
Total revenue | 332.6 | 449.1 | 463.2 | ||||||||
Asia Pacific | |||||||||||
Disaggregation of revenue | |||||||||||
Total revenue | 80.5 | 121.7 | 122 | ||||||||
Other | |||||||||||
Disaggregation of revenue | |||||||||||
Total revenue | 53.7 | 70 | 48.8 | ||||||||
Operating segment | LoyaltyOne | |||||||||||
Disaggregation of revenue | |||||||||||
Revenue from contracts with customers | 752 | 1,020.5 | 1,056.8 | ||||||||
Investment income | 12.8 | 12.6 | 11.6 | ||||||||
Total revenue | 764.8 | 1,033.1 | 1,068.4 | ||||||||
Operating segment | LoyaltyOne | Coalition loyalty program | |||||||||||
Disaggregation of revenue | |||||||||||
Revenue from contracts with customers | 262.5 | 290.1 | 352.3 | ||||||||
Operating segment | LoyaltyOne | Short-term loyalty programs | |||||||||||
Disaggregation of revenue | |||||||||||
Revenue from contracts with customers | 487.7 | 635.5 | 613.8 | ||||||||
Operating segment | LoyaltyOne | Other | |||||||||||
Disaggregation of revenue | |||||||||||
Revenue from contracts with customers | 1.8 | 94.9 | 90.7 | ||||||||
Operating segment | LoyaltyOne | United States | |||||||||||
Disaggregation of revenue | |||||||||||
Total revenue | 11.1 | 40.1 | 23.1 | ||||||||
Operating segment | LoyaltyOne | Canada | |||||||||||
Disaggregation of revenue | |||||||||||
Total revenue | 286.9 | 352.2 | 411.3 | ||||||||
Operating segment | LoyaltyOne | Europe, Middle East and Africa | |||||||||||
Disaggregation of revenue | |||||||||||
Total revenue | 332.6 | 449.1 | 463.2 | ||||||||
Operating segment | LoyaltyOne | Asia Pacific | |||||||||||
Disaggregation of revenue | |||||||||||
Total revenue | 80.5 | 121.7 | 122 | ||||||||
Operating segment | LoyaltyOne | Other | |||||||||||
Disaggregation of revenue | |||||||||||
Total revenue | 53.7 | 70 | 48.8 | ||||||||
Operating segment | Card Services | |||||||||||
Disaggregation of revenue | |||||||||||
Revenue from contracts with customers | (174.9) | (180.7) | (97.3) | ||||||||
Finance charges, net | 3,931.4 | 4,728.5 | 4,694.9 | ||||||||
Total revenue | 3,756.5 | 4,547.8 | 4,597.6 | ||||||||
Operating segment | Card Services | Servicing fees, net | |||||||||||
Disaggregation of revenue | |||||||||||
Revenue from contracts with customers | (174.9) | (180.7) | (97.3) | ||||||||
Operating segment | Card Services | United States | |||||||||||
Disaggregation of revenue | |||||||||||
Total revenue | 3,756.5 | 4,547.8 | 4,597.6 | ||||||||
Corporate/Other | |||||||||||
Disaggregation of revenue | |||||||||||
Revenue from contracts with customers | 0.1 | 0.4 | 0.6 | ||||||||
Total revenue | 0.1 | 0.4 | 0.6 | ||||||||
Corporate/Other | Other | |||||||||||
Disaggregation of revenue | |||||||||||
Revenue from contracts with customers | 0.1 | 0.4 | 0.6 | ||||||||
Corporate/Other | United States | |||||||||||
Disaggregation of revenue | |||||||||||
Total revenue | $ 0.1 | $ 0.4 | $ 0.6 | ||||||||
Minimum | Short-term loyalty programs | |||||||||||
Disaggregation of revenue | |||||||||||
Typical term of short-term loyalty programs | 42 days | ||||||||||
Maximum | Short-term loyalty programs | |||||||||||
Disaggregation of revenue | |||||||||||
Typical term of short-term loyalty programs | 140 days | ||||||||||
Typical contract term of the short-term loyalty programs | 1 year |
REVENUE - Contract Assets and L
REVENUE - Contract Assets and Liabilities (Details) - USD ($) $ in Millions | 12 Months Ended | ||||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Jan. 01, 2020 | Jan. 01, 2019 | |
Amounts recognized in the consolidated balance sheets: | |||||
Deferred revenue (current) | $ 898.5 | $ 807.9 | |||
Deferred revenue (non-current) | 105.5 | 114.1 | |||
Other current liabilities | $ 220.9 | 338.3 | |||
Period for which interest and fee income accrue until balance, interest and fees paid or charged off | 180 days | ||||
LoyaltyOne | |||||
Change in Contract with Customer, Liability | |||||
Deferred revenue | $ 1,004 | 922 | $ 875.3 | ||
Cash proceeds | 459.3 | 505.3 | |||
Revenue recognized | (400.3) | (502.9) | |||
Other | 1.4 | 0.6 | |||
Effects of foreign currency translation | 21.6 | 43.7 | |||
Amounts recognized in the consolidated balance sheets: | |||||
Deferred revenue (current) | 898.5 | ||||
Deferred revenue (non-current) | 105.5 | ||||
LoyaltyOne | Other current liabilities | |||||
Change in Contract with Customer, Liability | |||||
Deferred revenue | 66.9 | 122.8 | $ 122.8 | $ 110.2 | |
Revenue recognized | (526.6) | ||||
Cumulative revenue recognized | 375.9 | ||||
Service | |||||
Change in Contract with Customer, Liability | |||||
Deferred revenue | 247.2 | 258.6 | 248 | ||
Cash proceeds | 173.1 | 192 | |||
Revenue recognized | (188.8) | (193.7) | |||
Effects of foreign currency translation | 4.3 | 12.3 | |||
Amounts recognized in the consolidated balance sheets: | |||||
Deferred revenue (current) | 141.7 | ||||
Deferred revenue (non-current) | 105.5 | ||||
Redemption | |||||
Change in Contract with Customer, Liability | |||||
Deferred revenue | 756.8 | 663.4 | 627.3 | ||
Cash proceeds | 286.2 | 313.3 | |||
Revenue recognized | (211.5) | (309.2) | |||
Other | 1.4 | 0.6 | |||
Effects of foreign currency translation | 17.3 | 31.4 | |||
Amounts recognized in the consolidated balance sheets: | |||||
Deferred revenue (current) | 756.8 | ||||
Card Services | |||||
Amounts recognized in the consolidated balance sheets: | |||||
Unamortized contract costs | 311.1 | 406.8 | |||
Amortization of contract costs | 65.3 | 71.8 | 68.7 | ||
Impairment of contract costs | $ 38.1 | 0 | 0 | ||
Amortization term of direct loan amortization costs | 1 year | ||||
Unamortized deferred costs related to loan origination | $ 38 | 47.1 | |||
Period for which interest and fee income accrue until balance, interest and fees paid or charged off | 180 days | ||||
Period for which interest and fee income accrue until balance, interest and other fees are paid or charged off on installment loan receivables | 120 days | ||||
Card Services | Cost of operations | |||||
Amounts recognized in the consolidated balance sheets: | |||||
Amortization of contract costs | $ 11.9 | $ 11.9 | $ 9.8 |
REVENUE - Performance Obligatio
REVENUE - Performance Obligation (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2020USD ($) | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction | |
Initial application and transition, completed contract, same reporting period | true |
Incremental Cost of Obtaining Contract | true |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction | |
Revenue, expected timing of satisfaction of remaining performance | 12 months |
Revenue, remaining performance obligation | $ 141.7 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction | |
Revenue, expected timing of satisfaction of remaining performance | 12 months |
Revenue, remaining performance obligation | $ 75.1 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction | |
Revenue, expected timing of satisfaction of remaining performance | 12 months |
Revenue, remaining performance obligation | $ 29.5 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction | |
Revenue, expected timing of satisfaction of remaining performance | 12 months |
Revenue, remaining performance obligation | $ 0.9 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Millions | Apr. 25, 2019 | Oct. 31, 2019 | Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Numerator: | |||||||||||||
Income from continuing operations | $ 93.3 | $ 133.3 | $ 38.4 | $ 30 | $ 130.4 | $ 121.6 | $ 142.4 | $ 178.2 | $ 295 | $ 572.6 | $ 945.5 | ||
Less: Dividends declared on preferred stock | 2.8 | ||||||||||||
Less: Allocation of undistributed earnings | 6.8 | ||||||||||||
Income from continuing operations - basic | 295 | 563 | 945.5 | ||||||||||
(Loss) income from discontinued operations, net of taxes | $ (81.3) | $ (32.9) | $ (229.2) | $ (3.4) | $ (29.1) | (81.3) | (294.6) | 17.6 | |||||
Net income - basic | $ 213.7 | $ 268.4 | $ 963.1 | ||||||||||
Weighted average shares, basic | 47,800,000 | 50,000,000 | 54,900,000 | ||||||||||
Basic income (loss) attributable to common stockholders per share: | |||||||||||||
Income from continuing operations (in dollars per share) | $ 1.93 | $ 2.79 | $ 0.81 | $ 0.63 | $ 2.73 | $ 2.47 | $ 2.72 | $ 3.36 | $ 6.17 | $ 11.25 | $ 17.24 | ||
(Loss) income from discontinued operations (in dollars per share) | (1.68) | (0.70) | (4.69) | (0.07) | (0.55) | (1.70) | (5.89) | 0.32 | |||||
Net income per share (in dollars per share) | $ 0.25 | $ 2.79 | $ 0.81 | $ 0.63 | $ 2.03 | $ (2.22) | $ 2.65 | $ 2.81 | $ 4.47 | $ 5.36 | $ 17.56 | ||
Diluted income per share: | |||||||||||||
Income from continuing operations | $ 93.3 | $ 133.3 | $ 38.4 | $ 30 | $ 130.4 | $ 121.6 | $ 142.4 | $ 178.2 | $ 295 | $ 572.6 | $ 945.5 | ||
(Loss) income from discontinued operations, net of taxes | $ (81.3) | $ (32.9) | $ (229.2) | $ (3.4) | $ (29.1) | (81.3) | (294.6) | 17.6 | |||||
Net income | $ 213.7 | $ 278 | $ 963.1 | ||||||||||
Weighted average effect of dilutive securities: | |||||||||||||
Shares from assumed conversion of preferred stock (in shares) | 800,000 | ||||||||||||
Net effect of dilutive stock options and unvested restricted stock (in shares) | 100,000 | 100,000 | 200,000 | ||||||||||
Denominator for diluted calculations (in shares) | 47,900,000 | 50,900,000 | 55,100,000 | ||||||||||
Diluted income (loss) attributable to common stockholders per share: | |||||||||||||
Income from continuing operations (in dollars per share) | $ 1.93 | $ 2.79 | $ 0.81 | $ 0.63 | $ 2.74 | $ 2.41 | $ 2.71 | $ 3.35 | $ 6.16 | $ 11.24 | $ 17.17 | ||
(Loss) income from discontinued operations (in dollars per share) | (1.68) | (0.69) | (4.54) | (0.07) | (0.55) | (1.70) | (5.78) | 0.32 | |||||
Net income per share (in dollars per share) | $ 0.25 | $ 2.79 | $ 0.81 | $ 0.63 | $ 2.05 | $ (2.13) | $ 2.64 | $ 2.80 | $ 4.46 | $ 5.46 | $ 17.49 | ||
Series A Non-Voting Convertible Preferred Stock | |||||||||||||
Diluted income (loss) attributable to common stockholders per share: | |||||||||||||
Conversion of stock, shares converted | 150,000 | ||||||||||||
Value Act Holdings, L.P. | Series A Non-Voting Convertible Preferred Stock | |||||||||||||
Diluted income (loss) attributable to common stockholders per share: | |||||||||||||
Conversion of stock, shares converted | 150,000 | ||||||||||||
Conversion of stock, shares issued | 150,000 | 150,000 | |||||||||||
Value Act Holdings, L.P. | Common Stock | |||||||||||||
Diluted income (loss) attributable to common stockholders per share: | |||||||||||||
Conversion of stock, shares converted | 1,500,000 | 1,500,000 |
ACQUISITIONS (Details)
ACQUISITIONS (Details) shares in Millions, $ in Millions | Dec. 03, 2020USD ($)itemshares | Sep. 28, 2020USD ($)shares | Feb. 07, 2019USD ($) | Dec. 31, 2020USD ($)shares | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) |
Acquisition | ||||||
Equity consideration shares of common stock | shares | 1.9 | |||||
Total consideration, net of cash acquired | $ 266.8 | $ 6.7 | ||||
Fair values of assets acquired and liabilities assumed in acquisition | ||||||
Goodwill | $ 1,369.6 | $ 954.9 | $ 954.8 | |||
Equity consideration shares of common stock | shares | 1.9 | |||||
Developed technology | ||||||
Fair values of assets acquired and liabilities assumed in acquisition | ||||||
Developed technology | $ 90.7 | |||||
Blispay | ||||||
Acquisition | ||||||
Cash consideration | $ 6.7 | |||||
Fair values of assets acquired and liabilities assumed in acquisition | ||||||
Capitalized software | 5 | |||||
Goodwill | 2.3 | |||||
Total assets acquired | 7.3 | |||||
Components of consideration | ||||||
Contingent consideration, guarantee | 1 | |||||
Guarantee, fair value | $ 0.6 | |||||
Bread | ||||||
Acquisition | ||||||
Number of shares initially acquired | shares | 3.5 | |||||
Percentage of interest acquired | 6.00% | |||||
Total acquisition percentage | 100.00% | |||||
Equity consideration shares of common stock | shares | 1.9 | 1.9 | ||||
Cash consideration | $ 275 | $ 25 | ||||
Equity consideration | 149.2 | |||||
Deferred consideration | 75 | $ 75 | ||||
Total consideration paid | 491 | |||||
Gain (loss) recognized on remeasurement | 0 | |||||
Fair values of assets acquired and liabilities assumed in acquisition | ||||||
Installment loan receivables | 111.7 | |||||
Accounts receivable | 0.2 | |||||
Other current assets | 0.6 | |||||
Property and equipment | 0.3 | |||||
Developed technology | 90.7 | |||||
Right of use assets - operating | 3.6 | |||||
Deferred tax asset, net | 7 | |||||
Intangible assets | 11.3 | |||||
Goodwill | 369.6 | |||||
Total assets acquired | 595 | |||||
Accounts payable | 2 | |||||
Accrued expenses | 2.9 | |||||
Operating lease liabilities | 3.5 | |||||
Non-recourse borrowings of consolidated securitization entities | 95.6 | |||||
Total liabilities assumed | 104 | |||||
Net assets acquired | $ 491 | |||||
Number of warehouse facilities acquired | item | 2 | |||||
Equity consideration shares of common stock | shares | 1.9 | 1.9 |
DISPOSITION (Details)
DISPOSITION (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Jan. 10, 2020 | Dec. 31, 2020 |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Earnout payments received | $ 5 | ||
Disposal Group, Estimated Fair Value of Remaining Contingent Purchase Price | $ 1.5 | ||
Disposal Group, Disposed of by Sale, Not Discontinued Operations | Precima | |||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Total consideration | $ 43.8 | ||
Contingent consideration | 10 | ||
Net carrying value of assets and liabilities (including other comprehensive income) | 26.8 | ||
Allocation of goodwill | 3.2 | ||
Strategic transaction costs | 5.8 | ||
Pre-tax gain on sale of business, net of strategic transaction costs | 8 | ||
Cash associated with Precima, included in total consideration | $ 10.8 |
DISCONTINUED OPERATIONS (Detail
DISCONTINUED OPERATIONS (Details) - USD ($) $ in Millions | Jul. 01, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Apr. 30, 2019 | Apr. 12, 2019 |
Disposal Group, Including Discontinued Operation, Additional Disclosures | ||||||
Long-term Debt | $ 2,805.7 | |||||
Depreciation and amortization | $ 73.2 | $ 293.7 | ||||
Capital expenditures | 55.8 | 106.5 | ||||
Epsilon | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Consideration, cash associated with disposal group | $ 42.2 | |||||
Transaction costs | 79 | |||||
After tax loss on sale | 252.1 | |||||
Disposal Group, Including Discontinued Operation, Additional Disclosures | ||||||
Mandatory payment per credit agreement | $ 500 | |||||
Epsilon | Senior Notes | ||||||
Disposal Group, Including Discontinued Operation, Additional Disclosures | ||||||
Long-term Debt | $ 1,900 | |||||
Epsilon | Discontinued Operations, Held-for-sale | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Total consideration | $ 4,400 | |||||
Disposal Group, Including Discontinued Operation, Income Statement Disclosures | ||||||
Revenue | 2,175.1 | |||||
Cost of operations (exclusive of depreciation and amortization disclosed separately below) | 1,744.4 | |||||
Depreciation and other amortization | 115.4 | |||||
Amortization of purchased intangibles | 178.3 | |||||
Interest expense | 128.3 | |||||
Income before provision (benefit) from income taxes | 8.7 | |||||
Provision (benefit) for income taxes | (8.9) | |||||
(Loss) income from discontinued operations, net of taxes | $ 17.6 | |||||
Epsilon | Discontinued Operations, Disposed of by Sale | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Total consideration | 4,451.9 | |||||
Net carrying value of assets and liabilities (including other comprehensive income) | 3,939.7 | |||||
Disposal Group, Including Discontinued Operation, Income Statement Disclosures | ||||||
Revenue | 999.6 | |||||
Cost of operations (exclusive of depreciation and amortization disclosed separately below) | 110 | 993.9 | ||||
Depreciation and other amortization | 29.7 | |||||
Amortization of purchased intangibles | 43.5 | |||||
Interest expense | 64.1 | |||||
Gain on sale of Epsilon | $ (512.2) | (512.2) | ||||
Income before provision (benefit) from income taxes | (110) | 380.6 | ||||
Provision (benefit) for income taxes | (28.7) | 675.2 | ||||
(Loss) income from discontinued operations, net of taxes | $ (81.3) | $ (294.6) |
CREDIT CARD AND LOAN RECEIVAB_3
CREDIT CARD AND LOAN RECEIVABLES - Allowance for Loan Loss and Delinquencies (Details) $ in Millions | 12 Months Ended | |||||
Dec. 31, 2020USD ($)item | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2020USD ($)item | Dec. 03, 2020USD ($) | Dec. 31, 2019USD ($) | |
Total credit card and loan receivables | $ 16,784.4 | $ 19,463.1 | ||||
Less: Credit card and loan receivables - restricted for securitization investors | 11,208.5 | 13,504.2 | ||||
Other credit card and loan receivables | 5,575.9 | 5,958.9 | ||||
Unbilled finance charges | 219.4 | |||||
Allowance for loan loss | $ 1,171.1 | $ 1,038.3 | $ 1,119.3 | $ 2,008 | 1,171.1 | |
Allowance for Loan Loss | ||||||
Number of credit card and loan receivable groups | item | 4 | |||||
Payments allocated to future purchase activity | $ 0 | |||||
Balance at beginning of period | 1,171.1 | 1,038.3 | 1,119.3 | |||
Provision for loan loss | 1,266.2 | 1,187.5 | 1,016 | |||
Allowance associated with credit card and loan receivables transferred to held for sale | (54.8) | |||||
Change in estimate for uncollectible unpaid interest and fees | 10 | 25 | ||||
Recoveries | 204.6 | 234.5 | 214.2 | |||
Principal charge-offs | (1,287.9) | (1,289.2) | (1,281.4) | |||
Balance at end of period | $ 2,008 | 1,171.1 | 1,038.3 | |||
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 | $ 717.4 | $ 808.6 | $ 803.1 | |||
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 | |||||
Amortized cost of receivables balances contractually delinquent: | ||||||
Total delinquent | 915.6 | 1,391.4 | ||||
Principal receivables balances contractually delinquent: | ||||||
Re-aged accounts as percentage of total credit card and loan receivables | 2.80% | 2.40% | 2.10% | |||
Modified Credit Card Receivables | ||||||
Impaired credit card and loan receivables | 489.8 | 308.7 | ||||
Allowance for loan loss on impaired credit card receivables | $ 165.8 | $ 75.4 | ||||
Maximum percentage of credit card receivables to total portfolio | 3.00% | 3.00% | ||||
Average recorded investment in impaired credit card receivables | $ 412.4 | $ 295.4 | ||||
Interest income on modified credit card receivables | $ 30.1 | 22.6 | $ 27.9 | |||
Maximum | ||||||
Allowance for Loan Loss | ||||||
Number of days after notification of creditor's bankruptcy or death when an account is charged-off | 180 days | |||||
ASU 2016-13 | ||||||
Allowance for loan loss | $ 644 | 644 | $ 644 | $ 644 | ||
Allowance for Loan Loss | ||||||
Balance at beginning of period | 644 | |||||
Balance at end of period | $ 644 | $ 644 | ||||
Group A (Current, risk score - high) | ||||||
Allowance for Loan Loss | ||||||
Estimated Life (in months) | 14 months | |||||
Group B (Current, risk score - low) | ||||||
Allowance for Loan Loss | ||||||
Estimated Life (in months) | 19 months | |||||
Group C (Delinquent, risk score - high) | ||||||
Allowance for Loan Loss | ||||||
Estimated Life (in months) | 17 months | |||||
Group D (Delinquent, risk score - low) | ||||||
Allowance for Loan Loss | ||||||
Estimated Life (in months) | 26 months | |||||
Credit Card and Loan Receivables | ||||||
Receivables | 16,376.4 | 19,047.8 | ||||
Modified Credit Card Receivables | ||||||
Period for which late fee waivers and payment deferrals were made for credit card receivables | 2 months | |||||
Late fee waivers and payment deferrals | 2,200 | |||||
Extension of certain promotional plans | $ 89 | |||||
Number of short term forbearance programs | item | 2 | |||||
Short-term forbearance programs | 67.3 | |||||
Deferred forbearance programs | 157.4 | |||||
Period for which certain promotional plans were extended for credit card receivables | 3 months | |||||
Duration of short term program one | 3 months | |||||
Duration of short term program two | 6 months | |||||
Outstanding Balance | 39.9 | |||||
Maximum period of time temporary programs' concessions remain in place | 12 months | |||||
Installment Loan Receivables | ||||||
Receivables | 118 | |||||
Allowance for Loan Loss | ||||||
Period for which interest and fee income accrue until balance, interest and other fees are paid or charged off on installment loan receivables | 120 days | |||||
Installment Loan Receivables | Bread | ||||||
Allowance for loan loss | $ 5.7 | 5.7 | $ 5.7 | |||
Allowance for Loan Loss | ||||||
Balance at end of period | $ 5.7 | |||||
Other | ||||||
Receivables | $ 290 | $ 415.3 |
CREDIT CARD AND LOAN RECEIVAB_4
CREDIT CARD AND LOAN RECEIVABLES - Amortized Cost Basis Credit Card and Loan Receivables (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Financing Receivable, Past Due [Line Items] | ||
Total delinquent | $ 915.6 | $ 1,391.4 |
Current | 15,578.8 | 17,656.4 |
Total | 16,494.4 | 19,047.8 |
31 to 60 days delinquent | ||
Financing Receivable, Past Due [Line Items] | ||
Total delinquent | 272.5 | 399.1 |
61 to 90 days delinquent | ||
Financing Receivable, Past Due [Line Items] | ||
Total delinquent | 203.3 | 293.9 |
91 or more days delinquent | ||
Financing Receivable, Past Due [Line Items] | ||
Total delinquent | $ 439.8 | $ 698.4 |
CREDIT CARD AND LOAN RECEIVAB_5
CREDIT CARD AND LOAN RECEIVABLES - Troubled Debt Restructurings (Details) - Consumer Portfolio $ in Millions | 12 Months Ended | |
Dec. 31, 2020USD ($)item | Dec. 31, 2019USD ($)item | |
Credit Card Receivables | ||
Modifications related to troubled debt restructurings within credit card and loan receivables | ||
Number of Restructurings | item | 391,049 | 259,311 |
Pre-modification Outstanding Balance | $ 554.5 | $ 381.4 |
Post-modification Outstanding Balance | $ 552.6 | $ 380.8 |
Troubled debt restructurings that subsequently defaulted - credit card receivables | ||
Modifications related to troubled debt restructurings within credit card and loan receivables | ||
Number of Restructurings | item | 118,600 | 126,476 |
Outstanding Balance | $ 161.8 | $ 170.8 |
CREDIT CARD AND LOAN RECEIVAB_6
CREDIT CARD AND LOAN RECEIVABLES - Credit Quality on Amortized Cost Basis (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Credit Quality | ||
Amortized Cost Basis of Receivables Outstanding | $ 16,376.4 | $ 19,047.8 |
Percentage of amortized cost basis of credit card receivables outstanding | 100.00% | 100.00% |
No Score | ||
Credit Quality | ||
Amortized Cost Basis of Receivables Outstanding | $ 204.1 | $ 298.4 |
Percentage of amortized cost basis of credit card receivables outstanding | 1.20% | 1.60% |
27.1% and higher | ||
Credit Quality | ||
Amortized Cost Basis of Receivables Outstanding | $ 1,390.4 | $ 1,648.8 |
Percentage of amortized cost basis of credit card receivables outstanding | 8.50% | 8.70% |
17.1% - 27.0% | ||
Credit Quality | ||
Amortized Cost Basis of Receivables Outstanding | $ 848.8 | $ 1,108.5 |
Percentage of amortized cost basis of credit card receivables outstanding | 5.20% | 5.80% |
12.6% - 17.0% | ||
Credit Quality | ||
Amortized Cost Basis of Receivables Outstanding | $ 937 | $ 1,171.7 |
Percentage of amortized cost basis of credit card receivables outstanding | 5.70% | 6.20% |
3.7% - 12.5% | ||
Credit Quality | ||
Amortized Cost Basis of Receivables Outstanding | $ 7,305.5 | $ 8,292.1 |
Percentage of amortized cost basis of credit card receivables outstanding | 44.60% | 43.50% |
1.9% - 3.6% | ||
Credit Quality | ||
Amortized Cost Basis of Receivables Outstanding | $ 2,939.5 | $ 3,375.3 |
Percentage of amortized cost basis of credit card receivables outstanding | 17.90% | 17.70% |
Lower than 1.9% | ||
Credit Quality | ||
Amortized Cost Basis of Receivables Outstanding | $ 2,751.1 | $ 3,153 |
Percentage of amortized cost basis of credit card receivables outstanding | 16.90% | 16.50% |
Bread | Installment Loan Receivables | ||
Credit Quality | ||
Amortized Cost Basis of Receivables Outstanding | $ 118 | |
Bread | Installment Loan Receivables | FICO Score Above 660 | ||
Credit Quality | ||
Percentage of total amortized cost basis of revolving loan receivables outstanding | 86 | |
Bread | Installment Loan Receivables | FICO Score Below 660 | ||
Credit Quality | ||
Percentage of total amortized cost basis of revolving loan receivables outstanding | 14 |
CREDIT CARD AND LOAN RECEIVAB_7
CREDIT CARD AND LOAN RECEIVABLES - Securitized Credit Card Receivables (Details) $ in Millions | Sep. 30, 2020USD ($)Asset | Dec. 31, 2019USD ($)item | Sep. 30, 2019USD ($)item | Aug. 31, 2019USD ($)item | Jun. 30, 2019USD ($)item | Apr. 30, 2019USD ($)item | Dec. 31, 2020USD ($)itemAsset | Dec. 31, 2019USD ($)item | Dec. 31, 2018USD ($) |
Portfolio Held For Sale | |||||||||
Carrying value of the credit card portfolios held for sale | $ 408 | $ 0 | $ 408 | ||||||
Number of credit card portfolios transferred to held for sale | item | 1 | ||||||||
Number of credit card portfolios transferred from held for sale to receivables | Asset | 1 | ||||||||
Carring value of the loan and credit card portfolios transferred out of held for sale to receivables | $ 81.9 | ||||||||
Carrying value of the loan and credit card portfolios transferred to held for sale | $ 510.3 | ||||||||
Valuation adjustment on credit card and loan portfolios held for sale | $ 7.5 | $ 189.8 | |||||||
Number of credit card portfolios sold | item | 7 | 1 | 1 | 3 | 1 | 1 | 13 | ||
Proceeds from sale of credit card portfolios | $ 1,082.4 | $ 334.7 | $ 70.4 | $ 217.7 | $ 356.6 | $ 289.5 | $ 2,061.8 | $ 1,153.5 | |
Gain (loss) on sales of credit card portfolio | 24.5 | $ 15.2 | $ 1.7 | $ 2.9 | $ (0.4) | $ 20.4 | $ 43.9 | ||
Portfolio Acquisitions | |||||||||
Number of credit card portfolios acquired | 0 | 4 | |||||||
Purchase price of credit card portfolio | $ 924.8 | ||||||||
Purchase price of credit card receivables portfolio | 843.5 | 843.5 | |||||||
Purchase price of credit card receivables portfolio, intangible assets | 35.7 | 35.7 | |||||||
Purchase price of credit card receivables portfolio, other non-current assets | 45.6 | 45.6 | |||||||
Securitized Credit Card and Loan Receivables | |||||||||
Cash collateral, restricted deposits which are required to be used to cover losses on securitized credit card receivables | 0 | $ 0 | 0 | 0 | |||||
Total credit card and loan receivables - restricted for securitization investors | 13,504.2 | 11,208.5 | 13,504.2 | ||||||
Principal amount of credit card and loan receivables - restricted for securitization investors, 90 days | $ 321.8 | 200.8 | 321.8 | ||||||
Net charge-offs of securitized principal | $ 756.1 | $ 907.7 | $ 927 | ||||||
Minimum | |||||||||
Securitized Credit Card and Loan Receivables | |||||||||
Minimum interests requirement (as a percent) | 4.00% | ||||||||
Maximum | |||||||||
Securitized Credit Card and Loan Receivables | |||||||||
Minimum interests requirement (as a percent) | 10.00% |
INVENTORIES, NET (Details)
INVENTORIES, NET (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2020 | |
Inventories, net | $ 218 | $ 164.3 |
LoyaltyOne | ||
Inventory write-down | $ 18.4 |
OTHER INVESTMENTS (Details)
OTHER INVESTMENTS (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Marketable securities | |||
Amortized Cost | $ 219 | $ 257.2 | |
Unrealized Gains | 6.4 | 3 | |
Unrealized Losses | (0.4) | ||
Fair Value | 225.4 | 259.8 | |
Other Investments, Total | |||
Amortized Cost | 219 | 257.2 | |
Unrealized Gains | 6.4 | 3 | |
Unrealized Losses | (0.4) | ||
Fair Value | 225.4 | 259.8 | |
Fair Value, Marketable securities | |||
Less than 12 months | 18.8 | ||
12 Months or Greater | 13.1 | ||
Total | 31.9 | ||
Unrealized Losses, Marketable securities | |||
Less than 12 months | (0.2) | ||
12 Months or Greater | (0.2) | ||
Total | (0.4) | ||
Fair Value, Total | |||
Less than 12 months | 18.8 | ||
12 Months or Greater | 13.1 | ||
Total | 31.9 | ||
Unrealized Losses, Total | |||
Less than 12 months | (0.2) | ||
12 Months or Greater | (0.2) | ||
Total | (0.4) | ||
Amortized Cost | |||
Due in one year or less | 44.9 | ||
Due after one year through five years | 1 | ||
Due after ten years | 173.1 | ||
Total | 219 | ||
Fair Value | |||
Due in one year or less | 44.9 | ||
Due after one year through five years | 1 | ||
Due after ten years | 179.5 | ||
Fair Value | 225.4 | ||
Realized gains or losses | |||
Realized gains or losses from the sale of investment securities | $ 0 | $ 0 | $ 0 |
REDEMPTION SETTLEMENT ASSETS (D
REDEMPTION SETTLEMENT ASSETS (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
REDEMPTION SETTLEMENT ASSETS | ||
Amortized Cost | $ 674.6 | $ 600.4 |
Unrealized Gains | 19.1 | 2.4 |
Unrealized Losses | (0.2) | (2) |
Fair Value | 693.5 | 600.8 |
Fair Value | ||
Less than 12 months | 46.2 | 166.6 |
12 Months or Greater | 10.3 | 155.1 |
Total | 56.5 | 321.7 |
Unrealized Losses | ||
Less than 12 months | (0.1) | (1.3) |
12 Months or Greater | (0.1) | (0.7) |
Total | (0.2) | (2) |
Amortized cost of the redemption settlement assets by contractual maturity | ||
Due in one year or less | 144.9 | |
Due after one year through five years | 470.2 | |
Due after five year through ten years | 4.1 | |
Total | 619.2 | |
Estimated fair value of the redemption settlement assets by contractual maturity | ||
Due in one year or less | 146 | |
Due after one year through five years | 488 | |
Due after five year through ten years | 4.1 | |
Total | 638.1 | |
Realized gains or losses from the sale of investment securities | 0 | |
Restricted cash | ||
REDEMPTION SETTLEMENT ASSETS | ||
Amortized Cost | 55.4 | 39.3 |
Fair Value | 55.4 | 39.3 |
Mutual funds | ||
REDEMPTION SETTLEMENT ASSETS | ||
Amortized Cost | 26.9 | 25.1 |
Fair Value | 26.9 | 25.1 |
Corporate bonds | ||
REDEMPTION SETTLEMENT ASSETS | ||
Amortized Cost | 592.3 | 536 |
Unrealized Gains | 19.1 | 2.4 |
Unrealized Losses | (0.2) | (2) |
Fair Value | 611.2 | 536.4 |
Fair Value | ||
Less than 12 months | 46.2 | 166.6 |
12 Months or Greater | 10.3 | 155.1 |
Total | 56.5 | 321.7 |
Unrealized Losses | ||
Less than 12 months | (0.1) | (1.3) |
12 Months or Greater | (0.1) | (0.7) |
Total | $ (0.2) | $ (2) |
LEASES (Details)
LEASES (Details) | 12 Months Ended |
Dec. 31, 2020 | |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Remaining lease terms | 1 year |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Remaining lease terms | 18 years |
LEASES - Lease expense (Details
LEASES - Lease expense (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Lease expense | |||
Operating lease cost | $ 40.5 | $ 41.1 | |
Short-term lease cost | 1 | 2.7 | |
Variable lease cost | 6.2 | 6.8 | |
Total | $ 47.7 | $ 50.6 | |
Lease expense | $ 47.5 | ||
Remaining lease term - operating leases | 10 years 9 months 18 days | 11 years 6 months | |
Discount rate - operating leases | 5.20% | 5.20% | |
Supplemental cash flow information related to leases was as follows: | |||
Operating cash flows from operating leases | $ 45.8 | $ 46.6 | |
Operating leases - Right-of-use assets obtained in exchange for lease obligations | $ 7.6 | $ 28.4 |
LEASES - Maturities of lease li
LEASES - Maturities of lease liabilities (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Lease liabilities | ||
2021 | $ 38.8 | |
2022 | 41.2 | |
2023 | 38.3 | |
2024 | 36 | |
2025 | 35.2 | |
Thereafter | 209.6 | |
Total undiscounted lease liabilities | 399.1 | |
Less: Amount representing interest | (99.1) | |
Total present value of minimum lease payments | 300 | |
Amounts recognized in the December 31, 2020 consolidated balance sheet: | ||
Current operating lease liabilities | 23.6 | $ 22.6 |
Long-term operating lease liabilities | 276.4 | $ 291.7 |
Total present value of minimum lease payments | 300 | |
Asset impairment charge | $ 18.4 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) $ in Millions | Dec. 03, 2020USD ($) | Oct. 31, 2019USD ($)item | Dec. 31, 2020USD ($) | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) |
Property and equipment | ||||||
Total | $ 717.1 | $ 717.1 | $ 663.6 | |||
Accumulated depreciation and amortization | (406.2) | (406.2) | (381.3) | |||
Property and equipment, net | 310.9 | 310.9 | 282.3 | |||
Depreciation | ||||||
Depreciation | 65.5 | 40.6 | $ 41.2 | |||
Amortization on capitalized software | 35.5 | 39.3 | $ 39.5 | |||
Unamortized capitalized software costs | 165.5 | 165.5 | 74 | |||
Capitalized software, impairment | 4.1 | |||||
Proceeds from sale of building and land | $ 15.1 | 15.1 | ||||
Gain on sale of building and land | $ 6.1 | |||||
Lease term | 15 years | |||||
Number of tenant options | item | 4 | |||||
Term per each option to extend | 5 years | |||||
Computer software and development | ||||||
Property and equipment | ||||||
Total | 410.5 | 410.5 | 327.1 | |||
Furniture and equipment | ||||||
Property and equipment | ||||||
Total | 151 | 151 | 164.3 | |||
Land, buildings and leasehold improvements | ||||||
Property and equipment | ||||||
Total | 122.7 | 122.7 | 126 | |||
Construction in progress | ||||||
Property and equipment | ||||||
Total | 32.9 | $ 32.9 | $ 46.2 | |||
Bread | ||||||
Depreciation | ||||||
Developed technology | $ 90.7 | |||||
Developed technology | ||||||
Depreciation | ||||||
Developed technology | $ 90.7 | |||||
Useful life | 5 years | |||||
Card Services | ||||||
Depreciation | ||||||
Impairment charges | 3 | |||||
Accelerated depreciation | $ 24.7 |
INTANGIBLE ASSETS AND GOODWIL_2
INTANGIBLE ASSETS AND GOODWILL - Finite Lived Assets and Indefinite Lived Assets (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Schedule of Finite and Indefinite-lived Intangible Assets | ||
Finite lived assets, gross | $ 592.4 | $ 603.4 |
Accumulated Amortization | (511.9) | (451.3) |
Finite lived assets, net | 80.5 | 152.1 |
Total Intangible Assets | ||
Gross Assets | 593.6 | 604.6 |
Accumulated Amortization | (511.9) | (451.3) |
Net | 81.7 | 153.3 |
Tradenames | ||
Indefinite Lived Assets | ||
Indefinite lived assets | 1.2 | 1.2 |
Total Intangible Assets | ||
Net | 1.2 | 1.2 |
Customer contracts and lists | ||
Schedule of Finite and Indefinite-lived Intangible Assets | ||
Finite lived assets, gross | 363 | 325.1 |
Accumulated Amortization | (354.5) | (278.7) |
Finite lived assets, net | 8.5 | $ 46.4 |
Amortization Life and Method | ||
Useful life | 7 years | |
Total Intangible Assets | ||
Accumulated Amortization | $ (354.5) | $ (278.7) |
Customer contracts and lists | Minimum | ||
Amortization Life and Method | ||
Useful life | 3 years | |
Customer contracts and lists | Maximum | ||
Amortization Life and Method | ||
Useful life | 7 years | |
Premium on purchased credit card portfolios | ||
Schedule of Finite and Indefinite-lived Intangible Assets | ||
Finite lived assets, gross | $ 137.2 | 192.6 |
Accumulated Amortization | (72.8) | (93.2) |
Finite lived assets, net | 64.4 | 99.4 |
Total Intangible Assets | ||
Accumulated Amortization | $ (72.8) | $ (93.2) |
Premium on purchased credit card portfolios | Minimum | ||
Amortization Life and Method | ||
Useful life | 3 years | 1 year |
Premium on purchased credit card portfolios | Maximum | ||
Amortization Life and Method | ||
Useful life | 13 years | 13 years |
Collector database | ||
Schedule of Finite and Indefinite-lived Intangible Assets | ||
Finite lived assets, gross | $ 55 | $ 53.9 |
Accumulated Amortization | (54.5) | (52.9) |
Finite lived assets, net | $ 0.5 | $ 1 |
Amortization Life and Method | ||
Useful life | 5 years | 5 years |
Total Intangible Assets | ||
Accumulated Amortization | $ (54.5) | $ (52.9) |
Tradenames | ||
Schedule of Finite and Indefinite-lived Intangible Assets | ||
Finite lived assets, gross | 35 | 31.8 |
Accumulated Amortization | (30.1) | (26.5) |
Finite lived assets, net | 4.9 | 5.3 |
Total Intangible Assets | ||
Accumulated Amortization | $ (30.1) | $ (26.5) |
Tradenames | Minimum | ||
Amortization Life and Method | ||
Useful life | 4 years | 8 years |
Tradenames | Maximum | ||
Amortization Life and Method | ||
Useful life | 15 years | 15 years |
Noncompete agreements | ||
Schedule of Finite and Indefinite-lived Intangible Assets | ||
Finite lived assets, gross | $ 2.2 | |
Finite lived assets, net | $ 2.2 | |
Amortization Life and Method | ||
Useful life | 5 years |
INTANGIBLE ASSETS AND GOODWIL_3
INTANGIBLE ASSETS AND GOODWILL - Maturity Schedule (Details) - USD ($) $ in Millions | Dec. 03, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Intangible assets | ||||
Acquired intangible assets | $ 35.7 | |||
Amortization expense | $ 82.8 | 96.2 | $ 112.9 | |
Estimated amortization expense related to intangible assets for the next five years and thereafter | ||||
2021 | 25.8 | |||
2022 | 21 | |||
2023 | 16.1 | |||
2024 | 11.2 | |||
2025 | 2.4 | |||
Thereafter | $ 4 | |||
Customer relationships | ||||
Intangible assets | ||||
Acquired intangible assets | $ 21.8 | |||
Weighted average life | 2 years 8 months 12 days | |||
Marketing relationships | ||||
Intangible assets | ||||
Acquired intangible assets | $ 13.9 | |||
Weighted average life | 5 years 10 months 24 days | |||
Bread | ||||
Intangible assets | ||||
Acquired intangible assets | $ 11.3 | |||
Bread | Customer relationships | ||||
Intangible assets | ||||
Acquired intangible assets | $ 8.8 | |||
Weighted average life | 3 years | |||
Bread | Tradename | ||||
Intangible assets | ||||
Acquired intangible assets | $ 0.3 | |||
Weighted average life | 4 years | |||
Bread | Noncompete agreements | ||||
Intangible assets | ||||
Acquired intangible assets | $ 2.2 | |||
Weighted average life | 5 years |
INTANGIBLE ASSETS AND GOODWIL_4
INTANGIBLE ASSETS AND GOODWILL - Goodwill Information (Details) - USD ($) $ in Millions | Jul. 31, 2019 | Jul. 31, 2018 | Dec. 31, 2020 | Jan. 31, 2020 | Dec. 31, 2020 | Dec. 31, 2019 |
Goodwill | ||||||
Beginning Balance | $ 954.9 | $ 954.9 | $ 954.8 | |||
Goodwill acquired during the year | 369.6 | 2.3 | ||||
Goodwill related to sale of Precima | (3.2) | |||||
Effects of foreign currency translation | 48.3 | (2.2) | ||||
Ending Balance | $ 1,369.6 | 1,369.6 | 954.9 | |||
Goodwill impairment | $ 0 | $ 0 | ||||
Bread | ||||||
Goodwill | ||||||
Goodwill acquired during the year | 369.6 | |||||
Operating segment | LoyaltyOne | ||||||
Goodwill | ||||||
Beginning Balance | 690.9 | 690.9 | 693.1 | |||
Goodwill acquired during the year | 0 | 0 | ||||
Goodwill related to sale of Precima | (3.2) | (3.2) | ||||
Effects of foreign currency translation | 48.3 | (2.2) | ||||
Ending Balance | 736 | 736 | 690.9 | |||
Operating segment | Card Services | ||||||
Goodwill | ||||||
Beginning Balance | $ 264 | 264 | 261.7 | |||
Goodwill acquired during the year | 369.6 | 2.3 | ||||
Ending Balance | $ 633.6 | $ 633.6 | $ 264 |
RESTRUCTURING AND OTHER CHARG_3
RESTRUCTURING AND OTHER CHARGES (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Apr. 12, 2019 | |
Restructuring costs and reserve | |||
Restructuring charges | $ (8.2) | $ 118.1 | |
Restructuring, adjustment | (8.2) | (51.4) | |
Epsilon | Discontinued Operations, Held-for-sale | |||
Restructuring costs and reserve | |||
Total consideration | $ 4,400 | ||
Termination Benefits | |||
Restructuring costs and reserve | |||
Restructuring charges | (8.2) | 53.5 | |
Restructuring, adjustment | (8.2) | ||
Asset Impairments | |||
Restructuring costs and reserve | |||
Restructuring charges | 52 | ||
Restructuring, adjustment | (52) | ||
Lease Termination Costs | |||
Restructuring costs and reserve | |||
Restructuring charges | 9.1 | ||
Restructuring, adjustment | 0.7 | ||
Other Exit Costs | |||
Restructuring costs and reserve | |||
Restructuring charges | 3.5 | ||
Restructuring, adjustment | (0.1) | ||
Corporate/Other | |||
Restructuring costs and reserve | |||
Restructuring charges | 37.9 | ||
Corporate/Other | Termination Benefits | |||
Restructuring costs and reserve | |||
Restructuring charges | 18.6 | ||
Corporate/Other | Asset Impairments | |||
Restructuring costs and reserve | |||
Restructuring charges | 11.1 | ||
Corporate/Other | Lease Termination Costs | |||
Restructuring costs and reserve | |||
Restructuring charges | 7 | ||
Corporate/Other | Other Exit Costs | |||
Restructuring costs and reserve | |||
Restructuring charges | 1.2 | ||
LoyaltyOne | |||
Restructuring costs and reserve | |||
Restructuring charges | 0.1 | 50.8 | |
LoyaltyOne | Termination Benefits | |||
Restructuring costs and reserve | |||
Restructuring charges | 0.1 | 7.6 | |
LoyaltyOne | Asset Impairments | |||
Restructuring costs and reserve | |||
Restructuring charges | 40.7 | ||
LoyaltyOne | Lease Termination Costs | |||
Restructuring costs and reserve | |||
Restructuring charges | 0.2 | ||
LoyaltyOne | Other Exit Costs | |||
Restructuring costs and reserve | |||
Restructuring charges | 2.3 | ||
Card Services | |||
Restructuring costs and reserve | |||
Restructuring charges | (8.3) | 29.4 | |
Card Services | Termination Benefits | |||
Restructuring costs and reserve | |||
Restructuring charges | $ (8.3) | 27.3 | |
Card Services | Asset Impairments | |||
Restructuring costs and reserve | |||
Restructuring charges | 0.2 | ||
Card Services | Lease Termination Costs | |||
Restructuring costs and reserve | |||
Restructuring charges | $ 1.9 |
RESTRUCTURING AND OTHER CHARG_4
RESTRUCTURING AND OTHER CHARGES - Liability (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Restructuring Reserve | ||
Restructuring Reserve, Beginning Balance | $ 34.8 | |
Restructuring charges | (8.2) | $ 118.1 |
Adjustments for non-cash charges | (8.2) | (51.4) |
Cash payments | (23.3) | (31.9) |
Restructuring Reserve, Ending Balance | 3.3 | 34.8 |
LoyaltyOne | ||
Restructuring Reserve | ||
Restructuring charges | 0.1 | 50.8 |
Card Services | ||
Restructuring Reserve | ||
Restructuring charges | (8.3) | 29.4 |
Termination Benefits | ||
Restructuring Reserve | ||
Restructuring Reserve, Beginning Balance | 34.7 | |
Restructuring charges | (8.2) | 53.5 |
Adjustments for non-cash charges | (8.2) | |
Cash payments | (23.2) | (18.8) |
Restructuring Reserve, Ending Balance | 3.3 | 34.7 |
Termination Benefits | LoyaltyOne | ||
Restructuring Reserve | ||
Restructuring charges | 0.1 | 7.6 |
Termination Benefits | Card Services | ||
Restructuring Reserve | ||
Restructuring charges | (8.3) | 27.3 |
Asset Impairments | ||
Restructuring Reserve | ||
Restructuring charges | 52 | |
Adjustments for non-cash charges | (52) | |
Asset Impairments | LoyaltyOne | ||
Restructuring Reserve | ||
Restructuring charges | 40.7 | |
Asset Impairments | Card Services | ||
Restructuring Reserve | ||
Restructuring charges | 0.2 | |
Lease Termination Costs | ||
Restructuring Reserve | ||
Restructuring charges | 9.1 | |
Adjustments for non-cash charges | 0.7 | |
Cash payments | (9.8) | |
Lease Termination Costs | LoyaltyOne | ||
Restructuring Reserve | ||
Restructuring charges | 0.2 | |
Lease Termination Costs | Card Services | ||
Restructuring Reserve | ||
Restructuring charges | 1.9 | |
Other Exit Costs | ||
Restructuring Reserve | ||
Restructuring Reserve, Beginning Balance | 0.1 | |
Restructuring charges | 3.5 | |
Adjustments for non-cash charges | (0.1) | |
Cash payments | $ (0.1) | (3.3) |
Restructuring Reserve, Ending Balance | 0.1 | |
Other Exit Costs | LoyaltyOne | ||
Restructuring Reserve | ||
Restructuring charges | $ 2.3 |
ACCRUED EXPENSES (Details)
ACCRUED EXPENSES (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
ACCRUED EXPENSES | ||
Accrued payroll and benefits | $ 116.9 | $ 133.4 |
Accrued taxes | 57.6 | 18.1 |
Accrued other liabilities | 270.2 | 176.3 |
Accrued expenses | $ 444.7 | $ 327.8 |
DEBT (Details)
DEBT (Details) € in Millions | Apr. 03, 2020EUR (€)item | Dec. 20, 2019USD ($) | Dec. 31, 2020USD ($) | Oct. 31, 2020USD ($) | Aug. 31, 2020USD ($) | May 31, 2020USD ($) | Sep. 30, 2019EUR (€) | Jul. 31, 2019USD ($) | Dec. 31, 2020USD ($)item | Dec. 31, 2019USD ($) | Sep. 30, 2020USD ($) | Sep. 22, 2020 | Dec. 31, 2019EUR (€) | Dec. 19, 2019USD ($) | Apr. 30, 2019USD ($) | Jun. 30, 2016EUR (€) |
Debt | ||||||||||||||||
Total long-term and other debt | $ 2,834,300,000 | $ 2,834,300,000 | ||||||||||||||
Less: Unamortized discount and debt issuance costs | 28,600,000 | 28,600,000 | ||||||||||||||
Debt repaid by the company | 493,800,000 | |||||||||||||||
Less: Current portion | 6,553,900,000 | 6,553,900,000 | $ 6,942,400,000 | |||||||||||||
Long-term portion | 3,238,700,000 | 3,238,700,000 | 5,209,300,000 | |||||||||||||
Less: Current portion | 1,850,700,000 | 1,850,700,000 | 3,030,800,000 | |||||||||||||
Long-term portion | 3,859,200,000 | 3,859,200,000 | 4,253,200,000 | |||||||||||||
Loss from extinguishment of debt | (71,900,000) | |||||||||||||||
Maturities of long-term and other debt | ||||||||||||||||
2021 | 101,400,000 | 101,400,000 | ||||||||||||||
2022 | 1,382,900,000 | 1,382,900,000 | ||||||||||||||
2024 | 850,000,000 | 850,000,000 | ||||||||||||||
Thereafter | 500,000,000 | 500,000,000 | ||||||||||||||
Long-Term and Other Debt | 2,805,700,000 | 2,805,700,000 | ||||||||||||||
Maturities Of Deposits | ||||||||||||||||
2021 | 6,555,600,000 | 6,555,600,000 | ||||||||||||||
2022 | 1,739,600,000 | 1,739,600,000 | ||||||||||||||
2023 | 966,100,000 | 966,100,000 | ||||||||||||||
2024 | 530,600,000 | 530,600,000 | ||||||||||||||
2025 | 13,200,000 | 13,200,000 | ||||||||||||||
Total maturities | 9,805,100,000 | 9,805,100,000 | ||||||||||||||
Unamortized discount | (12,500,000) | (12,500,000) | ||||||||||||||
Total Deposits | 9,792,600,000 | 9,792,600,000 | ||||||||||||||
Maturities Of Non Recourse Borrowings Of Consolidated Securitization Entities | ||||||||||||||||
2021 | 1,852,100,000 | 1,852,100,000 | ||||||||||||||
2022 | 3,863,100,000 | 3,863,100,000 | ||||||||||||||
Total maturities | 5,715,200,000 | 5,715,200,000 | ||||||||||||||
Unamortized discount | (5,300,000) | (5,300,000) | ||||||||||||||
Total non-recourse borrowings of consolidated securitization entities | 5,709,900,000 | $ 5,709,900,000 | ||||||||||||||
Warehouse facility | ||||||||||||||||
Debt | ||||||||||||||||
Debt repaid by the company | 28,500,000 | |||||||||||||||
Number of facilities | item | 2 | |||||||||||||||
Series 2017-A asset backed term notes | ||||||||||||||||
Debt | ||||||||||||||||
Debt repaid by the company | $ 450,700,000 | |||||||||||||||
Retained amount of subordinated class of notes | $ 50,700,000 | |||||||||||||||
Series 2017-C asset backed term notes | ||||||||||||||||
Debt | ||||||||||||||||
Debt repaid by the company | $ 619,700,000 | |||||||||||||||
Retained amount of subordinated class of notes | $ 27,500,000 | |||||||||||||||
Series 2018-A Notes | ||||||||||||||||
Debt | ||||||||||||||||
Principal payments collected during accumulation period | $ 291,800,000 | |||||||||||||||
Series 2015-B asset-backed term notes | ||||||||||||||||
Debt | ||||||||||||||||
Debt repaid by the company | $ 625,000,000 | |||||||||||||||
Retained amount of subordinated class of notes | $ 150,000,000 | |||||||||||||||
Asset backed term notes | ||||||||||||||||
Debt | ||||||||||||||||
Amount borrowed | 0 | |||||||||||||||
Total deposits | ||||||||||||||||
Debt | ||||||||||||||||
Less: Unamortized discount and debt issuance costs | 12,500,000 | 12,500,000 | 23,300,000 | |||||||||||||
Deposits | 9,805,100,000 | 9,805,100,000 | 12,175,000,000 | |||||||||||||
Less: Current portion | 6,553,900,000 | 6,553,900,000 | 6,942,400,000 | |||||||||||||
Long-term portion | 3,238,700,000 | 3,238,700,000 | 5,209,300,000 | |||||||||||||
Certificates of deposit | ||||||||||||||||
Debt | ||||||||||||||||
Deposits | $ 6,014,900,000 | $ 6,014,900,000 | $ 8,585,200,000 | |||||||||||||
Certificates of deposit | Comenity Bank and Comenity Capital Bank | ||||||||||||||||
Debt | ||||||||||||||||
Weighted average interest rate (as a percent) | 2.58% | 2.58% | 2.66% | 2.66% | ||||||||||||
Certificates of deposit | Minimum | ||||||||||||||||
Debt | ||||||||||||||||
Interest Rate (as a percent) | 0.15% | 0.15% | ||||||||||||||
Certificates of deposit | Minimum | Comenity Bank and Comenity Capital Bank | ||||||||||||||||
Debt | ||||||||||||||||
Interest Rate (as a percent) | 0.15% | 0.15% | 1.33% | 1.33% | ||||||||||||
Denomination amount of certificate of deposits | $ 1,000 | |||||||||||||||
Certificates of deposit | Maximum | ||||||||||||||||
Debt | ||||||||||||||||
Interest Rate (as a percent) | 3.75% | 3.75% | ||||||||||||||
Certificates of deposit | Maximum | Comenity Bank and Comenity Capital Bank | ||||||||||||||||
Debt | ||||||||||||||||
Interest Rate (as a percent) | 3.75% | 3.75% | 4.00% | 4.00% | ||||||||||||
Denomination amount of certificate of deposits | $ 100,000 | |||||||||||||||
Money market deposits | ||||||||||||||||
Debt | ||||||||||||||||
Money market deposits | $ 3,790,200,000 | $ 3,790,200,000 | $ 3,589,800,000 | |||||||||||||
Debt instrument description of Variable rate basis | Federal Funds rate | |||||||||||||||
Money market deposits | Comenity Bank and Comenity Capital Bank | ||||||||||||||||
Debt | ||||||||||||||||
Money market deposits | $ 3,800,000,000 | $ 3,800,000,000 | $ 3,600,000,000 | |||||||||||||
Weighted average interest rate (as a percent) | 1.00% | 1.00% | 2.05% | 2.05% | ||||||||||||
Money market deposits | Minimum | ||||||||||||||||
Debt | ||||||||||||||||
Interest Rate (as a percent) | 0.38% | 0.38% | 1.84% | 1.84% | ||||||||||||
Money market deposits | Minimum | Comenity Bank and Comenity Capital Bank | ||||||||||||||||
Debt | ||||||||||||||||
Interest Rate (as a percent) | 0.38% | 0.38% | 1.84% | 1.84% | ||||||||||||
Money market deposits | Maximum | ||||||||||||||||
Debt | ||||||||||||||||
Interest Rate (as a percent) | 3.50% | 3.50% | 3.50% | 3.50% | ||||||||||||
Money market deposits | Maximum | Comenity Bank and Comenity Capital Bank | ||||||||||||||||
Debt | ||||||||||||||||
Interest Rate (as a percent) | 3.50% | 3.50% | 3.50% | 3.50% | ||||||||||||
Non-recourse borrowings of consolidated securitization entities | ||||||||||||||||
Debt | ||||||||||||||||
Less: Unamortized discount and debt issuance costs | $ 5,300,000 | $ 5,300,000 | $ 12,000,000 | |||||||||||||
Total non-recourse borrowings of consolidated securitization entities | 5,715,200,000 | 5,715,200,000 | 7,296,000,000 | |||||||||||||
Less: Current portion | 1,850,700,000 | 1,850,700,000 | 3,030,800,000 | |||||||||||||
Long-term portion | 3,859,200,000 | 3,859,200,000 | 4,253,200,000 | |||||||||||||
Fixed rate asset-backed term note securities | ||||||||||||||||
Debt | ||||||||||||||||
Total non-recourse borrowings of consolidated securitization entities | $ 3,423,800,000 | $ 3,423,800,000 | 4,891,000,000 | |||||||||||||
Fixed rate asset-backed term note securities | Minimum | ||||||||||||||||
Debt | ||||||||||||||||
Interest Rate (as a percent) | 2.03% | 2.03% | ||||||||||||||
Fixed rate asset-backed term note securities | Maximum | ||||||||||||||||
Debt | ||||||||||||||||
Interest Rate (as a percent) | 3.95% | 3.95% | ||||||||||||||
Secured Loan Facility | ||||||||||||||||
Debt | ||||||||||||||||
Total non-recourse borrowings of consolidated securitization entities | $ 86,300,000 | $ 86,300,000 | ||||||||||||||
Weighted average interest rate (as a percent) | 3.90% | 3.90% | ||||||||||||||
Line of credit amount outstanding | $ 86,300,000 | $ 86,300,000 | ||||||||||||||
Debt instrument description of Variable rate basis | LIBOR | |||||||||||||||
Conduit asset-backed securities | ||||||||||||||||
Debt | ||||||||||||||||
Maximum borrowing capacity | 3,200,000,000 | $ 3,200,000,000 | ||||||||||||||
Total non-recourse borrowings of consolidated securitization entities | 2,205,100,000 | 2,205,100,000 | $ 2,405,000,000 | |||||||||||||
Reduction in Credit Facility | 1,500,000,000 | 1,500,000,000 | ||||||||||||||
Line of credit amount outstanding | $ 2,200,000,000 | $ 2,200,000,000 | ||||||||||||||
Debt instrument description of Variable rate basis | LIBOR | |||||||||||||||
Number of facilities | item | 3 | |||||||||||||||
Conduit asset-backed securities | Minimum | ||||||||||||||||
Debt | ||||||||||||||||
Interest Rate (as a percent) | 1.39% | 1.39% | 2.79% | 2.79% | ||||||||||||
Conduit asset-backed securities | Maximum | ||||||||||||||||
Debt | ||||||||||||||||
Interest Rate (as a percent) | 1.89% | 1.89% | 2.96% | 2.96% | ||||||||||||
Long-term and other debt | ||||||||||||||||
Debt | ||||||||||||||||
Total long-term and other debt | $ 2,834,300,000 | $ 2,834,300,000 | $ 2,878,800,000 | |||||||||||||
Less: Unamortized discount and debt issuance costs | 28,600,000 | 28,600,000 | 28,900,000 | |||||||||||||
Less: Current portion | 101,400,000 | 101,400,000 | 101,400,000 | |||||||||||||
Long-term and other debt | 2,704,300,000 | 2,704,300,000 | 2,748,500,000 | |||||||||||||
Senior Notes | ||||||||||||||||
Debt | ||||||||||||||||
Extinguishment of debt | $ 1,900,000,000 | |||||||||||||||
Loss from extinguishment of debt | (71,900,000) | |||||||||||||||
Loss from extinguishment of debt, before write-off of deferred issuance costs | (49,900,000) | |||||||||||||||
Write-off of deferred issuance costs | $ 22,000,000 | |||||||||||||||
Senior Notes Due 2024 | ||||||||||||||||
Debt | ||||||||||||||||
Principal amount of debt | $ 850,000,000 | 850,000,000 | ||||||||||||||
Total long-term and other debt | $ 850,000,000 | $ 850,000,000 | $ 850,000,000 | |||||||||||||
Interest Rate (as a percent) | 4.75% | 4.75% | 4.75% | 4.75% | 4.75% | |||||||||||
Senior Notes Due 2026 | ||||||||||||||||
Debt | ||||||||||||||||
Principal amount of debt | $ 500,000,000 | |||||||||||||||
Total long-term and other debt | $ 500,000,000 | $ 500,000,000 | ||||||||||||||
Interest Rate (as a percent) | 7.00% | 7.00% | 7.00% | 7.00% | ||||||||||||
2017 Credit Agreement | ||||||||||||||||
Debt | ||||||||||||||||
Total availability under Credit Facility | $ 750,000,000 | $ 750,000,000 | ||||||||||||||
2017 revolving line of credit | ||||||||||||||||
Debt | ||||||||||||||||
Maximum borrowing capacity | $ 750,000,000 | $ 750,000,000 | $ 1,072,400,000 | $ 1,072,400,000 | ||||||||||||
Mandatory payment per credit agreement | 500,000,000 | |||||||||||||||
Threshold amount for future asset sales | $ 50,000,000 | |||||||||||||||
Total availability under Credit Facility | 750,000,000 | |||||||||||||||
Debt instrument description of Variable rate basis | LIBOR | |||||||||||||||
2017 Term Loans | ||||||||||||||||
Debt | ||||||||||||||||
Principal amount of debt | 2,028,800,000 | 2,028,800,000 | ||||||||||||||
Total long-term and other debt | $ 1,484,300,000 | $ 1,484,300,000 | $ 2,028,800,000 | |||||||||||||
Debt repaid by the company | $ 833,000,000 | |||||||||||||||
Weighted average interest rate (as a percent) | 1.90% | 1.90% | 3.30% | 3.30% | ||||||||||||
Aggregate principal payments as a percentage of the initial term loan amount in each of the first and second year payable in equal quarterly installments | 1.25% | |||||||||||||||
Debt instrument description of Variable rate basis | LIBOR | LIBOR | ||||||||||||||
BrandLoyalty credit agreement | ||||||||||||||||
Debt | ||||||||||||||||
Total long-term and other debt | $ 0 | $ 0 | ||||||||||||||
Debt instrument description of Variable rate basis | Euro Interbank Offered Rate | |||||||||||||||
Number of requests for one-year extensions | item | 2 | |||||||||||||||
Term of individual extensions | 1 year | |||||||||||||||
BrandLoyalty revolving line of credit | ||||||||||||||||
Debt | ||||||||||||||||
Maximum borrowing capacity | € 30 | 36,600,000 | $ 36,600,000 | |||||||||||||
Debt repaid by the company | € | € 32.5 | |||||||||||||||
BrandLoyalty revolving line of credit | Committed revolving credit facility | ||||||||||||||||
Debt | ||||||||||||||||
Maximum borrowing capacity | € | € 37.5 | |||||||||||||||
BrandLoyalty revolving line of credit | Uncommitted revolving credit facility | ||||||||||||||||
Debt | ||||||||||||||||
Maximum borrowing capacity | € | € 37.5 | |||||||||||||||
BrandLoyalty uncommitted line of credit | ||||||||||||||||
Debt | ||||||||||||||||
Maximum borrowing capacity | 30 | 36,600,000 | 36,600,000 | |||||||||||||
BrandLoyalty uncommitted line of credit | Credit Facility, Accordion Feature | ||||||||||||||||
Debt | ||||||||||||||||
Maximum borrowing capacity | € 80 | $ 97,700,000 | $ 97,700,000 | |||||||||||||
BrandLoyalty term loans | ||||||||||||||||
Debt | ||||||||||||||||
Debt repaid by the company | € | € 115 | |||||||||||||||
BrandLoyalty term loans | A-1 Term loan facility | ||||||||||||||||
Debt | ||||||||||||||||
Principal amount of debt | € | € 90 | |||||||||||||||
BrandLoyalty term loans | A-2 term loan facility | ||||||||||||||||
Debt | ||||||||||||||||
Principal amount of debt | € | € 100 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - AIR MILES Reward Program (Details) $ in Millions | Dec. 31, 2020USD ($) |
AIR MILES Reward Program | |
Letters of credit and other assurances | $ 150.5 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES - Regulatory Matters and Cardholders (Details) | Jan. 19, 2021USD ($)item | Dec. 31, 2020USD ($)item | Dec. 31, 2019USD ($) |
Cardholders | |||
Approximate number of cardholders | item | 45,500,000 | ||
Average unused lines of credit per account | $ 2,367 | ||
Comenity Bank | |||
Tier 1 capital to average assets | |||
Tier 1 capital to average assets, Actual Ratio (as a prcent) | 19 | 12.9 | |
Tier 1 capital to average assets, Minimum Ratio for Capital Adequacy Purposes (as a percent) | 4 | 4 | |
Tier 1 capital to average assets, Minimum Ratio to be Well Capitalized under Prompt Corrective Action Provisions | 5 | 5 | |
Common Equity Tier 1 capital to risk-weighted assets | |||
Common Equity Tier 1 capital to risk-weighted assets, Actual Ratio (as a percent) | 20.7 | 14.6 | |
Common Equity Tier 1 capital to risk-weighted assets, Minimum Ratio for Capital Adequacy Purposes (as a percent) | 4.50% | 4.50% | |
Common Equity Tier 1 capital to risk-weighted assets, Minimum Ratio to be Well Capitalized under Prompt Corrective Action Provisions (as a percent) | 6.50% | 6.50% | |
Banking Regulation, Risk-Based Information [Abstract] | |||
Tier 1 capital to risk-weighted assets, Actual Ratio (as a percent) | 20.7 | 14.6 | |
Tier 1 capital to risk-weighted assets, Minimum Ratio for Capital Adequacy Purposes (as a percent) | 6 | 6 | |
Tier 1 capital to risk-weighted assets, Minimum Ratio to be Well Capitalized under Prompt Corrective Action Provisions (as a percent) | 8 | 8 | |
Total capital to risk-weighted assets, Actual Ratio (as a percent) | 22 | 15.9 | |
Total capital to risk-weighted assets, Minimum Ratio for Capital Adequacy Purposes (as a percent) | 8 | 8 | |
Total capital to risk-weighted assets, Minimum Ratio to be Well Capitalized under prompt Corrective Action Provisions (as a percent) | 10 | 10 | |
Comenity Capital Bank | |||
Tier 1 capital to average assets | |||
Tier 1 capital to average assets, Actual Ratio (as a prcent) | 14.8 | 11.9 | |
Tier 1 capital to average assets, Minimum Ratio for Capital Adequacy Purposes (as a percent) | 4 | 4 | |
Tier 1 capital to average assets, Minimum Ratio to be Well Capitalized under Prompt Corrective Action Provisions | 5 | 5 | |
Common Equity Tier 1 capital to risk-weighted assets | |||
Common Equity Tier 1 capital to risk-weighted assets, Actual Ratio (as a percent) | 15.6 | 14.4 | |
Common Equity Tier 1 capital to risk-weighted assets, Minimum Ratio for Capital Adequacy Purposes (as a percent) | 4.50% | 4.50% | |
Common Equity Tier 1 capital to risk-weighted assets, Minimum Ratio to be Well Capitalized under Prompt Corrective Action Provisions (as a percent) | 6.50% | 6.50% | |
Banking Regulation, Risk-Based Information [Abstract] | |||
Tier 1 capital to risk-weighted assets, Actual Ratio (as a percent) | 15.6 | 14.4 | |
Tier 1 capital to risk-weighted assets, Minimum Ratio for Capital Adequacy Purposes (as a percent) | 6 | 6 | |
Tier 1 capital to risk-weighted assets, Minimum Ratio to be Well Capitalized under Prompt Corrective Action Provisions (as a percent) | 8 | 8 | |
Total capital to risk-weighted assets, Actual Ratio (as a percent) | 16.9 | 15.7 | |
Total capital to risk-weighted assets, Minimum Ratio for Capital Adequacy Purposes (as a percent) | 8 | 8 | |
Total capital to risk-weighted assets, Minimum Ratio to be Well Capitalized under prompt Corrective Action Provisions (as a percent) | 10 | 10 | |
Epsilon | Discontinued Operations, Disposed of by Sale | |||
Contingencies | |||
Loss contingency, total | $ 150,000,000 | ||
Number of installment payments | item | 2 | ||
Loss contingency, pre-tax | $ 110,000,000 | $ 40,000,000 | |
Loss contingency, net of tax | $ 81,300,000 | $ 32,900,000 |
STOCKHOLDERS' EQUITY - Stock Re
STOCKHOLDERS' EQUITY - Stock Repurchase Programs (Details) - USD ($) $ / shares in Units, $ in Millions | Aug. 15, 2019 | Jun. 30, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Jul. 01, 2020 | Jun. 30, 2020 | Jun. 09, 2020 | Jul. 31, 2019 | Jul. 19, 2019 | Jul. 26, 2018 | Jul. 01, 2015 | Jul. 01, 2010 |
Stock Repurchase Programs | |||||||||||||
Number of shares repurchased | 0 | 6,300,000 | 2,200,000 | ||||||||||
Total cost of shares repurchased | $ 976.1 | $ 443.2 | |||||||||||
2017 Stock Repurchase Program | |||||||||||||
Stock Repurchase Programs | |||||||||||||
Number of shares repurchased | 800,000 | ||||||||||||
Total cost of shares repurchased | $ 166 | ||||||||||||
2018 Stock Repurchase Program | |||||||||||||
Stock Repurchase Programs | |||||||||||||
Amount of company's outstanding common stock authorized to be repurchased | $ 500 | ||||||||||||
Number of shares repurchased | 1,300,000 | 1,400,000 | |||||||||||
Total cost of shares repurchased | $ 222.8 | $ 277.2 | |||||||||||
2019 Stock Repurchase Program | |||||||||||||
Stock Repurchase Programs | |||||||||||||
Amount of company's outstanding common stock authorized to be repurchased | $ 1,100 | ||||||||||||
Number of shares repurchased | 5,050,505 | ||||||||||||
Average cost per share (in dollars per share) | $ 148.50 | ||||||||||||
Total cost of shares repurchased | $ 750 | ||||||||||||
Available balance under stock repurchase program | $ 347.8 | ||||||||||||
Amount remaining of a stock repurchase plan that expired | $ 347.8 | ||||||||||||
Total direct costs | 3.3 | ||||||||||||
Commission expense | $ 2.2 | ||||||||||||
Modified Dutch Auction | |||||||||||||
Stock Repurchase Programs | |||||||||||||
Amount of company's outstanding common stock authorized to be repurchased | $ 750 | ||||||||||||
Modified Dutch Auction | Minimum | |||||||||||||
Stock Repurchase Programs | |||||||||||||
Share price (in dollars per share) | $ 144 | ||||||||||||
Modified Dutch Auction | Maximum | |||||||||||||
Stock Repurchase Programs | |||||||||||||
Share price (in dollars per share) | $ 162 | ||||||||||||
2010 Omnibus Incentive Plan | |||||||||||||
Stock Compensation Plans | |||||||||||||
Shares of common stock reserved for grant | 3,000,000 | ||||||||||||
2015 Omnibus Incentive Plan | |||||||||||||
Stock Compensation Plans | |||||||||||||
Shares of common stock reserved for grant | 5,100,000 | ||||||||||||
2020 Omnibus Incentive Plan | |||||||||||||
Stock Compensation Plans | |||||||||||||
Shares of common stock reserved for grant | 2,400,000 | 2,400,000 | |||||||||||
Stock Repurchase Programs | |||||||||||||
Maximum award amount | $ 1 |
STOCKHOLDERS' EQUITY - Stock Co
STOCKHOLDERS' EQUITY - Stock Compensation Plans (Details) - USD ($) $ in Millions | 1 Months Ended | 12 Months Ended | |||
Apr. 30, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Apr. 12, 2019 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs | |||||
Stock-based compensation expense | $ 21.3 | $ 25.1 | $ 44.4 | ||
Forfeiture rate (as a percent) | 5.00% | 5.00% | 5.00% | ||
Unrecognized expenses | $ 24.7 | ||||
Approximate weighted average period for recognizing expenses | 1 year 6 months | ||||
Income tax benefits related to stock-based compensation expense | $ 3 | $ 3.6 | $ 7.3 | ||
Cost of operations. | |||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs | |||||
Stock-based compensation expense | 12.5 | 16.5 | 23.3 | ||
General and administrative | |||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs | |||||
Stock-based compensation expense | $ 8.8 | 8.6 | 21.1 | ||
Discontinued Operations, Held-for-sale | Epsilon | |||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs | |||||
Stock-based compensation expense | $ 19.4 | $ 29.7 | $ 36.4 | ||
Total consideration | $ 4,400 |
STOCKHOLDERS' EQUITY - Restrict
STOCKHOLDERS' EQUITY - Restricted Stock Unit Awards and Stock Options (Details) - USD ($) $ / shares in Units, $ in Millions | Jan. 28, 2021 | Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Stock option activity | |||||||||
Balance at the end of the period (in shares) | 0 | 0 | |||||||
Dividends | |||||||||
Common Stock dividends and dividend equivalent rights declared (in dollars per share) | $ 0.21 | $ 0.21 | $ 0.21 | $ 0.63 | $ 0.63 | $ 0.57 | |||
Dividends declared | $ 59.9 | $ 127.1 | $ 125.9 | ||||||
Dividends paid | 60.6 | 127.4 | 125.2 | ||||||
Dividend equivalents accrued but not yet paid | $ 0.6 | $ 0.6 | $ 1.2 | $ 0.7 | |||||
Subsequent event | |||||||||
Dividends | |||||||||
Common Stock dividends and dividend equivalent rights declared (in dollars per share) | $ 0.21 | ||||||||
Restricted stock units | |||||||||
Fair Value Assumptions | |||||||||
Price correlation | 0.52% | 0.52% | |||||||
Expected volatility | 32.50% | ||||||||
Risk-free interest rate | 1.40% | ||||||||
Risk-free interest rate time period | 2 years | ||||||||
Number of Shares | |||||||||
Balance at the beginning of the period (in shares) | 513,132 | 513,132 | 796,912 | 807,810 | |||||
Shares granted (in shares) | 481,566 | 704,235 | 429,759 | ||||||
Shares vested (in shares) | (170,018) | (441,503) | (319,503) | ||||||
Shares forfeited (in shares) | (247,413) | (546,512) | (121,154) | ||||||
Balance at the end of the period (in shares) | 577,267 | 577,267 | 513,132 | 796,912 | |||||
Outstanding and Expected to Vest (in shares) | 345,266 | 345,266 | |||||||
Weighted Average Fair Value | |||||||||
Balance at the beginning of the period (in dollars per share) | $ 172.06 | $ 172.06 | $ 218.81 | $ 207.45 | |||||
Shares granted (in dollars per share) | 89.11 | 161.05 | 233.98 | ||||||
Shares vested (in dollars per share) | 175.09 | 218.45 | 224.62 | ||||||
Shares forfeited (in dollars per share) | 166.93 | 188.40 | 227.66 | ||||||
Balance at the end of the period (in dollars per share) | $ 103.89 | 103.89 | $ 172.06 | $ 218.81 | |||||
Outstanding and Expected to Vest (in dollars per share) | $ 105.49 | $ 105.49 | |||||||
Restricted stock, additional disclosures | |||||||||
Total fair value of units vested | $ 29.8 | $ 96.4 | $ 71.8 | ||||||
Aggregate intrinsic value of units outstanding and expected to vest | $ 25.6 | $ 25.6 | |||||||
Weighted-average remaining contractual life | 1 year 6 months | ||||||||
Market-based restricted stock unit awards | |||||||||
Number of Shares | |||||||||
Balance at the beginning of the period (in shares) | 24,288 | 24,288 | 56,229 | 28,172 | |||||
Shares granted (in shares) | 20,770 | 37,878 | 28,057 | ||||||
Shares forfeited (in shares) | (22,831) | (69,819) | |||||||
Balance at the end of the period (in shares) | 22,227 | 22,227 | 24,288 | 56,229 | |||||
Restricted stock, additional disclosures | |||||||||
Attainment percentage | 100.00% | 100.00% | 100.00% | ||||||
Performance-based restricted stock unit awards | |||||||||
Number of Shares | |||||||||
Balance at the beginning of the period (in shares) | 230,272 | 230,272 | 423,242 | 450,579 | |||||
Shares granted (in shares) | 219,186 | 420,239 | 263,542 | ||||||
Shares vested (in shares) | (42,097) | (262,773) | (188,680) | ||||||
Shares forfeited (in shares) | (186,135) | (350,436) | (102,199) | ||||||
Balance at the end of the period (in shares) | 221,226 | 221,226 | 230,272 | 423,242 | |||||
Restricted stock, additional disclosures | |||||||||
Attainment percentage | 100.00% | 100.00% | 100.00% | ||||||
Stock Compensation Plans, Additional Disclosures | |||||||||
Award vesting period | 3 years | ||||||||
Probable outcome (as a percent) | 0.00% | ||||||||
Performance-based restricted stock unit awards | Minimum | |||||||||
Stock Compensation Plans, Additional Disclosures | |||||||||
Earned percentage | 0.00% | ||||||||
Performance-based restricted stock unit awards | Maximum | |||||||||
Stock Compensation Plans, Additional Disclosures | |||||||||
Earned percentage | 150.00% | ||||||||
Service-based restricted stock unit awards | |||||||||
Number of Shares | |||||||||
Balance at the beginning of the period (in shares) | 258,572 | 258,572 | 317,441 | 329,059 | |||||
Shares granted (in shares) | 241,610 | 246,118 | 138,160 | ||||||
Shares vested (in shares) | (127,921) | (178,730) | (130,823) | ||||||
Shares forfeited (in shares) | (38,447) | (126,257) | (18,955) | ||||||
Balance at the end of the period (in shares) | 333,814 | 333,814 | 258,572 | 317,441 | |||||
Stock Compensation Plans, Additional Disclosures | |||||||||
Award vesting period | 3 years | ||||||||
Employee Stock Options | |||||||||
Stock Compensation Plans, Additional Disclosures | |||||||||
Award vesting period | 3 years | ||||||||
Expiration period for awards granted | 10 years | ||||||||
Stock option activity | |||||||||
Balance at the beginning of the period (in shares) | 10,854 | 11,859 | |||||||
Options exercised (in shares) | 0 | (10,854) | (886) | ||||||
Options forfeited (in shares) | (119) | ||||||||
Balance at the end of the period (in shares) | 10,854 | ||||||||
Exercisable, Options (in shares) | 10,854 | 11,859 | |||||||
Weighted Average Exercise Price | |||||||||
Outstanding beginning of period (in dollars per share) | $ 25.01 | $ 23.87 | |||||||
Options exercised (in dollars per share) | $ 25.01 | 12.70 | |||||||
Options forfeited (in dollars per share) | 2.74 | ||||||||
Balance at end of period (in dollars per share) | 25.01 | ||||||||
Exercisable (in dollars per share) | $ 25.01 | $ 23.87 | |||||||
Stock options activity, additional disclosures | |||||||||
Total intrinsic value of stock options exercised | $ 1.3 | $ 0.2 |
STOCKHOLDERS' EQUITY - Preferre
STOCKHOLDERS' EQUITY - Preferred Stock (Details) - shares | Apr. 25, 2019 | Oct. 31, 2019 | Dec. 31, 2019 |
Series A Non-Voting Convertible Preferred Stock | |||
Conversion of stock, shares converted | 150,000 | ||
Value Act Holdings, L.P. | Series A Non-Voting Convertible Preferred Stock | |||
Conversion of stock, shares converted | 150,000 | ||
Conversion of stock, shares issued | 150,000 | 150,000 | |
Value Act Holdings, L.P. | Common Stock | |||
Conversion of stock, shares converted | 1,500,000 | 1,500,000 |
EMPLOYEE BENEFIT PLANS (Details
EMPLOYEE BENEFIT PLANS (Details) - USD ($) | Jun. 05, 2015 | Jun. 30, 2015 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Jul. 01, 2015 | Jul. 20, 2001 |
EDCP | |||||||
Retirement Plans | |||||||
Vested percentage | 100.00% | ||||||
Retirement Savings Plan | |||||||
Retirement Plans | |||||||
Number of shares registered for issuance | 1,500,000 | ||||||
Number of shares available for issuance | 341,096 | ||||||
Minimum age limit of employees covered by the plan | 18 years | ||||||
Service period after which seasonal employees begin receiving employer matching contribution | 12 months | ||||||
Service period after which employees begin receiving employer matching contribution | 180 days | ||||||
Percentage of employees' contribution matched by dollar-to-dollar contribution by employer | 5.00% | ||||||
Company's matching and discretionary contributions | $ 15,700,000 | $ 35,300,000 | $ 44,800,000 | ||||
Group Retirement Savings Plan And Deferred Profit Sharing Plan | LoyaltyOne | |||||||
Retirement Plans | |||||||
Company's matching and discretionary contributions | $ 1,700,000 | 1,800,000 | $ 1,700,000 | ||||
Group Retirement Savings Plan | LoyaltyOne | |||||||
Retirement Plans | |||||||
Service period after which full-time employees begin receiving company matching contribution | 3 months | ||||||
Service period after which part-time employees begin receiving company matching contribution | 6 months | ||||||
Deferred Profit Sharing Plan | LoyaltyOne | |||||||
Retirement Plans | |||||||
Service period after which contributions vest | 1 year | ||||||
Service period after which employees begin receiving employer matching contribution | 12 months | ||||||
Percentage of employees' contribution matched by dollar-to-dollar contribution by employer | 5.00% | ||||||
Executive Deferred Compensation Plan | |||||||
Retirement Plans | |||||||
Deferred compensation liability | $ 19,900,000 | $ 33,300,000 | |||||
2005 Employee Stock Purchase Plan | Retirement Savings Plan | |||||||
Retirement Plans | |||||||
Number of shares available for issuance | 441,327 | ||||||
2015 Employee Stock Purchase Plan | |||||||
Employee Stock Purchase Plan | |||||||
Maximum amount of common stock permitted to be purchased annually per employee | $ 25,000 | ||||||
Maximum percentage of voting power after purchase of common stock under ESPP | 5.00% | ||||||
Offering period under ESPP | 6 months | ||||||
Purchase price of common stock as a percentage of fair market value of shares | 85.00% | ||||||
Maximum number of shares reserved for issuance under the ESPP | 1,441,327 | ||||||
Number of shares registered for issuance | 1,441,327 | ||||||
Number of shares issued under the ESPP | 65,430 | ||||||
Weighted-average issue price of shares issued under the ESPP (in dollars per share) | $ 46.73 | ||||||
Number of shares issued under the ESPP since the inception of the plan | 514,112 | ||||||
Retirement Plans | |||||||
Number of shares available for issuance | 927,215 | 1,000,000 |
ACCUMULATED OTHER COMPREHENSI_3
ACCUMULATED OTHER COMPREHENSIVE LOSS (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Jan. 01, 2018 | |
Accumulated Other Comprehensive Income | ||||
Balance at the beginning of the period | $ (99.9) | |||
Changes in other comprehensive income (loss) | 94.9 | $ 38.2 | $ 2.1 | |
Recognition of foreign currency translation adjustments upon sale of business | 3.8 | 26.8 | ||
Balance at the end of the period | (5) | (99.9) | ||
Epsilon | ||||
Accumulated Other Comprehensive Income | ||||
Recognition of foreign currency translation adjustments upon sale of business | 26.8 | |||
Precima | ||||
Accumulated Other Comprehensive Income | ||||
Recognition of foreign currency translation adjustments upon sale of business | 3.8 | |||
Accounting Standards Update ASU 2016-01 | ||||
Accumulated Other Comprehensive Income | ||||
Cumulative effect adjustment to retained earnings | $ 1.5 | |||
Net Unrealized Gains (Losses) on Securities | ||||
Accumulated Other Comprehensive Income | ||||
Balance at the beginning of the period | 2.5 | (10.7) | (8.7) | |
Changes in other comprehensive income (loss) | (2) | |||
Changes in other comprehensive income (loss) | 20.7 | 13.2 | ||
Balance at the end of the period | 23.2 | 2.5 | (10.7) | |
Net Unrealized Gains (Losses) on Cash Flow Hedges | ||||
Accumulated Other Comprehensive Income | ||||
Balance at the beginning of the period | (0.1) | (0.2) | (0.1) | |
Changes in other comprehensive income (loss) | (0.1) | |||
Changes in other comprehensive income (loss) | (0.6) | 0.1 | ||
Balance at the end of the period | (0.7) | (0.1) | (0.2) | |
Net Unrealized Gains (Losses) on Net Investment Hedge | ||||
Accumulated Other Comprehensive Income | ||||
Balance at the beginning of the period | (7.5) | (12.4) | (42) | |
Changes in other comprehensive income (loss) | 29.6 | |||
Changes in other comprehensive income (loss) | 4.9 | |||
Balance at the end of the period | (7.5) | (7.5) | (12.4) | |
Foreign Currency Translation Adjustments. | ||||
Accumulated Other Comprehensive Income | ||||
Balance at the beginning of the period | (94.8) | (114.8) | (89.4) | |
Changes in other comprehensive income (loss) | (25.4) | |||
Changes in other comprehensive income (loss) | 71 | (6.8) | ||
Balance at the end of the period | (20) | (94.8) | (114.8) | |
Foreign Currency Translation Adjustments. | Epsilon | ||||
Accumulated Other Comprehensive Income | ||||
Recognition of foreign currency translation adjustments upon sale of business | 26.8 | |||
Foreign Currency Translation Adjustments. | Precima | ||||
Accumulated Other Comprehensive Income | ||||
Recognition of foreign currency translation adjustments upon sale of business | 3.8 | |||
Accumulated Other Comprehensive Loss | ||||
Accumulated Other Comprehensive Income | ||||
Balance at the beginning of the period | (99.9) | (138.1) | (140.2) | |
Changes in other comprehensive income (loss) | 94.9 | 38.2 | 2.1 | |
Changes in other comprehensive income (loss) | 91.1 | 11.4 | ||
Balance at the end of the period | (5) | (99.9) | $ (138.1) | |
Accumulated Other Comprehensive Loss | Epsilon | ||||
Accumulated Other Comprehensive Income | ||||
Recognition of foreign currency translation adjustments upon sale of business | $ 26.8 | |||
Accumulated Other Comprehensive Loss | Precima | ||||
Accumulated Other Comprehensive Income | ||||
Recognition of foreign currency translation adjustments upon sale of business | $ 3.8 |
INCOME TAXES - Components of In
INCOME TAXES - Components of Income Tax and Reconciliation and Deferred Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||||||||||
Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Components of income before income taxes: | ||||||||||||
Domestic | $ 281.7 | $ 591.9 | $ 1,052.7 | |||||||||
Foreign | 112.8 | 146.5 | 162.3 | |||||||||
Income from continuing operations before income taxes | $ 146.2 | $ 175.9 | $ 47 | $ 25.4 | $ 167.4 | $ 164.2 | $ 193.8 | $ 213 | 394.5 | 738.4 | 1,215 | |
Deferred | ||||||||||||
Total deferred | (222.8) | (186.1) | 16.3 | |||||||||
Total provision for income taxes | 52.9 | 42.6 | 8.6 | (4.6) | 37 | 42.6 | 51.4 | 34.8 | $ 99.5 | $ 165.8 | $ 269.5 | |
Federal statutory rate (as a percent) | 21.00% | 21.00% | 21.00% | 35.00% | ||||||||
Reconciliation of recorded federal provision for income taxes to the expected amount computed by applying the federal statutory rate | ||||||||||||
Expected expense at statutory rate | $ 82.8 | $ 155.1 | $ 255.1 | |||||||||
Increase (decrease) in income taxes resulting from: | ||||||||||||
State income taxes, net of federal benefit | (0.8) | 33.6 | 57.4 | |||||||||
Foreign rate differential | 4.1 | (2.3) | 11.6 | |||||||||
Foreign restructuring | 3.6 | (48) | ||||||||||
Impact of 2017 Tax Reform | (2.4) | (30.2) | (29.7) | |||||||||
Global intangible low-taxed income | (7.8) | 8.7 | 15.5 | |||||||||
Non-deductible expenses (non-taxable income) | 8.3 | 9.1 | 3.7 | |||||||||
IRC Section 199, net of tax reserves | 12.5 | (0.8) | ||||||||||
Other | (0.8) | (8.2) | 4.7 | |||||||||
Total provision for income taxes | 52.9 | $ 42.6 | $ 8.6 | $ (4.6) | 37 | $ 42.6 | $ 51.4 | $ 34.8 | 99.5 | 165.8 | 269.5 | |
Deferred tax assets | ||||||||||||
Deferred revenue | 29.2 | 9.5 | 29.2 | 9.5 | ||||||||
Allowance for loan loss | 482.3 | 267.6 | 482.3 | 267.6 | ||||||||
Net operating loss carryforwards and other carryforwards | 106.2 | 69 | 106.2 | 69 | ||||||||
Stock-based compensation and other employee benefits | 3.8 | 13.7 | 3.8 | 13.7 | ||||||||
Lease liabilities | 74.4 | 74.4 | 74.4 | 74.4 | ||||||||
Accrued expenses and other | 81 | 40.3 | 81 | 40.3 | ||||||||
Intangibles assets | 5.5 | 23.2 | 5.5 | 23.2 | ||||||||
Total deferred tax assets | 782.4 | 497.7 | 782.4 | 497.7 | ||||||||
Valuation allowance | (50.1) | (64) | (50.1) | (64) | ||||||||
Deferred tax assets, net of valuation allowance | 732.3 | 433.7 | 732.3 | 433.7 | ||||||||
Deferred tax liabilities | ||||||||||||
Deferred income | 290.9 | 365.6 | 290.9 | 365.6 | ||||||||
Depreciation | 25.2 | 41.8 | 25.2 | 41.8 | ||||||||
Right of use assets | 57 | 61.1 | 57 | 61.1 | ||||||||
Total deferred tax liabilities | 373.1 | 468.5 | 373.1 | 468.5 | ||||||||
Total - Net deferred tax asset (liability) | (34.8) | (34.8) | ||||||||||
Total - Net deferred tax asset (liability) | 359.2 | 359.2 | ||||||||||
Amounts recognized in the consolidated balance sheets: | ||||||||||||
Non-current assets | 359.2 | 45.2 | 359.2 | 45.2 | ||||||||
Non-current liabilities | (80) | (80) | ||||||||||
Total - Net deferred tax asset (liability) | $ (34.8) | (34.8) | ||||||||||
Total - Net deferred tax asset (liability) | $ 359.2 | 359.2 | ||||||||||
Continuing Operations | ||||||||||||
Components of income before income taxes: | ||||||||||||
Income from continuing operations before income taxes | 394.5 | 738.4 | 1,215 | |||||||||
Current | ||||||||||||
Federal | 209.2 | 126 | 152.2 | |||||||||
State | 36.6 | 35.8 | 58 | |||||||||
Foreign | 47.8 | 11.5 | 52.8 | |||||||||
Total current | 293.6 | 173.3 | 263 | |||||||||
Deferred | ||||||||||||
Federal | (135.1) | (11.8) | 48 | |||||||||
State | (37.6) | 6.7 | 14.7 | |||||||||
Foreign | (21.4) | (2.4) | (56.2) | |||||||||
Total deferred | (194.1) | (7.5) | 6.5 | |||||||||
Total provision for income taxes | 99.5 | 165.8 | 269.5 | |||||||||
Increase (decrease) in income taxes resulting from: | ||||||||||||
Total provision for income taxes | $ 99.5 | $ 165.8 | $ 269.5 |
INCOME TAXES - Operating Loss C
INCOME TAXES - Operating Loss Carryforward (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Operating Loss, Carryforwards | |||
Foreign net operating loss carryforwards | $ 240.9 | ||
Increase (decrease) in valuation allowance | (13.9) | $ 27.7 | $ (40.1) |
Reconciliation of unrecognized tax benefits | |||
Balance at the beginning of the period | 274.3 | 296.3 | 208.3 |
Increases related to prior years' tax positions | 64.7 | 2.7 | 41.3 |
Decreases related to prior years' tax positions | (63.5) | (76.6) | (9.6) |
Increases related to current year tax positions | 10.7 | 58.3 | 61.5 |
Settlements during the period | (4.6) | (0.6) | (1) |
Lapses of applicable statutes of limitation | (8.3) | (5.8) | (4.2) |
Balance at the end of the period | 273.3 | 274.3 | 296.3 |
Cumulative interest and penalties with respect to unrecognized tax benefits | 74.7 | 67 | 66.7 |
Potential interest and penalties with respect to unrecognized tax benefits | 7.6 | (0.8) | 24.5 |
Unrecognized tax benefits, if recognized, would impact effective tax rate | 257.8 | $ 255.1 | $ 247.7 |
Capital losses | |||
Operating Loss, Carryforwards | |||
Foreign net operating loss carryforwards | 6.6 | ||
Capital loss carryforward | 10.6 | ||
Federal | |||
Operating Loss, Carryforwards | |||
Net operating loss carryovers | 146.4 | ||
Foreign | |||
Operating Loss, Carryforwards | |||
Tax credits | 33.8 | ||
State | |||
Operating Loss, Carryforwards | |||
Net operating loss carryovers | 232.3 | ||
Tax credits | 3 | ||
ASU 2016-13 | |||
Operating Loss, Carryforwards | |||
Increase in net deferred tax assets | $ 159 |
FINANCIAL INSTRUMENTS - Fair Va
FINANCIAL INSTRUMENTS - Fair Value of Instruments (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Financial assets | ||
Credit card and loan receivables, net | $ 14,776.4 | $ 18,292 |
Credit card receivables held for sale | 408 | |
Redemption settlement assets, restricted | 693.5 | 600.8 |
Other investments | 225.4 | 259.8 |
Financial liabilities | ||
Deposits | 10,015.9 | 12,303.6 |
Non-recourse borrowings of consolidated securitization entities | 5,783.4 | 7,333.6 |
Long-term and other debt | 2,875.1 | 2,878.8 |
Carrying Amount | ||
Financial assets | ||
Credit card and loan receivables, net | 14,776.4 | 18,292 |
Credit card receivables held for sale | 408 | |
Redemption settlement assets, restricted | 693.5 | 600.8 |
Other investments | 225.4 | 259.8 |
Derivative instruments | 0.4 | 0.2 |
Financial liabilities | ||
Derivative instruments | 1.5 | 0.3 |
Deposits | 9,792.6 | 12,151.7 |
Non-recourse borrowings of consolidated securitization entities | 5,709.9 | 7,284 |
Long-term and other debt | 2,805.7 | 2,849.9 |
Fair Value. | ||
Financial assets | ||
Credit card and loan receivables, net | 17,301.2 | 19,126 |
Credit card receivables held for sale | 436.2 | |
Redemption settlement assets, restricted | 693.5 | 600.8 |
Other investments | 225.4 | 259.8 |
Derivative instruments | 0.4 | 0.2 |
Financial liabilities | ||
Derivative instruments | 1.5 | 0.3 |
Deposits | 10,015.9 | 12,303.6 |
Non-recourse borrowings of consolidated securitization entities | 5,783.4 | 7,333.6 |
Long-term and other debt | $ 2,875.1 | $ 2,878.8 |
FINANCIAL INSTRUMENTS - Fair _2
FINANCIAL INSTRUMENTS - Fair Value Level Disclosure (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Assets disclosed at fair value | ||
Marketable securities | $ 225.4 | $ 259.8 |
Total assets measured at fair value | 17,301.2 | 19,562.2 |
Liabilities disclosed at fair value | ||
Total liabilities measured at fair value | 18,674.4 | 22,516 |
Level 2 | ||
Liabilities disclosed at fair value | ||
Total liabilities measured at fair value | 18,674.4 | 22,516 |
Level 3 | ||
Assets disclosed at fair value | ||
Total assets measured at fair value | 17,301.2 | 19,562.2 |
Recurring | ||
Assets disclosed at fair value | ||
Mutual funds | 26.9 | 25.1 |
Corporate bonds | 611.2 | 536.4 |
Marketable securities | 225.4 | 259.8 |
Derivative instruments | 0.4 | 0.2 |
Total assets measured at fair value | 863.9 | 821.5 |
Liabilities disclosed at fair value | ||
Derivative instruments | 1.5 | 0.3 |
Total liabilities measured at fair value | 1.5 | 0.3 |
Recurring | Level 1 | ||
Assets disclosed at fair value | ||
Mutual funds | 26.9 | 25.1 |
Marketable securities | 34.2 | 26.2 |
Total assets measured at fair value | 61.1 | 51.3 |
Recurring | Level 2 | ||
Assets disclosed at fair value | ||
Corporate bonds | 611.2 | 536.4 |
Marketable securities | 191.2 | 233.6 |
Derivative instruments | 0.4 | 0.2 |
Total assets measured at fair value | 802.8 | 770.2 |
Liabilities disclosed at fair value | ||
Derivative instruments | 1.5 | 0.3 |
Total liabilities measured at fair value | $ 1.5 | $ 0.3 |
FINANCIAL INSTRUMENTS - Signifi
FINANCIAL INSTRUMENTS - Significant Unobservable Input Information (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Changes in fair value of the Company's asset and 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 |
Fair value assets amount transfer from level 2 to level 1 | 0 | 0 |
Fair value liabilities amount transfer from level 1 to level 2 | 0 | 0 |
Fair value liabilities amount transfer from level 2 to level 1 | $ 0 | $ 0 |
FINANCIAL INSTRUMENTS - Assets
FINANCIAL INSTRUMENTS - Assets and Liabilities Not Carried at Fair Value (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Financial assets | ||
Credit card and loan receivables, net | $ 17,301.2 | $ 19,126 |
Credit card receivables held for sale | 436.2 | |
Total assets measured at fair value | 17,301.2 | 19,562.2 |
Financial liabilities | ||
Deposits | 10,015.9 | 12,303.6 |
Non-recourse borrowings of consolidated securitization entities | 5,783.4 | 7,333.6 |
Long-term and other debt | 2,875.1 | 2,878.8 |
Total liabilities measured at fair value | 18,674.4 | 22,516 |
Level 2 | ||
Financial liabilities | ||
Deposits | 10,015.9 | 12,303.6 |
Non-recourse borrowings of consolidated securitization entities | 5,783.4 | 7,333.6 |
Long-term and other debt | 2,875.1 | 2,878.8 |
Total liabilities measured at fair value | 18,674.4 | 22,516 |
Level 3 | ||
Financial assets | ||
Credit card and loan receivables, net | 17,301.2 | 19,126 |
Credit card receivables held for sale | 436.2 | |
Total assets measured at fair value | $ 17,301.2 | $ 19,562.2 |
FINANCIAL INSTRUMENTS - Asset_2
FINANCIAL INSTRUMENTS - Assets and Liabilities Measured at Fair Value on Nonrecurring Basis (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
FINANCIAL INSTRUMENTS | ||
Asset Impairment Charges | $ 63.7 | $ 52 |
PARENT-ONLY FINANCIAL STATEME_3
PARENT-ONLY FINANCIAL STATEMENTS (Details) - USD ($) shares in Millions, $ in Millions | Dec. 03, 2020 | Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Assets: | |||||||||||||
Cash and cash equivalents | $ 3,081.5 | $ 3,874.4 | $ 3,081.5 | $ 3,874.4 | |||||||||
Total assets | 22,547.1 | 26,494.8 | 22,547.1 | 26,494.8 | |||||||||
Liabilities: | |||||||||||||
Total liabilities | 21,025.5 | 24,906.5 | 21,025.5 | 24,906.5 | |||||||||
Stockholders' equity | 1,521.6 | 1,588.3 | 1,521.6 | 1,588.3 | $ 2,332.1 | $ 1,855.3 | |||||||
Total liabilities and stockholders' equity | 22,547.1 | 26,494.8 | 22,547.1 | 26,494.8 | |||||||||
Statements of Income | |||||||||||||
Total revenue | 1,109.8 | $ 1,050.5 | $ 979.3 | $ 1,381.8 | 1,461 | $ 1,437.6 | $ 1,348.5 | $ 1,334.2 | 4,521.4 | 5,581.3 | 5,666.6 | ||
Loss on extinguishment of debt | 71.9 | ||||||||||||
Interest expense, net | 112.5 | 115.1 | 127.7 | 138.6 | 141.6 | 140 | 143.5 | 143.9 | 493.9 | 569 | 542.3 | ||
Income before income taxes and equity in undistributed net income (loss) of subsidiaries | 146.2 | 175.9 | 47 | 25.4 | 167.4 | 164.2 | 193.8 | 213 | 394.5 | 738.4 | 1,215 | ||
Benefit for income taxes | (52.9) | $ (42.6) | $ (8.6) | 4.6 | (37) | (42.6) | (51.4) | (34.8) | (99.5) | (165.8) | (269.5) | ||
Net income | 213.7 | 278 | 963.1 | ||||||||||
Loss from discontinued operations | (81.3) | (32.9) | $ (229.2) | $ (3.4) | (29.1) | (81.3) | (294.6) | 17.6 | |||||
Other comprehensive income: | |||||||||||||
Net income | 213.7 | 278 | 963.1 | ||||||||||
Other comprehensive income, net of tax | 94.9 | 38.2 | 2.1 | ||||||||||
Statements of Cash Flows | |||||||||||||
Net cash (used in) provided by operating activities | 1,882.7 | 1,217.7 | 2,754.9 | ||||||||||
Investing activities: | |||||||||||||
Proceeds from sale of business | 26.7 | 4,409.7 | |||||||||||
Net cash provided by investing activities | 1,774.3 | 2,860.8 | (1,872) | ||||||||||
Financing activities: | |||||||||||||
Payment of debt extinguishment costs | (46.1) | ||||||||||||
Payment of deferred financing costs | (18.8) | (45.4) | (25.8) | ||||||||||
Purchase of treasury shares | (976.1) | (443.2) | |||||||||||
Dividends paid | (60.6) | (127.4) | (125.2) | ||||||||||
Proceeds from issuance of common stock | 2.8 | 12.4 | 17.6 | ||||||||||
Other | 1.1 | (27) | (31.3) | ||||||||||
Net cash used in financing activities | (4,166.5) | (4,091.7) | (1,217.9) | ||||||||||
Change in cash, cash equivalents and restricted cash | (494.9) | (9.6) | (347) | ||||||||||
Cash, cash equivalents and restricted cash at beginning of year | 3,958.1 | 3,967.7 | 3,958.1 | 3,967.7 | 4,314.7 | ||||||||
Cash, cash equivalents and restricted cash at end of year | 3,463.2 | 3,958.1 | $ 3,463.2 | 3,958.1 | 3,967.7 | ||||||||
Non-cash investing items | |||||||||||||
Equity consideration shares of common stock | 1.9 | ||||||||||||
Parent company | |||||||||||||
Assets: | |||||||||||||
Cash and cash equivalents | 0.2 | 0.2 | $ 0.2 | 0.2 | |||||||||
Investment in subsidiaries | 5,127 | 5,326.2 | 5,127 | 5,326.2 | |||||||||
Other assets | 41.8 | 3.4 | 41.8 | 3.4 | |||||||||
Total assets | 5,169 | 5,329.8 | 5,169 | 5,329.8 | |||||||||
Liabilities: | |||||||||||||
Current portion of long-term and other debt | 101.4 | 101.4 | 101.4 | 101.4 | |||||||||
Long-term and other debt | 2,704.3 | 2,748.5 | 2,704.3 | 2,748.5 | |||||||||
Intercompany liabilities, net | 742 | 806.7 | 742 | 806.7 | |||||||||
Other liabilities | 99.7 | 84.9 | 99.7 | 84.9 | |||||||||
Total liabilities | 3,647.4 | 3,741.5 | 3,647.4 | 3,741.5 | |||||||||
Stockholders' equity | 1,521.6 | 1,588.3 | 1,521.6 | 1,588.3 | |||||||||
Total liabilities and stockholders' equity | 5,169 | 5,329.8 | 5,169 | 5,329.8 | |||||||||
Statements of Income | |||||||||||||
Interest from loans to subsidiaries | 12.6 | 19.2 | 17.9 | ||||||||||
Dividends from subsidiaries | 256.3 | 922.6 | 810.1 | ||||||||||
Total revenue | 268.9 | 941.8 | 828 | ||||||||||
Loss on extinguishment of debt | 71.9 | ||||||||||||
Interest expense, net | 109.5 | 130 | 281.2 | ||||||||||
Other expenses, net | 1.7 | (0.7) | (0.4) | ||||||||||
Total expenses | 111.2 | 201.2 | 280.8 | ||||||||||
Income before income taxes and equity in undistributed net income (loss) of subsidiaries | 157.7 | 740.6 | 547.2 | ||||||||||
Benefit for income taxes | 21.2 | 42.1 | 7 | ||||||||||
Income before equity in undistributed net (loss) income of subsidiaries | 178.9 | 782.7 | 554.2 | ||||||||||
Equity in undistributed net (loss) income of subsidiaries | 34.8 | (504.7) | 408.9 | ||||||||||
Net income | 213.7 | 278 | 963.1 | ||||||||||
Other comprehensive income: | |||||||||||||
Net income | 213.7 | 278 | 963.1 | ||||||||||
Other comprehensive income, net of tax | 4.9 | 29.6 | |||||||||||
Total comprehensive income, net of tax | 213.7 | 282.9 | 992.7 | ||||||||||
Statements of Cash Flows | |||||||||||||
Net cash (used in) provided by operating activities | (137.6) | (1,029.1) | 82.3 | ||||||||||
Investing activities: | |||||||||||||
Investment in subsidiaries | (3.2) | (135) | |||||||||||
Proceeds from sale of business | 4,118.3 | ||||||||||||
Dividends received | 256.3 | 922.6 | 810.1 | ||||||||||
Net cash provided by investing activities | 253.1 | 4,905.9 | 810.1 | ||||||||||
Financing activities: | |||||||||||||
Borrowings under debt agreements | 1,276 | 3,083 | 4,527 | ||||||||||
Repayments of borrowings | (1,320.5) | (5,778.2) | (4,838.3) | ||||||||||
Payment of debt extinguishment costs | (46.1) | ||||||||||||
Payment of deferred financing costs | (9.1) | (20.7) | (4.6) | ||||||||||
Purchase of treasury shares | (976.1) | (443.2) | |||||||||||
Dividends paid | (60.6) | (127.4) | (125.2) | ||||||||||
Proceeds from issuance of common stock | 2.8 | 12.4 | 17.6 | ||||||||||
Other | (4.1) | (23.6) | (25.7) | ||||||||||
Net cash used in financing activities | (115.5) | (3,876.7) | (892.4) | ||||||||||
Change in cash, cash equivalents and restricted cash | 0.1 | ||||||||||||
Cash, cash equivalents and restricted cash at beginning of year | $ 0.2 | $ 0.1 | 0.2 | 0.1 | 0.1 | ||||||||
Cash, cash equivalents and restricted cash at end of year | $ 0.2 | $ 0.2 | $ 0.2 | 0.2 | $ 0.1 | ||||||||
Non-cash investing items | |||||||||||||
Non-cash dividend | $ 3,000 | ||||||||||||
Bread | |||||||||||||
Non-cash investing items | |||||||||||||
Equity consideration shares of common stock | 1.9 | 1.9 |
SEGMENT INFORMATION - Financial
SEGMENT INFORMATION - Financial Information (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Segment information | |||||||||||
Revenues | $ 1,109.8 | $ 1,050.5 | $ 979.3 | $ 1,381.8 | $ 1,461 | $ 1,437.6 | $ 1,348.5 | $ 1,334.2 | $ 4,521.4 | $ 5,581.3 | $ 5,666.6 |
Income (loss) before income taxes | 146.2 | 175.9 | 47 | 25.4 | 167.4 | 164.2 | 193.8 | 213 | 394.5 | 738.4 | 1,215 |
Interest expense, net | 112.5 | 115.1 | 127.7 | 138.6 | 141.6 | 140 | 143.5 | 143.9 | 493.9 | 569 | 542.3 |
Operating income (loss) | 258.7 | $ 291 | $ 174.7 | $ 164 | 309 | $ 304.2 | $ 337.3 | $ 356.9 | 888.4 | 1,307.4 | 1,757.3 |
Depreciation and amortization | 183.8 | 249.3 | 487.3 | ||||||||
Stock compensation expense | 21.3 | 54.8 | 80.8 | ||||||||
Asset impairments | 63.7 | 52 | |||||||||
Restructuring and other charges | (8.2) | 118.1 | |||||||||
Loss on extinguishment of debt | 71.9 | ||||||||||
Less: Securitization funding costs | 165.9 | 213.4 | 220.2 | ||||||||
Less: Interest expense on deposits | 219.5 | 225.6 | 165.7 | ||||||||
Capital expenditures | 54 | 142.3 | 199.8 | ||||||||
Total assets | 22,547.1 | 26,494.8 | 22,547.1 | 26,494.8 | |||||||
Continuing Operations | |||||||||||
Segment information | |||||||||||
Revenues | 4,521.4 | 5,581.3 | 5,666.6 | ||||||||
Income (loss) before income taxes | 394.5 | 738.4 | 1,215 | ||||||||
Interest expense, net | 493.9 | 569 | 542.3 | ||||||||
Operating income (loss) | 888.4 | 1,307.4 | 1,757.3 | ||||||||
Depreciation and amortization | 183.8 | 176.1 | 193.6 | ||||||||
Stock compensation expense | 21.3 | 25.1 | 44.4 | ||||||||
Gain on sale of business, net of strategic transaction costs | 8 | ||||||||||
Strategic transaction costs | 15.9 | 11.7 | |||||||||
Asset impairments | (63.7) | ||||||||||
Restructuring and other charges | (8.2) | 118.1 | |||||||||
Loss on extinguishment of debt | 71.9 | ||||||||||
Adjusted EBITDA | 1,156.9 | 1,710.3 | 1,995.3 | ||||||||
Less: Securitization funding costs | 165.9 | 213.4 | 220.2 | ||||||||
Less: Interest expense on deposits | 219.5 | 225.6 | 165.7 | ||||||||
Adjusted EBITDA, net | 771.5 | 1,271.3 | 1,609.4 | ||||||||
Capital expenditures | 54 | 86.5 | 93.3 | ||||||||
LoyaltyOne | |||||||||||
Segment information | |||||||||||
Restructuring and other charges | 0.1 | 50.8 | |||||||||
Card Services | |||||||||||
Segment information | |||||||||||
Restructuring and other charges | (8.3) | 29.4 | |||||||||
Operating segment | LoyaltyOne | |||||||||||
Segment information | |||||||||||
Revenues | 764.8 | 1,033.1 | 1,068.4 | ||||||||
Income (loss) before income taxes | 111 | 103.1 | 153.8 | ||||||||
Interest expense, net | (0.8) | 2.3 | 5.6 | ||||||||
Operating income (loss) | 110.2 | 105.4 | 159.4 | ||||||||
Gain on sale of business, net of strategic transaction costs | 8 | ||||||||||
Strategic transaction costs | 0.4 | 1 | |||||||||
Restructuring and other charges | 0.1 | 50.8 | |||||||||
Adjusted EBITDA | 186.2 | 244.5 | 254.2 | ||||||||
Adjusted EBITDA, net | 186.2 | 244.5 | 254.2 | ||||||||
Total assets | 2,422.3 | 2,338 | 2,422.3 | 2,338 | |||||||
Operating segment | LoyaltyOne | Continuing Operations | |||||||||||
Segment information | |||||||||||
Depreciation and amortization | 78 | 80.1 | 84.8 | ||||||||
Stock compensation expense | 5.5 | 7.2 | 10 | ||||||||
Capital expenditures | 24.3 | 41.5 | 34 | ||||||||
Operating segment | Card Services | |||||||||||
Segment information | |||||||||||
Revenues | 3,756.5 | 4,547.8 | 4,597.6 | ||||||||
Income (loss) before income taxes | 501.5 | 991.7 | 1,381.6 | ||||||||
Interest expense, net | 385.4 | 439 | 385.9 | ||||||||
Operating income (loss) | 886.9 | 1,430.7 | 1,767.5 | ||||||||
Strategic transaction costs | 0.3 | ||||||||||
Asset impairments | (63.7) | ||||||||||
Restructuring and other charges | (8.3) | 29.4 | |||||||||
Adjusted EBITDA | 1,052.4 | 1,558.7 | 1,881.9 | ||||||||
Less: Securitization funding costs | 165.9 | 213.4 | 220.2 | ||||||||
Less: Interest expense on deposits | 219.5 | 225.6 | 165.7 | ||||||||
Adjusted EBITDA, net | 667 | 1,119.7 | 1,496 | ||||||||
Total assets | 19,884.6 | 23,931.1 | 19,884.6 | 23,931.1 | |||||||
Operating segment | Card Services | Continuing Operations | |||||||||||
Segment information | |||||||||||
Depreciation and amortization | 102.8 | 89.3 | 101.1 | ||||||||
Stock compensation expense | 7 | 9.3 | 13.3 | ||||||||
Capital expenditures | 29.4 | 44.2 | 53.8 | ||||||||
Corporate/Other | |||||||||||
Segment information | |||||||||||
Revenues | 0.1 | 0.4 | 0.6 | ||||||||
Income (loss) before income taxes | (218) | (356.4) | (320.4) | ||||||||
Interest expense, net | 109.3 | 127.7 | 150.8 | ||||||||
Operating income (loss) | (108.7) | (228.7) | (169.6) | ||||||||
Strategic transaction costs | 15.2 | 10.7 | |||||||||
Restructuring and other charges | 37.9 | ||||||||||
Loss on extinguishment of debt | 71.9 | ||||||||||
Adjusted EBITDA | (81.7) | (92.9) | (140.8) | ||||||||
Adjusted EBITDA, net | (81.7) | (92.9) | (140.8) | ||||||||
Total assets | $ 240.2 | $ 225.7 | 240.2 | 225.7 | |||||||
Corporate/Other | Continuing Operations | |||||||||||
Segment information | |||||||||||
Depreciation and amortization | 3 | 6.7 | 7.7 | ||||||||
Stock compensation expense | 8.8 | 8.6 | 21.1 | ||||||||
Capital expenditures | $ 0.3 | $ 0.8 | $ 5.5 |
SEGMENT INFORMATION - Geographi
SEGMENT INFORMATION - Geographic Information (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Information concerning principal geographic areas | |||||||||||
Revenues | $ 1,109.8 | $ 1,050.5 | $ 979.3 | $ 1,381.8 | $ 1,461 | $ 1,437.6 | $ 1,348.5 | $ 1,334.2 | $ 4,521.4 | $ 5,581.3 | $ 5,666.6 |
Long-lived assets | 2,912.7 | 2,382.1 | $ 2,912.7 | $ 2,382.1 | |||||||
Revenues | Customer Concentration Risk | L Brands | |||||||||||
Concentration risk | |||||||||||
Concentration Risk, Percentage | 10.30% | 10.60% | 10.80% | ||||||||
United States | |||||||||||
Information concerning principal geographic areas | |||||||||||
Revenues | $ 3,767.7 | $ 4,588.3 | $ 4,621.3 | ||||||||
Long-lived assets | 1,874.9 | 1,361.1 | 1,874.9 | 1,361.1 | |||||||
Canada | |||||||||||
Information concerning principal geographic areas | |||||||||||
Revenues | 286.9 | 352.2 | 411.3 | ||||||||
Long-lived assets | 310.7 | 311.1 | 310.7 | 311.1 | |||||||
Europe, Middle East and Africa | |||||||||||
Information concerning principal geographic areas | |||||||||||
Revenues | 332.6 | 449.1 | 463.2 | ||||||||
Long-lived assets | 714.3 | 696.2 | 714.3 | 696.2 | |||||||
Asia Pacific | |||||||||||
Information concerning principal geographic areas | |||||||||||
Revenues | 80.5 | 121.7 | 122 | ||||||||
Long-lived assets | 11.4 | 12.8 | 11.4 | 12.8 | |||||||
Other | |||||||||||
Information concerning principal geographic areas | |||||||||||
Revenues | 53.7 | 70 | $ 48.8 | ||||||||
Long-lived assets | $ 1.4 | $ 0.9 | $ 1.4 | $ 0.9 |
SUPPLEMENTAL CASH FLOW INFORM_3
SUPPLEMENTAL CASH FLOW INFORMATION (Details) - USD ($) $ in Millions | Dec. 03, 2020 | Apr. 25, 2019 | Oct. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Cash and cash equivalents | $ 3,081.5 | $ 3,874.4 | $ 3,863.1 | ||||
Restricted cash included within other current assets | 326.3 | 44.4 | 60.7 | ||||
Restricted cash included within redemption settlement assets, restricted | 55.4 | 39.3 | 43.9 | ||||
Total cash, cash equivalents and restricted cash | 3,463.2 | $ 3,958.1 | $ 3,967.7 | $ 4,314.7 | |||
Restricted cash in principal accumulation for repayment | $ 291.8 | ||||||
Equity consideration shares of common stock | 1,900,000 | ||||||
Series A Non-Voting Convertible Preferred Stock | |||||||
Conversion of stock, shares converted | 150,000 | ||||||
Bread | |||||||
Deferred consideration | $ 75 | $ 75 | |||||
Equity consideration shares of common stock | 1,900,000 | 1,900,000 | |||||
Value Act Holdings, L.P. | Common Stock | |||||||
Conversion of stock, shares converted | 1,500,000 | 1,500,000 | |||||
Value Act Holdings, L.P. | Series A Non-Voting Convertible Preferred Stock | |||||||
Conversion of stock, shares converted | 150,000 | ||||||
Conversion of stock, shares issued | 150,000 | 150,000 |
QUARTERLY RESULTS OF OPERATIO_3
QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) | |||||||||||
Revenues | $ 1,109.8 | $ 1,050.5 | $ 979.3 | $ 1,381.8 | $ 1,461 | $ 1,437.6 | $ 1,348.5 | $ 1,334.2 | $ 4,521.4 | $ 5,581.3 | $ 5,666.6 |
Operating expenses | 851.1 | 759.5 | 804.6 | 1,217.8 | 1,152 | 1,133.4 | 1,011.2 | 977.3 | 3,633 | 4,273.9 | 3,909.3 |
Operating income | 258.7 | 291 | 174.7 | 164 | 309 | 304.2 | 337.3 | 356.9 | 888.4 | 1,307.4 | 1,757.3 |
Interest expense, net | 112.5 | 115.1 | 127.7 | 138.6 | 141.6 | 140 | 143.5 | 143.9 | 493.9 | 569 | 542.3 |
Income from continuing operations before income taxes | 146.2 | 175.9 | 47 | 25.4 | 167.4 | 164.2 | 193.8 | 213 | 394.5 | 738.4 | 1,215 |
Provision for income taxes | 52.9 | 42.6 | 8.6 | (4.6) | 37 | 42.6 | 51.4 | 34.8 | 99.5 | 165.8 | 269.5 |
Income from continuing operations | 93.3 | 133.3 | 38.4 | 30 | 130.4 | 121.6 | 142.4 | 178.2 | 295 | 572.6 | 945.5 |
(Loss) income from discontinued operations, net of taxes | (81.3) | (32.9) | (229.2) | (3.4) | (29.1) | (81.3) | (294.6) | 17.6 | |||
Net income (loss) | $ 12 | $ 133.3 | $ 38.4 | $ 30 | $ 97.5 | $ (107.6) | $ 139 | $ 149.1 | $ 213.7 | $ 278 | $ 963.1 |
Basic income (loss) per share (Note 4): | |||||||||||
Income from continuing operations (in dollars per share) | $ 1.93 | $ 2.79 | $ 0.81 | $ 0.63 | $ 2.73 | $ 2.47 | $ 2.72 | $ 3.36 | $ 6.17 | $ 11.25 | $ 17.24 |
(Loss) income from discontinued operations (in dollars per share) | (1.68) | (0.70) | (4.69) | (0.07) | (0.55) | (1.70) | (5.89) | 0.32 | |||
Net income (loss) per share (in dollars per share) | 0.25 | 2.79 | 0.81 | 0.63 | 2.03 | (2.22) | 2.65 | 2.81 | 4.47 | 5.36 | 17.56 |
Diluted income (loss) per share (Note 4): | |||||||||||
Income from continuing operations (in dollars per share) | 1.93 | 2.79 | 0.81 | 0.63 | 2.74 | 2.41 | 2.71 | 3.35 | 6.16 | 11.24 | 17.17 |
(Loss) income from discontinued operations (in dollars per share) | (1.68) | (0.69) | (4.54) | (0.07) | (0.55) | (1.70) | (5.78) | 0.32 | |||
Net income (loss) per share (in dollars per share) | $ 0.25 | $ 2.79 | $ 0.81 | $ 0.63 | $ 2.05 | $ (2.13) | $ 2.64 | $ 2.80 | $ 4.46 | $ 5.46 | $ 17.49 |
SCHEDULE II CONSOLIDATED VALU_2
SCHEDULE II CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS (Details) - Allowance for Doubtful Accounts -Trade receivables - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Movement in valuation and qualifying accounts | |||
Balance at Beginning of Year | $ 3.4 | $ 0.4 | $ 0.1 |
Charged to Costs and Expenses | 1.1 | 3.5 | 0.4 |
Write-Offs Net of Recoveries | (0.5) | (0.5) | (0.1) |
Balance at End of Year | $ 4 | $ 3.4 | $ 0.4 |